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Institut
Reviewing the development of network access charges in the German electricity market since 2002 reveals significant variation. While some firms continually increased or decreased their access charges, a variety of firms exhibited discontinuous behavior with price changes in both directions. From an economic viewpoint this price setting turbulence is astonishing because grid operators are non-contestable natural monopolists, which in this time period were regulated by Negotiated Third Party Access (NTPA). Depending on the effectiveness or ineffectiveness of NTPA, expected behavior would be either regulated average cost prices or monopoly prices, but not the observed turbulence. Although in 2005 NTPA scheme was replaced by a Regulated Third Party Access (RTPA) scheme with a regulator, an analysis of the factors influencing the price setting behavior within this period offers valuable information for the new regulator and the still discussed new incentive regulation, which is expected to start in 2009. Using multivariate estimations based on firm data covering the years 2000-2005, we test the hypotheses that asymmetric influence of regulatory threat, different cost and price calculation knowledge, strategic use of structural features and the obligation to publish specific access charges have influenced the electricity network access charges in Germany.
Actual Virtuality: the Arts
(2006)
Works Councils, Labor Productivity and Plant Heterogeneity: First Evidence from Quantile Regressions
(2006)
Using OLS and quantile regression methods and rich cross-section data sets for western and eastern Germany, this paper demonstrates that the impact of works council presence on labor productivity varies between manufacturing and services, between plants that are or are not covered by collective bargaining, and along the conditional distribution of labor productivity. No productivity effects of works councils are found for the service sector and in manufacturing plants not covered by collective bargaining. Besides demonstrating that it is important to look at evidence based on more than one data set, our empirical findings point to the efficacy of supplementing OLS with quantile regression estimates when investigating the behavior of heterogeneous plants.
This paper contributes to the flourishing literature on exports and productivity by using a unique newly available panel of exporting establishments from the manufacturing sector of Germany from 1995 to 2004 to test three hypotheses derived from a theoretical model by Hopenhayn (Econometrica 1992): (H1) Firms that stop exporting in year t were in t-1 less productive than firms that continue to export in t. (H2) Firms that start to export in year t are less productive than firms that export both in year t-1 and in year t. (H3) Firms from a cohort of export starters that still export in the last year of the panel were more productive in the start year than firms from the same cohort that stopped to export in between. While results for West Germany support all three hypotheses, this is only the case for (H1) and (H2) in East Germany.
This paper presents the first nonparametric test whether German works councils go hand in hand with higher labor productivity or not. It distinguishes between establishments that are covered by collective bargaining or not. Results from a Kolmogorov-Smirnov test for first order stochastic dominance tend to indicate that pro-productive effects are found in firms with collective bargaining only. However, the significance level of the test statistic is higher than a usually applied critical level. This somewhat weak evidence casts doubts on the validity of results from recent parametric approaches using a regression framework that point to high positive effects of works councils on productivity.
Combinatorial optimization is still one of the biggest mathematical challenges if you plan and organize the run-ning of a business. Especially if you organize potential factors or plan the scheduling and sequencing of opera-tions you will often be confronted with large-scaled combinatorial optimization problems. Furthermore it is very difficult to find global optima within legitimate time limits, because the computational effort of such problems rises exponentially with the problem size. Nowadays several approximation algorithms exist that are able to solve this kind of problems satisfactory. These algorithms belong to a special group of solution methods which are called local search algorithms. This article will introduce the topic of simulated annealing, one of the most efficient local search strategies. This article summarizes main aspects of the guest lecture Combinatorial Optimi-zation with Local Search Strategies, which was held at the University of Ioannina in Greece in June 1999.
An empirical analysis of various waves of the ALLBUS social survey shows that union density fell substantially in western Germany from 1980 to 2004 and in eastern Germany from 1992 to 2004. Such a negative trend can be observed for men and women and for different groups of the workforce. Regression estimates indicate that the probability of union membership is related to a number of personal and occupational variables such as age, public sector employment and being a blue collar worker (significant in western Germany only). A decomposition analysis shows that differences in union density over time and between eastern and western Germany to a large degree cannot be explained by differences in the characteristics of employees. Contrary to wide-spread perceptions, changes in the composition of the workforce seem to have played a minor role in the fall in union density in western and eastern Germany.
