Ongoing Research Projects

The Devil is in the Details:
Heterogeneous Effects of the German Minimum Wage on Working Hours and Minijobs 

(with Ying Liang and Thorsten Schank)

In 2015, Germany introduced a national minimum wage. While the literature agrees on at most limited negative effects on the overall employment level, we go into detail and analyze the impact on the working hours dimension and on the subset of minijobs. Using data from the German Structure of Earnings Survey in 2010, 2014, and 2018, we find empirical evidence that the minimum wage significantly reduces inequality in hourly and monthly wages. While various theoretical mechanisms suggest a reduction in working hours, these remain unchanged on average. However, minijobbers experience a notable reduction in working hours which can be linked to the specific institutional framework. Regarding employment, the results show no effects for regular jobs, but there is a noteworthy decline in minijobs, driven by transitions to regular employment and non-employment. The transitions in non-employment imply a wage elasticity of employment of -0.1 for minijobs. Our findings highlight that the institutional setting leads to heterogeneous effects of the minimum wage. 

Revise & Resubmit at the Journal of Public Economics. 

The manuscript is available as arXiv Economics Discussion Paper. 

It is also available as IZA Discussion Paper 16964. 

Labor Demand on a Tight Leash

(with Martin Popp)

We develop a labor demand model that encompasses pre-match hiring cost arising from tight labor markets. Through the lens of the model, we study the effect of labor market tightness on firms' labor demand by applying novel shift-share instruments to the universe of German firms. In line with theory, we find that a doubling in tightness reduces firms' employment by 5 percent. Taking into account the resulting search externalities, the wage elasticity of firms' labor demand reduces from -0.7 to -0.5 through reallocation effects. In light of our results, pre-match hiring cost amount to 40 percent of annual wage payments. 

Revise & Resubmit at the ILR Review. 

The manuscript is available as arXiv Economics Discussion Paper. 

It is also available as IZA Discussion Paper 16837.

Scarce Workers, High Wages?

(with Erik-Benjamin Börschlein and Martin Popp)

Labor market tightness tremendously increased in Germany between 2012 and 2022. We analyze the effect of tightness on wages by combining social security data with unusually rich information on vacancies and job seekers. Instrumental variable regressions reveal positive elasticities between 0.004 and 0.011, implying that higher tightness explains between 7 and 19 percent of the real wage increase. We report greater elasticities for new hires, high-skilled workers, the Eastern German labor market, and the service sector. In particular, tightness raised wages at the bottom of the wage distribution, contributing to the decline in wage inequality over the last decade. 

The manuscript is available as arXiv Economics Discussion Paper. 

A 22 percent increase
in the German minimum wage:
nothing crazy! 

(with Lars Chittka and Thorsten Schank)

We present the first empirical evidence on the 22 percent increase in the German minimum wage, implemented in 2022, raising it from Euro 9.82 to 10.45 in July and to Euro 12 in October. Leveraging the German Earnings Survey, a large and novel data source comprising around 8 million employee-level observations reported by employers each month, we apply a difference-in-difference-in-differences approach to analyze the policy's impact on hourly wages, monthly earnings, employment, and working hours. Our findings reveal significant positive effects on wages, affirming the policy's intended benefits for low-wage workers. Interestingly, we identify a negative effect on working hours, mainly driven by minijobbers. The hours effect results in an implied labor demand elasticity w.r.t. the employment volume of -0.17 which only partially offsets the monthly wage gains. We neither observe a negative effect on the individual's employment retention nor the regional employment levels.

The manuscript is available as arXiv Economics Discussion Paper. 

Long-run minimum wage evaluation from machine learning-based treatment bites

(with Benjamin Börschlein)

The empirical evaluation of national minimum wages, as proposed by Card (1992), relies on a bite measure that captures treatment variation, typically defined using wage information from the last period before the intervention. Bite-dependent estimates face the problem of dynamic selection. That is, it only identifies effects on initially treated workers, but the treatment bite may change over time. We apply machine learning methods to predict the contemporaneous bite of the German minimum wage. This allows us to estimate the impact on contemporaneously treated workers instead of initially treated workers. In a validation period, LASSO-predicted bite measures show significant improvements over conventional time-constant measures. When estimating contemporaneous wage effects of the German minimum wage introduction, wage increases are positive but smaller compared to conventional estimates.

The most recent version can be accessed here. 

Women helping women!
A replication from German administrative data

Female bosses helping other women to advance to managerial positions is a prominent finding of Kunze & Miller (The Review of Economics and Statistics, 99(5), 2017). A replication using novel information in the population of German administrative employment data corroborates the original finding. It also buttresses their result that women have to compete with other women to receive promotion. Complementing these results, I document that female careers are particularly disadvantaged in high-paying firms, where female bosses are even more important for women's chances of advancement. These results underscore the importance of the initial findings for women's chances of reaching managerial positions even in high-paying segments of the labor market.