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- ItemGlobal bilateral migration projections accounting for diasporas, transit and return flows, and poverty constraints(Rostock : Max Planck Inst. for Demographic Research, 2021) Rikani, Albano; Schewe, JacobBACKGROUND Anticipating changes in international migration patterns is useful for demographic studies and for designing policies that support the well-being of those involved. Existing forecasting methods do not account for a number of stylized facts that emerge from large-scale migration observations and theories: existing migrant communities - diasporas - act to lower migration costs and thereby provide a mechanism of self-amplification; return migration and transit migration are important components of global migration flows; and poverty constrains emigration. OBJECTIVE Here we present hindcasts and future projections of international migration that explicitly account for these nonlinear features. METHODS We develop a dynamic model that simulates migration flows by origin, destination, and place of birth. We calibrate the model using recently constructed global datasets of bilateral migration. RESULTS We show that the model reproduces past patterns and trends well based only on initial migrant stocks and changes in national incomes. We then project migration flows under future scenarios of global socioeconomic development. CONCLUSIONS Different assumptions about income levels and between-country inequality lead to markedly different migration trajectories, with migration flows either converging towards net zero if incomes in presently poor countries catch up with the rest of the world; or remaining high or even rising throughout the 21st century if economic development is slower and more unequal. Importantly, diasporas induce significant inertia and sizable return migration flows. CONTRIBUTION Our simulation model provides a versatile tool for assessing the impacts of different socioeconomic futures on international migration, accounting for important nonlinearities in migration drivers and flows.
- ItemWhen redistribution makes personalized pricing of externalities useless(Oxford : Wiley-Blackwell, 2021) Fleurbaey, Marc; Kornek, UlrikeWe consider a standard optimal taxation framework in which consumers' preferences are separable in consumption and labor and identical over consumption, but are affected by consumption externalities. For every nonlinear, income-dependent pricing of goods there is a linear pricing scheme, combined with an adjusted income tax schedule, that leaves all consumers equally well-off and weakly increases the government's budget. The result depends on whether a linear pricing scheme exists that keeps the aggregate amount of consumption at its initial level observed under nonlinear pricing. We provide sufficient conditions for the assumption to hold. If adjusting the income tax rate is not available, personalized prices for an externality can enhance social welfare if they are redistributive, that is, favor consumers with a larger marginal social value of income.
- ItemInformation exchange in laboratory markets: competition, transfer costs, and the emergence of reputation(Dordrecht [u.a.] : Springer Science + Business Media B.V., 2020) Hoffmann, Roman; Kittel, Bernhard; Larsen, MattiasPublic reputation mechanisms are an effective means to limit opportunistic behavior in markets suffering from moral hazard problems. While previous research was mostly concerned with the influence of exogenous feedback mechanisms, this study considers the endogenous emergence of reputation through deliberate information sharing among actors and the role of barriers in hindering information exchange. Using a repeated investment game, we analyze the effects of competition and transfer costs on players’ willingness to share information with each other. While transfer costs are a direct cost of the information exchange, competition costs represent an indirect cost that arises when the transfer of valuable information to competitors comes at the loss of a competitive advantage. We show that barriers to information exchange not only affect the behavior of the senders of information, but also affect the ones about whom the information is shared. While the possibility of sharing information about others significantly improves trust and market efficiency, both competition and direct transfer costs diminish the positive effect by substantially reducing the level of information exchange. Players about whom the information is shared anticipate and react to the changes in the costs by behaving more or less cooperatively. For reputation building, an environment is needed that fosters the sharing of information. Reciprocity is key to understanding information exchange. Even when it is costly, information sharing is used as a way to sanction others. © 2020, The Author(s).
- ItemA network of networks perspective on global trade(San Francisco, CA : Public Library of Science (PLoS), 2015) Maluck, J.; Donner, R.V.
- ItemFiscal Consolidation Programs and Income Inequality(Malden, Mass. [u.a.] : Wiley-Blackwell, 2020) Brinca, Pedro; Ferreira, Miguel H.; Franco, Francesco; Holter, Hans A.; Malafry, LaurenceWe document a strong empirical relationship between higher income inequality and stronger recessive impacts of fiscal consolidation episodes across time and space. To explain this finding, we develop a life-cycle economy with uninsurable income risk. We calibrate our model to match key characteristics of several European economies, including inequality and fiscal structures, and study the effects of fiscal consolidation programs. In our model, higher income risk induces precautionary savings behavior, which decreases the proportion of credit-constrained agents in the economy. These agents have less elastic labor supply responses to fiscal consolidations, which explain the correlation with inequality in the data.
