Current Research Projects

(For published research articles, please consult my CV)

Wage inequality in Germany after the minimum wage introduction

(with Thorsten Schank)

Monthly wage inequality in Germany continued to increase in the early 2000s, which is mainly explained by a rising part-time employment share. After 2010, inequality returned to the level of 2000. About half of the recent decrease is due to the introduction of the national minimum wage in 2015. While employment effects of the minimum wage are negligible, we find strong wage increases among the existing workforce. The minimum wage lowered wage inequality within eastern and western Germany, but also led to a convergence of the east-west wage differential. The increased labor incomes were not offset by decreasing social benefits. 

The article appears in the Journal of Labor Economics

It can be accessed here

Measurement error in bite-dependent minimum wage evaluations

(with Christian Westermeier)

We assess the role of measurement error in minimum wage evaluations when the treatment variable –the bite– is inferred from a survey wage distribution. We conduct Monte Carlo experiments on both simulated and empirical distributions of measurement error derived from a record linkage of survey wages and administrative data. On the individual-level treatment effects are downward biased by about 30 percent. Aggregation of the treatment information at the level of households, firms or regions is promising when the treatment variable is defined as a continuous bite-gap, but it still may not fully alleviate the bias. Besides of aggregation, we discuss two potential remedies: (a) dropping observations close to the minimum wage threshold and (b) identification from an instrumental variable which is inferred from a second wage source. We cannot recommend these strategies. 

Revise & Resubmit at Labour Economics

The most recent version can be accessed here

Labor Demand on a Tight Leash

(with Martin Popp)

Although theory highlights search frictions in tight labor markets, standard models of labor demand do not account for labor market tightness. Given the universe of administrative employment data on Germany, we study the effect of labor market tightness on firms' labor demand using novel Bartik instruments that rely on predetermined firm shares and national shifts at the occupation level. In line with theory, the IV results suggest that a 10 percent increase in labor market tightness reduces firms' employment by 0.5 percent. When accounting for search externalities, we find that the individual-firm wage elasticity of labor demand reduces from -0.7 to -0.5 at the aggregate level. For the 2015 minimum wage introduction, the elasticities imply only modest disemployment effects mirroring empirical ex-post evaluations. Moreover, the doubling of tightness between 2012 and 2019 led to a signicant slowdown in employment growth by 1.1 million jobs.

The manuscript is available as arXiv Economics Discussion Paper

It is also available as LASER Discussion Paper 143,

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

(with Benjamin Börschlein)

Most empirical evaluations of national minimum wages rely on a bite measure that captures treatment variation. Bite-dependent estimates face the problem of dynamic selection. That is, the treatment bite can change over time, even in the absence of a minimum wage. We apply machine learning methods to predict the contemporary bite of the German minimum wage, thereby accounting for unobserved dynamic selection. In an empirical evaluation, LASSO-predicted bite measures show significant improvements over conventional time-constant measures. When estimating the contemporary wage effects of the German minimum wage introduction, wage increases are shown to be positive but smaller compared with those under conventional estimation.

The most recent version can be accessed here

The Role of Working Hours:
Heterogenous Effects of the Minimum Wage 

(with Ying Liang and Thorsten Schank)

In 2015, a national minimum wage was introduced in Germany. Using the Structure of Earnings Survey, we can demonstrate significant effects of the minimum wage on hourly and monthly wages, leading to a significant reduction in wage inequality. Although several theoretical mechanisms suggest a reduction in hours, we cannot reject a null effect in the aggregate. However, in the group of subsidized minijobs, we find a reduction in working hours when the corresponding jobs would otherwise have to transition to regular, unsubsidized employment. In addition to the reductions in working hours, we find limited evidence for the upgrading of minijobs, but we observe a significant destruction of 56,000 minijobs. 

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. 

Labor demand responses to changing gas prices

(with Alexander Moog and Thorsten Schank)

In course of the current energy crisis, the consequences of increasing gas prices are heavily discussed. To date, however, there is no evidence of the impact of gas prices on the labor market. Using administrative employment data from 2012-2020, we find for manufacturing establishments a gas price elasticity of labor demand of -0.02, likely reflecting a scale effect. We also show that a rise in the gas price leads to an increase in establishment closure. A negative impact of the gas price on wages of 2 percent is consistent with rent-sharing.