Severance pay often results from a bargain between the firm and the employee to avoid or terminate a legal conflict. We theoretically investigate how income taxation affects these negotiations. Using panel data from West Germany and exploiting a change in tax law in 1999, we find that a higher...

In Germany, there is no trade union membership wage premium and a membership fee of 1% of the gross wage. Therefore, prima facie, there are strong incentives to free-ride on the benefits of trade unionism. We establish empirical evidence for a private gain from trade union membership which has...

Most German economists show strong patterns of professional specialisation. In their work, they either focus on basic research or on policy consultancy. The evidence provided by Haucap und Mödl has been used to question work incentives in academia. The suggestion to change work incentives,...

The German government plans to introduce a minimum wage from 2015. This must be understood as a response to the decline in collective bargaining coverage and the marked increase in employment in the low-wage sector. The authors discuss how many workers are affected by this new regulation and...

The European Central Bank (ECB) recently announced its willingness to do whatever is needed to save the euro. This has raised the question whether such a role of the ECB must lead to higher rates of infl ation. Under current recessive macroeconomic conditions in the eurozone, the ECB’s...

Looking around the world, one realizes that national minimum wages are not uncommon. Yet it is still very difficult to estimate what effects a minimum wage might have in Germany. This is not just a question of how high the minimum wage should be — its impacts would also depend on many details...