Research Seminar

NAFTA and drug-related violence in Mexico

(with Eduardo Hidalgo and Pablo Selaya)

We study how NAFTA changed the geography of violence in Mexico. We propose that open borders increased trafficking profits of Mexican cartels and resulted in violent competition among them. We test this hypothesis by comparing changes in drug-related homicides after NAFTA’s introduction in 1994 across municipalities with and without drug-trafficking routes. Routes are optimal paths connecting municipalities with a recent history of drug trafficking with U.S. ports of entry. On these routes, homicides increase by 27% relative to the pre-NAFTA mean. These results cannot be explained by changes in worker’s opportunity costs of using violence resulting from the trade shock.

23 April 2024

Martin Fischer (Lund University )

Labour market returns to compulsory schooling in the presence of school tracking

Returns to education from instrumental variable estimation using compulsory schooling reforms have been interpreted as local average treatment effects (LATE) with school dropouts as the complier sub-population. I show that within traditional European school systems employing academic tracking, compulsory schooling reforms do not necessarily warrant such an interpretation. The complier population instead includes a further, conceptually different group of students which face constraints imposed by the institutional setting. These students are unable to attend their desired amount of schooling within the non-academic track. Leveraging two quasi-experiments in Sweden, I can compare labour market returns for students who were given the option to attend one additional year of education in lower secondary school to students who were mandated to take an additional school year. Results for life-cycle earnings show that only those who were forced to stay gained large labour market returns following an additional year of schooling (12% vs. OLS returns to education of 6%). In contrast, students student who voluntarily stayed in school for another year gained substantially smaller labour market returns on average. Interpreting the results within a marginal treatment framework, students with a higher resistance to stay in school had the highest earnings gains from additional schooling. The results are in line with findings on the so-called incarceration effect and conceptually connect compulsory schooling reforms with changes in the school minimum leaving age, which naturally target drop-outs only.

30 April 2024

Patrick Lehnert (University of Zurich)

The Effect of Postsecondary Educational Institutions on Local Economies: A Bird’s-Eye View

(with Patrick Lehnert, Madison Dell, Uschi Backes-Gellner and Eric Bettinger)

Over the last 50 years, nations worldwide have established higher education institutions to stimulate local economic growth. However, empirical evidence on local economic outcomes is still scarce, mainly because of a lack of adequate data. This paper provides evidence on the expansion of branch campuses in Tennessee and Texas, two states that are representative of the underlying patterns in the U.S. as a whole. As we expect the economic effect to be very localized, we use a novel and highly disaggregated proxy for regional economic activity based on daytime satellite imagery. Applying three panel estimation methods—traditional difference-in-differences (DD), heterogeneityrobust DD, and instrumental variables (IV)—we find positive associations for Tennessee and Texas in all estimations. In Tennessee, the traditional DD approach yields an increase in GDP of 1.4 percent after a campus opens (according to our most conservative estimate) and is driven by two-year branch campuses. In Texas, this effect amounts to 5.9 percent, with both two- and four-year branch campuses contributing to it. In our IV estimations, we take advantage of local taxing regulations that influence the decision to open branch campuses in certain locations but not the local economic conditions. We use this exogenous variation to estimate causal effects and find an even larger positive effect of 12.5 percent for the most conservative estimate. Given the widespread use of higher education expansion to induce economic growth, particularly in rural areas, this paper contributes important evidence on the economic impact of such campus openings on regional economic activity.

7 May 2024

Christina Gathmann (University of Luxembourg)

AI and the Labor Market: Impact on Job Tasks, Firm Employment and Local Labor Markets

How will AI reshape jobs and labor markets, and how does its impact differ from prior waves of technological change like robots?. To answer this question, we develop new measures for the advancement of AI and robotics technologies in Europe using Natural Language Processing techniques on patent data. Combining the patent-based measures with survey data on tasks, we find that AI exposure shifts the content of jobs from non-routine abstract tasks towards routine tasks, the opposite of what is observed for robots. These task shifts occur mainly within narrowly defined occupations within manufacturing and services. Combining the patent-based measures with administrative data on establishments and workers in Germany, we find negative employment effects for AI whereas robots negatively affect low-skill employment but increase medium- and high-skill employment. We also investigate the employment and wage responses in local labor markets using a shift-share design. In both manufacturing and services, AI reduces employment for medium-skill workers, while robots replace mostly low-skilled workers in manufacturing.

14 May 2024

Raoul van Maarseveen (University of Cologne)

Urbanization and educational attainment: evidence from Africa

Despite the rapid urbanization of the developing world, little remains known about how urban residency and migration affect childhood outcomes. Using census data for 14 African countries combined with an age-at-move design, I show that childhood exposure to cities significantly increases primary school completion and literacy rates of children, even for poor urban households. The availability of schools and the lower opportunity costs of education appear to be the main factors explaining the higher education attainment in urban regions. The paper thus provides evidence of a novel channel through which urban migration can promote economic development in developing countries.

11 June 2024

Eric Maurin (Paris School of Economics)

Sick of Working from Home?

