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on Microeconomic European Issues |
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Issue of 2015‒08‒19
23 papers chosen by Giuseppe Marotta Università degli Studi di Modena e Reggio Emilia |
| By: | David Wright |
| Abstract: | Extending working life is an objective for many nations. However, the UK government has recently reported only modest improvement “compared to many nations”. A comparison of European, Labour Force Surveys show that Germany has reversed early retirement much faster than the UK since 2003. This was not forecast by previous researchers. In particular, Ebbinghaus’ influential cross-national analysis of early retirement, published in 2006, had predicted that liberal welfare states regimes like the UK would react faster than conservative ones like Germany. A review of changes to pensions and employment policies suggests the UK puts more emphasis on recruitment of older workers, flexible working and gradual retirement while Germany puts more emphasis on retention of older workers through age-management and employment protection. The paper compares the employment transitions of older workers using data covering 1993 to 2013 from the longitudinal surveys British Household Panel Survey, Understanding Society and the German Socio-Economic Panel. It finds little evidence for the recruitment of older workers or gradual retirement in either the UK or Germany and concludes it was the greater employment protection for older workers in Germany that enabled the employment rate for older workers to increase even during the recent recession. |
| Keywords: | Older workers, United Kingdom, Germany |
| JEL: | J21 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp782&r=all |
| By: | Chiara Mussida (DISCE, Università Cattolica); Dario Sciulli (Department of Economic Studies, Università G. d'Annunzio di Chieti-Pescara) |
| Abstract: | The interest for the effects of disability on employment probabilities has increased in the last decade. The socio-economic debate also stressed the need of empowering people with disabilities. Whilst the existing literature primarily examine the direct effects of disability, we extend the focus by analyzing also the indirect effects of disability i.e.the way employment probability of an individual is affected by the presence of disabled member(s) in own household. We perform a comparative analysis among four major Western European Countries, i.e., Italy, Spain, France and the UK, by using the EU SILC panel data for the period 2007-2010. We find negative direct effects of disability on employment probabilities in all the countries. We also find some evidence of significant indirect effects, especially for females, with mixed signs and magnitude across countries. Different institutions, policies and household behaviour contribute to explain cross-country differences. |
| Keywords: | Disability, employment probabilities, caring activities, state dependence, initial conditions, country differences. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie2:dises1507&r=all |
| By: | Wagner, Joachim (Leuphana University Lueneburg, Germany, Centre of Excellence for Science and Innovation Studies (CESIS), & Royal Institute of Technology (KTH), Sweden.) |
| Abstract: | Crinò and Epifani (2012) report and discuss two empirical regularities they find in a representative sample of Italian manufacturing firms. First, there is a negative correlation between firms’ productivity and their export share to low-income destinations. Second, there is a negative correlation between firms’ innovation activity and their export share to low-income destinations. This note uses recently available comparable high quality firm level data for six European countries (including Italy) and similarly specified empirical models in an attempt to replicate these results. Replication failed completely. The link found between the share of exports to low-income countries and either productivity or R&D intensity is never in line with the results from Crinò and Epifani (2012). |
| Keywords: | exports; low-income destinations; productivity; innovation; EFIGE data |
| JEL: | F14 |
| Date: | 2015–07–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0417&r=all |
| By: | Manuel Flores (OECD, France); Pilar Garcia-Gomez (Erasmus University Rotterdam, the Netherlands); Adriaan Kalwij (Utrecht University, the Netherlands) |
| Abstract: | We investigate how early life circumstances—childhood health and socioeconomic status (SES)—are associated with labor market outcomes over an individual’s entire life cycle. A life cycle approach provides insights not only into which labor market outcomes are associated with adverse childhood events but also into whether these associations show up early or only later in working life, and whether they vanish or persist over the life cycle. The analysis is conducted using the Survey of Health, Aging and Retirement in Europe, which contains retrospective information on early life circumstances and full work histories for over 20,000 individuals in thirteen European countries. We find that the associations between early life circumstances and (accumulated) labor market outcomes vary over an individual’s life cycle. For men and women, the effect of childhood SES on lifetime earnings accumulates over the life cycle through the associations with both working years and annual earnings. Moreover, for men this association with lifetime earnings reverses sign from negative to positive over their working life. We also find a smaller, positive long-term association between childhood health and lifetime earnings operating mainly through annual earnings and only to a lesser extent through working years, and which is not present at the beginning of the working life for women. Most of these life cycle profiles differ between European country-groups. Finally, for women we find a so-called buffering effect, i.e. that a higher parental SES reduces the negative impact of poor health during childhood on accumulated earnings over the life cycle. |
