History dependence in wages and cyclical selection: evidence from Germany

Anja Bauer and Benjamin Lochner
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Anja Bauer: Institute for Employment Research (IAB), Nuremberg, Germany

No 201629, IAB-Discussion Paper from Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]

Abstract: "Using administrative data from Germany, this paper analyzes the relation between wages and past and current labor market conditions. Specifically, it explores whether the data is more consistent with implicit contract models (Beaudry/DiNardo, 1991) or a matching model with on-the-job search and cyclical selection (Hagedorn/Manovskii, 2013). The data suggests that wages are related to past labor market conditions as contract theories postulate. However, past labor market conditions also affect contemporaneous wages through the evolution of the match qualities over a worker's job history - the main hypothesis of the selection model. Refining the selection model by taking into account within company job regrading, we find that wages of workers who switched employers and occupations at the same time respond stronger to the cycle than wages of job stayers. In contrast, wages of workers who only switch employers or occupations are not more cyclical than wages of workers who stay at their previous employer and in their previous occupation." (Author's abstract, IAB-Doku) ((en))

Keywords: Bundesrepublik Deutschland; Stichprobe der Integrierten Arbeitsmarktbiografien (SIAB); Berufsgruppe; Berufswechsel; Einkommenseffekte; Konjunkturabhängigkeit; Lohnentwicklung; Lohnfindung; matching; Qualität; Arbeitsmarktentwicklung; Arbeitsplatzwechsel; zwischenbetriebliche Mobilität; 1974-2014 (search for similar items in EconPapers)
JEL-codes: E24 E32 J31 J41 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2016
New Economics Papers: this item is included in nep-eur, nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published in/as: Labour Economics (2020), Art. 101932, doi:10.1016/j.labeco.2020.101932

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Journal Article: History dependence in wages and cyclical selection: Evidence from Germany (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:iab:iabdpa:201629

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