The Urban Wage Premium in Imperfect Labour Markets
Boris Hirsch, Elke J. Jahn, Alan Manning, Michael Oberfichtner
The 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.
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Firm Social Networks, Trust, and Security Issuances
Ming Fang, Iftekhar Hasan, Zenu Sharma, An Yan
European Journal of Finance,
forthcoming
Abstract
We observe that public firms are more likely to issue seasoned stocks rather than bonds when theirs boards are more socially-connected. These connected issuers experience better announcement-period stock returns and attract more institutional investors. This social-connection effect is stronger for firms with severe information asymmetry, higher risk of being undersubscribed, and more visible to investors. Our conjecture is this social-network effect is driven by trust in issuing firms. Given stocks are more sensitive to trust, these trusted firms are more likely to issue stocks than bonds. Trustworthiness plays an important role in firms’ security issuances in capital markets.
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Offshoring, Domestic Employment and Production. Evidence from the German International Sourcing Survey
Wolfhard Kaus, Markus Zimmermann
IWH Discussion Papers,
No. 14,
2022
Abstract
This paper analyses the effect of offshoring (i.e., the relocation of activities previously performed in-house to foreign countries) on various firm outcomes (domestic employment, production, and productivity). It uses data from the International Sourcing Survey (ISS) 2017 for Germany, linked to other firm level data such as business register and ITGS data. First, we find that offshoring is a rare event: In the sample of firms with 50 or more persons employed, only about 3% of manufacturing firms and 1% of business service firms have performed offshoring in the period 2014-2016. Second, difference-in-differences propensity score matching estimates reveal a negative effect of offshoring on domestic employment and production. Most of this negative effect is not because the offshoring firms shrink, but rather because they don’t grow as fast as the non-offshoring firms. We further decompose the underlying employment dynamics by using direct survey evidence on how many jobs the firms destroyed/created due to offshoring. Moreover, we do not find an effect on labour productivity, since the negative effect on domestic employment and production are more or less of the same size. Third, the German data confirm previous findings for Denmark that offshoring is associated with an increase in the share of ‘produced goods imports’, i.e. offshoring firms increase their imports for the same goods they continue to produce domestically. In contrast, it is not the case that offshoring firms increase the share of intermediate goods imports (a commonly used proxy for offshoring), as defined by the BEC Rev. 5 classification.
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The Macroeconomics of Testing and Quarantining
Martin S. Eichenbaum, Sergio Rebelo, Mathias Trabandt
Journal of Economic Dynamics and Control,
May
2022
Abstract
We develop a SIR-based macroeconomic model to study the impact of testing/ quarantining and social distancing/mask use on health and economic outcomes. These policies can dramatically reduce the costs of an epidemic. Absent testing/quarantining, the main effect of social distancing and mask use on health outcomes is to delay, rather than reduce, epidemic-related deaths. Social distancing and mask use reduce the severity of the epidemic-related recession but prolong its duration. There is an important synergy between social distancing and mask use and testing/quarantining. Social distancing and mask use buy time for testing and quarantining to come to the rescue. The benefits of testing/quarantining are even larger when people can get reinfected, either because the virus mutates or immunity is temporary.
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26.04.2022 • 10/2022
Regional effects of a recession in Germany triggered by an import stop for Russian gas
A halt in Russian gas deliveries would lead to a recession in the German economy. Not all regions would be equally affected: The Halle Institute for Economic Research (IWH) expects a significantly stronger slump in economic output in regions where the manufacturing sector has a large weight than elsewhere.
Oliver Holtemöller
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13.04.2022 • 8/2022
From Pandemic to Energy Crisis: Economy and Politics under Permanent Stress
The German economy is steering through difficult waters and faces the highest inflation rates in decades. In their spring report, the leading German economic research institutes revise their outlook for this year significantly downward. The recovery from the COVID-19 crisis is slowing down as a result of the war in Ukraine, but remains on track. The institutes expect GDP to increase by 2.7% and 3.1% in 2022 and 2023 respectively. In the event of an immediate interruption to Russian gas supplies, a total of 220 billion euros in German economic output would be at risk in both years.
