Hysteresis from Employer Subsidies
Emmanuel Saez, Benjamin Schoefer, David Seim
Journal of Public Economics,
August
2021
Abstract
This paper uses administrative data to analyze a large and 8-year long employer payroll tax rate cut in Sweden for young workers aged 26 or less. We replicate previous results documenting that during the earlier years of the reform, it raised youth employment among the treated workers, driven by labor demand (as workers’ take-home wages did not respond). First, drawing on additional years of data, this paper then documents that the longer-run effects during the reform are twice as large as the medium-run effects. Second, we document novel labor-demand-driven “hysteresis” from this policy – i.e. persistent employment effects even after the subsidy no longer applies – along two dimensions. Over the lifecycle, employment effects persist even after workers age out of eligibility. Three years after the repeal, employment remains elevated at the maximal reform level in the formerly subsidized ages. These hysteresis effects more than double the direct employment effects of the reform. Discrimination against young workers in job posting fell during the reform and does not bounce back after repeal, potentially explaining our results.
Read article
15.04.2021 • 11/2021
Pandemic delays upswing – Demography slows growth
In their spring report, the leading economic research institutes forecast an increase in gross domestic product of 3.7% in the current year and 3.9% in 2022. The renewed shutdown is delaying the economic recovery, but as soon as the risks of infection, particularly from vaccination, have been averted, a strong recovery will begin. The economy is likely to return to normal output levels around the start of the coming year.
Oliver Holtemöller
Read press release
30 Years after Reunification, Gross Domestic Product has Served its Purpose as an Indicator
Oliver Holtemöller
Wirtschaftsdienst,
Konferenzband "30 Jahre Deutsche Einheit", März
2021
Abstract
The comparison of living conditions in East and West Germany is often based on the gross domestic product per inhabitant. However, this measure is not a good welfare indicator in itself. It can be assumed that, measured by the gross domestic product per inhabitant, there will be no further significant equalisation of economic power in East and West Germany in the foreseeable future. This is because the age structure of East Germany, i.e. the ratio of employed persons to inhabitants, is less favourable than in the West. On the other hand, if one looks at important welfare indicators such as consumption opportunities, life expectancy, leisure time and income inequality, living conditions in East and West Germany are more similar than the gross domestic product per inhabitant suggests. In the debates on the catching-up process of East Germany, more emphasis should therefore be placed on labour productivity as a measure of economic strength and on welfare indicators as a measure of the equalisation of living conditions.
Read article
Measuring the Impact of Household Innovation Using Administrative Data
Javier Miranda, Nikolas Zolas
Measuring and Accounting for Innovation in the Twenty-First Century,
NBER Studies in Income and Wealth, Vol 78 /
2021
Abstract
We link USPTO patent data to U.S. Census Bureau administrative records on individuals and firms. The combined dataset provides us with a directory of patenting household inventors as well as a time-series directory of self-employed businesses tied to household innovations. We describe the characteristics of household inventors by race, age, gender and U.S. origin, as well as the types of patented innovations pursued by these inventors. Business data allows us to highlight how patents shape the early life-cycle dynamics of nonemployer businesses. We find household innovators are disproportionately U.S. born, white and their age distribution has thicker tails relative to business innovators. Data shows there is a deficit of female and black inventors. Household inventors tend to work in consumer product areas compared to traditional business patents. While patented household innovations do not have the same impact of business innovations their uniqueness and impact remains surprisingly high. Back of the envelope calculations suggest patented household innovations granted between 2000 and 2011 might generate $5.0B in revenue (2000 dollars).
Read article
Can Mentoring Alleviate Family Disadvantage in Adolescence? A Field Experiment to Improve Labor-Market Prospects
Sven Resnjanskij, Jens Ruhose, Simon Wiederhold, Ludger Woessmann
Abstract
We study a mentoring program that aims to improve the labor-market prospects of school-attending adolescents from disadvantaged families by offering them a university-student mentor. Our RCT investigates program effectiveness on three outcome dimensions that are highly predictive of adolescents later labor-market success: math grades, patience-social skills, and labor-market orientation. For low-SES adolescents, the one-to-one mentoring increases a combined index of the outcomes by half a standard deviation after one year, with significant increases in each dimension. Part of the treatment effect is mediated by establishing mentors as attachment figures who provide guidance for the future. The mentoring is not effective for higher-SES adolescents. The results show that substituting lacking family support by other adults can help disadvantaged children at adolescent age.
