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on Microeconomic European Issues |
| By: | Johannes Geyer; Peter Haan; Katharina Wrohlich |
| Abstract: | Parental leave and subsidized child care are prominent examples of family policies supporting the reconciliation of family life and labor market careers for mothers. In this paper, we combine different empirical strategies to evaluate the employment effects of these policies for mothers in Germany. In particular we estimate a structural labor supply model and exploit a natural experiment, i.e. the reform of parental leave benefits. By exploiting and combining the advantages of the different methods, i.e the internal validity of the natural experiment and the external validity of the structural model, we can go beyond evaluation studies restricted to one particular methodology. Our findings suggest that a combination of parental leave benefits and subsidized child care leads to sizable employment effects of mothers.Keywords: labor supply, parental leave benefits, childcare costs, structural model, natural experiment |
| JEL: | H31 J22 C52 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp645&r=eur |
| By: | Ciżkowicz, Piotr; Kowalczuk, Michał; Rzońca, Andrzej |
| Abstract: | We identify determinants of large disparities in local unemployment rates in Poland using panel data on NUTS-4 level (poviats). We find that the disparities are linked to local demographics, education and sectoral employment composition rather than to local demand factors. However, the impact of determinants is not homogenous across poviats. Where unemployment is low or income per capita is high, unemployment does not depend on the late working-aged share in the population but does depend relatively stronger on the share of early working-aged. Where unemployment is high or income per capita is low, unemployment does not depend on education attainment and is relatively less responsive to investment fluctuations. Where small farms are present, they are partial absorbers of workers laid off due to investment fluctuations. |
| Keywords: | local unemployment, Poland, panel data |
| JEL: | C23 J23 R23 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:56858&r=eur |
| By: | Nabila Arfaoui (University of Nice Sophia Antipolis, France; GREDEG CNRS) |
| Abstract: | Numerous theoretical and empirical studies show a positive correlation between eco-innovation and environmental regulation. However, very few analyses explain how environmental policies drive eco-innovation. This paper tries to fill this gap by studying eco-innovation-friendly mechanisms in the way the European REACH (Registration, Evaluation, Authorization and restriction of Chemicals) regulation has been designed. The aim of REACH, which entered into force in 2007 is "to ensure a high level of protection of human health and the environment while improving competitiveness and innovation", which makes it an appropriate subject for analysis of the relation between regulation and eco-innovation. The study uses data from a unique original survey, which identifies innovation-friendly mechanisms in relation with the push/pull effect of regulation on environmental innovations. Our results show that extended responsibility of producers has a positive impact to "pull demand" toward environmental innovation. Moreover the obligation to exchange information along the supply chain and the process of authorization play an important role to “push” environmental innovation. |
| Keywords: | Eco-innovation, REACH, Regulatory Push/Pull effect, Econometric modeling |
| JEL: | Q55 Q58 C51 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2014-19&r=eur |
| By: | DiMaria, Charles Henri; Peroni, Chiara; Sarracino, Francesco |
| Abstract: | This article is about the link between people’s subjective well-being, defined as an evaluation of one’s own life, and productivity. Our aim is to test the hypothesis that subjective well-being contributes to productivity using a two step approach: first, we establish whether subjective well-being can be a candidate variable to study Total Factor Productivity; second, we assess how much subjective well-being contributes to productivity at aggregate level through efficiency gains. We adopt Data Envelopment Analysis to compute total factor productivity and efficiency indices using European Social Survey and AMECO data for 20 European countries. Results show that subjective well-being is an input and not an output to production. |
| Keywords: | productivity, subjective well-being, TFP, efficiency gains, life satisfaction, economic growth, DEA. |
| JEL: | E23 I31 O47 |
| Date: | 2014–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:56983&r=eur |
| By: | Louis-Gaëtan Giraudet (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - AgroParisTech); D. Finon (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - AgroParisTech) |
