nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2015‒01‒03
thirty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Inequality of Opportunity in Health and the Principle of Natural Reward: evidence from European Countries By Bricard, Damien; Jusot, Florence; Trannoy, Alain; Tubeuf, Sandy
  2. Firm heterogeneity in productivity across Europe. What explains what? By Francesco Aiello; Fernanda Ricotta
  3. Regulation Performance and Investment in Telecommunications in the European Union: a policy evaluation approach By Paolo Piselli; Carla Scaglioni
  4. The Impact of Environmental Innovation on Employment Growth in Europe By Bettina Peters; Georg Licht
  5. Do labour market conditions shape immigrant-native gaps in employment outcomes? A comparison of 19 European countries By Markaki, Yvonni
  6. An international cohort comparison of size effects on job growth By Anyadike-Danes, Michael; Bjuggren, Carl-Magnus; Gottschalk, Sandra; Hölzl, Werner; Johansson, Dan; Maliranta, Mika; Myrann, Anja
  7. Fixed-term contracts and dismissal protection. Evidence from a policy reform in Germany By Lutz Bellmann; Hans-Dieter Gerner; Christian Hohendanner
  8. The effect of code-share agreements on the temporal profile of airline fares By Marco Alderighi; Alberto A. Gaggero; Claudio A. Piga
  10. Large-Scale Transition of Economic Systems – Do CEECs Converge Towards Western Prototypes? By Markus Ahlborn; Joachim Ahrens; Rainer Schweickert
  11. Composite indicators of flexibilization across EU regions: a critical re-appraisal and interpretation By Stelios Gialis; Lila Leontidou; Michael Taylor
  12. Do Market Incentives in the Hospital Industry Affect Subjective Health Perceptions? Evidence from the Italian PPS-DRG Reform By Cappellari, Lorenzo; De Paoli, Anna; Turati, Gilberto
  13. University knowledge and firm innovation. Evidence from European countries By Andrea Bellucci; Luca Pennacchio
  14. “Cooperation in R&D, firm size and type of partnership: Evidence for the Spanish automotive industry” By Erika Raquel Badillo; Francisco Llorente; Rosina Moreno
  15. Which factors drive the skill-mix of migrants in the long-run? By Andreas Beerli; Ronald Indergand
  16. “Cooperation in R&D, firm size and type of partnership: Evidence for the Spanish automotive industry” By Erika Raquel Badillo; Francisco Llorente; Rosina Moreno
  17. Cohort size and youth unemployment in Europe: a regional analysis By Duncan Roth; John Moffat
  18. How to woo the smart ones? Evaluating the determinants that particularly attract highly qualified people to cities By Buch, Tanja; Hamann, Silke; Niebuhr, Annekatrin; Rossen, Anja
  19. The pre-exit performance of German plants - How long is the 'shadow of death'? By Michaela Fuchs; Antje Weyh
  20. The impact of knowledge spillovers on regional total factor productivity. New empirical evidence from selected European countries By Paula Puskarova; Philipp Piribauer
  21. Ageing and entrepreneurship across Dutch regions By Jan de Kok; Tommy Span
  22. Wealth decumulation, portfolio composition and financial literacy among European elderly By Agnese Romiti; Mariacristina Rossi
  23. Unemployment Transitions to Stable and Unstable Jobs Before and During the Crisis By Nagore Garcia, A.; van Soest, A.H.O.
  24. Housing Collateral, Credit Constraints and Entrepreneurship - Evidence from a Mortgage Reform By Laerkholm Jensen, Thais; Leth-Petersen, Søren; Nanda, Ramana
  25. Is Flexicurity Good in Bad Times? Evidence on worker security in Europe By Gabriele Maria Mazzolini; Federica Origo
  26. Demanding occupations and the retirement age in the Netherlands By Niels Vermeer; Mauro Mastrogiacomo; Arthur van Soest
  27. Does quality affect patients’ choice of doctor? Evidence from the UK By Santos, R.;; Gravelle, H.;; Propper, C.;
  28. Regional productivity growth in Europe: a Schumpeterian perspective By Roberto Basile
  29. The Earnings Returns to Graduating with Honors: Evidence from Law Graduates By Ronny Freier; Mathias Schumann; Thomas Siedler
  30. Labor Market Integration of New Immigrants in Spain By Rodríguez-Planas, Núria; Nollenberger, Natalia

  1. By: Bricard, Damien; Jusot, Florence; Trannoy, Alain; Tubeuf, Sandy
    Abstract: This paper aims to quantify and compare inequalities of opportunity in health across European countries considering two alternative normative ways of treating the correlation between effort, as measured by lifestyles, and circumstances, as measured by parental and childhood characteristics, championed by Brian Barry and John Roemer. This study relies on regression analysis and proposed several measures of inequality of opportunities. Data from the Retrospective Survey of SHARELIFE, which focuses on life histories of European people aged 50 and over, are used. In Europe at the whole, inequalities in opportunities stand for almost 50% of the health inequality due to circumstances and efforts in Barry scenario and 57.5% in Roemer scenario. The comparison of the magnitude of inequalities of opportunity in health across European countries shows considerable inequalities in Austria, France, Spain, Germany, whereas Sweden, Poland, Belgium, the Netherlands and Switzerland present the lowest inequalities of opportunities. The normative principle on the way to treat the correlation between circumstances and effort makes little difference in Spain, Austria, Greece, France, Czech Republic, Sweden and Switzerland whereas it would matter the most in Belgium, the Netherlands, Italy, Germany, Poland and Denmark. In most countries, inequalities of opportunity in health are mainly driven by social background affecting adult health directly, and so would require policies compensating for poorer initial conditions. On the other hand, our results suggest a strong social and family determinism of lifestyles in Belgium, the Netherlands, Italy, Germany, Poland and Denmark, which emphasises the importance of inequalities of opportunities in health within those countries and calls for targeted prevention policies.
