Rainer Winkelmann, Work and health in Switzerland: Immigrants and Natives, In: Working paper series / Socioeconomic Institute, No. No. 203, 2002. (Working Paper)
This paper is concerned with a comparison of immigrants and Swiss citizens with respect to level of education, labor market outcomes and healthcare utilization. The evidence is based on data for 1999 from the first wave of the Swiss Household Panel. In order to control for confounding influences, linear and non-linear (negative binomial) regressio nmodels are used. The main result is that differences in economic position between immigrants and Swiss nationals tend to be smaller than those found in other countries. The observed differences (higher employment levels of immigrant women, lower earnings of immigrant men, higher healthcare utilization rates of all immigrants) tend to be no larger than those observed between Swiss citizens living in different parts of the country. |
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Thorsten Hens, Klaus Reiner Schenk-Hoppé, Bodo Vogt, On the Micro-foundations of Money: The Capitol Hill Baby-Sitting Co-op, In: Working paper series / Institute for Empirical Research in Economics, No. No. 108, 2002. (Working Paper)
We suggest a new micro-foundation of money in which markets are well-organized but consumers' preferences are stochastic. In this model, we solve for stationary equilibria and show that there is an optimum quantity of money. The rational solution of our model is compared with actual behavior in a laboratory experiment. It turns out that the experiment gives support to our theoretical results. |
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Reto Föllmi, Josef Zweimüller, Structural Change and the Kaldor Facts of Economic Growth, In: Working paper series / Institute for Empirical Research in Economics, No. No. 111, 2002. (Working Paper)
"We present a model in which two of the most important features of the long-run growth process are reconciled: the massive changes in the structure of production and employment; and the Kaldor facts of economic growth. We assume that households expand their consumption along a hierarchy of needs and firms introduce continuously new products. In equilibrium industries with an expanding and those with a declining employment share co-exist, and each such industry goes (or has already gone) through a cycle of take-off, maturity, and stagnation. Nonetheless macroeconomic aggregates grow pari passu at a constant rate." |
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Rafael Lalive, Jan C van Ours, Josef Zweimüller, The Effect of Benefit Sanctions on the Duration of Unemployment, In: Working paper series / Institute for Empirical Research in Economics, No. No. 110, 2002. (Working Paper)
This paper investigates the effectiveness of benefit sanctions in reducing unemployment duration. Data from the Swiss labor market allow making a distinction between the effect of a warning that a person is not complying with eligibility requirements and the effect of the actual enforcement of a benefit sanction. We find that both warning and enforcement have a positive effect on the exit rate out of unemployment. Moreover, the stricter the sanction policy the shorter is the duration of unemployment of the non-sanctioned. This can be taken as evidence of a strong ex-ante effect of a strict sanction policy. |
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Rainer Winkelmann, Why do firms recruit internationally? Result from the IZA International Employer Survey 2000, In: Working paper series / Socioeconomic Institute, No. No. 202, 2002. (Working Paper)
The paper studies the demand for foreign university graduates at the firm level. Using a unique dataset on recruitment policies of firms in four European countries, the determinants of demand for internationally mobile highly skilled employees are established. I investigate the number, origin, skills, and functions of foreign graduates, as well as the experiences of firms recruiting internationally. A number of hypotheses for the international demand are formulated and assessed. Foreign highly-skilled employees are recruited mainly because of their special skills that are not available domestically, be it international competence or technical know-how. |
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Martin Brown, Armin Falk, Ernst Fehr, Contractual Incompleteness and the Nature of Market Interactions, In: Working paper series / Institute for Empirical Research in Economics, No. No. 38, 2002. (Working Paper)
"We provide experimental evidence that contractual incompleteness, i.e., the absence of third party enforcement of workers effort or the quality of the good traded, causes a fundamental change in the nature of market interactions. If contracts are complete the vast majority of trades are initiated by public offers. Most trades take place in one-shot transactions and the contracting parties are indifferent with regard to the identity of their trading partner. Moreover, the short side of the market attempts to appropriate the whole gains from trade, which causes much disagreement about contract terms.nIf contracts are incomplete the vast majority of trades are initiated by private offers. The contracting parties form long-term relations and the provision of low effort or bad quality is penalized by the termination of the relationship. The threat of terminating the relation turns out to be an extremely powerful discipline device. " |
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Andreas Polk, Multilateral Agreement On Investments (MAI) - A Critical Assessment From an Industrial Economics Point of View, In: Working paper series / Socioeconomic Institute, No. No. 201, 2002. (Working Paper)
Though the Multilateral Agreement on Investment (MAI) has failed, the original draft is likely to serve as a basis for future negotiations. This article gives a critical assessment of the draft from an industrial economics point of view. First, I summarize the contents of the agreement which is relevant for market structure and competition. Then I develop the industrial economics approach, which serves as a basis for criticism. I conclude that a multilateral agreement on investment should (i) recognize competition concerns, (ii) give a suitable de.nition of investment, and (iii) should help to establish competition authorities in less developed countries. |
