Has earnings inequality in Germany changed in the 1980's?
The development of the West German earnings distribution in the 1980's is analysed on the basis of both the German Socio-Economic Panel and micro-data from the Employment Register of the Federal Labour Office. We find that earnings inequality in Germany has increased very little in the 1980's, if at all. It is shown ·that the marked increase in earnings inequality found in previous studies based on the register data is a statistical artifact related to a change in the coding of the earnings data. Our decomposition analysis based on estimated earnings functions reveals that the relative stability of the German earnings distribution in the 1980's has not resulted from large compensating changes in the composition of the labour force on the one hand, and changes in the returns to human capital on the other. While both of these components have changed little in the observation period, the former rather than the latter component has contributed to the small increase in earnings inequality observed in the register data. If anything, the earnings differential between skilled and unskilled workers has become smaller during the 1980's, while within-inequality has contributed very little to changes in inequality. Overall, the empirical results of this study seem compatible with an institutional explanation of the stability of the German earnings distribution.
|Date of creation:||1996|
|Date of revision:|
|Contact details of provider:|| Postal: L 7,1; D - 68161 Mannheim|
Web page: http://www.zew.de/
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.:
- Licht, Georg & Steiner, Viktor, 1993. "Assimilation, labour market experience, and earnings profiles of temporary and permanent immigrant workers in germany," ZEW Discussion Papers 93-06, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Katharine G. Abraham & Susan N. Houseman, 1993.
"Earnings Inequality in Germany,"
NBER Working Papers
4541, National Bureau of Economic Research, Inc.
- Katharine G. Abraham & Susan Houseman, 1995. "Earnings Inequality in Germany," NBER Chapters, in: Differences and Changes in Wage Structures, pages 371-404 National Bureau of Economic Research, Inc.
- Susan N. Houseman & Katharine G. Abraham, 1995. "Earnings Inequality in Germany," Book chapters authored by Upjohn Institute researchers, in: Richard B. Freeman & Lawrence F. Katz (ed.), Differences and Changes in Wage Structures, pages 371-403 W.E. Upjohn Institute for Employment Research.
- Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, vol. 14(1), pages 53-68, February.
- Schmidt, Christoph M & Zimmermann, Klaus F, 1991. "Work Characteristics, Firm Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 705-10, November.
- Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
- Murphy, Kevin M & Welch, Finis, 1990. "Empirical Age-Earnings Profiles," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 202-29, April.
- Lawrence F. Katz, 1986.
"Efficiency Wage Theories: A Partial Evaluation,"
NBER Working Papers
1906, National Bureau of Economic Research, Inc.
- Wagner, Joachim, 1994. "German wage curves, 1979-1990," Economics Letters, Elsevier, vol. 44(3), pages 307-311.
- Heckman, James J, 1979.
"Sample Selection Bias as a Specification Error,"
Econometric Society, vol. 47(1), pages 153-61, January.
- Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
- Gary Burtless, 1995. "International Trade and the Rise in Earnings Inequality," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 800-816, June.
- Francine D. Blau & Lawrence M. Kahn, 1994.
"International Differences in Male Wage Inequality: Institutions versus Market Forces,"
NBER Working Papers
4678, National Bureau of Economic Research, Inc.
- Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
- Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, September.
- Jenkins, Stephen P, 1995. "Accounting for Inequality Trends: Decomposition Analyses for the UK, 1971-86," Economica, London School of Economics and Political Science, vol. 62(245), pages 29-63, February.
- Blechinger, Doris & Pfeiffer, Friedhelm, 1996. "Technological change and skill obsolescence: the case of German apprenticeship training," ZEW Discussion Papers 96-15, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Velling, Johannes, 1995. "Wage discrimination and occupational segregation of foreign male workers in Germany," ZEW Discussion Papers 95-04, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:9632. 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.