    Keywords: Equality of opportunity; Principle of reward; Europe; health; inequality decomposition; efforts; circumstances;
    JEL: D63 I14 N30
    Date: 2014–09
  2. By: Francesco Aiello; Fernanda Ricotta
    Abstract: There is a substantial heterogeneity in productivity when comparing individual firms. However, even when heterogeneity is found, some questions still remain unaddressed. For instance, when focusing on EU nothing is known about the importance of firms' heterogeneity compared with that of location. This is a point to be addressed on empirical grounds: location is expected to affect firms, but there is no evidence quantifying the magnitude of these two effects across Europe. How much the difference is due to individual heterogeneity and how much it is a result of territorial influences? We depart from these arguments and contributes to the issue of EU TFP divide by questioning if differences in TFP levels depend on firms and regional specific effects. In other words, does location matter in understanding TFP regional disparities across Europe? If it does, how much of TFP variability is the result of being located in a region instead of in another. And, what about country-effects? In order to answer to these questions, we proceed by using data of firms operating in the seven European countries comprised in the EFIGE dataset (Austria, France, Germany, Hungary, Italy, Spain, United Kingdom, henceforth, EU7-EFIGE countries). In this respect, when focusing on these countries, the role of being located in different regions will be investigated, net of the country-effect. Furthermore, a deep-analysis on the impact of regionalism within a given country, will be made by focusing on France, Italy and Spain. The key variable of the study is the TFP, which has been calculated at firm level by Bruegel for 2008 by employing the Levinsohn and Petrin (2003) approach. The empirical setting we propose is consistent with the type of analysis we carry out. Indeed, in order to explain the role of different factor in explaining firms' TFP, we consider the multilevel approach. This model allows us to evaluate whether and to what extent space matters in determining firms' performance. In fact, multilevel regressions combine different levels of data aggregation and relate them in ways that render the simultaneous existence of distinct level-one and level-two equations explicit. After having found high TFP heterogeneity across firms and regions, we confirm that firm-specific characteristics greatly affect individual TFP. They dominate to location. Another evidence regards the regional effect. It is high when estimations disregard the country-effects: in such a case, location across EU regions explains about 15.2% of the firms differences in TFP. After controlling for country-effects, we find that about 95.3% of the variance in European firms' TFP is due to firms' characteristics and 4.7% is ascribable to regionalism. These proportions slightly differ when considering the case of France, Italy and Spain and when regressions attempt to capture the role of sectoral membership.
    Keywords: Total Factor Productivity; Firms? Heterogeneity; Sectoral innovation; Geography; Cross-Classified Models;
    JEL: L60 L25 O33
    Date: 2014–11
  3. By: Paolo Piselli; Carla Scaglioni
    Abstract: According to the European Regulatory Framework in Telecommunications sector, one of the main tasks required from the NRAs is to promote efficient investment and innovation in the field. The aim of this paper is to estimate the relevance of regulation for the growth of investment across 16 EU Countries. This is done estimating how regulation affects revenues and investment elasticity to incumbents’ market power. To do so, we use the panel structure of our data and the timing of the introduction of regulation to carry out two “quasi experiments”, where incumbents are ideally splitted in two groups, according to whether they are subject to a specific regulation or not. We consider a sample of 16 EU countries from 1997 to 2011. The results seem to to suggest that New Regulatory Framework has little reduced the impact of market share on firm’s revenues and investment in the recent years. Over a longer time span instead, being a regulated country does not imply lower revenues and investment by telecommunication companies. Instead, in regulated countries it is likely that the telecom sector benefits from a better economic and institutional environment, which makes firms more productive for a given level of market power. Finally, in countries with a long-lasting regulatory tradition, an increase in market share represents a more significant increase in firm’s market power than in a nonregulated country, so that in regulated countries, elasticity of investment to market share turns to be higher
    Keywords: telecommunications, regulated industries, investment, European Union
    JEL: C21 L43 L51 O52
    Date: 2014–10
  4. By: Bettina Peters; Georg Licht
    Abstract: This paper studies the impact of environmental innovation on employment growth using firm-level data for 16 European countries and the period 2006-2008. It extends the model by Harrison et al (2008) in order to distinguish between employment effects of environmental and non-environmental product as well as process innovation. By looking at country and sector level differences, it also generates new insights into the heterogeneity of the environmental innovation-employment growth link along different dimensions. The results demonstrate that both environmental and non-environmental product innovations are conducive to employment growth in European firms. We estimate a gross employment effect of product innovation for both types of product innovators that is very similar in nearly all countries and sectors. That is, in most cases a one-percent increase in the sales due to new products for environmental product innovators also increases gross employment by one percent. This implies that there is no evidence that environmentally-friendly new products are produced with higher or lower efficiency than old products. Yet, we observe differences in the contribution of environmental and non-environmental product innovation to employment growth across countries or sectors that are the result of differences in the average innovation engagement and innovation success across countries or sectors. The absolute contribution to employment growth is positive for both types of new products. However, we find mixed evidence for the relative importance. In manufacturing the contribution of environmental product innovators was larger than that of non-environmental product innovators in half of the countries. In services, however, non-environmental product innovators matters more for growth in the vast majority of countries. In contrast, environmental and non-environmental process innovation plays only a little role for employment growth.