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Bruno Frey, Stephan Meier, Pro-Social Behavior, Reciprocity or Both?, In: Working paper series / Institute for Empirical Research in Economics, No. No. 107, 2002. (Working Paper)
Empirical evidence is provided for the importance of non-reciprocal pro-social behavior of individuals in an anonymous, n-person pure public good setting. A unique panel data set of 136,000 observations is matched with an extensive survey.nEven under anonymous conditions, a large number of individuals are prepared to donate a not insignificant sum of money. Cooperation conditional on giving by specific other personsn(reciprocity) is present but the causal relationship is ambiguous. It is crucially important, whether, and in what way, one is asked to donate. Identification with the organization is also important. |
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Rafael Lalive, Jan C van Ours, Josef Zweimüller, The Impact of Active Labor Market Programs on the Duration of Unemployment, In: Working paper series / Institute for Empirical Research in Economics, No. No. 41, 2002. (Working Paper)
In 1997, the Swiss government introduced active labor market programs on a large scale to improve the job chances of unemployed workers. This paper evaluates the effect of these programs on the duration of unemployment. Our evaluation methodology allows for selectivity affecting the inflow into programs. We find that in most cases the programs do not reduce the duration of unemployment. The exception is the program of temporary wage subsidies which reduces unemployment, but only for foreign workers. From a cost-benefit point of view, temporary wage subsidies seem to be the only program worthwhile pursuing. |
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Takeshi Momi, Excess Demand Functions with Incomplete Markets: A Global Result, In: Working paper series / Institute for Empirical Research in Economics, No. No. 96, 2002. (Working Paper)
"The purpose of this paper is to give a global characterization of excess demand functions in a two period exchange economy with in-completenreal asset markets. We show that continuity, homogeneity and Walras law characterize the aggregate excess demand functions on any compact price set which maintains the dimension of the budget set." |
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Ernst Fehr, Urs Fischbacher, Why Social Preferences Matter - The Impact of Non-Selfish Motives on Competition, Cooperation and Incentives, In: Working paper series / Institute for Empirical Research in Economics, No. No. 84, 2002. (Working Paper)
A substantial number of people exhibit social preferences, which means they are not solely motivated by material self-interest but also care positively or negatively for the material payoffs of relevant reference agents. We show empirically that economists fail to understand fundamental economic questions when they disregard social preferences, in particular, that without taking social preferences into account, it is not possible to understand adequately (i) the effects of competition on market outcomes, (ii) laws governing cooperation and collective action, (iii) effects and the determinants of material incentives, (iv) which contracts and property rights arrangements are optimal, and (v) important forces shaping social norms and market failures. |
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Rafael Lalive, Josef Zweimüller, Benefit Entitlement and the Labor Market: Evidence from a Large-Scale Policy Change, In: Working paper series / Institute for Empirical Research in Economics, No. No. 105, 2002. (Working Paper)
This paper analyzes the impact of the Austrian Regional Extended Benefit Program (REBP) on the labor market outcomes for elderly workers in Austria. The REBP extended entitlement to regular unemployment benefits from 30 weeks to a maximum of 209 weeks for elderly individuals in certain regions. This policy change created a large-scale quasi-experimental situation from which a lot can be learned about the impact of unemployment insurance rules on the dynamics of employment, unemployment, and wages. We find that the REBP led to a tremendous increase in unemployment which was due to both an increase in the inflow to and thenoutflow from unemployment. The REBP also induced a strong increase in early retirement and in many cases, in particular for steel workers, entering unemployment meant withdrawal from the labor force. Finally, we show that there were also non-negligible eects of extended benefits on the level and the distribution of wages. |
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Urs Fischbacher, Christian Thöni, Excess Entry in an Experimental Winner-Take-All Market, In: Working paper series / Institute for Empirical Research in Economics, No. No. 86, 2002. (Working Paper)
"""Winner-Take-All""-markets, i.e. markets in which the relative and not the absolute performance is decisive, have gained in importance. Such markets have a tendency to provoke inefficiently many entries. We investigate the functioning of such markets with the help of experiments and show that there are even more inefficient entries than predicted by the Nash equilibrium. Moreover, this effect increases with group size. Quantal response equilibrium predicts the increase in group size but fails to predict the excess entry in the smaller group. We show that the excess entry is not caused by coordination failures. Furthermore, individual entry behavior is not significantly linked to risk preferences. We discuss several concepts that might explain the observed excess entry." |
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Daniel Waldenström, Bruno Frey, How Government Bond Prices Reflect Wartime Events. The Case of the Stockholm Market, In: Working paper series / Institute for Empirical Research in Economics, No. No. 102, 2002. (Working Paper)
