This article analyses how regional employment growth in Germany is affected by related variety, unrelated variety and the functions a region performs in the production process. Following the related variety literature, we argue that regions benefit from the existence of related activities that facilitate economic development. However, we argue that the sole reliance of related variety on standard industrial classifications remains debatable. Hence, we offer estimations for establishing that conceptual progress can indeed be made when a focus for analysis goes beyond solely considering industries. We develop an industry-function based approach of related and unrelated variety. Our findings suggest that related variety only in combination with a high functional specialization of the region facilitates regional growth in Germany. Additionally, also unrelated variety per se fails to wield influences affecting development of regions. It is rather unrelated, but functionally proximate variety in the groups “White Collar” and “Blue Collar Workers” positively affects regional employment growth.

In “Clio and the Economics of QWERTY,“ Paul David challenges an overarching, mainstream assumption that market forces should indeed lead toward efficient and optimal outcomes that include technology selection. David seeks to explain the endurance of technologies that his use of historiography judges inefficient and suboptimal. We challenge David's research, arguing that failure to consider the original institutional economics (OIE) tradition limits his grasp of complex processes to reduced notions of “path dependence“ based upon a “lock-in.“ This inquiry offers an alternative account of QWERTY and technology selection based upon Veblenian thinking, further supported by Paul Dale Bush's emphasis upon the ceremonial.

Takeover bids provide an option right to the target's shareholders; they guarantee the offered price but maintain the chance of higher offers. Using Option Pricing Theory (OPT) we estimate the probability and expected value of higher bids from target stock prices.

This dissertation applies the theory of technology accumulation to explain the internationalisation of foreign and West German multinational enterprises (MNEs) into East Germany. This theory shifts the focus from technology transfer to the international diffusion of innovation within the MNE. It rejects the position that all MNEs offer the same technological opportunities to host economies. Yet, most of the existing empirical research on postcommunist transition economies including East Germany applies the traditional technology transfer perspective. Therefore, this dissertation provides a complementary and novel approach. We assume a dynamic interaction between existing location specific technological capabilities within the host country, MNEs’ location choice, their internationalisation of research and development (R&D) and innovation, and the potential for technological spillover effects from MNEs to the host economy. The dissertation exploits information from the IWH FDI micro database on the full population of MNEs that entered East German manufacturing until 2005 and corresponding survey data. Microeconometric estimation results generate a number of novel findings: We can show that existing location specific technological capabilities affect MNEs’ general location choice within East Germany. They are not powerful enough to attract MNEs’ technological activities. Instead, the location of MNEs’ innovation requires the joint presence of technological and industry specialisation within regions, whereas foreign R&D benefits from technological specialisation in combination with a diversified industry structure. Moreover, the location of technological activity differs depending upon the underlying motive for internationalisation. Our findings suggest that the potential for technological externalities from affiliates to local firms is subject to centrally and locally driven technological heterogeneity of MNEs. Existing location specific technological capabilities do not affect the spillover potential. This hints a limited dynamic interaction of ownership and locational advantages in firms’ internationalisation. We derive implications for the technology accumulation theory as well as for various fields of science and technology policy.

International environmental protection like the combat of global warming exhibits properties of public goods. In the international arena, no coercive authority exists that can enforce measures to overcome free-rider incentives. Therefore decentralized negotiations between individual regions serve as an approach to pursue efficient international environmental protection. We propose a scheme which is based on the ideas of Coasean negotiations and Pigouvian taxes. The negotiating entities offer side-payments to counterparts in order to influence their taxation of polluting consumption. Side-payments, in turn, are self-financed by means of externality-correcting taxes. As we show, a Pareto-efficient outcome can be attained.

