Risky Business – The Role of Individual Risk Attitudes in Occupational Choice

This study analyzes the relationship of individual risk attitudes and occupational sorting with respect to occupational earnings risk. By using the German Mikrozensus, a precise measure for earnings risk is computed as the occupation-wide standard deviation of wages. Following the procedure proposed by Bonin (2007), this earnings risk measure is used as dependent variable in cross-sectional and panel data estimations using the SOEP data of 2004 and 2006, including a measure of the individual willingness to take risks. The significant relationship in cross-sectional analyses vanishes when controlling for unobserved heterogeneity. Cross-sectional results seem to be driven by the correlation of unobserved ability and willingness to take risks, and are potentially biased by an attenuation bias due to unstable risk preferences. This study contributes to the existing literature by showing the importance of controlling for unobserved heterogeneity and instability of attitudes when examing the effects of personality traits in labor market decisions.Risk attitudes; occupational sorting; earnings risk; mundlak transformation

Language and Labor Market Success

This article summarizes three different strands of the literature that address the labor market effects of language-related human capital. (1) A general importance is demonstrated in the empirical evidence on earnings and employment effects of literacy as the ability to productively use written information. Significant effects are found for developed and developing countries, leading on an aggregated macro level to a positive relationship between literacy and economic development. (2) The ongoing globalization leads to an increased demand for foreign language proficiency to reduce search and information costs and overcome cultural barriers in the trade of services and goods and tourism. Against the background of scarce skill supply, employers are willing to pay significant wage premia, especially for global and local lingua franca. (3) For international migrants, destination language skills display both a prerequisite for and outcome of successful integration. Investments into destination language skills are highly rewarded by wage returns and higher employment probabilities and act as the medium of translation to apply pre-migration human capital in the destination country labor market

What drives the language proficiency of immigrants?

Language proficiency is a key driver of immigrant integration. It increases job opportunities and facilitates social and political participation. However, despite its vital importance, many immigrants never reach adequate proficiency in the host country language. Therefore, insights into the underlying processes and associated factors are crucial for designing measures to improve language acquisition. Empirical evidence shows that immigrants differ in their ability to learn languages, in their experience of everyday language usage, and their incentives to learn host country languages. This offers a range of opportunities for public policy intervention

Big Fishes in Small Ponds: Ability Rank and Human Capital Investment

We study the impact of a student's ordinal rank in a high-school cohort on educational attainment several years later. To identify a causal effect, we compare multiple cohorts within the same school, exploiting exogenous variation in cohort composition. We nd that a student's ordinal rank in high-school signi cantly affects educational outcomes later in life. If two students with the same ability have a different rank in their respective cohort, the student with the higher rank is signi cantly more likely to nish high-school, to attend college, and to complete a 4-year college degree. These results suggest that students under- invest in their human capital if they have a low rank within their cohort even though they have a high ability compared to most students of the same age. Exploring potential channels, we nd that students with a higher rank have higher expectations about their future career, and feel that they are being treated more fairly by their teachers

A Big Fish in a Small Pond: Ability Rank and Human Capital Investment

We study the impact of a student's ordinal rank in a high school cohort on educational attainment several years later. To identify a causal effect, we compare multiple cohorts within the same school, exploiting idiosyncratic variation in cohort composition. We find that a student's ordinal rank significantly affects educational outcomes later in life. If two students with the same ability have a different rank in their respective cohort, the higher-ranked student is significantly more likely to finish high school, attend college, and complete a 4-year college degree. These results suggest that low-ranked students under-invest in their human capital even if they have a high ability compared to most students of the same age. Exploring potential channels, we find that students with a higher rank have higher expectations about their future career, a higher perceived intelligence, and receive more support from their teachers

Rank, Sex, Drugs, and Crime

In this paper we show that a student's ordinal rank in a high school cohort is an important determinant of engaging in risky behaviors. Using longitudinal data from representative US high schools, and exploiting idiosyncratic variation in the cohort composition within a school, we find a strong negative effect of a student's rank on the likelihood of smoking, drinking, having unprotected sex, and engaging in physical fights. We further provide suggestive evidence that these results are driven by status concerns and differences in career expectations

