Do German Welfare‐to‐Work Programmes Reduce Welfare Dependency and Increase Employment?

Abstract. During the last decade, many Western economies reformed their welfare systems with the aim of activating welfare recipients by increasing welfare‐to‐work programmes (WTWP) and job‐search enforcement. We evaluate the short‐term effects of three important German WTWP implemented after a major reform in January 2005 (‘Hartz IV’), namely short training, further training with a planned duration of up to three months and public workfare programmes (‘One‐Euro‐Jobs’). Our analysis is based on a combination of a large‐scale survey and administrative data that is rich with respect to individual, household, agency level and regional information. We use this richness of the data to base the econometric evaluation on a selection‐on‐observables approach. We find that short‐term training programmes, on average, increase their participants' employment perspectives. There is also considerable effect heterogeneity across different subgroups of participants that could be exploited to improve the allocation of welfare recipients to the specific programmes and thus increase overall programme effectiveness.     

Quantifying the risk-sharing welfare gains of social security

The welfare effects of intergenerational risk sharing through a pay-as-you-go social security system that is efficiently indexed to wages or interest rates are quantified. Comparing steady states, there are large welfare gains of being born into an economy with efficient risk sharing as compared to the current U.S. system. Efficient policy involves an increasingly risky net of tax income over the life cycle. When adjustment to steady state is taken into account, the welfare gains largely turn negative. The results are also compared and contrasted to the first best allocation.     

Human Capital, Growth, and Inequality in Russia

Our model captures the fact that Russia has both much human capital and an education system that produces the wrong skills for a market economy. We define a rule for the timing of educational restructuring that is Pareto optimal and that dominates all later times in a Paretian sense while simultaneously reducing inequality. We demonstrate that failure to implement restructuring early in the transition process is likely to produce a very long delay that will significantly reduce Russia's human capital. A retreat from subsidizing public education is likely to be counterproductive. We argue that early educational restructuring should be emphasized in Russia's transition strategy. J. Comp. Econom., December 1999, 27(4), pp. 618–643. Lingnan University, Tuen Mun, N.T., Hong Kong, People's Republic of China; University of Colorado, Denver, Denver, Colorado 88217; and Royal Holloway College, University of London, Egham, Surrey TW20 OEX, United Kingdom.     

WHY DO EUROPEANS WORK SO LITTLE?*

Market work per person is roughly 10% higher in the United States than in Sweden. However, if we include the work carried out in home production, the total amount of work only differs by 1%. I set up a model and show that differences in policy—mainly taxes—can account for the discrepancy in both labor supply and home production between Sweden and the United States. These results are independent of the elasticity of labor supply.     

Comparison Utility in a Growth Model

We examine the dynamics of two endogenous-growth modelsin which agents have comparison utility. In the inward-lookingeconomy, individuals care about how their current consumptioncompares with their own past consumption. In the outward-lookingeconomy, they care about how their own consumption compares withother peoples consumption. In response to a negative shock tocapital, saving and growth will temporarily fall in both of themodels that we consider but will remain constant in a model withstandard preferences. The decline will be smaller in the outward-than in the inward-looking case, but utility will be lower inthe former case because of a negative externality.     

Management by objectives – an effective tool for teamwork?

In recent years many companies have introduced self-regulatory teamwork requiring changes in leadership behaviour and systems as well. Consequently a renewed interest has arisen in management by objectives (MBO) as a means for leading self-regulating teams. But how do MBO systems work and how effective are they? The MBO system of a company in the construction supply industry was analysed. This company had implemented MBO at team level five years ago. In order to explore the mechanisms and effects of MBO at team level a model for group goal setting was tested. One hundred and seventy-six employees in twenty-six teams participated in the study, but only twenty-one groups having objective productivity data were included in the analyses at team level. Group goal commitment and group goals moderated by task interdependence are supposed to influence group processes as a mediating variable for group effectiveness. Results do not consistently support this model. Group goals and goal commitment predict group productivity and job satisfaction but group processes mediate only the relationship to job satisfaction. The moderating effect of task interdependence could not be supported. The consequences for developing a model for MBO at team level and implementing effective MBO systems are discussed.     

The Arctic Environmental Responsibility Index: A method to rank heterogenous extractive industry companies for governance purposes

The Arctic Environmental Responsibility Index (AERI) covers 120 oil, gas, and mining companies involved in resource extraction north of the Arctic Circle in Alaska, Canada, Greenland, Finland, Norway, Russia, and Sweden. It is based on an international expert perception survey among 173 members of the International Panel on Arctic Environmental Responsibility (IPAER), whose input is processed using segmented string relative ranking (SSRR) methodology. Equinor, Total, Aker BP, ConocoPhillips, and BP are seen as the most environmentally responsible companies, whereas Dalmorneftegeophysica, Zarubejneft, ERIELL, First Ore-Mining Company, and Stroygaz Consulting are seen as the least environmentally responsible. Companies operating in Alaska have the highest average rank, whereas those operating in Russia have the lowest average rank. Larger companies tend to rank higher than smaller companies, state-controlled companies rank higher than privately controlled companies, and oil and gas companies higher than mining companies. The creation of AERI demonstrates that SSRR is a low-cost way to overcome the challenge of indexing environmental performance and contributing to environmental governance across disparate industrial sectors and states with divergent environmental standards and legal and political systems.     

Do Long‐Term Unemployed Workers Benefit from Targeted Wage Subsidies?

We evaluate a wage subsidy program that is targeted at long‐term unemployed workers in Germany. We use an alternative identification procedure compared to empirical studies conducted so far. Exploiting the particular program regulations and large administrative data we estimate the impact of program availability using a regression discontinuity framework. Our results suggest no significant impact of the availability of the subsidy on labor market outcomes of the target group. Even though our analysis lacks some statistical power, our findings do not support the substantial positive effects obtained from matching studies. As our approach does not require observability of all drivers of selection, previous empirical studies justifying government expenditures on wage subsidies based on matching methods should be reconsidered.     

Risky choices and solidarity: disentangling different behavioural channels

Experimental Economics - We investigate whether informal support is sensitive to the extent to which individuals can influence their income risk exposure by opting into risk. In a laboratory...     

Board participation,toeholds and the cross-border effect

Research shows that the bid announcement return (BAR) of the acquiring firm is lower for cross-border than domestic acquisition announcements. The current lack of economically based explanations for this effect, labeled the cross-border effect by Moeller and Schlingemann (2005), motivates our study. We use unique hand-collected corporate governance data to study how the relationships between acquiring and target firms prior to a bid announcement affect the cross-border effect. Our tests show that non-operating associations between the acquiring and target firms, in the form of board participation and toeholds, have a positive effect on the BAR. The cross-border effect disappears when we control for board participation and toeholds. Thus, we suggest that the cross-border effect is at least partly a consequence of information asymmetries and the adverse selection problem that they generate.