nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2015‒02‒16
thirty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Gender and Immigration: Double Negative Effects in the Labor Market Outcomes of University Graduates in Germany? By Bünstorf, Guido; Krabel, Stefan
  2. Are ICT Displacing Workers? Evidence from Seven European Countries By Federico Biagi; Smaranda Pantea; Anna Sabadash
  3. Do Changes in Regulation Affect Temporary Agency Workers' Job Satisfaction? By Busk, Henna; Jahn, Elke J.; Singer, Christine
  4. R&D, Patenting and Market Regulation: Evidence from EU Electricity industry By Carlo Cambini; Federico Caviggioli; Giuseppe Scellato
  5. Spatial Clubs in European Regions. By Davide Fiaschi; Lisa Gianmoena; Angela Parenti
  7. The One Constant: A Causal Effect of Collective Bargaining on Employment Growth? Evidence from German Linked-Employer-Employee Data By Tobias Brändle; Laszlo Goerke
  8. The Effect of Ethnic Clustering on Migrant Integration in Germany By Treude, Barbara
  9. Do High-Skilled Immigrants find Jobs Faster than Low-Skilled Immigrants? By Wapler, Rüdiger; Hochfellner, Daniela
  10. Granting Birthright Citizenship - A Door Opener for Immigrant Children's Educational Participation and Success? By Saurer, Judith; Felfe, Christina
  11. Institutions and the Location Decisions of Highly Skilled Migrants to Europe By Klaus Nowotny
  12. Is there a Gender Gap in Preferences for Public Spending? Evidence from Germany By Haußen, Tina
  13. Firms’ Innovation Strategies Analyzed and Explained By Tavassoli, Sam; Karlsson, Charlie
  14. Coaching, Counseling, Case-Working: Do They Help the Older Unemployed out of Benefit Receipt and back into the Labor Market? By Bernhard Boockmann; Tobias Brändle
  15. The Lost Generation in Europe? - the Economic Crisis and Starting a Family By Schaffner, Sandra
  16. Assignment vs. choice: lessons from training vouchers By Poeschel, Friedrich
  17. Student assessment and grade retention: evidence from a natural experiment By Kimura, Marlies; Ochsen, Carsten
  18. How Effective Are Energy-Efficiency Incentive Programs? Evidence from Italian Homeowners By Anna Alberini; Andrea Bigano
  19. Labour Force Participation and Tax-Benefit Systems: A Cross-Country Comparative Perspective By K. Galušcák; G. Kátay
  20. The influence of noise on net revenue and values of investment properties: Evidence from Switzerland By Stefan Sebastian Fahrländer; Michael Gerfin; Manuel Lehner
  21. Charitable giving and its persistent and transitory reactions to changes in tax incentives: Evidence from the German taxpayer panel By Bönke, Timm; Werdt, Clive
  22. Does higher learning intensity affect student well-being? Evidence from the National Educational Panel Study By Quis, Johanna Sophie
  23. The Labour Supply Effect of Education Maintenance Allowance and its Implications for Parental Altruism By Holford, Angus J.
  24. Youth unemployment and mental health: dominance approach. Evidence from Poland. By Martyna Kobus; Marcin Jakubek
  25. When the minimum wage bites back: Quantile treatment effects of a sectoral minimum wage in Germany By Gregory, Terry
  26. The Impact of Centralization, Corruption and Institutional Quality on Procurement Prices: An Application to Pharmaceutical Purchasing in Italy By Simona Baldi; Davide Vannoni
  27. Is All Infrastructure Investment Created Equal? The Case of Portugal By Alfredo Marvão Pereira; Rui M. Pereira
  28. The macro-economic impact of e-commerce in the EU By Joseph Francois; Bertin Martens; Fan Yang
  29. Behavioral Responses to Local Tax Rates: Quasi-Experimental Evidence from a Foreigners Tax Scheme in Switzerland By Slotwinski, Michaela; Schmidheiny, Kurt
  30. Why Did Self-Employment Increase so Strongly in Germany? By Fritsch, Michael; Kritikos, Alexander S.; Sorgner, Alina

  1. By: Bünstorf, Guido; Krabel, Stefan
    Abstract: Survey data for a large sample of recent graduates from 37 German universities are used to study labor market outcomes of highly skilled young women and immigrants. Our results indicate a systemic wage gap for women, but not for male immigrants. We find no evidence that female immigrants suffer from a double-negative effect of being disadvantaged twofold (in terms of gender and immigration status). Similar patterns are obtained for job satisfaction and the match quality of competences and job requirements.