While it is a stylized fact that exporting firms pay higher wages than nonexporting firms, the direction of the link between exporting and wages is less clear. Using a rich set of German linked employer-employee panel data we follow over time plants that start to export. We show that the exporter wage premium does already exist in the years before firms start to export, and that it does not increase in the following years. Higher wages in exporting firms are thus due to self-selection of more productive, better paying firms into export markets; they are not caused by export activities.
In the face of uncertainty, ecosystems can provide natural insurance to risk averse users of ecosystem services. We employ a conceptual ecological-economic model to analyze the allocation of (endogenous) risk and ecosystem quality by risk averse ecosystem managers who have access to financial insurance, and study the implications for individually and socially optimal ecosystem management, and policy design. We show that while an improved access to financial insurance leads to lower ecosystem quality, the effect on the free-rider problem and on welfare is determined by ecosystem properties. We derive conditions on ecosystem functioning under which, if financial insurance becomes more accessible, (i) the extent of optimal regulation increases or decreases; and (ii) welfare, in the absence of environmental regulation, increases or decreases.
This paper analyzes, within a regional growth model, the impact of productive governmental policy and integration on the spatial distribution of economic activity. Integration is understood as enhancing territorial cooperation between the regions, and it describes the extent to which one region may benefit from the other region’s public input, e.g. the extent to which regional road networks are connected. Both integration and the characteristics of the public input crucially affect whether agglomeration arises and if so to which extent economic activity is concentrated: As a consequence of enhanced integration, agglomeration is less likely to arise and concentration will be lower. Relative congestion reinforces agglomeration, thereby increasing equilibrium concentration. Due to the congestion externalities, the market outcome ends up in suboptimally high concentration.
This paper analyzes the growth impact of fiscal and institutional governmental policies in a regional context. The government provides a productive input that is complementary to private capital. Institutional policies include the decision about the type of public input as well as on the size of the region as determined by the number of firms. Fiscal policies decide on the extent of the public input. Private capital accumulation incurs adjustment costs that depend upon the ratio between private and public investment. After deriving the decentralized equilibrium, fiscal and institutional policies as well as their interdependencies and welfare implications are discussed. Due to the feedback effects both policies may not be determined independently. It is also shown that depending on the region’s size different types of the public input maximize growth.
Converging institutions. Shaping the relationships between nanotechnologies, economy and society
(2006)
This paper develops the concept of converging institutions and applies it to nanotechnologies. Starting point are economic and sociological perspectives. We focus on the entire innovation process of nanotechnologies beginning with research and development over di_usion via downstream sectors until implementation in final goods. The concept is applied to the nano–cluster in the metropolitan region of Grenoble and a possible converging institution is identified.
Entrepreneurs and Freelancers: Are They Time and Income Multidimensional Poor? - The German Case
(2016)
Entrepreneurs and freelancers, the self-employed, commonly are characterized as not only to be relatively rich in income but also as to be rich in time because of their time-sovereignty in principle. Our introducing study scrutinises these results and notions about the well-being situation of self-employed persons not only by asking about traditional single income poverty but also by considering time poverty within the framework of a new interdependent multidimensional (IMD) poverty concept. The German Socio-economic panel with satisfaction data serves as the data base for the population wide evaluation of the substitution/compensation between genuine, personal leisure time and income. The available detailed Time Use Surveys of 1991/92 and 2001/2 of the Federal Statistics Office provide the data to quantify the multidimensional poverty in all the IMD poverty regimes. Important result: self-employed with regard to single income poverty, single time poverty and interdependent multidimensional time and income poverty in both years are much more affected by time and income poverty than all other active persons defining the working poor. A significant proportion of non-income-poor but time poor of the active population are not able to compensate their time deficit even by an above poverty income. These people are neglected so far within the poverty and well-being discussion, the discussion about the ´working poor´ and in the discussion about time squeeze and time pressure in general and in particular for the self-employed as entrepreneurs and freelancers.
