Structural Change and Productivity

The department of structural change and productivity analyses dynamics of structural change driven, for instance, by globalization or technological progress. Structural change causes prosperity and demise of regions, industries, and firms, and we use microeconometric methods to empirically assess these effects. The department staffs the secretariat of the Competitiveness Research Network (CompNet), which is a hub for research and policy analysis on competitiveness and productivity, and coordinates MICROPROD (EU Horizon 2020).

Our focus is on productivity, innovation, and labour market outcomes such as employment and wages. We devote special attention to the transformation process of the East German regions, initiated by the Fall of the Berlin Wall and the German unification. The Research Clusters "Institutions and Social Norms" and "Productivity and Innovation" build the framework for our research agenda and the corresponding policy advice.

Your contact

Professor Dr Steffen Müller
Professor Dr Steffen Müller
Leiter - Department Structural Change and Productivity
Send Message +49 345 7753-708

Refereed Publications

cover_american-economic-journal-macroeconomics.jpg

Ten Facts on Declining Business Dynamism and Lessons from Endogenous Growth Theory

Ufuk Akcigit Sina T. Ates

in: American Economic Journal: Macroeconomics, forthcoming

Abstract

In this paper, we review the literature on declining business dynamism and its implications in the United States and propose a unifying theory to analyze the symptoms and the potential causes of this decline. We first highlight 10 pronounced stylized facts related to declining business dynamism documented in the literature and discuss some of the existing attempts to explain them. We then describe a theoretical framework of endogenous markups, innovation, and competition that can potentially speak to all of these facts jointly. We next explore some theoretical predictions of this framework, which are shaped by two interacting forces: a composition effect that determines the market concentration and an incentive effect that determines how firms respond to a given concentration in the economy. The results highlight that a decline in knowledge diffusion between frontier and laggard firms could be a significant driver of empirical trends observed in the data. This study emphasizes the potential of growth theory for the analysis of factors behind declining business dynamism and the need for further investigation in this direction.

read publication

cover_international-journal-of-computational-economics-and-econometrics.jpg

Innovation Cooperation in East and West Germany: A Study on the Regional and Technological Impact

Uwe Cantner Alexander Giebler Jutta Günther Maria Kristalova Andreas Meder

in: International Journal of Computational Economics and Econometrics, forthcoming

Abstract

In this paper, we investigate the impact of regional and technological innovation systems on innovation cooperation. We develop an indicator applicable to regions, which demonstrates the relative regional impact on innovation cooperation. Applying this method to German patent data, we find that regional differences in the degree of innovation cooperation do not only depend on the technology structure of a region but also on specific regional effects. High-tech oriented regions, whether east or west, are not automatically highly cooperative regions. East German regions have experienced a dynamic development of innovation cooperation since re-unification in 1990. Their cooperation intensity remains higher than in West German regions.

read publication

cover_journal-of-the-european-economic-association.gif

Explaining Wage Losses after Job Displacement: Employer Size and Lost Firm Rents

Daniel Fackler Steffen Müller Jens Stegmaier

in: Journal of the European Economic Association, forthcoming

Abstract

Why does job displacement, e.g., following import competition, technological change, or economic downturns, result in permanent wage losses? The job displacement literature is silent on whether wage losses after job displacement are driven by lost firm wage premiums or worker productivity depreciations. We therefore estimate losses in wages and firm wage premiums. Premiums are measured as firm effects from a two-way fixed-effects approach, as described in Abowd, Kramarz, and Margolis (1999). Using German administrative data, we find that wage losses are, on average, fully explained by losses in firm wage premiums and that premium losses are largely permanent. We show that losses in wages and premiums are minor for workers displaced from small plants and strongly increase with pre-displacement firm size, which provides an explanation for the large and persistent wage losses that have been found in previous studies mostly focusing on displacement from large employers.

read publication

Cover_economic_and_industrial_democracy.jpg

Paid Vacation Use: The Role of Works Councils

Laszlo Goerke Sabrina Jeworrek

in: Economic and Industrial Democracy, forthcoming

Abstract

The article investigates the relationship between codetermination at the plant level and paid vacation in Germany. From a legal perspective, works councils have no impact on vacation entitlements, but they can affect their use. Employing data from the German Socio-Economic Panel (SOEP), the study finds that male employees who work in an establishment, in which a works council exists, take almost two additional days of paid vacation annually, relative to employees in an establishment without such institution. The effect for females is much smaller, if discernible at all. The data suggest that this gender gap might be due to the fact that women exploit vacation entitlements more comprehensively than men already in the absence of a works council.

read publication

cover_journal-of-human-resources.gif

The Urban Wage Premium in Imperfect Labour Markets

Boris Hirsch Elke J. Jahn Alan Manning Michael Oberfichtner

in: Journal of Human Resources, forthcoming

Abstract

Using administrative data for West Germany, this paper investigates whether part of the urban wage premium stems from greater competition in denser labor markets. We show that employers possess less wage-setting power in denser markets. We further document that an important part of the observed urban wage premia can be explained by greater competition in denser labor markets.

