The Role of Hours Changes for the Increase in German Earnings Inequality

Martin Biewen; Daniela Plötze

doi:10.1515/jbnst-2018-0013

Article

The Role of Hours Changes for the Increase in German Earnings Inequality

Martin Biewen and Daniela Plötze

Published/Copyright: March 20, 2019

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From the journal Jahrbücher für Nationalökonomie und Statistik Volume 239 Issue 2

Abstract

Using data from the German Structure of Earnings Survey (GSES), this paper studies the role of changes in working hours for the increase in male and female earnings inequality between 2001 and 2010. We provide both classic decompositions of the variance of log earnings into the variances of hours, wage rates and their covariance, and decompositions based on reweighting the conditional hours distribution. Depending on the inequality measure considered, our results suggest that between 10 and 30% of the increase in male earnings inequality and 37 to 47% of the increase in female earnings inequality can be explained by changes in working hours. In addition, a large part of the inequality increase can be accounted for by changes in the composition of person and firm characteristics.

Keywords: inequality; working hours; earnings; female labor market participation

JEL Classification: C14; J22; J31

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Article note

This paper uses the Scientific Use Files (SUF) of the German Structure of Earnings Surveys (GSES) 2001, 2006 and 2010 provided by the German Federal Statistical Office. We thank Kristin Nowak (Statistisches Landesamt Stuttgart) for her support. We also thank two anonymous reviewers, Matthias Seckler, Nicolas Herault and participants of ESPE 2018 for helpful comments.

Appendix

Table 12:

Summary statistics (means).

	Men		Women
Variable	2001	2010	2001	2010
cPersonal characteristics
Age 25–29 years	0.101	0.100	0.112	0.107
Age 30–34 years	0.163	0.112	0.159	0.106
Age 35–39 years	0.198	0.126	0.183	0.121
Age 40–44 years	0.174	0.181	0.170	0.183
Age 45–49 years	0.145	0.194	0.153	0.192
Age 50–54 years	0.122	0.153	0.129	0.152
Age 55–60 years	0.094	0.131	0.091	0.136
Lower/Middle sec., no voc. tr.	0.122	0.099	0.171	0.118
Lower/Middle sec., voc. tr.	0.671	0.627	0.626	0.566
Upper sec., possibly voc. tr.	0.045	0.054	0.066	0.088
University degree	0.100	0.107	0.045	0.064
Education unknown	0.060	0.109	0.089	0.162
Tenure 0–9 years	0.515	0.471	0.603	0.545
Tenure 10–20 years	0.283	0.309	0.266	0.306
Tenure 21–30 years	0.140	0.146	0.099	0.101
Tenure 31–46 years	0.060	0.073	0.030	0.046
Occupation	c(52 categories)
cFirm characteristics
Region North (SH,HH,BR,NS,BE)	0.157	0.165	0.157	0.172
Region Middle (NRW)	0.280	0.228	0.263	0.220
Region Middle-South (HE,RP,SL)	0.137	0.136	0.140	0.133
Region South (BW,BY)	0.326	0.351	0.334	0.349
Region East (MV,BR,S,SA,TH)	0.096	0.118	0.104	0.123
Mining	0.012	0.007	0.002	0.001
Food production, tobacco	0.048	0.051	0.102	0.099
Wood	0.052	0.058	0.056	0.051
Chemical industry	0.045	0.042	0.035	0.037
Manufacturing plastic	0.044	0.059	0.027	0.038
Metal production	0.204	0.207	0.084	0.089
Production business machines	0.079	0.062	0.076	0.056
Vehicle construction	0.094	0.086	0.025	0.027
Energy and water supply	0.031	0.047	0.015	0.027
Building and civil engineering	0.070	0.043	0.013	0.009
Constructional installations	0.050	0.065	0.018	0.023
Automobile trade, repair, gas	0.125	0.161	0.111	0.148
Retail, mending of durables	0.054	0.046	0.247	0.248
Banking	0.043	0.042	0.113	0.108
Insurance	0.043	0.017	0.068	0.032
Public ownership	0.058	0.034	0.066	0.045
Firmsize up to 50 employees	0.219	0.231	0.227	0.265
Firmsize 50-249 employees	0.270	0.290	0.262	0.279
Firmsize more than 249 employees	0.509	0.478	0.510	0.454
Union agreement	0.623	0.524	0.641	0.486
Number of observations	332,155	428,265	150,339	189,076

Source: Structure of Earnings Surveys 2001, 2010. Weighted data.

