with Jean-Victor Alipour, Oliver Falck, Simon Krause, Sebastian Wichert

CESifo Working Paper No. 10000, 2022. Reject & Resubmit, The Economic Journal.

Abstract: We estimate the impact of working from home (WFH) on the micro-geography of offline consumer spending in urban agglomerations. Our analysis draws on micro-geographic card-transaction data and WFH patterns in German cities between January 2019 and May 2022. We use a difference-in-differences design that exploits the spatially differential exposure to the WFH shock induced by Covid-19 through the local scope to expand WFH. Our estimates suggest that local spending increases by 2–3 percent per standard deviation higher pre-pandemic untapped WFH potential. These effects hold after the permanent lifting of pandemic restrictions, indicating persistent relocations of offline consumption within cities.

with Mathias Dolls, Clemens Fuest, Florian Neumeier

CESifo Working Paper No. 8839, 2021. Revise & Resubmit, Journal of Urban Economics.

Abstract: This paper examines the effects of real estate transfer taxes (RETT) on property prices using a rich micro dataset of roughly 17 million German properties for the period from 2005 to 2019. We exploit a 2006 constitutional reform that allows states to set their own RETT rates, leading to frequent increases in states’ tax rates in the subsequent years. Our monthly event study estimates indicate a price response that strongly exceeds the change in the tax burden for single transactions. Twelve months after a reform, a one percentage point increase in the tax rate reduces property prices by on average 3%. Effects are stronger for apartments and apartment buildings than for single-family houses. Moreover, negative price effects are predominantly found in growing housing market regions. Our results can be rationalized by a theoretical model that predicts larger price responses in sellers’ markets and for properties with a high transaction frequency.

with Julia Bachtrögler-Unger, Mathias Dolls, Paul Schüle, Hannes Taubenböck, Matthias Weigand

Regional Science and Urban Economics, 103, 103954, 2023.

Abstract: We present a novel approach for analyzing the effects of EU cohesion policy on local economic activity. For all municipalities in the border area of the Czech Republic, Germany and Poland, we collect project-level data on EU funding in the period between 2007 and 2013. Using night light emission data as a proxy for economic development, we show that the receipt of a higher amount of EU funding is associated with increased economic activity at the municipal level. Our paper demonstrates that remote sensing data can provide an effective way to model local economic development also in Europe, where no comprehensive cross-border data is available at such a spatially granular level.

with Mathias Dolls

Journal of Public Economics, 223, 104909, 2023.

Abstract: This paper analyzes behavioral responses to a 2014 reform in the German public pension system that lowered the full retirement age (FRA) of individuals with a long contribution history by up to two years and framed the new FRA as reference age for retirement. Using administrative data from public pension insurance accounts, we first document a substantial bunching response at the FRA exceeding the control group’s bunching by 83%. Second, we show in a difference-in-difference setting that a 1.0 year decrease in the FRA leads to a reduction in the average pension claiming age by 0.3-0.4 years. Treated individuals neither have poorer health nor are more likely to be liquidity-constrained than individuals in the control group. Our results suggest that the strong responses to the reform are driven both by the new FRA serving as a reference point and by financial incentives. Estimated fiscal costs of the reform are at the upper end of the range of previous back-of-the-envelope calculations. 

International Tax and Public Finance, 30, 215–246, 2023.

Abstract: This paper assesses to which degree housing purchase subsidies are capitalized into property prices. Using a large-scale micro-dataset on German house prices, I exploit the introduction of a new subsidy scheme in the state of Bavaria. My difference-in-difference estimations at the Bavarian interstate border indicate that the prices of single-family homes increased by approximately 10,000 euros more in Bavarian border regions. This is consistent with a full capitalization of the subsidy. No effect is found for apartments, whose purchasers seldom qualify for the subsidy. A heterogeneity analysis confrms that the price efect is larger in segments of the real estate market with a higher exposure to the subsidy scheme. I also provide suggestive evidence that the subsidy scheme slightly stimulated construction activity. Overall, my results indicate that instead of making house purchases more afordable for families, the subsidy scheme led to a rise in house prices and mainly benefted sellers of properties.

with Lukas Buchheim, Jonas Dovern, Sebastian Link

Journal of Economic Behavior & Organization, 195, 186-198, 2022.

