Skill Compression, Wage Differentials and Employment: Germany vs. the US
Germany's more compressed wage structure is taken by many analysts as the main cause of the German-US difference in job creation. We find that the US has a more dispersed level of skills than Germany but even adjusted for skills, Germany has a more compressed wage distribution than the US. The fact that jobless Germans have nearly the same skills as employed Germans and look more like average Americans than like low skilled Americans runs counter to the wage compression hypothesis. It suggests that the pay and employment experience of low skilled Americans is a poor counterfactual for assessing how reductions in pay might affect jobless Germans.
|Date of creation:||Mar 2000|
|Publication status:||published as Oxford Economic Papers, Vol. 53, no. 3 (July 2001): 582-603|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- Siebert, Horst, 1997. "Labor market rigidities and unemployment in Europe," Kiel Working Papers 787, Kiel Institute for the World Economy (IfW).
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- Freeman Richard B. & Schettkat Ronald, 1999. "The Role of Wage and Skill Differences in US-German Employment Differences / Die Bedeutung von Lohn- und Qualifikationsunterschieden für die deutschen-amerikanischen Beschäftigungsunterschiede," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 219(1-2), pages 49-66, February.
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