Computing Capital Stocks in the German Social Security Records and Quantifying Their Role for Wage Inequality

Markus Janser; Florian Lehmer; Ulrich Zierahn - Weilage

doi:10.1093/cesifo/ifae021

Computing Capital Stocks in the German Social Security Records and Quantifying Their Role for Wage Inequality

Markus Janser
, Florian Lehmer
, Ulrich Zierahn - Weilage^*

^*Corresponding author for this work

Research output: Contribution to journal › Article › Academic › peer-review

Abstract

We develop a method to impute capital stocks from investments for a sub-sample of firms in the German social security records and implement a machine-learning algorithm to predict capital stocks for the universe of firms. These capital stocks explain 40% of the variation in capital stocks of the Bureau van Dijk data. We make our data available for other researchers. We find that these capital stocks explain a sizeable fraction of wage inequality by extending the variance decomposition of Card et al. (2013), suggesting that rising firm heterogeneity in capital intensity may further amplify wage inequality. (JEL codes: C81, D24, and J31)

Original language	English
Pages (from-to)	370-393
Number of pages	25
Journal	CESifo Economic Studies
Volume	70
Issue number	4
Early online date	9 Oct 2024
DOIs	https://doi.org/10.1093/cesifo/ifae021
Publication status	Published - Dec 2024

Funding

Helpful comments and discussions from Melanie Arntz, Sabrina Genz, Terry Gregory, Johannes Ludsteck, Insa Weilage, an anonymous referee, and seminar participants at Utrecht University are gratefully acknowledged.

Keywords

capital stock
social security data
perpetual inventory method
imputation
machine learning
wage inequality

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ifae021Final published version, 1.21 MBLicence: CC BY

Cite this

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abstract = "We develop a method to impute capital stocks from investments for a sub-sample of firms in the German social security records and implement a machine-learning algorithm to predict capital stocks for the universe of firms. These capital stocks explain 40\% of the variation in capital stocks of the Bureau van Dijk data. We make our data available for other researchers. We find that these capital stocks explain a sizeable fraction of wage inequality by extending the variance decomposition of Card et al. (2013), suggesting that rising firm heterogeneity in capital intensity may further amplify wage inequality. (JEL codes: C81, D24, and J31)",

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AB - We develop a method to impute capital stocks from investments for a sub-sample of firms in the German social security records and implement a machine-learning algorithm to predict capital stocks for the universe of firms. These capital stocks explain 40% of the variation in capital stocks of the Bureau van Dijk data. We make our data available for other researchers. We find that these capital stocks explain a sizeable fraction of wage inequality by extending the variance decomposition of Card et al. (2013), suggesting that rising firm heterogeneity in capital intensity may further amplify wage inequality. (JEL codes: C81, D24, and J31)

KW - capital stock

KW - social security data

KW - perpetual inventory method

KW - imputation

KW - machine learning

KW - wage inequality

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Computing Capital Stocks in the German Social Security Records and Quantifying Their Role for Wage Inequality

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Keywords

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