Essays in labor economics with applications to Germany


Essays in labor economics with applications to Germany

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Title: Essays in labor economics with applications to Germany
Author: Yaman, Firat
Abstract: This dissertation consists of three essays in Labor Economics. The first chapter estimates the costs for establishments of hires and separations for a panel of German establishments. The panel records the start and the termination of the employment of all employees in the surveyed establishments, allowing estimation of adjustment costs under different assumptions of how frequently establishments revise their labor demand. Under the assumption that establishments revise their labor demand every month, 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. The second chapter analyzes 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 using information on naturalization and country of birth in a nationally representative survey. I find evidence for externalities of ethnic capital for ethnic groups. A higher average education of ethnics makes attendance of higher-quality secondary schools more likely. Moreover, the effect is mainly mediated through 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 third chapter analyzes the impact of regional own-ethnic concentration on the language proficiency of immigrants in Germany. It solves the endogeneity of immigrants' location choices by exploiting the fact that guest-workers in Germany after WWII were initially placed by firms and labor agencies. We find a robust negative effect of ethnic concentration on immigrants' language ability. Simulation results of a simultaneous location and learning choice model confirm the presence of the effect and show how immigrants with high learning cost select into ethnic enclaves. Under the counterfactual scenario of a regionally equal distribution of immigrants the share of German-speakers increases only modestly.
Department: Economics
Subject: Labor demand Adjustment costs Immigration Ethnic capital Ethnic concentration Language proficiency
Date: 2011-05

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