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UNDERSTANDING SOCIAL INEQUALITY Edited by Robert M. Blackburn

Iternational Journal of Sociology and Social Policy

Vol. 19 No. 9/10/11 1999

Contents

Page

Understanding Social Inequality by Robert M. Blackburn What is the Effect Technological Change on Earnings Inequality? by Michael R. Smith

24

How Redundancies Worsen Social Inequality by Bryn Jones and Peter Nistet

60

Social Change and the Life Course in East Germany: A Cohort Approach to Inequalities by Ansgar Weymann, Reinhold Sackmann and Matthias Wingens

90

Gender Inequality in Employment Status Following Family Migration in GB and the US: The Effect of Relative Occupational Status by Paul Boyle, Tom Cooke, Keith Halfacree and Dänen Smith

115

European Attitudes Towards Matemal Employment by Jacqueline Scott

151

Breaking the Silence: The Need to Re-articulate 'Class' by Harrtet Bradley and Gau Hebson

187

The Social Interaction Approach to the Measurement and Analysis of Social Stratification by Kenneth Prandy

215

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SOCIAL CHANCE AND THE LIFE COURSE IN EAST GERMANY: A COHORT APPROACH TO INEQUALITIES by Ansgar Weymann, Professor, EMPAS, University of Bremen, Reinhold Sackmann, PD, EMPAS, University of Bremen, 8c Matthias Wingens, PD, University of Bremen. 1. Social Change and the Life Course Hardly ever in history has a process of rapid and radical social change been äs much the object of observation and analysis by social scientists äs the modernization and transformation process of the Soviel Bloc. Historians have compared ihe breakdown of ihe Soviel Bloc wilh the French Revolution of 1789 and the Russian Revolution of 1917. Bolh of these revolutions splil ihe conlinenl bul ihe revolulions in ihe wake of ihe USSR's downfall lore down ihe dividing lines of confronlalion. Posl-1989 Germany has been relocaled lo her uncomforlable posilion in ihe cenlre of ihe coniinent. In lerms of sociological iheory, ihe collapse of ihe Soviel Block and ihe subsequent dramalic social change in a number of countries can be seen äs an insiruclive example of belaied modernizalion, a reclifying revolulion of an unsuccessful palhway. After ihe end of USSR hegemony over Cenlral and Easiern Europe, the nalion-siale was re-eslablished. Civil socielies of Western lypes are being reslored or eslablished for ihe first lime. The modernizalion processes thal are laking place in ihose former socialisl socielies (cf. Srubar, 1994) are characlerized by ihe developmenl of represenlative democracy, elaborated capilalism, welfare siaie and mass consumplion. Modernizalion promoles ihe economic and social differenlialion of the social siruclure äs well äs a persislenl change of cullure, religious Iraditions, beliefs, norms and values. In addilion, ihe individualizalion of life courses and biographies can be observed. However, wilhin ihis hislorical and macro-sociological modernizalion conlexl of former socialisl socielies, ihe case of Easl Germany is in a sense singular: by incorporaling ihe GDR inio ihe

International Journal of Sociology and Social Policy

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Federal Republic, ends and means of the transformation process were clearly defined and its course was sei from ihe beginning. As a consequence, ihe East German transformation suddenly led to a iremendous increase in income and welfare in only a few years. Bul al ihe same time the labour markel losl millions of Jobs due lo ihe monelary union, a lack of compeiiliveness of products and Services on ihe world markel, skyrockeling wages despile ihe conlinuation of low productivily, and a sectoral change of ihe economy from agricullure and induslry lo Services and consumer goods produclion (cf Pohl 1996). While ihe Iransformation in olher post-socialisl socielies occurred under ihe slogan: "bad ihings firsl, good ihings laler", ihe sequence in East Germany seemed to be reversed lo "good ihings firsl, bad ihings laler". In the GDR, educalional, employmenl and welfare inslilutions strongly influenced, or we could even say, direcied life course Iransitions from the lime of birlh until ihe lime of dealh, bul wilh unificalion this sirong inslilulional guidance had vanished. Because the state-regulaied inlerlinking of educalion and employmenl no longer exisled, ihe slalus passage from educalion lo work became problemalic and employmenl was no longer guaranieed. Thus, ihe hilherio u n k n o w n p r o b l e m of unemploymenl emerged äs well äs pressures for higher occupalional mobility, which Easl Germans were nol accuslomed lo. In addilion lo ihe prolracied revilalizalion of a compelilive economy, ihe labour markel and ihe occupalional siruclure have been profoundly reorganized, and educalional qualificalions and Professional skills have been partly devalued or re-evalualed. The posl-1989 slruclural upheavals and ihe renewal of inslilulions has affecied millions of life courses and eliciled growing inequalilies in Easl Germany (cf. Headey/Krause/Habich 1995). The implemenlalion of ihe Wesl German educalional, labour markel and employmenl syslem offers, on ihe one hand, far more opponunities for a self-delermined life course in various respects, bul on ihe olher hand supplies much weaker inslitulional guidance lhan ihe former ceniralized, socialisl GDR. The