Driven by new information technologies, working from home has experienced unprecedented growth since the COVID pandemic. We contribute to the debate on the consequences of this development by drawing on a French reform conducted in 2017, with the aim of facilitating telework agreements between employers and employees. We show that the reform was followed by a boom in working from home, particularly in mid-level occupations. On the other hand, employees in lower-level occupations were virtually unaffected. By comparing occupational groups before and after the reform, in firms that have signed telework agreements and in firms that have not, we find that the development of working from home coincides with a significant deterioration in the health status of mid-level employees, particularly men. Wages and number hours worked, on the other hand, remain largely unaffected.

18 June 2024

Christian Traxler (Hertie School)

Swiftness and Delay of Punishment

(with Libor Dušek)

This paper studies how the swiftness and delay of punishment affect behavior. Using rich administrative data from automated speed cameras, we exploit two (quasi-)experimental sources of variation in the time between a speeding offense and the sending of a ticket. At the launch of the speed camera system, administrative challenges caused delays of up to three months. Later, we implemented a protocol that randomly assigned tickets to swift or delayed processing. We identify two different results. First, delays have a negative effect on payment compliance: the rate of timely paid fines diminishes by 7 to 9% when a ticket is sent with a delay of four or more weeks. We also find some evidence that very swift tickets – sent on the first or second day following the offense – increase timely payments. These results align with the predictions of expert scholars that we elicited in a survey. Second, speeding tickets cause a strong, immediate, and persistent decline in speeding. However, we do not detect any robust, differential effects of swiftness or delay on speeding. This challenges widely held beliefs, as reflected in our survey. Yet, we document large mechanical benefits of swift punishment and provide a theoretical framework of learning and updating that explains our findings.

25 June 2024

Kristina Strohmeier (University of Duisburg Essen)

9 July 2024

Sebastian Findeisen (University of Konstanz)

Family-Friendly Workplace Policies

The literature has studied the willingness to pay for family-friendly amenities, but less is known about the supply side and the incentives for firms to provide these amenities. There are two main incentives for firms to offer family-friendly workplace policies. First, such amenities may increase employee retention or reduce the duration of labor market breaks after the arrival of children. Second, if some workers are willing to pay for these amenities, firms can offer them to attract new workers.

Our study utilizes German matched employer-employee data combined with detailed survey panel data on firm provision of childcare to examine these motives. We find that firm-provided childcare enhances retention and shortens labor market breaks for mothers, especially for high-wage mothers. It also contributes to employment growth, disproportionately driven by firms attracting female talent. These findings can be rationalized through a stylized model of imperfect competition in the labor market, where family-friendly workplace policies are modeled as an amenity with direct production benefits.

Previous seminars

Winter 2023/ 2024

The research seminar invites external researchers on a regular basis and is open to the public. It is part of the RTG day and takes place in the Math Tower, at Technical University of Dortmund , Vogelpothsweg 87,44227 Dortmund, in Room: 127 on Tuesdays from 16:15 to 17:30 during the winter term 2023/2024. The best way to reach here is by S-bahn (S1), which has a stop at “Dortmund Universität”.

17 October 2023

Dávid Krisztián Nagy (Barcelona School of Economics)

Room: 127

Math Tower, TU Dortmund

The Death and Life of Great British Cities

(with Stephan Heblich, Alex Trew and Yanos Zylberberg)

This paper studies how cities’ industrial structure shapes their life and death. Our analysis exploits the large heterogeneity in the early composition of English and Welsh cities. We extract built-up clusters from early historical maps, identify settlements at the onset of the nineteenth century, and isolate exogenous variation in the nature of their rise during the transformation of the economy by the end of the nineteenth century. We then estimate the causal impact of cities’ population and industrial specialization on their later dynamics. We find that cities specializing in a small number of industries decline in the long run. We develop a dynamic spatial model of cities to isolate the forces which govern their life and death. Intratemporally, the model captures the role of amenities, land, local productivity and trade in explaining the distribution of economic activity across industries and cities. Intertemporally, the model can disentangle the role of aggregate industry dynamics from city-specific externalities. We find that the long-run dynamics of English and Welsh cities is explained to a large extent by such dynamic externalities a la Jacobs.

24 October 2023

Pierre Magontier (University of Bern)

Room: 127

Math Tower, TU Dortmund

The Unintended Consequences of Post-Disaster Policies for Spatial Sorting

(with Marcel Henkel and Eunjee Kwon)

We provide new empirical and theoretical evidence on the spatial consequences of public policies driven by electoral motives. Using exogenous variation in the timing of natural disasters, we show that hurricanes occurring close to Election Day in the United States lead to increased local post-disaster efforts. These electorally motivated measures lead populations to sort into hazard-prone areas. To comprehend the aggregate implications of this sorting pattern, we introduce the relationship between electoral cycles and public policies in a spatial equilibrium model. These electorally motivated policies generate considerable productivity and output losses without being compensated by aggregate welfare gains.

7 November 2023

Steffen Altmann (University of Duisburg-Essen)

Room: 127

Math Tower, TU Dortmund

The Direct and Indirect Effects of Online Job Search Advice

(with Anita Glenny, Robert Mahlstedt and Alexander Sebald)

We study how online job search advice affects the job search behavior and labor market outcomes of unemployed workers. In a large-scale field experiment, we provide job seekers with vacancy information and occupational recommendations through an online dashboard. A two-stage randomized design with regionally varying treatment intensities allows us to account for treatment spillovers. Our results show that online advice is highly effective and significantly increases job seekers’ working hours and labor market earnings when the share of treated workers is relatively low. At the same time, we find substantial negative spillovers on other treated job seekers for higher treatment intensities, resulting from increased competition between treated job seekers who apply to the same vacancies. The negative indirect effects completely offset the positive direct effects of search advice when approaching a full roll-out.

