Lehrstuhl Volkswirtschaftslehre (Wirtschaftspolitik)

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The relationship between works councils and firms’ further training provision in times of technological change
(2022-09-14) Lammers, Alexander; Lukowski, Felix; Weis, Kathrin
Participating in further training is strategically important for employees to ensure their employability. Particularly for employees in low-skilled jobs, works councils — firm-level organizations that represent employees — constitute an important employee advocacy instrument in European countries, such as France and Germany. With comprehensive co-determination rights, works councils can influence firms’ hiring policies, job design and career paths (e.g. promotions). Using German firm-level data, we empirically investigate the influence of works councils on firms’ training provision for employees in firms below and above the industry level of technology. The results show that works councils have a positive effect on the percentage of employees in general, and of employees in low-skilled jobs in particular, participating in training, but only for firms below the industry level of technology. These results show the importance of works councils in supporting training in such firms and enhancing the employment prospects of employees in low-skilled jobs. In contrast, firms above the industry level of technology invest in training with or without a works council, indicating that the training interests of employers and employees are aligned.
Innovation and corporate governance in the firm - an empirical analysis with a focus on patents and ownership structure
(2021) Grünebaum, Tim; Kraft, Kornelius; Flatten, Tessa
This thesis aims at better understanding the complete process of knowledge production in the firm with a focus on Corporate Governance. I theoretically and empirically investigate firm decisions on innovation throughout a concept called the Innovation Value Chain (IVC). This concept includes all relevant firm decisions regarding developing innovative strategies. It starts at evaluating when firms innovate and – if they do – how much they invest in Research and Development (R&D) activities. Next it investigates which factors affect the transition from innovation input into actual tangible innovative assets. In case innovation projects are successful, I evaluate their actual value for the firm. Chapter 2 of this thesis offers a summary of the concept of innovation in the firm, a literature review on how it is affected by Corporate Governance, a discussion on innovation and patent measures as well as descriptive evidence on patenting activities of German firms. Chapter 3 investigates both the investment decision of firms as well as how these investments are transformed into innovative assets. These assets are – unlike in most other concepts – divided into different consecutive measures: Patent applications, patent grants and patent citations. In doing so we are able to address a project’s quality and novelty. A particular focus lies on the role of Corporate Governance in the form of ownership structure. It turns out that – whereas R&D investments are not affected by such structures – firms where managers own shares (owner-led firms) underperform in transferring investments into patents. Moreover – if they innovate – they rather focus on less risky worldwide conformity in innovation. On the other hand it turns out that firms benefit from monitor ownership, thus owners in the supervisory board that tend to control managers. Other control channels like capital concentration and institutional ownership also do not prove beneficial for firm-level innovation. Chapter 4 examines the effect of successful innovation on different performance measures. It turns out that patent grants and citations both increase sales in a production function environment, whereas there was no impact on return on assets and return on equity. Concerning ownership information the results again speak in favor of monitor rather than managerial ownership. Firms should thus endow monitors with shares to increase their effort and interest in the firm. Also owners should withdraw from management positions and rather carry out controlling duties. Chapter 5 focuses on the effect of innovation on firm survival. I am able to confirm the results from former studies that innovation decreases the probability of market exit. Furthermore the opinion of a stable effect throughout a firm’s life cycle is rejected. Whereas mature firms benefit from innovation by strategic renewal when competitors have caught up, young firms should rather stick to conventional investments rather than risky innovation. In summary this thesis helps in better understanding the complete process of knowledge production within the firm. It addresses ownership structure as a crucial factor of Corporate Governance which can be chosen by the firm as well as the role of different patent measures and their impact on different performance dimensions. Firms are thus encouraged to pick adequate Corporate Governance techniques in combination with clear innovation and performance goals, as links can be complex.
