Marshall's student Pigou noted: It's all in Marshall. From a static point of view, this seems rather bold in a constantly changing world. However, this statement becomes more plausible in a dynamic context, where principles are subject to change. Indeed, over time, Marshall's concept of external...

Demographic change will be one of the major challenges for economic policy in the developed world in the next decades. In this article, we analyze the relationship between age structure and the number of startups. We argue that an individual's decision to start a business is determined by his or...

The idea of an industrial policy that promotes large businesses - heavyweights - as the best way to compete in a globalized world has become, again, en vogue among European politicians. The only apparent controversy about the idea revolves around whether it is better to promote national...

Keeping up with rapid technological change necessitates constant innovation. Successful innovation depends on both incumbent workers' knowledge, based on experience, and knowledge about the latest technologies, along with the skills needed to implement them. Both of these knowledge-based...

New firm location decisions, relative to incumbents may be based on a choice between two types of advantages: natural advantages or those that arise from social embeddedness, the latter of which may particularly include knowledge spillovers. We analyze the relative importance of geographically...

We investigate whether time-persistent cultural borders impede economic exchange across regions of the same country. To measure cultural differences we evaluate, for the first time in economics, linguistic micro-data about phonological and grammatical features of German dialects. These data are...

In 2004, a section was added to the German Protection against Dismissal Act, establishing a new procedure to dismiss an employee, given a predetermined severance payment. Most legal scholars presume the change to be without impact, while a minority of experts claims it to be either beneficial or...

In Germany, there is no trade union membership wage premium, while the membership fee amounts to 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...

Does the Internet undermine social capital or facilitate inter-personal and civic engagement in the real world? Merging unique telecommunication data with geo-coded German individuallevel data, we investigate how broadband Internet affects several dimensions of social capital. One identification...

The German Income Tax Reform 2000, which announced a reduction in income tax rates to be implemented in a series of three stages, was welcomed by the public as a step towards unleashing lurking growth potentials. Nonetheless, in the course of the year 2001 a dispute arose, centering around the...