nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2015‒01‒31
25 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. A note on how to realize the full potential of the EU-SILC data By Berger, Melissa ; Schaffner, Sandra
  2. The effect of hiring subsidies on regular wages By Moczall, Andreas
  3. The productivity of family and hired labour in EU arable farming By Kloss, Mathias ; Petrick, Martin
  4. Maternity Leave and Its Consequences for Subsequent Careers in Germany By Nele E. Franz
  5. The Spanish productivity puzzle in the Great Recession. By Laura Hospido ; Eva Moreno-Galbis
  6. Gatekeeping versus monitoring: Evidence from a case with extended self-reporting of sickness absence By Torsvik, Gaute ; Vaage, Kjell
  7. The impact of the 2008 financial crisis on European enterprises: the role of innovation systems By Jan de Kok ; O Som ; P Neuhäusler
  8. A matter of life and death? Hospital distance and quality of care: evidence from emergency hospital closures and myocardial infarctions By Avdic, Danie
  9. Income effects of EU biofuel policies in Germany By Deppermann, Andre ; Offermann, Frank ; Grethe, Harald
  10. Early Birds in Day Care: The Social Gradient in Starting Day Care and Children's Non-cognitive Skills By Frauke H. Peter ; Pia S. Schober ; C. Katharina Spieß
  11. Influence of Unemployment Benefit on Duration of Registered Unemployment Spells By Beata Bieszk-Stolorz ; Iwona Markowicz
  12. Market valuation of health claims’ types and strength: the Italian yogurt market By Bimbo, Francesco ; Bonanno, Alessandro ; Viscecchia, Rosaria ; Nardone, Gianluca
  13. Time use for consumption and household production of food: is there a retirement-consumption puzzle in Germany? By Velarde, Melanie ; Herrmann, Roland
  14. Social interactions in inappropriate behavior for childbirth services: Theory and evidence from the Italian hospital sector By Guccio, C.; ; Lisi, D.;
  15. Which firms use trademarks - and why? Representative firm-level evidence from Germany By Crass, Dirk
  16. Options for meeting WFD targets beyond 2015 in a highly polluted river basin in Germany By Heidecke, Claudia ; Wagner, Andrea ; Kreins, Peter ; Venohr, Markus ; Wendland, Frank
  17. Search Balance and Product and Process Innovations By Martin Backfisch
  18. The capitalization of area payments into land rental prices: a panel sample selection approach By Guastella, Gianni ; Moro, Daniele ; Sckokai, Paolo ; Veneziani, Mario
  19. From low-cost airlines to low-cost high-speed rail? The French case By Marie Delaplace ; Frédéric Dobruszkes
  20. The impact of brand use on innovation performance: Empirical results for Germany By Crass, Dirk
  21. The sorting of female careers after first birth: A competing risks analysis of maternity leave duration By Arntz, Melanie ; Dlugosz, Stephan ; Wilke, Ralf A.
  22. Vertical Transmission of Overweight: Evidence From English Adoptees By Joan Costa-Font ; Mireia Jofre-Bonet ; Julian Le Grand
  23. Do exporting firms benefit from retail internationalization? Evidence from France By Cheptea, Angela ; Emlinger, Charlotte ; Latouche, Karine
  24. The German Labor Market for Older Workers in Comparative Perspective By John S. Heywood ; Uwe Jirjahn
  25. Modelling regional labour market dynamics. Participation, employment and migration decisions in a spatial CGE model for the EU By Damiaan Persyn ; d'Artis Kancs ; Wouter Torfs

  1. By: Berger, Melissa ; Schaffner, Sandra
    Abstract: The European Union Statistics on Income and Living Conditions (EU-SILC) is a rotational panel provided by Eurostat that covers variables with a high potential for comparative European labour market and social research. Unfortunately, its current availability limits its potential research applications. This research note describes these shortcomings of the current data provision. Furthermore, we make two contributions for a better exploitation of these data sets: First, we develop a method for combining the different waves in order to increase the number of usable observations; and second, we indicate how monthly data on income and hourly pay can be derived.
