Discussion Paper No. 527
February 14, 2025
The Evolution of Child-Related Gender Inequality in Germany and The Role of Family Policies, 1960-2018
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Abstract:
Using German administrative data from the 1960s onward, this paper (i) examines the long-term evolution of child-related gender inequality in earnings and (ii) assesses the impact of family policies on this inequality. Our first (methodological) contribution is a decomposition approach that separates changes in child-related inequality into three components: the share of mothers, child penalties, and potential earnings of mothers (absent children). Our second contribution is a comprehensive analysis of child-related gender inequality in Germany. We derive three sets of findings. First, child penalties (i.e., the share of potential earnings mothers lose due to children) have increased strongly over the last decades. Mothers who had their first child in the 1960s faced much smaller penalties than those who gave birth in the 2000s. Second, the fraction of overall gender inequality in earnings attributed to children rose from 14% to 64% over our sample period. We show that this trend resulted not only from growing child penalties but also from rising potential earnings of mothers. Intuitively, in later decades, mothers had more income to lose from child-related career breaks. Third, we show that parental leave expansions between 1979 and 1992 amplified child penalties and explain nearly a third of the increase in child-related gender inequality. By contrast, a parental benefit reform in 2007 mitigated further increases.
Keywords:
child penalties; family policy; gender earnings gap;
JEL-Classification:
H31; J13; J22;
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Discussion Paper No. 526
Geoeconomic Fragmentation and the Role of Non-Aligned Countries
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Abstract:
We analyze how non-aligned countries affect welfare outcomes in scenarios of global trade fragmentation. Using a quantitative trade model covering 141 countries and 65 economic sectors, we simulate different scenarios of geoeconomic fragmentation. We find that major non-aligned countries benefit from their neutral position, with welfare gains of up to 0.7%. Their manufacturing sectors particularly benefit under incomplete fragmentation, experiencing value added gains of 2.5%, while agriculture and services face modest declines. These gains turn into significant losses if they join either the Western or Eastern trade bloc. Moreover, world welfare losses increase from -1.9% under incomplete fragmentation to -2.7% when non-aligned countries join the West and to -3.7% when they join the East. Our results highlight the strategic importance of non-aligned countries in mitigating the negative effects of global trade fragmentation.
Keywords:
trade policy; gains from trade; global value chains; quantitative trade models; general equilibrium;
JEL-Classification:
F11; F13; F15; F17; F51;
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Discussion Paper No. 525
January 29, 2025
Informative Certification: Screening vs. Acquisition
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Abstract:
We study monopolistic certification in a buyer-seller relationship, explicitly distinguishing between its role as a device for screening versus acquisition. As a screening device, certification discloses soft information about a seller's private information. As an acquistion device, certification discloses hard information about the good's quality. Despite being costless, we show that, optimally, a monopolistic certifier provides non-maximal information-acquisition, while offering maximal screening. Thus, monopolistic certification exhibits no economic distortions as a screening device, resolving all private information, but provides too little hard information as an acquisition device. While feasible and costless, full information acquisition is suboptimal as it requires excessive information rents. Consequently, market inefficiencies remain due to market uncertainty but not due to private information.
Keywords:
certification; disclosure; screening; information acquisition; monopolistic distortions;
JEL-Classification:
D82;
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Discussion Paper No. 524
Finding a Good Deal: Stable Prices, Costly Search, and the Effect of Entry
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We study markets in which potential buyers engage in costly search to find a good deal. Our novel solution concept for prices builds upon the idea that any movement in a firm's price is followed by an opportunity for its competitors to respond with special offers. This mechanism selects the highest prices such that no firm wishes to undercut a competitor. We identify a distinctive closed-form pattern of disperse prices that uniquely satisfy our pricing solution, and pair that price profile with optimal fixed-sample search. In a stable equilibrium with active search, the intensity of search and consumer surplus are lower and industry profit is higher with more competitors. In a concentrated oligopoly, complete search in equilibrium can eliminate industry profit.
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Discussion Paper No. 523
January 23, 2025
Stable Price Dispersion
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Abstract:
We study the pricing of homogeneous products sold to customers who consider different sets of suppliers. We seek prices that are stable in the sense that no firm wishes to undercut any rival or to raise its price when rivals have a subsequent opportunity to undercut it. We identify stable and dispersed prices that emerge from both collective choice and non-cooperative pricing games, and derive predictions for prices across several price-consideration specifications. We show how the implications for firms and customers compare to those generated by conventional approaches.
