Risk Aversion and Sorting into Public Sector Employment

Abstract. This research note uses two German datasets – the large‐scale German Socioeconomic Panel and unique data from own student questionnaires – to analyse the relationship between risk aversion and the choice for public sector employment. Main results are (1) more risk‐averse individuals sort into public sector employment, (2) the impact of career‐specific and unemployment risk attitudes is larger than the impact of general risk attitudes and (3) risk taking is rewarded with higher wages in the private but not in the public sector.     

Einzelbesprechungen

Ohne Zusammenfassung     

Möglichkeiten und Grenzen der mathematischen Schadenmodellierung

Mathematical claims modelling is a traditional art of actuarial practice. However, changing expectations concerning the complexity and efficiency of mathematical models have lead to numerous developments in the recent years, particularly in the area of multivariate models. This goes hand in hand with questions about what is ?possible“ and what is ?meaningful“. Due to sophisticated improvements of the classical models, the one-dimensional situation is well-tractable today whenever sufficient data material is available. A more difficult task is the modelling of situations where data are sparse or, alternatively, highly complex. Here sometimes theoretical arguments have to be used for justification, as in the area of large claims or extreme values. A more modern approach to multivariate situations is via copulas which allow for a separation of the problem of marginal distributions and the joint dependence structure. However, so far there is little experience with such tools in the insurance world, which makes further scientific research necessary.     

Proposal for correction of the SCR calculation bias in Solvency II

In the context of Solvency II the Solvency Capital Requirement (SCR) is a well known financial demand which will have to be fulfilled by all European insurance companies to assure a theoretical ruin probability of 0.005 or less.     

Works Councils,Collective Bargaining,and Apprenticeship Training – Evidence From German Firms

In this paper, we investigate the effects of works councils on apprenticeship training in Germany. The German law attributes works councils substantial information and co‐determination rights to training‐related issues. Thus, works councils may also have an impact on the cost‐benefit relation of workplace training. Using detailed firm‐level data containing information on the costs and benefits of apprenticeship training, we find that firms with works councils make a significantly higher net investment in training compared to firms without such an institution. We also find that the fraction of former trainees still employed with the same firm 5 years after training is significantly higher in the presence of works councils, thus enabling firms to recoup training investments over a longer time horizon. Furthermore, all works council effects are much more pronounced for firms covered by collective bargaining agreements.     

Base Salaries,Bonus Payments,and Work Absence among Managers in a German Company

This paper provides scarce insider econometric evidence on the structure of management compensation and on the incentive effects of fixed base salaries and bonus payments. Six years of personnel data of 177 managers in a German company are analyzed with special emphasis on the highest achievable bonuses under a Management‐by‐Objectives (MBO) incentive scheme. The main finding of panel negative binomial regressions is that higher achievable bonus payments are correlated with fewer absent working days, which supports the incentive effect of performance pay for managers. The fixed base salary component is, however, not significantly correlated with managers’ work absence.     

Potential duration of unemployment benefits and labor market outcomes for older workers with health impairments in Germany

This research note estimates the causal effects of a cut in the potential duration of regular unemployment benefits for older workers in Germany on the labor market outcomes of individuals with health impairments. The analyzed reform is a natural experiment that allows a difference-in-differences strategy with treatment intensity. The results provide evidence for a significant decrease in the number of days in regular unemployment benefits and an increase in the number of days in employment. However, the results also suggest a significant increase in the number of days in unemployment (social) assistance, which are granted upon exhaustion of regular unemployment benefits.