nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2016‒01‒29
25 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Happy Birthday, your Fired! : The Effects of an Age-Dependent Minimum Wage on Youth Employment Flows in the Netherlands By Kabátek, Jan
  2. Working Time Reductions at the End of the Career. Do they prolong the Time Spent in Employment? By Andrea Albanese; Bart Cockx; Yannick Thuy
  3. Cross-Country Electricity Trade, Renewable Energy and European Transmission Infrastructure Policy By Jan Abrell; Sebastian Rausch
  4. Intertemporal pro-poorness By Florent Bresson; Jean-Yves Duclos; Flaviana Palmisano
  5. Minimum wages and the gender gap in pay. Evidence from the UK and Ireland. By BARGAIN Olivier; DOORLEY Karina; VAN KERM Philippe
  6. Periphery under Pressure: Morocco, Tunisia and the European Union’s Mobility Partnership on Migration By Mohamed Limam; Raffaella A. Del Sarto
  7. Assessing the Social and Macroeconomic Impacts of Labour Market Integration: A Holistic Approach By Pavel Ciaian; d’Artis Kancs
  8. Should everybody be in services? The effect of servitization on manufacturing firm performance By Matthieu Crozet; Emmanuel Milet
  9. No Pain, No Gain: The Effects of Exports on Job Injury and Sickness By Hummels, David; Munch, Jakob; Xiang, Chong
  10. Labor Market Policies and Self-Employment Transitions of Older Workers By Dimitris Christelis; Raquel Fonseca
  11. A Grassland strategy for farming systems in Europe to mitigate GHG emissions - An integrated spatially differentiated modelling approach By Gocht, Alexander; Espinosa, Maria; Leip, Adrian; Lugato, Emanuele; Schroeder, Lilli Aline; Van Doorslaer, Benjamin; Gomez y Paloma, Sergio
  12. Did policy reforms really decrease inequalities of access to French higher education? A comparison between Generation 1998 and 2010. By Magali Jaoul-Grammare
  13. Housing Decisions, Family Types and Gender: A Look across LIS Countries By Mariacristina Rossi; Eva Sierminska
  14. Worker Flows and Labour Market Adjustment during the Great Recession: Evidence from a Large Shock By H. Lehmann; T. Razzolini; A. Zaiceva
  15. Time spent on cultural activities at home in Spain: Differences between wage-earners and the self-employed By José Alberto Molina; Juan Carlos Campaña; Raquel Ortega
  16. Actual and perceived ?nancial sophistication and wealth accumulation: The role of education and gender By Christina E. Bannier; Milena Neubert
  17. An evaluation of the 1987 French Disabled Workers Act: Better paying than hiring By Thomas Barnay; Emmanuel Duguet; Christine Le Clainche; Yann Videau
  18. Corporate Flat Tax Reforms and Businesses' Location Choices. Evidence from Switzerland By Sergio Galletta; Agustin Redonda
  19. Monitoring income-related health differences between regions in Great Britain: a new measurement framework By Paul Allanson
  20. Valuing the benefits from health care interventions using life satisfaction data By Howley, P,;
  21. Innovator Mobility in Finland and Denmark By Bagger, Jesper; Maliranta, Mika; Määttänen, Niku; Pajarinen, Mika
  22. Law enforcement, municipal budgets and spillover effects: Evidence from a quasi-experiment in Italy By Sergio Galletta
  23. Are clusters more resilient in crises? Evidence from French exporters in 2008-2009 By Philippe Martin; Thierry Mayer; Florian Mayneris
  24. Rational habits in residential electricity demand By Massimo Filippini; Bettina Hirl; Giuliano Masiero
  25. Access to Medicines and European Market Integration By Fabio Pammolli; Armando Rungi

  1. By: Kabátek, Jan (Tilburg University, Center For Economic Research)
    Abstract: This paper investigates the effects of the age-dependent minimum wage on youth employment flow in the Netherlands. The Dutch minimum wage for workers aged 15-23 is defined as a step-wise increasing function of a worker's calendar age. At the aged of 23, workers become eligible for the "adult" minimum wage which does not increase further. This creates an incentive for firms to discriminate against employees on the basis of their age, substituting more expensive older workers with younger ones. IN order to grasp the size of these effects, I analyze monthly flows in and out of employment using administrative records for the entire youth population of the Netherlands. I account for the time remaining until workers' next birthdays, exploiting the fact that firms are facing a sharp discontinuity in labor costs in the month when a worker turns one year older. The results show a significant increase in job separation increases by 1.1% in the three calendar months which are closest to a worker's next birthday. This effect exhibits substantial heterogeneity with respect to a worker's age, showing that young and inexperienced workers are more likely to be affected by the discontinuities. The size of the effect also varies by the sector of employment, being particularly large for supermarket employees. Job accession peaks just after workers' birthdays, representing both entry of the workers with higher reservation wages and re-employment of the workers whose jobs are dissolved around the time of the discontinuity.