Read article
Birds, Birds, Birds: Co-worker Similarity, Workplace Diversity and Job Switches
Boris Hirsch, Elke J. Jahn, Thomas Zwick
British Journal of Industrial Relations,
No. 3,
2020
Abstract
We investigate how the demographic composition of the workforce along the sex, nationality, education, age and tenure dimensions affects job switches. Fitting duration models for workers’ job‐to‐job turnover rate that control for workplace fixed effects in a representative sample of large manufacturing plants in Germany during 1975–2016, we find that larger co‐worker similarity in all five dimensions substantially depresses job‐to‐job moves, whereas workplace diversity is of limited importance. In line with conventional wisdom, which has that birds of a feather flock together, our interpretation of the results is that workers prefer having co‐workers of their kind and place less value on diverse workplaces.
Read article
Age and High-Growth Entrepreneurship
Pierre Azoulay, Benjamin Jones, J. Daniel Kim, Javier Miranda
American Economic Review: Insights,
No. 1,
2020
Abstract
Many observers, and many investors, believe that young people are especially likely to produce the most successful new firms. Integrating administrative data on firms, workers, and owners, we study start-ups systematically in the United States and find that successful entrepreneurs are middle-aged, not young. The mean age at founding for the 1-in-1,000 fastest growing new ventures is 45.0. The findings are similar when considering high-technology sectors, entrepreneurial hubs, and successful firm exits. Prior experience in the specific industry predicts much greater rates of entrepreneurial success. These findings strongly reject common hypotheses that emphasize youth as a key trait of successful entrepreneurs.
Read article
12.02.2020 • 2/2020
Causes of populism: IWH begins international research project
Is the increasing strength of populist parties due to economic causes? The Halle Institute for Economic Research (IWH) is set to play a leading role in scrutinising this controversial question with immediate effect, together with researchers from England, Scotland and the Czech Republic. The Volkswagen Foundation is funding this interdisciplinary project to the tune of almost one million euro for four years.
Steffen Müller
Read press release
Business Dynamics Statistics of High Tech Industries
Nathan Goldschlag, Javier Miranda
Journal of Economics and Management Strategy,
No. 1,
2020
Abstract
Modern market economies are characterized by the reallocation of resources from less productive, less valuable activities to more productive, more valuable ones. Businesses in the High Tech sector play a particularly important role in this reallocation by introducing new products and services that impact the entire economy. In this paper we describe an extension to the Census Bureau’s Business Dynamics Statistics that tracks job creation, job destruction, startups, and exits by firm and establishment characteristics, including sector, firm age, and firm size in the High Tech sector. We preview the resulting statistics, showing the structural shifts in the High Tech sector over the past 30 years, including the surge of entry and young firm activity in the 1990s that reversed abruptly in the early‐2000s.
Read article
Does Extended Unemployment Benefit Duration Ameliorate the Negative Employment Effects of Job Loss?
Daniel Fackler, Jens Stegmaier, Eva Weigt
Labour Economics,
2019
Abstract
We study the effect of job displacement due to bankruptcies on earnings and employment prospects of displaced workers and analyse whether extended potential unemployment benefit duration (PBD) ameliorates the negative consequences of job loss. Using German administrative linked employer-employee data, we find that job loss has long-lasting negative effects on earnings and employment. Displaced workers also more often end up in irregular employment relationships (part-time, marginal part-time employment, and temporary agency work) than their non-displaced counterparts. Applying a regression discontinuity approach that exploits a three months PBD extension at the age threshold of 50 we find hardly any effects of longer PBD on labour market outcomes of displaced workers.
Read article
