Research

Sebastian Camarero Garcia and Michelle Hansch (2021): The effect of unemployment insurance benefits on (self-) employment: Two sides of the same coin?, Bundesbank Discussion Paper, No.  18/2021, Deutsche Bundesbank. R&R (Journal of Human Resources). 

Presented at: International Institute of Public Finance Conference (IIPF), Virtual Iceland, August 2020; Joint World Conference of EALE, SOLE and AASLE, Virtual Berlin, June 2020; European Association of Young Economists, 25th Spring Meeting of Young Economists (SMYE), Virtual Bologna, June 2021.

Abstract: Although active labor market policies often subsidize unemployed individuals to start their own businesses, little is known about the role of unemployment insurance (UI) generosity for self-employment. Exploiting the 2012 labor market reform in Spain which increased a discontinuity in the UI benefit schedule, we estimate the causal effect of lower UI generosity on the extensive margin of (self-)employment. We find heterogeneous effects: while the job-finding rate increases, the startup rate decreases. The reform’s unintended negative effect on self-employment (35-50%) outweighs the positive effect on re-employment (5-33%). The combined employment effect is smaller than analyses focusing only on re-employment suggest. 

Michelle Hansch, Jan Nimczik, and Alexandra Spitz-Oener (2024): Workplace Connections and Labor Migration: The Role of Information in Shaping Expectations, CRC Discussion Paper, No. 490.

Abstract: In a context where improved employment outcomes entail relocating to a new destination, how does information from former coworkers alter workers' labor migration decisions? We explore this question using the unique backdrop of German reunification in the early 1990s. For former workers of the German Democratic Republic (GDR), improving employment outcomes typically meant relocating to West Germany, which most were reluctant to do. We show that information from former GDR coworkers in West Germany significantly increased the employment probability of East Germans in West Germany. To identify these network effects, we document and exploit that GDR workers were as-good-as randomly assigned to networks by the GDR system from the perspective of the West German market economy. We then establish that the networks only trigger migration responses among East Germans whose contacts had positive work experiences in the West and were similar in their earnings potential in the market-based economy of reunified Germany. These contacts, in essence, serve as role models for the workers' prospects in the West, leading workers to trust the advice and assessments provided and ultimately altering the expected benefits from labor migration for the specific worker.

Smoothing the Turmoil: Harmonization of the KldB 1988 Occupation Codes over Time.