    Keywords: EU-SILC,sampling weights,income,Europe,data quality,panel data
    JEL: C81 C83 D31
    Date: 2015
  2. By: Moczall, Andreas (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] )
    Abstract: "What happens to the wages of regular workers in establishments subsidized with hiring subsidies? Does hiring programme participants result in windfalls that are distributed among regular workers? Do these reduce their wage demands to avoid being substituted by subsidized workers? Using linked employer-employee data from Germany, I estimate the effects of subsidizing an establishment on regular workers' wages using spell fixed effects regression. I find that hiring subsidy schemes do increase the daily wages of regular workers by up to almost one per cent in the manufacturing sector. These effects are limited to large establishments and abovemedian local unemployment rates. They occur within the establishment itself and are not merely the result of varying regional exposure to ALMP programmes. I conclude that hiring subsidies have a notable impact on regular workers beyond mere substitution." (Author's abstract, IAB-Doku) ((en))
    Keywords: IAB-Linked-Employer-Employee-Datensatz, Eingliederungszuschuss, Beschäftigerverhalten, Lohnstruktur, Betrieb, arbeitsmarktpolitische Maßnahme - Auswirkungen
    JEL: J38 J68 H25 C23
    Date: 2015–01–07
  3. By: Kloss, Mathias ; Petrick, Martin
    Abstract: This paper investigates the impact of labour force composition on productivity in EU arable farming. We test the heterogeneity of family and hired labour for a set of eight EU member states. To this end, we estimate augmented production functions using FADN data for the years 2001-2008. The results reject the notion that hired labour is generally less productive than family workers. In fact, hired labour is more productive than family members in countries traditionally characterised by family farms, namely France, West Germany and Poland. Here, an increase in reliance on hired labour or the shift of family labour to more productive tasks could raise productivity. This finding calls into question a main pillar of the received family farm theory. In about half the countries, there are no statistically different effects of both types of labour. For the United Kingdom, we find the classical case with family labour being more productive than hired labour. In this situation supervision by family members could increase productivity.
    Keywords: labour productivity, production function estimation, European Union, FADN, Labor and Human Capital, Productivity Analysis,
    Date: 2014–08
  4. By: Nele E. Franz
    Abstract: This paper analyzes the wage development of mothers interrupting their careers, in comparison to the wages of men who do not face a parental interruption. We estimate OLS regression models for different subcategories defined by age and point in time. We use data from the German Socioeconomic Panel from 1984 to 2011, to show that wages and the financial penalty for maternity differ according to the duration of interruption. We find a lower wage penalty in the short run for women interrupting their careers who are legally protected, but merely delayed penalties for the same group in the long run.
    Keywords: Human capital, parental leave, wages, OLS
    JEL: C21 J13 J24 J31
    Date: 2014
  5. By: Laura Hospido (Banco de España ); Eva Moreno-Galbis (GRANEM )
    Abstract: While Spain has traditionally underperformed its European peers in terms of labor productivity, the trend reverses after 2007. The evolution of aggregate productivity in Spain during the Great Recession is shaped largely, albeit not exclusively, by the adverse conditions in the labor market. Using a longitudinal sample of Spanish manufacturing and services companies between 1995 and 2012, we show that the recent increase in Spanish aggregate productivity is also responsive to the behavior of total factor productivity (TFP) and to composition effects. By combining the information at firm level on balance sheet items, collective agreements and imports-exports, we are able to establish that a collective agreement at the firm level and access to external markets are positively related to TFP performance during the whole period. In addition, our estimates indicate that firm TFP was negatively correlated to the proportion of temporary workers during the expansionary period, 1995-2007, whereas the sign of that correlation reversed during the crisis, 2008-2012. Finally, we relate this sign reversal to the changing composition of temporary workers in the labor market.