| Keywords: | Early life circumstances; lifetime earnings; life cycle; SHARE |
| JEL: | D10 I14 J14 J24 J31 O15 |
| Date: | 2015–08–06 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150094&r=all |
| By: | David Reichel (EUROPEAN UNION AGENCY FOR FUNDAMENTAL RIGHTS); Melissa Siegel (MAASTRICHT UNIVERSITY); Juan Carlos Andreo Tudela (Universidad Pablo de Olavide) |
| Abstract: | This report shows the role played by Information and Communication Technologies (ICT) in supporting the employability and integration of immigrants in Europe in three European countries, framed in their migration history, migration policies, integration policy and levels of integration of migrants in the country. This study complements the findings obtained in the report entitled "ICT for the employability and integration of immigrants in the European Union: Results from a survey in three Member States". The research found that age, education, employment status and type of occupation are drivers of digital inequalities; ICTs constitute an important resource for employability and integration of immigrants in the three countries, and specific groups of immigrants such as older and less educated are isolated from the digital world, and that immigrants they are not making more advanced uses of ICTs. Policy strategies go toward increasing access and the digital literacy of isolated groups and in particular for newly arrived migrants, as to provide on-line access to relevant information and on-line services for migrants through user friendly multi-lingual websites. |
| Keywords: | Digital single market, connected, immigrants, skills, employability, digital, competences, migration, integration, e-inclusion, digital agenda, information and communication technologies |
| JEL: | I00 I18 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc93966&r=all |
| By: | Sarah Dahmann (German Institute for Economic Research (DIW Berlin)); Silke Anger (Volkswirtschaftslehre Otto-Friedrich Universität Bamberg) |
| Abstract: | This paper investigates the short-term effects of a reduction in the length of high school on students' personality traits using a school reform carried out at the state level in Germany as a quasi-natural experiment. Starting in 2001, academic-track high school (Gymnasium) was reduced from nine to eight years in most of Germany's federal states, leaving the overall curriculum unchanged. This enabled students to obtain a university entrance qualification (Abitur) after a total of only 12 rather than 13 years of schooling. We exploit the variation in the length of academic-track high school over time and across states to identify the effect of schooling on students' Big Five personality traits and on their locus of control. Using rich data on adolescents and young adults from the German Socio-Economic Panel (SOEP) study, our estimates show that shortening high school caused students on average to be more extroverted and less emotionally stable. Our estimates point to important heterogeneous effects. In addition to differences between East and West Germany, we find that male students and students from disrupted families showed stronger personality changes following the reform: they became more agreeable and more extroverted, respectively. We conclude that the educational system plays an important role in shaping adolescents' personality traits. |
| Keywords: | Non-cognitive Skills, Big Five, Locus of Control, Skill Formation, High School Reform |
| JEL: | I21 I28 J24 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:duh:wpaper:1505&r=all |
| By: | J. Micha Steinhäuser; Klaus Eisenack (University of Oldenburg, Department of Economics) |
| Abstract: | Strongly correlated and spatially concentrated curtailment of power plants strongly affects the electricity market. Such curtailment is observed during heat waves in middle Europe, for example. First, curtailed power plants need to be substituted by more expensive ones. Second, additional congestion of the electricity grid may constrain substitution. These consequences and their spatial incidence have yet not been thoroughly assessed at the level of a national electricity system. Does congestion excessively amplifes curtailment costs? Do costs remain localized? How does the cost incidence depend on the market design? We employ a calibrated DC load <br>flow model of the German electricity system that simulates an energy-only market followed by redispatch, as well as nodal prices, for a representative week and renewable feed-in scenarios. We find that spatially concentrated curtailment by 10% of Germany's installed non-renewable generation capacity leads to a 3% welfare loss of the market value, but that loss is not driven by congestion. The electricity price rises by 14% in average, and up to 17% in peak load hours. Consumers bear the burden of curtailment, whereas producer gain in the aggregate. Effects considerably spill over to other regions. While consumers in Southern Germany always lose, consumers<br>in Eastern and Western Germany may gain welfare. Nodal pricing reduces loss by up to 1.5%, and shifts a larger burden to consumers and to Southern Germany. The aggregated economic effects of curtailment are manageable in Germany, but its distributional effects are multiple times larger. |
