{'fraction_non_alphanumeric': 0.02099370188943317, 'fraction_numerical': 0.005598320503848845, 'mean_word_length': 4.958333333333333, 'pattern_counts': {'":': 0, '<': 0, '<?xml version=': 0, '>': 0, 'https://': 0, 'lorem ipsum': 0, 'www.': 0, 'xml': 0}, 'pii_count': 0, 'substrings_counts': 0, 'word_list_counts': {'cursed_substrings.json': 0, 'profanity_word_list.json': 0, 'sexual_word_list.json': 0, 'zh_pornsignals.json': 0}}
A GEE-type Approach to a Two-Equation Panel Data Model with Continuous and Limited Dependent Variables

The main contribution of the study is to provide empirical evidence on an interaction between changes in the wage distribution and changes in the prevalence of performance-related pay (PRP) in West Germany in the 1990s based on GSOEP Data. We start with a descriptive analysis of changes in the wage distribution, changes in the prevalence of PRP as well as a link between both series. Our econometric analysis employs a two-equation panel data model with a continuous dependent variable (wage), a discrete dependent variable (PRP) and a flexible joint covariance matrix. We find a significant positive correlation between the residuals in the wage equation and the residuals in the PRP-equation. Moreover, we can show that (a) shocks in the wage equation have a long lasting effect on transitory earnings, while shocks exhibit no enduring impact on the likelihood of working within a PRP-scheme, and (b) the ratio of the permanent variance component and the overall variance is relatively more important for the PRP-equation than for the wage equation. Combining our results with evidence from other studies regarding the notable stability of the permanent income component in West Germany, we conjecture that one source of rising volatility in wages in West Germany in the 1990s is the increasing prevalence of PRP-schemes.