nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2015‒05‒22
twenty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Does EU Regulation Hinder or Stimulate Innovation? By Jacques Pelkmans; Andrea Renda
  2. Peer Effects on Obesity in a Sample of European Children By Gwozdz, Wencke; Sousa-Poza, Alfonso; Reisch, Lucia A.; Bammann, Karin; Eiben, Gabriele; Kourides, Yiannis; Kovács, Eva; Lauria, Fabio; Konstabel, Kenn; Santaliestra-Pasias, Alba M.; Vyncke, Krishna; Pigeot, Iris
  3. The fiscal effects of work-related tax expenditures in Europe. By Salvador Barrios; Serena Fatica; Diego Martínez-López; Gilles Mourre
  4. Access to Childcare and Second Child Arrival in European Countries By Hippolyte d’Albis; Paula Gobbi; Angela Greulich
  5. Another cluster premium: Innovation subsidies and R&D collaboration networks By Tom Broekel; Dirk Fornahl; Andrea Morrison
  6. School choice and segregation: evidence from Sweden By Böhlmark, Anders; Holmlund, Helena; Lindahl, Mikael
  7. State Dependence in Welfare Receipt: Transitions Before and After a Reform By Riphahn, Regina T.; Wunder, Christoph
  8. Does Education Raise Productivity and Wages Equally? The Moderating Roles of Age, Gender and Industry By Rycx, Francois; Saks, Yves; Tojerow, Ilan
  9. Learning about Job Search: A Field Experiment with Job Seekers in Germany By Altmann, Steffen; Falk, Armin; Jäger, Simon; Zimmermann, Florian
  10. The Pan-European Population Distribution Across Consistently Defined Functional Urban Areas By Schmidheiny, Kurt; Suedekum, Jens
  11. Does Commuting Affect Health? By Künn-Nelen, Annemarie
  12. Obesity and Economic Performance of Young Workers in Italy By Bruno, Giovanni S. F.; Caroleo, Floro Ernesto; Dessy, Orietta
  13. Measuring the negative externalities of a private leisure activity: hooligans and pickpockets around the stadium By Daniel Montolio; Simón Planells-Struse
  14. Drug Prices, Rents, and Votes in the German Health Care Market: An Application of the Peltzman Model By Anne Maria Busch
  15. Overeducation: A Disease of the School-to-Work Transition System By Caroleo, Floro Ernesto; Pastore, Francesco
  16. Drug Prices and Pressure Group Activities in the German Health Care Market: An Application of the Becker Model By Anne Maria Busch
  17. Do patients choose hospitals that improve their health? By Nils Gutacker; Luigi Siciliani; Giuseppe Moscelli; Hugh Gravelle
  18. Street Prostitution Zones and Crime By Bisschop, Paul; Kastoryano, Stephen; van der Klaauw, Bas
  19. Do Schools Discriminate Against Homosexual Parents? Evidence from an Internet Field Experiment By Diaz-Serrano, Luis; Meix-Llop, Enric
  20. Flexibility at a Cost: Should Governments Stimulate Tertiary Education for Adults? By Stenberg, Anders; Westerlund, Olle

  1. By: Jacques Pelkmans (Centre for European Policy Studies (CEPS), Brussels, Belgium); Andrea Renda (Centre for European Policy Studies (CEPS), Brussels, Belgium)
    Abstract: ‘Does EU regulation hinder or stimulate innovation’ is a frequently heard query in the EU, but there is little systematic analytical literature on the issue. Fragmented evidence or anecdotes dominate debates among EU regulatory decision-makers and in European business, insofar as there is a genuine debate at all. This text focuses on the multi-faceted, ambiguous and complex relationship between (EU) regulation and innovation in the economy, and discusses the innovation-enhancing potential of certain regulatory approaches as well as factors that tend to reduce incentives to innovate. We adopt an 'ecosystem' approach to both regulation and innovation and study the interactions between the two ecosystems. This general analysis and survey are complemented by seven case studies of EU regulation enabling and disabling innovation, two horizontal and five sectoral ones. The case studies are preceded by a broader contextual analysis of trends in EU regulation over the last three decades. These trends show the significant transformation of the nature as well as improvement of the quality of EU regulation, largely in the deepened internal market, which tend to have a favourable and lasting effect on the rate of innovation in the EU (other things being equal). Our findings include the following: Regulation can at times be a powerful stimulus to innovation. EU regulation matters at all stages of the innovation process. Different types of regulation can be identified in terms of innovation impact: general or horizontal, innovation specific and sector-specific regulation. More prescriptive regulation tends to hamper innovative activity, whereas the more flexible EU regulation is, the better innovation can be stimulated. Lower compliance and red-tape burdens have a positive effect on innovation. We recommend incorporating a specific test on innovation impacts in the ex-ante impact assessment of EU legislation as well as in ex-post evaluation. There is ample potential for fostering innovation by reviewing the EU regulatory acquis.
