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Employment Polarization in Germany: Role of Technology, Trade and Human Capital

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Abstract

Building on the canonical model of skill-biased technical change to incorporate differential effects of technology and international trade on the skill composition of occupations, the paper employs a task-based approach to analyze structural changes in regional employment within a rich vocational education setting in West Germany during 1979 and 2012. Results confirm theoretical predictions that regional employment districts with high initial share of routine occupations have experienced greater subsequent adoption of computer and information technology and larger decline in routine occupations. Exposure to global imports in goods and services has reduced overall employment in routine-intensive occupations; the magnitude being notably smaller as compared to technology. However, when looking at the direction of displacement of routine workers, regions with greater share of routine jobs have experienced greater growth of high-skilled abstract jobs in the subsequent periods while the overlap between initial apprenticeship intensity and subsequent decline in regional routine employment is significantly strong. Taken together, findings show that unlike in the USA where employment growth in low-skilled service occupations has been the greatest, in Germany there is a greater trend toward occupational upgrading and larger growth in managerial and professional occupations due to the operationalization of its apprenticeship system.

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Fig. 1

Source: Authors’ own calculation

Fig. 2

Source: United Nations Comtrade Database

Fig. 3

Source: Federal Statistical Office

Fig. 4

Source: Authors’ own calculation

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Notes

  1. See Fig. 5 in Appendix for apprenticeship contracts for each time period.

  2. One reason for this observation could be multicollinearity, following which we have provided alternate specifications in the Appendix where all variables of interest are included separately in subsequent models.

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Acknowledgements

Preliminary versions of the manuscript have been presented in DRUID Winter Conference Aalborg 2015 and Jena Economic Research Workshop 2015, and the comments and suggestions received in each of them are strongly acknowledged. Critical yet insightful discussions with Davide Consoli and Uwe Cantner have helped a great deal in formalizing the theoretical arguments. The Institute for Employment Research (IAB) and the Cornell Restricted Access Data Center (CRADC) also deserve special mention for providing remote access to their data and prompt response in processing the program les. This research has been financially supported by the Deutsche Forschungsgemeinschaft (DFG) and the Research Training Group 1411 “The Economics of Innovative Change.”

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Authors and Affiliations

  1. DST-Centre for Policy Research, Indian Institute of Technology Delhi, MS-901, Main Building, Hauz Khas, New Delhi, 110016, India

    Ipsita Roy

  2. Institute of Innovation and Knowledge Management (INGENIO), National Council for Scientific Research (CSIC) and Polytechnic University of Valencia (UPV), Camino de Vera, s/n, 46022, Valencia, Spain

    Davide Consoli

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  1. Ipsita Roy
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  2. Davide Consoli
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Correspondence to Ipsita Roy.

Appendix

Appendix

See Figs. 5 and 6, Tables 5 and 6.

Fig. 5
figure 5

Source: Authors’ own calculation, BIBB

Apprenticeship (1979–2012)

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Fig. 6
figure 6

Source: BIBB-VET 2013

Company apprenticeship offered per 100 applicants in the employment agency districts in 2012.

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Table 5 Estimation results with alternate specifications
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Table 6 Correlation table
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Roy, I., Consoli, D. Employment Polarization in Germany: Role of Technology, Trade and Human Capital. Ind. J. Labour Econ. 61, 251–279 (2018). https://doi.org/10.1007/s41027-018-0133-4

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