Labor markets, firms, institutions and employees: Three natural experiments (Germany)

In the three papers contained in this dissertation, I exploit two major social events of the twentieth century to study the interactions of firms, individuals and institutions in labor markets. In the first paper, I use the fall of the Berlin Wall and subsequent mass migration of East Germans to West Germany to study how migration affects natives' labor market outcomes. I use a novel set of instruments incorporating information about conditions external to the receiving labor market to control for the endogeneity of migrants' locational choices. I find no evidence that migration had a negative effect on natives in aggregate, but I do find significant differences across specific categories of natives. In absolute terms, migration increased unemployment among the oldest and the least educated workers and reduced it among workers with at least a high school education. Wage results lead to similar conclusions. I also find evidence of mitigating effects on employment outcomes due to immigrants' own demand for goods and services. In the second paper, I use the same migration experiment to study how responses to this labor supply shock in the West German machine tool industry varied in the presence of two labor market institutions---works councils and collective bargaining. I find that migration induced establishments to increase employment, but the employment response was confined to establishments without works councils. I also find evidence of outsourcing from firms with works councils or collective bargaining to firms without them, suggesting that migration and institutions interacted to alter firm boundaries in this industry. In the final paper, I study how long-term career outcomes are influenced by a chance event---the Vietnam Draft Lottery---early in the working career. Using an original data set, I find that men born in the years 1948-50 on dates placing them at high risk of induction are underrepresented in a sample of top executives at public U.S. companies in the 1990s. I present a model and empirical evidence suggesting that draft avoidance was related to the acquisition of human capital that affected promotion rates among executives.