Labor Market Institutions and Technology-Induced Labor Adjustment along the Extensive and Intensive Margins

Journal of Macroeconomics, 2024, 79, 103571 

Working Paper Version: Ruhr Economic Papers No. 806, RWI (April 2019)

What is the composition of total hours response to a technology shock in countries with different labor market institutions in terms of extensive and intensive margin movements? To answer this question, I identify technology shocks using structural vector autoregressions (SVARs) and decompose the responses of hours into adjustments along the extensive and intensive margins. I compare the adjustments along the two margins between groups of countries with strict and flexible labor market institutions. I find that both margins play a large role in accommodating technology shocks, with adjustments along the intensive margin being more important. Furthermore, countries with flexible labor market institutions display a larger drop in employment, whereas the results for the intensive margin are mixed. Finally, the cross-country differences in fluctuations along the two margins can be linked to the strictness of institutions that target quantity and price adjustments in the labor market. 

The Consequences of U.S. Technology Changes for Productivity in Advanced Economies, with Steffen Elstner

Macroeconomic Dynamics, 2023, 27(3), 718-742 

Working Paper Version: Ruhr Economic Papers No. 796, RWI  (February, 2019)

Since at least the mid-2000s, many advanced economies have experienced low productivity growth. This development is often related to declining productivity gains at the technology frontier, which is largely determined by the US. We challenge this explanation by studying the effects of US technology shocks on productivity levels in advanced economies. We find positive but small spillovers of US technology shocks. For many countries, the elasticity of their productivity with respect to a 1% increase in the US technology level is significantly lower than 1. Thus, the recent US productivity slowdown must have had a limited effect on productivity developments in advanced economies. Nevertheless, after 5 years, the degree of productivity spillovers varies across countries. Therefore, we analyze the role of institutions in shaping these results. Our findings suggest that isolated institutional characteristics are not able to explain the observed various spillover degrees. 

Growth Prospects and the Trade Balance in Advanced Economies, with Ansgar Belke & Steffen Elstner

Oxford Bulletin of Economics and Statistics, 2022, 84(5), 1209-1234   

Working Paper Version: Ruhr Economic Papers No. 827, RWI  (February, 2020)

Coverage: Wie lassen sich die deutschen Exportüberschüsse verringern?, WirtschaftsWoche, 14. Dezember, 2019,  Redakteur: Stefan Reccius.

Does an improvement in growth prospects (technological news shock) lead to a fall in the trade balance? We introduce a novel news shock identification scheme and obtain in a panel vector autoregression (VAR) for the G7 countries the following results. Positive news shocks have negative effects on the trade balance in the United States and Japan. However, in other G7 countries, the effects are positive to a great extent. The differences in trade balance dynamics are mainly due to heterogeneous reactions of labour markets and wealth effects. Further, the terms of trade and exchange rate movements play an important role in explaining the results. Therefore, policy recommendations aimed at reducing the trade imbalances through productivity-enhancing reforms in advanced economies might not entail the targeted effects.

Work in progress

Real Effects of Exchange Rate Uncertainty Shocks