The Macroeconomic Effects of Changes in the Organization of Production

• Applicants: Professor Dr. Christian Bayer; Professor Dr. Moritz Kuhn
• Subject Area: Economic Theory
• Term: since 2024
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 543313924

Technological and demographic change, globalization, and labor market reforms lead to constant adjustments in the labor market. As part of this process, firms change the organization of their production processes, create new jobs, and abolish existing ones. These changes affect workers, their careers, and the macroeconomic wage and employment structure. In the proposed research project, we will compile a novel historical dataset on the German labor market to study changes in the organization of production processes within and across industries and the implied changes for the wage and employment structure from 1957 to today. Based on the novel data, we will study the secular and business cycle trends of the German wage and employment structure over seven decades. The novel data allow us to also address important and timely economic policy questions. In connection to the secular trends, we will address the consequences for the wage and employment structure of the increase in female employment as a characteristic trend of the 20th century. In connection to business cycle fluctuations, we will rely on the fact that the new data will cover the decade of the 1960s and the German “Wirtschaftswunder” (economic miracle) to study the consequences of worker shortage. The starting point for this research project is the finding that job levels provide an important and powerful concept to describe the organization of the production process and offer a refinement to the task-based approach to analyze the labor market. Building on this insight, we pursue three objectives with this project. Objective 1 will focus on the compilation of the novel research dataset on the employment and wage structure in Germany from 1957 to 2021. This novel dataset will allow us to study secular and business-cycle fluctuations in employment and wages by industry, gender, and job levels. Objective 2 will build on this newly compiled dataset to study secular changes in the German wage and employment structure. Part of the analysis of secular trends will be to analyze the consequences of the increase in female labor supply on the wage and employment structure and the gender pay gap. Objective 3 will exploit that the newly compiled data will be at quarterly frequency and therefore allows us to study wage and employment changes at business-cycle frequency. Part of this analysis will be to study the changes in the German wage and employment structure during the period of labor shortage during the 1960s.

• DFG Programme: Research Grants