    JEL: O33 Q52 J23 C21 C23
    Date: 2014–11
  5. By: Markaki, Yvonni
    Abstract: This article draws from different theoretical and empirical literatures to analyse the role of socioeconomic and regulatory conditions on immigrant-native gaps across four outcomes; unemployment, monthly earnings, underemployment, and precarious contracts. The empirical results suggest that immigrant-native gaps are larger in countries with more immigrants. Evidence also indicates that a stricter regulation of regular contracts increases the immigrant-native earnings gap and immigrants’ chances of holding temporary contracts. A stricter regulation of temporary contracts increases immigrants’ risk of unemployment and underemployment. A higher union density appears to suppress wage differences across some immigrant groups, rather than in comparison to natives.
    Date: 2014–12–01
  6. By: Anyadike-Danes, Michael; Bjuggren, Carl-Magnus; Gottschalk, Sandra; Hölzl, Werner; Johansson, Dan; Maliranta, Mika; Myrann, Anja
    Abstract: The contribution of different-sized businesses to job creation continues to attract policymakers' attention, however, it has recently been recognized that conclusions about size were confounded with the effect of age. We probe the role of size, controlling for age, by comparing the cohorts of firms born in 1998 over their first decade of life, using variation across half a dozen northern European countries Austria, Finland, Germany, Norway, Sweden, and the UK to pin down size effects. We find that a very small proportion of the smallest firms play a crucial role in accounting for cross-country differences in job growth. A closer analysis reveals that the initial size distribution and survival rates do not seem to explain job growth differences between countries, rather it is a small number of rapidly growing firms that are driving this result.
    Keywords: birth cohort,firm age,firm size,firm survival,firm growth,distributed micro-data analysis
    JEL: L25 L26 E24 M13
    Date: 2014
  7. By: Lutz Bellmann (University of Erlangen-Nuremberg); Hans-Dieter Gerner (Institute of Employment Research, Nuremberg); Christian Hohendanner (Institute of Employment Research, Nuremberg, University of Erlangen-Nuremberg)
    Abstract: In our paper, we analyze the impact of German employment protection legislation on the firms’ employment adjustment patterns. We explore a reform of the Protection Against Dismissal Act (PADA) in 2004 that decreased the employment protection in small establishments and thus generated a quasi-experiment. Extending previous studies we distinguish between open-ended and fixed-term contracts, as the latter might be used to circumvent the PADA. Difference-in-differences estimations based on IAB Establishment Panel data show no overall effect of the reform on firms’ employment adjustment patterns. However, the proportion of hirings based on fixed-term contracts decreases.
    Date: 2014–11
  8. By: Marco Alderighi (Università della Valle d’Aosta, The Rimini Centre for Economic Analysis, Italy); Alberto A. Gaggero (Department of Economics and Management, University of Pavia, Italy); Claudio A. Piga (Keele Management School, United Kingdom, The Rimini Centre for Economic Analysis, Italy)
    Abstract: This paper aims at investigating how the pricing strategy of European airline carriers is affected by code-share agreements on international routes. Our data cover several routes linking the main UK airports to largest European destinations and includes posted fares collected at different days before departure. By analyzing the temporal profile of airline fares, we identify three main results. First, code-share increases fares especially for early bookers. Second, the higher prices in code-shared flights are offered by marketing carriers. Finally, when flights are in unilateral code-share, the pricing profile is flatter than under parallel code-share.
    Date: 2014–11
  9. By: Antonio Cabrales; Juan J. Dolado; Ricardo Mora
    Abstract: Using the Spanish micro data from the Programme for the International Assessment of Adult Competencies (PIAAC), we first document how the excessive gap in employment protection between indefinite and temporary workers leads to large differentials in on-the-job training (OTJ) against the latter. Next, we find that that the lower specific training received by temporary workers is correlated with lower literacy and numeracy scores achieved in the PIAAC study. Finally, we provide further PIAAC cross-country evidence showing that OJT gaps are quite lower in those European labour markets where dualism is less entrenched than in those where it is more extended.
