Macroeconomics and Labor Markets (en) Archive - Page 2 of 5 - IAB - Institut für Arbeitsmarkt- und Berufsforschung

The Allocation of Time and Remote Work — With Evidence on Employee Engagement and Remote Work

This paper studies the allocation of time among workers across jobs that vary in their remote intensity.

The proportion of employees who work remotely has surged from under 5% to over 60% between January to March 2020, converging to roughly 28% of days working from home versus in the office as of 2023. Motivated by these large structural shifts in the nature of work, this paper studies the allocation of time among workers across jobs that vary in their remote intensity. Drawing on the American Time Use Survey between 2019 and 2022, I document three main results. First, time allocated to leisure increased and to work decreased among more remote jobs with no significant change in home production. Second, these changes were concentrated among males, singles, and those without children. Third, these declines in labor supply cannot explain the recent decline in productivity; in contrast, sectors with greater remote work intensity exhibited greater productivity growth. In addition, I will also present results from a complementary paper that draws on employee engagement and labor market data from over 70,000 workers. While there is a positive association between always WFH and satisfaction, it vanishes after controlling for employee compensation, occupation, demographics, and workplace environment characteristics (e.g., feeling appreciated at work). Employees who always WFH also have a higher intention to leave their job than employees who never work from home. In contrast, less frequent WFH arrangements relate to higher satisfaction but no difference in intention to leave, and their impact is limited relative to workplace environment characteristics.

The Wage of Temporary Agency Workers

Using French administrative data we estimate the wage gap distribution between in-house and temporary agency workers.

Using French administrative data we estimate the wage gap distribution between in-house and temporary agency workers working in the same establishment and the same occupation. The average wage gap is about 3%, but the gap is negative in more than 25% of establishment × occupation cells. We develop and estimate a search and matching model which shows that the wage gap depends on the cost of job vacancies, on labor market frictions and on the labor management costs of temporary agencies for temp workers and user firms for in-house workers. Only a portion of the wage gap is efficient. A simple formula allows for estimating the taxes and subsidies that eliminate its inefficient component.

The dovish turnaround: Germany’s social benefit reform and job findings

On the labour markets, the last decades were characterised by structural supply-side reforms in many countries.

On the labour markets, the last decades were characterised by structural supply-side reforms in many countries. Following its hawkish reforms from the 2000s, recently, Germany made a dovish turnaround. Conditions in basic income support for unemployed became more generous. Before, a sanctions moratorium was applied. We analyse the consequences for job findings. Building on large administrative data, we use a labour market matching and a control group approach. The moratorium dampened job findings by more than seven percent and the subsequent benefit reform by more than six percent – about half of the positive effect of the 2000s reform.

Wage Setting Protocols and Labor Market Conditions: Theory and Evidence

We theoretically and empirically examine how firms’ choices of wage-setting protocols respond to labor market conditions.

We theoretically and empirically examine how firms’ choices of wage-setting protocols respond to labor market conditions. We develop a simple model in which workers may be able to send multiple job applications and firms choose between posting wages and Nash bargaining. Posting a wage allows the firm to commit to lower wages than would be negotiated ex post, but eliminates the ability to respond to a competing offer, should the worker have one. We show that higher productivity lowers both the application-vacancy ratio and the fraction of firms posting a wage. On the other hand, an increase in the number of applications per worker raises the application-vacancy ratio while lowering the fraction of firms posting a wage. As a result, the equilibrium fraction of firms posting a wage may be positively or negatively correlated with the application-vacancy ratio, depending on the source of shocks. The model also implies that an increase in the number of applications per worker may lead to a decrease in the number of posting firms rather than a change in the wages posted by those firms. Empirically, we demonstrate that the model’s predictions are confirmed in a novel dataset from an online job board.

The Impact of Multinationals Along the Job Ladder

Multinational affiliates are more productive than domestic firms, so how do they affect a host country through the labor market?

Multinational affiliates are more productive than domestic firms, so how do they affect a host country through the labor market? We use data for Norway to show that the labor market is characterized by a job ladder, with multinationals on the upper rungs. We calibrate a general equilibrium job ladder model with endogenous multinational entry to the Norwegian data. In a counterfactual where multinationals face an infinite entry cost, payments to labor fall and profits of domestic firms rise, but the impact is heterogeneous. Competition for workers increases low down on the job ladder, while it decreases high up.

