Testing for uniform wage trends in West-Germany: A cohort analysis using quantile regressions for censored data

Reinhard Hujer, Bernd Fitzenberger, Reinhold Schnabel and Thomas E. MaCurdy
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Reinhard Hujer: Department of Economics, Johann Wolfgang Goethe University, Mertonstraße 17, 60054 Frankfurt am Main, Germany
Thomas E. MaCurdy: Stanford University, Department of Economics, Landau Economics Building, Stanford, CA 94305-6072, USA

Empirical Economics, 2001, vol. 26, issue 1, 86 pages

Abstract: The rise of unemployment in West Germany is often attributed to an inflexibility of the wage structure in the face of a skill bias in labor demand trends. In addition, there is concern in Germany that during the 70s and 80s unions were pursuing a too egalitarian wage policy. In a cohort analysis, we estimate quantile regressions of wages taking account of the censoring in the data. We present a new framework to describe trends in the entire wage distribution across education and age groups in a parsimonious way. We explore whether wage trends are uniform across cohorts, thus defining a macroeconomic wage trend. Our findings are that wages of workers with intermediate education levels, among them especially those of young workers, deteriorated slightly relative to both high and low education levels. Wage inequality within age-education groups stayed fairly constant. Nevertheless, the German wage structure was fairly stable, especially in international comparison. The results appear consistent with a skill bias in labor demand trends, recognizing that union wages are only likely to be binding floors for low-wage earners.

Keywords: wage; inequality; ·; cohort; analysis; ·; quantile; regression; ·; censoring. (search for similar items in EconPapers)
JEL-codes: C24 J31 (search for similar items in EconPapers)
Date: 2001-03-19
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Citations: View citations in EconPapers (80)

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