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2010

December 2010:
 

Nikos Askitas appointed to scientific advisory board of DSZ-BO

N. Askitas
Nikos Askitas, Head of the IDSC of IZA, has been appointed as member of the Scientific Advisory Board of DSZ-BO, the Data Service Center of the Faculty of Sociology at the University of Bielefeld. The DSZ-BO is responsible for the archiving of business and organizational data. This includes linked data sets, such as linked employer-employee data. Like the IDSC of IZA, the DSZ-BO is now a member of the German scientific data movement to which IZA has been actively contributing for over a decade and which is now growing under the auspices of the German Data Forum (RatSWD).
 

IZA Research Report: Social Protection as an Economic Stabilizer

Social protection, in particular unemployment benefits, minimum income support and progressive taxation, have significantly contributed to reducing the depth and the duration of the current recession in EU Member States and to stabilizing labor markets and consumption. A recent study drafted for the European Parliament and coordinated by IZA on the role of social protection as an economic stabilizer finds that not only does social protection provide a safety net for those groups which have been hit hardest by the crisis, it also has a stabilizing effect on the overall demand for goods and services produced in the economy. Discretionary action in the field of social and labor market policy, pursued in most European economies, included a broad range of measures, such as employment incentives, higher benefits and increased transfers to low-income households.

"Further action, however, is needed to overcome inequalities in access to social protection faced by non-standard workers, and in designing a suitable exit strategy from discretionary stimulus in order to limit the fiscal constraints generated by anti-crisis policies," says Werner Eichhorst, coordinator of the study.

The full study is available online as IZA Research Report No. 31.
 

IZA Research Report: Supplementary income regulations fail to provide work incentives

The German reform of the rules governing the amount of supplementary income that welfare recipients may earn without benefit reductions has no significant effect on the labor supply behavior of the social assistance (ALG II) recipients. This is the main finding of an IZA study conducted for the Federal Ministry of Labor and Social Affairs.

In October 2010 the federal government coalition agreed to raise the supplementary income allowance in order to provide additional job search incentives and reduce the burden on public budgets. According to the IZA study, however, this reform has a slightly negative effect on labor supply and transfer payments. Instead, alternative proposals discussed prior to the reform could have yielded small positive effects.

The full text of the study is available in German language as IZA Research Report No. 32.

November 2010:
 

New IZA report analyzes the labor market situation of people with disabilities in the EU

A new IZA Research Report on the mobility and integration of people with disabilities into the labor market assesses their situation within the European Union and the impact of measures to increase their employment. People with disabilities face low employment rates, a high dependency on benefits as well as an increased poverty risk. The authors discuss various measures and approaches used across the EU, such as active labor market policies, employer subsidies and employment quotas.

Drafted for the Employment and Social Affairs Committee of the European Parliament, the report argues that disability should be addressed more broadly by focusing on remaining or partial work capacity rather than work incapacity. Therefore, a right balance between flexibility on the one hand and social security on the other is needed. The objective of promoting independent living for disabled people should be an explicit priority in the next EU Disability Action Plan. The report was coordinated by IZA experts Werner Eichhorst and Michael J. Kendzia. It is available as IZA Research Report No. 29 (PDF, 2 MB).
 

IZA proposes action plan for labor immigration to Germany

In view of an upcoming government coalition debate on skills shortages, IZA proposes a ten-point action plan for controlled labor immigration to Germany. At the core of the IZA plan is a points system for the selection of immigrants based on such criteria as education, language skills, work experience, and age. Other proposed measures include a quota system, an online information tool for potential immigrants, better integration through early childhood education, and an EU-wide "White Card" initiative. To concentrate all political efforts in this area, IZA also calls for the establishment of a federal ministry for immigration and integration.

The complete text of IZA's "Immigration Agenda" is available in German language as IZA Standpunkte No. 32.
 

