Job Stability Trends and Labor Market (Re-)Entry in West Germany 1984-1997

Abstract

This paper investigates whether job stability in western Germany shows any signs of decline and compares the findings to evidence for the US and the UK. Cross sectional data and calendar information from the German Socioeconomic Panel 1984-1997 are combined allowing to check possible influences of oversampling long jobs in cross sectional data. Three different measures are looked at. All indicate that there is a decline in job stability, not fully explained by the business cycle: median elapsed tenure of male workers declined from around 10 years to 8.5, the probability to be in short jobs seems to increase relatively steadily for both males and females, and the hazard for job ending has become increasingly higher despite the fact that the economy experienced the post-unification boom and the current recession. Cox proportional hazard models for different groups in the labor market show that men and women are equally affected. Part-time workers, although generally more likely to end their job, have suffered less. As ’outsiders’ are more likely to have difficulties finding stable jobs in rough times separate analyses are carried out those who have entered the job directly from unemployment or non-participation and workers who enter the labor market having just finished their highest degree. These are compared to the ’insiders’ who switch jobs directly. While ’insiders’ are less likely to leave their new job, outsiders face increasing risks of job termination.