Publications

Non-monotone contracts, which can well represent the theoretically optimal choice of a contracting problem, are often deemed as non-plausible labor contracts and attention is (therefore) confined to monotone if not linear contracts. In this paper we test the incentive effects of non-monotone contracts in a simple principal-agent setting. Principals select either a monotone or a non-monotone contract, both are incentive compatible, and agents then decide which effort level to choose. The results show that principals do select the non-monotone contract, agents virtually never reject the non-monotone contract and they expend that effort level which is desired by principals.

In the discussion about employment protection, little attention has been given to judicial mistakes. In most countries, only in the case of dismissals due to economic reasons, the employee is entitled to a severance payment. Given judicial mistakes when reviewing a dismissal, shirkers might falsely receive a severance payment while non-shirker might not. At fighting unemployment, increasing the level of severance payments can increase employment for small judicial mistakes and effectively dominate the pure firing costs which leave ambiguous effects on employment. For large judicial mistakes, the opposite can hold and severance payments can decrease employment.

This paper takes a closer look at the way unobserved characteristics of individuals confound wages and firm tenure. In turn of our structural analysis, which is built on estimating a reduced form for tenure and a structural wage equation, we disentangle returns to a latent type variable from estimates of general returns to tenure. The obtained results for Germany indicate that the type plays a crucial role in the remuneration of employees. As compared to types who stay, quitters earn less on average, but obtain steeper wage profiles in tenure. This nonseparability has previously remained unnoticed in the literature.

Im Zuge der Professionalisierung der Leitungsstrukturen erfolgt die Unterstellung der Universitätsverwaltung als Agenten der akademischen Universitätsleitung. Dies verändert die Möglichkeiten der Universität und des Ministeriums, in bilateralen Budgetverhandlungen Rentenanteile abschöpfen zu können. Einigungen mit verhandlungsstarken Universitäten betreffen nur noch einen Sockelbetrag. Darüber hinaus kann die wissenschaftliche Leistung abnehmen, während gleichzeitig unproduktive Aktivitäten unternommen werden. Im Ergebnis kann sich das Ministerium gezwungen fühlen, durch gesetzliche, die Autonomie der Universität weiter beschneidende Regelungen die Verhandlungsmacht der Universität zu beschränken.

In this paper, we study the effect of skill-biased technological change on unemployment when benefits are linked to the evolution of average income and when this is not the case. In the former case, an increase in the productivity of skilled workers and hence their wage leads to an increase in average income and hence in benefits. The increased fallback income, in turn, makes unskilled workers ask for higher wages. As higher wages are not justified by respective productivity increases, unemployment rises. More generally, we show that skill-biased technological change leads to increasing unemployment of the unskilled when benefits are endogenous.
The model provides a theoretical explanation for diverging developments in wage inequality and unemployment under different social benefits regimes: Analyzing the social legislation in 14 countries, we find that benefits are linked to the evolution of average income in Continental Europe but not in the U.S. and the UK. Given this institutional difference, our model predicts that skill-biased technological change leads to rising unemployment in Continental Europe and rising wage inequality in the U.S. and the UK.

We analyze the effects of instruction time and class size on student achievement in Germany. Using econometric evaluation techniques we are able to deal with unobserved heterogeneity in the student body. Specifically we apply first-difference methods and matching across subjects to control for overall student ability and specific skills. We find that an increase in class size reduces the performance of the students, while additional lessons improve the test score achievement. Both effects differ across federal states and individuals: Additional instruction time in states with central exit examinations enhances performance, while there is no effect in states without central exit examinations and more able students profit more from additional lessons as compared to their less able fellow students. We furthermore show that that reductions in class size accompanied by a decrease in instruction time can be a cost neutral instrument to raise student performance in states with central exit examinations.

The paper presents an index of globalization covering its three main dimensions: economic integration,
social integration, and political integration. Using panel data for 123 countries in 1970-2000 it is
analyzed empirically whether the overall index of globalization as well as sub-indexes constructed to
measure the single dimensions affect economic growth. As the results show, globalization indeed
promotes growth. The dimensions most robustly related with growth refer to actual economic
flows and restrictions in developed countries. Although less robustly, information flows also
promote growth whereas political integration has no effect.

Using panel data for 78 countries of origin we examine the impact of student flows to the United States on subsequent migration there over the period 1971-2001. What we find is that the stock of foreign students is an important predictor of subsequent migration. This holds true whether or not the lagged endogenous variable is included. The relationship is robust to the inclusion of time and country dummies, and remains when we account for outliers. The basic results also hold for a cross section of 36 countries of origin and 9 host countries. Our results have important policy implications which we discuss in the last section.