Professor Benjamin Schoefer, PhD

Professor Benjamin Schoefer, PhD
Current Position

since 5/22

Research Fellow Department of Laws, Regulations and Factor Markets

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

since 7/22

Associate Professor

University of California, Berkeley

Research Interests

  • macroeconomics
  • labour economics
  • corporate finance

Benjamin Schoefer joined the institute as a Research Fellow in May 2022. His research focuses on macroeconomics, labour economics, and corporate finance.

Benjamin Schoefer is Associate Professor in the Department of Economics at University of California, Berkeley. He received his PhD from Harvard University.

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Professor Benjamin Schoefer, PhD
Professor Benjamin Schoefer, PhD
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Worker Beliefs about Outside Options

Simon Jäger Christopher Roth Nina Roussille Benjamin Schoefer

in: Quarterly Journal of Economics, forthcoming


Standard labor market models assume that workers hold accurate beliefs about the external wage distribution, and hence their outside options with other employers. We test this assumption by comparing German workers’ beliefs about outside options with objective benchmarks. First, we find that workers wrongly anchor their beliefs about outside options on their current wage: workers that would experience a 10% wage change if switching to their outside option only expect a 1% change. Second, workers in low-paying firms underestimate wages elsewhere. Third, in response to information about the wages of similar workers, respondents correct their beliefs about their outside options and change their job search and wage negotiation intentions. Finally, we analyze the consequences of anchoring in a simple equilibrium model. In the model, anchored beliefs keep overly pessimistic workers stuck in low-wage jobs, which gives rise to monopsony power and labor market segmentation.

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Reservation Raises: The Aggregate Labour Supply Curve at the Extensive Margin

Preston Mui Benjamin Schoefer

in: Review of Economic Studies, forthcoming


We measure desired labour supply at the extensive (employment) margin in two representative surveys of the U.S. and German populations. We elicit reservation raises: the percent wage change that renders a given individual indifferent between employment and nonemployment. It is equal to her reservation wage divided by her actual, or potential, wage. The reservation raise distribution is the nonparametric aggregate labour supply curve. Locally, the curve exhibits large short-run elasticities above 3, consistent with business cycle evidence. For larger upward shifts, arc elasticities shrink towards 0.5, consistent with quasi-experimental evidence from tax holidays. Existing models fail to match this nonconstant, asymmetric curve.

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Productivity, Place, and Plants

Benjamin Schoefer Oren Ziv

in: Review of Economics and Statistics, forthcoming


Why do cities differ so much in productivity? A long literature has sought out systematic sources, such as inherent productivity advantages, market access, agglomeration forces, or sorting. We document that up to three quarters of the measured regional productivity dispersion is spurious, reflecting the “luck of the draw” of finite counts of idiosyncratically heterogeneous plants that happen to operate in a given location. The patterns are even more pronounced for new plants, hold for alternative productivity measures, and broadly extend to European countries. This large role for individual plants suggests a smaller role for places in driving regional differences.

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Working Papers

The Financial Channel of Wage Rigidity

Benjamin Schoefer

in: Econometrics Laboratory (EML), April 2022


I propose a financial channel of wage rigidity. In recessions, rigid average wages squeeze cash flows, forcing firms to cut hiring due to financial constraints. Indeed, empirical cash flows and profits would turn acyclical if wages were only moderately more procyclical. I study this channel in a search and matching model with financial constraints and wage rigidity among incumbent workers (but flexible new hires’ wages). While neither feature generates amplification individually, their interaction can account for much of the empirical labor market fluctuations—breaking the neutrality of incumbents’ wages for hiring, and showing that financial amplification of business cycles requires wage rigidity.

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