Efficiency and distributional effects of German labor market institutions
(2022) Lammers, Alexander; Kraft, Kornelius; Jung, Philip
This thesis expands knowledge on the efficiency and distributional effects of German labor market institutions. Chapter 2 considers the relevance of employee representation institutions for innovative output and disentangles the relationship between statutory and voluntary representation in this regard. This chapter finds positive effects of voluntary employee representation for incremental and radical product and for process innovation. Chapter 3 combines the concept of the social exchange theory within employee-employer related research. Using a dynamic difference-in-differences framework combined with matching algorithms, results from this chapter add to the previous literature and provide evidence that voluntary representation institutions raise labor productivity by 8 to 12 percent. In addition to employee representation, this thesis also broadens the perspective and investigates consequences of the Hartz reforms, i.e. changes in labor market institutions induced by Hartz III and Hartz IV. In this regard, empirical findings in Chapter 4 provide evidence that establishments that use the Federal Employment Agency as their recruitment channel, realize an increase in employment growth compared to establishments, which do not use the placement services. Finally, the results of chapter 5 indicate that labor market institutions also generate distributional effects. The Hartz IV reform exogenously reduces alternative wages and thus provides the opportunity to investigate this exogenous reduction in the outside option in wage bargaining in fine detail. First, structural break algorithms identify the Hartz IV policy reform as a significant change point in the labor share. Second, a synthetic control approach and a variant of a difference-in-differences framework are applied using unemployment rate variation among German counties in the year 2002 as a measure of treatment intensity. Results of this chapter contribute to the debate on income distribution and indicate that the Hartz IV reform results in a persistent reduction of the labor share by about two percentage points. In summary, the results of this thesis show that manager-initiated voluntary forms of representation are beneficial for establishments in terms of innovative output and labor productivity. Moreover, institutional changes induced by the Hartz III reform benefit establishments in terms of employment growth. Regarding distributional effects, employees seem to bear the cost in terms of lower labor shares during this period in Germany. To summarize and considering the empirical findings of this thesis, future designs and reforms of labor market institutions should therefore carefully balance efficiency gains with equity considerations.
The impact of financial markets on innovation
(2019) Giebel, Marek; Kraft, Kornelius; Hussinger, Katrin
This thesis focuses on the impact of financial markets on innovation. On the one hand, this includes the analysis of the sensitivity of innovative firms to restrictions in external financing. On the other hand, the reaction of innovation activities to changes in the supply of external financing is investigated. In that respect, in particular the lack of access to and supply of bank financing in the recent financial crisis is being used as source of underinvestment in innovation. The second chapter of this thesis questions how firms with different combinations of innovator status and usage of external financing adjusted their investment in the financial crisis. The results in Chapter 2 indicate that innovative firms clearly suffered from the financial crisis and invested less in capital goods as a result. The third chapter of the thesis investigates the impact of external financing constraints on the innovation expenditures of firms. Thus, the degree of reliance of a firm's main bank on the interbank market for loan refinancing purposes is used to identify a firm's restrictions for obtaining external means of funding. First, the results in Chapter 3 show that innovation expenses and its components are affected negatively by external financing constraints of firms. Additionally, the results in Chapter 3 show that R&D and marketing expenditures are negatively affected by the external financing constraints of firms. This hints at a reaction of marketing expenditures to external financing constraints. Chapter four of the thesis exploits the bank credit supply channel to use it as a determinant of a firm’s innovation behavior in the financial crisis. The empirical results of Chapter 4 show that the negative credit supply shock of the financial crisis largely affected the innovation behavior of firms. In that respect the chapter shows that firms adjusted their innovation activities in 2009 dependent on the credit supply during the financial crisis. On the opposite side, the results in Chapter 4 imply that firms tended not to adjust their innovation strategy to cope with the crisis. The empirical analysis in Chapter five determines the impact of firm financing constraints (measured by a credit rating index) on R&D by accounting for the stress on financial markets and resulting constraints from the firm’s main bank. The results of Chapter 5 indicate that firms were indeed reacting more sensitively to financing constraints during the financial crisis. However, the effect is not persistent in the period right after. Furthermore, Chapter 5 determines that firm financing constraints are indeed more prevalent when the firm is associated with a bank which has larger problems in maintaining its credit supply in such a crisis (i.e. with a low capitalized bank). Moreover, the results of Chapter 5 show that receiving a subsidy does not strongly affect the impact of constraints when controlling for the receipt of subsidies. However the subsidy itself affected the R&D expenditures of firms positively in the crisis period. A second set of tests imply that subsidies mitigate the financing constraints of firms and banks. Thus, firms which received a subsidy show no enhanced sensitivity to financing constraints of firms and banks in the financial crisis period.
