Band 226, Heft 6

We study how the education and retirement decision of a representative individual is affected by the demographic trend. Individuals optimally choose the date at which they leave school to work and at which they retire. Applying an OLG-model with a pay-as-you-go social security system we show how individuals optimally respond to a) a change in the current wage for a unit of human capital, b) a change in the perfectly foreseen future wage for a unit of human capital, c) a decrease in the anticipated future pension benefit, and d) an increase in the future social contribution rate. From the government’s point of view it would be desirable to control for an instrument which increases both the accumulation of human capital before starting to work and the retirement age. Our findings suggest that policy-makers should respond to the demographic trend by reducing pension benefits. Compared to the most relevant alternative, i.e. an increase in the contribution rate, individuals would choose a longer working life, working becomes more attractive. This in turn creates an incentive to invest more in education and to accumulate more human capital.

Collective wage contracts impose restrictions on wage-setting. We utilize German linked employer-employee data for blue-collar worker to compute the dispersion of wages and wage components within and across firms under three different wage-setting regimes: Establishments applying industry-wide collective contracts, establishments with firm-level contracts and uncovered establishments. The empirical analysis confirms a lower dispersion of wages and in particular “worker quality indices” for firms applying sectoral collective contracts compared to companies in the other two wage-setting regimes. Between the years 1990, 1995 and 2001 the dispersion of wages increases, and this is valid too for firms covered by industry-wide collective contracts. A sensitivity analysis demonstrates that the results retain their statistical significance and do not change qualitatively if we modify the minimum firm size (establishments with at least 50,100 and 250 employees) or take into account the endogeneity of tenure or self-selection of workers into bargaining regimes.

This article tests the thesis of supply-induced demand in the German hospital sector. The empirical investigation described makes use of comprehensive data and represents the first time this has been done for Germany. A cross-section analysis is performed at the level of geographical planning regions. At this level the hospital data encompass the whole population and distinguish ten different medical specialities. 13 different economic and social variables are analysed in a system of simultaneous equations. The result shows that the supply of treatment capacity has a positive influence on the demand for hospital treatments, the number of patients treated per 100,000 population rising with bed density. Alternative explanations for this phenomenon are also checked, without result. No correlation can be found between morbidity and the number of hospital cases in any given region. Although hospital bed density is found to depend on the number of hospital cases per head of population, this is no proof of the reverse causality, as this result can be traced back to the strategy behind the existing hospital planning. The validity of Roemer’s Law in Germany is likely to be (at least partially) due to this existing hospital planning. This is because the prevailing hospital planning procedure is distorted, indicating a higher need for hospital beds where bed density is already high. Given this situation, and the results of the regression analysis, it would seem appropriate to consider abolishing the hospital planning system and radically reducing the density of hospital beds.

Recent studies on international student performance renewed the interest in the contribution of human capital to economic growth. So far the exploration of large country comparisons delivered rather mixed results. Concentrating on OECD member countries, this paper uses panel data estimation techniques to refine this analysis. Furthermore, as theory differs about the right measure of human capital, the impact of the human capital stock as well as its rate of accumulation on economic growth is analyzed. Yet estimation results reveal only a positive impact of the human capital stock on economic growth suggesting that an increase in average schooling years by one year yields a rise in the GDP growth rate of about 0.5 percentage points. However, when taking possible endogeneity into account in an instrumental variables approach, these conclusions on the impact of the level of human capital on economic growth is demonstrated to be rather fragile.

According to the economic theory of crime, a rise in expected punishment - i.e. the product of probability and severity of punishment - results in a reduction of crime due to deterrence. What appears to be a simple and straightforward hypothesis turns out to be a demanding task for empirical examination because “crime” is composed of many different offence categories and expected punishment is influenced by the actions and decisions of different institutions such as police, public prosecutor’s office and the courts, and, thus, varies with respect to clearance and conviction rate as well as decisions regarding form (fine, probation, imprisonment) and size (length of prison sentence and size of fine) of punishment. Moreover, it makes a difference whether offenders are subject to general or juvenile criminal law. Usually, empirical analyses of crime/deterrence take simultaneous account of only a fraction of the items detailed above. In order to overcome this shortcoming the author has established a unique database combining information from different sources of official judicial statistics covering the German states for the period 1977-2001. Building on this database a comprehensive system of criminal prosecution indicators is derived and subsequently related to the incidence of six major offence categories using panel-econometrics. Revealing many negative significant effects for clearance and conviction rates but mostly insignificant coefficients for indicators of form and size of punishment the estimation results suggest that deterrence is mainly exerted at the initial levels of the criminal prosecution process. Finally, the econometric estimates are used in order to assess cost reductions for crime victims from increases in the severity of criminal prosecution. Thus, intensifying criminal prosecution permanently by 10 percent would reduce victims’ costs by at least € 250 million p.a.