Moral Hazard in a Mutual Health-Insurance System: German Knappschaften, 1867–1914

The Knappschaft underlies Bismarck’s sickness and accident insurance legislation (1883 and 1884), which in turn forms the basis of the German social-insurance system today and, indirectly, many social-insurance systems around the world. The Knappschaften were formed in the medieval period to provide sickness, accident, and death benefi ts for miners. By the mid-nineteenth century, participation in the Knappschaft was compulsory for workers in mines and related occupations, and the range and generosity of benefi ts had expanded considerably. Each Knappschaft was locally controlled and self-funded, and their admirers saw in them the ability to use local knowledge and good incentives to deliver benefi ts at low cost. This paper focuses on a problem central to any insurance system, and one that plagued the Knappschaften as they grew larger in the later nineteenth century: the problem of moral hazard. Replacement pay for sick miners made it attractive, on the margin, for miners to invent or exaggerate conditions that made it impossible for them to work. Here we outline the moral hazard problem the Knappschaften faced as well as the internal mechanisms they devised to control it. We then use econometric models to demonstrate that those mechanisms were at best imperfect.Sickness insurance; moral hazard; malingering; Knappschaft; social insurance

Moral hazard in a mutual health-insurance system: German Knappschaften, 1867-1914

This paper studies moral hazard in a sickness-insurance fund that provided the model for social-insurance schemes around the world. The German Knappschaften were formed in the medieval period to provide sickness, accident, and death benefits for miners. By the mid-nineteenth century, participation in the Knappschaft was compulsory for workers in mines and related occupations, and the range and generosity of benefits had expanded considerably. Each Knappschaft was locally controlled and self-funded, and their admirers saw in them the ability to use local knowledge and good incentives to deliver benefits at low cost. The Knappschaft underlies Bismarck’s sickness and accident insurance legislation (1883 and 1884), which in turn forms the basis of the German social-insurance system today and, indirectly, many social-insurance systems around the world. This paper focuses on a problem central to any insurance system, and one that plagued the Knappschaften as they grew larger in the later nineteenth century: the problem of moral hazard. Replacement pay for sick miners made it attractive, on the margin, for miners to invent or exaggerate conditions that made it impossible for them to work. Here we outline the moral hazard problem the Knappschaften faced as well as the internal mechanisms they devised to control it. We then use econometric models to demonstrate that those mechanisms were at best imperfect.sickness insurance, moral hazard, Knappschaft, social insurance

Bismarck to No Effect: Fertility Decline and the Introduction of Social Insurance in Prussia

Economists have long argued that introducing social insurance will reduce fertility. The hypothesis relies on standard models: if children are desirable in part because they provide security in case of disability or old age, then state programs that provide insurance against these events should induce couples to substitute away from children in the allocation of wealth. We test this claim using the introduction of social insurance in Germany in the 1880s and 1890s. Bismarck’s social-insurance system provided health insurance, workplace-accident insurance, and old age pensions to a majority of the working population. The German case appeals because the social insurance program started on a large scale and was compulsory for covered classes of workers, and because fertility in Germany in this period was still relatively high. Focusing on the state of Prussia, we estimate differences-in-differences models that ask whether marriage and marital fertility reacted to the introduction or extension of the main social insurance programs. For Prussia as a whole we find little impac

The introduction of Bismarck´s social security system and its effects on marriage and fertility in Prussia

Economists have long argued that introducing social insurance will reduce fertility. The hypothesis relies on standard models: if children are desirable in part because they provide security in case of disability or old age, then State programs that provide insurance against these events should induce couples to substitute away from children in the allocation of wealth. We test this claim using the introduction of social insurance in Germany in the period 1881-1910. Bismarck´s social-insurance scheme had three pillars: health insurance, workplace accident insurance, and an old age pension. Earlier studies typically focus on the pension alone; we consider all three pillars. We find that Bismarck´s social insurance system affected fertility overall only via its effects on the incentive to marry. The old age insurance by itself tended to reduce marriages, but the health and accident-insurance components had the opposite effect. For people exposed to all three pillars of social insurance, the two effects cancelled each other and the aggregate effect on fertility was muted

Electronic Consequences of Ligand Substitution at Heterometal Centers in Polyoxovanadium Clusters: Controlling the Redox Properties through Heterometal Coordination Number

The rational control of the electrochemical properties of polyoxovanadate‐alkoxide clusters is dependent on understanding the influence of various synthetic modifications on the overall redox processes of these systems. In this work, the electronic consequences of ligand substitution at the heteroion in a heterometal‐functionalized cluster was examined. The redox properties of [V$_{5}$O$_{6}$(OCH$_{3}$)$_{12}$FeCl] (1‐[V$_{5}$FeCl] ) and [V$_{5}$O$_{6}$(OCH$_{3}$)$_{12}$Fe]X (2‐[V5Fe]X ; X=ClO$_{4}$, OTf) were compared in order to assess the effects of changing the coordination environment around the iron center on the electrochemical properties of the cluster. Coordination of a chloride anion to iron leads to an anodic shift in redox events. Theoretical modelling of the electronic structure of these heterometal‐functionalized clusters reveals that differences in the redox profiles of 1‐[V$_{5}$FeCl] and 2‐[V$_{5}$Fe]X arise from changes in the number of ligands surrounding the iron center (e.g., 6‐coordinate vs. 5‐coordinate). Specifically, binding of the chloride to the sixth coordination site appears to change the orbital interaction between the iron and the delocalized electronic structure of the mixed‐valent polyoxovanadate core. Tuning the heterometal coordination environment can therefore be used to modulate the redox properties of the whole cluster

Catching-up and falling behind knowledge spillover from American to German machine tool makers

In our days, German machine tool makers accuse their Chinese competitors of violating patent rights and illegally imitating German technology. A century ago, however, German machine tool makers used exactly the same methods to imitate American technology. To understand the dynamics of this catching-up process we use patent statistics to analyze firms? activities between 1877 and 1932. We show that German machine tool makers successfully deployed imitating and counterfeiting activities in the late 19th century and the 1920s to catchup to their American competitors. The German administration supported this strategy by stipulating a patent law that discriminated against foreign patent holders and probably also by delaying the granting of patents to foreign applicants. Parallel to the growing international competitiveness of German firms, however, the willingness to guarantee intellectual property rights of foreigners was also increasing because German firms had now to fear retaliatory measures in their own export markets when violating foreign property rights within Germany