| Abstract: | White certificate obligations impose energy savings targets on energy companies and allow them to trade energy savings certificates. They can be seen as a means of internalizing energy-use externalities and addressing energy efficiency market failures. This paper reviews existing evaluations of experiences with white certificate obligations in Great Britain, Italy and France. Ex ante microeconomic analysis find that the obligation is best modelled as a hybrid subsidy-tax instrument, whereby energy companies subsidize energy efficiency and pass-through the subsidy cost onto energy prices. Ex post static efficiency assessments find largely positive benefit-cost balances, with national differences reflecting heterogeneity in technical potentials. Compliance involved little trading between obligated parties. Whether the cost borne by obligated parties was recovered through increased energy revenue could not be ascertained. Ex post dynamic efficiency assessments find that in addition to addressing liquidity constraints through subsidies, white certificate obligations seem to have addressed informational and organisational market failures. Confidence in these conclusions is limited by the fact that no econometric analysis was performed. Yet the lack of publicly available data, a counterpart to the rationale of the instrument of harnessing private financing, makes any empirical evaluation of white certificate obligations challenging. |
| Keywords: | White certificate obligation, energy savings, energy efficiency gap, static efficiency, dynamic efficiency |
| Date: | 2014–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01016110&r=eur |
| By: | Jakobsson, Niklas (Norwegian Social Research (NOVA)); Tengstam, Sven (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | This note studies the impact of immigration on welfare state generosity in 12 Western European countries. In estimations not coping with the possible endogeneity problem, there are indications of a negative relationship between immigration and welfare state generosity. However, when the distance to the Balkan wars are used as a source of exogenous variation in the immigrant share, as to overcome potential endogeneity in mobility across countries, our findings suggest that an increase in the immigrant share does not decrease welfare state generosity. |
| Keywords: | benefit generosity; immigration; social spending; welfare benefit |
| JEL: | F22 H53 J61 |
| Date: | 2014–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0599&r=eur |
| By: | Kruppe, Thomas (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Scholz, Theresa |
| Abstract: | "During the crisis (2008-09) Germany experienced a huge decrease in GDP. Employment, however, remained surprisingly stable. A whole strand of literature has aimed at quantifying the contribution of short-time work to the German labour market miracle. In the course of this literature we estimate the treatment effect of short-time work on employment at establishment level using a dynamic propensity score matching approach. The analysis is based on data from the IAB Establishment Panel combined with administrative data on short-time work establishments from the Federal Employment Agency. Our results do not indicate any treatment effect of short-time work on employment." (Author's abstract, IAB-Doku) ((en)) |
| Date: | 2014–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:201417&r=eur |
| By: | Balsvik, Ragnhild (Dept. of Economics, Norwegian School of Economics and Business Administration); Jensen, Sissel (Dept. of Economics, Norwegian School of Economics and Business Administration); Salvanes, Kjell G. (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | We analyze whether regional labor markets are affected by exposure to import competition from China. We find negative employment effects for low-skilled workers, and observe that low-skilled workers tend to be pushed into unemployment or leave the labor force altogether. We find no evidence of wage effects. We partly expect this in a Nordic welfare state where firms are flexible at the employment margin, while centralized wage bargaining provides less flexibility at the wage margin. Our estimates suggest that import competition from China explains almost 10% of the reduction in the manufacturing employment share from 1996 to 2007 which is half of the effect found by Autor, Dorn and Hanson (2013) for the US. |
| Keywords: | Import Competition; Local Labor Markets; Norway. |
| JEL: | F16 H53 J23 J31 |
| Date: | 2014–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2014_025&r=eur |
| By: | Hannes Kröger; Jürgen Schupp; Johann Behrens |
