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This study shows us that the city-size wage premium is larger for low-skilled than for high-skilled workers in Peru.

We use individual geocoded data from Peru and document that the city-size wage premium is larger for low-skilled than for high-skilled workers, in contrast with most developed countries. We interpret this evidence using a model of location choice with private amenity goods and non-homothetic preferences.

Skilled workers enjoy higher incomes and devote a higher expenditure share to amenity goods, such as private schools or upper-class neighborhoods. The supply of these amenities is subject to a fixed cost, and only sufficiently large cities have enough demand to offer them. Thus, skilled workers demand a higher wage premium to live in small cities, and the returns to working in a large city are smaller for them than for their unskilled counterparts. Our quantitative exercises indicate that the mechanism accounts for two-thirds of the gap in the city-size wage premium between high-skilled and low-skilled workers.

joint with Andrii Parkhomenko and Daniel Velásquez-Cabrera

This study rationalizes intuition and evidence altogether using a nonsequential search model.

Employers hire more selectively between heterogeneous productivity workers when applicants' queues are longer. Consistently, CPS data reveal a positive and concave relation between unemployment rates and wage inequality.

We rationalize intuition and evidence altogether using a nonsequential search model in which selective hiring stretches out the right tail of the wage distribution and compresses the left one. Using GMM-estimated parameters, we show that mean worker productivity distribution shifts are consistent with the evidence.

Welfare analysis suggests that regressive taxation may enhance efficiency because expected good matches stimulate vacancies, creating a positive externality for other job seekers.

(joint work with Alessandra Pizzo)

This worksphop is about using Linked employer-employee data to study worker and firm heterogeneity in wages as well as the importance of labour market sorting.

Linked employer-employee data offer a wide range of possibilities for researchers. For example, this type of data is used to understand the role of worker and firm quality in the development of wage inequality, as for example in Card, Heining, Kline (2013). A widely used approach to identify worker and firm quality was developed by Abowd, Kramarz and Margolis (1999).

Since then, many researchers have used the AKM model to study worker and firm heterogeneity in wages, as well as the importance of labour market sorting. While the model continues to be heavily used until today, recent developments discuss potential biases and propose corrections (for example Abowd et al, 2004; Andrews et al, 2008, 2012; Kline, Saggio, Sølvsten 2020; Bonhomme et al, 2023). As with the first edition of the workshop that took place in 2023, the purpose of the second edition continues to be to bring together researchers working on or interested in topics related to worker and firm quality to discuss current work.

This study is about the Increase in Refugees to Germany by Using the German Socio-Economic Panel and local district-level administrative data.

In 2015–16, Germany experienced a rapid and controversial increase in refugees that varied substantially across German districts. This increase provides unique leverage for analyzing how fractionalization, threat, and contact shape the consequences of immigration and ethnolinguistic heterogeneity.

Using the German Socio-Economic Panel and local district-level administrative data on refugee shares, we innovatively focus on within-person/within-district change in six exclusionary beliefs and behaviors. We demonstrate a two-level cross-cutting process that integrates threat and contact theory but contradicts fractionalization theory.

As the refugee share increased nationally, concerns about immigration and Far Right party support increased. However, district-level refugee shares significantly reduced concerns about immigration and Far Right party support. Also, rising district-level refugee shares are not associated with concerns about social cohesion, trust, residential moves, and subjective fair tax rates. While districts with fewer refugees drove the national-level threat, rising district-level refugee shares reduced or did not heighten exclusionary beliefs and behaviors.

This paper demonstrates that labor market regulations shape trade competition in labor-intensive activities.

This paper demonstrates that labor market regulations, such as minimum wages or payroll taxes, shape trade competition in labor-intensive activities. I exploit data from a large European trade program where firms from different countries supply labor services at the same location but face different payroll taxes and minimum wage rules. Country case-studies and model-consistent gravity estimates show large trade responses to tax and regulatory reforms, with an elasticity of trade in services to labor costs larger than one. The results imply that absent regulatory and fiscal harmonization, export competitiveness depends, in part, on domestic labor market policies. 

The workshop brings together junior and senior researchers working on issues about Urban Labor Markets and Local Income Inequality.

Urban labor markets provide agglomeration advantages to workers and firms. However, the distributional consequences are not fully understood. Agglomeration benefits are unevenly shared among low- and high-skilled workers. At the same time, many large urban labor markets around the world have experienced strongly rising housing costs in recent decades, especially for renters and young first-time homebuyers, putting these groups at risk of being priced out of the local labor market. The workshop aims to bring together junior and senior researchers working on these and related issues and welcomes both empirical and theoretical contributions. The list of topic includes, but is not limited to

  • Distributional consequences of agglomeration benefits
  • Labor market outcomes and housing affordability
  • Highly-local income inequality
  • Spatial extent of local labor markets and commuting patterns
  • Neighborhood effects and segregation
  • Interactions between local housing and labor markets

This conference marks the third international conference of the ELMI Network (Network of European Labour Market Research Institutes).

