German Establishments Research Articles

Enriching administrative data using survey data and machine learning techniques

I propose an approach to enrich administrative data with information only available in survey data using machine learning techniques. To illustrate the approach, I replicate a prominent study that used survey data to analyze the federal minimum wage introduction in Germany. In contrast to the original study, I use the universe of German establishments rather than the limited number of establishments that participated in the survey. As the administrative data do not contain information on whether establishments were treated by the minimum wage, I use a random forest classifier, trained on survey data, to predict the treatment status of establishments. The results obtained using the administrative data are qualitatively similar to the results obtained using the survey data. Beyond replication of previous research, this approach broadens the research potential of administrative data, enabling researchers to explore more detailed research questions at scale.

Transformation der Arbeit durch die Einführung neuer digitaler Technologien

Abstract Using data from a survey of 3,700 German establishments, this study examines how the adoption of new digital technologies correlates with key labour market indicators: new hires, workload intensification and workforce qualifications. Findings from interviews reveal a mixed impact of digitalisation on job demands and employment dynamics. While some firms experience workforce relief, others face heightened workload pressures. Despite widespread adoption, there is scant evidence of significant job losses attributed to technology integration. Instead, the data suggests a modest trend towards job creation. Notably, investment in workforce training emerges as a crucial factor in managing the digital transition.

Do tax incentives affect investment quality?

This paper examines the effect of tax incentives in the form of bonus depreciation on investment quality. Using the expiration of tax incentives via bonus depreciation in eastern Germany and a representative panel of West German establishments, we show that bonus depreciation significantly lowers investment quality. The average quality of investments, measured by the responsiveness of future revenue and other proxies for cash flow to current investment, reduces by 15.2–23.8% in the short run and 31.8–41.4% in the long run. Our research suggests that this adverse effect of tax subsidies is greater for jurisdictions with higher tax rates, in times of high unemployment, and for large or low-productivity establishments. Overall, while increasing investment quantity, as shown by prior literature, tax incentives such as bonus depreciation substantially reduce the quality of investments.

The dynamics of wage dispersion between firms: the role of firm entry and exit

Although wage inequality is an important and widely studied issue, the literature is vastly silent on the relationship between firm entry and exit and the wage dispersion between firms. Using a 50% random administrative sample of West German establishments over the period 1976–2017, I study wage dispersion dynamics between and within the groups of entering, exiting, and incumbent establishments by examining the distribution of average wages across establishments. The results show that entering establishments became increasingly unequal over time, thereby contributing to the rise in wage dispersion between establishments. However, exit rates of young and low-wage establishments have dampened this effect. These findings suggest considering the consequences for wage inequality when designing and assessing policy instruments for firm entry and exit.

Labour Mobility in German Establishments During the COVID-19 Crisis: Panel Data Analyses with Special Reference to Short-Time Work and Working from Home

Labour Mobility in German Establishments During the COVID-19 Crisis: Panel Data Analyses with Special Reference to Short-Time Work and Working from Home

Effects of mass layoffs on local employment—evidence from geo-referenced data

Abstract Using an event study approach and a novel data set that links administrative information on German establishments with exact distance measures from geo-referenced address data, we analyze the net impact of mass layoffs on local employment. We find that local spillovers significantly attenuate the direct impact of mass layoffs on municipal-level employment. About a quarter of the 1-year direct employment loss due to a mass layoff event is absorbed within the same municipality. Local spillovers are especially pronounced very close to the mass layoff site; the majority of the absorption is concentrated within a 1000-m radius. There is little evidence of spillovers beyond the affected municipality.

What Works? How Combining Equal Opportunity and Work–Life Measures Relates to the Within-Firm Gender Wage Gap

In this paper, we investigate how organizational equal opportunity and work–life measures when combined are associated with the gender wage gap within large German establishments. By looking at both kinds of measures as parts of a comprehensive personnel strategy, we provide a novel way to distinguish between a career-supportive implementation of work–life measures versus implementation as a compensating differential. Using a linked employer–employee dataset, we performed a cross-sectional multilevel regression analysis with fixed effects for 6439 respondents within 122 establishments. The results indicate that work–life measures that support employees in their parenthood responsibilities are linked to a significantly higher GWG, particularly for parents. Our results indicate that the implementation of work–life measures is used as compensating differentials, primarily for mothers. Particularly, this can be found when looking at the combination of multiple measures. In combination with equal opportunity measures for women, work–life measures that highlight the long-term absence from the workplace are associated with a higher GWG for parents.