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far-reaching macro social change has profoundly affected micro life course patterns. Life after 1989 is more self-determined, mobile, and flexible, but there are much higher risks of failure. 2. The study Our project is a longitudinal study that analyses three cohorts of East Germans in their transitions from education to employment and subsequent occupational careers from 1985 on (cf. Wingens/Weymann/Sackmann 1996). Up to now, two panel waves have been conducted, permitting a twelve-year window of observation; a third wave will be carried out in 2000, thus expanding the window of observation to fifteen years. The project observes the professional development of skilled workers and academics who graduated from vocational schools or universities in 1985, 1990, and 1995. Whereas the oldest cohort had their education, first Job and five years of employment under socialist conditions, the youngest cohort already graduated under West German conditions. The middle cohort had had their schooling in the GDR, but their first Job entries feil within the turmoil of its collapse and the very disarrayed and intricate Situation of the unification year. This cohort design allows an analysis of the East German transformation process in terms of inter- and intragenerational change. The project concentrates on younger cohorts because their occupational careers are indicative for the restructuring of the labour market and changes in the vocational structure in East Germany (cf. Ryder 1965). They are indicators of social change, stratification and inequality in the post-1989 transformation process. The focus of this article is on the development of educational, labour and gender related inequalities. Three sets of data have been collected: (1) a representative macro sample of life courses; (2) a qualitative and narrative micro sample of biographies; and (3) expert interviews with managers on the personnel policies of their firms.

93


(1) The macro panel study data are drawn from a quantitative, retrospective, standardized questionnaire survey collecting relevant data on a monthly basis. This macro panel study analyses life courses by means of life-event-history analysis (cf Blossfeld/Rohwer 1995). The random sample consists of 3776 cases. Samples have been drawn from the records of the above mentioned cohorts of university and vocational school graduates. Figure l provides detailed information about the macro sample structure. Fig. 1: Descriptive statistics of the macro-panel

year of final examination:

level of qualification Apprenticeship university degree £ column Gender male female

year of final examination:

n

%

n

%

n

408 rrj

42.5 57.5

505

43.1 56.9

1055

•

48.1 461 498 1 51.9

666

%

35.9 64.1

591

•Hl 43.8 658 1 56.2 513

•Hl

I. row

year of final examination: n

1.504 2.272 E^EwTl

39.8 60.2

47.1 52.9 mfi

805

48.9

1.779

840

51.1

1.997

nm

%

1 1 Art rt 1 l Evxn

1 OA

(2) The project also includes a micro panel, designed äs a biographical case study. Cases were drawn from the macro panel by selecting two occupational groups (agriculture; chemistry) whose employment opportunities had shrunk enormously and whose members, therefore, had to cope with considerable biographical discontinuity. The random sample comprises 67 cases. These data are drawn from qualitative interviews which were first conducted in 1992 (academics) and 1994 (skilled workers) and from a second wave in 1995. The micro panel analyses the subjective perception of the biography, the awareness

