nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2015‒03‒22
twenty-two papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Credit constraints and the extensive margins of exports: First evidence for German manufacturing By Wagner, Joachim
  2. Non-cash benefits from social housing in Europe: a comparative perspective By Markus M. Grabka; Grabka; Gerlinde Verbist
  3. Precarious and less well-paid? Wage differences between permanent and fixed-term contracts across the EU countries By António Dias da Silva; Alessandro Turrini
  4. Poverty Profiles and Well-Being: Panel Evidence from Germany By Andrew E. Clark; Conchita D'Ambrosio; Simone Ghislandi
  5. Wish You Were Here? Quasi-Experimental Evidence on the Effect of Education on Attitude toward Immigrants By d'Hombres, Beatrice; Nunziata, Luca
  6. Does Early Educational Tracking Increase Migrant-Native Achievement Gaps? Differences-In-Differences Evidence Across Countries By Ruhose, Jens; Schwerdt, Guido
  7. Apprenticeship, Vocational Training and Early Labor Market Outcomes in East and West Germany By Riphahn, Regina T.; Zibrowius, Michael
  8. Employment Subsidies, Informal Economy and Women's Transition into Work in a Depressed Area: Evidence from a Matching Approach By Deidda, Manuela; Di Liberto, Adriana; Foddi, Marta; Sulis, Giovanni
  9. How Health Plan Enrollees Value Prices Relative to Supplemental benefits and Service Quality By Christian Bünnings; Hendrik Schmitz; Harald Tauchmann; Nicolas R. Ziebarth
  10. Direct and indirect effects of mass layoffs : evidence from geo-referenced data By Berge, Philipp vom; Schmillen, Achim
  11. Joint Retirement of Couples: Evidence from a Natural Experiment By Bloemen, Hans; Hochguertel, Stefan; Zweerink, Jochem
  12. Scars of Recessions in a Rigid Labor Market By Cockx, Bart; Ghirelli, Corinna
  13. Employment and poverty dynamics in the EU countries before, during and after the crisis By András Gábos; Réka Branyiczki; Barbara Lange; György Tóth
  14. Is Self-employment a Way to Escape from Skill Mismatches? By Albiol, Judit; Díaz Serrano, Lluís; Teruel, Mercedes
  15. Low Pay as an Alternative to Public Direct Job Creation? Lessons from the German Case By Eichhorst, Werner
  16. Tracking, schools’ entrance requirements and the educational performance of migrant students By Jaap Dronkers; Dronkers; Roxanne-Amanda Korthals
  17. Social inclusion and altruism: empirical evidence from juvenile rehabilitation in Italy By Martina Menon; Federico Perali; Marcella Veronesi
  18. A New Balance of Power Between Suppliers and Retailers in Finland By Liu, Xing; Niemi, Jyrki
  19. Terrorism and international tourism: the case of Germany By Gabriel M. Ahlfeldt; Bastian Franke; Wolfgang Maennig
  20. Subject specific league tables and students'application decisions By Arnaud Chevalier; Xiaoxuan Jia
  21. The fiscal effects of work-related tax expenditures in Europe By Salvador Barrios; Serena Fatica; Diego Martinez; Gilles Mourre
  22. Learning to Take Risks? The Effect of Education on Risk-Taking in Financial Markets By Black, Sandra E.; Devereux, Paul J.; Lundborg, Petter; Majlesi, Kaveh

  1. By: Wagner, Joachim (Leuphana University Lueneburg & Centre of Excellence in Science & Innovation Studies (CESIS), Stockholm)
    Abstract: This paper uses a unique newly constructed data set to investigate for the first time the link between credit constraints and the extensive margins of exports in Germany, one of the leading actors on the international market for goods. In line with theoretical considerations and comparable results reported for a small number of other countries we report a negative impact of credit constraints on both the number of goods exported and the number of export destination countries that is both statistically highly significant and large from an economic point of view.
