Research

Research Interests

Population Economics, Labor Economics, Public Economics, Applied Microeconometrics – in particular relating to search frictions on the labor market and incomplete employment contracts

Motivation for Science

Why do wages move so little? Does this have allocational effects through excessive job destruction? Can wage rigidities explain why firms are reluctant to retain older workers? If yes, what should be done about it?

Publications

Wage Rigidities and Old-Age Unemployment
joint with Michael Reiter
EconPol Policy Brief 22, March 2020

Abstract: Wage smoothing is beneficial for firms and workers, but wage rigidities can lead to bilaterally inefficient separations. By comparing the impact of four policy measures regarding their impact on welfare, output and government expenditures, Martin Kerndler (TU Wien) and Michael Reiter (IHS Vienna, NYU Abu Dhabi, EconPol Europe) have identified a reasonable policy mix to counter the negative employment effects of wage rigidities.

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Working Papers

Size and persistence matter: Wage and employment insurance at the micro level
ECON WPS – Vienna University of Technology Working Papers in Economic Theory and Policy 04/2019, May 2019

Abstract: Firms provide substantial insurance against wage fluctuations and job loss. This paper studies how the interaction between shock size and persistence affects the firm's ability to insure workers against idiosyncratic firm-level shocks. Using linked employer-employee data from Germany, I find that wages respond largely symmetrically to positive and negative permanent shocks. Whereas transitory shocks lead to upward wage rigidity. Individual layoff probabilities only increase in response to negative permanent shocks. Interestingly, wage cuts and job loss after negative shocks are limited to blue-collar workers. Whereas white-collar workers are fully insured against negative shocks both in terms of wages and employment.

This paper was awarded the "Young Economist Award" at the NOeG Annual Meeting 2019.

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Contracting frictions and inefficient layoffs over the life-cycle
Working Paper
August 2018

Abstract: Low employment rates above age 55 are a major policy concern in many European countries. This paper analyzes the role of layoffs for the employment the elderly. Realistic frictions in wage contracting are introduced into an age-structured directed search model of the labor market. It turns out that although the contracting friction generates inefficiently high layoff rates at all ages, it particularly depresses the employment rate of the elderly. Moreover, the friction lowers the effectiveness of policy reforms. While reducing generosity of early retirement arrangements boosts employment among the elderly, these gains are lower in presence of the friction. Restricting access to early retirement should therefore be complemented by labor market policies that improve firms' willingness to keep elderly workers employed.

This paper was awarded the "Young Economist Award" at the NOeG Annual Meeting 2018.

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Book Chapters

Produktivität durch Soziale Kohäsion: Der Beitrag der österreichischen Sozialmiete
joint with Edwin Deutsch
In G. Biffl and N. Dimmel, editors, Migrationsmanagement 2 — Wohnen im Zusammenwirken mit Migration und Integration
omninum Verlag, ISBN 3990310186, January 2016

Abstract: This is an empirical study about how the productivity of selected industrial sectors across the Austrian regions is affected by socio-economic factors like personal characteristics and life-styles. Starting with theories put forward in the available literature, the basic hypothesis asks whether low skill workers contribute more to productivity when they live in social housing than living in other tenures. The innovative feature of the study is to embed the topic into the framework of polarisation between social strata. Using a panel over the period 2003 to 2009 and 35 Austrian NUTS3-regions, the evaluation of spatio-temporal econometric models permits to test the hypothesis. It is shown that the hypothesis is not rejected which means that the contribution of low skill social renters is indeed relatively higher. This is important as the spatial structure permits to detect an inherent mechanism of growing income inequality. The importance to supply sufficient affordable flats in mixed tenure structures is emphasized.

Download English version "The contribution to industrial productivity by social renters" presented at the ENHR Conference 2014

Reports

Industrial Diversity, Spatial Differentiation and Social Cohesion: Communicative Structures in the "Housing Topos"
joint with Edwin Deutsch
Report for the OeNB Jubilee Fund (Project No. 14292)
March 2014

Abstract: This is an empirical study about the productivity of selected industrial sectors across the Austrian regions. Starting with theories put forward in the available literature, it is asked which socioeconomic factors promote or impede the industrial development. Special attention is paid to communicative structures among the firms and the work force, which are strongly influenced by the living conditions of employment. For that, the authors coined the notion of "Housing Topos". In simple words, the notion encompasses the spatial distribution of the working population, together with their conditions of participating in the productive process and their living situation in housing. Using large data sets of Statistic Austria over the period 2003 to 2009, we apply spatio-temporal econometric models that permit to evaluate the productivity of industry in the Austrian regions. Among others, it is demonstrated that the productivity is enhanced by a sufficient diversity of activities, by the density of the population in agglomerations, by the participation of women in the productive process and by the influx of immigrants provided that they can live in affordable housing. The results permit certain policy conclusions which instruments may be adequate for creating a forward-looking diversity of activities and to promote a sustainable progress in the regional development.

Theses

Essays in Labor Economics
PhD Thesis, University of Vienna
Supervisors: Michael Reiter (IHS Vienna), Monika Gehrig-Merz
December 2018

Abstract: This dissertation consists of three essays relating to wage rigidities in ongoing employment relations. If employment is at will, efficient labor turnover requires occasional wage adjustments to make continuing employment mutually beneficial for the firm and the worker. In practice, the scope for wage adjustment may be restricted by institutional regulations and market failures. The first two essays study the implications of a specific form of wage rigidity within a search and matching framework. The third essay provides novel empirical insights.

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The twin hypothesis of education and retirement
MSc Thesis, TU Wien
Supervisor: Alexia Fürnkranz-Prskawetz
September 2013

Abstract: Common models examining the effects of demographic change and the efficiency of policy reforms often suffer from two important short-comings: (i) interaction between an individual's schooling and retirement decision is disregarded and (ii) a realistic demographic population structure is absent. In order to overcome these limitations, I combine two papers of Ben J. Heijdra and Ward E. Romp who developed a continuous time overlapping generations model in the manner of Blanchard (1985) allowing for age-dependent mortality rates. In my modification of their work, agents choose both length of schooling and retirement age endogenously. Pension benefits are calculated from life-time wage earnings which positively depend on the level of education. On the aggregate, dynamics are rather complicated due to generational turnover effects and a human capital externality. Nevertheless, I present a comparative static analysis of long-run effects as well as numerical simulations for the transition paths following demographic shocks and fiscal stimuli. I find that not controlling for individual adjustments in education and retirement at the same time will overestimate the negative impacts of aging on the macroeconomy. Similarly, the economic impact of education reforms is found to be much stronger if not only schooling but also retirement is treated as endogenous.

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Ein Leitfaden durch die Survival-Analyse am Beispiel KMUs in Österreich
BSc Thesis, TU Wien
Supervisor: Edwin Deutsch
September 2011

Abstract: Die vorliegende Arbeit entwickelt eine statisch fundierte Methode zur Klassifizierung von Unternehmensverläufen. Anschließend soll mittels einer umfassenden Survival-Analyse untersucht werden, welche Faktoren für die Überlebensdauer von Klein- und Mittelbetrieben am Markt ausschlaggebend sind. Von der Grundidee bis zu brauchbaren Resultaten ist es oft ein weiter und mühsamer Weg. Die vorliegende Arbeit soll hier besonders als Leitfaden dienen. Großer Wert wurde daher darauf gelegt, die erforderlichen Schritte und Denkprozesse fur den Leser nachvollziehbar aufzubereiten.

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