    Keywords: minimum wage; age-dependency; labor market flows
    JEL: J23 J31 J38 M51
    Date: 2016
  2. By: Andrea Albanese (Ghent University, Faculty of Economics and Business, SHERPPA); Bart Cockx (Ghent University, Faculty of Economics and Business, SHERPPA, UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES), IZA and CESifo); Yannick Thuy (Ghent University, Faculty of Economics and Business, SHERPPA)
    Abstract: In this paper we study the effects on the survival rate in employment of a scheme that facilitates gradual retirement through working time reductions. We use information on the entire labour market career and other observables to control for selection and take dynamic treatment assignment into account. We also estimate a competing risks model considering different (possibly selective) pathways to early retirement. We find that participation in the scheme initially prolongs employment, as participants keep accumulating full pension rights. However, as participants become eligible for early retirement subsequently, these larger financial incentives induce them to leave the labour force prematurely. These adverse incentives are stronger for individuals who reduce their working time most. After two (four) years for men (women), the positive effects reverse. The more favourable effect for women is likely a consequence of their lower opportunities to enter early retirement. The gradual retirement scheme fails the cost-benefit test.
    Keywords: Part-time work, older workers, Inverse Probability Weighting, dynamic selection into treatment, endogenous sampling
    JEL: J14 C22 J18 J22
    Date: 2015–12–23
  3. By: Jan Abrell (ETH Zurich, Switzerland); Sebastian Rausch (ETH Zurich, Switzerland)
    Abstract: This paper develops a multi-country multi-sector general equilibrium model, integrating high-frequency electricity dispatch and trade decisions, to study the eects of electricity transmission infrastructure (TI) expansion and re- newable energy (RE) penetration in Europe for gains from trade and carbon dioxide emissions in the power sector. TI can benet or degrade environ- mental outcomes, depending on RE penetration: it complements emissions abatement by mitigating dispatch problems associated with volatile and spa- tially dispersed RE but also promotes higher average generation from low- cost coal if RE production is too low. Against the backdrop of European decarbonization and planned TI expansion, we nd that emissions increase for current and targeted year-2020 levels of RE production and decrease for year-2030 targets. Enhanced TI yields sizeable gains from trade that de- pend positively on RE penetration, without creating large adverse impacts on regional equity.
    JEL: F18 Q28 Q43 Q48 C68
    Date: 2016–01
  4. By: Florent Bresson; Jean-Yves Duclos; Flaviana Palmisano
    Abstract: A long-lasting scientific and policy debate queries the impact of growth on distribution. A specific branch of the micro-oriented literature, known as ‘pro-poor growth’, seeks in particular to understand the impact of growth on poverty. Much of that literature supposes that the distributional impact should be measured in an anonymous fashion. The income dynamics and mobility impacts of growth are thus ignored. The paper extends this framework in two important manners. First, the paper uses an ‘intertemporal pro-poorness’ formulation that accounts separately for anonymous and mobility growth impacts. Second, the paper’s treatment of mobility encompasses both the benefit of “mobility as equalizer” and the variability cost of poverty transiency. Several decompositions are proposed to measure the importance of each of these impacts of growth on the pro-poorness of distributional changes. The framework is applied to panel data on 23 European countries drawn from the ‘European Union Statistics on Income and Living Conditions’ (EU-SILC) survey.
    Keywords: pro-poorness, income mobility, growth, poverty dynamics.
    JEL: D31 D63 I32
    Date: 2015
  5. By: BARGAIN Olivier; DOORLEY Karina; VAN KERM Philippe
    Abstract: Since women are disproportionately in low paid work, they should benefit the most from minimum wage policies. We exploit the introduction of a national minimum wage (MW) in Ireland (in 2000) and the UK (in 1999) to check this prediction. Using panel survey data, we implement difference-in-difference estimation of a distribution regression model. We separate out "price" effects from "composition" effects. A large reduction of the gap at low wages is found for Ireland, with small spill-over effects further up in the distribution. There is hardly any effect in Britain, largely because of apparent non-compliance with the minimum wage legislation.
