Wol , Joachim; T übswe e , Pa a i
A icle
The Speed o Lea ing he Old Job
Schmolle s Jah buch – Zei sch i ü Wi scha s- und Sozialwissenscha en. Jou nal o Applied
Social Science S udies
P o ided in Coope a ion wi h:
Duncke & Humblo , Be lin
Sugges ed Ci a ion: Wol , Joachim; T übswe e , Pa a i (2003) : The Speed o Lea ing he Old Job,
Schmolle s Jah buch – Zei sch i ü Wi scha s- und Sozialwissenscha en. Jou nal o Applied
Social Science S udies, ISSN 1865-5742, Duncke & Humblo , Be lin, Vol. 123, Iss. 1, pp. 55-69,
h ps://doi.o g/10.3790/schm.123.1.55
This Ve sion is a ailable a :
h ps://hdl.handle.ne /10419/292038
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The Speed o Lea ing he Old Job
A S udy on Job Changes and Exi s in o Unemploymen
Du ing he Eas Ge man T ansi ion P ocess*
By Joachim Wol and Pa a i T u
¨bswe e
Abs ac
This pape analyses how quickly old job ma ches ceased o exis du ing he Eas Ge -
man ansi ion p ocess om July 1990 o Decembe 1993. Using job spells om he
Ge man Socio-Economic Panel-Eas , we es ima e he e ec s o impo an co a ia es on
he ansi ion a es om he old job o a new one and in o unemploymen by a compe -
ing- isks du a ion model. Ou esul s sugges ha he speed o exi in o new jobs ises
wi h skills. The special sho - ime allowance slowed down he exi a e in o unemploy-
men . Wo ke s inc eased hei a e o job change empo a ily jus a e he end o his
p og am.
JEL Classi ica ion: C41, J63, P2
1. In oduc ion
Since p oduc ion in socialis economies was ela i ely labou in ensi e, he
des uc ion o a la ge numbe o jobs in he old i ms was ine i able in he
ansi ion p ocess. This pape s udies how quickly old job ma ches ceased o
exis in Eas Ge many and o wha ex en hey e mina ed by a job change o
by exi in o unemploymen .
The ealloca ion o labou was expec ed o lead o conside able lows be-
ween employmen and unemploymen and ice e sa. Bu in many ansi ion
economies hese lows emained low by Wes e n s anda ds (Boe i, 1994). This
also applies o Eas Ge many (Wol , 1998). To a la ge ex en , he ealloca ion
o labou om old less p oduc i e jobs o new ones ook place by di ec job
changes. Acco ding o da a om he Labou Ma ke Moni o , Eas Ge man
Schmolle s Jah buch 123 (2003) 1
Schmolle s Jah buch 123 (2003), 55–70
Duncke & Humblo , Be lin
* We a e ex emely g a e ul o S ephan Klasen, Rene
´Bo
¨heim, Jenni e Hun , he
pa icipan s o he XVI annual con e ence o he Eu opean Socie y o Popula ion Eco-
nomics and he pa icipan s o he GSOEP use con e ence 2002 o e y help ul com-
men s on ea lie e sions o his pape . Suppo om he Deu sche Fo schungsge-
meinscha unde he p ojec S b 386 is g a e ully acknowledged.
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56 Joachim Wol and Pa a i T u
¨bswe e
job changes made up o oughly 55% o o al hi ing om No embe o No-
embe o he yea s 1991 o 1993 (Ge man Fede al Labou O ice, 1994). This
igu e is conside ably highe han in ma ke economies.
1
Eas Ge many chose a s a egy o a apid ansi ion. Wi h he in oduc ion
o he Ge man Economic, Mone a y, and Social Union in July 1990 and uni i-
ca ion in Oc obe 1990, he Wes Ge man ins i u ional amewo k was
adop ed. A consequence was ha wages would adjus apidly o he much
highe Wes Ge man le els. Al eady in 1991 some collec i e ag eemen s
aimed a eaching his goal quickly.
2
Due o he wage ise and high subsidies
o new capi al in es men in Eas Ge many, a la ge p opo ion o he new jobs
we e good jobs wi h a high p oduc i i y and wage le el. Hence, new i ms
chose mo e capi al and human-capi al in ensi e p oduc ion echnologies han
p io o he ansi ion p ocess. Thus, hey needed highly alen ed applican s o
ill hei acancies, while old i ms needed o e ain alen ed wo ke s o u n
hei jobs in o p o i able ones. The speed o exi o wo ke s om old jobs in o
new jobs should hence inc ease in skills, pas occupa ional posi ion and pas