    Keywords: Credit constraints; exports; extensive margins
    JEL: F14
    Date: 2015–03–13
  2. By: Markus M. Grabka; Grabka; Gerlinde Verbist
    Abstract: Most of the available comparative empirical evidence on levels and trends in income inequalities and poverty in OECD countries relies on the concept of household disposable cash income, thus ignoring the services governments provide to households. Including those services matters a lot, however, for policy interpretation. While cash housing benefits are generally included in household disposable income, the effect of social housing is not accounted for. This may provide a misleading picture of the impact of overall housing policies on inequality and poverty, as some countries use different policies to help households meet their housing expenses. In this paper we study the value of the in-kind benefit households receive by living in social housing accommodation. For this purpose we calculate estimates of imputed rent, which until now has mainly been used to estimate the benefit derived from homeownership. We then analyse how these benefits are distributed over the population and how they help to combat poverty. Finally, in a case study for Germany, we compare cash and in-kind social benefits for housing.
    Keywords: Social housing, non-cash income, imputed rent, income distribution
    JEL: D31 H4 I31 I32
    Date: 2015–03
  3. By: António Dias da Silva; Alessandro Turrini
    Abstract: This paper analyses the main features of the wage differences between permanent and fixed-term workers and what sources are driving these differences, including the role of labour market institutions. We analyse wage differences between permanent and fixed-term contracts across EU countries using data from the European Structure of Earnings Survey. We find that after controlling for individual and job characteristics, workers on permanent contracts earn on average about 15% more than workers on fixed-term contracts with similar observable characteristics. The permanent contract wage premium is higher for men, workers at middle age and with middle education, and performing non-elementary occupations. We also find that permanent workers enjoy a higher education and age wage premium. We explore cross-country differences in the wage premium for permanent workers and correlate them with indicators of labour market institutions. Results indicate that a high wage premium for workers with permanent contracts is associated with high levels of employment protection for workers on permanent contracts, a high share of temporary employment in the economy, lengthy periods of unemployment benefit entitlement, and low minimum wages.
    JEL: J31 J41 J42
    Date: 2015–02
  4. By: Andrew E. Clark; Conchita D'Ambrosio; Simone Ghislandi
    Abstract: We consider the link between poverty and subjective well-being, and focus in particular on the role of time. We use panel data on 49,000 individuals living in Germany from 1992 to 2012 to uncover three empirical relationships. First, life satisfaction falls with both the incidence and intensity of contemporaneous poverty. Second, poverty scars: those who have been poor in the past report lower life satisfaction today, even when out of poverty. Last, the order of poverty spells matters: for a given number of years in poverty, satisfaction is lower when the years are linked together. As such, poverty persistence reduces well-being. These effects differ by population subgroups.
    Keywords: Income, poverty, subjective well-being, SOEP
    JEL: I31 I32 D60
    Date: 2015
  5. By: d'Hombres, Beatrice (European Commission); Nunziata, Luca (University of Padova)
    Abstract: We use European Social Survey and Labour Force Survey data to estimate the causal effect of education on European natives' opinion toward immigration exploiting reforms in compulsory education in Europe in the 1960s through the 1990s. Our findings show that higher education leads to a more positive attitude toward immigrants. We also investigate the mechanisms behind the effect of education on attitudes by evaluating both economic and non-economic channels. We find that higher education places individuals in occupations that are less exposed to the negative externalities of migration, although not in sectors/occupations where the share of migrants is necessarily smaller, suggesting that migrants and low-educated natives are complementary rather than substitutes in the labour market. In addition, education alters values and the cognitive assessment of the role of immigration in host societies, with a positive effect on tolerance of diversity and a positive effect on the assessment of immigration's role in host countries. Our findings suggest that education as a policy instrument can increase social cohesion in societies that are subject to large immigration flows.
