Cohort Size Effects on the German Labor Market

Abstract

Although population aging is internationally pervasive, only few recent studies analyze its effects on relative labor market outcomes in the most affected countries. This paper shows that demographic change in Germany causes shifts in the wage and employment structures in favor of young workers. I firstly account for the fact that workers compete for certain jobs mainly within occupational tracks. The empirical results indicate that a relatively small cohort size leads to higher employment rates for workers with low degrees of occupational specialization and to higher wages for workers with medium degrees of specialization. There is no evidence for cohort size effects for workers in highly specialized occupations.