Discussion Papers

Discussion Paper No. 191
October 16, 2019

Deutschland: ein Land der Mieter? Die Rolle von Erwartungen über zukünftige Immobilienpreisentwicklungen

Author:

Gohl, Niklas (DIW Berlin and University of Potsdam)
Haan, Peter (DIW Berlin and FU Berlin)
Michelsen, Claus (DIW Berlin)
Weinhardt, Felix (DIW Berlin, HU Berlin, CEP, IZA and CESifo)

Abstract:

Mehr als die Hälfte aller Haushalte in Deutschland wohnen zur Miete – ein im internationalen Vergleich sehr hoher Wert. Bisherige Studien haben vor allen Dingen den regulatorischen Rahmen des Immobilienmarkts hervorgehoben, der Mietwohnungen in Deutschland systematisch begünstigt. Allerdings gibt es keine Studien, die diese Erklärungen empirisch eindeutig untermauern können: einige Arbeiten betonen die Bedeutung von fundamentalen Marktdaten wie die Einkommensentwicklung, demographische Faktoren oder den Zuzug in eine Region. Diese Studie greift einen Aspekt auf, der bislang nicht in der Literatur diskutiert wurde. Untersucht wird, ob und zu welchem Anteil die geringe Eigentümerquote in Deutschland durch pessimistische Erwartungen bezüglich zukünftiger Immobilienpreisentwicklungen erklärt werden kann – erwarten Mieter keine oder nur geringe Preissteigerungen, so sinkt die Attraktivität einer Investition in die eigenen vier Wände. Für die empirische Analyse werden Daten aus einer neuen, repräsentativen Befragung, erhoben im Rahmen des SOEP-IS, ausgewertet. Befragte ausländischer Herkunft sind optimistischer hinsichtlich der Immobilienpreisentwicklung. Sie erwarten langfristig einen signifikant höheren Preisanstieg. Dies legt nahe, dass die erheblich pessimistischeren Preiserwartungen der einheimischen Bevölkerung auch dazu führen, dass sie sich seltener als die Bevölkerung in anderen Ländern für selbstgenutztes Wohneigentum entscheiden.

Keywords:

Wohneigentumsquote; Preiserwartungen; Immobilieninvestition

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Discussion Paper No. 190
October 16, 2019

Complexity and Distributive Fairness Interact in Affecting Compliance Behavior

Author:

Bellemare, Charles (Université Laval)
Deversi, Marvin (LMU Munich)
Englmaier, Florian (LMU Munich)

Abstract:

Filing income tax returns or insurance claims often requires that individuals comply with complex rules to meet their obligations. We present evidence from a laboratory tax experiment suggesting that the effects of complexity on compliance are intrinsically linked to distributive fairness. We find that compliance remains largely una ffected by complexity when income taxes are distributed to a morally justi fied charity. Conversely, complexity signi ficantly amplifi es non-compliance when income taxes appear wasted as they are distributed to a morally dubious charity. Our data further suggest that this non-compliance pattern is facilitated through the ambiguity that evolves from mostly unstrategic fi ling mistakes.

Keywords:

complexity; compliance; distributive fairness; experiment

JEL-Classification:

C91; D01; D91; H26

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Discussion Paper No. 189
September 30, 2019

Optimal Social Assistance and Unemployment Insurance in a Life-Cycle Model of Family Labor Supply and Savings

Author:

Haan, Peter (DIW Berlin)
Prowse, Victoria (Purdue University)

Abstract:

We empirically analyze the optimal mix and optimal generosity of unemployment insurance and social assistance programs. To do so, we specify a structural life-cycle model of the labor supply, savings, and social assistance claiming decisions of singles and married couples. Partial insurance against wage and employment shocks is provided by social programs, savings, and the labor supplies of all adult household members. We show that the optimal policy mix is dominated by moderately generous social assistance, which guarantees a permanent universal minimum household income, with only a minor role for temporary earnings-related unemployment insurance. The optimal amount of social assistance is heavily influenced by income pooling in married households. This pooling provides partial insurance against negative economic shocks, reducing the optimal generosity of social assistance.

Keywords:

unemployment insurance; social assistance; design of benefi t programs; life-cycle labor supply; family labor supply; intra-household insurance; household savings; employment risk; added worker e ffect

JEL-Classification:

J18; J68; H21; I38

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Discussion Paper No. 188
September 30, 2019

Insurance, Redistribution, and the Inequality of Lifetime Income

Author:

Haan, Peter (DIW Berlin)
Kemptner, Daniel (DIW Berlin)
Prowse, Victoria (Purdue University)

Abstract:

Individuals vary considerably in how much they earn during their lifetimes. We study how the tax-and-transfer system o sets inequalities in lifetime earnings, which would otherwise translate into di erences in living standards. Based on a life-cycle model, we fi nd that redistribution by taxes and transfers off sets 54% of the inequality in lifetime earnings that is due to heterogeneous skill endowments. Meanwhile, taxes and transfers insure 45% of lifetime earnings risk. Taxes would provide more insurance if based on lifetime instead of annual earnings. Requiring wealthy individuals to repay social assistance received when younger would strengthen the insurance and redistributive functions of social assistance.