14 November 2023

Armando Miano (IAB)

Room: 127

Math Tower, TU Dortmund

Search Costs, Outside Options, and On-the-Job Search

I study how beliefs about search costs, returns to search effort, and outside options relate to the job mobility decisions of employed workers. I design an online survey and administer it to a representative sample of wage and salaried workers in the US. I directly measure employed workers’ perceptions of search costs—time, money, stress—and the perceived return to their job search effort—the expected success rate of their job applications. I also elicit workers’ beliefs about their opportunities outside of their current job and measure their knowledge of the wage distribution in their occupation. I document significant heterogeneity in expectations across demographic groups. Women expect higher costs and lower returns to effort than men. I find that beliefs about outside options and returns to effort are strong predictors of job search intentions. In addition, respondents who expect to spend more time looking for job openings have a lower propensity to search, consistent with the relevance of information frictions. Using two information experiments, I show that accurate information about the median wage does not shift search intentions, while positive information on the recent search experience of similar workers is more effective for groups that are more worried about search costs.

21 November 2023

Philipp Meinen (Deutsche Bundesbank)

Room: 127

Math Tower, TU Dortmund

The effect of EU ETS on productivity

(with Arne Nagengast)

Recent research documents that the European Union’s (EU) Emissions Trading System (EU ETS) has led to significant reductions in CO₂ emissions of regulated sectors and firms (e.g., Beyer and Aklin, 2020; Dechezleprêtre et al., 2023). By contrast, the implications of the EU ETS on competitiveness and productivity dynamics of regulated sectors are still a matter of debate (see, for example, Martin et al., 2016 for a review). In this paper, we evaluate the effect of the EU ETS on economic performance by analysing a rich panel of 24 sectors in 20 EU countries between 1995 and 2017. We do so by exploiting recent advances in the literature on policy evaluation methods, which incorporate machine-learning approaches to improve upon existing estimation techniques (Athey et al., 2021). This allows us to identify the causal effect of the EU ETS on a range of economic performance measures at aggregate and disaggregate levels. Overall, we find a positive causal effect of the EU ETS on labour productivity of regulated sectors. This result is robust to a variety of sensitivity checks. Altogether, we find evidence for two adjustment mechanisms that reduce CO₂emissions. On the one hand, there is investment-led change in the production process, resulting in increases in productivity accompanied by higher output against the background of higher capital intensity and lower CO₂emission intensity of regulated sectors. On the other hand, the results are also consistent with a shakeout in some sectors, involving a decline in employment, output and CO₂ emissions as well as an increase in imported intermediate goods.

12 December 2023

Wolfgang Keller (University of Colorado Boulder/ NBER)

Room: 127

Math Tower, TU Dortmund

Colocation of Production and Innovation: Evidence from the United States

Is the decline of manufacturing behind new ideas getting harder to find? Shrinking manufacturing production in many advanced countries has raised concerns that the rate of innovation will fall as well because geographically proximate production may be a key input into innovation. This paper provides new evidence on the benefits from collocating innovation and production activities in the same firm. We also examine whether other firms benefit from the colocation of innovation in their region. Geo-coding all plants in US Census data, we provide the first decomposition of US innovation by firm type. We show, first, that manufacturing firms that have plants dedicated to innovation patent more than other manufacturing firms. Second, manufacturing firms with innovation plants close to their production facilities patent more than those with innovation plants further away. Possible implications for economic policy are discussed.

9 January 2024

Maksym Obrizan (Kyiv School of Economics)

Poverty, Unemployment and Displacement in Ukraine: three months into the war

This paper identifies the causal effects of full-scale kremlin aggression on socio-economic outcomes in Ukraine three months into the full-scale war. First, forced migration after February 24th, 2022 is associated with an elevated risk of becoming unemployed by 7.5% points. Second, difference-in-difference regressions show that in regions with fighting on the ground females without a higher education face a 9.6-9.9% points higher risk of not having enough money for food. Finally, in the regions subject to ground attack females with and without a higher education, as well as males without a higher education are more likely to become unemployed by 6.1-6.9%, 4.2-4.7% and 6.5-6.6% points correspondingly. This persistent gender gap in poverty and unemployment, when even higher education is not protective for females, calls for policy action. While more accurate results may obtain with more comprehensive surveys, this paper provides a remarkably robust initial estimate of the war’s effects on poverty, unemployment and internal migration.

