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Occupational Tasks and Wage Inequality in Germany: A Decomposition Analysis

Author

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  • Koomen, Miriam

    (Swiss National Bank)

  • Backes-Gellner, Uschi

    (University of Zurich)

Abstract

We study the role of occupational tasks as drivers of West German wage inequality. We match administrative wage data with longitudinal task data, which allows us to account for within-occupation changes in task content over time. We run RIF regression-based decompositions to quantify the contribution of changes in the returns to tasks to overall changes in the wage distribution from 1978 to 2006. We find that changes in the returns to tasks explain up to half of the increase in wage inequality since the 1990s, both at the top and the bottom of the wage distribution. Specifically, abstract tasks drive the upper wage gap, while interactive and routine tasks drive the lower wage gap. Importantly, we find low-wage occupations to have the highest routine task intensity. The association between occupational tasks and West German wage inequality is thus both stronger and different than prior research has found.

Suggested Citation

  • Koomen, Miriam & Backes-Gellner, Uschi, 2022. "Occupational Tasks and Wage Inequality in Germany: A Decomposition Analysis," IZA Discussion Papers 15702, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15702
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    More about this item

    Keywords

    decomposition analysis; wage inequality; skills; tasks; routine-biased technical change; RIF regression;
    All these keywords.

    JEL classification:

    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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