nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2016‒04‒04
25 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Old‐Age Employment and Hours of Work Trends: Empirical Analysis for Four European Countries By Aliaj, Arjeta; Flawinne, Xavier; Jousten, Alain; Perelman, Sergio; Shi, Lin
  2. An evaluation of the 1987 French Disabled Workers Act: Better paying than hiring By Thomas Barnay; Emmanuel Duguet; Christine Le Clainche; Yann Videau
  3. EU structural funds and regional income convergence: A sobering experience By Breidenbach, Philipp; Mitze, Timo; Schmidt, Christoph M.
  4. Sectoral Systems or Distance-to-the-Frontier Effects in Innovation? A Comparison of Three Medium-Technology Sectors in Germany, Italy and Spain By Fassio, Claudio
  5. Bargaining over Babies: Theory, Evidence, and Policy Implications By Doepke, Matthias; Kindermann, Fabian
  6. The Efficacy of Hybrid Collective Bargaining Systems: An Analysis of the Impact of Collective Bargaining on Company Performance in Europe By Braakmann, Nils; Brandl, Bernd
  7. Size of Training Firms: The Role of Firms, Luck, and Ability in Young Workers' Careers By Müller, Steffen; Neubäumer, Renate
  8. Individual Choice or Policies? Drivers of Female Employment in Europe By Lone Engbo Christiansen; Huidan Lin; Joana Pereira; Petia Topalova; Rima Turk
  9. Children´s opportunities in Germany: An application using multidimensional measures By Bartels, Charlotte; Stockhausen, Maximilian
  10. Family background and youth labour market outcomes across Europe By Gabriella Berloffa; Eleonora Matteazzi; Paola Villa
  11. Paternal Unemployment During Childhood: Causal Effects on Youth Worklessness and Educational Attainment By Steffen Müller; R. Riphahn; C. Schwientek
  12. Youth employment security and labour market institutions: a dynamic perspective By Gabriella Berloffa; Eleonora Matteazzi; Alina Sandor; Paola Villa
  13. The Adoption and Termination of Profit Sharing for Employees: Does Management's Attitude Play a Role? By Uwe Jirjahn
  14. Asymmetric Investment Responses to Firm-specific Uncertainty By Manuel Buchholz; Lena Tonzer; J. Berner
  15. Heterogeneous Effects of High School Peers on Educational Outcomes By Mendolia, Silvia; Paloyo, Alfredo R.; Walker, Ian
  16. Inequality of opportunity in health: a decomposition-based approach By Carrieri, V.;; Jones, M.A,;
  17. The effect of local taxes on firm performance: evidence from geo referenced data By Federico Belotti; Edoardo di Porto; Gianluca Santoni
  18. The Educational Consequences of Language Proficiency for Young Children By Yao, Yuxin; Ohinata, Asako; van Ours, Jan C.
  19. The evolution of immigration and asylum policy in Luxembourg: insights from IMPALA By Michel Beine; Bénédicte Souy
  20. Female Labor Supply, Human Capital and Welfare Reform By Richard Blundell; Monica Costa Dias; Costas Meghir; Jonathan Shaw
  21. Use it or lost it: Irish evidence By Irene Mosca; Robert E Wright
  22. Medical spending and hospital inpatient care in England: An analysis over time By Maria Jose Aragon; Martin Chalkley; Nigel Rice
  23. Heterogeneous Effects of Medical Interventions on the Health of Low-Risk Newborns By Daysal, N. Meltem; Trandafir, Mircea; van Ewijk, Reyn
  24. Firms that went out of business during the crisis By Sabrina Ferretti; Andrea Filippone; Giacinto Micucci
  25. Local and Spatial Cointegration in the Wage Curve – A Spatial Panel Analysis for German Regions By Reinhold Kosfeld; Christian Dreger

  1. By: Aliaj, Arjeta (HEC-University of Liège, Belgium); Flawinne, Xavier (HEC-University of Liège, Belgium); Jousten, Alain (University of Liège); Perelman, Sergio (CREPP, Université de Liège); Shi, Lin (HEC-University of Liège, Belgium)
    Abstract: For the last two decades, the increase of employment among cohorts of individuals aged 50+ has been a policy objective on the European employment agenda. The present paper takes stock of the situation as observed in Belgium over the time period 1997-2011. First, we provide analysis on the evolution of older workers' employment in Belgium and its neighboring countries Germany, France and the Netherlands using the EU Labour Force Survey. Second, we characterize the different employment and hours of work patterns for different age sub‐groups (50‐54, 55‐59, 60‐64) and provide evidence on their respective evolution. The results show that employment rates among older workers started to catch‐up with employment rates of younger cohorts as of 2001, and with more acuity after 2006. This effect dominates the observed negative effect on hours of work and hence leads to an increase in total hours of work of the cohort – net of any purely demographic effects.