    Keywords: EU regulation, innovation in economy
    JEL: D02 D23 G38 K23 L51
  2. By: Gwozdz, Wencke (Copenhagen Business School); Sousa-Poza, Alfonso (University of Hohenheim); Reisch, Lucia A. (Copenhagen Business School); Bammann, Karin (University of Bremen); Eiben, Gabriele (University of Gothenburg); Kourides, Yiannis (Research and Education Institute of Child Health, Cyprus); Kovács, Eva (University of Pecs); Lauria, Fabio (National Research Council, Italy); Konstabel, Kenn (University of Tartu); Santaliestra-Pasias, Alba M. (University of Zaragoza); Vyncke, Krishna (Ghent University); Pigeot, Iris (University of Bremen)
    Abstract: This study analyzes peer effects on childhood obesity using data from the first two waves of the IDEFICS study, which applies several anthropometric and other measures of fatness to approximately 14,000 children aged two to nine participating in both waves in 16 regions of eight European countries. Peers are defined as same-sex children in the same school and age group. The results show that peer effects do exist in this European sample but that they differ among both regions and different fatness measures. Peer effects are larger in Spain, Italy, and Cyprus – the more collectivist regions in our sample – while waist circumference generally gives rise to larger peer effects than BMI. We also provide evidence that parental misperceptions of their own children's weight goes hand in hand with fatter peer groups, supporting the notion that in making such assessments, parents compare their children's weight with that of friends and schoolmates.
    Keywords: peer effects, children, obesity, Europe
    JEL: I12 J13 J22
    Date: 2015–05
  3. By: Salvador Barrios; Serena Fatica; Diego Martínez-López; Gilles Mourre
    Abstract: The paper examines the fiscal impacts, and the associated welfare cost, of marginal reforms to work-related tax relief in five European countries. We combine a theoretical model of labour supply with micro-simulation results from an EU-wide model, which allows us to capture the interaction between the specific tax incentive and other relevant provisions of the tax-benefit system along the entire earnings distribution. We find that changes in labour supply decisions – both at the extensive (participation) and at the intensive margin (hours worked) – have significant impacts on the revenue gain from the simulated reforms. Our results suggest that at least one-fourth of the extra tax revenues collected through a reduction in work-related tax incentives is washed away following labour supply adjustment, notably due to lower participation by individuals most at risk of exclusion. In some instances, the erosion of the initial revenue gain becomes substantial. For policies strongly targeted at the bottom of the earnings distribution, the reform might even bring about a net revenue loss, depending on the calibration of the labour supply elasticities to reflect heterogeneity across types of workers. The welfare effect of contractions to these tax schemes could be far from negligible.
    Keywords: tax expenditures, labour supply, marginal welfare costs.
    JEL: H24 H31 J20
    Date: 2015–05
  4. By: Hippolyte d’Albis (UNIVERSITY PARIS 1, Paris Schoof of Economics); Paula Gobbi (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Angela Greulich (UNIVERSITE PARIS 1 Panthéon-Sorbonne)
    Abstract: This paper shows that differences in fertility across European countries mainly emerge in the transition from the first to the second child and that childcare services enabling women to work are an important determinant for this transition to occur. The theoretical framework proposed accounts for these two findings: in countries where childcare coverage is low, there is a U-shaped relationship between a couple's probability to have a second child and female potential wage, while in countries with easy access to childcare, this probability is positively related with the woman's potential wage. Both of these implications are confirmed empirically when utilizing the European Survey of Income and Living Conditions (EU-SILC) for estimating a woman's probability of having a second child as a function of education.
