On occasion of German Reunification Day: New Article on “Children of the Wall”

https://pixabay.com/en/germany-flag-hand-national-fingers-664894Today marks the 25th anniversary of German reunification. The signing of the German unification treaty had set in stone what Germans had not expected, but long desired: the unity of the German people. At the time, former German Chancellor Willy Brandt marked the iconic words: “Now what belongs together will grow together”. For this statement to become true, Germany had to make unprecedented efforts with regards to institutional, economic and societal unification. Especially in East Germany, the transition from a socialist planned economy to a free market economy had profound implications for the labor market and affected every aspect of life. Over the last ten years, the IZA has accompanied this process with various economic studies. One of the most recent contributions is a study by Arnaud Chevalier and Olivier Marie, to be published in the Journal of Political Economy, which analyses the effects of the ‘fertility shock’ that followed the fall of the Berlin wall.

Of the many areas that were affected by the collapse of the German Democratic Republic (GDR), demography was probably one of the least regarded. But the demographic ramifications were profound: Following the collapse of the Communist regimes, fertility in Eastern Germany dropped by 50% in the first three years, which has been described by demographers as the most substantial fall in birth rates that ever occurred in peacetime. For the IZA researchers, this provided a unique “natural experiment” that could be used for their study. In a first step Arnaud Chevalier and Olivier Marie sought to find out, which part of the population decided against parenthood in the wake of the GDR’s collapse. Next, they wanted to better understand the link between the fertility decision and the future developments of these ‘Children of the Wall’ (children born in East Germany between 1991 and 1993).

They found out that women, who gave birth during this period of economic and political uncertainties were on average younger, less educated, and more likely to be unmarried mothers. These are typical traits associated with lower “parental skills”, which lead their children to display worse outcomes on various socio-economic measures, including criminal participation. In their paper, Chevalier and Marie show that the offending behavior of the ‘Children of the Wall’ is much worse than could be expected. From age eight onwards, they exhibit arrest rates at least 50 percent higher than comparable peers. They explain this with the fact that parents who decided to have children amid the uncertainty of the GDR collapse were much worse in building up strong personal bonds to their children. At age 17, Children of the Wall are relatively similar to their peers in terms of broad educational attainment measures, but they report significantly worse emotional relationships with their parents. Chevalier and Marie also considered the risk attitude of mothers and children, which may have a strong impact on both fertility and offending decisions. They found that the women who gave birth just after the end of Communism in East Germany are much more willing to take risk and this is also true for their children. The findings of their study fit well with recent evidence on inter-generational risk attitude transmission and form perhaps one of the crucial pieces in understanding the fertility-crime relationship puzzle.

Beyond demography, IZA research on German reunification has mostly focused on the labor market consequences of the transition process. Ten years after unification, Holger Bonin and Klaus F. Zimmermann critically reviewed the effectiveness of labor market policies and job creation and training programs. In 2002, Paul Frijters, John P. Haisken-DeNew and Michael A. Shields touched upon the sensitive issue of East German welfare expectations after reunification and found that East Germans significantly over-estimated the welfare gains in the newly united German State. Axel Heitmueller and Kostas G. Mavromaras analyzed, how public and private pay in Germany developed in the 1990s, finding that wage convergence took place only in the public sector, while a pay gap between East and West remained in the private sector. In 2006 Dennis J. Snower and Christian Merkl provided a sober assessment of the East German labor market, suggesting that some of the problems have been aggravated by various well-intentioned forms of “care”, such as support in bargaining, unemployment benefits and job security provisions. The question of life satisfaction after unification was tackled several times by the IZA research community. The 2006 study by Richard A. Easterlin and Anke C. Zimmermann provides a detailed account of the wellbeing of different demographic groups in both East and West Germany. Differences in life satisfaction between east and west remain until today: This year’s paper by Christian Pfeifer and Inna Petrunyk reports that on average life satisfaction remains lower in the East, but the East-West gap continues to decrease for younger birth cohorts.

