nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2015‒04‒25
seventeen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  2. Joint Retirement of Couples: Evidence from a Natural Experiment By Hans Bloemen; Stefan Hochguertel; Jochem Zweerink
  3. Job and worker turnover in German establishments By Lutz Bellmann; Hans-Dieter Gerner; Richard Upward
  4. Measuring the Rebound Effect with Micro Data By Bruno de Borger; Ismir Mulalic; Jan Rouwendal
  5. Education, Health and Subjective Wellbeing in Europe By Leonardo Becchetti; Pierluigi Conzo; Fabio Pisani
  6. Off the Waterfront: The Long-run Impact of Technological Change on Dock Workers By El-Sahli, Zouheir; Upward, Richard
  7. Fiscal and Economic Aspects of Book Consumption in the European Union By Borowiecki, Karol J.; Navarrete, Trilce
  8. Does Experience Rating Improve Obstetric Practices? Evidence From Geographical Discontinuities in Italy By Sofia Amaral-Garcia; Paola Bertoli; Veronica Grembi
  9. Skill upgrading, wage gap and international trade: firm-level evidence for Italian manufacturing firms By Irene Iodice; Chiara Tomasi
  10. Does intermunicipal cooperation create inefficiency? A comparison of interest rates paid by intermunicipal organizations, amalgamated municipalities and not recently amalgamated municipalities By Allers, Maarten; van Ommeren, Bernard; Geertsema, Bieuwe
  11. Implications of British exit from the EU for the Irish agri-food sector By Alan Matthews
  12. How inventor royalty shares affect patenting and income in Portugal and Spain By Pere Arqué-Castells; Rui M Cartaxo; Jose García-Quevedo; Manuel Mira Godinho
  13. Structural Change and Total Factor Productivity: Evidence from Germany By Henze, Philipp
  14. Performance Pay and Productivity: The Moderating Role of a High-Wage Policy By Uwe Jirjahn
  15. Infant Health and Longevity: Evidence from a Historical Trial in Sweden By Bhalotra, Sonia R.; Karlsson, Martin; Nilsson, Therese
  16. Does Public Transit reduce Car Travel Externalities? By Martin W. Adler; Jos N. van Ommeren
  17. The Hidden Cost of Labor Market Entry During Recession: Unemployment Rate at Entry and Occupational Injury Risk of Young Workers By Leombruni, Roberto; Razzolini, Tiziano; Serti, Francesco

  1. By: Andrea Albanese; Bart Cockx (-)
    Abstract: In several OECD countries age-targeted wage subsidies have been introduced to increase the employment of older workers, but evidence on their effectiveness is scarce. This paper examines the effects of a permanent wage cost subsidy in Belgium on the employment rate, working time and hourly wage. We estimate these effects by integrating Inverse Probability Weighting in a, possibly trend-adjusted, Difference-in- Differences of endogenously sampled repeated cross sections. We find small positive short-run impacts on working time and larger ones on the employment rate, but only for employees at high risk of leaving to early retirement. The wage is not affected.
    Keywords: Wage cost subsidies, older workers, Weighted Difference-in-Differences,endogenous sampling
    JEL: J14 C21 J18 J3
    Date: 2015–04
  2. By: Hans Bloemen (VU University Amsterdam, the Netherlands); Stefan Hochguertel (VU University Amsterdam, the Netherlands); Jochem Zweerink (Utrecht University, the Netherlands)
    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: 2015–02–24
  3. By: Lutz Bellmann; Hans-Dieter Gerner; Richard Upward
    Abstract: We use a simple non-parametric regression approach to measure the relationship between employment growth, hirings and separations in a large panel of German establishments over the period 1993--2009. Although it is often claimed that firms in Europe have less flexibility in their ability to hire and fire, we find that the relationship between employment growth and worker flows in German establishments is very similar to the behaviour of US establishments. The relationship is stable over time, even during the most recent economic crisis, and across different types of establishment. We verify our results with independent measures from administrative data. We suggest that this result is due to: the strong relationship between employment reductions and voluntary separations; the low level of ``churning''; and the heterogeneity of jobs within establishments.
