Organizational Structure, Technological Change and Rising Wage Inequality in Germany: an Empirical Study Using Linked Employer-Employee Data

P.I.: Markus Gangl
R.A.: Fabian Ochsenfeld
Funding: Deutsche Forschungsgemeinschaft, Priority Program 1764
Duration: 1/2015-12/2017

The project addresses the role of firms for wage inequality in the German labor market. Specifically, our research focuses on firm-level sources of skill-based wage differentials and aims to understand the contribution of relevant changes in firms’ behavior and organization to the rise of wage inequality in Germany since the 1990s. The project will quantify the extent to which changing wage differentials have primarily been driven by changes in worker assignment or changes in firm-level wage policies, and will seek to identify empirically relevant organization-level correlates. Furthermore, the project will evaluate the causal role of technological and organizational change, including potential interactions between both components. In particular, our research aims for estimates of the effects of technology investments and firms’ use of non-standard contracts for skill-based wage differentials, and also seeks to estimate potential interactions with the presence of unions, corporate financial strategy and legal type of corporation. To achieve these goals, we will use the IAB’s LIAB linked employer-employee dataset augmented with job task data from the BIBB-IAB Qualification Surveys, and will rely on different variants of multilevel (hierarchical linear, random coefficient) modeling as well as fixed-effects estimators in its statistical analyses. The project is part of the German Science Foundation’s Priority Program 1764.