German tax system discourages mothers from combining family and career

According to a recent study by IZA and the Bertelsmann Foundation, mothers often remain stuck in so-called "mini-jobs" because moving up to a better paid job does not pay off in terms of net income gains. In an average four-person household, the secondary earner making one-third of the average income faces a marginal tax rate of around 50 percent - the highest in Europe. Even in such high-tax countries as Denmark (42%) and Sweden (30%), secondary earners fare better. In France (23%), the Netherlands (18%) and Austria (15%), additional income is taxed at less than half the German rate.

Once the wife's gross income exceeds the "mini-job" threshold of 400 euros, the marginal tax rate even exceeds 50 percent because income tax then becomes due on her entire labor income. As a result, many mothers are caught in a "low-income trap". Since low-paid jobs are usually also low-qualified, they rarely offer any opportunities for career development, said Werner Eichhorst (IZA), who co-authored the study. He called for a better labor market integration of mothers, which would allow fathers to reduce their working hours and contribute more to household work instead.

The study is available online as IZA Research Report No. 30.

October 2010:
 

Economics Nobel Prize awarded to IZA Fellows Dale Mortensen and Christopher Pissarides

Christopher Pissarides and Dale Mortensen
during the 2005 IZA Prize Ceremony
Jointly with Peter Diamond (MIT), the 2005 IZA Prize Laureates Dale T. Mortensen (Northwestern University) and Christopher A. Pissarides (London School of Economics) have been selected as the recipients of the 2010 Nobel Memorial Prize in Economic Sciences.

According to the Royal Swedish Academy of Sciences, the laureates "have enhanced our understanding of search markets" and "help us to comprehend a number of important economic questions in general, and the determinants and development of unemployment in particular."

In 2005, Mortensen and Pissarides were awarded the IZA Prize in Labor Economics for the same reasons [read more].
A collection of their most important work, edited by IZA, is about to appear in the IZA Prize Book Series published by OUP.

IZA Director Klaus F. Zimmermann welcomed the Nobel Committee's choice: "The three Nobel laureates have established a new school of economic thought within modern macroeconomics with a focus on the functioning of incomplete markets under realistic conditions. Supply and demand are both faced with incomplete information and institutional restrictions. This is time-consuming and involves costs which may lead to equilibria without market clearing. Taking these insights into account helps economists explain the causes of long-term unemployment and how to resolve structural rigidities. In this respect, the Nobel laureates' theory also provided the foundation for labor market reforms in Germany."
 

IZA Director Zimmermann elected as member of Academia Europaea

K. F. Zimmermann
In September 2010, IZA Director Klaus F. Zimmermann was elected to become a member of the Academia Europaea (The Academy of Europe). The Academy's members are scientists and scholars who collectively aim to promote learning, education and research. Founded in 1988, the non-governmental association now has over 2000 members, among them 38 Nobel laureates and other leading experts from the physical sciences and technology, biological sciences and medicine, mathematics, the letters and humanities, social and cognitive sciences, economics, and the law. Zimmermann is the first German economist since 1991 to be invited into the Academy's economics section.

[more about the Academia Europaea]
 

IZA Director Zimmermann speaks in Boston, Bratislava and Budapest

Klaus F. Zimmermann in a discussion with
Catherine L. Mann at Brandeis University
On the invitation of the Center for German and European Studies at Brandeis University and co-sponsored by the Rosenberg Institute of Global Finance and the International Studies Program, IZA Director Klaus F. Zimmermann visited Brandeis University (Boston, USA) on October 20, 2010. He discussed the topic "German Austerity vs. US Stimulus" in a public debate with Catherine L. Mann, Rosenberg Professor of Global Finance, Director of the Rosenberg Institute and Senior Fellow at the Peterson Institute for International Economics in Washington, DC.