    Keywords: labor productivity, TFP, temporary workers, collective agreements, exporting firms
    JEL: J24 J21 J52
    Date: 2015–01
  6. By: Torsvik, Gaute (University of Oslo ); Vaage, Kjell (University of Bergen )
    Abstract: We examine the impact of a policy reform that gave employees in a municipality extended rights to self-declare sickness absence. To identify the effect of bypassing the physician as an absence certifier we contrast the development of absence in the reform municipality with absence in similar municipalities. We use a standard difference–in–difference comparison and the synthetic control method to quantify the effect of the reform. Using these methods we find that the reform reduced sickness absence by more than 20%. It is the incidence of absence spells that declines, not their length. To explain this result, we emphasize that the reform not only removed the physician from the picture, it also put the employer more firmly into it by prescribing a detailed follow up scheme (phone calls, meetings, flowers) for the employer (the first line–leader) and the employee calling in sick. The combination of extended self–certification and employer involvement can be taken as a sign of trust and concern for the employees’ well-being or as enhanced monitoring. Both interpretations can explain the drop in absence we observe.
    Keywords: Sickness absence; Public reform; Gatekeeping; Trust; Monitoring
    JEL: C21 H55 J21
    Date: 2014–12–15
  7. By: Jan de Kok ; O Som ; P Neuhäusler
    Abstract: While after the 2008 financial crisis most European enterprises were faced with a reduction in the demand for their products, some were not. This study examines to which extent this depends on the overall innovation performance of their domestic country. The innovativeness of a country is reflected by the share of frequent innovators in a country and by the level of technological specialisation of a country. Our results show that the share of frequent innovators in a country does not affect the probability that individual enterprises are faced with negative demand effects of an economic crisis. If we interpret the share of frequent innovators as an indicator of the overall performance level of innovation of a country, this implies that – despite the overall innovativeness of a country might help to shorten times of recovery after a crisis – it does not mitigate the crisis’ effects on the turnover of individual enterprises. Our results further show a negative effect of technological specialisation: higher levels of technological specialisation are associated with a higher probability for individual enterprises to be faced with negative demand effects of an economic crisis. The size of this effect is considerable: on average, the difference in the probability that enterprises are faced with negative demand effects between the lowest and highest level of technical specialisation is approximately 10% points. Finally, our findings also show that smaller and older firms were more often faced by a reduction in their demand than larger and younger firms.      
    Date: 2014–12–18
  8. By: Avdic, Danie (CINCH-Health Economics Research Center )
    Abstract: The article analyzes to which extent residential proximity from an emergency hospital affects the probability of surviving an acute myocardial infarction (AMI). The critical time aspect in AMI treatment provides an ideal application for evaluating this proximity-outcome hypothesis. Previous studies have encountered empirical difficulties relating to potential endogenous health-based spatial sorting of involved agents and data limitations on out-of-hospital mortality. Using policy-induced variation in hospital distance, arising from plausibly exogenous emergency hospital closures in the highly regulated Swedish health care sector, and data on all AMI deaths in Sweden over two decades, estimation results show a clear robust and gradually declining probability of surviving an AMI of about two percentage points (three percent) per additional ten kilometers distance from a hospital. The results further show that spatial sorting and sample selection from out-of-hospital mortality are likely to significantly attenuate the distance effect unless accounted for.
    Keywords: Myocardial infarction; geographical access; hospital closures; health policy; spatial sorting; self-selection; out-of-hospital mortality; causal effect
    JEL: C23 I14 I18 R41
    Date: 2015–01–13
  9. By: Deppermann, Andre ; Offermann, Frank ; Grethe, Harald
    Abstract: The persistency of EU policies supporting first generation biofuels despite the clearly emerging picture of ecological benefits of this policy being small or even negative, leads to the conclusion that this policy is driven by other objectives such as its distributional effects. Against this background, the main objective of this article is to analyse income effects of an abolishment of biofuel policies at a disaggregated level for the German agricultural sector. Effects are estimated for different farm types and regions. Furthermore, differences between farm net value added and family farm income are analysed and distributional effects are estimated.
