Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104251
Authors: 
Ludsteck, Johannes
Haupt, Harry
Year of Publication: 
2007
Series/Report no.: 
Munich Discussion Paper 2007-22
Abstract: 
A firm that faces insufficient supply of labor can either increase the wage offer to attract more applicants, or reduce the hiring standard to enlarge the pool of potential employees, or do both. This simultaneous adjustment of wages and hiring standards has been emphasized in a classical contribution by Reder (1955) and implies that wage reactions to employment changes can be expected to be more pronounced for low wage workers than for high wage workers. We test this hypothesis (together with a related hypothesis on firm-specific human capital) by applying a bootstrap-based quantile regression approach to censored panel data from the German employment register. Our findings suggest that market clearing is achieved by a combination of wage and hiring standards adjustment.
Subjects: 
wage setting
hiring standards
wage structure
efficiency wages
panel quantile regression
censoring
JEL: 
J31
J41
C24
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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