    JEL: J71 J61 I23
    Date: 2014
  2. By: Federico Biagi (European Commission – JRC - IPTS); Smaranda Pantea (European Commission – JRC - IPTS); Anna Sabadash (European Commission – Eurostat)
    Abstract: This paper examines whether ICT substitute labour and reduce the demand for labour. We used firm-level comparable data separately for firms in manufacturing, services and ICT-producing sectors from seven European countries. We adopted a common methodology and applied it to a unique dataset provided by the ESSLait Project on Linking Microdata. We controlled for unobservable time-invariant firm-specific effects and we found no evidence of a negative relationship between intensity of ICT use and employment growth. We read this as an indication that ICT use is not reducing employment among ICT using firms.
    Keywords: Labour Demand, Technological Change, ICT
    JEL: J23 J24 O33 L86
    Date: 2014–12
  3. By: Busk, Henna (University of Jyväskylä); Jahn, Elke J. (Institute for Employment Research (IAB), Nuremberg); Singer, Christine (Institute for Employment Research (IAB), Nuremberg)
    Abstract: This paper evaluates the impact on temporary agency workers’ job satisfaction of a reform that considerably changed regulations covering the temporary help service sector in Germany. We isolate the causal effect of this reform by combining a difference-in-difference and matching approach and using rich survey data. We find that the change of the law substantially decreased agency workers’ job satisfaction while regular workers’ job satisfaction remained unchanged. Further analysis reveals that the negative effect on agency workers’ job satisfaction can be attributed to a decrease in wages and an increase in perceived job insecurity. These results are also robust to the use of different specifications and placebo tests.
    Keywords: temporary agency employment, deregulation, job satisfaction
    JEL: J28 J41 J88
    Date: 2015–01
  4. By: Carlo Cambini; Federico Caviggioli; Giuseppe Scellato
    Abstract: In this paper we study the effects of the changes in the level of product market regulation on the industry-level innovation intensity in the Electricity sector across 16 European countries during years 1990-2009. We matched data on R&D budgets and EPO patent applications from IEA and Eurostat Databases and indexes of market regulation conditions from OECD, in order to test the impact of deregulatory policies on the propensity to innovate in new energy technologies. Our findings indicate an increase in the aggregated Electricity R&D and in patenting activities following market deregulation. Our measure of market regulation intensity is based on the aggregation of three factors that capture respectively entry barriers, public ownership and vertical integration. Econometric results suggest that policies aimed at a reduction in vertical integration have a positive impact on both industry-level R&D and patenting. The reduction of public ownership of incumbent operators and entry barriers are mostly associated to a significant increase in R&D expenditures. In the paper we discuss the implication of this evidence in light of the current trend in investment in the electricity sector in Europe.
    Keywords: Innovation, Patents, Regulation, Electricity.
    JEL: L94
    Date: 2015
  5. By: Davide Fiaschi; Lisa Gianmoena; Angela Parenti
    Abstract: This paper finds evidence of spatial clubs in a sample of 254 European regions in the period 1991-2008. A dynamic extension of the Moran scatter plot, consisting in a non parametric estimate of the joint dynamics of GDP per worker and its spatial lag, suggests the emergence of three spatial clubs: one populated by regions belonging to the former Eastern Bloc countries, one by regions of PIGS countries (Portugal, Italy, Greece and Spain) and the last one by regions of other EU countries (notably Germany, France, UK and Northern Europe countries). In the long run the convergence process is evident only to two spatial clubs with Eastern regions converging to PIGS regions. Spatial spillovers are present across European regions, and their contribution to the emergence of spatial clubs is crucial. On the contrary, cross-region heterogeneity in human capital has a very limited impact on the distribution of GDP per worker. Finally, unobserved heterogeneity explains a substantial share of inequality and polarization.
