THREE ESSAYS ON EMPLOYMENT IMPACTS OF LABOR MARKET POLICIES

In this dissertation, I empirically investigate employment effects of labor market policies. In Chapter 1, I assess effects of minimum wages on low-skilled and female low-skilled employment, and reassess their impact on youth employment. The sample consists of 19 OECD countries from 1997–2013 for low-skilled, and 1983–2013 for young workers. Six different static or dynamic estimation approaches are applied on different versions of the specifications, controlling for up to quadratic time trends. I further investigate the effects in the long-run, over the business cycle, of high minimum wages, and of institutional complementarities. The findings consistently suggest that there is little evidence for substantial disemployment effects, neither for low-skilled, female low-skilled, nor young workers. The estimated employment elasticities are small, and statistically indistinguishable from zero. In chapter 2, I estimate the effects of large minimum wage increases on wages, employment, profits, inflation, and other outcome variables across economic sectors in European countries. The sample consists of 60 sectors for 23 countries from 1995 to 2019. I apply a local projections approach to difference-in-difference event studies. I find large and significant effects on real average wages and the compensation of employees. Employment effects are small and insignificant. For the total and market economy, the own-wage elasticity ranges from small positive to -0.1, suggesting that low-wage workers strongly benefit from minimum wage policies. I also find increasing effects on inflation, labor productivity, and decreasing effects on profit shares. In chapter 3, my co-authors and I analyze the robust performance of the German labor market in the Great Recession, and investigate to what extent cyclical reductions in productivity and working time cushioned employment losses. We present stylized facts and apply time-series techniques to estimate counterfactual developments. Our results show that the magnitude of temporary working time reductions was extraordinarily pronounced, whereas cyclical reductions in hourly productivity were in line with historical evidence. Using detailed information on instruments for the adjustment of working time, we uncover the institutional mechanisms behind this strong reduction. While short-time work played a significant role, working time accounts and discretionary variations in regular working time were equally important