Labor Force Status Dynamics in the German Labor Market: Individual Heterogeneity and Cyclical Sensitivity
The aggregate average unemployment rate in a given country is essentially the result of individual workers' transitions between the three core labor force states, employment, unemployment, and inactivity. The dynamics of these transitions depend both on individual duration in a particular state and the transition probabilities between states. Individual transitions, in turn, depend on personal characteristics, i.e. observable sociodemographic attributes and unobserved factors. Simultaneously, person-specific dynamics may be influenced by swings of the business cycle that differentially affect the likelihood of individual transitions. This paper analyzes these labor force status dynamics for the German labor market using comprehensive data on monthly transitions from the GSOEP, covering the time periods 1983-2003 for West Germany, and 1992-2003 for East Germany. For 18 demographic cells defined by sex, 3 age categories, and 3 education categories, the model uses loading factors to translate unobserved shocks to the labor market into observed cellspecific unemployment rates as well as bilateral transition probabilities between all states. This approach allows us to distinguish individual heterogeneity and cyclical volatility in describing labor force status flows. The results show that the experience of high unemployment rates is more sensitive to cyclical behavior for certain demographic groups, specifically unskilled and young workers. Heterogeneity in unemployment and transition rates differs between East and West Germany, as well as between the sexes. In East Germany, all demographic cells are almost entirely detached from the cycle. The unemployment structure of West German women is rather homogenous across age and education, in contrast to men and East-German women. The decisive component of the heterogeneity in unemployment dynamics is the re-employment rate.
|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: Vogelpothsweg 78, D-44221 Dortmund|
Phone: (0231) 755-3125
Fax: (0231) 755-5284
Web page: http://www.statistik.tu-dortmund.de/sfb475.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Daniel Cohen & Arnaud Lefranc & Gilles Saint-Paul, 1997. "French unemployment: a transatlantic perspective," Economic Policy, CEPR;CES;MSH, vol. 12(25), pages 265-292, October.
- Burda, Michael C & Wyplosz, Charles, 1993.
"Gross Worker and Job Flows in Europe,"
CEPR Discussion Papers
868, C.E.P.R. Discussion Papers.
- 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.
- Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 19 pages.
- Dale T. Mortensen & Christopher A. Pissarides, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 397-415.
- Hilary Hoynes, 1999.
"The Employment, Earnings, and Income of Less Skilled Workers Over the Business Cycle,"
NBER Working Papers
7188, National Bureau of Economic Research, Inc.
- Note: For best results & the figures should be printed on a non-Postscript printer. Hoynes & H., . "The Employment, Earnings, and Income of Less-Skilled Workers over the Business Cycle," Institute for Research on Poverty Discussion Papers 1199-99, University of Wisconsin Institute for Research on Poverty.
- Hilary Williamson Hoynes, 1999. "The Employment, Earnings, and Income of Less Skilled Workers Over the Business Cycle," JCPR Working Papers 85, Northwestern University/University of Chicago Joint Center for Poverty Research.
- Steven J. Davis & John Haltiwanger, 1990. "Gross Job Creation and Destruction: Microeconomic Evidence and Macroeconomic Implications," NBER Chapters, in: NBER Macroeconomics Annual 1990, Volume 5, pages 123-186 National Bureau of Economic Research, Inc.
- Abowd, John M & Zellner, Arnold, 1985. "Estimating Gross Labor-Force Flows," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(3), pages 254-83, June.
- Poterba, James M & Summers, Lawrence H, 1986. "Reporting Errors and Labor Market Dynamics," Econometrica, Econometric Society, vol. 54(6), pages 1319-38, November.
- Siebert, Horst, 1997.
"Labor market rigidities and unemployment in Europe,"
Kiel Working Papers
787, Kiel Institute for the World Economy (IfW).
- Siebert, Horst, 1997. "Labor market rigidities and unemployment in Europe," Kiel Working Papers 787, Kiel Institute for the World Economy.
- Cohen, Daniel & Lefranc, Arnaud & Saint-paul, 1997. "French unemployment : a transatlantique perspective," CEPREMAP Working Papers (Couverture Orange) 9705, CEPREMAP.
- Horst Siebert, 1997. "Labor Market Rigidities: At the Root of Unemployment in Europe," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 37-54, Summer.
- Kim B. Clark & Lawrence H. Summers, 1979. "Labor Market Dynamics and Unemployemnt: A Reconsideration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(1), pages 13-72.
- Boeri, Tito & Cramer, Ulrich, 1992. "Employment growth, incumbents and entrants : Evidence from Germany," International Journal of Industrial Organization, Elsevier, vol. 10(4), pages 545-565, December.
- Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
When requesting a correction, please mention this item's handle: RePEc:zbw:sfb475:200620. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.