    Keywords: Moran scatter plot, spatial panels, spatial spillovers, bipolarization, core-periphery pattern.
    JEL: C21 R11 O52 F41
    Date: 2015–02–01
  6. By: Triebs, Thomas; Tumlinson, Justin
    Abstract: Communism in East Germany sought to dampen the effect of market forces on firm productivity for nearly 40 years. How did East German firms respond to the free market after being thrust into it in 1990? We use a formal learning model and German business survey data to analyze the lasting impact of this far-reaching treatment on the way firms in former East Germany predicted their own productivity relative to firms in former West Germany during the two decades since Reunification. We find in confirmation of our formal model's predictions, that Eastern firms forecast productivity less accurately, particularly in dynamic and uncertain markets, but that the gap gradually closed over 12 to 13 years. Second, by analyzing the direction of firm level errors in conjunction with contemporaneous market signals we find that, in the years immediately following Reunification, Eastern firms estimate the market's role as generally less potent than Western firm do, an observation consistent with overweighting experiences from the communist era; however, over roughly 14 years both converge to the same (incorrect) overestimate of the market's role on their productivity.
    JEL: D21 D22 D83
    Date: 2014
  7. By: Tobias Brändle (Institut für Angewandte Wirtschaftsforschung (IAW), University of Tübingen); Laszlo Goerke (Institute for Labour Law and Industrial Relations in the EU, University of Trier)
    Abstract: A large number of articles have analysed ‘the one constant´ in the economic effects of trade unions, namely that union bargaining reduces employment growth by two to four percentage points per year. Evidence is, however, mostly related to Anglo Saxon countries. We investigate whether a different institutional setting might lead to a different outcome, making the constant a variable entity. We use linked-employer-employee data for Germany and analyse the effect of collective bargaining coverage on employment growth in German plants. We find a robust and negative correlation between being covered by a sector-wide bargaining agreement or firmlevel contract and employment growth per annum of about 0.8 percentage points. Using various approaches, however, we cannot establish a causal interpretation of the effects, suggesting that the cross-section results are driven by selection.
    Keywords: collective bargaining, employment growth, job flows, trade unions
    JEL: J23 J52 J53 J63
    Date: 2015–01
  8. By: Treude, Barbara
    Abstract: Even though ethnic clustering is common, both economic theory and empirical research have not been able to provide a clear-cut answer on its effects on the integration of immigrants. In this paper, we study the effect of residential clustering on the labour market outcome of immigrants in Germany. Thereby, we use two measures for labour market integration: the employment probability and the wage levels. Our paper contributes to the existing literature twofold: First, we extend it to Germany on which hardly any research has been conducted. Second, we employ a new methodological approach which allows for the identification of smaller ethnic clusters and thus a more precise estimation of its effects. This is achieved by including neighbouring spatial units in the regression model. In order to control for the endogeneity of the location decision, we use a two-step strategy, combining a control function and an instrumental variable (IV) approach. We observe immigrant clustering in Germany, using a Moran s I analysis. In addition, the analysis suggests the importance of residential clustering for the employment probability of immigrants, and for second or higher generation migrants, a positive impact of clustering on wages.
    JEL: J61 J31 R23
    Date: 2014
  9. By: Wapler, Rüdiger; Hochfellner, Daniela
    Abstract: This paper investigates the role that pre-immigration skills play in immigrants job-finding processes in Germany. We first show theoretically that the job-finding rate for the high-skilled varies depending on their search strategy: if they are prepared to look for both unskilled as well as skilled jobs (cross-skill matching), then their expected time to find a job is lower compared to the low-skilled. However, if the high-skilled are only prepared to look for and take up skilled jobs (ex post segmented matching), it might be that the high-skilled actually need longer to find a job. We then provide empirical evidence by studying the labour-market integration process of Ethnic Germans, one of the largest immigration groups in Germany, using novel German administrative data. Applying proportional hazard models, our estimates generally support the theoretical predictions: in case of cross-skill matching, the job finding rate of the high- and low-skilled does not differ significantly. However, if the length of time a job match holds is accounted for, then we do find that the high-skilled are significantly faster than the low-skilled. If the high-skilled only search for skilled jobs, the likelihood of finding a job is about 50% lower compared to the low-skilled.