    Keywords: biofuel policy, income effects, equilibrium model, farm group model, Farm Management,
    Date: 2014–08
  10. By: Frauke H. Peter ; Pia S. Schober ; C. Katharina Spieß
    Abstract: In recent years, almost all children below school age in Western industrialized countries have some experience of attending day care institutions. However, the age at which children enter day care and therefore the overall time spent in day carevaries substantially. We investigate the potential impact of later day care entry on the social and emotional behaviour of children, one important aspect of non-cognitive skills. Based on the English sample of the Millennium Cohort Study, we analyse the effects on children’s development at the age of five and seven, using propensity score techniques. We find clear evidence of effects on children’s development at the age of seven: Later day care entry increases children’s peer-problems and reduces prosocial behaviour. We find that boys with low educated mothers and from families with a household income below the poverty line are most strongly affected.
    Keywords: Day care entrance, early start, socio-emotional behaviour, propensity score matching
    JEL: J13 I21
    Date: 2014
  11. By: Beata Bieszk-Stolorz (University of Szczecin, Poland ); Iwona Markowicz (University of Szczecin )
    Abstract: The purpose of the article is to present the analysis of the influence of the unemployment benefit on the duration of the registered unemployment spells. The authors made a hypothesis that the very fact of receiving the benefit prolongs the job seeking time and determines the intensity of unemployment leaving. The power of this influence varies depending on a subgroup the unemployed person belongs to. The study was conducted on the basis of data from the Poviat Labour Office in Sulêcin. The data were collected in the course of the European Union project implementation. The analysis covered two periods of time – before and after Poland’s accession to the European Union and the change in legal regulations concerning unemployment benefits. In each of the periods the authors observed separate cohorts of the unemployed registered in 2001 and 2005. The closing dates of the observations were: the end of 2003 and 2007, respectively. Also, the authors examined whether the EU projects implemented after 2004 had an effect on the length of the unemployment spells as well as on the intensity of finding a job. The study confirmed the research hypotheses. The fact of claiming the unemployment benefit prolonged the unemployment spells in both periods of observation. The loss of the right to the benefit increased the probability of de-registration in each sub-group.
    Keywords: Kaplan-Meier estimator; Cox hazard model; hazard ratio; unemployment
    JEL: C01 C14 J64 J65 A11 A14 B16
    Date: 2014–12
  12. By: Bimbo, Francesco ; Bonanno, Alessandro ; Viscecchia, Rosaria ; Nardone, Gianluca
    Abstract: While consumer’s demand for foods delivering health benefits, or functional foods, increases, Reg.No.1924/2006, imposes to food manufacturers in the European market stringent criteria for health claims approval. Facing this trade-off, manufacturers need to assess which claim is more likely to lead to market success. We investigate the market value of different health claims, and their efficacy in Italy, using a large database of yogurt sales and a hedonic price framework. Our results indicate large variation in the marginal price of a health claim depending upon the type of health benefits delivered and the claim’s strength.
    Keywords: health claims, yogurt, hedonic price, Consumer/Household Economics,
    Date: 2014–08
  13. By: Velarde, Melanie ; Herrmann, Roland
    Abstract: In order to test whether a retirement-consumption puzzle does exist, we examine how food-related time use alters within the 50+ generation in Germany due to retirement. Based on the German Time-Use Survey, time-use patterns of retired and non-retired persons are compared statistically and determinants of time-use are elaborated by the use of double-hurdle and multiple regression models. There is no indication of a retirement-consumption puzzle but of a planned behavioral change in a new phase of life. Work-related food-away-from-home con-sumption is substituted by food production and consumption at home and associated shopping activities. Leisure-related away-from-home consumption gains importance for a portion of pensioners. These impacts are strong and highly significant for German households.
