Freedom of Choice and Poverty Alleviation

The Capability Approach (henceforth CA) views poverty as a multidimensional phenomenon that is not only characterised by lows levels of achievement in the various dimensions but also by a restricted opportunity to choose among different ways of life. The CA thus puts a lot of emphasis on (limited) freedom of choice as a crucial aspect of poverty. If poverty is seen in this way there are two ways to improve the situation of the poor: by broadening the set of opportunities open to them or by strengthening their ability to choose. The paper concentrates on the latter. Although the CA discusses several possibilities for strengthening the ability to choose it does not explicitly consider the role of enhancing the capability of choosing as a means of poverty alleviation. The paper summarizes which circumstances are seen in the CA as suitable for strengthening freedom of choice. Namely, the paper discusses the market as an institution that trains the ability to choose, democracy as a political institution that is based on freedom of choice and participatory methods as an attempt to build explicitly on freedom of choice of the participants. Two shortcomings in the theoretical conceptualization of freedom of choice in the CA are identified by discussing these institutions and circumstances: first, the interplay between social structures and individual agency is not modelled in much detail within the CA. Second, the CA does not provide an explicitly temporal model of agency. The paper takes a closer look at these shortcomings from a sociological perspective since the questions they raise are core questions of sociology. The problems are intertwined. In order to tackle the problem of social embedding in the CA one needs to introduce time and processes as well. Sociological approaches show how social structures evolve from the interaction of individuals. The paper gives an example of how sociological concepts of this interaction can be used for drawing a model of social work for strengthening the agency of the poor. The paper proceeds as follows: first the view of poverty as capability deprivation is presented. The second section gives an overview of the areas in which the CA discusses the strengthening of individual choice: the market, democracy and participatory projects. The third section elaborates on the shortcomings of the CA identified in the preceding section from a sociological perspective and introduces a concept of social work developed in a similar theoretical context. The conclusion summarizes the lessons and outlines further lines of research.     

Firm survival in the German automobile industry

In this paper, methods of duration analysis are applied to investigate determinants of firm survival in the German automobile industry during the period 1886–1939. A new comprehensive data set has been assembled in order to secure data comparable to that for the US automobile industry. Our results show that the forces shaping the survival pattern of firms over the life cycle are quite similar in both countries, i.e. early entry in the life cycle and prior experience are associated with a lower risk of exit. This finding holds equally when parametric, semiparametric and nonparametric methods are applied.We thank the participants of the 10th conference of the International Schumpeter Society in Milan, June 2004, and the 31st EARIE conference in Berlin, September 2004, for helpful discussion. We also thank two anonymous referees for their comments. All remaining errors are in our responsibility.     

Unobserved Individual and Firm Heterogeneity in Wage and Job‐Duration Functions: Evidence from German Linked Employer–Employee Data

Abstract. We analyse the correlations between individual and firm fixed effects, and wage and job‐duration functions. Our results for large firms suggest that low‐wage firms tend to be stable firms, suggesting that lower wages can buy job stability. Furthermore, high‐wage workers sort into the stable low‐wage firms. Our interpretation is that high‐wage workers have a higher wage to insure against job loss and can afford more easily to forgo wages in favour of job stability. This may provide an explanation of the puzzle identified in previous literature that high‐wage workers are matched to low‐wage firms.     

Dissertation abstract: Voting in the laboratory

Almost every week national elections are held somewhere in the world. Many more elections take place at federal and local levels of government. Surely, these are important events to many of us. This thesis aims at providing a better understanding of why and how people vote in elections. Three original modifications of Palfrey and Rosenthal’s (1983) participation game are used to study voter turnout theoretically and experimentally.¹ In the basic game, each voter supports (i.e., prefers) one of two exogenous candidates and privately decides between voting at a cost and abstaining (without costs). The candidate who receives more votes wins the election (ties are broken randomly) and each supporter of this candidate receives an equal reward, independent of whether or not she voted. The first study (published in the American Political Science Review 100, pp. 235–248) analyzes the effects of social embeddedness on turnout, assuming that voters may be influenced by observing the decisions of other voters around them (e.g., a family or working place). Our experimental results show that the social context matters: this information increases turnout by more than 50%. The increase is greater when neighbors support the same candidate rather than when they support opponents. The second study investigates the effects of public opinion polls on voter turnout and welfare. Poll releases resolve uncertainty about the level of support for each candidate caused by `floating’ voters, whose preferences change across elections. This information increases turnout in the laboratory by 28–34%, depending on the fraction of floating voters in the electorate. If polls indicate equal levels of support for both candidates—in which case aggregate benefits for society are not affected by the outcome—welfare decreases substantially due to costs from excessive turnout. In the final study, elections are preceded by the competition between two candidates: they simultaneously announce binding policy offers in which some voters can be favored at the expense of others through inclusion and exclusion in budget expenditure (Myerson 1993).² We observe that policy offers include 33% more voters—yielding a smaller budget share for each—when voting is compulsory rather than voluntary. Moreover, we find evidence of political bonds between voters and long-lived parties. Overall, in all three experiments many subjects strongly react to economic incentives (i.e., benefits, costs, and informational clues), often in line with what is observed outside of the laboratory. JEL Classification C72, C92, D72 Dissertation Committee: Arthur Schram, University of Amsterdam (advisor) Axel Ockenfels, University of Cologne Thomas Palfrey, California Institute of Technology Cees van der Eijk, University of Nottingham Frans van Winden, University of Amsterdam ¹Palfrey, T.R., & Rosenthal, H. (1983). A strategic calculus of voting. Public Choice, 41, 7–53. ²Myerson, R.B. (1993). Incentives to cultivate favored minorities under alternative electoral systems. American Political Science Review, 87, 856–869.     

The world economy in the summer of 1990

The global economy continues to show an upward trend—albeit at a slower pace— for the eighth year running, although performance differs considerably from country to country. What is the outlook for 1990 as a whole?     

Publication bias in the German social sciences: an application of the caliper test to three top-tier German social science journals

Systematic research reviews have become essential in all empirical sciences. However, the validity of research syntheses is threatened if the preparation, submission or publication of research findings depends on the statistical significance of these findings. The present study investigates publication bias in three top-tier journals in the German social sciences, utilizing the caliper test. For the period between 2001 and 2010, we have collected 156 articles that appeared in the Kölner Zeitschrift für Soziologie und Sozialpsychologie (KZfSS), the Zeitschrift für Soziologie (ZfS) and the Politische Vierteljahresschrift (PVS). In all three journals, we found empirical evidence for the existence of publication bias at the 10 % significance level. We also investigated possible causes linked to this bias, including single versus multiple authorship as well as academic degree. We found only weak support for the relationships between individual author characteristics and publication bias.