nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2014‒12‒19
23 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. European competitiveness - A semiparametric stochastic metafrontier analysis at the firm level By Verschelde, Marijn; Dumont, Michel; Rayp, Glenn; Merlevede, Bruno
  2. Border Eff ects in House Prices By Martin Micheli; Jan Rouwendal; Jasper Dekkers
  3. Determinants of the duration of European appellate court proceedings in cartel cases By Smuda, Florian; Bougette, Patrice; Hüschelrath, Kai
  4. External Constraints Matter for Privatizations By Ilaria Petrarca; Roberto Ricciuti
  5. Monitoring Subjective Well-Being: Some New Empirical Evidence for Germany By Erich Oltmanns; Albert Braakmann; Joachim Schmidt
  6. The structure of freight flows in Europe and its implications for EU railway freight policy By Mitusch, Kay; Liedtke, Gernot; Guihery, Laurent; Bälz, David
  7. The Gender Wealth Gap in Europe By Alyssa Schneebaum; Miriam Rehm; Katharina Mader; Patricia Klopf; Katarina Hollan
  8. Female Self-Employment and Children: The Case of Sweden By Andersson Joona, Pernilla
  9. Public Employment Policies and Regional Unemployment Differences By Caponi, Vincenzo
  10. 'The Choice Agenda' in European Health Systems: The Role of 'Middle Class Demands' By Joan Costa-i-Font; Valentina Zigante
  11. The Reservation Wage Curve: Evidence from the UK By Brown, Sarah; Taylor, Karl
  12. Unintended effects of reimbursement schedules in mental health care By Rudy Douven; Minke Remmerswaal; Ilaria Mosca (Ecorys)
  13. Determinants of students' success at university By Danilowicz-Gösele, Kamila; Meya, Johannes; Schwager, Robert; Suntheim, Katharina
  14. How do employment tax credits work? An analysis of the German inheritance tax By Franke, Benedikt; Simons, Dirk; Voeller, Dennis
  15. Abatement strategies and the cost of environmental regulation: Emission standards on the European car market By REYNAERT, Mathias
  16. Are intangibles more productive in ICT-intensive industries? Evidence from EU countries By Chen, Wen; Niebel, Thomas; Saam, Marianne
  17. The Italian wage curve reloaded: Does occupation matter? By Gucciardi, Gianluca
  18. Does Management Matter In Schools? By Nicholas Bloom; Renata Lemos; Raffaella Sadun; John Van Reenen
  19. Health Risk Factors among the Older European Populations: Personal and Country Effects By García-Muñoz, Teresa; Neuman, Shoshana; Neuman, Tzahi
  20. Taxing Animal Products: Protein Demand under Environmental Pressure and Social Impact in France By France, Caillavet; Adélaide, Fadhuile; Véronique, Nichèle
  21. EU Consumers’ Perceptions of Fresh-cut Fruit and Vegetables Attributes: a Choice Experiment Model By Baselice, Antonio; Colantuoni, Francesca; Lass, Daniel A.; Nardone, Gianluca; Stasi, Antonio
  22. Long-Term Care Insurance and Carers' Labor Supply: A Structural Model By Johannes Geyer; Thorben Korfhage
  23. Property debt overhang: the case of Irish SMEs By McCann, Fergal; McIdnoe-Calder, Tara

  1. By: Verschelde, Marijn; Dumont, Michel; Rayp, Glenn; Merlevede, Bruno
    Abstract: In this paper a semiparametric stochastic metafrontier approach is used to obtain insight into firm-level competitiveness in Europe. We differ from standard TFP studies at the firm level as we simultaneously allow for inefficiency, noise and do not impose a functional form on the input-output relation. Using AMADEUS firm-level data covering 10 manufacturing sectors from seven EU15 countries, (i) we document substantial, persistent differences in competitiveness (with Belgium and Germany as benchmark countries and Spain lagging behind) and a wide technology gap, (ii) we confirm the absence of convergence in TFP between the seven selected countries, (iii) we confirm that the technology gap is more pronounced for smaller firms, (iv) we highlight the role of post-entry growth for competitiveness. JEL Classification: C14, D24, L25, M13, O33
    Keywords: competitiveness, cross-country analysis, firm heterogeneity, post-entry growth, total factor productivity
    Date: 2014–07
  2. By: Martin Micheli; Jan Rouwendal; Jasper Dekkers
    Abstract: We estimate the effect of the Dutch-German border on house prices. In the last 40 years the development of house prices in the Netherlands and Germany has been substantially different. While the Netherlands have been hit by two real estate cycles, prices in Germany have been extraordinary stable. We develop a model for studying house prices and the impact of the border. Then we study the development of Dutch house prices close to the German border in the period 1985-2013. Next, combining German and Dutch real estate datasets, we study the jump in the housing price occurring at the border. Using different estimation strategies, we find that ask prices of comparable housing drop by about 16% when one crosses the Dutch-German border. Given that price discounts from the last observed asking price are substantially larger in Germany, we interpret our findings as indicating the willingness of Dutch households to pay up to 26% higher house prices to live among the Dutch.