    Keywords: Retirement-consumption puzzle, food-at-home consumption, food-away-from-home consumption, household production, time-use data, generation 50+, Consumer/Household Economics, Demand and Price Analysis,
    Date: 2014–08
  14. By: Guccio, C.; ; Lisi, D.;
    Abstract: Over the last decades the role of social interactions has become increasingly important in the economic discussion and, by now, it is acknowledged that the interaction across agents can produce both positive and negative effects. In this paper we evaluate the role of social interactions in the hospital sector using the large incidence of caesarean section, usually considered an inappropriate outcome in the childbirth service. In doing so, we lay out a theoretical model of hospitals’ behavior where the effect of peers’ behavior emerges by the simple sharing of the same institutional authority. Then, using the risk adjusted cesarean section rate of a large panel of Italian hospitals, we empirically investigate whether the behavior of each hospital is affected by the behavior of hospitals within the same region, after controlling for demand, supply and financial factors. In particular, we perform our empirical test employing both peer effects estimate and the spatial econometric approach, exploiting the panel dimension of our data. Both estimates show a significant and strong presence of peer effects among hospitals, robust to sensitivity analyses. We interpret this evidence as a large presence of constraint interactions in the healthcare sector, with important implications for the healthcare policy.
    Keywords: social interactions; peer effects; caesarian section; spatial econometrics;
    JEL: I11 C31
    Date: 2014–12
  15. By: Crass, Dirk
    Abstract: Trademarking firms are more productive, generate higher profits, and have a better survival rate. Trademarking firms are in one word more successful, which might motivate non-trademarking firms to adopt a trademark strategy. But this seems not to be the case. The proportion of trademarking firms in the German business sector amounts to just 18%. This figure is quite low, given that nearly each firm has reputation to protect. But why has the vast majority of firms no registered trademarks? Using a representative sample of German firms, the present paper links certain firm characteristics to a firms' propensity to register trademarks. The empirical results point to circumstances under which trademarks are significantly more often used: this is the case where a large distance between a firm and its customers exists, a firm's product quality is difficult to assess, a firm's products are characterized by a limited (but not strong) substitutability, and where a firm is engaged in R&D and introduces innovative products. Trademarks are considerably less frequently used if none of this is the case.
    Keywords: Intellectual Property Rights,Trademarks,Reputation,Innovation
    JEL: C25 D21 L14 O34
    Date: 2014
  16. By: Heidecke, Claudia ; Wagner, Andrea ; Kreins, Peter ; Venohr, Markus ; Wendland, Frank
    Abstract: The Weser River Basin will most likely not meet European water framework directive nitrogen concentration targets by 2015. We use the AGRUM model network connecting hydrological and nutrient transport models with a German agricultural sector model to analyse current and future nitrogen surplus developments, water quality aspects and additional agrienvironmental measures to discuss options for WFD targets until 2021. Results show that even with a full implementation of the nitrogen directive and with additional agrienvironmental measures the objectives of the WFD can hardly be met.
    Keywords: diffuse pollution / agricultural economic and hydrological modelling / cost of nutrient reduction measures / Weser river basin, Environmental Economics and Policy,
    Date: 2014–08
  17. By: Martin Backfisch (Duale Hochschule Baden-Württemberg )
    Abstract: Firms’ search for external knowledge is one aspect of knowledge integration in the innovation process. The literature has investigated innovation and the breadth of search in different information channels. We introduce the concept of search balance reflecting the heterogeneity of a firm’s knowledge base. Results from German Community Innovation Survey data shows that search balance is positively connected to the introduction of product as well as process innovations. The connection is stronger for process innovations. The relative balance between all information sources used by firms is important for process innovations, but less so for product innovations. Product innovations rely on specific search directions where internal or market-based knowledge is found, offering an alternative to balanced search. Such an alternative does not exist for process innovations such that knowledge from specific information channels has to be accompanied by balanced search in other channels to be successfully used for process innovations.
