Oskar-Morgenstern-Platz 11090 Wien
E-Mail: brigitte.hochmuth[at]univie.ac.at
About me
I am an Assistant Professor at the University of Vienna and a CEPR Research Affiliate. I spent the last academic year as Acting Professor at the University of Bonn.
My research leverages microdata within macroeconomic models to examine the (international) impacts of macroeconomic policies and the interplay between credit and labor markets. I focus particularly on household heterogeneity and the redistributive effects of these policies.
Click here for my CV. [Download].
Office hours: Please make an appointment via e-mail!
Upcoming Presentations: Workshop "Macroeconomic Policy with Heterogeneous Agents" @ University Paris-Dauphine, December 19-20 2024, organized by Adrien Auclert, Lise Patureau, and Fabien Tripier .
Teaching in the Winter term 24/25: Master Course in "Current Topics in Macroeconomic Policy" (in cooperation with the Austrian National Bank, OeNB)
New Working Paper: Incomplete Insurance and Open-Economy Spillovers of Labor Market Reforms (joint with Christian Merkl and Heiko Stüber).
I was co-organizing the EES Workshop on 'New Developments in the Macroeconomics of Labor Markets' on May 27-28, 2024, in Bonn. Click here for the program and more information.
From October 2023 to September 2024, I will be taking on an Acting Professorship ("Vertretungsprofessur") in Macroeconomics at the University of Bonn. In the winter term, I will be teaching "Makroökonomie A" and a Topics Course on “Micro Data meets Macro Questions”. I am looking forward to a stimulating and productive academic year 2023/24. During that time, I will be on leave from the University of Vienna.
December 2022: I am grateful to have received the Klaus Liebscher Economic Research Scholarship from the OeNB.
September 2022: I am coorganizing this year's Austrian Economic Association (NOeG) which takes place on September 19 & 20 at the University of Vienna. Program.
OeNB Summer School with Kurt Mitman: I will be holding the practical sessions at the OeNB Summer School 2022 on the topic "Macro models with heterogeneous agents and their use for monetary policy based on household-level micro data", Vienna, 29.8.-2.9.22. Click here for the Syllabus.
Current Research
Labor Market Reforms in Open Economies: Current Account Dynamics and Consumer Heterogeneity
(Revise and Resubmit at AEJ: Macro)
(joint with Stéphane Moyen, Felix Schröter, and Nikolai Stähler).
(Revise and Resubmit at AEJ: Macro)
(joint with Stéphane Moyen, Felix Schröter, and Nikolai Stähler).
Abstract: This paper establishes a link between labor market reforms and an increase in the reforming country’s net foreign asset position via a precautionary savings channel. Using a heterogeneous agent model of a small open economy with labor market frictions, we evaluate the current account effects of a major German unemployment benefit reform. We show that accounting for precautionary savings is qualitatively and quantitatively important for current account dynamics. Furthermore, welfare gains and losses are distributed unequally among agents. Compared to a closed economy, the reform is more detrimental in the short run and more beneficial in the long run.
Dwyer Ramsey Prize 2020 by the Society of Nonlinear Dynamics and Econometrics (SNDE)
Abstract: I document the heterogeneous effects of credit crunches on the labor market by firm age and over time. During the Great Financial Crisis (GFC), a credit supply shock caused young firms to reduce employment significantly more than old firms because the housing bust in 2006 led to a decline in young firms’ collateralizable housing assets, which restricted their borrowing capacity. To disentangle the relative contribution of the credit supply and net worth channels, I propose a financial frictions model with an explicit firm age structure. A simultaneous credit crunch and a decline in young firms’ housing net worth can reconcile the model with my empirical results. While old firms shift to equity financing, young firms depend on debt financing and cut labor demand. As young firms disproportionately account for aggregate job growth, my findings explain the sluggish labor market recovery after the GFC.
Incomplete Insurance and Open-Economy Spillovers of Labor Market Reforms (submitted)
(joint with Christian Merkl and Heiko Stüber).
(joint with Christian Merkl and Heiko Stüber).
Abstract: This paper shows that less generous unemployment benefits in one country may generate substantial negative long-run consumption spillovers to non-reforming countries under incomplete consumption insurance. While lower benefits reduce unemployment in the reforming country, employed workers increase their precautionary savings to compensate for reduced government-provided insurance. A portion of these additional savings flows to the non-reforming country and depresses long-term consumption due to the negative net foreign asset position. To discipline our quantitative model, we estimate the increase of Germany’s tradable sector in the aftermath of the Hartz unemployment insurance reform based on firm-level data. Our quantitative model matches a significant fraction of various macroeconomic trends after the reform, namely Germany’s persistent increase of aggregate savings and net foreign assets, the increase of net exports, the real exchange rate depreciation within the Eurozone, and the decline in unemployment. Conversely, Germany’s wage moderation before the reform appears to be unrelated to most of these phenomena.