On October 21 and 22, 2010, Zimmermann spoke at events in Bratislava and Budapest on "Ethnic Diversity in the European Labor Markets", drawing on the findings of a recent IZA project for the European Commission. In Bratislava he provided a keynote lecture to an international conference co-organized by the Friedrich Ebert Stiftung and IZA. The talk in Budapest was part of a lecture series at the Central European University. During his visit to Slovakia, Zimmermann also met with representatives of the Slovak government to provide advice for economic reforms, and spoke to various national newspapers and TV channels.

September 2010:
 

IZA Research Fellow Andrew Leigh elected to the Australian Parliament

A. Leigh
IZA Research Fellow Andrew Leigh was elected to the Australian House of Representatives in August 2010. He will be representing the seat of Fraser, the northern half of Canberra. Fraser is also home to the Australian National University, where Andrew was a Professor in the Research School of Economics until he resigned from this position to contest the federal election. He has done extensive research in labor economics, public economics, population economics, and the economics of elections. Andrew received a PhD from Harvard University in 2004, and has previously worked as a lawyer, a political adviser, and a think-tank researcher. He has published over 60 papers, including eleven IZA Discussion Papers and numerous articles in the American Economic Review, the Journal of Public Economics, the Economic Journal, Economics Letters, and the Journal of Health Economics.
 

IZA Director Zimmermann calls for new direction in Germany's family policy

In light of the fact that both fertility rates and female labor force participation remain disproportionately low in Germany, IZA Director Klaus F. Zimmermann has called on policymakers to create a more favorable environment for combining family and work. Among the most important aspects is the expansion of childcare facilities, which could be financed by abolishing the tax splitting option for married couples.

More than 25 years ago, Zimmermann had already analyzed this issue in a book on family economics and a policy-related article in the Wirtschaftsdienst journal. As founding editor of the Journal of Population Economics, he has since then stimulated further research in this field. Decision makers in politics, society and business must now "get their act together in time before demographic change starts to irrevocably dictate the agenda from 2015 on," said Zimmermann.

Against this background, it is a positive sign that the Verein für Socialpolitik (German Economic Association) has made "Economics of the Family" the theme of this year's annual meeting, which is held in Kiel this week. An IZA information booth at the meeting provides a selection of publications on the topic.

Read also:
- op-ed by Klaus F. Zimmermann in IZA Compact (p. 16): "Fertility and Female Work"
- more information in German
 

IZA Research Fellow Johannes Schwarze died in a road accident

J. Schwarze †
It is with deep sadness that we have to announce the tragic death of IZA Research Fellow Johannes Schwarze, who lost his life in a road accident on September 12, 2010.

Born in 1959, Johannes Schwarze received his Bachelor's degree from the University of Paderborn and his M.A. in Economics from the Technical University Berlin, where he also earned his PhD and post-doctoral degree (habilitation). Among other positions he worked as a Senior Research Associate at DIW Berlin (1989-1997) before he became a Professor of Economics at the University of Bamberg in 1997. An IZA Fellow for over a decade, Johannes Schwarze took part in various IZA activities and contributed numerous studies to the IZA Discussion Paper Series, mainly on social policy, income distribution, and subjective well-being.

The IZA community will honor his memory. Our thoughts are with his wife and two children.
 

Farewell to Werner A. Müller (Springer-Verlag) - Reception at IZA

Zimmermann and Müller
On the occasion of the retirement of Werner A. Müller, Executive Vice President Business/Economics & Statistics at Springer, IZA held a reception on September 24, 2010. Müller has collaborated with IZA Director Klaus F. Zimmermann and IZA in 16 book projects and helped to establish the Journal of Population Economics, which was founded by Zimmermann in collaboration with Springer and the European Society for Population Economics (ESPE). Now in its twenty-fourth volume, the Journal of Population Economics has steadily moved up the ranks to be widely recognized as the leading journal in the field, which is also reflected in the increasing number of submissions and published papers at the Journal. Müller has played an invaluable role in these developments.
Werner Müller joined Springer in July 1981. He was appointed to the Board of Directors in 1988 and became the Executive Vice President for Business/Economics and Statistics in September 2007.