    Keywords: retirement, employment, hours of work
    JEL: J08 J21 J26
    Date: 2016–03
  2. By: Thomas Barnay (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12); Emmanuel Duguet (TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique, ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12); Christine Le Clainche (CEE - Centre d'études de l'emploi - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé, LEM - Lille - Economie et Management - Université Lille 1 - Sciences et technologies - Fédération Universitaire et Polytechnique de Lille - CNRS - Centre National de la Recherche Scientifique); Yann Videau (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In France, the French Disabled Workers Act set up a legal quota of disabled workers in more than 20 employees companies. In order to encourage employers to better promote the employment of disabled people, this law decreed financial penalties for noncompliance. The aim of this paper is to evaluate the impact of this law on the employment of disabled people. We use a triple difference approach combined with dynamic exact matching and weighting methods in order to disentangle the pure effect of the legislation by controlling for both observable and unobservable correlated heterogeneities. Using a panel data set built from the “Santé et itinéraire professionnel” (lit. “Health and Labour Market Histories”) survey conducted in France in 2006-2007, we investigate whether disabilities have a significant impact on people’s employment, by distinguishing between the public and private sectors. We compare the labour trajectories of disabled people befor and after the implementation of the law (1968-1986 vs 1988-2006). Our findings highlight a negative impact of the Disabled Workers Act on the employment of disabled people. By enabling firms to abide by the legal employment obligation without hiring any disabled workers, this measure has probably had a counterproductive impact on the employment of disabled people. Nevertheless, this negative effect is restricted to the private sector; we find that the public sector shelters the disabled workers.
    Keywords: disability, employment policy, triple difference, matching, weighting
    Date: 2016–01
  3. By: Breidenbach, Philipp; Mitze, Timo; Schmidt, Christoph M.
    Abstract: The European Structural and Investment Funds (ESIF) are the prime instrument of EU regional policy. European policy makers place considerable hope into their growth stimulating funding measures to overcome current economic stagnation. Consequently, there is a strong need for credible evidence regarding the programs' effectiveness. Based on an empirical identification strategy linked to modern growth theory, we find that the disbursement of EU structural funds is negatively correlated with regional growth. Incorporating spatial dynamics and decomposing this correlation into a direct and a spatially-indirect component, it is particularly the latter which determines this 'sobering' finding. Regarding the economics behind these results, the obtained negative spatial effect may reflect the role played by policy-induced spatial competition among neighboring regions. It could also highlight the backwardness in technological endowment and economic structures of highly funded regions. In any case, EU structural funding does not seem to contribute effectively to foster income convergence across regions.
    Abstract: Die europäischen Struktur und Investmentfonds (ESIF) sind das wichtigste Instrument der EU-Regionalpolitik; die europäische Politik setzt große Hoffnungen in die wachstumsstimulierende Wirkung dieser Fördermaßnahmen zur Überwindung der aktuellen wirtschaftlichen Stagnation. Basierend auf einer empirischen Identifikationsstrategie können in diesem Papier keine Belege für positive Förderwirkungen gefunden werden. Werden räumliche Strukturen berücksichtigt, zeigt sich, dass räumlich indirekte Effekte dieses Ergebnis beeinflussen - also solche Regionen weniger wachsen, deren Nachbarn stark gefördert werden. Neben der potenziellen Erklärung, dass Nachbarn gegenseitig ihre Investoren abwerben, legt dieses Resultat nahe, dass hochgeförderte regionale Cluster unter struktureller und technologischer Rückständigkeit leiden, die durch Wachstumsprogramme nicht überwunden werden. Beide möglichen Erklärungen lassen den Schluss zu, dass die Förderung ihr eigentliches Ziel, die Konvergenz der Regionen, verfehlt.
