Family and gender still matter: the heterogeneity of returns to education in Germany

Using information on family background, we estimate returns to education, allowing for the heterogeneity of returns. In order to control for the unobserved heterogeneity shared by family members, we construct a siblings sample and employ family fixed-effects and family correlated random-effects models. Our main result is that family background still matters despite the substantial political efforts to equalize educational opportunities in Germany. Persons with less-educated parents earn lower wages, but have higher returns to education. This supports the view that persons from less-educated backgrounds still face higher marginal costs in the educational system. The same interplay between the wage level and marginal returns is found for the effect of gender and cohort. --Returns to education,siblings analysis,heterogeneity of returns

Realistic Man, Fantasy Policeman: The Longevity of Ruth Rendell's Reginald Wexford

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Einstein-Podolsky-Rosen - entangled motion of two massive objects

In 1935, Einstein, Podolsky and Rosen (EPR) considered two particles in an entangled state of motion to illustrate why they questioned the completeness of quantum theory. In the past decades, microscopic systems with entanglement in various degrees of freedom have successfully been generated, representing compelling evidence to support the completeness of quantum theory. Today, the generation of an EPR-entangled state of motion of two massive objects of up to the kilogram-scale seems feasible with state-of-the-art technology. Recently, the generation and verification of EPR-entangled mirror motion in interferometric gravitational wave detectors was proposed, with the aim of testing quantum theory in the regime of macroscopic objects, and to make available nonclassical probe systems for future tests of modified quantum theories that include (non-relativistic) gravity. The work presented here builds on these earlier results and proposes a specific Michelson interferometer that includes two high-quality laser mirrors of about 0.1 kg mass each. The mirrors are individually suspended as pendula and located close to each other, and cooled to about 4 K. The physical concepts for the generation of the EPR-entangled centre of mass motion of these two mirrors are described. Apart from a test of quantum mechanics in the macroscopic world, the setup is envisioned to test predictions of yet-to-be-elaborated modified quantum theories that include gravitational effects

Rates of Return of the German Pay-As-You-Go Pension System

Due to population aging, contribution rates of the mandatory German pay-as-you-go pension system are expected to increase dramatically during the next decades. This paper estimates the impact on the expected returns of contributions for different cohorts. I show that rates of return for younger cohorts will be between zero and one percent, depending on the demographic and economic scenarios; for some demographic groups they become negative. The implicit tax rates reach levels of around two-thirds of contributions for the youngest cohorts. If decreasing returns reduce incentives for labor supply and system participation, the whole system may become unsustainable. Indeed, I find empirical evidence for a recent decline of voluntary contributions and for a substitution away from taxable employment.

Banks without Parachutes - Competitive Effects of Government Bail-out Policies

Lecture on the first SFB/TR 15 meeting, Gummersbach, July, 18 - 20, 2004The explicit or implicit protection of banks through government bail-out policies is a universal phenomenon. We analyze the competitive effects of such policies in two models with different degrees of transparency in the banking sector. Our main result is that the bail-out policy unambiguously leads to higher risk-taking at those banks that do not enjoy a bail-out guarantee. The reason is that the prospect of a bail-out induces the rotected bank to expand, thereby intensifying competition in the deposit market and depressing other banks’ margins. In contrast, the effects on the protected bank’s risk taking and on welfare depend on the transparency of the banking sector

The Role of Liquidity and Implicit Guarantees in the German Twin Crisis of 1931

Using monthly balance-sheet data of all major German credit banks, we analyze deposit with-drawals and bank failures in the German banking and currency crisis of 1931. We find that de-posit withdrawals were driven by the run on the currency, but were also related to banks’ liquidity positions; that branch banks were no more stable than unit banks; and that large banks were privileged, being bailed out and receiving preferential access to the discount window. These findings underline the importance of liquidity and implicit guarantees in twin crises, while they question the benefits of branching in such crises.Twin crises, liquidity, implicit guarantees, “too big to fail”