| Abstract: | Background: The National Cohort (Nationale Kohorte = NaKo) will be one of the largest cohort studies in Europe to include intensive physical examinations and extensive information about the socio-demographic background and behavior of the subjects. However, regional selectivity of the study and potential learning effects due to the panel structure of the data present challenges for researchers using it. Methods: We discuss the two problems and show how they might lead to potential biases when trying to obtain results from the National Cohort that are representative for the total population of Germany. We suggest that the long-running German Socio-Economic Panel Study (SOEP) should be used as a reference data set for population means and as a control sample for detection of learning effects ("panel effects") induced by information about the results of individual medical examinations. Results: We present a wide range of topics and indicators which are available in both the German Socio-Economic Panel Study (SOEP) and the National Cohort (NaKo). These items can be harmonized to make the datasets comparable. The range of topics that overlap between SOEP and NaKo include socio-demographic variables, general indicators, socio-psychological environment, and to a limited extent biomarkers. Conclusion: Harmonizing certain survey item batteries from the NaKo to the SOEP standard can yield a great deal of additional research potential. This holds true both for researchers mainly interested in the NaKo data and for those mainly interested in the SOEP. |
| Keywords: | National Cohort, NaKo, German Socio-Economic Panel Study, SOEP, survey, study design, health surveys |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp651&r=eur |
| By: | Pedro S. Martins; Sofia Pessoa e Costa |
| Abstract: | Although activation services such as monitoring, training, job subsidies or workfare have been shown to increase exits from unemployment, there is no evidence about their effects during recessions. We address this policy-relevant question by evaluating a large activation programme introduced in Portugal in early 2012, a time of very high and still increasing unemployment. The programme was based on requiring specific unemployment benefit recipients to meet caseworkers in jobcentres and then participate in active labour market policies. Our analysis draws on rich longitudinal data, the targeted nature of the programme (namely of its component focused on those unemployed for at least six months), and fuzzy regression discontinuity methods. We find that, despite the weak labour market, the programme is very succesful as it doubles the monthly reemployment probability. Moreover, we find no effects in terms of income or transitions to non-employment. The results are robust to a number of checks, including a falsification exercise based on pre-programme data. |
| Keywords: | Public employment services, job search, public policy evaluation |
| JEL: | J64 J68 J22 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:cgs:wpaper:52&r=eur |
| By: | Matthew Tisdale; Thilo Grau; Karsten Neuhoff |
| Abstract: | The 2014 reform of the German Renewable Energy Act introduces a mandatory shift from a fixed feed-in tariff to a floating premium system. This is envisaged to create additional incentives for project developers, but also impacts revenues and costs for new investments in wind generation. Thus uncertainties for example about balancing costs and the impact of the location specific generation profile on the average price received by a wind project are allocated to renewable projects. We first estimate the magnitude of the impacts on wind projects based on historic and cross-country comparison. We then apply a cash-flow model for project finance to illustrate to what extent the impact of the uncertainty for project investors reduces the scale of debt that can be accessed by projects and thus increases financing costs. |
| Keywords: | Feed in tariff, financing renewables, project finance |
| JEL: | G32 L51 L94 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1387&r=eur |
| By: | Ahlert, Marlies; Pfarr, Christian |
| Abstract: | Social health care systems are inevitably confronted with the scarcity of resources and the resulting distributional challenges. Since prioritization implies distributional effects, decisions on respective rules should take citizens’ preferences into account. Thus, knowledge about citizens’ attitudes and preferences regarding different distributional issues implied by the type of financing health care is necessary to judge the public acceptance of a health system. In this study we concentrate on two distributive issues in the German health system: First, we analyse the acceptance of prioritizing decisions concerning the treatment of certain patient groups, in this case patients who all need a heart operation. Here we focus on the fact that a patient is strong smoker or a non-smoker, the criteria of age or the fact that a patient has or does not have young children. Second, we investigate Germans’ opinions towards income dependent health services. The results reveal strong effects of individuals’ attitudes regarding general aspects of the health system on priorities, e.g. that individuals behaving health demanding should not be preferred. In addition, experiences of limited access to health services are found to have a strong influence on citizens’ attitudes, too. Finally, decisions about different prioritization criteria are found to be not independent. |