    Keywords: EU regional policy,Solow growth model,spatial spillovers,panel data
    JEL: C21 R12 R58
    Date: 2016
  4. By: Fassio, Claudio (LUISS School of European Political Economy)
    Abstract: This study analyzes empirically whether the Sectoral Systems of Innovation or the Distanceto-the-Frontier perspective more accurately describe the patterns of innovation in medium technology sectors in Germany, Italy and Spain. While the Sectoral Systems of Innovation predicts the existence of technology-related similarities in innovative patterns in the same sectors across countries, the Distance-to-the Frontier suggests the existence of important differences related with the level of technological development of each national sector. Using Community Innovation Survey data and applying an econometric strategy specifically devised for innovations survey I am able to test a set of hypotheses directly related with each of the two theories. The results of the econometric analysis show that relevant differences across countries exist with respect to the intensity of R&D activities and the economic impact of different types of innovations, confirming the Distance-to-the-Frontier hypothesis, while great cross-country similarity emerges among the sources of knowledge used to develop new innovations, in line with the Sectoral Systems of Innovation framework. The results highlight the importance to take into account both frameworks for a useful analysis of innovation within sectors.
    Keywords: Sectoral Systems of innovation; Distance-to-the-Frontier; R&D and productivity
    JEL: L60 O31
    Date: 2014–05–20
  5. By: Doepke, Matthias (Northwestern University); Kindermann, Fabian (University of Bonn)
    Abstract: It takes a woman and a man to make a baby. This fact suggests that for a birth to take place, the parents should first agree on wanting a child. Using newly available data on fertility preferences and outcomes, we show that indeed, babies are likely to arrive only if both parents desire one, and there are many couples who disagree on having babies. We then build a bargaining model of fertility choice and match the model to data from a set of European countries with very low fertility rates. The distribution of the burden of child care between mothers and fathers turns out to be a key determinant of fertility. A policy that lowers the child care burden specifically on mothers can be more than twice as effective at increasing the fertility rate compared to a general child subsidy.
    Keywords: fertility, bargaining, child care
    JEL: J13
    Date: 2016–03
  6. By: Braakmann, Nils; Brandl, Bernd
    Abstract: Individual and company bargaining has increasingly supplanted sector and country collective bargaining leading to increasingly perforated and multi-layered national collective bargaining systems. In this paper, we develop a comprehensive categorization of bargaining and argue that both the bargaining level and the degree of integrative interaction between bargaining units matters for efficacy. This idea is tested using representative company level data for the European Union. We find that the efficacy of coordinated sector and multi-level systems is higher than for all other forms of bargaining. Policy implications are discussed as these results challenge current attempts to reform collective bargaining in Europe.
    Keywords: collective bargaining; efficacy; hybrid bargaining systems; company performance
    JEL: J31 J32 J52
    Date: 2016–02–08
  7. By: Müller, Steffen (IWH Halle); Neubäumer, Renate (University of Koblenz-Landau)
    Abstract: This paper analyzes how life-cycle unemployment of former apprentices depends on the size of the training firm. We start from the hypotheses that the size of training firms reduces long-run cumulated unemployment exposure, e.g. via differences in training quality and in the availability of internal labor markets, and that the access to large training firms depends positively on young workers' ability and their luck to live in a region with many large and medium-sized training firms. We test these hypotheses empirically by using a large administrative data set for Germany and find corroborative evidence.
    Keywords: unemployment, training, apprenticeship, young workers, mobility, firm size
    JEL: D21 L10 L25 L26 L29 M13
    Date: 2016–03
  8. By: Lone Engbo Christiansen; Huidan Lin; Joana Pereira; Petia Topalova; Rima Turk
    Abstract: Female labor force participation has increased markedly in many European countries during the past decades. Nonetheless, participation rates remain low in some economies, and a significant gender gap persists in most countries. Using micro-level data to control for factors that influence personal choice, we re-examine the determinants of female employment in Europe. The results highlight the importance of positive attitudes towards women working and individual characteristics such as years of education and number of children. However, even after controlling for these factors, policies are also key drivers of female employment.
