Berlin School of Economics Discussion Papers
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7
Motherhood and parental leave are frequent causes of worker absences and employment interruptions, yet we know little about their effects on firms. Based on linked employer-employee data from Germany, we examine how more generous leave benefits affect firm-level employment and hiring decisions. Focusing on small- and medium-sized firms, we show that more generous benefits reduce firm-level employment in the short term, which is driven by firms with few internal substitutes for the absent mother. However, firms do not respond to longer expected absences by hiring fewer young women, even when few internal substitutes are available. To rationalise the findings, we show that replacement hiring occurs largely before the expected absence and that firms hire more external replacements when fewer internal substitutes are available. These findings indicate that extended leave does not harm _rms when these can plan for the longer worker absences.
6
Balance sheet smoothing
(2022)
We investigate how managers smooth volatility in balance sheets, using the pension accounting change IAS 19R as a shock to balance sheet volatility. This shock increases pension plans’ funding transparency, which is the source of volatility, without targeting actual plan funding. We find that managers adjust funding levels, pension asset allocation and assumptions to mitigate volatility at this source, but also plan settlements increase drastically. The volatility of accruals decreases, whereas volatility of discretionary real decisions increases pointing to managerial decisions to alleviate volatility in balance sheets. The exposure to balance sheet volatility and the relative net costs of related smoothing are cross-sectional predictors of smoothing activities. Overall, we provide evidence consistent with a vast body of pension accounting literature mentioning but not explicitly investigating the transmission of pension plan volatility on firms’ balance sheets. Our findings link this literature with studies on balance sheet management and provide a new angle on the effects of a transparency mandate in (pension) accounting on managerial decision-making.
5
Over the past decades, the share of very young children in daycare has increased significantly in many OECD countries, including Germany. Despite the relevance of child health for child development and later life success, the effect of early daycare attendance on health has received little attention in the economic literature. In this study, I investigate the impact of a large daycare expansion in Germany on children’s age-specific mental and physical health outcomes. Based on a unique set of administrative health records covering 90% of the German population over a period of ten years, I exploit exogenous variation in daycare attendance induced by the expansion. My results provide evidence for the substitution of illness spells from the first years of elementary school to the first years of daycare. Specifically, I find that early daycare attendance increases the prevalence of respiratory and infectious diseases and healthcare consumption when entering daycare (1–2 years) by 5–6 percent. At elementary school age (6–10 years), the prevalence decreases by similar magnitudes. I do not find evidence for an effect of daycare attendance on mental disorders, obesity, injuries, vision problems, or healthcare costs. Heterogeneity analysis indicates more pronounced effects for children from disadvantaged areas, earlier detection of vision problems, and a reduction in obesity in these children.
4
We examine the additivity of stock-market expectations over different time intervals. When asked about a ten-year interval, survey respondents expect a stock-price change that is not equal to, but closer to zero than, the sum of their expectations over two shorter time intervals that cover the same ten years. Such sub-additivity is irrational in that it cannot stem from aggregating short-term expectations. Model estimates show that the pattern is consistent with a time perception where shorter time intervals have a proportionally larger weight. We also find that the respondents’ degree of additivity is correlated with making larger financial investments.
3
Fossil fuels have shaped the European economy since the industrial revolution. In this paper, we analyse the effect of coal and oil on long-run economic growth, exploiting variation at the level of European NUTS-2 and NUTS-3 regions over the last century. We show that an “oil invasion” in the early 1960s turned regional coal abundance from a blessing into a curse, using new detailed data on carboniferous strata as an instrument. Moreover, we show that human capital accumulation was the key mechanism behind this reversal of fortune. Not only did former coal regions fail to accumulate sufficient levels of human capital, but pre-industrial human capital helped declining regions to reinvent themselves. Without sufficient human capital, fossil fuels did never generate sustainable growth.
2
Mindfulness-based meditation practices are becoming increasingly popular in Western societies, including in the business world and in education. While the scientific literature has largely documented the benefits of mindfulness meditation for mental health, little is still known about potential spillovers of these practices on other important life outcomes, such as performance. We address this question through a field experiment in an educational setting. We study the causal impact of mindfulness meditation on academic performance through a randomized evaluation of a well-known 8-week mindfulness meditation training delivered to university students on campus. As expected, the intervention improves students’ mental health and non-cognitive skills. However, it takes time before students' performance can benefit from mindfulness meditation: we find that, if anything, the intervention marginally decreases average grades in the short run, i.e., during the exam period right after the end of the intervention, whereas it significantly increases academic performance, by about 0.4 standard deviations, in the long run (ca. 6 months after the end of intervention). We investigate the underlying mechanisms and discuss the implications of our results.
1
We study the local evolution of female labour supply and cultural norms in West Germany in reaction to the sudden presence of East Germans who migrated to the West after reunification. These migrants grew up with high rates of maternal employment, whereas West German families mostly followed the traditional breadwinner-housewife model. We find that West German women increase their labour supply and that this holds within households. We provide additional evidence on stated gender norms, West-East friendships, intermarriage, and child care infrastructure. The dynamic evolution of the local effects on labour supply is best explained by local cultural learning and endogenous child care infrastructure.