How are political events reflected in financial asset prices? Break points in sovereign debt prices are analyzed for Denmark, Norway, Finland, Sweden, Germany and Belgium during 1930-1948, using unique data from the Stockholm Stock Exchange. Unlike in countries in-volved in WWII, this market was unregulated. The outbreak of World War II heavily depressed prices of government bonds. Countries which were occupied (Belgium, Denmark and Norway) or under attack (Finland) saw their debt depreciate substantially. The battle of Stalingrad turns out indeed to be a turning-point of the war. This approach represents a complementary quantitative method to analyze the impact of political events. |
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Colin F Camerer, Ernst Fehr, Measuring social norms and preferences using experimental games: A guide for social scientists, In: Working paper series / Institute for Empirical Research in Economics, No. No. 97, 2002. (Working Paper)
Experimental games turned out to be remarkably productive tools for examining the nature of social preferences and social norms. This paper describes the methods and tools of experimental game theory and provides a selection of games that have been useful. We also discuss the role of evolutionary explanations of and social preference theory in organizing the data in a coherent way. |
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Aleksander Berentsen, Guillaume Rocheteau, Money and Information, In: Working paper series / Institute for Empirical Research in Economics, No. No. 99, 2002. (Working Paper)
This paper investigates the role of fiat money in decentralized markets, where producers have private information about the quality of the goods they supply. Money is divisible, terms of trade are determined endogenously, and agents can finance their consumption with money or with real production. When the fraction of high quality producers in the economy is given, money promotes the production of high-quality goods, which improves the quality mix and welfare unambiguously. When this fraction is endogenous, however, we find that money can be valued even though it decreases welfare relative to the barter equilibrium. The origin of this inefficiencynis that money provides consumption insurance to low-quality producers, which can result in a higher fraction of low-quality producers in the monetary equilibrium. Finally, we find that most often agents acquire more information in the monetary equilibrium. Consequently, money is welfare-enhancing because it promotes usefulnproduction and exchange, but not because it saves information costs. |
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Aleksander Berentsen, Guillaume Rocheteau, Money and the Gains from Trade, In: Working paper series / Institute for Empirical Research in Economics, No. No. 100, 2002. (Working Paper)
"This paper studies the role of money in environments where in each meeting there isna double coincidence of real wants. Traders who meet at random finance their purchases through current production, the sale of divisible money or both. It is shown that in the absence of valued money if traders have asymmetric tastes for each others good, they produce and exchange socially ine .cient quantities. With valued money, however, traders exchange efficient quantities if the asymmetry of tastes is not too large. It is shown that the gains from trade in the monetary economy are strictly greater than those in the corresponding barter economy, that the Friedman rule holds, and that the allocation of resources in the monetary economy converges to the allocation in the barter economy as the growth rate of the money supply is increased." |
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Simon Gächter, Arno Riedl, Moral Property Rights in Bargaining, In: Working paper series / Institute for Empirical Research in Economics, No. No. 113, 2002. (Working Paper)
"In many business transactions, in labor-management relations, in international conflicts, and welfare state reforms bargainers seem to hold strong entitlements that shape negotiations. Despite their importance, the role of entitlements in negotiations has not received much attention. We fill the gap by designing an experiment that allows us to measure the entitlements and to track them through the whole negotiation process. We find strong entitlement effects that shape opening offers, bargaining duration, concessions and reached (dis-)agreements. We argue that entitlements constitute a moral property right that is influential independent of negotiators legal property rights." |
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Aleksander Berentsen, Guillaume Rocheteau, On the Efficiency of Monetary Exchange: How Divisibility of Money Matters, In: Working paper series / Institute for Empirical Research in Economics, No. No. 101, 2002. (Working Paper)
We use alternative assumptions about the divisibility of goods and money and thenability of agents to use lotteries on money to investigate to what extent the indivisibility of money is the cause for the typically inefficient production and consumption decisions in search-theoretic models of money. Our framework potentially generates three types of inefficiencies: the no-trade inefficiency, where no trade takes place even though it would be socially efficient to trade; and the too-much-trade and too-little-trade inefficiencies, where the quantities produced and exchanged are either larger or smaller than what the solution to a social planner's problem would mandate. It is shown that while the no-trade and the too-much-trade inefficiencies are caused by the indivisibility of money, the too-little-trade inefficiency remains even when money is divisible unless it is sufficiently valued. |
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Bruno Frey, Stephan Meier, Selfish and Indoctrinated Economists?, In: Working paper series / Institute for Empirical Research in Economics, No. No. 103, 2002. (Working Paper)
Many people believe that economists in general are more selfish than other people and that this greater selfishness is due to economics education. This paper offers empirical evidence against this widely held belief. Using a unique data set on giving behaviour in connection with two social funds at the University of Zurich, it is shown that economics education does not make people act more selfishly. Rather, this natural experiment suggests that the particular behaviour of economists can be explained by a selection effect. |
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