"Werner Müller has been a friend and reliable publisher to me for nearly 30 years. We are grateful for this productive relationship and wish him all the best for the future," said Zimmermann.
 

2010 IZA Prize in Labor Economics goes to Francine D. Blau

Francine D. Blau
This year's IZA Prize in Labor Economics is awarded to U.S. economist Francine D. Blau (Cornell University). The prestigious award recognizes Blau's seminal contributions to the economic analysis of labor market inequality. She has written extensively on the role of women in the labor market and on gender differences in pay and many other aspects of economic life. Her work has profoundly shaped the view of scholars and policymakers on the causes and consequences of gender differences in economic outcomes, and on policies for advancing women's labor market position and well-being.
The award ceremony will take place at the ASSA annual meetings in Denver on January 8, 2010 [view program].

See also:
IZA press statement | Award Statement of the IZA Prize Committee | Francine Blau's homepage | Cornell University news page

August 2010:
 

IZA supports project to test anonymous job applications

A recent study published as IZA Discussion Paper No. 4741, which found significant discrimination against applicants with Turkish-sounding names, fueled the public debate on ethnic discrimination by employers in Germany. In response to these concerns, the Federal Anti-Discrimination Agency (ADS) has now initiated a project to test anonymous job applications. Among IZA's contributions to the project is a study that analyzes the international experience with similar projects and provides recommendations for the implementation of anonymous job application processes (see IZA Research Report No. 27).

IZA Director Zimmermann stressed the importance of attracting qualified immigrants to meet the growing skills shortage caused by demographic change. "Discrimination based on ethnic origin sends the wrong signal to a group that the labor market urgently needs. But stricter laws alone cannot change attitudes or recruitment policies. We hope that this project will help employers realize the advantages of a multi-ethnic workforce," said Zimmermann.

[read more in German]

 

IZA Fellows receive EEA's Hicks-Tinbergen Medal

D Fougère, F. Kramarz, J. Pouget
The 2010 Hicks-Tinbergen Medal was awarded to IZA network members Denis Fougère, Francis Kramarz and Julien Pouget for their article "Youth Unemployment and Crime in France", published in the Journal of the European Economic Association (Vol. 7, Issue 5). The medal was presented at the 25th Congress of the European Economic Association (EEA) in Glasgow on August 23, 2010, by EEA President Christopher A. Pissarides. The award-winning article previously appeared as IZA Discussion Paper No. 2009.

The EEA awards the Hicks-Tinbergen-Medal every two years for an outstanding publication in the Association's journal.
[more information]

July 2010:
 

David Robalino becomes Co-Director of IZA's "Employment and Development" program

D. Robalino
As of July 2010, David A. Robalino (World Bank) succeeds Robert Holzmann as Co-Director of the "Employment and Development" program. Robalino will head this joint research program of IZA and the World Bank together with Markus Frölich (University of Mannheim).

David Robalino is the Labor Team leader at the Social Protection anchor of the World Bank. His recent work deals with issues related to the design of unemployment benefits systems in middle income countries, the extension of social insurance programs to the informal sector, and the integration of social protection and education/training policies to improve labor market outcomes and productivity growth.

[more on the Employment and Development program]
 

IZA Director calls for fundamental changes in German immigration policy

K. F. Zimmermann
In view of the skilled labor shortage in Germany, IZA Director Klaus F. Zimmermann has urged policymakers to ease the current restrictions on labor immigration. An export nation like Germany "cannot survive in the globalized world" without opening its labor market to qualified foreign workers, said Zimmermann in an interview with the news agency "ddp". At the same time he proposed the establishment of a "Federal Ministry for Immigration and Integration" to ensure a consistent policy with regard to all economic, social and educational aspects surrounding this issue.

