nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2016‒03‒23
twenty-six papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Putting a price tag on security: Subjective well-being and willingness-to-pay for crime reduction in Europe By Brenig, Mattheus; Proeger, Till
  2. Building subjective well-being indicators at the subnational level: A preliminary assessment in OECD regions By Monica Brezzi; Marcos Diaz Ramirez
  3. Employee Representation Legislations and Innovation By Belloc, Filippo
  4. The mobility of displaced workers: How the local industry mix affects job search strategies By Frank Neffke; Anne Otto; César Hidalgo
  5. Innovation strategies and firm growth By Stefano Bianchini; Federico Tamagni; Gabriele Pellegrino
  6. Effective Tax Rates and Effective Progressivity in a Fiscally Decentralized Country By Roller, Marcus; Schmidheiny, Kurt
  7. The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records By Simon H. Boserup; Wojciech Kopczuk; Claus T. Kreiner
  8. How returns from tertiary education differ by field of study: Implications for policy-makers and students By Lehouelleur, Sophie; Beblavý, Miroslav; Maselli,Ilaria
  9. Work Capacity and Longer Working Lives in Belgium By Alain Jousten; Mathieu Lefebvre
  10. Health Capacity to Work at Older Ages in France By Didier Blanchet; Eve Caroli; Corinne Prost; Muriel Roger
  11. Healthy, Happy and Idle: Estimating the Health Capacity to Work at Older Ages in Germany By Hendrik Jürges; Lars Thiel; Axel Börsch-Supan
  12. Health Capacity to Work at Older Ages in Denmark By Paul Bingley; Nabanita Datta Gupta; Peder Pedersen
  13. Does say on pay matter? Evidence from the German natural experiment By Troeger, Tobias H.; Walz, Uwe
  14. Do Tax Incentives for Research Increase Firm Innovation? An RD Design for R&D By Antoine Dechezleprêtre; Elias Einiö; Ralf Martin; Kieu-Trang Nguyen; John Van Reenen
  15. EU ETS Facets in the Net: How Account Types Influence the Structure of the System By Simone Borghesi; Andrea Flori
  16. Measuring fuel poverty in France: Which households are the most fuel vulnerable? By Bérangère Legendre; Olivia Ricci
  17. Students in Work and their Impact on the Labour Market By Fabo, Brian; Beblavý, Miroslav
  18. Effects of taxes on youth self-employment and income By Egebark, Johan
  19. The impact of investment incentives: evidence from UK corporation tax returns By Giorgia Maffini; Jing Xing; Michael P. Devereux
  21. The (Displacement) Effects of Spatially Targeted Enterprise Initiatives: Evidence from UK LEGI By Elias Einiö; Overman; Henry
  22. Optimal Policy Identification: Insights from the German Electricity Market By Johannes Karl Herrmann; Ivan Savin
  23. Labor markets, academic performance and the risk of school dropout: evidence for Spain By Juan Guio; Álvaro Choi; Josep-Oriol Escardíbul
  24. Anatomy of Risk Premium in UK Natural Gas Futures By Beatriz Martínez; Hipòlit Torró
  25. Staying-on after twenty-one: the returns to postgraduate education By Pamela Lenton
  26. Retirement, pension eligibility and home production By Emanuele Ciani

  1. By: Brenig, Mattheus; Proeger, Till
    Abstract: Using information on life satisfaction and crime from the European Social Survey, we apply the life satisfaction approach (LSA) to determine the relationship between subjective well-being (SWB), income, victimization experience, fear of crime and various regional crime rates across European regions, while controlling for potentially confounding socio-economic variables. We show that fear of crime, criminal victimization and the average regionally perceived fear of crime significantly reduce life satisfaction across Europe. Building upon these results, we quantify the monetary value of improvements in public safety and its valuation in terms of individual well-being. The loss in satisfaction for victimized individuals corresponds to 21,790€. Increasing an average individual´s perception within his neighborhood from unsafe to safe yields a benefit equivalent to 12,700€. Our results regarding crime and SWB in Europe largely resemble previous results for different countries and other criminal contexts, whereby using the LSA as a valuation method for public good provision yields similar results as stated preference methods and considerably higher estimates than revealed preference methods.
