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We present empirical evidence suggesting that technological progress in the digital age will be biased not only with respect to skills acquired through education but additionally with respect to non-cognitive skills (personality). We measure the direction of technological change by estimated future digitalization probabilities of occupations, and non-cognitive skills by the Big Five personality traits from four German worker surveys. Even though we control for education and work experience, we find that workers who are more open to experience, emotionally more stable and less agreeable will tend to be less susceptible to digitalization. We also find that future technological progress may not continue to hollow out the middle class as much as it did in the recent past. These results suggest that education and labor market policies should put more emphasis on children’s and workers’ personalities to strengthen their labor market resilience in the digital age.

The German labour force is expected to shrink in the next two decades due to a decline in population. Therefore, the immigration of workers from abroad could compensate for potential negative consequences of such population decline. Is Germany competitive for immigration—i.e., do German employers pay enough to make it attractive as a destination country? We explore the wage gap between foreigners and German employees in particular and focus on different countries of origin to better understand issues related to wage setting among these groups. For this purpose, a threefold Oaxaca–Blinder decomposition is performed using comprehensive data with a vast amount of information on a large number of workers and firms. The results suggest that most of the wage gap can be explained by observed characteristics, and in most cases, very little difference remains unexplained. We provide evidence on differences specific to the country of origin which could be taken into consideration to attract people from abroad to better integrate them into the German labour market.

This paper examines the link between innovation and the endowments of creative and science oriented STEM – Science, Technology, Engineering and Mathematics – workers at the level of the firm and at the city-/regional-level in Germany. It also looks into whether the presence of these two groups of workers has greater benefits for larger cities than smaller locations, thus justifying policies to attract these workers in order to make German cities ‘smarter’. The empirical analysis is based on a probit estimation, covering 115,000 firm-level observations between 1998 and 2015. The results highlight that firms that employ creative and STEM workers are more innovative than those that do not. However, the positive connection of creative workers to innovation is limited to the boundaries of the firm, whereas that of STEM workers is as associated to the generation of considerable innovation spillovers. Hence, attracting STEM workers is more likely to end up making German cities smarter than focusing exclusively on creative workers.

Using comprehensive data for German establishments (1999-2008), we estimate plant-level production functions to analyze if 'cultural diversity' affects total factor productivity. We distinguish diversity in the establishment's workforce and in the aggregate regional labor force where the plant is located. We find that a larger share of foreign workers –either in the establishment or in the region –does not affect productivity. However, there are strong spillovers associated with the degree of cultural heterogeneity. The aggregate level is, quantitatively, at least as important as the workforce composition inside the establishment. Diversity thus seems to induce externalities beyond the boundaries of a single firm; it improves local business environments.

Germany is expected to decline in terms of population in the next few decades. In the transition period, the working-age population will shrink faster than the share of pensioners. This phenomena, the “demographic change”, puts pressure on the welfare system and therefore, strategies are requested to face the demographic process. Strategies discussed in the political and scientific debate are the exhausting of the labor force that is available, e.g. employment of females and older workers, and immigration. We consider these channels and its impact on firm productivity using comprehensive German firm-level data. Our evidence suggests that such channels are not harmful for the firm but there is also no strong positive relationship. Thus, at least the channels considered may contribute to the reduction of the burden of the demographic transition.

We explore the impact of the age structure of human capital on average regional productivity by applying a spatial econometric analysis based on an augmented Lucas-type production function. We also apply a new definition of regional human capital focusing on its availability. The estimates provide evidence that there are age specific human capital effects in Germany and that a temporary increase in regional productivity could occur during the demographic transition. Furthermore, it becomes clear that the availability-based definition of human capital provides additional insight and so, could enrich future studies on regional human capital. Resumen Exploramos el impacto de la estructura de edades del capital humano sobre la productividad regional media mediante un analisis econometrico espacial basado en una funcion de produccion tipo Lucas aumentada. Aplicamos tambien una nueva definicion de capital humano regional poniendo enfasis en su disponibilidad. Las estimaciones aportan pruebas de que en Alemania existen efectos del capital humano especificos de la edad y que la productividad regional podria aumentar temporalmente durante la transicion demografica. Ademas, queda claro que la definicion de capital humano basada en la disponibilidad aporta conocimientos adicionales y por lo tanto podria enriquecer en el futuro estudios sobre capital humano regional.

This article shows how the impulses of the transformation process in eastern Germany have spread through the economy and the labour market. The form of transformation has long-term effects on the form of control over the economy; it is managed largely from western firms. This fact has manifold consequences for the innovation behaviour of plants, among others, which in turn is further related to productivity and thus to the labour market. We argue that this transfers further to persistently lower wages and higher unemployment rates in eastern compared with western Germany.

This paper analyses the impact of the regional age structure on growth of German regions. Based on a neoclassical growth model an augmented Solow model was derived and estimated in a spatial econometric approach. Besides labor and human capital, public spendings and urbanisation measures are controlled for. Adding the age structure of the employed labor force, which we use as proxy for the age pattern of human capital, improves the regression model significantly. Spatial autocorrelation is controlled for and supports OLS results. To get deeper insights in the effectiveness of the age structure quantile regression techniques are applied to distinguish the effects between various levels of growth rates. The results of the different estimation approaches provide evidence that the age structure matters for growth.