    Keywords: Openness, knowledge sources, innovative search, search balance, innovation, innovation performance
    JEL: K21 K42 L41
    Date: 2014
  18. By: Guastella, Gianni ; Moro, Daniele ; Sckokai, Paolo ; Veneziani, Mario
    Abstract: Previous empirical literature suggests that agricultural subsidies are capitalized into farmland rents and that the introduction of the 2003 decoupling reform of the EU Common Agricultural Policy, attaching the subsidy to land only, might have even extended the phenomenon of capitalization. Employing the FADN dataset for Italy we investigate this issue using methodologies accounting for selectivity, endogeneity and individual heterogeneity simultaneously. The evidence suggests that selectivity bias causes inconsistent estimation of parameters and wrong inference. Results reveal instead that, in Italy, there is no incidence of both coupled and decoupled payments.
    Keywords: Agricultural and Food Policy, Land Economics/Use, Resource /Energy Economics and Policy,
    Date: 2014–09
  19. By: Marie Delaplace ; Frédéric Dobruszkes
    Abstract: This paper explores OUIGO (pronounced ‘we go’), the low-cost high-speed rail (HSR) service launched by the French state-owned railways in April 2013. In this exploration, we: (1) compare OUIGO with the traditional French HSR and the low-cost airlines (LCAs), and (2) analyse fares proposed by OUIGO and its competitors. We thus analyse the new service in terms of production conditions, communication, marketing, booking, network geography, at-terminal and on-board experience and fares. We find that the railway industry’s constraints (including market regulations, technical rigidities and incumbent employment relations) affect the OUIGO business model, which appears as a hybrid between LCAs and traditional French HSR carriers, although fares can be very attractive indeed.
    Date: 2015
  20. By: Crass, Dirk
    Abstract: The market launch of product innovations is the most visible output of a firm's investment in innovation activities. To achieve this objective most efficiently, firms strengthen their technological capabilities, acquire external knowledge in a number of different ways, and optimize their innovation process. The success of a firm's innovation strategy has two dimensions: First, the ability of a firm to master the research and development process, leading to the market introduction of a product innovation. Second, the ability to turn the market introduction of a product innovation into commercial success. While a firms technological abilities make a product innovation possible, this product might face a lack of interest among potential customers after its market introduction. The introduction of a product innovation under a brand name might generate interest, adds credibility and reputation and has the potential for the firm to better appropriate the returns from its innovations. This paper investigates the role of brand use for the commercial success of product innovations, using a representative sample of German firms. The results show that firms can improve the odds of commercial success by pursuing a branding strategy. The market introduction of a product innovation is shown to be associated with 35% larger sales if the firm uses an established brand to introduce the product innovation into the market.
    Keywords: innovation performance,brands,trademarks,innovation,Germany
    JEL: O32 O34
    Date: 2014
  21. By: Arntz, Melanie ; Dlugosz, Stephan ; Wilke, Ralf A.
    Abstract: A number of contributions have found evidence for motherhood being a critical life event for women's employment careers. This study presents a detailed model for the du- ration of maternity leave in which young mothers can make a transition into a number of states related to employment and unemployment among others. The model incorporates a large number of factors including the legal framework, individual and firm character- istics. We provide a comprehensive picture of the sorting mechanisms that lead to the differentiation of women's employment careers after birth. Our empirical evidence is de- rived from large linked administrative individual labour market data from Germany for a period of three decades. We obtain unprecedented insights how women's skills, the quality of the previous job match, firm level characteristics, labour market conditions and leave legislation are related to the length of maternity duration.