- ItemOptimal carbon taxation and horizontal equity: A welfare-theoretic approach with application to German household data(Amsterdam : Elsevier, 2022) Hänsel, Martin C.; Franks, Max; Kalkuhl, Matthias; Edenhofer, OttmarWe develop a model of optimal taxation and redistribution under an ambitious climate target. We take into account vertical income differences, but also explicitly capture horizontal equity concerns by considering heterogeneous energy efficiencies. By deriving first- and second-best rules for policy instruments including carbon and labor taxes, transfers and energy subsidies, we investigate analytically how vertical and horizontal inequality is considered in the welfare maximizing tax structure. We calibrate the model to German household data and a 30 percent emission reduction goal and show that redistribution of carbon tax revenues via household-specific transfers is the first-best policy. Under plausible assumptions on inequality aversion, transfers to energy-intensive households should be about five times higher than transfers to energy-efficient households. Equal per-capita transfers do not require to observe households’ efficiency type, but increase equity-weighted mitigation costs by around 5 percent compared to the first-best. Mitigation costs increase by less, if the government can implement a uniform clean energy subsidy or household-specific tax-subsidy schemes on energy consumption and labor income that target heterogeneous energy efficiencies. Horizontal equity concerns may therefore constitute a new second-best rationale for clean energy policies or differentiated energy taxes.
- ItemThe social cost of carbon and inequality: When local redistribution shapes global carbon prices(Amsterdam [u.a.] : Elsevier, 2021) Kornek, Ulrike; Klenert, David; Edenhofer, Ottmar; Fleurbaey, MarcThe social cost of carbon is a central metric for optimal carbon prices. Previous literature shows that inequality significantly influences the social cost of carbon, but mostly omits heterogeneity below the national level. We present an optimal taxation model of the social cost of carbon that accounts for inequality between and within countries. We find that climate and distributional policy can generally not be separated. If only one country does not compensate low-income households for disproportionate damages, the social cost of carbon tends to increase globally. Optimal carbon prices remain roughly unchanged if national redistribution leaves inequality between households unaffected by climate change and if the utility of households is approximately logarithmic in consumption.
- ItemThe impact of climate conditions on economic production. Evidence from a global panel of regions(Amsterdam [u.a.] : Elsevier, 2020) Kalkuhl, Matthias; Wenz, LeonieWe present a novel data set of subnational economic output, Gross Regional Product (GRP), for more than 1500 regions in 77 countries that allows us to empirically estimate historic climate impacts at different time scales. Employing annual panel models, long-difference regressions and cross-sectional regressions, we identify effects on productivity levels and productivity growth. We do not find evidence for permanent growth rate impacts but we find robust evidence that temperature affects productivity levels considerably. An increase in global mean surface temperature by about 3.5°C until the end of the century would reduce global output by 7–14% in 2100, with even higher damages in tropical and poor regions. Updating the DICE damage function with our estimates suggests that the social cost of carbon from temperature-induced productivity losses is on the order of 73–142$/tCO2 in 2020, rising to 92–181$/tCO2 in 2030. These numbers exclude non-market damages and damages from extreme weather events or sea-level rise. © 2020 The Authors
- ItemPigou in the 21st Century: a tribute on the occasion of the 100th anniversary of the publication of The Economics of Welfare(New York, NY : Springer Science + Business Media B.V., 2021) Edenhofer, Ottmar; Franks, Max; Kalkuhl, MatthiasThe year 2020 marks the centennial of the publication of Arthur Cecil Pigou’s magnum opus The Economics of Welfare. Pigou’s pricing principles have had an enduring influence on the academic debate, with a widespread consensus having emerged among economists that Pigouvian taxes or subsidies are theoretically desirable, but politically infeasible. In this article, we revisit Pigou’s contribution and argue that this consensus is somewhat spurious, particularly in two ways: (1) Economists are too quick to ignore the theoretical problems and subtleties that Pigouvian pricing still faces; (2) The wholesale skepticism concerning the political viability of Pigouvian pricing is at odds with its recent practical achievements. These two points are made by, first, outlining the theoretical and political challenges that include uncertainty about the social cost of carbon, the unclear relationship between the cost–benefit and cost-effectiveness approaches, distributional concerns, fragmented ministerial responsibilities, an unstable tax base, commitment problems, lack of acceptance and trust between government and citizens as well as incomplete international cooperation. Secondly, we discuss the recent political success of Pigouvian pricing, as evidenced by the German government’s 2019 climate policy reform and the EU’s Green Deal. We conclude by presenting a research agenda for addressing the remaining barriers that need to be overcome to make Pigouvian pricing a common political practice.
- ItemOpportunities and constraints of adopting market governance in protected areas in Central and Eastern Europe(Utrecht : Igitur, Utrecht Publishing and Archiving Services, 2013) Otto, I.M.; Chobotová, V.This article analyses the transition from the traditional hierarchical governance of natural resources in Central and Eastern Europe towards the new forms of market governance of protected areas, including the introduction of fees and compensation. Our conceptual framework suggests that markets can be effective in governing transactions that involve low asset specificity and low frequency of disturbances. However, the introduction of markets should be accompanied by appropriate rules of market organization that particularly regulate their monitoring and impose sanctions in cases of mismanagement. The analysis of market governance in Poland, the Czech Republic and Slovakia reveals that in the face of decreasing funding for biodiversity protection and state budgetary problems, markets are more a necessity than a means to improve resource management. Although markets should complement rather than substitute traditional forms of governance, for certain types of transactions, markets are useful. They can be effectively implemented, provided that property rights are recognized and legal settings that regulate the monitoring and enforcement of market rules are set up.