Employment Effects of Introducing a Minimum Wage: The Case of Germany
Oliver Holtemöller, Felix Pohle
Economic Modelling,
July
2020
Abstract
Income inequality has been a major concern of economic policy makers for several years. Can minimum wages help to mitigate inequality? In 2015, the German government introduced a nationwide statutory minimum wage to reduce income inequality by improving the labour income of low-wage employees. However, the employment effects of wage increases depend on time and region specific conditions and, hence, they cannot be known in advance. Because negative employment effects may offset the income gains for low-wage employees, it is important to evaluate minimum-wage policies empirically. We estimate the employment effects of the German minimum-wage introduction using panel regressions on the state-industry-level. We find a robust negative effect of the minimum wage on marginal and a robust positive effect on regular employment. In terms of the number of jobs, our results imply a negative overall effect. Hence, low-wage employees who are still employed are better off at the expense of those who have lost their jobs due to the minimum wage.
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01.07.2020 • 11/2020
New Horizon 2020 project: The Challenge of the Social Impact of Energy Transitions
Funded by the European Commission’s Framework Programme Horizon 2020, the ENTRANCES project recently closed its kick-off meeting with a high scientific and institutional participation, and taking on the challenge of modeling the social impact of the energy transition.
Oliver Holtemöller
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Corona Shutdown and Bankruptcy Risk
Oliver Holtemöller, Yaz Gulnur Muradoglu
IWH Online,
No. 3,
2020
Abstract
This paper investigates the consequences of shutdowns during the Corona crisis on the risk of bankruptcy for firms in Germany and United Kingdom. We use financial statements from the period 2014 to 2018 to predict how pervasive risk of bankruptcy becomes for micro, small, medium, and large firms due to shutdown measures. We estimate distress for firms using their capacity to service their debt. Our results indicate that under three months of shutdown almost all firms in shutdown industries face high risk of bankruptcy. In Germany, about 99% of firms in shutdown industries and in the UK about 98% of firms in shutdown industries are predicted to be under distress. The furlough schemes reduce the risk of bankruptcy only marginally to 97% of firms in shutdown industries in Germany and 95% of firms in shutdown industries in the United Kingdom in case of a three-month shutdown. In sectors that are not shutdown under conservative estimates of contagion of sales losses, our results indicate considerable risk of widespread bankruptcies ranging from 76% of firms in Germany to 69% of firms in the United Kingdom. These early findings suggest that the impact of corona crisis on corporate sector via shutdowns can be severe and subsequent policy should be designed accordingly.
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Drilling and Debt
Erik P. Gilje, Elena Loutskina, Daniel Murphy
Journal of Finance,
No. 3,
2020
Abstract
This paper documents a previously unrecognized debt‐related investment distortion. Using detailed project‐level data for 69 firms in the oil and gas industry, we find that highly levered firms pull forward investment, completing projects early at the expense of long‐run project returns and project value. This behavior is particularly pronounced prior to debt renegotiations. We test several channels that could explain this behavior and find evidence consistent with equity holders sacrificing long‐run project returns to enhance collateral values and, by extension, mitigate lending frictions at debt renegotiations.
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Bank Accounting Regulations, Enforcement Mechanisms, and Financial Statement Informativeness: Cross-country Evidence
Augustine Duru, Iftekhar Hasan, Liang Song, Yijiang Zhao
Accounting and Business Research,
No. 3,
2020
Abstract
We construct measures of accounting regulations and enforcement mechanisms that are specific to a country's banking industry. Using a sample of major banks in 37 economies, we find that the informativeness of banks’ financial statements, measured by the value relevance of earnings and common equity, is higher in countries with stricter bank accounting regulations and countries with stronger enforcement. These findings suggest that superior bank accounting and enforcement mechanisms enhance the informativeness of banks’ financial statements. In addition, we find that the effects of bank accounting regulations are more pronounced in countries with stronger enforcement in the banking industry, suggesting that enforcement is complementary to bank accounting regulations in achieving higher value relevance of financial statements. Our study has important policy implications for bank regulators.
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Comparing Financial Transparency between For-profit and Nonprofit Suppliers of Public Goods: Evidence from Microfinance
John W. Goodell, Abhinav Goyal, Iftekhar Hasan
Journal of International Financial Markets, Institutions and Money,
January
2020
Abstract
Previous research finds market financing is favored over relationship financing in environments of better governance, since the transaction costs to investors of vetting asymmetric information are thereby reduced. For industries supplying public goods, for-profits rely on market financing, while nonprofits rely on relationships with donors. This suggests that for-profits will be more inclined than nonprofits to improve financial transparency. We examine the impact of for-profit versus nonprofit status on the financial transparency of firms engaged with supplying public goods. There are relatively few industries that have large number of both for-profit and nonprofit firms across countries. However, the microfinance industry provides the opportunity of a large number of both for-profit and nonprofit firms in relatively equal numbers, across a wide array of countries. Consistent with our prediction, we find that financial transparency is positively associated with a for-profit status. Results will be of broad interest both to scholars interested in the roles of transparency and transaction costs on market versus relational financing; as well as to policy makers interested in the impact of for-profit on the supply of public goods, and on the microfinance industry in particular.
