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DIW on 17.08.2017, 11:00 h
Income or Leisure? On the Hidden Benefits of (Un-)Employment

Abstract: We study the usually assumed trade-off between income and leisure in labor supply decisions using comprehensive German panel data. We compare non-employed individuals after plant closures with employed people regarding both income and time use as well as their subjective perceptions of these two factors. We find that the gain of non-working time translates into higher satisfaction with free time, while time spent on hobbies increases to a lesser extent than home production. Additionally, satisfaction with family life increases, which may be a hidden benefit of being unemployed. In contrast, satisfaction with income strongly declines when [...] ( more )

DIW on 17.08.2017, 11:00 h
Smoking Behaviour in Germany: Evidence from the SOEP

Abstract: As in most OECD countries, smoking prevalence and cigarette consumption have been decreasing in Germany since the early 2000s. This paper analyses whether smoking prevalence and cigarette consumption, as well as their development over time, differ between socio-economic subgroups. Identifying these differences provides insights into the effect of policy interventions on German smoking behaviour. Based on data from the Socio-Economic Panel (SOEP), a large longitudinal study of the German population, we find that both the decline in smoking prevalence and the decline in average cigarette consumption were probably driven by a behavioural change [...] ( more )

DIW on 11.08.2017, 12:00 h
How Does Availability of County-Level Healthcare Services Shape Terminal Decline in Well-Being?

Abstract: Both lifespan psychology and life course sociology highlight that contextual factors influence individual functioning and development. In the current study, we operationalize context as county-level care services in inpatient and outpatient facilities(e.g., number of care facilities, privacy in facilities) and investigate how the care context shapes well-being in the last years of life. To do so, we combine 29 waves of individual-level longitudinal data on life satisfaction from now deceased participants in the nationwide German Socio-Economic Panel Study (N = 4557; age at death: M = 73.35, SD = 14.20; 47% women) with county-level data from [...] ( more )

DIW on 11.08.2017, 12:00 h
The Effects of Conflict on Fertility: Evidence from the Genocide in Rwanda

Abstract: This paper analyzes the effects of the 1994 genocide in Rwanda on fertility outcomes. We study the effects ofviolence on both the timing of the first birth after the genocide and the total number of post-genocide births. Weanalyze individual-level data from several Demographic and Health Surveys, using event history and count datamodels. The paper contributes to the literature on the demographic effects of violent conflict by testing twochannels through which conflict influences subsequent fertility. First, the type of violence exposure as measuredby child death as well as by the death of a woman?s sibling. Second, the conflict-induced [...] ( more )

DIW on 11.08.2017, 03:00 h
Liberalisation of Passenger Rail Services

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DIW on 11.08.2017, 02:00 h
Involuntary Job Loss and Changes in Personality Traits

Abstract: Economists consider personality traits to be stable, particularly throughout adulthood.However, evidence from psychological studies suggests that the stability assumption maynot always be valid, as personality traits can respond to certain life events. Our paperanalyzes whether and to what extent personality traits are malleable over a time spanof eight years for a sample of working individuals. Furthermore, we specifically look atchanges in personality traits after a major adverse life event: involuntary job loss. We usedata from the German Socio-Economic Panel Study (SOEP) from 2004 to 2014 ? a periodover which individuals? Big Five [...] ( more )

DIW on 10.08.2017, 04:00 h
Exploiting the Economic Opportunities of the Energy Transition

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DIW on 08.08.2017, 12:00 h
Levels of and Changes in Life Satisfaction Predict Mortality Hazards: Disentangling the Role of Physical Health, Perceived Control, and Social Orientation

Abstract: It is well-documented that well-being typically evinces precipitous decrements at the end of life. However, research has primarily taken a postdictive approach by knowing the outcome (date of death) and aligning in retrospect how well-being has changed for people with documented death events. In the present study, we made use of a predictive approach by examining whether and how levels of and changes in life satisfaction prospectively predict mortality hazards and delineate the role of contributing factors, including health, perceived control, and social orientation. To do so, we applied shared parameter growth-survival models to 20-year [...] ( more )

DIW on 08.08.2017, 04:00 h
Taxing Childcare: Effects on Childcare Choices, Family Labor Supply and Children

Abstract: Previous studies report a range of estimates for the response of female labor supply and childcare attendance to childcare prices. We shed new light on these questions using a policy reform that raises the price of public daycare. After the reform, children are 8 percentage points less likely to attend public daycare which implies a compensated price elasticity of -0.6. There is little labor supply response in the full sample, though declines for vulnerable subgroups. Spillover effects on older siblings and fertility decisions show that the policy affects the whole household, not just targeted family members.
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DIW on 08.08.2017, 03:00 h
The Returns to Personality Traits across the Wage Distribution

Abstract: This paper investigates heterogeneous wage effects of non-cognitive skills across the wage distribution. I develop a model of wage determination under uncertainty with respect to individual productivity based on three components (minimum wages, productivity premiums, bargaining premiums). Based on this model, I expect (i) a larger importance and (ii) larger effects of non-cognitive skills for high-wage employees compared to their low-wage counterparts. I test these hypotheses with unconditional quantile regressions using large-scale survey data from Germany, the UK, and Australia. To test the joint explanatory contribution of multiple [...] ( more )

DIW on 08.08.2017, 03:00 h
How Do Entrepreneurial Portfolios Respond to Income Taxation?

