Abstract: Many displaced workers exhaust their initial stream of unemployment insurance benefits (UI). I analyze Germany's 2005 Hartz IV reform, which reduced the generosity of long-term unemployment assistance available once these initial benefits run out. Using administrative data on UI claimants, I exploit cross-cohort and within-cohort heterogeneity in the timing of Hartz IV's effective onset to estimate how long-term benefit reductions affect jobless durations, subsequent wages, and job characteristics. The hazard rate of reemployment rises steadily in the months before benefit cuts bind, culminating in a much larger spike at initial benefit exhaustion than was evident before the reform. I find that a worker subject to the new benefit schedule is 12.4 percent less likely to experience a one-year jobless spell. Conditional on completed jobless duration, workers who accept jobs after exhausting their initial entitlements earn 4 to 8 percent lower wages than they would have absent the reform. Averaging across completed durations, and accounting for offsetting wage gains due to shorter spells, I conclude that UI reform had at most a slight impact on mean reemployment wages: my estimates allow me to rule out wage declines exceeding 1.5 percent or increases exceeding 1.8 percent. Hartz IV diverted claimants from low-paid "mini-jobs" that often supplement UI receipt: net employment gains are driven by full-time jobs. Hartz IV's direct effects on individual job-finding—if not offset by general equilibrium forces—may have lowered Germany's steady-state unemployment rate by 0.9 percentage points.
Import Competition and the Great US Employment Sag of the 2000s
(with Daron Acemoglu, David Autor, David Dorn, and Gordon Hanson), Journal of Labor Economics, 2016
Abstract: Even before the Great Recession, US employment growth was unimpressive. Between 2000 and 2007, the economy gave back the considerable employment gains achieved during the 1990s, with a historic contraction in manufacturing employment being a prime contributor to the slump. We estimate that import competition from China, which surged after 2000, was a major force behind both recent reductions in US manufacturing employment and—through input-output linkages and other general equilibrium channels—weak overall US job growth. Our central estimates suggest job losses from rising Chinese import competition over 1999–2011 in the range of 2.0–2.4 million.
Return of the Solow Paradox? IT, Productivity, and Employment in US Manufacturing
(with Daron Acemoglu, David Autor, David Dorn, and Gordon Hanson), American Economic Review Papers & Proceedings, 2014
Selected Work in Progress
Cohort-Crowding in Entry-Level Labor Markets: Evidence from German High School Reforms
(with Simon Janssen and Markus Nagler)
Spillover Effects from Import Competition: Evidence from US Plants
(with Daron Acemoglu, David Autor, David Dorn, and Gordon Hanson)