Wages and Employment Growth: Disaggregated Evidence for West Germany

HWWA Discussion Paper No. 275

35 Pages Posted: 18 Jun 2004

See all articles by Jens Suedekum

Jens Suedekum

Heinrich-Heine-University Duesseldorf, Duesseldorf Institute for Competition Economics (DICE); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Institute for the Study of Labor (IZA)

Uwe Blien

Institute for Employment Research (IAB); IZA Institute of Labor Economics

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Date Written: 2004

Abstract

We address the effects of wages on employment growth on the basis of a theoretical model from which cost and demand effects can be derived. In the empirical analysis, we take a highly disaggregated perspective and apply a newly developed shift-share regression technique on an exhaustive and very accurate data set for West Germany. The regression shows that the impact of regional wages on employment growth is significantly negative. There is some variation of this effect across sectors, but in no case we find support for the claim that an exogenous wage increase leads to higher employment growth.

Keywords: Employment growth, shift-share-analysis, regional wages, purchasing

JEL Classification: J23, E24, R11

Suggested Citation

Südekum, Jens and Blien, Uwe, Wages and Employment Growth: Disaggregated Evidence for West Germany (2004). HWWA Discussion Paper No. 275, Available at SSRN: https://ssrn.com/abstract=556210 or http://dx.doi.org/10.2139/ssrn.556210

Jens Südekum (Contact Author)

Heinrich-Heine-University Duesseldorf, Duesseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Uwe Blien

Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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