 The Wage Response to Shocks: The Role of Inter-Occupational Labour AdjustmentNo 54, Working Papers from Toronto Metropolitan University, Department of Economics Abstract: How do cities' average wages adjust to a shock, e.g. trade-induced or technology-induced, shifting the industrial and/or occupational composition of employment? This question is commonly answered using a shift-share analysis, which imputes the e ects of composition changes on cities' average wages in a purely mechanical way. This paper argues that a shift-share approach can be misleading if compositional shifts spill over into industrial and occupational wages. Using data on Germany, this paper finds that the spillover effects from a shift in industrial and occupational composition are large and imply a total effect on cities' average wages of 2.8 times the effect that is predicted by a shift-share exercise. In addition, results indicate that in the case of Germany, accounting for adjustments along the occupational mix is crucial to identify these spillovers, even if one is only interested in the e ect of an industry-specific shock. Keywords: Wages; Worker Mobility; Spillovers; Industrial and Occupational Composition; Local Labour Markets. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:rye:wpaper:wp054 Access Statistics for this paper More papers in Working Papers from Toronto Metropolitan University, Department of Economics Contact information at EDIRC. |
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