Contributions published at Department of Economics (Florian Scheuer)

This paper presents an experimental examination of the Falkinger (1996) mechanism for overcoming the free-rider problem. The basic idea of the mechanism is that deviations from the mean contribution to the public good are taxed and subsidized. The mechanism has attractive properties because (i) it induces higher contributions to the public good and can implement an efficient level of contributions as a Nash equilibrium, (ii) the government budget is always balanced irrespective of the level of individual contributions, (iii) it is simple and policy makers need only little information to implement the mechanism. To examine the empirical properties of the mechanism we conducted a large series of experiments. It turns out that the introduction of the mechanism generates immediate and large efficiency gains. This result is robust throughout many different experimental settings. Moreover, in the presence of the mechanism the Nash equilibrium is a rather good predictor of behavior.

Garnishment of wage as a way for creditors to enforce payment by unwilling or insolvent debtors, while very common in Germany and Switzerland, is not very successful. Based on a dynamic model of debtor behaviour, this paper explores two alternatives of reform. One is to reduce the rate of garnishment, which at present amounts to 100 percent of the wage income exceeding a defined subsistence level, thus probably destroying incentives to work. According to model simulations, reducing the rate of garnishment is likely to result in an increase of labour supply but a decrease of garnishment revenue per period. Second, the introduction of a debt release as it exists in the United States would have an ambiguous effect on labour supply. While providing debtors with a fresh start, it would result a partial loss for creditors. A Pareto improvement thus does not seem to be possible. When taxpayers as an involved third party are taken into account, however, a potential Pareto improvement appears attainable through debt release.

This paper examines two competing explanations for workers' absenteeism, the shirking hypothesis and the adjustment-to-equilibrium hypothesis. Data on German workers for 1985-88 from the German SocioEconomic Panel are used in order to estimate the determinants of workers' absenteeism. The results indicate that firm size matters after wage effects are controlled for. This evidence supports the shirking hypothesis.

Summary Recent debate on the reasons for the informal sector has led to renewed focus on how to operationalize the measurement of informal employment. This paper investigates congruence between three empirical measures of the rate of informality using Brazilian household survey data for the period 1992-2004. Sixty-three percent of the economically active are informal according to at least one definition, but only 40\% are informal according to all three. Regression analysis is used to shed further light on differences in these measures. Appropriate measurement is therefore of high significance to policy analysis and design of appropriate strategies to reduce informality.

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Recently, the 'new economic geography' literature has developed as a theory of the emergence of large agglomerations which relies on increasing returns to scale and transportation costs. This literature builds on diverse intellectual traditions. It combines the insights of traditional regional science with those of modern trade theory and thus attempts to provide an integrative approach to interregional and international trade. The paper surveys this literature and discusses its relation to earlier approaches to similar topics.

This paper analyses the effects of taxation and subsidies in an economy with private provision of a public good. It is shown that in a situation where all individuals contribute, taxation affects the equilibrium allocation if and only if at least one individual's voluntary contribution to the public good has an impact on the aggregate tax payments of the others. We then consider linear nonneutral tax-subsidy schemes and analyse efficiency and uniqueness of the resulting Nash equilibria. We show that an efficient Nash equilibrium, where all individuals contribute, will in general not be unique, and establish a non-uniformity property which a tax-subsidy scheme must fulfil in order to induce a unique interior equilibrium that is efficient. Throughout the paper it is assumed that individuals fully understand and take into account the government's budget constraint.

This paper examines costs in the Swiss nursing home industry, an issue of concern to Swiss policy makers because of the explosion of elderly care costs and the aging of the population. The paper considers estimation of a translog cost function employing panel data for a sample of 36 nonprofit nursing homes operating in Ticino, a canton of Switzerland, over the period 1993-1995. Using a set of dummy variables quality differences are considered. The results of this analysis indicate the existence of economies of scale for most output levels.

National policies towards the regulation of the telecommunications industry have undergone significant change in response to technological progress and increasing competition. This article discusses the consecutive revisions of the Swiss regulatory framework during the 1990's and presents lessons to be drawn from this process. After reviewing the Telecommunications Act (Fernmeldegesetz; FMG) 1992 and the reasons for its revision, this article presents the most important prescriptions of the FMG 98 concerning the licence regime, universal service, and interconnection. The implementation of the FMG 98 has led to a fundamental change in regulatory policy. However, transitional rules appear to promote excessively slow adjustments in the current industry configuration.