Linguistic Distance and the Language Fluency of Immigrants

We use a newly available measure of linguistic distance developed by the German Max Planck Institute for Evolutionary Anthropology to explain heterogeneity in language skills of immigrants. This measure is based on an automatical algorithm comparing pronunciation and vocabulary of language pairs. Using data from the German Socio-Economic Panel covering the period from 1997 to 2003, the linguistic distance measure is applied within a human capital framework of language acquisition. It is shown that linguistic distance is the most important determinant for host country language acquisition and that it explains a large fraction of language skill heterogeneity between immigrants. By lowering the effi ciency and imposing higher costs of language learning, the probability of reporting good language skills is decreasing by increasing linguistic distance.Zur Analyse der Heterogenität in den Sprachfähigkeiten von Immigranten wird ein neues Maß zur Messung der linguistischen Distanz von Sprachen verwendet, das auf einem vom Max-Planck-Institut für evolutionäre Anthropologie entwickelten Verfahren basiert. Zur Berechnung des Maßes wird ein automatischer Algorithmus verwendet, der die Aussprache von Wörtern innerhalb von Sprachpaaren vergleicht. Für die Untersuchung wird das Maß der linguistischen Distanz in den Rahmen eines Humankapital-Ansatzes zur Erlangung von Sprachfähigkeiten integriert und unter Verwendung von Daten des deutschen Sozio-Ökonomischen Panels für die Jahre 1997-2003 empirisch analysiert. Es wird gezeigt, dass die linguistische Distanz zwischen der Muttersprache und der Sprache im Einwanderungsland die wichtigste Determinante zur Erlangung von Sprachkenntnissen darstellt und ein großer Anteil der Heterogenität in der Sprachfähigkeit von Immigranten durch die linguistische Distanz zwischen der Sprache des Heimatlandes und des Gastlandes erklärt werden kann. Durch eine Erhöhung der linguistischen Distanz steigen der Schwierigkeitsgrad und damit verbunden auch die Kosten des Spracherwerbs. Dies hat zur Folge, dass die Wahrscheinlichkeit, gute Sprachkenntnisse in der jeweiligen Landessprache zu besitzen, mit zunehmender linguistischer Distanz signifikant abnimmt

Language Barriers and Immigrant Health Production

We study the impact of language deficiency on the health production of childhood migrants to Australia. Our identification strategy relies on a quasi-experiment comparing immigrants arriving at different ages and from different linguistic origins by utilising a measure of differences along a continuous range of linguistic distances. Our main results indicate a large negative effect of English deficiency on physical health that is robust to a range of different specifications. In the presence of considerable non-classical measurement error in self-reported language proficiency, our results provide lower and upper bounds for the true effect of English deficiency on health of one half and a full standard deviation in the health score respectively. The empirical analysis is framed in terms of a Grossman model which indicates a twofold role of language skills in health production: language deficiency directly affects the efficiency of health production and indirectly affects access to health inputs. We provide some suggestive evidence on the relative importance of these distinct roles

Minority Salience and Political Extremism

This paper studies electoral effects of exposure to religious minorities in the context of Muslim communities in Germany. Using unique data on mosques' construction and election results across municipalities over the period 1980-2013, we find that the presence of a mosque increases political extremism. To establish causality, we exploit arguably exogenous variation in the distance of the election date to the month of Ramadan, when Muslim communities become more visible to the general public. Our findings show that vote shares for both right- and left-wing extremist parties become larger when the election date is closer to Ramadan. We additionally show that the change in minority salience also increases the likelihood of politically motivated crimes against Muslims

Linguistic Structures and Economic Outcomes

Linguistic structures have recently started to attract attention from economists as determinants of economic phenomena. This paper provides the first comprehensive review of this nascent literature and its achievements so far. First, we explore the complex connections between language, culture, thought and behaviour. Then, we summarize the empirical evidence on the relationship between linguistic structures and economic and social outcomes. We follow up with a discussion of data, empirical design and identification. The paper concludes by discussing implications for future research and policy