    Keywords: Childcare, Education, Fertility, Female Employment
    JEL: J11 J13 J16
    Date: 2015–05–11
  5. By: Tom Broekel; Dirk Fornahl; Andrea Morrison
    Abstract: This paper investigates the allocation of R&D subsidies with a focus on the granting success of firms located in clusters. On this basis it is evaluated whether firms in these clusters are differently embedded into networks of subsidized R&D collaboration than firms located elsewhere. The theoretical arguments are empirically tested using the example of the German biotechnology firms’ participation in the 6th EU-Framework Programmes and national R&D subsidization schemes in the early 2000s. We show that clusters grant firms another premium to their location, as they are more likely to receive funds from the EU-Framework Programmes and hold more favourable positions in national knowledge networks based on subsidies for joint R&D.
    Keywords: Innovation policy, R&D subsidy, collaboration networks, embeddedness, technology cluster
    JEL: R11 O33 R58 D85
    Date: 2015–05
  6. By: Böhlmark, Anders (Swedish Institute for Social Research, Stockholm University); Holmlund, Helena (IFAU - Institute for Evaluation of Labour Market and Education Policy); Lindahl, Mikael (Department of Economics, Uppsala University)
    Abstract: This paper studies the evolution of school segregation in Sweden in the aftermath of the 1992 universal school voucher reform, which spurred the establishment of new independent voucher schools and introduced parental choice. The empirical analysis assesses the relative importance of neighbourhood sorting, parental choice and the location of independent schools for school segregation. In particular, it exploits variation in school choice opportunities across municipalities, and provides descriptive evidence that in regions where school choice has become more prevalent, school segregation between immigrants and natives, and between children of high/low educated parents, has increased more than in regions where choice is limited. This result also holds when we account for residential sorting and focus on excess school segregation over and above the segregation that would occur if all pupils attended their assigned schools. The estimates suggest that the increase in school segregation 15 years after the voucher reform that can be attributed to choice is relatively small, and in an international comparison Sweden still ranks as a country with a low-to-medium segregated school system. Our findings are suggestive of the implications for student sorting in other settings where similar voucher schemes are introduced.
    Keywords: school segregation; school choice
    JEL: I20
    Date: 2015–05–04
  7. By: Riphahn, Regina T. (University of Erlangen-Nuremberg); Wunder, Christoph (Martin-Luther University, Halle-Wittenberg)
    Abstract: We study state dependence in welfare receipt and investigate whether welfare transitions changed after a welfare reform. Using data from the German Socio-Economic Panel, we apply dynamic multinomial logit estimators and find that state dependence in welfare receipt is not a central feature of the German welfare system. We find that welfare transitions changed after the reform: transitions from welfare to employment became more likely and persistence in welfare and inactivity declined. We observe a large relative increase in transitions from employment to welfare. Immigrants' responsiveness to the labor market situation increased after the reform.
    Keywords: social assistance, state dependence, unemployment benefit II, immigration, dynamic multinomial logit
    JEL: I38 J61
    Date: 2015–05
  8. By: Rycx, Francois (Free University of Brussels); Saks, Yves (National Bank of Belgium); Tojerow, Ilan (Free University of Brussels)
    Abstract: The labour market situation of low-educated people is particularly critical in most advanced economies, especially among youngsters and women. Policies aiming to increase their employability either try to foster their productivity and/or to decrease their wage cost. Yet, the evidence on the misalignment between education-induced productivity gains and corresponding wage cost differentials is surprisingly thin, inconclusive and subject to various econometric biases. We estimate the impact of education on productivity, wage costs and productivity-wage gaps (i.e. profits) using rich Belgian linked employer-employee panel data. Findings, based on the generalised method of moments (GMM) and Levinsohn and Petrin (2003) estimators, show a significant upward-sloping profile between education and wage costs, on the one hand, and education and productivity, on the other. They also systematically highlight that educational credentials have a stronger impact on productivity than on wage costs. This 'wage compression effect', robust across industries, is found to disappear among older cohorts of workers and to be more pronounced among women than men. Overall, findings suggest that particular attention should be devoted to the productivity to wage cost ratio of low-educated workers, especially when they are young and female, but also to policies favouring gender equality in terms of remuneration and career advancement.
