Wage structure and labour mobility in the West German private sector 1993-2000

Since the early 90's the West German firms have to deal with sharp changes of economic environment: the German Unification, the emerging competitors in the east European countries and the deregulation of several labour market institutions. We analyse the wage structure, the wage changes and the labour mobility during this period using the linked employer-employee dataset from the Institute for Employment Research for the years 1993, 1995 and 2000. The dataset allows us to investigate especially the wage structure within firms and the exit and entry rates of workers at firm level. The main finding is that both wage inequality within and between firms and workers mobility was rising during the 90's. This development is mainly driven by the dynamics of high wage workers and high wage firms. The rising variance of wages can only partly be explained by a change in the occupational composition of firms. A decomposition of the variance of wages shows that the importance of the firm-specific variation increases, whereas that of human capital variation decreases.