Advanced further training or dual higher education study: a choice experiment on the influence of employers’ preferences on career advancement

Although the number of graduates with a bachelor’s degree has risen over recent years, little information is available as to which position such persons hold within an establishment and whether they compete on the career ladder with persons from the vocational sector with advanced further training, for example master craftsmen, technicians or certified senior clerks. This article presents the results of a choice experiment in which decision makers at German establishments had to choose between three candidates to fill a vacant project management position. The candidates had completed either advanced further training or a bachelor’s programme in dual courses of study (training- or practice-integrated). They further differed in other characteristics, such as the place of training, final mark, occupational experience and specialisation. The results show that the training strategy of the establishments as well as their general experience with bachelor’s graduates plays an important role when the chances of career advancement are assessed. Persons with advanced further training certificates are only preferred if the establishments exclusively support advanced training programmes. For all other establishments the qualification path of the candidates does not matter. The results give rise to the supposition that dual higher education studies will represent an attractive alternative for young people as opposed to advanced further training if such dual programmes are expanded and awareness of them increases.

Shortage of Skilled Labor, Unions and the Wage Premium: A Regression Analysis with Establishment Panel Data for Germany

The author investigates the different influences of labor shortage on wages in firms with or without collective bargaining agreements. In addition to training, technological solutions, and organizational flexibility, employers can also offer higher wages at a constant employment level to fill vacancies if the current payments are lower than the marginal revenue of the workers. Firms with collective bargaining agreements probably already pay wages according to marginal revenue or, in the case of rent sharing, above it, and the remuneration is probably also not adjusted. Using wage regressions with panel data for German establishments, this paper shows that collective bargaining and a lack of skilled workers can lead to higher wages. However, the latter only applies to firms that are not bound by collective agreements. Hence, wage differentials between these firms decrease, providing further explanation for a countercyclical development of the wage premium from the collective bargaining agreement.

Firm Heterogeneity and the Impact of Immigration: Evidence from German Establishments

Firm Heterogeneity and the Impact of Immigration: Evidence from German Establishments

Owners, external managers and industrial relations in German establishments

AbstractUsing data from the representative IAB Establishment Panel in Germany and estimating a heteroskedastic probit model with fixed effects, this paper finds a negative relationship between the existence of owner‐management in an establishment and the probabilities of having a works council or a collective bargaining agreement. We show that family firms which are solely managed by the owners or by external executives significantly differ in the presence of these kinds of worker representation. The probabilities of having works councils and (company‐level) collective agreements increase substantially if just some of the managers do not belong to the owner family. We argue that these differences cannot simply be attributed to an aversion of the owners against co‐determination and unions but suggest taking account of the notion of socio‐emotional wealth prevalent in family firms. In addition, our results support the idea that external managers mainly act as agents rather than stewards in family firms.

New technologies and employee well-being: the role of training provision

ABSTRACT This paper contributes to the discussion about the impact of new technology on the labour market by analysing the impact of new workplace technologies on the well-being of employees in German establishments. We first show that there is no significant overall effect on different measures of employee well-being. We then introduce the role of skill gaps and workplace training and show that a negative effect exists for workers who do not possess sufficient skills in the use of the new technologies and that this negative impact can be completely offset by the provision of training in the use of the newly introduced technologies.

Apprenticeship non-completion in Germany: a money matter?

German establishments heavily rely on the apprenticeship system for skill supply. With one in four apprenticeship contracts ending before successful completion, it is in the interest of establishments and policy-makers to determine factors, which reduce non-completion. This paper investigates the role of apprenticeship wages and income prospects after completion for apprenticeship non-completion in Germany. For this purpose, this study identifies incidences of apprenticeship non-completion in a large sample of administrative data on employment biographies and estimates a piecewise exponential model of the non-completion hazard with shared frailties by occupations. The results suggest a robust and significant association with both apprenticeship wages and skilled worker wages. All else at means, apprenticeships which are paid 5% more than the mean apprenticeship wage, on average have a 0.8 percentage points higher estimated survival rate. In turn, an apprenticeship expected to lead to a skilled job that is paid 5% above average, has an estimated survival rate, which is 3.1 percentage points higher on average. These findings highlight the importance of income prospects for apprenticeship non-completion.

Do Work–Life Measures Really Matter? The Impact of Flexible Working Hours and Home-Based Teleworking in Preventing Voluntary Employee Exits

Numerous studies have demonstrated the importance of work–life measures, which are designed to contribute to job quality and help reconcile employees’ work and personal lives. In our study, we asked whether such measures can also work as inducements to prevent employees from voluntarily leaving a firm. We considered flexible working hours and home-based teleworking as flexibility measures that are potentially attractive to all employees. To address the possible bias caused by sketchy implementation and their actual selective use, we chose to examine employees’ perceptions of the offer of these measures. We investigated the moderation of the effect by organizational culture and supervisor and coworker support. We controlled for several indicators of job quality, such as job satisfaction and perceived fairness, to isolate specific ways in which work–life measures contributed to voluntary employee exit, and checked for a selective attractiveness of work–life measures to parents and women as the main caregivers. Using a three-wave panel employer–employee survey, we estimated multilevel mixed-effects logistic regression models for 5452 employees at 127 large German establishments. Our results confirmed that both types of flexibility measures were associated with a lower probability of voluntarily exit. This applied more to men than to women, and the probability was reduced by a demanding organizational culture. Both measures seemed not to be specifically designed to accommodate main caregivers but were attractive to the whole workforce.

