nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2016‒02‒23
23 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Broadband Infrastructure and Entrepreneurship: Evidence from German Municipalities By Falck, Oliver; Mazat, Andreas; Stockinger, Bastian
  2. Settlements and appeals in the European Commission's cartel cases: An empirical assessment By Hellwig, Michael; Hüschelrath, Kai; Laitenberger, Ulrich
  3. The UK productivity puzzle 2008-13: evidence from British businesses By Riley, Rebecca; Rosazza-Bondibene, Chiara; Young, Garry
  4. Job Loss and Immigrant Labor Market Performance By Bratsberg, Bernt; Raaum, Oddbjørn; Røed, Knut
  5. Beyond average energy consumption in the French residential housing market: A household classification approach By Emmanuel Hache; Déborah Leboullenger; Valérie Mignon
  6. Equality of opportunities for young Italian workers By Francesco Scervini; Agnese Peruzzi; Enrica Chiappero
  7. Old before their time: The role of employers in retirement decisions By Piera Bello; Vincenzo Galasso
  8. Adjusting to globalization - Evidence from worker-establishment matches in Germany By Dauth, Wolfgang; Findeisen, Sebastian; Suedekum, Jens
  9. Facility- and Service-based Competition and Investment in Fixed Broadband Networks: Lessons from a Decade of Access Regulations in the European Union Member States By Briglauer, Wolfgang; Gugler, Klaus; Haxhimusa, Adhurim
  10. Fertility and the Business Cycle: The European Case By Bellido, Héctor; Marcén, Miriam
  11. Coordinating Cross-Country Congestion Management By Friedrich Kunz; Alexander Zerrahn
  12. The drivers of the substitution of individual services for bundled services: The case of Spain By Urueña López, Alberto; Gijón, Covadonga; Castro García-Muñoz, Raquel; Ureña Fernández, Olga; Feijóo, Claudio
  13. Health Capacity to Work at Older Ages: Evidence from Spain By Pilar García Gómez; Sergi Jiménez-Martín; Judit Vall-Castello
  14. “Technological cooperation in Spanish firms” By Erika Raquel Badillo; Rosina Moreno
  15. Are Unemployment Benefits harmful to the stability of working careers? The case of Spain By Yolanda F. Rebollo-Sanz; J. Ignacio García-Pérez
  17. Uncertainty in the labour market: How does fixed-term employment affect fertility and mental health of the young generation? By Wolfgang Auer; Natalia Danzer
  19. Intergenerational and Inter-Ethnic Well-Being: An Analysis for the UK By Richard Dorsett; Cinzia Rienzo; Martin Weale
  20. Socioeconomic Inequality of Access to Healthcare: Does Patients' Choice Explain the Gradient? Evidence from the English NHS By Giuseppe Moscelli; Luigi Siciliani; Nils Gutacker; Richard Cookson
  21. Youth ! ... How did you find your job ? By Fathi Fakhfakh; Annick Vignes; Jihan Ghrairi
  22. Understanding the "regional policy mix": A classification and analysis of European regions' support policies By Kroll, Henning
  23. The (Displacement) Effects of Spatially Targeted Enterprise Initiatives: Evidence from UK LEGI By Einiö, Elias; Overman, Henry G

  1. By: Falck, Oliver; Mazat, Andreas; Stockinger, Bastian
    Abstract: Policy makers in many places regularly call for broadband infrastructure deployment to foster regional development. While some empirical studies deal with the productivity impact of broadband Internet availability, few hard facts are known about its relation to establishment start-up. This paper contributes to closing the gap, providing causal evidence on the impact of broadband Internet availability on establishment start-up. We apply an instrumental variables approach, exploiting technological peculiarities of the preexisting voice telephony network that impeded high-speed Internet availability to circumvent endogeneity bias. We find that Internet effects on establishment start-up might take some time to realize and are likely heterogeneous across sectors, establishment size and knowledge intensity.