16 January 2024

Erik Bengtsson (Lund University)

Room: 127

Math Tower, TU Dortmund

The Social Origins of Democracy and Authoritarianism Reconsidered: Prussia and Sweden in Comparison

(with Felix Kersting)

The implications of land inequality for politics and democratization is a classical debate in social sciences and political economy. A recurring argument is what the political scientist Carles Boix has formulated as that “The absence of landlordism constitutes a necessary precondition for the triumph of democracy”. We revisit this debate by studying two in various ways crucial cases: Prussia, the locus classicus of the pernicious effects of landlordism, and Sweden, often perceived to be Prussia’s opposite, as a farmer-dominated social structure led to stable democratization. Our comparison shows the flaws of these interpretations: on standard measures of land inequality, Sweden was more unequal than Prussia in the late 1800s, but nevertheless, obviously, the political outcomes were very different. We explore why land inequality had such different effects on politics in Sweden compared to Prussia, utilizing various measures of land inequality (share of land held by nobles; distribution of farm sizes; presence of large estates), looking at 241 election districts in Sweden from the imposition of universal male suffrage in 1909 to the 1940s, and 236 election districts in Prussia for all general election between 1871 and 1912. Land inequality, in its different measures, had no negative effect on vote participation in Sweden, no positive effect on the Conservative vote share, and no negative effect on the Socialist vote share. We explore why in a qualitative-historical section focusing on Scania, the most unequal region in Sweden but also the hotbed of democratic movements. For Prussia, land inequality is correlated with votes for the conservative party, however, not with turnout as measure of democratic participation. We relate the (in part) opposing findings to the different responses to growing import competition during the first wave of globalization.

23 January 2024

Christian Traxler (Hertie School)

Room: 127

Math Tower, TU Dortmund

Swiftness and Delay of Punishment

(with Libor Dusek)

This paper studies how the swiftness and delay of punishment affect behavior. Comprehensive administrative data from automated speed cameras allow us to track the driving records of cars over time. We also observe the exact date of speeding ticket dispatch, delivery, and payment. At the start of the speed camera system, administrative challenges caused delays in ticket dispatch of up to three months. Later, we implemented a protocol to randomize the sequence of ticket processing. Utilizing these two (quasi-)experimental sources of variation in the time between an offense and ticket dispatch, we present two different results. First, we identify a significant effect of delays on payment compliance: The rate of timely paid fines diminishes by 7 to 9% when a ticket is sent with a delay of four or more weeks after an offense. We also find some evidence that sending tickets swiftly – on the first or second days following the offense – increases timely payments. These results align with the predictions of academic economists and criminologists, as elicited in a survey. Second, we show that speeding tickets cause a strong, immediate, and persistent decline in speeding. However, we do not detect any robust, differential effects of swiftness or delay. This challenges widely held beliefs, as reflected in our survey. Yet, we document large mechanical benefits of swift punishment and provide a theoretical framework that explains our findings.

30 January 2024

Albrecht Ritschl (LSE)

Room: 127

Math Tower, TU Dortmund

Seniority Reversals and Endogenous Sudden Stops: Some Transfer Problem Dynamics

(with Tai-Kuang Ho)

Sovereign debt restructuring often ends in abject failure, as analogies from corporate debt restructuring are applied without proper analysis of dynamic disincentives (Bulow and Rogoff, 1989). In this paper we analyze the dynamic incentive effects of debt restructuring and changes in seniority among rivalling debt elements in a stochastic endowment economy with a risk averse sovereign debtor. Away from the default zone, the debtor will prefer to hold senior debt to signal creditworthiness and to obtain a so-called good housekeeping seal of approval. After a major adverse shock and within the default zone, fresh money will only be granted if the debtor is allowed to issue senior debt, making legacy debt junior. This leads to a borrowing binge and is often followed by sudden stop and default episodes in which the junior debt is defaulted on first. We calibrate the model to interwar Germany under the Dawes Plan of 1924-29, where new debt was issued in large amounts. Our simulation results bear out the predictions of Keynes (1922, 1929) about the dim prospects of recovering reparations.

Previous seminars

Summer 2023

The research seminar invites external researchers on a regular basis and is open to the public. It is part of the RTG day and during the Summer term 2023 it will take place at UDE’s Duisburg Campus in LC 026, on Tuesdays from 16:15 to 17:30. The easiest way to reach Duisburg Campus is by Bus #933 or #926 from Duisburg Central Train Station. Because of the construction at the East Entrance (Osteingang), please follow the signs to reach the bus stop at the Mülheimer Straße. This bus stop is called “Duisburg Hbf”.

The RTG Day will take place in LF212, and LB 338 is reserved from 10 am to 3 pm for the courses taught on the RTG day.

18 April 2023

Jan Nimczik (ESMT Berlin)

UDE, Duisburg Campus

Workplace Connections and Migration: Evidence from German Reunification

(with Michelle Hansch, Ole Monscheuer, and Alexandra Spitz-Oener)

We study the impact of co-worker networks on the migration decisions of East Germans after reunification. Based on a novel data set that links rich administrative data from the German Democratic Republic (GDR) in 1989 to German social security data, we identify East Germans’ workplace connections formed in the GDR as well as their labor market trajectories after reunification. We then analyze how former GDR co-workers who have migrated to West Germany impacted the migration decision of East Germans after reunification. For identification, we focus on East Germans who are displaced by establishment closures between 1992 and 2005. Having a former GDR co-worker who works in West Germany substantially increases the probability to move to West Germany after job displacement. We find that contacts who work in high-quality firms in West Germany are particularly important in triggering East-West migration.

