Skill premiums and the supply of young workers in Germany / Albrecht Glitz (Humboldt-Universität zu Berlin, Universitat Pompeu Fabra, Barcelona GSE and IZA), Daniel Wissmann (Ludwig-Maximilians-Universität München) ; IZA Institute of Labor Economics
VerfasserGlitz, Albrecht In der Gemeinsamen Normdatei der DNB nachschlagen ; Wissmann, Daniel In der Gemeinsamen Normdatei der DNB nachschlagen
KörperschaftForschungsinstitut zur Zukunft der Arbeit In der Gemeinsamen Normdatei der DNB nachschlagen
ErschienenBonn, Germany : IZA Institute of Labor Economics, July 2017
Elektronische Ressource
Umfang1 Online-Ressource (53 Seiten) : Diagramme
SerieDiscussion paper ; no. 10901
URNurn:nbn:de:hbz:5:2-136102 Persistent Identifier (URN)
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In this paper, we study the development and underlying drivers of skill premiums in Germany between 1980 and 2008. We show that the significant increase in the medium to low skill wage premiums since the late 1980s was almost exclusively concentrated among the group of workers aged 30 or below. Using a nested CES production function framework which allows for imperfect substitutability between young and old workers, we investigate whether changes in relative labor supplies could explain these patterns. Our model predicts the observed differential evolution of skill premiums very well. The estimates imply an elasticity of substitution between young and old workers of about 8, between medium- and lowskilled workers of 4 and between high-skilled and medium/low-skilled workers of 1.6. Using a cohort level analysis based on Microcensus data, we find that long-term demographic changes in the educational attainment of the native (West-)German population - in particular of the post baby boomer cohorts born after 1965 - are responsible for the surprising decline in the relative supply of medium-skilled workers which caused wage inequality at the lower part of the distribution to increase in recent decades. We further show that the role of (lowskilled) migration is limited in explaining the long-term changes in relative labor supplies.