Reversed Roles? Wage and Employment Effects of the Current Crisis

Abstract

In Germany, the economic crisis 2008/09 was restricted to export-oriented industries such as automotive, chemistry, and mechanical engineering and hence to industries with a high proportion of qualified employees. Therefore, we expect the most current crisis to have a reversed effect on the relative earnings position between more and less qualified in contrast to a development that favored the more qualified since the beginning of the 1980s. Our empirical study is based on the Institute for Employment Research (IAB) Establishment Panel, a representative German establishment level panel data set that surveys information from almost 16,000 personal interviews with high ranked managers.

Despite the “German Job Miracle,” conditional difference-in-differences estimations to control for observed and unobserved heterogeneity reveal substantial employment reductions in establishments affected by the economic crisis. Falls in employment are strongest in plants with a relatively low proportion of qualified workers. Furthermore, our results indicate that the economic crisis is associated with a decline in wages, but only in those establishments that do not operate working time accounts. In sum, we do not find evidence for the current crisis having a reversed effect on the relative earnings position. Obviously once again, the higher qualified are better off than the lower qualified.

Citation

Bellmann, L. and Gerner, H.-D. (2011), "Reversed Roles? Wage and Employment Effects of the Current Crisis", Immervoll, H., Peichl, A. and Tatsiramos, K. (Ed.) Who Loses in the Downturn? Economic Crisis, Employment and Income Distribution (Research in Labor Economics, Vol. 32), Emerald Group Publishing Limited, Leeds, pp. 181-206. https://doi.org/10.1108/S0147-9121(2011)0000032009