Structural estimation of labor adjustment costs with temporally disaggregated data

Estimating labor adjustment costs is plagued by a variety of errors, many arising from data limitations. Most researchers have assumed that adjustment decisions are made at the firm level, that adjustment happens at the frequency at which a firm is observed (typically annually or quarterly), and that adjustment costs are incurred on net changes in employment. In this paper, I estimate a dynamic optimization model of labor adjustment of establishments based on data that permit 1) specifying any desired adjustment frequency, 2) estimating the model based on net and on gross employment flows and 3) allowing for simultaneous hirings and separations. The unit of observation is an establishment. Results for adjustment costs depend crucially on the model specification. Only a monthly adjustment model yields cost parameters in a reasonable range, while estimates from quarterly and annual adjustment models imply negative (adjustment implies a gain rather than a loss) or excessive adjustment costs. Estimating the model on net employment changes implies hiring and separation costs of around four annual median salaries, while the model on gross changes implies costs on the order of 1.7 annual median salaries. Adjustment costs differ significantly between small and large establishments. However, a dynamic model performs only marginally better than a static model with respect to out-of-sample predictions

Aggregate Unemployment Decreases Individual Returns to Education

On the basis of a theoretical model, we argue that higher aggregate unemployment affects individual returns to education. We therefore include aggregate unemployment and an interaction term between unemployment and the individual education level in a standard Mincer equation. Our results show that an increase in regional unemployment by 1% decreases the returns to education by 0.005 percentage points. This implies that higher skilled employees are better sheltered from labour market changes with respect to their jobs but encounter larger wage changes than less skilled employees. Differences in regional unemployment can in addition almost fully explain the observed large differences in regional returns to education. We use representative individual data and regional panel variation in unemployment between different German regions and for different employee groups. We demonstrate that our results are robust with respect to aggregation bias, time lags and potential endogeneity of the unemployment variable

Generating Useful Test Data for Complex Linked Employer-Employee Datasets

When data access for external researchers is difficult or time consuming it can be beneficial if test datasets that mimic the structure of the original data are disseminated in advance. With these test data researchers can develop their analysis code or can decide whether the data are suitable for their planned research before they go through the lengthly process of getting access at the research data center. The aim of these data is not to provide any meaningful results. Instead it is important to maintain the structure of the data as closely as possible including skip patterns, logical constraints between the variables, and longitudinal relationships so that any code that is developed using these test data will also run on the original data without further modifications. Achieving this goal can be challenging for complex datasets such as linked employer-employee datasets (LEED) where the links between the establishments and the employees also need to be maintained. Using the LEED of the Institute for Employment Research we illustrate how useful test data can be developed for such complex datasets. Our approach mainly relies on traditional statistical disclosure control (SDC) techniques such as data swapping and noise addition for data protection. Since statistical inferences need not be preserved, high swapping rates can be applied to sufficiently protect the data. At the same time it is straightforward to maintain the structure of the data by adding some constraints on the swapping procedure

Stichprobe der Integrierten Arbeitsmarktbiografien (SIAB) 1975-2008

Dieser Datenreport beschreibt die Stichprobe der Integrierten Arbeitsmarktbiografien (SIAB) 1975 – 2008