GINI DP 1: Distributional Consequences of Labor-Demand Adjustments to a Downturn. A Model-Based Approach with Application to Germany 2008-09

Macro-level changes can have substantial effects on the distribution of resources at the household level. While it is possible to speculate about which groups are likely to be hardest-hit, detailed distributional studies are still largely backward-looking. This paper suggests a straightforward approach to gauge the distributional and fiscal implications of large output changes at an early stage. We illustrate the method with an evaluation of the impact of the 2008-2009 crisis in Germany. We take as a starting point a very detailed administrative matched employeremployee dataset to estimate labor demand and predict the effects of output shocks at a disaggregated level. The predicted employment effects are then transposed to household-level microdata, in order to analyze the incidence of rising unemployment and reduced working hours on poverty and inequality. We focus on two alternative scenarios of the labor demand adjustment process, one based on reductions in hours (intensive margin) and close to the German experience, and the other assuming extensive margin adjustments that take place through layoffs (close to the US situation). Our results suggest that the distributional and fiscal consequences are less severe when labor demand reacts along the intensive margin. JEL Classifcation : D58, J23, H24, H60.

Fiscal sustainability and demographic change: a micro-approach for 27 EU countries

The effect of demographic change on the labor force and on fiscal revenues is topical in light of potential pension shortfalls. This paper evaluates the effect of demographic changes between 2010 and 2030 on labor force participation and government budgets in the EU-27. Our analysis involves the incorporation of population projections, and an explicit modeling of the supply and demand side of the labor market. Our approach overcomes key shortcomings of most existing studies that focus only on labor supply when assessing the effects of policy reforms. Ignoring wage reactions greatly understates the increase in fiscal revenues, suggesting that fiscal strain from demographic change might be less severe than currently perceived. Beyond, ou r micro-based approach captures the impact on fiscal revenues more accurately than previous studies. Finally, as a policy response to demographic change and worsening fiscal budgets, we simulate the increase in the statutory retirement age. Our policy simulations confirm that raising the statutory retirement age can balance fiscal budgets in the long run

Do higher corporate taxes reduce wages? : Micro evidence from Germany

Because of endogeneity problems very few studies have been able to identify the incidence of corporate taxes on wages. We circumvent these problems by using an 11-year panel of data on 11,441 German municipalities' tax rates, 8 percent of which change each year, linked to administrative matched employer-employee data. Consistent with our theoretical model, we find a negative effect of corporate taxation on wages: a 1 euro increase in tax liabilities yields a 77 cent decrease in the wage bill. The direct wage effect, arising in a collective bargaining context, dominates, while the conventional indirect wage effect through reduced investment is empirically small due to regional labor mobility. High and medium-skilled workers, who arguably extract higher rents in collective agreements, bear a larger share of the corporate tax burden

Exporting and labor demand : micro-level evidence from Germany

It is widely believed that globalization affcts the extent of employment and wage responses to economic shocks. To provide evidence for this, we analyze the effect of firms' exporting behavior on the elasticity of labor demand. Using rich, German administrative linked employer-employee panel data from 1996 to 2008, we explicitly control for self-selection into exporting and endogeneity concerns. In line with our theoretical model, we find that exporting at both the intensive and extensive margins significantly increases the (absolute value of the) unconditional own-wage labor demand elasticity. This is not only true for the average worker, but also for different skill groups. For the median firm, the elasticity is three-quarters higher when comparing exporting to nonexporting firms

Plant litter dynamics in the forest-stream interface: Precipitation is a major control across tropical biomes

Riparian plant litter is a major energy source for forested streams across the world and its decomposition has repercussions on nutrient cycling, food webs and ecosystem functioning. However, we know little about plant litter dynamics in tropical streams, even though the tropics occupy 40% of the Earth's land surface. Here we investigated spatial and temporal (along a year cycle) patterns of litter inputs and storage in multiple streams of three tropical biomes in Brazil (Atlantic forest, Amazon forest and Cerrado savanna), predicting major differences among biomes in relation to temperature and precipitation regimes. Precipitation explained most of litter inputs and storage, which were generally higher in more humid biomes (litterfall: 384, 422 and 308 g m-2 y-1, storage: 55, 113 and 38 g m-2, on average in Atlantic forest, Amazon and Cerrado, respectively). Temporal dynamics varied across biomes in relation to precipitation and temperature, with uniform litter inputs but seasonal storage in Atlantic forest streams, seasonal inputs in Amazon and Cerrado streams, and aseasonal storage in Amazon streams. Our findings suggest that litter dynamics vary greatly within the tropics, but point to the major role of precipitation, which contrasts with the main influence of temperature in temperate areas. © 2017 The Author(s)