    Date: 2014–11
  10. By: Markus Ahlborn; Joachim Ahrens; Rainer Schweickert
    Abstract: In order to identify convergence patterns among the group of Central and Eastern European Countries (CEECs) we analyze clusters of traditional OECD countries, i.e. EU-15 plus Norway and Switzerland, Anglo-Saxon non-EU countries plus Japan, and CEECs based on macro data on government regulation and spending instead of micro data on firm relations and market characteristics as is usually applied in Varieties-of-Capitalism (VoC) analysis. This framework is supposed to incorporate some of the critique that has been expressed towards the traditional VoC-approach, especially its ignorance of government spending and performance. We acknowledge for the transition aspect by looking at cluster history and principal component analysis for periods of transition. Our analysis reveals that there is consolidation rather than convergence with CEECs being divided in clusters leaning towards CME and LME prototypes respectively. Overall, there are worlds of redistribution within which clusters differ with respect to their mix of – negatively correlated – regulation and innovation. Interestingly, CEECs do not mix up with Mediterranean MMEs, which indeed provide a kind of worst case setting, while Scandinavian CMEs as well as traditional LMEs provide a kind of role model within their respective worlds of redistribution
    Keywords: Varieties of Capitalism, Worlds of Welfare States, Government Spending, Regulation, Cluster Analysis, Transition, Economic Systems, CEECs
    JEL: H10 P10 P51
    Date: 2014–11
  11. By: Stelios Gialis; Lila Leontidou; Michael Taylor
    Abstract: The aim of the paper is to present a comparative analysis of the diffusion of ?flexible contractual arrangements' (FCA) across the European Union (EU). The homonymous FCA Composite Indicator (CI) is calculated for all 200 NUTS II-level regions of France, Germany, the UK, Denmark, Sweden, Belgium, Greece, Italy, Spain, Portugal, Bulgaria and Romania. The CI is calculated for 2005, 2008 and 2011 to present a clear picture of causal effects leading up to, and arising from, the 2008 financial crisis and ensuing recession. A total of eight (8) sub-indicators, grouped into three (3) distinct pillars, are synthesized into the common FCA CI. The novelty of the study lies on that is the first research attempt that accounts for a regional FCA CI by critically re-appraising existent methodology. The findings, and the cluster and outlier analysis performed on them, depict that the crisis had more intense consequences in certain regions than in others, and thus its effects upon regional labour markets were spatially uneven. As discussed in the paper, such an unevenness runs along, and cuts across, a variety of scales, namely the global, the EU and the intra-EU ones. All regions that are at the top of the FCA CI ranking, namely all Greek and more than half of the Spanish, Portuguese, Bulgarian and Romanian regions, are socio-spatial entities that lack advanced economic and social or welfare structures while at the same time facing important pressures from international and EU competitors. The paper stresses that the search for less rigidity and enhanced employability in labour markets, observed in the official policies of EU and national authorities since mid-1990s or so, reflects an agenda for re-regulating employment protection and security norms according to new accumulation priorities. Indeed, different flexibilizing mechanisms, related to increasing global competition and de-stabilized modes of social reproduction across the EU, and within its regions, are seen to have reinforced each other many years before the current crisis occurred. These trends seem to exacerbate in the post-2008 period leading poor forms of atypical work and high flexibilization to prevail, especially in the less privileged Southern and Eastern EU regions. Based on the FCA CI findings, the paper ends by arguing that CIs analysis may prove to be useful when not considered as a goal per se; rather, it should be seen as a first step towards in-depth and focused research, and the triggering of discussion on issues of social action and political intervention.
    JEL: J41 J21
    Date: 2014–11
  12. By: Cappellari, Lorenzo (Università Cattolica del Sacro Cuore); De Paoli, Anna (University of Milan Bicocca); Turati, Gilberto (University of Turin)
    Abstract: We exploit time variation across Italian Regions in the implementation of a prospective pay systems (PPS) for hospitals based on Diagnosis Related Groups (DRGs) to assess their impact on self-assessed health status and on the use of health care services. We consider a survey of more than 600,000 individuals, over the years 1993-2007, with information on both individuals' perceived health and their access to a number of health services. Results suggest that the introduction of market incentives via a fixed-price payment system does not lead to worst health perceptions. Instead, the reform marked a moderate decrease in hospitalization and day hospital treatments, coupled with a clear decrease in the access to emergency services. Results are robust to a number of sensitivity checks.
    Keywords: health reforms, self-assessed health
    JEL: I11 I18
    Date: 2014–11
  13. By: Andrea Bellucci; Luca Pennacchio
    Abstract: In recent decades firms have intensified the exploration of external sources of knowledge to enhance their innovation capabilities. This paper presents an empirical analysis of the factors that affect the importance of academic knowledge for firms’ innovative activities. An integrated approach that simultaneously considers country-level and firm-level factors is adopted. Regarding the former factors, the analysis shows that the entrepreneurial orientation of university and the quality of academic research increase the importance of knowledge transfers from universities to firms. This suggests that the environmental and institutional context contribute to explain cross-national disparities in university-industry interactions and in the effectiveness of knowledge transfer. In regard to the latter factors, the results indicate that firms oriented toward open search strategies and radical innovations are more likely to draw knowledge from universities. Furthermore, firms belonging to high technology sectors and firms with high absorptive capacity place greater value on the various links with universities. With respect to firm size the estimates show an inverted U-shaped relation with the importance of universities as a source of knowledge. However, the greatest benefits from interacting with universities are achieved by small and young research-active firms.
