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Dr Matthias Mertens

Dr Matthias Mertens
Current Position

since 2/21

Head of the Research Group Market Power, Input Costs, and Technology

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

since 10/19

Head of IWH-CompNet-Team

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

since 10/15

Member of the Department Structural Change and Productivity

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

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Research Interests
  • product and input market power
  • firm productivity
  • production costs of firms

Matthias Mertens joined the Department of Structural Change and Productivity in October 2015. His research focuses on product and input market power, production costs of firms, and firm productivity.

Matthias Mertens holds a masters' degree in economics and in economic law, both from Martin Luther University Halle-Wittenberg. He optained his PhD from Otto von Guericke University Magdeburg. From January to May 2023 he was a visiting researcher at Harvard University.

Your contact

Dr Matthias Mertens
Dr Matthias Mertens
Mitglied - Department Structural Change and Productivity
Send Message +49 345 7753-707 Personal page

Publications

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Labor Market Power and Between-Firm Wage (In)Equality

Matthias Mertens

in: International Journal of Industrial Organization, December 2023

Abstract

I study how labor market power affects firm wage differences using German manufacturing sector firm-level data (1995-2016). In past decades, labor market power increasingly moderated rising between-firm wage differences. This is because high-paying firms possess high and increasing labor market power and pay wages below competitive levels, whereas low-wage firms pay competitive or even above competitive wages. Over time, large, high-wage, high-productivity firms generate increasingly large labor market rents while charging comparably low product markups. This provides novel insights on why such top firms are profitable and successful. Using micro-aggregated data covering most economic sectors, I validate key results for multiple European countries.

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Import Competition and Firm Productivity: Evidence from German Manufacturing

Richard Bräuer Matthias Mertens Viktor Slavtchev

in: World Economy, No. 8, 2023

Abstract

Abstract We study how different types of import competition affect firm productivity using firm-product data from German manufacturing (2000-2014). Competition from high-income countries causes affected domestic firms to increase their productivity and lower their prices. Oppositely, import competition from low-wage countries does not lead to firm productivity gains. Instead, domestic firms' sales and input usage decline. Our findings confirm the intuition of ladder models that the effect of competition depends on the "closeness" of competitors. They are in line with widespread X-inefficiencies throughout the economy, which firms reduce in response to competition from high-income countries.

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European Firm Concentration and Aggregate Productivity

Tommaso Bighelli Filippo di Mauro Marc Melitz Matthias Mertens

in: Journal of the European Economic Association, No. 2, 2023

Abstract

This paper derives a European Herfindahl–Hirschman concentration index from 15 micro-aggregated country datasets. In the last decade, European concentration rose due to a reallocation of economic activity toward large and concentrated industries. Over the same period, productivity gains from an increasing allocative efficiency of the European market accounted for 50% of European productivity growth while markups stayed constant. Using country-industry variation, we show that changes in concentration are positively associated with changes in productivity and allocative efficiency. This holds across most sectors and countries and supports the notion that rising concentration in Europe reflects a more efficient market environment rather than weak competition and rising market power.

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Working Papers

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Declining Business Dynamism in Europe: The Role of Shocks, Market Power, and Technology

Filippo Biondi Sergio Inferrera Matthias Mertens Javier Miranda

in: IWH Discussion Papers, No. 19, 2023

Abstract

We study the changing patterns of business dynamism in Europe after 2000 using novel micro-aggregated data that we collect for 19 European countries. In all of them, we document a decline in job reallocation rates that concerns most economic sectors. This is mainly driven by dynamics within sectors, size classes, and age classes rather than by compositional changes. Large and mature firms show the strongest decline in job reallocation rates. Simultaneously, the shares of employment and sales of young firms decline. Consistent with US evidence, firms’ employment changes have become less responsive to productivity. However, the dispersion of firms’ productivity shocks has decreased too. To enhance our understanding of these patterns, we derive a firm-level framework that relates changes in firms’ productivity, market power, and technology to job reallocation and firms’ responsiveness.

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Minimum Wages, Productivity, and Reallocation

Mirja Hälbig Matthias Mertens Steffen Müller

in: IZA Discussion Paper, No. 16160, 2023

Abstract

We study the productivity effect of the German national minimum wage by applying administrative firm data. At the firm level, we confirm positive effects on wages and negative employment effects and document higher productivity even net of output price increases. We find higher wages but no employment effects at the level of aggregate industry × region cells. The minimum wage increased aggregate productivity in manufacturing. We do not find that employment reallocation across firms contributed to these aggregate productivity gains, nor do we find improvements in allocative efficiency. Instead, the productivity gains from the minimum wage result from within-firm productivity improvements only.

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Minimum Wages, Productivity, and Reallocation

Mirja Hälbig Matthias Mertens Steffen Müller

in: IWH Discussion Papers, No. 8, 2023

Abstract

We study the productivity effect of the German national minimum wage by applying administrative firm data. At the firm level, we confirm positive effects on wages and negative employment effects and document higher productivity even net of output price increases. We find higher wages but no employment effects at the level of aggregate industry × region cells. The minimum wage increased aggregate productivity in manufacturing. We do not find that employment reallocation across firms contributed to these aggregate productivity gains, nor do we find improvements in allocative efficiency. Instead, the productivity gains from the minimum wage result from within-firm productivity improvements only.

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Browse all working papers

Keywords

Labour Market Productivity Green Transition East Germany
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