How political economies affect immigrants' socio-economic incorporation. A comparative analysis of immigrants’ poverty risks across advanced industrialised countries

Immigration and the resulting increasing ethnic diversity have become an important characteristic of advanced industrialised countries. At the same time, the majority of the countries in question are confronted with structural transformation such as deindustrialisation and changes in family structures as well as economic downturn, which limit the capacities of nation-states in addressing rising inequality and supporting those individuals at the margins of the society. This paper addresses both issues, immigration and inequality, by focusing on immigrants’ socio-economic incorporation into the receiving societies of advanced industrialised countries. The aim of this paper is to explain cross-national variation in immigrants’ poverty risks. Drawing on the political economy as well as the migration literature, the paper develops a theoretical framework that considers how the impact of the national labour market and welfare system on immigrants’ poverty risks is moderated by the integration policies, which regulate immigrants’ access to the labour market and social programs (or immigrants’ economic and social rights). The empirical analysis draws on income surveys as well as a newly collected data set on economic and social rights of immigrants in 19 advanced industrialised countries, including European countries as well as Australia, and North America, for the year 2007. As the results from multilevel analysis show, integration policies concerning immigrants’ access to the labour market and social programs can partly explain cross-national variations in immigrants’ poverty risks. In line with the hypothesis, stricter labour market regulations such as minimum wage setting reduce immigrants’ poverty risks stronger in countries where they are granted easier access to the labour market. However, concerning the impact of more generous social programs the reductive poverty effect is stronger in countries with less inclusive access of immigrants to social programs. The paper concludes by discussing possible explanations for this puzzling finding.

Labour Market Prospects of Swiss Career Entrants after Completion of Vocational Education and Training

This study seeks to find the reasons for the rising risk of unemployment for people who have completed basic vocational education and training (VET) in Switzerland. We focus on the long-term structural shift on the demand side of the labour market and its consequences for new entrants? chances of employment in the labour force. A detailed analysis of the development of vacancies for such ?career entrants? in the time period 2001 to 2011 suggests that neither a growing occupational mismatch nor a general shift in the level of education to the disadvantage of workers with vocational education can be made responsible for the rising unemployment of labour market entrants. Instead, the available evidence indicates that a diminishing part of the vacancies suited for VET graduates remains open to entrants because of the increasing job requirements with regard to work experience and further education. Basic vocational education and training alone is increasingly less a guarantee for a smooth entry into the working world.

Bargaining for power and information : an experimental and theoretical analysis of the interaction between institutions, externalities and adverse selection

