Interfirm Job Mobility of Two Cohorts of Young German Men 1979 - 1990: An analysis of the (West-)German Employment Statistic Register Sample concerning multivariate failure times and unobserved heterogeneity

The OECD (1993) has documented that the majority of workers in
industrialised countries can look forward to finding a stable
employment relationship. However new entrants into the labor force
experience high turnover. Promoting institutions which support
longer tenures and worker participation (or ''voice`` in the firm)
utilize strategies to encourage enterprise and employee efforts in
skill formation and training. The results of the OECD (1993) study
show that attachments between employee and employer are more likely
to endure for Japanese, French and German workers. Furthermore
Germany has the highest share of young new recruits who received
any formal training from their employer. In Germany, 71.5 % of
young new recruits were trained at any job within 7 years after
leaving school, whereas in the U.S. only 10.2 % of young new
recruits were similarly trained (cf. OECD 1993, 137). It is
sometimes assumed that employment protection policies have been
exogenously imposed and thus probably impair efficiency. However,
research on the micro-economics of labor markets has shown that
employers may be interested in long-term employment relationships
(cf. Levine 1991). Here, the job training model focusing on the
importance of human capital investment, specifically the job
shopping and matching model stressing the process of information
gathering through employment experience should be mentioned. In
such models employment protection legislation has not only
desirable distributional effects but also help to ensure efficient
outcomes. Therefore, it is important to assess the relevance of
micro- economic theories empirically. This paper provides an
empirical analysis of job durations in Western Germany using
information from two cohorts of new entrants to the labor force
documented in the (West-)German employment statistic register
sample (cf. Bender and Hilzendegen 1996). The appropriate empirical
technique to study job length is event history or survival
analysis. In labor market research, survival analysis has primarily
focused on explaining the length of unemployment spells.
Application of this technique to employment is less common 1 ,
because huge longitudinal data sets are needed. Apart from testing
hypotheses about the effect of personal characteristics and labor
demand variables (e.g. firm size and industry affiliation), we will
assess the influence of heterogeneity of the members of the two
cohorts on their duration profile. The applied model and estimation
method allow for unobserved heterogeneity and correlation between
the clustered failure times of one employee as well as for
right-censored spells. Our analysis is not restricted to the
beginning of the working life of the employees. The individual
retirement decision is affected by employment protection and early
retirement regulations which differ widely between the firms. The
respective data are missing in the employment statistic register,
so that the retirement decision cannot be modelled explicitly.