East German Labour Market
Hans-Ulrich Brautzsch
Wirtschaft im Wandel,
No. 11,
2008
Abstract
In the course of 2008, the situation on the East German labour market improved again. The registered unemployment declined significantly. On the one hand, this is due to the positive development of employment situation. On the other, labour supply decreased like in recent years. The underemployment rate is still about twice as high as in West Germany. In 2009, the situation on the East German labour market will hardly improve due to weak production growth.
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Low Wages in the Service Sector in Eastern Germany: Extent and Reasons
Joachim Wilde, Christian Keller
Wirtschaft im Wandel,
No. 11,
2008
Abstract
In recent years, employment has grown noticeably in Germany. Although this is good news, some people criticize that many jobs are low-paid, i.e. the wage is less than two thirds of the medium wage. An eye-catching example is the service sector in Eastern Germany. However, a systematic analysis of this sector in Eastern Germany is missing until now. The article closes this gap in the literature.
Concerning the whole service sector in Eastern Germany, about 25 percent of the employees get a low (gross) wage. This is not much more than the average of all sectors. However, in some branches of the service sector, much more employees get low wages. More than 40% of the employees of retail trade, restaurant business and services near to companies (“unternehmensnahe Dienstleistungen”) are paid low. The probability to get a low wage is significantly higher for women and the so-called minijobbers.
Since the tax system adjusts differences, all calculations were also done for net wages. On the one hand, the part of low-paid workers decreases for all branches and all subpopulations. On the other hand, the probability to get a low wage does not differ anymore between minijobbers and full-time employees. Thus, the tax system does not only reduce low-paid employment, it also changes its structure.
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The Identification of Regional Industrial Clusters Using Qualitative Input-Output Analysis
Mirko Titze, Matthias Brachert, Alexander Kubis
IWH Discussion Papers,
No. 13,
2008
Abstract
The ‘cluster theory’ has become one of the main concepts promoting regional competitiveness, innovation, and growth. As most studies focus on measures of concentration of one industrial branch in order to identify regional clusters, the appropriate analysis of specific vertical relations within a value-adding chain is developing in this discussion. This paper tries to identify interrelated sectors via national input-output tables with the help of Minimal Flow Analysis by Schnabl (1994). The regionalization of these national industry templates is carried out with the allocation of branch-specific production values on regional employment. As a result, the paper shows concentrations of vertical clusters in only 27 of 439 German NUTS-3 regions.
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Foreign Subsidiaries in the East German Innovation System – Evidence from manufacturing industries
Jutta Günther, Johannes Stephan, Björn Jindra
Applied Economics Quarterly Supplement,
No. 59,
2008
Abstract
This paper analyses the extent of technological capability of foreign subsidiaries located in East Germany, and looks at the determinants of foreign subsidiaries’ technological sourcing behaviour. The theory of international production underlines the importance of strategic and regional level variables. However, existing empirical approaches omit by and large regional level factors. We employ survey evidence from the “FDI micro database” of the IWH, that was only recently made available, to conduct our analyses. We find that foreign subsidiaries are above average technologically active in comparison to the whole East German manufacturing. This can be partially explained by the industrial structure of foreign direct investment. However, only a limited share of foreign subsidiaries with R&D and/or innovation activity source technological knowledge from the East German innovation system. If a subsidiary follows a competence augmenting strategy or does local trade, it is more likely to source technological knowledge locally. The endowment of a region with human capital and a scientific infrastructure has a positive effect too. The findings suggest that foreign subsidiaries in East Germany are only partially linked with the regional innovation system. Policy implications are discussed.
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Demographic Change and Labour Markets: Why are Older Employees less Mobile?
Lutz Schneider
Wirtschaft im Wandel,
No. 10,
2008
Abstract
Since older workers are less disposed to change jobs workforce ageing will affect labour mobility in Germany. On the basis of the IAB-Employment Sample (IABS) the contribution analyzes the effect of age on job and occupational mobility. The study focuses on the question whether older workers are less mobile due to the optimal matching quality of their current job which cannot be improved by job switches or whether other factors have to be considered for explaining the age related mobility decline.
Econometric results firstly confirm the significance of expected wage growth for mobility decision across all age groups. Secondly, older workers seem to benefit from wage increase due to a job change less frequently than younger workers. However, this factor explains only a part of the mobility lag. Even after controlling for the wage effect younger workers change jobs more often than older ones.
For this reason the opinion that ageing will impede the labour market adjustments cannot be disabled. If older workers only slightly react on wage signals and do not respond to attractive offers growing firms might face problems to recruit appropriate staff – a trend which could have negative consequences for technological and sectoral changes of the entire economy.
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Economic Effects of the Halle Institute for Economic Research
Ulrich Blum
Wirtschaft im Wandel,
No. 10,
2008
Abstract
The most important approach to assess the scholarly performance of an institute is to evaluate its academic output. Economic research institutes such as the Halle Institute for Economic Research (IWH) furthermore are targeted at providing policy advice to public authorities. This adds an additional criterion, the ability to impact policy discussions in Germany and beyond.
