Labor market tightness and individual wage growth: evidence from Germany

Journal for Labour Market Research

Table 1 The effect of the occupation-specific labor market tightness on individual wages

	Baseline		Full model
	OLS	Ada LASSO	OLS	Ada LASSO
	(1)	(2)	(3)	(4)
ue-ratio effect	− 0.256 (0.022)	− 0.276 (0.015)	− 0.101 (0.032)	− 0.250 (0.015)
\(\Delta\) ue-ratio effect	− 0.215 (0.015)	− 0.219 (0.014)	− 0.065 (0.048)	− 0.120 (0.012)
Control variables	Yes	Yes	Yes	Yes
Occupation, region, industry, and time FE	Yes	Yes	Yes	Yes
Occupation # (\(ue\) and \(\Delta ue\)) interaction effects	No	No	Yes	Yes
N	316,711	316,711	316,711	316,711
Adj. R²	0.589	0.589	0.593	0.591
No. of variables	324	132	520	186
AIC	392,069.1	392,327.6	390,087.0	390,346.4
BIC	395,407.5	393,746.1	395,643.9	392,340.9

Dependent variable is the individual wage 10 years after labor market entry
OLS estimation: baseline model without occupation-specific interaction effects (Columns 1 and 2); full interaction model using occupation-specific interaction effects for \(ue\) and \(\Delta ue\) (Columns 3 and 4); adaptive LASSO estimates are reported in Columns 2 and 4, respectively
Most of the control variables are included after LASSO. Heteroscedasticity robust clustered standard errors at the level of region#occupation of the coefficients are in parentheses