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and meaning of opportunities and constraints and the logic of biographical coping strategies. (3) Finally, expert Interviews with personnel managers were carried out. The sample includes 36 companies from different branches, small and large, young and old. This firm study analyses personnel policies of firms from 1985 to 1997. Its focus is on cohort competition, young cohorts entering the labour market versus old cohorts on their way out, and strategies for such a cohort exchange. This article mainly reports the results of the macro panel study. The focus of interest is to analyse to what extent the life course observed in terms of Status passages - Job entries, career mobility, retraining and fertility - depends on the following factors: level of education, cohort membership, gender, occupational experience, East German unemployment rate, labour market sector and occupation a person belongs to, tertiarization of the economy, and impact of the so-called "window of opportunity" immediately following the collapse of the GDR until the middle of 1992. Additionally, some information from the firm study is included concerning the age structure of the labour force and personnel policies of employers in expanding and contracting, newly founded and older firms. In conclusion, a few Spotlights from the micro panel study are mentioned, shedding light on the biographical coping strategies. 3. Results Changes in the macro structure and life courses are closely interrelated. After unification, the East German labour market was characterized by a shrinking workforce, by changing importance of economic sectors, and by high unemployment rates (3.1). Within this macro context, upward and downward mobility of employees (3.2), employment transitions (3.3), effects of vocational retraining measures (3.4), cohort distribution within and personnel policies of firms (3.5), fertility change (3.6), and finally, biographical coping strategies (3.7) are analysed.


95

3.1 The labour market in transition Two independent macro labour market processes can be observed. First, there was a strong shift in the relative importance of economic sectors. The percentage of persons employed in the agricultural sector dropped from about 10% in 1989 to about 4% in 1997. During the same period, the percentage of persons employed in the production sector sank from about 45% to about 33%, while in the Service sector the respective percentage rose from about 45% to about 63%. This illustrates the contraction of the agriculture and production sectors and the rapid tertiarization after unification that led to much pressure on career mobility. At the same time, however, a dramatic overall reduction of employment opportunities in absolute numbers can be observed. This reduction even applies to the Service sector, which had raised hopes of sufficiently compensating for the loss of Jobs in the other sectors. As Figure 2 shows, these hopes have been dashed.

Fig. 2: Number of persons in employment by industnal sector (Source: Stilistisches Bundesami) in 1000

s»»

96


The general labour market contraction and the enforced mobility resulting from changed sectoral opportunities are two of the major factors that generate a permanent high unemployment rate. However, unemployment is very unevenly distributed over the workforce. Our macro panel data show that there are tremendous differences between the unemployment rates of skilled workers and academics. Both groups started with an unemployment rate of about 6% in 1990 and ended up with about 14% for skilled workers and 5% for university graduates in 1997. Compared to the educational level, gender differences in unemployment rates are clearly less significant (women's unemployment rate is about 4% higher than the men's rate); differences between the cohorts hardly exist. Thus, we can conclude that at first glance employability predominantly depends on the level of education achieved whereas gender and cohort effects are of less importance. The traditional impact of education on vocational careers in Germany, and thereby on stratification and inequality, remains salient and persistent during the whole turmoil of the transformation process. 3.2 Mobility What patterns of occupational mobility can be observed in an economic Situation of labour market contraction and dramatic shift among the relative size of the economic sectors? Both processes create a high pressure on career mobility (cf. Mayer, Diewald and Solga 1999). But what are the factors that determine upward and downward career mobility under the structural conditions of labour market contraction and rapid tertiarization? Some explanations for upward and downward mobility are given by the following multivariate analysis. Figure 3 shows a "piecewise constant rate model" which - in contrast to functions that assume an a priori definition of the type of time dependence of the social process under investigation - allows for flexible modeling of time dependence, i.e.: this model estimates a separate transition rate for each time interval of the social process (while assuming a constant rate during each process time interval). The transition rate is a

97


Fig. 3: Occupational upward and downward mobility of the cohorts 1985, 1990 and 1995 (piecewise constant exponential model; individual characteristics and pcriod cffccts; percentage change in the estimated rate) Upward moves

Downward

0- 12months

0,00004 ***

0,0000060 ***

12-24months

0,00005 ***

0,0000001 ***

24-36 months

0,00005 ***

0,0000011 ***

36-48 months

0,00005 ***

0,0000011 ***

48 - 60 months

0,00007 ***

0,0000009 ***

> 60 months

0,00009 ***

0,0000012 ***

Transition rates

Independent variables Cohort 1985

775,15%***

1269,79%***

Cohort 1990

182,99%***

158,18% ***

Cohort 1995

reference group

reference group

Apprenticeship University degree Subsequent university

-73,15%***

-8,01% n.s.

reference group

reference group

112,01%***

-58,62% ***

Prestige (MPS)

-3,84% ***

0,23% n.s.

