Regional age structure and young workers' wages

Arbeitspapier

This paper estimates the effect that changes in the size of the youth population have on the wages of young workers. Assuming that differently aged workers are only imperfectly substitutable, economic theory predicts that individuals in larger age groups earn lower wages. We test this hypothesis for a sample of young, male, fulltime employees in Western Germany during the period 1999-2010. In contrast to other studies, functional rather than administrative spatial entities are used as they provide a more accurate measure of the youth population in an actual labour market. Based on instrumental variables estimation, we show that an increase in the youth share by one percentage point is predicted to decrease a young worker's wages by 3 %. Our results also suggest that a substantial part of this effect is due to members of larger age groups being more likely to be employed in lower-paying occupations.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IAB-Discussion Paper ; No. 6/2016

Classification and Topics

• Classification: Wirtschaft ; Labor Force and Employment, Size, and Structure ; Wage Level and Structure; Wage Differentials ; Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
• Subject: age structure ; wages ; youth share ; labour-market regions ; instrumental variables ; occupational selection

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Garloff, Alfred ; Roth, Duncan
• Event: Veröffentlichung
• (who): Institut für Arbeitsmarkt- und Berufsforschung (IAB)
• (where): Nürnberg
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/146146
• Last update: 10.03.2025, 11:45 AM CET