    Keywords: House prices; European integration; border effects
    JEL: R31 F15 R21
    Date: 2014–10
  3. By: Smuda, Florian; Bougette, Patrice; Hüschelrath, Kai
    Abstract: The duration of appellate court proceedings is an important determinant of the efficiency of a court system. We use data of 234 firm groups that participated in 63 cartels convicted by the European Commission between 2000 and 2012 to investigate the determinants of the duration of the subsequent one- or two-stage appeals process. We find that while the speed of the firststage appellate court decision depends on the court's appeals-related workload, the complexity of the case, the degree of cooperation by the firms involved and the clarity of the applied rules and regulations, the second-stage appellate court proceedings appear to be largely unaffected by those drivers. We take our empirical results to derive conclusions for both firms that plan to file an appeal as well as public policy makers.
    Keywords: Law and economics,antitrust policy,cartels,appeals,European Union
    JEL: K21 K41 K42 L41
    Date: 2014
  4. By: Ilaria Petrarca (Department of Economics (University of Verona)); Roberto Ricciuti (Department of Economics (University of Verona))
    Abstract: We present an analysis of the share of public ownership in the product market in the OECD countries from 1974 to 2007. Despite much has been said on the broad topic of reforms and regulation, a sector-specific insight is missing. We replicate the analysis of Galasso (2014) by sector of activity accounting both for the dynamic bias of the lagged public ownership and the degree of state ownership at the beginning of the period. At the aggregate level both persistence and initial conditions play a major role, together with the European Single Market Program membership. Specifically, EMU members have a smaller share of public ownership in the electricity sector, while SMP members have less privatized telecommunications. Looking at the sub-sample of years when a change in the share of public ownership occurred, we find a composition effect of SMP: it has a negative impact on public ownership in telecommunications, but a positive one in the rail sector. Overall, we find that the countries in our sample tend to privatize mainly when decision taken at the supranational level (the EU for European countries) push towards this policy.
    Keywords: : product market regulation, privatization, OECD countries, dynamic regression
    JEL: C23 H5 L5 L98
    Date: 2014–10
  5. By: Erich Oltmanns; Albert Braakmann; Joachim Schmidt
    Abstract: What is subjective well-being influenced by? Since the Report by the Commission on the Measurement of Economic Performance and Social Progress by Stiglitz, Sen and Fitoussi a huge number of studies has raised this question - with partly different findings. In addition, international organizations are increasingly addressing subjective well-being issues. The post-2015 development agenda of the United Nations as well as the inclusive growth strategy of the OECD may be quoted as examples. Facing the current state of national and international discussion, this paper analyses appropriate indicators for the mostly named factors influencing subjective well-being. The goal of the empirical study for Germany is twofold: First of all, the indicators discussed prominently are analysed with regard to the relevance for explaining the degree of subjective well-being (micro level). Secondly, it is examined, whether the relevance of these indicators changes over time. The empirical results presented in this paper are mainly based on yearly longitudinal data of private households in Germany. Currently, the data set covers about 21,000 individuals living in more than 12,000 private households. The data set provides information on various indicators for subjective well-being mentioned by most of the recent studies, like for instance people's life-circumstances and individual assessments. Concluding remarks concern on one hand the question if data from EU-SILC (because of its Europe-wide coverage) are useful in this context. On the other hand the combination of data at the micro level with indicators at the aggregate level is discussed as well.
