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DIW Discussion Papers 656 / 2006
The Orange Revolution unveiled significant political and economic tensions between ethnic Russians and Ukrainians in Ukraine. Whether this divide was caused by purely ethnic differences or by ethnically segregated reform preferences is unknown. Analysis using unique micro data collected prior to the revolution finds that voting preferences for the forces of the forthcoming Orange Revolution were strongly ...
2006| Amelie Constant, Martin Kahanec, Klaus F. Zimmermann
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DIW Discussion Papers 655 / 2006
We contribute to the literature on the relationship between cognitive abilities and labour market outcomes providing first evidence for Germany. In particular, cross-sectional data from the German Socio-Economic Panel (SOEP) are used, which include two measures of cognitive ability, one test of fluid mechanics (speed test) and another test of crystallised pragmatics (word fluency test). We find a positive ...
2006| Silke Anger, Guido Heineck
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DIW Discussion Papers 654 / 2006
Empirical studies on the earnings effects of tobacco use have found significant wage penalties attached to smoking. We produce evidence that suggests that these estimates are significantly upward biased. The bias arises from a general failure in the literature to control for the past smoking behavior of individuals. 2SLS earnings estimates show that the smoking wage penalty is reduced by as much as ...
2006| Silke Anger, Michael Kvasnicka
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DIW Discussion Papers 653 / 2006
This paper examines the effects of political determinants on the allocation of public expenditures. Analyzing an OECD panel from 1990 to 2004, a SURE model controls for the contemporaneous correlation between the different expenditure categories (COFOG). I find that left governments set other priorities than right governments: In particular, they increase spending for "Environment protection", "Recreation; ...
2006| Niklas Potrafke
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DIW Discussion Papers 652 / 2006
I test if parties matter with respect to the allocation of public expenditures in Germany. Considering the allocation of rights and duties due to the federal structure, two econometric models are estimated. First, a SURE model analyses spending at the federal level for the period from 1950 to 2003 and finds evidence for partisan politics and election year effects. Second, I examine the spending behaviour ...
2006| Niklas Potrafke
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DIW Discussion Papers 651 / 2006
In this paper we apply standard cartel theory to identify the major institutional stabilizers of Germany's area tariff system of collective bargaining between a single industry union and the industry's employers association. Our cartel analysis allows us to demonstrate that recent labor policy reforms that intend to make labor markets more "flexible" further serve to stabilize the labor cartel while ...
2006| Justus Haucap, Uwe Pauly, Christian Wey
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DIW Discussion Papers 650 / 2006
In Germany, processes can be observed that have long been out of keeping with the principle of equality of opportunity. Unemployment is concentrated in the structurally weak peripheral areas, in Eastern Germany in particular; emigration of young and better-educated people to the West is not diminishing, but contrary to expectation is again on the increase; aging pro-cesses have set in already, and ...
2006| Annette Spellerberg, Denis Huschka, Roland Habich
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DIW Discussion Papers 649 / 2006
In this paper we analyze the impact of the economic reforms implemented in 1980s and of the Custom Union Agreement of 1996 on the intra-industry trade in Turkey. Using the panel data for 15 trading partners of Turkey and the sample period 1970-2005, we record the positive impact of both reforms with the former reforms exercising stronger influence on the intra-industry trade measured either by the ...
2006| Sule Akkoyunlu, Konstantin A. Kholodilin, Boriss Siliverstovs
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DIW Discussion Papers 648 / 2006
This study analyzes the mobility between three labor market states: working in low paid jobs, working in higher paid jobs and not working. Using German panel data I estimate dynamic multinomial logit panel data models with random effects taking the initial conditions problem and potential endogeneity of panel attrition into account. In line with results from other countries, this first study on Germany ...
2006| Arne Uhlendorff
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DIW Discussion Papers 647 / 2006
I construct a new dataset with financial and housing wealth in 16 countries and investigate the effect of wealth on consumption. The baseline estimation method based on the sluggishness of consumption growth implies that the long-run marginal propensity to consume out of total wealth averaged across countries is 5 cents. I find substantial heterogeneity in the wealth effects: the individual country ...
