Research
Research
"Short-Term Relief, Long-Term Pain? The Impact of Short-Time Work on Employment"
Abstract: This paper studies the selection and employment effects of Short-Time Work (STW), a policy that subsidizes job retention during temporary reductions in labor demand. Using a novel high-frequency panel linking monthly STW claims to the universe of German Social Security records from 2009 to 2022, we document a historically unprecedented surge in STW participation during the COVID-19 pandemic, with nearly one-fourth of all establishments and workers enrolled by mid-2020. STW users tended to be larger, slower-growing, and paid lower wages than non-users. We estimate the relationship between STW use and establishment outcomes using three empirical approaches. First, cross-sectional OLS shows that STW participation is associated with 5% lower employment growth and no wage effects. Second, event studies reveal a persistent 6% decline in employment by 2022 among STW users, alongside higher turnover. Third, to address selection, we instrument for 2020 STW use with pre-pandemic STW experience following Boeri and Bruecker (2011). IV estimates suggest lower employment growth, equivalent to roughly one million fewer jobs by 2022, but should be interpreted with caution due to concerns about instrument validity. Our findings highlight the need for careful calibration of STW policies, such as dynamic eligibility rules and experience rating, to target support and mitigate long-run inefficiencies."Bridging the Gap: Economic Impacts of Mandatory Wage Agreements in Long-Term Care"
Abstract: This paper studies the labor market impacts of Germany’s 2022 Healthcare Development Act (GVWG), which required all publicly funded long-term care (LTC) providers to pay nursing staff at or above regional collective agreement levels. Using administrative data on the universe of German employees and a difference-in-differences design comparing LTC to hospital nurses, we find that the reform raised daily wages for LTC nurses by 8 EUR (9%) without reducing overall employment or firm entry, or affecting the composition of new hires. The wage distribution in LTC compressed sharply relative to the control group. To unpack this, we combine two complementary strategies. A cross-sectional approach shows that lower-paid LTC nurses were significantly more likely to exit the sector, with top-quintile nurses 26 percentage points more likely to remain full-time employed by 2023. A longitudinal cohort analysis finds that, conditional on staying, low-wage LTC nurses experienced faster wage growth than their pre-reform counterparts: bottom-quintile nurses in the post-reform cohort gained 0.29 log points over three years, compared to 0.22 pre-reform. These findings indicate that the reform caused both real wage gains and positive selection, jointly driving compression. Our results provide new evidence on how institutional wage floors may affect earnings distributions and workforce dynamics in an essential human service sector.
“Health Insurance as Economic Stimulus? Evidence from Long-Term Care Jobs”, with Martin B. Hackmann, Jörg Heining, Maria Polyakova, and Holger Seibert (submitted; NBER WP #33429, early version circulated as Upjohn Institute Working Paper 21-357)
Abstract: We leverage decades of administrative data and quasi-experimental variation in the introduction of universal long-term care (LTC) insurance in Germany in 1995 to examine whether health insurance expansions can stimulate local economies. We find that the LTC insurance rollout led not only to sizeable growth of the target LTC sector but also to an aggregate fall in unemployment and an increase in labor force participation. Quantitatively, a 10-percentage-point increase in the share of insured LTC patients led to 4 more nursing home workers per 1,000 individuals aged 65 and older (12% increase). Wages did not rise in the LTC sector or other sectors of the economy. The quality of newly hired nursing home workers declined, but this had no negative effect on old-age life expectancy. Overall, the insurance expansion brought lower-skilled workers into new jobs rather than reallocating workers away from other productive sectors. Our marginal value of public funds (MVPF) analysis suggests that the reform paid for itself when taking the positive fiscal externalities in the labor market into account. To understand which market primitives underpin our findings and to inform the external validity of our results, we develop and estimate a general model of labor markets with product-market subsidies in the presence of wedges, such as income taxes. Our model simulations show that the aggregate welfare effects of insurance expansions are theoretically ambiguous and depend centrally on the magnitude of frictions in input markets.
“Helping Saudi Youth Succeed on the Labour Market: Evidence from a Job Training Programme” (with Ammar A. Malik and Samia Sekkarie). In: N. Quilliam & M. C. Thompson (Eds.), Saudi Youth: Policies and Processes. Springer Nature, 107-128, June 2024.
“Machine-Based Expert Recommendations and Consumer Choices for Medicare Prescription Drug Insurance” (with M. Kate Bundorf, Maria Polyakova, Cheryl D. Stults, Amy Meehan, Ting Pun, Albert Chan, and Ming Tai-Seale). Health Affairs, 38 (3), 482-490, March 2019.
“Impact of Medicare Advantage Enrollment on Utilization of Intensity-Modulated Radiation Therapy and Cost of Care for Cancer Treatment” (with Alex L. Chin, Laurence C. Baker, Daniel P. Kessler, and M. Kate Bundorf), International Journal of Radiation Oncology, Biology, Physics, 102 (3), 41, 2018.