My main research areas are Macroeconomics and Monetary Economics.

Working Paper

The effects of firing costs on labor market dynamics

Armando Näf, Yannic Stucki and Jacqueline Thomet

We examine the role of employment protection legislation (EPL) on labor market dynamics in a search and matching model with costly firing. To guide our modeling approach, we establish three empirical regularities. First, average job destruction flows are much larger than average net reductions in employment. Second, stronger EPL is associated with a larger relative variability of job creation vs job destruction flows. Third, stronger EPL is associated with a weaker Beveridge curve relation measured as the negative correlation between vacancies and unemployment. We then use our model to examine the role of job destruction flows for the assessment of the firing costs’ impact on labor market dynamics. We find that considering only net reductions in employment instead of job destruction flows biases the quantitative evaluation. The impact of firing costs on the labor market is an order of magnitude smaller when only net reductions in employment are costly. In addition, the distortionary impact of firing costs on labor market dynamics is underestimated. Firms opt to adjust labor input more strongly along the job creation and the intensive margin (hours worked per worker) when firing costs apply to job destruction flows.

Heterogeneity in Returns to Wealth - Evidence from Swiss Administrative Data

Marc Brunner, Jonas Meier and Armando Näf

In this paper we address how returns on financial assets vary across the population. Exploiting rich administrative data, we are able to neatly describe the heterogeneity across all parts of the distribution of wealth. We find compelling evidence that the rich benefit from higher returns. Likely, this is due to two different effects that have been called scale dependence and type dependence. The former is due to an observed positive correlation between net worth and returns. The latter describes a high persistence of returns for each individual, most possibly due to better information and market access advantages. We find evidence that both channels play an important role. Further, with respect to inequality, our results suggest that there is a wide heterogeneity across different socio-demographic dimensions in Switzerland which has been growing over time. Conceptually, this paper contributes by modelling the full distribution of returns. This allows to address the scale effect of net worth on the returns throughout the distribution of the latter. We find that net worth crucially determines the top of the return's distribution highlighting another channel through which wealth inequality reinforces itself.