Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwe... more Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may
Career Choices of German High School Graduates: Evidence from the German Socio-Economic Panel
This paper explores the economic determinants affecting high shcool graduates' career choices... more This paper explores the economic determinants affecting high shcool graduates' career choices in Germany. The estimation results show that high school graduates' career decisions are at least partially determined by economic considerations. Other major determinants are the parental skill-level, and age at the time of Abitur.
Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research pu... more Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.
Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research pu... more Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.
This paper investigates trends and changes in the structural composition of women's weekly market... more This paper investigates trends and changes in the structural composition of women's weekly market hours worked in former West-Germany using aggregate time-series data from the German micro census from 1957 until 2002. Aggregate weekly hours worked per workingage woman are decomposed into hours worked per employee-the intensive margin of adjustment-and the employment-to-population (EP-) ratio-the extensive margin. The decomposition is performed by women's marital status, their age, and whether or not young children are present. The main results are that since the mid 1970s, the EP-ratio has steadily risen among female employees of all marital statuses whereas the weekly hours worked per female employee have declined. These changes have been the most distinct among married women with young children. The paper attributes much of the observed changes for married women to institutional modifications in the federal legislation governing parental leave which have occurred since 1986.
Journal of the European Economic Association, 2019
We outline a formal procedure for deriving the aggregate wage-elasticity of labor supply for a la... more We outline a formal procedure for deriving the aggregate wage-elasticity of labor supply for a large group of heterogeneous workers who operate under uncertainty. Heterogeneity relates to preferences, income, wealth, and the labor market status. If each worker faces a small, possibly nonuniform wage change, the implied aggregate wage-elasticity can be represented by a closed-form expression. This expression captures an extensive and an intensive margin. We empirically implement the procedure for a dynamic model of individual labor supply and a micro panel of men in Germany from 2000 to 2013. We find that the extensive margin is less time-varying than the intensive margin, and that its size varies with the measure of reservation wages. Self-reported reservation wages render a larger extensive margin than other proxies. The estimated aggregate Frisch wage-elasticity varies between 0.85 and 1.06, and the two margins matter equally strongly for the unbalanced sample.
Heterogeneous Job-Matches and Real Wages: The Composition Bias Revisited
Many aggregate statistics on an average real wage exhibit a composition bias. This bias arises be... more Many aggregate statistics on an average real wage exhibit a composition bias. This bias arises because the composition of workers and jobs systematically changes over the business cycle. The one-sector stochastic growth model is augmented by matching frictions in the labor market and idiosyncratic productivity shocks. This modification allows the distinction between labor productivity and real wages, and the introduction of an empirically meaningful distribution of workers across wages. The augmented model replicates the changing composition of job-matches over the cycle. It is used to assess how the shape of the distribution of job-matches across wage rates, or costs associated with matching, affect the size of the bias. The results can serve as guidelines for further research on cross-country comparisons of the importance of the bias.
Changes in married Women's Labor Supply Behavior in Germany, 1985-2005
In Germany, the amount of labor supplied by women in partnerships has undergone drastic changes o... more In Germany, the amount of labor supplied by women in partnerships has undergone drastic changes over the past two decades. Their employment ratio has steadily risen while – contrary to the trend observed in many Western industrialized countries – their weekly market hours worked have significantly declined. This paper uses micro data from the German SocioEconomic Panel (SOEP) to study the link between changes in the wage structure and crosssectional changes in married women’s labor supply that have occurred in Germany since the mid 1980s. Following the stratification method by Juhn and Murphy (1997), it links the changes in wives’ labor market behavior to their partner’s wage rate and to family circumstances, thereby documenting the heterogeneity in the incidence of hours’ reduction. The smallest decrease in weekly market hours occurred among high-skilled women and women with a high-wage partner; this pattern prevails even when young children are present. The evidence is consistent with results derived from estimating a simple household model of wives’ market hours using Garen’s (1984) control function approach. Wives’ market hours react positively to a rise in their own wage and negatively to a rise in their partner’s wage, or to small children in the family. JEL Classification: J13, J22
Search Theory Rediscovered: Recent Developments in the Macroeconomics of the Labor Market
Search Theory and Unemployment, 2002
Page 27. 2 Search Theory Rediscovered: Recent Developments in the Macroeconomics of the Labor Mar... more Page 27. 2 Search Theory Rediscovered: Recent Developments in the Macroeconomics of the Labor Market Monika Merz University of Bonn Abstract This paper surveys recent work in the area of labor market search and dynamic macroeconomics. ...
