Firing the Furnace? – An Econometric Analysis of Utilities’ Fuel Choice

This paper attempts to predict the potential effects of CO2 emissions trading on fuel choice in the German electric power industry. By analyzing panel data (1968–1998) of major utilities, we show that the fuel mix of electric utilities is price inelastic. As a consequence, the implementation of a CO2 trading scheme will, if anything, only slightly induce interfuel substitution. Accordingly, low-carbon fuels will hardly replace lignite and hard coal through CO2 emissions trading, as long as abatement targets are not extremely ambitious. However,one cannot rule out that fuel prices may become more important for the utilities’ fuel mix as a result of deregulation in the German power sector.fuel mix, high-carbon fuels, CO2 emissions trading

A Note on Consistency of Heckman-type two-step Estimators for the Multivariate Sample-Selection Model

This analysis shows that multivariate generalizations to the classical Heckman (1976 and 1979) two-step estimator that account for cross-equation correlation and use the inverse Mills ratio as a correction-term are consistent only if certain restrictions apply to the true error-covariance structure.We derive an alternative class of generalizations to the classical Heckman two-step approach that conditions on the entire selection pattern rather than the selection of particular equations and, therefore, uses modified correction-terms. This class of estimators is shown to be consistent. In addition, Monte-Carlo results illustrate that these estimators display a smaller mean square prediction error.Multivariate sample-selection model, censored system of equations, Heckman-correction

West-East Convergence in the Prevalence of Illicit Drugs: Socioeconomics or Culture?

In contrast to West-Germany, illicit drugs were virtually absent in East-Germany until 1990. Yet, after the collapse of the former GDR, East-Germany was expected to encounter a sharp increase in the prevalence of substance abuse.By analyzing individual data,we find that East-Germany largely caught up withWest-Germany’s ever-growing prevalence of illicit drugs within a single decade.We decompose the west-east difference in prevalence rates into an explained and an unexplained part using a modified Blinder-Oaxaca procedure. This decomposition suggests that the observed convergence is just weakly related to socioeconomic characteristics and therefore remains mainly unexplained. That is, West- and East-Germans seem to have become more alike per se. We conclude that both parts of the country have converged in terms of the culture of drug consumption.Illicit drugs, west-east convergence, decomposition

Much Ado About Nothing? – Smoking Bans and Germany’s Hospitality Industry

Over the last years, public smoking bans have been introduced in most European countries. Unlike elsewhere, in Germany such bans were introduced at state level at diff erent points in time, which provides important intra-country regional variation that can be exploited to identify the eff ects of such bans on the hospitality industry. Using monthly data from a compulsory survey carried out by the German Federal Statistical Offi ce, we study the short-run eff ects that these bans had on establishments’ sales. In contrast to the largely US-based literature, we fi nd that smoke-free policies had a negative (yet moderate) eff ect on establishment sales. Closure rates of businesses in the hospitality industry, however, were not signifi cantly aff ected by the introduction of state smoking bans.smoking bans; sales; intra-country regional variation

The Causal Impact of Fear of Unemployment on Psychological Health

We analyze the eff ect of job insecurity on psychological health. We extend the group of people being aff ected to employees who have insecure jobs to account for a broader measure of the mental health consequences of potential unemployment. Using panel data with staff reductions in the company as an exogenous source of job insecurity, we fi nd that an increase in fear of unemployment substantially decreases the mental health status of employees. Quantile regression results yield particularly strong eff ects for individuals of already poor mental health.Fear of unemployment; mental health; job insecurity; labor market dynamics

Less Social Health Insurance – More Private Supplementary Insurance? – Empirical Evidence from Germany

This paper uses individual level data to analyze the effect of changes in the compulsory benefit package of the German statutory health insurance scheme on the demand for private supplementary insurance. In particular, we aim at measuring the effect of excluding dentures from the benefit package in 1997 as well as the effect of re-including them in 1999.Adifference-in-differences estimator is used. Individuals born prior to 1979 serve as control group because only the young were affected by the reform.Our results do not exhibit any significant effects on the demand for supplementary health insurance. Thus, the hypothesis that clients do make informed choices about their health insurances’ coverage is not supported.Supplementary private health insurance, dentures, difference- indifferences

Do Organizational Forms matter? – An Econometric Analysis of Innovativeness in the German Wastewater Sector

In the German wastewater sector, innovations are often regarded to be the key to both more efficient service provision and reduction of environmental and health-related problems. However, it is unclear what factors foster these innovations. One possible candidate factor is increased competition in this sector and the entry of private service providers. So far, there is no empirical evidence to answer the question of whether private firms are, in fact, more innovative than others. To address this question, we conducted a survey among German firms that provide wastewater services and estimated a structural model to explain firms’ innovativeness. Our results suggest that firm size improves innovativeness; however, private service providers are not significantly more innovative than providers operated by local governments.We conclude that restructuring the sector to form larger units may foster innovative activities even without any changes in the legal framework.Wastewater services, innovativeness, structural econometric model

Consistency of Heckman-type two-step Estimators for the Multivariate Sample-Selection Model

This analysis shows that multivariate generalizations to the classical Heckman (1976 and 1979) two-step estimator that account for cross-equation correlation and use the inverse Mills ratio as correction-term are consistent only if certain restrictions apply to the true error-covariance structure. An alternative class of generalizations to the classical Heckman two-step approach is derived that condition on the entire selection pattern rather than selection in particular equations and, therefore, use modified correction-terms. It is shown that this class of estimators is consistent. In addition, Monte-Carlo results illustrate that these estimators display a smaller mean square prediction error

Heterogeneity in the Intergenerational Transmission of Alcohol Consumption – A Quantile Regression Approach

This paper addresses the question of whether the effect of parental drinking on children’s later consumption of alcohol – which is frequently found to be of positive sign – exhibits a certain pattern of heterogeneity. In particular, if this eff ect is more prominent in the upper tail than elsewhere in the distribution of children’s alcohol consumption, conventional regression analyses that focus on the mean eff ect may substantially underrate parental drinking as a risk factor for children’s later alcohol abuse. In our empirical application, we address this issue by applying censored quantile regression methods to German survey data. The supposed pattern of heterogeneity is indeed found in the data, at least for daily parental drinking. In addition, the intergenerational transmission of alcohol consumption exhibits gender-specific heterogeneity.Alcohol consumption; intergenerational transmission; heterogeneity; censored quantile regression