| Keywords: | climate change; distribution; energy-only market; Germany; heat wave; loop-ows; market design; nodal prices; renewables; surplus |
| JEL: | D39 Q41 Q54 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:old:dpaper:379&r=all |
| By: | Fischer, Justina A.V. (University of Mannheim); Pastore, Francesco (University of Naples II) |
| Abstract: | This study analyses whether the role of religion for employment of married women in Europe has changed over time and along women's life cycles. Using information on 44'000 married European women from the World Values Survey 1981-2013, we find that in OECD-Europe there is little difference among women of any age since 1997. For non-OECD-Europe, we find differences by religion among young women, but not among those older than 40 years, which we attribute to an upbringing under communist regimes. Only Muslim women show a lower employment probability that persists across time, regions, and life cycles. |
| Keywords: | religion, labor market participation, modernization, gender, Europe, transition countries, Eastern Europe, OECD, World Values Survey |
| JEL: | D83 J16 J22 N34 Z12 Z13 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9244&r=all |
| By: | Thomas Barnay (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS); Sandrine Juin (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS) |
| Abstract: | In France, the number of dependent elderly should d ouble by 2060. It is thus important to address the well-being of this growing share of the population. This work aims at estimating the effects of informal care and formal care on the mental health of dependent elderly. Furthermore, we allow the effect of care to vary de pending on the level of dependence, the gender of the dependent elderly and the relationship between the elderly and the primary informal caregiver. Many theoretical models include a production function of health which has two inputs, formal care and informal care but t his function has not been the subject of many empirical studies. In order to estimate the health production function, we use the French Disability and Health Survey (2008). Using a sample of 4,067 dependent elderly, three equations are jointly estimated by the maximum-likelihood method: mental health, informal care and formal care. Correlated residuals partially take into account the relationship between formal and informal cares and the reverse causality of mental health on care received. We use two mental health indicators: depression and the Mental-Health Inventory (MHI-5). The results show a positive effect of informal care on mental health, for slightly dependent elderly, for individuals receiving care from friends or neighbors and for men receiving care from a daughter or from siblings. Formal care decreases the risk of depression and improves the MHI-5 of elderly dependent people, this last effect being higher for women. |
| Date: | 2015–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01100236&r=all |
| By: | Díaz Serrano, Lluís |
| Abstract: | This paper estimates the determinants of productivity differentials across urban areas in Spain. To do so we resort to Spanish Social Security administrative data (MCVL) matched with workers’ fiscal information. We use two-step approach that allows us to control for the confounding effects due to the sorting of more productive workers and more productive firms in bigger cities. Our results indicate that city size is a significant determinant of productivity differentials across Spanish urban areas. We estimate an elasticity of urban agglomeration of 3.3%, which is within the range of values already observed in other countries. We also find that the level of human capital, firm size and the level of industrial specialization also matters in order explain productivity differentials across Spanish cities. Keywords: Agglomeration, wages, productivity, city size. JEL codes: R10, R23, J31 |
| Keywords: | Àrees metropolitanes, Espanya, Ciutats, Productivitat (Economia), Salaris, Economia regional, 332 - Economia regional i territorial. Economia del sòl i de la vivenda, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:urv:wpaper:2072/247805&r=all |
| By: | Flavia Coda Moscarola (University of Turin and CeRP-Collegio Carlo Alberto); Elsa Fornero (University of Turin and CeRP-Collegio Carlo Alberto); Steinar strom (The Ragnar Frisch Centre for Economic Research) |
| Abstract: | Both economic and epidemiological literature have shown that perceived high strain at work and lack of social infrastructures are good predictors of sick-leave. The latter is particularly relevant in (Mediterranean) countries where facilities for children and LTC services are relatively scarce and women are frequently asked to fill the gap. The Italian 2011 pension reform, approved under the threat of a financial crisis, significantly restricted age and seniority requirements for retirement, especially for women in private employment, who still enjoyed a much more favorable treatment than men and women in public service. We investigate whether (employed) older Italian women reacted to the postponement of retirement by increasing their recourse to sick-leave. The empirical analysis, based on a noteworthy administrative data set provided by the Italian Social Security Agency, offers unequivocal evidence that this has indeed been the case, in particular for grandmothers. |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:crp:wpaper:148&r=all |