    Keywords: immigration, attitude towards immigrants, perception, education, compulsory education reforms
    JEL: I20 J61 J15
    Date: 2015–02
  6. By: Ruhose, Jens (Ifo Institute for Economic Research); Schwerdt, Guido (University of Konstanz)
    Abstract: We study whether early tracking of students based on ability increases migrant-native achievement gaps. To eliminate confounding impacts of unobserved country traits, we employ a differences-in-differences strategy that exploits international variation in the age of tracking as well as student achievement before and after potential tracking. Based on pooled data from 12 large-scale international student assessments, we show that cross-sectional estimates are likely to be downward-biased. Our differences-in-differences estimates suggest that early tracking does not significantly affect overall migrant-native achievement gaps, but we find evidence for a detrimental impact for less integrated migrants.
    Keywords: immigration, educational inequalities, educational tracking, differences-in-differences
    JEL: I21 J15 I28
    Date: 2015–03
  7. By: Riphahn, Regina T. (University of Erlangen-Nuremberg); Zibrowius, Michael (Cologne Institute for Economic Research)
    Abstract: We study the returns to apprenticeship and vocational training for three early labor market outcomes all measured at age 25 for East and West German youths: non-employment (i.e., unemployment or out of the labor force), permanent fulltime employment, and wages. We find strong positive effects of apprenticeship and vocational training. There are no significant differences for different types of vocational training, minor differences between East and West Germany and males and females, and no significant changes in the returns over time. Instrumental variable estimations confirm the regression results. The positive returns hold up even in poor labor market situations.
    Keywords: youth unemployment, school-to-work transition, returns to education, vocational training, transition economics
    JEL: J40 J24 I29
    Date: 2015–03
  8. By: Deidda, Manuela (University of Cagliari); Di Liberto, Adriana (University of Cagliari); Foddi, Marta (University of Cagliari); Sulis, Giovanni (University of Cagliari)
    Abstract: We analyze the effects of an ALMP for disadvantaged workers implemented in a depressed area of Italy. Using propensity-score matching, we find that a) the employment subsidy had a positive effect for participants on both the probability of finding a job and income, b) the outcome of the policy was more positive for women, and c) the program was more effective for older and less-educated female workers. Using data on previous contacts between workers and firms and on informal channels for job search activity, we ultimately explore the role of the program in promoting the transition from informal to salaried employment.
    Keywords: employment subsidies, female labor-force participation, evaluation, informal economy
    JEL: C14 C83 J64 J16
    Date: 2015–02
  9. By: Christian Bünnings; Hendrik Schmitz; Harald Tauchmann; Nicolas R. Ziebarth
    Abstract: This paper empirically assesses the relative role of health plan prices, service quality and optional benefits in the decision to choose a health plan. We link representative German SOEP panel data from 2007 to 2010 to (i) health plan service quality indicators, (ii) measures of voluntary benefit provision on top of federally mandated benefits, and (iii) health plan prices for almost all German health plans. Mixed logit models incorporate a total of 1,700 health plan choices with more than 50 choice sets for each individual. The findings suggest that, compared to prices, health plan service quality and supplemental benefits play a minor role in making a health plan choice.
    Keywords: Service quality, non-essential benefits, prices, health plan switching, German sickness funds, SOEP
    JEL: D12 H51 I11 I13 I18
    Date: 2015
  10. By: Berge, Philipp vom; Schmillen, Achim
    Abstract: "Using a novel data set that contains precise geo-referenced information on the universe of German establishments, we analyse both the direct effects of mass layoffs and any indirect impacts on workers who are employed in the vicinity of an establishment being closed down. In line with the literature, we document economically significant impacts of mass layoffs on the employment and earnings prospects of directly displaced workers. In contrast, neither an individual-level difference-indifference approach nor an alternative establishment-level approach inspired by the spatial economics literature find evidence of additional adverse economic effects for workers or establishments indirectly exposed to mass layoffs." (Author's abstract, IAB-Doku) ((en))
    Keywords: Massenentlassungen, Beschäftigungseffekte, regionaler Arbeitsmarkt, Bayern, Bundesrepublik Deutschland
    JEL: J64 J65 R12
    Date: 2015–03–16
  11. By: Bloemen, Hans (VU University Amsterdam); Hochguertel, Stefan (VU University Amsterdam); Zweerink, Jochem (VU University Amsterdam)
    Abstract: We estimate and explain the impact of early retirement of husbands on their wives’ probability to retire within one year, using administrative micro panel data that cover the whole Dutch population. We employ an instrumental variable approach in which the retirement choice of husbands is instrumented with eligibility rules for generous early retirement benefits that were temporarily and unexpectedly available to them. We find that early retirement opportunities of husbands increased the wives' probability to retire by 24.6 percentage points. This is a strong, and robust effect. Partly, wives respond to husbands' choices at ages when they are themselves likely eligible for early retirement programs.
