The allocation of free allowances for firms belonging to the carbon leakage list of the European Union Emissions Trading Scheme (EU ETS) was found to lead to substantial overcompensation, which is why some stakeholders recently have called for a phasing out of free allowances in the near term. This paper analyzes the consequences of phasing out free allowances in a dynamic two- period model when one group of countries unilaterally implements climate policies such as an emissions trading scheme. A carbon price induces firms to invest in abatement capital, but may also lead to the relocation of some firms. The social planner addresses the relocation problem by offering firms transfers, i.e. free allowances, conditional on maintaining the production in the regulating country. If transfers are unrestricted in both periods, then the social planner can implement the first best by setting the carbon price equal to the marginal environmental damage and using transfers to prevent any relocation. However, if transfers in the future period are restricted, it is optimal to implement a declining carbon price path with the first period price exceeding the marginal environmental damage. A high carbon price triggers investments in abatement capital and thus creates a lock-in effect. With a larger abatement capital stock, firms are less affected by carbon prices in the future and therefore less prone to relocate in the second period where transfers are restricted.
Weniger anzeigenUsing harmonized household survey data, we analyse long run social mobility in the US, the UK, and Germany and test recent theories of multigenerational persistence of socio-economic status. In this country comparison setting we find evidence against Gregory Clark’s “universal law of social mobility”. In general, our results show that the long run persistence of socio-economic status tends to vary with the institutional context. Our findings on the existence of a direct and independent effect of grandparents’ social status on grandchildren’s status are mixed.
Weniger anzeigenWe use data from the European Household Finance and Consumption Survey in order to examine the distributional effect of intergenerational wealth transfers on the net worth distribution in 8 European countries and compare it to recent findings for the US. To do so, we resort to the decomposition of the coefficient of variation as suggested and applied by Wolff (1987, 2002, 2015) and Wolff and Gittleman (2014). The results hint that inheritances and gifts have a vastly equalizing effect on inequality in household wealth in all 8 countries.
Weniger anzeigenWe analyze the positive and normative effects of a progressive tax on wages in a nonlinear New Keynesian DSGE model in the presence of demand and technology shocks. The non-linearity allows us to disentangle the effects of the progressive tax on the volatility and the level of macroeconomic variables, for both intertemporally optimizing (“Ricardian") and non-Ricardian (“rule-of- thumb") households. We find that the interaction of the two household types is of crucial importance. When only Ricardian households are considered, progressive taxes increase welfare (compared to at taxes) in the presence of technology shocks. Aggregate welfare falls, however, when rule-of-thumb households are added to the analysis. The progressive tax increases the welfare of the latter household by lowering its consumption volatility, but this is overcompensated for by the destabilization of Ricardian household consumption. Under demand shocks, progressive taxes reduce the welfare of both household types, with the welfare of rule-of-thumb households falling despite a decline in their consumption volatility. The reason is a lower average consumption level which is related to the changed curvature of the marginal cost function.
Weniger anzeigenI propose a method to decompose changes in income inequality into the contributions of policy changes, wage rate changes, and population changes while considering labor supply reactions. Using data from the Socio-Economic Panel (SOEP), I apply this method to decompose the increase in income inequality in Germany from 2002 to 2011, a period that saw tax reductions and a controversial overhaul of the transfer system. The simulations show that tax and transfer reforms have had an inequality reducing effect as measured by the Mean Log Deviation and the Gini coefficient. For the Gini, these effects are offset by labor supply reactions. In contrast, policy changes explain part of the increase in the ratio between the 90th and the 50th income percentile. Changes in wage rates have led to a decrease in income inequality. Thus, the increase in inequality was mainly due to changes in the population.
Weniger anzeigenWe quantify the importance of precautionary labor supply using data from the German Socio- Economic Panel (SOEP) for 2001-2012. We estimate dynamic labor supply equations augmented with a measure of wage risk. Our results show that married men choose about 2.5% of their hours of work or one week per year on average to shield against unpredictable wage shocks. This implies that about 26% of precautionary savings are due to precautionary labor supply. If self- employed faced the same wage risk as the median civil servant, their hours of work would reduce by 4%.