Corporate governance in the private and public sector
(2017) Dyballa, Katharina; Kraft, Kornelius; Jung, Philip
Corporate governance in Germany experienced a growing relevance in both the private and public sectors. Therefore, the focus of this dissertation lies on the evaluation of the effectiveness of corporate governance instruments in both sectors. However, whereas in the private sector the general goal of corporate governance is to motivate managers in order to increase the wealth of the corporation, in the public sector the goal is rather to meet performance objectives in an efficient and effective manner. Accordingly, analyzing effectiveness of corporate governance instruments in private respectively public sectors will differ from each other: Regarding the private sector, the main focus lies on the question whether corporate governance instruments indeed lead to a successful alignment of shareholder’s and manager’s interests. As the alignment of interests is predominantly provided by monetary incentives, this dissertation (chapter 2 to 4) empirically focuses on the impact of three corporate governance mechanisms (foreign competition, the implementation of mandatory disclosure obligations, and German codetermination) on level and design of executive compensation. By showing that (1) a high degree of foreign competition increases managerial pay incentives (U.S. and Germany), (2) stronger disclosure obligations have a leveling effect in particular on inappropriate high remuneration levels and (3) labor’s interest is similar to shareholder’s and thus increases managerial pay incentives in cases of codetermination, one might conclude that the considered private sector instruments succeed in improving corporate governance. According to the new public management approach the general goal of corporate governance in the public sector is rather focusing on efficiency and effectivity. Thus, the corresponding empirical analysis in chapter 5 focuses on the evaluation of efficiency and quality in local public services using the example of German employment offices. Additionally in this context, chapter 5 provides insights on the impact of several new public management characteristics on efficiency and quality in German employment offices. It turns out that the effectiveness of some new public management indicators did not reveal the expected impact: They neither lead to an increase in job agency’s efficiency nor quality. Furthermore a job agency’s efficiency deviates between 3 to 35% from cost minimum and there is no general trade-off between efficiency and quality.
Household debt and the macroeconomy
(2017) Klein, Mathias; Linnemann, Ludger; Winkler, Roland
This thesis presents four essays that study the determinants of private household debt and the relation between private indebtedness and macroeconomic activity. Chapter 1 shows that inequality and household debt are cointegrated of order one and therefore share a common trending relation. In Chapter 2, I demonstrate that interpersonal comparison is an important driver of short-run credit movements. Chapter 3 points out that the effects of fiscal consolidations crucially depend on the level of private indebtedness. In Chapter 4, I present a model with financial frictions that is able to replicate the empirical responses of household debt and other main macro aggregates to technology shocks and income tax cuts.
Vertical relationships, competition, knowledge search and innovation
(2014-03-27) Köhler, Christian; Kraft, Kornelius; Czarnitzki, Dirk
This thesis deals with modern topics in industrial organization and in economics of innovation in particular. It encompasses four empirical studies which are related to both the aims expressed in the Europe 2020 strategy as well as the means to reach them. Chapter 2 deals with issues of bargaining in vertical relationships. The first study of this chapter explores how bargaining affects the R&D profitability of suppliers. The results show that a supplier’s bargaining power is a crucial determinant of R&D profitability. The second study in this chapter examines if buyer power is detrimental to suppliers’ innovation incentives and shows that this is indeed the case. The negative effect of buyer power is however mitigated by downstream competition intensity if interaction effects are included. The third chapter deals with the relationship between competition intensity and innovation incentives. There is a long-standing interest in this question and the chapter contributes to the literature by supplying results derived from German firm-level data. In addition, the results of two competition measures are contrasted and the technological distance of a firm – which is argued to have an effect on firms’ innovation incentives as well – is accounted for. The results provide evidence for a negative effect of average competition levels on firms’ innovation incentives. The fourth chapter is dedicated to the knowledge search of innovative firms and explores patterns of knowledge screening in different sectors with regards to their contribution to innovation success. This chapter contributes to the rich literature on open innovation.
