Journal Article

No. 2010-10 | March 19, 2010
Occupational Upgrading and the Business Cycle in West Germany PDF Icon


The occupational skill structure depends on the business cycle if employers respond to shortages of applicants during upturns by lowering their hiring standards. Devereux uses this implication to construct empirical tests for the notion of hiring standards adjustment (the so-called Reder hypothesis) and finds affirmative evidence for the U.S labour market. The authors replicate his analysis using German employment register data. Regarding the occupational skill composition they obtain somewhat lower but qualitatively similar responses to the business cycle despite of well known institutional differences between the U.S. and German labour market. The responsiveness of occupational composition wages to the business cycle is considerably lower in Germany.

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JEL Classification

C24 J31 J41 J62


Thomas Büttner, Peter Jacobebbinghaus, and Johannes Ludsteck (2010). Occupational Upgrading and the Business Cycle in West Germany. Economics: The Open-Access, Open-Assessment E-Journal, 4 (2010-10): 1—37.


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Comments and Questions

Anonymous - Effect of globalisation
March 20, 2010 - 13:01

I am wondering if this effect has been linked to globalisation of industrial manufacturing. The diferentiated results seem to indicate that. Would be interesting to carry out a comparative study. I think that this is a very interesting finding and has clear policy implications at EU level where long-life learning, ...[more]

... upgrading the EU skill force, etc. needs deeper thinking. Also, would it be reasonable to think that the German outcome as compared to the one in the US is linked to stronger union action?