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Regional Population Structure and Young Workers’ Wages

  • Alfred Garloff
  • Duncan Roth
Chapter
Part of the Advances in Spatial Science book series (ADVSPATIAL)

Abstract

This paper estimates the effect that changes in the size of the youth population have on the wages of young workers. Assuming that differently aged workers are only imperfectly substitutable, economic theory predicts that individuals in larger age groups earn lower wages. We test this hypothesis for a sample of young, male, full-time employees in Western Germany during the period 1999–2010. Based on instrumental variables estimation, we show that an increase in the youth share by one percentage point is predicted to decrease a young worker’s wages by about 3%. Moreover, our results suggest that a substantial part of this effect can be ascribed to members of larger age groups being more likely to be employed in lower-paying occupations.

Keywords

Population structure Wages Youth share Instrumental variables Occupational selection 

Notes

Acknowledgements

The authors would like to thank Stefan Fuchs, Bernd Hayo, John Moffat, Norbert Schanne and two anonymous referees for their advice and are grateful for comments from the participants of IAB’s regional research network meeting in Aalen, the 54th Conference of the European Regional Science Association (ERSA), the 5th ifo Workshop Arbeitsmarkt und Sozialpolitik, the joint IAB Regional Science Academy workshop in Amsterdam and the 28th Conference of the European Association of Labour Economists (EALE). The Federal Institute for Research on Building, Urban Affairs and Spatial Development kindly provided the shapefile of the German labour-market regions. Our thanks also go to Annie Roth for proof-reading an earlier version of this paper.

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Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Institute for Employment Research (IAB)Frankfurt am MainGermany
  2. 2.Institute for Employment Research (IAB)DüsseldorfGermany

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