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Testing for uniform wage trends in West-Germany: A cohort analysis using quantile regressions for censored data

  • Bernd Fitzenberger
  • Reinhard Hujer
  • Thomas E. MaCurdy
  • Reinhold Schnabel
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Part of the Studies in Empirical Economics book series (STUDEMP)

Abstract

The rise of unemployment in West Germany is often attributed to an inflexibility of the wage structure in the face of a skill bias in labor demand trends. In addition, there is concern in Germany that during the 70s and 80s unions were pursuing a too egalitarian wage policy. In a cohort analysis, we estimate quantile regressions of wages taking account of the censoring in the data. We present a new framework to describe trends in the entire wage distribution across education and age groups in a parsimonious way. We explore whether wage trends are uniform across cohorts, thus defining a macroeconomic wage trend. Our findings are that wages of workers with intermediate education levels, among them especially those of young workers, deteriorated slightly relative to both high and low education levels. Wage inequality within age-education groups stayed fairly constant. Nevertheless, the German wage structure was fairly stable, especially in international comparison. The results appear consistent with a skill bias in labor demand trends, recognizing that union wages are only likely to be binding floors for low-wage earners.

Key words

wage inequality cohort analysis quantile regression censoring. 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2002

Authors and Affiliations

  • Bernd Fitzenberger
    • 1
  • Reinhard Hujer
    • 2
  • Thomas E. MaCurdy
    • 3
  • Reinhold Schnabel
    • 4
  1. 1.Department of EconomicsUniversity of MannheimMannheimGermany
  2. 2.Department of EconomicsJohann Wolfgang Goethe UniversityFrankfurt am MainGermany
  3. 3.Stanford University, Department of EconomicsLandau Economics BuildingStanfordUSA
  4. 4.Department of EconomicsUniversity of EssenEssenGermany

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