While available evidence suggests that the events of September 11th negatively influenced the relative earnings of employees with Arab background in the US, it is not clear that they had similar effects in other countries. Our study for Germany provides evidence that the events also affected the...

We present a model in which workers with greater ability and greater risk tolerance move into performance pay jobs to capture rents and contrast it with the classic agency model. Estimates from the German Socio-Economic Panel confirm testable implications drawn from our model. First, before...