    Keywords: Euro Area;Labor markets;Labor force participation;gender gaps, International Social Survey Programme, labor force, labor, labor supply, employment, General, Economics of Gender, General, International Social Survey Programme.,
    Date: 2016–03–07
  9. By: Bartels, Charlotte; Stockhausen, Maximilian
    Abstract: Single parents and unmarried couples are increasingly replacing the traditional nuclear family. This paper investigates if the greater variety in living arrangements contributes to increased resource disparities among children in Germany. Children in single parent families are disadvantaged in at least three dimensions decisive for their later achievements: material standard of living, parental education, and parental childcare time. We compute multidimensional inequality and poverty indices using SOEP data from 1991-2012. We distinguish between parental and publicly provided childcare, which is an increasingly important in-kind benefit in Germany. We find that both multidimensional inequality and poverty declined as expanded public childcare strongly reduces resource disparities among children.
    Keywords: multidimensional inequality,multidimensional poverty,inequality indices,demography
    JEL: D30 D63 I32 J12 J13
    Date: 2016
  10. By: Gabriella Berloffa (Department of Economics and Management, University of Trento, Italy); Eleonora Matteazzi (Department of Economics and Management, University of Trento, Italy); Paola Villa (Department of Economics and Management, University of Trento, Italy)
    Abstract: The paper investigates the intergenerational transmission of worklessness in a cross-country comparative analysis. Using the 2011 EU-SILC ad-hoc module on intergenerational transmission of disadvantages, we study the extent to which family background affects youth labour market outcomes. We focus on young people aged 25-34. The empirical findings provide evidence of an intergenerational persistence of worklessness and the positive role of parents’ employment in explaining youth labour market outcomes. Also gender differences with respect to the influence of the family of origin are relevant. Mothers' working condition during adolescence affects systematically, and to a large extent, their daughters’ probability of being employed, while fathers’ employment generally increases their sons' probability of being in employment. Empirical evidence suggests that policies should pay attention to both youth and parental worklessness.
    Keywords: family background, worklessness, intergenerational mobility, NEET, inequalities.
    JEL: J16 J62 J64
    Date: 2016–02
  11. By: Steffen Müller; R. Riphahn; C. Schwientek
    Abstract: Using long-running data from the German Socio-Economic Panel (1984-2012), we investigate the impact of paternal unemployment on child labor market and education outcomes. We first describe correlation patterns and then use sibling fixed effects and the Gottschalk (1996) method to identify the causal effects of paternal unemployment. We find different patterns for sons and daughters. Paternal unemployment does not seem to causally affect the outcomes of sons. In contrast, it increases both daughters‘ worklessness and educational attainment. We test the robustness of the results and explore potential explanations.
    Keywords: youth unemployment, educational attainment, intergenerational mobility, causal effect, Gottschalk method, sibling fixed effects
    JEL: C C J
    Date: 2016–03
  12. By: Gabriella Berloffa (Department of Economics and Management, University of Trento, Italy); Eleonora Matteazzi (Department of Economics and Management, University of Trento, Italy); Alina Sandor (Department of Economics and Management, University of Trento, Italy); Paola Villa (Department of Economics and Management, University of Trento, Italy)
    Abstract: In this paper we propose a dynamic perspective to analyse young people's labour market performance. The approach is based on the analysis of individual trajectories in the labour market, and focuses on young Europeans about five years after they left education. We use this approach also to examine the effects of employment protection legislation and labour market policies on objective youth employment security. Empirical findings suggest that the most disadvantaged groups, such as women and low educated workers, benefit from a more stringent regulation regulation on temporary contracts and higher national expenditures on labour market policies.
    Keywords: employment protection legislation, youth, job security, employment security, EU-SILC.
    JEL: J21 J48 J62
    Date: 2016–02
  13. By: Uwe Jirjahn
    Abstract: Examinations on the determinants of profit sharing usually focus on objective firm characteristics. Using data from manufacturing firms in Germany, this study shows that managers’ subjective attitudes towards profit sharing also play an important role in the adoption and termination of this payment scheme. Positive management attitudes are associated with an increased likelihood of adopting profit sharing. While to some extent this entails failed experimentation, positive managerial attitudes also substantially contribute to a sustained use of profit sharing. The pattern of results holds even when controlling for a variety of objective firm characteristics.