Read these selected IZA Discussion Papers on German Reunification:

Image Source: Pixabay
Posted in Research | Tagged , , , , , , , , , , | Leave a comment

Street prostitution zones make cities safer

prostitutionDesignated zones for street prostitution have reduce crime in the Netherlands. Data from 1994-2011 for Dutch cities show a decrease in registered sexual abuse and rape by up to 40% in the first two years after introduction of prostitution zones. While perceived crime also dropped, positive long-term effects are only reported for prostitution zones that included a licensing system. These are the findings of an IZA paper by Paul Bisschop, Stephen Kastoryano, and Bas van der Klaauw.

In the Netherlands, the first legal street prostitution zones were opened in the early 1980s to deal with residents’ complaints and to improve the safety and health conditions of prostitutes. These so-called “tippelzones” – derived from tippelen, the Dutch word for street walking – are designated zones in which soliciting and purchasing sex is tolerated between strict opening and closing hours at night. Some zones are regulated further, requiring prostitutes to acquire licenses for practicing their profession. Since illegal prostitution is known to be related to international trafficking organizations and other forms of crime, the authors examined whether tippelzones had an effect on actual and perceived crime.

Decrease in registered and perceived crime

Using data from the Dutch Ministry of Justice on registered crime in the 25 largest Dutch municipalities, the authors were able to prove a connection between regulation of prostitution and crime. Once a street prostitution zone was opened, regardless of licensing practice, sexual abuse and rape decreased by 30% to 40% in the first two years. In cities that enforced licensed tippelzones from the start, registered drug crime dropped by 25%.

Perceived crime was also affected by the opening of tippelzones. According to data from the Population Police Monitor for the period of 1993 until 2006, residents of prostitution zones reported an increase in drug nuisance of over 5% in the first two years after opening. However, the further people lived away from the zones, the less they complained about drug crime in their neighborhood. In the long term, city-wide positive effects on perceived crime could only be reported in prostitution zones that included a licensing system.

Connection between prostitution and drug offenses

The findings suggest that the market for sex is connected to drug crime and sexual violence. Many prostitutes are illegal residents, which makes them more vulnerable to sexual violence and abuse, while drug use by prostitutes and clients attracts people in the drug trade. By establishing a designated zone, where prostitution is legally tolerated, municipal governments can deprive criminals of an important coordination hub. At the same time, the health and safety of sex workers is improved. Street prostitution zones usually provide resting quarters with washing facilities, clean needles, local medical assistance and a safer working environment.

Even after 30 years, tippelzones remain controversial in the Netherlands. Critics argue that they promote prostitution and encourage human trafficking, while residents of the zones complain about drug crime at their doorsteps. Public acceptance depends largely on the knowledge about the positive effects. The IZA paper is the first empirical study on the spillover effects of regulating street prostitutes on crime.

Download the complete paper (IZA DP No. 9038):

Posted in Research | Tagged , , , , , , , , , , , | Leave a comment

Do case workers really help the unemployed? Interview with Michael Rosholm

rosholmUnemployment in Europe, particularly among young people, has risen dramatically during the Great Recession. This has put a lot of pressure on job center employees and their clients, with instances of violent attacks making headlines. We wanted to know how well the case-worker approach works when compared to other active labor market policies. IZA fellow Michael Rosholm (Aarhus University), an expert on youth unemployment and active labor market policies, answered our questions. He recently authored an IZA World of Labor article on case workers.

Case workers in job centers are not immensely popular among the unemployed, especially when it comes to sanctions. How successful are they really at bringing people back into employment?

Michael Rosholm: Well, quite successful in fact. There is quite a bit of evidence suggesting that when case workers attend meetings with unemployed workers, they tend to find jobs faster. This is probably due to the fact that the unemployed are often inexperienced at job search, since, fortunately, it is typically not an event occurring often in a person’s labor market career. Therefore, they can use all the job search assistance they can get from the case workers. Case workers can provide information on the state of various segments of the labor market, point to specific jobs even, and provide general advice on effective methods of job search.

