Do Digital Information Technologies Help Unemployed Job Seekers Find a Job? Evidence from the Broadband Internet Expansion in Germany
Nicole Gürtzgen, André Diegmann, Laura Pohlan, Gerard J. van den Berg
European Economic Review,
February
2021
Abstract
This paper studies effects of the introduction of a new digital mass medium on reemployment of unemployed job seekers. We combine data on high-speed (broadband) internet availability at the local level with German individual register data. We address endogeneity by exploiting technological peculiarities that affected the roll-out of high-speed internet. The results show that high-speed internet improves reemployment rates after the first months in unemployment. This is confirmed by complementary analyses with individual survey data suggesting that internet access increases online job search and the number of job interviews after a few months in unemployment.
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Why Are Households Saving so much During the Corona Recession?
Reint E. Gropp, William McShane
IWH Policy Notes,
No. 1,
2021
Abstract
Savings rates among European households have reached record levels during the Corona recession. We investigate three possible explanations for the increase in household savings: precautionary motivations induced by increased economic uncertainty, reduced consumption opportunities due to lockdown measures, and Ricardian Equivalence, i.e. increases in the expected future tax-burden of households driven by increases in government debt. To test these explanations, we compile a monthly panel of euro area countries from January 2019 to August 2020. Our findings indicate that the chief driver of the increase in household savings is supply: As governments restrict households’ opportunities to spend, households spend less. We estimate that going from no lockdown measures to that of Italy’s in March, would have resulted in the growth of Germany’s deposit to Gross Domestic Product (GDP) ratio being 0.6 percentage points higher each month. This would be equivalent to the volume of deposits increasing by roughly 14.3 billion euros or 348 euros per house monthly. Demand effects, driven by either fears of unemployment or fear of infection from COVID-19, appear to only have a weak impact on household savings, whereas changes in government debt are unrelated or even negatively related to savings rates. The analysis suggests that there is some pent-up demand for consumption that may unravel after lockdown measures are abolished and may result in a significant increase in consumption in the late spring/early summer 2021.
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Private Equity in the Hospital Industry
Janet Gao, Yongseok Kim, Merih Sevilir
ECGI Working Paper,
No. 787,
2021
Abstract
We examine employment and patient outcomes at hospitals acquired by private equity (PE) firms and PE-backed hospitals. While employment declines at PE-acquired hospitals, core medical workers (physicians, nurses, and pharmacists) increase significantly. The proportion of wages paid to core workers increases at PE-acquired hospitals whereas the proportion paid to administrative employees declines. These results are most pronounced for deals where the acquirers are publicly traded PE-backed hospitals. Non-PE-backed acquirers also cut employment but do not increase core workers or reduce administrative expenditures. Finally, PE-backed acquirers are not associated with worse patient satisfaction or mortality rates compared to their non-PE-backed counterparts.
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25.01.2021 • 2/2021
High public deficits not only due to the pandemic – Medium-term options for fiscal policy
According to the IWH’s medium-term projection, Germany's gross domestic product will grow more slowly between 2020 and 2025 than before, not only because of the pandemic crisis, but also because the work force will decline. The resulting structural public deficits are, if the legal framework remains unchanged, likely to be higher than the debt brake allows. Consolidation measures, especially if they relate to government revenues, entail economic losses in the short term. “There is much to be said, also from a theoretical point of view, for not abolishing the debt brake, but for relaxing it to some extent,” says Oliver Holtemöller, head of the Department of Macroeconomics and vice president at Halle Institute for Economic Research (IWH).
Oliver Holtemöller
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Involuntary Unemployment and the Business Cycle
Lawrence J. Christiano, Mathias Trabandt, Karl Walentin
Review of Economic Dynamics,
January
2021
Abstract
Can a model with limited labor market insurance explain standard macro and labor market data jointly? We construct a monetary model in which: i) the unemployed are worse off than the employed, i.e. unemployment is involuntary and ii) the labor force participation rate varies with the business cycle. To illustrate key features of our model, we start with the simplest possible framework. We then integrate the model into a medium-sized DSGE model and show that the resulting model does as well as existing models at accounting for the response of standard macroeconomic variables to monetary policy shocks and two technology shocks. In addition, the model does well at accounting for the response of the labor force and unemployment rate to these three shocks.
