René Fahr

Did the Hartz Reforms Speed‐Up the Matching Process? A Macro‐Evaluation Using Empirical Matching Functions

Abstract Starting in January 2003, Germany implemented the first two so-called Hartz reforms, followed by the third and fourth packages of Hartz reforms in January 2004 and January 2005, respectively. The aim of these reforms was to accelerate labor market flows and reduce unemployment duration.Without attempting to evaluate the specific components of these Hartz reforms, this paper provides a first attempt to evaluate the overall effectiveness of the first two reform waves, Hartz I/II and III, in speeding up the matching process between unemployed and vacant jobs. The analysis is conceptually rooted in the flow-based view underlying the reforms, estimating the structural features of the matching process. The results indicate that the reforms indeed had an impact in making the labor market more dynamic and accelerating the matching process.

Fairness as a constraint on trust in reciprocity: earned property rights in a reciprocal exchange experiment

Abstract We investigate the concept of mindreading in a trust–reciprocity experiment. Our results show that the Trustees send back more, the stronger the Trustors’ property rights are. But instead of strategically relying on this reciprocal behavior, Trustors tend to unilaterally implement a fair outcome.

Regional Dependencies in Job Creation: An Efficiency Analysis for Western Germany

This paper investigates the efficiency of the matching process between job seekers and vacancy posting firms in West Germany, using variation across labour market regions and across time. The results of a stochastic frontier analysis shed new light on the extent of and regional differences in search frictions, on potential determinants of frictional inefficiencies and on the consequences of German reunification for the matching process. The paper also presents novel evidence on the complex interactions between spatial contingencies among regional labour markets: matching efficiency decreases with spatial autocorrelation in hiring, implying indirect evidence for crowding externalities.

Loafing or learning?--the demand for informal education

Abstract Using detailed time use data for Germany a positive correlation is found between the level of schooling and time investments in informal education. Two hypotheses explain this observation: (1) highly educated people have higher opportunity costs of their leisure time and thus prefer leisure activities which add to their market productivity (wage effect) and (2) highly educated people have a preference for ‘high quality’ leisure (taste effect). The demand for informal education is derived in a household production model accounting for both explanations. An empirical investigation finds evidence for both effects with the taste effect being more important.

Individual Determinants of Work Attendance: Evidence on the Role of Personality

We investigate the influence of personality as measured by the Big Five personality scale on absenteeism using the 2005 wave of the German Socio-Economic Panel (GSOEP). Estimates of a double hurdle negative binomial regression allow us to test hypotheses on the influence of the Big Five personality traits on work attendance. Our findings augment previous results on the link between personality and absenteeism by analysing representative data and including a large set of control variables typically not available in small scale surveys. We find clear negative correlations between the absence probability and Conscientiousness among women. For male employees a negative correlation with the incidence of absence is observed for the Agreeableness dimension. When looking at the length of absence occurrences Neuroticism is found to significantly influence male absenteeism despite controlling for the subjective health of the individual. Following the reasoning by Bowles et al. (2001) for the provision of effort by employees, employers might pay for incentive-enhancing preferences such as low Neuroticism among male employees because employers can only insufficiently monitor the true level of sickness of their employees and consequently want to avoid voluntary absenteeism.

Loafing or Learning? The Demand for Informal Education

Using detailed time use data for Germany, a positive correlation is found between the level of schooling and time investments in informal education. Two hypotheses explain this observation: (1) Highly educated people have higher opportunity costs of their leisure time and thus prefer leisure activities which add to their market productivity (wage effect); and (2) Highly educated people have a preference for ‘high-quality’ leisure (taste effect). The demand for informal education is derived in a household production model accounting for both explanations. An empirical investigation finds evidence for both effects, with the taste effect being more important.