    Keywords: gender wage gap; minimum wage; distribution regression; UK; Ireland
    JEL: C14 J16
    Date: 2016–01
  6. By: Mohamed Limam; Raffaella A. Del Sarto
    Abstract: Morocco and Tunisia resisted for some time pressure from the European Union to sign readmission agreements. These agreements co-opt states into the EU’s migration governance, and include a commitment to cooperation on the expulsion of unwanted migrants in Europe. Their recent acceptance of a largely unbalanced arrangement on the issue, the Mobility Partnership, came at a crucial time in the political history of these two countries. This paper shows that the EU exploited the extremely fragile and uncertain political context after the start of the uprisings, in order to push Morocco and Tunisia to sign up to the Mobility Partnership. What is more, the EU anchored the pursuit of what is a clear EU priority in a normative discourse, effectively linking cooperation on migration to EU support for democratisation in the ‘neighbourhood’, after the Arab upheavals. The article thus highlights a concrete case in which the EU engaged in realpolitik, using norms and values strategically. However, the normative framing of EU policies also contributed to the construction of an (allegedly) normative EU identity. Hence, the article challenges simplistic notions of ‘normative power Europe’.
    Keywords: European Union, Tunisia, Morocco, migration, Mobility Partnership, Arab uprising
    Date: 2015–10
  7. By: Pavel Ciaian (European Commission – JRC - IPTS); d’Artis Kancs (European Commission – JRC - IPTS)
    Abstract: In the age of globalisation and the knowledge economy, skill mobility is perceived as one of the key factors for fully unlocking the labour market potential. Assessing the social and macroeconomic impacts of increased skill mobility is an important though also challenging task, which requires a holistic approach. This study presents the dynamic spatial general equilibrium approach taken in the Regional Holistic Model (RHOMOLO) to better understand the relationship between education, skills, migration and economic growth. Two key channels of labour market adjustment -- upward skill mobility and spatial skill mobility -- are presented and explained in particular detail. By performing numerical simulations and conceptual analysis of labour market integration, we aim to facilitate understanding of the advantages and limitations of the approach taken in RHOMOLO, and its potential for education, skills and employment policy impact assessment. The results from our analysis suggest that a holistic approach is indeed crucial for capturing all the direct and indirect, short- and long-run effects, and it has a wide potential for assessing region-, sector- and skill-specific macroeconomic and social effects of policies aiming at integration e.g. of marginalised communities, such as Roma or refugees, into the EU labour markets.
    Keywords: Dynamic spatial general equilibrium model, skills, education, employment, labour, migration, wage, human capital.
    JEL: C68 D58 F22 J20 J61 J64 O15
    Date: 2015–12
  8. By: Matthieu Crozet; Emmanuel Milet
    Abstract: The servitization of the manufacturing sector refers to the evolution of manufacturers' capabilities to o er services as a complement to or a substitute for the goods that they produce. A vast literature has described these strategies and has shown that this phenomenon is widespread and growing in most developed economies. However, very little systematic evidence of the extent or consequences of servitization based on a comprehensive dataset of fi rms exists. In this paper, we provide such evidence using exhaustive data for French manufacturing firms between 1997 and 2007. We fi nd that the vast majority of French manufacturers sell services in addition to producing goods. The shift toward services is growing steadily but at a slow pace. We also provide evidence of a causal impact of servitization on firm performance. Controlling for various sources of endogeneity bias, we find that fi rms that start selling services experience an increase in their profi tability between 3.7% and 5.3%, increase their employment by 30%, increase their total sales by 3.7%, and increase their sales of goods by 3.6%. The results hold for most industries, although some heterogeneity exists.