    Keywords: crime rate,fear of crime,life satisfaction approach,subjective well-being,willingness-to-pay
    JEL: D10 H41 H56 I31
    Date: 2016
  2. By: Monica Brezzi; Marcos Diaz Ramirez
    Abstract: This paper provides, for the first time, estimates of subjective well-being variables in 373 OECD subnational regions, allowing comparison of various measures of how people experience and evaluate their lives within and across all 34 OECD countries. Different weighting strategies as well as several robustness checks have been carried out to ensure regional representativeness and to provide reliable indicators. The results show that it is possible to obtain robust regional estimates of subjective well-being through the Gallup World Poll for the variables satisfaction with life and social support network. These estimates could be included in the OECD Regional Well-Being Database to provide two additional well-being dimensions measured uniquely with subjective indicators. In addition to these two variables, the paper explores the feasibility of other subjective indicators, either from Gallup or the European Statistics on Income and Living Standards (EU SILC), which are particularly meaningful when measured at the city or regional levels, such as satisfaction with the living environment, satisfaction with commuting time, trust in the political system, and feeling of safety in the community. Finally, a regression analysis is performed to give an insight of the explanatory power of both individual and regional specific characteristics to self-reported life satisfaction. The results show that regional fixed effects capture around 10 percentage points of the variation in life satisfaction, of which 30% can be associated to observable regional characteristics such as mortality rate and air pollution. Furthermore, life satisfaction tends to be negatively affected not only by the individual unemployment status but also by the level of unemployment of the region; in the OECD area, everything else equal, being unemployed is associated with 7 percentage points less of life satisfaction compared to someone that is employed; whereas, an increase of 1 percentage point in the unemployment rate at the regional level is related with 0.4 percentage points less of satisfaction with life as a whole.
    Keywords: subjective well-being, regional disparities, access to services, World Gallup Poll, European Statistics on Income and Living Conditions
    JEL: I31 R11
    Date: 2016–03–04
  3. By: Belloc, Filippo
    Abstract: We analyse how countries' innovation outcomes are affected by national legislations of worker participation to corporate governance. We develop a model of employee representation laws (ERL) and innovation in the presence of incomplete labour contracts and predict heterogeneous ERL effects across different systems of dismissal regulation. We then perform a panel regression analysis, exploiting 2-digit panel data for 21 manufacturing sectors of USA, UK, India, France and Germany, over the 1977-2005 period. We find that ERL effects on aggregate innovation output are positive, statistically significant and higher in magnitude where national labour laws impose significant firing costs to the firm with respect to institutional settings in which firing costs are low or absent. These results are robust to possible technology selection dynamics, endogeneity and institutional changes in the legal system of patent protection. We also estimate ERL effects on innovation conditional on firing costs at an industry level and show that the impact of ERL is relatively larger in those sectors where the human capital contribution to production is higher. Our results have relevant implications for the optimal design of employee representation legislations.
    Keywords: Employee Representation Law, Innovation, Panel data, Resource /Energy Economics and Policy, K31, O31, P51,
    Date: 2016–02–01
  4. By: Frank Neffke; Anne Otto; César Hidalgo
    Abstract: Establishment closures leave many workers unemployed. Based on employment histories of 20 million German workers, we find that workers often cope with their displacement by moving to different regions and industries. However, which of these coping strategies is chosen depends on the local industry mix. A large local presence of predisplacement or related industries strongly reduces the rate at which workers leave the region. Moreover, our findings suggest that a large local presence of the predisplacement industry induces workers to shift search efforts toward this industry, reducing the spatial scope of search for jobs in alternative industries and vice versa.
    Keywords: Displacement, local industry mix, agglomeration externalities, matching, mobility
    JEL: J24 J61 J64 R12
    Date: 2016–03
  5. By: Stefano Bianchini (BETA, University of Strasbourg); Federico Tamagni (Scuola Superiore San'Anna); Gabriele Pellegrino (WIPO & EPFL & IEB)
    Abstract: In this work, we explore the relations between sales growth and a set of innovation indicators that capture the different sources, modes and results of the innovative activity undertaken within firms. We exploit a rich panel on innovation activity of Spanish manufacturing firms, reporting detailed CIS-type information continuously over the period 2004-2011. Standard GMM-panel estimates of the average effect of innovation activities reveal significant and positive effect for internal R&D, while no effect is found for external sourcing of knowledge (external R&D, acquisition of embodied and disembodied technologies) as well as for output of innovation (process and product innovation). However, fixed-effects quantile regressions reveal that innovation activities, apart from process innovation and disembodied technical change, display a positive effect on high-growth performance. Finally, we find evidence of super-modularity of the growth function, revealing complementarities of internal R&D with product innovation, and between product and process innovation.
