Brigitte Hochmuth

Oscar-Morgenstern-Platz 11090 Wien E-Mail: brigitte.hochmuth[at]

About me

I am an Assistant Professor (non-tenure track) at the University of Vienna.

In my research, I use micro data for macro models to answer questions on the effects of labor market policies and the interaction of credit and labor markets. I am especially interested in the role of nonlinearities and heterogeneity.

I am also a Fellow at the Institute for Advanced Studies (IHS) Vienna.

Click here for my CV. [Download].



Current Research Projects

Dwyer Ramsey Prize 2020 by the Society of Nonlinear Dynamics and Econometrics (SNDE)

Abstract: This paper shows that credit crunches cause labor market effects that are nonlinear over time and heterogeneous by firm age. During the Great Financial Crisis, 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' housing collateral and restricted their ability to borrow. To understand the underlying mechanism, I propose a financial frictions model with an explicit firm age structure. A simultaneous credit crunch and a decline in young firms' net worth can reconcile the model with my empirical results. While old firms switch 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 Great Financial Crisis. A counterfactual experiment shows that absent the net worth shock, the U.S. unemployment rate would have been back to its pre-crisis level two years quicker.

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.

Short-Run Pain and Long-Run Gain: The Dark Shadow of Benefit Reforms in a Monetary Union
(joint with Christian Merkl and Heiko Stüber).


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]

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]

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


At the University of Vienna, I am teaching

  1. Current Topics in Macroeconomic Policy (Master level), summer term 2022. Course Description.

  2. Makroökonomie (Bachelor level), winter term

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