The role of selection effects in organizational change: Empirical evidence on worker participation and human resource management practices in Germany
(2013-06-04) Lang, Julia; Kraft, Kornelius; Zwick, Thomas
This dissertation tries to obtain a better understanding of how selection effects can affect the analysis of human resource management practices or employee participation. The effects of works councils and selected personnel measures in German firms are analysed, where selection on observable and unobservable factors is controlled for by using matching techniques and difference-in-differences. Chapter 2 shows that works councils are rather implemented in firms where employees are afraid of losing their job but also in firms with relatively high wages. The introduction of a works council has no effect on several outcomes like wages, employee turnover and overtime work, but a positive effect on workers’ perceived job security. Thus, the aim of works councils seems to be rent protection rather than rent seeking. In Chapter 3 the effects of profit sharing on productivity are analysed. As profit sharing means that wages directly depend on the firm’s performance, incentive effects are expected. The study shows that – although profit sharing positively affects productivity - effects are overestimated if selection is not taken into account. Profit sharing can also affect different outcomes, e.g. investments in human capital, which is analysed in Chapter 4. The results indicate that firms which introduce profit sharing have a higher increase in training intensity compared to firms without profit sharing. However, this is only the case if the majority of employees participate in profits. Chapter 5 shows how training can affect workers’ labour market success. Older and younger workers have different aims when participating in training which also reflects in different effects. Younger participants profit from training by an increase in wages whereas older participants experience an increase in perceived job security.
Mandatory Codetermination in Germany
(2013-04-15) Gralla, Rafael; Kraft, Kornelius; Schnabel, Claus
The aim of this dissertation is to provide a more detailed insight into the effects of German codetermination rights on employment and productivity. Chapter 2 deals with the impact of German codetermination rights on overtime hours. The main findings are that the effects of works councils strongly depend on the contracted working time and also differ across quantiles of the overtime hours distribution. Chapter 3 analyzes the impact of works councils on discrepancies between preferred and actual working hours of employees. It is shown that employees in codetermined establishments are more likely to match their working time preferences. This positive effect is due to a reduction of overemployment. Chapter 4 examines the differences in the likelihood of overpayment and overemployment in establishments with and without works councils. In contrast to other studies, assessments by the management concerning the existence of such problems are used. The main result is that establishments with works councils that are prepared to interfere with the management are more likely to suffer from overemployment but do not differ in the likelihood of overpayment compared to establishments without works councils. Establishments with works councils that are in line with the management, however, do not differ from establishments without a works council with regard to the likelihood of overemployment but have a lower likelihood of overpayment. In Chapter 5, differences in employment growth between firms with and without works councils by separating introduction effects from potential selectivity effects are examined. Using a difference in differences framework, it is shown that firms with works councils have higher employment growth before establishing a works council. However, employment growth declines after introduction. The reason for lower employment growth is identified in reduced hiring rates but constant dismissal rates. Finally, Chapter 6 contains an estimation of the effect of almost parity codetermination and dispersion of capital ownership of stock companies on productivity. It is shown that a concentration of capital ownership counteracts and neutralizes negative effects of codetermination. Furthermore, productivity-enhancing effects of representation by a capital owner in the supervisory board are revealed if a firm is codetermined.