Work experience in months

-4,04% ***

-4,22% ***

Gender: female

14,84% n.s.

-9,25% n.s.

Child aged 0- 6

37,15%**

1,25% n.s.

-61,1%***

-28,44% *

Sectoral change

15,07%***

16,05%***

Period 90-92

57,02% ***

95,61%***

Interaction Effects Female and child aged 0-6 Period Effects

Number of persons Number of subepisodes Number ofevents Log-likelihood • significanl at ps 0,05 level

•' significant atpsO.Ol level

3490

3490

26735

26735

909

719

-9539,5378

-9539,5378

••• significant atpsO.OOl Icvcl

n. s. not significant

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Vol. 19 Number 9/10/11 1999

mathematical concept which can verbally be expressed äs a person's propensity to change from one state into another (e.g.: from one Job to another). The fact that the constant interval specific rates do not diverge substantially from each other means that most of the process specific time dependence is controlled by the meaningful covariates. Generally, there has been far more upward than downward career mobility in the transformation process of East Germany. A look at the covariates, however, shows significant differences among subgroups. Cohort membership seems to be a salient factor in determining mobility. The overall fluctuation (i.e. upward and downward mobility) is by far highest for the 1985 cohort. Members of this cohort received a GDR education and training and also had their first Job entry and first years of employment under socialist conditions. Thus, the 1985 cohort obviously is less well adapted to the new labour market Situation than the two younger cohorts. While there is no significant effect for women generally, women having preschool age children suffer dramatically from the new labour market regime. The educational level attained has significant effects on upward mobility. Compared to the level of apprenticeship, university graduates are more likely to be candidates for upward mobility. Postponed academic graduation (i.e. in addition to a vocational school degree received earlier) has a strikingly strong effect in stimulating upward mobility; it also plays a significant role in preventing downward mobility. Two observations are important with respect to the above mentioned structural labour market context (cf. DiPrete/Nonnemaker 1997). Firstly, the so-called "window of opportunity" (which directly followed the collapse of the GDR and was open until the end of 1992) had a significant positive effect on both career advancement and decline. These turbulent first two unification years offered great opportunities, but also immense risks for individuals' labour market chances and vocational careers. And secondly, the process of tertiarization is still going on and significantly influencing career mobility. In the wake of

International Journal of Sodology and Social Policy

99

tertiarization, new opportunities for young cohorts but also severe risks are constantly created. The transformation of East Germany's economy and labour market is not over yet. 3.3 Transition from non-employment into a Job What are the factors determining the dynamics of transitions from non-employment into employment? Figure 4 shows that the time passing until a transition into a Job occurs varies considerably between subgroups of the macro sample. Within an observation window of twenty-four months, men get a Job much faster than women (4.1); the younger the cohort, the sooner they found a new Job (4.2); also, academics left the Status of non-employment for a Job faster than graduates from vocational schools (4.3). A multivariate analysis of employment transitions reveals significant details of the process. The impact of education, gender, cohort and other covariates on vocational careers must be analysed on the basis of two perspectives: the transition risk from employment to unemployment must be distinguished from the chance of a transition from non-employment to employment and both events may vary independently. Figure 5 only deals with the transition chance from non-employment into a Job. Chances of leaving the Status of non-employment and getting a Job are best for the period between three and six months. With respect to cohort membership, it is important to note that the older the cohort, the poorer the chance of leaving non-employment for a Job. There is a strong gender effect with women having much worse transition chances than men. This gender effect increases if preschool age children are taken into account: whereas the effect of having preschool age children is not significant per se, the interaction effect shows that little children have a very negative effect on their mothers' transition chances (cf. Licht/Steiner 1994; Marvin 1995). In terms of macro structure, the East German unemployment rate negatively effects the transition into employment, which is no surprise. Surprising, however, is that work experience doesn't pay: occupational experience is

