To go or not to go: Emigration from Germany

This study analyzes the qualitative aspects of emigration from Germany taking account of economic and non-economic reasons. The reported willingness to emigrate from Germany in the German Socio-Economic Panel (GSOEP) is explained for men and women by three groups of variables: individual characteristics, household characteristics, and regional characteristics. It turns out that the educational background and West German residency positively affect the willingness to emigrate, whereas German nationality, age, and the family situation are mostly negatively correlated with it.emigration, intention variable, probit estimation, German Socio Economic Panel (GSOEP)

Harmonisation of Old-Age Security Within the European Union

Not sufficiently harmonised national pension systems within the European Union distort the allocation of labour and endanger redistributive activities. This paper identifies the most decentralised level of harmonisation which guarantees efficient allocation and enables redistribution. For this, we build on theoretical results to evaluate the realised distribution of the legal power between the European Union and the Member States and the resulting level of harmonisation. We find that harmonisation is sub-optimally low. Binding rules guaranteed by the European Union are needed which means that the Member States have to concede more fundamental responsibilities to the European Union.European integration, mobility, unfunded pension systems, system competition, allocation of labour, intergenerational redistribution

Migration and the Welfare State: The Economic Power of the Non-Voter?

This paper investigates the impact of emigration on the political choice regarding the size of the welfare state. Mobility has two countervailing effects: the political participation effect and the tax base effect. With emigration, the composition of the constituency changes. This increases the political influence of the less mobile part of the population. The new political majority has to take into account that emigration reduces tax revenues and thereby affects the feasible set of redistribution policies. The interaction of the two e¤ects has so far not been analyzed in isolation. We find that the direction of the total e¤ect of migration depends on the initial income distribution in the economy. Our results also contribute to the empirical debate on the validity of the median-voter approach for explaining the relation between income inequality and redistribution levels.migration; redistribution; voting

Voting on Labour-Market Integration and Education Policy when Citizens Differ in Mobility and Ability

We analyse how institutional and political decisions are intertwined. Citizens who differ in their mobility and ability vote first on labour market integration and afterwards on education policy. The institutional decision on integration influences the succeeding education policy. More surprisingly, the prospect of voting on education policy also affects the preceding integration decision. There are incentives for citizens to vote strategically for the institutional setting in which their preferred education policy is more successful at the polls. We show how a ‘joint’ analysis of the institutional and political decision alters the results compared to an ‘isolated’ analysis of either of the two decisions. Also, we explore how the two-dimensional heterogeneity of the citizens shapes the voting equilibrium in our setting with sequential voting.voting, labour-market integration, education policy, migration

Mobility and the Role of Education as a Commitment Device

European integration forces system competition within European countries. This competition has important implications for both the public pay-as-you-go pension scheme and the public education system. Without labor mobility, each generation has an incentive to invest in the human capital of the subsequent generation in order to maximize pension payments. It is a popular belief that increasing labor mobility decreases the incentives to finance the education of the subsequent generation. This paper shows that this is not true if human capital investment increases the mobility of the subsequent generation and can thus be used as a commitment device for low taxes.Education, intergenerational transfers, commitment

Integration, Mobility, and Human Capital Formation

In this note, we show that labour market integration can be a double-edged sword. In the presence of local human capital externalities, integration and the ensuing agglomeration of skilled labour can cause a decline in human capital and the total wage sum (net of education costs). In particular, integration depresses the incentives for some talented but immobile individuals to become skilled.human capital, migration, labour market integration, agglomeration

Migration and the Welfare State: The Economic Power of the Non-Voter?

This paper investigates the impact of emigration on the political choice regarding the size of the welfare state. Mobility has two countervailing effects: the political participation effect and the tax base effect. With emigration, the composition of the constituency changes. This increases the political influence of the less mobile part of the population. The new political majority has to take into account that emigration reduces tax revenues and thereby affects the feasible set of redistribution policies. The interaction of the two effects has so far not been analyzed in isolation. We find that the direction of the total effect of migration depends on the initial income distribution in the economy. Our results also contribute to the empirical debate on the validity of the median-voter approach for explaining the relation between income inequality and redistribution levels

Health Insurance Competition in Germany - The Role of Advertising

In the 1990s, competition among health insurance funds (‘sickness funds’) was introduced in Germany. As one means of competition, free choice of initial health funds and subsequent switching between them was made available to all insured. Since then, the number of funds has decreased substantially, and funds have had to engage in competitive strategies to remain in the market. In this paper, we want to analyse the funds’ advertising activities in the face of the changed competitive environment. This has not been possible to date due to a lack of data. We use two new datasets to get a first insight into the potential effects of competition on funds’ advertising strategies; one of the volume and cost of advertisements and one of their contents. Our results suggest that competition has been associated with an increase in the amount of advertising. As to the adverts themselves, we find that there was a decrease in the share of advertisements of a ‘general’ content in favour of advertisements of a more ‘fund-specific’ content. The data therefore indicate that once the market was open to switching of funds by the insured, funds’ advertising efforts changed to differentiating their own perceived strengths from those of competitor funds. These observations allow us to draw some tentative conclusions about the relevance of (attempts of) risk selection by health funds via advertisements and about the general success of the pro-competitive legislation.Regulated competition; health insurance market; risk selection; advertising; Germany

Migration and the Welfare State: The Economic Power of the Non-Voter?

This paper investigates the impact of emigration on the political choice regarding the size of the welfare state. Mobility has two countervailing effects: the political participation effect and the tax base effect. With emigration, the composition of the constituency changes. This increases the political influence of the less mobile part of the population. The new political majority has to take into account that emigration reduces tax revenues and thereby affects the feasible set of redistribution policies. The interaction of the two effects has so far not been analyzed in isolation. We find that the direction of the total effect of migration depends on the initial income distribution in the economy. Our results also contribute to the empirical debate on the validity of the median-voter approach for explaining the relation between income inequality and redistribution levels.migration; redistribution; voting

When will the Germans Get Trapped in their Pension System?

The upcoming demographic crisis in Germany demands fundamentalreforms of the pension system. In a democracy, reforms are, however, onlyfeasible when they are supported by the majority of the electorate. Todetermine whether the majority is in favor of reforms of the pension system,we calculate for each year the "indifference age" as the age of the cohortwhich is not affected by the reform and the "median age" as the age of thepolitically decisive cohort. Until 2023, the median age is below theindifference age implying that the young have the majority and the reformcan be democratically enforced. After 2023, Germany will be characterizedby a gerontocratic system where the old decide over the young. Only the fearthat the young might emigrate – and perhaps a certain altruistic attitudetowards their own descendants – will prevent the old from exploiting theyoung.demographic crisis, pension reform, political feasibility, median age, indifference age