| By: | Claudio Marcantonini; Vanessa Valero |
| Abstract: | In order to combat global warming, Italy has committed to clear environmental goals by reducing its CO2 emissions. To this purpose, it has notably encouraged renewable energy development through a variety of support schemes, ranging from green certificates to feed-in and premium tariffs. As a result, during the last years, the production of electricity from renewable energy sources, especially from wind and solar energy, has experienced a considerable surge. In this paper we estimate the cost of reducing CO2 emissions in the power sector by deploying wind and solar energy in Italy from 2008 to 2011. The results show that, for the period analyzed, the average costs for wind are in the order of 150 €/tCO2, while for solar are much higher, above 1000 €/tCO2. This is because solar energy generators receive much higher remunerations per MWh of generated electricity than wind energy generators. These costs are about twice as high as in Germany. This is due to the difference between the incentive schemes and the power system in the two countries. |
| Keywords: | Abatement Cost, Renewable Energy, Wind Energy, Solar Energy, Italy |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2015/20&r=all |
| By: | Jan Baran |
| Abstract: | This paper investigates the impact of antidumping on EU trade. Compared to previous studies, this paper moves the time horizon of analysis forward, covering the period from 1992 to 2010. Information on antidumping investigations is taken from relatively new Global Antidumping Database. The theoretical model suggests that both import and export flows should be affected. The econometric investigation shows that the use of antidumping significantly distorts imports. A strong and long-lasting effect of trade destruction is identified for AD cases ending with the imposition of final protection. For AD cases withdrawn by applicants or rejected by AD authority, the trade destruction effect is short-lived, and is limited to the duration of provisional measures. The introduction of AD protection also causes an increase in imports from countries not covered by the AD investigation (the trade diversion effect). The results obtained from the model augmented with leading variables reveal that EU antidumping is used against aggressive exporters that rapidly increase their sales on the European market. There is no convincing evidence of antidumping having an impact on EU exports. Although there is a decline in exports, it cannot be associated with antidumping as it starts before the initiation of AD. |
| Keywords: | antidumping, trade policy, international trade, trade destruction, trade diversion |
| JEL: | F13 F14 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:ibt:wpaper:wp122015&r=all |
| By: | Charlotte von Möllendorff; Heinz Welsch |
| Abstract: | Electricity from renewable sources avoids disadvantages of conventional power generation but often meets with local resistance due to visual, acoustic, and odor nuisance. We use representative panel data on the subjective well-being of 46,678 individuals in Germany, 1994-2012, for identifying and valuing the local externalities from solar, wind and biomass plants in respondents’ postcode area and adjacent postcode areas. We find significant well-being externalities of all three technologies that differ with regard to their temporal and spatial characteristics. The monetary equivalent of 1 MW capacity expansion is estimated to be in the range of 0.3-0.7 percent of per capita income. |
| Keywords: | renewable energy, local externality, subjective well-being, life satisfaction, non-market valuation |
| JEL: | Q42 D62 I31 Q51 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp779&r=all |
| By: | Peter Levell (Institute for Fiscal Studies); Jonathan Shaw (Institute for Fiscal Studies) |
| Abstract: | In this paper we discuss two alternative approaches to constructing complete adult life-cycles using data from an 18-year panel. The first of these is a splicing approach - closely related to imputation - that involves stitching together individuals observed at different ages. The second is a microsimulation approach that uses panel data to estimate transition probabilities between different states at adjacent ages and then simulates a large number of individuals with different initial values. Our aim throughout is to construct life-cycle profiles of employment, earnings and family circumstances that are representative of UK individuals born between 1945 and 1954. On balance, we find the microsimulation approach is to be preferred because it allows us to correct for observable differences across cohorts, and it is more amenable to counterfactual modelling. |
| Keywords: | Microsimulation |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:15/01&r=all |
| By: | Farré, Lídia (University of Barcelona); Fasani, Francesco (Queen Mary, University of London); Mueller, Hannes (IAE Barcelona (CSIC)) |
