PhD Lunch Seminars Amsterdam

Noémi Peter (University of Amsterdam) and Lukáš Tóth (University of Amsterdam)
Tuesday, 3 June 2014

Family and/or Career? The Effect of Sibling Sex Composition on Earnings, Education and Family formation
Noémi Peter (University of Amsterdam)

We examine how the gender of a sibling affects earnings, education and family formation. Identification of the effect is complicated because parental preferences for children’s sex composition can confound the analysis. We address this problem by using a sample of twins: in these cases, the two children are born at the same time, so parents cannot make decisions about the second-born twin based on the gender of the first-born twin. Since we are able to distinguish between monozygotic and dizygotic twins, we can ensure that the results are not led by zygosity differences between same-sex and opposite-sex twins. To the best of our knowledge, such a twin-based empirical approach is novel in the economics literature. We find that men with sisters earn less and are less likely to be married and have children. In case of women, effects are mainly on timing: women with sisters have kids earlier and obtain lower education, but there is not effect on their earnings after childbearing age. Joint with Petter Lundborg and Dinand Webbink.



Public Goods as a Compensation in Cartel Offenses
Lukáš Tóth (University of Amsterdam)

We study the conditions under which it is socially beneficial for a cartel to form if the cartelized firms are mandated to produce a public good as a compensation for consumers damaged by the price increase. We employ a standard private provision of public goods model with CES utility functions. Consumers with heterogeneous preferences can spend their wealth endowment on the private good produced by the (possibly) cartelized industry, the public good or on a composite commodity representing the remainder of the economy. We derive the level of cartel-produced public good necessary to make all consumers at least as well off as before the price increase. Such a compensation, that at the same time makes the cartel profitable, is less likely to exist if the heterogeneity of preferences for the public good is high, or if there exists a large initial provision of the public good by nature. If all consumers purchase the public good, wealth distribution does not matter. Differences in wealth endowments make a profitable compensation less likely to exist only if some consumers do not privately purchase the public good. While the firm provision of the public good can mitigate the freeriding problem, financing the public good through various means of taxation is more efficient. We compare the Nash equilibrium with the Lindahl equilibrium in order to assess the fairness of the allocation resulting from the cartel formation and the provided compensation. Cartel provision of the public good serves as an equalizing factor when wealth heterogeneity is high, but it is also much more favourable to the consumer who likes the public good relatively more. Joint with M.P. Schinkel.