The Cohort Size‐Wage Relationship in Europe

Moffat, John; Roth, Duncan

doi:10.1111/labr.12081

Cited by 16 publications

(12 citation statements)

References 27 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Also for this group, the decrease of median wages has been a bit stronger for the young than the experienced, which contributes to a widening wage gap pattern. There is some literature analyzing the relationship between education attainment and wages with particular focus on the role of cohort size (e. g. Freeman 1979;Welsh 1979;Berger 1983;Fertig and Schmidt 2004;Morin 2015;Moffat and Roth 2016). The key assumption of the studies is that workers of different ages or experiences are only imperfectly substitutable; therefore, an increase in the size of a specific experience-education group will mainly affect the wages of workers in this group.…”

Section: A Review Of Trends In Education and Wage Developmentmentioning

confidence: 99%

The changing situation of labor market entrants in Germany

Reinhold

Thomsen

2017

J Labour Market Res

View full text Add to dashboard Cite

Concurrently with a steady increase of the supply of college educated workers, recent evidence for the U.S. indicated a decline in the demand for and the real wages of this group after 2000. We investigate empirically, whether there has been a similar trend in Germany. Based on comprehensive, long-run administrative data for the years 1975 to 2010, we use a set of employment indicators to analyze labor market patterns of job market entrants. Besides consideration of the developments of education attainment and wages over time, we put a particular focus on changes of the task composition, the chances of entering top-paying jobs, entry wages and wage growth, and skill premia over time. To allow for a detailed analysis, we distinguish four education groups. The empirical picture shows that since the year 2000 job entrants with higher education have experienced decreasing employment shares in top-paying positions. Moreover, starting wages and wage growth have both decreased until the end of the observation period, too. A reason for this has been the substitution of jobs that were formerly executed by lower qualifications. Our findings reveal similarities between Germany and the U.S. in terms of some declining fortunes of the young. However, whereas in the U.S. college educated workers have been affected, the results indicate that in Germany the medium-skilled and low-skilled have been particularly impaired.

show abstract

Section: A Review Of Trends In Education and Wage Developmentmentioning

confidence: 99%

The changing situation of labor market entrants in Germany

Reinhold

Thomsen

2017

J Labour Market Res

View full text Add to dashboard Cite

show abstract

“…Easterlin's hypothesis about the effect of relative cohort size on cohort income has received moderate empirical support. A large study of 21 European countries in Moffat and Roth (2013) finds negative effects of cohort size on wages, therefore supporting the Easterlin hypothesis, with the effect being stronger shortly after entering the labor market and stronger for more educated workers. Moffat and Roth note that their findings are consistent with most, but not all, of the prior econometric studies.…”

Section: Introductionmentioning

confidence: 76%

“…The assumption of perfect substitutability by age implies, for example, that the marginal contribution of an additional 25 year old to a workforce is the same regardless of how many 25 year olds are currently employed-in other words, irrespective of how scarce they are. The assumption of perfect substitution of labor among age cohorts, although still common in demographic-macroeconomic models, has been challenged, tested empirically, and relaxed in a variety of modeling approaches [Levine and Mitchell (1988), Lam (1989), Hamermesh (1993), Kremer and Thomson (1998), Card and Lemieux (2001), Blanchet (2002), Rojas (2005), Guest (2007), Prskawetz et al (2008), Roger and Wasmer (2009), Moffat and Roth (2013)]. Fertig and Schmidt (2003) analyze the effect of imperfect labor substitution by age on wages of large cohorts, which is relevant for the present study.…”

Section: Introductionmentioning

confidence: 99%

Fertility, immigration, and lifetime wages under imperfect labor substitution

Guest

Parr

2020

J. Dem. Econ.

View full text Add to dashboard Cite

This paper provides new insights into the effect of birth cohort size on cohort lifetime wages and its sensitivity to the future trajectories of immigration and fertility. The main innovation is to relax the typical assumption of perfect substitution of labor by age. The effect of imperfect substitution of labor by age is to qualify the standard result that smaller birth cohorts are likely to enjoy relatively high wages since that result depends on the size of co-worker cohorts. The positive small cohort effect on lifetime wages therefore depends on demographic patterns, which are simulated here through low and high fertility and immigration projections. The analysis applies to actual and projected cohorts for Australia and tests the sensitivity to alternative demographic parameters, and the substitution and discount parameters. The effects of imperfect substitution can amount several percentage points of lifetime wages.

show abstract

“…A drawback with respect to identifying the effect of interest is that the size of an age group within a given spatial unit is arguably endogenous due to self-selection of individuals into highwage areas. Korenman and Neumark (2000) proposed birth rates as an instrument, while other authors have since used the lagged relative size of age groups as exogenous predictors (Skans, 2005;Garloff et al, 2013;Roth, 2016a and2016b). Whereas cross-country migration might be deemed too small to influence the size of nationally defined age groups, endogeneity resulting from self-selection through migration becomes a larger concern when the spatial units that are used to construct the measure of population structure are defined at a sub-national level.…”

Section: Population Structure and Wagesmentioning

confidence: 99%

Regional Population Structure and Young Workers’ Wages

Garloff

Roth

2018

Advances in Spatial Science

Self Cite

View full text Add to dashboard Cite

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, full-time 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.

show abstract

The Cohort Size‐Wage Relationship in Europe

Cited by 16 publications

References 27 publications

The changing situation of labor market entrants in Germany

The changing situation of labor market entrants in Germany

Fertility, immigration, and lifetime wages under imperfect labor substitution

Regional Population Structure and Young Workers’ Wages

Contact Info

Product

Resources

About