Felix Wellschmied PhD Candidate

Publications:

Quantifying the Contribution of Search to Wage Inequality [download] [Appendix] [code]

(Volker Tjaden and Felix Wellschmied) (Accepted at the American Economic Journal: Macroeconomics)

We empirically establish that one third of job transitions lead to wage losses. Using a quantitative on the job search model we find that 60 percent of them are movements down the job ladder. Accounting for them, our baseline calibration matches the large residual wage inequality in US data while attributing only 13.7 percent of overall wage inequality to the presence of search frictions in the labor market. We can trace the difference between ours and previous much higher estimates to our explicit modeling of non-value improving job to job transitions.

Working Papers:

The Adverse Effects of Asset Means-Testing Income Support [download]

Job Market Paper

This paper uses a life-cycle model with uninsurable earnings shocks to study the welfare consequences of a cost neutral reform which abolishes the asset limits present in US income support programs at the beginning of the 2000s. Households with a high innate earnings ability prefer a means-tested over a non-means-tested policy because it allows for high insurance after particularly poor labor market outcomes. Households with low ability prefer the non-means-tested policy. Under means-testing, they substantially reduce their precautionary and retirement savings. Their consumption volatility increases, and they do not accumulate sufficient assets to uphold their consumption during retirement. An unborn household is willing to pay $1$ percent of life-time consumption to abolish the means-test.

Cyclicality of Job and Worker Flows: New Data and a New Set of Stylized Facts [download]

(Christian Bayer, Rüdiger Bachmann, Stefan Seth and Felix Wellschmied)

We study the relationship between cyclical job and worker flows at the plant level using a new data set spanning from 1976-2006. We find that procyclical labor demand explains relatively little of procyclical worker flows. Instead, all plants in the employment growth distribution increase their worker turnover during booms. We also find that cyclical changes in the employment growth distribution are mostly driven by plants moving from inactivity to a growing labor force during booms. Consequently, increased labor turnover at growing plants is the main quantitative driver behind increased labor turnover during booms. We argue that on the job search models are able to capture non-parallel shifts in the employment growth distribution and procyclical conditional worker flows for a range of the growth distribution. Yet, they fail to rationalize procyclical accession rates for all shrinking and procylical separation rates for all growing plants.

Work in progress:

Labor Productivity, Job and Worker Flows in West and East Germany

Worker Skills and Job and Worker Flows

Interest Rates, Plant Size, and Employment Growth