The Welfare Effects of Asset Means-Testing Income Support:
This paper quantitatively characterizes the asset means-test which minimizes consumption volatility in a life-cycle model with incomplete markets and idiosyncratic earnings risk. A means-test allocates transfers to those households with the highest utility gains from extra consumption. Moreover, it serves as substitute for history and age dependent taxation. However, too low asset limits provide incentives for high school dropouts to accumulate almost no wealth. As a result, they miss private insurance and suffer from high consumption volatility. For an unborn, an asset limit of $145000 balances these effects and implies substantial welfare gains beyond no means-testing.
Plant Age, Uncertain Match Quality, and Churning (with R. Bachmann, C. Bayer and S. Seth)
We document labor churning in a unique dataset covering the universe of German plants. Labor churning is large and procyclical, where the latter is explained by procyclical job-to-job movements. Churning is particularly pronounced at young plants where it is also more procyclical. Moreover, young plants hire a larger fraction of their workforce through job-to-job transition than old ones and more so in booms. We relate this to the quality of information workers have about the plants with which they form a match. A Job offer with (partially) uncertain match quality has a call-option property. The worker can walk away from a bad match, searching on the job. If job quality is more uncertain at young plants, there is more worker turnover in steady state and young plants become particularly attractive in times of low unemployment.