    Keywords: Gross domestic product, Stiglitz-Sen-Fitoussi-Report, quality of life, Socioeconomic Panel (SOEP), Germany
    JEL: C2 I31
    Date: 2014
  6. By: Mitusch, Kay; Liedtke, Gernot; Guihery, Laurent; Bälz, David
    Abstract: We analyse the potential for shifting freight transports to the railways in Western and Central Europe. This potential arises for large and concentrated freight flows over long distances of about 300 km or more. However, we show that there are only few such freight flows in Europe, and that they are concentrated or connected to the central European population centers, sometimes called the "Blue Banana". As a consequence, the European railway freight corridors according to EU Regulation 913/2010 should be divided into two distinct groups: first tier and second tier corridors. Substantial innovations should be introduced on the first tier corridors first, in order to increase efficiency and reduce noise. This refers to core innovations for rolling stock like the introduction of automatic couplings, electronic or electro-pneumatic brakes, and modern bogies.
    Keywords: freight transport,railways,corridors,rolling stock,innovation policy
    JEL: R48 L92 Q55
    Date: 2014
  7. By: Alyssa Schneebaum (Department of Economics, Vienna University of Economics and Business); Miriam Rehm (Vienna Chamber of Labour); Katharina Mader (Department of Economics, Vienna University of Economics and Business); Patricia Klopf (Department of Global Business and Trade, Vienna University of Economics and Business); Katarina Hollan (Austrian Institute of Economic Research)
    Abstract: This paper studies the gender wealth gap using 2010 Household Finance and Consumption Survey data for 15 European countries, and finds that households with only one male adult have more net wealth than households with one female adult, and that households with an adult couple have the highest net wealth. Using OLS regressions to predict net wealth and the inverse hyperbolic sine transformation of net wealth, as well as the nonparametric DiNardo-Fortin-Lemieux re-weighting technique, to study the relationship between household and personal characteristics with net wealth, the paper finds that differences in labor market characteristics between male and female households, most notably lifetime labor force participation and wages, explain much of the gender wealth gap.
    Keywords: Gender, Wealth, Wealth Gap, Distribution
    JEL: D31 J16 E21
    Date: 2014–10
  8. By: Andersson Joona, Pernilla (SOFI, Stockholm University)
    Abstract: Previous studies, mostly from Anglo-Saxon countries, find a positive correlation between the presence of young children in the household and self-employment probabilities among women. This has been seen as an indication of women with young children choosing self-employment as a way of balancing work and family commitments. This paper studies the relationship between children and female self-employment in a country with family friendly policies and a generous welfare system: Sweden. The initial hypothesis is that we will not find evidence of a positive effect of children on self-employment among Swedish women since there are other institutions in place aiming at facilitating the combination of work and family. Using Swedish register data for the period 2004-2008 we do, however, find that the presence of young children increases the probability of choosing self-employment also among Swedish women. The effect is strongest for women with very young children, 0-3 years of age. These results also hold in a panel data model that takes individual unobserved heterogeneity into account. We also analyze time-use data and find, contrary to what has been found in many other countries, that self-employed women spend more, or as much, time on market work than wage-earning women. This raises doubts about whether women in Sweden chose self-employment as a way of balancing work and family commitments. We suggest an alternative interpretation which is that women who chose self-employment while the children are young in fact are women with strong preferences for market work.
