Work in progress
Labor market integration policies and the convergence of regions (with Herbert Dawid, Simon Gemkow, and Philipp Harting)
Abstract: We study the role of different labor market integration policies on economic performance and convergence of two distinct regions in an agent-based model. Due to a complementarity between the cost saving nature of capital goods with a higher quality and specific skills needed to fully exploit the technologically advanced capital stock, distinct labor market policies result in non-trivially different outcomes. We show that various labor market integration policies yield via differing regional worker flows to distinct regional distributions of specific skills. Through this mechanism relative regional prices are affected determining the shares that the regions can capture from overall consumption good demand. There occurs to be a trade-off between aggregate output and convergence of regions with closed labor markets resulting in relatively high convergence but low output, and more integrated labor markets yielding higher output but lower convergence. Furthermore, results differ substantially in several respects as distinct labor market opening policies are applied..
How German labor courts decide: an econometric case study (with Helge Berger)
Abstract: Courts are an important element in the institutional framework of labor markets, often determining the actual degree of employment protection through their interpretation and development of the law. German labor courts provide a vivid example in this regard, but little is know about their behavior. A unique data set of more than 200 court verdicts reveals that social criteria such as age or tenure influence court decisions. This reflects some of the legal guidelines given to judges. However, various other employee characteristics, the type of job, local labor market conditions, and court composition also seem to shape labor court behavior. At least as striking is the fact that workers’ chances to win seem to depend systematically on where and when their cases are filed. Lastly, while labor court behavior is predictable to some degree, considerable ex-ante uncertainty about outcomes remains.
Economic incentives and the timing of births: Evidence from the German parental benefit reform 2007 (with Henry Ohlsson)
Abstract: Economic theory suggests that incentives matter for people's decisions. This paper investigates whether this also holds for less self-evident areas of life such as the timing of births. We make use of a natural experiment when the German government changed its parental benefit system January 1, 2007. The policy change strongly increased economic incentives for women to postpone delivery to the new year provided that they were employed.The incentives for women not employed were not the same, they could gain slightly from giving birth before the policy change. Applying a difference-in-difference-in-difference approach, we find very strong evidence that women with an employment history near to the end of their term indeed succeeded to shift births and became subject to the new and more generous parental benefit system.We estimate the quantitative impact to correspond to a 5--6~percentage points increased probability to give birth the first seven days of 2007 rather than the last seven days of 2006 for employed women.
Labour courts, nomination bias and unemployment in Germany (with Helge Berger)
Abstract: Labor courts play an important role in determining the effective level of labor market regulation in Germany, but their application of law may not be even-handed. Based on a theoretical model of the legal process and a new panel data set, we identify a nomination bias in labor court activity -- that is, court activity varies systematically with the political leaning of the government that has appointed judges. In an extension, we find a significant positive relation between labor court activity and unemployment, even after controlling for the endogeneity of court activity.
Female employment and divorce: taking into account a social multiplier
Abstract: We propose a model of interactions in marriage and labor markets that takes into account a feedback process from aggregate divorce rates on individuals' decisions. By including this social multiplier one can explain why no or even relatively small changes in men's attitudes towards sharing the breadwinner role with their wives may result in considerable variation of female labor force participation rates and divorce rates.
Coalition governments and policy reform with asymmetric information (with Carsten Helm)
Abstract: With ideological parties being better informed about the state of the world than voters, the true motivation of policy proposals is hard to judge for the electorate. However, if reform proposals have to be agreed upon by coalition parties, it may become possible for the government to signal to the voters its private information about the necessity of reforms. Therefore, in coalition governments reforms will be more in line with policy requirements than in single-party governments. This is usually beneficial for the coalition parties as well as for the voter.
Referral hiring, endogenous social networks, and inequality: an agent-based analysis (with Simon Gemkow)
Abtract: The importance of referral hiring which is workers finding employment via social contacts is nowadays an empirically well documented fact. It also has been shown that social networks for finding jobs can create stratification. These analyses are by and large based on exogenous network structures. We go beyond the existing work by building an agent-based model of the labor market where the social network of potential referees is endogenous. Workers invest some of their endowments into building up and fostering their social networks as an insurance device against future job losses. We look into how social networks and inequality respond to increased uncertainty in the labor market. We find that larger variability in firms' labor demand reduces workers' efforts put into social networks leading to lower inequality.