Essays on the determinants of changing employment and wage structures

This thesis consists of four essays that contribute to the empirical literature on the determinants of recent changes in the employment and wage structure in Germany. The first essay analyzes recent employment growth at the lower tail of the wage distribution and its relation to technological progress. An econometric analysis suggests that tech-nological progress has shifted the demand from routine intensive occupations towards low-paying service occupations that require non-routine manual tasks, which are difficult to be replaced by information technologies, thereby contributing to the polarization of the employment structure. The second essay explores the role of technological change in the evolution of spatial wage inequality. The results indicate technological change is one driver of wage inequality by increasing the compensation for non-routine cognitive tasks, and by decreasing the compensation for routine and non-routine manual tasks. The third essay exploits regional variation in the liberalization of shop-closing legislation in Germany to identify the causal impact of product market deregulation on employment outcomes in the retail sector. The results from the empirical analysis suggest that the deregulation had moderately negative effects on retail employment, leading to a loss of approximately 19,000 full-time equivalent jobs. The reason is that deregulation induced a change in the market structure by significantly decreasing the number of small retail stores which are relatively more personnel-intensive than larger formats. The fourth essay provides an empirical analysis of the impact of changes in public sector employment on employment in the private sector at the level of local labor markets. It shows that expansions in public employment can be associated with a sizeable crowding out effect on private sector employment. Moreover, the results indicate that employment losses are concentrated in the tradable sector.