Industry Mix, Local Labor Markets, and the Incidence of Trade Shocks
Steffen Müller, Jens Stegmaier, Moises Yi
Journal of Labor Economics,
forthcoming
Abstract
We analyze how skill transferability and the local industry mix affect the adjustment costs of workers hit by a trade shock. Using German administrative data and novel measures of economic distance we construct an index of labor market absorptiveness that captures the degree to which workers from a particular industry are able to reallocate into other jobs. Among manufacturing workers, we find that the earnings loss associated with increased import exposure is much higher for those who live in the least absorptive regions. We conclude that the local industry composition plays an important role in the adjustment processes of workers.
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Organized Labor, Labor Market Imperfections, and Employer Wage Premia
Sabien Dobbelaere, Boris Hirsch, Steffen Müller, Georg Neuschäffer
ILR Review,
No. 3,
2024
Abstract
This article examines how collective bargaining through unions and workplace codetermination through works councils relate to labor market imperfections and how labor market imperfections relate to employer wage premia. Based on representative German plant data for the years 1999-2016, the authors document that 70% of employers pay wages below the marginal revenue product of labor and 30% pay wages above that level. Findings further show that the prevalence of wage markdowns is significantly smaller when organized labor is present, and that the ratio of wages to the marginal revenue product of labor is significantly larger. Finally, the authors document a close link between labor market imperfections and mean employer wage premia, that is, wage differences between employers corrected for worker sorting.
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Who Benefits from Place-based Policies? Evidence from Matched Employer-Employee Data
Philipp Grunau, Florian Hoffmann, Thomas Lemieux, Mirko Titze
IWH Discussion Papers,
No. 11,
2024
Abstract
We study the wage and employment effects of a German place-based policy using a research design that exploits conditionally exogenous EU-wide rules governing the program parameters at the regional level. The place-based program subsidizes investments to create jobs with a subsidy rate that varies across labor market regions. The analysis uses matched data on the universe of establishments and their employees, establishment-level panel data on program participation, and regional scores that generate spatial discontinuities in program eligibility and generosity. These rich data enable us to study the incidence of the place-based program on different groups of individuals. We find that the program helps establishments create jobs that disproportionately benefit younger and less-educated workers. Funded establishments increase their wages but, unlike employment, wage gains do not persist in the long run. Employment effects estimated at the local area level are slightly larger than establishment-level estimates, suggesting limited spillover effects. Using subsidy rates as an instrumental variable for actual subsidies indicates that it costs approximately EUR 25,000 to create a new job in the economically disadvantaged areas targeted by the program.
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27.03.2024 • 11/2024
East Germany's lead over West Germany in terms of growth is bound to shrink – Implications of the Joint Economic Forecast Spring 2024 for the East German economy
In 2023, the East German economy is expected to have expanded by 0.5%, while it shrank by 0.3% in Germany as a whole. The Halle Institute for Economic Research (IWH) forecasts an East German growth rate of 0.5% again for 2024, and a rate of 1.5% in 2025. The unemployment rate is expected to be 7.3% in 2024 and 7.1% in the following year.
Oliver Holtemöller
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27.03.2024 • 10/2024
Joint Economic Forecast 1/2024: Headwinds from Germany and abroad: institutes revise forecast significantly downwards
According to Germany’s five leading economic research institutes, the country’s economy shows cyclical and structural weaknesses. In their spring report, they revised their GDP forecast for the current year significantly downward to 0.1%. In the recent fall report, the figure was still 1.3%. Expectations for the coming year are almost unchanged at 1.4% (previously 1.5%). However, the level of economic activity will then be over 30 billion euros lower due to the current weak phase.
