The Labor Market and Employment (Handbook article). The labor market differs from typical markets in important ways. We find job competition and collective mechanisms that set wages and working conditions. Changes in employment bring about changes in wages and prices and entail political and...

Corporate organization varies within a country and across countries with country size. The paper starts by establishing some facts about corporate organization based on unique data of 660 Austrian and German corporations. The larger country (Germany) has larger firms with flatter more decentral...

In this paper we analyze the conditions under which a foreign direct investment (FDI) involves a net capital flow across countries. Frequently, foreign direct investment is financed in the host country without an international capital movement. We develop a model in which the optimal choice of...

A firm that faces insufficient supply of labor can either increase the wage offer to attract more applicants, or reduce the hiring standard to enlarge the pool of potential employees, or do both. This simultaneous adjustment of wages and hiring standards has been emphasized in a classical...

Wage Dispersion and Efficiency. It is often assumed that markets generate efficient allocations, but these are not necessarily fair. The widening of wage differentials that is currently observed is interpreted in this manner: Skill-biased technological progress increases demand for skilled work...

This paper analyzes whether there exists a causal relationship between parental employment and children's educational attainment. We address potential endogeneity problems due to (i) selection of parents in the labor market by estimating a model on sibling differences and (ii) reverse causality...

The Annual Congress of the German Economic Association has become one of the largest national meetings of professional economists. The contributed papers at the Congress undergo a rigorous and competitive selection procedure where only about one half of all submissions are accepted for...

This paper deals with the impact of electoral competition on politicians' outside earnings. We propose a simple theoretical model with politicians facing a tradeoff between allocating their time to political effort or to an alternative use generating outside earnings. The model has a testable...

We discuss survey evidence on individuals' willingness to sanction norm violations - such as evading taxes, drunk driving, fare dodging, or skiving o work - by expressing disapproval or social exclusion. Our data suggest that people condition their sanctioning behavior on their belief about the...

The German health care reform of 2004 imposes a charge of 10 Euro for the first visit to a doctor in each quarter of the year. At first glance, there is no inhibiting effect of this fee on utilization in the German Socio-Economic Panel. However, this study reveals that the true effect is...