Abstract: How did optimism or pessimism about the duration of shutdowns during the COVID-19 pandemic affect firms’ business outlook and behavior? In a large panel of German firms, we identify sentiment as the only plausible determinant of the cross-sectional variation in the expected shutdown length because this variation is uncorrelated with fundamentals. Firms incorporate this sentiment regarding the shutdown duration in their more general business outlook. Sentiment was also an important determinant of firms’ crisis response: More pessimistic firms—those that perceived the shutdown to last longer—were more likely to implement strong measures like layoffs or canceling investments. The implementation of soft measures, e.g., working from home, was unrelated to the sentiment regarding the shutdown length.

with Andreas Peichl, Daniel Waldenström

The Journal of Economic Inequality, 20, 97-188, 2022.

Abstract: This paper studies the sensitivity of long-run trends in top income shares to differences in top-share measures. While the standard measure fixes a share of the population, we define alternatives that allow variation in both incomes and size of the top group based on defining absolute income thresholds. In an application to United States data, we find that top income share trends over the past century vary somewhat depending on the measure used. Allowing top groups to increase in size after 1980 along with overall economic growth results in a larger increase of top income shares. The historical drops before WWII are sensitive to the choice of income deflator: using GDP inflates interwar top income shares but using CPI deflates them. Altogether, these results recommend using complementary approaches to defining top income groups when measuring long-term top income share trends.

with Lukas Buchheim, Sebastian Link

German Economic Review, 23(1), 79-119, 2022.

Abstract: COVID-19 hit firms by surprise. In a high frequency, representative panel of German firms, the business outlook declined and business uncertainty increased only at the time when the spread of the COVID-19 pandemic led to domestic policy changes: The announcement of nation-wide school closures on March 13 was followed by the largest change in business perceptions by far. In contrast, the data provides no evidence for the relevance of other potential sources of information on business perceptions: Firms did not learn from foreign policy measures, even if they relied on inputs from China or Italy. The local, county-level spread of COVID-19 cases affected expectations and uncertainty, albeit to a much lesser extent than the domestic policy changes.

with Dorine Boumans, Clemens Fuest, Klaus Wohlrabe

International Tax and Public Finance, 27, 1608–1630, 2020.

Abstract:The Tax Cuts and Jobs Act constitutes the largest change to the US tax system since the 1980s and thoroughly alters the way in which multinational companies are taxed. Current assessments on the reform’s international impact vary widely. This article sheds light on the tax reform’s expected effects on other countries. We first use representative German business survey data to analyze the impact of the reform on German firms. Many firms with substantial US revenues or capacities in the USA intend to expand US investment in response to the reform, in particular large firms and manufacturing companies. The effects on investment in Germany are ambiguous: While some firms substitute between investment locations, others expand in both countries. We subsequently extend our analysis to a global level using worldwide survey data. The results suggest a negative impact on tax revenues and investment in countries with close economic ties to the USA.

with Maurizio Bussolo, Mattia Makovec, Andreas Peichl, Marc Stöckli, Iván Torre, Christian Wittneben

in: What Drives Inequality?, Research on Economic Inequality, 27, 19-38, 2019.

Abstract: European countries have the world’s most redistributive tax and transfer systems. While they have been well equipped to deal with vertical inequality – fostering redistribution from the rich to the poor – less is known about their performance in dealing with horizontal inequality, that is, in redistributing across socioeconomic groups. In a context where individuals may not only care about vertical redistribution, but also about the economic situation of the specific groups they belong to, the horizontal dimension of redistribution becomes politically salient and can be a source of social tensions. The authors analyse the performance of the 28 EU countries for redistribution across (i) age groups; (ii) occupational groups; and (iii) household types over the period 2007–2014 using counterfactual simulation techniques. We find a significant degree of heterogeneity across countries: changes in the tax and transfer system have particularly hit the young and the losers of occupational change in Eastern European countries, while households with greater economic security have benefited from these changes. The findings of this study suggest that horizontal inequality is a dimension which policy-makers should take into account when reforming tax and transfer systems.