Cross-sectional earnings risk and occupational sorting: The role of risk attitudes

This paper investigates to what extent individuals' risk preferences are correlated with the cross-sectional earnings risk of their occupation. We exploit data from the German Socio-Economic Panel, which contains a direct survey question about willingness to take risks that has been shown to be a behaviorally valid measure of risk aversion. As a measure of earnings risk, we use the cross-sectional variation in earnings that is left unexplained by human capital variables in Mincerian wage regressions. Our evidence shows that individuals with low willingness to take risks are more likely to work in occupations with low earnings risk. This pattern is found regardless of the level of occupation categories, region, gender and labor market experience.     

The Lévy LIBOR model

Models driven by Lévy processes are attractive because of their greater flexibility compared to classical diffusion models. First we derive the dynamics of the LIBOR rate process in a semimartingale as well as a Lévy Heath-Jarrow-Morton setting. Then we introduce a Lévy LIBOR market model. In order to guarantee positive rates, the LIBOR rate process is constructed as an ordinary exponential. Via backward induction we get that the rates are martingales under the corresponding forward measures. An explicit formula to price caps and floors which uses bilateral Laplace transforms is derived.     

Langlebigkeit und Altern: Gene oder Umwelt?

Aging is defined as loss of homeostasis which affects all metabolic systems, including DNA. Interspecies comparisons and lessons from the human genetic instability syndromes suggest a correlation between DNA-homeostasis and maximum lifespan, whereas average lifespan depends mainly on environmental factors. Current demographic data suggest a maximum lifespan in humans of 110–115. The average life expectancy at birth has reached 80 years in the wealthy nations and may exceed, at least in females, 90 years by the year 2050. Genetic and biological reasons, but also lifestyle factors, account for the greater longevity of women. Attempt to define a ?longevity“ genotype so far have not been met with success, but carriers of the ApoE4-Allele appear to have a disadvantage. Unlike the situation in model organisms, aging and longevity in humans seem to be influenced by numerous genes and environmental interactions. Most people do not die of old age but of age-related diseases which are frequent because of lack of natural selection against genetic defects that cause late-onset diseases. Moreover, genes causing late-onset diseases show evidence of antagonistic pleiotropy, rendering these genes resistant to removal from our genome. Likewise, thermoinstability of DNA and generation of reactive oxygen species during oxidative phosphorylation are two endogenous sources of genomic instability that limit our lifespan and cannot be overcome without fundamentally altering the biological make-up of our species. Genomic instability causes cancer and accelerates the aging process, as evidenced by the human caretaker gene syndromes which typically show progeroid features. From a genetic point of view, cancer and aging may be moderately delayed and / or mitigated by lifestyle and medical / environmental interventions, but given the constraints of our biological make-up, they cannot be eradicated.     

The disposition effect and loss aversion: Do gender differences matter?

This paper analyzes gender differences in the disposition effect in an experiment based on Weber and Camerer (1998). The results emphasize that female investors realize less capital losses, have significantly higher disposition effects and are more loss averse than men.     

Outsourcing,Importing and Innovation: Evidence from Firm‐level Data for Emerging Economies

This paper investigates two sourcing strategies of firms, outsourcing and importing, and links these to innovation activities. The authors examine this empirically using firm‐level data for 28 emerging market economies and find robust evidence that outsourcing increases the likelihood to spend on R&D and via this channel raises innovation output, whereas importing increases innovation output, but not R&D. The results hold when implementing an instrumental variables approach. It is found that results crucially depend on the institutional environment in the economy, e.g. property rights and intellectual property rights protection. The results suggest that better institutions magnify the gains from importing, but not from outsourcing. EU countries also reap additional positive innovation effects from importing compared with non‐EU countries.     

The Antecedents and Consequences of Affordable Value Innovations for Emerging Markets

Emerging markets offer tremendous growth opportunities for firms. While established multinational firms typically focus on premium segments in emerging markets, they often fail to leverage additional growth opportunities in so‐called good enough or low‐income segments in emerging markets. Customers in these low‐income markets have substantially different requirements and are very price sensitive. Theoretical and case‐based research suggests that innovating for these low‐income segments in emerging markets differs significantly from innovating for premium or traditional Western markets. We argue that tapping successfully into low‐income segments in emerging markets requires the development of new products that meet the low price expectations while at the same time offering also value to customers in these segments. We refer to these new products as affordable value innovations. We analyze the antecedents of affordable value innovation for emerging markets. We draw on institutional theory to derive three potentially relevant antecedents of affordable value innovation for emerging markets. These are bricolage, local embeddedness, and standardization. We test our hypotheses using multiple informant data from 47 multinational corporations involving 103 innovation projects that target low‐income customers in emerging markets. Our empirical analysis shows that all three antecedents have significant effects on the level of affordable value innovation: while bricolage and local embeddedness are positively related to the level of affordable value innovation, standardization has a negative impact. We also examine the relationship between the level of affordable value innovation and performance. We find evidence for our basic assumption that a firm's capability to develop and launch affordable value innovations is key to success in emerging markets. It indicates that a firm's investments in affordable value innovations for emerging markets pay off financially. Finally, a cross‐regional comparison of our data shows that the key findings on antecedents of affordable value innovation and its impact on performance do not vary across various emerging markets. Overall, our findings offer important implications for research on and the practice of innovation for low‐income segments in emerging markets.     

Beitragsfinanzierung im „demografiegestressten“ Rentensystem möglich

Wirtschaftsdienst - Trotz des demografischen Wandels ist ein beitragsfinanziertes Rentensystem in Deutschland möglich und wünschenswert. Ein Rentenniveau von beispielsweise 50 % kann auch...     

Foreign Acquisitions,Domestic Multinationals,and R&D

Our aim in this paper is to evaluate the causal effect of foreign acquisition on research and development (R&D) intensity in targeted domestic firms. We are able to distinguish domestic multinational enterprises (MNEs) and non‐MNEs, which allows us to investigate the fear that the change in ownership of domestic MNEs to foreign MNEs leads to a reduction in R&D activity in the country. Overall, our results give no support to the fears that foreign acquisition of domestic firms leads to a relocation of R&D activity in Swedish MNEs. Rather, in this paper, we find robust evidence that foreign acquisitions lead to increasing R&D intensity in acquired domestic MNEs and non‐MNEs.