Publications

We study whether employment prospects of old and young workers differ after a plant closure. Using Austrian administrative data and a combination of exact matching and fixed effects, we show that old and young workers face similarly large displacement costs in terms of employment in the long-run, but old workers lose considerably more initially and gain later. Effects on wages of displaced workers are not age-dependent. We interpret these findings in the light of a standard job search model augmented to allow for an absorbing state capturing the option of “early retirement”.

The German economy exhibits rising service and declining manufacturing employment, but this decline is much sharper in import-competing than export-oriented branches. We first document the individual-level job transitions behind those trends. They are not driven by manufacturing workers who smoothly switch to services. The observed shifts are entirely due to young entrants and returnees from non-employment. We then investigate if rising trade with China and Eastern Europe causally affected those labor flows. Exploiting variation across industries and regions, we find that globalization did not speed up the manufacturing decline in Germany. It even retained those jobs in the economy.

This paper aims at identifying possible drawbacks of large committees. I present a model of a committee of experts with career concerns where each expert may observe an argument about the state of the world but be unsure about the argument’s soundness. Experts may remain silent or decide to be the first to announce an argument. In contrast with the existing literature, I focus on the possibility that experts may discover duplicate information. I show that experts become more reluctant to speak in larger committees as a result. This effect can be sufficiently strong to make small groups of experts optimal.

Experiments are a complex teaching method carrying a high cognitive load and the risk of failure, which both may induce stress among students. However, it remains unclear if the work setting modulates physiological, subjective, and/or emotional stress responses during experiments. In a randomized experimental field study school students (N = 104) either watched a biology experiment on video (passive condition), conducted the experiment on their own (active condition) or in small groups (interactive condition). Meanwhile, their subjective stress perception, heart rate variability (HRV), salivary cortisol concentration, and achievement emotions were assessed. In the active condition we observed the strongest subjective and HRV stress responses, followed by the interactive condition. Students of the passive condition displayed the weakest stress reactions. Students of the other two conditions showed a weakened diurnal cortisol decrease, indicating more stress. Across conditions, enjoyment dropped and boredom increased, most pronounced in the passive condition. Moreover, there were some associations between subjective, emotional and physiological stress responses. The findings suggest that conducting experiments alone carries the risk of self-attributed failure signified by elevated stress. In contrast, conducting an experiment in a group is less stressful, as others may constitute a source of support. Watching others conduct an experiment carries a low risk of failure and, thus, the lowest stress responses, but comes with the cost of minimized enjoyment and maximized boredom.

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We analyze optimal taxation of labor and capital income in a life cycle framework with idiosyncratic income risk and ex-ante heterogeneity. Tax instruments are simple in that they can only condition on current income. We provide a decomposition of labor income tax formulas into a redistribution and an insurance component. The latter is independent of the social welfare function and determined by the degree of income risk and risk aversion. The optimal linear capital tax is non-zero and trades off redistribution and insurance against savings distortions. Our quantitative results reveal that the insurance component contributes significantly to optimal labor income tax rates and provides a lower bound on optimal taxes. Optimal capital taxes are significant.

The investigation of learning processes by assessing students’ experience along with objective characteristics within a classroom context has a long tradition in empirical learning process research (e.g. Sembill, 1984 et passim; Wild & Krapp, 1996). However, most of the existing studies confine themselves to psychological variables that seem to be too narrowly considered, as there is theoretical and empirical evidence proving the involvement of somatic and psychological processes in learning and in stress reactions. Furthermore there is a lack of studies that investigate situation-related experience (states) as an outcome of interactions between relatively stable characteristics (traits) and continuously changing “objective” context conditions. Against this background, we will present an approach for cross-classified multilevel longitudinal modelling of person-situation interactions in naturalistic educational settings. We illustrated our model with the example of students’ stress experience referring to empirical data that we measured within a multidisciplinary research project (pedagogy, psychology, adolescent medicine). 53 students at a public German vocational school were investigated during 9 lessons. There are up to 38 state measurements per person, resulting in 2,014 measurements in total. Taking into account that states are nested within persons and within situations we applied a cross-classified multilevel model to analyse effects on students’ stress experience. The analysis shows significant person-situation interactions between academic self-concept and classroom demands and between baseline cortisol concentration and classroom demands: the relation between classroom demands and stress experience depends on relatively stable person-related characteristics. A deeper knowledge about the complex interrelations between traits, states, and continuously changing context conditions seems to be essential for a more holistic understanding of learning at school and for the identification of crucial aspects for an evidence-based design and implementation of teaching and learning arrangements.