read publication

Working Papers

Organised Labour, Labour Market Imperfections, and Employer Wage Premia

Sabien Dobbelaer Boris Hirsch Steffen Müller Georg Neuschäffer

in: Tinbergen Institute Discussion Paper, No. 20, 2020

Abstract

This paper examines how collective bargaining through unions and workplace co-determination through works councils shape labour market imperfections and how labourmarket imperfections matter for employer wage premia. Based on representative Germanplant data for the years 1999{2016, we document that labour market imperfections arethe norm rather than the exception. Wage mark-downs, that is wages below the marginalrevenue product of labour rooted in employers' monopsony power, are the most prevalentoutcome. We further nd that both types of organised labour are accompanied by asmaller prevalence and intensity of wage mark-downs whereas the opposite holds for wagemark-ups, that is wages above the marginal revenue product of labour rooted in workers'monopoly power. Finally, we document a close link between our production-based labourmarket imperfection measures and employer wage premia. The prevalence and intensityof wage mark-downs are associated with a smaller level and larger dispersion of premiawhereas wage mark-ups are only accompanied by a higher premium level.

read publication

cover_iza-discussion-papers-2020-november.png

Organised Labour, Labour Market Imperfections, and Employer Wage Premia

Sabien Dobbelaer Boris Hirsch Steffen Müller Georg Neuschäffer

in: IZA Discussion Paper, No. 13909, 2020

Abstract

This paper examines how collective bargaining through unions and workplace co-determination through works councils shape labour market imperfections and how labourmarket imperfections matter for employer wage premia. Based on representative Germanplant data for the years 1999{2016, we document that labour market imperfections arethe norm rather than the exception. Wage mark-downs, that is wages below the marginalrevenue product of labour rooted in employers' monopsony power, are the most prevalentoutcome. We further nd that both types of organised labour are accompanied by asmaller prevalence and intensity of wage mark-downs whereas the opposite holds for wagemark-ups, that is wages above the marginal revenue product of labour rooted in workers'monopoly power. Finally, we document a close link between our production-based labourmarket imperfection measures and employer wage premia. The prevalence and intensityof wage mark-downs are associated with a smaller level and larger dispersion of premiawhereas wage mark-ups are only accompanied by a higher premium level.

read publication

cover_DP_2020-19.jpg

Robot Adoption at German Plants

Liuchun Deng Verena Plümpe Jens Stegmaier

in: IWH Discussion Papers, No. 19, 2020

Abstract

Using a newly collected dataset of robot use at the plant level from 2014 to 2018, we provide the first microscopic portrait of robotisation in Germany and study the potential determinants of robot adoption. Our descriptive analysis uncovers five stylised facts concerning both extensive and, perhaps more importantly, intensive margin of plant-level robot use: (1) Robot use is relatively rare with only 1.55% German plants using robots in 2018. (2) The distribution of robots is highly skewed. (3) New robot adopters contribute substantially to the recent robotisation. (4) Robot users are exceptional along several dimensions of plant-level characteristics. (5) Heterogeneity in robot types matters. Our regression results further suggest plant size, low-skilled labour share, and exporter status to have strong and positive effect on future probability of robot adoption. Manufacturing plants impacted by the introduction of minimum wage in 2015 are also more likely to adopt robots. However, controlling for plant size, we find that plant-level productivity has no, if not negative, impact on robot adoption.

read publication

Immigration and Entrepreneurship in the United States

Pierre Azoulay Benjamin Jones J. Daniel Kim Javier Miranda

in: NBER Working Paper, No. 27778, 2020

Abstract

Immigration can expand labour supply and create greater competition for native-born workers. But immigrants may also start new firms, expanding labour demand. This paper uses U.S. administrative data and other data resources to study the role of immigrants in entrepreneurship. We ask how often immigrants start companies, how many jobs these firms create, and how these firms compare with those founded by U.S.-born individuals. A simple model provides a measurement framework for addressing the dual roles of immigrants as founders and workers. The findings suggest that immigrants act more as "job creators" than "job takers" and that non-U.S. born founders play outsized roles in U.S. high-growth entrepreneurship. 

read publication

cover_DP_2020-14.jpg

The East-West German Gap in Revenue Productivity: Just a Tale of Output Prices?

Matthias Mertens Steffen Müller

in: IWH Discussion Papers, No. 14, 2020

Abstract

East German manufacturers’ revenue productivity (value-added per worker) is some 8 (25) percent below West German levels, even three decades after German unification. Using firm-product-level data containing information on product quantities and prices, we analyse the role of product specialisation and reject the prominent ‚extended work bench hypothesis‘, stating a specialisation of Eastern firms in the intermediate input production as explanation for these sustained productivity differences. We decompose the East’s revenue productivity disadvantage into Eastern firms selling at lower prices and producing more physical output for given amounts of inputs within ten-digit product industries. This suggests that Eastern firms specialise vertically in simpler product varieties generating less consumer value but being manufactured with less or cheaper inputs. Vertical specialisation, however, does not explain the productivity gap as Eastern firms are physically less productive for given product prices, implying a genuine physical productivity disadvantage of Eastern compared to Western firms.

read publication
Mitglied der Leibniz-Gemeinschaft LogoTotal-Equality-LogoWeltoffen Logo