25 Jahre IWH

25 Jahre IWH

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The Appropriateness of the Macroeconomic Imbalance Procedure for Central and Eastern European Countries

Martina Kämpfe, Tobias Knedlik
IWH Discussion Papers, Nr. 16, 2017
Abstract
The experience of Central and Eastern European countries (CEEC) during the global financial crisis and in the resulting European debt crises has been largely different from that of other European countries. This paper looks at the specifics of the CEEC in recent history and focuses in particular on the appropriateness of the Macroeconomic Imbalances Procedure for this group of countries. In doing so, the macroeconomic situation in the CEEC is highlighted and macroeconomic problems faced by these countries are extracted. The findings are compared to the results of the Macroeconomic Imbalances Procedure of the European Commission. It is shown that while the Macroeconomic Imbalances Procedure correctly identifies some of the problems, it understates or overstates other problems. This is due to the specific construction of the broadened surveillance procedure, which largely disregarded the specifics of catching-up economies.
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Who Buffers Income Losses After Job Displacement? The Role of Alternative Income Sources, the Family, and the State

Daniel Fackler, Eva Hank
IWH Discussion Papers, Nr. 28, 2016
Abstract
Using survey data from the German Socio-Economic Panel (SOEP), this paper analyses to what extent alternative income sources, reactions within the household context, and redistribution by the state attenuate earnings losses after job displacement. Applying propensity score matching and fixed effects estimations, we find high individual earnings losses after job displacement and only limited convergence. Income from selfemployment slightly reduces the earnings gap and severance payments buffer losses in the short run. On the household level, we find substantial and rather persistent losses in per capita labour income. We do not find that increased labour supply by other household members contributes to the compensation of the income losses. Most importantly, our results show that redistribution within the tax and transfer system substantially mitigates income losses of displaced workers both in the short and the long run whereas other channels contribute only little.
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Plant-level Employment Development before Collective Displacements: Comparing Mass Layoffs, Plant Closures, and Bankruptcies

Daniel Fackler, Steffen Müller, Jens Stegmaier
IWH Discussion Papers, Nr. 27, 2016
Abstract
To assess to what extent collective job displacements can be regarded as unanticipated exogenous shocks for affected employees, we analyze plant-level employment patterns before bankruptcy, plant closure without bankruptcy, and mass layoff. Utilizing administrative data covering all West German private sector plants, we find no systematic employment reductions prior to mass layoffs, a strong and long-lasting reduction prior to closures, and a much shorter shadow of death preceding bankruptcy. Our analysis of worker flows underlines that bankruptcies seem to struggle for survival while closures follow a shrinking strategy. We conclude that the scope of worker anticipation of upcoming job loss is smallest for mass layoffs and largest for closures without bankruptcy.
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Losing Work, Moving Away? Regional Mobility After Job Loss

Daniel Fackler, Lisa Hölscher
IWH Discussion Papers, Nr. 26, 2016
publiziert in: LABOUR: Review of Labour Economics and Industrial Relations
Abstract
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 analyze whether the high and persistent earnings losses of displaced workers can in part be explained by limited regional mobility. Our findings do not support this conjecture as we find substantial long lasting earnings losses for both movers and stayers. In the short run, movers even face slightly higher losses, but the differences between the two groups of displaced workers are never statistically significant. This challenges whether migration is a beneficial strategy in case of involuntary job loss.
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Social Distress and Economic Integration

Walter Hyll, Lutz Schneider
IWH Discussion Papers, Nr. 21, 2016
Abstract
We analyze whether social distress from income comparisons affects attitudes towards the integration of economies. Using Germany’s division as natural experiment, we find that East Germans’ feelings of relative deprivation with respect to better-off West Germans led to significantly more support for the upcoming German re-unification.
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Identifying the Effects of Place-based Policies – Causal Evidence from Germany

Eva Dettmann, Matthias Brachert, Mirko Titze
IWH Discussion Papers, Nr. 18, 2016
Abstract
The German government provides discretionary investment grants to structurally weak regions to reduce regional disparities. We use a regression discontinuity design that exploits an exogenous discrete jump in the probability of receiving investment grants to identify the causal effects of the investment grant on regional outcomes. We find positive effects for regional gross value-added and productivity growth, but no effects for employment and gross wage growth.
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Social Comparisons and Attitudes towards Foreigners. Evidence from the ‘Fall of the Iron Curtain’

Walter Hyll, Lutz Schneider
IWH Discussion Papers, Nr. 12, 2016
Abstract
We exploit the natural experiment of German re-unification to address the question whether distress from social (income) comparisons results in negative attitudes towards foreigners. Our empirical approach rests upon East German individuals who have West German peers. We use the exogenous variation of wealth of West German peers shortly after the fall of the Berlin Wall as an instrument to identify the effect of distress from social comparisons on East Germans’ attitudes. We find robust evidence that East Germans expose strong negative attitudes towards foreigners, particularly from low-wage countries, if they worry about their economic status compared to better-off peers.
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Financial Literacy and Self-employment

Aida Ćumurović, Walter Hyll
IWH-Diskussionspapiere, Nr. 11, 2016
publiziert in: The Journal of Consumer Affairs
Abstract
In this paper, we study the relationship between financial literacy and self-employment. We use established financial knowledge-based questions to measure financial literacy levels. The analysis shows a highly significant correlation between selfemployment and financial literacy scores. To investigate the impact of financial literacy on being self-employed, we apply instrumental variable techniques based on information on economic education before entering the labour market and education of parents. Our results reveal that financial literacy positively affects the probability of being self-employed. As financial literacy is acquirable, findings suggest that entrepreneurial activities may be raised via enhancing financial knowledge.
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Paternal Unemployment During Childhood: Causal Effects on Youth Worklessness and Educational Attainment

Steffen Müller, Regina T. Riphahn, Caroline Schwientek
IWH Discussion Papers, Nr. 8, 2016
publiziert in: Oxford Economic Papers
Abstract
Using long-running data from the German Socio-Economic Panel (1984-2012), we investigate the impact of paternal unemployment on child labor market and education outcomes. We first describe correlation patterns and then use sibling fixed effects and the Gottschalk (1996) method to identify the causal effects of paternal unemployment. We find different patterns for sons and daughters. Paternal unemployment does not seem to causally affect the outcomes of sons. In contrast, it increases both daughters‘ worklessness and educational attainment. We test the robustness of the results and explore potential explanations.
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Size of Training Firms and Cumulated Long-run Unemployment Exposure – The Role of Firms, Luck, and Ability in Young Workers’ Careers

Steffen Müller, Renate Neubäumer
IWH-Diskussionspapiere, Nr. 5, 2016
publiziert in: International Journal of Manpower
Abstract
This paper analyzes how life-cycle unemployment of former apprentices depends on the size of the training firm. We start from the hypotheses that the size of training firms reduces long-run cumulated unemployment exposure, e.g. via differences in training quality and in the availability of internal labor markets, and that the access to large training firms depends positively on young workers’ ability and their luck to live in a region with many large and medium-sized training firms. We test these hypotheses empirically by using a large administrative data set for Germany and find corroborative evidence.
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