Working Paper: NBER ID: w7610
Authors: Richard Freeman; Ronald Schettkat
Abstract: Germany's more compressed wage structure is taken by many analysts as the main cause of the German-US difference in job creation. We find that the US has a more dispersed level of skills than Germany but even adjusted for skills, Germany has a more compressed wage distribution than the US. The fact that jobless Germans have nearly the same skills as employed Germans and look more like average Americans than like low skilled Americans runs counter to the wage compression hypothesis. It suggests that the pay and employment experience of low skilled Americans is a poor counterfactual for assessing how reductions in pay might affect jobless Germans.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| wage compression (J31) | job creation (J68) |
| skill distribution (J24) | wage dispersion (J31) |
| institutional wage-setting mechanisms (J38) | wage compression (J31) |
| wage compression (J31) | wage distribution (J31) |
| skill differences (J24) | wage compression (J31) |