    JEL: J61 J64 J15
    Date: 2014
  10. By: Saurer, Judith; Felfe, Christina
    Abstract: Does granting citizenship at birth help immigrant children to integrate in the host country's educational system and thus, to promote their educational success? Our identification strategy is based on a reform of the German naturalization law in 2000. We exploit this natural experiment and use a difference-in-difference design that compares children born shortly before and after the reform in years of policy change and years where no policy change took place. Our empirical analysis relies on two comprehensive datasets, administrative data from school entry examinations and the German Micro Census, Europe's largest household survey. We find positive effects on immigrant children's participation in non-mandatory preschool (by 3.2 percentage points) and referral to upper secondary school (by 7.8 percentage points).
    JEL: J15 J24 I21
    Date: 2014
  11. By: Klaus Nowotny
    Abstract: This paper investigates the economic, labor market and institutional factors that make regions and countries attractive for highly skilled migrants vis-`a-vis lowskill migrants. Based on micro-data for 11 EU countries, a discrete choice model estimated at the NUTS-2 level shows that location decisions are not only determined by factors related to earnings opportunities, distance, networks, common language and colonial relationships, but also by institutional factors such as migration policy, the income tax system, or labor market institutions; it also lends some support to the welfare magnet hypothesis: a higher unemployment replacement rate increases the attractiveness of a country. The empirical analysis however reveals only minor differences in the effects of institutions on location decisions by skill level, limiting the scope for policy makers to affect the skill composition of migration.
    Keywords: Highly skilled migration, regional location decisions, institutions, migration policy
    JEL: F22 R23 C35
    Date: 2015–01
  12. By: Haußen, Tina
    Abstract: In several empirical contributions researchers have found a gender gap in preferences for public spending. This paper analyzes the persistence of these gender gaps when income differences between individuals are taken into consideration. Using survey data from the years 1996 and 2006 of German respondents, we show that gender gaps in preferences vanish when we control for individual income relative to the German median income. The larger this income ratio, the lower the preferences for social security (health care, retirement and unemployment) but the larger the preferences for education spending. Controlling for pseudo individual income (the actual available income if income is shared between all household members), gender gaps in health care and retirement reappear. This may reflect an insurance motive of women who fear to lose the benefits from sharing income within the household.
    JEL: J16 H50 D70
    Date: 2014
  13. By: Tavassoli, Sam (Centre for Innovation, Research and Competence in the Learning Economy (CIRCLE), Blekinge Institute of Technology.); Karlsson, Charlie (Blekinge Institute of Technology, Jönköping International Business School & Centre of Excellence for Science and Innovation Studies (CESIS))
    Abstract: This paper analyzes various innovation strategies of firms. Using five waves of the Community Innovation Survey in Sweden, we have traced the innovative behaviour of firms over a ten-year period, i.e. between 2002 and 2012. We distinguish between sixteen innovation strategies, which compose of Schumpeterian 4 types of innovations (process, product, marketing, and organizational) plus various combinations of these four types. First, we find that firms are not homogenous in choosing innovation strategies; instead, they have a wide range of preferences when it comes to innovation strategy. Second, using Transition Probability Matrix, we found that firms also persist to have such a diverse innovation strategy preferences. Finally, using Multinomial Logit model, we explained the determinant of each innovation strategies, while we gave special attention to the commonly used innovation strategies among firms.
    Keywords: innovation strategy; product innovations; process innovations; market innovations; organizational innovations; innovation strategies; heterogeneity; firms; persistence; Community Innovation Survey; Sweden
    JEL: D22 L20 O31 O32
    Date: 2015–02–02
  14. By: Bernhard Boockmann; Tobias Brändle
    Abstract: Job search assistance and intensified counseling have been found to be effective for labor market integration by a large number of studies, but the evidence for older and hard-to-place unemployed individuals more specifically is mixed. In this paper we present key results from the evaluation of “Perspektive 50plus”, a large-scale active labor market program directed at the older unemployed in Germany. To identify the treatment effects, we exploit regional variation in program participation. Based on survey evidence, we argue that participation of regions is not endogenous in the vast majority of cases. We use a combination of different evaluation estimators to check the sensitivity of the results to selection, substitution and local labor market effects. We find large positive effects of the program in the range of five to ten percentage points on integration into unsubsidized employment. However, there are also substantial lock-in effects, such that program participants have a higher probability of remaining on public welfare benefit receipt for up to one year after commencing the program.