wages, which a e p oxies o hei alen s. The e e se should be ue o exi s
in o unemploymen .
P o ec ion agains dismissal may be ano he impo an de e minan o he
speed o exi om he old job. P o ec ion may be mo e comple e he olde he
wo ke and he highe his o he enu e. I may also be mo e comple e o
wo ke s wi h child en. The e o e, he ansi ion a es bo h in o new jobs and
in o unemploymen should decline wi h age, child en and enu e.
As many old jobs we e likely o become unp o i able, an impo an empo -
a y p og am o special allowances o sho - ime wo k was in oduced o e-
duce job losses. P io o i s end in Janua y 1992, he old i ms had a means o
e aining hei mos alen ed wo ke s, e en i hei jobs we e no ye p o i able.
This should ha e kep he exi a es om he old jobs in o unemploymen ini i-
ally ela i ely low compa ed wi h he pe iod a e Decembe 1991. Howe e ,
i could also explain a ia ion in he speed o exi in o new jobs o e ime.
Be o e he end o he sho - ime allowance p og am, new employe s had
di icul ies inding alen ed unemployed applican s. The e o e, hey may ha e
hi ed wo ke s di ec ly om hei old i m, which would ha e caused ansi ion
a es in o new jobs o be ela i ely high. When he sho - ime allowance p o-
g am ended, he old i ms had o shed quickly a la ge p opo ion o hei s a ,
Schmolle s Jah buch 123 (2003) 1
1Pissa ides (1994) summa ized e idence on job changes in se e al coun ies: Blan-
cha d and Diamond (1989) ound ha be ween 1968 o 1986 abou 20% o new hi es in
he U.S. esul om job changes. Acco ding o es ima es o Bu da and Wyplosz (1994)
o Wes -Ge many in he yea 1987 a 17% his p opo ion is e en lowe .
2A con ac in he me al indus y ag eed o each Wes Ge man g oss wages by
1994. The median eal mon hly consume wage ose by mo e han 80% in he i s six
yea s o ansi ion (Hun , 2001).
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The Speed o Lea ing he Old Job 57
so ha wo ke s’ incen i es o sea ch on- he-job and o accep a job o e we e
ela i ely high. Consequen ly, we expec he job- o-job ansi ion a e o peak
jus a e Decembe 1991. In he cou se o 1992 and 1993 i should be ela-
i ely low, as i became easie o ill acancies wi h alen ed unemployed ap-
plican s.
P e ious empi ical s udies did no add ess he speed o exi om old o new
jobs. Lich and S eine (1994) used he Ge man Socio-economic Panel Eas
(GSOEP-Eas ) o s udy employmen du a ion o he i s nine mon hs since
July 1990. They analysed he de e minan s o exi om employmen in o
sho - ime wo k, unemploymen and non-pa icipa ion by a logis ic du a ion
model. One impo an esul was ha he likelihood o emaining employed
ises wi h a wo ke ’s wage in May 1990. Ano he empi ical s udy on employ-
men du a ion in Eas Ge many o Hun (2002) ega ds a much longe ime
ho izon and dis inguished be ween olun a y and in olun a y sepa a ions om
employmen as compe ing isks. He analysis also elies on he GSOEP-Eas
and con i ms ha he wage in May 1990 had a posi i e e ec on he p obabil-
i y o emaining employed o people who we e employed in mid 1990. I
wages unde socialism inc eased wi h alen s, his may e lec a emp s by old
i ms o keep hei mos alen ed wo ke s and a emp s by i ms c ea ing jobs
o hi e hem.
Some o ou hypo heses con adic implica ions o a model de eloped by
Boe i (1997) o explain high job- o-job mo emen s in ansi ion economies.
His s a ing poin is ha unde socialism he mos educa ed wo ke s had li le
incen i e o de elop hei skills on he job, due o wage comp ession. Fo his
eason, and due o he ac ha dismissing low-p oduc i i y wo ke s was al-
mos impossible, manage s had li le incen i e o moni o hei wo ke s’ p o-
duc i i y. Unde some u he assump ions his model explains why a high p o-
po ion o new hi es esul ed om job changes. He assumes ha pas occupa-
ion, pas wage, o oca ional a ainmen du ing socialism do no signal he
