The Role of Wage and Skill Differences in US-German Employment Differences

Richard B. Freeman, Ronald Schettkat

NBER Working Paper No. 7474
Issued in January 2000
NBER Program(s):The Labor Studies Program

Greater job creation in the US than in Germany has often been related to greater wage dispersion coupled with less regulated labour and product markets in the US. Based on the Comparative German American Structural Database and the International Adult Literacy Survey we find that employment of skilled to unskilled labour is unrelated to differences in skill premium but that changes in relative employment are related to changes in relative wages raising the possibility of some substitution behavior. Still, the differing dispersion of wages is not a major contributor to differences in employment rates. The jobs problem in Germany is one of a general lack in demand for labor.

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Document Object Identifier (DOI): 10.3386/w7474

Published: Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), vol. 219/1-2 (July 1999): 49-66 citation courtesy of

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