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Existing evidence on peer effects in a work environment stems from either laboratory experiments or from real-word studies referring to a specific firm or specific occupation. Yet, it is unclear to what extent these findings apply to the labor market in general. In this paper, therefore, we investigate peer effects in the workplace for a representative set of workers, firms, and occupations with a focus on peer effects in wages rather than productivity. Our estimation strategy – which links the average permanent productivity of workers' peers to their wages – circumvents the reflection problem and accounts for the endogenous sorting of workers into peer groups and firms. On average, we find only small peer effects in wages. We also find small peer effects in the type of high skilled occupations which more closely resemble those used in studies on knowledge spillover. In the type of low skilled occupations analyzed in existing studies on social pressure, in contrast, we find larger peer effects, about half the size of those identified in similar studies on productivity.

This paper develops a model and derives novel testable implications of referral-based job search networks in which employees provide employers with information about potential job market candidates that they otherwise would not have. Using unique matched employer-employee data that cover the entire workforce in one large metropolitan labor market over a 20 year period, we find strong support for the predictions of our model. We first show that firms are more likely to hire minority workers from a particular group if the existing share of workers from that group employed in the firm is higher. We then provide evidence that workers earn higher wages, and are less likely to leave their firms, if they were hired by a firm with a larger share of minority workers from their own group and are therefore more likely to have obtained the job through a referral. The effects are particularly strong at the beginning of the employment relationship and decline with tenure in the firm. These findings have important implications in suggesting that job search networks help to reduce informational deficiencies in the labor market and lead to productivity gains for workers and firms.

This paper evaluates the impact of three major expansions in leave coverage in Germany on the long-run education and labor market outcomes of children. Evaluation of three policy reforms as opposed to a single reform enables us to analyze whether the impact of paid leave differs from that of unpaid leave, and whether an expansion of a relatively short leave period is more beneficial to child development than an expansion of an already long leave period. Our empirical analysis combines two large administrative data sources on wages, unemployment, and school outcomes. We identify the causal impact of the reforms by comparing outcomes of children born shortly before and shortly after a change in maternity leave legislation, and therefore require substantially weaker assumptions for identification than existing studies. We find little support for the hypothesis that an expansion in maternity leave legislation improves children’s outcomes. Given the precision of our estimates, we can statistically rule out the hypothesis that the expansion in paid leave from 2 to 6 (unpaid leave from 18 to 36) months raised wages (attendance at high track schools) by more than 0.3 % (0.1 %).

This paper studies how portable skill accumulated in the labor market are. Using rich data on tasks performed in occupations, we propose the concept of task-specific human capital to measure the transferability of skills empirically. Our results on occupational mobility and wages show that labor market skills are more portable than previously considered. We find that individuals move to occupations with similar task requirements and that the distance of moves declines with time in the labor market. We also show that task-specific human capital is an important source of individual wage growth, in particular for university graduates. For them, at least 40 percent of overall wage growth over a ten year period can be attributed to task-specific human capital. For the low- and medium-skilled, task-specific human capital accounts for at least 35 and 25 percent of overall wage growth respectively.

This paper analyzes the impact of expansions in leave coverage on mothers' labor market outcomes after childbirth. The focus is on Germany, a country that underwent several changes in maternity leave legislation since the late 70s. We identify the causal impact of an expansion in maternity leave by comparing labor market outcomes of women who gave birth shortly (i.e. one month) before and after a change in maternity leave legislation. There is strong evidence that each expansion induced women to delay their return to work. Despite this strong short-term effect, the expansions had little impact on women's labor supply in the long-run. The expansion from 2 to 6 months reduced women's wages, even 8 years after childbirth. This effect is mostly explained by the delay in the return to work. The delay in the return to work caused by the expansions in leave from 6 to 10 months and 18 to 36 months also lowered wages. However, this negative effect is offset by a positive selection effect, resulting in a zero or even positive overall effect.

This paper challenges the view that the wage structure in West-Germany has remained stable throughout the 80s and 90s. Based on a 2 % sample of social security records, we show that wage inequality has increased in the 1980s, but only at the top of the distribution. In the early 1990s, wage inequality started to rise also at the bottom of the distribution. Hence, while the US and Germany experienced similar changes at the top of the distribution throughout the 80s and 90s, the patterns at the bottom of the distribution are reversed. We show that changes in the education and age structure can explain a substantial part of the increase in inequality, in particular at the top of the distribution. We further argue that selection into unemployment cannot account for the stable wage structure at the bottom in the 80s. In contrast, about one third of the increase in lower tail inequality in the 90s can be related to de-unionization. Finally, fluctuations in relative supply play an important role in explaining trends in the skill premium. These findings are consistent with the view that technological change is responsible for the widening of the wage distribution at the top. The widening of the wage distribution at the bottom, however, may be better explained by episodic events, such as changes in labour market institutions and supply shocks.

Previous studies assume that labor market skills are either fully general or specific to the firm. This paper uses patterns in mobility and wages to analyze how portable specific skills are in the labor market. The empirical analysis combines data on tasks performed in different jobs with a large panel on complete working histories and wages. Our results demonstrate that labor market skills are partially transferable across occupations. We find that individuals move to occupations with similar task requirements and that the distance of moves declines with time in the labor market. Further, tenure in the last occupation affects current wages, and the effect is stronger if the two occupations are similar. Our estimates suggest that task-specific human capital is the most important source of wage growth for university graduates. For the low- and medium-skilled, returns to task human capital are also sizeable, though smaller than for labor market experience.

This paper tests the hypothesis that unions, through imposing wage floors that lead to wage compression, increase on-the-job training. Our analysis focuses on Germany which provides an interesting context to test this hypothesis, due to its large scale apprenticeship programme and its collective bargaining system that is based on voluntary union recognition. To guide the empirical analysis, we first develop a model of firm-financed training. A novel feature of our model is that a unionised and non-unionised sector coexist, and only unionized firms are bound by union wages. The model creates a rich set of empirical implications regarding apprenticeship training, layoffs, wage cuts, and wage compression in unionized and nonunionised firms. Our empirical analysis is based on firm panel data matched with administrative employee data, and provides strong support for our model. Our main results are that unionisation increases training, and that wage floors and wage compression play a more important role in unionised than in non-unionised firms.