BackgroundTraumatization in childhood can result in lifelong health impairment and may have a negative impact on other areas of life such as education, social contacts and employment as well. Despite the frequent occurrence of traumatization, which is reflected in a 14.5 percent prevalence rate of severe child abuse and neglect, the economic burden of the consequences is hardly known. The objective of this prevalence-based cost-of-illness study is to show how impairment of the individual is reflected in economic trauma follow-up costs borne by society as a whole in Germany and to compare the results with other countries’ costs.MethodsFrom a societal perspective trauma follow-up costs were estimated using a bottom-up approach. The literature-based prevalence rate includes emotional, physical and sexual abuse as well as physical and emotional neglect in Germany. Costs are derived from individual case scenarios of child endangerment presented in a German cost-benefit-analysis. A comparison with trauma follow-up costs in Australia, Canada and the USA is based on purchasing power parity.ResultsThe annual trauma follow-up costs total to a margin of EUR 11.1 billion for the lower bound and to EUR 29.8 billion for the upper bound. This equals EUR 134.84 and EUR 363.58, respectively, per capita for the German population. These results conform to the ones obtained from cost studies conducted in Australia (lower bound) and Canada (upper bound), whereas the result for the United States is much lower.ConclusionChild abuse and neglect result in trauma follow-up costs of economically relevant magnitude for the German society. Although the result is well in line with other countries’ costs, the general lack of data should be fought in order to enable more detailed future studies. Creating a reliable cost data basis in the first place can pave the way for long-term cost savings.

No abstract

Background: Traumatization in childhood can result in lifelong health impairment and may have a negative impact on other areas of life such as education, social contacts and employment as well. Despite the frequent occurrence of traumatization, which is reflected in a 14.5 percent prevalence rate of severe child abuse and neglect, the economic burden of the consequences is hardly known. The objective of this prevalence-based cost-of-illness study is to show how impairment of the individual is reflected in economic trauma follow-up costs borne by society as a whole in Germany and to compare the results with other countries' costs. Methods: From a societal perspective trauma follow-up costs were estimated using a bottom-up approach. The literature-based prevalence rate includes emotional, physical and sexual abuse as well as physical and emotional neglect in Germany. Costs are derived from individual case scenarios of child endangerment presented in a German cost-benefit-analysis. A comparison with trauma follow-up costs in Australia, Canada and the USA is based on purchasing power parity. Results: The annual trauma follow-up costs total to a margin of EUR 11.1 billion for the lower bound and to EUR 29.8 billion for the upper bound. This equals EUR 134.84 and EUR 363.58, respectively, per capita for the German population. These results conform to the ones obtained from cost studies conducted in Australia (lower bound) and Canada (upper bound), whereas the result for the United States is much lower.

If the future market wage is uncertain, engaging in long‐term employment is risky, with the risk depending on how regulated the labor market is. In our experiment long‐term employment can result either from offering long‐term contracts or from repeatedly and mutually opting for rematching. Treatments differ in how regulations restrict the employer's flexibility in adapting the employment contract. All treatments allow for longer contract duration as well as for mutually opting to be rematched. Effort is chosen by employees after a contract is concluded. Treatments vary from no contract flexibility to no restriction at all. Will more (downward) flexibility be used in ongoing employment but reduce labor market efficiency? And will regulation crowd out long‐term employment, in the form of long‐term contracts or voluntary rematching? (JEL C72, C90, F16, J21, J24, L10)

Facing a stochastic market wage, which is independent of their own hiring policy, employers offer contracts specifying fixed wage, revenue share and employment duration. In ongoing employment relations it depends on the treatment whether fixed wages can be only increased or also decreased. Will the uncertainty of the future market wage and less wage flexibility lead to temporary employment? And, if not, will employers adjust wages to changing market wages and will workers in ongoing employment relations react to wage decreases via effort choices? Our results partly question empirical claims, e.g. of Bewley (1995), and confirm the tendency to establish ongoing employment relations. Granting more wage flexibility to employers altogether questions rather than enhances efficiency since it induces opportunistic wage cuts to which employees react with lower efforts.JEL classification: C72, C90, F16, J21, J24, L10