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All-over in Europe, unemployment became a growing problem from the mid 1980s to the mid 1990s. Nevertheless, the effects on the economical situation of the unemployed and the whole population are quite different in European countries. In this paper we first give a brief overview over the development of unemployment rates in eight member states of the European Union and over the different reactions to provide the social protection of the unemployed. Therefore we look at the social security expenditures, the level of income replacement for the unemployed and recent social policy reforms concerning them. In the second section of the paper, we examine the development of income distribution and poverty taking different poverty lines into consideration. There is no general pattern neither for the relationship of inequality among the unemployed to the whole economically active population nor for the development from the 80s to the 90s. But one can say that in countries with increasing income inequality also poverty is rising (especially in the UK) and that where inequality among the unemployed is less pronounced the proportions of the poor went down from the mid 80s to the mid 90s (France and Ireland). In nearly all countries the risk of being poor is ernormously high for the unemployed, Denmark is the only exception.
The paper analyses the relationship between deposit insurance, debt-holder monitoring, bank charter values, and risk taking for European banks. Utilising cross-sectional and time series variation in the existence of deposit insurance schemes in the EU, we find that the establishment of explicit deposit insurance significantly reduces the risk taking of banks. This finding stands in contrast to most of the previous empirical literature. It supports the hypothesis that in the absence of deposit insurance, European banking systems have been characterised by strong implicit insurance operating through the expectation of public intervention at times of distress. Hence the introduction of an explicit system may imply a de facto reduction in the scope of the safety net. This finding provides a new perspective on the effects of deposit insurance on risk taking. Unless the absence of any safety net is credible, the introduction of deposit insurance serves to explicitly limit the safety net and, hence, moral hazard. We also test further hypotheses regarding the interaction between deposit insurance and monitoring, charter values and "too-big-to-fail." We find that banks with lower charter values and more subordinated debt reduce risk taking more after the introduction of explicit deposit insurance, in support of the notion that charter values and subordinated debt may mitigate moral hazard. Finally, large banks (as measured in relation to the banking system as a whole) do not change their risk taking in response to the introduction of deposit insurance, which suggests that the introduction of explicit deposit insurance does not mitigate "too-big-to-fail" problems.
This paper uses the co-incidence of extreme shocks to banks’ risk to examine within country and across country contagion among large EU banks. Banks’ risk is measured by the first difference of weekly distances to default and abnormal returns. Using Monte Carlo simulations, the paper examines whether the observed frequency of large shocks experienced by two or more banks simultaneously is consistent with the assumption of a multivariate normal or a student t distribution. Further, the paper proposes a simple metric, which is used to identify contagion from one bank to another and identify “systemically important” banks in the EU.
This dissertation consists of four self-contained chapters in the overlapping fields of industrial organization and organizational economics on the topics pricing, careers and supervision. Each chapter is the result of an independent research project. The dissertation analyzes empirical research topics by exploring novel observational data sets. It sheds light on open questions in the economic profession by extending fundamental models on pricing in the first two chapters and by challenging conventional explanations and methods on careers and supervision in the last two chapters.
- Chapter 1:
The first chapter is based on joint work with Steffen Eibelshäuser. It models price competition among brick-and-mortar retailers with business hours. Specifically, we propose a dynamic model of intraday price competition featuring spatial differentiation and firm size heterogeneity. The model makes detailed predictions concerning equilibrium-pricing patterns. When spatial differentiation is high and consumers cannot easily switch between retailers, equilibrium prices are stable at oligopoly levels. When differentiation is low, equilibrium prices fluctuate in cycles. The shapes of the cycles depend on the level of differentiation and on retailers’ reaction times. When reaction times decrease, the number of price cycles increases. In a second step, we apply the model to the German retail gasoline market. Gasoline retailers have been using digital price tags for decades and fast-paced price competition with more than ten price changes per day is no exception. Our model has successfully predicted the emergence of an additional intraday subcycle in April 2017. Moreover, we were able to confirm several detailed predictions concerning the shape of equilibrium price paths and individual firm behavior. Finally, we calibrate the model using a generalized method of moments. The model fits the data remarkably well, with coefficients of determination ranging from 60% to 80%. We use the fitted model to evaluate a number of policy counterfactuals. Restricting price increases results in higher prices and decreased welfare, leading us to conclude that regulation of dynamic markets is highly complex and can easily backfire.
- Chapter 2:
The second chapter analyzes the price-matching policies of two gasoline retailers. Customers of these retailers that are able to provide evidence of competitors posting lower prices have the ability to claim price matches. As shown in the first chapter, the Edgeworth Cycle model rationalizes price fluctuations in the German gasoline retail market. To determine policy interactions in cycling markets, this chapter extends the classical Edgeworth Cycle model by price-matching. The model predicts that price-matching retailers post higher prices and initiate price increases. The price-consulted firm anticipates this strategy, posts lower prices, and provokes the implementing firm to restore the price more frequently. Consulted stations also anticipate earlier price restoration reactions from implementing stations and, thus, provoke restorations earlier. This effect dominates in welfare calculations, such that price matching has positive welfare implications.