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The Real Impact of Ratings-based Capital Rules on the Finance-Growth Nexus
Iftekhar Hasan, Gazi Hassan, Suk-Joong Kim, Eliza Wu
International Review of Financial Analysis,
January
2021
Abstract
We investigate whether ratings-based capital regulation has affected the finance-growth nexus via a foreign credit channel. Using quarterly data on short to medium term real GDP growth and cross-border bank lending flows from G-10 countries to 67 recipient countries, we find that since the implementation of Basel 2 capital rules, risk weight reductions mapped to sovereign credit rating upgrades have stimulated short-term economic growth in investment grade recipients but hampered growth in non-investment grade recipients. The impact of these rating upgrades is strongest in the first year and then reverses from the third year and onwards. On the other hand, there is a consistent and lasting negative impact of risk weight increases due to rating downgrades across all recipient countries. The adverse effects of ratings-based capital regulation on foreign bank credit supply and economic growth are compounded in countries with more corruption and less competitive banking sectors and are attenuated with greater political stability.
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16.12.2020 • 26/2020
New wave of infections delays economic recovery in Germany
The lockdown is causing production in Germany to decline at the end of the year. When restrictions will be relaxed again, the recovery is likely to pick up pace only slowly, partly because the temporary reduction in value-added taxes is expiring. In spring, milder temperatures and an increasing portion of the population being vaccinated are likely to support the German economy to expand more strongly. The Halle Institute for Economic Research (IWH) forecasts that gross domestic product will increase by 4.4% in 2021, following a 5% decline in 2020. In East Germany, both the decline and the recovery will be significantly less pronounced.
Oliver Holtemöller
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High public deficit not only because of Corona - Medium-term options for action for the state
Andrej Drygalla, Oliver Holtemöller, Axel Lindner, Matthias Wieschemeyer, Götz Zeddies, Katja Heinisch
Konjunktur aktuell,
No. 4,
2020
Abstract
According to the IWH's medium-term projection, Germany's gross domestic product will grow by an average of ½% in price-adjusted terms in the years to 2025, which is 1 percentage point slower than in the period from 2013 to 2019. This is due not only to the sharp slump in 2020, but also to the fact that the labour force will decline noticeably. Government revenues will be expanding much more slowly than in previous years. Even after the pandemic crisis is overcome, the state budget is likely to have a structural deficit of about 2% relative to GDP if the legal framework remains unchanged, and the debt brake will continue to be violated. Consolidation measures to reduce this deficit ratio to ½ % would push production in Germany below the normal rate of capacity utilization. Simulations with the IWH fiscal policy model show that consolidation on the expenditure side would reduce production by less than consolidation on the revenue side. There is much to be said, also from a theoretical point of view, for not abolishing the debt brake, but for relaxing it to some extent.
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Public Bank Guarantees and Allocative Efficiency
Reint E. Gropp, Andre Guettler, Vahid Saadi
Journal of Monetary Economics,
December
2020
Abstract
A natural experiment and matched bank/firm data are used to identify the effects of bank guarantees on allocative efficiency. We find that with guarantees in place unproductive firms receive larger loans, invest more, and maintain higher rates of sales and wage growth. Moreover, firms produce less productively. Firms also survive longer in banks’ portfolios and those that enter guaranteed banks’ portfolios are less profitable and productive. Finally, we observe fewer economy-wide firm exits and bankruptcy filings in the presence of guarantees. Overall, the results are consistent with the idea that guaranteed banks keep unproductive firms in business for too long.
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Heterogeneity in Criminal Behaviour after Child Birth: the Role of Ethnicity
Kabir Dasgupta, André Diegmann, Tom Kirchmaier, Alexander Plum
Abstract
This paper documents behavioral differences in parental criminality between majority and minority ethnic groups after child birth. The particular effect we exploit is that of the gender of the first-born child on fathers’ convictions rates. Based on detailed judicial and demographic data from New Zealand, we first show that the previously documented inverse relationship between having a son and father’s criminal behaviour holds across the average of the population. However, when splitting the fathers’ sample by ethnicity, the effect appears to be entirely driven by the white part of the population and that there is no effect on the native Maori. The strong ethnic divide is observed along many dimensions and challenges the implicitly made assumption in the economics of crime literature that findings are universally applicable across cultures and race.
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