Volkswirtschaft - Open Access LMU - Teil 01/03 Archiv
250 Episoden
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In this paper an alternative view of the relation between the wage level, wage dispersion, training incentives and employment is presented. We provide some theoretical arguments which cast doubt on the standard thesis that unemployment - especially in Germany - is mainly caused by labor market institutions and excessive wages. Rather there are several indications that a persistent lack of demand is responsible for the major part of the German unemployment problem.
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In transition and developing countries, we observe rather high levels of corruption even if they have democratic political systems. This is surprising from a political economy perspective, as the majority of people generally suffers from high corruption levels. Our model is based on the fact that corrupt officials have to pay an entry fee to get lucrative positions. In a probabilistic voting model, we show that a lack of financial institutions can lead to more corruption as more voters become part of the corrupt system. Well-functioning financial institutions, in turn, can increase the political support for anti-corruption measures.
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Lecture on the first SFB/TR 15 meeting, Gummersbach, July, 18 - 20, 2004Globalization has been identified by many experts as a new way firms organize their activities and as the emergence of talent as the new stakeholder in the firm. This paper examines the role of trade integration for the changing nature of the corporation. International trade leads to a ’war for talent’ which makes it more likely that an organizational equilibrium emerges in the integrated world economy in which control is delegated to lower levels of the firms’ hierarchy empowering human capital. Furthermore, trade integration is shown to lead to waves of outsourcing and to convergence in corporate cultures across countries.
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Lecture on the first SFB/TR 15 meeting, Gummersbach, July, 18 - 20, 2004We report on several experiments on the optimal allocation of ownership rights. The experiments confirm the property rights approach by showing that the ownership structure affects relationship-specific investments and that the subjects achieve the most efficient ownership allocation starting from different initial conditions. However, in contrast to the property rights approach, the most efficient ownership structure is joint ownership. These results are neither consistent with the self-interest model nor with models that assume that all people behave fairly, but they can be explained by the theory of inequity aversion that focuses on the interaction between selfish and fair players.
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The number of firm bankruptcies is surprisingly low in economies with poor institutions. We study a model of bank-firm relationship and show that the bank's decision to liquidate bad firms has two opposing effects. First, the bank gets a payoff if a firm is liquidated. Second, it loses the rent from incumbent customers due to its informational advantage. We show that institutions must improve significantly in order to yield a stable equilibrium in which the optimal number of firms is liquidated. However, in a particular range, improving institutions may even decrease the number of bad firms liquidated.
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Abstract: Business groups in emerging markets perform better than unaffiliated firms. We study how business groups can substitute some functions of missing institutions, for example, enforcing contracts. In a two period model, there is no contract enforcement in the first period. The firms within the business group are connected to each other by a vertical production structure, resulting in externalities due to double marginalization, and an internal capital market. Our model derives the sequencing of investments and the credit contract offered by the headquarters that solve the ex post moral hazard problem. Thus, the business group's organizational mode and the financial structure facilitate relational contracting.
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Government bonds are interest-bearing assets. Increasing public debt increases income, wealth, and consumption demand. The smaller government expenditure is, the larger consumption demand must be in equilibrium, and the larger must be public debt. Conversely, lower public debt implies higher government spending and taxation. Public debt plays, thus, an important role in establishing equilibrium. It distributes output between consumers and government. In case of insufficient demand, a larger public debt entails higher consumption and less public spending. If upper bounds on public debt are introduced (as in the Maastricht treaty), such constraints place lower bounds on taxation and public spending or may even rule out the existence of macroeconomic equilibrium altogether. Domar(1944) and Gehrels(1957) have discussed similar issues in an unemployment setting. In contrast, this note considers the full employment case and looks at adjustments in debt, taxes and government spending that preserve full employment. The explicit modelling of some adjustment processes that have not been considered in the earlier contributions leads to somewhat different and, in a sense, more "debt-friendly" results.