    Keywords: Firm growth, product and process innovation, internal and external R&D, embodied and disembodied technical change, fixed-effects quantile regressions, complementarity
    JEL: C21 D22 O31 O32
    Date: 2016
  6. By: Roller, Marcus; Schmidheiny, Kurt
    Abstract: This paper proposes measures to quantify the effective level and the effective progressivity of taxation in a fiscally decentralized country taking income sorting into account. Using data on the universe of Swiss taxpayers, we find that rich households effectively face significantly lower average and marginal tax rates and lower progressivity than in the benchmark case that does not consider income sorting. This is because high-income households systematically avoid high taxation by locating in low-tax jurisdictions. The results are stronger for singles than for families, indicating that singles are more sensitive to spatial tax differentials than families. Although income tax schedules of the Swiss federation, the 26 cantons and the more than 2,600 municipalities are all strictly progressive, the effectively paid country-wide average tax rate is regressive for households with very high incomes and without children. The proposed measure of the effective average and marginal tax rates also allows us to adequately describe the evolution of the country-wide tax burden over time. We document that about half of the reduction in the tax burden on top incomes between 1975 and 2009 is due to reductions in statutory tax rates and about half to stronger income sorting of the population. Our results also hold when we account for the disutility from housing prices into which tax rates capitalize.
    Keywords: Effective Tax Rates; Fiscal Decentralization; Income Segregation; Progressive Taxation
    JEL: H71 H73 R23
    Date: 2016–03
  7. By: Simon H. Boserup; Wojciech Kopczuk; Claus T. Kreiner
    Abstract: Using Danish administrative data, we estimate the impact of bequests on the level and inequality of wealth. We employ an event study design where we follow the distribution of wealth over time of people who are 45-50 years old, and divide them into treatment group and control group depending on whether a parent dies or not. Bequests account for 26 percent of the average post-bequest wealth 1-3 years after parental death and significantly affect wealth throughout the distribution. We find that bequests increase measures of absolute wealth inequality (variance), but reduce relative inequality (top wealth shares). Following the receipt of bequests, variance of the distribution censored at the top/bottom 1% increases by 33 percent, but the top 1% share declines by 6 percentage points from an initial level of 31 percent and the top 10% share declines by 10 percentage points from a base of around 81 percent.
    JEL: D31 E21 J62
    Date: 2016–01
  8. By: Lehouelleur, Sophie; Beblavý, Miroslav; Maselli,Ilaria
    Abstract: With the huge growth in enrolment in higher education, the key question facing young people today is not so much “what to study” as “whether to study”. Taking a methodologically innovative approach, this paper measures the net present value of university education and compares returns from studying a range of different subjects. We use data from five European countries (France, Italy, Hungary, Poland and Slovenia) and include (opportunity) costs in the computation. Results suggest that enrolling in science, technology, engineering and mathematics (STEM) courses is often not the best investment for students, especially female students. In choosing what to study, therefore, students are taking decisions that are consistent with their own private returns. This suggests that policy-makers should consider changing the incentives offered if they wish to change students’ behaviour.
    Date: 2015–07
  9. By: Alain Jousten; Mathieu Lefebvre
    Abstract: We explore the link between health indicators and employment rates of the population aged 55 or more. Our focus lies on work capacity as a key determinant of employment. Using cohort mortality information as a proxy for overall health outcomes, we establish a substantial untapped work capacity in the population 55+. Even stronger results are obtained when relying on individual-level objective and subjective health and socioeconomic parameters as predictors.