For more information (in German) see:
- full text of the ddp interview (July 25, 2010)
- op-ed by Klaus F. Zimmermann in Süddeutsche Zeitung (July 27, 2010)
- IZA Standpunkt No. 28 ("Mehr ökonomische Rationalität in der Zuwanderungspolitik")


June 2010:
 

IZA Fellow Ken Troske appointed to Congressional Oversight Panel

K. Troske
U.S. Senate Minority Leader Mitch McConnell has appointed IZA Research Fellow Kenneth R. Troske to serve on the five-member Congressional Oversight Panel (COP). The panel was created by Congress in 2008 as an independent watchdog over the United States Treasury's spending of $700 billion allotted to stabilize the American economy under the Troubled Asset Relief Program (TARP).

Troske is professor of economics, department chair and director of the Center for Business and Economic Research (CBER) at the University of Kentucky. A prolific researcher, his expertise is regularly sought by national and international media. He joined the IZA network in 2002 and spent one year in Bonn as a Visiting Research Fellow. "I am honored to be chosen by Sen. McConnell to be part of this important oversight panel," said Troske. "And I look forward to working with my fellow members to ensure that actions taken by the Treasury Department and financial institutions are in the best interests of the American people and our economy."
 

IZA publishes 5000th Discussion Paper: "The Crime Reducing Effect of Education"

With the publication of IZA Discussion Paper No. 5000, another landmark is reached in the 12-year history of the world's largest working paper series in labor economics. Established in 1998 with about three contributions per month, the IZA DP series now grows at an average pace of two new working papers every single day. But the series is also renowned for its high quality. It only contains work by IZA staff researchers, fellows and affiliates, all of whom are labor economists with a proven publication record. Not surprisingly, therefore, more than half of the IZA papers have already been published, or are forthcoming, in major academic journals or collective volumes.

IZA DP No. 5000 is a contribution by Stephen Machin (UCL, CEP and IZA), Olivier Marie (ROA, Maastricht University and CEP), and Sunčica Vujić (LSE). Using various data sources from Britain, the paper shows empirically that criminal activity is negatively associated with higher levels of education. To identify the causal effect of education, the authors use changes in compulsory school leaving age laws over time. The findings imply that improving education can yield significant social benefits and can be a key policy tool in the drive to reduce crime. [Download IZA DP No. 5000]
 

IZA Research Fellow Douglas J. Krupka passed away

Douglas J. Krupka †
IZA is deeply saddened by the unexpected passing of Douglas James Krupka after a brief and fierce battle with cancer. Born 1974 in Cleveland, Ohio, Douglas received a BA from the University of Virginia, and a Masters and PhD from the University of Chicago. He worked as an Assistant Professor at Georgia State University before coming to IZA as a Senior Research Associate and Deputy Program Director for the "Future of Labor" research program in 2007. He had just joined IRLEE and the Ford School at the University of Michigan in the fall of 2009.

Douglas was not only an outstanding scholar with numerous publications, presentations, and awards, but also a prolific reader, avid adventurer and traveler, and had a special love for animals and the environment. He is survived by his wife, Erin, who is also an IZA Research Fellow, and two children. Our thoughts are with his family.
[obituary]

May 2010:
 

IZA study: FDP tax plan would lead to a massive drop in tax revenue

A new IZA study simulates the fiscal and employment effects of the revised proposal by the Free Democrats (FDP) to implement an income tax rate schedule with five brackets. The reform would lower tax revenues by up to 32 billion euros per year while creating only about 170,000 full-time equivalent jobs.

Read more (in German)

 

Study finds high success rates for start-ups out of unemployment

According to a joint study by IZA and DIW Berlin, start-ups out of unemployment are much more successful than commonly thought. While start-ups out of necessity tend to be less successful, the majority of previously unemployed entrepreneurs are motivated by creativity and the desire to become more independent. As a result, more than two-thirds of the new businesses survive after five years, and about 40 percent of the start-ups create additional jobs.

The study was published as IZA Discussion Paper No. 4661 [Download PDF].

