Population Aging, Social Security, and the New Immigration Policy in Germany

I construct a heterogeneous agent overlapping generations model with agents differing in age, origin (immigrant or native), and working ability. Calibrating the model to the German economy, I explicitly take into account differences in inter-generational transmission of working ability, fertility, and the main features of the German social security and tax systems. I analyze the impacts of exogenous immigration policy changes on the evolution of population, government accounts, and welfare along the transition path. I find that an inflow of high-skilled immigrants that is equal to 0.2 percent of the population per year increases welfare for all types of agents on the new balanced growth path (by 2.8 to 0.1 percent depending on the type of the agent). The key to the results is the interaction between the German pension system, equilibrium prices, and the decline in pensioner-contributor ratio. My results show that a reasonable immigrant inflow (0.2 percent of the population per year) may increase welfare and reinforce the sustainability of the social security system, which is in contrast to Fehr, Jokisch, and Kotlikoff (2004).International Migration, Social Security, Aging, Overlapping, Generations Model

The Kalai-Smorodinsky Bargaining Solution Manipulated by Pre-Donations is Concessionary

This study examines the manipulability of simple n-person bargaining problems by pre-donations where the Kalai-Smorodinsky solution is operant. We extend previous results on the manipulation of two-person bargaining problems to the n-person case and show that in a world where a prebargaining stage is instituted in which the bargainers may unilaterally alter the bargaining problem, bargainers with greater ideal payoffs transform the bargaining set into one on which the Kalai- Smorodinsky solution distributes payoffs in accordance with the Concessionary division rule of disputed property.Bargaining Solutions, Pre-donation, Kalai-Smorodinsky

Search, Moral Hazard, and Price Dispersion

We study the effects of insurance coverage on consumer search behavior and the pricing of services covered by insurance, constructing a general equilibrium model of moral hazard in search with an endogenous price distribution. When an insured event occurs, households request quotes from firms, who offer a homogenous service at various prices. We show that lower coinsurance rates reduce the amount of search by households, allowing firms to increase their prices. Hence, moral hazard in search is far more costly than shown in previous models, which ignored equilibrium firm response to changes in consumer search behavior.

Searching on a Deadline

Abstract We analyze an equilibrium search model where the buyer seeks to purchase a good before a deadline. The buyer's reservation price rises continuously as the deadline approaches. A seller cannot observe a potential buyer's remaining time until deadline, and hence posts a price that weighs the probability of sale versus the profit once sold. The model has a unique equilibrium, which can take exactly one of two forms. In a late equilibrium, buyers initially forgo any purchases, only accepting some offers as the deadline draws near. In an early equilibrium, buyers are willing to accept some offers even as they enter the market. Equilibrium price dynamics are determined by the concentration of buyers near their deadline, as well as their urgency of completing the transaction before their deadline

Rushing to Overpay: The REIT Premium Revisited

We explore the questions of whether and why Real Estate Investment Trusts (REITs) pay more for real estate than non-REIT buyers, consequently breaking the law of one price. We develop a model where REITs optimally pay more for property because (1) they are able, due to capital access advantages and, (2) are occasionally compelled, due to regulatory time constraints on the deployment of capital. We show that the typically large (20 to 60 percent) and statistically significant (p-values less than 0.01) REIT-buyer premiums found in standard empirical hedonic pricing models are biased due to unobserved explanatory variables. Using a repeat-transaction methodology that controls for unobserved independent variables, we find the REIT-buyer premium to be about 5 percent. Furthermore, we show that REITs¿ ability (as measured by access to capital markets) and regulator compulsion (as measured by capital deployment deadlines) are related to the price premium.Real Estate Investment Trusts (REITs), commercial properties, hedonic price analysis, repeat transactions, market efficiency, law of one price, price premium

The n-Person Kalai-Smorodinsky Bargaining Solution under Pre-Donations

Abstract This study examines the behavior of simple n-person bargaining problems under pre-donations where the Kalai-Smorodinsky (KS) solution is operant. Pre-donations are a unilateral commitment to transfer a portion of one's utility to someone else, and are used to distort the bargaining set and thereby influence the bargaining solution. In equilibrium, these pre-donations are Pareto-improving over the undistorted solution; moreover, when the agents' preferences are sufficiently distinct, the equilibrium solution coincides with the Concessionary Division rule

Code and data files for "Running Out of Time: Limited Unemployment Benefits and Reservation Wages"

Code and data to replicate results of the article.