Universitat Rovira i Virgili

A New Measure of Wage Risk: Occupation‑Specific Evidence for Germany


Helmut, H., Rodriguez-Justicia, D. and Theilen, B. (2022): "A New Measure of Wage Risk: Occupation‑Specific Evidence for Germany", Social Indicators Research

This study proposes a new measure of wage risk based on estimated probabilities to earn an hourly wage that is below some specific lower quantile of the wage distribution. Using the German SOEP as an information rich data base, we determine wage risks overall and for nine job categories during the period from 1992 until 2015. Our empirical results show that, firstly, the low-wage workers in Germany are clearly worse off after the Hartz reforms. Workers in Western Germany have experienced both a decline in low-wages and a rise of wage risk, while workers in Eastern Germany suffered from trends in wage risk only. Secondly, both in Western and Eastern Germany, the overall evidence hides important heterogeneity showing up at occupational levels. In Western Germany, the described utility losses have been particularly strong for Unskilled workers, Service & sales workers, Craftsmen and Operatives. In Eastern Germany, this holds for male and female Unskilled workers and Craftsmen and female Operatives, Clerks and Technicians.


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Bernd Theilen