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Self-efficacy reflects the self-belief that one can persistently perform difficult and novel tasks while coping with adversity. As such beliefs reflect how individuals behave, think, and act, they are key for successful entrepreneurial activities. While existing literature mainly analyzes the influence of the task-related construct of entrepreneurial self-efficacy, we take a different perspective and investigate, based on a representative sample of 1,405 German business founders, how the personality characteristic of generalized self-efficacy influences start-up performance as measured by a broad set of business outcomes up to 19 months after business creation. Outcomes include start-up survival and entrepreneurial income, as well as growth-oriented outcomes such as job creation and innovation. We find statistically significant and economically important positive effects of high scores of self-efficacy on start-up survival and entrepreneurial income, which become even stronger when focusing on the growth-oriented outcome of innovation. Furthermore, we observe that generalized self-efficacy is similarly distributed between female and male business founders, with effects being partly stronger for female entrepreneurs. Our findings are important for policy instruments that are meant to support firm growth by facilitating the design of more target-oriented offers for training, coaching, and entrepreneurial incubators., CEPA Discussion Papers; 61

We conduct a laboratory experiment to study how locus of control operates through people's preferences and beliefs to influence their decisions. Using the principal-agent setting of the delegation game, we test four key channels that conceptually link locus of control to decision- making: (i) preference for agency; (ii) optimism and (iii) confidence regarding the return to effort; and (iv) illusion of control. Knowing the return and cost of stated effort, principals either retain or delegate the right to make an investment decision that generates payoffs for themselves and their agents. Extending the game to the context in which the return to stated effort is unknown allows us to explicitly study the relationship between locus of control and beliefs about the return to effort. We find that internal locus of control is linked to the preference for agency, an effect that is driven by women. We find no evidence that locus of control influences optimism and confidence about the return to stated effort, or that it operates through an illusion of control.

Die vorliegende Studie im Auftrag der Mindestlohnkommission analysiert die Auswirkungen der Einführung des gesetzlichen Mindestlohns zum 1. Januar 2015 sowie der Anhebungen zum 1. Januar 2017 und 1. Januar 2019 auf die Zielgrößen Beschäftigungsbewegungen und betriebliche Lohnstrukturen bis einschließlich des Jahres 2020. Als Datenbasis dienen administrative Daten der Bundesagentur für Arbeit, die die Betriebs- und Beschäftigtenebene miteinander verbinden und mit Indikatoren zur Mindestlohnbetroffenheit verknüpft werden. Dies erlaubt die Anwendung ökonometrischer Methoden, die einem Experimentalstandard möglichst nahekommen, so dass die erzielten Ergebnisse eine Interpretation im Sinne von Ursache-Wirkungs-Relationen erlauben. Dazu werden verschiedene Varianten des so genannten Differenz-in-Differenzen-Ansatzes bzw. Eventstudien verwendet.

We investigate the effect of the COVID-19 pandemic on self-employed people’s mental health. Using representative longitudinal survey data from Germany, we reveal differential effects by gender: whereas self-employed women experienced a substantial deterioration in their mental health, self-employed men displayed no significant changes up to early 2021. Financial losses are important in explaining these differences. In addition, we find larger mental health responses among self-employed women who were directly affected by government-imposed restrictions and bore an increased childcare burden due to school and daycare closures. We also find that self-employed individuals who are more resilient coped better with the crisis., CEPA Discussion Papers; 46

We provide the first estimates of the impact of managers��� risk preferences on their training allocation decisions. Our conceptual framework links managers��� risk preferences to firms��� training decisions through the bonuses they expect to receive. Risk-averse managers are expected to select workers with low turnover risk and invest in specific rather than general training. Empirical evidence supporting these predictions is provided using a novel vignette study embedded in a nationally representative survey of firm managers. Risk-tolerant and risk-averse decision makers have significantly different training preferences. Risk aversion results in increased sensitivity to turnover risk. Managers who are risk-averse offer significantly less general training and, in some cases, are more reluctant to train workers with a history of job mobility. All managers, irrespective of their risk preferences, are sensitive to the investment risk associated with training, avoiding training that is more costly or targets those with less occupational expertise or nearing retirement. This suggests the risks of training are primarily due to the risk that trained workers will leave the firm (turnover risk) rather than the risk that the benefits of training do not outweigh the costs (investment risk)., CEPA Discussion Papers; 44

