Firm Dynamics and Employment Outcomes
In a market economy, firm foundations and closures are important drivers of resource (re)allocation, structural change, and economic development which is particularly important with respect to the economic transformation of East Germany from a state-directed to a market economy. At the same time, job displacement coming along with structural change may have serious consequences for affected employees, such as unemployment, earnings losses, or lower job quality in a new job. This research group uses microeconometric methods to analyze foundation, evolution, and failure of firms, the amount and quality of jobs created by new firms and the consequences of firm closures for employees, in particular in terms of labor market outcomes such as employment and wages.
Research ClusterProductivity and Innovation
01.2020 ‐ 12.2023
The Rise of Populist Parties in Europe: The Dark Side of Globalization and Technological Change?
The ultimate goal of the project is to assess whether economic hardship, caused by forces hitting open economies - typically viewed as being beyond the control of individual voters and national authorities - can explain the recent success of populist and nationalist movements in the EU.
01.2019 ‐ 12.2021
MICROPROD („Raising EU Productivity: Lessons from Improved Micro Data“)
The goal of MICROPROD is to contribute to a greater understanding of the challenges brought about in Europe by the fourth industrial revolution and the associated ‘productivity puzzle’ in a context of globalisation and digitisation, and to provide alternative policy options to better address these challenges.
This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 764810.
07.2018 ‐ 12.2020
Firm Wage Differentials in Imperfect Labour Markets: The Role of Market Power and Industrial Relations in Rent Splitting between Workers and Firms
German Research Foundation (DFG)
The main purpose of this proposal is to grasp a firmer understanding of how employment rents are split between workers and employers in imperfect labour markets and how labour market institutions, such as unions and works councils, influence the distribution of rents. In that it not only promises new insights into the wage formation process and the likely consequences of important labour market trends like falling unionisation and worker codetermination, but also promises to inform important public policy debates, such as which rights should be granted to organised labour.
02.2019 ‐ 09.2019
Evaluation of the IAB Establishment Panel 2018 and Preparation of a Results Report for West and East Germany
Final report: Fehlende Fachkräfte in Deutschland – Unterschiede in den Betrieben und mögliche Erklärungsfaktoren: Ergebnisse aus dem IAB-Betriebspanel 2018. IAB-Forschungsbericht 10/2019. (in German, English abstract available)
04.2016 ‐ 03.2019
Wage and Employment Effects of Bankruptcies
German Research Foundation (DFG)
The project analyzes the process and the consequences of firm failure. For the first time, evidence on the consequences of small firms’ bankruptcy on employees’ earnings and wages is provided. The project e.g. shows that employees of small firms are more likely to see their employer failing but, at the same time, face smaller earnings and wage losses than employees displaced from larger firms. Check the below research articles for further insights.
01.2018 ‐ 12.2018
Evaluation of the IAB Establishment Panel 2017 and Preparation of a Results Report for West and East Germany
Final report: Lohnunterschiede zwischen Betrieben in Ost- und Westdeutschland: Ausmaß und mögliche Erklärungsfaktoren. Ergebnisse aus dem IAB-Betriebspanel 2017. IAB-Forschungsbericht 6/2018. (in German, English abstract available)
01.2017 ‐ 09.2017
Evaluation of the IAB Establishment Panel 2016 and Preparation of a Results Report for West and East Germany
Final report: Produktivitätsunterschiede zwischen West- und Ostdeutschland und mögliche Erklärungsfaktoren. Ergebnisse aus dem IAB-Betriebspanel 2016. IAB-Forschungsbericht 16/2017. (in German, English abstract available)
The Impact of Female Managers on the Gender Pay Gap: Evidence from Linked Employer–Employee Data for Germany
in: Economics Letters, No. 3, 2013
We find that increasing the female share in first-level management by 10% points decreases the unexplained within-job gender pay gap by 0.5 log points. The effect is more pronounced for the female share in second-level than in first-level management.