    Keywords: Job turnover, worker turnover, hirings and separations JEL Classification: J2, J23, J63, D22
    Date: 2015
  4. By: Bruno de Borger (University of Antwerp, Belgium); Ismir Mulalic (Technical University of Denmark, Denmark); Jan Rouwendal (Faculty of Economics and Business Administration, VU University Amsterdam, the Netherlands)
    Abstract: We provide estimates of the rebound effect for car transport in Denmark, using a rich data set with individual household data on car use, fuel efficiency, and car as well as household characteristics. A demand model is estimated in first differences; the availability of households in the sample that replaced their car during the period of observation combined with information on their driving behaviour before and after the car switch allows us to identify the rebound effect. Endogeneity is taken into account by using appropriate instruments. Results include the following. First, we reject the 'conventional' formulation in which only fuel cost per kilometre matters. Second, the selection equation confirms that higher fuel prices induce households to switch car. Third, the results suggest the presence of a rebound effect that is on the lower end of the estimates available in the literature. Specifically, our best estimate of the rebound effect is some 7.5%-10%. Fourth, the fuel price sensitivity of the demand for kilometres appears to be declining with household income, but we do not find a significant impact of income on the rebound effect. Finally, simulation results indicate that the small rebound effect and changes in car characteristics in response to higher fuel prices imply that -- compared to the reference scenario -- higher fuel prices lead to a substantial reduction in both the demand for kilometres and in demand for fuel.
    Keywords: The rebound effect, fuel efficiency, first difference models
    JEL: D01 C02
    Date: 2015–03–23
  5. By: Leonardo Becchetti (DEDI & CEIS, University of Rome "Tor Vergata"); Pierluigi Conzo (Dept. of Economics and Statistics, University of Turin); Fabio Pisani (Faculty of Economics, University of Rome "Tor Vergata")
    Abstract: The productive and allocative theories predict that education has positive impact on health: the more educated adopt healthier life styles and use more efficiently health inputs and this explains why they live longer. We find partial support for these theories with an econometric analysis on a large sample of Europeans aged above 50 documenting a significant and positive correlation among education years, life styles, health outputs and functionalities. We however find confirmation for an anomaly already observed in the US, namely the more educated are more likely to contract cancer. Our results are robust when controlling for endogeneity and reverse causality in IV estimates with instrumental variables related to quarter of birth and neighbours’ cultural norms
    Keywords: health satisfaction, education, life satisfaction, public health costs
    JEL: I21 I12 I31
    Date: 2015–04–17
  6. By: El-Sahli, Zouheir (Department of Economics, Lund University); Upward, Richard (University of Nottingham)
    Abstract: We investigate how individual workers and local labour markets adjust over a long time period to a discrete and plausibly exogenous technological shock, namely the introduction of containerisation in the UK port industry. This technology, which was introduced rapidly between the mid-1960s and the late-1970s, had dramatic consequences for specific occupations within the port industry. Using longitudinal micro-census data we follow dock-workers over a 40 year period and examine the long-run consequences of containerisation for patterns of employment, migration and mortality. The results show that the job guarantees protected dock-workers’ employment until their removal in 1989. A matched comparison of workers in com- parable unskilled occupations reveals that, even after job guarantees were removed, dock-workers did not fare worse than the comparison group in terms of their labour market outcomes. Our results suggest that job guarantees may significantly reduce the cost to workers of sudden technological change, albeit at a significant cost to the industry.
    Keywords: containerisation; labour markets; England and Wales; dock workers; technological change.
    JEL: J51 J64 J65 O33
    Date: 2015–04–14
  7. By: Borowiecki, Karol J. (Department of Business and Economics); Navarrete, Trilce (Department of Business and Economics)
    Abstract: One of the available and yet underappreciated tools in cultural policy at the national level is the reduction of VAT rates for cultural goods and services. We document the standard and reduced VAT rates in EU-28 countries in the period from 1993 to 2013 and explore the underlying determinants. We further introduce a simple theoretical framework to explain how reduced fiscal rates are expected to decrease prices and increase quantities of the consumed cultural goods and services. We then estimate quantitatively that a decrease in the VAT rate for books by one percentage point is associated with an economically significant drop in the price by 2.6 percent. Finally, we show the positive effect of a fiscal rate reduction on the book expenditure of well-off households, where a one percentage point decrease in the VAT rate for books leads to an increase in expenditure by 2.7 percent.