A rarely discussed issue is the effect of an institute on the local economy. The IWH is located in a region of East Germany that is still catching up economically. Transformation problems are still very visible. In such an economic environment, the expenditures of an institute play an important role in stabilizing local demand. The analysis shows, by using input-output-methods, that the most important factor for the local economy is the demand stemming from wages earned by the employees of the institute. Especially the local area, where most of the staff lives, heavily benefits from this effect. Expenditures of about 4.6 million Euros which include the salaries of the staff of about 70 persons generates sufficient demand in the area to guarantee employment for another 35 persons. In addition, as crowding out of activities by additional demand is presently not an issue in East Germany, the taxes generated account for a considerable part of the budget.
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Evaluating the German (New Keynesian) Phillips Curve
Rolf Scheufele
IWH Discussion Papers,
No. 10,
2008
Abstract
This paper evaluates the New Keynesian Phillips Curve (NKPC) and its hybrid
variant within a limited information framework for Germany. The main interest rests on the average frequency of price re-optimization of firms. We use the labor income share as the driving variable and consider a source of real rigidity by allowing for a fixed firm-specific capital stock. A GMM estimation strategy is employed as well as an identification robust method that is based upon the Anderson-Rubin statistic. We find out that the German Phillips Curve is purely forward looking. Moreover, our point estimates are consistent with the view that firms re-optimize prices every two to three quarters. While these estimates seem plausible from an economic point of view, the uncertainties around these estimates are very large and also consistent with perfect nominal price rigidity where firms never re-optimize prices. This analysis also offers some explanations why previous results for the German NKPC based on GMM differ considerably. First, standard GMM results are very sensitive to the way how orthogonality conditions are formulated. Additionally, model misspecifications may be left undetected by conventional J tests. Taken together, this analysis points out
the need for identification robust methods to get reliable estimates for the NKPC.
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Alterung und technologisches Innovationspotential. Eine Linked Employer-Employee Analyse
Lutz Schneider
Zeitschrift für Bevölkerungswissenschaft,
No. 1,
2008
Abstract
Growth in advanced economies is essentially driven by innovation activities. The question rises from a demographic point of view as to whether the trend of an ageing workforce will affect the innovation capacities of these economies. To answer this question, the paper examines on the basis of a German linked-employer-employee-dataset whether an older workforce lowers a firm’s potential to generate product innovations. The empirical approach is based on an Ordered-logit regression model, relating a firm’s innovation potential to the age composition of its employees. The analysis provides evidence of significant age effects. The estimated age-innovation-profile follows an inverted U-shaped pattern, it peaks at the age of about 40 years. A separate estimation shows that technicians and engineers age seems to be particularly relevant.
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Comparing the training activities of unemployed and full-time employed people
Birgit Schultz, Joachim Wilde
Zeitschrift für Arbeitsmarktforschung,
No. 1,
2008
Abstract
Many empirical studies for Germany consider either the training activities of the unemployed or those of employees. However, a comprehensive comparison of both groups had not been conducted until now. The paper closes this gap. Using data from the latest time-use survey (Zeitbudgeterhebung) of the Federal Statistical Office, the amount of training undertaken by the two groups is compared. Furthermore, the types of activities that are made use of in particular are described. Heterogeneity due to different relevant socioeconomic characteristics in the two groups is eliminated by applying a matching procedure. The findings demonstrate that only 49% of unemployed people participate in any kind of training activity off the job. In the case of full-time employment 59 % would take part. Concerning the average expenditure of time per week the difference is reversed, i.e. the expenditure of time is greater during unemployment. However, a large proportion of the training activities undertaken by the unemployed comprises general training, e.g. by reading books or watching television. Furthermore, the result is driven by a different potential of time that can be used for training activities off the job. In relation to this potential of time, the amount of training activity is still smaller during unemployment.
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Foreign Subsidiaries in the East German Innovation System – Evidence from Manufacturing Industries
Jutta Günther, Björn Jindra, Johannes Stephan
IWH Discussion Papers,
No. 4,
2008
Abstract
This paper analyses the extent of technological capability of foreign subsidiaries located in East Germany, and looks at the determinants of foreign subsidiaries’ technological sourcing behaviour. The theory of international production underlines the importance of strategic and regional level variables. However, existing empirical approaches omit by and large regional level factors. We employ survey evidence from the “FDI micro data- base” of the IWH, that was only recently made available, to conduct our analyses. We find that foreign subsidiaries are above average technologically active in comparison to the whole East German manufacturing. This can be partially explained by the industrial structure of foreign direct investment. However, only a limited share of foreign subsidiaries with R&D and/or innovation activity source technological knowledge from the East German innovation system. If a subsidiary follows a competence augmenting strategy or does local trade, it is more likely to source technological knowledge locally. The endowment of a region with human capital and a scientific infrastructure has a positive effect too. The findings suggest that foreign subsidiaries in East Germany are only partially linked with the regional innovation system. Policy implications are discussed.
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