    Date: 2015
  2. By: Hellwig, Michael; Hüschelrath, Kai; Laitenberger, Ulrich
    Abstract: The introduction of the European Union (EU) Settlement Procedure in 2008 aimed at promoting the procedural efficiency of cartel investigations by the European Commission (EC). We use a data set consisting of 579 firms groups convicted by the EC for cartelization from 2000 to 2015 to investigate the impact of the settlement procedure on the probability to file an appeal. Based on the estimation of a model of the firm's decision to appeal in the presettlement era, we subsequently run out-of-sample predictions to estimate the number of hypothetical appeals cases in the settlement era absent the settlement procedure. Our findings of a settlement-induced reduction in the number of appeals of up to 55 percent allow the conclusion that the introduction of the settlement procedure generated substantial additional benefits to society beyond its undisputed key contribution of a faster and more efficient handling of cartel investigations by the EC.
    Keywords: antitrust policy,cartels,settlements,appeals,ex-post evaluation,European Union
    JEL: K21 L41
    Date: 2016
  3. By: Riley, Rebecca (Natioinal Institute of Economic and Social Research and Centre for Macroeconomics); Rosazza-Bondibene, Chiara (Natioinal Institute of Economic and Social Research and Centre for Macroeconomics); Young, Garry (Bank of England)
    Abstract: In many larger advanced economies labour productivity growth slowed sharply and remained subdued for years after the credit crisis of 2007/08. Nowhere was this more obvious than in the United Kingdom. We examine the dynamics of productivity among British businesses that lie behind this stagnation. The most striking feature is the widespread weakness in total factor productivity within firms, pointing to the importance of a common factor in explaining productivity weakness. In addition,we find that the positive correlation between surviving firms’ employment growth and their relative productivity ranking broke down after 2007/08, as would be expected if an adverse credit supply shock had caused inefficiencies in resource allocation across firms. Indeed, during the immediate recession years 2008/09, this shift was most apparent in sectors with many small and bank dependent businesses. But subsequently, while the contribution of external reallocation to aggregate productivity growth in 2010/13 was smaller than in previous years, this was not obviously associated with sectoral bank dependence. We illustrate the sensitivity of these findings to the choice of decomposition method.
    Keywords: Productivity growth; productivity decomposition; resource allocation; credit shock; Great Recession; Great Stagnation.
    JEL: L11 O47
    Date: 2015–06–23
  4. By: Bratsberg, Bernt (Ragnar Frisch Centre for Economic Research); Raaum, Oddbjørn (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research)
    Abstract: While integration policies typically focus on labor market entry, we present evidence showing that immigrants from low‐income countries tend to have more precarious jobs, and face more severe consequences of job loss, than natives. For immigrant workers in the Norwegian private sector, the probability of job loss in the near future is twice that of native workers. Using corporate bankruptcy for identification, we find that the adverse effects of job loss on future employment and earnings are more than twice as large for immigrant employees.
    Keywords: migration, job loss, firm closure, unemployment
    JEL: F22 H55 J24 J65
    Date: 2016–02
  5. By: Emmanuel Hache; Déborah Leboullenger; Valérie Mignon
    Abstract: The need to reduce Green House Gases emissions has jointly lead to increasing concerns regarding the efficiency of national mitigation agendas and the potential exposure of certain households to energy poverty. Hence, the comprehension of the key determinants that influence the energy demand appears to be crucial for the effectiveness and fairness of energy policies. We particularly consider that targeting specific households’ groups rather than looking for a unique national target level of energy consumption would be more effective. This article explores the scope of having a disaggregated energy consumption market to design policies aimed at curbing residential energy consumption or lowering its carbon intensity. Using a clustering method based on CHAID (Chi Square Automatic Interaction Detection) methodology, we find that the different levels of energy consumption in the French residential sector are related to socio-economic, dwelling and regional characteristics. Then, we build a typology of energy-consuming households where targeted groups (fuel poor, high income and high consuming households) are clearly and separately identified through a simple and transparent set of characteristics. This classification represents an efficient tool for energy efficiency programs and energy poverty policies but also for potential investors, which could provide specific and tailor-made financial tools for the different groups of consumers. Furthermore, our approach is helpful to design an energy efficiency score that could reduce the rebound effect uncertainty for each identified household group.
    Keywords: Energy consumption, residential sector, clustering method, France.
