Identifying the Effects of Place-based Policies – Causal Evidence from Germany
Matthias Brachert, Eva Dettmann, Mirko Titze
IWH Discussion Papers,
Nr. 18,
2016
Abstract
The German government provides discretionary investment grants to structurally weak regions to reduce regional disparities. We use a regression discontinuity design that exploits an exogenous discrete jump in the probability of receiving investment grants to identify the causal effects of the investment grant on regional outcomes. We find positive effects for regional gross value-added and productivity growth, but no effects for employment and gross wage growth.
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Does the Technological Content of Government Demand Matter for Private R&D? Evidence from US States
Viktor Slavtchev, Simon Wiederhold
American Economic Journal: Macroeconomics,
Nr. 2,
2016
Abstract
Governments purchase everything from airplanes to zucchini. This paper investigates the role of the technological content of government procurement in innovation. In a theoretical model, we first show that a shift in the composition of public purchases toward high-tech products translates into higher economy-wide returns to innovation, leading to an increase in the aggregate level of private R&D. Using unique data on federal procurement in US states and performing panel fixed-effects estimations, we find support for the model's prediction of a positive R&D effect of the technological content of government procurement. Instrumental-variable estimations suggest a causal interpretation of our findings.
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Paternal Unemployment During Childhood: Causal Effects on Youth Worklessness and Educational Attainment
Steffen Müller, Regina T. Riphahn, Caroline Schwientek
Abstract
Using long-running data from the German Socio-Economic Panel (1984-2012), we investigate the impact of paternal unemployment on child labor market and education outcomes. We first describe correlation patterns and then use sibling fixed effects and the Gottschalk (1996) method to identify the causal effects of paternal unemployment. We find different patterns for sons and daughters. Paternal unemployment does not seem to causally affect the outcomes of sons. In contrast, it increases both daughters‘ worklessness and educational attainment. We test the robustness of the results and explore potential explanations.
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Young, Restless and Creative: Openness to Disruption and Creative Innovations
Daron Acemoglu, Ufuk Akcigit, Murat Alp Celik
NBER Working Paper,
Nr. 19894,
2015
Abstract
This paper argues that openness to new, unconventional and disruptive ideas has a first-order impact on creative innovations—innovations that break new ground in terms of knowledge creation. After presenting a motivating model focusing on the choice between incremental and radical innovation, and on how managers of different ages and human capital are sorted across different firms with different degrees of openness to disruption, we provide firm-level, patent level and cross-country evidence consistent with this pattern. Our measures of creative innovations proxy for innovation quality (average number of citations per patent) and creativity (fraction of superstar innovators, the likelihood of a very high number of citations, and generality of patents). Our main proxy for openness to disruption is the age of the manager - based on the idea that only companies or societies open to such disruption will allow the young to rise up within the hierarchy. Using this proxy at the firm, patent and country level, we present robust evidence that openness to disruption is associated with more creative innovations, but we also show that once the effect of the sorting of young managers to firms that are more open to disruption is factored in, the (causal) impact of manager age on creative innovations is small.
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The Effect of Succession Taxes on Family Firm Investment: Evidence From a Natural Experiment
Margarita Tsoutsoura
Journal of Finance,
Nr. 2,
2015
Abstract
This paper provides causal evidence on the impact of succession taxes on firm investment decisions and transfer of control. Using a 2002 policy change in Greece that substantially reduced the tax on intrafamily transfers of businesses, I show that succession taxes lead to a more than 40% decline in investment around family successions, slow sales growth, and a depletion of cash reserves. Furthermore, succession taxes strongly affect the decision to sell or retain the firm within the family. I conclude by discussing implications of my findings for firms in the United States and Europe.
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Intergenerational Transmission of Unemployment - Evidence for German Sons
M. Mäder, Steffen Müller, Caroline Schwientek, Regina T. Riphahn
Jahrbücher für Nationalökonomie und Statistik,
Nr. 4,
2015
Abstract
This paper studies the association between the unemployment experience of fathers and their sons. Based on German survey data that cover the last decades we find significant positive correlations. Using instrumental variables estimation and the Gottschalk (1996) method we investigate to what extent fathers' unemployment is causal for offsprings' employment outcomes. In agreement with most of the small international literature we do not find a positive causal effect for intergenerational unemployment transmission. This outcome is robust to alternative data structures and to tests at the intensive and extensive margin of unemployment.
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Does the Technological Content of Government Demand Matter for Private R&D? Evidence from US States
Viktor Slavtchev, Simon Wiederhold
Abstract
Governments purchase everything from airplanes to zucchini. This paper investigates the role of the technological content of government procurement in innovation. We theoretically show that a shift in the composition of public purchases toward high-tech products translates into higher economy-wide returns to innovation, leading to an increase in the aggregate level of private research and development (R&D). Collecting unique panel data on federal procurement in US states, we find that reshuffling procurement toward high-tech industries has an economically and statistically significant positive effect on private R&D, even after extensively controlling for other R&D determinants. Instrumental-variable estimations support a causal interpretation of our findings.
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The Social Capital Legacy of Communism-results from the Berlin Wall Experiment
Peter Bönisch, Lutz Schneider
European Journal of Political Economy,
Nr. 32,
2013
Abstract
In this paper we establish a direct link between the communist history, the resulting structure of social capital, and attitudes toward spatial mobility. We argue that the communist regime induced a specific social capital mix that discouraged geographic mobility even after its demise. Theoretically, we integrate two branches of the social capital literature into one more comprehensive framework distinguishing an open type and a closed type of social capital. Using the German Socio-Economic Panel (GSOEP) we take advantage of the natural experiment that separated Germany into two parts after the WWII to identify the causal effect of social capital on mobility. We estimate a three equation ordered probit model and provide strong empirical evidence for our theoretical propositions.
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Vertical Grants and Local Public Efficiency
Ivo Bischoff, Peter Bönisch, Peter Haug, Annette Illy
Abstract
This paper analyses the impact of vertical grants on local public sector efficiency. First, we develop a theoretical model in which the bureaucrat sets the tax price while voters choose the quantity of public services. In this model, grants reduce efficiency if voters do not misinterpret the amount of vertical grants the local bureaucrats receive. If voters suffer from fiscal illusion, i.e. overestimate the amount of grants, our model yields an ambiguous effect of grants on efficiency. Second, we use the model to launch a note of caution concerning the inference that can be drawn from the existing cross-sectional studies in this field: Taking into account vertical financial equalization systems that reduce differences in fiscal capacity, empirical studies based on cross-sectional data may yield a positive relationship between grants and efficiency even when the underlying causal effect is negative. Third, we perform an empirical analysis for the German state of Saxony-Anhalt, which has implemented such a fiscal equalization system. We find a positive relationship between grants and efficiency. Our analysis shows that a careful reassessment of existing empirical evidence with regard to this issue seems necessary.
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