Heterogeneous Risk Preferences, Entrepreneurship, and Wealth Inequality
(joint with Monika Merz and Fabian Prettenthaler); funded by the OeNB Anniversary Fund (project number 18885)
Abstract: This paper studies the role of heterogeneous risk preferences in shaping entrepreneurial decisions and their implications for wealth inequality. We examine how individuals' risk attitudes guide their choice between becoming a risk-bearing entrepreneur and a wage worker with a more stable income. To empirically ground our analysis, we use self-reported risk attitudes among the German workforce based on data from the German Socioeconomic Panel (GSOEP) and estimate their impact on the likelihood of workers transitioning into self-employment. Our findings highlight that risk tolerance is a key determinant of entrepreneurship. We further build a life-cycle model of occupational choice with Epstein-Zin preferences and heterogeneous risk attitudes to explore how these attitudes influence sorting into entrepreneurship, the composition of entrepreneurs by talent and risk preference, and savings behavior in the cross-section and the aggregate. Our results reveal that accounting for heterogeneous risk preferences matters quantitatively for capturing salient features of the wealth distribution in Germany.
The Macroeconomcis of Labor Shortages
(with Gregor Böhl)
Abstract: We document that the households' labor market participation margin is a key driver of macroeconomic dynamics and policy responses. We build a HANK model with participation choice in which shifts in demographics, productivity, or preferences can lead to significant labor shortages, which strongly alter inflation and output responses to economic shocks and policy measures. While either the rich or the poor reject common policies such as increases in government spending or tax cuts because of their distortionary effect on labor market participation, we find that untargeted transfers are Pareto improving.
The Macroeconomic and Distributional Consequences of Fiscal Policy in a Small-Open Economy
(with Wolfgang Lechthaler and Clara de Luigi)
Publications
Hartz IV and the Decline of German Unemployment: A Macroeconomic Evaluation (with Britta Kohlbrecher, Christian Merkl, and Hermann Gartner), Journal of Economic Dynamics and Control Vol. 127, June 2021, 104114.
[Published Version], Latest Working Paper Versions: [IHS WP] [Cesifo WP]
Related Policy Articles & Media Coverage: [IZA Newsroom], [IZA Newsroom (DE)], [Makronom]
Related Policy Articles & Media Coverage: [IZA Newsroom], [IZA Newsroom (DE)], [Makronom]
Abstract: This paper proposes a new approach to evaluate the macroeconomic effects of the ‘Hartz IV’ reform, which reduced the generosity of long-term unemployment benefits. We propose a model with different unemployment durations, where the reform initiates both a partial effect and an equilibrium effect. We estimate the relative importance of these two effects and the size of the partial effect based on the IAB Job Vacancy Survey. Our approach does not hinge on an external source for the decline in the replacement rate for long-term unemployed. We find that Hartz IV was a major driver for the decline of Germany’s steady state unemployment and that partial and equilibrium effect were nearly of equal importance. In addition, we provide direct empirical evidence on labor selection, one potential dimension of recruiting intensity.
Counteracting Unemployment in Crises: Non-Linear Effects of Short-Time Work Policy (joint with Britta Gehrke) The Scandinavian Journal of Economics, Vol. 123, Issue 1, January 2021, pp, 144 - 183.
[Published Version] [IZA Discussion Paper]
Related Policy Articles & Media Coverage:
VoxEU Article, in German: [ifo Schnelldienst] [WirtschaftsWoche] [Zeitschrift f. Wirtschaftspolitik]
Related Policy Articles & Media Coverage:
VoxEU Article, in German: [ifo Schnelldienst] [WirtschaftsWoche] [Zeitschrift f. Wirtschaftspolitik]
Abstract: Short-time work is a labor market policy that subsidizes working time reductions among firms in financial difficulty to prevent layoffs. Many OECD countries have used this policy in the Great Recession. This paper shows that the effects of short-time work are strongly time dependent and nonlinear over the business cycle. It may save up to 0.87 jobs per short-time worker in deep economic crises. In expansions, the effects are smaller and may turn negative. We disentangle discretionary short-time work from automatic stabilization in German data using smooth transition VARs.
In the Media
Wenn die Wirtschaft schrumpft. Krisenfest trotz Rezession? Ö1 Punkt 1 (Radio Show), October 7, 2022:
An die Arbeit! Falter 36/21 (Newspaper), September 8, 2021.
Teaching
At the University of Vienna, I am teaching
Current Topics in Macroeconomic Policy (Master level), summer term. Course Description.
Makroökonomie (Bachelor level, for Business students), winter term
At the University of Bonn, I was teaching
Summer term 2024:
Arbeitsmärkte und Bevölkerungsökonomie (Bachelor Level)
Research Seminar on "Inequality" (Bachelor Level).
Winter term 2023/24:
Furthermore, my teaching experience during my Ph.D. studies at the University of Erlangen-Nuremberg covered the following courses:
Macroeconomics, Undergraduate Level
International Economics, Undergraduate Level, Exercise Class
European Topics in Economics, Master Seminar with the European Commission
Empirical Applications in Financial Economics, Master Seminar
Large-scale Data Management, Master Seminar
Supervision of Bachelor and Master Theses