    JEL: J14 J21 J26
    Date: 2016–02
  10. By: Didier Blanchet; Eve Caroli; Corinne Prost; Muriel Roger
    Abstract: France stands out as a country with a low labor force attachment of older workers. A reversal in the trend of French labor participation rates over 50 is under way, partly due to the pension reforms that took place since 1993. The French ageing process is driven by large gains in life expectancy and Pension reforms allocate part of these gains to work rather than to retirement. The implicit assumptions guiding the reforms have been that additional years of life are years with a health status that can be considered reasonably compatible with work. If this is not the case, the idea of sharing these additional years of life between work and retirement is questionable. Considering mortality and health status, we question the fact that the reforms may have gone too far in increasing the retirement age. To tackle these issues, we rely on two different methodological approaches developed in the economic literature: one based on the gap in employment rates across time for given mortality rates; the other using the work/health relationship measured at certain ages to predict the health-related work capacity of older age groups at the same period of time. Both methods aim at providing measures of additional work capacity. This capacity may be defined as a measure of the distance between current retirement ages and what we call the “health barrier”, i.e. the age at which health prevents people from working longer. Both methods predict high average levels of additional work capacity. However, the picture becomes somewhat different when disaggregating the results by social groups or education. Our results emphasize the idea that policies aiming at activating any estimated additional work capacity should take into account, when possible, the heterogeneity of health conditions in the population. Moreover, additional work capacity cannot be a general indicator of how much seniors should work. The methods used here indeed leave aside many factors that determine the employment rate of older workers.
    JEL: I10 J14 J21 J26
    Date: 2016–02
  11. By: Hendrik Jürges; Lars Thiel; Axel Börsch-Supan
    Abstract: After two decades of reforms that have tightened eligibility for early retirement and the generosity of social security payments, the German government has begun to turn back time and re-introduce more generous disability and early retirement benefits. Often, poor health is cited as the main reason why workers cannot work until the regular retirement age. In this chapter, we try to answer a seemingly simple question: what is the proportion of older individuals who could work in the labor market if they wanted to and if they were not limited by poor health? To answer this question, we follow two different empirical approaches with a similar logic: we estimate the link between health and labor force participation in a population whose employment patterns are or were hardly affected by the current (early) retirement incentives. Using these “pure health effects” on labor force participation to extrapolate to a population that is currently strongly affected by legislation informs us how many could not work for health reasons and how many could work. We find substantial capacity to work among the older population. We estimate that two thirds of the population would be capable of working in the labor market until they turn 70 if they wanted to.
    JEL: H31 H55 I19 J14 J26
    Date: 2016–02
  12. By: Paul Bingley; Nabanita Datta Gupta; Peder Pedersen
    Abstract: Longevity is increasing and many people are spending a greater proportion of their lives reliant on pensions to support consumption. In response to this, several countries have mandated delays to age of first entitlement to pension benefits in order to reduce incentives to retire early. However, it is unknown to what extent older individuals have the health capacity to sustain the longer working lives that delayed pension benefits may encourage. We estimate the health capacity to work longer in Denmark by comparing how much older individuals work today with how much those with similar mortality rates worked in the past, and how much younger individuals today with similar self-assessed health work. We find substantial health capacity for longer working lives among those currently aged 55 and above. We also find significant heterogeneity by education and gender. Those with a high school degree have the greatest additional work capacity, women have more additional capacity than men, especially women with a college degree.
    JEL: I14 J26
    Date: 2016–02
  13. By: Troeger, Tobias H.; Walz, Uwe
    Abstract: This paper investigates the potential implications of say on pay on management remuneration in Germany. We try to shed light on some key aspects by presenting quantitative data that allows us to gauge the pertinent effects of the German natural experiment that originates with the 2009 amendments to the Stock Corporation Act of 1965. In order to do this, we deploy a hand-collected data set for Germany's major firms (i.e. DAX 30), for the years 2006-2012. Rather than focusing exclusively on CEO remuneration we collected data for all members of the management board for the whole period under investigation. We observe that the compensation packages of management board members of Germany's DAX30-firms are quite closely linked to key performance measures. In addition, we find that salaries increase with the size of the company and that ownership concentration has no significant effect on compensation. Also, our findings suggest that the two-tier system seems to matter a lot when it comes to compensation. However, it would be misleading to state that we see no significant impact of the introduction of the German say on pay-regime. Our findings suggest that supervisory boards anticipate shareholder-behavior.
    Keywords: say-on-pay,corporate governance,management compensation
    JEL: K20 K22 L22
    Date: 2016
  14. By: Antoine Dechezleprêtre; Elias Einiö; Ralf Martin; Kieu-Trang Nguyen; John Van Reenen
    Abstract: We present the first evidence showing causal impact of research and development (R&D) tax incentives on innovation outcomes. We exploit a change in the asset-based size thresholds for eligibility for R&D tax subsidies and implement a Regression Discontinuity Design using administrative tax data on the population of UK firms. There are statistically and economically significant effects of the tax change on both R&D and patenting, with no evidence of a decline in the quality of innovation. R&D tax price elasticities are large at about 2.6, probably because the treated group is from a sub-population subject to financial constraints. There does not appear to be pre-policy manipulation of assets around the thresholds that could undermine our design, but firms do adjust assets to take advantage of the subsidy post-policy. We estimate that over 2006-11 business R&D would be around 10% lower in the absence of the tax relief scheme.