    Keywords: Servitization, firm-level data
    Date: 2015–10
  9. By: Hummels, David; Munch, Jakob; Xiang, Chong
    Abstract: We live in a century of globalization and rising expenditures on health, but little rigorous research has been done to understand the impacts of globalization on individuals’ health. We combine Danish data on individuals’ health with Danish matched worker-firm data to understand how increases in exports by firms affect their employees’ job injuries and sickness during 1995-2006. We find that rising exports lead to higher rates of injury and sickness, mainly for women. A 10% exogenous increase in exports increases women’s chance of severe job injury by 6.35%, severe depression, 2.51%, using antithrombotic drugs, 7.70%, and hospitalizations due to heart attacks or strokes, 17.44%. Rising exports also lead to higher work efforts by both men and women: less minor sick-leave days and more total hours (regular plus over-time). During the 2007-2009 recession, Danish exports and on-the-job injuries fell significantly. An out-of-sample prediction using our estimates accounts for 12%- 62% of the actual decrease in job injury counts in this period. Finally, we develop a framework to calculate the contemporaneous welfare losses due to higher rates of multiple types of injury and sickness, and show that for the average male and female worker, the welfare loss from the adverse health outcomes is substantial but small relative to the wage gains from rising exports (4.16% for men but 18.83% for women).
    Keywords: Health Economics and Policy, International Relations/Trade, Labor and Human Capital,
    Date: 2015–12
  10. By: Dimitris Christelis; Raquel Fonseca
    Abstract: We study transitions in and out of self-employment of older individuals using internationally comparable survey data from 13 OECD countries. We compute selfemployment transitions as conditional probabilities arising from a discrete choice panel data model. We examine the influence on self-employment transitions of labor market policies and institutional factors (employment protection legislation, spending on employment and early retirement incentives, unemployment benefits, strength of the rule of law), as well as individual characteristics like physical and mental health. Selfemployment is strongly affected by government policies: larger expenditures on employment incentives impact it positively, while the opposite is true for expenditures on early retirement and unemployment benefits.
    Keywords: self-employment, transitions, ageing, labor policies, panel data
    JEL: J21 J24 C4
    Date: 2015
  11. By: Gocht, Alexander; Espinosa, Maria; Leip, Adrian; Lugato, Emanuele; Schroeder, Lilli Aline; Van Doorslaer, Benjamin; Gomez y Paloma, Sergio
    Abstract: This paper assesses the impact of an EU-wide policy to expand grassland area and increase carbon sequestration in soils. The paper uses the economic Common Agricultural Policy Regionalized Impact (CAPRI) model which represents the EU Agriculture by 2,450 mathematical programming farm type models in combination with the biogeochemistry model CENTURY which determines the carbon sequestration at a high resolution level. Both models are linked at the NUTS3 level using the location information in the Farm Accounting Data Network. We simulated a grassland premium such that farmers increase grassland by 5% cost efficiently, whereas we assumed that farmers with lower costs can contribute more. Our findings are that the GHG mitigation potential and costs depend on carbon sequestration rates, the land market and the induced land use changes, and the regional agricultural production structure. The overall net effect in Europe simulated with the model is a reduction of 4.3 Mio t CO2e (equivalents) when converting 2.9 Mio ha into grassland. A premium was calculated so that farmers increase grassland voluntary. It amounts on average to 238 EUR/ha, summing up to a total cost of 417 Mio EUR. The net abatement costs are based on the premium payments and account on average 97 EUR/t CO2e. Substantial carbon sequestration (28% of the total sequestration) can be achieved already with 50 EUR/t CO2e. The carbon sequestration would be most effective in regions in France, Italy and Spain, the Netherlands and Germany. Larger farms and farm types specialized in cereals and protein crops, mixed field cropping, granivores and the mixed crops-livestock farming have the highest potential to relatively low costs.
    Keywords: Agricultural and Food Policy,
    Date: 2015
  12. By: Magali Jaoul-Grammare
    Abstract: Since the 1980s, equal opportunities were at the heart of all educational reforms and the fight against inequalities became the priority whether they are geographical, social or cultural. Starting from this point, the aim of this work is to analyze if the various reforms allowed a democratization of higher studies, especially with regard to prestigious courses. We use a multinomial logistic regression to compare the Cereq database Generation 1998 and 2010. Our results show that in spite of a reduction of some inequalities, access to various areas of higher education and more particularly access to prestigious and selective training courses, remains affected by inequalities, in particular by gender and social inequalities.
    Keywords: Access, France, Higher Education, Inequalities.
