Working Papers
Labor-Market Adjustment to Policy-Directed Firm Closures
joint project with Raffael Kind & David Wittekopf
Presented at (* if presented by coauthor): EEA-ESEM Congress 2026 (Dublin, scheduled); IAAE Annual Conference 2026 (Lisbon, scheduled); 2nd Berlin PhD Conference in Economics 2026 (Berlin, scheduled); Spatial Inequality Conference by FRB Atlanta and Stone Center at the University of Chicago 2026 (Atlanta); Florence Political Economy Applied Research Lab 2026 (Florence); European Causal Inference Meeting 2025 (Ghent)
Abstract ·
Paper: Available upon request
A large literature documents that negative labor-demand shocks scar affected communities through persistent job loss, earnings declines, and political radicalization. Yet a theoretical tradition going back to Schumpeter's notion of creative destruction predicts that the closure of unproductive firms can also free resources for more productive uses. Whether the cleansing or scarring force dominates in any given episode plausibly depends on what set off the destruction. Existing studies have largely confirmed the scarring hypothesis for market-driven shocks -- where demand or technology forces firms to exit -- but the policy-relevant case of a government choosing to let firms fail remains almost entirely unaddressed. We study one such setting. After reunification, the German Treuhandanstalt liquidated thousands of state-owned East German firms as part of the transition from a planned to a market economy. Combining firm-level data on 6,608 Treuhand firms with administrative histories for 251,812 workers from September 1989 onward, we find that a one-standard-deviation increase in a county's exposure to Treuhand liquidations raises labor earnings by 2.7 log points. These effects are not driven by selection through unemployment or migration. We attribute this premium to faster reallocation of workers from declining to expanding sectors, and higher rates of new firm establishments which provide higher average pay. Further, high-exposure counties register persistently lower support for far-right parties across three decades of federal elections. Our results provide a clean existence proof that creative destruction can dominate scarring, and suggest that the adverse consequences associated with labor-demand shocks reflect not destruction per se but the failure to reallocate.
Work in Progress
Wind of Structural Change
The Economic Transformation of East Germany and Occupational Status Gaps
joint project with Raffael Kind & David Wittekopf
Presented at (* if presented by coauthor): 15th Annual Meeting of the Armenian Economic Association 2025 (Yerevan); 5th EUI Alumni Conference in Economics 2025 (Florence); IAB 17th Interdisciplinary PhD-Workshop – Perspectives On (Un-)Employment 2026 (Nürnberg); Seminar in Empirical Microeconomics 2026 (Konstanz)
Abstract ·
Video Pitch ·
Paper: Available upon request
East Germany's structural transformation from a socialist planned economy to a capitalist market economy led to rising wages but also resulted in job losses and downward occupational mobility as many workers were forced into lower-status jobs due to firm liquidations and privatizations. The Treuhand agency, tasked with privatizing East Germany’s state-owned enterprises, became infamous for its chaotic operations and controversial decisions. Our findings reveal a significant divergence in occupational status trajectories between East and West: while East Germans experienced a marked decline in occupational status following reunification, West Germans benefited from occupational status growth during the same period. Exploiting geographic variation in the intensity of the economic transformation, we apply the design-based method proposed by Borusyak & Hull (2023) to examine the causal effect of the Treuhand’s activities on changes in the occupational statuses of East Germans. While Borusyak & Hull rely on quasi-randomness in timing for identification, our approach leverages quasi-randomness in the intensity of firm exits within a given county. This study adds a new perspective to the discussion on macroeconomic transformation following economic transitions. Observing societal labor market experiences through the lens of occupational status provides deeper insights into the social fears and resentments that have shaped post-reunification dynamics in the former socialist country.
Education Mismatch Through Early School Tracking Policies
Abstract
This paper investigates the cost of track switching in the German education system, arising from early track choice policies and the resultant educational mismatches. Utilizing empirical data, I analyze key features of the system, including mismatch and track switching rates, and integrate these findings into a theoretical model. The goal is to estimate the cost associated with switching tracks. The findings reveal that this cost amounts to 14% of lifetime income, a significant figure that underscores the economic impact of early educational decisions. The paper suggests policy interventions, such as delaying track choices to reduce mismatches and exploring ways to mitigate the high costs of switching tracks.
Agriculture, Productivity, and Land Distribution in Developing Countries
Abstract
A major issue in development is the observed low productivity in agriculture, especially for small farms. I argue that misallocation of land across crops can explain both the observed low labor productivity in the agriculture sector of developing countries and asymmetries between small and large farms. Using a simple model of crop choice, I show that inefficiencies in the goods and land markets would drive small farmers to endogenously choose low productivity crops to provide for their subsistence, despite the suitability of the soil for such crops. Larger farmers, however, are able to optimally allocate among a greater variety of crops, exploiting the suitability of their soil endowment. Survey data from Malawi provides empirical evidence: Misallocation of land resources leads to low productivity at the lower end of the farm size distribution. As most farms in developing countries are of small size, low labor productivity prevails in agriculture overall.
Pre-PhD Projects
How well-behaved are revisions to quarterly fiscal data in the euro area?
with Krzysztof Bańkowski and Thomas Faria
Abstract ·
ECB Working Paper No. 2676
Since most macroeconomic data are revised after the initial release both researchers and policy-makers have no choice rather than recognising and understanding the revisions. This paper analyses revisions to the fiscal data in the euro area, also by contrasting them with the ‘better-understood’ macro revisions. Concretely, the study verifies whether fiscal revisions fulfil requirements to treat them as well-behaved. To this end, we construct a fiscal quarterly real-time dataset, which contains quarterly releases of Government Finance Statistics and which is supplemented by macro variables from Main National Accounts. Fiscal revisions do not satisfy desirable properties expected from well-behaved revisions. In particular, they tend to have a positive bias, they exhibit a big dispersion and they are largely predictable. Also, they are similar to macro revisions, in particular since 2014, which contradicts the often heard view about fiscal data being subject to particularly large revisions.