p oduc i i y o a wo ke o he employe s who c ea e new jobs. His model p e-
dic s high job- o-job mo emen s, bu acco ding o his assump ion and in con-
as o ou iews, one would no expec ha he speed a which people lea e
hei old job o a new one a ies conside ably wi h di e ences in hese a i-
bu es.
Ou analysis is based on e ospec i ely collec ed indi idual job du a ion
da a om he GSOEP-Eas . We s udy he de e minan s o he du a ion o old
jobs o e he pe iod July 1990 o Decembe 1993 and apply s anda d econo-
me ic du a ion models o in es iga ing he abo e hypo heses.
Schmolle s Jah buch 123 (2003) 1
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58 Joachim Wol and Pa a i T u
¨bswe e
2. The Eas Ge man labou ma ke
in he i s yea s o ansi ion
In Eas Ge many he impac o he ansi ion o a ma ke economy on he
labou ma ke was ema kable. Employmen ell om mo e han 9.7 million
people in he i s qua e o 1989 o 6.2 million people a i s ( i s ) ough i e
yea s la e . Mo e han 90% o his ne job loss had occu ed by he i s qua e
o 1992. By ha ime he unemploymen a e had eached mo e han 15%.
Table 1 displays some di e ences be ween he Eas and Wes Ge man la-
bou ma ke wi h espec o he unemploymen a e, he in low a e in o unem-
ploymen , as well as he ou low a e om unemploymen om 1991 o 1993.
These s a is ics a e compu ed using da a om he Fede al Labou O ice and
he Mic ocensus. A mone a y union in July 1990, he Eas Ge man unemploy-
men a e was less han ou pe cen . By 1991 i was al eady abo e en pe -
cen . In he ollowing wo yea s i wen up o oughly 16% and was abou
wice as high as in Wes Ge many. E en hough he e was a la ge employmen
educ ion, by Wes e n s anda ds Eas Ge man lows in o and ou o unemploy-
men do no seem ex emely high. Be ween 1991 and 1993, pe mon h on
a e age 1.5% o he people in he labou o ce became unemployed. Fo Wes
Ge many his a e age mon hly in low a e in o unemploymen was be ween
one and 1.2%.
Table 1
Unemploymen a e and unemploymen dynamics om 1991 o 1993
(in pe cen )
Eas Ge many Wes Ge many
1991 1992 1993 1991 1992 1993
Unemploymen Ra e 10.3 14.8 15.8 6.3 6.6 8.2
G oss In low Ra e in o Unemploymen
a)
1.4 1.6 1.5 1.0 1.0 1.2
G oss Ou low Ra e om Unemploymen
b)
9.6 10.8 10.3 18.3 16.9 14.9
a)
A e age mon hly in low in o egis e ed unemploymen di ided by he labou o ce.
b)
A e age mon hly ou low om egis e ed unemploymen di ided by he annual a e age unem-
ploymen s ock.
Sou ces: Fede al Labou O ice and Mic ocensus
One eason o he low in low a es may ha e been he special sho - ime
allowance ha was in o ce un il he end o 1991. I ga e wo ke s a isk o
losing hei job ime o ind a new one wi hou en e ing unemploymen . In
Wes Ge many his p og am only applies o i ms a ec ed by empo a y eco-
nomic shocks, while in Eas Ge many i applied o any i m wi h a need o
Schmolle s Jah buch 123 (2003) 1
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The Speed o Lea ing he Old Job 59
es uc u e.
3
In 1991 1.8 million wo ke s – mo e han 25% o he Eas Ge man
employmen – we e on his p og am. Collec i e ag eemen s on empo a y p o-
ec ion agains dismissal ha we e in o ce un il June 1991 also pa ly explain
he mode a e in low a es.
Table 1 also shows ha he ou low a es we e low by Wes e n s anda ds.
F om 1991 o 1993 he mon hly a e age ou low a e om unemploymen in
Eas Ge many was close o 10% while in Wes Ge many i anged om 14.9
o 18.3%. The low Eas Ge man ou low a es may e lec he ac ha em-
ploye s hi ed wo ke s di ec ly om hei old jobs a he han om he pool o
unemployed.
3. Me hods and da a
3.1 Econome ic me hods
We analyse he disc e e andom a iable du a ion o he old job, T. The ha-
za d a e measu es he p obabili y o exi ing om he old job in mon h o any
des ina ion s a e, p o ided ha he indi idual has been in he old job up o he
beginning o ha mon h. A haza d a e may addi ionally be condi ioned on a
ec o o explana o y a iables x


