Ongoing Work
Minimum Wages and the Rise in Solo Self-Employment
joint with Terry Gregory and Angelika Ganserer, IZA Discussion Paper 15283. (update September 2023)
We show that the first-time adoption of minimum wages in German industries led to an increase in the share of solo self-employment by up to 8.1 percentage points within a quasi-experimental setting. We explain this result with the cost shock, which led to reduced labor demand and wages for dependent employment, while at the same time creating incentives for independent employment. Our results suggest that dependent employees have been involuntarily pushed into solo self-employment. As a consequence, these workers experience more precarious employment with poorer social security and lower incomes. Such unintended side effects are likely to occur when the minimum wage is set extraordinarily high, especially during an economic downturn.
Effect of Minimum Wages on Solo Self-Employment
Task Shifts in the Fourth Industrial Revolution - Firm-Level Evidence
joint with Melanie Arntz, Sabrina Genz, Terry Gregory, and Florian Lehmer, IZA Discussion Paper 16740
Computerization has replaced workers in routine occupations and resulted in job polarization. This paper links administrative employment data with a novel firm survey to distinguish computerization from older 3.0 and cutting-edge 4.0 technologies. We find that the decline of routine tasks is not linked to technology adoption within firms. Instead, de-routinization is mainly driven by employment relocation within 4.0 adopter group. We explain our findings with a scale and composition effects of adopting cutting-edge technologies, such as Artificial Intelligence: large adopters at the outset replace more routine tasks, and initially less routine-intensive adopters grow faster. This suggests that successful technology adoption requires complementary investments in re-training and organizational change.
Decomposition of task changes in 4.0 technology adopters
Expertise at Work: New Technologies, New Skills, and Worker Impacts
joint with Cäcilia Lipowski and Anna Salomons, ZEW Discussion Paper
We study how new digital technology reshapes vocational training and skill acquisition and its impact on workers' careers. We construct a novel database of legally binding training curricula and changes therein, spanning the near universe of vocational training in Germany over five decades, and link curriculum updates to breakthrough technologies using Natural Language Processing techniques. Our findings reveal that technological advances drive training updates, with curriculum content evolving towards less routine intensive tasks, and greater use of digital and social skills. Using administrative employer-employee data, we show that educational updates help workers adapt to new demands for their expertise, and earn higher wages compared to workers with outdated skills. These findings highlight the role of changes in within-occupational skill supply in meeting evolving labor market demands for non-college educated workers.
This paper finds that firms respond to trade shocks by changing outsourcing more than labor, adjusting their labor-to-outsourcing ratio, and thus mitigating potential employment consequences of trade. High labor adjustment costs may serve as an explanation in the short run, but we find that these effects are persistent. We develop a theoretical framework to show which properties production functions must fulfill to explain these effects and show that these conditions are met in our data. The shape of the production technology can explain why outsourcing persistently mitigates employment consequences of trade shocks.
Computing Capital Stocks in the German Social Security Records and Quantifying their Role for Wage Inequality
joint with Markus Janser and Florian Lehmer, minor revision at CESifo Economic Studies
We develop a method to compute capital stocks from investments for a sub-sample of firms in the German social security records and implement a machine-learning algorithm to predict capital stocks for all remaining firms. These capital stocks explain 40 % of the variation in capital stocks of the Bureau van Dijk data. We make our data available for other researchers. We find that capital stocks explain a sizeable fraction of wage inequality by extending the variance decomposition of Card et al. (2013): Up to 24.3 % of firm wage premia can be explained by differences in capital stocks.