Nicole Gürtzgen

Environmental Policy, Intra-Industry Trade and Transfrontier Pollution

The paper discusses effects of domestic environmental policy on foreignemissions and on transboundary pollution. We use a Dixit-Stiglitz typemodel of monopolistic competition with an endogenous number of firms.Production generates environmental externalities which spill over to theother country. It is shown that environmental policy has an impact onmarket structure at home and abroad. These market structure effectsinduce changes in emissions abroad. In contrast to what has been derivedin earlier contributions, it turns out to be possible that tighterenvironmental standards at home lead to less emissions abroad. The paperderives these results and provides the economic intuition behind them.Finally, conditions for optimal environmental policies are derived.

Analysing welfare reform in a microsimulation-AGE model: The value of disaggregation

We present a fully integrated microsimulation-AGE model that uses the labour market model PACE-L and data from the German Socio-Economic Panel. We use the model to analyse reform proposals designed to encourage labour force participation at the lower end of the wage distribution. A special focus of this paper is on comparing the fully disaggregated version of the model with more aggregated ones in order to pin down in which respects disaggregation can actually further our insights, and in which respects aggregation can be justified

The Effect of Firm- and Industry-Level Contracts on Wages - Evidence from Longitudinal Linked Employer-Employee Data

Using a large linked employer-employee data set, this paper presents new evidence on the wage premium under collective bargaining contracts in western and eastern Germany. The novel feature of our analysis is that we use a longitudinal data set. In contrast to previous studies, we seek to assess the extent to which differences in wages between workers in covered and uncovered firms arise from the non-random selection of workers and firms into the different regimes. By measuring the relative wage gains or losses of workers employed in firms that change contract status, we obtain estimates that depart considerably from previous results relying on cross-sectional data. Industrylevel contracts in western Germany and firm-level contracts in eastern Germany are associated with a small, but statistically significant average wage premium of about 2 per cent. Finally, results from a trend-adjusted differencein - difference approach indicate that the industry-level wage premium in western Germany might be downward biased and the firm-level premium in eastern Germany might still be upward biased, once differences in pre-transition wage growth are accounted for.

Reforming Social Welfare in Germany: An Applied General Equilibrium Analysis

Abstract In this paper, the effects of social assistance reform proposals are discussed for the case of Germany using a computable general equilibrium model that incorporates a discrete choice model of labour supply. This allows us to identify general equilibrium effects of the reforms on wages and unemployment. The simulation results show that general equilibrium wage reactions mitigate labour supply effects and that unemployment in fact decreases. Wage reactions are thus sufficiently strong to prevent additional labour supply from translating into higher unemployment. The simulations indicate that major cuts in welfare payments are necessary to produce substantial employment effects.

Alternative approaches to discrete working time choice in an AGE framework

We compare two options of integrating discrete working time choice of heterogenous households into a general equilibrium model. The first, known from the literature, produces household heterogeneity through a working time preference parameter. We contrast this with a model that directly incorporates a logit discrete-choice approach into a AGE framework. On the grounds of both calibration consistency and adequate accomodation of within-household interaction, we argue that the logit approach is preferable.

Firm Heterogeneity and Wages Under Different Bargaining Regimes: Does a Centralised Union Care for Low-productivity Firms?

This paper studies the relationship between wages and the degree of firm heterogeneity in a given industry under different wage setting structures. To derive testable hypotheses, we set up a theoretical model that analyses the sensitivity of wages to the variability in productivity conditions in a unionsised oligopoly framework. The model distinguishes centralised and decentralised wage determination. The theoretical results predict wages to be negatively associated with the degree of firm heterogeneity under centralised wage-setting, as unions internalise negative externalities of a wage increase for low-productivity firms. We test this prediction using a linked employeremployee panel data set from the German mining and manufacturing sector. Consistent with our hypotheses, the empirical results suggest that under industry-level bargaining workers in more heterogeneous sectors receive lower wages than workers in more homogeneous sectors. In contrast, the degree of firm heterogeneity is found to have no negative impact on wages in uncovered firms and under firm-level contracts.

Trade liberalisation and union wages in a differentiated Bertrand duopoly

In a framework of a unionized international Bertrand duopoly with differentiated products, this article analyzes national labor market interdependencies and the consequences of trade liberalization for union wages. The analysis suggests that national wages are likely to be strategic complements (substitutes) if products are ordinary substitutes (complements). Under the assumption of linear demand, it is shown that bilateral trade liberalization always leads to higher union set wages and union utilities, regardless of the nature of product rivalry. An analysis of the consequences of unilateral tariff reductions shows that foreign tariff reductions always give rise to higher union wages and utilities, whereas the impact of unilateral domestic tariff reductions depends on the nature of product rivalry.

Revisiting the Impact of Union Structures on Wages: Integrating Different Dimensions of Centralisation

In a framework of a unionised oligopoly, this paper reconsiders the impact of the bargaining structure on union wages. In particular, two dimensions along which centralisation may occur, namely the professional and firm line, are integrated into one modelling framework. It will be shown that, when taking into account different centralisation dimensions, wage outcomes of different bargaining regimes cannot simply be ranked according to the degree of bargaining centralisation. The argument will be that negotiated wages rather depend on the technical relationship between different groups of labour and goods as well as upon the dimension along which centralisation takes place.