    Keywords: Innovation, industry-university links, knowledge transfer, university entrepreneurial orientation
    JEL: O32 O33 L20
    Date: 2014–11
  14. By: Erika Raquel Badillo (Faculty of Economics, University of Barcelona); Francisco Llorente (Faculty of Economics, University of Barcelona); Rosina Moreno (Faculty of Economics, University of Barcelona)
    Abstract: This paper aims to analyse cooperation in R&D in the automobile industry in Spain. It first examines to what extent firms cooperate with external actors in the field of technological innovation, and if so, with what type of cooperation partner, paying special attention to the differentiation according to the size of the firms. Second, it aims to study how the firm’s size may affect not only the decision of cooperating but also with which type of partner, while controlling for other determinants that have been considered in the literature as main drivers of collaborative activities in R&D. We use data provided by the Technological Innovation Panel in the 2006-2008 period for firms in the automotive sector. We estimate a bivariate probit model that takes into account the two types of cooperation mostly present in the automotive industry, vertical and institutional, explicitly considering the interdependencies that may arise in the simultaneous choice of both.
    Keywords: Innovation, Cooperation in R&D, Partnership, Firm size, Automotive Industry JEL classification: D22, O32, L24, L62
    Date: 2014–11
  15. By: Andreas Beerli; Ronald Indergand
    Abstract: A pervasive, yet little acknowledged feature of international migration to developed countries is that newly arriving immigrants are increasingly highly skilled since the 1980s. This paper analyses the determinants of changes in the skill composition of immigrants using a framework suggested by Grogger & Hanson (2011). We focus on Switzerland, which continuously showed very high immigration rates and dramatic changes in the skill composition of immigrants. In addition, the recent integration of Switzerland into the European labour market in 2002 serves as a policy experiment which allows analysing the influence of a reduction on immigration restrictions on immigrants from European countries in comparison to those from other countries. Our findings suggest that changes of education supply in origin countries and shifts to the relative demand for education groups stand out as the two most important drivers. Yet, while supply alone predicts only a modest increase in the case of highly educated workers and a large increase of middle educated workers, one particular demand channel, the polarisation of labour demand induced by the adoption of computer capital, is crucial to explain the sharp increase in highly educated workers and the mere stabilisation of the share of middle educated immigrant workers. The abolition of quotas for EU residents played a smaller role, yet may have slightly reduced the high skill share among immigrants relative to immigrants from other countries.
    Keywords: International migration, self selection, migration policy, job polarisation
    JEL: F22 J61 J24 J31
    Date: 2014–12
  16. By: Erika Raquel Badillo (Department of Econometrics. University of Barcelona); Francisco Llorente (Department of Econometrics. University of Barcelona); Rosina Moreno (Department of Econometrics. University of Barcelona)
    Abstract: This paper aims to analyse cooperation in R&D in the automobile industry in Spain. It first examines to what extent firms cooperate with external actors in the field of technological innovation, and if so, with what type of cooperation partner, paying special attention to the differentiation according to the size of the firms. Second, it aims to study how the firm’s size may affect not only the decision of cooperating but also with which type of partner, while controlling for other determinants that have been considered in the literature as main drivers of collaborative activities in R&D. We use data provided by the Technological Innovation Panel in the 2006-2008 period for firms in the automotive sector. We estimate a bivariate probit model that takes into account the two types of cooperation mostly present in the automotive industry, vertical and institutional, explicitly considering the interdependencies that may arise in the simultaneous choice of both.
    Keywords: Innovation, Cooperation in R&D, Partnership, Firm size, Automotive Industry JEL classification: D22, O32, L24, L62
    Date: 2014–10
  17. By: Duncan Roth; John Moffat
    Abstract: Will the projected decline in the youth share of European countries' populations alleviate the currently high levels of youth unemployment in Europe? Economic theory predicts that in the absence of perfectly competitive labour markets, changes in the relative size of age groups will cause changes in age-specific unemployment rates. In light of the expected development of the youth population's size over the coming decades, this paper utilises heterogeneity in the structure of youth populations across European countries and regions to identify the effect of nationally and regionally defined age-cohort size on the probability of young individuals being unemployed. To account for the possibility that individuals self-select into areas of low unemployment, the empirical analysis employs an instrumental variables estimator to identify the causal effect of age-cohort size. The results show that individuals in larger cohorts are more likely to be unemployed and that the estimated effect is larger when analysis is conducted using less aggregated spatial units. Although the macroeconomic environment is found to be a more important determinant of unemployment probability, shrinking youth cohorts should therefore improve the current youth unemployment situation.
