Research

A large literature investigates the employment effects of minimum wages, with comparatively little evidence on other adjustment margins. In this paper, we analyze the impact of a nationwide introduction of minimum wages in Germany on employer-induced work pressure, using detailed worker-level survey data. Applying a difference-in-differences approach, we show that the introduction of minimum wages increased work pressure in occupations more exposed to the minimum wage. The increase in work pressure cannot be explained by compositional changes in terms of demographics, job complexity, or hours worked.

How does Artificial Intelligence (AI) affect the task content of jobs, and how do workers adjust to AI’s diffusion? To answer these important questions, we combine novel patent-based measures of AI and robot exposure with individual survey data on job tasks and administrative data on worker careers. Like prior studies, we find that robots have reduced routine tasks. In sharp contrast, AI has reduced abstract tasks like information gathering and increased the demand for complex routine tasks like monitoring processes. These task shifts affect all skill groups, mainly occur within detailed occupations, and become stronger over time. While displacement effects are small, workers have responded by switching jobs, often to less exposed industries. The AI-related task shifts and negative wage effects are stronger for low-skilled workers and older incumbents. Labor market entrants, in turn, face lower entry wages and fewer employment opportunities in exposed industries.

Workers’ perceptions of pay and job characteristics shape their labor market behavior. We characterize perceptions about the link between wages and amenities across jobs by carrying out a survey among over 3,000 workers in Germany. Average perceptions are consistent with the existence of compensating differentials, i.e., a trade-off between wages and amenities. However, perceptions differ substantially across workers and amenities. Workers subject to lower labor market frictions are more likely to perceive compensating differentials. Workers anchor their beliefs around their personal valuation of amenities, suggesting misperceptions. Finally, beliefs about the link between wages and amenities predict job search behavior.

We use a generalized random forest to provide new insights into the link between exports and earnings inequality between workers. Using German administrative data and exploiting variation in exports to China and Eastern Europe over time, we estimate worker-level earnings responses to exports across skill, demographic, occupational, and firm dimensions. We find that the workers with the largest earnings gains are younger, more likely to be male, high-skilled, employed in specialized occupations, and in large firms. The relative earnings gains peak around the 70th percentile of the pre-shock earnings distribution. Overall, the effects on inequality are modest, as the gains from exports are broadly shared across the earnings distribution.

We use causal machine learning to revisit the link between electronic monitoring (EM) and criminal recidivism. Combining a generalized random forest with the judge instrumental variable design by Di Tella and Schargrodsky (2013), we confirm a negative average effect of EM on rearrest rates. We uncover treatment effect heterogeneity linked to demographics and the criminal history, but the results indicate that no individuals experience an increased rearrest probability from EM. Our findings highlight the benefits of causal machine learning for policy-relevant questions and suggest that the effectiveness of EM depends on the composition of the target population.