25 April 2023

Wilhelm Kohler (University of Tübingen)

UDE, Duisburg Campus

Pandemics, Public Policy, and Peltzman Effects

The study of infection dynamics routinely relies on versions of the compartmental SIR model. We extend the basic SIR model to explore the trade-offs which govern individual behavior. We limit our analysis to a highly stylized version of the model and analyze peoples’ response to specific public policies in closed form. For both, vaccination and lockdown policies we establish Peltzman effects: As policies lower the risk of infections, people become more socially active, in turn, undermining their effectiveness. Data for US states and countries in Western Europe suggest that such effects are shaping actual infection dynamics to a considerable extent.

2 May 2023

Hannah Illing (University of Bonn)

UDE, Duisburg Campus

Hiring and the Dynamics of the Gender Gap

(with Hanna Schwank and Linh Tô)

To understand how the gender wage gap interacts with job mobility, we examine the internal and external labor market responses to exogenous hiring shocks by gender. Using matched employer-employee data from Germany, our empirical strategy leverages 50,000 unexpected worker deaths to characterize how firms respond to exogenous vacancies of positions formerly held by male or female workers. We find that female replacement workers take up positions with lower average existing wages regardless of the gender of their predecessors. Furthermore, female replacement workers have significantly lower starting wages than male replacement workers, by between 15 to 19 log points, and their wages grow much more slowly over time.

9 May 2023

Bernd Fitzenberger (IAB Nürnberg)

UDE, Duisburg Campus

The role of unemployment and job change when estimating the returns to migration

(with Julian Emmler)

Estimating the returns to migration from East to West Germany, we focus on pre-migration employment dynamics, earnings uncertainty, and job change. Migrants are found to be negatively selected with respect to labor market outcomes, with a large drop in earnings and employment during the last few months before migration. We find sizeable positive earnings and employment gains of migration both in comparison to staying or job change. The gains vary considerably with pre-migration earnings and with the counterfactual considered. Future migrants have worse expectations for their labor market prospects in the East and migrants show a greater openness to mobility.

(Canceled) 16 May 2023

Ismir Mulalic (Copenhagen Business School)

UDE, Duisburg Campus

Productivity and wage effects of an exogenous improvement in transport infrastructure: accessibility and the Great Belt Bridge

(with Bruno De Borger and Jan Rouwendal)

In this paper, we study the short-run effects on firm productivity and wages of a large and very localized discrete shock in the quality of transport infrastructure, viz. the opening of the Great Belt Bridge connecting the Copenhagen area with the neighbouring island Funen and the mainland of Denmark. The empirical results are consistent with the view that the new

infrastructure facilitated matching between firms and workers in the areas surrounding the bridge, increasing both productivity and wages, but there are also wider ranging effects that cannot be explained by labour market matching. Specifically, we find that productivity significantly increased in the regions near the bridge only, especially for relatively small firms in the retail industry and, to a lesser extent, the construction industry. Unlike the productivity effects, increasing wages are not limited to the areas surrounding the bridge but are significant throughout the country, also in regions and industries where productivity remained unaffected. We further find that the opening of the bridge increased inequality between workers: wages of male workers reacted stronger than those of female workers, and the wage effect was found to increase in education.

6 June 2023

Evaluation Day, Regional Disparities and Economic Policy

13 June 2023

Pierpaolo Parrotta (IÉSEG School of Management)

UDE, Duisburg Campus

Breaking Up Cartels, Self-Reporting and Innovation Outcomes

(with Marianna Marino, Giacomo Valletta, Valerio Sterzi, Annabelle Jochem)

In this paper, we report evidence on the effect of self-reporting behavior on innovation outcomes in cartelized industries. We test the hypothesis that self-reporting behavior, compared to direct detection, provides the anti-trust authority with a superior set of information to eradicate the anti-competitive effects of cartel persistence. Our estimation strategy is based on a difference- in-difference approach that compares industries in which cartels have been self-reported (treated) with those affected by cartels that have been detected directly by the European Commission (controls) over the 1996-2012 period. Our results show that cartel breaking due to self-reporting increased the (quality weighted) number of patent applications and patenting firms in previously cartelized industries, being both effects mainly led by non-collusive and new patenting companies, respectively. Furthermore, introducing the 2002 reform of EU leniency program in our estimation setting, we find that the effects due to self-reporting enlarge after the aforementioned reform, which enhanced both transparency and predictability of the leniency policy.

20 June 2023

Daniel Sturm (London School of Economics and Political Science)

UDE, Duisburg Campus

How Useful are Quantitative Urban Models for Cities in Developing Countries?

(with Kohei Takeda and Anthony J. Venables)

Most of the world’s urban population lives in cities in developing countries where data from traditional sources is often scarce. In this paper we show how quantitative urban models can be estimated in such data-scarce environments using data from Dhaka. Building on recent work estimating commuting costs using increasingly available mobile phone data together with Google travel times, we show how this data can be combined with newly available satellite data on building heights to estimate the key structural parameters of an urban model. We use the model to estimate the price of land and floor space in each ward of Dhaka, which are typically difficult to directly observe in developing country cities. To illustrate how the model can be used for policy analysis, we consider model counterfactuals of the impact of an increase in density, which we model as an increase in the floor space supply elasticity, and the construction of a new radial road.

