This study compares the wages and wage rigidity of entrants with incumbent workers in the West German labour market, based on individual data from 1975 to 1995. On average entrants (around 11 per cent of the workforce each year) wages were 40 per cent lower than incumbent wages, with a rising tendency. Roughly 53 per cent of this difference can be attributed to observed heterogeneity. Further econometric evidence suggests that wage rigid-ity existed for entrants, with an average estimated yearly wage sweep-up of 2.4. This was pre-sumably an important reason for rising unemployment in the observation period.

Gernandt, Johannes and Friedhelm Pfeiffer (2006), Einstiegslöhne bei unvollkommenen Arbeitsmärkten, Perspektiven der Wirtschaftspolitik 7 (2), 147-172.