Firm Heterogeneity and the Impact of Immigration: Evidence from German Establishments

We revisit the old question of how immigration affects the welfare of native workers. As opposed to most of the previous literature, we look at this question through the lens of firms, as they play a crucial role in immigration and are massively heterogeneous even within sectors. We use a novel establishment-level dataset from Germany to document a new dimension of firm heterogeneity: Large firms spend a higher share of their wage bill on immigrants than small firms. We show analytically and quantitatively that ignoring this heterogeneity in immigrant share leads to biased welfare gains from immigration. To do so, we set up and estimate a quantitative model where heterogeneous firms choose their immigrant share and validate the model using an instrumental variables strategy. We then use the model to quantify the welfare effects and the bias of a 20% increase in the number of immigrants in Germany as observed between 2011 and 2017. The welfare of natives increases both through higher wages and profits, and lower prices, with aggregate welfare gains of $4 billion for native workers and $15 billion for firm owners. Immigration leads native workers to reallocate within-sector across firms, a key mechanism that explains the source of the bias. If we estimate the model without firm-level data on immigrant employment, we would underestimate the welfare gains for native workers by 11%.

Employment effects of payroll tax subsidies

This paper exploits several reforms of wage subsidies in the framework of the German Minijob program to investigate substitution and complementarity relationships between subsidized and non-subsidized labor demand. We apply an instrumental variables approach and use administrative data on German establishments for the period 1999–2014. Particularly in small establishments (0–9 employees), subsidized Minijob employment comprises large shares of the work force, on average over 40%. For these establishments, robust evidence shows that increasing the subsidization of Minijob employment crowds out non-subsidized employment. Our results imply that Minijob employment in 2014 may have eliminated more than 0.5 million unsubsidized employment relationships just in small establishments. This represents an unintended and harmful consequence of the Minijob subsidy.

Learning to Export by Hiring: The Role of Employee Task-Specific Export Knowledge

Exporting is a common strategy used by firms to enter foreign markets. Existing literature has given attention to the importance of export spillovers in explaining firms’ decision to export. However, limited attention has been devoted to the understanding of the learning to export process. By drawing on the literature on export spillovers and strategic human capital we aim to analyze the implications that specific types of hiring patterns have for the export performance of firms. More specifically, we hypothesize that the export performance of firms that hire employees with task-specific export knowledge and skills acquired in exporting firms is higher, and lower if firms hire employees with task-specific export knowledge acquired in non-exporting firms. We use data from an employer-employee database and empirically test our predictions for a sample of approximately 30 000 German establishments. Our findings contribute to a deeper understanding of the micro-foundations of the learning to export process.

Do Tax Incentives Reduce Investment Quality?

This paper examines the effect of tax incentives in the form of bonus depreciation on the quality of investment. Using the expiration of tax incentives via bonus depreciation in East Germany and a representative panel of West German establishments, we show that bonus depreciation significantly lowers the quality of investment. The average quality of investments, measured by the responsiveness of future sales to current investment, reduces by 22.6–34.6%. This adverse effect of tax subsidies is greater for jurisdictions with higher tax rates as well as for large or high-productivity firms. Overall, while increasing investment quantity, as shown by prior literature, tax incentives such as bonus depreciation substantially reduce the quality of investments.

Reassessing the foreign ownership wage premium in Germany

AbstractThis paper evaluates the effect of foreign takeover on wages of workers in German establishments, using rich linked employer–employee data from 2003 to 2014. To identify a causal effect of foreign takeover, we combine propensity‐score matching with a difference‐in‐difference estimator. We find that a takeover by a foreign investor leads to a wage premium of 4.0 log points in the year after ownership change, which further increases to 6.3 log points 3 years after acquisition. The wage premium is largest for high‐skilled workers, which is consistent with three theoretical arguments, namely rent appropriation by managers, technology protection and training on new technology. We also show that the wage premium does not pick up an exporter effect due to a platform investment of the foreign owner, that it takes about 4 years before it fully develops, that it does not vanish after foreign divestment and that the wage increase is specific to foreign acquisition instead of ownership change per se.

Employment Adjustments Following Rises and Reductions in Minimum Wages: New Insights From a Survey Experiment

AbstractThe effects of large minimum wage increases are still unknown. Our survey experiment randomly assigns increases or decreases in minimum wages to German establishments and asks about employers’ expectations concerning employment adjustments. The larger the increase in the minimum wage is, the larger the expected reduction in employment. The reduction is stronger in plants that are more strongly affected by the current national minimum wage and in plants that have neither collective agreements nor a works council. In contrast, employment expectations do not increase if the minimum wage is reduced. This mainly reflects that few plants would cut wages.