Department of Economics
50 Memorial Drive
Cambridge, MA 02142
NBER Program Affiliations:
NBER Affiliation: Faculty Research Fellow
Institutional Affiliation: Massachusetts Institute of Technology
NBER Working Papers and Publications
|November 2019||Labor in the Boardroom|
with Benjamin Schoefer, Jörg Heining: w26519
We estimate the effects of a mandate allocating a third of corporate board seats to workers (shared governance). We study a reform in Germany that abruptly abolished this mandate for certain firms incorporated after August 1994 but locked it in for the older cohorts. In sharp contrast to the canonical hold-up hypothesis – that increasing labor's power reduces owners' capital investment – we find that granting formal control rights to workers raises capital formation. The capital stock, the capital-labor ratio, and the capital share all increase. Shared governance does not raise wage premia or rent sharing. It lowers outsourcing, while moderately shifting employment to skilled labor. Shared governance has no clear effect on profitability, leverage, or costs of debt. Overall, the evidence ...
|January 2019||Marginal Jobs and Job Surplus: A Test of the Efficiency of Separations|
with Benjamin Schoefer, Josef Zweimüller: w25492
By the influential “Coasean” theory of employment relationships, job separations occur only once the worker and the employer have exhausted all remaining gains from trade through flexible bargaining and unrestricted contracting, with joint job surplus hence having turned negative. Our strategy to study this empirically elusive view is to track jobs longitudinally over the course of the introduction and sudden abolition of a policy that subsidized nonemployment and hence lowered job surplus: an age-and-region-specific extension of the maximum duration of unemployment benefits from one to four years in Austria. We document that this program destroyed 10.9ppt of jobs (a 27% increase in the separation rate). By the Coasean theory, these separations must have extracted marginal (low-surplus) jo...
|November 2018||Wages and the Value of Nonemployment|
with Benjamin Schoefer, Samuel G. Young, Josef Zweimüller: w25230
Nonemployment is often posited as a worker’s outside option in wage setting models such as bargaining and wage posting. The value of nonemployment is therefore a key determinant of wages. We measure the wage effect of changes in the value of nonemployment among initially employed workers. Our quasi-experimental variation in the value of nonemployment arises from four large reforms of unemployment insurance (UI) benefit levels in Austria. We document that wages are insensitive to UI benefit changes: point estimates imply a wage response of less than $0.01 per $1.00 UI benefit increase, and we can reject sensitivities larger than $0.03. The insensitivity holds even among workers with low wages and high predicted unemployment duration, and among job switchers and recently unemployed workers. ...