2006| Jiri Slacalek
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DIW Discussion Papers 646 / 2006
Using merged data from the British Household Panel Survey (BHPS) and the German Socio-Economic Panel (SOEP), this paper applies a parametric difference-in-differences approach to assess the real effects of the introduction of the Euro on subjective well-being. A complementary nonparametric approach is also used to analyze the impact of difficulties with the new currency on well-being. The results indicate ...
2006| Christoph Wunder, Johannes Schwarze, Gerhard Krug, Bodo Herzog
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DIW Discussion Papers 645 / 2006
Using a sample of fare quotes for non-stop travel from New York to London, this paper investigates the dynamics of offered fares as the departure date nears. We find that the general trend is toward fare increase at an accelerated rate as the departure date approaches. Clear differences in price-setting strategies among the carriers competing on a particular route are documented.
2006| Volodymyr Bilotkach, Yuriy Gorodnichenko, Oleksandr Talavera, Igor Zubenko
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DIW Discussion Papers 644 / 2006
This study is intended to assess the introduction of increased capitalization requirements for Ukrainian insurance firms. To do so, we employ up-to-date frontier efficiency analysis. The analysis suggests that an increase in size occurs not only because of the regulator's requirements, but also because all scale inefficient firms have been persistently operating under increasing returns to scale. Additionally, ...
2006| Oleg Badunenko, Bogdana Grechanyuk, Oleksandr Talavera
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DIW Discussion Papers 643 / 2006
The European Union's strategy to raise employment is confronted with very low work participation among many minority ethnic groups, in particular among immigrants. This study examines the potential of immigrants' identification with the home and host country ethnicity to explain that deficit. It introduces a two-dimensional understanding of ethnic identity, as a combination of commitments to the home ...
2006| Amelie Constant, Liliya Gataullina, Klaus F. Zimmermann
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DIW Discussion Papers 642 / 2006
We examine the process of building social relationships as a non-cooperative game that requires mutual consent and involves reaching out to others at a cost. Players create their social network from amongst their set of acquaintances. Having acquaintances allows players to form naive beliefs about the feasibility of building direct relationships with their acquaintances. These myopic beliefs describe ...
2006| Robert P. Gilles, Sudipta Sarangi
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DIW Discussion Papers 641 / 2006
We evaluate three policy reforms targeted at older unemployed people: (i) an hourly wage subsidy, (ii) an in-work credit, and (iii) a subsidy of social security contributions on low wages. The work incentive, labour supply and welfare effects of these hypothetical reforms are analysed on the basis of a detailed micro-simulation model for Germany which includes a structural household labour supply model. ...
2006| Peter Haan, Viktor Steiner
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DIW Discussion Papers 640 / 2006
Siegel (1995) has developed a technique with which the systematic risk of a security (beta) can be estimated without recourse to historical capital market data. Instead, beta is estimated implicitly from the current market prices of exchange options that enable the exchange of a security against shares on the market index. Because this type of exchange options is not currently traded on the capital ...
2006| Sven Husmann, Andreas Stephan
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DIW Discussion Papers 639 / 2006
Using data from the long-running German Socio-Economic Panel Survey (SOEP), this paper provides evidence that life goals matter substantially to subjective well-being (SWB). Nonzero sum goals, which include commitment to family, friends and social and political involvement, promote life satisfaction. Zero sum goals, including commitment to career success and material gains, appear detrimental to life ...
2006| Bruce Headey
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DIW Discussion Papers 638 / 2006
This paper investigates the link between the optimal level of non-financial firms' liquid assets and industry-level uncertainty. We develop a structural model of a firm's value maximization problem that predicts that as industry-level uncertainty increases the firm will increase its optimal level of liquidity. We test this hypothesis using a panel of German firms drawn from the Bundesbank's balance ...
2006| Christopher F. Baum, Dorothea Schäfer, Oleksandr Talavera
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DIW Discussion Papers 637 / 2006
Our study investigates the link between bank lending behavior and macroeconomic uncertainty. We develop a dynamic model of a bank's value maximization that results in a negative relationship between loan to capital ratio and macroeconomic uncertainty. This proposition is tested using a panel of Ukrainian banks collected from NBU and covering the period 2003q1-2005q3. The results indicate that banks ...
2006| Oleksandr Talavera, Andriy Tsapin, Oleksandr Zholud