    Keywords: R&D, patents, tax, innovation, Regression Discontinuity design
    JEL: O31 O32 H23 H25 H32
    Date: 2016–03
  15. By: Simone Borghesi (University of Siena, Department of International and Political Sciences, Italy); Andrea Flori (IMT Institute for Advanced Studies Lucca, Italy)
    Abstract: In this work, we investigate which countries have been more central during Phases I and II of the European Emission Trading Scheme (EU ETS) with respect to the different types of accounts operating in the system. We borrow a set of centrality measures from Network Theory's tools to describe how the structure of the system has evolved over time and to identify which countries have been in the core or in the periphery of the network. In doing this, we investigate by means of extensive partitions on the different types of accounts and transactions characterizing the EU ETS whether the role of intermediaries (approximated by Person Holding Accounts - PHAs) has affected the overall structure of the system. Preliminary findings over the period 2005-2012 suggest that PHAs have played a prominent role in the transaction of permits, heavily influencing the configuration of the system. This motivates further research on the impact of non-regulated entities in the EU ETS design.
    Keywords: Emission Trading, EU ETS, European Union Transaction Log (EUTL) data, Account and Transaction Types, Network Analysis, Centrality Measures
    JEL: C45 D85 L14 Q48 Q54 Q58
    Date: 2016–01
  16. By: Bérangère Legendre (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Olivia Ricci (CEMOI - Centre d'Économie et de Management de l'Océan Indien - Université de la Réunion - IAE - Institut d'Administration des Entreprises - Université de la Réunion)
    Abstract: Fuel poverty is a growing concern in France. Following the hike in energy prices that started in 2004, the problem of energy affordability for low-income households entered the political debate with the " Grenelle de l " environnement " in 2007. According to the standard UK definition (10% ratio) 3.8 million households were subject to fuel poverty in France in 2006. We question the way fuel poverty is currently measured and compare the impact of alternative measurement approaches on the extent and composition of fuel poverty in France. Then, we identify and characterize vulnerable households that are not ordinarily poor, but can be pushed into poverty because of their fuel bills. A logit, a clog log and a mixed effect logit model are used to analyze which factors influence the probability of vulnerable households to fall into poverty. The study indicates that the proportion of fuel poor people and their characteristics differ significantly depending on the fuel poverty measure chosen. The econometric results show that the probability of falling into poverty is higher for those who are retired living alone, rent their home, use an individual boiler for heating, cook with butane or propane and have poor roof insulation. Current French fuel poverty reduction policies appear to be inappropriate given our conclusions.
    Keywords: Fuel poverty,vulnerable households,poverty indicators,clog log model
    Date: 2015
  17. By: Fabo, Brian; Beblavý, Miroslav
    Abstract: The purpose of this study is to evaluate the size and composition of the student labour force in order to consider its potential impact on labour markets in the European Union. The paper is based on an analysis of EU Labour Force Survey data from 2011, supplemented by the findings of the EUROSTUDENT project. The structure of student labour is discussed within the framework of the so-called ‘crowding-out’ literature, which identifies competition for jobs between students and low educated non-students, particularly in the retail and wholesale sectors. In contrast to these assumptions, the authors found that, depending on the age of the student, the profile of student workers closely matches that of non-students with medium- to-high educational attainment. In general, the retail and wholesale sectors are of importance in the employment of students under the age of 25, but students typically take positions in the middle of the occupational hierarchy, rather than in the lower-grade positions. Meanwhile, older students, often professionals furthering their education while studying, are typically located in similar jobs and sectors to university graduates. A common trait of student work is its very high degree of flexibility compared to that of non-students. Nevertheless, the structure of student labour does not lead us to believe that student workers are particularly prone to be present in the precarious segment of the labour market.