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JEL-Classification:
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Discussion Paper No. 522
Measuring Quality of Life under Spatial Frictions
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Abstract:
Using a quantitative spatial model as a data-generating process, we explore how spatial frictions affect the measurement of quality of life. We find that under a canonical parameterization, mobility frictions—generated by idiosyncratic tastes and local ties—dominate trade frictions—generated by trade costs and non-tradable services—as a source of measurement error in the Rosen-Roback framework. This non-classical measurement error leads to a downward bias in es-timates of the urban quality-of-life premium. Our application to Germany reveals that accounting for spatial frictions results in larger quality-of-life differences, different quality-of-life rankings, and an urban quality-of-life premium that exceeds the urban wage premium.
Keywords:
housing; spatial frictions; rents; prices; productivity; quality of life; spatial equilibrium; wages;
JEL-Classification:
J200; J300; R200; R300; R500;
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Discussion Paper No. 521
January 15, 2025
Climbing the Ivory Tower: How Socio-Economic Background Shapes Academia
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Abstract:
We explore how socio-economic background shapes academia, collecting the largest dataset of U.S. academics’ backgrounds and research output. Individuals from poorer backgrounds have been severely underrepresented for seven decades, especially in humanities and elite universities. Father’s occupation predicts professors’ discipline choice and, thus, the direction of research. While we find no differences in the average number of publications, academics from poorer backgrounds are both more likely to not publish and to have outstanding publication records. Academics from poorer backgrounds introduce more novel scientific concepts, but are less likely to receive recognition, as measured by citations, Nobel Prize nominations, and awards.
Keywords:
academics; socio-economic background; science; u.s. census;
JEL-Classification:
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Discussion Paper No. 520
January 9, 2025
Gender Identity and Economic Decision Making
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Abstract:
Economic research on gender gaps has focused on variation based on the binary classification of “men” and “women”. We explore whether a self-reported continuous measure of gender identity (CGI) explains variation in economic decisions and outcomes beyond the relationship with binary gender. We analyze data from four diverse populations (N=8,018), including measures of economic preferences and educational and labor market outcomes. We find that CGI is significantly associated with economic outcomes, with stronger relationships for men than women. Our results indicate that incorporating measures of self-reported gender identity could enhance our understanding of gender gaps in economic behavior and outcomes.
Keywords:
gender identity; non-binary gender; economic preferences; economic outcomes;
JEL-Classification:
C91; J16; J2;
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Discussion Paper No. 519
December 30, 2024
Do Women Comply More Than Men? Experimental Evidence from a General Population Sample
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Women are often perceived as more compliant than men; however, the literature provides inconclusive evidence. Using a novel experimental design comprising two complementary experiments, we test this claim in online samples representative of the German adult population. The first experiment (N=1600) features a probabilistic social dilemma game (PDG) in which participants can increase their individual payoff at the expense of exposing themselves and their group to probabilistic losses. In two treatment conditions, they receive either a recommendation on socially optimal behavior or a recommendation and information on weakly non-compliant peer behavior. We find that the recommendation strongly affects behavior but more so for women than for men. However, information on the non-compliant behavior of others does not induce significantly different responses in men and women. In the second experiment (N=522), we elicit empirical and normative expectations about behavior in the PDG with a recommendation to study the role of norms in following it. While men and women are expected to hold similar normative beliefs, men are expected to follow the recommendation less often, suggesting that compliance is a female social norm.
Keywords:
gender; compliance; public good; social dilemma; risk-taking; social norms;
JEL-Classification:
J16; I12; D81; H41;
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Discussion Paper No. 518
December 12, 2024
Pareto-Improvements, Welfare Trade-Offs and the Taxation of Couples
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We develop a theory of tax reforms for a setting with multi-dimensional heterogeneity amongst taxpayers and multiple economic decisions that are all subject to fixed and variable costs. The theorems in this paper provide a complete characterization of the conditions under which Pareto- or welfare-improving tax reforms exist. We focus on one application, the taxation of couples, and present a detailed analysis of the behavioral responses to taxation in this setting. Squaring the theorems with this analysis yields sufficient statistics for the existence of Pareto- or welfare-improving tax reforms. In the empirical part, we apply them to US data. Our findings include the following: Tax rates on secondary earnings are inefficiently high when secondary earnings are close to primary earnings. Also, reducing the tax system’s degree of jointness is not Pareto-improving. Whether it raises welfare depends on a trade-off between poverty alleviation and gender balance.
Keywords:
taxation of couples; pareto efficiency; tax reforms; optimal taxation; non-linear income taxation;
JEL-Classification:
C72; D72; D82; H21;