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IWH-Tarif-Check: Kräftige Reale Netto-Tariflohnzuwächse für Beschäftigte in der Chemischen Industrie: Neue Gehaltsbestandteile in der Chemischen Industrie erhöhen reale Netto-Tariflohnzuwächse deutlich
Oliver Holtemöller, Birgit Schultz
IWH-Tarif-Check,
No. 2,
2019
Abstract
Ende November 2019 wurde ein neuer Tarifvertrag für die Chemische Industrie abgeschlossen. Dementsprechend steigen die tabellenwirksamen Tariflöhne zum Juli 2020 um 1,5% und ein Jahr später nochmals um 1,3%. Hinzu kommen Einmalzahlungen in Höhe von 4,0% – 6,0% eines Monatsentgelts für die Zeit bis zur ersten Tariferhöhung im Juli 2020. Zusätzlich wurde erstmalig ein tarifliches Zukunftskonto im Gegenwert von zwei Tagen im Jahr 2020, drei Tagen im Jahr 2021 und danach jeweils fünf Tagen je Jahr vereinbart, die als Freizeit genommen, angespart oder ausgezahlt werden können. Dies entspricht einem Plus von 1,8 %. Hinzu kommt eine tarifliche Pflegezusatzversicherung und die Anhebung des Weihnachtsgeldes. Durch diese Zusatzvereinbarungen werden die eher niedrigen tabellenwirksamen Tariflohnsteigerungen erheblich aufgewertet. Insgesamt umfasst der Tariflohnabschluss ein Plus von mehr als 6% für eine Laufzeit von bis zu 29 Monaten.
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Konjunktur aktuell: Weltwirtschaft wieder etwas kräftiger – aber Deutschland zunächst weiter im Abschwung
Konjunktur aktuell,
No. 4,
2019
Abstract
Im Jahr 2020 zieht die Weltwirtschaft wieder etwas an, weil der Gegenwind von den Handelskonflikten nachlässt. Die jüngsten Produktionsdaten deuten allerdings noch nicht auf eine durchgreifende Besserung der internationalen Konjunktur hin. Auch wegen der niedrigen Preisdynamik ist die Geldpolitik im Lauf des Jahres vielerorts noch einmal expansiver geworden. Wenn weitere Zollerhebungen im Wesentlichen ausbleiben, dürfte der Abschwung im Verarbeitenden Gewerbe um die Jahreswende 2019/2020 zu Ende gehen. Allerdings bleibt die Zukunft der politischen Rahmenbedingungen für den internationalen Handel unsicher. Das ist ein wichtiger Grund, warum mit einem kräftigen weltwirtschaftlichen Aufschwung für den Prognosezeitraum nicht zu rechnen ist. Zudem dürfte die Expansion der Nachfrage aus China weiter nachlassen.
Die deutsche Wirtschaft befindet sich weiter im Abschwung. Ursache ist im Wesentlichen die schwache Auslandsnachfrage nach Produkten des Verarbeitenden Gewerbes, bedingt durch die von den USA ausgehenden protektionistischen Tendenzen und den bevorstehenden Brexit. Als weiterer Faktor kommen die Probleme im Automobilbau hinzu, denn die Branche steht mit am Beginn eines drastischen Strukturwandels. Im Jahr 2020 dürfte eine leichte Belebung der internationalen Konjunktur den deutschen Export wieder anziehen lassen. Der Anstieg wird aber nicht allzu hoch ausfallen, nicht zuletzt, weil die Lohnstückkosten seit einiger Zeit deutlich zugenommen haben. Auf der anderen Seite stabilisieren die recht deutlichen Lohnzuwächse die binnenwirtschaftliche Nachfrage. Zudem wirkt die Finanzpolitik expansiv, und die günstigen Finanzierungsbedingungen werden zusammen mit der Wohnungsknappheit in Ballungsräumen den Bauboom am Leben halten. Das Bruttoinlandsprodukt wird im Jahr 2020 wohl um 1,1% zunehmen, auch dank einer hohen Zahl an Arbeitstagen. Der Produktionszuwachs in Ostdeutschland dürfte mit 1,3% höher ausfallen als in Gesamtdeutschland. Die Verbraucherpreisinflation bleibt moderat, die Beschäftigung nimmt nur noch wenig zu.
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Spillovers of Asset Purchases Within the Real Sector: Win-Win or Joy and Sorrow?
Talina Sondershaus
IWH Discussion Papers,
No. 22,
2019
Abstract
Events which have an adverse or positive effect on some firms can disseminate through the economy to firms which are not directly affected. By exploiting the first large sovereign bond purchase programme of the ECB, this paper investigates whether more lending to some firms spill over to firms in the surroundings of direct beneficiaries. Firms operating in the same industry and region invest less and reduce employment. The paper shows the importance to consider spillover effects when assessing unconventional monetary policies: Differences between treatment and control groups can be entirely attributed to negative effects on the control group.
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02.10.2019 • 20/2019
Joint Economic Forecast Autumn 2019: Economy Cools Further – Industry in Recession
Berlin, October 2, 2019 – Germany’s leading economics research institutes have revised their economic forecast for Germany significantly downward. Whereas in the spring they still expected gross domestic product (GDP) to grow by 0.8% in 2019, they now expect GDP growth to be only 0.5%. Reasons for the poor performance are the falling worldwide demand for capital goods – in the exporting of which the Germany economy is specialised – as well as political uncertainty and structural changes in the automotive industry. By contrast, monetary policy is shoring up macroeconomic expansion. For the coming year, the economic researchers have also reduced their forecast of GDP growth to 1.1%, having predicted 1.8% in the spring.
Oliver Holtemöller
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