    Keywords: Profit sharing, management attitude, management discretion, subjective factors, experimentation
    JEL: J33 M52
    Date: 2016
  14. By: Manuel Buchholz; Lena Tonzer; J. Berner
    Abstract: This paper analyzes how firm-specific uncertainty affects firms’ propensity to invest. We measure firm-specific uncertainty as firms’ absolute forecast errors derived from survey data of German manufacturing firms over 2007–2011. In line with the literature, our empirical findings reveal a negative impact of firm-specific uncertainty on investment. However, further results show that the investment response is asymmetric, depending on the size and direction of the forecast error. The investment propensity declines significantly if the realized situation is worse than expected. However, firms do not adjust their investment if the realized situation is better than expected, which suggests that the uncertainty effect counteracts the positive effect due to unexpectedly favorable business conditions. This can be one explanation behind the phenomenon of slow recovery in the aftermath of financial crises. Additional results show that the forecast error is highly concurrent with an ex-ante measure of firm-specific uncertainty we obtain from the survey data. Furthermore, the effect of firm-specific uncertainty is enforced for firms that face a tighter financing situation.
    Keywords: risk climate, microeconomic survey data, forecast errors, firm investment, uncertainty
    JEL: D22 D84 E32
    Date: 2016–03
  15. By: Mendolia, Silvia (University of Wollongong); Paloyo, Alfredo R. (University of Wollongong); Walker, Ian (Lancaster University)
    Abstract: We investigate the relationship between peers' abilities and educational outcomes at the end of high school using data from the rich Longitudinal Study of Young People in England (LSYPE) matched to the National Pupil Database of children in state schools in England. In particular, we focus on the effect of peers' abilities, measured through achievements in Key Stage 3 (Age 14), on high powered test scores at Ages 16 and 18, and on the probability of attending university. Our identification strategy is based on a measure of the peers of peers' ability. In particular, for each individual, we look at her high school peers and select their primary school peers who do not attend the same high school and who did not attend the same primary school as the individual. We then use peers-of-peers ability, measured using Age 11 test scores as an instrument for high school average peer ability, measured using Age 14 test scores. We also use quantile regression to explore the effect of peers' ability on different parts of the distributions of the outcomes. Our results show that average of peers' abilities has a moderate positive effect on test scores at Ages 16 and 18, and that being in a school with a large proportion of low-quality peers can have a significantly detrimental effect on individual achievements. Furthermore, peers' ability seems to have a stronger effect on students at the bottom of the grade distribution, especially at Age 16.
    Keywords: peer effects, instrumental variables, test scores
    JEL: I20 J24
    Date: 2016–03
  16. By: Carrieri, V.;; Jones, M.A,;
    Abstract: This paper presents a decomposition-based approach to measure inequality in health that captures Roemer’s distinction between circumstances and effort. Our approach builds on a decomposition of the Gini index with heterogeneous responses and is extended to decompose an inequality of opportunity Gini index inspired by the “fairness gap†principle. An original feature of our empirical analysis is the use of objectively measured biomarker as health outcomes and as proxies for relevant effort variables. Using data from the Health Survey for England from 2003 to 2012, we find that circumstances are the leading determinant of inequality in cholesterol, glycated haemoglobin, fibrinogen and mean arterial pressure. Moreover, we find a strong interaction between circumstances and effort leading to a smaller effect of effort on health for individuals in worse circumstances. Among the effort factors, we find that healthy diet and physical activity play the largest role in shaping objective health.
    Keywords: biomarkers; decomposition analysis; health inequalities; inequality of opportunity;
    JEL: C1 C5 D63 I14
    Date: 2016–03
  17. By: Federico Belotti; Edoardo di Porto; Gianluca Santoni
    Abstract: This paper investigates the impact of business property taxation on firms' performance using a panel of italian manufacturing firms. To account for endogeneity in local taxation, we exploit a pairwise spatial differenced generalized method of moments estimator. As well as providing robust inference, we also improve on existing work by exploiting the exogenous variation in local taxes generated by the political alignment of each local government with the central one. We find that property taxation exerts a negative impact on firms' employment, capital and sales to such an extent as to significantly affect total factor productivity.