    Keywords: Cultural consumption; book markets; cultural policy; value added tax; fiscal policy
    JEL: H21 H31 I30 K34 Z11
    Date: 2015–04–15
  8. By: Sofia Amaral-Garcia (ETH Zurich); Paola Bertoli (University of Economics, Prague); Veronica Grembi (Copenhagen Business School & CEIS, University of Rome "Tor Vergata")
    Abstract: Using data from 2002 to 2009 inpatient discharge records on deliveries in the Italian region of Piedmont, we assess the impact of an increase in malpractice pressure on obstetric practices, as identified by the introduction of experience-rated malpractice liability insurance. Our identification strategy exploits the exogenous location of public hospitals in court districts with and without schedules for noneconomic damages. We perform difference-in-differences and difference-in-discontinuities analyses. We find that the increase in medical malpractice pressure is associated with a decrease in the probability of performing a C-section from 2.3 to 3.7 percentage points (7% to 11.6% at the mean value of C-section) with no consequences for a broadly defined measure of complications or neonatal outcomes. We show that these results are robust to the different methodologies and can be explained by a reduction in the discretion of obstetric decision making rather than by patient cream skimming.
    Keywords: Experience rating, Medical liability insurance, Difference-in-discontinuities, C-sections, Scheduled damages
    JEL: K13 K32 I13
    Date: 2015–04–17
  9. By: Irene Iodice; Chiara Tomasi
    Abstract: This paper aims at investigating the evolution of the employment and wage structure of Italian manufacturing firms in the early 2000s. The work analyzes whether skills and wage movements have been taken place between or within sectors, and within sector, between or within firms. We show that most of the changes are reported within firms and that the rise in the share of skilled workers in the wage bill is due to an increase in the relative demand for skilled labor. The analysis reveals that the relative price of the skilled factor does not adjust positively: the wage premium inside firms indeed falls. The results also suggest that while the relative number of hours worked by skilled workers within firms rises, the hourly wage premium falls. The drop in the hourly wage premium is even larger than that in the annual wage gap. Finally, we observe that the within-firm skill upgrading is strongly and significantly related to trade activities. On the contrary, a firm's change in wage premium is uncorrelated to its level of commitment to international exposure.
    Keywords: heterogeneous firms, wage premium, skill upgrading, international trade
    Date: 2015–04–20
  10. By: Allers, Maarten; van Ommeren, Bernard; Geertsema, Bieuwe (Groningen University)
    Abstract: In many countries, local governments operating on a small scale face a choice between amalgamation and cooperation. This paper applies a novel methodology to investigate the implications of this choice for operating efficiency. Using a unique micro-level dataset of over 11,000 loans made to both municipalities and intermunicipal organizations in the Netherlands, we show that the latter consistently pay higher interest rates than the former.<br/>That is remarkable, because credit risk is zero in both cases, and we control for loan characteristics like amortization and maturity. In contrast, municipal amalgamation does not result in higher interest rates. Possible legal or administrative costs associated with enforcing loan guarantees cannot explain the higher interest paid by intermunicipal organizations. That is because we find that public companies (which may default) do not pay higher interest rates<br/>than public bodies (which never default). Surprisingly, the number of partners cooperating in an intermunicipal organization does not affect interest rates. Thus, we find no evidence for the ?law of 1/n?.
    Date: 2015
  11. By: Alan Matthews (Department of Economics, Trinity College Dublin)
    Abstract: Whether the UK should hold a referendum on continued membership of the European Union (EU) is one of the issues in its general election to be held in May 2015. A possible British withdrawal, or Brexit, would have profound implications for Ireland and particularly for its agri-food sector, given the extensive trade links between the two economies and the role played by the EU’s Common Agricultural Policy. This paper examines the consequences of a possible Brexit for the Irish agri-food sector. Much would depend on the nature of the trade arrangements that would be put in place between the UK and the EU following Brexit, and the paper contains an extensive discussion of the various options. The paper concludes that Brexit would be unambiguously negative from the perspective of both Irish producers and consumers, and recommends various ways in which the inevitable disruption might be minimised.
    Keywords: Brexit, Ireland, UK withdrawal, agri-food sector, EU single market
    JEL: F15 Q17
    Date: 2015–04–15
  12. By: Pere Arqué-Castells (Northwestern University & IEB); Rui M Cartaxo (Universidade de Lisboa, UECE); Jose García-Quevedo (University of Barcelona & IEB); Manuel Mira Godinho (Universidade de Lisboa and UECE)
    Abstract: Portuguese and Spanish universities have adopted well-defined royalty sharing schedules during the last fifteen years. We investigate whether these inventor royalty shares have been effective at stimulating inventors’ efforts and ultimately improving university outcomes. We base our empirical analysis on university-level data as well as on new self-collected surveys completed by inventors and Technology Transfer Offices (TTOs). Econometric evidence from the university-level dataset indicates that royalty shares have no impact on patenting or licensing income. The same result emerges from the inventors’ survey, with most respondents claiming to be largely unaffected by royalty sharing. Evidence from both the TTO and inventors’ surveys suggests that inventors do not react to royalty sharing because of the poor commercial prospects of their inventions, which means there is little income to be shared. These poor prospects appear to reflect the fact that the TTOs do not focus sufficiently on commercializing inventions and inventors are unable to produce potentially licensable inventions.