Abstract: We investigate how personal income taxes affect the portfolio share of personal wealth that entrepreneurs invest in their own business. In a reformulation of the standard portfolio choice model that allows for underreporting of private business income to tax authorities, we show that a fall in the tax rate may increase investment in risky entrepreneurial business equity at the intensive margin, but decrease entrepreneurial investment at the extensive margin. To test these hypotheses, we use household survey panel data for Germany eliciting the personal wealth composition in detail in 2002, 2007, and 2012. We analyze the effects of personal [...] ( more )

DIW on 07.08.2017, 11:00 h
Designing a Global Energy System Based on 100% Renewables for 2050: GENeSYS-MOD: An Application of the Open-Source Energy Modelling System (OSeMOSYS)

Abstract: This paper develops a path for the global energy system up to 2050, presenting a new application of the open source energy systems model OSeMOSYS to the community. It allows quite disaggregate energy and emission analysis: GENeSYS-MOD (Global Energy System Model) uses a system of linear equations of the energy system to search for lowestcost solutions for a secure energy supply, given externally defined constraints, mainly in terms of CO2-emissions. The General Algebraic Modeling System (GAMS) version of OSeMOSYS is updated to the newest version and, in addition, extended and enhanced to include e.g. a modal split for transport, an improved [...] ( more )

DIW on 07.08.2017, 05:00 h
"What Else Are You Worried about?" - Integrating Textual Responses into Quantitative Social Science Research

Abstract: Open-ended questions have routinely been included in large-scale survey and panel studies, yet there is some perplexity about how to actually incorporate the answers to such questions into quantitative social science research. Tools developed recently in the domain of natural language processing offer a wide range of options for the automated analysis of such textual data, but their implementation has lagged behind. In this study, we demonstrate straightforward procedures that can be applied to process and analyze textual data for the purposes of quantitative social science research. Using more than 35,000 textual answers to the question [...] ( more )

DIW on 07.08.2017, 05:00 h
Wind Power and Externalities

Abstract: This paper provides a literature review on wind power and externalities from multiple perspectives. Specifically, the economic rationale behind world-wide wind power deployment is to mitigate negative externalities of conventional electricity technologies, notably emissions from fossil fuels. However, wind power entails externalities itself. Wind turbines can lower quality of human life through noise and visual impacts, and threaten wildlife. Variable wind electricity can impose additional costs within the electricity system. Locally and nationally, employment, output, and security of electricity supply can be affected. Assembling evidence [...] ( more )

DIW on 07.08.2017, 04:00 h
Long-Run Power Storage Requirements for High Shares of Renewables: Review and a New Model

Abstract: The purpose of this article is twofold. First, we review model-based analyses that explore the role of power storage in energy systems with high shares of variable renewables. Second, we introduce a new model that is specifically designed for exploring long-term storage requirements. The literature survey focuses on recent contributions in the peer-reviewed energy economics and engineering literature. We compare key characteristics of the different models, provide an overview of model applications, and summarize key findings on power storage requirements. We also evaluate which system values of storage are covered by respective model [...] ( more )

DIW on 07.08.2017, 03:00 h
Long-Run Power Storage Requirements for High Shares of Renewables: Results and Sensitivities

Abstract: We use the model DIETER, introduced in a companion paper, to analyze the role of power storage in systems with high shares of variable renewable energy sources. The model captures multiple system values of power storage related to arbitrage, capacity, and reserve provision. We apply the model to a greenfield setting that is loosely calibrated to the German power system, but may be considered as a more generic case of a thermal power system with increasing shares of variable renewables. In a baseline scenario, we find that power storage requirements remain moderate up to a renewable share of around 80%, as other options on both the supply and [...] ( more )

DIW on 04.08.2017, 09:00 h
Power-to-Heat for Renewable Energy Integration: Technologies, Modeling Approaches, and Flexibility Potentials

Abstract: Flexibly coupling power and heat sectors may contribute to both renewable energy integration and decarbonization. We present a literature review of modelbased analyses in this field, focusing on residential heating. We compare geographical and temporal research scopes and identify state-of-the-art analytical model formulations, particularly concerning heat pumps and thermal storage. While numerical findings are idiosyncratic to specific assumptions, a synthesis of results generally indicates that power-to-heat technologies can cost-effectively contribute to fossil fuel substitution, renewable integration, and decarbonization. Heat pumps and [...] ( more )