Oliver Holtemöller
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Do Public Bank Guarantees Affect Labor Market Outcomes? Evidence from Individual Employment and Wages
Laura Baessler, Georg Gebhardt, Reint E. Gropp, Andre Guettler, Ahmet Taskin
IWH Discussion Papers,
No. 7,
2024
Abstract
We investigate whether employees in Germany benefit from public bank guarantees in terms of employment probability and wages. To that end, we exploit the removal of public bank guarantees in Germany in 2001 as a quasi-natural experiment. Our results show that bank guarantees lead to higher employment, but lower wage prospects for employees after working in affected establishments. Overall the results suggest that employees do not benefit from bank guarantees.
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07.03.2024 • 6/2024
Germany stuck in stagnation ‒ private consumption remains below pre-pandemic levels
Weak consumption and investment in Germany are partly due to inflation-induced losses in real income and declines in energy-intensive production. However, concerns about the competitive strength of the German economy are also weighing on the willingness of private households and companies to spend. In its spring forecast, the Halle Institute for Economic Research (IWH) expects gross domestic product to expand by just 0.2% in 2024, while the forecast for 2025 includes growth of 1.5% (eastern Germany: 0.5% and 1.4%). Last December, the IWH forecast had assumed an increase of 0.5% for Germany in 2024 and of 1.2% for 2025.
Oliver Holtemöller
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A Congestion Theory of Unemployment Fluctuations
Yusuf Mercan, Benjamin Schoefer, Petr Sedláček
American Economic Journal: Macroeconomics,
No. 1,
2024
Abstract
We propose a theory of unemployment fluctuations in which newhires and incumbentworkers are imperfect substitutes. Hence, attempts to hire away the unemployed during recessions diminish the marginal product of new hires, discouraging job creation. This single feature achieves a ten-fold increase in the volatility of hiring in an otherwise standard search model, produces a realistic Beveridge curve despite countercyclical separations, and explains 30–40% of U.S. unemployment fluctuations. Additionally, it explains the excess procyclicality of new hires’ wages, the cyclical labor wedge, countercyclical earnings losses from job displacement, and the limited steady-state effects of unemployment insurance.
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IWH-Tarif-Check: Keine realen Netto-Tariflohnzuwächse für Beschäftigte im öffentlichen Dienst der Länder
Oliver Holtemöller, Birgit Schultz
IWH Tarif-Check,
No. 3,
2023
Abstract
*** „Inflationsausgleichszahlung“ und Tariflohnsteigerungen dürften Verbraucherpreis-
inflation nur knapp ausgleichen. *** Die Tarifvertragsparteien des öffentlichen Dienstes der Länder haben sich vor kurzem auf einen neuen Tariflohnabschluss geeinigt: Es wurde vereinbart, dass Einmalzahlungen von insgesamt 3 000 Euro in elf Monats-
beträgen abgabenfrei als so genannte Inflationsausgleichsprämie gezahlt werden. Bereits im Dezember 2023 soll ein Teilbetrag in Höhe von 1 800 Euro ausgezahlt werden, von Januar bis einschließlich Oktober gibt es monatlich jeweils 120 Euro. Die regulären Tabellenentgelte erhöhen sich währenddessen nicht. Erst ab November 2024, wenn die Inflationsausgleichszahlung wegfällt, gibt es eine Stufenerhöhung über 200 Euro für alle Beschäftigten. Auf diese setzt ab Februar 2025 dann eine reguläre prozentuale Erhöhung von 5,5% auf. Der Tarifvertrag läuft bis Ende Oktober 2025.
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14.12.2023 • 30/2023
Exports and private consumption weak ‒ Germany is waiting for an economic upturn
In the winter of 2023/2024, the German economy is still in a downturn. Parts of industry have lost competitiveness, real incomes have fallen in 2023 due to inflation, and there is uncertainty about the course of fiscal policy. However, rising real incomes and a slight increase in exports should cause a pickup from spring onwards. The Halle Institute for Economic Research (IWH) expects gross domestic product (GDP) to fall by 0.3% in 2023 and to expand by 0.5% in 2024 (East Germany: +0.5% and +0.7%). In September, the IWH forecast had assumed a decline of 0.5% for Germany in 2023 and expected growth of 0.9% for the coming year.
Oliver Holtemöller
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