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Merkl, Christian & Heiko Stüber (2024): Wage and employment cyclicalities at the establishment level. In: European Economic Review, Jg. 161, 2023-11-07. DOI:10.1016/j.euroecorev.2023.104636

Abstract

"Although the quantitative relationship between employment cyclicality and wage cyclicality is central for the dynamics of macroeconomic models, there is little empirical evidence on this topic. We use the German AWFP dataset to document that wage cyclicalities are very heterogeneous across establishments. Based on this heterogeneity, we estimate the relationship between employment cyclicality and wage cyclicality at the establishment level. We use this micro-estimate as a calibration target for a macro labor market flow model with heterogeneous wage dynamics that nests the standard search and matching model. Based on this micro-macro linkage, we provide a new quantitative benchmark for the role of wage rigidity in search and matching models. Furthermore, we show that acyclical and countercyclical wage establishments are key drivers for stronger labor market reactions in recessions than in booms." (Author's abstract, IAB-Doku, © Elsevier) ((en))

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Daniele, Federica & Heiko Stüber (2023): The Micro-Origins of Business Cycles: Evidence from German Metropolitan Areas. In: The Review of Economics and Statistics, Jg. 105, H. 1, S. 70-85., 2023-01-01. DOI:10.1162/rest_a_01005

Abstract

"How large is volatility due to large firms? We answer this question through both reduced-form analysis and a calibration exercise. First, we exploit time and spatial variation across German cities and show that higher concentration is associated with more persistent local business cycles, and local concentration Granger causes local employment volatility. From a business cycle perspective, we find evidence in favor of granularity-driven recessions only. Next, we calibrate a structural model along the lines of Carvalho and Grassi (2019) and find that the more fat-tailed productivity distribution in bigger cities crucially depends also on the higher probability that firms will grow." (Author's abstract, IAB-Doku, © MIT Press Journals) ((en))

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Bachmann, Rüdiger, Christian Bayer, Heiko Stüber & Felix Wellschmied (2022): Monopsony Makes Firms Not Only Small but Also Unproductive: Why East Germany Has Not Converged. (CEPR discussion paper 17302), London, 67 S.

Abstract

"When employers face a trade-off between growing large and paying low wages - that is, when they have monopsony power - some productive employers will decide to acquire fewer customers, forgo sales, and remain small. These decisions have adverse consequences for aggregate labor productivity. Using high-quality administrative data from Germany, we document that East German plants (compared to West German ones) face a steeper size-wage curve, invest less into marketing, and remain smaller. A model with labor market monopsony, product market power, and customer acquisition matching these features of the data predicts 10 percent lower aggregate labor productivity in East Germany." (Author's abstract, IAB-Doku) ((en))

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Bachmann, Rüdiger, Christian Bayer, Heiko Stüber & Felix Wellschmied (2022): Monopsony Makes Firms Not Only Small but Also Unproductive: Why East Germany Has Not Converged. (IZA discussion paper 17302), Bonn, 67 S.

Abstract

"When employers face a trade-off between growing large and paying low wages - that is, when they have monopsony power - some productive employers will decide to acquire fewer customers, forgo sales, and remain small. These decisions have adverse consequences for aggregate labor productivity. Using high-quality administrative data from Germany, we document that East German plants (compared to West German ones) face a steeper size-wage curve, invest less into marketing, and remain smaller. A model with labor market monopsony, product market power, and customer acquisition matching these features of the data predicts 10 percent lower aggregate labor productivity in East Germany." (Author's abstract, IAB-Doku) ((en))

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Bachmann, Rüdiger, Christian Bayer, Heiko Stüber & Felix Wellschmied (2022): Monopsony Makes Firms Not Only Small but Also Unproductive: Why East Germany Has Not Converged. (CESifo working paper 9751), München, 67 S.

Abstract

"When employers face a trade-off between growing large and paying low wages - that is, when they have monopsony power - some productive employers will decide to acquire fewer customers, forgo sales, and remain small. These decisions have adverse consequences for aggregate labor productivity. Using high-quality administrative data from Germany, we document that East German plants (compared to West German ones) face a steeper size-wage curve, invest less into marketing, and remain smaller. A model with labor market monopsony, product market power, and customer acquisition matching these features of the data predicts 10 percent lower aggregate labor productivity in East Germany." (Author's abstract, IAB-Doku) ((en))

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Bachmann, Rüdiger, Christian Bayer, Heiko Stüber & Felix Wellschmied (2022): Monopsony Makes Firms Not Only Small but Also Unproductive: Why East Germany Has Not Converged. In: VOX H. 24.05.2022.

