Working Papers
Displacement Effects in Manufacturing and Structural Change (with Alice Kügler and Uta Schönberg) - revise and resubmit at Review of Economic Studies
We investigate the consequences of structural change for workers displaced from the manufacturing sector. Manufacturing establishments traditionally employed low- and high-wage workers in similar proportions and paid substantial wage premiums to both types of workers. Structural change has led to the disappearance of these jobs, particularly for low-wage workers. Decomposing displacement wage losses, we show that low-wage workers suffer considerable losses in establishment premiums following displacement, whereas high-wage workers tend to fall down the match quality ladder. With ongoing structural change, losses in wages and establishment premiums have increased over time, especially for low-wage workers, in part because they are increasingly forced to switch to low-knowledge service jobs where establishment premiums are low. Our findings further highlight that structural change and layoffs in manufacturing have significantly contributed to job polarization and the rise in assortative matching of workers to firms.
Firm Expansion in Imperfect Labor Markets (with Martin Friedrich and Uta Schönberg) - draft available upon request
We test for the prevalence of imperfect competition in the labor market by analyzing the effects of sudden expansions among medium-sized firms on wage setting combining matching with an event study approach. The approach allows us to study the wage response to firm-specific labor demand shocks across a wide range of industries and occupations, while guarding ourselves against picking up region-specific shocks or spillover effects on overall local labor demand. We find that in response to an average increase in firm size of 35 percent, residual wages at expanding firms rise by 2 percent implying a markdown due to labor market power of around 0.07. We facilitate this interpretation by showing that (1) the commuting times of hired workers increase following the expansion, (2) markdowns are higher for workers that have fewer outside options and (3) markdowns are higher in local industries where employment is more concentrated. We further show that firms hold more labor market power over incumbent than newly hired workers and that markdowns have risen over time.
Workplace Heterogeneity in Wage Growth (with Diego Battiston and Martin Friedrich) - draft available upon request
We study differential wage growth across firms. To this end, we propose a statistical model that extends the workhorse model of wage determination by Abowd et al. (1999) to allow for firm-type-specific wage growth. We estimate the model using linked employer-employee data from Germany for the years 1996 to 2016. We show that wage growth differs across firms and that these differences can at least partially be explained by differential human capital accumulation. Workers keep the additional accumulated pay when switching firms. This has important considerations for our understanding of the sources of wage inequality. We show that the presence of firm-type specific wage growth biases the variance and sorting components of the AKM model. The dispersion of worker quality and sorting is less important in explaining wage inequality than previously thought.
Selected Work in Progress
The Local Fiscal Response to Migration (with Tyler Brown and Jan Stuhler)
Interregional Tax Competition (with Jan Stuhler and Jelena Todorovic)
Can Public Spending Stimulate the Local Labor Market? (with Camila Steffens and Jan Stuhler)
Why do individuals do gig work? (with Martin Friedrich, Vico Kutz, Julia Lang, Christoph Mueller and Jan Nimczik)
Publications and Accepted Papers
The Dynamic Response of Municipal Budgets to Revenue Shocks (with Jan Stuhler)- American Economic Journal: Applied Economics, Vol 16 (4), 2024 (Working Paper Version)
How do fiscal grants affect revenues, spending and taxation? Exploiting quasi-exogenous variation in Germany’s fiscal equalization scheme triggered by Census recounts, we study the local fiscal response to intergovernmental grants. The response exhibits important dynamics. With investments peaking after five years, fiscal grants generate dynamic feedback effects between spending and revenue streams and a positive long-run multiplier. Revenue losses trigger more rapid adjustments, yet the long-run response is symmetric. The tax response only becomes sizeable several years after the shock, and stretches over more than a decade. Well-known empirical anomalies in public finance such as the “flypaper effect” are thus primarily a short-run phenomenon, while long-run fiscal behavior appears more consistent with standard theories of fiscal federalism.
The Effects of Cash for Clunkers on Local Air Quality (with Nicolas Koch and Alexander Rohlf) - Journal of Urban Economics, Vol 138 (6), 2023 (Working Paper Version)
We study the effects of a large car scrappage scheme in Germany on new car purchases and local air quality by combining vehicle registration data with data on local air pollutant emissions. For identification we exploit cross-sectional variation across districts in the number of cars eligible for scrappage. The scheme had substantial effects on car purchases and did not simply reallocate demand across time in the short-term. Nevertheless, about half of all subsidized buyers benefited from windfall gains. The renewal of the car stock improved local air quality suggesting substantial mortality benefits that likely exceed the cost of the policy. While policy take-up is somewhat smaller in urban districts, improvements in air quality and health tend to be larger due to a higher car density.
National Industry Trade Shocks, Local Labor Markets, and Agglomeration Spillovers - Review of Economic Studies, Vol. 87 (3), 2020 (Working Paper Version)
I was awarded the Young Labour Economist Prize (2017) of the European Association of Labour Economists (EALE) for this paper.
Using a broad set of national industry trade shocks, I employ a novel approach to estimate agglomeration effects by exploiting within industry variation in indirect exposure to the other local industries’ (national) trade shocks across local labor markets. This variation stems from differences in local industry composition and allows to test for the existence of heterogeneous agglomeration effects across industries. I find considerable employment spillovers from other tradable industries’ trade shocks and even stronger effects within the same broad sector. Spillovers are larger for industries employing similar workers and are triggered predominantly by shocks to high technology industries.
Spillover Effects of Mass Layoffs (with Christina Gathmann & Uta Schönberg) - Journal of the European Economic Association, Vol. 18 (1), 2020 (Working Paper Version)
Using administrative data on firms and workers in Germany, we quantify the spillover effects of mass layoffs. Our empirical strategy combines matching with an event study approach to trace employment and wages in regions hit by a mass layoff relative to suitable control regions. We find sizable and persistent negative spillover effects on the regional economy: regions, and especially firms producing in the same broad industry as the layoff plant, lose many more jobs than in the initial layoff. In contrast, negative employment effects on workers employed in the region at the time of the mass layoff are considerably smaller. Strikingly, workers younger than 50 suffer no employment losses, as geographic mobility fully shields them from the decline in local employment opportunities.
Other Publications/ Policy Reports
Regionaldaten: Verknüpfungen ermöglichen (with Thomas Bauer, Christina Gathmann, Christian Raffer, Sebastian Siegloch, Sandra Schaffner, Andreas Lichter) - Wirtschaftsdienst, 2023, 103(11), 746-749
Gig-Work bei Lieferdiensten in Deutschland: Beschäftigung hat in den letzten Jahren stark zugenommen (with Martin Friedrich, Ramona Jost, Julia Lang , Christoph Müller) - IAB Forum, April 2024, Series „Beschäftigung in der Gig-Ökonomie“