Wirtschaftswissenschaftliche Forschung

Optimal Use of Labour Market Policies


Labour market policies for the unemployed combine passive income
support with active measures that aim at improving jobseekers'
employment prospects. This paper extends the theoretical framework
developed by Pavoni and Violante (2005a) for the optimal choice between different active and passive policies. Their model is extended to a setting which allows for the use of a job search assistance programme that affects the exit rate to employment by raising search effectiveness, but not productivity in the job. These programmes are among the most widely used activation measures in OECD countries and should therefore be taken into account when considering the optimal design of labour market policies. The enriched model is used to answer a range of interesting policy questions. On the one hand, the optimality of the West German policy in the period 2000-2002 as well as the benefits from tightening monitoring are assessed. It is shown that sizeable budget savings could have been realised by switching to the optimal scheme, but that the net gains from tighter monitoring are only small. On the other hand, interesting results on the optimal use of job search assistance and training are derived. It is shown that existing policies already share some but not all features of the optimal scheme.

Optimal Use of Labor Market Policies: The Role of Job Search Assistance


This paper studies the role of job search assistance programs in
optimal welfare-to-work programs. The analysis is based on an
adapted version of the framework developed by citet{PV06}. This
framework allows for endogenous choice of benefit types and levels,
wage taxes or subsidies, and activation measures such as monitoring
and job search assistance for each period of unemployment in a
dynamic environment with negative duration dependence in exit rates
to employment and potentially depreciation in reemployment wages. We show that the main role of job search assistance is to delay or
prevent situations in which it is no longer optimal to incentivize
the worker to provide positive search effort. It is used to restore
or maintain some minimum exit rate to employment which increases
with the cost-effectiveness of job search assistance. We also find
that in line with existing policies, these programs should mainly be
used at the beginning of unemployment and for short durations.
However, contrary to existing schemes they should exclusively be
targeted at unemployed workers with low initial exit rates to
employment in this case. For all other workers they should only be
used if they fail to find a job within reasonable time despite high
expected initial exit rates.

Labour Market Policy in Germany: Institutions, Instruments and Reforms since Unification


Almost 15 years after Unification in 1990, Germany is still struggling with the economic consequences of this event. Although the East German economy has made considerable progress since its near-collapse after the German monetary, economic and social union in July 1990, the East German labour market has not yet recovered. Western Germany, which had to bear a substantial part of the fiscal cost of German Unification, is also faced with high unemployment though the rate is considerably lower than in the Eastern part. Expenditure for activation measures and income support during unemployment is substantial and one of the highest among OECD countries. In response to exploding cost of unemployment and continuing public pressure to solve the unemployment problem, the German Federal Government has started the largest social policy reform in the history of the Federal Republic. This paper reconstructs the development of the German labour market and the stepwise reform of German labour market policy since German Unification in 1990. It provides a detailed description of the instruments of German active labour market policy and reviews the existing econometric evidence on their effectiveness.

Temporal stability and psychological foundations of cooperation preferences


A core element of economic theory is the assumption of stable preferences. We test this assumption in public goods games by repeatedly eliciting cooperation preferences in a fixed subject pool over a period of five months. We find that cooperation preferences are very stable at the aggregate level, and, to a smaller degree, at the individual level, allowing us to predict future behavior fairly accurately. Furthermore, our results provide evidence on the psychological foundations of cooperation preferences. The personality dimension ‘Agreeableness' is closely related to both the type and the stability of cooperation preferences.

Personality, personal values and cooperation preferences in public goods games : A longitudinal study


Recent research on behavioral heterogeneity in social dilemma situations has increasingly focused on exploring the predictive value of individual difference variables. This paper contributes to this line of research by examining how cooperation preferences in a series of three public goods games conducted over the course of five months are related to personality traits and personal values. A variant of the four player one-shot public goods game was administered to classify participants' cooperation preferences, along with measures of the Big-Five personality dimensions and Rokeach's terminal values. Results revealed that, when considered independently, Agreeableness and prosocial values were indicative of individual preferences for cooperation. However, when considered simultaneously, only Agreeableness emerged as a significant predictor of cooperation preferences. The findings are interpreted in terms of how personality and personal values jointly impact economic behavior

HIV/AIDS Knowledge and Behaviour: Have Information Campaigns Reduced HIV Infection? The Case of Kenya