    Keywords: education, labour costs, productivity, linked panel data
    JEL: C33 I21 J24 J31
    Date: 2015–05
  9. By: Altmann, Steffen (University of Copenhagen); Falk, Armin (University of Bonn); Jäger, Simon (Harvard University); Zimmermann, Florian (University of Zurich)
    Abstract: We conduct a large-scale field experiment in the German labor market to investigate how information provision affects job seekers' employment prospects and labor market outcomes. Individuals assigned to the treatment group of our experiment received a brochure that informed them about job search strategies and the consequences of unemployment, and motivated them to actively look for new employment. We study the causal impact of the brochure by comparing labor market outcomes of treated and untreated job seekers in administrative data containing comprehensive information on individuals' employment status and earnings. While our treatment yields overall positive effects, these tend to be concentrated among job seekers who are at risk of being unemployed for an extended period of time. Specifically, the treatment effects in our overall sample are moderately positive but mostly insignificant. At the same time, we do observe pronounced and statistically significant effects for individuals who exhibit an increased risk of long-term unemployment. For this group, the brochure increases employment and earnings in the year after the intervention by roughly 4%. Given the low cost of the intervention, our findings indicate that targeted information provision can be a highly effective policy tool in the labor market.
    Keywords: job search, information provision, unemployment, field experiment
    JEL: C93 D04 D83 J64 J68
    Date: 2015–05
  10. By: Schmidheiny, Kurt (University of Basel); Suedekum, Jens (Heinrich Heine University Düsseldorf)
    Abstract: We analyze the first data set on consistently defined functional urban areas in Europe and compare the European to the US urban system. City sizes in Europe do not follow a power law: the largest cities are "too small" to follow Zipf's law.
    Keywords: city size distributions, Zipf's law, functional urban areas, urban systems
    JEL: R11 R12
    Date: 2015–04
  11. By: Künn-Nelen, Annemarie (ROA, Maastricht University)
    Abstract: This paper analyzes the relation between commuting time and health in the United Kingdom. I focus on four different types of health outcomes: subjective health measures, objective health measures, health behavior, and health care utilization. Fixed effect models are estimated with British Household Panel Survey data. I find that whereas objective health and health behavior are barely affected by commuting time, subjective health measures are clearly lower for people who commute longer. A longer commuting time is, moreover, related to more visits to the general practitioner. Effects turn out to be more pronounced for women and for commuters driving a car. For women, commuting time is also negatively related to regular exercise and positively to calling in sick.
    Keywords: health, commuting time, transportation mode
    JEL: I12 R41
    Date: 2015–04
  12. By: Bruno, Giovanni S. F. (Bocconi University); Caroleo, Floro Ernesto (University of Naples Parthenope); Dessy, Orietta (Università Cattolica del Sacro Cuore)
    Abstract: In this paper we explore recent ISFOL-PLUS 2006-2008-2010 data available for Italy about height and weight of young workers with the purpose of analysing the relationship between measures of obesity and measures of economic performance. Among the latter, we introduce job satisfaction, both overall and for nine specific aspects, which has not been previously considered in the literature on the effects of obesity. Interestingly enough, we find that BMI does not discriminate young workers with respect to their job earnings, but it does affect negatively young workers' job satisfaction with important gender effects.
    Keywords: obesity, overweight, body mass index, job satisfaction, gross income
    JEL: J28 J81 I14
    Date: 2015–05
  13. By: Daniel Montolio (University of Barcelona & IEB); Simón Planells-Struse (University of Barcelona & IEB)
    Abstract: Given the recent increase observed in crime and violence related to sport activities and the subsequent need for governments to devote more resources to deter this pattern, this article presents empirical evidence that could justify the possibility of taxing the negative externalities associated with the staging of football matches. Focusing specifically on theft (mainly pick pocketing) and assault (interpersonal violence or hooliganism), we seek to determine the extent to which this private leisure activity is responsible for negative crime externalities on a urban context. Drawing on data for the matches played by Football Club Barcelona (FCB) and geocoded crime data for the city of Barcelona (Spain), we assess whether there is an increase in thefts and assaults across the city of Barcelona. Then, conducting an Exploratory Spatial Data Analysis (ESDA) and a spatial regression at the census tract level, we determine the effect of football matches on crime by comparing crime rates during home and away matches. We find an increase in the number of thefts across the whole city but, especially, in those census tracts within a 700-meter radius of the stadium, indicating that despite the increase in the number of police officers on duty in the vicinity of the stadium, potential offenders are attracted to crowds where rewards are likely to be higher and the probability of being apprehended lower. These results are confirmed by the relatively low number of crimes committed during away matches in the census tracts around the stadium. A similar spatial pattern is found for assaults, although the overall impact across the city is not significant. Our results, therefore, provide evidence of a displacement effect of violent supporters (hooligans) towards the census tracts closest to the FCB stadium on football days.
