This paper derives the optimal financial contract when a borrowing entrepreneur can evade taxes in a model of costly state verification. In contrast to previous literature on costly state verification and financial contracting, we find that standard debt contracts are not optimal when tax...

Is tax compliance driven only by extrinsic motivations such as deterrence and tax policy or is there also a role for intrinsic motivations such as morals, norms and psychology? Agents may comply based on moral sentiments, social norms, guilt and shame (Andreoni et al. 1998), all of which are...

We provide difference-in-differences evidence from Germany on the effect of deregulating weekday shop opening hours on employment in food retailing. Using data on the universe of German shops, we find that relaxing restrictions on business hours increased employment by 0.4 workers per shop...

Using quarterly worker flow data of U.S. establishments, we find that an unexpected increase in uncertainty reduces hirings and quits, while it raises layoffs. This finding suggests that the real option effect of uncertainty is less important for employment decisions. Hence plants do not freeze...

In this paper a labor supply model with demand side rationing is estimated to analyze the economic policies that directly affect incentives to work as well as labor costs. The framework is applied to evaluate the employment effects of a federal minimum wage in Germany and the impact of employer-...

Over the last decades, the United States and other developed countries have experienced profound job polarization whereby employment in high-skill and low-skill occupations increased at the expense of employment in middle-skill occupations. This paper examines the wage effects of job...

Job polarization the rise in employment shares of high and low skill jobs at the expense of middle skill jobs occurred in the US not just recently, but also in the late nineteenth and early twentieth centuries. We argue that in each case polarization resulted from increased automation, and...

This paper analyzes the question why desired and actual sharing of market work and family duties among parents with young children in Germany fall apart. Potential explanations include financial incentives favoring the single-earner model, as well as constraints in choosing working hours due to...

I test some predictions of Gary Becker’s theory of taste discrimination regarding discrimination of foreigners by employers, co-workers and customers. I combine a 2% sample of the German working population and a 50% sample of German plants with low-level regional data, including the vote...

Using a representative establishment data set for Germany, we show that, in line with the existing literature for several countries, fi rms' adjustment costs for employment are characterized by a fixed and convex functional form. Furthermore, they are asymmetric with dismissal costs exceeding...