Abstract

"When employers face a trade-off between growing large and paying low wages - that is, when they have monopsony power - some productive employers will decide to acquire fewer customers, forgo sales, and remain small. These decisions have adverse consequences for aggregate labor productivity. Using high-quality administrative data from Germany, we document that East German plants (compared to West German ones) face a steeper size-wage curve, invest less into marketing, and remain smaller. A model with labor market monopsony, product market power, and customer acquisition matching these features of the data predicts 10 percent lower aggregate labor productivity in East Germany." (Author's abstract, IAB-Doku) ((en))

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Bachmann, Rüdiger, Christian Bayer, Heiko Stüber & Felix Wellschmied (2022): Monopsone machen Unternehmen nicht nur klein, sondern auch unproduktiv: Warum die Wirtschaft Ostdeutschlands nicht konvergiert ist. In: Ifo Dresden berichtet, Jg. 29, H. 5, S. 9-12.

Abstract

"Wir dokumentieren, basierend auf administrativen Daten, dass in ostdeutschen Betrieben – im Vergleich zu westdeutschen – die Löhne mit der Größe der Betriebe stärker steigen, dass ostdeutsche Betriebe weniger in Marketing investieren, kleiner bleiben und im Durchschnitt niedrigere Löhne zahlen. Ein Modell mit Arbeitsmarktmacht, Gütermarktmacht und Kundenakquise sagt eine um 10% niedrigere aggregierte Arbeitsproduktivität in Ostdeutschland voraus und erklärt damit einen substanziellen Teil des anhaltenden Produktivitätsgefälles zwischen West- und Ostdeutschland." (Autorenreferat, IAB-Doku)

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Kovalenko, Tim, Claus Schnabel & Heiko Stüber (2022): Is the German labour market granular? In: Applied Economics Letters, Jg. 29, H. 1, S. 41-48., 2020-12-28. DOI:10.1080/13504851.2020.1855300

Abstract

"This paper is the first to investigate the relevance of the 'granular hypothesis' proposed by Gabaix (Econometrica 2011) for employment growth. Using comprehensive data for Germany, we show that the establishment size distribution in terms of employment is indeed fat-tailed and that idiosyncratic shocks to large establishments explain a substantial portion of aggregate employment change. This relationship is more pronounced in the manufacturing than the service sector. Our findings may be an argument for stabilizing the largest establishments when hit by negative idiosyncratic shocks, since their employment fluctuations could spill over to aggregate employment growth." (Author's abstract, IAB-Doku) ((en))

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Mahajan, Parag, Dhiren Patki & Heiko Stüber (2022): Bad Times, Bad Jobs? How Recessions Affect Early Career Trajectories. (Working paper / Federal Reserve Bank of Dallas, Research Department 22-12), Boston, 21 S. DOI:10.29412/res.wp.2022.12

Abstract

"Studies find that if a worker enters the labor market during an economic downturn versus a period of expansion, they likely will have more difficulty finding a high-paying job, because the availability of such jobs is strongly procyclical. The earnings penalty for starting a career during bad times is both substantial and persistent. Indeed, this paper finds that a typical recession causes entrants to experience a 6 percent loss in earnings cumulated over the first 15 years of their careers. But, the authors ask, to what extent do non-pecuniary characteristics of jobs offset some of those earnings losses? They address this question by relying on population-scale linked employer-employee administrative data from Germany to estimate both the pecuniary and non-pecuniary impact of entering the workforce during a recession." (Author's abstract, IAB-Doku) ((en))

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Bachmann, Rüdiger, Christian Bayer, Christian Merkl, Stefan Seth, Heiko Stüber & Felix M. Wellschmied (2021): Worker Churn in the Cross Section and Over Time: New Evidence from Germany. In: Journal of monetary economics, Jg. 117, S. 781-797., 2020-05-21. DOI:10.1016/j.jmoneco.2020.05.003

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Merkl, Christian & Heiko Stüber (2021): Wage and Employment Cyclicalities at the Establishment Level. (CESifo working paper 9283), München, 78 S.