    Keywords: Crime, football, hooliganism, negative externalities, police forces
    JEL: K42 H27 R1 L83
    Date: 2015
  14. By: Anne Maria Busch (Leuphana University Lueneburg, Germany)
    Abstract: Using the health care reform of 2004 as an experience, the reaction of consumers (insured persons) and producers (pharmaceutical industry) based on electoral behavior and relating to drug prices and copayments imposed on drugs is analyzed. The changes in prices and medications after this reform make it to a natural choice. For the analysis, the interest group model by Peltzman (1976) is applied to the German health care market. The vote-maximizing government has to find the optimal combination of rent and price of regulation. As a result, the vote-maximizing outcome is determined by a price level which reflects the interests of consumers as well as the pharmaceutical industry. The analysis of the reaction of consumers related to the co-payment rules of 2004 leads to the hypothesis that the regulator, and finally the pharmaceutical industry, sets drug prices in a way that they are ranging from 5 to 50 Euro. Prices between 50 and 100 Euro are possible as well, reflecting a balance of power facing the pharmaceutical industry. Producers who had accepted the 1989 reference price had an incentive to increase their price while lowering their sales volume.
    Keywords: German health care market, interest groups, political pressure, lobbyism
    JEL: D72 D78 I39
    Date: 2015–05
  15. By: Caroleo, Floro Ernesto (University of Naples Parthenope); Pastore, Francesco (University of Naples II)
    Abstract: This paper aims to survey the theoretical and empirical literature on cross-country differences in overeducation. While technological change and globalization have entailed a skill-bias in the evolution of labour demand in the Anglo-Saxon countries, instead, in other advanced economies in Western Europe the increased educational level has not been associated with a parallel raise in the share of skilled occupations, therefore generating skills mismatch. This suggests that a demand-side explanation of overeducation is justified in Western Europe, which would be also confirmed by circumstantial evidence coming from the recent literature. Nonetheless, overeducation may also turn to be positive in the long run if the expansion of the supply of skills generates a technological upgrading of the production system. Moreover, from a micro-economic point of view, recent theoretical and empirical studies tend to justify a human capital theory based interpretation of the phenomenon, whereas the disorganization of the educational system, its degree of integration with the labour market may play an important role in helping young graduates develop the work experience and the competences they need to prevent them from experiencing overeducation. Overeducation causes a penalty to individuals in terms of earnings and employment opportunities and a waste of resources to the society at large in terms of state investment into education that do not bear its yields. Both penalties are higher not only where the demand for skill is lower, but also where school-to-work transition systems fail to effectively address the aim of generating competences rather than only education for their graduates.
    Keywords: school-to-work transition, university graduates, AlmaLaurea, overeducation, overskilling, earnings, (ordered) probit, sample selection bias, Heckit, Italy
    JEL: C25 C26 C33 I2 J13 J24
    Date: 2015–05
  16. By: Anne Maria Busch (Leuphana University Lueneburg, Germany)
    Abstract: This article analyzes the shifts of power relation and influence between pharmaceutical industry (producers), pharmacies, and social health insurers (SHI) in Germany based on drug prices. Since the health care reform of 2004, these interest groups have negotiated fees and discounts among each other without any intervention from the government. These negotiations and resulting amendments to the original law express the shift of power of the involved groups, which can be explained with the Becker (1983) model. As a result, a trend becomes apparent, which shows a slight increase in political pressure on the part of SHI and a big decrease of political pressure on the part of pharmacies and producers. This reflects the cost control trend in combination with the empowerment incentives for SHI. The last years have shown increased competition between the interest groups, resulting in more balanced power relations. Nevertheless, the most powerful group is still the producer group and the influence of SHI is still very low.
