Economy in Shock — Financial Policy is Holding Up
Oliver Holtemöller, Stefan Kooths, Claus Michelsen, Torsten Schmidt, Timo Wollmershäuser
Wirtschaftsdienst,
No. 4,
2020
Abstract
Nach Ansicht der führenden deutschen Wirtschaftsforschungsinstitute bricht die Konjunktur in Deutschland als Folge der Corona-Pandemie drastisch ein. Um die Infektionswelle abzubremsen, hat der Staat die wirtschaftliche Aktivität hierzulande stark eingeschränkt. Deshalb dürfte das Bruttoinlandsprodukt 2020 um 4,2 % schrumpfen. Die Rezession hinterlässt deutliche Spuren auf dem Arbeitsmarkt und im Staatshaushalt. In der Spitze wird die Arbeitslosenquote auf 5,9 % und die Zahl der Kurzarbeiter auf 2,4 Mio. hochschnellen. Die finanzpolitischen Stabilisierungsmaßnahmen führen 2020 zu einem Rekorddefizit im gesamtstaatlichen Haushalt von 159 Mrd. Euro. Nach dem Shutdown wird sich die Konjunktur schrittweise erholen. Entsprechend fällt der Anstieg des Bruttoinlandsprodukts 2021 mit 5,8 % kräftig aus. Mit dieser Prognose sind erhebliche Abwärtsrisiken verbunden, etwa weil sich die Pandemie deutlich langsamer abschwächen lässt, oder weil das Wiederhochfahren der wirtschaftlichen Aktivität schlechter gelingt als angenommen bzw. eine erneute Ansteckungswelle auslöst.
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08.04.2020 • 5/2020
Economy in Shock – Fiscal Policy to Counteract
The coronavirus pandemic is triggering a severe recession in Germany. Economic output will shrink by 4.2% this year. This is what the leading economics research institutes expect in their spring report. For next year, they are forecasting a recovery and growth of 5.8%.
Oliver Holtemöller
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Jobs and Matches: Quits, Replacement Hiring, and Vacancy Chains
Yusuf Mercan, Benjamin Schoefer
American Economic Review: Insights,
No. 1,
2020
Abstract
In the canonical DMP model of job openings, all job openings stem from new job creation. Jobs denote worker-firm matches, which are destroyed following worker quits. Yet, employers classify 56 percent of vacancies as quit-driven replacement hiring into old jobs, which evidently outlived their previous matches. Accordingly, aggregate and firm-level hiring tightly track quits. We augment the DMP model with longer-lived jobs arising from sunk job creation costs and replacement hiring. Quits trigger vacancies, which beget vacancies through replacement hiring. This vacancy chain can raise total job openings and net employment. The procyclicality of quits can thereby amplify business cycles.
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Private Debt, Public Debt, and Capital Misallocation
Behzod Alimov
IWH-CompNet Discussion Papers,
No. 7,
2019
Abstract
Does finance facilitate efficient allocation of resources? Our aim in this paper is to find out whether increases in private and public indebtedness affect capital misallocation, which is measured as the dispersion in the return to capital across firms in different industries. For this, we use a novel dataset containing industrylevel data for 18 European countries and control for different macroeconomic indicators as potential determinants of capital misallocation. We exploit the within-country variation across industries in such indicators as external finance dependence, technological intensity, credit constraints and competitive structure, and find that private debt accumulation disproportionately increases capital misallocation in industries with higher financial dependence, higher R&D intensity, a larger share of credit-constrained firms and a lower level of competition. On the other hand, we fail to find any significant and robust effect of public debt on capital misallocation within our country-sector pairs. We believe the distortionary effects of private debt found in our analysis needs a deeper theoretical investigation.
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HIP, RIP, and the Robustness of Empirical Earnings Processes
Florian Hoffmann
Quantitative Economics,
No. 3,
2019
Abstract
The dispersion of individual returns to experience, often referred to as heterogeneity of income profiles (HIP), is a key parameter in empirical human capital models, in studies of life‐cycle income inequality, and in heterogeneous agent models of life‐cycle labor market dynamics. It is commonly estimated from age variation in the covariance structure of earnings. In this study, I show that this approach is invalid and tends to deliver estimates of HIP that are biased upward. The reason is that any age variation in covariance structures can be rationalized by age‐dependent heteroscedasticity in the distribution of earnings shocks. Once one models such age effects flexibly the remaining identifying variation for HIP is the shape of the tails of lag profiles. Credible estimation of HIP thus imposes strong demands on the data since one requires many earnings observations per individual and a low rate of sample attrition. To investigate empirically whether the bias in estimates of HIP from omitting age effects is quantitatively important, I thus rely on administrative data from Germany on quarterly earnings that follow workers from labor market entry until 27 years into their career. To strengthen external validity, I focus my analysis on an education group that displays a covariance structure with qualitatively similar properties like its North American counterpart. I find that a HIP model with age effects in transitory, persistent and permanent shocks fits the covariance structure almost perfectly and delivers small and insignificant estimates for the HIP component. In sharp contrast, once I estimate a standard HIP model without age‐effects the estimated slope heterogeneity increases by a factor of thirteen and becomes highly significant, with a dramatic deterioration of model fit. I reach the same conclusions from estimating the two models on a different covariance structure and from conducting a Monte Carlo analysis, suggesting that my quantitative results are not an artifact of one particular sample.