Labor Market Discrimination and the Racial Unemployment Gap: Can Monetary Policy Make a Difference?

Black workers experience a higher unemployment rate, as well as more volatile employment dynamics, than white workers.

Black workers experience a higher unemployment rate, as well as more volatile employment dynamics, than white workers, and the racial unemployment rate gap is largely unexplained by observable characteristics. We develop a New Keynesian model with search and matching frictions in the labor market, endogenous separations, and employer discrimination against Black workers to explain these outcomes. The model is consistent with key features of the aggregate economy and is able to explain key labor market disparities across racial groups. We then use this model to assess the effects of the Federal Reserve's new monetary policy framework—interest rates respond to shortfalls of employment from its maximum level rather than deviations—on racial inequality in the labor market. We find that shifting from a Deviations interest rate rule to a Shortfalls rule reduces the racial unemployment rate gap and the model-based measures of labor market discrimination but increases the average inflation rate. From a welfare perspective, we find that the Shortfalls approach does not do much to reduce racial inequality in our model economy.

Wage Setting in Times of High and Low Inflation

The recent surge in inflation led many unions and firms to alter their bargaining and wage-setting policies.

The recent surge in inflation led many unions and firms to alter their bargaining and wage-setting policies. Using novel German firm-level survey data, we document the extent of state dependency of wage-setting behavior across firms and workers given high vs. low inflation environments. The granularity of our micro-level data also allows us to study heterogeneous patterns across sectors, firms, and workers. Embedding the empirical findings in a New Keynesian model with heterogeneous firms, we then analyze the implications of state-dependent wage-setting behavior for the transmission and propagation of shocks. Lastly, we discuss the interaction of state-dependent wage setting with firms' monopsony power and how these features impact monetary policy and the slope of the Phillips curve.

The European Unemployment Puzzle: Implications from Population Aging

We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks.

We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the considerable extent to which demographic changes over the last 30 years contribute to the decline of unemployment rate. Our findings have important policy implications given the expected aging of the working population in Europe. Furthermore, lowering inflation volatility is less costly in terms of higher unemployment volatility. It suggests that optimal monetary policy is more hawkish in the older society. Our results hint also at a partial reversal of the European-US unemployment puzzle due to the fact that in the US the share of young workers is expected to remain robust.

The Dark Shadow of Benefit Reforms in the Open Economy

This paper analyzes the open-economy spillover effects of labor market reforms under incomplete insurance. Using microeconomic data, we document a boost in the tradable sector in the aftermath of the German Hartz IV reform. In our model, this phenomenon can be explained by an increase in household savings due to higher precautionary savings in response to the reduction in the generosity of unemployment insurance (Hartz IV). Besides reducing unemployment in the reforming country, lower unemployment benefits generate long-run negative consumption spillovers in a monetary union, which we call the dark shadow of labor market reforms. Our model can match various German trends post Hartz IV reform, such as: i) a lasting increase in net foreign asset position, ii) short-term expansion of the tradable sector relative to the non-tradable sector, and iii) continued depreciation of the real exchange rate. By contrast, simulations of German wage moderation result in qualitatively different open-economy effects that are not in line with the empirical patterns for Germany.

Labor market beliefs and the gender wage gap

We study the role of labor market beliefs in the gender pay gap. We find that, on average, women expect to receive lower salaries than men and also expect to receive fewer offers when employed.

We study the role of labor market beliefs in the gender pay gap. We find that, on average, women expect to receive lower salaries than men and also expect to receive fewer offers when employed. Gender differences in expectations explain a sizable fraction of the residual gap in reservation wages. We estimate a partial equilibrium job search model that incorporates worker heterogeneity in beliefs about the wage offer distribution, arrival rates, and separation rate. Counterfactual exercises show that labor market beliefs play an important role in the gender wage gap, but matter little for the gender differences in welfare. Eliminating gender differences in the actual offer distribution, by contrast, decreases the gender gap in pay and welfare.