    Keywords: local taxation;endogeneity;spatial differencing;two-way clustering
    JEL: H22 H71 R38
    Date: 2016–02
  18. By: Yao, Yuxin (Tilburg University); Ohinata, Asako (University of Leicester); van Ours, Jan C. (Tilburg University)
    Abstract: This paper studies the educational consequences of language proficiency by investigating the relationship between dialect-speaking and academic performance of 5-6 year old children in the Netherlands. We find that dialect-speaking has a modestly negative effect on boys' language test scores. In addition, we study whether there are spillover effects of peers' dialect-speaking on test scores. We find no evidence for spillover effect of peers' dialect-speaking. The test scores of neither Dutch-speaking children nor dialect-speaking children are affected by the share of dialect-speaking peers in the classroom.
    Keywords: dialect-speaking, test scores, spillover effects, language, academic performance
    JEL: J24 I2
    Date: 2016–03
  19. By: Michel Beine (CREA, Université du Luxembourg); Bénédicte Souy (CREA, Université du Luxembourg)
    Abstract: This article presents and discusses the evolution of immigration policy of Luxembourg concerning the entry of economic, family related and humanitarian migrants. To that aim, we rely on some of the data of the IMPALA project that codes from immigration laws the entry conditions in a set of immigration countries. We focus on some entry tracks specific to skilled and unskilled migrants and compare some of the conditions prevailing in Luxembourg with those observed in France, the US and Australia. We also propose a narrative analysis of the changes in the Luxembourgish regulation since the end of the 19th Century. We show that Luxembourg has improved its immigration system over time and follows mainly reforms introduced in the other European countries and at the European level.
    Keywords: IMPALA project, Immigration policy, Asylum policy, Luxembourgish regulation
    JEL: K F22 J08 J61
    Date: 2016
  20. By: Richard Blundell (University College London); Monica Costa Dias (Institute for Fiscal Studies and CEF-UP at the University of Porto); Costas Meghir (Cowles Foundation, Yale University); Jonathan Shaw (Institute for Fiscal Studies and University College London)
    Abstract: We estimate a dynamic model of employment, human capital accumulation - including education, and savings for women in the UK, exploiting tax and benefit reforms, and use it to analyze the effects of welfare policy. We find substantial elasticities for labor supply and particularly for lone mothers. Returns to experience, which are important in determining the longer-term effects of policy, increase with education, but experience mainly accumulates when in full-time employment. Tax credits are welfare improving in the UK and increase lone-mother labor supply, but the employment effects do not extend beyond the period of eligibility. Marginal increases in tax credits improve welfare more than equally costly increases in income support or tax cuts.
    Keywords: Female labor supply, Welfare reform, Tax credits, Education choice, Dynamic discrete choice models, Life cycle models
    JEL: H2 H3 J22 J24
    Date: 2013–04
  21. By: Irene Mosca (The Irish Longitudinal Study of Ageing, Trinity College Dublin); Robert E Wright (Department of Economics, University of Strathclyde)
    Abstract: A small but growing body of research suggests that retirement and cognitive decline are related. In fact, some have argued that retirement causes cognitive decline. The aim of this paper is to add to this literature using data of older women from The Irish Longitudinal Study on Ageing (TILDA). Ordinary least square (OLS) regressions show a significant negative association between retirement and cognitive functioning. These estimates are based on the assumption that retirement is exogenous. As retirement is potentially endogenous with respect to cognition, instrumental variable (IV) methods are also used. The instrument employed is the abolition of the so-called “Marriage Bar”. In simple terms, the Marriage Bar was the requirement that women leave paid employment on getting married. It was established in the 1930s and removed in the 1970s. When IV estimations are used, the effect of retirement on cognition is negative but statistically insignificant. Differences between OLS and IV estimates are compared with a standard test. OLS estimates are preferred as the null hypothesis of exogeneity of retirement cannot be rejected at conventional statistical levels.