DIW on 02.08.2017, 03:00 h
Value-Added Tax Cuts Bring Greatest Relief to Lower and Middle Income Households

Abstract: If the desire is to provide tax relief to households with lower and middle incomes in Germany, it is necessary to target the valueadded tax rather than the personal income tax. Lowering the standard value-added tax rate by one percentage point (from 19 to 18 percent) would mean relief worth 11 billion euro for consumers. The reduced value-added tax rate of seven percent should only be cut for food and local public transportation. Lowering it by two percentage points to five percent would generate relief equaling 3.8 billion euro. In total, these reform measures would generate fiscal relief of just under 15 billion euro. The simultaneous [...] ( more )

DIW on 02.08.2017, 03:00 h
Relief for the Middle Class through Value-Added Tax Cuts: Six Questions for Stefan Bach

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DIW on 01.08.2017, 05:00 h
Do Entrepreneurs Really Earn Less?

Abstract: Based on large representative German household survey data, we compare incomes of the self-employed with those of paid employees. We find that the entrepreneurial income gap is largest for those holding a tertiary degree, but in two directions: positive for employers (self-employed with further employees) and negative for solo entrepreneurs. Entrepreneurs holding a tertiary degree also face the greatest income variation. However, some solo self-employed earn more than their employed counterparts, in particular those with a university entrance degree as the highest level of education.
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DIW on 27.07.2017, 11:00 h
Status Inequality, Moral Disengagement and Violence

Abstract: This paper studies the causal effect of status differences on moral disengagement and violence. To measure violent behavior, in the experiment, a subject can inflict a painful electric shock on another subject in return for money. We exogenously vary relative status in the realm of sexual attractiveness. In three between-subject conditions, the assigned other subject is either of higher, lower or equal status. The incidence of electric shocks is substantially higher among subjects matched with higher- and lower-status others, relative to subjects matched with equal-status others. This causal evidence on the role of status inequality on [...] ( more )

DIW on 26.07.2017, 09:00 h
Changes in Common Ownership of German Companies

Abstract: Ownership of publicly listed German companies has undergone significant changes in recent years. The aim of this report is to document these trends since 2007 and analyze the extent to which firms that compete in the same product market are owned by the same investors, which is known as common ownership. We show that some large foreign institutional investors have overtaken domestic investors and now occupy the top spots. This is true both in terms of value and the number of blockholdings, i.e. large blocks of shares.In addition, there has been an increase in ownership concentration overall. That said, private and governmental investors with [...] ( more )

DIW on 26.07.2017, 09:00 h
The Concentration in the Investor Market Has Intensified: Eight Questions for Jo Seldeslachts

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DIW on 20.07.2017, 01:00 h
The Emotional Timeline of Unemployment: Anticipation, Reaction , and Adaptation

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DIW on 20.07.2017, 01:00 h
Individual Risk Preferences and the Demand for Redistribution

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DIW on 19.07.2017, 05:00 h
Involuntary Job Loss and Changes in Personality Traits

Abstract: Economists consider personality traits to be stable, particularly throughout adulthood. However, evidence from psychological studies suggests that the stability assumption may not always be valid, as personality traits can respond to certain life events. Our paper analyzes whether and to what extent personality traits are malleable over a time span of eight years for a sample of working individuals. Furthermore, we specifically look at changes in personality traits after a major adverse life event: involuntary job loss. We use data from the German Socio-Economic Panel Study (SOEP) from 2004 to 2014 ? a period over which individuals? Big [...] ( more )

DIW on 19.07.2017, 04:00 h
Company Rating with Support Vector Machines

Abstract: This paper proposes a rating methodology that is based on a non-linear classification method, a support vector machine, and a non-parametric isotonic regression for mapping rating scores into probabilities of default. We also propose a four data set model validation and training procedure that is more appropriate for credit rating data commonly characterised with cyclicality and panel features. Tests on representative data covering fifteen years of quarterly accounts and default events for 10,000 US listed companies confirm superiority of non-linear PD estimation. Our methodology demonstrates the ability to identify companies of diverse [...] ( more )

DIW on 14.07.2017, 12:00 h
Determinants of Chinese Direct Investments in the European Union

Abstract: This article analyses the determinants of Chinese foreign direct investment (FDI) activities in the European Union (EU). Evidence is based on panel Poisson models drawing on two investment monitors at the individual project level. Greenfield investments (GI) and mergers and acquisitions (M&A) are distinguished. The findings indicate that market size and bilateral trade are the main factors for Chinese investment in the EU. In contrast, business-friendly institutions do not foster FDI. Probably, Chinese investors are risk averse, and prefer regions with less competitive markets. The striking difference between GIs and M&As is related to unit [...] ( more )

