Sectoral Transformation, Turbulence, and Labor Market Dynamics in Germany

Ronald Bachmann and Michael Burda

No 3324, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper analyzes the interaction between structural change and labor market dynamics in West Germany, during a period in which industrial employment declined by more than 30% and service sector employment more than doubled. Using transition data on individual workers, we document a marked increase in structural change and turbulence, in particular since 1990. Net employment changes resulted partly from an increase in gross flows, but also from an increase in the net transition “yield" at any given gross worker turnover. In growing sectors, net structural change was driven by accessions from nonparticipation rather than unemployment; contracting sectors reduced their net employment primarily via lower accessions from nonparticipation. While gross turnover is cyclically sensitive and strongly procyclical, net reallocation is countercyclical, meaning that recessions are associated with increased intensity of sectoral reallocation. Beyond this cyclical component, German reunification and Eastern enlargement appear to have contributed significantly to this accelerated pace of structural change.

Keywords: sectoral and occupational mobility; gross worker flows; turbulence (search for similar items in EconPapers)
JEL-codes: J62 J63 J64 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2008-01
New Economics Papers: this item is included in nep-lab and nep-ltv
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Citations: View citations in EconPapers (9)

Published - published in: German Economic Review, 2010, 11 (1), 37 - 59

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Related works:
Journal Article: Sectoral Transformation, Turbulence and Labor Market Dynamics in Germany (2010)
Journal Article: Sectoral Transformation, Turbulence and Labor Market Dynamics in Germany (2010)
Working Paper: Sectoral Transformation, Turbulence, and Labour Market Dynamics in Germany (2007)
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