| Abstract: | This article documents a strong connection between unemployment and mental disorders using data from the Spanish Health Survey. We exploit the collapse of the construction sector to identify the causal effect of job loss. Our results suggest that an increase of the unemployment rate by 10 percent due to collapse of the sector raised mental disorders in the affected population by 3 percent. We argue that the large size of this effect responds to the fact that the construction sector was at the centre of the macroeconomic shock. As a result, workers exposed to the negative employment shock faced very low chances of re-entering employment. We show that this led to long unemployment spells, hopelessness and feelings of uselessness. |
| Keywords: | mental health, great recession, unemployment, Spain |
| JEL: | I10 J60 C26 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9235&r=all |
| By: | Degryse, Hans; Matthews, Kent (Cardiff Business School); Zhao, Tianshu |
| Abstract: | We study the sensitivity of banks’ credit supply to small and medium size enterprises (SMEs) in the UK to banks’ financial condition before and during the financial crisis. Employing unique data on the geographical location of all bank branches in the UK, we connect firms’ access to bank credit to the financial condition (i.e., bank health and the use of core deposits) of all bank branches in the vicinity of the firm over the period 2004-2011. Before the crisis, banks’ local financial conditions did not influence credit availability irrespective of the functional distance (i.e., the distance between bank branch and bank headquarters). However, during the crisis, we find that SMEs with in their vicinity banks that have stronger financial condition face greater credit availability when the functional distance is low. Our results point to a “flight to headquarters” effect during the financial crisis. |
| Keywords: | financial crisis; credit supply; flight to headquarters; flight to quality; bank organization |
| JEL: | G21 G29 L14 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2015/5&r=all |
| By: | Salm, Martin (Tilburg University); Wübker, Ansgar (RWI) |
| Abstract: | Medical providers often have a significant influence on treatment decisions which they can use in their own financial interest. Classical models of supplier-induced demand predict that medical providers will supply fewer services if they face increasing prices. We test this prediction based on a reform of hospital financing in Germany. Uniquely, this reform changed the overall level of reimbursement – with increasing prices for some hospitals and decreasing prices for others – without affecting the relative prices for different types of patients. Based on administrative data, we find that hospitals do indeed react to increasing prices by reducing service supply. |
| Keywords: | physician-induced demand, hospital care, prospective payment |
| JEL: | I11 L10 L21 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9229&r=all |
| By: | Lundborg, Petter (Department of Economics, Lund University); Majlesi, Kaveh (Department of Economics, Lund University) |
| Abstract: | Studies on the intergenerational transmission of human capital usually assume a one-way spillover from parents to children. But what if children also affect their parents’ human capital? Using exogenous variation in education, arising from a Swedish compulsory schooling reform in the 1950s and 1960s, we address this question by studying the causal effect of children’s schooling on their parents’ longevity. We first replicate previous findings of a positive and significant cross-sectional relationship between children’s education and their parents’ longevity. Our causal estimates tell a different story; children’s schooling has no significant effect on parents’ survival. These results hold when we examine separate causes of death and when we restrict the sample to low-income and low-educated parents. |
| Keywords: | Intergenerational transmission; Human capital; Longevity; Compulsory schooling; Education |
| JEL: | I10 I21 J14 |
| Date: | 2015–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2015_022&r=all |
| By: | Marlène Guillon (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC)); Michel Celse (Conseil National du Sida); Pierre-Yves Geoffard (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC)) |
| Abstract: | Background In 2011, migrants accounted for 47% of newly diagnosed cases of HIV infection in France, including 70% from Sub-Saharan Africa. These populations meet with speci_c obstacles leading to late diagnosis and access to medical and social care. Reducing these delays has a proven benefit to patients' health and contributes to a better control of the epidemic by preventing secondary infections. Methods The objective of this study is to assess the cost-effectiveness impact of an early access to care (ATC) for migrant people living with HIV (PLHIV) in France. The model compares \early" vs. \late" ATC for migrant PLHIV in France, defined by an entry into care with a CD4 cell count of 350 and 100/mm3 respectively, and integrate the positive externality of treatment on prevention. To evaluate the cost-effectiveness of \early" ATC, incidence and hidden prevalence among migrants in France were estimated. Findings Early ATC strategy proved cost-saving, or cost-effective in the worst case scenario. In the most favorable scenario, early ATC generated an average net saving of €198,000 per patient, and prevented 0.542 secondary infection. In the worst case scenario, early ATC strategy generated an average cost of €28,000, a cost-effectiveness ratio of €133,000 per averted infection and prevented 0.211 secondary infection. Interpretation In addition to individual health benefit, improving early ATC for migrant PLHIV proves an efficient strategy in terms of public health and economics. These results stress out the benefit of ensuring ATC for all individuals living with HIV in France. |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-01118612&r=all |