    JEL: C25 I24 I28
    Date: 2015
  13. By: Mariacristina Rossi; Eva Sierminska
    Abstract: In this paper we shall examine homeownership trends over the past 3 to 4 decades and discuss differences related to the homeownership gap for women and men, with a focus on most recent trends. We shall compare differences in the US to those in countries with different institutional structures and shall pay particular attention to differences across family types. Our estimation techniques will allow us to discuss the role of determinants from a gender perspective. We find that single women are better off than single men without children and a reverse trend exists in families with children. The general negative effect for women remains for younger cohorts in the face of risking homeownership. The latest crisis did not change the general long-running trend of the homeownership gap except for the US and France. The findings of this paper could provide an international perspective on differential homeownership rates among women and men, across countries and over time. Given that the value of one’s own home (home equity) is the largest financial reserve in a household’s wealth portfolio, it is important to have a better understanding of the differences resulting from gender and family types.
    Keywords: Housing, Wealth, Gender, homeownership, time trends
    JEL: D1 D3 R2 J1
    Date: 2015
  14. By: H. Lehmann; T. Razzolini; A. Zaiceva
    Abstract: This paper analyzes how the labor market adjusts to the Great Recession. To this aim, we use the data for Latvia, a country that has experienced one of the most severe recessions in Europe and a subsequent remarkable recovery. Employing longitudinal EU SILC data and a panel data set constructed by us from various waves of the Latvian Labour Force Survey (LLFS), we estimate worker transitions between labor market states. Labor market adjustment takes place predominantly at the extensive margin since it is driven by flows from permanent wage employment to unemployment. We also show that older, non-Latvian and above all less skilled workers are especially hard hit by the economic crisis. Estimated transitions between four mutually exclusive occupational groups demonstrate that downward mobility is very limited even during the Great Recession. Finally, wage regressions suggest that job mobility is not associated with increased labour productivity during and immediately after the crisis.
    JEL: J6 J21 P20 P23
    Date: 2015–12
  15. By: José Alberto Molina (Faculty of Economics and Business Studies, Universidad de Zaragoza); Juan Carlos Campaña (Faculty of Economics and Business Studies, Universidad de Zaragoza); Raquel Ortega (Faculty of Economics and Business Studies, Universidad de Zaragoza)
    Abstract: We analyze differences between wage-earners and self-employees in the time spent on different cultural activities at home (reading, watching TV, and listening to the radio). To that end, we estimate a SUR model with data from the Spanish Time Use Survey for 2009-2010. Our results show that being self-employed has a negative and significant effect on the time dedicated to reading and to watching TV, older individuals spend more time reading, and being male influences the time spent watching TV and listening to the radio, in a statistically significant and positive way. Additionally, those with a higher level of education spend more time reading, while those with lower levels of education prefer to watch TV. Adults with better health spend less time on both reading and watching TV, and families with larger numbers of children up to age 5 tend to spend less time on all three of our at-home cultural activities. Finally, living in a larger city has a positive effect on the time dedicated to all three options.
    Keywords: Reading, Watching TV, Listening to radio, Wage-earners, Self-employees, Time uses, SUR model
    JEL: D12 D13 J22
    Date: 2016–01
  16. By: Christina E. Bannier (Department of Corporate Finance, Johannes Gutenberg-Universitaet Mainz); Milena Neubert (Department of Corporate Finance, Johannes Gutenberg-Universitaet Mainz)
    Abstract: This study examines the role of actual and perceived ?nancial sophistication (i.e., ?nancial literacy and con?dence) for individuals’ wealth accumulation. Using survey data from the German SAVE initiative, we ?nd strong gender- and education-related di?erences in the distribution of the two variables and their e?ects on wealth: As ?nancial literacy rises in formal education, whereas con?dence increases in education for men but decreases for women, we observe that women become strongly undercon?dent with higher education, while men remain overcon?dent. Regarding wealth accumulation, we show that ?nancial literacy has a positive e?ect that is stronger for women than for men and is increasing (decreasing) in education for women (men). Con?dence, however, supports only highly-educated men’s wealth. When considering di?erent channels for wealth accumulation, we observe that ?nancial literacy is more important for current ?nancial market participation, whereas con?dence is more strongly associated with future-oriented ?nancial planning. Overall, we demonstrate that highly-educated men’s wealth levels bene?t from their overcon?dence via all ?nancial decisions considered, but highly-educated women’s ?nancial planning suffers from their undercon?dence. This may impair their wealth levels in old age.
