Hannes Winner

How Corruption Influences Foreign Direct Investment: A Panel Data Study

This article analyzes the sign and development of the effect of corruption on foreign direct investment (FDI). Economic theory distinguishes grabbing hand corruption from helping hand corruption. The former suggests a negative impact of corruption on FDI, the latter one a positive effect. Empirically, we apply a data set of 21 home and 59 developed and less developed host countries covering between 1983 and 1999. To investigate the corruption impact, we employ a panel data model that particularly refers to the knowledge‐capital model of multinational activity. We find a negative relationship between corruption and FDI. This, in turn, suggests that the helping hand effects of corruption are outweighed by the grabbing hand effects. Further, we observe that corruption is an important impediment of FDI in developed economies but not in less developed ones. Finally, we demonstrate that the importance of corruption has decreased over the years.

Incorporation and Taxation: Theory and Firm-Level Evidence

This paper provides a theory and firm-level evidence on the incorporation decision of entrepreneurs in a model of taxes and corporate governance. The theory explains how the incorporation decision of entrepreneurs is driven by taxation (corporate and personal income taxes), corporate transparency, access to external capital and limited liability. We estimate features of this model using a large cross-section of more than 540, 000 firms in European manufacturing. We find that higher personal income tax rates favor incorporation while higher corporate tax rates reduce the probability to incorporate. These findings are robust to the inclusion of other economic and institutional determinants of external financing and choice of organizational form.

The impact of endogenous tax treaties on foreign direct investment: theory and evidence

This paper investigates the effect of tax treaties on bilateral stocks of outward FDI. For this purpose we employ a numerically solvable general equilibrium model of trade and multinational firms to study the impact of tax treaties on both welfare and outward FDI. The model indicates under which factor endowment configurations countries gain in welfare when implementing a tax treaty. This motivates an empirical specification of the endogenous selection into implementing new tax treaties. Using data of bilateral OECD outward FDI between 1985 and 2000, we find a significant negative impact of newly implemented tax treaties on outward FDI stocks.

Transfer Pricing as a Tax Compliance Risk

This paper studies the role of transfer pricing as a critical compliance issue. Specifically, we analyse whether and to what extent the perceived risk associated with transfer pricing responds to country-, industry- and firm-specific characteristics. Empirically, transfer pricing risk awareness is measured as a professional assessment reported by the person with ultimate responsibility for transfer pricing in their company. Based on a unique global survey conducted by a Big 4 accounting firm in 2007 and 2008, we estimate the number of firms reporting transfer pricing being the largest risk issue with regard to subsequent tax payments. We find that transfer pricing risk awareness depends on variables accounting for general tax and transfer pricing specific strategies, the types and characteristics of intercompany transactions the multinational firms are involved in, their individual transfer pricing compliance efforts and resources dedicated to transfer pricing matters.

Physician density in a two-tiered health care system

We investigate the density of non-contract (private) physicians in a two-tiered health care system, i.e., one with co-existing public and private health care providers. In particular, we analyze how the densities of private and public suppliers of outpatient health care (general practitioners and specialists) are related to each other. Using a panel of 121 Austrian districts between 2002 and 2008, we apply a Hausman–Taylor estimator, which allows to treat each of these densities as endogenous. We find that the density of non-contract specialists is positively associated with the density of non-contract general practitioners, but not significantly related to the density of contract general practitioners. We also observe a negative relationship between the densities of non-contract and contract general practitioners and the ones of non-contract and contract specialists, indicating competitive forces between the private and the public sector of the outpatient health care provision in Austria. Our results contribute to the ongoing debate on the role of non-contract physicians for health care provision in Austria.

The Wage Premium of Globalization: Evidence from European Mergers and Acquisitions

We provide evidence on the impact of globalization on labor market outcomes analyzing pay differences between foreign-acquired and domestically-owned firms. For this purpose, we use firm level data from 16 European countries over the time period 1999-2006. Applying propensity score matching techniques we estimate positive wage premia of cross-boarder merger and acquisitions (M&As), suggesting that foreign acquired firms exhibit higher short-run (post-acquisition) wages than their domestic counterparts. The observed wage disparities are most pronounced for low paying firms (with average wages below the median). Finally, we find systematic wage premia in Western European countries, but not so in Eastern Europe.