| Keywords: | health care priority-setting; distributive preferences; quality of health care |
| JEL: | D63 D71 I14 I18 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:56881&r=eur |
| By: | Heckley, Gawain A. (Dept. of Clinical Science, Lund University); Jarl, Johan (Dept. of Clinical Science, Lund University); Gerdtham , Ulf-G. (Department of Economics, Lund University) |
| Abstract: | This paper provides an extensive analysis of the demand for alcohol in terms of total quantity and quantity subdivided into frequency and intensity demand. The analysis compares across alcohol types (beer, wine and spirits), alcohol drinking pattern (average drinker vs. binge drinkers) and also how these decisions differ across gender. The analysis is based on a large sample of cross-sectional data from Sweden 2004-11. The results show a positive socioeconomic (income and education) gradient in quantity. This gradient is generally positive in the frequency decision while negative in the intensity decision. Women predominantly choose to drink wine and show a strong positive socioeconomic gradient in both frequency and intensity demand for wine. Binge drinkers show less of a differentiation across alcohol types and this is true even of binge drinking women. Smoking is universally positively associated with quantity, frequency and intensity of alcohol demand with the exception of wine binge drinkers. The results highlight that while quantity consumed has a positive socioeconomic gradient, policies targeted at the less affluent and less educated are likely to have the greatest impact in reducing the social cost of alcohol and in reducing the socioeconomic gradient in health and socioeconomic related health inequality. |
| Keywords: | Alcohol; demand; drinking pattern; binge drinking |
| JEL: | I10 I12 I14 |
| Date: | 2014–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2014_025&r=eur |
| By: | Christina Gathmann; Nicolas Keller |
| Abstract: | Immigrants in many countries have lower employment rates and earnings than natives. We study whether the option to naturalize improves immigrant assimilation. The empirical analysis relies on two major immigration reforms in Germany, acountry with a weak record of immigrant integration. Using discontinuities in the reforms' eligibility rules, we find few returns of citizenship for men, but substantial returns for women. Returns are also larger for more recent immigrants, but essentially zero for traditional guest workers. For immigrant women, access to citizenship accounts for 70% of the assimilation rate, i.e. the wage return of an additional year in Germany. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp656&r=eur |
| By: | Løken, Katrine V. (Department of Economics, University of Bergen); Lundberg, Shelly (Department of Economics, University of California, Santa Barbara); Riise, Julie (Department of Economics, University of Bergen) |
| Abstract: | In this paper, we use a 1998 reform in the federal funding of local home-based care for the elderly in Norway to examine the effects of formal care expansion on the labor supply decisions and mobility of middle-aged children. Our main finding is a consistent and signi cant negative impact of formal care expansion on work absences longer than 2 weeks for the adult daughters of single elderly parents. This effect is particularly strong for daughters with no siblings, and this group is also more likely to exceed earnings thresholds after the reform. We find no impacts of the reform on daughter's mobility or parental health, and no effects on adult sons. Our results provide evidence of substitution between formal home-based care and informal care for the group that is most likely to respond to the parent's need for care - adult daughters with no siblings to share the burden of parental care. These results also highlight the importance of labor market institutions that provide flexibility in enabling women to balance home and work responsibilities. |
| Keywords: | Formal and informal care; elderly; welfare state; women's career |
| JEL: | J14 J22 |
| Date: | 2014–06–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bergec:2014_003&r=eur |
| By: | Peter Eibich |
| Abstract: | This paper estimates the causal effect of retirement on health, health behavior, and healthcare utilization. Using Regression Discontinuity Design to exploit financial incentives in the German pension system for identification, I investigate a wide range of health behaviors (e.g. alcohol and tobacco consumption, physical activity, diet and sleep) as potential mechanisms. The results show a long-run improvement in health upon retirement. Relief from work-related stress and strain, increased sleep duration and more frequent physical exercise seem to be key mechanisms through which retirement affects health. Moreover, the improvement in health caused by retirement leads to a reduction in healthcare utilization. |