Subsidizing the geographical mobility of unemployed workers may improve welfare by relaxing their financial constraints and allowing them to find jobs in more prosperous regions. We exploit regional variation in the promotion of mobility programs along administrative borders of German employment agency districts to investigate the causal effect of offering such financial incentives on the job search behavior and labor market integration of unemployed workers. We show that promoting mobility ��� as intended ��� causes job seekers to increase their search radius, apply for and accept distant jobs. At the same time, local job search is reduced with adverse consequences for reemployment and earnings. These unintended negative effects are provoked by spatial search frictions. Overall, the unconditional provision of mobility programs harms the welfare of unemployed job seekers., CEPA Discussion Papers; 42

Predicting entrepreneurial development based on individual and business-related characteristics is a key objective of entrepreneurship research. In this context, we investigate whether the motives of becoming an entrepreneur influence the subsequent entrepreneurial development. In our analysis, we examine a broad range of business outcomes including survival and income, as well as job creation, expansion and innovation activities for up to 40 months after business formation. Using self-determination theory as conceptual background, we aggregate the start-up motives into a continuous motivational index. We show – based on a unique dataset of German start-ups from unemployment and non-unemployment – that the later business performance is better, the higher they score on this index. Effects are particularly strong for growth oriented outcomes like innovation and expansion activities. In a next step, we examine three underlying motivational categories that we term opportunity, career ambition, and necessity. We show that individuals driven by opportunity motives perform better in terms of innovation and business expansion activities, while career ambition is positively associated with survival, income, and the probability of hiring employees. All effects are robust to the inclusion of a large battery of covariates that are proven to be important determinants of entrepreneurial performance., CEPA Discussion Papers; 59

The importance of personal preferences for economic and educational choices is documented in a quickly growing strand of literature. Among others, risk attitudes have been identified as important determinants for individual economic choices. However, the literature studying the influence of a decision maker’s preferences on training choices has been less prominent. This paper aims to contribute to the literature by providing results of a discrete choice experiment among decision makers in German firms. It addresses the question, how risk attitudes of key decision makers relate to their choices to invest in worker training. The data used for the empirical analysis stems from a unique firm-level survey providing both the discrete choice experiment and measures for the risk attitudes of respondents who have decision-making power in the firm (i.e. owners/partners, managers, heads of a HRM department). Risk attitudes are surveyed in the form of a direct assessment, i.e. the respondents report their willingness to take risks. This procedure of measuring risk attitudes is identified as the most valid in experimental settings in the literature. We draw on a mixed logit models to assess decision makers’ preferences for granting continuing training to workers who differ in their age, their gender, their mobility and their professional competencies. Furthermore, the choice experiment includes attributes of the training to be granted. These comprise the transferability of the training, its duration and its cost coverage. Based on this framework, we expect that higher personal preferences for risk are positively related to the willingness to invest in general (transferable) continuing training. The findings support the notion that economic preferences of decision makers in a firm are important determinants for firm-level choices. As expected, a higher willingness of the decision maker to take risks corresponds to a higher likelihood to invest resources into mobile and transferable training when compared to a decision maker with a lower willingness to take risks. The analysis in this paper contributes to the literature by showing that firms’ training decisions may be contingent on person-level preferences, a link that has rarely been studied based on experimental settings. The results have strong implications for theoretical models explaining strategic firm behavior in competitive markets.

