I study the effect of increasing competition on financial performance through labour leverage. To capture competition, I exploit variation in product market contestability in the U.S. airline industry. First, I find that increasing competitive pressure leads to increasing labour leverage, proxied by labour share. This explains the decrease in operating profitability through labour rigidities. Second, by exploiting variation in human capital specificity, I show that contestability of product markets induces labour market contestability. Whereas affected firms might experience more stress through higher wages or loss of skilled human capital, more mobile employee groups benefit from competitions through higher labour shares.

This paper investigates how foreign ownership shapes bank information environments. Using a sample of listed banks from 60 countries over 1997–2012, we show that foreign ownership is significantly associated with greater (lower) informativeness (synchronicity) in bank stock prices. We also find that stock returns of foreign-owned banks reflect more information about future earnings. In addition, the positive association between price informativeness and foreign ownership is stronger for foreign-owned banks in countries with stronger governance, stronger banking supervision, and lower monitoring costs. Overall, our evidence suggests that foreign ownership reduces bank opacity by exporting governance, yielding important implications for regulators and governments.

Labour market institutions are policy interventions aiming to improve labour market outcomes in terms of employment and wages. However, because labour markets are complex, it is not straight forward whether these policy interventions achieve their objectives. Instead, they may result in the opposite or induce side effects. In this dissertation, the impact of minimum wages and employment protection legislation on employment are studied. The first chapter discusses labour market institutions, focusing on the above mentioned polices. The second chapter analyses the effects of the German minimum-wage introduction on employment. The findings suggest that marginal employment decreased while regular employment increased. The third chapter studies the same policy with respect to a different aspect: The minimum wage attracts labour mobility from low-wage neighbouring countries (the Czech Republic and Poland) in the respective border regions. This inflow of foreign workers does not have a negative effect on native employment. The fourth chapter addresses a shortcoming of existing NK-SAM models that allow embedding employment protection legislation. A proposed extension improves the models’ empirical relevance under a restrictive assumption.

In this article, we use cross-state panel and cross-U.S. commuting-zone data to look at the relationship between innovation, top income inequality and social mobility. We find positive correlations between measures of innovation and top income inequality. We also show that the correlations between innovation and broad measures of inequality are not significant. Next, using instrumental variable analysis, we argue that these correlations at least partly reflect a causality from innovation to top income shares. Finally, we show that innovation, particularly by new entrants, is positively associated with social mobility, but less so in local areas with more intense lobbying activities.

Higher incentive pay is associated with better firm performance. I introduce a model of CEO-firm matching to disentangle the two confounding effects that drive this result. On one hand, higher incentive pay directly induces more effort; on the other hand, higher incentive pay indirectly attracts more talented CEOs. I find both effects are essential to explain the result, with the selection effect accounting for 12.7% of the total effect. The relative importance of the selection effect is the largest in industries with high talent mobility and in more recent years.

Weiterhin gilt in Deutschland: Für den Bildungserfolg ist es nicht entscheidend, was ein Kind kann, sondern woher es kommt. Die soziale Herkunft eines Kindes bestimmt in hohem Maße dessen Bildungsniveau, beruflichen Erfolg und Einkommen. Eine Untersuchung des Statistischen Bundesamts vom letzten Jahr zeigt, dass 61% der unter 15-Jährigen, deren Eltern selbst einen hohen Bildungsabschluss haben, 2015 ein Gymnasium besuchten, während dies nur für 14% der Jugendlichen aus Familien mit niedrigem Bildungsabschluss gilt. Empirische Studien belegen: Kinder mit einem bildungsfernen Familienhintergrund können in Deutschland nur mit einer deutlich niedrigeren Wahrscheinlichkeit als etwa in skandinavischen Ländern (Dänemark, Norwegen, Finnland und Schweden) und einer ähnlich hohen Wahrscheinlichkeit wie in den USA sozial aufsteigen.

Using German survey data, we investigate the relationship between involuntary job loss and regional mobility. Our results show that job loss has a strong positive effect on the propensity to relocate. We also analyse whether displaced workers who relocate to a different region after job loss are better able to catch up with non-displaced workers in terms of labour market performance than those staying in the same region. Our findings do not support this conjecture as we find substantial long-lasting earnings losses for movers and stayers and even slightly but not significantly higher losses for movers.

We use rich German administrative data to estimate new measures of skill transferability between manufacturing and other sectors. These measures capture the value of workers' human capital when applied in different sectors and are directly related to workers' displacement costs. We estimate these transferability measures using a selection correction model, which addresses workers' endogenous mobility, and a novel selection instrument based on the social network of workers. Our results indicate substantial heterogeneity in how workers can transfer their skills when they move across sectors, which implies heterogeneous displacement costs that depend on the sector to which workers reallocate.

In this study, we examine how noncompetition agreements and the mobility of human capital – a core asset of any firm – affect innovations of publicly traded firms in the United States. We find that firms in states with stricter noncompetition enforcement have fewer patent applications. We also examine patent forward citations and find that tougher enforcement of such contracts is associated with less innovative patents. Notably, we find that stronger enforcement of noncompetition agreements impedes innovation for firms facing intense industry labor mobility. High-powered, equity-based compensation positively moderates the relationship between noncompetition enforcement and innovation, but only for the quality of innovation.

We study the effect of top tax rates on “superstar” inventors’ international mobility since 1977, using panel data on inventors from the US and European Patent Offices. We exploit the differential impact of changes in top tax rates on inventors of different qualities. Superstar inventors' location choices are significantly affected by top tax rates. In our preferred specification, the elasticity to the net-of-tax rate of the number of domestic superstar inventors is around 0.03, while that of foreign superstar inventors is around 1. These elasticities are larger for inventors in multinational companies. An inventor is less sensitive to taxes in a country if his company performs a higher share of its research there.