Abstract

"We document substantial cross-sectional heterogeneity of German establishments’ real wage cyclicality over the business cycle. While wages of the median establishment are moderately procyclical, 36 percent of establishments have countercyclical wages. We estimate a negative connection between establishments’ wage cyclicality and their employment cyclicality, thereby providing a benchmark for quantitative macroeconomic models. We propose and calibrate a labor market flow model to match various empirical facts and to perform counterfactual exercises. If all establishments behaved as the most procyclical ones, labor market amplification would drop by one-third. If all followed Nash bargaining, it would drop by more than two-thirds." (Author's abstract, IAB-Doku) ((en))

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Haller, Peter & Daniel Heuermann (2020): Opportunities and competition in thick labor markets. Evidence from plant closures. In: Journal of regional science, Jg. 60, H. 2, S. 273-295., 2019-07-11. DOI:10.1111/jors.12460

Abstract

"Since Marshall (1890), it has been widely held in urban economic theory that cities insure workers against the risk of unemployment by offering a larger pool of potential jobs. Using a large administrative panel data set on workers displaced as a result of plant closures, we examine whether positive effects from a higher urban job density are offset by more intense competition between workers. When controlling for the sorting of workers between regions, we find robust evidence that the effect of job competition on unemployment duration exceeds that of job opportunities in absolute value. Our results put the idea of urban risk sharing into perspective and provide an explanation for observed longer unemployment durations in cities." (Author's abstract, Published by arrangement with John Wiley & Sons) ((en))

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Merkl, Christian & Heiko Stüber (2019): Value added, wages, and labor market flows at the establishment level. In: Applied Economics Letters, Jg. 26, H. 2, S. 135-142., 2018-02-19. DOI:10.1080/13504851.2018.1441501

Abstract

"In this article, we analyse the connection between value added, wages and labour market flows at the establishment level. We develop a simple model to illustrate the expected comovement of these variables. For the empirical analysis, we link the new German Administrative Wage and Labor Market Flow Panel data set to the IAB Establishment Panel. We show that establishments' hires rates have a positive and separations rates a negative comovement with establishment-specific value added, whereby hires react by more than separations. In addition, we provide evidence that establishments' partial equilibrium reaction is an important driver for aggregate labour market dynamics." (Author's abstract, IAB-Doku) ((en))

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Merkl, Christian & Heiko Stüber (2018): Value added, wages, and labor market flows at the establishment level. (IZA discussion paper 11314), Bonn, 17 S.

Abstract

"In this paper, we analyze the connection between value added, wages, and labor market flows at the establishment level. We develop a simple model to illustrate the expected comovement of these variables. For the empirical analysis, we link the new German Administrative Wage and Labor Market Flow Panel (AWFP) dataset to the IAB Establishment Panel. We show that establishments' hires rates have a positive and separations rates a negative comovement with establishment-specific value added, whereby hires react by more than separations. In addition, we provide evidence that establishments' partial equilibrium reaction is an important driver for aggregate labor market dynamics." (Author's abstract, IAB-Doku) ((en))

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Bachmann, Rüdiger, Christian Bayer, Christian Merkl, Stefan Seth, Heiko Stüber & Felix Wellschmied (2017): Worker churn and employment growth at the establishment level. (CESifo working paper 6702), München, 30 S.

Abstract

"We study the relationship between employment growth and worker flows in excess of job flows (churn) at the establishment level using the new German AWFP dataset spanning from 1975 - 2014. Churn is above 5 percent of employment along the entire employment growth distribution and most pronounced at rapidly-adjusting establishments. We find that the patterns of churn along the employment growth distribution can be explained by separation rate shocks and time-to-hire frictions. These shocks become larger on average during boom periods leading to procyclical worker churn. Distinguishing between separations into non-employment and to other establishments, we find that separations to other establishments drive all procyclical churn. In a secondary contribution, we compare German worker and job flows with their US counterparts and recent US findings." (Author's abstract, IAB-Doku) ((en))

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Bachmann, Rüdiger, Christian Bayer, Christian Merkl, Stefan Seth, Heiko Stüber & Felix Wellschmied (2017): Worker churn and employment growth at the establishment level. (CEPR discussion paper 12343), London, 30 S.

