Hohenheim discussion papers in business, economics and social sciences

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The effect of project funding on innovative performance : an agent-based simulation model
(2015) Bogner, Kristina
Analyzing the effect of Direct Project Funding (DPF) on innovative performance of economic agents is a major challenge for innovation economists and policy makers who must give valid policy recommendations and decide on the allocation of financial resources. An approach that becomes more and more important is the use of agent-based modeling in analyzing innovative performance of market players. In this paper, an agentbased percolation model is used to investigate the effects of project funding on innovative performance in terms of the maximum technological frontier that can be reached as well as in terms of the number of innovations generated by firms. The model results show that firms which participate in subsidized projects outperform firms that do not participate in subsidized projects, especially in increasingly complex technological fields. However, the worse performance of firms that do not participate in subsidized projects can be offset by an increase in the firms’ financial resources. Hence, the model indicates, the effect of project funding is a purely financial one and might even have negative effects on innovative performance. This is the case if, for instance, a high number of funded research projects disturbs firms’ paths through the technology space. Following the results of the model, project funding is most effective and important in increasingly complex technology spaces and less effective and important in less complex technology spaces. Moreover, the model results show, other financial resources as venture capital can substitute for direct project funding.
The impact of temporary agency work on trade union wage setting : a theoretical analysis
(2015) Baudy, Philipp; Beißinger, Thomas
Focusing on the cost-reducing motive behind the use of temporary agency employment, this paper aims at providing a better theoretical understanding of the effects of temporary agency work on the wage-setting process, trade unions’ rents, firms’ profits and employment. It is shown that trade unions may find it optimal to accept lower wages to prevent firms from using temporary agency workers. Hence, the firms’ option to use agency workers may affect wage setting also in those firms that only employ regular workers. However, if firms decide to employ agency workers, trade union wage claims will increase for the (remaining) regular workers. An intensive use of temporary agency workers in high-wage firms may therefore be the cause and not the consequence of the high wage level in those firms. Even though we assume monopoly unions that ascribe the highest possible wage-setting power to the unions, the economic rents of trade unions decline because of the firms’ option to use temporary agency work, whereas firms’ profits may increase.
Are sociocultural factors important for studying a science university major?
(2015) Grossmann, Volker; Osikominu, Aderonke; Osterfeld, Marius
This paper examines the role of the sociocultural background of students for choosing STEM fields in university. We combine rich survey data on university graduates in Switzerland with municipality level information from the census as well as nationwide elections and referenda to characterize a students home environment with respect to religious and political attitudes towards gender equality and science-related issues. Our empirical estimates are based on a structural Roy model which accounts for differences in costs (relative distance to the next technical university) and earnings across majors as well as for selection bias. Our findings suggest that male students from conservative municipalities are more likely to study a STEM field, whereas the sociocultural background plays little role for the major choice of females.
The long shadow of history : roman legacy and economic development - evidence from the German limes
(2015) Wahl, Fabian
This paper contributes to the understanding of the long-run consequences of Roman rule on economic development. In ancient times, the area of contemporary Germany was divided into a Roman and non-Roman part. The study uses this division to test whether the formerly Roman part of Germany show a higher nightlight luminosity than the non-Roman part. This is done by using the Limes wall as geographical discontinuity in a regression discontinuity design framework. The results indicate that economic development—as measured by luminosity—is indeed significantly and robustly larger in the formerly Roman parts of Germany. The study identifies the persistence of the Roman road network until the present as an important factor causing this development advantage of the formerly Roman part of Germany both by fostering city growth and by allowing for a denser road network.
Bidirectional relationship between investor sentiment and excessreturns : new evidence from the wavelet perspective
(2015) Marczak, Martyna; Beißinger, Thomas
This paper sheds new light on the mutual relationship between investor sentiment and excess returns corresponding to the bubble component of stock prices. We propose to use the wavelet concept of the phase angle to determine the lead–lag relation between these variables. The wavelet phase angle allows for decoupling short– and long–run relations and is additionally capable of identifying time–varying comovement patterns. By applying this concept to excess returns of the monthly S&P500 index and two alternative monthly US sentiment indicators we find that in the short run (until 3 months) sentiment is leading returns whereas for periods above 3 months the opposite can be observed.
