Individualism, Human Capital Formation, and Labor Market Success
Katharina Hartinger, Sven Resnjanskij, Jens Ruhose, Simon Wiederhold
Journal of the European Economic Association,
forthcoming
Abstract
There is an ongoing debate about the economic effects of individualism. We establish that individualism leads to better educational and labor market outcomes. Using data from the largest international adult skill assessment, we identify the effects of individualism by exploiting variation between migrants at the origin country, origin language, and person level. Migrants from more individualistic cultures have higher cognitive skills and larger skill gains over time. They also invest more in their skills over the life-cycle, as they acquire more years of schooling and are more likely to participate in adult education activities. In fact, individualism is more important in explaining adult skill formation than any other cultural trait that has been emphasized in previous literature. In the labor market, more individualistic migrants earn higher wages and are less often unemployed. We show that our results cannot be explained by selective migration or omitted origin-country variables.
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Why Is the Roy-Borjas Model Unable to Predict International Migrant Selection on Education? Evidence from Urban and Rural Mexico
Stefan Leopold, Jens Ruhose, Simon Wiederhold
World Economy,
No. 2,
2025
Abstract
The Roy-Borjas model predicts that international migrants are less educated than nonmigrants because the returns to education are generally higher in developing (migrant-sending) than in developed (migrant-receiving) countries. However, empirical evidence often shows the opposite. Using the case of Mexico-U.S. migration, we show that this inconsistency between predictions and empirical evidence can be resolved when the human capital of migrants is assessed using a two-dimensional measure of occupational skills rather than by educational attainment. Thus, focusing on a single skill dimension when investigating migrant selection can lead to misleading conclusions about the underlying economic incentives and behavioral models of migration.
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Training, Automation, and Wages: International Worker-level Evidence
Oliver Falck, Yuchen Guo, Christina Langer, Valentin Lindlacher, Simon Wiederhold
IWH Discussion Papers,
No. 27,
2024
Abstract
Job training is widely regarded as crucial for protecting workers from automation, yet there is a lack of empirical evidence to support this belief. Using internationally harmonized data from over 90,000 workers across 37 industrialized countries, we construct an individual-level measure of automation risk based on tasks performed at work. Our analysis reveals substantial within-occupation variation in automation risk, overlooked by existing occupation-level measures. To assess whether job training mitigates automation risk, we exploit within-occupation and within-industry variation. Additionally, we employ entropy balancing to re-weight workers without job training based on a rich set of background characteristics, including tested numeracy skills as a proxy for unobserved ability. We find that job training reduces workers’ automation risk by 4.7 percentage points, equivalent to 10 percent of the average automation risk. The training-induced reduction in automation risk accounts for one-fifth of the wage returns to job training. Job training is effective in reducing automation risk and increasing wages across nearly all countries, underscoring the external validity of our findings. Women tend to benefit more from training than men, with the advantage becoming particularly pronounced at older ages.
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Training, Automation, and Wages: International Worker-level Evidence
Oliver Falck, Yuchen Guo, Christina Langer, Valentin Lindlacher, Simon Wiederhold
CESifo Working Papers,
No. 11533,
2024
Abstract
Job training is widely regarded as crucial for protecting workers from automation, yet there is a lack of empirical evidence to support this belief. Using internationally harmonized data from over 90,000 workers across 37 industrialized countries, we construct an individual-level measure of automation risk based on tasks performed at work. Our analysis reveals substantial within-occupation variation in automation risk, overlooked by existing occupation-level measures. To assess whether job training mitigates automation risk, we exploit within-occupation and within-industry variation. Additionally, we employ entropy balancing to re-weight workers without job training based on a rich set of background characteristics, including tested numeracy skills as a proxy for unobserved ability. We find that job training reduces workers’ automation risk by 4.7 percentage points, equivalent to 10 percent of the average automation risk. The training-induced reduction in automation risk accounts for one-fifth of the wage returns to job training. Job training is effective in reducing automation risk and increasing wages across nearly all countries, underscoring the external validity of our findings. Women tend to benefit more from training than men, with the advantage becoming particularly pronounced at older ages.
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Robots, Occupations, and Worker Age: A Production-unit Analysis of Employment
Liuchun Deng, Steffen Müller, Verena Plümpe, Jens Stegmaier
European Economic Review,
November
2024
Abstract
We analyse the impact of robot adoption on employment composition using novel micro data on robot use in German manufacturing plants linked with social security records and data on job tasks. Our task-based model predicts more favourable employment effects for the least routine-task intensive occupations and for young workers, with the latter being better at adapting to change. An event-study analysis of robot adoption confirms both predictions. We do not find adverse employment effects for any occupational or age group, but churning among low-skilled workers rises sharply. We conclude that the displacement effect of robots is occupation biased but age neutral, whereas the reinstatement effect is age biased and benefits young workers most.
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Deutschland braucht eine klare wirtschaftspolitische Strategie
Reint E. Gropp
Wirtschaft im Wandel,
No. 3,
2024
Abstract
Die deutsche Wirtschaft steht unter Druck, doch die aktuellen Maßnahmen der Regierung führen kaum zu einer nachhaltigen Erholung. Unternehmen sind mit Unsicherheiten konfrontiert, die Investitionen hemmen – insbesondere hinsichtlich der Energieversorgung und der damit verbundenen Kosten. Viele Betriebe schieben deshalb notwendige Investitionen auf – genau die Investitionen, die das wirtschaftliche Wachstum antreiben könnten.
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Industry Mix, Local Labor Markets, and the Incidence of Trade Shocks
Steffen Müller, Jens Stegmaier, Moises Yi
Journal of Labor Economics,
No. 3,
2024
Abstract
We analyze how skill transferability and the local industry mix affect the adjustment costs of workers hit by a trade shock. Using German administrative data and novel measures of economic distance we construct an index of labor market absorptiveness that captures the degree to which workers from a particular industry are able to reallocate into other jobs. Among manufacturing workers, we find that the earnings loss associated with increased import exposure is much higher for those who live in the least absorptive regions. We conclude that the local industry composition plays an important role in the adjustment processes of workers.
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Robot Adoption at German Plants
Liuchun Deng, Verena Plümpe, Jens Stegmaier
Jahrbücher für Nationalökonomie und Statistik,
No. 3,
2024
Abstract
Using a newly collected dataset at the plant level from 2014 to 2018, we provide the first microscopic portrait of robotization in Germany and study the correlates of robot adoption. Our descriptive analysis uncovers five stylized facts: (1) Robot use is relatively rare. (2) The distribution of robots is highly skewed. (3) New robot adopters contribute substantially to the recent robotization. (4) Robot users are exceptional. (5) Heterogeneity in robot types matters. Our regression results further suggest plant size, high-skilled labor share, exporter status, and labor shortage to be strongly associated with the future probability of robot adoption.
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Economic Outlook
Joint Economic Forecast Spring 2025 Geopolitical turn intensifies crisis – structural reforms even more urgent April 10, 2025 The German economy will continue to tread water in…
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IWH FDI Micro Database
IWH FDI Micro Database The IWH FDI Micro Database (FDI = Foreign Direct Investment) comprises a total population of affiliates of multinational enterprises (MNEs) in selected…
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