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Looking at smoking-behavior it can be shown that there are differences concerning the time-preference-rate. Therefore this has an effect on the optimal schooling decision in the way that we appear a lower average human capital level for smokers. According to a higher time-preference-rate additionally we suppose a higher return to education for smokers who go further on education. With our empirical findings we can confirm the presumptions. We use interactions-terms to regress the average rate of return with IV. Therefore we obtain that smokers have a significantly higher average return to education than non-smokers.
In this paper we develop a spatial Cournot trade model with two unequally sized countries, using the geographical interpretation of the Hotelling line. We analyze the trade and welfare effects of international trade between these two countries. The welfare analysis indicates that in this framework the large country benefits from free trade and the small country may be hurt by opening to trade. This finding is contrary to the results of Shachmurove and Spiegel (1995) as well as Tharakan and Thisse (2002), who use related models to analyze size effects in international trade, where the small country usually gains from trade and the large country may lose.
In the first part of the report of the GTZ expert group an overview on the basics of integration and tax harmonisation within a common market is given. Chapter II. concentrates on the problems of national and international tax law regarding double taxation before the harmonisation process within the EU is described in detail. This process is not a best practice example but at least the experiences made in the course of the last five decades are interesting enough and might contribute important information for regions, which more or less recently have started a similar endeavour. The harmonisation needs are discussed for value added taxation (VAT), excise taxation, and income taxation. The problems of tax administrations, procedures laws, taxpayers’ rights and obligations as well as tax compliance are also taken into consideration. The second part of the study reviews the national tax systems within the EAC member countries. Before the single taxes are described in more detail, the macroeconomic situation is illuminated by some basic figures and the current stand of the inner-community integration analysed. Then the single tax bases and tax rates are confronted to shed some light on the necessities for the development of a common market within the near future. Again the value added tax laws, excise taxes and income taxes are discussed in detail, while regarding the latter the focus is on company taxation. For a better systematic analysis the national tax laws are confronted within an overview. The chapter is closed with a summary of the tax rates applied and a rough estimation of the tax burdens within the Partner States. The third part of this report contains the policy recommendations of the expert group following the same structures as the chapters before and presenting the results for the VAT, the excises and the corporate income tax (CIT). Additionally the requirements for tax procedures and administration as well as problems of transparency and information exchange are discussed in detail before the strategic recommendations are derived in close relation to the experiences made within the EU harmonisation process. The recommendations are based on the following normative arguments: (1) Tax harmonisation is a basic requirement for economic integration. (2) Equality of taxation is an imperative of tax justice and demands the avoidance of double taxation as well as the combat of tax evasion and corruption. (3) The avoidance of harmful tax competition between the Partner States. (4) The strengthening of taxpayers’ rights in tax procedures. Hence, all kinds of income, goods and services should be taxed once and only once.
The paper sheds some light on the education returns in Germany in the post war period. After describing higher education in Germany the current stand of higher education financing within the single states is presented. In six states tuition fees will be introduced in 2007/08 and discussions are going on in even some more. In the second part of the paper an empirical analysis is done using longitudinal data from the German social pension system. The analysis over the whole lifecycle renders results which proof that the higher education advantages are quite remarkable and might be a justification for more intensified financing by tuition fees. But all this has to be embedded into an encompassing strategy of tax and social policy, especially to prevent a strengthened process of social selection, which would be counterproductive for an increased and highly qualified human capital in Germany.
Real costs of freight transportation have strong increased in Russia particularly during the period of price liberalization 1992–93. This paper investigates possible connections between rising transport costs and the evolution of the size structure of the system of cities in the Russian Federation and its federal subjects. Empirical findings suggest that under conditions of a closed system agglomeration processes according to the predictions of the model of Tabuchi et al. (2005) would have taken place especially in the periphere regions of the North and Far East.
This paper gives a review on the theoretical foundation for fiscal decentralisation and a status quo analysis of the intergovernmental relations in Mongolia. It consists of two parts. Part I briefly reviews the theories of fiscal decentralisation and its impact on the nations’ welfare considering the major challenges for a transition economy. Part II of the paper describes the general structure and scope of the government and examines the current fiscal autonomy in Mongolia focusing on the four main areas of intergovernmental relations. This paper concludes that local governments in Mongolia are still far away from having the political, administrative and fiscal autonomy. New approaches for the assignments of expenditures and revenues in Mongolia are urgently needed.
