This dissertation comprises four empirical chapters which contribute to the fields of labor economics, inequality research, and health economics.
The first chapter studies the relationship between the spatial distribution of labor market inspections and non-compliance with Germany’s Minimum Wage Law. By combining novel administrative data on labor market inspections with the German Socio-economic Panel (SOEP), we document that the inspection probability is higher in regions with higher non-compliance. This implies a risk-based allocation of inspection efforts and, hence, their endogeneity. Using fixed-effects and an instrumental variable approach, we show that higher inspection efforts have a limited effect on compliance. Based on a theoretical framework and international evidence, we discuss challenges for law enforcement, the political importance of compliance, and potential improvement measures.
The second chapter focuses on inequality in monthly earnings in Germany and the role of desired and actual working hours. We document a significant rise in monthly earnings inequality between 1993 and 2018. The main contributors are inter-temporal increases in working hours inequality and increases in the covariance between working hours and hourly wages, while changes in the distribution of hourly wages play a minor role. We develop a novel double decomposition technique which reveals that these results are particularly pronounced in the growing groups of female employees and service sector employees. If employees had been able to realize their desired optimal working hours, the increase in inequality would have been more moderate. This is mainly because employees with low hourly wages work less than desired, a finding that is reinforced over time—even after controlling for various covariates.
The third chapter investigates the labor market effects of transitory and persistent health shocks. Using machine learning based on sick days and hospitalizations, we derive two novel health shock indicators: one for transitory and one for persistent shocks. By using these new indicators, we overcome issues in the measurement of health, such as heterogeneity and measurement error. In an event study framework, we analyze the respective effects of either shock type on employment, yearly working hours, and labor earnings, but also partner earnings and household net income. Persistent shocks induce large negative employment effects that end up impacting household net incomes. In contrast, transitory shocks induce only minor employment effects that leave household net incomes unaffected. We also investigate effect heterogeneity and find that individuals over 50 years of age are particularly affected by health shocks. Accordingly, persistent health shocks reduce employment of individuals above 50 by 25 percentage points.
The fourth chapter analyzes the effect of occupational routine task intensity on workers’ mental and physical health in the context of technological progress and automation driving the deroutinization of job tasks. By combining individual-level health information of German employees with data on occupational task profiles and applying an instrumental variable strategy, I find that male and female workers are oppositely affected by occupational routine task intensity. For women, routine tasks are more likely cognitive routine tasks that negatively affect mental health. For men, routine tasks are more likely manual routine tasks that negatively affect physical health, but have a positive effect on mental health. When considering the overall workforce, the effects on mental health balance out, but a significant negative effect of routine task intensity on physical health remains.