    Keywords: Cohort size; unemployment; regional labour markets; causal effect; instrumental variables; EU-SILC
    JEL: J10 J21 R23
    Date: 2014–11
  18. By: Buch, Tanja; Hamann, Silke; Niebuhr, Annekatrin; Rossen, Anja
    Abstract: Human capital is a driving factor of innovation and economic growth. Economic prospects of cities depend on high qualified workers' knowledge and therefore, attracting highly qualified workers plays a fundamental role for cities' prospects. This study contributes to the question which factors primarily determine the mobility-decision of highly qualified workers by investigating the determinants of the migration balance of German cities between 2000 and 2010. Furthermore, it compares the effects of several labour- and amenity-related variables on migration rates of highly qualified workers and the remaining workforce. Findings suggest that local labour market conditions influence the mobility decision but amenities matter too for the high-skilled. The preferences of the highly qualified workers partly differ from those of the rest of the workforce. However, there are also several factors that do not show systematic differences across skill groups.
    Keywords: migration,cities,qualification level,highly qualified,labour market conditions,amenities,Germany
    JEL: C23 J61 R23
    Date: 2014
  19. By: Michaela Fuchs; Antje Weyh
    Abstract: This paper deals with the question whether firms' employment performance in the periods preceding their exit can be regarded as casting a 'Shadow of Death' on their final leaving the market. This aspect is of high relevance for politicians and other decision-makers, because by knowing more about possible indicators of market exit and possible problems of firms, they might have instruments at hand to detain unwanted firm deaths. Although it can be seen as a stylized fact that exiting firms exhibit a worse economic performance in the time before exit, a systematic and detailed analysis of the pre-exit perfomance seems warranted. With specific regard to Germany, it is not clear how long the Shadow of Death is and which influence can be attributed to other factors specific to the firm, its employees or its environment. We study the pre-exit performance of German plants in terms of employment change and to this use a comprehensive data set that covers the whole of Germany and contains monthly plant data for the years from 1999 to 2012. Carrying out detailed sector-, region- and time-specific analyses, in a first step we are able to complement the existing literature on the Shadow of Death in detailed descriptive respects. Furthermore, it is not very clear how long the Shadow of Death is and which influence can be attributed to factors specific to the firm, its employees or its environment. Therefore, in a second step we use statistical matching approaches to identify the causal relations. We use a two-step matching procedure using covariate and nearest neighbour matching. In a final step, the conditional difference-in-difference estimator is applied. First descriptive results show that most of the exits take place at the end of a quarter in a year, especially at the end of the fourth quarter. Furthermore, the surviving plants start and operate with more employees. A Shadow of Death exists nearly as long as the plant exists, i.e. here eight or nine years long. On average and for larger plants, employment decline starts between 54 and 63 months before closure.
    JEL: C14 L25 R30
    Date: 2014–11
  20. By: Paula Puskarova; Philipp Piribauer
    Abstract: This paper aims to identify the contribution of knowledge capital and its determinant - human capital - to total factor productivity differences among regions within a regression framework in general and the impact of their spillovers on regional total factor productivity in particular. The focus is laid on interregional spillovers between the Western and Eastern EU and namely, within the triangle of capital regions Vienna-Budapest-Bratislava. The results challenge some previous empirical studies in the sense that once the human capital is accounted for, the significance and magnitude of spillovers from conventional reservoirs of knowledge - patent stocks - falls. Vienna appears to be the largest contributor to the productivity increases in Bratislava. Budapest's productivity seems to be sensitive to knowledge and human capital endowments of EU, but not those of Vienna. Keywords: knowledge capital, knowledge spillover, human capital, human capital spillover, total factor productivity, spatial panel
    Keywords: knowledge capital; knowledge spillover; human capital; human capital spillover; total factor productivity; spatial panel
    JEL: O33 O47 R12
    Date: 2014–11
  21. By: Jan de Kok; Tommy Span
    Abstract: In this study we examine whether the ageing of the Dutch labour force has had an effect on entrepreneurship rates in the recent past, and if it is likely to have an effect in the future. Because we only have data on a relatively short period of time (2001 – 2009), we focus on variation between regions instead of variation across time. The first two research questions of this study are therefore: to which extent are regional differences in business ownership rates and in start-up rates related to regional differences in the age composition of the workforce? To answer these questions, we have applied a shift-share analysis on available data on the age composition of the labour force and entrepreneurship rates for 12 Dutch provinces for the years 2001 - 2009. We find that there is indeed an age composition effect: regional deviations from the national age structure of the labour force can partly account for regional deviations from the national entrepreneurship rates. This applies for business ownership rates as well as start-up rates. The size of this age composition effect is however not very large. By combining these identified age composition effects with expected changes of the age structure of the Dutch workforce (between 2010 and 2060), we have been able to answer the third and final research question of this study, to which extent the ageing of the workforce would affect entrepreneurship rates at national level. Our results show that there is hardly any effect to be expected. This lack of impact may be due to the combination of different factors. First of all, the identified age composition effects are not very large. Secondly, the expected changes in the shares of the different age groups may not be large enough to cause large changes in the entrepreneurship rates. Finally, the changes that do occur for different age groups may counteract each other.