    Keywords: cognition, ageing, retirement
    JEL: J14 J26
    Date: 2016–02
  22. By: Maria Jose Aragon (Centre for Health Economics, University of York, UK.); Martin Chalkley (Centre for Health Economics, University of York, UK.); Nigel Rice (Centre for Health Economics and Department of Economics and Related Studies, University of York, UK.)
    Abstract: Health care in England is predominantly provided free at the point of service through the publicly funded National Health Service (NHS). Total NHS expenditure, which has risen in real terms by an average of 3.7% per annum since the inception of the NHS in 1948, constituted 7.9% of GDP in 2012. This paper presents a summary of the trends in medical expenditure in England and then using detailed administrative data presents analysis of the growth over 15 years of expenditure and activity in hospital inpatient health care, which represents around 20-25% of all NHS expenditure. We document the coincidence of observed trends in expenditure with reported activity, morbidity and the proximity of individuals to death. We find that; (i) expenditure for both elective and emergency inpatient care broadly follows activity so expenditure is mostly driven by activity rather than unit costs; (ii) expenditure is concentrated in individuals with multiple diseases so that the prevalence and identification of complex medical conditions are important drivers of expenditure and (iii) health care activity rises substantially for individuals in the period before death so that expenditure is driven substantially by mortality in the population. Taken together these findings indicate that this element of health care expenditure in England has been substantially driven by the underlying morbidity and age of the population in conjunction with improving health care technology
    Keywords: English National Health Service, health care expenditure, health care activity, end of life expenditures
    JEL: H51 J11 I19
    Date: 2016–03
  23. By: Daysal, N. Meltem (University of Southern Denmark); Trandafir, Mircea (University of Southern Denmark); van Ewijk, Reyn (University of Mainz)
    Abstract: We investigate the impact of early-life medical interventions on low-risk newborn health. A policy rule in The Netherlands creates large discontinuities in medical treatments at gestational week 37. Using a regression discontinuity design, we find no health benefits from additional treatments for average newborns. However, there is substantial heterogeneity in returns to treatments with significant health benefits for newborns in the lowest income quartile and no benefits in higher income quartiles. This seems due to increased maternal stress from referral to an obstetrician among higher-income mothers, heterogeneous effects of home births, and potential difficulties in risk screening among low-income women.
    Keywords: medical interventions, birth, heterogeneity, mortality
    JEL: I11 I12 I18 J13
    Date: 2016–03
  24. By: Sabrina Ferretti (Bank of Italy); Andrea Filippone (Bank of Italy); Giacinto Micucci (Bank of Italy)
    Abstract: This paper analyzes the Italian companies that filed for bankruptcy or underwent voluntary liquidation between 2008 and 2012 and identifies the main characteristics of this phenomenon. The econometric analysis based on firms’ balance sheet data suggests that the probability of going out of business was greater for smaller and younger companies. Other characteristics being equal, such as size, sector and geographical location, the likelihood of a firm initiating bankruptcy proceedings was more strongly correlated with imbalances in its financial structure such as a high leverage ratio, while a firm’s likelihood of opting for voluntary liquidation was influenced to a greater extent by low profitability.
    Keywords: bankruptcies, liquidations, financial structure
    JEL: G33 L25 K20
    Date: 2016–03
  25. By: Reinhold Kosfeld (University of Kassel); Christian Dreger (University of Kassel)
    Abstract: The wage curve introduced by Blanchflower and Oswald (1990, 1994) postulates a negative correlation between wages and unemployment. Empirical results focus on particular theoretical channels establishing the relationship. Panel models mostly draw on unionized bargaining or the efficiency wage hypothesis. Spatial econometric approaches can be rationalized by monopsonistic competition. However, the approaches either ignore the issue of nonstationarity or treat the data as if it were nonspatial. In this paper, we adopt a global cointegration approach recently proposed by Bienstock and Felsenstein (2010) to account for nonstationarity of regional data. By specifying a spatial error correction model (SpECM), equilibrium adjustments are considered in both space and time. Applying the methodology for West German labour markets, we find strong evidence for the existence of a long-run wage curve with spatial effects.
    Keywords: wage curve, regional labour markets, spatial panel models, global cointegration analysis
    JEL: J30 J60 C33 R15
    Date: 2016

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