AIDS continues to have a devastating effect on developing countries, particularly in Sub-Saharan Africa. The lack of a proven effective vaccine to stop HIV transmission has lead to much of public policy putting an emphasis on information campaigns in order to reduce HIV-prevalence. In this paper we examine the impact of HIV/AIDS-knowledge from two sides. First, we examine to what extent the campaigns have been successful at inducing the expected behavioural change with regards to HIV-related attitudes. Second, we examine the impact of HIV/AIDS knowledge on HIV status. The basic policy issue can be expressed as follows: even if individuals have acquired sufficient and necessary information on the basic facts about AIDS, factors such as innate risk attitudes or cultural background could undermine the effects of the campaigns. Using the Kenya Demographic and Health Survey (2003) we elicit empirical evidence on the relation between declared HIV/AIDS-knowledge, behavioural attitudes related to HIV/AIDS situations and the relation between knowledge and observed HIV-status. Overall, our empirical findings suggest that information campaigns have been effective at equipping the adult population in Kenya with the required knowledge to avoid becoming HIV-positive. However, when HIV-status is measured objectively we find that the relation between correctly declared attitudes and actual behaviour is only statistically significant for females that have arrived into sexuality late enough to benefit from such campaigns: it is for these females that the impact of the information campaigns has been to statistically reduce the probability of becoming HIV-positive, as intended. In the case of males we find that there is no statistical relation between either knowledge or timing of the information campaigns and a positive HIV-status. Nevertheless, another important finding refers to the selection bias induced by males who are sampled randomly but decline to take the HIV-test. The consequences of this bias are twofold; first, the estimated policy parameters for males should be interpreted with caution, but more importantly, estimating the population level HIV-prevalence for Kenyan males based on the DHS implies underestimating the true and unknown prevalence rate. Our analysis controls for individual characteristics, selection bias and endogeneity effects thus allowing us to make inferences for the full population and with regards to policy implementation.

A Life-cycle model of human capital formation and educational choices in developing economies


In impoverished societies a shock to the household's resources often results in a decision to reduce the contemporaneous investment on children's education. Although such shocks may be transitory in nature they could lead to permanent long run effects in terms of reduced human capital for future generations thus further enhancing a state of deprivation. This paper models the long-run effects of productivity shocks using a micro-economic founded life-cycle model where investment uncertainty faced by heterogeneous households plays a crucial role with regards to optimal educational choices for their primary school age children. The dynamics in the structural model provide the basis for identification and estimation of endogenous human capital formation allowing for household's heterogeneity, a concept often missing from empirically implemented macro-models of growth. The empirical section illustrates the modelling strategy and estimation procedure using data from Tanzania (The Kagera Health and Development Survey, 1991-1994). The results suggest that primary school age orphans that attend school regularly can experience gains in human capital (i.e., productive capacity within the household) that are 6.2% higher than similar orphans in a non-schooling regime. Howerver, when one or both parents are present to bring up the children, the gains that result from attending school are small when we compared these to the human capital gains that result from intergenerational transfers,i.e., gains purely from knowledge transfers between generations.

Identification and Estimation with Partial Respondents and Anchoring Effects


Household surveys often suffer from nonresponse on variable such as income, savings or wealth. The work by Charles F. Manski in the 1990s shows how bounds on conditional quantiles on the variable of interest can be derived, allowing for any type of non-random item nonresponse. The width between these bounds can be reduced using follow up questions in the form of unfolding brackets for initial non-respondents. However, evidence from both the psychology and economic literature suggest that such design is vulnerable to anchoring effects. In this paper Manski's bounds are extended to incorporate information provided by bracket respondents allowing for three alternative nonparametric assumptions on anchoring. The new bounds are applied to earnings in the 1996 wave of the Health and Retirement study. The results show that introducing categorical questions in the form of unfolding designs can be useful to increase the precision of the bounds, even if anchoring is allowed for.

Health Indicators, Health Systems and the Annual Report of the World Health Organization


Every year the World Health Organization (WHO) publishes an annual report that summarizes the status of public health for all UN member countries. Such report analysis aspects such as life-expectancies, health spending and the relation between spending and effectiveness within the health system in each of the member countries. This articles provides a reivew of a new time series indicator that aims at evaluating the relative performace of all health systems by clasifying these in a single ranking that takes into account all private and public aspect of the system. The ranking implies a probabilistic classification that remains highly related to measures of inequality. The article evaluates the effectiveness of the new health related Time Series measure as a way to evaluate the existing health systems of UN member countries.

HIV/AIDS knowledge differentials by Geopolitical, Social and Economic Status: Evidence from Surveyed Children in South East Asia


Diskussionspapier, Volkswirtschaftliche Abteilung, Universität St. Gallen#### The HIV/AIDS epidemic is a major public health threat, with evidence showing that information campaigns are effective policy tools to control its evolution. Many of these are designed to increase children's knowledge on HIV before they become sexually active or start to experiment with intravenous drugs, with the effectiveness of such campaigns subject to the extend to which they reach all sectors in the population. This paper applies matching methods and techniques for programme evaluation to detect differentials in children's knowledge on HIV/AIDS by geopolitical, social and economic status, allowing for health risk-taking behaviour. Drawing from a sample of surveyed children in South East Asia and the Pacific, the results show support for Amartya Sen's (2002) suggested negative effect of non-democracies on HIV/AIDS awareness, although children in democracies with low development and/or low HIV-prevalence seem to be less well equipped to deal with the epidemic. Within-country results suggest that gender, schooling status and living in a urban setting are determinants of knowledge differentials, while parental income or occupation are not. This study has policy implications with respect to what sectors in the population should information campaigns target. Download Discussion Paper: (pdf, 500kb)


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