Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/115878
Authors: 
Bönke, Timm
Giesecke, Matthias
Lüthen, Holger
Year of Publication: 
2015
Series/Report no.: 
Discussion Paper, School of Business & Economics: Economics 2015/26
Abstract: 
This paper uncovers ongoing trends in idiosyncratic earnings volatility across generations by decomposing residual earnings auto-covariances into a permanent and a transitory component. We employ data on complete earnings life cycles for prime age men born 1935 through 1974 that covers earnings between 1960 and 2009. Over this period, the German labor market undergoes a heavy transformation and experiences strong deregulation, deunionization and a shift in employment from the industrial to the service sector. Our findings of increases in both components reflect the distinct phases of this transformation process. In magnitude, the transitory component increases most strongly in the early 1970s and the 1990s for young workers, whereas the permanent component displays the strongest increases for older workers in the early 1980 and the 2000s. Thus, the changes complicate the labor market entry for young workers while widening wage differences for established workers.
Subjects: 
Earnings dynamics
Life cycle
Earnings distribution
Inequality
Earnings volatility
JEL: 
D31
D33
H24
Document Type: 
Working Paper

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