    Keywords: active labor market programs, evaluation, long-term unemployment, older unemployed
    JEL: J68 J14
    Date: 2015–01
  15. By: Schaffner, Sandra
    Abstract: Young adults are the most hit by the current economic crisis. This can be observed in high youth unemployment rates in countries like Spain. At the same time fertility is relatively low in the most concerned countries whereas those in their fertile phase experience high unemployment rates. Based on these facts we investigate how marriage and fertility decisions in Europe respond to economic insecurity. We analyse both, the individual economic status as well as increased insecurity due to increased risk of unemployment during the financial crisis. Our results reveal that employed workers are the most likely to marry. However, this relationship becomes smaller during the economic crisis. Men in the most struck countries are even less likely to marry when they are unemployed during recession. Although we find effects on marriage we cannot observe any effects of the economic crisis on fatherhood. Over all countries we can observe that the fertility rate of employed women becomes higher during the economic crisis. Especially unemployed and self employed women in Greece, Italy and Cyprus are less fertile.
    JEL: J12 J13 J64
    Date: 2014
  16. By: Poeschel, Friedrich
    Abstract: For instrumental-variable estimation using binary instruments, we offer simple methods to obtain policy-relevant insights beyond local average treatment effects. We demonstrate the methods by evaluating an element of choice introduced into active labour market policy in Germany by a reform in 2003. Instead of being assigned to training courses by caseworkers, unemployed job seekers receive vouchers allowing them to choose among approved courses. Our data record the receipt of a voucher and the participation in a course. We use exogenous variation in treatment probabilities across locally integrated labour markets as an instrument. Applying our theoretical methods, we can make statements on the distribution of treatment effects and thereby infer the priorities of caseworkers. We further examine the consequences of choice for policy effectiveness and finally explore the distributions of gains or losses from choice.
    JEL: H43 J68 I38
    Date: 2014
  17. By: Kimura, Marlies; Ochsen, Carsten
    Abstract: In Germany and many other countries, students are tracked into various secondary school types. This paper studies whether parents or teachers assess students potential educational performance more adequately. Educational attainment is measured by grade retention rates. We take advantage of a reform in the German state of North Rhine- Westphalia (NRW) in 2006. The reform replaced parents choice about their children s secondary school type by a binding teacher recommendation. Our data comprises class-level information on all public secondary schools in the state. We find that binding teacher recommendations cause less grade retentions. The effect is mainly driven by students from better situated districts. This finding may capture that with free parental choice, overambitious parents tend to select too demanding tracks for their children.
    JEL: I20 I28 I21
    Date: 2014
  18. By: Anna Alberini (AREC, University of Maryland, Fondazione Eni Enrico Mattei (FEEM), Center for Economic Research, ETH Zurich, and Queen’s University Belfast); Andrea Bigano (Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Centre on Climate Change (CMCC))
    Abstract: We evaluate incentives for residential energy upgrades in Italy using data from an original survey of Italian homeowners. In this paper, attention is restricted to heating system replacements, and to the effect of monetary and non-monetary incentives on the propensity to replace the heating equipment with a more efficient one. To get around adverse selection and free riding issues, we ask stated preference questions to those who weren’t planning energy efficiency upgrades any time soon. We argue that these persons are not affected by these behaviors. We use their responses to fit an energy-efficiency renovations curve that predicts the share of the population that will undertake these improvements for any given incentive level. This curve is used to estimate the CO2 emissions saved and their cost-effectiveness. Respondents are more likely to agree to a replacement when the savings on the energy bills are larger and experienced over a longer horizon, and when rebates are offered to them. Reminding about CO2 (our non-monetary incentive) had little effect. Even under optimistic assumptions, the cost-effectiveness of incentives of size comparable to that in the Italian tax credit program is generally not favorable.
