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Local and Spatial Cointegration in the Wage Curve: A Spatial Panel Analysis for German Regions

The wage curve introduced by Blanchflower and Oswald (1990, 1994) postulates a negative correlation between wages and unemployment. Empirical results focus on particular theoretical channels establishing the relationship. Panel models mostly draw on unionized bargaining or the efficiency wage hypothesis. Spatial econometric approaches can be rationalized by monopsonistic competition. However, the approaches ...

Maternity Leave and Its Consequences for Subsequent Careers in Germany

This paper analyzes the wage development of mothers interrupting their careers, in comparison to the wages of men who do not face a parental interruption. We estimate OLS regression models for different subcategories defined by age and point in time. We use data from the German Socioeconomic Panel from 1984 to 2011, to show that wages and the financial penalty for maternity differ according to the ...

Unemployment and Portfolio Choice: Does Persistence Matter?

We use a life-cycle model of consumption and portfolio choice to study the effects of social security on the investment decisions of households for the European case. Our model is mainly based on the one developed by Cocco, Gomes, and Maenhout (2005). We extend it by unemployment risk using Markov chains to model the transition between different employment states. In contrast to most models in the ...

Unemployment and Portfolio Choice: Does Persistence Matter?

Households can rely on private savings or on public unemployment insurance to hedge against the risk of becoming unemployed. These hedging mechanisms are used differently across countries. In this paper, we use a life cycle model to study the effects of unemployment on the portfolio choice of households in the US and in Germany. We distinguish short- and long-term unemployment and find that, in case ...

Are Education and Entrepreneurial Income Endogenous and Do Family Background Variables Make Sense as Instruments? A Bayesian Analysis

Education is a well-known driver of (entrepreneurial) income. The measurement of its influence, however, suffers from endogeneity suspicion. For instance, ability and occupational choice are mentioned as driving both the level of (entrepreneurial) income and of education. Using instrumental variables can provide a way out. However, three questions remain: whether endogeneity is really present, whether ...

Longevity, Life-Cycle Behavior and Pension Reform

How can public pension systems be reformed to ensure fiscal stability in the face of increasing life expectancy? To address this pressing open question in public finance, we estimate a life-cycle model in which the optimal employment, retirement and consumption decisions of forward-looking individuals depend, inter alia, on life expectancy and the design of the public pension system. We calculate that, ...

Mental Illness and Unhappiness

This paper is a contribution to the second World Happiness Report. It makes five main points. 1. Mental health is the biggest single predictor of life-satisfaction. This is so in the UK, Germany and Australia even if mental health is included with a six-year lag. It explains more of the variance of life-satisfaction in the population of a country than physical health does, and much more than unemployment ...

Unemployment and Portfolio Choice: Does Persistence Matter?

We use a life cycle model of consumption and portfolio choice to study the effects of social security on the investment decisions of households for the European case. Our model is mainly based on the one developed by Cocco, Gomes, and Maenhout (2005). We extend it by unemployment risk using Markov chains to model the transition between different employment states. In contrast to most models in the ...

Success at Work, Life Patterns, and Overall Life Satisfaction: Changes in the Lives of Men and Women since the 1980s in West Germany

This paper focuses on the structural relationship between family building and upward mobility. Typically this relationship is analyzed for women only, while we include men as well. With new patterns of intimate partnerships and non-traditional families, on the one hand, and a changing labor market, on the other hand, new assertions about their connection have emerged. Using SOEP-data, the possible ...

Konfliktfeld Globalisierung: Verteilungs- und Umweltprobleme der weltwirtschaftlichen Integration