Oliver Holtemöller
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Handelsschocks, Arbeitsmärkte und Wohlstand während der ersten Globalisierung
Richard Bräuer, Wolf-Fabian Hungerland, Felix Kersting
Wirtschaft im Wandel,
No. 1,
2022
Abstract
Dieser Beitrag untersucht Deutschland in der ersten Globalisierung in den Jahrzehnten vor dem Ersten Weltkrieg. Damals erlebte das Deutsche Reich eine massive Zunahme von Getreideimporten aus Amerika. Wir vergleichen Landkreise, die auf die importierten Getreidesorten spezialisiert waren, mit Kreisen, die andere landwirtschaftliche Güter hergestellt haben. Unsere Resultate zeigen, dass viele Arbeitskräfte die Kreise verlassen, in denen vom Handelsschock betroffene Produkte hergestellt wurden. Allerdings bleiben die in modernen Volkswirtschaften beobachteten negativen Effekte auf Einkommen pro Kopf und Sterblichkeit aus, auch eine politische Radikalisierung findet nicht statt. Unsere Ergebnisse legen nahe, dass die Migrationsbewegungen negative wirtschaftliche und in der Folge auch politische Auswirkungen abfedern. Damals verließen etwa viermal so viele Einwohner ihren Landkreis nach einem Handelsschock wie in vergleichbaren Situationen in den heutigen USA.
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Does Working at a Start-up Pay Off?
Daniel Fackler, Lisa Hölscher, Claus Schnabel, Antje Weyh
Small Business Economics,
No. 4,
2022
Abstract
Using representative linked employer-employee data for Germany, this paper analyzes short- and long-run differences in labor market performance of workers joining start-ups instead of incumbent firms. Applying entropy balancing and following individuals over ten years, we find huge and long-lasting drawbacks from entering a start-up in terms of wages, yearly income, and (un)employment. These disadvantages hold for all groups of workers and types of start-ups analyzed. Although our analysis of different subsequent career paths highlights important heterogeneities, it does not reveal any strategy through which workers joining start-ups can catch up with the income of similar workers entering incumbent firms.
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Mission, Motivation, and the Active Decision to Work for a Social Cause
Sabrina Jeworrek, Vanessa Mertins
Nonprofit and Voluntary Sector Quarterly,
No. 2,
2022
Abstract
The mission of a job affects the type of worker attracted to an organization but may also provide incentives to an existing workforce. We conducted a natural field experiment with 246 short-term workers. We randomly allocated some of these workers to either a prosocial or a commercial job. Our data suggest that the mission of a job has a performance-enhancing motivational impact on particular individuals only, those with a prosocial attitude. However, the mission is very important if it has been actively selected. Those workers who have chosen to contribute to a social cause outperform the ones randomly assigned to the same job by about half a standard deviation. This effect seems to be a universal phenomenon that is not driven by information about the alternative job, the choice itself, or a particular subgroup.
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The Place-based Effects of Police Stations on Crime: Evidence from Station Closures
Sebastian Blesse, André Diegmann
Journal of Public Economics,
March
2022
Abstract
Many countries consolidate their police forces by closing down local police stations. Police stations represent an important and visible aspect of the organization of police forces. We provide novel evidence on the effect of centralizing police offices through the closure of local police stations on crime outcomes. Combining matching with a difference-in-differences specification, we find an increase in reported car theft and burglary in residential properties. Our results are consistent with a negative shift in perceived detection risks and are driven by heterogeneous station characteristics. We can rule out alternative explanations such as incapacitation, crime displacement, and changes in police employment or strategies at the regional level. We argue that criminals are less deterred due to a lower visibility of the local police.
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