Panel Analysis of NPOs in Germany Design and Preliminary Results Lutz Bellmann Christian Hohendanner André Pahnke Third International Conference on Establishment Surveys Montréal 6/18/2007 – 6/21/2007

2 Panel Analysis of NPOs in Germany Design and Preliminary Results 1. Introduction 2. The IAB Establishment Panel 3. The German Linked-Employer-Employee Dataset 4. Identification of the Third Sector in the IAB Establishment Panel 5. Preliminary Results: Labour demand in nonprofit establishments

3 since 1993: West Germany since 1996: East Germany The IAB-Establishment Panel

4 East Germany West Germany Number of interviewed establishments

5 Population  Employment Register of the Federal Employment Agency  Employees are registered for the employment statistics together with an establishment code (mandatory reporting) (coverage: 80% of total employment)  All establishments with at least one employee covered by the social security system  not covered by the Social Security System: civil servants, unpaid family workers, self-employed and marginal employment

6 The IAB-Establishment Panel  ~ establishments: 1% of all plants, 9% of total employment  all branches, all sizes  stratified sample of 17 branches and 10 sizes of establishments  Disproportionate sample: larger establishments are overrepresented  face-to-face interviews  about 80 questions (annual, modular and “hot topics”)

7 Annual Questions  Development of employment  Structure of the workforce  Vocational training  Investment  Remuneration  Working hours  Industrial relations (wage agreements, work council) etc.

8 Modular Questions (every two or three years)  Innovation  Organisational change  Public subsidies  Further Training  Adjustment strategies (internal/external flexibility)  Recruitment strategies (e.g. contact with the Federal Employment Agency)

9 IAB-Establishment Panel Employment Statistics  size and structure of workforce and anticipated changes  hiresandseparations  turnover  businesspolicy incl.innovations and organisational changes  working and operating hours  apprenticeships / training  further training  public subsidies  gender  date ofbirth  occupation  qualification  earnings  industry  region Establishment Code IAB Linked-Employer-Employee Panel (LIAB)

10 NPOs in the IAB Establishment Panel Originally not solely created to analyze nonprofit organizations  no specific questions on npo‘s  no information about voluntary workers, donation  not covered: small associations with solely voluntary workers, establishments without employees covered by social security

11 Identification of Nonprofit Establishments  growing importance of the sector  IAB decided to select nonprofit organizations for further research  a part of the establishments can be found in the sector category “not for- profit organizations”  some nonprofit establishments are registered in other sectors (health, social work, culture etc.)  The selection procedure was done by TNS Infratest Social Research

12 Identification of Nonprofit Establishments Definition of nonprofit establishments  neither part of the private economy nor part of the public sector  not oriented towards gaining profits Relevant information in the IAB-Establishment-Panel  legal status, ownership, profit situation, sector; no information about voluntary donation, voluntary workers

13 Selection Procedure (by TNS Infratest Social Research) 1.Preselection of potential establishments based on the following information  sector: education, health and social work, culture, sports and entertainment, non-profit organizations  legal status: associations, charitable foundations, foundations under public law  ownership, profit situation 2.Manual selection (considering all relevant information, especially: name of establishment) 3. Result: establishments identified as “nonprofit”

14 NonprofitPrivatePublicValid?Total Number of identified establishments

15 IAB Establishment Panel 2004 BranchNon-profit establishments Education231 Health and social work526 Culture, Sports and Entertainment52 Nonprofit Organizations192 Total1001 Nonprofit Establishments 2004

16 Example: Labour Demand in nonprofit organizations

17 Qualification-specific unemployment

18 Labour Demand for different skill groups in nonprofit establishments  Motivation  Declining demand for unskilled labour force  High unemployment rate of unskilled labour force  Explanation  technological change  increased international competition  organizational change

19 Employment growth by sector Source: Zimmer/Priller (2000: 120)

20 Labour demand of nonprofit establishments Growing proportion of the total volume of work of nonprofit establishments  general expansion of service needs  most activities are work-intensive personal and social services  less exposed to rationalization pressures  But: most activities in the third sector require demanding skills  demand for the unskilled probably not higher or even lower compared to the private sector Research Question: Is there a difference between the labour demand for different qualification groups in the three sectors?