The reversal of the gender pay gap among public-contestselected young employees
(2015) Töpfer, Marina; Castagnetti, Carolina; Rosti, Luisa
This paper analyzes the effect of public-contest recruitment on earnings by applying an extended version of the Oaxaca-Blinder model with double selection to microdata on Italy. We find that the gender pay gap vanishes among public-contest selected employees, and even reverses in favor of women (-17.4%) in the young sample. The reversal is because public contests are merit-based and gender-fair screening devices. They are merit-based because selected employees possess higher productive characteristics than unselected ones, both women and men. They are gender-fair because the coefficients component in the Oaxaca-Blinder decomposition is never significant among public-contest recruited employees, either with or without selection. On the contrary, among employees not hired by public contest the gender pay gap is positive and significant (7.6%), and it is entirely due to coefficients, that is to discrimination in the career path.
A neo-Schumpeterian perspective on the analytical macroeconomic framework : the expanded reproduction system
(2015) Jun, Bogang; Kim, Tai-Yoo
This study aims to introduce a new analytical macroeconomic framework, the expanded reproduction system, that combines the accumulated wisdom of several contemporary economic models while also compensating for their shortcomings. This new framework may be used to study macroeconomic phenomena from both the supply and demand side over a number of different time intervals. Furthermore, as we account for both new product and productivity innovations, we are able to account for both qualitative and quantitative developments within the economy.
EuroMInd-D : a density estimate of monthly gross domestic product for the Euro area
(2015) Proietti, Tommaso; Marczak, Martyna; Mazzi, Gianluigi
EuroMInd-D is a density estimate of monthly gross domestic product (GDP) constructed according to a bottom–up approach, pooling the density estimates of eleven GDP components, by output and expenditure type. The components density estimates are obtained from a medium-size dynamic factor model of a set of coincident time series handling mixed frequencies of observation and ragged–edged data structures. They reflect both parameter and filtering uncertainty and are obtained by implementing a bootstrap algorithm for simulating from the distribution of the maximum likelihood estimators of the model parameters, and conditional simulation filters for simulating from the predictive distribution of GDP. Both algorithms process sequentially the data as they become available in real time. The GDP density estimates for the output and expenditure approach are combined using alternative weighting schemes and evaluated with different tests based on the probability integral transform and by applying scoring rules.
Internet use and subjective well-being in China
(2015) Sousa-Poza, Alfonso; Nimrod, Galit; Nie, Peng
Using data from the 2010 China Family Panel Studies, we analyze the association between Internet use and various measures of subjective well-being (SWB) in a sample of 16- to 60- year-old Chinese. Our analysis shows that although intensive Internet use is significantly associated with lower levels of SWB, we hardly observe any associations when the focus is on participation in specific online activities. Nevertheless, SWB depends on perceptions of Internet use; that is, the importance that different individuals ascribe to different purposes for using the Internet and how much they believe that their Internet use is displacing other activities. Our results suggest that, contrary to previous findings, differences in beneficial outcomes (the third level digital divide) do not necessarily arise from individuals’ actual Internet use (the second level digital divide) but rather may result from their subjective perceptions of such usage. Our findings also point to a possible cultural factor that puts Chinese Internet users at psychological risk.
A data–cleaning augmented Kalman filter for robust estimation of state space models
(2015) Marczak, Martyna; Proietti, Tommaso; Grassi, Stefano
This article presents a robust augmented Kalman filter that extends the data– cleaning filter (Masreliez and Martin, 1977) to the general state space model featuring nonstationary and regression effects. The robust filter shrinks the observations towards their one–step–ahead prediction based on the past, by bounding the effect of the information carried by a new observation according to an influence function. When maximum likelihood estimation is carried out on the replacement data, an M–type estimator is obtained. We investigate the performance of the robust AKF in two applications using as a modeling framework the basic structural time series model, a popular unobserved components model in the analysis of seasonal time series. First, a Monte Carlo experiment is conducted in order to evaluate the com- parative accuracy of the proposed method for estimating the variance parameters. Second, the method is applied in a forecasting context to a large set of European trade statistics series.
Participative political institutions and city development 800-1800
(2015) Wahl, Fabian
This study investigates the effect of participative political institutions (PPIs) that emerged in many central European cities from the late 13th century. The empirical analysis of the paper is based on newly compiled long-run data for the existence of different types of PPIs in 104 cities in the Holy Roman Empire. The effect of both an overall index of participativeness of political institutions as well as of the individual PPIs is tested empirically. When pooled over all periods and observations, there seems to be a significant positive overall effect of PPIs in the German-speaking area but not in the Low Countries. The study founds considerable spatial and temporal heterogeneity in the effect of PPIs. Furthermore, the effect of different types of PPIs differs substantially and in general seems to be short-lived. That is, the results show that the positive initial effect of some PPIs declined the longer they existed and over time.
