Elke Wolf

How much does a year off cost? Estimating the wage effects of employment breaks and part-time periods

Discontinuities in the employment profile are supposed to cause wage cuts since they imply an interruption in the accumulation of human capital as well as a depreciation of the human capital stock built up in the past. In this paper, we estimate the return to effective experience, taking into account both the timing and the duration of non-work and part-time employment spells. Estimation results for German women suggest that deviations from full-time employment are associated with significant wage cuts owing to the depreciation of human capital. Postponing the discontinuity leads to a further fall of the wage rate. Controlling for individual heterogeneity with respect to industry sector and job position decreases the estimated depreciation rates. This we interpret as an indication for segregation in the labor market. We conclude that traditional wage estimations that do not control for depreciation underestimate the return to effective experience.

Reassessing the Impact of High Performance Workplaces

High performance workplace practices were extolled as an efficient means to increase firm productivity. The empirical evidence is disputed, however. To assess the productivity effects of a broad variety of measures, we simultaneously account for both unobserved heterogeneity and endogeneity using establishment panel data for Germany. We show that increasing employee participation enhances firm productivity in Germany, whereas incentive systems do not foster productivity. Our results further indicate that firms with structural productivity problems tend to introduce organisational changes that increase employee participation whereas well performing firms are more likely to offer incentives.

Gender Earnings Gap in German Firms: The Impact of Firm Characteristics and Institutions

Most existing analyses on the gender wage gap (GWG) have neglected the establishment as a place where inequality between male and female employees arises and is maintained. The use of linked employee-employer data permits us to move beyond the individual and consider the importance of the workplace to explain gender pay differentials. That is, we first provide a comprehensive study on the effects of various firm characteristics and the institutional framework on the GWG in Germany. The innovation of our research is that we do not just compare average male and female wages (of specific groups of employees), but look at within-firm gender wage differentials. Our results indicate that the mean GWG within firms is smaller than the average overall GWG. Furthermore, we can show that firms with formalized co-determination (works council) and those covered by collective wage agreements are more likely to have smaller GWG. It is also interesting to note that the wage differential between men and women decreases with firm size and increases with the wage level.

Reassessing the Productivity Impact of Employee Involvement and Financial Incentives

Employee involvement and financial incentives are often praised as effective means for increasing firm productivity. We assess the productivity effects of these human resource practices by accounting for the main sources of estimation bias - unobserved hetero- geneity and endogeneity - and by using representative establishment panel data for Germany. We show that employee involvement raises establishment productivity, but financial incentive systems do not. An important result is that accounting for unobserved heterogeneity and endogeneity reverses the conclusions on the estimated productivity effects obtained from simple cross-sectional regressions.

How to Limit Discrimination? Analyzing the Effects of Innovative Workplace Practices on Intra-Firm Gender Wage Gaps Using Linked Employer-Employee Data

This paper provides a new approach to assess the impact of organisational changes fostering employee involvement, performance related pay schemes and other relevant trends in personnel policy on the gender wage gap. Our results indicate that innovative human resource practices tend to limit the wage differential between men and women. The innovation of this study is that we use linked employer-employee data to look at within-firm gender wage differentials. To investigate the theoretical hypotheses regarding the effect of selected human resource measures on gender wage inequality, we calculate a firm-specific gender wage gap accounting for differences in individual characteristics.

Does Work Time Flexibility Work? An Empirical Assessment of the Efficiency Effects for German Firms

In this paper we assess the impact of flexible work time schedules on firm efficiency using representative establishment data for Germany. Following the approach by Battese and Coelli (1995), we estimate a stochastic production frontier and the determinants of technical efficiency simultaneously. The innovation of our study is that we draw on technical efficiency instead of productivity to appraise the success of flexible working hours. The results indicate that while the use of work time schedules with moderate flexibility is positively related to technical efficiency, highly flexible work time arrangements seem to be negatively correlated with an efficient organization of the work flow. However, these efficiency losses should not be interpreted as causal effects, because highly flexible work time schedules are most likely to be introduced in struggling firms.

Comparing the Part-time Wage Gap in Germany and the Netherlands

In this paper, I contrast the quality of part-time jobs - in terms of hourly wage rates - with those of full-timers. Using the Netherlands as a benchmark, helps to assess the size and seriousness of the estimated wage differentials in Germany. Based on two comparable household surveys, I estimate the wage gap between part-time and full-time employees in Germany and the Netherlands, taking into account individual and job-specific characteristics and treating participation and working hours as endogenous. Based on this simultaneous wage-hours model, I can show that German part-timers generally earn lower wages than comparable full-time workers. The results further point out that more experienced women, who accumulated more human capital during their working life, face higher wage cuts for reduced working hours then women who spent only few years in employment. The comparison with the wage structure in the Netherlands, which exhibits much smaller wage differentials between full-time and part-time employees, leads one to suppose that the existing wage gap in Germany may impede women, especially the more experienced ones, in taking a part-time employment.

The part-time wage gap in Germany and the Netherlands

Do part-time workers earn lower hourly wage rates than full-timers? Economic theory provides some reasons to expect the productivity of a part-time worker to be lower than the productivity of a full-time worker, other things being equal. For instance, the usual start-up effects at the beginning of the working day or the additional effort which is necessary to coordinate the work of more employees reduces the productivity of part-timers compared to full-time employees with the same individual characteristics. But in real life, some of the relevant characteristics are not equal. It is well known that part-time workers are on average less skilled, do different types of jobs and that employers tend to offer less training to employees with reduced working hours (Evans et al., 2001). A look at the median hourly earnings in 1995 indicates that in most countries, part-time workers indeed earn lower wages than full-timers (OECD, 1999). In the Netherlands, median hourly earnings of part-time workers represent about 93 percent of those of full-timers, whereas this ratio is only 87 percent in Germany. There also exists a limited amount of evidence that hourly earnings of part-timers working less than 20 hours per week are even lower than those of other part-timers. Partly, these wage gaps can be explained by the various individual and job-specific characteristics mentioned above. But what can be said about these wage gaps if differences in human capital and other relevant characteristics are taken into account? Previous results suggest that at least in Germany these wage differentials can partly be explained by individual and job-related characteristics, but there still remains a significant wage cut for part-timers after controlling for these characteristics (Kaukewitsch and Rouault, 1998; Bardasi and Gornick, 2000). The object of this chapter is to compare the quality — in terms of wage rates — of part-time jobs in Germany and the Netherlands.