Ethnic externalities and 2nd generation immigrants

I analyze the role of regional ethnic capital – defined as the average years of schooling of ethnic groups – in the educational attainment of young second generation immigrants in Germany and whether results are sensitive to regional aggregation. I find evidence for externalities of ethnic capital for ethnic groups at the regional level. A higher average education of ethnics makes attendance of higher-quality secondary schools more likely. Moreover, the marginal effect of the externality is increasing in the ethnic concentration in the region. However, if higher than regional aggregates are used for the measurement of ethnic capital, no externalities are detected

The costs of adjusting labor: Evidence from temporally disaggregated data

I estimate the costs for establishments of hires and separations using a dynamic labor demand framework and matched employer-employee data from Germany, which records the exact dates of start and end of an employment spell. I estimate adjustment costs under different assumptions of adjustment frequencies. Under the assumption that establishments revise their labor demand every month, GMM estimates suggest hiring costs per employee of approximately 5,000 Euros, and costs of separations of 1,000 Euros. Hiring costs vary considerably between skilled (8,000 to 28,000 Euros per hire) and unskilled (4,000 to 8,000 Euros) labor. Spatial aggregation (large establishments) is associated with lower cost estimates, and only monthly adjustment frequencies yield estimates consistent with theoretical predictions

Homeownership and Unemployment Duration

We examine the effects of homeownership on individuals' unemployment durations in the USA. We take into account that an unemployment spell can terminate with a job or with a non-participation transition. The endogeneity of homeownership is addressed through the estimation of a full maximum likelihood function which jointly models the competing hazards and the probability of being a homeowner. Unobserved factors contributing to the probability of being a homeowner are allowed to be correlated with unobservable heterogeneity in the hazard rates. We find that unemployed homeowners are less likely to find a job than renters. The effect is small but statistically significant for most specifications. The effect is stronger for outright owners and weaker for mortgage holders. We also find that outright owners have a higher and mortgage holders a lower probability of exiting to non-participation than renters

Ethnic concentration and language fluency of immigrants in Germany

Studies that investigate the effect of the regional ethnic composition on immigrant outcomes have been complicated by the self-selection of ethnic minorities into specific neighbourhoods. We analyse the impact of own-ethnic concentration on the language proficiency of immigrants by exploiting the fact that the initial placement of guest-workers after WWII was determined by labour demanding firms and the federal labour administration and hence exogenous to immigrant workers. Combining several data sets, we find a small but robust and significant negative effect of ethnic concentration on immigrants’ language ability. Simulation results of a choice model in which location and learning decisions are taken simultaneously confirm the presence of the effect. Immigrants with high learning costs are inclined to move to ethnic enclaves, so that the share of German-speakers would increase only modestly even under the counterfactual scenario of a regionally equal distribution of immigrants across Germany

Credit Supply, Homeownership and Mortgage Debt

We analyse the effect of credit supply on households' homeownership status and mortgage debt, as well as other variables relating to housing costs and home equity. We demonstrate that banking deregulation as enacted by the Interstate Banking and Branching Efficiency Act (IBBEA) together with states' autonomy to set the degree and timing of deregulation provides an exogenous shift in credit supply which shows variation across states and time. We use this variation to isolate the effect of credit supply from confounding factors which could simultaneously affect credit supply and demand. Using a rich individual-level panel covering the period 1996 to 2008, and controlling for individual and region-year fixed effects, we find that a shift from full regulation to full deregulation increases the probability of owning a home by one, and of having a mortgage by two percentage points. The deregulation observed between 1990 and 2005 can explain at least one fifth, and up to 45% of the increase in homeowneship and the share of households with mortgages. For observations residing in non-metropolitan areas, we also find significant effects of deregulation on the amount of mortgage debt, reported home values, monthly mortgage payments, and debt to value as well as debt to income ratios. Most of these effects are driven by young households, and by individuals with higher incomes. Our results inform on the causes of the rise in homeownership and mortgage debt in the 1990s and 2000s which have led up to the housing crisis in the late 2000s

Structural Estimation of Labor Adjustment Costs

Structural estimation of labor adjustment costs suffers from a myriad of specification errors, largely due to data constraints. The literature usually assumes that adjustment decisions are made at the firm level, that adjustment happens at the frequency at which a firm is observed (typically annually or quarterly), and that adjustment costs are incurred on net changes in employment. This paper builds and estimates a dynamic optimization model of labor adjustment of establishments using data that permit 1) specifying any desired adjustment frequency (including daily adjustment), 2) using the micro unit of an establishment, 3) estimating the model based on net and on gross employment flows and 4) allowing for simultaneous hirings and separations. Results for adjustment costs depend crucially on the model specification. Only a monthly adjustment model yields positive cost parameters, while estimates from quarterly and annual adjustment models imply negative adjustment costs (that is adjustment implies a gain rather than a loss). Estimating the model on net employment changes imply hiring and separation costs of more than four annual median salaries, while the model on gross changes implies costs on the order of two annual median salaries. Adjustment costs differ significantly between small and large establishments. However, a static specification of the model performs equally well as the dynamic model with respect to out-of-sample predictions

Ethnic externalities in education and second-generation immigrants

I analyze the role of ethnic and native human capital – defined respectively as the average years of schooling of ethnic groups and of natives within a specific region – and of ethnic concentrations in the educational attainment of second generation immigrants in Germany. Compared to natives’ children, parents’ education has a small and insignificant effect on second generation immigrants’ education. Ethnic concentrations have a negative effect, while ethnic capital is insignificant. The effect of native capital, too, is insignificant but much larger in magnitude than the effect of ethnic capital. For women, mother’s education is relatively more important. For men, ethnic concentrations constitute a stronger impediment to educational attainment than for women