    Keywords: work, family, self-employment, fertility
    JEL: J22 L26 J13
    Date: 2014–09
  9. By: Caponi, Vincenzo (Ryerson University)
    Abstract: This paper contributes to the existing literature on public employment showing that the wage setting policy of the public sector can be an important determinant of private employment and unemployment. I look at the case of geographically homogeneous wages across regions with different private sector productivity, and show that public employment generates a crowding out effect against private employment. This effect is larger the larger is the public sector share of total employment. I present a two region two sector model based on Pissarides (2000) heterogeneous search and matching model where vacancies are posted by the private and the public sector as in Quadrini and Trigari (2007) and Gomes (2014). I calibrate the model to the Italian labor market and show that the uniform wage setting policy adopted by the central government, in the presence of productivity unbalance across regions, is responsible for up to 40% of the unemployment gap between the North and South. Policy experiments suggest that reducing the size of public employment reduces unemployment in lower productive regions while allowing for regional wage setting in the public sector almost eliminates the unemployment differential.
    Keywords: Italy, European unemployment, regional unemployment, public employment
    JEL: E24 J60
    Date: 2014–09
  10. By: Joan Costa-i-Font; Valentina Zigante
    Abstract: We examine the role of political economy drivers of the choice agenda in European health systems including middle class electoral support. Building on the reform trajectories and current institutional framework in eight western European countries where there have been significant choice reforms, we explore the preferences for choice and health system satisfaction in those countries. We find provider choice to be supported by middle class demands and health systems satisfaction, but weak evidence of other alternative political motivations for the expansion of provider choice. We conclude that in addition to efficiency improvements, provider choice is largely correlated with the demands for choice among the middle class. The provider choice agenda responds as much to political economy consideration as it does to efficiency arguments.
    Keywords: provider choice, health system satisfaction, tax funded health systems, middle class demands
    Date: 2014–11
  11. By: Brown, Sarah (University of Sheffield); Taylor, Karl (University of Sheffield)
    Abstract: We investigate the relationship between an individuals' reservation wage, i.e. the lowest wage acceptable in order to enter into employment, and unemployment in the local area district. Largely unexplored in the literature this adds to the work which has examined the association between employee wages and unemployment – the 'wage curve'.
    Keywords: wage curve, reservation wages, unemployment
    JEL: J64 J31 R23
    Date: 2014–10
  12. By: Rudy Douven; Minke Remmerswaal; Ilaria Mosca (Ecorys)
    Abstract: We evaluate the introduction of a reimbursement schedule for self-employed mental health care providers in the Netherlands in 2008. The reimbursement schedule follows a discontinuous discrete step function ―once the provider has passed a treatment duration threshold the fee is flat until a next threshold is reached. We use administrative mental health care data of the total Dutch population from 2008 to 2010. We find an efficiency effect: on the flat part of the fee schedule providers prolong treatment only if marginal benefits to patients outweigh marginal costs. We estimate a reduction in treatment duration by 2 to 6% and lower costs by 3 to 5% compared to a control group. However, we also find unintended effects: providers treat patients longer to reach a next threshold and obtain a higher fee. The data shows gaps and bunches in the distribution function of treatment durations, just before and after a threshold. In total, about 11 to 13% of treatments are shifted to over a next threshold, resulting in a cost increase of approximately 7 to 8%.
    JEL: I11 I12 I18
    Date: 2014–11
  13. By: Danilowicz-Gösele, Kamila; Meya, Johannes; Schwager, Robert; Suntheim, Katharina
    Abstract: This paper studies the determinants of academic success using a unique administrative data set of a German university. We show that high school grades are strongly associated with both graduation probabilities and final grades, whereas variables measuring social origin or income have only a smaller impact. Moreover, the link between high school performance and university success is shown to vary substantially across faculties. In some fields of study, the probability of graduating is rather low, while grades are quite good conditional on high school performance. In others, weaker students have a greater chance of graduating, but grades are more differentiated.
