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

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  • Jacobi, Lena
  • Schaffner, Sandra

Abstract

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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  • Jacobi, Lena & Schaffner, Sandra, 2008. "Does Marginal Employment Substitute Regular Employment? – A Heterogeneous Dynamic Labor Demand Approach for Germany," Ruhr Economic Papers 56, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:56
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    2. Bechara, Peggy & Kasten, Tanja & Schaffner, Sandra, 2015. "Dokumentation des RWI-Einkommensteuer-Mikrosimulationsmodells (EMSIM)," RWI Materialien 86, RWI - Leibniz-Institut für Wirtschaftsforschung.
    3. Matthias Collischon & Kamila Cygan-Rehm & Regina T. Riphahn, 2021. "Employment effects of payroll tax subsidies," Small Business Economics, Springer, vol. 57(3), pages 1201-1219, October.
    4. Berthold, Norbert & Coban, Mustafa, 2013. "Mini- und Midijobs in Deutschland: Lohnsubventionierung ohne Beschäftigungseffekte?," Discussion Paper Series 119, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    5. Koelling Arnd, 2017. "Labor Demand and Unequal Payments: Does Wage Dispersion Matter? Using German Employer-Employee Data to Analyze the Influence of Intra-Firm Wage Inequality on Labor Demand," Review of Economics, De Gruyter, vol. 68(1), pages 1-39, April.
    6. Lichter, Andreas & Peichl, Andreas & Siegloch, Sebastian, 2015. "The own-wage elasticity of labor demand: A meta-regression analysis," European Economic Review, Elsevier, vol. 80(C), pages 94-119.
    7. Boll, Christina & Hüning, Hendrik & Leppin, Julian & Puckelwald, Johannes, 2015. "Potential effects of a statutory minimum wage on the gender pay gap: A simulation-based study for Germany," HWWI Research Papers 163, Hamburg Institute of International Economics (HWWI).
    8. Hanan Nazier, 2019. "Estimating Labor Demand Elasticities and Elasticities of Substitution in Egyptian Manufacturing Sector: A Firm-Level Static Analysis," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 62(4), pages 549-575, December.
    9. Lamla, Bettina & Coppola, Michela, 2013. "Is it all about access? Perceived access to occupational pensions in Germany," MEA discussion paper series 201312, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    10. Boss, Alfred & Christensen, Björn & Schrader, Klaus, 2010. "Die Hartz IV-Falle: Wenn Arbeit nicht mehr lohnt," Kiel Discussion Papers 474/475, Kiel Institute for the World Economy (IfW Kiel).
    11. Gabriela Galassi, 2021. "Labor Demand Response to Labor Supply Incentives: Lessons from the German Mini-Job Reform," Staff Working Papers 21-15, Bank of Canada.
    12. Berthold Norbert & Coban Mustafa, 2013. "Mini- und Midijobs in Deutschland: Lohnsubventionierung ohne Beschäftigungseffekte? / Mini- and Midi-Jobs in Germany: Do Wage Subsidies have an Effect on Employment?," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 64(1), pages 289-324, January.
    13. Galassi, Gabriela, 2021. "Labor Demand Response to Labor Supply Incentives: Lessons from the German Mini-Job Reform," IZA Discussion Papers 14248, Institute of Labor Economics (IZA).
    14. Ulrich Walwei, 2014. "Times of change: what drives the growth of work arrangements in Germany? [Zeiten des Wandels: Was treibt das Wachstum atypischer Erwerbsformen in Deutschland?]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 47(3), pages 183-204, September.
    15. Boll, Christina & Hüning, Hendrik & Leppin, Julian & Puckelwald, Johannes, 2015. "Potenzielle Auswirkungen des Mindestlohnes auf den Gender Pay Gap in Deutschland: Eine Simulationsstudie," HWWI Policy Papers 89, Hamburg Institute of International Economics (HWWI).
    16. Arnd Kölling, 2014. "Labor Demand and Unequal Payment: Does Wage Inequality matter? Analyzing the Influence of Intra-firm Wage Dispersion on Labor Demand with German Employer-Employee Data," Working Paper Series in Economics 326, University of Lüneburg, Institute of Economics.

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    More about this item

    Keywords

    Mini-Jobs; dynamic labor demand; elasticities; Hartz-reforms;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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