Value added, wages and labour market flows at the establishment level

Christian Merkl and Heiko Stüber

Applied Economics Letters, 2019, vol. 26, issue 2, 135-142

Abstract: In this article, we analyse the connection between value added, wages and labour market flows at the establishment level. We develop a simple model to illustrate the expected comovement of these variables. For the empirical analysis, we link the new German Administrative Wage and Labor Market Flow Panel data set to the IAB Establishment Panel. We show that establishments’ hires rates have a positive and separations rates a negative comovement with establishment-specific value added, whereby hires react by more than separations. In addition, we provide evidence that establishments’ partial equilibrium reaction is an important driver for aggregate labour market dynamics.

Date: 2019
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Related works:
Working Paper: Value Added, Wages, and Labor Market Flows at the Establishment Level (2018)
Working Paper: Value added, wages, and labor market flows at the establishment level (2017)
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DOI: 10.1080/13504851.2018.1441501

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