    Date: 2015–07
  18. By: Egebark, Johan (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: I study the link between taxes and youth self-employment. I make use of a Swedish reform, implemented in 2007–09, which suddenly made the payroll tax and the self-employment tax vary by age. The results suggest that youth self-employment is insensitive to tax reductions, both in the short run and in the somewhat longer run. I also study the effect of the tax reductions on income. For those that are defined as self-employed, I find positive effects on income from self-employment, and negative effects on income from wage employment. This finding suggests that the lower taxes caused the self-employed to reallocate time from employment to self- employment.
    Keywords: youth unemployment; self-employment tax; tax subsidy; self-employment
    JEL: H25 H32 J23 J38 J68
    Date: 2016–03–01
  19. By: Giorgia Maffini; Jing Xing; Michael P. Devereux
    Abstract: How do tax incentives affect firmsÕ investment? Using confidential UK corporation tax returns, we provide new evidence on the effects of incentives in the form of depreciation allowances. We exploit a 2004 exogenous change in the qualifying thresholds for the first-year depreciation allowances (FYAs) and conduct a difference-in-difference analysis. Results suggest that the investment rate increased between 2.1 and 2.6 percentage points when firms became qualified for FYAs, relative to firms that never qualified. This implies an increase in investment rate of 11 percent at the mean. We exploit exogenous variation in the timing of tax payments to show that this large effect is not due to an increase in available cash and hence, this is primarily a cost of capital effect. Firms respond rather quickly to FYAs, within 12 to 18 months. Firms also bunch just below notches in the cost of capital created by the qualifying thresholds, suggesting salience of the FYAs. Such behaviour does not drive our main results.
    Keywords: investment, corporate tax, depreciation allowances, SMEs.
    Date: 2016–03
  20. By: Riccardo Crescenzi; Mara Giua
    Abstract: This paper looks at the European Union as a laboratory to study how ‘spatially-targeted’ policies (i.e. the EU Cohesion and Rural Development Policies) interact with sectoral ‘spatially-blind’ policies (i.e. the Common Agricultural Policy - CAP), jointly shaping regional growth dynamics. The analysis of the drivers of regional growth shows that the EU Regional Policy has a positive influence on economic growth in all regions. However, its impact is stronger in the most socio-economically advanced areas and is maximised when its expenditure is complemented by Rural Development and CAP funds. The top-down funding of the CAP seems to be able to concentrate some benefits in the most deprived areas. This suggests that bottom-up policies are not always the best approach to territorial cohesion. Top-down policies may – in some cases – be effective in order to channel resources to the most socioeconomically deprived areas. Territorial cohesion requires the flexible integration and coordination of both bottom-up and top-down approaches.
    Keywords: Regional Policy, European Union, Regional Growth, Rural Development, Common Agricultural Policy
    JEL: O18 R11 R58
    Date: 2016–03
  21. By: Elias Einiö; Overman; Henry
    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: Place-based policy, Programme evaluation, Displacement, Employment
    JEL: J20 O40 R11 H25
    Date: 2016–03–07
  22. By: Johannes Karl Herrmann (Friedrich Schiller University of Jena, Faculty of Economics and Business Administration); Ivan Savin (Friedrich Schiller University of Jena, Faculty of Economics and Business Administration, and Chair for Economic Policy, Karlsruhe Institute of Technology)
    Abstract: The diffusion of renewable electricity generating technologies is widely considered as crucial for establishing a sustainable energy system in the future. However, the required transition is unlikely to be achieved by market forces alone. For this reason, many countries implement various policy instruments to support this process, also by re-distributing related costs among all electricity consumers. This paper presents a novel history-friendly agent-based study aiming to explore the efficiency of different mixes of policy instruments by means of a Differential Evolution algorithm. Special emphasis of the model is devoted to the possibility of small scale renewable electricity generation, but also to the storage of this electricity using small scale facilities being actively developed over the last decade. Both combined pose an important instrument for electricity consumers to achieve partial or full autarky from the electricity grid, particularly after accounting for decreasing costs and increasing efficiency of both due to continuous innovation. Among other things, we find that the historical policy mix of Germany introduced too strong and inflexible demand-side instruments (like feed-in tariff) too early, thereby creating strong path-dependency for future policy makers and reducing their ability to react to technological but also economic shocks without further increases of the budget.
