We use a linked employer-employee data set from Germany to estimate the wage effect of foreign-affiliates in East and West Germany. In addition, the wage effects of the large number of West German affiliates which are located in East Germany are also considered. The implemented techniques allow...

Positive assortative matching implies that high productivity workers and firms match together. However, there is almost no evidence of a positive correlation between the worker and firm contributions in two-way fixed-effects wage equations. This could be the result of a bias caused by standard...

Increases in standard hours have been a contentious policy issue in Germany. Whilst this might directly lead to a substitution of workers by hours, there may also be a positive employment effect due to reduced costs. Moreover, the response of firms differs between firms which offer overtime and...