    Date: 2014–11–27
  22. By: Agnese Romiti; Mariacristina Rossi
    Abstract: This paper analyses the role played by financial literacy in savings decisions and wealth decumulation. The broad evidence shows that (elderly) households do not decumulate their assets as they age, contradicting the standard life-cycle theory, which predicts that households should decumulate their assets in order to keep their consumption smooth. In particular, older people seem to be very attached to illiquid assets, such as housing wealth, which is far more difficult to liquidate and use in case of unexpected shocks and for consumption smoothing. Using the SHARE (Survey of Health, Ageing, and Retirement in Europe) survey, we try to detect whether more financial literacy brings about more optimal behaviour from a life-cycle perspective. We look at the impact of financial literacy on three different dimensions of savings decisions: an unbalanced portfolio with excessive weight assigned to illiquid assets, the optimal consumption path, and wealth decumulation. According to our findings, higher financial literacy substantially reduces the portfolio imbalance of people aged 50+ by reducing the weight of housing wealth over total net worth. In addition, higher financial literacy is responsible for a more optimal consumption path and, in particular for men, for both net worth and housing wealth decumulation.
    Keywords: Financial literacy, savings, wealth decumulation, housing, portfolio
    JEL: D14 D91 G11
    Date: 2014
  23. By: Nagore Garcia, A.; van Soest, A.H.O. (Tilburg University, Center For Economic Research)
    Abstract: Using administrative records data from Spanish Social Security, we analyse the pattern and the determinants of individual unemployment benefit spell durations. We compare a period of expansion (2005-2007) and the recent recession (2009-2011), allowing us to determine the impact of the current crisis. In line with the duality that characterizes the Spanish labour market, we distinguish between exits to a stable job and exits to an unstable job. We estimate a Multivariate Mixed Proportional Hazard Model for each time period. We find similar effects of the crisis for stable and unstable jobs, which are particularly strong in the first year of the spell. Moreover, slight negative duration dependence is found, especially for stable jobs in the expansion period until the time of unemployment benefit expires. Individuals who are most affected by the financial crisis tend to be males, those aged 16-24 and 40-51 years, those living in regions with higher unemployment rates, individuals who are less qualified or work in manual occupations (particularly construction) and immigrants.
    Keywords: unemployment durations; Business cycle; dual labour markets; re-employment probability
    JEL: J64 C41 E32
    Date: 2014
  24. By: Laerkholm Jensen, Thais; Leth-Petersen, Søren; Nanda, Ramana
    Abstract: We study how a mortgage reform that exogenously increased access to credit had an impact on entrepreneurship, using individual-level micro data from Denmark. The reform allows us to disentangle the role of credit access from wealth effects that typically confound analyses of the collateral channel. We find that a $30,000 increase in credit availability led to a 12 basis point increase in entrepreneurship, equivalent to a 4% increase in the number of entrepreneurs. New entrants were more likely to start businesses in sectors where they had no prior experience, and were more likely to fail than those who did not benefit from the reform. Our results provide evidence that credit constraints do affect entrepreneurship, but that the overall magnitudes are small. Moreover, the marginal individuals selecting into entrepreneurship when constraints are relaxed may well be starting businesses that are of lower quality than the average existing businesses, leading to an increase in churning entry that does not translate into a sustained increase in the overall level of entrepreneurship.
    Keywords: credit constraints; entrepreneurship; household wealth; mortgage finance
    JEL: D14 D31 G21 L25 L26
    Date: 2014–11
  25. By: Gabriele Maria Mazzolini; Federica Origo
    Abstract: The aim of this paper is to assess the effect of flexicurity on different measures of workers’ perceived security during the economic crisis. According to flexicurity principles, if a country wants to increase flexibility by lowering employment protection, it should increase security by increasing expenditure on labour market policies to preserve worker wellbeing. Our empirical analysis, based on five waves of the Flash Eurobarometer survey on “Monitoring the social impact of the crisis” matched with Eurostat data on expenditure on labour market policies and OECD indicators of employment protection legislation, confirm that, even during the crisis, changes in policy mix according to flexicurity principles increase - ceteris paribus - both perceived job and employment security and the effect is usually greater on the latter. However, the adoption of the flexicurity strategy seems only partly to have higher effects on workers with initial low values of either job or employment flexicurity.
