Testing for uniform wage trends in West-Germany: A cohort analysis using quantile regressions for censored data |
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Authors: | Bernd Fitzenberger Reinhard Hujer Thomas E MaCurdy Reinhold Schnabel |
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Institution: | Department of Economics, University of Mannheim, 68131 Mannheim, Germany, E-Mail: Bernd.Fitzenberger@vwl.uni-mannheim.de, DE Department of Economics, Johann Wolfgang Goethe University, Mertonstra?e 17, 60054 Frankfurt am Main, Germany, DE Stanford University, Department of Economics, Landau Economics Building, Stanford, CA 94305-6072, USA, US Department of Economics, University of Essen, Universit?tsstra?e 12, 45117 Essen, Germany, DE
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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. |
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Keywords: | : wage inequality cohort analysis quantile regression censoring |
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