For some time, it has been debated whether a lack of wage
flexibility is at the roots of the high and persistent unemployment
in West Germany. In the presence of a skill bias in labor demand,
which increases the relative de mand for more highly skilled labor
over time, there only seems to exist the choice between higher wage
inequality or higher unemployment rates. This study scrutinizes
whether and in what way this line of thought is consis tent with
empirical findings for West Germany. The analysis ranges from
extensive descriptive evidence on wage trends to the estimation of
a struc tural model of wage bargaining. As the most important
database, I use the IAB-Beschiiftigtenstichprobe from 1975 to 1990.
This study was accepted as a Habilitation thesis by the Department
of Economics and Statistics of the University of Konstanz in
October 1998. The only major change relates to appendix B on the
block bootstrap procedure now summarizing the main aspects of the
method. I am very grateful to my advisor Prof. Dr. Wolfgang Franz
for his support, encouragement, and inspiration. From 1993 to 1997,
he ran the Center for International Labor Economics at the
University of Konstanz in such a way that it provided a fruitful
environment for empirical research in labor economics. I am also
indebted to Prof. Dr. Winfried Pohlmeier and to Prof. Dr. Gerd
Ronning for undertaking the task to evaluate my Habilitation
thesis."
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