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Recent publications

Heterogeneous Workers, Trade, and Migration

A garden architect is different from a software engineer, not so much in terms to her skill level, but more in terms of the type of skills, meaning the special tasks she is trained to do very well. In other words, the labor force of any country is characterized not only by vertical, but also by horizontal skill differentiation. Modern literature of trade and migration is mostly concerned with vertical skill differentiation. In a joint paper with Inga Heiland, we are investigating the consequences of horizontal skill differentiation for both trade and for migration:

What drives the decision between vertical integration and outsourcing

Imperfections of contracts about produced inputs are often responsible for manufacturing firms facing a so-called hol-up problem, which  in turn leads to inefficient input levels because the parties to such a contract face distorted incentives. The property-rights theory argues that an optimal reaction to this problem calls for vertical integration of the supply of con-contractible inputs, provided that they are sufficiently important in the production relationship, and for an arms-length provision (outsourcing) otherwise. But where to draw this line of the firm boundary also dependends on the productivity of the firm. What, exactly, is the role for firm productivity for efficient firm boundaries? Does this theory find support through empirical evidence? A tentativ answer in a joint paper with Marcel Smolka:

International trade in tasks, wages and unemployment

Modern industrial production relies on workers performing myriads of tasks, some of which may be performed in foreign economies where labor is cheaper. This is a relatively recent phenomenon made possible by progress in the technology of communication and informatio. Intuition suggests that "importing tasks" is to the disadvantage of domestic workers who face a wage reduction of unemployment. Is this necessarily true? An negative answer to this question in a joint paper with  Jens Wrona:

Internationale Investition und heimische Regulierung

International investors often see the danger of being disadvantaged by regulation of the host country's government eroding the ex-post profitability of their investment. A possible reason for this is that governments, while being concerned about the profitability of domestic investments, are decidedly less so with foreign investment. To correct for this asymmetry, international agreements often provide for so-called "investor-state-dispute-settlement" involving compensation for the damage incurred, to be awarded (or denied) by ad-hoc bodies outside countries' jurisdiction. Do such provisions lead to inefficiently tame regulation, so as to avoid compensatory payments? In joint work with Frank Stähler, we show that the opposite may be true:

Offshoring and uncertainty

Moving parts of the production chain to foreign locations (offshoring) is usually seen as a consequence of firms arbitraging on cost-differences between different countries. However, it may also be the consequence of differences in labor market institutions responsible for whether or not firms may swiftly adjust to unforeseen changes in demand. In joint work with Bohdan Kukharskyy, we develop a theoretical model highlighting a positive relationship between the degree of  offshoring on the one hand and the flexibility of labor market institutions of foreign countries as well as an industry's volatility on the other. We show that this model finds support if confronted with the data:  

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