'Marginal employment' and the demand for heterogeneous labour - elasticity estimates from a multi-factor labour demand model for Germany

We develop a structural multi-factor labour demand model which distinguishes between eight labour categories including marginal employment, i.e. low-paying jobs with only a few working hours and partially exempted from employee's social security contributions. Using a new panel data set for Germany, the model is estimated both for the number of workers and total working hours. For unskilled and skilled workers in full-time employment, we find labour demand elasticities similar to previous estimates. Our new estimates of own-wage elasticities for marginal employment range between −0.13 (number of male workers in West Germany) to −1 (working hours for women).