. The condi ional p obabili y o exi ing o a
speci ic des ina ion s a e, J

j, is called ansi ion a e and is deno ed as:
P

T

;
J

j
j
T

;
x

 

j

j
x


;
j

1
;
...
;
M

1

The uncondi ional p obabili y ha a spell does no end wi h an exi up o
he mon h T

is he su i al p obabili y and is de ined as:
S

j
x

 
Y


1
1
ÿ
X
M
j

1

j

j
x


"#

2

We assume he logis ic speci ica ion o modelling he disc e e andom a i-
able T (Allison, 1982; Jenkins, 1995). The ansi ion a es a e hen speci ied
as

j

j
x

 
exp


j

x

01

j

1

P
M
m

1
exp


m

x

01

m

;
j

1
;
...
;
M
;

3

whe e

j ep esen s a pa ame e o he ime e ec , which may a y om
mon h o mon h. The pa ame e ec o ,

j, o he co a ia es di e s o each
Schmolle s Jah buch 123 (2003) 1
3Sho - ime wo ke s wi h child en ecei ed 68% o hei ne wage loss, while hose
wi hou child en ecei ed 63%.
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60 Joachim Wol and Pa a i T u
¨bswe e
exi s a e. We conside ansi ions o a new job and o unemploymen . Wi hin-
i m job changes a e no conside ed o be a ansi ion. Spells ha end wi h a
ansi ion o some des ina ion s a e jcon ibu e o he likelihood by he p oduc
o he co esponding ansi ion a e wi h he su i al p obabili y. Spells ha
end wi hou a ansi ion du ing ou obse a ion pe iod ( igh -censo ed spells)
con ibu e o he likelihood unc ion by he su i al p obabili y alone. Since
ansi ions o non-pa icipa ion a e a e, we ea spells ha end by such an exi
as igh -censo ed. Assuming he logis ic speci ica ion, he likelihood unc ion
can be ans o med in o he likelihood o a mul inomial logi model.
3.2 Da a
The GSOEP-Eas , a ep esen a i e sample o he Eas Ge man popula ion
on a household basis, is he da a sou ce o ou analysis.
4
This panel s udy col-
lec s in o ma ion on he s a and end o jobs e ospec i ely, which enabled us
o cons uc job spells o wo ke s who held an ongoing job in July 1990. Thei
jobs a e old jobs in he sense ha hey we e c ea ed p io o mone a y union.
We de ined July 1990 as he job s a in o de o analyse how long old job
ma ches su i ed du ing he ansi ion p ocess. Comple ed spells end wi h an
exi p io o 1994. Spells ha con inued in 1994 a e ega ded as igh -cen-
so ed. We used he calenda in o ma ion o de e mine he exi s a e.
Ou sample was limi ed o wo ke s who a e younge han 53 yea s in 1990.
Olde wo ke s had he addi ional op ion o exi ing in o special ea ly e i emen
p og ams. Hence, hei beha iou wi h espec o new job o unemploymen
exi s would di e much om ha o wo ke s who we e no eligible o ea ly
e i emen . We also d opped job spells o women on ma e ni y lea e a hei
i s in e iew in 1990. They did no p o ide in o ma ion on a la ge numbe o
impo an job- ela ed co a ia es. We d opped spells i a co a ia e alue is
missing om he s a o he spell. I a ime- a ying co a ia e is no missing a
he s a bu a some o he poin in ime du ing a spell, we ea he spell as
igh -censo ed in he mon h be o e he missing alue occu s. This le us wi h
a sample size o mo e han 2,400 obse a ions.
3.3 Desc ip i e S a is ics
Table 2 displays he composi ion o ou spell sample by des ina ion s a e
and gende , be o e spells a e d opped owing o missing co a ia e in o ma ion.
Sligh ly mo e han 50% o he spells ep esen men. Mo e han 22% o he
spells o men bu only 13.9% o he spells o women end in a job change ( ows
ou and six). The modal emale exi s a e is unemploymen . We es i-
Schmolle s Jah buch 123 (2003) 1
4Fo a gene al desc ip ion o he GSOEP-Eas see Wagne e al. (1993). The da a
we e p o ided by he Deu sches Ins i u u
¨ Wi scha s o schung.
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The Speed o Lea ing he Old Job 61
Table 2
Composi ion o he sample o old job spells by des ina ion s a e
Men Women
Numbe P opo ion
(pe cen ) Numbe P opo ion
(pe cen )
Sample size 1381 100 1264 100
Righ -censo ed 805 58.3 730 57.8
