Regional Population Structure and Young Workers' Wages

摘要

This paper empirically analyses how changes in the size of the youth population affect the wages of young male workers. Under the assumption that differently aged individuals are only imperfectly substitutable because of differences in firm-specific, occupation-specific, industry-specific or general human capital, economic theory predicts that an increase in the size of an age group reduces the earnings of the members of that group. This hypothesis is tested using a sample of young male employees from Western Germany. The demographic forces that are currently changing the age-structure of the German population illustrate the relevance of this analysis. Specifically, the share of young individuals is projected to fall by 2.5 percentage points (equivalently, by 15%) at the national level over the period 2010-2025.