Determinants of wages in the German service and manufacturing sectors

Abstract

"This paper examines the influence of several determinants on the firms' wage level and wage gap and tries to discriminate between supply and demand approach, efficiency wage theory and wage bargaining approach by using information from about 4,000 interviews with establishment representatives in the IAB Establishment Panel. There are significant wage level regressions showing firms' long-term consideration most of all regarding the proportion of women, part-time and qualified workers employed. The same holds for the effect of the existence of a seniority wage system and a company pension plan. However, the effect of these variables is not always significant in the wage level regressions estimated separately for the manufacturing and the service industries. The influence of the number of vacancies per employee is stronger in the wage gap regressions compared with the wage level regressions. In the wage gap regressions the variables proportion of women, qualified and part-time employees are insignificant with the exception of the part-time employees in the services and the full sample. Furthermore the number of vacancies per employee exhibits highly significant effects in the wage gap regression of the full sample and the services. These results could be interpreted to support the hypothesis that firms makes the wage gap according to short-term considerations. Furthermore, the effect of establishment size on the wage level is not uniforme, but increasing. In the multivariate analysis the effect is less than in the univariate one. The wage gap does not vary in manufacturing, but declines with increasing etablishment size in services. These results are in contrast with those of other studies revealing an increasing establishment size effect on wages." (Author's abstract, IAB-Doku) ((en))

Cite article

Bellmann, L. & Kohaut, S. (1995): Determinants of wages in the German service and manufacturing sectors. An empirical analysis based on the IAB establishment panel. In: IAB Labour Market Research Topics No. 15, p. 1-17.