Matthias Schündeln

Precautionary Savings and Self-Selection: Evidence from the German Reunification “Experiment”

We combine particular features of the German civil service with the unique event of German reunification to test the theory of precautionary savings and to quantify the importance of self-selection into occupations due to differences in risk aversion. In the presence of self-selection, failing to control for risk aversion in empirical tests of precautionary savings results in a bias that could lead to a false rejection of the theory. We exploit the fact that for individuals from the former German Democratic Republic (GDR) German reunification in 1990 caused an exogenous reassignment of income risks. Our findings suggest that self-selection of risk averse individuals into low-risk occupations is economically important and decreases aggregate precautionary wealth holdings significantly.

Deterring or Displacing Electoral Irregularities? Spillover Effects of Observers in a Randomized Field Experiment in Ghana

This article studies the effect of domestic observers deployed to reduce irregularities in voter registration in a new democracy, and in particular, the response of political parties’ agents to these observers. Because political parties operate over large areas and party agents may relocate away from observed registration centers, observers may displace rather than deter irregularities. We design and implement a large-scale two-level randomized field experiment in Ghana in 2008 taking into account these spillovers and find evidence for substantial irregularities: the registration increase is smaller in constituencies with observers; within these constituencies with observers, the increase is about one-sixth smaller on average in electoral areas with observers than in those without; but some of the deterred registrations appear to be displaced to nearby electoral areas. The finding of positive spillovers has implications for the measurement of electoral irregularities or analysis of data collected by observers.

ARE IMMIGRANTS MORE MOBILE THAN NATIVES? EVIDENCE FROM GERMANY

Low rates of internal migration in many European countries contribute to the persistence of significant regional labor market differences. I use the Mikrozensus, a large annual sample of households living in Germany, to further our understanding of the underlying reasons. This paper makes two main contributions: first, the paper quantifies the disutility of migrating. To this end, I estimate conditional logit models of the migration decision across the German federal states. Second, I then focus on the differences between immigrants and natives. I find significantly higher responsiveness to labor market differentials in the immigrant population than in the native population. Unobserved moving costs for immigrants are estimated to be only about 31 percent of this same cost for natives. The findings bear on the assessment of the economic impact of immigration, and the paper contributes to the current immigration�?related policy debates that feature prominently in many European countries, and that likely will continue to be important in light of the ongoing EU expansion and the resulting east–west migration.

On the endogeneity of political preferences: Evidence from individual experience with democracy

Political preferences provide economic capital Longer periods of democratic government favor economic growth, which in turn stabilizes democracy. But is this relationship a given? Fuchs-Schundeln and Schundeln collected individual-level data from more than 100 countries over two decades. Support for democracy did indeed increase as the length of time lived in a democratic system increased. Science, this issue p. 1145 The more years you live in a democracy, the more you prefer it over other political systems. Democracies depend on the support of the general population, but little is known about the determinants of this support. We investigated whether support for democracy increases with the length of time spent under the system and whether preferences are thus affected by the political system. Relying on 380,000 individual-level observations from 104 countries over the years 1994 to 2013, and exploiting individual-level variation within a country and a given year in the length of time spent under democracy, we find evidence that political preferences are endogenous. For new democracies, our findings imply that popular support needs time to develop. For example, the effect of around 8.5 more years of democratic experience corresponds to the difference in support for democracy between primary and secondary education.

Ethnic Heterogeneity and the Private Provision of Public Goods

Abstract Theoretically, more ethnic heterogeneity may lead to higher aggregate provision of privately provided public goods if ethnic heterogeneity increases the uncertainty about the aggregate level of public good provision. Empirical results in this article, which are based on household survey data from Kampala, Uganda, show robust evidence that an increase in ethnic heterogeneity is associated with an increase in the willingness to contribute to public goods. The findings suggest that the mechanism, through which public goods are provided, that is whether they are provided publicly or privately, is important in understanding the role of ethnic diversity in public goods provision.