Continue reading

Posted in Research | Tagged , , , , | Leave a comment

Can gender differences in computer use explain why boys do worse in school than girls?

computer boy schoolBoys perform worse in school than girls, which has been dubbed the “Boy Crisis”. An analysis of the latest data on educational outcomes among boys and girls reveals extensive disparities in grades, reading and writing test scores, and other measurable educational outcomes, and these disparities exist across family resources and race.

Focusing on disadvantaged schoolchildren, a new IZA paper by Robert Fairlie (University of California, Santa Cruz) examines whether time investments made by boys and girls related to computer use contribute to the gender gap in academic achievement. Data from several sources indicate that boys are less likely to use computers for schoolwork. Boys are more likely to use computers for playing games, but less likely than girls to use computers for social networking and e-mail.

Continue reading

Posted in Research | Tagged , , , , , , , , , , , , , | Comments Off on Can gender differences in computer use explain why boys do worse in school than girls?

Economic activity and the spread of viral diseases

virusesViruses are a major threat to human health. Over the last century, they were responsible for many more deaths than all armed conflicts that took place during that period. From an economic point of view, virus-induced sicknesses hinder economic activity and impose huge costs on society through premature deaths, hospitalization and loss of productivity. But vice versa, economic activity influences the spread of viruses, by increasing interpersonal contacts and social interaction.

In a new IZA discussion paper, Jérôme Adda (Bocconi University) addresses such unintended consequences of economic activity on the spread of infections, and whether counter-measures that limit interpersonal contacts are cost-effective methods to prevent the spread of viruses through social interaction.

Continue reading

Posted in Research | Tagged , , , , , , , , | Comments Off on Economic activity and the spread of viral diseases

What is the cost of falling victim to violent crime?

crime1Violent crimes, be it physical and sexual assault, robbery or homicide, unfortunately are still common in any society. From an economic point of view, being a victim to a violent crime imposes significant direct monetary costs (through forgone wages and medical care) and intangible indirect costs associated with pain, psychological distress, and a decrease in quality of life. These indirect costs are potentially severe and occurring for a long period. Still, putting a number on these costs is methodologically challenging.

David W. Johnston, Michael A. Shields and Agne Suziedelyte of Monash University, Melbourne, attempt to estimate the impact of violent crime victimization on well-being and to calculate the amount of required compensation. Using Australian survey data, they compare individuals before and after they experienced a violent crime and observe how the victimization is related to drops in self-reported satisfaction with one’s life. Comparing this drop in life satisfaction with correlations between income and life satisfaction then allows the authors to come up with a monetary valuation of being victimized.

Continue reading

Posted in Research | Tagged , , , , , , , , | Comments Off on What is the cost of falling victim to violent crime?

IZA Fellow Uwe Sunde wins prestigious Gossen Prize

The Verein für Socialpolitik (VfS), the association of German-speaking economists, has awarded this year’s Gossen Prize to Uwe Sunde. The decision of the prize committee was announced during the VfS annual meeting in Münster this week.


Uwe Sunde at IZA

Uwe Sunde is currently Professor of Economics at his alma mater, the University of Munich. He became affiliated with IZA in the fall of 1998 and enrolled in the European Doctoral Program. Supervised by IZA Director Klaus F. Zimmermann, he spent one year each of his doctoral studies at the Bonn Graduate School of Economics and Universitat Pompeu Fabra in Barcelona. After obtaining his habilitation from the University of Bonn in 2008, he held a chair in macroeconomics at the University of St. Gallen until 2012.

Continue reading

Posted in IZA News | Tagged , , , | Comments Off on IZA Fellow Uwe Sunde wins prestigious Gossen Prize