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briq is part of the University Bonn’s new cluster of excellence

Euphoric excitement in Bonn last week: With six “Clusters of Excellence” to receive funding under the Excellence Strategy of the German federal and state governments, the University of Bonn is the most successful university in Germany.

In total, 57 cluster initiatives received funding commitments of up to ten million euros per year for an initial period of seven years. The cluster “ECONtribute: Markets and Public Policy” – a joint initiative of the Universities of Bonn and Cologne, briq, and the MPI Collective Goods – is the only predominantly economics-focused application that made it into the second round of the Excellence Strategy.

The researchers, including briq CEO Armin Falk as one of the principal investigators, aim to analyze the causes and policy implications of market failure. Combining theoretical with behavioral approaches, the cluster will seek answers to important policy-relevant questions such as the following:

  • How do you measure and deal with market power in the digital age when many offers are virtually free of charge but paid for by the provision of data?
  • What are the consequences for consumer protection?
  • How do preferences for fairness or justice influence the design of minimum wages or inheritance taxes?
  • Can (and should) individuals be “nudged” into behavior to their own benefit?

“Our research at briq on the foundations of decision-making, behavioral applications to public and labor economics, the study of discrimination and the malleability of moral behavior perfectly fit the cluster’s research plan. We look forward to contributing our expertise,” said Armin Falk.

Learning about job search

Brochure for job seekers

To investigate how information provision affects job seekers’ employment prospects and labor market outcomes, Steffen Altmann (University of Copenhagen), Armin Falk (briq and University of Bonn), Simon Jäger (MIT) and Florian Zimmermann (briq and University of Bonn) conducted a large-scale field experiment in the German labor market.

Individuals assigned to the treatment group of the experiment received a brochure that informed them about job search strategies and the consequences of unemployment, and motivated them to actively look for new employment.

The authors studied the causal impact of the brochure by comparing labor market outcomes of treated and untreated job seekers in administrative data containing comprehensive information on individuals’ employment status and earnings.

While the treatment yields overall positive effects, these tend to be concentrated among job seekers who are at risk of being unemployed for an extended period of time. Specifically, the treatment effects in the overall sample are moderately positive but mostly insignificant.

At the same time, the researchers do observe pronounced and statistically significant effects for individuals who exhibit an increased risk of long-term unemployment. For this group, the brochure increases employment and earnings in the year after the intervention by roughly 4%.

Given the low cost of the intervention, our findings indicate that targeted information provision can be a highly effective policy tool in the labor market, the authors conclude.

[Read the press release in German]