Structural Change, Wage Inequality, and the Occupational Mix of Firms : Evidence from German Micro Data

The purpose of this dissertation is to shed new light on the causes and consequences of structural change, both in terms of inter-sectoral reallocations of employment and intra-sectoral reallocations of employment. Its focus lies on Germany, which is among the industrialized nations that experienced substantial structural change over the last decades, i.e. a shift of employment toward services. The results of my empirical analyses show that structural change has a positive effect on the increasing wage gap in Germany that is comparable to the effect of international trade. Additionally, I show the importance of using detailed micro-level data to account for intra-sectoral changes of employment, i.e. the rising share of employment in service occupations within manufacturing. In a further step, I show that diverging sectoral growth rates of total factor productivity (TFP) are a driving force behind inter-sectoral changes of employment. My findings reveal a negative relationship between employment growth and TFP growth and thus confirm the theoretical predictions of Ngai & Pissarides (2007). In a final step, I focus on intra-sectoral reallocations of employment within the manufacturing sector and investigate the effects of three different channels of international trade on the occupational mix in manufacturing. Hence, I am able to investigate very precisely which employees benefit or suffer from the increasing exposure to international trade. The results provide diverse occupational effects from trade at the industry-level, while estimations at the establishment-level only show few significant effects.