We consider a simple class of dynamic games. A continuum of players chooses between two actions (“locations”) in each period; per-period payoffs depend positively on the number of players choosing the same action. The resulting dynamics are investigated. If one location receives a favorable shock, the effects of the strength of externalities and the heterogeneity of the population on the extent of adjustment may be non-monotone and discontinuous, due to two competing effects. With stronger externalities (lower heterogeneity), less players move initially, but more players follow once the process has gained momentum.

This paper reports quantitative information on the effects of tariffs and quotas on prices of individual goods. The analyses uses the natural experiment provided by a comprehensive unilateral trade policy reform in New Zealand to examine the response of foreign exporters to an incident of liberalisation that is unique in the developed world. The price effects of tariffs and quotas are estimated using a multidestination 7-digit longitudinal product-level dataset on export values and quantities. The effects are found to be by no means equivalent: whereas tariffs display no significant effect, the impact that quantitative restrictions have on the terms-of-trade of the country that imposes them are unequivocally detrimental and quantitatively important.

In der Sozialversicherung gelten Risikoselektionen als unerwuenscht, weil sie die Gefahr mit sich bringen, dass der einheitliche Risikopool in der Sozialversicherung aufgespalten und die sozialpolitisch gewuenschten Umverteilungsstroeme zwischen den Versicherten reduziert werden. Der Beitrag zeigt am Beispiel der sozialen Krankenversicherung in der Schweiz und der Bundesrepublik Deutschland auf, dass die Selbstselektion von Versicherten in der Sozialversicherung produktiv, das heisst wohlfahrtssteigernd eingesetzt werden kann, ohne den ‚solidarischen‘ Charakter der Sozialversicherung in Frage zu stellen. Konkret wird vorgeschlagen, den Versicherten innerhalb eines durch einen Risikoausgleich gestuetzten Wettbewerbs zwischen den Krankenkassen eine groessere Wahlfreiheit ueber die Hoehe des Versicherungsschutzes einzuraeumen. Fuer Versicherte mit niedrigem Risiko oder hohem Einkommen kann es sinnvoll sein, ihren Versicherungsschutz innerhalb der Sozialversicherung zu reduzieren, obwohl sie dann aufgrund des konstanten Transfers an andere Versicherte der sozialen Krankenversicherung einen hoeheren Preis pro Einheit Sozialversicherungsschutz zu zahlen haben.

The macro evidence of increased adjustment pressure since the early 1970s suggests that job mobility should have increased. Hence, retrospective and spell data from the German Socio-Economic Panel are combined in order to test the hypothesis that job stability for German workers declined between 1974 and 1994. Using count data regression models in which we control for labour market experience, various demographic factors, and occupation, we find that job stability did not decrease, but if anything increased, between 1974 and 1994. Our finding suggests that labour market inflexibility is an important factor in explaining the European unemployment problem.

In this paper we have examined the scale and cost inefficiency of a sample of Swiss electricity distribution utilities. To do so, we have considered estimation of a stochastic frontier average cost model using the approach suggested by Schmidt and Sickles (1984) for panel data. A translog cost function was estimated using panel data for a sample of 30 municipal utilities over the period 1992-1996. The results indicate the existence of economies of output and customer density and economies of scale. Moreover, the findings on cost inefficiency show that a majority of the distribution utilities is not producing at the minimum level of the cost and that a possible application of the frontier methodology employed in this paper relates to the regulation and benchmarking of the delivery rates.

Attachment of wage as a way for creditors to enforce payment by unwilling or insolvent debtors is not very successful in several countries. Based on a dynamic model of debtor behaviour, this paper explores two alternatives of reform. One is to reduce the rate of attachment, which at present amounts to 100 percent of the wage income exceeding the subsistence level, thus probably destroying incentives to work. According to model simulations, reducing the attachment rate is likely to result in an increase of labour supply but a decrease of attachment revenue per period. Second, the introduction of a debt release would have an ambiguous effect on labour supply. While resulting in a partial loss for creditors, it would permit debtors to get out of debt. A Pareto improvement thus does not seem to be possible. When taking the taxpayers as an involved third party into account, however, a potential Pareto improvement appears attainable.

Die vorliegende Untersuchung wurde ermöglicht durch das vom Bundesamt für Energiewirtschaft finanzierte Projekt „Auswirkungen einer grenzkostenorientierten Tarifrevision auf die Elektrizitätsnachfrage“. Wir danken dem Bundesamt für Energiewirtschaft, dem Bundesamt für Statistik sowie den Elektrizitätswerken der Städte Zürich, Bern und Basel für die tatkräftige Unterstützung des Projekts.