Josef Zweimüller

Income Distribution and Demand-Induced Innovations

We introduce non-homothetic preferences into an innovation-based growth model and study how income and wealth inequality affect economic growth. We identify a (positive) price effect-where increasing inequality allows innovators to charge higher prices and (negative) market-size effects-with higher inequality implying smaller markets for new goods and/or a slower transition of new goods into mass markets. It turns out that price effects dominate market-size effects. We also show that a redistribution from the poor to the rich may be Pareto improving for low levels of inequality. Copyright 2006, Wiley-Blackwell.

Firm Size Wage Differentials in Switzerland: Evidence from Job Changers

We analyze firm size wage differentials by not only studying wage changes of workers who move between firms of different size classes but also by explicitly analyzing the underlying mobility decisions. Our analysis is based on a new data-set for Switzerland. We consider the OLS size premium as a distinct determinant of individual wages and ask how this wage-component affects the dynamics of individual wages over time and the mobility and search behavior of workers. We find no evidence for the hypothesis that larger employers provide worse working conditions, but about half of the OLS size differential is accounted for by worker heterogeneity.

Does raising the retirement age increase employment of older workers

Two pension reforms in Austria increased the early retirement age (ERA) from 60 to 62 for men and from 55 to 58.25 for women. We find that raising the ERA increased employment by 9.75 percentage points among affected men and by 11 percentage points among affected women. The reforms had large spillover effects on the unemployment insurance program but negligible effects on disability insurance claims. Specifically, unemployment increased by 12.5 percentage points among men and by 11.8 percentage points among women. The employment response was largest among high-wage and healthy workers, while low-wage and less healthy workers either continued to retire early via disability benefits or bridged the gap to the ERA via unemployment benefits. Taking spillover effects and additional tax revenues into account, we find that for a typical birth-year cohort a one year increase in the ERA resulted in a reduction of net government expenditures of 107 million euros for men and of 122 million euros for women.

Unequal Assignment and Unequal Promotion in Job Ladders

In this study gender differentials in professional status attainment are analyzed. In the theoretical literature, unequal treatment of females is often rationalized by their higher probability of quitting. To test this hypothesis empirically we use data from the Austrian microcensus and find that neither the risk of childbearing nor different productive characteristics can explain the crowding of females in lower hierarchical positions. Females have to fulfill higher ability standards to be promoted; work experience is not rewarded in the same manner as it is for men.

Unemployment and Right‐Wing Extremist Crime

It is frequently argued that unemployment plays a crucial role for the occurrence of right-wing extremist crimes. We empirically test this hypothesis using data from Germany. We find that right-wing criminal activities occur more frequently when unemployment is high. The big difference in right-wing crime between East and West German states can mostly be attributed to differences in unemployment. This finding reinforces the importance of unemployment as an explanatory factor for right-wing crime and questions explanations based solely on the different socialization in former communist East Germany and the liberal West German states.

The Demand for Social Insurance: Does Culture Matter?

Can different social groups develop different demands for social insurance of risks to health and work? We study this issue across language groups in Switzerland. Language defines social groups and Swiss language groups are separated by a clear geographic border. Actual levels of social insurance are identical on either side of the within state segments of the language border. We can therefore study the role of culture in shaping the demand for social insurance. Specifically, we contrast at the language border actual voting decisions on country-wide changes to social insurance programs. Key results indicate substantially higher support for expansions of social insurance among residents of Latin-speaking (i.e. French, Italian, or Romansh) border municipalities compared to their German-speaking neighbors in adjacent municipalities. We consider three possible explanations for this finding: informal insurance, ideology, and the media. We find that informal insurance does not vary enough to explain stark differences in social insurance. However, differences in ideology and segmented media markets are potentially important explanatory factors.

Job Creation and Job Destruction in a Regulated Labor Market: The Case of Austria

We study Austrian job reallocation in the period of 1978 to 1998, using a large administrative dataset where we correct for “spurious” entries and exits of firms. We find that on average 9 out of 100 randomly selected jobs were created within the last year, and that about 9 out of randomly selected 100 jobs were destroyed within the next year. Hence, the magnitude of Austrian job flows seems to be comparable to other countries, similar to the well-known results of Davis et al. (1996) for the United States. Job reallocation appears to be driven primarily by idiosyncratic shocks. However, job creation increases significantly during cyclical upswings whereas job destruction rises in downturns. We also find substantial persistence of job creation and destruction. The pronounced pattern of job reallocation rates falling with firm size and age continues to hold when we use a set of controls. Finally, we show that – controlling for sector and firm size composition – Austrian job reallocation rates are only half the rates for the U.S. This result is not surprising given the impact of tighter regulation and labor law in Austria.

The Impact of Income Inequality on Product Diversity and Economic Growth

The paper presents an empirical analysis of a model of endogenous growth and innovation with unequal incomes and hierarchical consumer demand. The theoretical model predicts a positive impact of income inequality on product diversity. The impact of inequality on per-capita growth may be positive or negative depending upon the assumptions about productivity growth, where the standard assumption that productivity is positively related to product diversity implies a positive impact. In the empirical part, indices for absolute and relative product diversity are calculated from ICP-expenditure data. The empirical evidence shows that a significant positive relationship exists between income inequality and relative product diversity and that the relationship between income inequality and economic growth is negative and significant. The results lead to the conclusion that the diversity-productivity relationship used in new growth theory has to be treated with scepticism.

Firm-Specific Training: Consequences for Job Mobility

This paper analyzes the impact of formal training on worker mobility. Using data from the Swiss Labor Force Survey, we find that on-the-job search activities and, to a smaller extent, actual job separations are significantly affected by both employer-provided and general training. Moreover, while the separation probability of searching workers is strongly affected by previous firm-provided training, no such effect shows up for non-searchers. This is consistent with the hypothesis that workers bear most of the cost of specific training.

Gender Wage Differentials in Private and Public Sector Jobs

In this study gender wage differentials in private and public sector jobs in Austria are calculated. Occupational attainment is considered as endogeneous by the use of an ordered response model. Results show that wage discrimination is also present in the public sector, though on a lower level. Both in private firms and for public servants a substantial part of this unwarranted differential is due to unequal professional advancement.