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DIW Discussion Papers 415 / 2004
This paper examines the impact of children on female wages in the UK using the National Child Development Study. Empirically this involves using an extension of the Roy model, which simultaneously corrects for the endogeneity of labour force participation and fertility. The wage differential between women without children and women with children is estimated to range between 19% and 22% not accounting ...
2004| Tarja K. Viitanen
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DIW Discussion Papers 414 / 2004
This study uses the hedonic approach to measure the amenity value of climate in Germany. Unlike in earlier research separate hedonic wage and house price regressions are estimated for relatively small geographic areas and formal tests undertaken to determine whether the coefficients describing the impact of climate variables are homogenous across these areas. Evidence suggests that German households ...
2004| Katrin Rehdanz, David Maddison
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DIW Discussion Papers 413 / 2004
This paper analyses the effects of activity choices on farm household income and consumption in a war-affected developing country. The study uses household survey data from Mozambique and controls for the endogeneity of activity choices with instrumental variables. War-time activity choices (such as subsistence farming) are shown to enhance welfare in the post-war period. Market and social exchange ...
2004| Tilman Brück
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DIW Discussion Papers 412 / 2004
This study analyzes the effect of child care costs on the labor supply of mothers with preschool children in Germany using data from the German Socio-Economic Panel (2002). Child care costs are estimated on the basis of a sample selection model. A structural household utility model, which is embedded in a detailed tax-benefit model, is used for labor supply estimation. In contrast to a previous German ...
2004| Katharina Wrohlich
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DIW Discussion Papers 411 / 2004
Financial theory creates a puzzle. Some authors argue that high-risk entrepreneurs choose debt contracts instead of equity contracts since risky but high returns are of relatively more value for a loan-financed firm. On the contrary, authors who focus explicitly on start-up finance predict that entrepreneurs are the more likely to seek equity-like venture capital contracts, the more risky their projects ...
2004| Dorothea Schäfer, Axel Werwatz, Volker Zimmermann
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DIW Discussion Papers 410 / 2004
This paper investigates the effects of macroeconomic volatility on non-financial firms' cash holding behavior. Using an augmented cash buffer-stock model, we demonstrate that an increase in macroeconomic volatility will cause the cross-sectional distribution of firms' cash-to-asset ratios to narrow. We test this prediction on a panel of non-financial firms drawn from the annual COMPUSTAT database covering ...
2004| Christopher F. Baum, Mustafa Caglayan, Neslihan Ozkan, Oleksandr Talavera
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DIW Discussion Papers 409 / 2004
We analyze optimal income taxes with deductions for work-related or consumptive goods. We consider two cases. In the first case (called a complex tax system) the tax authorities can exactly distinguish between consumptive and work-related expenditures. In the second case (called a simple tax system) this distinction is not exact. Assuming additively separable utility functions, we show that work-related ...
2004| Pio Baake, Rainald Borck, Andreas Löffler
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DIW Discussion Papers 408 / 2004
Tax competition for a mobile factor is different in "new economic geography settings" compared to standard tax competition models. The agglomeration rent which accrues to the mobile factor in the core region can be taxed. Moreover, a tax differential between the core and the periphery can be maintained. The present paper reexamines this issue in a setting which, in addition to the core-periphery equilibria, ...
2004| Rainald Borck, Michael Pflüger
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DIW Discussion Papers 407 / 2004
We link life-satisfaction data to inequality of the pre- and post-government income distribution at the regional level, to estimate the degree of inequality aversion. Three different inequality measures are used. In addition, we investigate whether a reduction in inequality by the state increases individual well-being. We find only weak evidence that Germans are inequality averse. Inequality reduction ...
2004| Johannes Schwarze, Marco Härpfer
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DIW Discussion Papers 406 / 2004
We consider a linear city model where both firms and consumers have to incur transport costs. Following a standard Hotelling (1929) type framework we analyze a duopoly where firms facing a continuum of consumers choose locations and prices, with the transportation rate being linear in distance. From a theoretical point of view such a model is interesting since mill pricing and uniform delivery pricing ...