Neither market income nor consumption expenditure provides an adequate picture of individual standard of living. It is time which enables and restricts individual activities and is a further brick to a more comprehensive picture of individual wellbeing. In our study we focus on a prominent part of time use in non-market services: it is parental child care which contributes not only to individual but also to societal well-being. Within a novel approach we ask for multidimensional polarization effects of parental child care where compensation/ substitution of time for parental child care versus income is interdependently evaluated by panel estimates of societys subjective well-being. The new interdependent 2DGAP measure thereby provides multidimensional polarization intensity information for the poor and the rich and disentangles the single time and income contribution to subjective well-being ensuring at the same time the interdependence of the polarization dimensions. Socio-economic influences on the polarization pole risk and intensity will be quantified by two stage Heckman estimates. The analyses are based on the German Socio-Economic Panel with 21 waves and robust fixed effects estimates of subjective well-being as well as the German Time Use Surveys 1991/92 and actual 2012/13 with detailed diary time use data. The empirical results discover the interdependent relations between parental child care and income under a common evaluation frame and contribute to the question of dimension specific targeted policies in a multidimensional polarization approach. Prominent result: compensation between parental child care time and income proved to be significant, but there are multidimensional regions with no compensation, where parental child care time deficit is not compensated by income. Interdependent multidimensional polarization by headcount and intensity increased significantly over the twenty years under investigation with remarkable risk and intensity differences between the polarization poles with different disentangled parental child care time and income contributions to subjective well-being.
Abstract As simple as it is, results describing the world are heavily dependent on the quality of the underlying data. One of the very crucial variables in microanalytical analyses of well-being and human resources is income. The more, when the situation of the self-employed is regarded. This paper focus on the distribution of income based on very sound data: the German Income Tax Statistic (Einkommensteuerstatistik) 1992. New is the actual possibility to use for the first time such a sound microdatabase to analyze the self-employed in particular: a 100.000 microdata sample of the population wide German Income Tax Statistic. New is the comparison between income from dependent and self-employed work with emphasis on the entrepreneurs and professions, and new is the indepth decomposition inequality analysis of the aggregated groups and of the single professions based on an inequality generalized entropy decomposition approach. One overall striking result is: the occupational status as an employee, entrepreneur or as a profession with its connected low between inequality share is by far not the overall driving factor to ‘explain’ the overall income distribution and inequality picture of the re-unified Germany; it is the within group inequality which counts in particular.
Quality of life and satisfaction with life are of particular importance for individuals as well as for society concerning the “demographic change” with now longer retirement periods. This study will contribute to the life satisfaction discussion and quantifies life satisfaction and pattern of explanation before and after such a prominent life cycle event, the entrance into retirement. In particular, with the individual longitudinal data and 33 waves of the Socio-Economic Panel (SOEP) and the appropriate microeconometric causal fixed effects robust panel methods we ask and quantify if actual life satisfaction indeed is decreasing before re-tirement, is increasing at the entrance into retirement, and is decreasing then after certain periods back to a foregoing level. Thus, we ask if such an anticipation and adaptation pattern– as known from other promi-nent events – is also to discover for life satisfaction before and after retirement in Germany. Main result: Individual and family situation lift life satisfaction after retirement for many years, the (former) occupational situation, however, absorbs this effect both for pensioners and civil service pensioners. It remains only one period of improvement with close anticipation and adaptation at entering retirement but no furthermore significant change compared to pre-retirement life satisfaction. This holds for pensioners (German pension insurance, GRV) but there is no significant effect at all for civil service pensioners.
This paper discusses a model of vertical and horizontal product differentiation within the Dixit-Stiglitz framework of monopolistic competition. Firms compete not only in prices and horizontal attributes of their products, but also in the quality that can be controlled by R&D activities. Based upon the results of a general equilibrium model, intra-sectoral trade and the welfare implications of public intervention in terms of research promotion are considered. The analysis involves a numerical application to ten basic European industries.
