CHAIR OF

PUBLIC ECONOMICS

The ageing of the German population will necessarily reduce the pension levels provided by the German pay-as-you-go public pension insurance. The pension reforms of the last decade aimed at encouraging savings in private, fully-funded pension insurances (through tax advantages and subsidies). However, only a minority of Germans has decided to make use of these opportunities. Andreas Knabe and Joachim Weimann propose to strengthen this type of old-age provision by using insights from behavioural economics.

The paper can be found here.

By applying a heterogeneous slope model, Alexander Plum and Sara Ayllón (University of Girona) show that unemployment state dependence varies across workers. Assuming a homogeneous effect of past unemployment on the risk of staying unemployed underestimates the scarring effect of unemployment in the majority of European countries analyzed.

The publication can be found here.

In a new working paper, Andreas Knabe, Ronnie Schöb and Joachim Weimann shed more light on the subjective well-being of workfare participants and compare it to the well-being of unemployed and employed workers. Using data from a self-conducted survey among participants in workfare schemes in Germany, two subdimensions of subjective well-being life satisfaction and emotional well-being are separately examined to obtain a more comprehensive view of the subjective impact of workfare jobs. The results show that the life satisfaction of workfare participants is between that of employed and unemployed people. More surprisingly, perhaps, their emotional well-being is the highest of these three groups.

The working paper can be found here.

This article develops a method for implementing a simulated multivariate random-effects probit model for unbalanced panels (with gaps) and illustrates the model by using artificial data. Halton draws generated by mdraws are used to simulate multivariate normal probabilities with the mvnp() egen function. The estimator can be easily adjusted, for example, to allow for autocorrelated errors. The advantages of this simulated estimation, when compared with existing commands such as redpace, are high accuracy and improved stability.

The publication can be found here.

In a new discussion paper, Andreas Knabe (together with Clemens Hetschko and Ronnie Schöb, Freie Universität Berlin) examines whether unemployment leads to long-lasting losses in life satisfaction even after becoming reemployed that are not related to income losses (scarring effects). By examining the transition of unemployed persons to retirement, it is possible to separate the scars caused by future labor market uncertainty from genuine scars purely related to past experiences. The study finds evidence for such genuine unemployment scars for people who were unemployed for the first time in their life directly prior to retirement, but not for people with earlier unemployment experiences.

The discussion paper can be found here.