Authors: Carsten Hefeker and Michael Neugart
Abstract: We develop a model to analyze policymakers’ incentives to install policy rules, comparing the case of no rule with a binding and a contingent policy rule that allows policymakers to suspend the rule in response to a sufficiently large shock. First, abstracting from political polarization, we show that the choice of the policy rule depends on policymakers’ policy targets. Depending on the policy target, there is an unambiguous ranking going from a no-rule regime to a contingent rule to a binding rule. Next, allowing for political polarization, the incentive to install the different types of rules changes with political polarization between different policymakers and their probability of being elected into office. Increasing political polarization when there is a sufficiently high election probability for policymakers with a high policy target increases the preference for more binding policy rules. It also leads to stricter rules in a contingent rule regime.
Authors: Darius Griebenow, Jens J. Krüger, and Michael Neugart
Abstract: When setting up the world's largest emission trading system to combat carbon dioxide pollution, European policymakers were facing strong pressure to supply industry with free allocations of emission allowances. This has led to the issue of over-allocation of allowances with, however, limited evidence to which extent this over-allocation occurred. After all, measuring the extent of over-allocation properly requires the construction of a meaningful counter-factual. We propose an approach which exploits a policy change in the allocation of allowances in 2013, when the third phase of the European Emissions Trading System (ETS) started. From then onward, electricity producers were not granted free allowances anymore, in contrast to all other installations which were endowed with allowances. By comparing these groups, we attempt to assess how installations would have behaved in Phase 3, had they still received free allowances as the comparison group did. Compared to Phase 2, electricity producers in Phase 3 were, on average, holding 505804 allowances less. This change in stocks is driven by the policy-induced reduction in the free allowances, while no change can be observed in purchases, sales, and carbon dioxide emissions.
Sponsored by the Federal Ministry of Education and Research
Digital Green Tech funding measure – environmental technology meets digitalization. Duration: 9/2023 to 9/2025.
Short summary: Water management in Germany is neither resource-efficient nor does it meet needs as needed: drought leads to supply gaps, operation is not energy-optimal and there are pipe losses. New, flexible, resource-saving (resources: water, energy, money), but also comprehensible operating strategies are necessary. Although data-based methods of artificial intelligence and heuristic approaches hold considerable potential, questions arise immediately regarding the availability of the necessary data as well as the traceability and transparency of the approaches. These are the reason for the approval trap of autonomous systems. However, if market economy mechanisms are used, with adequate market design, the market's inherent resource and allocation efficiency can be used to achieve comprehensible, resource-efficient and needs-based operating strategies.
Project partners: Michael Neugart, Peter Pelz, Rolf Findeisen, Wilo SE, RheinEnergie
Authors: Herbert Dawid, Philipp Harting, and Michael Neugart
Abstract: We study how the use of machine-learning based algorithms for the determination of wage offers affects workers’ wages on online labor platforms. Firms use reinforcement-learning to update posted wages on the platform, and heterogeneous workers send applications based on the posted information. We show that if firms use a deep Q-network (DQN), as an example of a state-of-the-art machine learning algorithm, the emerging wages closely resemble the equilibrium outcome. However, slightly changing the setup of the algorithms can lead to substantial collusion and wages well below the equilibrium level. In particular, we identify a specific property of the algorithms, namely whether experience replay is used, which determines whether collusion occurs or not. Our findings are robust with respect to many features of the model, including the design of the online labor platform.
Author: Michael Neugart
Abstract: This paper brings individual level evidence to the hypothesis that women holding political offices affects mass mobilization. With a regression discontinuity design, I analyze the effect of close victories of directly elected female candidates in mixed-gender races at the federal elections in Germany in 2013 on individuals' decisions to turnout at the federal elections in Germany in 2017. In contrast to previous studies, when analyzing the effects of women in important political positions on turnout, mediating channels such as changes in the pool of candidates and policy implications for voters after a close victory of a female candidate are taken into account. The results indicate no effect of women winning a close electoral race on female turnout in the future. These findings hold even when considering intermediate and possibly compensating channels affecting turnout.
Authors: Michael Neugart and Anna Zaharieva
Abstract: Empirical studies show that female workers are under-represented in highest hierarchical positions of companies, which is known as the glass-ceiling effect. In this study we investigate the relationship between social networks and the glass-ceiling effect. Specifically, we develop an equilibrium search and matching model where job ladders consist of three hierarchical levels and social networks are generated endogenously. Male and female workers move up in the hierarchical ladder via job-to-job transitions between firms and internal promotions within firms. They also accumulate experience which is a necessary requirement for applying to jobs in the highest hierarchical level. Open vacancies can be filled by formal matching of applicants to jobs or by referrals, which implies that senior workers recommend their social contacts for the job. Social networks exhibit gender homophily, which reflects the fact that social ties are more likely to be formed between workers of the same gender. In a setting when female workers are the minority, there are too few female contacts in the social networks of their male colleagues. This disadvantage implies that female workers are refereed less often for the jobs and under-represented in senior hierarchical positions of firms. We show that referrals via homophilous social networks can explain part of the total wage gap stemming from the glass-ceiling effect in Germany (6.4%). This mechanism is amplified by more hierarchical firm structures, stronger clustering of social networks, and earlier promotion times.
