Long-term effectiveness of supported employment: 5-year follow-up of a randomized controlled trial

Objective The individual placement and support model of supported employment has been shown to be more effective than other vocational approaches in improving competitive work over 1-2 years in persons with severe mental illness. The authors evaluated the longer-term effects of the model compared with traditional vocational rehabilitation over 5 years. Method A randomized controlled trial compared supported employment to traditional vocational rehabilitation in 100 unemployed persons with severe mental illness. Competitive work and hospital admissions were tracked for 5 years, and interviews were conducted at 2 and 5 years to assess recovery attitudes and quality of life. A cost-benefit analysis compared program and total treatment costs to earnings from competitive employment. Results The beneficial effects of supported employment on work at 2 years were sustained over the 5-year follow-up period. Participants in supported employment were more likely to obtain competitive work than those in traditional vocational rehabilitation (65% compared with 33%), worked more hours and weeks, earned more wages, and had longer job tenures. Reliance on supported employment services for retaining competitive work decreased from 2 years to 5 years for participants in supported employment. Participants were also significantly less likely to be hospitalized, had fewer psychiatric hospital admissions, and spent fewer days in the hospital. The social return on investment was higher for supported employment participants, whether calculated as the ratio of work earnings to vocational program costs or of work earnings to total vocational program and mental health treatment costs. Conclusions The results demonstrate that the greater effectiveness of supported employment in improving competitive work outcomes is sustained beyond 2 years and suggest that supported employment programs contribute to reduced hospitalizations and produce a higher social return on investment.

Reversal of gender differences in Educational Attainment – historical analysis of the West German Case

Background information: During the late 1970s and the early 1980s, West Germany witnessed a reversal of gender differences in educational attainment, as females began to outperform males. Purpose: The main objective was to analyse which processes were behind the reversal of gender differences in educational attainment after 1945. The theoretical reflections and empirical evidence presented for the US context by DiPrete and Buchmann (Gender-specific trends in the value of education and the emerging gender gap in college completion, Demography 43: 1–24, 2006) and Buchmann, DiPrete, and McDaniel (Gender inequalities in education, Annual Review of Sociology 34: 319–37, 2008) are considered and applied to the West German context. It is suggested that the reversal of gender differences is a consequence of the change in female educational decisions, which are mainly related to labour market opportunities and not, as sometimes assumed, a consequence of a ‘boy’s crisis’. Sample: Several databases, such as the German General Social Survey, the German Socio-economic Panel and the German Life History Study, are employed for the longitudinal analysis of the educational and occupational careers of birth cohorts born in the twentieth century. Design and methods: Changing patterns of eligibility for university studies are analysed for successive birth cohorts and gender. Binary logistic regressions are employed for the statistical modelling of the individuals’ achievement, educational decision and likelihood for social mobility – reporting average marginal effects (AME). Results: The empirical results suggest that women’s better school achievement being constant across cohorts does not contribute to the explanation of the reversal of gender differences in higher education attainment, but the increase of benefits for higher education explains the changing educational decisions of women regarding their transition to higher education. Conclusions: The outperformance of females compared with males in higher education might have been initialised by several social changes, including the expansion of public employment, the growing demand for highly qualified female workers in welfare and service areas, the increasing returns of women’s increased education and training, and the improved opportunities for combining family and work outside the home. The historical data show that, in terms of (married) women’s increased labour market opportunities and female life-cycle labour force participation, the raising rates of women’s enrolment in higher education were – among other reasons – partly explained by their rising access to service class positions across birth cohorts, and the rise of their educational returns in terms of wages and long-term employment.

Monopsony Power, Pay Structure and Training

Although interest in monopsonistic influences on labor market outcomes has revived in recent years, only a few empirical studies provide direct evidence on this topic. In this article, the authors analyze the effect of monopsony power on pay structure, using a direct measure of labor market thinness. The authors find evidence of monopsony power, as firms facing fewer local competitors offer lower wages to skilled labor and trainees, but not to unskilled labor. The findings have important implications for the economic theory of training, as most recent models assume monopsonistic pay-setting for skilled labor, but not for trainees.

Gonadotrophin stimulation for in vitro fertilization significantly alters the hormone milieu in follicular fluid: a comparative study between natural cycle IVF and conventional IVF.