    Keywords: university,high school,grade point average,faculties,education
    JEL: I23 I21
    Date: 2014
  14. By: Franke, Benedikt; Simons, Dirk; Voeller, Dennis
    Abstract: Employment tax credit programs have been repeatedly used during economic crises, although their usefulness is empirically contestable. The objective of this paper is to quantify the tax effects of employment tax credit programs. A recent revision of the German inheritance tax law provides an eminent opportunity to analyze the effects caused by such a preferential treatment. The tax liability depends on a company's future employment expenses. Hence, we use micro-level data of realized business transfers from the German Inheritance Tax Statistic and combine them with a simulation of the future development of employment over the relevant time-horizon. We identify the magnitude of tax reductions granted to business transfers under a preferential treatment. Further, we demonstrate that these reductions are considerably larger in times of economic growth. Our findings also suggest that employment tax credits have pro-cyclical effects and specifically foster transfers between unrelated parties. Finally, the preferential treatment of business transfers does not provide incentives to increase employment.
    Keywords: Alternative tax treatments,Employment tax credits,Inheritance tax,Simulation
    JEL: C15 H30 K34
    Date: 2014
  15. By: REYNAERT, Mathias
    Abstract: Emission standards are one of the major policy tools to reduce greenhouse gas emissions from transportation. The welfare effects from this type of regulation depend on how ?firms choose to abate emissions: by changing relative prices, by downsizing their fl?eet or by adopting technology. This paper studies the response of fi?rms to a new emission standard in the European car market using panel data covering 1998-2011. The data show that ?rms choose to comply with the regulation by adopting new technology. To evaluate the welfare e¤ects of the regulation I estimate a structural model using data from before the policy announcement and explicitly test the ability of the model to explain the observed responses. I fi?nd that, because the abatement is done by technology adoption, consumer welfare increases and overall welfare effects depend on market failures in the technology market. The design of the regulation matters to induce technology adoption.
    Date: 2014–11
  16. By: Chen, Wen; Niebel, Thomas; Saam, Marianne
    Abstract: Using sectoral intangible investment data we confirm that intangible capital is a significant determinant of labour productivity growth. The sectoral setting further allows us to identify the differential impacts of intangible capital across industries with varying degrees of ICT intensity. Intangible capital appears to be significantly more productive in ICT-intensive sectors than in those that use little ICT. This finding remains robust across various alternative industry ICT intensity measures and aligns with the prior firm-level studies that place emphasis on the complementary role of intangible assets in ICT investment.
    Keywords: Intangible capital,ICT,economic growth,labour productivity
    JEL: E22 J24 O47
    Date: 2014
  17. By: Gucciardi, Gianluca
    Abstract: This paper provides some evidence on the existence of the wage curve - the negative relationship between individual wages and the local unemployment rate - within a number of occupations. It exploits the Bank of Italy's Household Survey and draws data from 1977 to 2008. An occupation-level wage curve exists for all the employees, while it holds only for a sub-set of the self-employed. In particular, the wage curve has an elasticity of approximately -0.05 for the blue-collars, an elasticity of -0.1 for the employees and of approximately -0.2 for the executives. This suggests that professional labor markets may have different levels of flexibility, also within the same country. In particular, the professional categories with higher (lower) levels of negative elasticity belong to more (less) flexible labor markets.