What role does labor play in firms' market value? We use a production-based asset pricing mod... more What role does labor play in firms' market value? We use a production-based asset pricing model with factor adjustment costs and forward-looking agents to explore this question. We posit that the hiring of labor is akin to investment in capital and that the two interact, with the interaction being a crucial determinant of the dynamic behavior of market value. Using aggregate US corporate sector data, we estimate firms' optimal hiring and investment decisions and the consequences for firms' value. (JEL E22, E24, G31, G32, M51)
Worker flows to and from unemployment simultaneously occur over the US business cycle, and the si... more Worker flows to and from unemployment simultaneously occur over the US business cycle, and the size of the flows is positively linked to the unemployment rate. Unemployment flows and the unemployment rate are highly volatile, persistent and countercyclical. Inflows lead the unemployment rate, and the unemployment rate leads outflows over the business cycle. The one-sector stochastic growth model is augmented by matching frictions in the labor market and match-specific productivity shocks that introduce ex post heterogeneous job-matches. Matching frictions help generate the lead-lag relationship between unemployment flows and the unemployment rate. Combined with heterogeneous job-matches they generate endogenous unemployment flows and an unemployment rate whose dynamic characteristics match observed data.
Existing models of the business cycle have been incapable of explaining many of the stylized fact... more Existing models of the business cycle have been incapable of explaining many of the stylized facts that characterize the US labor market. The standard real business cycle model is modified by introducing two-sided search in the labor market as an economic mechanism that propagates technology shocks. This new analytical environment can explain many phenomena of the business cycle that the standard model either has resolved in an unsatisfactory manner or has not been able to address at all.
The Mortensen-Pissarides model with heterogeneous job-matches and persistent unemployment has bec... more The Mortensen-Pissarides model with heterogeneous job-matches and persistent unemployment has become a popular workhorse for studying aggregate phenomena in the labor market. This paper develops a microeconomic structure decentralizing a generalized social planner's version of this model. It is shown in the presence of the indivisibility of labor, heterogeneous job-matches, and persistent unemployment, that different households can.fully insure themselves against variations in wealth, if they have access to a complete insurance market. Also factor prices and matching rates are derived.
Time Series Evidence of Unemployment Flows: The Sample Period Matters
Journal of Business & Economic Statistics, 1999
Worker flows to and from unemployment occur at all stages of the U.S. business cycle. The flows&#... more Worker flows to and from unemployment occur at all stages of the U.S. business cycle. The flows' dynamics affect the dynamics of the unemployment rate. This article studies the dynamics of unemployment flows and the unemployment rate and explores and documents changes over time. Rigorous diagnostic tests are used to investigate the structural stability of projectional relationships involving flows and the unemployment rate.
Das Institut für Weltwirtschaft ist im Januar 1989 vom Bundesministerium für Wirtschaft beauftrag... more Das Institut für Weltwirtschaft ist im Januar 1989 vom Bundesministerium für Wirtschaft beauftragt worden, für die Deregulierungskommission der Bundesregierung eine Studie über die Regulierungen auf dem Arbeitsmarkt anzufertigen. Aufgabe der Untersuchung ...
Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwe... more Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may
Career Choices of German High School Graduates: Evidence from the German Socio-Economic Panel
This paper explores the economic determinants affecting high shcool graduates' career choices... more This paper explores the economic determinants affecting high shcool graduates' career choices in Germany. The estimation results show that high school graduates' career decisions are at least partially determined by economic considerations. Other major determinants are the parental skill-level, and age at the time of Abitur.
Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research pu... more Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.
Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research pu... more Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.
This paper investigates trends and changes in the structural composition of women's weekly market... more This paper investigates trends and changes in the structural composition of women's weekly market hours worked in former West-Germany using aggregate time-series data from the German micro census from 1957 until 2002. Aggregate weekly hours worked per workingage woman are decomposed into hours worked per employee-the intensive margin of adjustment-and the employment-to-population (EP-) ratio-the extensive margin. The decomposition is performed by women's marital status, their age, and whether or not young children are present. The main results are that since the mid 1970s, the EP-ratio has steadily risen among female employees of all marital statuses whereas the weekly hours worked per female employee have declined. These changes have been the most distinct among married women with young children. The paper attributes much of the observed changes for married women to institutional modifications in the federal legislation governing parental leave which have occurred since 1986.
Journal of the European Economic Association, 2019
We outline a formal procedure for deriving the aggregate wage-elasticity of labor supply for a la... more We outline a formal procedure for deriving the aggregate wage-elasticity of labor supply for a large group of heterogeneous workers who operate under uncertainty. Heterogeneity relates to preferences, income, wealth, and the labor market status. If each worker faces a small, possibly nonuniform wage change, the implied aggregate wage-elasticity can be represented by a closed-form expression. This expression captures an extensive and an intensive margin. We empirically implement the procedure for a dynamic model of individual labor supply and a micro panel of men in Germany from 2000 to 2013. We find that the extensive margin is less time-varying than the intensive margin, and that its size varies with the measure of reservation wages. Self-reported reservation wages render a larger extensive margin than other proxies. The estimated aggregate Frisch wage-elasticity varies between 0.85 and 1.06, and the two margins matter equally strongly for the unbalanced sample.
Heterogeneous Job-Matches and Real Wages: The Composition Bias Revisited
Many aggregate statistics on an average real wage exhibit a composition bias. This bias arises be... more Many aggregate statistics on an average real wage exhibit a composition bias. This bias arises because the composition of workers and jobs systematically changes over the business cycle. The one-sector stochastic growth model is augmented by matching frictions in the labor market and idiosyncratic productivity shocks. This modification allows the distinction between labor productivity and real wages, and the introduction of an empirically meaningful distribution of workers across wages. The augmented model replicates the changing composition of job-matches over the cycle. It is used to assess how the shape of the distribution of job-matches across wage rates, or costs associated with matching, affect the size of the bias. The results can serve as guidelines for further research on cross-country comparisons of the importance of the bias.