    JEL: Q48 I32 C38
    Date: 2016
  6. By: Francesco Scervini; Agnese Peruzzi; Enrica Chiappero
    Abstract: The duality of the labour market in Italy is a dramatic social and economic issue. Not only the youth unemployment rate is one of the highest in Europe (39.7% in 2014), but also the quality of job contracts is very low for young, compared to elder cohorts. Moreover, Italy is perceived as a low-mobility country, where individual outcomes depend signicantly on initial conditions and parental background. This paper exploits the heterogeneity of job contracts to investigate whether and how circumstances beyond individual control affect the labour market outcomes of young labour force, not only as the probability of employment, but also as the type of job contract achieved. Results confirm that the role of predetermined conditions is very strong, in particular gender and the region of origin, but also parental labour status. The relative effects and significances of circumstances changed their magnitude over time.
    Keywords: Intergenerational equality of opportunity, Labour market, Job contracts, Inequality.
    JEL: D63 J21 J60
  7. By: Piera Bello; Vincenzo Galasso
    Abstract: Do elderly workers retire early voluntarily, or are they induced (or even forced) by their employees? To establish the relevance of the labor demand component in retirement decisions, we consider a trade liberalization between Switzerland and the EU – the Mutual Recognition Agreement (MRA). A vast literature suggests that these trade liberalizations induce firms to relocate and to restructure, with large compositional effects on the labor market particularly for the elderly workers, who face higher mobility costs. Using Swiss Labor Force Survey data, we use a difference in differences approach to compareearly retirement behavior in three periods (pre-liberalization, announcement, and implementation) for three groups of industries. MRA industries represent our treatment group; control groups are non-MRA manufacturing industries, and services. Our empirical results show that elderly workers are more likely to retire early in the MRA sector during the announcement period, and that the employment of young (30-years old) male workers increases. The distribution of wages by age is instead unaffected. Additional empirical evidence using Swiss Business Census and UN Comtrade data suggests that the increase in early retirement in MRA is not explained by more firms’ exits, nor by more early retirement among the exiting firms. It is rather the surviving MRA firms, which react to the increase in competition by adjusting their labor force and use more early retirement.
    Date: 2016
  8. By: Dauth, Wolfgang; Findeisen, Sebastian; Suedekum, Jens
    Abstract: This paper addresses the impact of rising international trade exposure on individual earnings profiles in heterogeneous worker-establishment matches. We exploit rich panel data on job biographies of manufacturing workers in Germany, and apply a high-dimensional fixed effects approach to analyze endogenous mobility between plants, industries, and regions in response to trade shocks. Rising import penetration reduces earnings within job spells, and it induces workers to leave the exposed industries. Intra-industry mobility to other firms or regions are far less common adjustments. This induced industry mobility mitigates the adverse impacts of import shocks in the workers' subsequent careers, but their cumulated earnings over a longer time horizon are still negatively affected. By contrast, we find much less evidence for sorting into export-oriented industries, but the earnings gains mostly arise within job spells. These results point at an asymmetry in the individual labour market response to trade shocks: Import shocks trigger substantial "push effects", whereas the "pull effects" of export shocks are weaker.
    Keywords: international trade,Individual labour market responses,work biographies,endogenous worker mobility,Germany
    JEL: F16 J31 R11
    Date: 2016
  9. By: Briglauer, Wolfgang; Gugler, Klaus; Haxhimusa, Adhurim
    Abstract: This paper employs firm-level panel data of 57 incumbent and entrant firms for 23 European countries in the decade from 2003 to 2012. We examine the impact of service- and facility-based competition on firm level investment as well as the strategic effects underlying infrastructure investment decisions. At the same time we explicitly model the structural dynamics of broadband investment using dynamic panel estimation techniques. We find that facility-based competition exerts a positive and significant impact on both incumbents and entrants implying that incumbents’ and entrants’ investment decisions are strategic complements. Moreover, this strategic complementarity is much more pronounced with respect to the entrants. Finally, we show that service-based competition appears to have no significant impact on the investment decision of incumbents and entrants and that there is no supportive evidence for the so-called “ladder of investment” hypothesis. With respect to the later phase of market regulation, service-based competition exerts a negative impact on entrants’ investment.