Teacher Experience and the Class Size Effect - Experimental Evidence
in: Journal of Public Economics, 2013
We analyze teacher experience as a moderating factor for the effect of class size reduction on student achievement in the early grades using data from the Tennessee STAR experiment with random assignment of teachers and students to classes of different sizes. The analysis is motivated by the high costs of class size reductions and the need to identify the circumstances under which this investment is most rewarding. We find a class size effect only for senior teachers. The effect exists at all deciles of the achievement distribution but is less pronounced at lower deciles. We further show that senior teachers outperform rookies only in small classes. Interestingly, the class size effect is likely due to a higher quality of instruction in small classes.
Women Move Differently: Job Separations and Gender
in: Journal of Labor Research, No. 4, 2012
Using a large German linked employer–employee data set and methods of competing risks analysis, this paper investigates gender differences in job separation rates to employment and nonemployment. In line with descriptive evidence, we find lower job-to-job and higher job-to-nonemployment transition probabilities for women than men when controlling for individual and workplace characteristics and unobserved plant heterogeneity. These differences vanish once we allow these characteristics to affect separations differently by gender. When additionally controlling for wages, we find that both separation rates are considerably lower and also significantly less wage-elastic for women than for men, suggesting an interplay of gender differences in transition behaviour and the gender pay gap.
Works Councils and Establishment Productivity
in: ILR Review, No. 4, 2012
Declining union density in many industrialized countries increases interest in alternative forms of employee representation, such as works councils. The German works council is one of the most powerful forms of worker representation in developed countries, but little is known of its causal effect on productivity. The author used a large linked employer-employee panel data set to examine this issue. Comparing firms with and without a works council, the author finds that establishments with a works council are on average 6.4% more productive; but he also presents evidence that this figure underestimates the true productivity effect of works councils.
The Productivity Effect of Temporary Agency Work: Evidence from German Panel Data
in: The Economic Journal, No. 562, 2012
This study investigates the effect of temporary agency work on the user firm’s productivity. We hypothesise that using temporary agency work to enhance numerical flexibility and to screen job candidates may increase productivity, whereas temporary workers’ lower firm-specific human capital and spillover effects on the user’s permanent employees may adversely affect productivity. Other than the sparse existing literature on this issue, we exploit a large panel data set and control for time-invariant and time-varying unobserved heterogeneity by using the system GMM estimator. We find a robust hump-shaped effect of the extent of temporary agency work on the user firm’s productivity.
Explaining Wage Losses after Job Displacement: Employer Size and Lost Firm Rents
in: IWH Discussion Papers, No. 32, 2017
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.
Identifying Bankruptcies in German Social Security Data
in: FDZ-Methodenreport, No. 10, 2017
Many empirical studies about firm exits point out that it is important to distinguish between different types of closures, e.g., voluntary and involuntary liquidations. This report describes how exits due to bankruptcies can be identified in the German Establishment History Panel (BHP). In contrast to other closures, bankruptcies can be unambiguously regarded as indica-tion for economic failure and can therefore be interpreted as involuntary exits.
Plant-level Employment Development before Collective Displacements: Comparing Mass Layoffs, Plant Closures, and Bankruptcies
in: IWH Discussion Papers, No. 27, 2016
To assess to what extent collective job displacements can be regarded as unanticipated exogenous shocks for affected employees, we analyze plant-level employment patterns before bankruptcy, plant closure without bankruptcy, and mass layoff. Utilizing administrative data covering all West German private sector plants, we find no systematic employment reductions prior to mass layoffs, a strong and long-lasting reduction prior to closures, and a much shorter shadow of death preceding bankruptcy. Our analysis of worker flows underlines that bankruptcies seem to struggle for survival while closures follow a shrinking strategy. We conclude that the scope of worker anticipation of upcoming job loss is smallest for mass layoffs and largest for closures without bankruptcy.