The second part of the chapter tests the hypotheses with price data on the German gasoline retail market. The estimation exploits a discontinuity in the policy-affected retailers. Therefore, the analysis disentangles the competitive effects of implementing and price-consulted market participants in comparison to retailers that are not affected. As predicted, the posted average and minimum prices of one implementing retailer and its consulted competitors increase. For the other price-matching retailer, I find reduced prices that contradict the model. The last part of the chapter relates the empirics to static models and shows that the dynamic component provides previously undiscovered insights.
- Chapter 3:
The third chapter is based on joint work with Emmanuelle Auriol and Guido Friebel. It represents the subtopic of careers in this dissertation. Specifically, the chapter provides the first comprehensive data collection analysis of women’s careers in all European research institutions in the field of economics. Using a web-scraping algorithm that constantly accesses position information on institutions’ websites, we collect a novel data set on researchers in Europe. These details entail information on researchers’ gender obtained by the first name and a face recognition. Similar to survey data on U.S. institutions, we identify a leaky pipeline, as women are less likely to become professors than men are. The situation is very heterogeneous across Europe. The gap is substantially larger in Western and Southern Europe than in Central and Eastern Europe. Furthermore, we identify institutions with a higher research output and a better research-ranking having a systematically lower share of females in full professor positions as well as entry-level positions for Ph.D. graduates. Austria, Belgium, Italy, Portugal, and Spain are the drivers for this correlation. All these results are in line with the “leaky pipeline” hypothesis, in which, over the different stages of a career, the attrition of women is higher than the one of men. We show that the cohort hypothesis arguing that the lag effect between the time of Ph.D. completion and the time of promotion to a full professorship is unable to explain the current low number of females.
- Chapter 4:
The fourth and last chapter "What does Mystery Shopping do?" is based on joint work with Sidney Block, Guido Friebel, Matthias Heinz, and Nick Zubanov. It addresses an auditing practice with a yearly U.S.-turnover of 19.5 billion USD in 2016 (European Society for Opinion and Market Research, 2017: Global Market Research 2017). The term mystery represents the key aspect of the tool. During an anonymous visit, so-called mystery shoppers perform certain predefined tasks such as purchasing a product, asking questions, registering complaints, or behaving in a certain way. Following their visit, the shoppers provide detailed reports about their experiences to the evaluated firms. The chapter investigates whether the practice is suitable to determine employees’ pay. Contrary to the general understanding that firms are able to observe service quality and, in turn, can proxy for business success with mystery shopping, we do not observe mystery-shopping evaluations to correlate positively with firm performance. A decomposition of the evaluation reports indicates that mystery-shopping scores are biased and the shopper’s identity explains up to 20% of the score’s variance. Thus, the shopper’s identity has the largest impact out of all observable characteristics. With the results that mystery-shopping scores are noisy and biased, we conclude that they are not suitable for performance pay in the context of our study. In addition, we show that if the number of observations is sufficiently large, aggregated scores relate to business success. The required number of shops per evaluation period must be, however, larger by a factor between 3 and 30 per evaluated subject. Hence, cost advantages of mystery shopping diminish such that the cost benefits to customer assessments could vanish completely. The current methodology, however, may still be useful for other employee-related purposes like monitoring, which is in line with the policies of the considered firms.
Multilevel governance of energy transitions depends on the coordination between national, supra- and international administrative actors. Coordination takes place in systems of multilevel administration, which constitute highly dynamic arenas dominated by legally non-binding instruments and reciprocal interactions and relationships. This article seeks to gain insights into the underlying coordination processes by asking which conditions account for the change over time of coordination between administrative actors in multilevel administration systems. First, research on multilevel administration is summarized. Second and starting from historic and discursive institutionalist theory, a conceptual framework is outlined to assess the conditions and modes that account for the dynamics of coordination in general, and the change of coordination instruments in particular. A trend towards persuasive coordination in a process of institutional layering driven by endogenous conditions is expected. Empirically, an in-depth comparative analysis is conducted based on exploratory interviews with 90 experts mainly from the European Commission, the International Energy Agency, and national administrators from Canada and Europe. The results unveil that administrative coordination evolves according to at least three types of layering that go beyond the initial hypothesis: first, through layering of coordination instruments; second, as an increase in formal and non-formal interactions through a growing number of channels and complexity of interactions over time; third, as layering of inter-administrative relationships through a growing importance of personal networks and the creation of new contacts. By analysing the dynamics of multilevel administrative coordination, the article contributes to an important but underdeveloped aspect of the governance of supra- and international energy transitions.