    JEL: L43 L52 L96
    Date: 2015
  10. By: Bellido, Héctor; Marcén, Miriam
    Abstract: This paper analyzes the role of the business cycle in fertility, using data from 30 European countries for the period 1991 to 2013. We find that the unemployment rate, utilized as a proxy for the evolution of the business cycle, negatively affects the fertility rate, at least in the short term. This is maintained even when we control for the welfare generosity of the European countries, and for other socio-economic variables and unobservable characteristics that can vary by country and/or over time. Our results suggest that fertility decisions behave in a pro-cyclical way, although the effect of the business cycle variations is quite moderate. By age of women, we observe differences in the response of the fertility rate, with the impact of economic problems being lower for those who are at the end of their childbearing years. Supplementary analysis, developed to explore the impact of the business cycle on the entire distribution of the fertility rate, indicates that the effect of the unemployment rate varies considerably, having a strong effect on the fertility rate at higher quantiles, corresponding with higher fertility rates.
    Keywords: Fertility, unemployment, business cycle
    JEL: J13 J64
    Date: 2016–02–09
  11. By: Friedrich Kunz; Alexander Zerrahn
    Abstract: We employ a detailed two-stage model to simulate the operation of the Central Eastern European electricity market and network. Implementing different cases of coordination in congestion management between national transmission system operators, numerical results show the beneficial impact of closer cooperation. Specific steps comprise the sharing of network and dispatch information, cross-border counter-trading, and multilateral redispatch in a flow-based congestion management framework. Efficiency gains are accompanied by distributional effects. Closer economic cooperation becomes especially relevant against the background of changing spatial generation patterns, deeper international integration ofnational systems, and spillovers of national developments to adjacent systems.
    Keywords: Electricity, congestion management, network modeling, Europe
    JEL: C63 L51 L94
    Date: 2016
  12. By: Urueña López, Alberto; Gijón, Covadonga; Castro García-Muñoz, Raquel; Ureña Fernández, Olga; Feijóo, Claudio
    Abstract: In 2007, Spanish telecoms companies began to offer bundled services. Operators started by offering phone plus broadband and phone plus broadband plus pay television bundles, and in doing so, were able to reduce aggregated prices for consumers. In addition to monetary incentives, this study examines the causes that lead consumers (individuals) and households (as economic agents) to replace individual contracts with bundled contracts including more (or fewer) services from those previously subscribed to individually. A model of demand of access to household and individual services was estimated for three services: landline phone, Internet, and pay television using a representative panel of telecoms consumers in Spain. The results show –in decreasing order- the influence of previous experience with particular services, followed by factors related to usage and factors linked with socio-demographic characteristics. Monetary incentives -contrary to common belief- play a significant but minor role.
    Keywords: telecoms bundles,substitution,landline phone,broadband Internet,pay tv,triple play,random effects model
    Date: 2015
  13. By: Pilar García Gómez; Sergi Jiménez-Martín; Judit Vall-Castello
    Abstract: In a world with limited PAYGO financing possibilities this paper explores whether older Spanish individuals have the health capacity to work longer. For that purpose we use Milligan-Wise and Cutler-Meara Cutler-Meara-Richards-Shubik simulation methods. Our results suggest that Spanish workers have significant additional capacities to extend their working careers.
    Keywords: work capacity, Retirement, Health
    JEL: J11 J26 I12 I18
    Date: 2016–02
  14. By: Erika Raquel Badillo (AQR Research Group. University of Barcelona.); Rosina Moreno (AQR Research Group.Faculty of Economics, University of Barcelona)
    Abstract: This paper aims to study to what extent participating in technological cooperation agreements can be a useful mechanism for improving the innovative capacity of Spanish firms, specially in the context of the economic recession. We analyse if there are differences in the returns obtained from cooperation alliances according to the firm’s size as well as different geographical scopes of such alliances. In addition, we want to study to what extent innovation cooperation may have a different effect on incremental innovations than on radical/breakthrough innovation s. We use the Spanish Technological Innovation Panel from 2004 to 2012 to provide evidence on the above issues.