    Keywords: Financial literacy, ?nancial sophistication, con?dence, wealth, household ?nance, behavioral ?nance, gender, formal education
    JEL: D91 G11 D83 J26
    Date: 2016–01–13
  17. By: Thomas Barnay; Emmanuel Duguet; Christine Le Clainche; Yann Videau
    Date: 2016
  18. By: Sergio Galletta (IdEP, Economia, Universita' Svizzera italiana, Switzerland); Agustin Redonda (Council on Economic Policies (CEP), Switzerland)
    Abstract: Profit taxation affects corporate investment decisions through several channels. This paper focuses on the impact of corporate income flat tax reforms on businesses' location choices. Since 1990, Swiss states (cantons) have been switching from a graduated to a flat tax rate scheme on profits. The paper assesses the effects of such a reform on the number of establishments by computing a difference-in-differences estimation. Our results show a negative impact on the number of firms in a given jurisdiction. Interestingly, the effect is considerably larger for riskier firms, suggesting the presence of an insurance effect from progressive taxation for risk-averse entrepreneurs.
    Keywords: Corporate taxes, Business location, Flat-tax, Tax reform, Progressive taxation
    JEL: H25 H32 H71 R3
    Date: 2016–01–18
  19. By: Paul Allanson
    Abstract: The paper proposes a new class of income-related health stratification indices that measure the extent to which differences in population health status between the regions of a country are systematically related to regional prosperity. The indices depend in general both on the degree to which the populations of different regions occupy well-defined layers or strata in the national distribution of the health outcome and on the scale of between-region differences in those outcomes if these are quantifiable, where the socioeconomic dimension is taken into account by ranking the regions in terms of economic prosperity rather than population health status. In particular, headcount and gap indices may be interpreted as measures of the overall incidence and depth of income-related health stratification between regions respectively, with the former well-defined for polytomous categorical variables without the need for etither dichotomisation or cardinalisation. The new measurement framework is used to examine the evolution of income-related health differences between the regions of Great Britain over the period from 1991 to 2008.
    Keywords: income-related health stratification, regional analysis, ordinal data
    JEL: D63 I14 I18
    Date: 2016–01
  20. By: Howley, P,;
    Abstract: This paper uses life satisfaction data to calculate the extent to which individuals are willing to trade money for improvements in their health status. Using a large nationally representative survey in the UK, I showthat the amount of extra equivalent household income to make someone with a health condition, as well off in terms of life satisfaction as someone without the health condition, ranges from a low of £4,235 per annum for impairments associated with asthma to a high of £31,283 for impairments associated with congestive heart failure. These values could be used as a basis for a cost-benefit analysis of health care interventions aimed at the medical conditions examined. Relative to previous work, I address a number of critical empirical challenges when it comes to using this compensating income variation approach for determining the monetary value of a health improvement. First, I address the issue of income endogeneity in life satisaction by instrumenting income with the educational status of respondents’ parents. Second, I control for the potentially confounding role of personality differences by including a measure of the Big Five personality traits in the micro-econometirc analysis of life satisfaction.
    Keywords: life satisfaction; compensating income variation; instrumental variables; health conditions;
    JEL: I1 I31
    Date: 2016–01
  21. By: Bagger, Jesper; Maliranta, Mika; Määttänen, Niku; Pajarinen, Mika
    Abstract: Abstract Workers have different abilities in research, development and innovation (R&D&I) activities. Firms have different “prospects for innovation”. Innovation is facilitated by matching innovators, i.e. workers that are specialized in R&D&I to firms with good prospects for innovation. Aggregate productivity growth requires that firms with the best prospects for innovation are quickly matched to innovators. The mobility of innovators is also important for positive knowledge spillovers to materialize. We use Finnish and Danish linked employer-employee data to study labour mobility, focusing on innovators. For Finland, Denmark is an interesting benchmark country because its labour market is generally considered very flexible. We find that overall labour mobility is significantly lower in Finland than in Denmark. However, relative to other occupation groups, innovators are actually more mobile in Finland than in Denmark. In Finland, innovators tend to cluster in firms that are among the most productive in their industry.