    Keywords: wage curve,occupation,unemployment,Italian regions
    JEL: J31 J64 E24
    Date: 2014
  18. By: Nicholas Bloom; Renata Lemos; Raffaella Sadun; John Van Reenen
    Abstract: We collect data on operations, targets and human resources management practices in over 1,800 schools educating 15-year-olds in eight countries. Overall, we show that higher management quality is strongly associated with better educational outcomes. The UK, Sweden, Canada and the US obtain the highest management scores closely followed by Germany, with a gap to Italy, Brazil and then finally India. We also show that autonomous government schools (i.e. government funded but with substantial independence like UK academies and US charters) have significantly higher management scores than regular government schools and private schools. Almost half of the difference between the management scores of autonomous government schools and regular government schools is accounted for by differences in leadership of the principal and better governance.
    Keywords: Management, pupil achievement, autonomy, principals
    JEL: L2 M2 I2
    Date: 2014–11
  19. By: García-Muñoz, Teresa (Universidad de Granada); Neuman, Shoshana (Bar-Ilan University); Neuman, Tzahi (Hebrew University, Jerusalem)
    Abstract: It is now common to use the individual's self-assessed-health-status (SAHS) as a measure of health. The use of SAHS is supported by numerous studies that show that SAHS is a better predictor of mortality and morbidity than medical records. The 2011 wave of the rich Survey of Health Aging and Retirement Europe (SHARE) is used for the exploration of the full spectrum of factors behind the health-status in 16 European countries, focusing on behavioral risk factors (smoking, alcohol consumption and obesity) – both at the individual and country levels. The main findings are: (i) SAHS regressions provide clear evidence of the significant effects of the three behavioral risk factors on the individual's SAHS, beyond and above effects of health conditions and of socio-economic personal variables; (ii) the second, more innovative, finding is related to the effects of country-specific risk factors (country-level measures of smoking, obesity, and alcohol consumption) on the subjective-health of the residents, controlling for personal characteristics. Adapting the technique presented in Oswald and Wu (2010), country effects derived from the SAHS regression are examined for correlations with a set of objective country macro measures. They include: share of smokers on a daily/regular basis; alcohol consumption (per-capita liters per year); share of obese individuals in the country. It appears that country-level smoking and obesity affect negatively aggregate country SAHS, while alcohol consumption has no effect. It is therefore not only 'who you are' that affects the subjective rating of health, but also 'in which country you live': both individual and country-level risk factors affect subjective-health and the two levels of behavioral risks accumulate and reinforce the subjective-health assessment. This suggests the economic cost-effectiveness of preventive obesity and smoking treatment and seems to be at odds with the 'Easterlin Paradox' that emphasizes within country individual effects and denies cross-country effects.
    Keywords: self-assessed-health-status, smoking, obesity, alcohol consumption, Europe, SHARE
    JEL: I1 J1 Z1
    Date: 2014–10
  20. By: France, Caillavet; Adélaide, Fadhuile; Véronique, Nichèle
    Abstract: Europe committed to reduce greenhouse gas emissions (GHG) by 40 % by 2030 from 1990 levels. Food emits about 30% of all GHG, the major toll arising from animal products (half of food GHG). This urges the necessity of public actions to encourage sustainable diets. Food policy is now at the double stake of preserving environment and improving health. To implement a public policy combining environmental and nutritional issues in a socially- conscious framework, a food demand study and the potential substitutions between foods is necessary. This article aims at offering a solid base for such policy decisions. Which are the food groups more suitable for a price change? Where are the more disparities in price responsiveness among income classes? Are own-price effects the only relevant? Do cross-price effects matter? To study food demand, we estimate an EASI demand system. It is based on a pseudo panel of 8112 observations constructed from Kantar panel data (1998-2010). It registers French households purchases for food-at-home. We add the nutritional content and Greenhouse gas emission related to foods through Life Cycle Analysis. For 21 food groups, built according to their environmental and nutritional characteristics, we run expenditure and price elasticities. Based on these results, two taxation scenarios are implemented. For each we increase by 20% the prices of food categories with most adverse effects on (1) environment only (ENV) and (2) both environment and health (ENV-NUT). The ENV scenario induces more reductions in environment impact than the ENV-NUT scenario, in particular for SO2 emissions. A greatest impact is observed for lower-average income households and with a household head less than 30 years old. However, undesirable nutritional effects lead to consider the necessity of a trade-off between environment and nutrition. Our conclusions find that this trade-off is not so costly (-18% in terms of CO2). Moreover, our results give new insights for targeting public policies toward the youngest households which we find more sensitive to prices and which are at the beginning of the consumption life-cycle.