    Keywords: Energy-efficiency Incentives, Free Riding, Adverse Selection, Stated Preferences, CO2 Emissions Reductions; CO2 emissions Reductions Supply Curves, Residential Energy Consumption
    JEL: Q41 Q48 Q54 Q51
    Date: 2014–11
  19. By: K. Galušcák; G. Kátay
    Abstract: This paper investigates the extent to which cross-country differences in aggregate participation rates can be explained by divergence in tax-benefit systems. We take the example of two countries, the Czech Republic and Hungary, which – despite a lot of similarities – differ markedly in labour force participation rates. We first replicate for Czech household-level data the labour supply estimation for Hungary presented in Benczúr et al. (2014) and use the two perfectly comparable estimates to simulate how the aggregate participation rate would change in one country if the other country’s tax and social welfare system were adopted. Our estimation results yield similar labour supply elasticities for both countries, suggesting that individual preferences are essentially identical. The simulation results show that about one-half of the total difference in the participation rates of the 15–74 years old population can be explained by differences in the tax-benefit systems. The highest response is obtained for married women or women of childbearing age. This is related to the more generous maternity benefit system in place in Hungary as compared to the Czech Republic.
    Keywords: Cross-country comparison, labour supply, microsimulation, participation rate, tax-benefit systems.
    JEL: C63 H24 I38 J22 P50
    Date: 2015
  20. By: Stefan Sebastian Fahrländer; Michael Gerfin; Manuel Lehner
    Abstract: In this study we use hedonic models to measure the influence of noise nuisance on rents, costs and values of investment properties in Switzerland. Countrywide data is provided by institutional real estate investors. The effects are measured for aircraft noise, road traffic noise and railroad noise. We show that negative effects appear between lower and upper tresholds which vary between different noise types and across residential and non-residential properties. Rents, costs and values are affected below the administrative tresholds given by the LSV and the negative impact ceases at an upper threshold. However high noise nuisance might influence investment decisions, i.e. offices are built instead of housing etc. These important effects are not given account in the data. In addition, directly measured reductions on market values are lower than the expected reductions based on empirical effects on rents and costs. The reasons for the different market value reductions may be found in the Swiss tenancy law. Rents for dwellings within existing rental agreements can only be adjusted in accordance with the change of the “reference interest rate” (Referenzzinssatz) and the CPI. The analysis shows that the average contract duration is dependent on the noise nuisance, which leads to a significant reduction of noise-induced losses within periods of increasing market rents.
    Keywords: Hedonic prices; investment property; Switzerland; noise nuisance; GAM; spline
    Date: 2015–01
  21. By: Bönke, Timm; Werdt, Clive
    Abstract: We estimate the elasticity of charitable giving with respect to price and income changes using a rich panel of income tax returns covering the period 2001 to 2006. Employing censored quantile regression and exploiting the panel structure, the advantage of our analysis is twofold: First, we derive results for different points in the underlying distribution of charitable giving and allow for giving to be heterogeneous. Thus, we do not only estimate responses of giving to prices and incomes but also where the incentives matter most. Second, we disentangle long-run responses to persistent changes in price and income from temporary reactions, consumption smoothing, or tax planning. Indeed, our results suggest that price elasticity is heterogenous across the distribution of donors and that the persistent price elasticity is close to one in absolute value at the upper and lower tail of the distribution of charitable giving.
    Keywords: charitable giving,price and income elasticity,censored quantile regression,taxpayer panel,administrative data,school performance
    JEL: C31 H31 H53
    Date: 2015
  22. By: Quis, Johanna Sophie
    Abstract: Starting in 2004/2005, the German state Baden-Wurttemberg reduced academic track duration from nine to eight years, leaving cumulative instruction time mostly unchanged. I use this change in schooling policy to identify the effect of schooling intensity on student well-being in life and school, perceived stress, mental health indicators and self-efficacy. Using rich data from the National Educational Panel Study (NEPS), estimates show higher strains for girls in terms of stress and mental health than for boys. Unexpectedly, male subjective general well-being slightly increases with the reform. Student well-being in school and self-efficacy remain mostly unchanged.