While a growing body of literature finds positive impacts of Start-Up Subsidies (SUS) on labor market outcomes of participants, little is known about how the design of these programs shapes their effectiveness and hence how to improve policy. As experimental variation in program design is unavailable, we exploit the 2011 reform of the current German SUS program for the unemployed which strengthened case-workers’ discretionary power, increased entry requirements and reduced monetary support. We estimate the impact of the reform on the program’s effectiveness using samples of participants and non-participants from before and after the reform. To control for time-constant unobserved heterogeneity as well as differential selection patterns based on observable characteristics over time, we combine Difference-in-Differences with inverse probability weighting using covariate balancing propensity scores. Holding participants’ observed characteristics as well as macroeconomic conditions constant, the results suggest that the reform was successful in raising employment effects on average. As these findings may be contaminated by changes in selection patterns based on unobserved characteristics, we assess our results using simulation-based sensitivity analyses and find that our estimates are highly robust to changes in unobserved characteristics. Hence, the reform most likely had a positive impact on the effectiveness of the program, suggesting that increasing entry requirements and reducing support in-creased the program’s impacts while reducing the cost per participant.

While a growing body of literature finds positive impacts of Start-Up Subsidies (SUS) on labor market outcomes of participants, little is known about how the design of these programs shapes their effectiveness and hence how to improve policy. As experimental variation in program design is unavailable, we exploit the 2011 reform of the current German SUS program for the unemployed which strengthened case-workers’ discretionary power, increased entry requirements and reduced monetary support. We estimate the impact of the reform on the program’s effectiveness using samples of participants and non-participants from before and after the reform. To control for time-constant unobserved heterogeneity as well as differential selection patterns based on observable characteristics over time, we combine Difference-in-Differences with inverse probability weighting using covariate balancing propensity scores. Holding participants’ observed characteristics as well as macroeconomic conditions constant, the results suggest that the reform was successful in raising employment effects on average. As these findings may be contaminated by changes in selection patterns based on unobserved characteristics, we assess our results using simulation-based sensitivity analyses and find that our estimates are highly robust to changes in unobserved characteristics. Hence, the reform most likely had a positive impact on the effectiveness of the program, suggesting that increasing entry requirements and reducing support in-creased the program’s impacts while reducing the cost per participant., CEPA Discussion Papers; 30

Mit der Reform des Gründungszuschusses im Jahr 2011 wurden die Rahmenbedingungen der Gründungsförderung für Arbeitslose im Sozialgesetzbuch III umfassend reformiert und die Förderzahlen reduzierten sich drastisch. Insgesamt ist das Arbeitsmarktinstrument weiterhin ein Erfolg: Die meisten Geförderten sind auch knapp 3,5 Jahre nach der Gründung noch selbstständig und etwa ein Drittel von ihnen hat mindestens einen Beschäftigen. Von denjenigen, die ihre Selbstständigkeit inzwischen beendet haben, sind die meisten sozialversicherungspflichtig beschäftigt. Damit haben Geförderte eine deutlich höhere Beschäftigungsquote als vergleichbare Personen ohne diese Förderung. Auch ihre monatlichen Nettoverdienste sowie ihre Jobzufriedenheit sind höher. Verbesserungspotenzial gibt es allerdings bei der sozialen Absicherung: Geförderte zahlen seltener in eine Rentenversicherung oder in die Arbeitslosenversicherung ein und sind mit ihrer sozialen Absicherung unzufriedener als vergleichbare Personen.

In many countries, women are over-represented among low-wage employees, which is why a wage floor could benefit them particularly. Following this notion, we analyse the impact of the German minimum wage introduction in 2015 on the gender wage gap. Germany poses an interesting case study in this context, since it has a rather high gender wage gap and set the minimum wage at a relatively high level, affecting more than four million employees. Based on individual data from the Structure of Earnings Survey, containing information for over one million employees working in 60,000 firms, we use a difference-in- difference framework that exploits regional differences in the bite of the minimum wage. We find a significant negative effect of the minimum wage on the regional gender wage gap. Between 2014 and 2018, the gap at the 10th percentile of the wage distribution was reduced by 4.6 percentage points (or 32%) in regions that were strongly affected by the minimum wage compared to less affected regions. For the gap at the 25th percentile, the effect still amounted to -18%, while for the mean it was smaller (-11%) and not particularly robust. We thus find that the minimum wage can indeed reduce gender wage disparities. While the effect is highest for the low-paid, it also reaches up into higher parts of the wage distribution., CEPA Discussion Papers; 40

We analyze workers' risk preferences and training investments. Our conceptual frame- work differentiates between the investment risk and insurance mechanisms underpin- ning training decisions. Investment risk leads risk-averse workers to train less; they undertake more training if it insures them against future losses. We use the German Socio-Economic Panel (SOEP) to demonstrate that risk affinity is associated with more training, implying that, on average, investment risks dominate the insurance benefits of training. Crucially, this relationship is evident only for general training; there is no relationship between risk attitudes and specific training. Thus, as expected, risk preferences matter more when skills are transferable – and workers have a vested interest in training outcomes – than when they are not. Finally, we provide evidence that the insurance benefits of training are concentrated among workers with uncertain employment relationships or limited access to public insurance schemes.

