In this paper we study the relationship between task complexity and the occupational wage- and employment structure. Complex tasks are defined as those requiring higher-order skills, such as the ability to abstract, solve problems, make decisions, or communicate effectively. We measure the task complexity of an occupation by performing Principal Component Analysis on a broad set of occupational descriptors in the Occupational Information Network (O*NET) data. We establish four main empirical facts for the U.S. over the 1980–2005 time period that are robust to the inclusion of a detailed set of controls, subsamples, and levels of aggregation: (1) There is a positive relationship across occupations between task complexity and wages and wage growth; (2) Conditional on task complexity, routine-intensity of an occupation is not a significant predictor of wage growth and wage levels; (3) Labor has reallocated from less complex to more complex occupations over time; (4) Within groups of occupations with similar task complexity labor has reallocated to non-routine occupations over time. We then formulate a model of Complex-Task Biased Technological Change with heterogeneous skills and show analytically that it can rationalize these facts. We conclude that workers in non-routine occupations with low ability of solving complex tasks are not shielded from the labor market effects of automatization.

There are pronounced and persistent wage differences between men and women in all parts of the world. A significant element of these wage disparities can be attributed to differences in worker and workplace characteristics, which are likely to mirror differences in worker productivity. However, a large part of these differences remains unexplained, and it is common to attribute them to discrimination by the employer that is rooted in prejudice against female workers. Yet recent empirical evidence suggests that, to a large extent, the gaps reflect “monopsonistic” wage discrimination—that is, employers exploiting their wage-setting power over women—rather than any sort of prejudice.

The authors investigate immigrants’ and natives’ labor supply to the firm within an estimation approach based on a dynamic monopsony framework. Applying duration models that account for unobserved worker heterogeneity to a large administrative employer–employee data set for Germany, they find that immigrants supply labor less elastically to firms than do natives. Under monopsonistic wage setting, the estimated elasticity differential predicts a 7.7 log points wage penalty for immigrants thereby accounting for the entire unexplained native–immigrant wage differential of 5.8 to 8.2 log points. When further distinguishing immigrant groups differing in their time spent in the German labor market, their immigration cohort, and their age at entry, the authors find that the observed unexplained wage differential is larger for those groups that show a larger elasticity differential relative to natives. These findings not only suggest that search frictions are a likely cause of employers’ more pronounced monopsony power over their immigrant workers but also imply that employers profit from discriminating against immigrants.

Building on the right-to-manage model of collective bargaining, this paper tries to infer union power from the observed results in wage setting. It derives a time-varying indicator of union strength taking account of taxation, unemployment benefits, and the labour market situation and confronts this indicator with annual data for Germany. The results show that union power did not change much from 1992 to 2002 but fell markedly (by about one-third) from 2002 to 2007 in the aftermath of substantial labour market reforms.

Using a large German linked employer–employee data set and methods of competing risks analysis, this paper investigates gender differences in job separation rates to employment and nonemployment. In line with descriptive evidence, we find lower job-to-job and higher job-to-nonemployment transition probabilities for women than men when controlling for individual and workplace characteristics and unobserved plant heterogeneity. These differences vanish once we allow these characteristics to affect separations differently by gender. When additionally controlling for wages, we find that both separation rates are considerably lower and also significantly less wage-elastic for women than for men, suggesting an interplay of gender differences in transition behaviour and the gender pay gap.

Which are the main frictions and the driving forces of business cycle dynamics in an open economy? To answer this question we extend the standard new Keynesian model in three dimensions: we incorporate financing frictions for capital, employment frictions for labor and extend the model into a small open economy setting. We estimate the model on Swedish data. Our main results are that (i) a financial shock is pivotal for explaining fluctuations in investment and GDP. (ii) The marginal efficiency of investment shock has negligible importance. (iii) The labor supply shock is unimportant in explaining GDP and no high frequency wage markup shock is needed.

In the European Monetary Union the transnational coordination of collective wage bargaining has acquired increased importance on the trade union agenda. The metal sector has been at the forefront of these developments. This paper addresses the issue of crossborder coordination of wage setting in the metal sector in the central western European region, that is, in Germany, the Netherlands and Belgium, where coordination practices have become firmly established in comparison to other sectors. When testing the interaction of wage developments in the metal sector of these three countries, relevant macroeconomic (inflation and labour productivity) and sector-related variables (employment, export-dependence) are considered with reference to the wage policy guidelines of the European Commission and the European Metalworkers’ Federation. Empirical evidence can be found for a wage coordination effect in the form of increasing compliance with the wage policy guidelines of the European Metalworkers’ Federation. The evidence for compliance with the stability-oriented wage guideline of the European Commission is weaker.

This article assesses whether the economy of East Germany is catching up with the West German region in terms of welfare. While the primary measure for convergence and catching up is per capita output, we also look at other macroeconomic indicators such as unemployment rates, wage rates and production levels in the manufacturing sector. In contrast to existing studies of convergence between regions of the reunified Germany, our approach is based purely upon the time series dimension and is thus directly focused on the catching up process in East Germany as a region. Our testing set-up includes standard ADF unit root tests as well as unit root tests that endogenously allow for a break in the deterministic component of the process. We find evidence of catching up for East Germany for most of the indicators. However, the convergence speed is slow, and thus it can be expected that the catching up process will take further decades until the regional gap is closed.

This article investigates women’s and men’s labor supply to the firm within a semistructural approach based on a dynamic model of new monopsony. Using methods of survival analysis and a large linked employer‐employee data set for Germany, we find that labor supply elasticities are small (1.9–3.7) and that women’s labor supply to the firm is less elastic than men’s (which is the reverse of gender differences in labor supply usually found at the level of the market). Our results imply that at least one‐third of the gender pay gap might be wage discrimination by profit‐maximizing monopsonistic employers.

For much of 2009, falling external demand will be the main drag on production in the euro area, with exports expected to decrease by about 13% in 2009. At the same time, the structural problems of the financial sector, combined with the uncertainty on future economic perspectives, will continue to impede investment, which will be reduced by about 6% in 2009. Consumers will benefit from the increase in real wages that started in the summer of 2008 and will – due to the slow reaction of wage setting to the business cycle in most European countries – continue for the year 2009. Thus, private consumption will, albeit shrinking modestly (-0.6%) because of rising unemployment, be a stabilizing factor for the economy in the euro area. A positive contribution will also come from public consumption, whose growth is forecasted at 1% for 2009 and 0.5% for 2010.