Weniger anzeigenDuring the European financial crisis, the European Central Bank implemented a series of unconventional monetary policy measures. We argue that these unconventional monetary policy measures created soft budget constraints for the Eurozone countries by lowering their bond yield spreads. This hypothesis is tested using pooled OLS estimations and two different datasets: monetary policy event dummies and the purchase volumes of the Securities Markets Programme (SMP). We find significantly negative effects on bond yield spreads for both datasets, leading us to accept the hypothesis. The results are confirmed by robustness checks that directly estimate the effect of unconventional monetary policy on central government debt.
Weniger anzeigenUsing specific panel data of German welfare benefit recipients, we investigate the non-pecuniary life satisfaction effects of in-work benefits. Our empirical strategy combines difference-in-difference designs with synthetic control groups to analyze transitions of workers between unemployment, regular employment and employment accompanied by welfare receipt. Working makes people generally better off than being unemployed, but employed welfare recipients do not reach the life satisfaction level of regular employees. This implies that welfare receipt entails non-compliance with the norm to make one’s own living. Our findings allow us to draw cautious conclusions on employment subsidies paid as welfare benefits.
Weniger anzeigenWe revisit the alleged retirement consumption puzzle. According to the life- cycle theory, foreseeable income reductions such as those around retirement should not affect consumption. However, we first recall that given higher leisure endowments after retirement, the theory does predict a fall of total market consumption expenditures. In order not to mistake this predicted drop for a puzzle we focus on housing consumption which can be plausibly regarded as complementary to leisure, and we control for the leisure change in our empirical specifications, using micro data for Germany (SOEP), where housing expenditures are observable as rents for the majority (60%), as well as dwelling relocations. We still find significant negative impacts of the retirement status on housing consumption, which is hard to reconcile with the life-cycle theory. For retirees we also find significant effects of the income reduction at retirement on housing. However, the effects are small in quantitative terms, given the lock-in nature of past housing decisions.
Weniger anzeigenResource-rich dictatorships are more inclined to repress civil society than others. In this paper, we identify a tradeoff between political rents from natural resources and the organizational density of civil society. This organizational density determines the extent to which citizens can threaten the dictator with a revolution. We find that, in the occurrence of a negative oil price shock, regime change becomes likely, whereas a positive oil shock increases the extractive capacity of the dictator. When a negative oil price shock occurs, the persecution of failed revolutionaries can prevent revolution if the probability of revolutionary success is already low ex-ante. Historical and contemporary illustrations are drawn from Iran, the Soviet Union/Russia and Egypt.
Weniger anzeigenGeographically weighted small area methods have been studied in literature for small area estimation. Although these approaches are useful for the estimation of small area means efficiently under strict parametric assumptions, they can be very sensitive to outliers in the data. In this paper, we propose a robust extension of the geographically weighted empirical best linear unbiased predictor (GWEBLUP). In particular, we introduce robust projective and predictive small area estimators under spatial non-stationarity. Mean squared error estimation is performed by two different analytic approaches that account for the spatial structure in the data. The results from the model- based simulations indicate that the proposed approach may lead to gains in terms of efficiency. Finally, the methodology is demonstrated in an illustrative application for estimating the average total cash costs for farms in Australia.
Weniger anzeigenPrivate wealth is a crucial factor for the economic well-being of households. Key determinants of private wealth include intergenerational wealth transfers (gifts and inheritances), which are gaining importance since 1990, as research suggests. We conduct a detailed investigation of the distribution of wealth transfers in eight Euro-area countries. First, we investigate the patterns of prevalence and level of past wealth transfers in the individual countries: Who received transfers, and what is their present value in absolute terms? We find that in most countries the percentages of households with a transfer as well as the mean present value of those transfers is increasing along the distribution of net wealth. Using a series of country-specific multivariate regressions, we find that households with higher income and education levels have both a higher probability of receiving transfers and higher absolute transfer value. We then analyze the present value of transfers as a percent of current net worth. Here, in relative terms, some of the results are reversed, as the relative importance of intergenerational transfers does not increase with the level of wealth or income. Using a fractional logit regression we conclude that for higher income quintiles the share of current net worth due to past intergenerational transfers tends to be decreasing.