2004| Sudipta Sarangi, Hrachya Kyureghian
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DIW Discussion Papers 405 / 2004
The success of joint liability programs depends on nature and composition of borrowing groups. Group formation is a costly process and in our model these costs vary with the social identity of group partners. We show that risk heterogeneity in a borrowing group may arise due to the social identity of the agents. The presence of caste and gender bias may not resolve the adverse selection and moral hazard ...
2004| Prabirendra Chatterjee, Sudipta Sarangi
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DIW Discussion Papers 404 / 2004
This paper examines the implications of restricting the tradability of carbon rights in the presence of induced technical change. Unlike earlier approaches aiming at exploring the tradability-technology linkage we focus on climate-relevant 'carbon-saving' technical change. This is achieved by incorporating endogenous investment in carbon productivity into the RICE-99 integrated assessment model of ...
2004| Patrick Matschoss, Heinz Welsch
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DIW Discussion Papers 403 / 2004
This paper investigates the attitudes towards the Euro and their changes over time in Germany by using longitudinal micro data from the German Socio Economic Panel Study (SOEP). We observe that a large part of the German population was worried about the new currency before its implementation. Individual changes of worries can be explained by theories of self-perception and cognitive dissonance. According ...
2004| Bettina Isengard, Thorsten Schneider
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DIW Discussion Papers 402 / 2004
We analyse competition between two network providers when the quality of each network depends negatively on the number of customers connected to that network. With respect to price competition we provide a sufficient condition for the existence of a unique pure strategy Nash equilibrium. Comparative statics show that as the congestion effect gets stronger quantities will decrease and prices increase, ...
2004| Pio Baake, Kay Mitusch
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DIW Discussion Papers 401 / 2004
Having close linkages with the counterfactual concept of causality, nonparametric matching estimators have recently gained in popularity in the statistical and econometric literature on causal analysis. Introducing key concepts of the Rubin causal model (RCM), the paper discusses the implementation of counterfactual analyses by propensity score matching methods. We emphasize the suitability of the ...
2004| Markus Gangl, Thomas A. DiPrete
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DIW Discussion Papers 400 / 2004
Recent contributions to the empirical analysis of the relationship between financial system development and economic growth found that an exogenous component of financial system development causes economic growth, is a good predictor of growth and that its growth impact is relatively large. In addition, the empirical literature on banking crises predicts that their adverse effects on economic growth ...
2004| Ulrich Thießen
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DIW Discussion Papers 399 / 2004
Based on a panel of German professional forecasts for 1970 to 2002 we find that growth and inflation forecasts are unbiased and weakly, but not strongly efficient. Besides the effect of diverging forecasting dates, no other substantial differences in forecasting quality are found among forecasters. We argue that is not always advisable to listen to the majority of forecast-ers. The dispersion of forecasts ...
2004| Jörg Döpke, Ulrich Fritsche
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DIW Discussion Papers 398 / 2004
This paper examines how different unionisation structures affect firms' innovation incentives and industry employment. We distinguish three modes of unionisation with increasing degree of centralisation: (1) "Decentralisation" where wages are determined independently at the firm-level, (2) "coordination" where one industry union sets individual wages for all firms, and (3) "centralisation" where an ...
2004| Justus Haucap, Christian Wey
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DIW Discussion Papers 397 / 2004
In a small structural model we find asymmetries in the effects of monetary policy in Germany depending on whether the economy is in an upswing or a downswing. These two different regimes are also identified using a Markov-switching model and the Kalman filter. Our results indicate that the effects of monetary policy are significantly higher in a downswing than in an upswing. It follows not only that ...
2004| Vladimir Kuzin, Silke Tober
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DIW Discussion Papers 396 / 2004
Since the inequality of earnings in East Germany has approached West German levels in the late 1990s, the standard Roy model predicts that a positive selection bias of East-West migrants should disappear. Using a switching regression model and data from the IAB-employment sample, we find however that employed East-West migrants remain positively self-selected with respect to unobserved abilities. This ...
2004| Herbert Brücker, Parvati Trübswetter