    Keywords: Innovation cooperation; Technological partners; Performance; Spanish firms. JEL classification: L25; O31; O33; R1
    Date: 2016–01
  15. By: Yolanda F. Rebollo-Sanz; J. Ignacio García-Pérez
    Abstract: Unemployment insurance is usually found to show negative effects in the transition from unemployment to a new job. However, the extent to which workers’ careers might improve or deteriorate as a result of the unemployment insurance system is not immediately clear. This paper addresses the effects of certain aspects of this system on employment stability by jointly accounting for benefits endogeneity, dynamic selection issues and occurrence dependence. The analysis is undertaken for a dual labour market, such as the market in Spain, where temporary and permanent workers differ with respect to numerous individual and labour market characteristics. We find that non-insured unemployed workers experience a greater rate of transition to employment than insured workers. But we also find that benefits encourage job stability for temporary workers not only by increasing subsequent job tenure but also by increasing the probability of entering into a permanent contract. Finally, we get that shortening the duration of the benefit entitlement period does not seem to lead to significant gains in overall employment stability, which increases at most by 4.3%.
    Date: 2015–02
  16. By: Marusca De Castris (Roma Tre, University of Rome); Guido Pellegrini (Sapienza, University of Rome)
    Abstract: The focus of our paper is the identification of the regional effects of industrial subsidies when the presence of subsidized firms is spatially correlated. In this case the stable unit treatment value assumption (SUTVA) in the Rubin model is not valid and some econometric methods should be used in order to detect the consistent policy impact in presence of spatial dependence. We propose a new methodology for estimating the unbiased “net” effect of the subsidy, based on novel “spatial propensity score matching” technique that compare treated and not treated units affected by similar spillover effects due to treatment. We offer different econometrical approaches, where the “spatial” propensity score is estimated by standard or spatial probit models. Some robustness tests are also implemented, using different instrumental variable spatial models applied to a probit model. We test the model using an empirical application, based on a dataset that incorporates information on incentives to private capital accumulation by Law 488/92, mainly devoted to SME, and Planning Contracts, created for large projects, in Italy. The analysis is carried out on a disaggregated territorial level, using the grid of the local labour system. The results show a direct effect of subsidies on subsidized firms. The sign of the impact is generally positive, the output effect outweighing the substitution effect. Confronting the standard and the “spatial” estimation, we observed a positive but small crowding out effect across firms in the same area and across neighbouring areas, mostly in the labour market. However, due to the small sample, the difference in impacts estimated by the standard and the “spatial” effect of subsidies is not statistically significant.
    Keywords: spatial propensity score, policy evaluation, propensity score matching, spatial analysis
    JEL: R12 R23 C21
    Date: 2015
  17. By: Wolfgang Auer; Natalia Danzer
    Abstract: We study the short- to medium-run effects of starting a career on a fixed-term contract on subsequent fertility and health outcomes. We focus on the career start since we expect that temporary contracts and their inherent economic uncertainty imply a path dependence which might have spill-over effects on other domains of life. Our empirical analysis is based on rich data from the German Socio-Economic Panel which provides comprehensive information about individuals’ labour market history as well as fertility behaviour, and physical and mental health indicators. Our main results are that due to fixed-term employment at labour market entry women tend to: (i) postpone first births, (ii) have fewer children within ten years after graduation and (iii) have lower mental health status within three years after graduation. These associations are strongest in the subsample of native women with secondary education. In contrast, we find no significant correlations for men. We argue that these findings are robust to potential endogeneity threats.
    Keywords: starting a career, fixed-term contracts, economic uncertainty, maternity postponing, fertility, mental health, life satisfaction
    JEL: J13 J18 J41
    Date: 2015–02
  18. By: Alessia (University of Barcelona); Paolo Naticchioni (Roma Tre University and Iza)
    Abstract: This paper aims at disentangling the role played by different explanations on the urban wage premium along the wage distribution. We analyze the wage dynamics of migrants from lower to higher density areas in Italy, using quantile regressions and individual data. The results show that unskilled workers benefit more from a wage premium accruing over time, while skilled workers enjoy a wage premium when they migrate as well as a wage increase over time. Further, we find that for unskilled workers the wage growth over time is mainly due to human capital accumulation in line with the “learning” hypothesis, while for skilled workers the wage growth is mainly explained by the “coordination” hypothesis, i.e., cities enhance the probability of better matches between workers and firms.
