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Do small labor market entry cohorts reduce unemployment?

Author

Listed:
  • Garloff, Alfred

    (Institute for Employment Research (IAB), Nuremberg, Germany)

  • Pohl, Carsten

    (Institute for Employment Research (IAB), Nuremberg, Germany)

  • Schanne, Norbert

    (Institute for Employment Research (IAB), Nuremberg, Germany)

Abstract

"In this paper we study the effect of small labor market entry cohorts on (un)employment in Western Germany. From a theoretical point of view, decreasing cohort sizes may on the one hand reduce unemployment due to 'inverse cohort crowding' or on the other hand increase unemployment if companies reduce jobs disproportionately. Consequently, the actual effect of cohort shrinking on (un)employment is an empirical question. We analyze the relationship between (un)employment and cohort sizes using a long panel of Western German labor market regions. In this context, we account for both the likely endogeneity of cohort size due to migration of the (young) workforce across regions using lagged births as instruments as well as for temporal and spatial autocorrelation. Our results provide good news for the (Western) German labor market: small entry cohorts are indeed likely to decrease the overall unemployment rate and thus to improve the situation of job seekers. Accordingly, with regard to the employment rate we find that it is positively affected by a decrease in the youth share." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Garloff, Alfred & Pohl, Carsten & Schanne, Norbert, 2011. "Do small labor market entry cohorts reduce unemployment?," IAB-Discussion Paper 201118, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    • Handle: RePEc:iab:iabdpa:201118
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    More about this item

    Keywords

    Bundesrepublik Deutschland ; Westdeutschland ; Auswirkungen ; Beschäftigungseffekte ; Bevölkerungsrückgang ; Bevölkerungsstruktur ; demografischer Wandel ; demografischer Wandel ; Geburtenrückgang ; internationaler Vergleich ; Jugendliche ; junge Erwachsene ; Altersstruktur ; OECD ; regionaler Vergleich ; Arbeitslosenquote ; Arbeitsmarktchancen ; Arbeitsuchende ; 1978-2009;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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