Regional Population Structure and Young Workers’ Wages

Alfred Garloff and Duncan Roth
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Alfred Garloff: Institute for Employment Research (IAB)

Chapter Chapter 13 in Modelling Aging and Migration Effects on Spatial Labor Markets, 2018, pp 261-283 from Springer

Abstract: Abstract This paper estimates the effect that changes in the size of the youth population have on the wages of young workers. Assuming that differently aged workers are only imperfectly substitutable, economic theory predicts that individuals in larger age groups earn lower wages. We test this hypothesis for a sample of young, male, full-time employees in Western Germany during the period 1999–2010. Based on instrumental variables estimation, we show that an increase in the youth share by one percentage point is predicted to decrease a young worker’s wages by about 3%. Moreover, our results suggest that a substantial part of this effect can be ascribed to members of larger age groups being more likely to be employed in lower-paying occupations.

Keywords: Population structure; Wages; Youth share; Instrumental variables; Occupational selection (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/978-3-319-68563-2_13

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