This paper discusses the interdependencies that exist between vertically-linked industries in the (Spence-)Dixit-Stiglitz model of monopolistic competition. The main objective is to develop a concept for quantifying the magnitude of sectoral coherence in models of the New Economic Geography. It is motivated by the suggestion, by Venables (1996), that 'strategic industries' be identi®ed in terms of their agglomeration potential. Using a partial-analytic approach, we focus on inter-industrial relations in a closed economy to draw conclusions regarding international trade. We ascertain that two factors have an impact upon the strength of industrial linkages: 1) the monopolistic scope of intermediate suppliers, in terms of (technical) substitution elasticity; and the share in downstream costs for intermediates. Within a simulation study, this paper applies this new theoretical concept to eight basic industries across ten European countries.
Information technology and administrative reform : will the time after E-Government be different?
(2003)
Dieser Aufsatz wurde anlässlich eines Symposiums in einer Festschrift zu Ehren von Prof. Dr. Heinrich Reichmann veröffentlicht. Es geht um seine Verdienste im Bereich Electronic Government (E-Government) und Verwaltungsreform.
The paper demonstrates how the E–stability principle introduced by Evans and Honkapohja can be applied to models with heterogeneous and private information in order to assess the stability of rational expectations equilibria under learning. The paper extends already known stability results for the Grossman and Stiglitz model to a more general case with many differentially informed agents and to the case where information is endogenously acquired by optimizing agents. In both cases it turns out that the rational expectations equilibrium of the model is inherently E-stable and thus locally stable under recursive least squares learning.
In the course of railway reforms at the end of the last century, European national governments, as well the EU Commission, decided to open markets and to separate railway networks from train operations. Vertically integrated railway companies argue that such a separation of infrastructure and operations would diminish the advantages of vertical integration and would therefore not be suitable to raise economic welfare. In this paper, we conduct a pan-European analysis to investigate the performance of European railways with a particular focus on economies of scope associated with vertical integration. We test the hypothesis that integrated railways realize economies of joint production and, thus, produce railway services on a higher level of e±ciency. To determine whether joint or separate production is more e±cient we apply an innovative Data Envelopment Analysis super-e±ciency bootstrapping model which relates the e±ciency for integrated production to a virtual reference set consisting of the separated production technology and which is applicable to other network industries as energy and telecommunication as well. Our ¯ndings are that for a majority of European Railway companies economies of scope exist.
The European Union’s Council Regulation on support for rural development by the European Agricultural Fund for Rural Development has introduced auctioning as a new instrument for granting agri-environmental payments and awarding conservation contracts for the recent multi-annual budgetary plan. This paper therefore deals with the conception and results of two case study auctions for conservation contracts. Results of two field experiments show much differentiated bid prices in the model-region and budgetary cost-effectiveness gains of up to 21% in the first auction and up to 36% in the repeated auction. Besides these promising results, some critical aspects as well as lessons to be learned will also be discussed in this paper to improve the design and performance of upcoming conservation auctions.
Abstract: A recent survey of 54 micro-econometric studies reveals that exporting firms are more productive than non-exporters. On the other hand, previous empirical studies show that exporting does not necessarily improve productivity. One possible reason for this result is that most previous studies are restricted to analysing the relationship between a firm’s export status and the growth of its labour productivity, using the firms’ export status as a binary treatment variable and comparing the performance of exporting and non-exporting firms. In this paper, we apply the newly developed generalised propensity score (GPS) methodology that allows for continuous treatment, that is, different levels of the firms’ export activities. Using the GPS method and a large panel data set for German manufacturing firms, we estimate the relationship between a firm’s export-sales ratio and its labour productivity growth rate. We find that there is a causal effect of firms’ export activities on labour productivity growth. However, exporting improves labour productivity growth only within a sub-interval of the range of firms’ export-sales ratios.
This paper examines whether the attacks on the World Trade Center and the Pentagon on September 11th, 2001 have influenced the job prospects of Arabs in the German labor market. Using a large, representative database of the German working population, the attacks are treated as a natural experiment that may have caused an exogenous shift in attitudes toward persons who are perceived to be Arabs. Evidence from regression-adjusted difference-in-differences-estimates indicates that 9/11 did not cause a severe decline in job prospects. This result is robust over a wide range of control groups and several definitions of the sample and the observation period. Several explanations for this result, which is in line with prior evidence from Sweden, are offered.