The paper describes the exchange program in between the University of Wisconsin/ Milwaukee and the University of Potsdam in the field of economics. It discusses in detail the development of the program, including the problems and challenges. Additionally a brief description of the curriculum is presented. Then the future possibilities of the Transatlantic Degree Program (TDP) are discussed and the influences and problems of the Bologna process analysed.
Do institutions matter?
(2006)
Contens 1 Introduction 2 Institutions and the Institutional Change 2.1 Institutions and Theoretical Concepts in Economics 2.2 Path Dependence 2.3 Inconsistence of Institutional Development 2.4 Determinants of Effectiveness 2.5 Efficiency of New Institutions 3 What is “Competition Policy”? 4 The Competition Policy in Russia as an Institution 4.1 Establishment of the Competition Policy as an Institution 4.2 Market Structure and Competition Policy 4.3 Measures of Competition Policy 4.3.1 Prohibition of Competition Restrictive Agreements or Concerted Actions 4.3.2 Abuse of Dominance 4.3.3 Merger Control 4.3.4 Restrictive Action to Competition of Administrative Bodies 4.4 Violations of the Competition Law 4.5 Problems of the Russian Competition Policy 5 Which Mistakes Russia has made with the Implementation of theCompetition Policy? 6 Is a Lacking Effectiveness of Transplanted Institutions Inevitable? 7 Concluding Remarks
A casual look at regional unemployment rates reveals that there are vast differences, which cannot be explained by different institutional settings. Our paper attempts to trace these differences in the labor market performance back to the regions' specialization in products that are more or less advanced in their product cycle. The model we develop shows how individual profit and utility maximization endogenously yields higher employment levels in the beginning. In later phases, however, employment decreases in the presence of process innovation. Our model suggests that the only way to escape from this vicious circle is to specialize in products that are at the beginning of their "economic life". The model is based on an interaction of demand and supply side forces.
Textbook wisdom says that competition yields lower prices and higher consumer surplus than monopoly. We show in two versions of a simple location-product differentiation model with and without endogenous choice of products that these two results have to be qualified. In both models, more than half of the reasonable parameter values lead to higher prices with duopoly than with monopoly. If the product characteristics are exogenous to the firms, consumers may even be be better off with monopoly in average.
This paper analyses the structural change in Russia during the transition from the planned to a market economy. With regard to the famous three sector hypothesis, broad economic sectors were formed as required by this theory. The computation of their shares at GNP at market prices using Input-Output tables, and the adjustment of results from distortions, generated as side effects of tax avoidance practices, shows results that clearly reject claims that Russia would be on the road to a post-industrial service economy. Instead, at least until 2001, a tendency of "primarisation" could be observed, that presents Russia closer to less-developed countries.
Instability in competition
(2005)
In this paper we show that Puu (2002) does not provide a stable solution to the location game, according to his own definition of stability. If the usual two-stage game is considered, where in the first stage a location is chosen once and forever, and in the second stage prices are determined, the equilibrium proves stable for a sizeable interval of parameters, however. Even though this procedure is most common in analyzing Hotelling's location problem, it is not satisfying because it exhibits an inconsistent informational structure. The search for a better concept of stability is imperative.
Table of contens 1 Introduction 2 The concept of sustainability 2.1 Ecological sustainability 2.2 Social sustainability 2.3 Economic sustainability 2.4 The sustainability strategy of the german government 3 Effects of energy use on the enviromment 4 Requirements of the SSGG for energy policy 4.1 Ecological implications of thr SSGG 4.2 Social and economic requirements of the SSGG 5 The German Renewable Energies Act 5.1 Objectives 5.2 Design and mechanisms 5.3 Fees-in tariffs 6 Does the EEG meet the sustainability requirements of the SSGG? 6.1 Management rules 6.2 Social sustainability 6.3 Economic sustainability 6.4 Development tendencis 7 Possible amendments for more sustainability 7.1 Changing the promotional system 7.2 A European regulation
Social segregation in cities takes place where different household groups exist and when, according to Schelling, their location choice either minimizes the number of differing households in their neighborhood or maximizes their own group. In this contribution an evolutionary simulation based on a monocentric city model with externalities among households is used to discuss the spatial segregation patterns of four groups. The resulting complex spatial patterns can be shown as graphic animations. They can be applied as initial situation for the analysis of the effects a rent control has on segregation.
