Publications

The textbook search and matching model suffers from too little amplification and weak internal propagation. We argue that the double failure is due to two negative feedback channels. Intuitively, a decline (rise) in unemployment (vacancies) rises both the wage rate, the “wage channel,” and the effective cost to fill a vacancy, the “hiring cost channel.” Therefore, we introduce hiring costs and strategic wage bargaining. The interaction between these two modifications limits the impact of both channels effectively and persistently. Thus, the modified model is able to closely match the (inversely) u-shaped impulse responses of vacancies and unemployment.

We present a novel experimental design to measure honesty and lying. Participants receive a die which they roll privately. Since their payoff depends on the reported roll of the die, the subjects have an incentive to be dishonest and report higher numbers to get a higher payoff. This design has three advantages. First, cheating cannot be detected on the individual level, which reduces potential demand effects. Second, the method is very easy to implement. Third, the underlying true distribution of the outcome under full honesty is known, and hence it is possible to test different theoretical predictions. We find that about 20% of inexperienced subjects lie to the fullest extent possible while 39% of subjects are fully honest. In addition, a high share of subjects consists of partial liars; these subjects lie, but do not report the payoff-maximizing draw. We discuss different motives that explain the observed behavioral pattern.

The use of a multidimensional approach to deprivation has known an increasing interest in the literature. This paper builds on this literature by proposing a deprivation index that weighs different dimensions according to their perceived importance by members of alternative reference groups. We first characterize a deprivation index following this line of thought. We then apply this method to European data and show that preferences over dimensions are differentiated by reference groups. This differentiation affects the value of deprivation for each country, group and the ranking of each.

We study infinitely repeated two-player games with perfect monitoring and assume that each period consists of two stages: one in which the players simultaneously choose an action and one in which they can transfer money to each other. In the first part of the paper, we derive simple conditions that allow a constructive characterization of all Pareto-optimal subgame perfect payoffs for all discount factors. In the second part, we examine different concepts of renegotiation-proofness and extend the characterization to renegotiation-proof payoffs.

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This research studied the concept of enacted peer support during adolescence by means of the Harry Potter Series. A network approach was used. Results indicated the importance of reciprocity and transitivity for enacted peer support during adolescence. Contrary to our expectations, gender, age and personality traits did not affect enacted peer support. No homophily effects based on gender and age were detected. However, students were found to be more supportive of students with similar personality traits. We hope this study adds to the current knowledge on peer support in adolescence and promotes the use of social theories and methods in literacy research.

We examine the impact of culture on the work behavior of second-generation immigrant women in Canada. We contribute to the current literature by analyzing the role of intermarriage in intergenerational transmission of culture and its subsequent effect on labor market outcomes. Using relative female labor force participation and total fertility rates in the country of ancestry as cultural proxies, we find that culture matters for the female labor supply. Cultural proxies are significant in explaining number of hours worked by second-generation women with immigrant parents. Our results provide evidence that the impact of cultural proxies is significantly larger for women with immigrant parents who share same ethnic background than for those with intermarried parents. The fact that the effect of culture is weaker for women who were raised in intermarried families stresses the importance of intermarriage in assimilation process. Our findings imply that government policies targeting labor supply of women may have differential effect on labor market behavior of immigrant women of different ancestries.

We analyze an exchange economy of unsecured credit where borrowers have the option to declare bankruptcy in which case they are temporarily excluded from financial markets. Endogenous credit limits are imposed that are just tight enough to prevent default. Economies with temporary exclusion differ from their permanent exclusion counterparts in two important properties. If households are extremely patient, then the first-best allocation is an equilibrium in the latter economies but not necessarily in the former. In addition, temporary exclusion permits multiple stationary equilibria, with both complete and with incomplete consumption smoothing.

We experimentally show that current models of reciprocity are incomplete in a systematic way using a new variant of the ultimatum game that provides second-movers with a marginal-cost-free punishment option. For a substantial proportion of the population, the degree of first-mover unkindness determines the severity of punishment actions even when marginal costs are absent. The proportion of these participants strongly depends on a treatment variation: higher fixed costs of punishment more frequently lead to extreme responses. The fractions of purely selfish and inequity-averse participants are small and stable. Among the variety of reciprocity models, only one accommodates (rather than predicts) parts of our findings. We discuss ways of incorporating our findings into the existing models.

This paper investigates empirically the influence of government ideology on social policy using German data. Examining the funding and the benefits of social security and public healthcare policy, my results suggest that policies implemented by governments dominated by left- and rightwing parties were similar over the 1951–2007 period. Leftwing governments, however, spent more in the 1970s and rightwing governments did so after German Reunification in 1990. Since policy convergence encourages new parties to enter the political arena, and party platforms on social policy matters are likely to undergo further changes in light of demographic change, the observed pattern may thus be a transitory phenomenon.

How do maternal work conditions, such as psychological stress and physical hazards, affect children's development? Combining data from the Child Development Supplement of the Panel Study of Income Dynamics and the Occupational Information Network allows us to shed some light on this question. We employ various techniques including OLS with extensive controls, a value added approach and individual fixed effects in order to address potential endogeneity problems. Our results reveal that mothers’ exposure to work-related hazards negatively affects children's cognitive development and to work-related stress negatively affects children's behavioral development. While maternal time investments play a small but significant role in mediating these negative associations, paternal time investments neither reinforce nor compensate these associations.

We present a new experimental paradigm where choice-induced preference change is measured for alternatives which are never compared directly, but rather confronted with other alternatives in a way which keeps choices predictable without exogenously manipulating them. This implicit-choice design improves on the free-choice paradigm, avoiding the recently criticized selection bias. Rating and ranking spreads in two experiments show that preference-based choices feed back into and alter preferences even if choices are not directly among similarly evaluated alternatives. In agreement with recent brain-imaging evidence, response time measurements for direct choice pairs in our experiments indicate that reappraisal processes are already triggered during decision making, with larger post-choice spreads (sharper attitude change) being associated to quicker decisions.