Press Prudence, Nazi Student Orders, and Jim Crow

This Article discusses the 1931 decision of the Austrian Constitutional Court in which it was held that rules promulgated by the University of Vienna, which aimed to separate the student body into four ethnically-defined nations, were invalid. The Article notes the striking similarities of the case to Brown v. Board of Education and other American equal protection education cases. In examining the decision the article states that in declining to uphold an equivalent to the \u27separate but equal\u27 doctrine, the Austrian justices did for Austrian law what Plessy had failed to do for US law thirty five years before. The Austrian Court held that the University violated constitutional principles of equality and that they had no authority to do so

Optimal Unemployment Insurance and Voting

The framework of a general equilibrium heterogeneous agent model is used to study the optimal design of an unemployment insurance (UI) scheme and the voting behaviour on unemployment policy reforms. In a first step, the optimal defined benefit and defined replacement ratio UI systems are obtained in simulations. Then, the question whether switching to such an optimal system from the status quo would be approved by a majority of the voters is explored. Finally, the transitional dynamics following a policy change are analysed. Accounting for this transition has an important influence on the voting outcome.insurance, heterogeneous agents, job search, voting, human capital

Optimal Unemployment Insurance with Variable Skill Levels

I study the consequences of heterogeneity of skills for the design of an optimal unemployment insurance, using a principal-agent set-up with a risk neutral insurer and infinitely lived risk averse agents. Agents, who are characterised by different productivities or skills, are employed by firms offering wages that depend both on the agents’ individual skill level and the quality of the worker-firm-match. Agents face the risk of losing their job and, while unemployed, are offered jobs with different match qualities. No search effort by the agent is needed to receive offers. Individual productivity declines during unemployment due to depreciation of skills and increases on the job because of learning by doing. Any insurance offered must take into account the moral hazard problem created by the fact that job offers are private information to the agent. A further complication is due to the unobservability of an agent’s productivity. I find that under an optimal contract, periods of unemployment are characterised by declining benefits. Agents are further punished for long unemployment by reducing expected future utility. A new result obtained from this approach is the observation that under an efficient contract, agents whose productivity is relatively high tend to have a shorter unemployment duration and a higher productivity growth in the future. Unemployment benefits do not only depend on an agent’s employment history, but also on the skills reported by the agent. Agents are punished for accepting jobs that do not seem to be in line with their reported skills.Unemployment Insurance, Human Capital, Adverse Selection, Moral Hazard

Nonanticipating estimation applied to sequential analysis and changepoint detection

Suppose a process yields independent observations whose distributions belong to a family parameterized by \theta\in\Theta. When the process is in control, the observations are i.i.d. with a known parameter value \theta_0. When the process is out of control, the parameter changes. We apply an idea of Robbins and Siegmund [Proc. Sixth Berkeley Symp. Math. Statist. Probab. 4 (1972) 37-41] to construct a class of sequential tests and detection schemes whereby the unknown post-change parameters are estimated. This approach is especially useful in situations where the parametric space is intricate and mixture-type rules are operationally or conceptually difficult to formulate. We exemplify our approach by applying it to the problem of detecting a change in the shape parameter of a Gamma distribution, in both a univariate and a multivariate setting.Comment: Published at http://dx.doi.org/10.1214/009053605000000183 in the Annals of Statistics (http://www.imstat.org/aos/) by the Institute of Mathematical Statistics (http://www.imstat.org

Optimal Unemployment Insurance in a Search Model with Variable Human Capital

The framework of a general equilibrium heterogeneous agents model is used to study the optimal design of an unemployment insurance scheme and the voting behaviour on unemployment policy reforms. Agents, who have a limited lifetime and participate in the labour market until they reach the retirement age, can either be employed or unemployed in each period of their working life. Unemployed agents receive job offers of different (match) qualities. Moreover, unemployed agents suffer a decline of their individual productivity during unemployment, whereas the productivity of employed agents increases over time. Any form of unemployment insurance must take into account an important trade-off. On the one hand, generous benefits are desirable as they provide good insurance of the risk-averse agents against unforeseen income fluctuations (caused by layoffs and the randomness of individual job offers). On the other hand, high benefits induce a moral-hazard problem, as certain groups of agents choose to decline job offers that, while not being as attractive as the unemployment benefit from an individual point of view, a central planner would make them accept. An optimal unemployment insurance scheme is one that maximizes the expected lifetime utility of a newly born agent. Two types of unemployment insurance are considered, one with defined benefits and one with defined replacement ratios. A numerical version of the model is calibrated to the West German economy and simulated at ½-monthly frequency, resulting in an agent’s life-span of 1440 periods. The welfare maximising unemployment insurance scheme is determined in simulations. Under this optimal system, no payments are made to short-term unemployed agents. Long-term unemployed receive rather low (social assistance level) benefits, the optimal level of which depends on the assumed degree of risk aversion. Defined benefit systems provide a higher welfare than defined replacement ratios. I then address the question whether the majority of population would support the optimal system given the status quo. It turns out that older or unemployed agents tend vote in favour of the status quo, whereas young employed agents would approve the reform. If voters can choose between keeping their current unemployment system and jumping to the equilibrium associated with the optimal policy, there is a slight majority of just above 50% for the optimal policy. Finally, a more realistic case is considered, in which voters do not choose between the long-rung equilibria associated with policy changes, but take into account the transition process to the new equilibrium. The adjustment process of the macro environment after the policy reform is computed for a time span of sixty years. As some of the relevant variables adjust very slowly to their new long-run equilibrium values, the effect of the transition process on voting behaviour cannot be neglected

Democracy and the European Constitution: Majority Voting and Small Member States

The purpose of this article is to shed light on the relation between large and small member states with regard to the majority principle. Since Maastricht at the latest the institutional discussion centers around the question of how to devise a decision system which pays equal attention to the interests of small and large states in the European Union. This article challenges several underlying assumptions: that size is an important factor determining the political clout of a member state; the existence of ‘natural’ interest divergences and the competitive nature of the European politiy. Finally, it questions the intrinsic relation between majority voting and democracy.democracy; majority voting; European Convention; legitimacy; political science

An Intergenerational Model of Domestic Violence

This paper proposes and analyzes an intergenerational model of domestic violence (IMDV) in which behavioral strategies or scripts are transmitted from parents to children. The model rests upon three key assumptions: * The probability that a husband will be violent depends on whether he grew up in a violent home. * The probability that a wife will remain with a violent husband depends on whether she grew up in a violent home. * Individuals who grew up in violent homes tend to marry individuals who grew up in violent homes. The IMDV calls attention to three features neglected in the domestic violence literature. The first is the marriage market. If some men are more likely than others to be violent as husbands and some women are more likely than others to remain in violent marriages, then the probability that such individuals marry each other is crucial. The second neglected feature is divorce: ongoing domestic violence requires the conjunction of a husband who is violent and a wife who stays. Third, variables and policies that reduce the rate of domestic violence in the short run are likely to reduce it even further in the long run.