Crime does pay (at least when it’s violent)!– On the compensating wage differentials of high regional crime levels

This paper investigates whether high regional crime levels lead to a compensating wage differential paid by firms in the respective region. Using data from German social security records and official police statistics for 2003 to 2006, we consider both violent and non-violent crimes and use three-way error-components estimators to control for individual and regional heterogeneity. Our findings suggest a positive and rather large compensating differential for the risk of falling victim to a violent crime while no such effect exists for other criminal activities. However, our results also suggest that the wage effects for most individuals are rather small due to small variation in the crime rates.Compensating wage differentials, crime, three-way error-components model

Other-Regarding Preferences, Spousal Disability and Happiness: Evidence from German Couples

This paper considers the impact of adverse health shocks that hit an individual's partner on subjective well-being. Using data on couples from the German Socio-Economic Panel for the years 1984 to 2006, I compare the losses in well-being caused by own and spousal disability using panel-regressions. I find that women and to a lesser extent men are harmed by spousal disability which is consistent with the existence of other-regarding preferences within couples. The magnitude of effects suggests that spousal disability is about one quarter to one half as harmful as individual disability with larger effects being found for women.Disability, subjective well-being, other-regarding preferences

Islamistic Terror, the War on Iraq and the Job Prospects of Arab Men in Britain: Does a Country’s Direct Involvement Matter?

This paper examines whether the labor market prospects of Arab men in England are influenced by recent Islamistic terrorist attacks and the war on Iraq. We use data from the British Labour Force Survey from Spring 2001 to Winter 2006 and treat the terrorist attacks on the USA on September 11th, 2001, the Madrid train bombings on March 11th, 2004 and the London bombings on July 7th, 2005, as well as the beginning of the war on Iraq on March 20th, 2003, as natural experiments that may have lead to a change in attitudes toward Arab or Muslim men. Using treatment group definitions based on ethnicity, country of birth, current nationality, and religion, evidence from regression-adjusted dierence-in-dierences-estimators indicates that the real wages, hours worked and employment probabilities of Arab men were unchanged by the attacks. This finding is in line with prior evidence from Europe.Discrimination, September 11th, Islamistic terror, employment, wages

Psychological traits and the gender gap in full-time employment and wages: Evidence from Germany

This paper shows that differences in various non-cognitive traits, specifically the “big five”, positive and negative reciprocity, locus of control and risk aversion, contribute to gender inequalities in wages and employment. Using the 2004 and 2005 waves of the German Socio-Economic Panel, evidence from regression and decomposition techniques suggests that gender differences in psychological traits are more important for inequalities in wages than in employment. Differences in the “big five”, in particular in agreeableness, conscientiousness and neurocitism matter for both wages and employment. For the latter, the results also show a large effect of differences in external locus of control.Gender wage gap, non-cognitive traits, decomposition

The Role of Psychological Traits for the Gender Gap in Full-Time Employment and Wages: Evidence from Germany

This paper shows that differences in various non-cognitive traits, specifically the "big five", positive and negative reciprocity, locus of control and risk aversion, contribute to gender inequalities in wages and employment. Using the 2004 and 2005 waves of the German Socio-Economic Panel, evidence from regression and decomposition techniques suggests that gender differences in psychological traits are more important for inequalities in wages than in employment. Differences in the "big five", in particular in agreeableness, conscientiousness and neurocitism matter for both wages and employment. For the latter, the results also show a large effect of differencesin external locus of control.Gender wage gap, non-cognitive traits, decomposition

Neo-Nazism and discrimination against foreigners: A direct test of taste discrimination

I test some predictions of Gary Becker’s theory of taste discrimination regarding discrimination of foreigners by employers, co-workers and customers. I combine a 2% sample of the German working population and a 50% sample of German plants with low-level regional data, including the vote shares of three right-wing parties as a proxy for regional racism. The results show that (a) foreigner-native wage differentials rise with the share of right-wing voters, (b) the exact magnitude of the effects varies between skill groups and by gender, the largest effects being found for high-skilled men and women, (c) average employment shares of natives vary very little with the share of right-wing voters, (d) segregated firms become more common in manufacturing and construction when support for right-wing parties rises, while no effects are found for services and gastronomy and (e) the negative wage effects are strongest for foreigners working in services, while no effects are found in manufacturing and gastronomy. These results broadly confirm the predictions from taste discrimination.taste discrimination, segregated firms, wage differentials

Differences in the earnings distribution of self- and dependent emploxed German men - evidence from a quantile regression decomposition analysis

This paper uses data from the German Socio-Economic Panel of the years 2000 to 2005 to study the earnings differential between self- and dependent employed German men. Constructing a counterfactual earnings distribution for the self-employed German dependant employment and using quantile regression decompositions we find that the earnings differential over the distribution cannot be explained by differences in endowments. Furthermore, low-earning self-employed could earn more in dependent employment. Finally, the observed earnings advantage for the self-employed at the top of the earnings distribution os not associated with higher returns to observable variables.self-employment, earnings differential, quantile regression decomposition, Machado/Mata decomposition

The impact of September 11th, 2001 on the job prospects of foreigners with Arab background - Evidence from German labor market data

This paper examines whether the attacks on the World Trade Center and the Pentagon on September 11th, 2001 have influence on the job prospects of Arabs in the German labor market. Using a large, representative database of the German working population, the attacks are treated as a natural experiment that may have caused an exogenous shift in attitudes toward persons who are perceived to be Arabs. Evidence from regression-adjusted difference-in-differences-estimates indicates the 9/11 did not cause a severe decline in job prospects. This result is robust over a wide range of control groups and several definitions of the sample and the observation period. Several explanations for this result, which is in line with prior evidence from Sweden, are offered.

Fields of training, plant characteristics and the gender wage gap in entry wages among skilled workers– Evidence from German administrative data

This paper investigates the gender wage gap among skilled German workers after the end of vocational training using data from social security record. Using information on worker and plant characteristics for both the training plant and the current employer, results from standard decomposition techniques show that up to 91% of an initial 14% earnings disadvantage for women in the first job can be attributed to differences in endowments. Of these, occupational segegreation explains up to two thirds of the earnings gap, with plant characteristics accounting for up to 30%.Gender wage gap, decomposition, field of training

The consequences of own and spousal disability on labor market outcomes and subjective well-being: Evidence from Germany

In this paper, I contrast the effects of individual and spousal disability on subjective wellbeing and labor supply using data on couples from the German Socio-Economic Panel for the years 1984 to 2006. I find that both men and women reduce their propensity to work when they or their partner become disabled. The effects of spousal disability are economically large. I find no evidence for hours and wage adjustments by spousal disability, although there are wage effects of individual disability. The life-satisfaction of women, but not of men, is reduced considerably by their partners’ disability. The effects are about 33 to 50% as large as those of individual disability. I also find no evidence that individuals adapt to their partners’ disability, although there is adaption to individual disability.disability, labor supply, subjective well-being, adaption; other-regarding preferences