Volume 225, Issue 3

With its great financial reform in 1969 the Federal Republic of Germany pushed through a model of cooperative federalism. One of ist central elements is the fiscal equalization scheme between the states in the federation. After the German reunification there was a shift in science as well as in the political sphere from this model to one of competitive federalism. From the point of view of efficiency, there have since been calls for the elimination of fiscal equalization, in particular. The models from which this conclusion is drawn are extremely restrictive. It will be shown that it is the distribution of land ownership that decides whether a fiscal equalization scheme is necessary if governments have unrestricted access to land rent taxation. Moreover, it will be shown that replacing a tax on rents accruing to the immobile factor of production, land, by a tax on the mobile factor of production, labor, leads to efficiency as well, if a fiscal equalization scheme is established. These results are derived by linking the question of the necessity of a fiscal equalization scheme to the question of the efficient provision of public inputs. Zusammenfassung Mit der großen Finanzreform des Jahres 1969 setzte sich in der Bundesrepublik Deutschland das Leitbild des kooperativen Föderalismus durch. Eines seiner zentralen Elemente ist der Finanzausgleich zwischen den Bundesländern. Nach der deutschen Wiedervereinigung fand sowohl in der Wissenschaft wie auch im politischen Raum ein Wechsel vom Leitbild des kooperativen Föderalismus hin zum Leitbild des kompetitiven Föderalismus statt. Ausgehend von diesem neuen Leitbild wird unter anderem die Abschaffung des Länderfinanzausgleichs gefordert. Die Modelle, mit deren Hilfe diese Forderung hergeleitet wird, sind jedoch sehr restriktiv. In diesem Beitrag soll gezeigt werden, dass die Modellierung der Eigentumsverhältnisse bei Grund und Boden darüber entscheiden, ob ein Finanzausgleich erforderlich ist, wenn die Bodenrenten beliebig besteuert werden können. Darüber hinaus wird gezeigt, dass auch die Besteuerung des mobilen Produktionsfaktors Arbeit zu Effizienz führen kann, wenn ein geeigneter Finanzausgleich stattfindet. Diese Ergebnisse werden aus Modellen hergeleitet, in denen es nicht um die Bereitstellung öffentlicher Konsumgüter sondern vielmehr um die Bereitstellung öffentlicher Inputs – also der produktionsbezogenen Infrastruktur – geht.

This paper addresses the question, What role should economic reasoning play in the compilation of the official consumer price index (CPI) ? It is argued that economic theory has developed some extremely helpful techniques such as the economic cost of living index (COLI). However, by contending that the COLI should provide the only conceptual framework for a CPI, too much is expected from it. The COLI’s theoretical and practical limitations require us to find supplementary guidance outside the COLI framework. Furthermore, a consistent, fast, and reliable computational method for a COLI is not yet in sight. Therefore, the CPI must be computed by some sort of statistical price index (SP). For finding an appropriate SP, one can follow a direct and an indirect search strategy. In the direct approach, a SP is regarded as suitable, only if it satisfies a number of basic properties that are considered as indispensable for a meaningful CPI (axiomatic index theory). In the indirect approach, one looks for those SPs that provide a particularly close approximation to a COLI (superlative price index formulas). Advocates of the COLI are natural supporters of the indirect method. Opponents of the COLI lean more towards the direct method. Some regard both approaches as useless. Here it is argued that both approaches provide useful guidance when selecting a SP.

Based on the GSOEP (2000) for Western Germany, the paper deals with the influence of reported reservation wages on unemployment duration. The selectivity in the reservation wage observations due to only one interview per year in the GSOEP is included in the model by Heckman-correction, and the possibility of censored spells is accounted for by a Hazard-rate analysis with semiparametric unobserved heterogeneity. The results show that only by correction for the selectivity bias the theoretically expected positive effect of reservation wages on the unemployment duration can be found; it then occurs at a considerable level.

The educational attainment of second generation immigrants is of crucial importance for their subsequent labor market success in Germany. While the schooling outcomes of Germans improved in recent decades, German-born children of immigrants did not partake in this development. The paper applies representative data from the Mikrozensus and the German Socioeconomic Panel (GSOEP) to investigate the development and determinants of educational attainment of immigrant youth. Even after controlling for covariate effects, the time trends in the educational attainment of nationals and second generation immigrants deviate. These different developments over time seem to be related to the changing nationality composition of second generation immigrants in Germany. Zusammenfassung Der Bildungserfolg der in Deutschland geborenen Kinder von Zuwanderern ist für deren späteren Arbeitsmarkterfolg von zentraler Bedeutung. Während die Bildung der Einheimischen sich in den letzten Dekaden stetig verbesserte, nahmen die in Deutschland geborenen Kinder der Zuwanderer an diesem Prozess nicht teil. Die Studie nutzt repräsentative Daten des Mikrozensus und des deutschen Sozioökonomischen Panels (GSOEP) um Entwicklung und Determinanten des Bildungserfolges von Zuwandererkindern zu untersuchen. Selbst wenn man für erklärende Variablen kontrolliert, ergeben sich unterschiedliche Entwicklungen für die Zuwanderer zweiter Generation und Einheimische über die Zeit. Die Ergebnisse legen nahe, dass dieser Umstand auf die Verschiebungen in der Herkunftslandstruktur der Zuwanderer in Deutschland zurückgeht.

Concerning German social assistance earlier studies calculate a non-take-up rate of more than 50 percent. This contradicts intuition. Using data from the low-income panel we estimate eligibility and non-take-up rate more precisely. However, avoiding simulation errors of earlier studies reduces the rate only slightly. Therefore, we estimate a multiple probit model to explain the nontake- up behavior. Significant reasons are low claims, stigma and the expectation of a short life of eligibility. Additionally, we show a significant simultaneous relation between earned income and the tendency to participate in social assistance. The sign is negative in both directions.

Is the German business cycle obsolete? Measurements of the business cycle using new measures for the cycle and the trend by the degree of utilization of capacities of firms show some irregularities in the development of the business cycle since 1998. It may be supposed that there is still an endogenous development but that there are difficulties in adapting.