Do foreign workers reduce trade barriers? Microeconomic evidence
This paper provides evidence that foreign workers reduce firms' trade costs and thus increase the probability that firms export. This informs both the literature on trade costs and the microeconomic literature on firms' export behaviour. We identify the nationality of each worker in a large sample of German establishments, and relate this to the exporting behaviour of these establishments. We allow for the possible endogeneity of an establishment's workforce by instrumenting the share of foreign workers with the regional distribution of foreign workers in the wider labour market. We find a significant effect of worker nationality on exporting which is not driven by the industrial, occupatio…
High Wage Workers Match with High Wage Firms: Clear Evidence of the Effects of Limited Mobility Bias
Positive assortative matching implies that high productivity workers and firms match together. However, there is almost no evidence of a positive correlation between the worker and firm contributions in two-way fixed-effects wage equations. This could be the result of a bias caused by standard estimation error. Using German social security records we show that the effect of this bias is substantial in samples with limited inter-firm movement. The correlation between worker and firm contributions to wage equations is unambiguously positive.
Foreign-owned firms around the world: A comparative analysis of wages and employment at the micro-level
Abstract This paper provides the first microeconomic cross-country analysis of the effects of foreign ownership on wages, employment and worker turnover rates. Using firm-level and linked worker-firm data, we apply a standardised methodology for three developed (Germany, Portugal, UK) and two emerging economies (Brazil, Indonesia). We find that wage effects are larger in developing countries, and that for each country the largest effect on wages comes from workers who move from domestic to foreign firms. Employment growth after foreign takeover is concentrated in high-skill jobs. In contrast to widespread fears, there is no evidence that wage gains come at the expense of greater job insecur…
Does the internet increase the job finding rate? Evidence from a period of expansion in internet use
Abstract We examine the impact of household access to the internet on job finding rates in Germany during a period (2006–2009) in which the share of households with a broadband connection increased by 31 percentage points, and job-seekers increased their use of the internet as a search tool. During this period, household access to broadband internet was almost completely dependent on the availability of a particular technology (DSL). We therefore exploit the variation in DSL availability across municipalities as an instrument for household access to the internet. OLS estimates which control for differences in individual and local area characteristics suggest a job finding advantage of about…
Migration and imperfect labor markets: theory and cross-country evidence from Denmark, Germany and the UK
We investigate the labor market effects of immigration in Denmark, Germany and the UK, three countries which are characterized by considerable differences in labor market institutions and welfare states. Institutions such as collective bargaining, minimum wages, employment protection and unemployment benefits affect the way in which wages respond to labor supply shocks, and, hence, the labor market effects of immigration. We employ a wage-setting approach which assumes that wages decline with the unemployment rate, albeit imperfectly. We find that the wage and employment effects of immigration depend on wage flexibility and the composition of the labor supply shock. In Germany immigration i…
More hours, more jobs? The employment effects of longer working hours
Increases in standard hours of work have been a contentious policy issue in Germany. Whilst this might directly lead to a substitution of workers by hours, there may also be a positive employment effect due to reduced costs. Moreover, the response of firms may differ between firms that offer overtime and those that do not. For a panel of German plants (2001–2006) drawn from the IAB Establishment Panel, we are the first to analyse the effect of increased standard hours on employment. Using difference-in-difference methods we find that, consistent with theory, overtime plants showed a significant positive employment response, whilst for standard-time plants there is no difference between plan…