External refereed essays

In Vino Pecunia? The Association between Beverage-Specific Drinking Behavior and Wages

The positive association between moderate alcohol consumption and wages is well documented in the economic literature. Positive health effects as well as networking mechanisms serve as explanations for the "alcohol-income puzzle". Using individual-based microdata from the SOEP for 2006, we confirm that this relationship exists for Germany as well. More importantly, we shed light on the alcohol-income ...

Advanced Mechanisms for the Promotion of Renewable Energy: Models for the Future Evolution of the German Renewable Energy Act

The German Renewable Energy Act (EEG) has been very successful in promoting the deployment of renewable electricity technologies in Germany. The increasing share of EEG power in the generation portfolio, increasing amounts of fluctuating power generation, and the growing European integration of power markets governed by competition calls for a re-design of the EEG. In particular, a more efficient system ...

Ethnosizing Immigrants

The ethnosizer, a new measure of the intensity of a person's ethnic identity, is proposed using information on language, culture, societal interaction, history of migration, and ethnic self-identification. A two-dimensional version classifies immigrants into four states: integration, assimilation, separation and marginalization. Results based on the German Socio-economic Panel for 2001 are as follows. ...

Indenture as a Self-Enforced Contract Device: An Experimental Test

We experimentally test the efficacy of indenture as a self-enforced contract device. In an indenture game, the principal signals the intention of payment on delivery by tearing a banknote in half and giving the agent one half of it as "prepayment"; the agent receives the completing half after delivering the service. By forward induction, cooperation is incentive-compatibly self-enforcing. The indenture ...

The Effects of Income Taxation on Severance Pay

Severance pay often results from a bargain between the firm and the employee to avoid or terminate a legal conflict. We theoretically investigate how income taxation affects these negotiations. Using panel data from West Germany and exploiting a change in tax law in 1999, we find that a higher income tax on severance pay reduces the probability of obtaining it and - in some specifications - also lowers ...

Life Goals Matter to Happiness: A Revision of Set-Point Theory

The purpose of the paper is to assess the theory that the downside risk insurance provided by more generous welfare states generates long run efficiency gains, which counterbalance the short run efficiency losses caused by work disincentives in these states (Feldstein 1974, 1976; Sinn 1995, 1996). Testing downside risk theory requires long term data, so the paper makes use of the three longest running ...

Individuelle Erträge von Weiterbildung in KMU's und Großbetrieben: Evidenz für Westdeutschland

The Within-Distribution Business Cycle Dynamics of German Firms

In this article, we analyse stylized facts for Germany's business cycle at the firm level. Based on longitudinal firm-level data from the Bundesbank's balance sheet statistics covering, on average, 55 000 firms per year from 1971 to 1998, we estimate transition probabilities of a firm in a certain real sales growth regime switching to another regime in the next period, e.g. whether a firm that has ...

Die kurzfristigen Steuereffekte der "Thesaurierungsbegünstigung": eine mikrofundierte Analyse

Mit der Unternehmensteuerreform 2008 wird es Personenunternehmen ermöglicht, Gewinne, die im Unternehmen verbleiben sollen, ermäßigt zu besteuern. Werden diese ermäßigt versteuerten Gewinne zu einem späteren Zeitpunkt entnommen, erfolgt eine Nachbelastung in Höhe von 25 % zzgl. Solidaritätszuschlag. Einen kurzfristigen steuerlichen Anreiz zur ermäßigt besteuerten Gewinneinbehaltung gibt es somit auf ...

Success in the University Admission Process in Germany: Regional Provenance Matters

[An erratum to this article can be found at http://dx.doi.org/10.1007/s10734-009-9271-4 ]. - School education in Germany is under the responsibility of the federal states and as a consequence average grades differ widely across regions. Since school leavers apply nationwide for admission to university, regional provenance may thus matter a lot for the success probability in the admission process. Using ...

"Making Work Pay" in a Rationed Labour Market

This paper empirically analyzes the labor supply effects of two "making work pay" reforms in Germany. We provide evidence in favor of policies that distinguish between low effort and low productivity by targeting individuals with low wages rather than those with low earnings. We discuss our results more generally and with comparisons to the family-based tax credits in force in the US and the UK. For ...

Optimal Taxation: The Design of Child-Related Cash- and In-Kind-Benefits

In this paper, we empirically derive the welfare function that guarantees that the current German tax and transfer system for single women is optimal. In particular, we compare the welfare function conditional on the presence and age of children and assess how recent reforms of in-kind childcare transfers affect the welfare function. Our analysis is based on a discrete model of optimal taxation. We ...

Optimal Income Taxation of Lone Mothers: An Empirical Comparison for Britain and Germany

Optimal tax rules are used to evaluate the optimality of taxation for lone mothers in Germany and Britain. The theoretical model is combined with elasticities derived from the structural estimation of lone mothers' labour supply. For both countries we do not find that in-work credits with marginal tax rates are optimal. However we show that when the government has a low taste for redistribution, out-of-work ...

Making Work Pay for the Elderly Unemployed: Evaluating Alternative Policy Reforms for Germany

We evaluate three policy reforms targeted at older unemployed people: (i) an hourly wage subsidy, (ii) an in-work credit, and (iii) an employment bonus in the form of subsidized social security contributions on low wages. The work-incentive, labor-supply, and welfare effects of these policy reforms are analyzed on the basis of a behavioral microsimulation model for Germany. We find that the simulated ...

What Drives Heterogeneity in Foreign Exchange Rate Expectations: Insights from a New Survey

Foreign exchange rate expectations play a central role in virtually all monetary models for the open economy. Therefore, it is extremely important to gain empirical insights into the expectations formation process. In this paper, we use a unique disaggregated data set to model the expectations of file Yen/USD exchange rate of about 50 leading foreign exchange rate professionals. The survey includes ...

Price Convergence in an Enlarged Internal Market

This paper investigates the effects of EU enlargement on price convergence. The internal market is expected to boost integration and increase efficiency and welfare through a convergence of prices in product markets. Two principal drivers are crucial to explain price developments. On one hand, higher competition exerts downward pressure on prices because of lower markups. On the other hand, the catching-up ...

A Link between Workers' Remittances and Business Cycles in Germany and Turkey

This paper examines the cyclical interactions between the remittances of Turkish workers in Germany and output in both Turkey and Germany. Our analysis introduces a new data set covering 1962 to 2004, never used before in the research literature and considered to be a more reliable source than the data sets used in other studies. By dividing the original sample into recruitment, family reunification, ...

A Dynamic Panel Data Approach to the Forecasting of GDP of German Länder

Das Sozio-oekonomische Panel (SOEP): Multidisziplinäres Haushaltspanel und Kohortenstudie für Deutschland: eine Einführung (für neue Datennutzer) mit einem Ausblick (für erfahrene Anwender)

Solidarität gesucht: Osteuropas Finanzmärkte in der globalen Finanzkrise

The global financial crisis has also hit Eastern Europe. Since the liberalisation and privatisation of the financial markets in the European Union's eastern states, the importance of the banking sector has grown, and the integration of these young financial markets in the global financial system has increased. The consequence is a greater vulnerability to crises. The new EU members cannot give sweeping ...