    Keywords: self-efficacy,high school reform,subjective well-being,mental health,stress,NEPS
    JEL: I12 I28 I21 J24
    Date: 2015
  23. By: Holford, Angus J. (University of Essex)
    Abstract: Education Maintenance Allowance (EMA) was a UK government cash transfer paid directly to children aged 16-18, in the first two years of post-compulsory full-time education. This paper uses the labour supply effect of EMA to infer the magnitude of the transfer response made by the parent, and so test for the presence of an 'effectively altruistic' head-of-household, who redistributes resources among household members so as to maximise overall welfare. Using data from the Longitudinal Study of Young People in England, an EMA payment of £30 per week is found to reduce teenagers' labour supply by 3 hours per week and probability of employment by 13 percentage points from a base of 43%. We conclude that parents withdraw cash and in-kind transfers from their children to a value of between 22% and 86% of what the child receives in EMA. This means we reject the hypothesis of an effectively altruistic head-of-household, and argue that making this cash transfer directly to the child produces higher child welfare than if the equivalent transfer were made to parents.
    Keywords: Education Maintenance Allowance, altruism, transfers, rotten kid, labour supply
    JEL: I38 J22 H53
    Date: 2015–01
  24. By: Martyna Kobus; Marcin Jakubek
    Abstract: In this paper we present evidence on the relationship between mental health and unemployment among Polish youth. The literature establishes links between mental health and unemployment, but the evidence concerning youths is scarce. We utilize 2010/2011 World Mental Health Survey that contains detailed information on the prevalence of psychiatric diseases and mental disorders in Poland. We compare health distributions in terms of both inequality and welfare relying on methods for ordinal data developed recently. We find that youth employed generally have better health status than youth unemployed, but the differences are very small when it comes to more detailed questions concerning mood (i.e. sadness, anxiety, anger). To observe substantial differences between two populations, one needs to ask even more detailed questions concerning personal feelings. Clear differences, however, emerge for social interactions and undertaking own initiative. Here employed present unambiguously better than unemployed.
    Keywords: youth unemployment, mental health, Poland
    JEL: J20 J22 I10
    Date: 2015–01
  25. By: Gregory, Terry
    Abstract: In this study we investigate the minimum wage (MW) effects for a German sub-construction sector where the MW bites extraordinary hard by international standards. Within a quasiexperiment we estimate the Quantile Treatment Effects of the MW on the conditional and unconditional distribution of earnings. For Eastern Germany, the results indicate significant real (nominal) wage increases that ripple up to about the 0.6th quantile. However, the MW also led to declining real wages (stagnating nominal wages) among upper-decile workers, thus reducing the average pay reward for high-skilled labour in the sector. We provide evidence that a rising labour cost burden for firms together with an increased bargaining power of employers over workers still employed in the sector led to wage moderation at the upper decile, particularly among smaller East German firms. Overall this paper demonstrates how a MW geared towards the lower rank may render unexpected side effects for other workers located higher up in the wage distribution and who are mostly assumed to be unaffected by such policy interventions.
    Keywords: unconditional quantile regression,minimum wages,wage effects,wage moderation,labour shortages
    JEL: J31 J38 C21
    Date: 2014
  26. By: Simona Baldi (ART- Transport Regulation Authority, Italy); Davide Vannoni (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)
    Abstract: This paper deals with the open issue about the choice between a centralized versus a decentralized public procurement strategy. Using a unique dataset on tender prices of selected drugs for hospital usage awarded by a sample of 52 Italian local health service providers (ASLs) between 2009 and 2012, we test which procurement system (centralized, decentralized or hybrid) performs better. Controlling for several covariates, we always find that centralized and hybrid procurers pay lower prices as compared to decentralized units. Moreover, our results show that in areas in which corruption is higher or, more generally, institutional quality is lower, the effect of centralization in negotiating lower prices is much stronger, with savings that can reach also 50 percent of the price paid by ASLs that procure on their own.
    Keywords: Public procurement, Centralization, Decentralization, Pharmaceutical spending.
