Macroeconomics and Labor Markets (en) Archive - IAB - Institut für Arbeitsmarkt- und Berufsforschung

Trade Shocks: Next generation

This paper explores the effects of childhood import shocks on long-run outcomes using linked full-count Census data.

This paper explores the effects of childhood import shocks on long-run outcomes using linked full-count Census data between 1910 and 1940 and a novel identification strategy that isolates quasi-random variation in local import competition.

We show that individuals exposed to import competition in their first 10 years of life report lower incomes and reduced upward mobility 30 years later, with effects that fall most heavily on the left tail of the income distribution. More exposed individuals also exhibit lower educational attainment and increased mobility between states.

Intergenerational structural change plays a critical role in our results, with import competition reducing the probability that sons work in high-earning, high-education occupations regardless of their father’s income level.

(Joint work with John Lopresti and Andrew Greenland).

Left Behind? West-East German Disparities in the Cost of Job Loss

This paper studies regional disparities in the cost of job loss between West and East Germany.

Based on German administrative data, I document that, relative to their pre-displacement level, earnings losses of displaced workers are on average lower in East Germany than in West Germany. A shift–share decomposition shows that roughly one-third of this West–East gap is due to differences in the industry mix of job destruction: after the early deindustrialization of the East, job losses there were less concentrated in manufacturing and more in construction than in the West.

The remaining two thirds reflects smaller earnings losses in the East within industries, which are linked to lower firm wage premia among East German employers. Structural effects - the earnings losses associated with the same job lost across different regions - allow identifying an earnings penalty for displaced workers in the East that is more in line with the weaker labor market performance of the East. Although regional mobility to the West offsets earnings losses among movers, the vast majority of East Germans do not relocate to the West after job loss.

The Ins and Outs of Vacancies

The study documents the cyclicality of vacancy flows and their contribution to variation in the vacancy stock with data from Austria.

This paper uses large-scale high-frequency data on vacancy flows and matched employer-employee data from Austria to document the cyclicality of vacancy flows and their contribution to variation in the vacancy stock.

We document four key facts: (1) Vacancy inflows explain at least one-third of the cyclical variation in the vacancy stock, whereas the remainder is explained by vacancy fillings; (2) vacancy lapses, while accounting for about 20% of vacancy outflows, are acyclical and do not contribute to variation in the stock; (3) replacement vacancies, i.e. vacancies posted following a quit of a worker to another firm, are a key driver of vacancy inflows over the business cycle; and (4) the composition of vacancy inflows varies little over the business cycle and cannot account for the cyclical variation in vacancy filling. We set up a search-and-matching model with fixed costs of vacancy posting and on-the-job search, and calibrate it to match the averages of vacancy flows.

The calibrated model highlights the crucial role of on-the-job search – particularly replacement hires – in explaining the observed importance of vacancy inflows for cyclical fluctuations in the vacancy rate.

New Hires’ Informal Training and Turnover

This study analyses the relationship between informal on-the-job training and turnover of new hires.

We analyze the relationship between informal on-the-job training and turnover of new hires. To this end, we use unique survey data about different aspects of informal co-worker training and link it to both firm-level and individual-level administrative data.

We find that informal training is negatively associated with turnover of new hires six months after entering the firm. However, this relationship becomes smaller and statistically weaker after 12 months.

Further heterogeneity analysis reveals a trade-off after one year, as onboarding can, to some extent, contribute to increased retention in firms with a lower wage premium and thereby help to mitigate costly worker turnover in these firms.

Joint work with Didier Fouarge and Carolin Linckh.

The Role of Wages and Fringe Benefits in Job Search

This paper studies the role of wages and job benefits in job search behavior. We use wage and benefit data from a market-leading employer review platform and run a large-scale randomized control trial on an online job board to estimate the elasticity of job seekers' applications to posted wages and their willingness to pay for job benefits. A 10% higher wage increases job seekers' probability to view and apply to an ad by 3-5%. Many job benefits are highly valued by job seekers: Home office and company cars are valued at around 15 percent of wages, company-provided child care at 10 percent and and parking spots at around 7 percent of wages. The average vacancy offers job benefits worth 25 percent of wages. We further document that higher-paying firms typically offer more amenities. Taking the distribution and valuation of job benefits into account, we show that job value inequality is significantly higher than wage inequality.