Economic Freedom and Taxation: Is There a Trade-off in the Locational Competition Between Countries?

This paper investigates the relationshipbetween economic freedomand taxation. We argue that an economicallyfree environment improvesthe attractiveness of a location, which, inturn, enables governmentsto levy higher business taxes. To test thishypothesis empirically, weestimate the impact of economic freedom onthe national tax policy,where the latter is measured by thecorporate tax revenue related toGNP (corporate tax ratio). We utilize adata set of 46 developed and lessdeveloped countries between 1980 and 1997and find a clear confirmationof our hypothesis. Further, a simulationanalysis reveals that the observedchange in economic freedom has equalizedthe international distributionof corporate tax ratios.

Fat-Free Mass and Fasting Glucose Values in Patients with and without Statin Therapy Assigned to Age Groups between 75 Years

Objective: The aging-associated changes in body composition result in an increased cardiometabolic risk. A tremendous reduction of cardiovascular morbidity and mortality can be obtained by statin therapy. Statins are well tolerated, with myopathy as the most serious negative side effect. Some recently published studies indicate that the incidence of type 2 diabetes might be increased during intensified statin therapy. The aim of our study was to investigate whether statin therapy has an influence on the aging-associated changes in fat-free mass (FFM). Methods: A total of 3,280 persons attending a medical outdoor center between January 2005 and July 2011 were assigned to 3 age groups from <60 to >75 years. Clinical data, body mass index (BMI), and body composition were evaluated in the different age groups in patients with and without statin therapy. To analyze the impact of statin use on FFM, we regressed a patients FFM on an interaction term between statin use and age and other control variables. Results: Aging was associated with a decrease in BMI and FFM, while fat mass continuously increased up to the age of >75 years. This was paralleled by a continuous increase in fasting glucose levels in patients with and without statin therapy. The loss of FFM between the age group <60 years and >75 years was more pronounced in statin-treated patients (10.88%) than in non-statin users (8.47%). Creatine phosphokinase values revealed a decrease of 7.77 U/l between the age groups <60 and >75 years in non-statin users and of 14.75 U/l in statin users. Statistical analysis indicated that the effect of statin therapy on FFM is more pronounced in younger than in older patients. Conclusions: Patients under statin therapy seem to be more vulnerable to the aging-associated lowering of FFM. Diagnostic procedures and interventions to prevent a loss of muscle mass might be of particular advantage in elderly patients under statin therapy.

Regional density of private dentists: empirical evidence from Austria

OBJECTIVES We investigated the determinants of disparities in the regional density of private dentists in Austria. Specifically, we focused on the relationship between the density of private dentists and their public counterparts, thereby controlling for other possible covariates of dentist density. METHODS Dentist density was measured at the district level. We used panel data of dentist density from 121 Austrian districts over the years 2001-2008. We applied a Hausman-Taylor framework to cope with possible endogeneity and to control for cross-district effects in the dentist density. RESULTS A significant negative relationship was found between the density of private and public dentists, indicating a substitution effect between the two dentist groups. A significant positive spatial relationship also existed for private and public dentists in the neighboring regions. Dental capacities in public and private hospitals and dental laboratories run by the public health insurance system did not have a significant effect on private dentist density. CONCLUSIONS Although a strong negative relationship existed between private and public dentists within the districts, one should not draw the conclusion that private dentists in Austria are close substitutes for public dentists. Such a conclusion would require further empirical analysis on the utilization patterns of dental services and their relationships with financing mechanisms.

Pricing Damages for Pain and Suffering in Court: The Impact of the Valuation Method

We analyze the pricing of pain and suffering and, in particular, whether the corresponding compensation for pain and suffering is affected by a courts approach to valuing such damages. For this purpose, we use data on pain and suffering verdicts in Austria, where courts are generally free to choose between a per‐diem and a lump‐sum scheme to assess damages for pain and suffering. The per‐diem approach was introduced in 1990 but was not adopted in all Austrian provincial courts. This enables us to estimate the causal impact of the change in calculation schemes. Applying a difference‐in‐difference framework to estimate this treatment effect, we observe that courts increased their compensation by about 38 percent to 59 percent after the implementation of the per‐diem scheme.