Read more (in German)
 

Anne Gielen wins CentER Society Prize 2010

A. Gielen
IZA Research Associate Anne C. Gielen was awarded the CentER Society Prize 2010 for her dissertation on "Age-Specific Labor Market Dynamics" (2008). This year's prize honored the CentER dissertation research receiving the most media attention (based on CentER Dissertations published and cited in the media between 2004-2009). Gielen's paper was selected from five nominations.

The prize-winning publication is a collection of four studies which investigate how labor market flexibility can contribute to achieving a better allocation of labor in the economy. The focus lies on several aspects of flexibility: labor mobility, flexible wage schemes, and flexibility in working hours. The effects of flexibility are studied using panel data and matched worker-firm data, which allow to uncover labor supply and labor demand relations that determine individual labor market behavior.

[more about the CentER Society Prize]

April 2010:
 

IZA Research Report on EU social policies now available

A new IZA Research Report on EU social policies tracks the impact of the subsequent European Social Agendas, which were presented by the European Commission within the framework of the Lisbon Strategy, on actual policies adopted. The study also assesses the role played by the European Parliament with regard to regulatory, funding and "soft law" instruments. Furthermore, the authors discuss the overall development of welfare states under the umbrella of EU policy strategies and in the current economic crisis. For the future EU 2020 strategy, the report calls for a more active involvement of the European Parliament and a more balanced approach to economic and social objectives.

The analysis was commissioned by the European Parliament and prepared by IZA, the Austrian WIFO research institute and Brussels-based IDEA Consult. Coordinated by IZA Deputy Director of Labor Policy Werner Eichhorst, the report was presented to the European Parliament's Committee on Employment Social Affairs and is now available as IZA Research Report No. 24: [Download PDF - 135 pages, 705KB]
 

New study explores link between football and family violence

A recent IZA Discussion Paper by IZA Prize winner David Card (UC Berkeley) and Gordon Dahl (UC San Diego) studies the link between family violence and the emotional cues associated with wins and losses by local professional football teams. The empirical analysis uses police reports of violent incidents on Sundays during the professional football season. Controlling for the pre-game point spread and the size of the local viewing audience, the authors find that upset losses (defeats when the home team was predicted to win by 4 or more points) lead to a 10 percent increase in the rate of at-home violence by men against their wives and girlfriends. In contrast, losses when the game was expected to be close have small and insignificant effects. Upset wins (when the home team was predicted to lose) also have little impact on violence, consistent with asymmetry in the gain-loss utility function. The rise in violence after an upset loss is concentrated in a narrow time window near the end of the game, and is larger for more important games. The authors find no evidence for reference point updating based on the halftime score.

Read the complete paper: IZA DP No. 4869
 

IZA Director re-elected head of the ARGE institutes

Klaus F. Zimmermann, Director of IZA and President of the German Institute for Economic Research (DIW Berlin), was re-elected for another three years as Director of the Executive Board of the Association of German Economic Research Institutes (ARGE) in April 2010.

"The ARGE institutes will continue to promote economic and social policies based on sound scientific research," said Zimmermann after the unanimous vote. "As head of the ARGE, I am determined to keep making the voices of economic reason heard among policymakers."

Established in 1950, ARGE comprises 29 German economic research institutes including IZA and DIW Berlin. The association's main objective is to provide a forum for information exchange on current issues in economic research and policy.
 

IZA Research Report: Atypical employment in Germany on the rise, but on a comparatively low level

Temporary employment in Germany has doubled between 2000 and 2007. Contrary to public perception, however, it still plays a minor role in the labor market. According to recent data, temporary jobs account for only 1.6% of total hours worked. This is one of the findings of a new study published by IZA and the Bertelsmann Foundation, which analyzes the development of atypical employment in Germany in international comparison.

Fixed-term contracts, on the other hand, are more commonplace in Germany. With a share of about 15% of all contracts, fixed-term employment in Germany is above average when compared internationally. But a closer look reveals that half of these fixed-term contracts are apprenticeships. While involuntary fixed-term jobs seem quite high at 25%, this number is actually the third lowest among 23 European countries.