    Keywords: instruments, retirement, couples
    JEL: C26 J26 J12 J14
    Date: 2015–02
  12. By: Cockx, Bart (Ghent University); Ghirelli, Corinna (Ghent University)
    Abstract: We study the impact of graduating in a recession in Flanders (Belgium), i.e. in a rigid labor market. In the presence of a high minimum wage, a typical recession hardly influences the hourly wage of low educated men, but reduces working time and earnings by about 4.5% up to twelve years after graduation. For the high educated, the working time is not persistently affected, but the penalty on the hourly wage (and earnings) increases with experience, and attains roughly -6% ten years after labor market entry. We also contribute to the literature on inference with few clusters.
    Keywords: scars, graduating, labor market rigidity, recession, few clusters, cluster robust
    JEL: C12 C41 E32 I21 J22 J23 J31 J6
    Date: 2015–02
  13. By: András Gábos; Réka Branyiczki; Barbara Lange; György Tóth
    Abstract: The paper aims to contribute to a better understanding of how employment change relates to changes in poverty in the European Union’s Member States by looking at both micro and macro level correlations. EU-LFS and EU-SILC data are used to analyse trends between 2005 and 2012, to reflect also on the societal effects of the financial and economic crisis. Time series for this period show that the crisis has resulted in very different employment trajectories. Larger volatility in employment was accompanied by a relatively sizeable change in poverty rates as well. According to our preferred regression model estimates, poverty to employment elasticity has been around 25 percent on average in the EU in the period between 2005 and 2012. The decomposition of poverty changes shows that countries differ greatly in the portion of total poverty changes attributed to changes in the poverty rates of both individuals living in jobless and non-jobless households, as well as in the portion of total poverty changes attributed to the changes in the population share of those in jobless households. We conclude that the success of poverty reduction depends to a large extent on three factors: the dynamics of overall employment growth, the fair distribution of the employment growth across households with different work intensity and properly designed social welfare systems to smooth out income losses for those families who are, for some reasons, unable to generate sufficient income for themselves from the labour markets.
    Keywords: individual employment, work intensity, poverty, social policy, financial crisis, EU-SILC, panel regression
    JEL: J20 I32 I38
    Date: 2015–03
  14. By: Albiol, Judit; Díaz Serrano, Lluís; Teruel, Mercedes
    Abstract: During the last two decades, skill mismatches have become one of the most important issues of policy concern in the EU (European Commission, 2008). Hence, the literature has stressed the necessity to reduce skill mismatches. We contribute to this literature by analyzing the impact of the transition from salaried employment to self-employment on self-reported skill mismatches. To do so, we resort to the European Community Household Panel (ECHP) covering the period 1994–2001. Using panel data, we track individuals over time and measure their self-reported skill mismatch before and after the transition. Our empirical findings indicate not only that the average self-employee is less likely to declare being skill-mismatched but also that those individuals who transit from salaried employment to self-employment reduce their probability of skill mismatches after the transition. Keywords: Self-employment, skill mismatches, salaried employment. JEL Classification: L26, J24, B23 __________________________
    Keywords: Emprenedoria, Col·locabilitat, Econometria, Treballadors, Treballadors autònoms, 331 - Treball. Relacions laborals. Ocupació. Organització del treball,
    Date: 2014
  15. By: Eichhorst, Werner (IZA)
    Abstract: This contribution draws some conclusions from the experience of attempts by the German government at integrating the most vulnerable groups into the labor market, in particular the long-term unemployed and the low skilled. There has been a sort of paradigm shift that goes beyond active labor market policies and public direct job creation in favor of allowing for a more flexible labor market to emerge, thus implying a growing low-pay sector. This policy reversal can be seen as a partial success as those that were formerly excluded now have a somewhat better access to the labor market. However, this improved access comes with some limitations in terms of the quality of jobs and with respect to the upward mobility of those who enter the labor market at low-pay levels.