    Keywords: Urban Wage Premium, Human Capital, Spatial Sorting, Wage Distribution, Quantile Fixed Effects
    JEL: J31 J61 R23
    Date: 2015
  19. By: Richard Dorsett; Cinzia Rienzo; Martin Weale
    Abstract: This paper uses a UK nationally representative data set to examine the extent to which family migration history helps explains inter-ethnic variations in subjective well-being. We confirm that there is significant variation in well-being across ethnic group and across migrant generations. On average, recent migrants appear to have higher levels of well-being. We also find that, while language difficulties are associated with lower well-being, retaining cultural links is important: living in areas where one’s own ethnic group is well represented and having friends from the same ethnic group is associated with a higher level of well-being. Individuals’ choice to retain cultural ties and identity may alleviate feelings of cultural distance and difficulties with integration.
    Date: 2015–07
  20. By: Giuseppe Moscelli (Centre for Health Economics, University of York, UK); Luigi Siciliani (Department of Economics and Related Studies, University of York, UK); Nils Gutacker (Centre for Health Economics, University of York, UK); Richard Cookson (Centre for Health Economics, University of York, UK)
    Abstract: Equity of access is a key policy objective in publicly-funded healthcare systems. Using data on patients undergoing non-emergency heart revascularization procedures in the English National Health Service, we find evidence of significant differences in waiting times within public hospitals between patients with different socioeconomic status (up to 35% difference between the most and least deprived population quintiles). We employ selection models to test whether such differences are explained by patients exercising choice over hospital or type of treatment. Selection bias due to choice has a limited effect on the gradient suggesting the presence of substantial inequities within the public system.
    Keywords: waiting times, inequalities, socioeconomic status, selection bias, choice.
    JEL: I14 I11 I18 C34
    Date: 2015–06
  21. By: Fathi Fakhfakh (UP2 - Université Panthéon-Assas - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique); Annick Vignes (CAMS - Centre d'analyse et de mathématique sociale - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales, ENPC - Ecole des Ponts ParisTech - École des Ponts ParisTech (ENPC)); Jihan Ghrairi (TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique, UP2 - Université Panthéon-Assas - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche)
    Abstract: French youth suffer from a high level of unemployment. Despite a large number of public policies, youth employability remains at a critical level. This article emphasizes the role of networks in getting a job, while distinguishing between school networks and social/professional networks, and this a novelty of this study. We postulate that workers use networks differently depending mainly on their individual and their socio-spatial characteristics. The empirical analysis shows that more than 30% of young people find a job thanks to their social or school network. School networks help better-educated people, whereas social networks are more fruitful for the less well-educated. Being a woman or having non-French parents reduce the probability of finding a job through social or school networks. Finally, people living in sensitive urban areas are more affected by unemployment, and they are more likely to find a job through school networks, public agencies or competitive exams. Thus, networks help in finding a job, but to different extents depending on education, origin, gender or place of residence.
    Keywords: youth labor market,job access channels,Social and professional networks,school networks,socio-spatial indicators
    Date: 2015
  22. By: Kroll, Henning
    Abstract: In recent years, no small number of studies have emphasised the importance of "getting the policy mix right". What that term, "policy mix" relates to, however, remained less than clear, not least as a result of the absence of an appropriate database on regional policies. With the Regional Innovation Monitor repository, such a database has now become available. Using this novel source of data, this paper identifies specific types of "policy mixes" common among European regions as well as external and internal factors that determine regional policy makers' choices of policy mixes. Finally, it demonstrates that regions' choice of a particular policy mixes may have influenced their economic resilience during the recent years of crisis.
    Date: 2016
  23. By: Einiö, Elias; Overman, Henry G
    Abstract: We investigate the impacts of a significant area-based intervention (LEGI) that aimed to increase employment and entrepreneurial activity in 30 disadvantaged areas across England. We examine the spatial pattern of effects at a fine spatial scale using panel data for small geographic units and a regression discontinuity design that exploits the programme eligibility rule. The results indicate considerable local displacement effects. Employment increases in treated areas close to the treatment area boundary at the cost of significant employment losses in untreated localities just across the boundary. These differences vanish quickly when moving away from the boundary and do not persist after the programme is abolished. These findings support the view that area-based interventions may have considerable negative displacement effects on untreated parts of the economy. This displacement can substantially reduce (or in this case eliminate) any net benefits.
    Keywords: displacement; employment; place-based policy; programme evaluation
    JEL: H25 J20 O40 R11
    Date: 2016–02

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