Abstract: We investigate the role of cultural norms in shaping women’s labor supply decisions after childbirth. Specifically, we are interested in the interplay between childhood socialization and adulthood environment. To that end, we leverage the setting of the German reunification when East Germany’s gender egalitarian culture induced by socialism and West Germany’s more traditional culture were brought together. We find that East German gender norms are persistent whereas West German ones are not. West German mothers adjust their behavior to that of their East German peers not only when immersed in East German environment but even after returning to the West.

Working paper available here. Short video for general interest audience here (German only). VoxEU column here.

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Abstract: How do human capital investments respond to student-finance induced changes in cost? In 1983, Germany moved from a system offering means-tested student finance as a mix of a grant and a loan to exclusively a loan. Exploiting this unique setting, we find human capital investments of low-income students to be highly cost-sensitive. Loans were interest-free and income-contingent repayment plans effectively insured individuals against adverse labour market outcomes. Our event study results reveal that despite these favourable conditions, the reform reduced enrolment rates amongst funding eligible students substantially, with pupils re-allocating into apprenticeship training instead. The contraction in enrolment was particularly pronounced in teacher training, which was geared for a career in the public sector, and much less so in subjects associated with higher labour market returns. Furthermore, we find that funding eligible students became increasingly concerned with being financially independent and exploring different career options before making a final commitment. These results suggest that reform impacts were mainly driven by increased costs, but reinforced by heightened debt concerns. Finally, we also document that individual level responses to the policy added up to unintended consequences at the aggregate level. As a product of the reform, access to university was narrowed for low-income students of all abilities and the overall supply of teachers contracted during a time when pupil numbers were expanding.

Working paper available here.

Abstract: This paper shows that the local availability of universities acted as a catalyst in the catch-up of women in higher education that has been documented for developed countries in the latter half of the 20th century. It uses the foundation of new universities in the 1960s and 1970s in West German regions which previously did not have a university as a case study to understand how women’s mobility and education decisions interact. I first document women’s low regional mobility in post-war West Germany along with their low educational attainment. Second, I exploit that the university expansion exogenously brought universities to women’s doorsteps in a difference-in-differences (DiD) strategy. Comparing regions which experienced a university opening within 20 km to those where no university was opened, I show that women benefited more than men from a close-by university opening, closing the local gender gap in university education by about 72%. Third, I provide evidence that local universities partly increased university education through reduced costs, while part of the effect is due to higher expected returns, highlighting an important second channel through which universities promote education to local youths.

Working paper available here.

Abstract: Since ethnic clustering is common in Germany, a better understanding of its effects on the integration of immigrants could be important for integration policies, especially in the light of rising immigration and a skilled worker shortage. Yet, both economic theory and empirical research for other countries cannot give a clear-cut answer to whether clustering is beneficial or detrimental for immigrants' integration. In this paper, the effect of residential clustering on the labour market outcome of first- generation immigrants in Germany is analysed empirically. It, thus, contributes to the literature by extending it to Germany on which hardly any research has been conducted. For the analysis, two measures for labour market integration are used: the employment probability and wage levels. In order to control for the endogeneity of the location decision, a two-step strategy is used, combining a control function and an instrumental variable (IV) approach. The results suggest a negative enclave effect on both employment and wages, that is even larger when sorting is taken into account.

Working paper available here.