This paper examines whether the labor market prospects of Arab men in England are influenced by recent Islamistic terrorist attacks and the war on Iraq. We use data from the British Labour Force Survey from Spring 2001 to Winter 2006 and treat the terrorist attacks on the USA on September 11th, 2001, the Madrid train bombings on March 11th, 2004 and the London bombings on July 7th, 2005, as well as the beginning of the war on Iraq on March 20th, 2003, as natural experiments possibly having led to a change in attitudes toward Arab or Muslim men. Using treatment group definitions based on ethnicity, country of birth, current nationality, and religion, evidence from regression-adjusted di_erence-in-di_erences-estimators indicates that the real wages, hours worked and employment probabilities of Arab men were unchanged by the attacks. This finding is in line with prior evidence from Europe.
This paper uses data from the German Socio-Economic Panel for the years 2000 to 2005 to study the earnings differential between self- and dependent employed German men. Constructing a counterfactual earnings distribution for the self-employed in dependent employment and using quantile regression decompositions we find that the earnings differential over the distribution cannot be explained by differences in endowments. Furthermore, low-earning self-employed could earn more in dependent employment. Finally, the observed earnings advantage for the self-employed at the top of the earnings distribution is not associated with higher returns to observable variables.
Economic theory suggests both positive and negative relationships between intra-firm wage inequality and productivity. This paper contributes to the growing empirical literature on this subject. We combine German employer-employee-data for the years 1995-2005 with inequality measures using the whole wage distribution of a firm and rely on dynamic panel-data estimators to control for unobserved heterogeneity, simultaneity problems and possible state dependence. Our results indicate a relative minor influence of intra-firm wage inequality on firm productivity. If anything, they provide some support for a view suggesting that some inequality may be beneficial, while too much leads to a detrimental effect on productivity.
Strong sustainability, according to the common definition, requires that different natural and economic capital stocks have to be maintained as physical quantities separately. Yet, in a world of uncertainty this cannot be guaranteed. To therefore define strong sustainability under uncertainty in an operational manner, we propose to use the concept of viability. Viability means that the different components and functions of a dynamic, stochastic system at any time remain in a domain where the future existence of these components and functions is guaranteed with sufficiently high probability. We develop a unifying and general ecological-economic concept of viability that encompasses the traditional ecological and economic notions of viability as special cases. It provides an operational criterion of strong sustainability under conditions of uncertainty. We illustrate this concept and demonstrate its usefulness by applying it to livestock grazing management in semi-arid rangelands.
Managing increasing environmental risks through agro-biodiversity and agri-environmental policies
(2008)
Agro-biodiversity can provide natural insurance to risk-averse farmers by reducing the variance of crop yield, and to society at large by reducing the uncertainty in the provision of public-good ecosystem services such as e.g. CO2 storage. We analyze the choice of agro-biodiversity by risk-averse farmers who have access to financial insurance, and study the implications for agri-environmental policy design when on-farm agro-biodiversity generates a positive risk externality. While increasing environmental risk leads private farmers to increase their level of on-farm agro-biodiversity, the level of agro-biodiversity in the laissez-faire equilibrium remains inefficiently low. We show how either one of two agri-environmental policy instruments can cure this risk-related market failure: an ex-ante Pigouvian subsidy on on-farm agro-biodiversity and an ex-post compensation payment for the actual provision of public environmental benefits. In the absence of regulation, welfare may increase rather than decrease with increasing environmental risk, if the agroecosystems is characterized by a high natural insurance function, low costs and large external benefits of agro-biodiversity.
Abstract. The ecological literature suggests that biodiversity reduces the variance of ecosystem services. Thus, conservative biodiversity management has an insurance value to risk-averse users of ecosystem services. We analyze a conceptual ecological-economic model in which such management measures generate a private benefit and, via ecosystem processes at higher hierarchical levels, a positive externality on other ecosystem users. We find that ecosystem management and environmental policy depend on the extent of uncertainty and risk-aversion as follows: (i) Individual effort to improve ecosystem quality unambiguously increases. The free-rider problem may decrease or increase, depending on the characteristics of the ecosystem and its management; in particular, (ii) the size of the externality may decrease or increase, depending on how individual and aggregate management effort influence biodiversity; and (iii) the welfare loss due to free-riding may decrease or increase, depending on how biodiversity influences ecosystem service provision.