Exi s in o new jobs 312 22.6 176 13.9
Exi s in o unemploymen 228 16.5 334 26.4
Exi s in o non-pa icipa ion 36 2.6 24 1.9
ma ed Kaplan-Meie su i al p obabili ies in he old job. By he end o 1993
abou 49.5% o men and 46% o women su i ed in hei old job. We also
es ima ed hese p obabili ies o a sample o wo ke s om he GSOEP-Wes ,
who held a job in July 1990. Abou 80% o men and 75% o women in Wes
Ge many s ill held hei old job a he end o 1993. These p opo ions a e sub-
s an ially highe han o Eas Ge many, and demons a e ha Eas Ge man
wo ke s le hei old jobs apidly du ing he ansi ion p ocess.
Table 3 shows he means o he main a iables (and he s anda d de ia ions
o con inuous a iables). The samples o 1,286 male and 1,193 emale spells
used in he eg ession analysis a e smalle han hose used o calcula e he Ka-
plan-Meie es ima es. The i s se o co a ia es a e he ime in e als o he
baseline haza d, which a e no o equal leng h o a ious easons. Fo exam-
ple, we chose a e y sho in e al o h ee mon hs leng h o he pe iod De-
cembe 1991 o Feb ua y 1992 o quan i y he empo a y ise o he exi a es
a e he sho - ime allowance ended. The las in e al ins ead exceeds one
yea , as he numbe o exi s in his in e al is e y small.
The nex se o co a ia es, age and he numbe o child en, ep esen pe -
sonal and household a ibu es. Table 3 shows ha he sha e o young men ex-
ceeds ha o young women. This is no su p ising as young mo he s a e mo e
likely o be non-pa icipan s han young a he s. As a as child en a e con-
ce ned he dis ibu ion is qui e simila o bo h sexes. Table 3 also p esen s
desc ip i e s a is ics on occupa ional quali ica ion. 71% o men and 67.6% o
women ha e no deg ee o an app en iceship. 19% o men and 24.5% o wo-
men a e ei he mas e c a smen o go an enginee ing o echnical deg ee. We
e e o hese ca ego ies as echnical school. Mo e han 10% o men and abou
8% o women hold a deg ee om a uni e si y o a echnical college.
The las se o co a ia es cha ac e ize he old job in 1990. We dis inguish
be ween ou occupa ional ca ego ies: The i s – missing, sel -employed o
ainee – ep esen s a e y small sha e o bo h samples. The second, blue col-
la wo ke s, is he modal g oup o men, while he hi d – o emen, un-o
Schmolle s Jah buch 123 (2003) 1
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62 Joachim Wol and Pa a i T u
¨bswe e
Table 3
Cha ac e is ics o he male and emale spell samples
Co a ia es Male sample Female sample
Mean S d.
De . Mean S d.
De .
Calenda Time July 90 – Aug. 90 0.090 0.093
Sep . 90 – No . 90 0.120 0.127
Dec. 90 – Feb. 91 0.108 0.114
Ma . 91 – May 91 0.095 0.099
June 91 – July 91 0.055 0.056
Aug. 91 – No . 91 0.103 0.103
Dec. 91 – Feb. 92 0.069 0.068
Ma . 92 – July 92 0.096 0.092
Aug. 92 – Dec. 93 0.264 0.247
Pe sonal and household cha ac e is ics:
Age
<
26 0.183 0.158
26 o 35 0.334 0.346
36 o 45 0.278 0.298
>
45 0.205 0.199
Own child en No child en
<
17 yea s 0.443 0.411
1 child 0.260 0.289
mo e han 1 child 0.297 0.300
Occupa ional
quali ica ion No deg ee o app en iceship 0.707 0.676
Technical school 0.190 0.245
Uni e si y o echnical college 0.103 0.079
Cha ac e is ics o old job in 1990:
Occupa ion Missing, sel -employed, ainee 0.082 0.057
Blue-colla wo ke 0.624 0.295
Fo emen, un- o semi-skilled whi e
colla wo ke s 0.130 0.467
P o essional o manage ial posi-
ion 0.165 0.181
Tenu e in
June 1990

2 yea s 0.163 0.159
3–4 yea s 0.126 0.135
5–7 yea s 0.121 0.135
8–10 yea s 0.103 0.111
11–15 yea s 0.164 0.175
>
15 yea s 0.323 0.285
O he ln (hou ly wage) 1.781 0.734 1.726 0.647
Sample size (expanded sample) 27044 24402
Numbe o spells 1286 1193
Schmolle s Jah buch 123 (2003) 1
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The Speed o Lea ing he Old Job 69
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OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/schm.123.1.55 | Gene a ed on 2023-04-04 12:31:38