27 June 2023

Hans Koster (Vrije Universiteit Amsterdam)

UDE, Duisburg Campus

Identifying Housing Preferences in Regulated Markets: Evidence from Waiting Lists

(with Jos van Ommeren and Zhiling Wang)

In many markets, goods are not allocated based on prices. A prominent example is public housing that is typically allocated based on waiting times. Using a dynamic framework, we show that these waiting times are informative on household preferences regarding the quality of public housing. We apply this framework to estimate the internal and external effects of a large-scale Dutch policy to improve public housing. By estimating unconditional quantile regressions, we show that public housing tenants have a strong preference to reside in newly-built housing units and positively value new public housing units nearby. In addition, we find that owner-occupying residents only weakly value nearby newly-built public housing. These results emphasize that the welfare benefits of improvements in public housing are likely to be strongly underestimated if effects on household residing in the regulated public housing sector are not taken into account.

4 July 2023

Michael Oberfichtner (IAB Nürnberg)

UDE, Duisburg Campus

The wage elasticity of recruitment

One of the factors likely to affect the market power of employers is the sensitivity of the flow of recruits to the offered wage, but there is very little research on this. This paper presents a methodology for estimating the wage elasticity of recruitment and applies it to German data. Our estimates of the wage elasticity of recruitment are about 1.4. We also report evidence that high-wage employers are more selective in hiring, in which case the relevant recruitment elasticity should be higher, about 2.2. Together with prior estimates of the quit elasticity these results imply that wages are 72–77% of the marginal product of labour. Further, we find lower elasticities for recruits hired from non-employment as well as for women, non-German nationals, non-prime-age workers, less skilled workers, and workers with less complex jobs.

Winter 2022/2023

The research seminar invites external researchers on a regular basis and is open to the public. It is part of the RTG day and takes place in the Math Tower, at Technical University of Dortmund , Vogelpothsweg 87,44227 Dortmund, in Room: 127 on Tuesdays from 16:15 to 17:30 during the winter term 2022/2023. The best way to reach here is by S-bahn (S1), which has a stop at “Dortmund Universität”.

25 October 2022

Andreas Mense (Institute for Employment Research (IAB), London School of Economics)

Room: 127

Math Tower, TU Dortmund

The Determinants of Homeownership across Space

In this paper, we employ a new instrumental variable strategy to identify the causal effect of the accommodation type on the housing tenure choice. According to our estimates, a ten percentage points increase in the share of multi-family housing causes the homeownership rate to decrease by eight percentage points. Because housing is durable, this very tight relationship has important long-run consequences for the location choices of homeowners, and hence for local inequality within and between cities. Two complementary theoretical mechanisms likely explain this result: A landlord production efficiency advantage, and a coordination failure for owner-occupiers in multi-family housing.

08 November 2022

Brigitte Hochmuth (University of Vienna, Department of Economics,IHS)

Room: 127

Math Tower, TU Dortmund

Financial Constraints, Firm Age, and the Labor Market

This paper shows that credit crunches cause labor market effects that are nonlinear over time and heterogeneous by firm age. During the Great Financial Crisis, a credit supply shock caused young firms to reduce employment significantly more than old firms, because the housing bust in 2006 led to a decline in young firms’ housing collateral and restricted their ability to borrow. To understand the underlying mechanism, I propose a financial frictions model with an explicit firm age structure. A simultaneous credit crunch and a decline in young firms’ net worth can reconcile the model with my empirical results. While old firms switch to equity financing, young firms depend on debt financing and cut labor demand. As young firms disproportionately account for aggregate job growth, my findings explain the sluggish labor market recovery after the Great Financial Crisis. A counterfactual experiment shows that absent the net worth shock, the U.S. unemployment rate would have been back to its pre-crisis level two years quicker.

15 November 2022

Nicola Fontana (Trinity College Dublin)

Room: 127

Math Tower, TU Dortmund

Backlash against Airbnb: Evidence from London

Anti-globalization sentiments have been on the rise in recent years. In urban contexts, these attitudes may take the form of backlash against tourism. In this paper, I examine the role of Airbnb, a major short-term rental platform, in explaining the rising discontent against tourists. To do so, I construct a rich and spatially disaggregated dataset to study the consequences of Airbnb penetration in London. First, I document that 1 additional Airbnb tourist per 1000 residents increases complaints against tourists by 2.2 per cent. Secondly, I explore the roots – pecuniary and non-pecuniary – of these reactions. I find that higher Airbnb penetration is associated with a decrease in neighbourhood quality, while the housing market is only marginally affected. These negative externalities can be explained by a lack of monitoring and coordination by hosts, which are key differences between short-term renting and traditional hotel accommodations. Finally, I provide evidence that the deterioration of neighbourhood quality markedly reduces social capital, as measured by the number of charitable organizations, and worsens attitudes towards globalization, leading to higher support for Brexit.

22 November 2022

Holger Görg (Kiel University)

Room: 127

Math Tower, TU Dortmund

Who is to suffer? Quantifying the impact of sanctions on German firms

We use novel and hitherto unavailable firm level panel data for German firms to look at the effects of the 2014 Sanctions against Russia on German firms. Using a difference-in-differences analysis, we study the impact on trade volumes, quantities and prices, as well as other aspects of firm performance such as employment and productivity.

