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The structure of hiring costs in Germany - evidence from firm-level data

  • Samuel Muehlemann

    ()

    (Department of Economics, University of Bern, Switzerland; IRLE, University of California, Berkeley, USA; IZA, Bonn, Germany)

  • Harald Pfeifer

    ()

    (Federal Institute for Vocational Education and Training, Bonn, Germany; ROA, Maastricht University, The Netherlands)

This paper analyzes the structure of hiring costs of skilled workers in Germany. Using detailed and representative firm-level data on recruitment and adaptation costs of new hires, we find that average hiring costs amount to more than 8 weeks of wage payments (4,700 Euros). The structure of hiring costs is convex, as an increase in the number of hires by 1% increases hiring costs by 1.3%. We find moderate effects of labor market institutions on the magnitude but none on the structure of hiring costs. Furthermore, we provide evidence in favor of monopsony power in the German labor market.

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File URL: http://repec.business.uzh.ch/RePEc/iso/leadinghouse/0077_lhwpaper.pdf
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Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Economics of Education Working Paper Series with number 0077.

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Length: 37 pages
Date of creation: Apr 2012
Date of revision: Sep 2013
Handle: RePEc:iso:educat:0077
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  17. Carola M. Frege, 2002. "A Critical Assessment of the Theoretical and Empirical Research on German Works Councils," British Journal of Industrial Relations, London School of Economics, vol. 40(2), pages 221-248, 06.
  18. Addison, John T. & Schnabel, Claus & Wagner, Joachim, 2003. "The course of research into the economic consequences of German works councils," Discussion Papers 22, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  19. Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
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