| By: | Asdrubali, Pierfederico; Tedeschi, Simone; Ventura, Luigi |
| Abstract: | This paper aims to fill the gap on the analysis of risksharing channels at the micro level, both within and across households. Using data from the Bank of Italy's Survey on Household Income and Wealth covering the financial crisis, we are able to quantify in a unified and consistent framework several risksharing mechanisms that so far have been documented separately. We find that Italian households were able to smooth at least 78% of shocks to household head's non-financial income (labelled "basic income") in 2008-2010, a fraction rising to 80% in 2010-2012. The most important smoothing mechanism turns out to be within-household risksharing, which is able to absorb about half of a shock; but an analysis by net wealth discloses striking differences in within-household risksharing between "poor" and "rich" households. Self-insurance through saving/dissaving is also notable, as it cushions 28% of changes in basic income in 2008-2010, and 24% in 2010-2012. Interestingly, risksharing through portfolio diversification and private transfers is rather limited, but the overall degree of shock absorption occurring through private risksharing channels reaches 70%, as opposed to a meager 7% of a shock cushioned by public transfers and taxes. |
| Keywords: | Household Risksharing; Precautionary Saving; Consumption Smoothing; Income Smoothing. |
| JEL: | C31 D1 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65906&r=all |
| By: | Henley, Andrew (Aberystwyth University) |
| Abstract: | In the UK by late 2014 there were almost 0.75m more self-employed than at the start of the financial crisis in early 2008. This represents over 75% of jobs growth in the UK over the same period. This experience has attracted commentary from independent policy analysts and others, focusing on whether growth has been structural, reflecting changes in the nature of employment and attitudes towards business venturing, or cyclical, reflecting a post-crisis shift towards flexible insecure forms of employment as an alternative to long-term unemployment. Recent commentary has also focused on heterogeneity across UK regions. Longitudinal data covering 2009-2013 from the ESRC Understanding Society survey are used to examine transitions into self-employment, and regression correlation with indicators of labour market conditions (unemployment, earnings) in the area local to the individual. Transitions into self-employment from both previous paid employment and inactivity found to be are negatively correlated with lagged local unemployment rates and positively correlated with lagged lower quartile earnings in the local area. These correlation patterns, although varying in size, hold for men and women, and are robust to controlling for individual characteristics. This suggests that local pull factors are far more significant in driving transitions into self-employment, and explains why business formation rates are higher, post-2008, in more advantaged UK areas. Self-employed business ownership does not appear to a significant alternative to unemployment for those where of paid employment demand is weak. Entrepreneurial activity prospers were wages are higher and unemployment lower. |
| Keywords: | self-employment, local unemployment, local earnings, longitudinal analysis |
| JEL: | J21 M13 R23 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9232&r=all |
| By: | Coppola, Gianluigi (University of Salerno); O'Higgins, Niall (ILO International Labour Organization); Pinto, Claudio (University of Salerno) |
| Abstract: | In this paper we look at the relationship between health and income as mediated by “lifestyle” choices; that is, a set of behaviours which are thought to influence health and are generally considered to invoke a substantial degree of free choice. The main underlying assumption is that individuals are co-producers of their own health. We first present a theoretical model in which health affects a consumer's utility through a Health Production Function in which health is the output and consumer goods are the inputs. We then estimate an empirical model of health related choices and outcomes. We find that there are substantial differences between the permanent and transitory income determinants – also in terms of the direction of the effects. Moreover, we find that income effects often differ significantly in size and sometimes sign according to whether the income change was positive or negative. This is attributed to the dependence creating nature of the consumption goods involved (smoking cigarettes and drinking alcohol) and their role as anxiety reducing goods which suggests that the simple theoretical model outlined here – some form of which is usually employed to analyse these issues - is not fully adequate to deal with the type of lifestyle consumption goods considered here. We indicate the lines along which a model needs to be developed in order to take this more fully into account, based on the rational addiction approach originating with Becker. |
| Keywords: | health, lifestyle, income, young people |
| JEL: | D11 D12 I12 J13 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9249&r=all |