STUDY QUESTION Is the steroid hormone profile in follicular fluid (FF) at the time of oocyte retrieval different in naturally matured follicles, as in natural cycle IVF (NC-IVF), compared with follicles stimulated with conventional gonadotrophin stimulated IVF (cIVF)? SUMMARY ANSWER Anti-Mullerian hormone (AMH), testosterone (T) and estradiol (E2) concentrations are ∼3-fold higher, androstenedione (A2) is ∼1.5-fold higher and luteinizing hormone (LH) is ∼14-fold higher in NC-IVF than in cIVF follicles, suggesting an alteration of the follicular metabolism in conventional gonadotrophin stimulated IVF. WHAT IS KNOWN ALREADY In conventional IVF, the implantation rate of unselected embryos appears to be lower than in NC-IVF, which is possibly due to negative effects of the stimulation regimen on follicular metabolism. In NC-IVF, the intrafollicular concentration of AMH has been shown to be positively correlated with the oocyte fertilization and implantation rates. Furthermore, androgen treatment seems to improve the ovarian response in low responders. STUDY DESIGN, SIZE, DURATION This cross-sectional study involving 36 NC-IVF and 40 cIVF cycles was performed from 2011 to 2013. Within this population, 13 women each underwent 1 NC-IVF and 1 cIVF cycle. cIVF was performed by controlled ovarian stimulation with HMG and GnRH antagonists. PARTICIPANTS/MATERIALS, SETTING, METHODS Follicular fluid was collected from the leading follicles. AMH, T, A2, dehydroepiandrosterone (DHEA), E2, FSH, LH and progesterone (P) were determined by immunoassays in 76 women. Aromatase activity in follicular fluid cells was analysed by a tritiated water release assay in 33 different women. For statistical analysis, the non-parametric Mann-Whitney U or Wilcoxon tests were used. MAIN RESULTS AND ROLE OF CHANCE In follicular fluid from NC-IVF and from cIVF, median levels were 32.8 and 10.7 pmol/l for AMH (P < 0.0001), 47.2 and 18.8 µmol/l for T (P < 0.0001), 290 and 206 nmol/l for A2 (P = 0.0035), 6.7 and 5.6 pg/ml for DHEA (n.s.), 3292 and 1225 nmol/l for E2 (P < 0.0001), 4.9 and 7.2 mU/ml for FSH (P < 0.05), 14.4 and 0.9 mU/ml for LH (P < 0.0001) and 62 940 and 54 710 nmol/l for P (n.s.), respectively. Significant differences in follicular fluid concentrations for AMH, E2 and LH were also found in the 13 patients who underwent both NC-IVF and cIVF when they were analysed separately in pairs. Hormone analysis in serum excluded any relevant impact of AMH, T, A2, and E2 serum concentration on the follicular fluid hormone concentrations. Median serum concentrations were 29.4 and 0.9 mU/ml for LH (P < 0.0001) and 2.7 and 23.5 nmol/l for P (P < 0.0001) after NC-IVF and c-IVF, respectively. Positive correlations were seen for FF-AMH with FF-T (r = 0.35, P = 0.0002), FF-T with FF-LH (r = 0.48, P < 0.0001) and FF-E2 with FF-T (r = 0.75, P < 0.0001). The analysis of aromatase activity was not different in NC-IVF and cIVF follicular cells. LIMITATION, REASONS FOR CAUTION Any association between the hormone concentrations and the implantation potential of the oocytes could not be investigated as the oocytes in cIVF were not treated individually in the IVF laboratory. Since both c-IVF and NC-IVF follicles were stimulated by hCG before retrieval, the endocrine milieu in the natural cycle does not represent the pure physiological situation. WIDER IMPLICATIONS OF THE FINDINGS The endocrine follicular milieu and the concentration of putative markers of oocyte quality, such as AMH, are significantly different in gonadotrophin-stimulated conventional IVF compared with natural cycle IVF. This could be a cause for the suggested lower oocyte quality in cIVF compared with naturally matured oocytes. The reasons for the reduced AMH concentration might be low serum and follicular fluid LH concentrations due to LH suppression, leading initially to low follicular androgen concentrations and then to low follicular AMH production. STUDY FUNDING/COMPETING INTERESTS Funding for this study was obtained from public universities (for salaries) and private industry (for consumables). Additionally, the study was supported by an unrestricted grant from MSD Merck Sharp & Dohme GmbH and IBSA Institut Biochimique SA. The authors are clinically involved in low-dose monofollicular stimulation and IVF therapies, using gonadotrophins from all gonadotrophin distributors on the Swiss market, including Institut Biochimique SA and MSD Merck Sharp & Dohme GmbH. Otherwise, the authors have no competing interests. TRIAL REGISTRATION NUMBER Not applicable.