Table 13:

Selected vs. unrestricted sample, 2010.

	Men				Women
Variable	Select.	Unrestr.	Δ	se(Δ)	Select.	Unrestr.	Δ	se(Δ)
Mean monthly wage	3,406.25	3,216.20	190.05	20.12	2,089.01	2,006.77	82.23	20.80
Gini monthly wage	0.260	0.298	−0.037	0.003	0.344	0.341	0.003	0.004
Mean monthly hours	164.33	160.34	3.98	0.555	129.67	124.51	5.158	0.870
Gini monthly hours	0.071	0.097	−0.025	0.002	0.200	0.219	−0.018	0.003
Mean hourly wage	20.77	19.81	0.955	0.108	15.48	15.52	−0.038	0.108
Gini hourly wage	0.255	0.276	−0.020	0.001	0.249	0.234	0.014	0.002
Age	43.28	42.87	0.405	0.089	43.30	43.44	−0.140	0.094
Lower/Middle sec., no voc. tr.	0.099	0.089	0.009	0.001	0.118	0.106	0.012	0.003
Lower/Middle sec., voc. tr.	0.629	0.530	0.099	0.001	0.566	0.499	0.067	0.006
Upper sec., possibly voc. tr.	0.054	0.064	−0.009	0.003	0.088	0.076	0.011	0.003
University degree	0.107	0.173	−0.066	0.004	0.064	0.159	−0.095	0.006
Education unknown	0.109	0.142	−0.032	0.002	0.162	0.158	0.003	0.005
Tenure	12.52	11.82	0.700	0.122	10.56	12.26	−1.69	0.259
Region North (SH,HH,BR,NS,BE)	0.164	0.193	−0.028	0.005	0.172	0.202	−0.030	0.008
Region Middle (NRW)	0.222	0.223	−0.000	0.007	0.219	0.219	−0.000	0.013
Region Middle-South (HE,RP,SL)	0.136	0.139	−0.002	0.004	0.133	0.137	−0.003	0.007
Region South (BW,BY)	0.351	0.311	0.039	0.007	0.349	0.293	0.056	0.012
Region East (MV,BR,S,SA,TH)	0.118	0.128	−0.009	0.003	0.123	0.146	−0.022	0.006
Public ownership	0.034	0.093	−0.059	0.005	0.045	0.180	−0.135	0.010
Firmsize up to 50 employees	0.231	0.206	0.024	0.003	0.265	0.189	0.076	0.006
Firmsize 50-249 employees	0.290	0.270	0.019	0.005	0.279	0.239	0.039	0.009
Firmsize more than 249 employees	0.478	0.523	−0.044	0.007	0.454	0.571	−0.116	0.013
Union agreement	0.524	0.567	−0.042	0.006	0.486	0.633	−0.147	0.011
Number of observations	428,265	859,736	–	–	189,076	675,922	–	–

Source: Structure of Earnings Surveys, 2010. Weighted data. Means unless stated otherwise. Bootstrapped standard errors in parentheses (500 replications, clustered at firm level). Standard errors take into account dependency between selected and unrestricted samples.

Received: 2018-02-01

Revised: 2018-07-27

Accepted: 2018-08-02

Published Online: 2019-03-20

Published in Print: 2019-04-24

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https://doi.org/10.1515/jbnst-2018-0013

Keywords for this article

inequality; working hours; earnings; female labor market participation