    Keywords: EASI demand system, food purchases, socioeconomic inequalities, public policy, Consumer/Household Economics, Demand and Price Analysis, Environmental Economics and Policy, Food Consumption/Nutrition/Food Safety, C35, D12, Q15,
    Date: 2014–05
  21. By: Baselice, Antonio; Colantuoni, Francesca; Lass, Daniel A.; Nardone, Gianluca; Stasi, Antonio
    Abstract: The fresh-cut sector is constantly evolving and innovating in order to enhance quality and safety of products, which attributes are generally valued by consumers. Quality and safety are multifaceted attributes because they arise from a wide set of methods/technologies, therefore the knowledge about consumers’ preferences for food technologies is still matter of debate. The present paper tests whether new fresh-cut fruit and vegetables (F&V) attributes influence consumers’ choices and preferences. At the same time, we are able to verify the influence of socio-demographic characteristics on consumers’ preferences. A Latent Class Multinomial Logit Model has been fitted for four different European countries: Greece, Italy, Spain and United Kingdom, in order to divide the consumers in different latent classes based on their choice and their characteristics. Fresh-cut F&V consumers for the four European countries, have a similar behavior in terms of preferences. We can divide the consumers in two different latent classes: the first made by consumers that do not appreciate any fresh-cut F&V attributes, and the second that include consumers that appreciate the several fresh-cut F&V attributes.
    Keywords: fresh-cut fruit and vegetables, consumers' preferences, Choice Experiment, Latent Class Model, Agribusiness, Agricultural and Food Policy, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, C83, D12, Q18,
    Date: 2014
  22. By: Johannes Geyer; Thorben Korfhage
    Abstract: In Germany, individuals in need of long-term care receive support through benefits of the long-term care insurance. A central goal of the insurance is to support informal care provided by family members. Care recipients can choose between benefits in kind (formal home care services) and benefits in cash. From a budgetary perspective family care is a cost-saving alternative to formal home care and to stationary nursing care. However, the opportunity costs resulting from reduced labor supply of the carer are often overlooked. We focus on the labor supply decision of family carers and the incentives set by the long-term care insurance. We estimate a structural model of labor supply and the choice of benefits of family carers. We find that benefits in kind have small positive effects on labor supply. Labor supply elasticities of cash benefits are larger and negative. If both types of benefits increase, negative labor supply effects are offset to a large extent.
    Keywords: labor supply, long-term care, long-term care insurance, structural model
    JEL: J22 H31 I13
    Date: 2014
  23. By: McCann, Fergal (Central Bank of Ireland); McIdnoe-Calder, Tara (Central Bank of Ireland)
    Abstract: The detrimental impacts of credit booms, property booms and firm over-leverage are well-established in a growing literature highlighting their effects on household consump- tion, firm investment and economic growth. The link between credit-fuelled property market booms and firms' ability to service their debts has however up to this point not been studied. Using a unique data set on the property and "core" enterprise debts of Irish Small and Medium Enterprises (SMEs) at December 2013, we highlight the extent to which Irish non-real-estate SMEs have borrowed for property investment purposes. We show that the existence of such property-related debts is a crucial determinant of the probability of SME loan default, suggesting a large property-related debt overhang for these firms. We extend the analysis by showing that the intensity of firms' property- related borrowings has an additional impact on the probability of loan default. In doing so, we highlight an additional channel through which credit-driven property booms can have long-lasting harmful eects on economic growth prospects.
    Keywords: Property markets, SMEs, credit risk, firm leverage.
    Date: 2014–10

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