Changes in married Women's Labor Supply Behavior in Germany, 1985-2005
In Germany, the amount of labor supplied by women in partnerships has undergone drastic changes o... more In Germany, the amount of labor supplied by women in partnerships has undergone drastic changes over the past two decades. Their employment ratio has steadily risen while – contrary to the trend observed in many Western industrialized countries – their weekly market hours worked have significantly declined. This paper uses micro data from the German SocioEconomic Panel (SOEP) to study the link between changes in the wage structure and crosssectional changes in married women’s labor supply that have occurred in Germany since the mid 1980s. Following the stratification method by Juhn and Murphy (1997), it links the changes in wives’ labor market behavior to their partner’s wage rate and to family circumstances, thereby documenting the heterogeneity in the incidence of hours’ reduction. The smallest decrease in weekly market hours occurred among high-skilled women and women with a high-wage partner; this pattern prevails even when young children are present. The evidence is consistent with results derived from estimating a simple household model of wives’ market hours using Garen’s (1984) control function approach. Wives’ market hours react positively to a rise in their own wage and negatively to a rise in their partner’s wage, or to small children in the family. JEL Classification: J13, J22
Search Theory Rediscovered: Recent Developments in the Macroeconomics of the Labor Market
Search Theory and Unemployment, 2002
Page 27. 2 Search Theory Rediscovered: Recent Developments in the Macroeconomics of the Labor Mar... more Page 27. 2 Search Theory Rediscovered: Recent Developments in the Macroeconomics of the Labor Market Monika Merz University of Bonn Abstract This paper surveys recent work in the area of labor market search and dynamic macroeconomics. ...
What role does labor play in firms' market value? We use a production-based asset pricing mod... more What role does labor play in firms' market value? We use a production-based asset pricing model with factor adjustment costs and forward-looking agents to explore this question. We posit that the hiring of labor is akin to investment in capital and that the two interact, with the interaction being a crucial determinant of the dynamic behavior of market value. Using aggregate US corporate sector data, we estimate firms' optimal hiring and investment decisions and the consequences for firms' value. (JEL E22, E24, G31, G32, M51)
Worker flows to and from unemployment simultaneously occur over the US business cycle, and the si... more Worker flows to and from unemployment simultaneously occur over the US business cycle, and the size of the flows is positively linked to the unemployment rate. Unemployment flows and the unemployment rate are highly volatile, persistent and countercyclical. Inflows lead the unemployment rate, and the unemployment rate leads outflows over the business cycle. The one-sector stochastic growth model is augmented by matching frictions in the labor market and match-specific productivity shocks that introduce ex post heterogeneous job-matches. Matching frictions help generate the lead-lag relationship between unemployment flows and the unemployment rate. Combined with heterogeneous job-matches they generate endogenous unemployment flows and an unemployment rate whose dynamic characteristics match observed data.
Existing models of the business cycle have been incapable of explaining many of the stylized fact... more Existing models of the business cycle have been incapable of explaining many of the stylized facts that characterize the US labor market. The standard real business cycle model is modified by introducing two-sided search in the labor market as an economic mechanism that propagates technology shocks. This new analytical environment can explain many phenomena of the business cycle that the standard model either has resolved in an unsatisfactory manner or has not been able to address at all.
The Mortensen-Pissarides model with heterogeneous job-matches and persistent unemployment has bec... more The Mortensen-Pissarides model with heterogeneous job-matches and persistent unemployment has become a popular workhorse for studying aggregate phenomena in the labor market. This paper develops a microeconomic structure decentralizing a generalized social planner's version of this model. It is shown in the presence of the indivisibility of labor, heterogeneous job-matches, and persistent unemployment, that different households can.fully insure themselves against variations in wealth, if they have access to a complete insurance market. Also factor prices and matching rates are derived.
Time Series Evidence of Unemployment Flows: The Sample Period Matters
Journal of Business & Economic Statistics, 1999
Worker flows to and from unemployment occur at all stages of the U.S. business cycle. The flows&#... more Worker flows to and from unemployment occur at all stages of the U.S. business cycle. The flows' dynamics affect the dynamics of the unemployment rate. This article studies the dynamics of unemployment flows and the unemployment rate and explores and documents changes over time. Rigorous diagnostic tests are used to investigate the structural stability of projectional relationships involving flows and the unemployment rate.
Das Institut für Weltwirtschaft ist im Januar 1989 vom Bundesministerium für Wirtschaft beauftrag... more Das Institut für Weltwirtschaft ist im Januar 1989 vom Bundesministerium für Wirtschaft beauftragt worden, für die Deregulierungskommission der Bundesregierung eine Studie über die Regulierungen auf dem Arbeitsmarkt anzufertigen. Aufgabe der Untersuchung ...
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