Edgar Preugschat - RESEARCH

Thoughts without content are empty, intuitions without concepts are blind.

- Immanuel Kant, Critique of pure reason (1787)

Current Working Papers and Work in Progress

Optimal Regional Labor Market Policies accepted at the European Economic Review (joint with Philip Jung and Philipp Korfmann - previous version: IZA Discussion Paper No. 14204, 2021)

We empirically document and investigate the large regional labor market dispersion of inflow, outflow and unemployment rates within Germany. Using a calibrated model with endogenous mobility we find that optimally set region-specific labor market policies can lead to sizable welfare and employment gains.

Home is Where Your Heart is - Taxation and Regional Mobility over the Life Cycle (joint with Philip Jung and Philipp Korfmann)

We document facts of spatial labor mobility over the life cycle using individual labor market histories for Germany. We then estimate a spatial discrete-choice model to evaluate the effects of the current income tax system in Germany on mobility and welfare and compare our estimates to an optimal tax system.

Publications (with links to working paper versions)

With a quantitative model we argue that housing policies can account for a large fraction of the gap between the homeownership rates in Germany and the US. Moving to a housing policy regime similar to the one in the US would, however, lower welfare in Germany.

We document a strong negative correlation between homeownership rates and wealth inequality for Euro area countries that is robust to the inclusion of other observables. Our study reveals that not only the degree of wealth concentration at the very top but also the wealth accumulation in the lower half of the distribution is important for understanding the cross-country differences in wealth inequality.

Employing an instrumental variable approach we argue in this note that homeownership affects wealth accumulation in a negative way.

We build a model where firms rank applicants by unemployment duration that captures both the observed strong deterioration in job finding rates and the small decline of reemployment wages by duration. The calibrated model shows that the effects of ranking are also quantitatively important.

We develop an explicit and tractable theory that links productivity spillovers to frictional labor mobility between firms. We identify conditions under which policies improve welfare. In particular, we find that covenants not to compete can lower welfare.

We experimentally test theories of pricing when buyers have limited price information and/or face coordination frictions. We confirm the theoretical predictions, except in those cases where sellers face a large fraction of informed buyers without coordination frictions. Adding noise to selling decisions can reconcile data and theory.

Older Working Papers

Efficiency in a Directed Search Model with Information Frictions and Selective Hiring (joint with Javier Fernández-Blanco)

The note shows that if there is symmetric incomplete information about workers' productivity and firms can discriminate between applicants after testing them, vacancies in the current period exert a negative externality on next period’s hiring.

Unionization Patterns and Firm Reallocation

The paper studies a model of the interaction between decentralized union organizing and firm turnover that captures stylized facts of the US. Moreover, the model can generate the observed long-term gradual decline in the unionization rate without relying on concomitant changes in the environment.