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Regulation of investor access to financial products is often based on product familiarity indicated by previous use. The underlying premise that lack of familiarity with a product class causes unwarranted participation is difficult to test. This paper uses household-level data from the ‘experiment’ of German reunification that (exogenously) offered to East Germans access to capitalist products (exogenously) unfamiliar to them. We compare the evolution of post-unification participation of former East and West Germans in financial products, controlling for relevant household characteristics. We vary familiarity differentials by considering (i) both unfamiliar ‘capitalist’ products (stocks, bonds, and consumer credit) and ones available in the East (savings accounts and life insurance); and (ii) cohorts with different exposure to capitalism. We find that East Germans participated immediately in unfamiliar risky securities, at rates comparable to West Germans of similar characteristics. They phased out disproportionate participation in previously familiar assets as familiarity with capitalist products grew. They were more likely to use consumer debt, partly to catch up with richer new peers. We find no signs of abrupt participation drops that could suggest mistakes or regret related to lack of familiarity.
Nach knapp vier Monaten Corona-Krise stellen sich auch der Wissenschaft viele Fragen: Sind bestimmte Teile der Gesellschaft stärker von den Folgen betroffen, klafft eine Gerechtigkeitslücke? Öffnen sich vielleicht aber auch Wege für neue medizinische, gesellschaftliche, wirtschaftliche und ökologische Ansätze? Forscherinnen und Forscher der Goethe-Universität aus verschiedenen Disziplinen wagen eine Zwischenbilanz und einen Ausblick.
Wirtschaftliche Umbrüche, wie sie mit der deutschen Wiedervereinigung verbunden waren, sind in industrialisierten Ländern selten. Sie bieten deshalb aus wissenschaftlicher Sicht eine wertvolle Gelegenheit, um Erkenntnisse über das ökonomische Verhalten von Menschen zu gewinnen. Das Sparverhalten der Ostdeutschen nach der deutschen Wiedervereinigung bestätigt, dass Menschen ihre Ersparnis rational planen.
Using a structural life-cycle model, we quantify the long-term impact of school closures during the Corona crisis on children affected at different ages and coming from households with different parental characteristics. In the model, public investment through schooling is combined with parental time and resource investments in the production of child human capital at different stages in the children's development process. We quantitatively characterize both the long-term earnings consequences on children from a Covid-19 induced loss of schooling, as well as the associated welfare losses. Due to self-productivity in the human capital production function, skill attainment at a younger stage of the life cycle raises skill attainment at later stages, and thus younger children are hurt more by the school closures than older children. We find that parental reactions reduce the negative impact of the school closures, but do not fully offset it. The negative impact of the crisis on children's welfare is especially severe for those with parents with low educational attainment and low assets. The school closures themselves are primarily responsible for the negative impact of the Covid-19 shock on the long-run welfare of the children, with the pandemic-induced income shock to parents playing a secondary role.
