Extending the common baseline model does not fundamentally change the low contribution of labor quality to productivity growth in Germany. Labor quality growth is low owing to a small increase in educational attainment of workers and declines in relative returns.

We investigate whether the costs of job displacement differ between blue and white collar workers. In the short-run earnings and employment losses are substantial for both groups but stronger for white collars. In the long run, there are only weak effects for blue collar workers but strong and...