Abstract

"We study the relationship between employment growth and worker flows in excess of job flows (churn) at the establishment level using the new German AWFP dataset spanning from 1975 - 2014. Churn is above 5 percent of employment along the entire employment growth distribution and most pronounced at rapidly-adjusting establishments. We find that the patterns of churn along the employment growth distribution can be explained by separation rate shocks and time-to-hire frictions. These shocks become larger on average during boom periods leading to procyclical worker churn. Distinguishing between separations into non-employment and to other establishments, we find that separations to other establishments drive all procyclical churn. In a secondary contribution, we compare German worker and job flows with their US counterparts and recent US findings." (Author's abstract, IAB-Doku) ((en))

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Bachmann, Rüdiger, Christian Bayer, Christian Merkl, Stefan Seth, Heiko Stüber & Felix Wellschmied (2017): Worker churn and employment growth at the establishment level. (IZA discussion paper 11063), Bonn, 30 S.

Abstract

"We study the relationship between employment growth and worker flows in excess of job flows (churn) at the establishment level using the new German AWFP dataset spanning from 1975 - 2014. Churn is above 5 percent of employment along the entire employment growth distribution and most pronounced at rapidly-adjusting establishments. We find that the patterns of churn along the employment growth distribution can be explained by separation rate shocks and time-to-hire frictions. These shocks become larger on average during boom periods leading to procyclical worker churn. Distinguishing between separations into non-employment and to other establishments, we find that separations to other establishments drive all procyclical churn. In a secondary contribution, we compare German worker and job flows with their US counterparts and recent US findings." (Author's abstract, IAB-Doku) ((en))

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Bachmann, Rüdiger, Christian Bayer, Christian Merkl, Stefan Seth, Heiko Stüber & Felix Wellschmied (2017): Worker churn and employment growth at the establishment level. In: VOX H. 01.11.2017, o. Sz., 2017-10-23.

Abstract

"Many establishments both hire and lay off within a short time window, resulting in 'churn'. This column uses a newly constructed dataset to show that the rate of churn in Germany is high and can be up to 40% greater in booms compared to recessions. Both establishments that are shrinking and those that are growing hire more and lay off more in booms than in recessions." (Author's abstract, IAB-Doku) ((en))

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Bachmann, Rüdiger, Christian Bayer, Christian Merkl, Stefan Seth, Heiko Stüber & Felix Wellschmied (2017): Beschäftigungswachstum und "Worker Churn" auf der Betriebsebene. In: Ökonomenstimme H. 22.11.2017, o. Sz., 2017-11-13.

Abstract

"Betriebe stellen häufig Mitarbeiter im gleichen Zeitraum ein, in dem sie sich von anderen Arbeitskräften trennen. Dieses Phänomen wird auch als '(Worker) Churn' bezeichnet. Die Churn-Rate misst pro Betrieb den Anteil der Arbeitnehmer, die neu hinzugekommen bzw. weggegangen sind, relativ zum Anteil der neu hinzugekommen bzw. weggefallen Arbeitsstellen. Auch in Deutschland ist die Churn-Rate groß, wie dieser Beitrag zeigt. In Aufschwüngen liegt sie bis zu 40 Prozent höher als in Rezessionen. Interessanterweise gilt dieses zyklische Verhalten sowohl für wachsende als auch schrumpfende Betriebe." (Autorenreferat, IAB-Doku)

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Bachmann, Rüdiger, Christian Bayer, Christian Merkl, Stefan Seth, Heiko Stüber & Felix Wellenschmied (2017): Job and worker flows: New stylized facts for Germany. (FAU Discussion papers in economics 02/2017), Nürnberg, 22 S.

Abstract

"We study the relationship between cyclical job and worker flows at the establishment level using the new German AWFP dataset spanning from 1975 - 2014. We find that worker turnover moves more procyclical than job turnover. This procyclical worker churn takes place along the entire employment growth distribution of establishments. We show that these procyclical conditional worker flows result almost exclusively from job-to-job transitions. Growing establishments fuel their employment growth by poaching workers from other establishments as the boom matures. At the same time, non-growing establishments replace these workers by hiring from other establishments and non-employment." (Author's abstract, IAB-Doku) ((en))