Weniger anzeigenTo increase employee participation in training activities, the German government introduced a large-scale training voucher program in 2008 that reduces training fees by half. Based on a randomized field experiment, this paper analyzes whether providing information about the existence and the conditions of the training voucher had an effect on actual training activities of employees. Because the voucher was newly introduced, only one-fourth of the eligible employees knew the voucher exists at the time of the experiment. The information intervention informed a random sample of eligible employees by telephone about the program details and conditions. The results indicate that the information significantly increased treated individuals’ knowledge of the program but had no effect on voucher take-up or participation in training activities. Additional descriptive analyses suggest that the reasons for these zero effects are that the demand for self-financed training is low and that liquidity constraints do not discourage many employees from training participation.
Weniger anzeigenCountries with high income inequality also show a strong association between parents’ and children’s economic well-being; i.e. low intergenerational mobility. This study is the first to test this relationship in a between and within country setup, using harmonized micro data from 18 Latin American countries spanning multiple cohorts. It is shown that experiencing higher inequality in childhood has a negative effect on intergenerational mobility as adults. Furthermore, the influence of economic growth and public education is evaluated: both have a positive, significant, and substantial effect on intergenerational mobility.
Weniger anzeigenSmall area estimation is a research area in official and survey statistics of great practical relevance for National Statistical Institutes and related organisations. Despite rapid developments in methodology and software, researchers and users would benefit from having practical guidelines that assist the process of small area estimation. In this paper we propose a general framework for the production of small area statistics that is based on three broadly defined stages namely, Specification, Analysis/Adaptation and Evaluation. The corner stone of the proposed framework is the principle of parsimony. Emphasis is given on the interaction between a user and a methodologist for specifying the target geography and parameters in light of the available data. Model-free and model-dependent methods are described with focus on model selection and testing, model diagnostics and adaptations e.g. use of data transformations. The use of uncertainty measures and model and design-based simulations for method evaluation are also at the centre of the paper. We illustrate each stage of the process both theoretically and by using real data for estimating a simple and complex (non-linear) indicators.
Weniger anzeigenIn aging societies, information on how to reform pension systems is essential to policy makers. This study scrutinizes effects of early retirement disincentives on retirement behavior, individual welfare, pensions and public budget. We employ administrative pension data and a detailed model of the German tax and social security system to estimate a structural dynamic retirement model. We find that labor market participation and retirement behavior in general are strongly influenced by the level of disincentives. Further, disincentives come at the cost of increasing inequality and individual welfare losses. Still, net public returns are more than five times as high as monetarized individual welfare losses. Our estimates also suggest that similar levels of net public returns achieved by indiscriminating pension cuts are associated with individual welfare losses that are at least twice as high.
Weniger anzeigenSingle parents and unmarried couples are increasingly replacing the traditional nuclear family. This paper investigates if the greater variety in living arrangements contributes to increased resource disparities among children in Germany. Children in single parent families are disadvantaged in at least three dimensions decisive for their later achievements: material standard of living, parental education, and parental childcare time. We compute multidimensional inequality and poverty indices using SOEP data from 1991-2012. We distinguish between parental and publicly provided childcare, which is an increasingly important in-kind benefit in Germany. We find that both multidimensional inequality and poverty declined as expanded public childcare strongly reduces resource disparities among children.
Weniger anzeigenYes, indeed; at least for macroeconomic policy interaction. We examine a Neo- Classical economy and provide the conditions for policy arrangements to successfully stabilize the economy when agents have either rational or adaptive expectations. For a contemporaneous-data monetary policy rule, the monetarist solution is unique and stationary under a passive fiscal/active monetary policy regime if monetary policy appropriately incorporates expectational heterogeneity. In contrast, the active fiscal/passive monetary policy regime's fiscalist solution is prone to explosiveness due to empirically plausible expectational heterogeneity. Nevertheless, this can be a well-defined, rather orthodox equilibrium. For operational monetary policy rules, only the results for the fiscalist solution prevail. Moreover, our results are plausible from an adaptive learning viewpoint.
Weniger anzeigenThe paper analyses how the IMF brought its experience gained in emerging market sovereign debt crises in the troika’s handling of the euro crisis. We link models of multiple equilibria with the IMF’s experience made in Latin American crises in the 2000s. We examine subsequent changes in the IMF’s policy guidelines and show that previous insights have been taken in, but applied only with a significant delay and partially against institutional rules and internal advice for the case of Greece. Hence, we argue that the inclusion of the IMF in Europe’s crisis fighting did not completely deliver what had been hoped for.
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