Globalization and Gender Equality

Legal rights continue to differ between women and men, particularly in developing countries. In this paper, we examine whether economic integration can improve gender equality by the law during working life. We design a novel instrumental variable strategy based on regional waves of globalization, which serve as strong exogenous predictors of national globalization trends. Our main estimate suggests that an increase in globalization by one relative standard deviation, equivalent to a permanent transition from Indonesia to the United States, is associated with an 12.1% increase in gender equality, measured by the extent to which men and women are treated equally by law. We also find that this effect is almost entirely driven by de facto globalization. Linking globalization to more than 300,000 individuals from over 100 countries, we provide evidence for a microfoundation of the macroeconomic effects.

Catching-up or falling behind? Wage prospects and labor market performance in Germany

This seminar is about understanding how individuals form expectations about future wages.

Understanding how individuals form expectations about future wages and how these prospects evolve over time is crucial for assessing the acceptability of existing wage disparities. Providing a novel metric of wage prospects, we propose using probit regressions to assess individual ex-ante expectations of earning a wage from a specific quintile of the wage distribution and relate these estimates to realized (i.e., ex-post) wage outcomes.

Utilizing a large dataset of almost 250,000 observations from the German Socio-Economic Panel, covering the period from 1992 to 2020, our study reveals strong segmentations in the German labor market by gender and region, with women and East German workers more likely to earn lower wages. The 2003-2005 labor market reforms increased the probability of earning lower wages overall but slightly reduced gender and regional segmentation. For the bottom income quintiles, the reforms worsened wage prospects, particularly affecting part-time workers, minijobbers, and workers in West Germany.

Conversely, higher income earners saw improved wage prospects post-reforms. Finally, the new measure of wage prospects is predictive of actual wage transitions and exhibits theory-conform correlation with life satisfaction, which underscores its importance for understanding individual fairness considerations.

Conflict in Dismissals

This paper quantifies the share of dismissals distorted by conflict and identifies the drivers.

Dismissal costs are shaped by firm and worker behavior. While they might coordinate to minimize costs, adversarial separations may also entail cost-seeking actions ("conflict").

This paper quantifies the share of dismissals distorted by conflict and identifies the drivers. Our strategy exploits the choice between two modes of separation in France: personal dismissals and ''separations by mutual agreement'' (SMAs). Since SMAs waive dismissal red tape costs and enable severance pay bargaining, they should always be preferred to dismissals in an efficient bargaining model. In contrast, we find that only 12% of potential dismissals are resolved through SMAs. We then identify the sources of conflict that lead to the choice of the costlier separation mode in 88% of dismissals.

Our survey of HR directors reveals three crucial drivers, which account for 63% of the failures to convert dismissals into SMAs: (i) hostility between the employer and the employee, (ii) employers using dismissals as a discipline device, and (iii) asymmetric beliefs about labor court outcomes following a dismissal.

Mind the Gap: Effects of the National Minimum Wage on the Gender Wage Gap of Full-Time Workers in Germany

The effectiveness of the minimum wage on gender wage differences is examined.

With its introduction in 2015, the national minimum wage intends to benefit primarily low-wage workers in Germany. I examine the effectiveness of the minimum wage on gender wage gaps of full-time workers among the lower half of the wage distribution. Using administrative data, distinct regional differences in the extent of wage differentials and responses to the minimum wage occur. Overall, wage gaps between men and women at the 10th percentile decrease by 2.46 and 6.34 percentage points in the West and East of Germany after 2015. Applying counterfactual wage distributions, I provide new evidence that the introduction of the minimum wage decreases wage differentials by 60% to 95%. Group-specific analyses show various responses on the basis of age, educational level and occupational activity. Counterfactual aggregate Oaxaca-Blinder decompositions indicate a decrease in discriminatory remuneration structures in the West of Germany resulting from the introduced minimum wage.

To Find Relative Earnings Gains After the China Shock, Look Outside Manufacturing and Upstream

The authors use employer-employee data to follow US workers' long-run employment flows and earnings after trade liberalization with China.

We use employer-employee data to follow US workers' long-run employment flows and earnings after trade liberalization with China. We find that manufacturing workers in more exposed counties flow disproportionately into low-skill services such as retail and temp agencies, and are more likely to exhibit nominal wage declines after seven years. Formal difference-in-differences analysis reveals that exposure to this shock operates predominantly through workers' local labor market versus industry, that greater upstream exposure via suppliers can offset the adverse impact of own and downstream exposure, and that workers initially employed outside manufacturing generally exhibit relative earnings growth as a result of the liberalization.