Keywords:

lifetime earnings; lifetime income; tax-and-transfer system; taxation; unemployment insurance; disability benefi ts; social assistance; inequality; redistribution; insurance; endowments; risk; dynamic life-cycle models

JEL-Classification:

D63; H23; I24; I38; J22; J31

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Discussion Paper No. 187
September 30, 2019

Financial Education in Schools: A Meta-Analysis of Experimental Studies

Author:

Kaiser, Tim (University of Koblenz-Landau & DIW Berlin)
Menkhoff, Lukas (DIW Berlin)

Abstract:

We study the literature on school financial education programs for children and youth via a quantitative meta-analysis of 37 (quasi-) experiments. We find that financial education treatments have, on average, sizeable impacts on financial knowledge (+0.33 SD), similar to educational interventions in other domains. Additionally, we document smaller effects on financial behaviors among students (+0.07 SD). When restricting the sample to 18 randomized experiments average effect sizes are estimated to be about 0.15 SD units on financial knowledge and 0.07 SD units on financial behaviors. These results are robust irrespective of the meta-analytic method used and when accounting for publication bias. Subgroup analyses show the beneficial effect of more intensive treatments, albeit with decreasing marginal returns.

Keywords:

financial education; financial literacy; financial behavior; meta-analysis

JEL-Classification:

I21; A21; D14

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Discussion Paper No. 186
September 19, 2019

Financial Literacy and Intra-Household Decision Making: Evidence from Rwanda

Author:

Grohmann, Antonia (DIW Berlin)
Schoofs, Annekathrin (University of Passau & RWI)

Abstract:

Research has consistently shown that women’s involvement in household decision making positively affects household outcomes such as nutrition and education of children. Is financial literacy a determinant for women to participate in intra-household decision making? Using data on savings groups in Rwanda, we examine this relationship and show that women with higher financial literacy are more involved in financial and expenditure decisions. Instrumental Variable estimations confirm a causal link. For this reason, we perform a decomposition analysis breaking down the gender gap in financial literacy into differences based on observed sociodemographic and psychological characteristics and differences in returns on these characteristics. Our results show high explanatory power by education, happiness, symptoms of depression, and openness, but also suggest that a substantial fraction can be explained by differences in returns. We argue that this results from a strong role of society and culture.

Keywords:

financial literacy; women empowerment; intra-household decision making

JEL-Classification:

D14; J16; G02

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Discussion Paper No. 185
September 18, 2019

Coupled Lotteries – A New Method to Analyze Inequality Aversion

Author:

Koch, Melanie (DIW Berlin)
Menkhoff, Lukas (HU and DIW Berlin)
Schmidt, Ulrich (University of Kiel and ifW Kiel)

Abstract:

We develop and implement a new measure for inequality aversion: two peers are endowed with identical binary lotteries and the only choice they make is whether they want to play out the lotteries independently or with perfect positive correlation (coupling). Coupling has no other e ect than preventing outcome inequality. We implement the method in a survey in rural Thailand as well as a supplemental sample in a lab in Germany. As theoretically expected, coupling is related to being more risk averse, to having social status concerns, and to relying more often on formal and informal insurance. However, coupling is not related to giving in the dictator game.

Keywords:

inequality aversion; correlated risk; social status concerns

JEL-Classification:

D63; D91; D81

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Discussion Paper No. 184
September 18, 2019

The Wage Penalty of Regional Accents

Author:

Grogger, Jeffrey (University of Chicago)
Steinmayr, Andreas (LMU Munich)
Winter, Joachim (LMU Munich)

Abstract:

Previous work has documented that speaking one’s native language with an accent distinct from the mainstream is associated with lower wages. In this study, we seek to estimate the causal effect of speaking with a distinctive regional accent, disentangling the effect of the accent from that of omitted variables. We collected data on workers’ speech in Germany, a country with wide variation in regional dialects. We use a variety of strategies in estimation, including an instrumental variables strategy in which the instruments are based on research findings from the linguistics of accent acquisition. All of our estimators show that speaking with a distinctive regional accent reduces wages by an amount that is comparable to the gender wage gap. We also find that workers with distinctive regional accents tend to sort away from occupations that demand high levels of face-to-face contact, consistent with various occupational sorting models.

Keywords:

accent; dialect; wage penalty; discrimination; SOEP

JEL-Classification:

J24; J07

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Discussion Paper No. 183
September 18, 2019

The More the Merrier? On the Optimality of Market Size Restrictions

Author:

Colin von Negenborn (HU Berlin)

Abstract:

This paper provides a novel rationale for the regulation of market size when heterogeneous firms compete. A regulator seeks to maximize total welfare by choosing the number of firms allowed to enter the market, e.g. by issuing a certain number of licenses. Opening up the market for more firms has a two-fold effect: it increases competition and thus welfare, but at the same time, it also attracts more cost-intensive firms, driving down average production efficiency. The regulator hence faces a trade-off between raising beneficial competition and detrimental costs. If goods are sufficiently substitutable, the latter effect can outweigh the former. It is then optimal to restrict the market size, rationalizing a limit to competition. This result holds even in the absence of entry costs, search costs or increasing returns to scale, which previous literature required.

Keywords:

regulation; imperfect competition; oligopolies

JEL-Classification:

D43; L13; L51

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Discussion Paper No. 182
September 16, 2019

Student Performance and Loss Aversion

Author:

Karle, Heiko (Frankfurt School of Finance & Management)
Engelmann, Dirk (HU Berlin)
Peitz, Martin (University of Mannheim)

Abstract:

In this paper, we match data on student performance in a multiple-choice exam with data on student risk preferences that are extracted from a classroom experiment. We find that more-loss-averse students leave more questions unanswered and perform worse in the multiple-choice exam when giving an incorrect answer is penalized compared to not answering. We provide evidence that loss aversion parameters extracted from lottery choices in a controlled experiment have predictive power in a field environment of decision making under uncertainty. Furthermore, the degree of loss aversion appears to be persistent over time, as the experiment was conducted three months prior to the exam. We also find important differences across genders; they are partly explained by differences in loss aversion.

Keywords:

loss aversion; decision making under uncertainty; multiple choice

JEL-Classification:

C91; D01; D11; D83

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