Research
Firm expansion in imperfect labor markets
with Ines Helm and Uta Schoenberg
We test for imperfect competition in the labor market by analyzing the effects of sudden expansions among medium-sized firms on wage setting. Our approach allows us to study the wage response to firm-specific labor demand shocks across a wide range of industries. We combine matching with an event study approach to trace wages in expanding firms relative to those in suitable control firms. We find that in response to an average increase in firm size of 35 percent, residual wages at expanding firms rise by 2 percent. We do not find any indication of spillover effects on total local labor demand. Therefore, the positive wage effects appear to reflect a movement along the labor supply curve faced by the firm. These estimates imply an inverse labor supply elasticity to the firm of 0.07, which is approximately equal to the markdown in wages from their level in a perfectly competitive equilibrium. We validate this monopsony interpretation by further showing that (1) the commuting times of hired workers increase following firm expansion, (2) markdowns are higher for workers with fewer outside options, (3) markdowns are higher in local industries with more concentrated employment, and (4) markdowns are lower in firms that take part in collective bargaining. Finally, we document that the estimated wage markdowns have increased over time.
Do temporary employees experience increased material deprivation? Evidence from German panel data
with Nils Teichler
Revised and resubmitted to Journal of European Social Policy
Economic insecurity has recently received increasing attention as a determinant of material deprivation. We contribute to this line of research by analyzing the relationship between temporary employment and material deprivation. We argue that low-income workers who are employed temporarily face exacerbated deprivation because they may forego basic needs to provide for an uncertain future. We use German panel data for the years 2008–2020, finding that temporary employment is positively associated with material deprivation. This finding is robust to our controlling for important variables such as household income and needs, individual- and household fixed effects and when considering lagged independent variables. The association is not driven by young or highly educated workers who may be more likely to hold temporary jobs without experiencing sustained material deprivation. In further analyses, we also find a positive association between material deprivation and temporary agency work, as well as perceived job insecurity.
published in Journal of Economics & Statistics
This paper evaluates the short to medium run employment effects of the 2015 introduction of a statutory minimum wage in Germany. The effect of the policy is recovered from variation in the bite of the minimum wage across occupations using a difference-in-differences estimator. The analysis reveals that the reform only had a small impact on employment and highlights the importance of regional effect heterogeneity. In East Germany, marginal employ- ment decreased by about 18,000 jobs in the short run and 52,000 jobs in the medium run, respectively, due to the minimum wage. In West Germany, no negative employment effects are detectable, but regular employment increased temporarily because of the reform. The medium run estimates include the impact of the first marginal increase of the wage floor from €8.50 to €8.84 in 2017.
Employment effect of firm expansion
Wage effect of firm expansion
Effect of temporary employment on material deprivation along the income distribution
Trend of marginal employment ("mini jobs") around minimum wage reform in weakly vs. strongly treated occupations
