Wages and Employment Growth: Disaggregated Evidence for West Germany

Jens Suedekum and Uwe Blien ()

No 1128, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We address the effects of wages on employment growth on the basis of a theoretical model from which cost and demand effects can be derived. In the empirical analysis we take a highly disaggregated perspective and apply a newly developed shift-share regression technique on an exhaustive and very accurate data set for West Germany. The regression shows that the impact of regional wages on employment growth is significantly negative. There is some variation of this effect across sectors, but in no case we find support for the claim that an exogenous wage increase leads to higher employment growth.

Keywords: purchasing power argument; employment growth; shift-share-analysis; regional wages (search for similar items in EconPapers)
JEL-codes: E24 J23 R11 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2004-04
New Economics Papers: this item is included in nep-geo and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Published - published as 'Stimulating employment growth with higher wages? A new approach to address an old controversy' in: Kyklos, 2007, 60 (3), 441-467

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Related works:
Working Paper: Wages and Employment Growth: Disaggregated Evidence for West Germany (2004)
Working Paper: Wages and Employment Growth: Disaggregated Evidence for West Germany (2004)
Working Paper: Wages and Employment Growth: Disaggregated Evidence for West Germany (2004)
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