Bargaining is the building block of many economic interactions, ranging from bilateral to multilateral encounters and from situations in which the actors are individuals to negotiations between firms or countries. In all these settings, economists have been intrigued for a long time by the fact that some projects, trades or agreements are not realized even though they are mutually beneficial. On the one hand, this has been explained by incomplete information. A firm may not be willing to offer a wage that is acceptable to a qualified worker, because it knows that there are also unqualified workers and cannot distinguish between the two types. This phenomenon is known as adverse selection. On the other hand, it has been argued that even with complete information, the presence of externalities may impede efficient outcomes. To see this, consider the example of climate change. If a subset of countries agrees to curb emissions, non-participant regions benefit from the signatories’ efforts without incurring costs. These free riding opportunities give rise to incentives to strategically improve ones bargaining power that work against the formation of a global agreement. This thesis is concerned with extending our understanding of both factors, adverse selection and externalities. The findings are based on empirical evidence from original laboratory experiments as well as game theoretic modeling. On a very general note, it is demonstrated that the institutions through which agents interact matter to a large extent. Insights are provided about which institutions we should expect to perform better than others, at least in terms of aggregate welfare. Chapters 1 and 2 focus on the problem of adverse selection. Effective operation of markets and other institutions often depends on good information transmission properties. In terms of the example introduced above, a firm is only willing to offer high wages if it receives enough positive signals about the worker’s quality during the application and wage bargaining process. In Chapter 1, it will be shown that repeated interaction coupled with time costs facilitates information transmission. By making the wage bargaining process costly for the worker, the firm is able to obtain more accurate information about the worker’s type. The cost could be pure time cost from delaying agreement or cost of effort arising from a multi-step interviewing process. In Chapter 2, I abstract from time cost and show that communication can play a similar role. The simple fact that a worker states to be of high quality may be informative. In Chapter 3, the focus is on a different source of inefficiency. Agents strive for bargaining power and thus may be motivated by incentives that are at odds with the socially efficient outcome. I have already mentioned the example of climate change. Other examples are coalitions within committees that are formed to secure voting power to block outcomes or groups that commit to different technological standards although a single standard would be optimal (e.g. the format war between HD and BlueRay). It will be shown that such inefficiencies are directly linked to the presence of externalities and a certain degree of irreversibility in actions. I now discuss the three articles in more detail. In Chapter 1, Olivier Bochet and I study a simple bilateral bargaining institution that eliminates trade failures arising from incomplete information. In this setting, a buyer makes offers to a seller in order to acquire a good. Whenever an offer is rejected by the seller, the buyer may submit a further offer. Bargaining is costly, because both parties suffer a (small) time cost after any rejection. The difficulties arise, because the good can be of low or high quality and the quality of the good is only known to the seller. Indeed, without the possibility to make repeated offers, it is too risky for the buyer to offer prices that allow for trade of high quality goods. When allowing for repeated offers, however, at equilibrium both types of goods trade with probability one. We provide an experimental test of these predictions. Buyers gather information about sellers using specific price offers and rates of trade are high, much as the model’s qualitative predictions. We also observe a persistent over-delay before trade occurs, and this mitigates efficiency substantially. Possible channels for over-delay are identified in the form of two behavioral assumptions missing from the standard model, loss aversion (buyers) and haggling (sellers), which reconcile the data with the theoretical predictions. Chapter 2 also studies adverse selection, but interaction between buyers and sellers now takes place within a market rather than isolated pairs. Remarkably, in a market it suffices to let agents communicate in a very simple manner to mitigate trade failures. The key insight is that better informed agents (sellers) are willing to truthfully reveal their private information, because by doing so they are able to reduce search frictions and attract more buyers. Behavior observed in the experimental sessions closely follows the theoretical predictions. As a consequence, costless and non-binding communication (cheap talk) significantly raises rates of trade and welfare. Previous experiments have documented that cheap talk alleviates inefficiencies due to asymmetric information. These findings are explained by pro-social preferences and lie aversion. I use appropriate control treatments to show that such consideration play only a minor role in our market. Instead, the experiment highlights the ability to organize markets as a new channel through which communication can facilitate trade in the presence of private information. In Chapter 3, I theoretically explore coalition formation via multilateral bargaining under complete information. The environment studied is extremely rich in the sense that the model allows for all kinds of externalities. This is achieved by using so-called partition functions, which pin down a coalitional worth for each possible coalition in each possible coalition structure. It is found that although binding agreements can be written, efficiency is not guaranteed, because the negotiation process is inherently non-cooperative. The prospects of cooperation are shown to crucially depend on i) the degree to which players can renegotiate and gradually build up agreements and ii) the absence of a certain type of externalities that can loosely be described as incentives to free ride. Moreover, the willingness to concede bargaining power is identified as a novel reason for gradualism. Another key contribution of the study is that it identifies a strong connection between the Core, one of the most important concepts in cooperative game theory, and the set of environments for which efficiency is attained even without renegotiation.

LCD vs. E-ink: An Analysis of the Reading Behavior

Electronic books (e-book) are an interesting option compared to classic paper books. Most e-reading devices of the first generation were based on e-ink technology. With the appearance of the Apple iPad on the market, TFT-LCDs became important in the field of e-reading. Both technologies have advantages and disadvantages but the question remains whether one or the other technology is better for reading. In the present study we analyzed and compared reading behavior when reading on e-inkreader (e-ink displays) and on tablets (TFT-LCDs) as measured by eye-tracking. The results suggest that the reading behavior on tablets is indeed very similar to the reading behavior on e-ink-reader. Participants showed no difference in fixation duration. Significant differences in reading speed and in the proportion of regressive saccades suggest that tablets, under special artificial light conditions, may even provide better legibility.

Torn between state and market: Private policy implementation and conflicting institutional logics

Policy implementation by private actors constitutes a “missing link” for understanding the implications of private governance. This paper proposes and assesses an institutional logics framework that combines a top-down, policy design approach with a bottom-up, implementation perspective on discretion. We argue that the conflicting institutional logics of the state and the market, in combination with differing degrees of goal ambiguity, accountability and hybridity play a crucial role for output performance. These arguments are analyzed based on a secondary analysis of seven case studies of private and hybrid policy implementation in diverging contexts. We find that aligning private output performance with public interests is at least partly a question of policy design congruence: private implementing actors tend to perform deficiently when the conflicting logics of the state and the market combine with weak accountability mechanisms.