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Occupational upgrading and the business cycle in West Germany

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  • Büttner, Thomas
  • Jacobebbinghaus, Peter
  • Ludsteck, Johannes

Abstract

The occupational skill structure depends on the business cycle if employers respond to shortages of applicants during upturns by lowering their hiring standards. Devereux uses this implication to construct empirical tests for the notion of hiring standards adjustment (the so-called Reder hypothesis) and finds affirmative evidence for the U.S labour market. The authors replicate his analysis using German employment register data. Regarding the occupational skill composition they obtain somewhat lower but qualitatively similar responses to the business cycle despite of well known institutional differences between the U.S. and German labour market. The responsiveness of occupational composition wages to the business cycle is considerably lower in Germany.

Suggested Citation

  • Büttner, Thomas & Jacobebbinghaus, Peter & Ludsteck, Johannes, 2010. "Occupational upgrading and the business cycle in West Germany," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-37.
    • Handle: RePEc:zbw:ifweej:201010
    DOI: 10.5018/economics-ejournal.ja.2010-10
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    Citations

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    Cited by:

    1. Sedláček, Petr, 2014. "Match efficiency and firms' hiring standards," Journal of Monetary Economics, Elsevier, vol. 62(C), pages 123-133.
    2. Brenzel, Hanna & Müller, Anne, 2015. "Higher wages or lower expectations? : adjustments of German firms in the hiring process," IAB-Discussion Paper 201506, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    3. Stüber, Heiko, 2012. "Are real entry wages rigid over the business cycle? : Empirical evidence for Germany from 1977 to 2009," IAB-Discussion Paper 201206, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Ekkehart Schlicht, 2016. "Efficiency wages: Variants and implications," IZA World of Labor, Institute of Labor Economics (IZA), pages 275-275, July.
    5. Verhaest, Dieter & Bogaert, Elene & Dereymaeker, Jeroen & Mestdagh, Laura & Baert, Stijn, 2016. "Crowding Out in the Labour Market: Do Employers Lend a Hand?," IZA Discussion Papers 9654, Institute of Labor Economics (IZA).
    6. Bauer, Anja & Lochner, Benjamin, 2020. "History dependence in wages and cyclical selection: Evidence from Germany," Labour Economics, Elsevier, vol. 67(C).
    7. Anneleen Vandeplas & Anna Thum-Thysen, 2019. "Skills Mismatch and Productivity in the EU," European Economy - Discussion Papers 100, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    8. Zwysen, Wouter, 2014. "A disadvantaged childhood matters more if local unemployment is high," ISER Working Paper Series 2014-43, Institute for Social and Economic Research.

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    More about this item

    Keywords

    Hiring standards; business cycle adjustment; occupational upgrading; wage structure; wage setting; overqualification;
    All these keywords.

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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