DIW on 14.07.2017, 11:00 h
Risk Forecasting in (T)GARCH Models with Uncorrelated Dependent Innovations

Abstract: (G)ARCH-type models are frequently used for the dynamic modelling and forecasting of risk attached to speculative asset returns. While the symmetric and conditionally Gaussian GARCH model has been generalized in a manifold of directions, model innovations are mostly presumed to stem from an underlying IID distribution. For a cross section of 18 stock market indices, we notice that (threshold) (T)GARCH-implied model innovations are likely at odds with the commonly held IID assumption. Two complementary strategies are pursued to evaluate the conditional distributions of consecutive TGARCH innovations, a non-parametric approach and a class of [...] ( more )

DIW on 14.07.2017, 03:00 h
Regular Employment Continues to Play Important Role: Interview with Peter Krause and Christian Franz

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DIW on 14.07.2017, 03:00 h
Mozart or Pelé? The Effects of Adolescents' Participation in Music and Sports

Abstract: We analyse the effects of playing music, or doing sports on education and health outcomes of adolescents. After identifying adolescents who play music, do sports, or both, in the German Socio-Economic Panel, we use matching procedures to estimate causal effects. We find that playing music instead of doing sports fosters educational outcomes by about 0.1 standard deviations. Effects are stronger for girls, and for children from more highly educated families. Doing sports improves perceived health more strongly than playing music. Engaging in both activities, music and sports, improves educational outcomes by about 0.2 standard deviations and [...] ( more )

DIW on 14.07.2017, 03:00 h
Income Groups and Types of Employment in Germany since 1995

Abstract: This report examines how income groups and forms of employment in Germany have changed in the past two decades. Since the mid-1990s, inequality in disposable household income in Germany has generally increased. This trend was in effect until 2005. While fewer people had disposable incomes in the median range, the proportion of the population at both tails of the income distribution increased. At the same time, there were many changes in the labor market. Employment rose, working hours became increasingly differentiated, and starting in 2005, the unemployment rate fell. While the employment increase was spread across almost all income groups, [...] ( more )

DIW on 14.07.2017, 01:00 h
Public Preferences for Alternative Electricity Mixes in Post-Fukushima Japan

Abstract: Using representative household survey data from Japan after the Fukushima accident, we estimate peoples' willingness-to-pay (WTP) for renewable, nuclear, and fossil fuels in electricity generation. We rely on random parameter econometric techniques to capture various degrees of heterogeneity between the respondents, and use detailed regional information to assess how WTP varies with the distance to both the nearest nuclear power plant and to Fukushima. Compared to fossil fuels, we find a positive WTP for renewable and a negative WTP for nuclear fuels. These effects, in absolute terms, increase with the proximity to Fukushima.
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DIW on 13.07.2017, 12:00 h
Probing Birth-Order Effects on Narrow Traits Using Specification Curve Analysis

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DIW on 13.07.2017, 12:00 h
Fiscal Equalization and Tax Enforcement

Abstract: In many countries organized as federations, fiscal equalization schemes have been implemented to mitigate vertical or horizontal imbalances. Such schemes usually imply that the member states of the federation can only partly internalize (marginal) tax revenue before redistribution. Aside from the internalized marginal revenue, referred to as the marginal tax-back rate, the remainder is redistributed. We investigate the extent to which state-level authorities in such federation under-exploit their tax bases. By means of a stylized model, we show that the member states have an incentive to align the effective tax rates on their residents with [...] ( more )

DIW on 13.07.2017, 02:00 h
Growing up with a Single Mother and Life Satisfaction in Adulthood: A Test of Mediating and Moderating Factors

Abstract: Single parenthood is increasingly common in Western societies but only little is known about its long-term effects. We therefore studied life satisfaction among 641 individuals (ages 18?66 years) who spent their entire childhood with a single mother, 1539 individuals who spent part of their childhood with both parents but then experienced parental separation, and 21,943 individuals who grew up with both parents. Individuals who grew up with a single mother for their entire childhood and to a lesser degree also individuals who experienced parental separation showed a small but persistent decrease in life satisfaction into old age [...] ( more )

DIW on 12.07.2017, 05:00 h
Risk Weighting for Government Bonds: Challenge for Italian Banks

Abstract: Although banks are required to document their equity capital for loans, corporate bonds, and other receivables, they are currently exempted from the procedure when investing in government bonds: they enjoy an ?equity capital privilege.? As part of the Basel III regulatory framework redraft, the privilege may be eliminated in order to disentangle the default risks between sovereigns and banks. The present study examines how much additional equity capital the banks of the euro area?s major nations would require if the equity capital privilege were eliminated. At nine billion euros, the estimates show the highest capital requirement for [...] ( more )

WZB on 01.12.2016, 03:10 h
Law, Labor, and Democracy

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