Research

Firms are not necessarily geographically static, in fact, they sometimes move across space within an economy. We define three possible destination types for relocating firms: major cities (urbanization), urbanized districts (suburbanization), and rural districts (counterurbanization). In this paper, we document relocation activity into all types of spatial structures, however, suburbanization is the predominant pattern in Germany. The literature on relocations of firms mostly ignores that relocating firms and their motives to relocate could be vastly different depending on their destination region. In our empirical analyses, we therefore examine heterogeneities by spatial structure in terms of firm selection and regional attraction factors. Our results reveal that firms moving to major cities and those moving to urbanized or rural districts are vastly different from each other in terms of firm size, wage level, and knowledge intensity. Our regional-level analysis reveal that especially relocating firms to urbanized districts are attracted by lower business taxes in these regions, suggesting that the suburbanization patterns are largely driven by regional differences in the local business tax rates. In contrast, there is no evidence that lower population densities, industry concentration, or regional wage levels matter for any of the moving types.

Firms are not necessarily geographically static, in fact, they sometimes move across space within an economy. We define three possible destination types for relocating firms: major cities (urbanization), urbanized districts (suburbanization), and rural districts (counterurbanization). In this paper, we document relocation activity into all types of spatial structures, however, suburbanization is the predominant pattern in Germany. The literature on relocations of firms mostly ignores that relocating firms and their motives to relocate could be vastly different depending on their destination region. In our empirical analyses, we therefore examine heterogeneities by spatial structure in terms of firm selection and regional attraction factors. Our results reveal that firms moving to major cities and those moving to urbanized or rural districts are vastly different from each other in terms of firm size, wage level, and knowledge intensity. Our regional-level analysis reveal that especially relocating firms to urbanized districts are attracted by lower business taxes in these regions, suggesting that the suburbanization patterns are largely driven by regional differences in the local business tax rates. In contrast, there is no evidence that lower population densities, industry concentration, or regional wage levels matter for any of the moving types.

Uncertainty shocks are found to affect labour market outcomes adversely. Most studies interrelate non-convex labour adjustment costs with the propagation of macroeconomic uncertainty to the labour market. I show that non-convex labour adjustment costs differ by establishment size in Germany. Hence, uncertainty shocks should affect large and small establishments differently. Therefore, this article studies the effects of uncertainty shocks on employment adjustments in large and small establishments employing four structural vector auto-regressive models for Germany from 1992 to 2014. These four models estimate the effects of uncertainty shocks on employment, worker flows, job flows, as well as worker churn in establishments with fewer than 100 and with at least 100 employees. The results suggest that uncertainty shocks trigger considerable employment fluctuations in large establishments while they barely affect small establishments. Furthermore, large establishments adjust their labour input by delaying the replacement of workers.

This paper is the first to investigate the relevance of the ''granular hypothesis'' proposed by Gabaix (Econometrica 2011) for employment growth. Using comprehensive data for Germany, we show that the establishment size distribution in terms of employment is indeed fat-tailed and that idiosyncratic shocks to large establishments explain a substantial portion of aggregate employment change. This relationship is more pronounced in the manufacturing than the service sector. Our findings may be an argument for stabilizing the largest establishments when hit by negative idiosyncratic shocks, since their employment fluctuations could spill over to aggregate employment growth.

Gender pay gaps persist worldwide despite political emphasis to close them. The literature found various drivers of the gaps but remained vastly silent about the role of cyclical dynamics. Using quarterly US data over the period 1979–2019, we study the effects of cyclical dynamics on the gender pay gap based on a structural vector auto-regression model with zero and sign restrictions. The results suggest that technology shocks lead to lower levels of the gender pay gap in the medium run, while higher wage bargaining power reduces the gap in the short run. However, these reductions of the gap come at the cost of increased unemployment. As a policy implication, these results imply a trade-off between lower gender pay gaps and higher unemployment.