The study is available in German language only:
IZA Research Report 25: "Atypische Beschäftigung und Niedriglohnarbeit" [Download PDF]

March 2010:
 

IZA proposes "Agenda 2020" to achieve full employment in Germany

In light of the current debate on the "Hartz" reforms of the German labor market and the reorientation of the German welfare state, IZA has published a strategy paper that proposes ways to achieve full employment in Germany by the end of the decade. In addition to reforming the education system, IZA advocates a stronger focus on the job prospects of the low-skilled and long-term unemployed. A new understanding of the welfare state should center on the principle of reciprocity as embodied in the workfare concept. Workfare is socially just and incentivizes self-reliance rather than permanent dependence on benefit payments. Vouchers should replace some of the cash benefits for children. Job centers as a one-stop shop for the unemployed should become independent institutions to avoid conflicts of jurisdiction. Finally, Germany would be well advised to adopt a consistent immigration policy based on economic needs.

Further reading:
- IZA press statement (March 10, 2010 - in German)
- Complete paper (IZA Policy Paper No. 15)

Hilmar Schneider/Klaus F. Zimmermann, "Agenda 2020: Strategies to Achieve Full Employment in Germany", IZA Policy Paper No. 15.


February 2010:
 

IZA Fellow Deborah Cobb-Clark to head Melbourne Institute

D. Cobb-Clark
IZA Research Fellow Deborah A. Cobb-Clark, a world expert on the effects of public policies on labor market outcomes, has been appointed Director of the Melbourne Institute of Applied Economic and Social Research and Ronald F. Henderson Professor at the University of Melbourne. She will take up the appointment on April 27, 2010. The Institute is responsible for running the national household panel (HILDA) and conducts extensive social policy research for the Australian government.

Affiliated with IZA for almost a decade now, Professor Cobb-Clark has been a frequent visitor to IZA over the past years. She is the former Head of the Economics Program at the Research School of Social Sciences, and inaugural Director of the Social Policy Evaluation, Analysis and Research (SPEAR) Centre at the Australian National University.

Much of her research has focused on immigration policy and its impact on the labor market outcomes of migrants. She has also examined how the receipt of income support affects young people's decisions to engage in risky behavior and the role of gender in promotions, occupational choice, and wages. She is currently leading the innovative Youth in Focus project, a longitudinal survey funded by the Australian Research Council and the Commonwealth Government.
 

Book recommendation: "The Economics of Codetermination: Lessons from the German Experience"

J. Addison
A recent book by IZA Research Fellow John T. Addison provides the first ever comprehensive economic evaluation of the long-standing German system of works councils and worker directors on company boards. This system of codetermination, or Mitbestimmung, is unique in the degree of information provision, consultation, and participation ceded employees. Addison analyzes the effects of works councils on establishment productivity, profitability, investment in physical and intangible capital, employment, training, wages and organizational flexibility, as well as the influence of worker directors on some of the same indicators plus, critically, shareholder value. Today, works councils are in decline while worker directors have scarcely been embraced either from within or without. This book examines these challenges and addresses the likely evolution of codetermination.

John T. Addison is the Hugh C. Lane Professor of Economic Theory at the University of South Carolina and Professor-at-Large at the Free University of Bolzano. An IZA Research Fellow since 2001, he has contributed nearly 50 research papers to the IZA Discussion Paper Series. His work is mainly concerned with unions and plant closings, unemployment duration analysis, employment protection, and the impact of employee involvement on firm performance.