We study the effect of unannounced recognition on performance with a field experiment involving first-year Dutch university students attending tutorials as part of a compulsory course. Our treatment, given in randomly selected tutorial groups, was to publicly recognize students who scored within the top 30% of their respective group on the first of the two midterm exams. The overall treatment effect on the second midterm grade is 0.03s (s=s= grade standard deviation) for the recipients of recognition, and 0.15s for the non-recipients, both statistically insignificant. The effect for the non-recipients increases with class attendance (itself unaffected by our treatment) and proximity to the cutoff grade for recognition, reaching a significant 0.55s for the 23% of the non-recipients who attended at least 12 out of 13 classes and were within the first quartile of the distance to cutoff. We argue that conformity to performance norm is among the forces shaping the effects we observe.

We estimate the causal impact of restructuring aid granted by the European Commission between 2000 and 2012 on the survival and financial viability of aided firms. Using a comprehensive dataset we find that restructuring aid decreases the hazard rate of a market exit by 58–68% and increases firms’ average survival time by 8–15 years, depending on the definition of firm survival. We also find that aid receiving firms have a significantly higher probability to improve their financial viability than the counterfactual group in the longer run.

Including disaggregate variables or using information extracted from the disaggregate variables into a forecasting model for an economic aggregate may improve the forecasting accuracy. In this paper we suggest to use the boosting method to select the disaggregate variables which are most helpful in predicting an aggregate of interest. We conduct a simulation study to investigate the variable selection ability of this method. To assess the forecasting performance a recursive pseudo-out-of-sample forecasting experiment for six key Euro area macroeconomic variables is conducted. The results suggest that using boosting to select relevant predictors is a feasible and competitive approach in forecasting an aggregate.

Policy proposals promoting vocational education focus on the school-to-work transition. But with technological change, gains in youth employment may be offset by less adaptability and diminished employment later in life. To test for this trade-off, we employ a difference-in-differences approach that compares employment rates across different ages for people with general and vocational education. Using micro data for 11 countries from IALS, we find strong and robust support for such a trade-off, especially in countries emphasizing apprenticeship programs. German Microcensus data and Austrian administrative data confirm the results for within-occupational-group analysis and for exogenous variation from plant closures, respectively.

We conduct a laboratory experiment that tests two fundamental predictions unique to salience theory. If an agent purchases one of two vertically differentiated products, salience theory makes the following two distinct predictions. First, it hypothesizes that a higher expected price level for both products shifts demand toward the more expensive, high-quality product. Second, it predicts that demand for the high-quality product is larger if the price level is expectedly high than if it is unexpectedly high. In our experiment, subjects purchased fast or slow Internet access at different price levels. Our results strongly support both predictions of salience theory. (JEL: D03)

This paper describes a hierarchy with peer hiring to explore the reasons behind the management rule “A’s hire A’s and B’s hire C’s”. Workers are promoted based on talent and therefore like to hire less talented co-workers. This is why B’s hire C’s. The same logic should cause A’s to hire B’s, but there is a trade-off in the model: A’s are more likely to be promoted, and a manager profits from more talented subordinates. If this effect is strong enough, then indeed A’s hire A’s

In a field experiment with a retail chain (1,300 employees, 193 shops), randomly selected sales teams received a bonus. The bonus increases both sales and number of customers dealt with by 3 percent. Each dollar spent on the bonus generates $3.80 in sales, and $2.10 in profit. Wages increase by 2.2 percent while inequality rises only moderately. The analysis suggests effort complementarities to be important, and the effectiveness of peer pressure in overcoming free-riding to be limited. After rolling out the bonus treatment, and control shops' performance converge, suggesting long-term stability of the treatment effect.