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This paper provides a unified analysis for the onset of the 1998 financial crisis and the strong economic recovery afterward in Russia and other former Soviet Union countries. Before the crisis a banking failure arose owing to the coexistence of a lemons credit market and high government borrowing. In a lemons credit market low credit risk firms switched from bank to nonbank finance, including trade credits and barter trade, generating an externality on banks’ interest rates. The collapse of the treasury bills market in the financial crisis triggered a change in banks’ lending behavior, providing initial conditions for banking development.
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This paper provides an economic explanation of the frequent rule changes in the Formula One (F1) motor racing series. In a two-stage model, the FIA (as the organizer of the F1) first decides whether to change the rules or not, and then the racing teams compete in a contest. It turns out that a rule change reduces the teams' performances, but also improves competitive balance between the teams. The rule change is implemented, if the FIA's revenue gain from the latter effect overcompensates the FIA's revenue loss from the former effect. We provide empirical evidence from F1 seasons in the period 1950-2003 which supports the main implications of the model.
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The proposed paper will discuss the controversy on Germany's economic recovery after the Depression and the role Nazi work creation programs had therein. Economic data suggests evidence of a cyclical turning point of the economic crisis in the summer of 1932 with some leading indicators reaching the turning point already in January 1932, which I propose to discuss. Data of the years 1933/34 support this argumentation. On this empirical basis the impact of Hitler's work creation programs have to be re-evaluated: these programs were not the causes of Germany’s economic recovery of but only supported a self-sustaining cyclical upswing to 1936. The basis of that upswing is to be seen, as Knut Borchardt has already argued 12 years ago, in the "normalisation" of the structural relations between factor prices and productivity, i. e. the improvement of supply conditions and profit chances.
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We trace the introduction of anthropometric indicators into development and labor economics in the late 1970s.
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Entry for the Elgar Companion to Alfred Marshall, edited by Tiziano Raffaelli, Marco Dardi, and Giacomo Becatini, Cheltenham: Edward Elgar 2004
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The paper elaborates the idea that voting is an instance of the aggregation of judgments, this being a more general concept than the aggregation of preferences. To aggregate judgments one must first measure them. I show that such aggregation has been unproblematic whenever it has been based on an independent and unrestricted scale. The scales analyzed in voting theory are either context dependent or subject to unreasonable restrictions. This is the real source of the diverse 'paradoxes of voting' that would better be termed 'voting pathologies'. The theory leads me to advocate what I term evaluative voting. It can also be called utilitarian voting as it is based on having voters express their cardinal preferences. The alternative that maximizes the sum wins. This proposal operationalizes, in an election context, the abstract cardinal theories of collective choice due to Fleming and Harsanyi. On pragmatic grounds, I argue for a three valued scale for general elections.
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In this paper we study the influence of economic stability on the level of corruption in a country, where high stability is defined as a low level of variance in economic output growth. We present a political competition model with exogenous shocks to economic output where politicians can decide about the level of corruption and an election is held within the framework of a Bayesian game. Corruption is assumed to be harmful to the economy and politicians try to maximize income from corrupt activities as well as the probability of getting reelected. We show that independent of the absolute size of economic output growth a low degree of economic stability yields a high level of corruption and vice versa. Thus we conclude that not only does corruption influence economic activity, but also the opposite effect might exist, namely that exogenously caused fluctuations of output influence the readiness of politicians to behave in a corrupt manner. To support our theoretical findings we additionally carry out a cross-country empirical analysis of GDP growth variance and corruption and come to results confirming our thesis.
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This study compares the duration of new job matches in the east and west German labour market that formed between the start of the German Economic, Monetary and Social Union in July 1990 and December 2000. The study relies on job duration data drawn from the German Socio-economic Panel. It shows with non-parametric duration methods that job matches are less stable in east than in west Germany. However, this is not the case in the first years of the transition process, in which most likely the more profitable jobs were created and the best job matches were formed. Results form the non-parametric analysis but also from a proportional hazards model that controls for important covariates imply that the transition rates into alternative jobs and into unemployment vary with tenure in a way, which is in line with predictions of theories of job mobility such as the job specific capital hypothesis and matching theories.