    Keywords: direct job creation, low pay, subsidized employment, evaluation, Germany
    JEL: J64 J65 J68
    Date: 2015–03
  16. By: Jaap Dronkers; Dronkers; Roxanne-Amanda Korthals
    Abstract: The aim of this paper is to investigate the relation between tracking and migrant students’ performance (and parental background), taking into account school selection policies, and to compare the results across natives, first and second generation migrants. We combine two insights: the need to take into account school level variables when estimating the relation between education system and student performance and the need for including region of origin to correctly estimate models for migrant students. We use PISA 2009, selecting 31 countries with school features, of which 15 countries with information on the region of origin of the migrant students. We run separate analyses for native and first and second generation migrants, without and with origin dummies. We find that migrant students in education systems with many tracks which are themselves in schools in which the principal always considers prior performance in accepting students to the school have equal or higher scores than students in systems with only one track. However, in the full sample the influence of education systems for first generation students is absent: their performance is nearly only based on individual and school characteristics, while the performance of second generation migrant students is also influenced by tracks or prior performance. Still, the influence of the combination of tracks and entrance selection is weaker than that for native students.
    Keywords: Cross-national comparison, migrant students, native students, education system, schools with and without entrance-selection based on prior achievement, PISA data, origin countriesCreation-Date: 2015-03
    JEL: I21 I24 J15
  17. By: Martina Menon; Federico Perali; Marcella Veronesi
    Abstract: Social inclusion is a multidimensional phenomenon that involves social, political, and economic aspects of individuals' life. While social inclusion is a priority of the European Agenda 2020, little is known about individuals' preferences for social inclusion and its relationship with altruism. We exploit the marked cultural and socio-economic differences between North and South of Italy to investigate the relationship between people's preferences for the social inclusion of juvenile offenders and parental and non-parental altruism using a unique and large household survey. Between North and South of Italy, we do not find policy relevant differences in terms of social inclusion but, interestingly, we find that the altruistic motives are significantly different.
    Keywords: Social inclusion, altruism, juvenile crime, rehabilitation.
    JEL: D61 D63 D64
    Date: 2015
  18. By: Liu, Xing; Niemi, Jyrki
    Abstract: The last twenty years has witnessed substantial changes in retailing across most European countries. Private labels (PL) has become increasingly important strategic tool for European retailers to gain market share, loyalty of customers and reinforce the bargaining power toward suppliers and countervailing power against manufacturing brands. (Bonfrer and Chintagunta, 2004; Hansen et al., 2006; Groznik et. al. 2010 EU commission, 2011). The combination of recession and a retail food price spike during the last 5 years provides even more opportunity for PL growth as increasingly price-sensitive customers shift to PL alternatives.1(Volpe, 2011) According to statistics from Private Label Manufacturer Association (PLMA), the market share of PLs accounts for 17 to 48% of the groceries market in the EU in 2012. In Finland, the sales of private labels have been growing significantly during the last five years. However, the total share of the sales is still lower than in the EU countries on average. PL share is positively correlated to concentration levels in food retail. (Lincoln and Thomason, 2009). Table 1 presents the concentration of national grocery markets in a number of EU countries versus the market shares of PLs based on the volumes obtained from PLMA. Figure 1 displays the total market share of PLs including food and non-food in Finland calculated in value. Clearly, Finnish grocery trade is the most concentrated amongst EU members of states. Even though the market share of PLs in Finland has not reached as high level as the other European countries such as Germany and UK, the market share of PLs in food sector based on sales value, has been steadily grown from 7.6% in 2003 to 12% in 20122(See Figure 1). Given the close link between concentration levels and PL share, the expectation that PL market share in Finland is projected to increase by between 3- 5% points yearly in the coming five years. Compared to the current level of 12 percent, this entails that PL market share is set to over 20% in value in the coming 5 years.