| Keywords: | retirement, health, regression discontinuity design, health behavior, healthcare |
| JEL: | I12 J14 J26 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp669&r=eur |
| By: | Pedro S. Martins |
| Abstract: | Several countries extend collective bargaining agreements to entire sectors, therefore binding non-subscriber workers and employers. These extensions may address coordination issues but may also impose sector-specific minimum wages and other work conditions that are not appropriate for several workers and firms. In this paper, we analyse the impact of such extensions along several margins drawing on firm-level monthly data for Portugal, a country where extensions have been widespread until recently. We find that both formal employment and wage bills in the relevant sector fall, on average, by 2% - and by 25% more across small firms - over the four months after an extension is issued. These results are driven by both reduced hirings and increased firm closures. On the other hand, informal work, not subject to labour law or extensions, tends to increase. Our findings are robust to several checks, including a falsification exercise based on extensions that were announced but not implemented. |
| Keywords: | Collective agreements, Worker flows, Wage rigidity |
| JEL: | J31 J52 J23 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:cgs:wpaper:51&r=eur |
| By: | Edmark, Karin (Research Institute of Industrial Economics (IFN)); Frölich, Markus (University of Mannheim); Wondratschek, Verena (Centre for European Economic Research (ZEW)) |
| Abstract: | This study analyses whether the Swedish school choice reform, enacted in 1992, had different effects on students from different socio-economic backgrounds. We use detailed geographical data on students’ and schools’ locations to construct measures of the degree of potential choice. This allows us to study the effects of choice opportunities among public schools, whereas previous studies have focused on newly opened private schools. Our results suggest small positive or no effects of choice opportunities, depending on specification and outcome. We find no strong evidence of differences between subgroups; if anything, effects tend to be slightly more positive for disadvantaged groups, such as students from low-income families. Taken together, the results indicate that students from a socio-economically disadvantaged or immigrant background were not harmed by the reform. |
| Keywords: | School choice; School competition; Treatment evaluation; Cognitive and non-cognitive skills |
| JEL: | C21 I24 |
| Date: | 2014–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1030&r=eur |
| By: | Steffen Huck; Tobias Schmidt; georg Weizsäcker |
| Abstract: | We study behavior in an investment experiment conducted with a representative sample of German households (SOEP-IS). Respondents allocate a fixed budget between a safe asset and a risky asset whose returns are tied to the German stock market and earn monetary returns based on their decisions. Experimental investment choices correlate with beliefs about stock market returns and exhibit desirable external validity: They are a strong predictor for real-life stock market participation. The experimental set-up allows exogenous modification of the risky asset's return but investments are inelastic except for financially savvy subsamples. A laboratory experiment accompanies the data collection and yields similar results. |
| Keywords: | Stock market expectations, stock market participation, portfolio choice, artefactual field experiment, SOEP |
| JEL: | D1 D14 D84 G11 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp650&r=eur |
| By: | Curtis, John; di Cosmo, Valeria; Deane, Paul |
| Keywords: | Climate policy/electricity/Interconnection/Ireland/Policy |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb2014/1/7&r=eur |
| By: | Olivier Thévenon (INED); Willem Adema (INED); Nabil Ali (INED) |
| Abstract: | Family policies are central to the well-being of individuals in Europe, but they differ substantially across countries. Drawing on the OECD Social Expenditure database (SOCX), Olivier Thévenon, Willem Adema and Nabil Ali describe the different policies in European countries to support families with children. They examine the modalities and the size of social spending on family benefits (expressed as a proportion of GDP), and consider how they have changed recently in response to the economic crisis. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:idg:posoce:512&r=eur |
