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Does Marginal Employment Substitute Regular Employment? – A Heterogeneous Dynamic Labor Demand Approach for Germany

  • Lena Jacobi
  • Sandra Schaffner


In Germany we observe a decline in regular employment and an increase in atypical forms of employment. Especially marginal part-time employment which is characterized by lower tax rates and lower social security contributions increased substantially after a reform in 2003 made this type of employment even more attractive to employers. In our paper we estimate the substitutability of regular employment by marginal part-time employment using data on the industry level before and after the reform.We detect high substitution elasticities with respect to three skill categories of regular employment in both time periods. The substitutability of unskilled full-time workers increased significantly after the reform.

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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0056.

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Length: 38 pages
Date of creation: Jul 2008
Date of revision:
Handle: RePEc:rwi:repape:0056
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