Organised by the Institute for Structural Research (IBS), Institute for Employment Research (IAB), and Luxembourg Institute of Socio-Economic Research (LISER), the international scientific conference Jobs, Skills, and Productivity in Structural Transformations aims to bring together leading scholars in the social sciences to address the challenges of the employability, skill mismatches and skill upgrading, social cohesion, and public policy responses to industrial and structural transitions.

The conference marks the third international conference of the ELMI Network (Network of European Labour Market Research Institutes), composed of 11 research institutes to facilitate the international exchange of best practices, ideas and people (www.elmi-network.eu). It promotes multi-disciplinary European research collaborations, and the exchange of best practices in data management, data access, and discussions with policy-makers and stakeholders.

We are particularly interested in papers that address the following issues:

  • Labour market consequences and long-term career trajectories of workers affected by deindustralisation and large structural shifts
  • The impact of green and digital transitions on skill demand and skill mismatches
  • Labour market consequences of military rearmament
  • Regional disparities in labour market adaptation to structural change
  • The role of education systems in preparing workers for structural transitions
  • The effectiveness of active labour market policies (ALMPs) in addressing structural transformations

The workshop accepts empirical contributions that assess the design, implementation and impact of labour market policies.

The research department Basic Income Support and Activation and the working group Social Protection in Changing Times at the IAB invite interested researchers to submit their extended abstracts or full papers to the 7th workshop ‘Evaluation of Passive and Active Labour Market Policies’.
The workshop provides an opportunity for researchers working on related subjects to present their
research, receive constructive feedback and meet other scholars in the field.

The workshop accepts empirical contributions that assess the design, implementation and impact
of passive and active labour market policies. Examples include:

  • Effects of passive and active labour market policies on labour market outcomes and wellbeing
  • Impact of automation and use of artificial intelligence within public employment services
  • Research on street-level bureaucracies, the behaviour of caseworkers and the role of public employment services
  • Econometric and statistical methods for the evaluation of passive and active labour market policies

This paper studies how family and firm investments interact to explain gender gaps in career achievement.

This paper studies how family and firm investments interact to explain gender gaps in career achievement. Using Danish administrative data, we first document novel evidence of this interaction through a “spousal effect” on firm-side career investments. This effect is accounted for by family labor supply choices that shape worker characteristics, which then influence firms’ training and promotion decisions.

Our main theoretical contribution is to develop a quantitative life cycle model that captures these family-firm interactions through household formation, families’ joint career and fertility choices, and firms’ managerial training and promotion decisions. We then use the estimated model to show that the interaction between families and firms in the joint equilibrium of labor and marriage markets is important when evaluating firm-side and family-side policy interventions. We find that gender-equal parental leave and a managerial quota can both improve gender equality, but leave implies costly skill depreciation, whereas the quota raises aggregate welfare, in part through adjustments in marital sorting towards families that invest in women.

The presentation focuses on the relevance of the labour market in strategies of people living in poverty securing their livelihood.

With the reproach of ‘dependency’, the receipt of welfare benefits is given a pejorative connotation, whereas securing one’s livelihood through paid work is seen as the epitome of ‘independence’ (Fraser/Gordon 1994). However, the assumption that receiving welfare benefits reduces work incentives has been disproved. Research has shown that employment continues to be an important goal for the long-term unemployed and poor (Dörre et al. 2013; Shildrick et al. 2012; Patrick 2017). Yet, access to the labour market is often difficult for people living in poverty for a variety of reasons such as health impairments, unpaid care responsibilities or lack of educational qualifications. When they do find work, it is mostly in precarious jobs with working conditions that are harmful to their health, leading to insecurity and, consequently, other forms of dependency.

Based on an ongoing research project on the welfare production of people living in poverty, the presentation focuses on the relevance of the labour market in their strategies of securing their livelihood: How do they position themselves in the face of the alternative of 'welfare dependency' and the insecurities of the labour market? It will be analysed how their labour market strategies develop and change in the context of individual biographies as well as labour market and welfare state conditions. The data include three interview waves with 40 poor households in Switzerland. Four standpoints with regard to welfare production were taken into account, which also imply different labour market positions: Working poor, who forego welfare benefits; single parents with limited availability for paid work; migrants, whose educational qualifications are often not recognised; and old-age pensioners, who are exempted from the obligation to work.

The findings suggest that particularly migrants without recognised formal qualifications pursue professional plans linked to the goal of social advancement and accept almost any full-time job in the low-wage sector. For single mothers, reconciling paid work with caring responsibilities is crucial, often leading them into fragmented work arrangements with no prospects for advancement. Lone mothers living on social assistance accept adverse working conditions in order to comply with the social norm of working, even if this does not significantly improve their standard of living, as they have to hand over most of their wages to the welfare office. For about half of the sample, labour market opportunities are reduced over the life course due to health impairments. A small number of cases deliberately refuse available employment opportunities in order to realise alternative life plans or roles, while at the same time refusing welfare benefits.

The presentation focuses on interviewees’ labour market strategies and examines the work and employment forms into which they lead them: regular low-wage work, marginal employment in private households, gig work, self-employment and various forms of informal work. It also looks at strategies beyond conventional employment, such as investing in cryptocurrencies, trading second-hand goods or subletting rooms.