Labor market policy tools such as training and sanctions are commonly used to help bring workers back to work. By analogy to medical treatments, the individual exposure to these tools may have side effects. We study effects on health using individual-level population registers on labor market events outcomes, drug prescriptions and sickness absence, comparing outcomes before and after exposure to training and sanctions. We find that training improves cardiovascular and mental health and lowers sickness absence. The results suggest that this is not due to improved employment prospects but rather to instantaneous features of participation such as, perhaps, the adoption of a more rigorous daily routine. Unemployment benefits sanctions cause a short-run deterioration of mental health, possibly due higher stress levels, but this tapers out quickly., CEPA Discussion Papers, 22

The reaction of the German labor market to the Great Recession 2008/09 was relatively mild – especially compared to other countries. The reason lies not only in the specific type of the recession – which was favorable for the German economy structure – but also in a series of labor market reforms initiated between 2002 and 2005 altering, inter alia, labor supply incentives. However, irrespective of the mild response to the Great Recession, there are a number of substantial future challenges the German labor market will soon have to face. Female labor supply still lies well below that of other countries and a massive demographic change over the next 50 years will have substantial effects on labor supply as well as the pension system. In addition, due to a skill-biased technological change over the next decades, firms will face problems of finding employees with adequate skills. The aim of this paper is threefold. First, we outline why the German labor market reacted in such a mild fashion, describe current economic trends of the labor market in light of general trends in the European Union, and reveal some of the main associated challenges. Thereafter, the paper analyzes recent reforms of the main institutional settings of the labor market which influence labor supply. Finally, based on the status quo of these institutional settings, the paper gives a brief overview of strategies to combat adequately the challenges in terms of labor supply and to ensure economic growth in the future.

Unhealthy behavior can be extremely costly from a micro- and macroeconomic perspective and exploring the determinants of such behavior is highly important from an economist’s point of view. We examine whether locus of control (LOC) can explain alcohol consumption as an important domain of health behavior. LOC measures how much an individual believes that she is in control of the consequences of her own actions for her life’s future outcomes. While earlier literature showed that an increasing internal LOC is associated with increased health-conscious behavior in domains such as smoking, exercise or diets, we find that drinking seems to be different. Using German panel data from the Socio-Economic Panel (SOEP) we find a significant positive effect of having an internal LOC on the probability of moderate and regular drinking. We suggest and discuss two likely mechanisms for this relationship and find interesting gender differences. While social investments play an important role for both men and women, risk perceptions are especially relevant for men.

This reference paper describes the sampling and contents of the IZA Evaluation Dataset Survey and outlines its vast potential for research in labor economics. The data have been part of a unique IZA project to connect administrative data from the German Federal Employment Agency with innovative survey data to study the out-mobility of individuals to work. This study makes the survey available to the research community as a Scientific Use File by explaining the development, structure, and access to the data. Furthermore, it also summarizes previous findings with the survey data.

