Technology, wages and churning in Western Germany

Abstract

"Most theories of the impact of the implementation of new technology on employment predict that technological change incolves the reshuffling of workers between firms implementing new technology and those business units located further away from the technological frontier. However, based on data from the first and third wave of the German Establishment Survey (using the information of about 4000 establishments interviewed 1993 and 1995), we estimated a structural model for the technology level, wage drift and churning, i.e. the same firms experienced both hirings and firings, and tested the hypothesis that firms located on the technological frontier experience larger turnover rates than other units. Thereby technological change, chrning and wages are ultimately endogenous to firms: they can either change their workforce in response to changes in the technology they use or upgrade existing jobs, i.e., via the retraining of workers and a more gradual introduction of new machinery. This choice between and external adjustment is also likely to be affected by conditions external to firms, such as the availability of workers matching the skills required by new technologies, the costs of dismisslas associated to employment protection regulations and collective bargaining, constraints placed on the process, etc." (Author's abstract, IAB-Doku) ((en))

Cite article

Bellmann, L. & Kölling, A. (1997): Technology, wages and churning in Western Germany. Estimates from the IAB-Establishment Panel. In: S. Laaksonen (Hrsg.) (1997): The evolution of firms and industries : international perspectives, p. 417-427.