Inequality in Income and Wealth in Switzerland from 1970 to 2010

The supposed rise of inequality in income and wealth is a much-discussed issue. Since in a number of industrialized countries a trend towards more inequality was observed over the last decades, it is often assumed that Switzerland has experienced a similar development. Yet, although a variety of studies exists that provide inequality estimates for the Swiss society at different points in time, no conclusive picture of the changes in inequality can be drawn from these studies. For example, recent estimates by the Swiss Federal Statistical Office indicate that – against expectations – inequality in disposable equivalent-incomes has not risen since the end of the 1990ies, whereas other studies indicate that earnings from employment – especially top salaries – have become more unequal. The reasons for the inconclusive picture are manifold. For example, trends might have been different for different income types and results might strongly depend on the quality of the used data. To close the knowledge gap in inequality research in Switzerland a new Swiss National Science Foundation project by the University of Bern and the Bern University of Applied Sciences has been started in 2013. Individual tax data from cantons will be analyzed along with aggregate data from the Swiss Federal Tax Administration, covering a period from the early 1970ies to the present. The goal is to gain a systematic overview of the development of inequality in income and wealth in Switzerland as a whole and within cantons, and to determine how changes can be explained. In our talk we will present first results from this project.

Three essays on prices and selection

Competitive Market Segmentation Abstract In a two-firm model where each firm sells a high-quality and a low-quality version of a product, customers differ with respect to their brand preferences and their attitudes towards quality. We show that the standard result of quality-independent markups crucially depends on the assumption that the customers' valuation of quality is identical across firms. Once we relax this assumption, competition across qualities leads to second-degree price discrimination. We find that markups on low-quality products are higher if consuming a low-quality product involves a firm-specific disutility. Likewise, markups on high-quality products are higher if consuming a high-quality product creates a firm-specific surplus. Selection upon Wage Posting Abstract We discuss a model of a job market where firms announce salaries. Thereupon, they decide through the evaluation of a productivity test whether to hire applicants. Candidates for a job are locked in once they have applied at a given employer. Hence, such a market exhibits a specific form of the bargain-then-ripoff principle. With a single firm, the outcome is efficient. Under competition, what might be called "positive selection" leads to market failure. Thus our model provides a rationale for very small employment probabilities in some sectors. Exclusivity Clauses: Enhancing Competition, Raising Prices Abstract In a setting where retailers and suppliers compete for each other by offering binding contracts, exclusivity clauses serve as a competitive device. As a result of these clauses, firms addressed by contracts only accept the most favorable deal. Thus the contract-issuing parties have to squeeze their final customers and transfer the surplus within the vertical supply chain. We elaborate to what extent the resulting allocation depends on the sequence of play and discuss the implications of a ban on exclusivity clauses.

Disparate Wages in a Globalized World

This study uses wage data from the UBS Prices and Earnings survey to highlight Disparate Wages in a Globalized World from di↵erent perspectives. This wage data is characterised by remarkable consistency over the last 40 years, as well as unusual global comparability. In the first chapter we analyse the convergence hypothesis for purchasing power adjusted wages across the world for 1970 to 2009. The results provide solid evidence for the hypotheses of absolute and conditional convergence in real wages, with the key driver being faster overall growing wage levels in lower wage countries compared to higher wage countries. At the same time, the highest skilled professions have experienced the highest wage growth, while low skilled workers’ wages have lagged, thus no convergence in this sense is found between skill groups. In the second chapter we examine deviations in international wages from Factor Price Equalisation theory (FPE). Following an approach analogous to Engel (1993) we find that deviations from FPE are more likely driven by the higher variability of wages between countries than by the variability of di↵erent wages within countries. With regard to the traditional analysis of the real exchange rate and the Balassa-Samuelson assumptions our analysis points to a larger impact on the real exchange rate likely stemming from the movements in the real exchange rate of tradables, and only to a lesser extent from the lack of equalisation of wages within countries. In the third chapter our results show that India’s economic and trade liberalisation, starting in the early 1990s, had very di↵erential impacts on skill premia, both over time and over skill levels. The most striking result is the large increase in wage inequality of high-skilled versus low-skilled professions. Both the synthetic control group method and the di↵erence-in-di↵erences (DID) approach suggest that a significant part of this increase in wage inequality can be attributed to India’s liberalisation.

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.

How specific is apprenticeship training? Evidence from inter-firm and occupational mobility after graduation

Do apprenticeships convey mainly general or also firm- and occupation-specific human capital? Specific human capital may allow for specialization gains, but may also lead to allocative inefficiency due to mobility barriers. We analyse the case of Switzerland, which combines a comprehensive, high-quality apprenticeship system with a lightly regulated labour market. To assess human capital transferability after standardized firm-based apprenticeship training, we analyse inter-firm and occupational mobility and their effects on post-training wages. Using a longitudinal data set based on the PISA 2000 survey, we find high inter-firm and low occupational mobility within one year after graduation. Accounting for endogenous changes, we find a negative effect of occupation changes on wages, but no significant wage effect for firm changes. This indicates that occupation-specific human capital is an important component of apprenticeship training and that skills are highly transferable within an occupational field.