This paper studies the effect of increased immigration in Austria on the unemployment risk of young natives. Austria experienced a dramatic rise in the share of alien workers as a result of the breakdown of the former commu-nist regimes (especially from former Yugoslavia). We concentrate on unemployment entry of young male workers, who are supposed to compete most heavily with new immigrants. Our results indicate that the detrimental impact - if it exists at all - is only minor. This is irrespective of the analyzed proxy for competition: The share of foreign workers in an industry or in a region.
This paper analyzes the impact of inequality on growth when technical progress is driven by innovations and consumers have hierarchic preferences. Inequality has an impact on growth because it affects the structure and the dynamics of demand. Redistribution from very rich to very poor consumers is beneficial for growth. In general, the growth effect depends on the nature of redistribution. Due to a demand externality of R&D activities multiple equilibria are possible.
Personnel economics has put forward conflicting arguments concerning the impact of increased wage dispersion within a firm on the productivity of its workers. Besides giving more incentives, bigger wage differentials might also give rise to less co-operation and more politicking amongst workers resulting in worse outcomes. We try to shed light on these issues using panel data for Austrian firms. As indicators for firm performance we use standardised wages. For white-collar wages the following picture emerges: more dispersion leads to higher earnings up to some point where the relation changes its direction. For blue-collar wages we find a positive association between dispersion and standardised wages between firms, but no relation within firms over time.
Over the recent years one could repeatedly hear the claim that a rising concern for relative standing (in terms of consumption) was partly responsible for the decline in household savings and in growth that could be observed in some developed countries (particularly in the US) and that the rise in income inequality had further aggravated this process. In this paper we want to analyze under which conditions (concerning the importance of social comparisons for peoples' behavior and their choice of reference groups) this claim is valid. We show that an increase in a societies' concern for relative standing aggravates a negative impact of inequality on growth if two conditions are fulfilled: individuals have a higher concern for their present than for their future relative standing and individuals have a tendency to find their reference groups among people that are wealthier then they are themselves. Empirical data suggest that the negative impact of inequality on growth is stronger in highly developed economies. This is compatible with the explanation that is presented in this paper if individuals living in highly developed countries are more likely to have a high concern for relative standing. We will argue (using research on the cultural consequences of economic development) that this is a reasonable assumption to make.
There is strong evidence that people exploit their bargaining power in competitive markets but not in bilateral bargaining situations. There is also strong evidence that people exploit free-riding opportunities in voluntary cooperation games. Yet, when they are given the opportunity to punish free-riders, stable cooperation is maintained although punishment is costly for those who punish. This paper asks whether there is a simple common principle that can explain this puzzling evidence. We show that if some people care about equity the puzzles can be resolved. It turns out that the economic environment determines whether the fair types or the selfish types dominate equilibrium behavior.
"Historical events are reflected in asset prices. Looking at government bond prices of five European countries traded on the Swiss stock exchange during WWII provides a useful way of interpreting the importance attributed to various war events. We direct our attention to value changes in government bonds of five different nations: On the side of the Axis, Germany and Austria; on the side of the Allies, France; and the two neutral countries Belgium and Switzerland. The econometric analysis reveals that some events that are generally considered crucial are clearly reflected in government bond prices of the countries considered. This holds, in particular, for the official outbreak of the war in July to September 1939 (which sent down the government bond values not only of Austria, Belgium and France but also of Germany) and for losses and gains of national sovereignty."
Using information on job changes and search behavior of workers and controlling for endogenousnmobility we study firm-size wage differentials in Switzerland. We find that the observed crosssectionalnfirm size premium cannot be explained exclusively by worker heterogeneity. Almost 50n% of the cross-section differential is a firm-size effect.
We build a theoretical framework that allows for endogenous conflict behaviour (i.e., fighting efforts) and for endogenous natural resource exploitation (i.e., speed, ownership, and investments). While depletion is spread in a balanced Hotelling fashion during peace, the presence of conflict creates incentives for rapacious extraction, as this lowers the stakes of future contest. This voracious extraction depresses total oil revenue, especially if world oil demand is relatively elastic and the government’s weapon advantage is weak. Some of these political distortions can be overcome by bribing rebels or by government investment in weapons. The shadow of conflict can also make less efficient nationalized oil extraction more attractive than private extraction, as insecure property rights create a holdup problem for the private firm and lead to a lower license fee. Furthermore, the government fights less intensely than the rebels under private exploitation, which leads to more government turnover. Without credible commitment to future fighting efforts, private oil depletion is only lucrative if the government’s non-oil office rents are large and weaponry powerful, which guarantees the government a stronger grip on office and makes the holdup problem less severe.
Traditionally, economists make a sharp distinction between stated and revealed preferences, viewing the latter as more fully meeting the assumptions of economic analysis. Here, we consider one form of empirical evidence regarding this belief: the consistency of choices in stated and revealed preference tasks. We show that both kinds of task can produce consistent choices, suggesting that both can measure underlying preferences, if necessary conditions are met. We propose that a necessary condition is that task be either familiar to those facing it or offer contextual cues that substitute for familiarity, such as prices in competitive markets or recommendations from trusted, knowledgeable sources. We show that how well decision makers achieve such understanding is often confounded with the method that researchers use. Considering task familiarity not only clarifies some of the conflicting evidence regarding revealed and stated preference methods, but raises potentially productive questions regarding the roles of social institutions in shaping preferences.
What makes you a successful cooperator? Using data from the British television game show 'Golden Balls' we analyze a prisoner's dilemma game and its pre-play. We find that players strategically select their partner for the PD, e.g., they bear in mind whether contestants lied. Players' expectations about the stake size strongly influence the outcome of the PD: The lower the stakes, the more likely players successfully cooperate. Most interestingly, unilateral cooperation is encouraged by mutually promising not to defect and shaking hands on it, but a mere handshake serves as manipulating device and increases successful defection.