13 December 2022

Volker Nitsch (TU Darmstadt)

Room: 127

Math Tower, TU Dortmund

Smart or Smash? The Effect of Financial Sanctions on Trade in Goods and Services

(with Tibor Besedeš and Stefan Goldbach)

The recent empirical literature shows that financial sanctions reduce German cross-border financial flows with sanctioned countries. Against this background, this research project deals with the question of whether financial sanctions also affect trade in goods and services. We compare the effect of financial sanctions on cross-border financial flows with their effect on flows of goods and services. The latter can be interpreted as a spillover effect.

10 January 2023

Banu Demir Pakel (Bilkent University, Department of Economics)

Room: 127

Math Tower, TU Dortmund

O-Ring Production Networks

(with Cecilia Fieler, Daniel Xu, and Kelly Yang)

We study a production network where quality choices are interconnected across firms. High-quality firms are skill intensive and trade more with other high-quality firms. Using data from Turkish firms, we document strong assortative matching of skills in the production network. A firm-specific export demand shock from a rich country increases the firm’s skill intensity and shifts the firm toward skill- intensive domestic partners. We develop a quantitative model with heterogeneous firms, endogenous quality choices, and network formation. An economy-wide export demand shock of 5 percent induces exporters and non-exporters to upgrade quality, raising the average wage by 1.2 percent. This effect is about nine times the effect in a special case of the model with no interconnection of quality choices.

17 January 2023

Lena Dräger (Leibniz University of Hannover)

The Hidden Heterogeneity of Inflation and Interest Rate Expectations: The Role of Preferences

(with Michael J. Lamla and Damjan Pfajfar)

Using a new consumer survey dataset, we show that consumers with the same inflation or interest rate expectations can differently assess whether the level of the corresponding variable is appropriate for the economy or too high/too low. This `hidden heterogeneity’ in expectations is relatively stable over time, even with large changes in actual inflation. Macroeconomic preferences are correlated with the related macroeconomic expectations, but vary also across sociodemographic characteristics and net wealth position. We also show that the variation in inflation preferences can be explained with risk preferences. Overall, this adds a new dimension to the definition of anchored expectations.

24 January 2023

Sebastian Till Braun (University of Bayreuth)

Room: 127

Math Tower, TU Dortmund

Reversing Fortunes of German Regions, 1926–2019: Boon and Bane of Early Industrialization?

(with Paul Berbée and Richard Franke)

This paper shows that 19th-century industrialization is an important determinant of the significant changes in Germany’s economic geography observed in recent decades. Using novel data on economic activity in 163 labor market regions in West Germany, we establish that nearly half of them experienced a reversal of fortune between 1926 and 2019, i.e., they moved from the lower to the upper median of the income distribution or vice versa. Economic decline is concentrated in North Germany, economic ascent in the South. Exploiting plausibly exogenous variation in access to coal, we show that early industrialization turned from an advantage for economic development to a burden after World War II. The dominant position of heavy industry, supported by the local political-administrative system, limited regional adaptability when the old industries fell into crisis. Today, the early industrialized regions suffer from low innovation and deindustrialization. The (time-varying) effect of industrialization explains most of the decline in regional inequality observed in the 1960s and 1970s and about half of the current north-south gap in economic development.

31 January 2023

Oliver Rehbein (University of Bonn)

Room: 127

Math Tower, TU Dortmund

Using a hand-collected data set on almost one million local television news stories in the U.S., this paper shows that depositors respond to changes in the intensity of reporting about the COVID-19 pandemic by holding more demand deposits. Counties, where pandemic news stories are 10 percentage points more frequent relative to all news stories hold 1.3% more demand deposits after the onset of the pandemic. This effect holds when controlling for the intensity of the pandemic and several other alternative explanations. Further evidence suggests that local news reflects the intensity of local discourse, which in turn causes a spike in deposits, especially in counties with a weaker social structure. The results suggest that the intensity of societal discourse around an event can have significant implications for banks and the real economy.

Summer 2022

The research seminar invites external researchers on a regular basis and is open to the public. It is part of the RTG day and takes place in room WST-A.12.04, Weststadttürme, Essen on Tuesdays from 16:15 to 17:30 during the summer term 2022.

Due to the spread of the coronavirus it is possible that some talks will be given in a virtual seminar. Further information will be released on this website.

12 April 2022

Andreas Lichter (HHU Düsseldorf, DICE)

WST-A. 12.04,

Weststadttürme, Essen

Fiscal and Economic Effects of Local Austerity

(with Melinda Fremerey and Max Löffler)

We study the fiscal and broader economic consequences of a large-scale consolidation program in Germany’s most populous state, North Rhine-Westphalia. For identification, we exploit political discretion in the composition of the treatment group that allows us comparing municipalities subject to fiscal consolidation to neighbors under similar financial distress ultimately not chosen for program participation. Overall, the policy helped targeted municipalities to considerably consolidate budgets. Whereas the amount of consolidation was remarkably homogeneous across the distribution of treated municipalities, strategies of consolidation differed substantially between smaller and larger municipalities. The former primarily cut spending on public services and raised property taxes, whereas the latter imposed no cuts on residents’ amenities but shifted parts of the burden of consolidation on local businesses. Smaller municipalities subject to treatment further experienced declines in population levels and average house prices after policy implementation, whereas larger ones saw no adverse economic outcomes.