Commute time and subjective well-being in urban China
(2015) Sousa-Poza, Alfonso; Nie, Peng
Using data from the 2010 China Family Panel Studies, this study investigates the association between commute time and subjective well-being in a sample of 16- to 65-year-old employees in urban China. We find evidence that a longer commute time is associated with lower levels of both life satisfaction and happiness, especially when the commute times are extreme (≥ 1 hour per day). A multiple mediation analysis further indicates that the relation between commute time and happiness is partially mediated by time spent on daily activities, particularly sleeping. We calculate the amount of income necessary to compensate an employee’s loss in well-being at approximately 82 yuan per hour of commute time, implying that, in urban China, the annual loss of well-being amounts to around 10 billion yuan.
Simulating knowledge diffusion in four structurally distinct networks : an agent-based simulation model
(2015) Kudic, Muhamed; Mueller, Matthias; Bogner, Kristina; Buchmann, Tobias
In our work we adopt a structural perspective and apply an agent-based simulation approach to analyse knowledge diffusion processes in four structurally distinct networks. The aim of this paper is to gain an in-depth understanding of how network characteristics, such as path length, cliquishness and the distribution and asymmetry of degree centrality affect the knowledge distribution properties of the system. Our results show – in line with the results of Cowan and Jonard (2007) – that an asymmetric or skewed degree distribution actually can have a negative impact on a network’s knowledge diffusion performance in case of a barter trade knowledge diffusion process. Their key argument is that stars rapidly acquire so much knowledge that they interrupt the trading process at an early stage, which finally disconnects the network. However, our findings reveal that stars cannot be the sole explanation for negative effects on the diffusion properties of a network. In contrast, interestingly and quite surprisingly, our simulation results led to the conclusion that in particular very small, inadequately embedded agents can be a bottleneck for the efficient diffusion of knowledge throughout the networks.
Democratic prospects in Imperial Russia : the revolution of 1905 and the political stock market
(2015) Opitz, Alexander
This paper assesses the attitude of investors towards Democratic change by performing an event study using Russian government bonds. The Revolution of 1905 offers an ideal occasion as, alongside the related revolutionary events, it was accompanied by two opposing constitutional changes within a short period of time. This study contributes to the debate as to whether Imperial Russia could possibly have followed other Western European states, i.e. gradually adopting a democratic rule, or whether a revolution was inevitable – as the writing of Soviet history suggests. Furthermore, the Russo-Japanese War is taken into consideration. The results are basically in line with the literature on the impact of wars on capital markets. Prices of two types of bonds on both the Saint Petersburg and the Berlin stock exchange are employed. As it turns out, investors in the East and West were largely consistent in their reactions.
Offshoring and labour market reforms : modelling the German experience
(2015) Hellier, Joël; Beißinger, Thomas; Chusseau, Nathalie
A usual interpretation of the high performance of the German economy since 2005 is that the Hartz labour market reforms have boosted German competitiveness, resulting in higher exports, higher production and lower unemployment. This explanation is at odds with the sequence of observed facts. We propose and model an alternative scenario in which offshoring explains the gains in competitiveness but increases unemployment and inequality, and the subsequent labour market reforms lower unemployment by lessening the reservation wage and expanding the non-tradable sector. The model replicates the developments of the German economy since 1995: 1) Germany offshores more intensively than other advanced countries; 2) The increase in competitiveness and in the exports/production ratio occurs before the implementation of the labour market reform, and this comes with both higher inequality and higher unemployment; 3) The implementation of the reform reduces unemployment, but also decreases the exports/production ratio and increases inequality. The model also predicts that the reduction in unemployment in Germany would have occurred without the Hartz reforms, but later and less intensively. We finally discuss the possible extension of this ‘strategy’ to other Eurozone countries, and alternative policies that activate similar mechanisms without increasing inequality.
