Employment trajectories in Germany: do firm characteristics and regional disparities matter?

Abstract

The employment period is of central importance in the life course and therefore ensuring job stability, whether internally or between firms, is essential for workers. In considering this, it is worthwhile to note from the outset that employees act within a particular framework. Employment trajectories are affected by firm-specific opportunity structures and diverse regional heterogeneities. Furthermore, the role of the business cycle is also an important factor to be addressed. This article is to contribute to existing research on employment trajectories and particularly towards addressing more fully structural factors that frame action, which remain under investigated. In order to gain a fuller picture of structural and cyclical determinants, a German linked employer-employee dataset as well as data on regional economic characteristics using the ‘Spatial Planning Regions’ (German statistical units) were merged. The hierarchically clustered data was explored through multilevel models of analysis. Firstly, the key factors of influence on employment stability were identified, followed by the determinants of upward, lateral and downward inter-firm mobility as well as those transitions that lead to unemployment. This article shows that during an economic upswing inter-firm promotions are more frequently achieved, whereas in an economic downswing the risks of unemployment increase. Moreover, it was found that investment in further training and internal infrastructure has a positive effect on employment trajectories. In addition, work councils increase employment stability, especially during periods of economic growth. In contrast to this, employment trajectories are destabilised through a disadvantageous firm demography as well as the intensive use of fixed-term employment. Densely populated areas offer better employment opportunities, whereas unemployment risks dominate in rural areas during an economic downswing. Furthermore, differences in levels of productivity as well as the particular labour market environment accentuate unequal employment opportunities. Regardless of qualification level, all employees within a region during an economic upswing benefit from the accumulation of a higher level of human capital, whereas during an economic downturn, skill segregation prevails, where it is only the highly qualified that benefit.