Determinanten der Kartellstabilität – eine theoretische und empirische Analyse
(2012-05-22) Giesen, Stefan; Kraft, Kornelius; Czarnitzki, Dirk
Ziel dieser Dissertation ist es, theoretisch und empirisch ein klareres Bild über die Ausgestaltung illegaler Kartellvereinbarungen zu geben und dabei vier relevante Forschungsfragen zu beantworten. • Welche Strategien können die Kartellaußenseiter verfolgen, wenn das Kartell nicht alle Marktteilnehmer umschließt? • Einige Kartelle sind erfolgreicher und langlebiger als andere. Welchen Einfluss hat die interne Organisation eines Kartells auf dessen Dauer? • Wann zerbrechen Kartellvereinbarungen, im Boom oder in der Rezession? • Wie effektiv ist das europäische Kronzeugenprogramm hinsichtlich der Destabilisierung von Kartellabsprachen? D`Aspremont et al. (1983) zeigen in ihrer Arbeit, dass neben dem Kartell noch Außenseiter, sogenannte Fringe, am Markt agieren können, ohne dass ein Kartell daran zerbricht. In der Dissertation wird nun überprüft, welche Auswirkungen ein möglicher Zusammenschluss der Außenseiter auf die Kartellstabilität hat. Es zeigt sich, dass sich zwei Kartelle auf demselben Markt bilden können und sich dabei gegenseitig stabilisieren. Einzige Bedingung dafür ist, dass das zuerst gebildete Kartell weiterhin als Marktführer agiert und sich das Folgerkartell ausschließlich aus den zwei verbliebenen Außenseitern zusammensetzt. Basierend auf einem Datensatz aller zwischen 1980 und 2008 durch die Europäische Kommission verurteilten Kartelle wird im Gegensatz zu früheren empirischen Untersuchungen zum ersten Mal zwischen dem Risiko, von der Wettbewerbsbehörde entdeckt zu werden und dem Risiko einer Selbstauflösung der illegalen Vereinbarung unterschieden. Dabei zeigt sich, dass sich illegale Vereinbarungen besser durchsetzen lassen, wenn sich die Kartellmitglieder umfangreich überwachen und bei Quotenüberschreitungen entschädigen. Diese beiden Mechanismen helfen demnach dabei, die unterschiedlichen Interessen der Mitglieder anzugleichen. Im Gegensatz dazu weisen kulturelle Unterschiede große destabilisierende Effekte auf.
"Two people gotta stick together..."
(2011-09-08) Neimann, Stefanie; Kraft, Kornelius; Schnabel, Reinhold
The present thesis tries to obtain a better understanding how economic and marriage-related decisions are linked to each other. The first part deals with cross-spouse effects on economic decisions, in this case on health behavior and on labor force participation at older age. The second part examines the impact of various economic factors on the risk of marital dissolution. In summary, all chapters show that there are strong interrelationships between the two most important aspects in life, namely family and career. However, we also see that men and women react and behave differently. For instance, the wife has an effect on the husband’s probability to see the doctor but not vice versa. Moreover, a female breadwinner increases the risk of divorce substantially which we cannot find for couples with a male main earner. Thus, the results suggest that economic theory and empirical analyses do not only have to consider the family background but also to distinguish between men and women. Needless to say that there are still many open questions. For instance, except in Chapter 2, we restrict the analysis to married couples since cohabitation is less common among older people and moreover, separation has usually less severe consequences if the couple is not married. Nevertheless, given the growing acceptance and equal treatment under law, it becomes increasingly interesting to extend the analyses to cohabiting couples. Moreover, not only family structure has changed, work life is also changing. More and more jobs, in particular for high-educated, require high flexibility and mobility by both, men and women. Consequently, for a larger section of the population, the success of a relationship is challenged by commuting and living apart together. It is not fully known yet to what extent these factors alter the risk of separation. Another interesting aspect is the new parental-leave regulation. The new law provides financial incentives for fathers to take a share of the legal parental-leave. However, given our result that female and male breadwinners do not seem to be perfect substitutes, the question is whether maternity and paternity leave have a different effect on marital stability. Thus, there are still many aspects we do not know but, to conclude with Tina Turner, “some people gotta stay whatever and give one another shelter on a rainy day”.
Entrepreneurship, innovation and competition
(2010-01-12T12:50:30Z) Heger, Diana; Kraft, Kornelius; Kaiser, Ulrich
Testing in nonstationary and dependent panels with applications to purchasing power parity
(2007-04-20T12:23:01Z) Hanck, Christoph; Krämer, Walter; Kraft, Kornelius

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