    Keywords: differential evolution, electricity storage, energy grid, feed-in tariff, renewable energy
    JEL: C63 Q41 Q42 Q48
    Date: 2016–03–08
  23. By: Juan Guio (University of Barcelona & Universidad Central); Álvaro Choi (University of Barcelona & IEB); Josep-Oriol Escardíbul (University of Barcelona & IEB)
    Abstract: Labor market dynamics and the expectations of finding a job are believed to be strong determinants of individuals’ educational decisions. Thus, the academic performance and permanency of students in the school system are closely related to their perceptions of unemployment. The impact of high unemployment rates on schooling decisions may operate through, at least, two effects: a “family” effect, which urges individuals to dropout owing to limited access to educational resources, and a “local labor market” effect that encourages them to remain in school. In this paper we, specifically, analyze the impact of a household’s labor market situation and the effect of local labor unemployment on i) the risk of early school dropout and ii) academic performance, which typically declines before the decision to dropout is taken. These relations are assessed via a set of multilevel linear and logistic regression analyses using PISA 2006, 2009 and 2012 microdata. Results suggest that both parental unemployment and local labor market unemployment increase the risk of school dropout by reducing student academic performance. However, the negative “family” and “local labor market” effects seem to decrease as labor market conditions worsen.
    Keywords: School dropout, multilevel logistic regression, PISA, labor market
    JEL: J64 I21 E32
    Date: 2016
  24. By: Beatriz Martínez (Department of Business Finance, University of Valencia); Hipòlit Torró (Financial and Actuarial Economics, University of Valencia)
    Abstract: In many futures markets, trading is concentrated in the front contract and positions are rolled-over until the strategy horizon is attained. In this paper, a pair-wise comparison between the conventional risk premium and the accrued risk premium in rolled-over positions in the front contract is carried out for UK natural gas futures. Several novel results are obtained. Firstly, and most importantly, the accrued risk premium in rollover strategies is significatively larger than conventional risk premiums and increases with the time to delivery. Specifically, for strategy horizons between three and six months, this difference increases from 1% to 10%. Secondly, it is the first time that risk premium in day-ahead futures has been measured in this market. The average value of the day-ahead risk premium is 0.5% per day and it is statistically significant. Thirdly, all risk premiums are significantly larger and more volatile in winter. Finally, risk premium time-variation is analyzed using a regression model. It is shown that reservoirs, weather, liquidity, volatility, skewness, and seasons are able in all cases to explain between 21% and 59% of the risk premium time-variation (depending on the futures maturity and sub-period).
    Keywords: Natural Gas Market, Futures Premium, Rollover, Seasonal Risk Premiums
    JEL: G13 L95
    Date: 2016–01
  25. By: Pamela Lenton (Department of Economics, University of Sheffield)
    Abstract: The expansion of higher education in the UK has led to an increase in the number of postgraduate as well as undergraduate students. This paper investigates the wage return to postgraduate degrees, differentiating between traditional Masters degrees, vocational postgraduate degrees and PhDs, over the period 1993-2014. We additionally, differentiate between the area of study for Masters degrees. Results show that wage returns to both undergraduate and all postgraduate degrees have increased over time. The subject undertaken at Masters level is more important in determining wages for males. Females holding a Masters degree in any subject earn a significant wage premium. There is also evidence of growth in the wage returns to other, vocational, non-Masters degrees. The findings of this paper imply that not only are postgraduates highly skilled individuals but that the provision of postgraduate courses, and thence postgraduate degree holders within the UK labour market should be increased.
    Keywords: Human Capital; Postgraduate Education; Wage returns
    JEL: J24
    Date: 2016–07
  26. By: Emanuele Ciani (Bank of Italy)
    Abstract: I estimate the effect of retirement on housework by exploiting the discontinuity in pension eligibility generated by the Italian social security rules. Using microdata from the 2007 wave of the Survey on Income and Living Conditions (SILC), I show that women increase their time spent on home production by more than 400 minutes per week. For men, there is on average no evidence of a significant change, which differs from the results of studies in other countries. However, estimates are heterogeneous by marital status, suggesting that married men do not increase time spent on household production because they can rely on their spouses. I also discuss other possible explanations, in particular men dedicating their time to ‘semi-leisure chores’ that do not fall under the definition of housework used in SILC. Overall, results suggest that retirement does not lead to a more equal distribution of ‘core’ household chores between genders.
    Keywords: retirement, house work, regression discontinuity
    JEL: J22 J26 D1
    Date: 2016–02

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