Search Results

We examine the dynamic role of education and experience as determinants of wages. It is hypothesised that an employee’s education is an important signal to the employer initially. Over time, the returns to schooling should decrease with labour market experience and increase with initially unobserved ability, since the employer gradually obtains better information on the productivity of an employee. Replicating US studies using data from a large German panel data set (GSOEP), we find no evidence for the employer learning hypothesis for Germany. Differentiating blue-collar and white-collar workers and estimating quantile regressions, however, leads to the conclusion that employer learning takes place for blue-collar workers at the lower end of the wage distribution. We further show, that information on the productivity of an employee is to a large extend private.

Published abstract reprinted by permission of the copyright owner. Show less

Using detailed time use data for Germany, a positive correlation is found between the level of schooling education and time investments in informal education. Two hypotheses explain this observation: (1) highly educated people have higher opportunity costs of their leisure time and thus prefer leisure activities which add to their market productivity (wage effect) and (2) highly educated people have a preference for ‘high quality’ leisure (taste effect). The demand for informal education is derived in a household production model accounting for both explanations. An empirical investigation finds evidence for both effects with the taste effect being the more important effect. Highly educated people accumulate human capital through their specific leisure time use. This increases the skill-gap between higher and lower educated people.

Published abstract reprinted by permission of the copyright owner. Show less

We develop a simple search equilibrium model of workplace training and education based on two features. First, investment in education improves job-related learning skills and reduces training costs burdened by firms. Second, firms with vacant skilled job slots can choose between recruitment from the market and training. Compared to Germany and Japan, the US [United States] has both a higher inflow rate into unemployment and a higher efficiency of the matching process. While the combined effort of these differences on the share of educated labour is ambiguous, the effect on the percentage of firms undertaking workplace training is to unambiguously reduce it.

Published abstract reprinted by permission of the copyright owner. Show less

We analyse the effects of government-sponsored training for the unemployed conducted during East German transition. For the microeconometric analysis, we use a new, large and informative administrative database that allows us to use matching methods to reduce potential selection bias, to study different types of programmes, and to observe interesting labour market outcomes over eight years. We find that, generally, all training programmes under investigation increase long-term employment prospects and earnings. However, as an important exception, the longer training programmes are on average not helpful for their male participants. At least part of the explanation for this negative result is that caseworkers severely misjudged the structure of the future demand for skills.

Published abstract reprinted by permission of the copyright owner. Show less

Several German states recently introduced tuition fees for university education. We investigate whether these tuition fees influence the mobility of university applicants. Based on administrative data of applicants for medical schools in Germany, we estimate the effect of tuition fees on the probability of applying for a university in the home state. We find a small but significant reaction: the probability of applying for a university in the home state falls by two percentage points (baseline: 69 per cent) for high-school graduates who come from a state with tuition fees. Moreover, we find that students with lower high-school grades react more strongly to tuition fees. This might have important effects on the composition of students across states.

Published abstract reprinted by permission of the copyright owner. Show less

Whether Europe will be able to stand up to its internal and external challenges crucially depends on its ability to manage its internal mobility and inflows of international migrants. Using a unique expert opinion survey, we document that Europe needs skilled migrants, and skill mismatch is to be expected. A review of current immigration policies shows that despite a number of positive recent developments Europe lacks a consistent strategy to address this challenge effectively, paralyzed by the notion of ‘fortress’ Europe, which we argue should be abandoned. Since significant political tensions can be expected between native actors that favor and disfavor further immigration, improving European immigration policies and procedures is a formidable challenge. This task involves the need to improve Europe’s image among potential migrants, especially the high-skilled ones.

Published abstract reprinted by permission of the copyright owner. Show less

Based on a German representative sample of employees we explore the relevance and development of further training in private sector firms. We focus on formal training and explore possible individual and job-based determinants of its incidence. We also show changes over time during a 20 year observation period from 1989 to 2008. Most hypotheses are supported by the empirical evidence. Job status and firm size are the most relevant characteristics for training participation. Furthermore, our analyses reveal a general trend of rising training rates from 1989 to 2008 indicating an increased importance in the German labor market.

Published abstract reprinted by permission of the copyright owner. Show less

In view of the demographic trends, most EU countries face the problem of a declining work force in the future. Understanding the interaction between income support systems (such as unemployment benefits, social assistance, early retirement and pension systems) and total labor supply is of crucial importance to combat problems and ensure economic growth in the future. The German labor market has been plagued by high and persistent unemployment in the last two decades in combination with a relatively low labor force participation of women. This created a situation where labor market reforms were unavoidable. The speed and depth of the reforms are remarkable, mainly aimed at activating people by increasing their incentives to take up work. The aim of this paper is to give a brief overview of the German income support systems and labor market polices, their recent reforms and – where already possible – effects of these reforms. Overall, Germany seems to be on the right track. The recent reforms helped to tackle some labor market problems but also created high political unrest. It remains to be seen how future governments react to worsened economic conditions in light of these experiences.

Published abstract reprinted by permission of the copyright owner. Show less

Several firm-related aspects of employee productivity are analysed using GSOEP [German Socio-Economic Panel] data. The basic premise is that, as a consequence of frustration, overeducated employees are less productive than their correctly allocated colleagues. However, the results obtained in the present study contradict the few available empirical findings, all of which are based on data from the United States. When comparing employees working in jobs with similar levels of requirements (the sole approach which seems to be useful), overqualified employees are found to be healthier, more strongly work- and career-minded, more likely to participate in on-the-job training, and to have longer periods of tenure with the same firm than their correctly allocated colleagues. No significant differences could be determined with respect to job satisfaction. These findings are consistent with the established fact that overeducated workers receive wage premiums for their surplus schooling. The overall results make the hiring of overqualified applicants understandable, and could explain the employers’ motivation to accept persistent overeducation in the labour force.

Published abstract reprinted by permission of the copyright owner. Show less

This paper is based on recently collected and rich survey data of a representative sample of entrants into unemployment in Germany. Our data include a large number of migration variables, allowing us to adapt a recently developed concept of ethnic identity: the ethnosizer. To shed further light on the native-migrant differences in economic outcomes, we investigate the labor market reintegration, patterns of job search, and reservation wages across unemployed migrants and natives in Germany. Our results indicate that separated migrants have a relatively slow reintegration into the labor market. We explain this finding by arguing that this group exerts a relatively low search effort and that it has reservation wages which are moderate, yet still above the level which would imply similar employment probabilities as other groups of migrants.

Published abstract reprinted by permission of the copyright owner. Show less