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Effekte der Einführung des gesetzlichen Mindestlohns: Eine Fallstudie für das Handwerk in Sachsen-Anhalt
Hans-Ulrich Brautzsch, Birgit Schultz
Wirtschaft im Wandel,
No. 5,
2018
Abstract
Knapp 8% der Beschäftigten in den Handwerksbetrieben Sachsen-Anhalts verdienten vor der Einführung des gesetzlichen Mindestlohns zu Beginn des Jahres 2015 brutto weniger als 8,50 Euro je Stunde. Allerdings differiert die Betroffenheit stark. In den besonders betroffenen Gewerken war zu befürchten, dass die durch den Mindestlohn induzierte Kostensteigerung zu einem spürbaren Beschäftigungsabbau führt. In diesem Kontext werden drei Fragen untersucht: (1) Wie hoch war die Mindestlohnbetroffenheit im Handwerk in Sachsen-Anhalt? (2) Welche – über die Lohnkostenerhöhung hinausgehenden – Effekte hatte die Mindestlohneinführung in den Handwerksbetrieben? (3) Welche Ausweichreaktionen haben die Handwerksbetriebe unternommen, um die höhere Kostenbelastung zu bewältigen? Die Untersuchungen basieren auf den von den Handwerkskammern Halle und Magdeburg durchgeführten Konjunkturumfragen, die in Kooperation mit dem IWH um zusätzliche Fragen zur Mindestlohneinführung erweitert wurden. Die Ergebnisse der Schätzungen zeigen keine signifikanten Beschäftigungseffekte infolge der Einführung des gesetzlichen Mindestlohns. Vielmehr haben die Handwerksbetriebe vor allem mit Preiserhöhungen reagiert.
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Does it Payoff to Research Economics? A Tale of Citation, Knowledge and Economic Growth in Transition Countries
Dejan Kovač, Boris Podobnik, Nikol Scrbec
Physica A: Statistical Mechanics and its Applications,
September
2018
Abstract
There are many economic theories that promote human capital as a key driver of a country’s economic growth, but it is challenging to test this theory empirically on a country level and causally interpret the coefficients due to several identification problems. We tried to answer this particular question by using a quasi-natural experiment that happened quarter century ago – the fall of communist block in Eastern Europe. We use a shock to a particular scientific field – economics, to test whether the future investment into that particular field resulted in increased welfare and economic growth. The economics paradigm that was governing all of the communist block ceased to exist. Human capital depreciated over night and all communist countries had to transit from planned economy to a market economy. In the following years countries had to adapt to market economy through additional investment in human capital and research. We find that countries which lack both of the two fourth mentioned components had 25 years later a relatively lower economic growth and wealth. Unlike economics, other fields such as physics and medicine did not go through the same process so we use them as a placebo effect for our study. We find that the relative ratio of citations between economics and physics in post-communist countries is increasing only 15 years after the “paradigm” shock which gives a suggestive evidence that timing of investment into particular scientific field matters the most.
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Auswirkungen des gesetzlichen Mindestlohns im Handwerk in Sachsen-Anhalt
Hans-Ulrich Brautzsch, Birgit Schultz
Zeitschrift für Wirtschaftspolitik,
No. 2,
2018
Abstract
This paper examines the effects of the minimum wage introduction in Germany in 2015 on the skilled crafts sector in Saxony-Anhalt.
Using novel survey data on the skilled crafts sector in Saxony-Anhalt, we examine three questions: (1) How many employees are affected by the minimum wage introduction in the skilled crafts sector in Saxony-Anhalt? (2) What are the effects of the minimum wage introduction? (3) How did firms react to wage increase?
We find that about 8 % of all employees in the skilled crafts sector in Saxony-Anhalt are directly affected by the minimum wage introduction. A difference-in-difference estimation reveals no significant employment effects of the minimum wage introduction. We test for alternative adjustment strategies and observe a significant increase of output prices.
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Flooded Through the Back Door: Firm-level Effects of Banks‘ Lending Shifts
Oliver Rehbein
IWH Discussion Papers,
No. 4,
2018
Abstract
I show that natural disasters transmit to firms in non-disaster areas via their banks. This spillover of non-financial shocks through the banking system is stronger for banks with less regulatory capital. Firms connected to a disaster-exposed bank with below median capital reduce their employment by 11% and their fixed assets by 20% compared to firms in the same region without such a bank during the 2013 flooding in Germany. Relationship banking and higher firm capital also mitigate the effects of such negative cross-regional spillovers.
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