19 April 2022

Katharina Erhardt (HHU Düsseldorf, DICE)

WST-A. 12.04,

Weststadttürme, Essen

Empirical Productivity Distributions and International Trade

(with Peter Egger and Sergey Nigai)

We use firm-level data for 15 countries and 13 manufacturing sectors to estimate firm-level
productivity parameters and to establish representative country-sector-specific empirical
productivity distributions. We use these distributions against the backdrop of multi-sector versions of the models of Eaton and Kortum (2002) and Melitz (2003) to quantify the role of technology in shaping international trade flows. We find that, on average, absolute advantage measured as productivity differences across countries within sectors explains 15% and 21% of the total variation in bilateral trade shares in the models of Eaton and Kortum (2002) and Melitz (2003), respectively. In contrast, on average, comparative advantage measured as productivity
differences across sectors within countries explains 39% and 47% of the variation in trade flows in these two models. We also demonstrate that empirical productivity distributions entail
quantitatively important micro-to-macro implications for marginal responses of trade flows to changes in trade costs, for gravity-type estimation of trade models, and for comparative statics
isomorphism between the customarily parameterized models of international trade. We confirm the predictions of the two aforementioned models under empirical productivity distributions in the data.

26 April 2022

Nina Boberg-Faclic (University of Southern Denmark)

WST-A. 12.04,

Weststadttürme, Essen

Winners and Losers from Agrarian Reform: Evidence from Danish Land Inequality 1682-1895
(with M. Lampe, P. L. Martinelli, and P. Sharp)

Pro-market and pro-farmer agrarian reforms enacted in eighteenth century Denmark laid the basis for rural development but we demonstrate that they also resulted in increased inequality. We investigate this using a novel parish-level database spanning more than two centuries. We identify the impact of land quality on inequality following the reforms by instrumenting with soil type and find increases in areas with more productive land. We propose and find evidence for a mechanism whereby agrarian reforms allowed areas with better soil quality to realize greater productivity gains. This in turn led to greater population increases, and a larger share of smallholders and landless laborers. Finally, we demonstrate the impact on the winners and losers: more unequal areas witnessed increases in top incomes, but greater emigration of the rural poor, to the United States in particular. Thus, the losers were able to vote with their feet, in stark contrast to those who might lose from similar reforms in developing countries today.

3 May 2022

Daniel Avdic (Monash University, Center for Health Economics)

WST-A. 12.04,

Weststadttürme, Essen

Provider responses to market entry under competing health technologies

(with Nils Gutacker, Giovanni van Empel and Johan Vikström)

We analyze supplier-induced demand as a strategic response to market entry by exploiting the relaxation of regulatory restrictions in cardiac care that led to an expansion in the number of hospitals providing catheter-based treatment (PCI) to patients in Sweden. Since patients’ choice of hospital in the Swedish healthcare system is determined by their place of residence, hospital providers exert local monopoly powers with incentives to treat patients in-house rather than sending them to other hospitals. This may lead to non-optimal treatment choices. Relating observed treatments of residents in catchment areas where hospitals opened a PCI lab to residents in unaffected catchment areas in a difference-in-differences empirical design, we find that patients with clinical indications for cardiac surgery (CABG) were five percentage points more likely to receive a PCI after their local hospital opened a PCI lab. In contrast, we find no corresponding effect that incumbent hospitals reduced their use of PCI on their remaining patient population to offset the reduction in CABG surgery. We conclude that the expansion of PCI labs was a likely contributor to the respective rise and decline of PCI and CABG over time in Sweden.

10 May 2022

Sonia Bhalotra (University of Warwick, Department of Economics)

Antidepressant Use and School Academic Achievement
(with Meltem Daysal, Nis Lydiksen and Mircea Trandafir)

We investigate impacts of antidepressant treatment on academic achievement among Danish children who are referred to a child psychiatrist. Leveraging quasi-random assignment of patients to psychiatrists with different prescribing tendencies, we find that treatment significantly increases test scores, especially in math and among girls. Treatment effects are larger among children of less educated mothers who, in general, are less likely to be treated, indicating negative selection on gains based on observables. However, there is positive selection on gains based on unobservables. The effect of treatment on the treated exceeds the average treatment effect, but the effect of treatment on the untreated is positive, suggestive of under-prescribing of SSRI for children. Estimates of policy relevant treatment effects reinforce the evidence of under-prescribing. These results are relevant in view of controversy over prescribing antidepressants to children.

17 May 2022

Board Meeting

7 June 2022

Internal Seminar (Pfingstwoche)

14 June 2022

Frédéric Robert-Nicoud (University of Geneva)

WST-A. 12.04,

Weststadttürme, Essen

Attention: starts at 14.30

Sorting to Expensive Cities

(with Cecile Gaubert)

We develop a spatial general equilibrium model featuring heterogeneous households holding non-homothetic preferences and cities endowed with heterogeneous consumption and production amenities. In equilibrium, desirable and productive locations command high housing prices; they are disproportionately inhabited by high-income earners; the cost of living of high-income earn- ers relative to the cost of living of low-income earners is lower in expensive cities than in more affordable ones. These equilibrium properties are all related: we show that high-ability/high- income households sort disproportionately to expensive and/or productive places if housing is the income inelastic good under general non-homothetic preferences.

21 June 2022

Jonathan Colmer (University of Virginia)