100


Fig.4: Transition to cmploymeot*


101

Fig.5: Transition to employment (piecewise constant exponential model)

Fij.4.l. Transition 10 employment by «enöcr

Transition rates 0 - 3 months 3 - 6 months 6 - 9 months > 9 months

Fif.4 2: Transiüon to emplo>Tncm b> «hon

0,2625*** 0,4086*** 0,3130*** 0,2006***

Independent variables Cohortl985 Cohort 1990 Cohort 1995 Unemployment rate (in %) Work experience in months Placeof training: Leipzig One previous non-employmcnt period Two and more previous non-employment periods Scientißc / occupational groups Social-/Cultural Sciences Teachers Natural sciences Agricultural sciences Medical doctors Production- and consumer goods Construction, fitting, maintenance Administration Other Services Gender: female Child aged 0-6 Marriage Interaction Effects Female and child aged 0-6 Work experience of the Cohort 1985

-15%n.s. reference group 16%* -3 % *** 0,20 % 3 % fl'.§: 13%n.s. 19%n.s.

-29 % *** -23 % * -40 % *** -38 % reference group -60 % *** -37 % *** -49% *** -45 % *** -16%*** -12%n.s. 12%n.s. -45%***

-0,35 % * 1703 4604

Number of persons Number of subepisodes Number ofevents Log-likelihood

1853 -6018,59

Urnr 12 rro.-vM

' m-un graph lific and confiJt 3« Intervall

• significam at p s 0,05

** significant a t p ä O , 0 1

*•* signtficant at p s 0,001

n. s. not significanc

102


substantively devaluated for the 1985-cohort. Also not to be expected was that previous periods of unemployment have no negative effects on transition chances. With regard to occupational groups, people trained in production and consumer goods branches have the worst o p p o r t u n i t i e s for leaving non-employment and taking up a Job. This result confirms - äs already said - that Job creation by the tertiarization process cannot compensate for the Job losses in the other sectors of the East German economy. 3.4 Re-employment effects of vocational training measures


103

Fig.6: Reemployment after unemployment spell (piecewise constant exponential model) Model 1

Model 2

Model 3

Model 4

0 - 6 months

0.1645***

0.1653***

0.2130***

0.2180***

6 - 1 2 months

0.1613***

0.1614***

0.2114***

0.2155***

> 12 months

0.1127***

0.1138***

0.1484***

0.1527*** -32%***

Transition rates

Independent variables

Vocational retraining measures have been a preferred instrument of labour market policy, especially during the turmoil of the first unification years. Until the end of 1994, more than 34 billions of DM had been spent for such programmes and more than half of the East German population of employable age took part, at least once, in some sort of training measure. However, is this political strategy of human capital investment an effective instrument for fighting unemployment (cf. Fitzenberger/Prey 1997; OECD 1997)? In order to determine the effect of retraining measures on re-employment chances, we analytically distinguish the human capital effect of a measure from its institutional effect.

Cohort 1985

-30%***

-29%***

-32%***

Cohort 1990

- 6% n.s.

- 6% n. s.

- 8% n.s.

- 7% n. s.

Gender. male

29%***

29%***

29%***

29%***

Apprenticeship

-28%***

-28%***

-27%***

-27%***

Further training: institutional effect

- 75% ***

- 75% ***

- 75% ***

- 75% ***

Further training: Human Capital effect

640% ***

375% ***

655% ***

375% ***

Duration of rurther training in months

-2% n.s.

-l%n.s.

- 3% n.s.

-l%n.s.

Work experience in months

-0.11% n.s.

-0.11% n.s.

-0.07% n.s.

-0.07% n.s.

12%*

10%

Period Effecis Rate of unemployment (in %)

Figure 6 shows that retraining measures have a positive effect in terms of human capital investment. But this positive effect is counteracted by a negative institutional effect. As "inmates" of retraining institutions, people can display only very restricted Job search activities during the time of their retaining measure and are, therefore, not available to the labour market. Taking into account that the positive effect mainly refers to people that have been unemployed for a long time, the human capital effect is not only counterbalanced but, on the whole, even outbalanced by the negative institutional effect. This non-intended effect of delaying the transition into employment became a kind of "retraining trap" äs the labour market turmoil of the first unification years gave way to a labour market reconsolidation. As can be seen from Figure 6,

Period before '92/12

- 2% n.s.