    JEL: H57 H83 L33
    Date: 2015–02
  27. By: Alfredo Marvão Pereira (Department of Economics, The College of William and Mary); Rui M. Pereira (Department of Economics, The College of William and Mary)
    Abstract: In this paper we analyze the effects of infrastructure investment on economic performance in Portugal using a newly developed data set. We employ a vector autoregressive approach to estimate the elasticity and marginal products of investments on twelve different types of infrastructure investment on private investment, employment and output. We find that the largest long-term accumulated effects come from investments in railroads, ports, airports, health, education, and telecommunications. For all of these infrastructures, the output multipliers are sizable enough to suggest that these investments would pay for themselves in the form of additional tax revenues. We find also that for investments in airports and health infrastructures the bulk of the effects are short-term demand side effects while for railroads and health the bulk of the effects come from long-term supply side effects. Finally, investments in health and airports show a clear pattern of decreasing marginal returns with railroads, ports, and telecommunications showing a relative stable pattern. In terms of the other infrastructure assets, we find that the economic effects of investments in municipal roads, highways, and electricity and gas are not significant or relevant. Investments in national roads, waste and waste water, and refinery infrastructures have positive economic effects but not large enough to also have a positive budgetary effects. Clearly, not all infrastructure investments are created equal along several and rather relevant dimensions from a policy perspective.
    Keywords: Infrastructure Investment, Multipliers, Economic Performance, Budgetary Effects, VAR, Portugal.
    JEL: C32 E22 E62 H54 H60 O47 O52
    Date: 2015–02–05
  28. By: Joseph Francois (World Trade Institute); Bertin Martens (European Commission – JRC - IPTS); Fan Yang (Hohenheim University)
    Abstract: We use data on cross-border e-commerce between EU Member States to estimate the implied cross-border trade cost reduction when consumers move from offline to online consumption. We plug this trade cost estimate into a macro-sector multi-country CGE model to estimate the impact of online retailing on consumers as well as producers. We find that cross-border e-commerce increases real household consumption. However, the domestic spill-over effect squeezes price margins in the retail sector and has a negative output effect for that sector. The resulting retail sector efficiency gains have a positive effect on production in other sectors. The combined macro-economic effect of these transmission channels is generally positive for EU Member States, ranging between 0.07 and 0.25 per cent of GDP. As such, this paper adds an innovative macro-perspective to existing micro-economic estimates of the impact of e-commerce on consumer welfare.
    Keywords: e-commerce, online trade, cross-border trade, international trade, EU digital single market, CGE model, non-tariff barriers
    JEL: F14 C54
    Date: 2014–09
  29. By: Slotwinski, Michaela; Schmidheiny, Kurt
    Abstract: For a long time two main obstacles have prevented researchers from empirically identifying the causal effect of income taxes on individuals behavior: omitted variable bias and the inherent reverse causality between income taxes and the tax base. This paper exploits an institutional feature of Swiss tax law concerning the income taxation of foreign employees living in Switzerland (Quellenbesteuerung). The implied discontinuities (tax notches) allow us to draw causal inferences on behavioral reactions of individuals to taxation within a quasi-random setting. We study the effect of local taxes on individuals location choice and income adjustment to preferential tax schemes at such institutional tax notches. We find strong evidence that foreigners with income around the tax notch strategically adjust their income. We do not find evidence that local income tax rates affect the initial location choice of newly arriving foreigners. However, we do find significant effects of local income tax rates on the location choice once these foreigners receive permanent residence status after 5 years of arrival. These effects materialize mainly for high income earners.
    JEL: J22 H24 J61
    Date: 2014
  30. By: Fritsch, Michael (University of Jena); Kritikos, Alexander S. (University of Potsdam, DIW Berlin); Sorgner, Alina (University of Jena)
    Abstract: Germany experienced a unique rise in the level of self-employment in the first two decades following unification. Applying the non-linear Blinder-Oaxaca decomposition technique, we find that the main factors driving these changes in the overall level of self-employment are demographic developments, the shift towards service sector employment, and a larger share of population holding a tertiary degree. While these factors explain most of the development in self-employment with employees and the overall level of self-employment in West Germany, their explanatory power is much lower for the stronger increase of solo self-employment and of self-employment in former socialist East Germany.
    Keywords: self-employment, non-linear Blinder-Oaxaca decomposition technique, entrepreneurship, Germany
    JEL: L26 D22
    Date: 2015–01

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