Jorn-Steffen Pischke

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In 1988, the wage distribution in East Germany was much more
compressed than in West Germany or the U.S. Since the
collapse of Communism and unification with West Germany,
however, the wage structure in eastern Germany has changed
considerably. In particular, wage variation has increased,
the payoff to education has decreased somewhat, industry
differentials have expanded, and the white collar premium has
increased. Although average wage growth has been remarkably
high in eastern Germany, individual variation in wage growth
is similar to typical western levels. The wage structure of
former East Germans who work in western Germany resembles the
wage structure of native West Germans in some respects, but
their experience-earnings profile is flat.

Year of Publication
Date Published
Publication Language
Citation Key
In Richard B. Freeman and Lawrence F. Katz (eds.) Differences and Changes in Wage Structures (Chicago:University of Chicago Press, 1995)
Pischke, J.-S., & Krueger, A. (1992). A Comparative Analysis of East and West German Labor Markets: Before and After Unification. Retrieved from (Original work published August 1992)
Working Papers

Germany has experienced a high and rising rate of anti-foreigner violence during the early
1990s. To analyze the determinants of crime against foreigners we assembled a new data set
on the number and nature of such crimes at the county level based on newspaper reports. We
find significant differences in the patterns of violence in the eastem and westem parts of the
country. The incidence of anti-foreigner crime is higher in the east and rises with distance
from the former west German border. Economic variables like unemployment and wages
matter little for the level of crime once location in the east is taken into account. The relative
number of foreigners in a county has no relationship with the incidence of ethnic crimes in the
west, whereas in the east it has a positive association with the number of crimes per resident
and a negative association with the number of crimes per foreign resident.

Year of Publication
Date Published
Publication Language
Citation Key
Journal of Human Resources Vol 32, No. 1, Winter, 1997
Pischke, J.-S., & Krueger, A. (1996). A Statistical Analysis of Crime Against Foreigners in Unified Germany. Retrieved from (Original work published February 1996)
Working Papers

Observations and Conjectures on the U.S. Employment Miracle
This paper has three goals. First, to place U.S. job growth in international perspective
by exploring cross-country differences in employment and population growth. This section finds
that the U.S has managed to absorb added workers -- especially female workers -- into
employment at a greater rate than most countries. The leading explanation for this phenomenon
is that the U.S. labor market has flexible wages and employment practices, whereas European
labor markets are rigid. The second goal of the paper is to evaluate the labor market rigidities
hypothesis. Although greater wage flexibility probably contributes to the U.S.'s comparative
success in creating jobs for its population, the slow growth in employment in many European
countries appears too uniform across skill groups to result from relative wage inflexibility alone.
Furthermore, a great deal of labor market adjustment seems to take place at a constant real wage
in the U.S. This leads to the third goal: To speculate on other explanations why the U.S. has
managed to successfully absorb so many new entrants to the labor market. We conjecture that
product market constraints contribute to the slow growth of employment in many countries.

Year of Publication
Date Published
Publication Language
Citation Key
Pischke, J.-S., & Krueger, A. (1997). Observations and Conjectures on the U.S. Employment Miracle. Retrieved from (Original work published August 1997)
Working Papers

This paper uses aggregate birth year/calendar year level data derived
from the Current Population Survey (CPS) to estimate the effect of Social
Security wealth on the labor supply of older men in the l970s and 1980s.
The analysis focuses on the 1977 amendments to the Social Security Act
which lead to a substantial, unanticipated differential in benefits for
otherwise identical individuals depending on whether they were born before
or after 1917. This differential has become known as the benefit notch.
There are two principal differences between the present analysis and the
previous literature. First, this paper uses time-series variations in
benefit levels to estimate the relationship between benefits and labor
supply in an era when real benefits were falling for new recipients.
Second, variation in benefit levels across cohorts is used to estimate the
relationship between benefits and labor supply. The results support a
conclusion that labor supply continued to decline for the "notch babies"
who received lower Social Security benefits than earlier cohorts.

Year of Publication
Date Published
Publication Language
Citation Key
Journal of Labor Economics, Vol 10, no.2, October, 1992
Pischke, J.-S., & Krueger, A. (1989). The Effect of Social Security on Labor Supply: A Cohort Analysis of the Notch Generation. Retrieved from (Original work published July 1989)
Working Papers

Individual income is much more variable than aggregate per capita income. I argue that aggregate information is
therefore not very important for individual consumption decisions and construct a model of life-cycle consumption in
which individuals react optimally to their own income process but ignore economy wide information. Since individual
income is less persistent than aggregate income consumers will react too little to aggregate income variation. Aggregate
consumption will be excessively smooth. Since aggregate information is slowly incorporated into consumption,
aggregate consumption will be autocorrelated and correlated with lagged income. On the other hand, the model has
the same prediction for micro data as the standard permanent income model. I argue that this is roughly in accord with
the findings in the literature.
The second part of the paper provides empirical evidence on individual and aggregate income processes and calibrates
the model using the estimated parameters. The model predictions roughly correspond to the empirical findings for
aggregate consumption. Allowing for the existence of measurement error in micro income, durables, finite lifetimes
of consumers, and advance information improves the predictions of the model. These features introduce relatively
small changes as compared to the impact of incomplete information.

Year of Publication
Date Published
Publication Language
Citation Key
Econometrica , Vol. 63, No. 4, July, 1995
Pischke, J.-S. (1991). Individual Income, Incomplete Information, and Aggregate Consumption. Retrieved from (Original work published August 1991)
Working Papers