Optimal spatial patterns of two, three and four segregated household groups in a monocentric city
(2004)
Usually, in monocentric city models the spatial patterns of segregated household groups are assumed to be ring-shaped, while early in the 1930ies Hoyt showed that wedge-shaped areas empirically predominate. This contribution presents a monocentric city model with different household groups generating positive externalities within the groups. At first, border length is founded as a criterion of optimality. Secondly, it is shown that mixed patterns of concentric and wedge-shaped areas represent multiple equilibria if more than two groups of households are being considered. The welfare optimal segregated pattern depends on the relative purchasing power of different household groups.
Usually, in monocentric city models, the spatial patterns of segregated ethnic groups are assumed to be ring-shaped, whereas in the 1930ies Hoyt showed that empirically wedge-shaped areas predominate. In contrast to Rose-Ackerman.s discussion of the in.uence within a ring-shaped pattern which the aversion which different households in the context of racism have, Yinger showed that, depending on the population mix, a wedge-shaped pattern may arise if it is border length which causes the spatial pattern. In this contribution, a simulation based on a monocentric city model with two or more different household groups is used to derive spatial patterns. Wedge-shaped segregation is shown to be the result of positive externalities among similar households. Differences between households only lead to ring-shaped patterns if the e¤ect of a city center on spatial structure dominates neighborhood e¤ects. If more than two groups of households are being considered, mixed patterns of concentric and wedge-shaped areas arise.
Economy vs. history
(2004)
The aim of this study is to examine in which cases economic forces or historical singularities prevail in the determination of the long-run distribution of firms. We develop a relatively general model of heterogenous firms' location choice in discrete space. The main force towards an agglomerated structure is the reduction of transaction costs for consumers if firms are located closely, whilst competition and transport costs work towards a more disperse structure. We then assess the importance of the initial conditions by simulating and comparing the resulting distribution of firms for identical economic parameters but varying initial settings. If the equilibrium distributions of firms are similar we conclude that economic forces have prevailed, while differences in the resulting distributions indicate that 'history' is more important. The (dis)similarity of distributions of firms is calculated by means of a measure, which exhibits a number of desirable features.
In the recent years there are many researchs discussing the effects of trade policy (tariffs, subsidies etc.) in international trade. The results are manifold. Some authors show that trade policy has negative effects on welfare, some spatial economists demonstrate that trade policy can have positive effects on welfare. This paper considers the effects of the trade policy made by both countries participating in international trade in a spatial economic model. It can be showed that trade policy of both trade partners (tariffs of one country and export subsidies of the other country) can improve the world welfare in comparison with free trade.
Table of contents 1 Introduction 2 Ecological regulation and cost effectiveness 2.1 Climate policy 2.2 Promotion of renewable energies 3 Ecological regulation and security of supply 3.1 Climate policy 3.2 Promotion of renewable energies 4 The German Renewable Energies Act (EEG) 4.1 Objectives 4.2 Design and mechanisms 5 The European emissions trading system (EETS) 5.1 Objectives 5.2 Framework 6 The EEG and the EETS: trade off between ecological objectivesand cost effectiveness, innovation and security of supply? 6.1 EEG 6.2 EETS 6.3 Comparison between the approaches of the EEG and the EETS 7 Conclusions and outlook
(De)regulatory interventions frequently have unintended cross- market effects, which may or may not be desirable. We assess the effects of three policies on aggregate variables, in particular real income, from a theoretical perspective. Our results suggest that instruments acting upon wages have only a weak impact on real income, whereas the distribution of income is affected strongly. In contrast, a policy that enhances product market competition is fostering real income, but also impacts strongly on union wages and the distribution of income.
Existing theoretical literature fails to explain the differences between the pay of workers that are covered by union agreements and others who are not. This study aims at closing this gap by a single general- equilibrium approach that integrates a dual labor market and a two- sector product market. Our results suggest that the so called 'union wage gap' is largely determined by the degree of centralization of the bargains, and, to a somewhat lesser extent, by the expenditure share of the unionized sector's goods.