    Keywords: Agribusiness, Consumer/Household Economics, Production Economics,
    Date: 2014–10
  19. By: Gabriel M. Ahlfeldt; Bastian Franke; Wolfgang Maennig
    Abstract: We analyse how German tourists react to unanticipated shocks that alter their risk perception of selected tourism destinations. Using a difference-in-difference strategy which flexibly accounts for macroeconomic conditions and also addresses potential problems of serial correlation, we isolate significant effects of the 9/11 (2001) terrorist attacks, as well as for the attacks in Egypt (1997), Tunisia (2002), Morocco (2003) and Indonesia (2003). These terror attacks impacted especially on Islamic countries all over the world, indicating a transmission mechanism driven by ethnic and religious proximity. At the same time, tourism into Islamic countries was temporarily substituted by tourism to (south) European countries.
    Keywords: terrorism; 9/11; Islamic countries; tourism demand
    JEL: L83 Z12
    Date: 2015
  20. By: Arnaud Chevalier (IZA); Xiaoxuan Jia (Anglia Ruskin University and Royal Holloway, University of London)
    Abstract: Do applicants to higher education rely on expert judgement about the quality of the course when applying? Using application data across UK universities over a period of 8 years, we investigate how league tables affect prospective students’ application decisions. We use subject specific ranking rather than the commonly used institution level ranking. We find that a one standard deviation change in the subject-level ranking score of an institution is associated with on average a 4.3% increase in application numbers per faculty. This effect is particularly pronounced among faculties with the best scores, and overseas applicants. Limits to the number of applications have increased the preponderance of league tables.
    Keywords: Higher education applications, league tables
    JEL: I23
    Date: 2015–03–13
  21. By: Salvador Barrios; Serena Fatica; Diego Martinez; Gilles Mourre
    Abstract: Work-related tax incentives can have a significant effect on how much, if at all, certain individuals decide to work. This paper examines the fiscal impacts and associated welfare costs of reforms to such tax relief measures in five European countries, France, Spain, the United Kingdom, Hungary and Slovakia. It finds that at least a quarter of the extra tax revenue raised by lowering work-related tax incentives tends to get lost, as individuals react by working less or withdrawing altogether. The revenue gain is particularly limited following the removal of tax incentives targeting the very lowest earners, which may even lead to revenue losses in some cases. Reducing work-related tax reliefs also has significant negative welfare effects.
    JEL: H24 H31 J20
    Date: 2015–02
  22. By: Black, Sandra E. (University of Texas at Austin); Devereux, Paul J. (University College Dublin); Lundborg, Petter (Lund University); Majlesi, Kaveh (Lund University)
    Abstract: We investigate whether acquiring more education when young has long-term effects on risk-taking behavior in financial markets and whether the effects spill over to spouses and children. There is substantial evidence that more educated people are more likely to invest in the stock market. However, little is known about whether this is a causal effect of education or whether it arises from the correlation of education with unobserved characteristics. Using exogenous variation in education arising from a Swedish compulsory schooling reform in the 1950s and 1960s, and the wealth holdings of the population of Sweden in 2000, we estimate the effect of education on stock market participation and risky asset holdings. We find that an extra year of education increases stock market participation by about 2% for men but there is no evidence of any positive effect for women. More education also leads men to hold a greater proportion of their financial assets in stocks and other risky financial assets. We find no evidence of spillover effects from male schooling to the financial decisions of spouses or children.
    Keywords: education, financial market, risk-taking
    JEL: G11
    Date: 2015–03

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