'' ... and they are really lying'': Clean evidence on the pervasiveness of cheating in professional contexts from a field experiment

We investigate the pervasiveness of lying in professional contexts such as insurance fraud, tax evasion and untrue job applications. We argue that lying in professional contexts share three characterizing features: (1) the gain from the dishonest behavior is uncertain, (2) the harm that lying may cause to the other party is only indirect and (3) lies are more indirect lies by action or written statements. Conducted as a field experiment with a heterogenous group of participants during a University “Open House Day”, our “gumball-machine-experiment” provides field evidence on how preferences for lying are shaped in situations typically found in professional contexts which we consider to be particularly prone to lying behavior compared to other contexts. As a key innovation, our experimental design allows measuring exact levels of cheating behavior under anonymous conditions. We find clean evidence that cheating is prevalent across all sub groups and that more than 32% of the population cheats for their own gain. However, an analysis of the cheating rates with respect to highest educational degree and professional status reveals that students cheat more than non-students. This finding warrants a careful interpretation of generalizing laboratory findings with student subjects about the prevalence of cheating in the population.

Can Tax Rate Increases Foster Investment Under Entry and Exit Flexibility? - Insights from an Economic Experiment

It is well-known that taxes affect risky investment decisions. Analytical studies indicate that tax rate increases can foster (accelerate) investment if there is flexibility, in particular when an exit option is available. We design an experiment that is based on an analytical model with binomial random walk and entry and exit flexibility. Contrasting the underlying model, we find accelerated investment, which is often considered as an increased willingness to invest, on tax rate increases to be independent of the existence of an exit option. However, we observe this investor reaction only for a tax increase, not for a tax decrease. This investment behavior is driven possibly by tax salience and the mechanisms known from the theory of irreversible choice under uncertainty. Our empirical evidence suggests that the accelerating tax effects are much more common than is predicted by the theoretical literature. Policy makers should therefore carefully consider the behavioral aspects when anticipating taxpayer reactions.

Tailored Financial Incentives to Fight Medical Non-Persistence in Therapeutic Treatment: A Behavioral Economic Engineering Approach

The development and design of financial incentive schemes as a sustainable and cost-effective intervention strategy to foster effectiveness of medical interventions remains a significant challenge in health care delivery.Based on the findings of the conceptual model of medical non-persistence we test three different financial incentive schemes. These incentives are derived upon concepts of behavioral economics, in particular mental accounting, prospect theory and choice bracketing, and incorporated into deposit, copayment and bonus schemes. We conduct randomized laboratory experiments to evaluate the performance and effectiveness of each incentive scheme on persistence behavior under controlled conditions. Participants in the experiment are students remunerated according to their performance in the experiment.We find that financial incentive schemes based on the principles of prospect theory significantly improve treatment persistence compared to the situation where there are no incentives at all. This finding implies that the simple but smart re-allocation of co-payments and co-payment support between the treatment initiation phase and treatment maintenance phase represents an effective way of promoting persistence behavior.This study delivers first applications of behavioral interventions based on theoretical foundation. Using the method of experimental economics the study serves as a first proof of concept of a scalable way to design, calibrate and test the effectiveness of financial incentives on behavioral change. This approach is inevitable for broad application in real world as it minimizes the need for patient research while clarifying the impact of interventions under controlled conditions before these interventions get implemented in the field.

Paying For a Higher Workload? The Relation Between Customer's Co-Production and Willingness to Pay

We increasingly observe the use of co-production in managerial practice, as customers undertake additional tasks in service processes that service providers traditionally have performed. In 1995 Continental was the first airline to offer self-check-in kiosks, but today more than two thirds of travelers check in using self-service. Similarly, since their introduction more than 10 years ago, supermarket self-checkouts have grown widespread (Hill, 2011). Nor are these shifts to more customer co-production limited to technology-enabled contexts. Even some highend restaurants use co-production as core part of their business model, such as the Seafood Market and Restaurant in Bangkok, where customers take a shopping trolley and wander around the market to choose their food. They move to the checkout counter, where it is weighed and sent to the kitchen while customers pay, before being seated to wait for their dishes (http://www.seafood.co.th). In all these examples,