Employment Effects of Introducing a Minimum Wage: The Case of Germany
Income inequality has been a major concern of economic policy makers for several years. Can minimum wages help to mitigate inequality? In 2015, the German government introduced a nationwide statutory minimum wage to reduce income inequality by improving the labour income of low-wage employees. However, the employment effects of wage increases depend on time and region specific conditions and, hence, they cannot be known in advance. Because negative employment effects may offset the income gains for low-wage employees, it is important to evaluate minimum-wage policies empirically. We estimate the employment effects of the German minimum-wage introduction using panel regressions on the state-industry-level. We find a robust negative effect of the minimum wage on marginal and a robust positive effect on regular employment. In terms of the number of jobs, our results imply a negative overall effect. Hence, low-wage employees who are still employed are better off at the expense of those who have lost their jobs due to the minimum wage.
Financial Linkages and Sectoral Business Cycle Synchronisation: Evidence from Europe
We analyse whether financial integration between countries leads to converging or diverging business cycles using a dynamic spatial model. Our model allows for contemporaneous spillovers of shocks to GDP growth between countries that are financially integrated and delivers a scalar measure of the spillover intensity at each point in time. For a financial network of ten European countries from 1996-2017, we find that the spillover effects are positive on average but much larger during periods of financial stress, pointing towards stronger business cycle synchronisation. Dismantling GDP growth into value added growth of ten major industries, we observe that some sectors are strongly affected by positive spillovers (wholesale & retail trade, industrial production), others only to a weaker degree (agriculture, construction, finance), while more nationally influenced industries show no evidence for significant spillover effects (public administration, arts & entertainment, real estate).
On the Effect of Business and Economic University Education on Political Ideology: An Empirical Note
Journal of Business Ethics,
We empirically test the hypothesis that a major in economics, management, business administration or accounting (for simplicity referred to as Business/Economics) leads to more-conservative (right-wing) political views. We use a panel dataset of individuals (repeated observations for the same individuals over time) living in the Netherlands, drawing data from the Longitudinal Internet Studies for the Social Sciences from 2008 through 2013. Our results show that when using a simple fixed effects model, which fully controls for individuals’ time-invariant traits, any statistically and quantitatively significant effect of a major in Business/Economics on the Political Ideology of these individuals disappears. We posit that, at least in our sample, there is no evidence for a causal effect of a major in Business/Economics on individuals’ Political Ideology.
flexpaneldid: A Stata Command for Causal Analysis with Varying Treatment Time and Duration
IWH Discussion Papers,
The paper presents a modification of the matching and difference-in-differences approach of Heckman et al. (1998) and its Stata implementation, the command flexpaneldid. The approach is particularly useful for causal analysis of treatments with varying start dates and varying treatment durations (like investment grants or other subsidy schemes). Introducing more flexibility enables the user to consider individual treatment and outcome periods for the treated observations. The flexpaneldid command for panel data implements the developed flexible difference-in-differences approach and commonly used alternatives like CEM Matching and difference-in-differences models. The novelty of this tool is an extensive data preprocessing to include time information into the matching approach and the treatment effect estimation. The core of the paper gives two comprehensive examples to explain the use of flexpaneldid and its options on the basis of a publicly accessible data set.
Evidenzbasierte Politikberatung (IWH-CEP)
Zentrum für evidenzbasierte Politikberatung (IWH-CEP) ...
Europas Finanzmarkt: Zwangsehe oder lose Bekanntschaft? IWH-Tagung am 26.02.2020: Gebietsreformen und Banken,...
The Joint Dynamics of Sovereign Ratings and Government Bond Yields
Journal of Banking & Finance,
Can a negative shock to sovereign ratings invoke a vicious cycle of increasing government bond yields and further downgrades, ultimately pushing a country toward default? The narratives of public and political discussions, as well as of some widely cited papers, suggest this possibility. In this paper, we will investigate the possible existence of such a vicious cycle. We find no evidence of a bad long-run equilibrium and cannot confirm a feedback loop leading into default as a transitory state for all but the very worst ratings. We use a bivariate semiparametric dynamic panel model to reproduce the joint dynamics of sovereign ratings and government bond yields. The individual equations resemble Pesaran-type cointegration models, which allow for valid interference regardless of whether the employed variables display unit-root behavior. To incorporate most of the empirical features previously documented (separately) in the literature, we allow for different long-run relationships in both equations, nonlinearities in the level effects of ratings, and asymmetric effects in changes of ratings and yields. Our finding of a single good equilibrium implies the slow convergence of ratings and yields toward this equilibrium. However, the persistence of ratings is sufficiently high that a rating shock can have substantial costs if it occurs at a highly speculative rating or lower. Rating shocks that drive the rating below this threshold can increase the interest rate sharply, and for a long time. Yet, simulation studies based on our estimations show that it is highly improbable that rating agencies can be made responsible for the most dramatic spikes in interest rates.
Do Diasporas Affect Regional Knowledge Transfer within Host Countries? A Panel Analysis of German R&D Collaborations
Interactive regional learning involving various actors is considered a precondition for successful innovations and, hence, for regional development. Diasporas as non-native ethnic groups are regarded as beneficial since they enrich the creative class by broadening the cultural base and introducing new routines. Using data on research and development (R&D) collaboration projects, the analysis provides tentative evidence that the size of diasporas positively affects the region’s share of outward R&D linkages enabling the exchange of knowledge. The empirical analysis further confirms that these interactions mainly occur between regions hosting the same diasporas, pointing to a positive effect of ethnic proximity rather than ethnic diversity.
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