    Keywords: flexicurity; economic crisis; job security; employment security; labour market policies
    JEL: J08 J65 I38
    Date: 2014
  26. By: Niels Vermeer; Mauro Mastrogiacomo; Arthur van Soest
    Abstract: In the policy debate on increasing the statutory retirement age, the issue has been raised to make an exception for workers with demanding occupations, since health considerations may make it unreasonable to expect them to work longer. We use unique Dutch survey data to analyze the general public's opinions on what are demanding occupations, to what extent it is justified that someone with a demanding occupation can retire earlier, and on the willingness to contribute to an earlier retirement scheme for such occupations through higher taxes. A representative sample of Dutch adults answered several questions about hypothetical persons with five different jobs. Panel data models are used to analyze the answers, accounting for confounding factors affecting the evaluations of the demanding nature of the jobs as well as their reasonable retirement age or willingness to contribute to an early retirement scheme. The Dutch public thinks that workers in demanding occupations should be able to retire earlier. A one standard deviation increase in the perceived demanding nature of an occupation translates into a one year decrease in the reasonable retirement age and a 30 to 40 percentage points increase in the willingness to contribute to an early retirement scheme for that occupation. There is some evidence that respondents whose own job is similar to the occupation they evaluate find this occupation more demanding than other respondents but respondents are also willing to contribute to early retirement of occupations that are not similar to their own.
    Keywords: Retirement age; public pensions; justification bias
    JEL: J26 J81 H55
    Date: 2014–11
  27. By: Santos, R.;; Gravelle, H.;; Propper, C.;
    Abstract: Provider competition is a currently popular healthcare reform model. A necessary condition for greater competition to improve quality is that providers will face higher demand if they improve their quality. In this paper we test this crucial assumption in an important part of the health care market by examining whether quality affects the choice of family doctor. We use data on the choices made by 3.4 million English patients from amongst nearly 1000 family doctor practices to estimate the determinants of choice and, in particular, whether quality affects choice. The English setting is a particularly useful test bed since all individuals are entitled to register with a family physician and generally cannot access non-emergency hospital care without doing so. All care is free, so choice of family doctor is not affected by price. Moreover, measures of clinicalquality are publicly available. We find that patients do respond to quality and are willing to travel further to higher quality practices. Our estimates suggest that a one standard deviation increase in the publicly available measure of quality would increase the number of patients a practice would attract by around 15% of the practice patient list.
    Keywords: quality; demand; healthcare; choice; competition; family practice;
    JEL: I11 I18
    Date: 2014–08
  28. By: Roberto Basile (Facoltà di Economia (Faculty of Economics), Seconda Università degli Studi di Napoli (Naples Second University))
    Abstract: Using data for the European regions at NUTS-2 level, we test the predictions of a microfounded Schumpeterian growth model with technological interdependence recently developed by Ertur and Koch (2011, EK11). Spatial interdependence is identified by means ofa semiparametric geoadditive spatial autoregressive model which permits us to disentanglethe effect of nonlinearities, spatial heterogeneity and spatial dependence. A control function approach is applied to estimate this particular SAR-type model using the spatial lag of the quality of regional governance and of its components (corruption, rule of law, government effectiveness and accountability) as instrumental variables for the endogenous term Wy. The results corroborate the predictions of EK11’s model: R&D investments and R&D spillovers are important divers of regional growth in Europe. However, spillover effects are much lower after controlling for spatial unobserved heterogeneity. Moreover, important nonlinearities in the effect of physical capital investments emerge, putting into question the strong homogeneity assumption and suggesting a threshold effect in growth behavior.
    Keywords: Regional growth, spatial dependence, nonlinearities, semiparametric models
    JEL: R11 R12 C14
    Date: 2014–11
  29. By: Ronny Freier; Mathias Schumann; Thomas Siedler
    Abstract: This paper studies the causal effects of graduating from university with an honors degree on subsequent earnings. While a rich body of literature has focused on estimating returns to human capital, few studies have analyzed returns at the very top of the education distribution. We highlight the importance of honors degrees for future labor market success in the context of German law graduates. Using a difference-in-differences research design combined with entropy balancing, we find that students of law who passed the state bar exam with an honors degree receive a significant earnings premium of about 14 percent. The results are robust to various sensitivity analyses.
    Keywords: returns to education, difference-in-differences, entropy balancing, law graduates, earnings
    JEL: J01 J31 J44
    Date: 2014
  30. By: Rodríguez-Planas, Núria (Queens College, CUNY); Nollenberger, Natalia (Queen Mary, University of London)
    Abstract: This paper assesses how new immigrants to Spain fare in the country's labor market, evaluating the conditions under which they are able to find employment, and their progress out of unskilled work into middle-skilled jobs. Using Spanish Labor Force Survey data from 2000 through 2011, we find that immigrants who arrived before the 2008 recession had little trouble finding work immediately, but those who arrived after 2008 struggled to find work as Spanish unemployment rates skyrocketed. Immigrants' individual characteristics had a limited effect on their employment trajectories. Although many immigrants who arrived in Spain between 2000 and 2007 were able to find work and eventually move out of the low-skilled positions, the nature of their jobs meant that they were not protected from the recession, and many became unemployed as the economy shed low- and middle-skilled jobs in sectors dominated by immigrants. In the long term, Spain will likely need immigrants to cover labor shortages because of its aging population and the emigration of native-born workers to other countries. The findings suggest that for many workers, finding middle-skilled work alone isn't enough, and integration policies could aim to help workers transition from the secondary to the primary labor market in order to find their way into more stable employment.
    Keywords: immigrants, Great Recession, Spain
    JEL: J15 J24 J61 J62
    Date: 2014–11

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