- 2% *

4% n.s.

l%n.s.

Interaction Effects Further training: Human Capital effect and period before '92/12

91%*

97%*

Number of episodes

3703

3703

3703

Number of events

1670

1670

1670

1670

-6369.26

-6367.39

-6368.01

-6365.97

Log-likelihood • significant atpsO.05

•* significant a t p s O , 0 1

••• significantal ps 0,001

n. s. not sigmficant

3703

104


extensive retraining schemes have been well implemented and they worked effectively until the end of 1992, i.e. during the "window of opportunity". But after this period (when the opportunity structure was in a state of flux), a process of closure in a Weberian sense occurred, resulting in an insider-outsider problem. The Job owners, again fairly well protected from dismissal, closed shops, and there were no vacancies for the Outsiders in the waiting lines anymore. Under such structural conditions, vocational retraining schemes tend to produce negative outcomes and to fail äs a re-employment strategy. 3.5 Cohort competition and personnel policy of firms As already mentioned, labour market contraction and insufficient compensation of Job losses by the tertiarization process reduce the Job opportunities for young cohorts. There is little cohort exchange in East Germany, but much cohort competition. This general problem (cf. Pfeffer 1981; Stewman 1988) became even more salient because labour market policy, in co-operation with unions and employers' associations, offered attractive early retirement packages to millions of workers. This policy, combined with very few openings of new positions in most branches and firms, resulted in a lack of cohorts over 55 years in most firms. The age distribution of the current workforce is concentrated around the middle ages (from 35 to 45 years) with few entries and exits. Consequently, these cohorts are "turning grey" collectively. In a few branches, firms were newly established in considerable numbers after 1989. This includes expanding sectors such äs banks, investment business, business and tax consultants. Such firms did not or almost did not exist in the socialist GDR economy. The age distribution of the work force in these firms is uneven, too. Because they could not take advantage of the GDR workforce, they had to Start with a new young staff and the age distribution peak is between 25 to 35 years. Therefore, there are few chances for young cohorts to enter a firm labour market because old cohorts are not leaving firms to retire in the near future. Only economic growth


105

and enhanced mobility of those who are employed can create better opportunities for vacancy competition. Figure 7 illustrates the cohort distribution of employees of tax, business and firm consultants; of banks, loans and savings institutes; of non-hospitalised health care Services; of health insurance companies; of environmental protection firms; and of the chemical industry. The cohort distribution of firms in these branches (columns) is compared to the age distribution of the entire workforce in these branches according to the East German micro census data (solid line). As can be seen from the comparison, the cohort distribution in many East German firms is uneven. This has resulted in less entries, that is, less cohort exchange and more cohort competition. It should be added that most firms have yet not developed a Strategie personnel policy which would help to manage this precarious Situation. There are only a few Strategie and long term personnel policies dedicated to a permanent and continuous cohort exchange, that is, directed toward obtaining a more even age distribution within the firm. What can be found instead is an incrementalist personnel policy - with firms only reacting to their day to day problems and ignoring any possible changes in personnel structure. 3.6 Fertility change Changes in opportunity structures, such äs education, labour market entrance, occupational careers, and firm labour markets have resulted in an unprecedented drop of fertility rates in East Germany (cf. Witte/Wagner 1995). In the GDR women's age at first child birth was very young. As Figure 8 shows, this pattern of early motherhood changed from cohort to cohort, postponing first child birth. While already at the age of 25 the percentage of mothers among women of the 1985 cohort was 52%, the respective percentage for the 1990 cohort was only 28% and for the 1995 cohort only 12%. One can expect that the younger cohorts will to some extent make up for their postponed

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Rg. 7: Agc distribuüon in East German firms Tax and businew Consulting (S firms)

Banking (4 fiiros)

Non-hospiulijed Health Carc (4 firms}

Health Insurance (5 fums) l O ü

100 T 50

60 J

60 *0 -

33 T3

200

35