Continuity under a different name, the outcome of privatisation in Serbia
(2016) Geloso, Vincent; Ivanovic, Vladan; Kufenko, Vadim; Begovic, Boris; Stanisic, Nenad
Normally, privatisation is seen as beneficial. In the case of Serbia, the results are disappointing. This paper considers the failure of privatisation in Serbia – a latecomer in the matter – where privatisation was partly a result of exogenous pressures. In Serbia, a sizeable number of privatised firms were bought by bureaucrats and politicians and all firms were subjected to a period of supervision. We argue that this process of privatisation was designed to allow rentseekers to conserve their privileges through asset stripping and that this explains the failure. In order to do so, we perform empirical analysis of the determinants of liquidation, merger and bankruptcy of privatised firms from 2002 to 2015. We construct a novel data set from primary sources, free of the ‘survivorship bias’ and containing proxies for various types of owners, indirect signs of asset stripping strategy and a broad range of controls. Our results indicate that firms owned by politicians face significantly higher risks of bankruptcy, especially after the end of supervision.
Fuel for life : domestic cooking fuels and women’s health in rural China?
(2016) Xue, Jianhong; Sousa-Poza, Alfonso; Nie, Peng
Using longitudinal and biomarker data from the China Family Panel Studies and the China Health and Nutrition Survey, this study examines the association between the type of domestic cooking fuel and the health of women aged ≥16 in rural China. Regarding three major domestic cooking fuels (wood/straw, coal and liquefied natural gas (LNG)), we find that, compared to women whose households cook with dirty fuels like wood/straw, women whose households cook with cleaner fuels like LNG have a significantly lower probability of chronic or acute diseases and are more likely to report better health. Even after controlling for unobserved individual heterogeneity, we find some evidence that women in households cooking with LNG are less likely to suffer from chronic/acute diseases. Cooking with domestic coal instead of wood or straw is also associated with elevated levels of having certain risks (such as systolic and diastolic blood pressure) related to cardiovascular diseases.
The legacy of Friedrich List : the expansive reproduction system and the Korean history of industrialization
(2016) Jun, Bogang; Gerybadze, Alexander; Kim, Tai-Yoo
This study revisits the theory of Friedrich List from a more comprehensive and modernized perspective and applies it to the Korean history of industrialization. Although List is well known as the scholar who insisted on the protection of infant industry, his argument on protectionism is a part of the broader picture depicted in his book The National System of Political Economy (1841). This study follows his theoretical legacy in various fields of study. Although we can find his theoretical influence in several fields of research such as the national innovation system, concept of national competitiveness, and theory of developmental state, these studies fail to embrace all the arguments of List. Additionally, theses models focus more heavily on the explanation of historical and regional development phenomena without providing general principles of economic development behind the phenomena. This study therefore aims to suggest the expansive reproduction system as a generalized and modernized version of List’s theory and to show its example by using the Korean history of industrialization. Consequently, we argue that the economic development of Korea has been achieved by putting the theory of List into practice.
Deregulation of temporary agency employment in a unionized economy : does this really lead to a substitution of regular employment
(2016) Baudy, Philipp; Cords, Dario
There have been continuous deregulation efforts concerning temporary agency employment in almost all European countries aiming at an increasing exibility in the European labor markets. This paper theoretically investigates the effects of a legal deregulation of temporary agency employment on wage setting and the employment structure in a unionized economy with labor market frictions. Multiple-worker firms bargain simultaneously with temporary agencies and labor unions to determine the respective labor costs. It is shown that there is a hump-shaped relationship between the degree of legal deregulation of temporary agency employment and the rate of temporary employment used in the production process. Temporary agency employment may even decrease despite its deregulation. Furthermore, regular employment monotonically increases, while individual workers and labor unions suffer from deregulation due to declining wages and a reduction in labor unions utility.
A data-driven procedure to determine the bunching window : an application to the Netherlands
(2016) Bosch, Nicole; Dekker, Vincent; Strohmaier, Kristina
This paper presents new empirical evidence on taxpayers responsiveness to taxation by estimating the compensated elasticity of taxable income with respect to the net-of-tax rate in the Netherlands. Applying the bunching approach introduced by Saez (2010), we find small, but clear evidence of bunching behaviour at the thresholds of the Dutch tax schedule with a precise estimated elasticity of 0.023 at the upper threshold. In line with the literature, we find much larger estimates for women and self-employed individuals, but we can also identify significant bunching behaviour for wage employed individuals which we can attribute to tax deductions for couples. We add to the bunching literature by proposing to rely on the information criteria to determine the counterfactual model, as well as developing an intuitive, data-driven procedure to determine the bunching window.

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