Macro- and microeconomic analyses of heterogeneous labor market outcomes
This proposal analyzes labor markets from both a macro- and a microeconomic perspective. It consists of four subprojects with the common objective to significantly advance our understanding of heterogeneities in labor market behavior and outcomes. The subprojects lead to novel insights regarding the intended and unintended consequences of different public policies, ranging from educational policies over the welfare state to maternal leave policies. The starting point of the first subproject are recently documented patterns of hours worked by productivity on the aggregate and individual level. Based on a macroeconomic model, it analyzes the role of subsistence consumption and the welfare state as driving forces of hours worked differences by level of development. The remaining three subprojects focus on gender. The second subproject investigates whether maternity leave policies have negative consequences for the labor market success of women of child-bearing age by lowering the expected length of a match for employers. It exploits variation in maternal leave policies across German states in an empirical analysis, whose estimates inform a frictional labor market model that allows conducting counterfactual policy experiments. The third subproject asks whether the possibility of experimentation reduces the inclination of women to shy away from competitive settings. Exploiting both within- and cross-country variation, it tests whether the reversibility of choices in secondary school has an effect on the willingness of girls vs. boys to specialize in math-intensive subjects, and thereby ultimately on educational and labor market outcomes. The fourth subproject analyzes whether an increase in the share of women in an occupation leads to lower wages in this occupation due to the devaluation of its prestige. It uses the German reunification as a natural experiment to establish causal effects, relying on the different occupational distributions of East and West German women.