Erhöht Globalisierung die Ungleichheit der Einkommen?

The article tests the thesis that globalization increases the earnings inequality of households. It extends the time series data set of Alderson and Nielsen (2002) who supported the globalization thesis. Alternative models provide no evidence that foreign trade, foreign investment, and migration increase inequality. The article gives reasons for these results and shows that OECD countries pass through an endogenous sectoral and demographic crisis in the transition to post-industrial service societies. Therefore, the paper adapts Kuznets’ theorem of sector dualism to the subsectors of the service economy. The polarization of value addition within the service sector appears as the crucial determinant of increased earnings inequality of households.     

Working Poor

The study compares relative risks of working poor in the US and Germany. The risk of working poor is assumed to be a consequence of both the macro-structural change towards post-industrial service societies and the micro-structural change of private households. From this twofold perspective, the guiding hypotheses are developed and then tested with the German Socio-Economic Panel (GSOEP) and the Panel Study of Income Dynamics (PSID). The risk of working poor has increased both in Germany and the United States. Both commonalities and marked differences appear: Whereas high numbers of children dominate risks in the US, the German risk-set is determined by the hurdle between part-time and fulltime households, which disadvantages young and lone parents particularly. A common development is the successive devaluation of fulltime employment by sector risks which are growing into the fulltime labour market even in Germany.     

Psychology Implies Paternalism? Bounded Rationality may Reduce the Rationale to Regulate Risk-Taking

Behavioral economists increasingly argue that violations of rationality axioms provide a new rationale for paternalism – to “de-bias” individuals who exhibit errors, biases and other allegedly pathological psychological regularities associated with Tversky and Kahneman’s (in Science 185:1124–1131, 1974) heuristics-and-biases program. The argument is flawed, however, in neglecting to distinguish aggregate from individual rationality. The aggregate consequences of departures from normative decision-making axioms may be Pareto-inferior or superior. Without a well-specified theory of aggregation, individual-level biases do not necessarily imply losses in efficiency. This paper considers the problem of using a social-welfare function to decide whether to regulate risk-taking behavior in a population whose individual-level behavior may or may not be consistent with expected utility maximization. According to the social-welfare objective, unregulated aggregate risk distributions resulting from non-maximizing behavior are often more acceptable (i.e., lead to a weaker rationale for paternalism) than population distributions generated by behavior that conforms to the standard axioms. Thus, psychological theories that depart from axiomatic decision-making norms do not necessarily strengthen the case for paternalism, and conformity with such norms is generally not an appropriate policy-making objective in itself.     

CONTRACTS AS RENT‐SEEKING DEVICES: EVIDENCE FROM GERMAN SOCCER

Recent theoretical research has identified many ways how contracts can be used as rent‐seeking devices vis‐à‐vis third parties, but there is no empirical evidence on this issue so far. To test some basic qualitative properties of this literature, we develop a theoretical and empirical framework in the context of European professional soccer where (incumbent) teams and players sign binding contracts which, however, are frequently renegotiated when other teams (entrants) want to hire the player. Because they weaken entrants in renegotiations, long‐term contracts are useful rent‐seeking devices for the contracting parties. However, they reduce the likelihood of (mutually beneficial) transfers, which generates a trade‐off in the spirit of Aghion and Bolton (1987). Using a data set from the German “Bundesliga,” our model predictions are broadly confirmed. (JEL L14, J63, L40, L83)     

The Direct and Indirect Impact of Religion on Well-Being in Germany

A European Social Survey (ESS)—based study of Clark and Lelkes on the European level showed a double positive connection between religion and life-satisfaction: not only did a personal involvement have a positive impact, but there was also a regional externality. Even atheists seemed to be happier in areas with many religious people. However, the regional structure of the ESS can be seen as methodologically doubtful. We therefore replicated the study with more rich German data. In our study we confirm the positive individual effect of religion, but we did find a negative regional externality. However, further analysis revealed, this was an effect of an omitted variable: the degree of urbanization. In a more detailed approach we show that this effect is confined to areas with a protestant majority. We conclude that the positive degree of urbanization influence on life-satisfaction is presumably due to the chance for more political participation in the (protestant) city states in Germany.     

ESTIMATION OF DISCRETE CHOICE MODELS WITH MINIMAL VARIATION OF ALTERNATIVE-SPECIFIC VARIABLES

The paper states conditions for minimal variation within the explanatory variables such that the maximum likelihood estimate of the coefficient vector in the discrete choice logit model is unique. Special emphasis is given to the case that (almost) all individuals observe the same set of alternative-specific explanatory variables. The aspect of 'experimental design' in discrete choice models is discussed.     

Business Ethics of Innovation

Business ethics of innovation strives to give orientation in settings where new products, new markets, new environments are predominant. The provision of new products and solutions is inseparably intertwined with the consequences of their use. These can be manifold and in some cases an (unwanted) consequence might even preclude them from being used. A case in point is illustrated by an example from the pharmaceutical industry.An earlier version of this paper appeared in the Newsletter No. 49, September 2004 of the Europäische Akademie GmbH, ISSN 1432–0150.

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