    Keywords: Research and development, innovation, occupational choice, labour mobility, innovator mobility, resource allocation
    JEL: J24 J62
    Date: 2016–01–13
  22. By: Sergio Galletta (IdEP, Economia, Universita' Svizzera italiana, Switzerland)
    Abstract: In this paper, I empirically investigate the presence of spillover effects resulting from the strengthening of law enforcement against corruption and organized crime in local governments. Specifically, I take advantage of an Italian law that gives power to the central government to replace democratically elected municipal officials who are potentially connected with mafia with a commission of non-elected administrators. Fixed effects model estimates that focus on a sample of municipalities from three Italian regions (Campania, Calabria and Sicilia) for the period 1998 to 2013 show that the city council dismissal of a municipality fosters a reduction in public investments in neighboring municipalities. Additional empirical evidence suggests that this result could be explained by the presence of law enforcement spillovers potentially reducing misconducts in neighboring municipalities.
    Keywords: Horizontal interaction, Italy, Mafia, Corruption
    JEL: D73 E62 H72 K42
    Date: 2016–01
  23. By: Philippe Martin (Département d'économie); Thierry Mayer (Département d'économie); Florian Mayneris (Institut de recherches économiques et sociales)
    Abstract: Clusters have already been extensively shown to favor firm-level economic performance (productivity, exports, innovation etc.). However, little is known about the capacity of firms in clusters to resist economic shocks. In this paper, we analyze whether firms that agglomerate in clusters and firms that have been selected to benefit from the « competitiveness cluster » industrial policy, implemented in France in 2005, have performed better on export markets during the recent economic turmoil. We show that, on average, both agglomeration and the cluster policy are associated with a higher survival probability of firms on export markets, and conditioning on survival, a higher growth rate of their exports. However, these effects are not stronger during the 2008-2009 crisis; if anything, the opposite is true. We then show that this weaker resilience of competitiveness cluster firms is probably due to the fact that firms in clusters are more dependent on the fate of the « leader », i.e. the largest exporter in the cluster.
    Keywords: Clusters; Competitiveness clusters; Exports; Crisis; Resilience
    JEL: F1 R10 R11 R12 R15
    Date: 2016
  24. By: Massimo Filippini (ETH Zurich, Switzerland); Bettina Hirl (Institute of Economics, Università della Svizzera italiana); Giuliano Masiero (Institute of Economics, Università della Svizzera italiana)
    Abstract: Dynamic partial adjustment models of residential electricity demand account for the fact that households may not adjust electricity consumption immediately in response to changes in prices, income, and other relevant factors, because of behavioral habits or adjustment costs for the capital stock of appliances. However, forward-looking behavior is generally neglected. Expectations about future prices or consumption may have an impact on current decisions. In this paper we propose rational habit models for residential electricity demand and apply them to a panel of 48 US states between 1995 and 2011. We estimate lead consumption models using fixed effects, instrumental variables, and the GMM Blundell-Bond estimator. We find that expectations about future consumption significantly influence current consumption decisions, which suggests that households behave rationally when making electricity consumption decisions. This novel approach may improve our understanding of the dynamics of residential electricity demand and the evaluation of the effects of energy policies.
    Keywords: Residential electricity, Partial adjustment models, Dynamic panel data models, Rational habits
    JEL: D12 D84 D99 Q41 Q47 Q50
    Date: 2016–01
  25. By: Fabio Pammolli (IMT Institute for Advanced Studies Lucca & CEDRM Foundation); Armando Rungi (IMT Institute for Advanced Studies Lucca)
    Abstract: In this paper we document a process of price convergence in the European market for pharmaceuticals and relate it to access to innovative medicines in individual countries. The EU is a peculiar case study, where free circulation of goods exists, but pricing policies are designed and implemented by Member States. Thanks to a unique census database on product sales and launches for Â…fifteen EU countries, we detect a process of price convergence, both in nominal and in real terms. Therefore, we Â…nd that a faster rate of price convergence and a lower income per capita are associated with stronger delays in launches of new medicines. Moreover, country delays tend to be higher for innovative and Â…first in class chemical compounds. Our results suggest that inefficiencies arise from drugs regulation, when countries widely differ in income per capita, public Â…finance sustainability conditions, and regulatory frameworks. Policies of external reference pricing tend to exacerbate welfare losses. A policy of differential pricing is suggested, in order to take into account both therapeutic value and willingness to pay.
    Keywords: Economic integration, Price convergence, Product launches, European Single Market, Healthcare, Pharmaceutical industry, Pricing
    JEL: F15 I11 L65 L11 L51
    Date: 2016–01

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