Agro-biodiversity can provide natural insurance to risk averse farmers. We employ a conceptual ecological-economic model to analyze the choice of agrobiodiversity by risk averse farmers who have access to financial insurance. We study the implications for individually and socially optimal agro-ecosystem management and policy design when on-farm agro-biodiversity, through ecosystem processes at higher hierarchical levels, generates a positive externality on other farmers. We show that for the individual farmer natural insurance from agro-biodiversty and financial insurance are substitutes. While an improved access to financial insurance leads to lower agro-biodiversity, the e_ects on the market failure problem (due to the external benefits of on-farm agro-biodiversity) and on welfare are determined by properties of the agro-ecosystem and agro-biodiversity’s external benefits. We derive a specific condition on agro-ecosystem functioning under which, if financial insurance becomes more accessible, welfare in the absence of regulation increases or decreases.
We analyze the optimal dynamic scale and structure of a two-sectoreconomy, where each sector produces one consumption good and one specific pollutant. Both pollutants accumulate at di_erent rates to stocks which damage the natural environment. This acts as a dynamic driving force for the economy. Our analysis shows that along the optimal time-path (i) the overall scale of economic activity may be less than maximal; (ii) the time scale of economic dynamics (change of scale and structure) is mainly determined by the lifetime of pollutants, their harmfulness and the discount rate; and (iii) the optimal control of economic scale and structure may be non-monotonic. These results raise important questions about the optimal design of environmental policies.
We develop a comprehensive multi-level approach to ecological economics (CML-approach) which integrates philosophical considerations on the foundations of ecological economics with an adequate operationalization. We argue that the subject matter and aims of ecological economics require a specific combination of inter- and transdisciplinary research, and discuss the epistemological position on which this approach is based. In accordance with this understanding of inter- and transdisciplinarity and the underlying epistemological position, we develop an operationalization which comprises simultaneous analysis on three levels of abstraction: concepts, models and case studies. We explain these levels in detail, and, in particular, deduce our way of generic modeling in this context. Finally, we illustrate the CML-approach and demonstrate its fruitfulness by the example of the sustainable management of semi-arid rangelands.
This paper traces the profound decline in German unionism over the course of the last three decades. Today just one in five workers is a union member, and it is now moot whether this degree of penetration is consistent with a corporatist model built on encompassing unions. The decline in union membership and density is attributable to external forces that have confronted unions in many countries (such as globalization and compositional changes in the workforce) and to some specifically German considerations (such as the transition process in postcommunist Eastern Germany) and sustained intervals of classic insider behavior on the part of German unions. The ‘correctives’ have included mergers between unions, decentralization, and wages that are more responsive to unemployment. At issue is the success of these innovations. For instance, the trend toward decentralization in collective bargaining hinges in part on the health of that other pillar of the dual system of industrial relations, the works council. But works council coverage has also declined, leading some observers to equate decentralization with deregulation. While this conclusion is likely too radical, German unions are at the cross roads. It is argued here that if they fail to define what they stand for, are unable to increase their presence at the workplace, and continue to lack convincing strategies to deal with contemporary economic and political trends working against them, then their decline may become a rout.
We use comparable micro level panel data for 14 countries and a set of identically specified empirical models to investigate the relationship between exports and productivity. Our overall results are in line with the big picture that is by now familiar from the literature: Exporters are more productive than non-exporters when observed and unobserved heterogeneity are controlled for, and these exporter productivity premia tend to increase with the share of exports in total sales; there is strong evidence in favour of self-selection of more productive firms into export markets, but nearly no evidence in favour of the learning-by-exporting hypothesis. We document that the exporter premia differ considerably across countries in identically specified empirical models. In a meta-analysis of our results we find that countries that are more open and have more effective government report higher productivity premia. However, the level of development per se does not appear to be an explanation for the observed cross-country differences.