John T. Addison: The Economics of Codetermination - Lessons from the German Experience, Palgrave Macmillan 2009. ISBN: 978-0-230-60609-8, ISBN10: 0-230-60609-1, 192 pages. [more info]

 

New study shows ethnic discrimination in Germany's labor market

A recent IZA Discussion Paper studies ethnic discrimination in Germany's labor market with a correspondence test. To each of 528 advertisements for student internships the authors sent two similar applications, one with a Turkish-sounding and one with a German-sounding name. A German name raises the average probability of a callback by about 14 percent. Differential treatment is particularly strong and significant at smaller firms, at which the applicant with the German name receives 24 percent more callbacks. Discrimination disappears when the sample is restricted to applications including reference letters which contain favorable information about the candidate's personality. This finding is interpreted as evidence for statistical discrimination.

Leo Kaas, Christian Manger: Ethnic Discrimination in Germany's Labour Market: A Field Experiment, IZA Discussion Paper No. 4741

 

International Herald Tribune op-ed by IZA Director Zimmermann: "Social democracy in America?"

In a recent commentary that appeared in the International Herald Tribune and the online edition of the New York Times, IZA Director Klaus F. Zimmermann argues that the United States is on its way to become a "European-style social democracy", even if this "appears like heresy to quite a few Americans – and something to be avoided at all costs."

"With 20 percent of working-age American males currently out of work, the need for more support payments rises," Zimmermann explains. "America's new normal may well be that it is not so exceptional anymore – that it may be discovering the limits of its economic dynamism, just as Europe did decades ago. The net effect is a considerably higher need for social support."

From a European perspective, Zimmermann defines two areas for necessary change. First, the current U.S. tax system awards social benefits "not to those in dire straits, but rather to people comfortably situated in the American middle class." Second, there is a consensus for social spending, but not "on the other side of the ledger – agreeing to higher taxes to cover the costs of the redistribution measures."

[read the complete article]

January 2010:
 

IZA Young Labor Economist Award presented to Alexandre Mas

Marco Caliendo, Alexandre Mas
The 2009 IZA Young Labor Economist Award was awarded to Princeton University professor Alexandre Mas for his outstanding paper on "Labour Unrest and the Quality of Production: Evidence from the Construction Equipment Resale Market", (Review of Economic Studies Vol. 75 (1), 2008, 229-258). IZA Research Director Marco Caliendo presented the award to Mas during the ASSA annual meetings in Atlanta on January 4, 2010. The award reflects IZA's strong ambition to support young and aspiring academics. Mas' study "is a pioneering paper that shows how important psychological factors such as work morale may be for firms' productivity and profitability," said Caliendo in his laudation. Alexandre Mas earned his Ph.D. from Princeton University in 2004. In 2004 he joined the Haas School of Business and the Department of Economics at the University of California, Berkeley, as an Assistant Professor and became an Associate Professor in 2008. In 2009, he returned to Princeton as Professor of Economics and Public Affairs. He is currently on leave to serve as the Chief Economist of the U.S. Department of Labor.

More about the IZA Young Labor Economist Award
 

IZA Fellow Andrew Oswald joins editorial board of Science

A. Oswald
IZA Research Fellow Andrew J. Oswald (University of Warwick) has joined the board of editors of Science, the principal journal of the American Association for the Advancement of Science. Along with Ernst Fehr (University of Zurich), who is also an IZA Fellow, he is one of the few economists to have been invited to join Science's board in the journal's 130-year history. Oswald is known for his research at the borders between economics, psychology and epidemiology, while Fehr has made important contributions to behavioral and experimental economics, as well as to the emerging field of neuroeconomics.

Science and Nature are viewed as the two leading scientific journals in the world; they have print circulations of approximately 100,000 and Impact Factors of approximately 30. Science's estimated readership is one million people per week.

Both Oswald and Fehr have published recent work as IZA Discussion Papers this week:
  • Andrew J. Oswald, Stephen Wu: "Objective Confirmation of Subjective Measures of Human Well-being: Evidence from the USA", IZA DP No. 4695, January 2010 (forthcoming in Science)
  • Björn Bartling, Ernst Fehr, Klaus M. Schmidt: "Screening, Competition, and Job Design: Economic Origins of Good Jobs", IZA DP No. 4710, January 2010.