60 research outputs found
empirical evidence from a German natural experiment
The amendment to the German Trade and Crafts Code in 2004 offers a natural
experiment to asses the causal effects of this reform on the probabilities of
being self-employed and transition into and out of self-employment, using
cross-sections (2002-2006) of German microcensus data. This study applies the
difference-in-differences technique in logit models for four occupational
groups. Easing the educational entry requirement has fostered self-employment
significantly for less qualified craftsmen, almost doubling the entry
probability, even as exit rates remained unaffected. Weaker effects occur for
other occupational groups. These findings have implications for the design of
regulations with educational requirements
Entry Regulation and Entrepreneurship: Empirical Evidence from a German Natural Experiment
The amendment to the German Trade and Crafts Code in 2004 offers a natural experiment to asses the causal effects of this reform on the probabilities of being self-employed and transition into and out of self-employment, using cross-sections (2002-2006) of German microcensus data. This study applies the difference-in-differences technique in logit models for four occupational groups. Easing the educational entry requirement has fostered self-employment significantly for less qualified craftsmen, almost doubling the entry probability, even as exit rates remained unaffected. Weaker effects occur for other occupational groups. These findings have implications for the design of regulations with educational requirements.Regulation, Entrepreneurship, Educational entry requirement, Natural experiment, Craftsmanship
Precautionary and Entrepreneurial Saving: New Evidence from German Households
The well-documented positive correlation between income risk and wealth was interpreted as evidence for high amounts of precautionary wealth in various studies. However, the large estimates emerged from pooling non-entrepreneurs and entrepreneurs without controlling for heterogeneity. This paper provides evidence for Germany based on representative panel data including private wealth balance sheets. Entrepreneurs, who face high income risk, hold more wealth than employees, but it is shown that this is not due to precautionary motives. Entrepreneurs may rather save for old age, as they are usually not covered by statutory pension insurance. The analysis accounts for endogeneity of entrepreneurial choice.precautionary saving, precautionary wealth, entrepreneurship
An Experimental Test of Ricardian Equivalence
This paper tests whether the Ricardian Equivalence proposition holds in a life
cycle consumption laboratory experiment. This proposition is a fundamental
assumption underlying numerous studies on intertemporal choice and has
important implications for tax policy. Using nonparametric and panel data
methods, we find that the Ricardian Equivalence proposition does not hold in
general. Our results suggest that taxation has a significant and strong impact
on consumption choice. Over the life cycle, a tax relief increases consumption
on average by about 22% of the tax rebate. A tax increase causes consumption
to decrease by about 30% of the tax increase. These results are robust with
respect to variations in the difficulty to smooth consumption. In our
experiment, we find the behavior of about 62% of our subjects to be
inconsistent with the Ricardian proposition. Our results show dynamic effects;
taxation inuences consumption beyond the current period
Precautionary and Entrepreneurial Saving: New Evidence from German Households
The well-documented positive correlation between income risk and wealth was interpreted as evidence for high amounts of precautionary wealth in various studies. However, the large estimates emerged from pooling non-entrepreneurs and entrepreneurs without controlling for heterogeneity. This paper provides evidence for Germany based on representative panel data including private wealth balance sheets. Entrepreneurs, who face high income risk, hold more wealth than employees, but it is shown that this is not due to precautionary motives. Entrepreneurs may rather save for old age, as they are usually not covered by statutory pension insurance. The analysis accounts for endogeneity of entrepreneurial choice.precautionary saving, precautionary wealth, entrepreneurship
Entry regulation and competition : evidence from retail and labormarkets of pharmacists
We examine a deregulation of German pharmacists to assess its effects on retail and labor markets. From 2004 onward, the reform allowed pharmacists to expand their single-store firms and to open or acquire up to three affliated stores. This partial deregulation of multi-store prohibition reduced the cost of firm expansion substantially and provides the basis for our analysis. We develop a theoretical model that suggests that the general limitation of the total store
number per firm to four is excessively restrictive. Firms with high managerial effciency will open more stores per furm and have higher labor demand. Our empirical analysis uses very rich information from the administrative panel data on the universe of pharmacies from 2002 to 2009 and their affiliated stores matched with survey data, which provide additional information on the characteristics of expanding firms before and after the reform. We find a sharp immediate increase in entry rates, which continues to be more than five-fold of its pre-reform level after five years for expanding firms. Expanding firms can double revenues but not profits after three years. We show that the increase of the number of employees by 50% after five years and the higher overall employment in the local markets, which increased by 40%, can be attributed to
the deregulation
Occupational licensing and the gender wage gap
We use a unique survey of the EU labor force to investigate the relationship between occupational licensing and the gender wage gap. We find that the gender wage gap is canceled for licensed self-employed workers. However, this closure of the gender wage gap is not mirrored by significant changes in the gender gap inhours worked. Our results are robust using decomposition methods, quantile regressions, different datasets, and selection correction
Occupational regulation, institutions, and migrants labor market outcomes
We study how licensing, certification and unionisation affect the wages of natives and migrants and their representation among licensed, certified, and unionized workers. We provide evidence of a dual role of labor market institutions, which both screen workers based on unobservable characteristics and also provide them with wage setting power. Labor market institutions confer significant wage premia to native workers (3.9, 1.6, and 2.7 log points for licensing, certification, and unionization respectively), due to screening and wage setting power. Wage premia are significantly larger for licensed and certified migrants (10.2 and 6.6 log points), reflecting a more intense screening of migrant than native workers. The representation of migrants among licensed (but not certified or unionized) workers is 14% lower than that of natives. This implies a more intense screening of migrants by licensing institutions than by certification and unionization
Optimal Taxation Under Different Concepts of Justness
A common assumption in the optimal taxation literature is that the social
planner maximizes a welfarist social welfare function with weights decreasing
with income. However, high transfer withdrawal rates in many countries imply
very low weights for the working poor in practice. We reconcile this puzzle by
generalizing the optimal taxation framework by Saez (2002) to allow for
alternatives to welfarism. We calculate weights of a social planner’s function
as implied by the German tax and transfer system based on the concepts of
welfarism, minimum absolute and relative sacrifice, as well as subjective
justness. For the latter we use a novel question from the German Socio-
Economic Panel. We find that the minimum absolute sacrifice principle is in
line with social weights that decline with net income. Absolute subjective
justness is roughly in line with decreasing social weights, which is reflected
by preferences of men, West Germans, and supporters of the grand coalition
parties
How important is precautionary labor supply?
We quantify the importance of precautionary labor supply using data from the German Socio-Economic Panel (SOEP) for 2001-2012. We estimate dynamic labor supply equations augmented with a measure of wage risk. Our results show that married men choose about 2.5% of their hours of work or one week per year on average to shield against unpredictable wage shocks. This implies that about 26% of precautionary savings are due to precautionary labor supply. If self-employed faced the same wage risk as the median civil servant, their hours of work would reduce by 4%
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