    Keywords: work interruptions,cumulative incidence,leave legislation
    JEL: J13 J18 C41
    Date: 2014
  22. By: Joan Costa-Font ; Mireia Jofre-Bonet ; Julian Le Grand
    Abstract: We examine the vertical transmission of overweight drawing upon a sample of English children, both adopted and non-adopted, and their families. Our results suggest strong evidence of an intergenerational association of overweight among adoptees, indicating transmission through cultural factors. We find that, when both adoptive parents are overweight, the likelihood of an adopted child being overweight is between 10% and 20% higher than when they are not. We also find that the cultural transmission of overweight is not aggravated by having a full-time working mother, so do not confirm the existence of a female labour market participation penalty on child overweight among adoptees. Overall, our findings, despite subject to data limitations, are robust to a battery of robustness checks, specification and sample selection corrections.
    Keywords: Vertical transmission, cultural transmission, overweight, children, natural parents, Body Mass Index, sample selection
    JEL: I18 D13 Z1
    Date: 2015–01
  23. By: Cheptea, Angela ; Emlinger, Charlotte ; Latouche, Karine
    Abstract: In this paper, we explore the link between globalization of the retail sector and the export activity of firms from their origin country. In a previous paper (Cheptea, Emlinger and Latouche, forthcoming), we showed that exporting firm from countries with internationalized retail companies benefit more from this process than firms from other countries. The underlying assumption of this paper is that the main benefits are grasped by the retailers’ domestic suppliers. In other words, firms that sell their products under retailers’ brands benefit more from the overseas expansion of retailers than other firms. We employ French firm-level data to evaluate the effect for the two types of firms. We identify retailers’ suppliers using the certification of French agri-food firms with the private IFS standard, granting them the right to sell their products under a retailer’s brand. Our empirical objective is to estimate whether firms with IFS certification have better export performance on markets where French retail companies have established outlets. We find that certified French firms export more than non-certified firms to markets where IFS retailers established outlets (mainly outside Europe). The difference is statistically significant and robust to the use of firm- and country-specific fixed effects. Results are similar for the extensive and the intensive margin of exports.
    Keywords: Multinational retailers, Firm-level exports, Private standards, Agribusiness, International Relations/Trade, F12, F14, F23,
    Date: 2014–08
  24. By: John S. Heywood ; Uwe Jirjahn
    Abstract: This paper focuses on the German labor market for older workers. It does so in comparison with other countries and with a unique focus on the role of employer incentives for retaining and hiring older workers. It argues that while employment of older German workers has improved due to changes in government policy, the labor market for older workers remains characterized by far less mobility and opportunity. While we recognize the potential explanations of reduced productivity and age discrimination, we review evidence pointing to the importance of life-cycle contracts (Hutchens 1986, Lazear 1979). These contracts can be efficient but typically imply that older workers will have difficulty being re-hired into career jobs after separation. We suggest that attempts to reduce or eliminate such life-cycle contracts are likely to be counter-productive but suggest how other countries, particularly Japan, have dealt with this issue.
    Keywords: Older workers, deferred compensation, productivity, discrimination, labor market institutions
    JEL: J14 J33
    Date: 2015
  25. By: Damiaan Persyn (European Commission – JRC - IPTS ); d'Artis Kancs (European Commission – JRC - IPTS ); Wouter Torfs (European Commission – JRC - IPTS )
    Abstract: This paper outlines how regional labour market adjustments to macro-economic and policy shocks are modelled in RHOMOLO through participation, employment and migration decisions of workers. RHOMOLO, being a multi-sectoral, inter-regional general equilibrium model, is complex both in terms of its dimensionality and the modelling of spatial interactions through trade flows and factor mobility. The modelling of the labour market is therefore constrained by the tractability and computational solvability of the model. The labour market module consists of individual labour participation decisions, including the extensive margin (to participate or not) and the intensive margin (hours of work). Unemployment is determined through a wage curve and inter-regional labour migration decisions are modelled in a discrete-choice framework, with backward-looking expectations.
    Keywords: Participation, unemployment, labour migration, wage curve, CGE, new economic geography
    JEL: C68 D58 F22 J20 J61 J64 O15
    Date: 2014–12

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