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Regional Population Structure and Young Workers’ Wages

In: Modelling Aging and Migration Effects on Spatial Labor Markets

Author

Listed:
  • Alfred Garloff

    (Institute for Employment Research (IAB))

  • Duncan Roth

    (Institute for Employment Research (IAB))

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.

Suggested Citation

  • Alfred Garloff & Duncan Roth, 2018. "Regional Population Structure and Young Workers’ Wages," Advances in Spatial Science, in: Roger R. Stough & Karima Kourtit & Peter Nijkamp & Uwe Blien (ed.), Modelling Aging and Migration Effects on Spatial Labor Markets, chapter 0, pages 261-283, Springer.
    • Handle: RePEc:spr:adspcp:978-3-319-68563-2_13
    DOI: 10.1007/978-3-319-68563-2_13
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    References listed on IDEAS

    as
    1. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    2. Jerry Hausman, 2001. "Mismeasured Variables in Econometric Analysis: Problems from the Right and Problems from the Left," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 57-67, Fall.
    3. Eckey, Hans-Friedrich & Kosfeld, Reinhold & Türck, Matthias, 2006. "Abgrenzung deutscher Arbeitsmarktregionen," Volkswirtschaftliche Diskussionsbeiträge 81, University of Kassel, Faculty of Economics and Management.
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    More about this item

    Keywords

    Population structure; Wages; Youth share; Instrumental variables; Occupational selection;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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