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Journal for Labour Market Research

Table 8 Estimation of the selection modela (only private plants; 1996/7–2010b; probit estimatorc; dependent variable is a dummy variable whether the plant adjusts the number employees covered by social security from period t−1 to period t)

From: Employment adjustment in German firmsBetriebliche Beschäftigungsanpassung in Deutschland

Explanatory variables

Western Germany

Eastern Germany

coeff.

std.error

coeff.

std.error

l t−2

0.5464***

0.0075

0.5627***

0.0086

|ΔTurnover| (absolute percentage change)

0.0000

0.0000

0.0003*

0.0001

|ΔNom. wage bill per employee| (absolute percentage change)

0.0004**

0.0002

0.0001

0.0002

|ΔShare of female employees| (absolute change in percentage points)

0.0047***

0.0010

−0.0092***

0.0012

|ΔShare of qualified employees| (absolute change in percentage points)

0.0008

0.0005

0.0013**

0.0006

|ΔShare of part-time employees| (absolute change in percentage points)

−0.0019***

0.0006

−0.0031***

0.0009

|ΔShare of fixed-term employees| (absolute change in percentage points)

0.0066***

0.0012

0.0060***

0.0013

|ΔShare of employees covered by social security| (absolute change in percentage points)

0.0805***

0.0027

0.0776***

0.0039

Profit situation ‡(dummy: very good/good = 1)

0.0356*

0.0185

0.0740***

0.0207

Improvement of the profit situation (dummy: yes = 1)

0.0024

0.0185

−0.0557***

0.0208

Deterioration of the profit situation (dummy: yes = 1)

0.0539***

0.0184

0.0139

0.0203

Modern production technology (dummy: 1 or 2 on 5-point scale = 1)

−0.0153

0.0180

−0.0051

0.0200

Improvement of the production technology (dummy: yes = 1)

−0.0050

0.0205

−0.0233

0.0226

Deterioration of the production technology (dummy: yes = 1)

0.0309

0.0214

0.0080

0.0236

Works council ‡(dummy: yes = 1)

−0.0245

0.0255

−0.0496

0.0322

Covered by collective agreement ‡(dummy: yes = 1)

−0.0386**

0.0179

−0.0038

0.0208

Firm expects turnover increase (dummy: yes = 1)

0.2761***

0.0229

0.3063***

0.0271

Firm expects turnover reduction (dummy: yes = 1)

0.2320***

0.0231

0.2394***

0.0249

Change1 expects turnover (dummy: yes = 1)d

−0.1047***

0.0215

−0.0588**

0.0239

Change2 expects turnover (dummy: yes = 1)e

0.0775***

0.0213

0.0799***

0.0230

Constant

−1.6676***

0.0813

−1.6786***

0.0713

Industry dummies

yes***

 

yes***

 

Year dummies

yes

 

yes***

 

Number of observations (plant-years)

45470

 

34692

 

Wald (44)

9115.50***

   

Pseudo R-squared

0.3398

   
  1. aThe table presents coefficients and standard errors clustered at the establishment level. Reference categories of the dummy variable groups: no turnover change expected, agriculture and forestry, no change of the profit situation, no change of the production technology, no change of the turnover expectations and 1996. Significance levels: ∗ p<0.1; ∗∗ p<0.05; ∗∗∗ p<0.01. ‡Indicates that the information refers to the previous year
  2. b l t−2 is only observable for Eastern Germany from 1997 onwards. Therefore, the estimation for Eastern Germany is based on the years 1997 to 2010
  3. cFor a converging probit model in Eastern Germany I use an IRLS-Algorithm instead of the default Newton-Raphson-Algorithm. Thus a Wald statistic and the pseudo R-squared are not generated
  4. dThe dummy variable reflects a plant expecting a change of the turnover, while expecting no change in the previous period
  5. e The dummy variable reflects a plant expecting no change of the turnover, while expecting a change in the previous period
  6. Source: IAB Establishment Panel, waves 1996/7–2010
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