Seit dem 1. Januar 2015 gilt in Deutschland ein flächendeckender gesetzlicher Mindestlohn. Welche Beschäftigungseffekte lassen sich nach fünf Jahren feststellen? Hat der Mindestlohn Arbeitsplätze gekostet, und wie viel Arbeitsvolumen ist durch den Mindestlohn verdrängt worden? Welche Anpassungskanäle wurden von den Unternehmen genutzt, um Entlassungen zu vermeiden? Konnte die Zahl der Transferempfänger und das Armutsrisiko reduziert werden? Wird die Coronakrise zum Stresstest für den Mindestlohn? Unsere Autoren diskutieren über Antworten auf diese Fragen. Andreas Knabe, Universität Magdeburg, Ronnie Schöb, Freie Universität Berlin, und Marcel Thum, ifo Institut und TU Dresden, zeigen, dass ein großer Teil der bisher vorliegenden Evaluationsstudien zu den Wirkungen des Mindestlohns negative Beschäftigungseffekte finden, wobei diese primär bei den geringfügig Beschäftigten auftreten. Füge man diese Ergebnisse, die auf ein durch den Mindestlohn leicht gebremstes Jobwachstum hindeuten, mit den Erkenntnissen über die Reduzierungen der Arbeitsstunden zusammen und rechnet den Verlust an Arbeitsvolumen in Arbeitsplätze um, ergeben sich Beschäftigungsverluste im mittleren sechsstelligen Bereich. Nach Ansicht von Oliver Bruttel, Mindestlohnkommission, hat die Einführung des Mindestlohns kaum negative Beschäftigungseffekte. Den Betrieben steht aber eine Vielzahl an Anpassungskanälen, wie z.B. Veränderung der Arbeitszeit, der Preise oder der Produktivität, zur Verfügung, durch die sie die gestiegenen Lohnkosten ausgleichen können. Benjamin Börschlein und Mario Bossler Institut für Arbeitsmarkt- und Berufsforschung (IAB) der Bundesagentur für Arbeit, Nürnberg, sehen ebenfalls nur sehr geringe negative Beschäftigungseffekte durch den Mindestlohn. Die Einführung des Mindestlohns konnte aber auch das Armutsrisiko nicht vermindert. Allerdings habe er zur Verringerung der Ungleichheit beigetragen und sollte als politisches Instrument verwendet werden, um diskriminierend niedrige Löhne zu verhindern. Nach Ansicht von Felix Pakleppa, Zentralverband Deutsches Baugewerbe, hat der gesetzliche Mindestlohn die Erwartungen nicht erfüllt. Es gebe kaum ein Gesetz, das für das Baugewerbe so überflüssig sei wie das Mindestlohngesetz, denn der Bau-Mindestlohn liege weit über dem Niveau des gesetzlichen Mindestlohns. Die Einführung des gesetzlichen Mindestlohns habe für die Unternehmen des Baugewerbes erst einmal mehr Bürokratie verursacht. Holger Bonin und Nico Pestel, Institut zur Zukunft der Arbeit (IZA), Bonn, sehen nach wie vor Beschäftigungsrisiken durch den Mindestlohn. Die Arbeitgeber hätten zwar auf die Mindestlohneinführung kaum mit vermehrten Entlassungen reagiert, zeigten allerdings in der Tendenz mehr Zurückhaltung bei Neueinstellungen. Auch könnten sich negative Beschäftigungseffekte des Mindestlohns noch nicht voll ausgeprägt haben, da die Einführung mitten in eine lang anhaltende Boomphase der deutschen Wirtschaft fiel. Die Corona-Rezession werde zum Stresstest für den Mindestlohn. Mit Blick auf die Gewährleistung gleichwertiger Lebensverhältnisse in Deutschlands schlagen die Autoren eine regionale Differenzierung bei der Weiterentwicklung des Mindestlohns vor. Alexandra Fedorets, DIW Berlin, sieht die Einführung des Mindestlohns insgesamt positiv. Sie habe Potenzial für die langfristige Verwirklichung einer "High-Road"-Strategie – mit höherer Produktivität, höherer Bezahlung, höheren Preisen und einer höheren Qualität von Waren und Dienstleistungen. Dies setze allerdings auch eine entsprechende Weiterqualifizierung von Arbeitskräften voraus. Marco Caliendo, Universität Potsdam, zeigt, dass mit der Einführung des Mindestlohns einiges erreicht, aber wesentliche Ziele verfehlt wurden. Die Löhne im unteren Bereich seien zwar gestiegen, ohne dass es zu einem größeren Abbau an Beschäftigung gekommen sei. Gleichzeitig sei der Mindestlohn in vielerlei Hinsicht nicht existenzsichernd und werde nicht vollumfänglich durchgesetzt. Für die Politik bestehe weiterhin Handlungsbedarf.