    Keywords: Patents, IPR, university, knowledge transference
    JEL: I23
    Date: 2015
  13. By: Henze, Philipp
    Abstract: This paper uses a long time series of German employment data to test the theory of Ngai & Pissarides (2007). The theory suggests that the shift of employment shares from manufacturing to services is due to divergent growth rates of total factor productivity (TFP) in the two sectors. To test the theoretical predictions, I use the "Establishment History Panel" together with sectoral data on total factor productivity. The results confirm the theoretical predictions, i.e. they show a negative relationship between employment growth and TFP growth.
    Keywords: Structural Change,Economic Growth,Total Factor Productivity
    JEL: L16 O14 O40 D24
    Date: 2015–04–16
  14. By: Uwe Jirjahn
    Abstract: Using panel data from German establishments, this study finds that performance pay is associated with increased productivity only when it is coupled with a high-wage policy. This holds for individual-based performance pay, group-based performance pay and profit sharing.
    Keywords: Performance pay, high-wage policy, productivity, fixed effects regressions
    JEL: D20 J33 M52
    Date: 2015
  15. By: Bhalotra, Sonia R. (University of Essex); Karlsson, Martin (University of Duisburg-Essen); Nilsson, Therese (Lund University)
    Abstract: This paper investigates the potential of an infant intervention to improve life expectancy, contributing to emerging interest in the early life origins of chronic disease. We analyse a pioneering program trialled in Sweden in the 1930s, which provided information, support and monitoring of infant care. Using birth certificate data from parish records matched to death registers, we estimate that the average duration of program exposure in infancy led to a 1.54% point decline in the risk of infant death (23% of baseline risk) and a 2.37% decline in the risk of dying by age 75 (6.5% of baseline risk).
    Keywords: infant health, life expectancy, early life interventions, program evaluation
    JEL: I15 I18 H41
    Date: 2015–04
  16. By: Martin W. Adler (VU University Amsterdam, the Netherlands); Jos N. van Ommeren (VU University Amsterdam, the Netherlands)
    Abstract: One of the main unanswered questions in the field of urban economics is to which extent subsidies to public transit are justified. We examine one of the main benefits of public transit, a reduction in car congestion externalities, the so-called congestion relief benefit, using quasi-natural experimental data on citywide public transit strikes for Rotterdam. On weekdays, a strike induces car speed to decrease only marginally on the highway ring road (by 3 percent) but substantially on inner city roads (by 10 percent). During rush hour, the strike effect is much more pronounced. The congestion relief benefit is substantial, equivalent to about half of the public transit subsidy. We demonstrate that during weekends, car speed does not change noticeable due to strikes. Further, we show that public transit strikes induce similar increases in number of cyclists as number of car travelers suggesting that bicycling-promoting policies to reduce car congestion externalities might be attractive.
    Keywords: transit subsidies, public transit, traffic congestion, congestion relief benefit, strike
    JEL: H76 J52 L92 R41
    Date: 2015–01–22
  17. By: Leombruni, Roberto (University of Turin); Razzolini, Tiziano (University of Siena); Serti, Francesco (Universidad de Alicante)
    Abstract: A unique dataset from Italy is used to study the effect of unfavorable business cycle conditions at entry on future workplace safety of young workers. We find that higher local unemployment rates at entry have a positive effect both on severe injuries and non-severe injuries. While the impact of unemployment at entry on severe injuries is constant over time, the effect on non-severe injuries is less pronounced and increases with experience, thus indicating that the reporting behavior is affected by initial conditions. In addition, the same cohorts of workers experience slower wage growth, despite being initially compensated for the occupational injury risk. These results suggest that entrants during recession may be persistently locked into low quality jobs and that the mix of hazardous tasks offered by employers throughout the business cycle can be used to overcome wage and other institutional rigidities of the Italian labor market.
    Keywords: unemployment at entry, young workers, workplace injury, job amenities
    JEL: J24 J28 J31
    Date: 2015–04

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