Payroll Taxes, Firm Behavior, and Rent Sharing: Evidence from a Young Workers' Tax Cut in Sweden
Emmanuel Saez, Benjamin Schoefer, David Seim
American Economic Review,
Nr. 5,
2019
Abstract
This paper uses administrative data to analyze a large employer-borne payroll tax rate cut for young workers in Sweden. We find no effect on net-of-tax wages of young treated workers relative to slightly older untreated workers, and a 2–3 percentage point increase in youth employment. Firms employing many young workers receive a larger tax windfall and expand right after the reform: employment, capital, sales, and profits increase. These effects appear stronger in credit-constrained firms. Youth-intensive firms also increase the wages of all their workers collectively, young as well as old, consistent with rent sharing of the tax windfall.
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Potential International Employment Effects of a Hard Brexit
Hans-Ulrich Brautzsch, Oliver Holtemöller
Abstract
We use the World Input Output Database (WIOD) to estimate the potential employment effects of a hard Brexit in 43 countries. In line with other studies we assume that imports from the European Union (EU) to the UK will decline by 25% after a hard Brexit. The absolute effects are largest in big EU countries which have close trade relationships with the UK like Germany and France. However, there are also large countries outside the EU which are heavily affected via global value chains like China, for example. The relative effects (in percent of total employment) are largest in Malta and Ireland. UK employment will also be affected via intermediate input production. Within Germany, the motor vehicle industry and in particular the “Autostadt” Wolfsburg are most affected.
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May the Force Be with You: Exit Barriers, Governance Shocks, and Profitability Sclerosis in Banking
Michael Koetter, Carola Müller, Felix Noth, Benedikt Fritz
Deutsche Bundesbank Discussion Paper,
Nr. 49,
2018
Abstract
We test whether limited market discipline imposes exit barriers and poor profitability in banking. We exploit an exogenous shock to the governance of government-owned banks: the unification of counties. County mergers lead to enforced government-owned bank mergers. We compare forced to voluntary bank exits and show that the former cause better bank profitability and efficiency at the expense of riskier financial profiles. Regarding real effects, firms exposed to forced bank mergers borrow more at lower cost, increase investment, and exhibit higher employment. Thus, reduced exit frictions in banking seem to unleash the economic potential of both banks and firms.
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The Privatisation Activities of the Treuhandanstalt and the Transformation of the East German Corporate Landscape: A New Dataset for First Explorations
Alexander Giebler, Michael Wyrwich
IWH Technical Reports,
Nr. 1,
2018
Abstract
Even nearly 30 years after the fall of the Berlin Wall, the privatisation and transformation of East Germany's business landscape is controversially discussed in the media and politics. The privatisation process led to enormous structural changes, which were associated with massive job losses. In particular, the stagnating regional development of East Germany is often blamed on the “long shadow” of the privatisation activities of the Treuhandanstalt (THA). From a scientific perspective, however, there are hardly any contributions dealing with the effects of privatisation activities. The IWH-Treuhand Privatisation Micro Database introduced in this technical report is novel as such that it provides comprehensive information on employment and turnover figures for formerly state-owned enterprises for the early 1990s.
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Within Gain, Structural Pain: Capital Account Liberalization and Economic Growth
Xiang Li, Dan Su
New Structural Economics Working Paper No. E2018010,
2018
Abstract
This paper is the first to study the effects of capital account liberalization on structural transformation and compare the contribution of within term and structural term to economic growth. We use a 10-sector-level productivity dataset to decomposes the effects of opening capital account on within-sector productivity growth and cross-sector structural transformation. We find that opening capital account is associated with labor productivity and employment share increment in sectors with higher human capital intensity and external financial dependence, as well as non-tradable sectors. But it results in a growth-reducing structural transformation by directing labor into sectors with lower productivity. Moreover, in the ten years after capital account liberalization, the contribution share of structural transformation decreases while that of within productivity growth increases. We conclude that the relationship between capital account liberalization and economic growth is within gain and structural pain.
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Auswirkungen des gesetzlichen Mindestlohns im Handwerk in Sachsen-Anhalt
Hans-Ulrich Brautzsch, Birgit Schultz
Zeitschrift für Wirtschaftspolitik,
Nr. 2,
2018
Abstract
This paper examines the effects of the minimum wage introduction in Germany in 2015 on the skilled crafts sector in Saxony-Anhalt.
Using novel survey data on the skilled crafts sector in Saxony-Anhalt, we examine three questions: (1) How many employees are affected by the minimum wage introduction in the skilled crafts sector in Saxony-Anhalt? (2) What are the effects of the minimum wage introduction? (3) How did firms react to wage increase?
We find that about 8 % of all employees in the skilled crafts sector in Saxony-Anhalt are directly affected by the minimum wage introduction. A difference-in-difference estimation reveals no significant employment effects of the minimum wage introduction. We test for alternative adjustment strategies and observe a significant increase of output prices.
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Public Investment Subsidies and Firm Performance – Evidence from Germany
Matthias Brachert, Eva Dettmann, Mirko Titze
Jahrbücher für Nationalökonomie und Statistik,
Nr. 2,
2018
Abstract
This paper assesses firm-level effects of the single largest investment subsidy programme in Germany. The analysis considers grants allocated to firms in East German regions over the period 2007 to 2013 under the regional policy scheme Joint Task ‘Improving Regional Economic Structures’ (GRW). We apply a coarsened exact matching (CEM) in combination with a fixed effects difference-in-differences (FEDiD) estimator to identify the effects of programme participation on the treated firms. For the assessment, we use administrative data from the Federal Statistical Office and the Offices of the Länder to demonstrate that this administrative database offers a huge potential for evidence-based policy advice. The results suggest that investment subsidies have a positive impact on different dimensions of firm development, but do not affect overall firm competitiveness. We find positive short- and medium-run effects on firm employment. The effects on firm turnover remain significant and positive only in the medium-run. Gross fixed capital formation responses positively to GRW funding only during the mean implementation period of the projects but becomes insignificant afterwards. Finally, the effect of GRW-funding on labour productivity remains insignificant throughout the whole period of analysis.
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State Enforceability of Noncompete Agreements: Regulations that Stifle Productivity!
S. Anand, Iftekhar Hasan, P. Sharma, Haizhi Wang
Human Resource Management,
Nr. 1,
2018
Abstract
Noncompete agreements (also known as covenants not to compete [CNCs]) are frequently used by many businesses in an attempt to maintain their competitive advantage by safeguarding their human capital and the associated business secrets. Although the choice of whether to include CNCs in employment contracts is made by firms, the real extent of their restrictiveness is determined by the state laws. In this article, we explore the effect of state‐level CNC enforceability on firm productivity. We assert that an increase in state level CNC enforceability is detrimental to firm productivity, and this relationship becomes stronger as comparable job opportunities become more concentrated in a firm's home state. On the other hand, this negative relationship is weakened as employee compensation tends to become more long‐term oriented. Results based on hierarchical linear modeling analysis of 21,134 firm‐year observations for 3,027 unique firms supported all three hypotheses.
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Flooded Through the Back Door: Firm-level Effects of Banks‘ Lending Shifts
Oliver Rehbein
IWH Discussion Papers,
Nr. 4,
2018
Abstract
I show that natural disasters transmit to firms in non-disaster areas via their banks. This spillover of non-financial shocks through the banking system is stronger for banks with less regulatory capital. Firms connected to a disaster-exposed bank with below median capital reduce their employment by 11% and their fixed assets by 20% compared to firms in the same region without such a bank during the 2013 flooding in Germany. Relationship banking and higher firm capital also mitigate the effects of such negative cross-regional spillovers.
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