| By: | Skedinger, Per (Research Institute of Industrial Economics (IFN)) |
| Abstract: | In response to high and enduring youth unemployment, large payroll tax cuts for young workers were implemented in two Swedish reforms in 2007 and 2009. This paper analyses the effects of the reforms on worker outcomes and firm performance in the retail industry, an important employer of young workers. In general, the estimated effects on job accessions, separations, hours and wages, are small. For workers close to the minimum wage the estimates suggest larger, but still modest, effects on the probability of job accession. There is also some evidence on increasing profits in a subsample of firms that employed relatively many young workers before the first reform, with estimated effects commensurate with small behavioural effects of the payroll tax cuts. The conclusion is that reducing payroll taxes is a costly means of improving employment prospects for the young. |
| Keywords: | Tax subsidy; Labour costs; Minimum wages; Retail industry |
| JEL: | H21 H25 H32 J38 |
| Date: | 2014–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1031&r=eur |
| By: | Konstantin A. Kholodilin; Tobias Thomas; Dirk Ulbricht |
| Abstract: | Expectations form the basis of economic decisions of market participants in an uncertain world. Sentiment indicators reflect those expectations and thus have a proven track record for predicting economic variables. However, respondents of surveys perceive the world to a large extent with the help of media. So far, mainly very crude media information, such as word-count indices, has been used in the prediction of macroeconomic and financial variables. In this paper, we employ a rich data set provided by Media Tenor International, based on the sentiment analysis of all relevant media information in Germany from 2001 to 2014, whose results are transformed into several monthly indices. German industrial production is predicted in a real-time out-of-sample forecasting experiment using more than 17,000 models formed of all possible combinations with a maximum of 3 out of 48 macroeconomic, survey, and media indicators. It is demonstrated that media data are indispensable when it comes to the prediction of German industrial production both for individual models and as a part of combined forecasts. They increase reliability by improving accuracy and reducing instability of the forecasts, particularly during the recent global financial crisis. |
| Keywords: | Forecast combination, media data, German industrial production, reliability index, R-word |
| JEL: | C10 C52 C53 E32 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1393&r=eur |
| By: | Bernt Bratsberg (Frisch Centre for Economic Research); Oddbjørn Raaum (Frisch Centre for Economic Research); Knut Røed (Frisch Centre for Economic Research) |
| Abstract: | Using longitudinal data from the date of arrival, we study longâ€term labor market and social insurance outcomes for all major immigrant cohorts to Norway since 1970. Immigrants from highincome countries performed as natives, while labor migrants from lowâ€income source countries had declining employment rates and increasing disability program participation over the lifecycle. Refugees and family migrants assimilated during the initial period upon arrival, but labor market convergence halted after a decade and was accompanied by rising social insurance rates. For the children of labor migrants of the 1970s, we uncover evidence of intergenerational assimilation in education, earnings and fertility. |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1426&r=eur |
| By: | Brekke, Kurt R. (Dept. of Economics, Norwegian School of Economics and Business Administration); Siciliani, Luigi (University of York); Straume, Odd Rune (University of Minho) |
| Abstract: | We study the effects of a hospital merger using a spatial competition framework with semialtruistic hospitals that invest in quality and expend cost-containment effort facing regulated prices. We find that the merging hospitals always reduce quality, whereas non-merging hospitals respond by increasing (reducing) quality if qualities are strategic substitutes (complements). A merger leads to higher average treatment cost efficiency and, if qualities are strategic substitutes, might also increase average quality in the market. If a merger leads to hospital closure, the resulting effect on quality is positive (negative) for all hospitals in the market if qualities are strategic substitutes (complements). Whether qualities are strategic substitutes or complements depends on the degree of altruism, the effectiveness of cost-containment effort, and the degree of cost substitutability between quality and treatment volume. |
| Keywords: | Hospital mergers; Quality competition; Cost efficiency; Antitrust. |
| JEL: | I11 I18 L13 L44 |
| Date: | 2014–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2014_021&r=eur |