21 Data and Method  Method: standard dynamic labour demand function  Dynamic panel analysis (Arellano/Bond, 1991; Blundell/Bond, 1998; IAB-Establishment Panel e.g. Addisson/Teixeira, 2006)  Data: Linked Employer-Employee-Data

22 Dynamic Labour Demand Model n it = α 1 n it-1 + α 2 X it + γ i + ν t + ε it n it : number of employees (log.) in establishment i and period t X it : vector of control variables γ i : plant-specific error term ν t : time-specific error term ε it : error term n it-1 : number of employees (log.) in previous period t-1

23 Determinants of labour demand  number of employees (previous period)  financial situation: sales, budget  wage sum per capita for two qualification groups - unskilled (without apprenticeship) and skilled (with apprenticeship or university degree)  organizational and technological change  employment structure (shares of part-time work, females and qualified employees)  work council

24 Results  labour demand in nonprofit sector is higher compared to the private sector  but this demand refers to the high-skilled workforce  there is no indication that nonprofit establishments have a higher demand for unskilled employees Conclusion: results dampen exaggerated expectations concerning the labour demand for the low-skilled workers in the nonprofit sector

25 Data Access for external researchers  Research Data Centre (FDZ) of the German Federal Employment Agency:  On-site use  Remote data access  For further questions:

26 Thank you!

27 selected variablesSpecification IIISpecification IISpecification I Number of employees (log.) (previous period)*0.918***0.757***0.792*** (0.040)(0.088) Investment in IT*0.013*** (0.004) Organizational change*0.004 (0.003) Nonprofit sector0.016**0.043*** (0.007)(0.015) Public sector * (0.003)(0.007) Observations Number of ID Hansen-Test AR10.00 AR *apart from lagged employment, organizational and technological change, all covariates are considered as exogeneous Results: Labour demand – all skill groups

28 selected variablesSpecification IIISpecification IISpecification I Number of employees (log.) (previous period)0.402*** (0.089)(0.153)(0.159) Total employment (log.)0.521***0.723***0.711*** (0.077)(0.132)(0.138) Investment in technology0.004 (0.003) Organizational change (0.002) Nonprofit sector0.013***0.023*** (0.005)(0.008) Public sector *** (0.003)(0.006) Observations Number of ID Hansen-Test AR AR Results: Labour demand - skilled

29 selected variablesSpecification IIISpecification IISpecification I Number of employees (log.) (previous period)*0.549***0.349***0.368*** (0.070)(0.118)(0.119) Total employment (log.)0.369***0.480***0.453*** (0.060)(0.091)(0.089) Investment in IT*-0.041*** (0.012) Organizational change* (0.007) Nonprofit sector (0.010)(0.012) Public sector-0.039***-0.059*** (0.008)(0.013) Observations Number of ID Hansen-test AR10.00 AR *apart from lagged employment, organizational and technological change, all covariates are considered as exogeneous Results: Labour demand - unskilled

30 The dynamics of the IAB-Establishment Panel cc.: company code y.: year

31 Atypical Employment in nonprofit establishments  slow down of job creation in the traditional areas of health care and social services  funding structure: highly dependent on public support  financial constraints of the public sector  consequence: high shares of atypical employment

32 Atypical Employment 2004 in three sectors Source: IAB Establishment Panel 2004; * 2003; extrapolated values PrivatePublicThirdTotal Part-time contracts19,426,540,521,3 Fixed-term contracts5,05,413,45,6 Marginal part-time contracts 11,33,210,910,7 Free-lancer1,40,37,21,7 Job Creation Schemes*0,42,35,60,8 Temporary Agency Work1,10,10,20,9 Source: IAB Establishment Panel; Aggregated proportions of total employment in %