Our analysis is concerned with the impact of a regionalisation of unemployment insurance (UI) on workers’ preferences, on firms’ profits, and on effciency. The existence and the extent of UI are endogenously derived by maximising an objective function of the state. Three different types of regionalisation are considered which differ with respect to the area the UI objective function is related to, and with respect to the policy variable used to maximise it. It comes to light that workers are always in favour of central UI, while it depends on the type of regionalisation whether or not firms are better off with regional or with central UI. The same somewhat surprising result applies for efficiency.
We examine the effects of regionalising the budget of unemployment insurance (UI) on wages, employment, and on UI parameters, which, for their part, determine the agents’ preferences concerning such a reform. A numerical example shows that, under reasonable assumptions, the intuition that the reform would enhance efficiency and improve the economic situation of agents from the low- unemployment region to the disadvantage of agents from the high- unemployment region is not valid in general.
This study examines how the size of trade unions relative to the la- bor force impacts on the desirability of different organizational forms of self-financing unemployment insurance (UI) for workers, firms, and with reference to an efficiency criterion. For this purpose, we respectively nu- merically compare the outcome of a model with a uniform payroll tax to a model where workers pay taxes according to their systematic risk of unemployment. Our results highlight the importance of the bargaining structure for the assessment of a particular UI scheme. Most importantly, it depends on the size of the unions whether efficiency favors a uniform or a differentiated UI scheme.
Public pensions in the U.S.
(2005)
Contents: The Public Old Age Insurance of the U.S. -Historical overview -Technical details -Individual equity and social adequacy The Economic Problem of Old Age -Risks and economic security -Old age, retirement, and idividual precaution -Insurance markets, market failures, and social insurance -Options for public pension systems The Problems of Social Security -The financial balance of OASDI -Causes of the long-run problems -Rates of return -Conclusion - The case for Social Security reform Proposed Remedies -Full, partial, or no privatization? -The President's Commission to Strengthen Social Security -Kotlikoff's Personal Security System -The Diamond-Orszag Three-Part plan
Many European countries have experienced a significant increase of unemployment in recent years. This paper reviews several theoretical models that try to explain this phenomenon. Predominantly, these models claim a link between the poor performance of European labor markets and the high level of market regulation. Commonly referred to as the Eurosclerosis debate, prominent approaches consider insider-outsider relationships, search-models, and the influence of hiring and firing costs on equilibrium employment. The paper presents empirical evidence of each model and studies the relevance of the identified rigidities as a determinant of high unemployment in Europe. Furthermore, a case study analyzes the unemployment problem in Germany and critically discusses new reform efforts. In particular this section analyzes whether the recently enacted Hartz reforms can induce higher employment.
Revisiting public investment
(2004)
The consumption equivalence method is the theoretical basis of public cost-benefit analysis. Consumption equivalence public capital prices are explicitly introduces in order to sufficiently care for the opportunity cost of public expenditure. This can solve the dispute about the social rate of discount within public cost-benefit analysis witch was generated on a criterion looking similar to the capital value formula, known as Lind’s approach. The social rate of discount is liberated from opportunity costs considerations and the discounting away of the effects for future welfare vanishes. The corresponding question whether one should accept a positive value of the pure rate of social time preference is an old issue. Its current state between the prescriptive and descriptive view can also be interpreted as a consequence of the oversimplification of standard cost– benefit analysis. But apart from an economic self-process the pure rate of social time preference is also defined as a business-as-usual value of social distance discounting. Hence, a political choice has to be made about this rate which is free in principal.
An exhaustive and disjoint decomposition of social choice situations is derived in a general set theoretical framework using the new tools of the Lifted Pareto relation on the power set of social states representing a pre-choice comparison of choice option sets. The main result is the classification of social choice situations which include three types of social choice problems. First, we usually observe the common incompleteness of the Pareto relation. Second, a kind of non-compactness problem of a choice set of social states can be generated. Finally, both can be combined. The first problem root can be regarded as natural everyday dilemma of social choice theory whereas the second may probably be much more due to modeling technique implications. The distinction is enabled at a very general set theoretical level. Hence, the derived classification of social choice situations is applicable on almost every relevant economic model.
Contents: Actors, Markets and Interest Groups in Health Services Private and Social Health Insurance in a Simple Model Misallocation and Malpractice in Social Health Care and Insurances -The UK Health Care System -The German Social Health Insurance System -Current Discussions: Intertemporal Perspective and Fundamental Change Interplay of Public and Private Health Insurance: Lessons for Countries in Transition Summary: The Necessary Steps to a Fundamental Reform