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You are here: Home Issues Volume IV(1) - July 2015

Volume IV(1) - July 2015

In this issue, results of Bachelor and master theses are presented by S. Adamczyk, M. Klencz, S. Stahlmann, F. Weber and W. Zhou. Additonally, Dr. Fabian Kindermann discusses optimal taxes on the rich.

Volume IV(1) - July 2015

How to Obtain the Issue? A free digital copy of The Bonn Journal of Economics is accessible online. In addition, all Theses and Contributions are available separately. Please refer to the list of articles below for the corresponding links.

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The Employer-Size Wage Effect: A comparison between Germany and the USA

Sandra Adamczyk. Full Text. The Bonn Journal of Economics. Volume IV, No. 1 (July 2015), pp. 6-22. The neoclassical theory, within the framework of a perfect labor market, suggests that the wage can be explained by the supply and demand of labor. But in reality, the labor market is subject to asymmetrical information and therefore not perfect. Additionally, substantial wage differentials between identical employees and different firm sizes exist. This thesis tries to analyse this so called Employer-Size Wage Effect. Considering Germany and America, it presents the best-known empirical studies for each country and compares both countries based on theoretical explanatory approaches for this phenomenon.

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Insuring Non-Verifiable Losses in Networks

Michael Klencz. Full Text. The Bonn Journal of Economics. Volume IV, No. 1 (July 2015), pp. 23-41. Insurance relations can have various aspects of incompleteness. Research focussed mainly on informational asymmetries. The object of this article is the examination of incomplete insurance contracts with non-verifiable elements where the policyholder is part of a network. If the insurer is concerned about his reputation, he is incentivised to reward premium payments by the policyholder, even if the threat to switch the insurer is not credible. This topic can be classified to the field of contract theory and insurance economics. It deals with non-verifiable elements in an insurance relation and is based on the work of Doherty, Laux and Muermann. The optimal insurance contract in their setting has a deductible and an upper limit, which can be observed in reality. The novel future is that this contract is derived for non-verifiable losses and the upper limit is obtained endogenously.

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Evolution of Wage Inequality in the U.S. and Germany - Technological Progress or Institutional Changes?

Sarah Stahlmann. Full Text. The Bonn Journal of Economics. Volume IV, No. 1 (July 2015), pp. 42-59.During the 1980s and 1990s wage inequality in the U.S. and German labor market increased, which is usually attributed to either skill-biased technological change (SBTC) or institutional changes. In the light of different developments in these two countries, this paper aims to identify how the introduction of new technologies, especially microcomputers, declining real minimum wages and de-unionization affected the wage distribution. It turns out that SBTC and changing labor market institutions can account for about three-quarters of the rise in wage inequality.

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Demand Estimation in the Mutual Fund Industry before and after the Financial Crisis: A Case Study of S&P 500 Index Funds

Frederik Weber. Full Text. The Bonn Journal of Economics. Volume IV, No. 1 (July 2015), pp. 60-75. The 2008 financial crisis was caused by a huge bubble in the real-estate sector with unexampled credit expansions and risk taking in the sub-prime sector. It led to what Kenneth Rogoff named “the worst economic crisis since the 1929 Great Depression”, coming along with several bank failures and massive government and central bank interventions. Of course, private investors’ portfolios were massively affected by these transformations, as many households lost great fractions of their savings and pensions. This paper examines to what extent the financial crisis changed private investors preferences for financial products.

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The Effects of Joint and Several Liability Rule on Collusion and Antitrust Settlement

Wanli Zhou. Full Text. The Bonn Journal of Economics. Volume IV, No. 1 (July 2015), pp. 76-91. In contrast to the American antitrust law, which adopts the joint and several liability rule without contribution among the firms participated in cartel, China and the EU set forth the joint and several liability rule with contribution among these firms. Different joint and several liability rules may have different effects on the firms’ collusion and its choice between settlement and trial. The purpose of the study is to analyze and compare these effects and to make competition policy recommendations about joint and several liability rule concerning contribution.

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Earnings Inequality and Taxes on the Rich

Dr. Fabian Kindermann. Full Text. The Bonn Journal of Economics. Volume IV, No. 1 (July 2015), pp. 92-103. How to optimally tax the rich is a controversial topic. Recent studies in public economics have suggested to substantially raise tax rates on top earners in order to boost overall tax revenue. We evaluate this policy advice in a macroeconomic model that features a life cycle perspective of households as well as wage risk. We find that tax revenue from the rich can indeed be increased by setting very large tax rates for these people. In addition, higher tax rates on the top 1% earners can make society as a whole better off.

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