    Keywords: interest groups, political pressure, health care market, regulation
    JEL: D78 I39 D72 I18
    Date: 2015–05
  17. By: Nils Gutacker (Centre for Health Economics, University of York, UK); Luigi Siciliani (Department of Economics and Related Studies, University of York, UK); Giuseppe Moscelli (Centre for Health Economics, University of York, UK); Hugh Gravelle (Centre for Health Economics, University of York, UK)
    Abstract: Many health care systems collect and disseminate information on provider quality in order to facilitate patient choice and induce competitive behaviour amongst providers. The Department of Health in England has recently mandated the collection of patient-reported health outcome measures (PROMs) for the purpose of performance assessment and consumer information. This is the first attempt to routinely measure the gain in health that patients experience as the result of care and thus offer a more comprehensive picture of hospital quality than existing ‘failure measures’ such as mortality or readmission rates. In this paper we test whether hospital demand responds to hospital quality measures based on health gains in addition to more conventional measures. We estimate hospital choice models for elective hip replacement surgery using rich administrative data for all publicly-funded patients in the English NHS in 2010-2012. Our focus is on two key aspects of hospital choice: 1) the extent to which patients are more likely to choose hospitals which are expected to achieve larger improvements in patients’ health and 2) whether patients’ response to quality differs with their morbidity, as measured by pre-operative health status, and other characteristics such as age or income deprivation. In order to address potential endogeneity bias we implement an empirical strategy based on lagged explanatory variables, hospital fixed effects and a control group design based on demand for emergency hip replacement. Our results suggest that hospitals can increase demand by 9% if they increase the average health gains that patients experience by one standard deviation. Hospital demand has a higher elasticity with respect to average health gains than emergency readmission or mortality rates. Elective patients are twice as willing as emergency hip replacement patients to travel further for an increase in quality
    Keywords: Patient choice, hospital demand, demand elasticity, quality of care, health outcomes
    Date: 2015–05
  18. By: Bisschop, Paul (SEO Economic Research); Kastoryano, Stephen (University of Mannheim); van der Klaauw, Bas (VU University Amsterdam)
    Abstract: This paper studies the effects of introducing legal street prostitution zones on both registered and perceived crime. We exploit a unique setting in the Netherlands where legal street prostitution zones were opened in nine cities under different regulation systems. We provide evidence that the opening of these zones was not in response to changes in crime. Our difference-in-difference analysis using data on the largest 25 Dutch cities between 1994 and 2011 shows that opening a legal street prostitution zone decreases registered sexual abuse and rape by about 30% to 40% in the first two years. For cities which opened a legal street prostitution zone with a licensing system we also find significant reductions in drug-related crime and long-term effects on sexual assaults. Perceived drug nuisance increases upon opening but then decreases below pre-opening levels in cities with a licensed prostitution zone. In contrast, we find permanent increases in perceived drug crime in the areas adjacent to the legal prostitution zones.
    Keywords: prostitution, registered crime, perceived crime, regulation, difference-in-difference
    JEL: J16 J47 K14 K23 K42
    Date: 2015–05
  19. By: Diaz-Serrano, Luis (Universitat Rovira i Virgili); Meix-Llop, Enric (Universitat Rovira i Virgili)
    Abstract: The recognition of homosexual rights is a controversial issue in many countries. Spain was the third country in the world (after Netherlands and Belgium) to introduce a law recognizing homosexual marriage and adoption of children. In this paper, we examine for the first time whether schools are more hesitant to give feedback to homosexual parents during children's pre-registration period in Spain. In order to do that, we designed an internet field experiment to be conducted in schools. We created three types of fictitious couples; one heterosexual, one male homosexual and one female homosexual, and send emails to schools making sexual orientation explicit. Our results show that men homosexual couples had a significant lower probability to receive and answer than heterosexual couples (22.5 percentage points less). No statistically significant differences in the response rate were found between female homosexual and heterosexual couples. This result suggests that male homosexual couples might be penalized because of the lack of a maternal figure.
    Keywords: discrimination, field experiment, schools, homosexual rights
    JEL: H41 I20 K36
    Date: 2015–05
  20. By: Stenberg, Anders (SOFI, Stockholm University); Westerlund, Olle (Umeå University)
    Abstract: Most OECD countries experience high unemployment rates and declining growth in higher educational attainment. An often suggested government policy is therefore to allocate resources towards formal schooling for adults. However, returns on such investments are uncertain and the foregone earnings are potentially large. We use Swedish population register data from 1982 to 2011 to estimate average long run earnings returns on higher education for 29- to 55-year-olds who enrolled 1992-1993. We find substantial positive estimates, but these only fully emerge after approximately ten years. Nevertheless, calculations indicate that the benefits for society exceed the costs also under fairly pessimistic assumptions.
    Keywords: adult education, human capital, earnings
    JEL: H30 H52 I20 J24 O30
    Date: 2015–05

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