Im Zuge des Outsourcing beziehen Industrieunternehmen zur Fertigung ihrer Produkte Dienstleistungen, die sie früher selbst erstellt haben. Infolge der Lohnunterschiede zwischen Industrie und Dienstleistungssektor ändert sich damit aus volkswirtschaftlicher Sicht die Belastung der Industriegüter mit Arbeitskosten. Die Studie geht der Frage nach, wie bedeutsam dieser Effekt ist. Dazu werden mit dem offenen statischen Input-Output-Modell der Verflechtungsgrad der Industrie mit ihren Zulieferzweigen, die Beschäftigungsintensitäten der Produktion und das Arbeitskostengefälle zwischen den Produktionsbereichen für Deutschland und im Vergleich mit Frankreich und den Niederlanden analysiert. Im Ergebnis zeigt die Erweiterung der Arbeitskostenanalyse der Industrieproduktion um die Beschäftigungs- und Lohnintensitäten in den Zulieferbereichen eine - gesamtwirtschaftlich betrachtet - geringere Belastung der Industriegüter mit Lohnkosten in Deutschland, Frankreich und den Niederlanden an als es die sektoralen Größen in der Industrie signalisieren. Dabei ist der Unterschied in Deutschland quantitativ besonders stark ausgeprägt. Diese “Lohnersparnis“ hat sich nach dem Jahr 2000 etwas verstärkt. Der Entlastungseffekt wird ganz entscheidend über die unmittelbaren Vorleistungsinputs, d. h. die erste Verflechtungsstufe der Industrieproduktion erreicht.

This paper evaluates the New Keynesian Phillips curve (NKPC) and its hybrid variant within a limited information framework for Germany. The main interest resides in the average frequency of price re-optimization by firms. We use the labor income share as the driving variable and consider a source of real rigidity by allowing for a fixed firm-specific capital stock. A GMM estimation strategy is employed as well as an identification robust method based on the Anderson–Rubin statistic. We find that the German Phillips curve is purely forward-looking. Moreover, our point estimates are consistent with the view that firms re-optimize prices every 2–3 quarters. These estimates seem plausible from an economic point of view. But the uncertainties around these estimates are very large and also consistent with perfect nominal price rigidity, where firms never re-optimize prices. This analysis also offers some explanation as to why previous results for the German NKPC based on GMM differ considerably. First, standard GMM results are very sensitive to the way in which orthogonality conditions are formulated. Further, model mis-specifications may be left undetected by conventional J tests. This analysis points out the need for identification robust methods to get reliable estimates for the NKPC.

We use Italian regional data to answer the question whether trade affects within-country income differentials. In Italy, the more affluent Northern regions trade more with the rest of the world than the poorer ones in the Southern “Mezzogiorno” regions. Prima facie, there is a positive correlation between external trade and per capita income. Studying this relationship empirically requires taking into account the endogenous component of trade. We argue that panel cointegration models can complement instrumental variables techniques to account for the endogeneity of trade in a panel context. Both methods show a positive link between trade openness and the level of income per capita.

Im vorliegenden Papier wird die Bedeutung der Besitzverflechtungen zwischen Aktiengesellschaften (bzw. Kapitalgesellschaften im Allgemeinen) für die gegenwärtige Finanzmarktkrise herausgearbeitet. Durch den wechselseitigen Besitz von Firmen untereinander ist eine Situation entstanden, in denen bestellte Manager sich lediglich kontrollieren. Durch entstehende Abhängigkeiten und die innerhalb der verhältnismäßig kleinen Gruppe von Topmanagern mögliche implizite Koordination konnten Vorstände über die Entlohnungs- und damit auch über die Anreizsysteme, denen sie ausgesetzt sind, wesentlich mitentscheiden. Dies hat, wie gezeigt wird, erheblich zur Entstehung von Anreizsystemen beigetragen, die sich im Kern an kurzfristigen Erfolgen orientieren. Da insbesondere in der Finanzintermediation kurz- und langfristige Gewinnoptimierung durch die starke Korrelation von Risiko und Gewinnmöglichkeiten einem starken Trade- off unterliegen, haben diese Anreizsysteme wiederum eine erhebliche Rolle in der verfehlten Risikopolitik der Banken gespielt, die ein wesentliche Ursache der Krise war.

This paper presents an alternative explanation of the gender pay gap resting on a simple Hotelling-style duopsony model of the labour market. Since there are only two employers, equally productive women and men have to commute and face travel cost to do so. We assume that some women have higher travel cost, e.g., due to more domestic responsibilities. Employers exploit that women on average are less inclined to commute and offer lower wages to all women. Since women's firm-level labour supply is for this reason less wage-elastic, this model is in line with Robinson's explanation of wage discrimination.