nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2016‒05‒08
eighteen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Maternal Education, Divorce, and Changes in Economic Resources: Evidence from Germany By Liliya Leopold; Thomas Leopold
  2. Your Retirement and My Health Behaviour: Evidence on Retirement Externalities from a Fuzzy Regression Discontinuity Design By Müller, Tobias; Shaikh, Mujaheed
  3. The Growth Effects of EU Membership for the UK: a Review of the Evidence By Crafts, Nicholas
  4. Early Maternal Employment and Non-cognitive Outcomes in Early Childhood and Adolescence: Evidence from British Birth Cohort Data By Lekfuangfu, Warn N.; Powdthavee, Nattavudh; Clark, Andrew E.; Ward, George
  5. Income Inequality among Children in Europe 2008–2013 By Yekaterina Chzhen; Sudhanshu Handa; Emilia Toczydlowska; Zlata Bruckauf; UNICEF Innocenti Research Centre
  6. Energy efficiency in french homes: how much does it cost? By Edouard Civel; Jérémy Elbeze
  7. Falling Behind: Socio-demographic profiles of educationally disadvantaged youth. Evidence from PISA 2000-2012 By Zlata Bruckauf; UNICEF Innocenti Research Centre
  8. Fairness for Children. A league table of inequality in child well-being in rich countries By UNICEF Office of Research - Innocenti
  9. Individual heterogeneity and pension choices: How to communicate an effective message? By Giovanni Gallo; Costanza Torricelli; Arthur van Soest
  10. Regional Disparities In Access To Health Care: A Multilevel Analysis In Selected OECD Countries By Monica Brezzi; Patrizia Luongo
  11. "Flattening" the Tax Evasion: Evidence from the Post-Communist Natural Experiment By Filer, Randall K.; Hanousek, Jan; Lichard, Tomáš; Torosyan, Karine
  12. Gender Quota inside the Boardroom: Female Directors as New Key Players? By Rebérioux, Antoine; Roudaut, Gwenael
  13. Measuring the conditions for participation in Germany for the next few years - An application of the TBI. By Dr. Thomas Drosdowski; Britta Stöver; Dr. Marc Ingo Wolter
  15. Disability Insurance Benefits and Labor Supply Choices: Evidence from a Discontinuity in Benefit Awards By Müller, Tobias; Boes, Stefan
  16. Do the rich (really) consume higher-quality goods? Evidence from international trade data By Vincenzo Merella; Daniel Santabárbara
  17. Flexibilising the Labour Market: Who Wants to Loosen Employment Protection Legislation in Italy? By Maria Chiara Morandini
  18. Information, financial aid and training participation: Evidence from a randomized field experiment By Görlitz, Katja; Tamm, Marcus

  1. By: Liliya Leopold; Thomas Leopold
    Abstract: This study investigated the effects of divorce on educational gaps in mothers’ economic resources. The results shed new light on two opposing theoretical positions that have informed research on social inequality in the consequences of divorce. Recent extensions of the “diverging destinies” perspective posit that divorce is more consequential among the disadvantaged than among the privileged. The notion of “divorce as an equalizer” posits the reverse. Based on data from the German SOEP, we estimated correlated random-effects models to examine educational gaps in divorce-related changes of mothers’ household income and risk of poverty. The results are inconsistent with the diverging destinies perspective, as educational gaps in mothers’ economic resources did not widen after divorce. Instead, we found partial support for the competing notion of divorce as an equalizer, as higher educated mothers experienced larger declines in household income. Educational gaps in the risk of poverty remained constant.
    Date: 2016
  2. By: Müller, Tobias; Shaikh, Mujaheed
    Abstract: This paper presents evidence on intra-household retirement externalities by assessing the causal effect of partner's retirement on own health behaviour in Europe. We identify partner's retirement effects by applying a fuzzy regression discontinuity (RD) framework using retirement eligibility as an exogenous instrument for partner's retirement status. Using data from the Survey of Health, Ageing and Retirement in Europe (SHARE) we find that while partner's retirement increases own physical activity, it also increases smoking by up to 7 cigarettes a day and increases alcohol intake by 1-2 drinks per day. Furthermore, we find that physical activity increases only for individuals that are themselves retired pointing toward compensated effects that arise due to husband's and wife's retirement being complements. Similarly, an increase in alcohol intake is observed only if the individuals are themselves retired and an increase in smoking is only observed if the partner is a smoker suggesting mutual positive externalities and leisure complementarities.
    Keywords: Retirement Externalities, Health Behaviour, Fuzzy Regression Discontinuity Design
    JEL: C26 I12 J26
    Date: 2016
  3. By: Crafts, Nicholas (University of Warwick)
    Abstract: This paper reviews the literature on the implications of EU membership for the UK. It concludes that membership has raised UK income levels appreciably and by much more than 1970s’ proponents of EU entry predicted. These positive effects stem from the EU’s success in increasing trade and the impact of stronger competition on UK productivity. The economic benefits of EU membership for the UK have far exceeded the costs of budgetary transfers and regulation. Brexit is risky and its impact would depend heavily on the terms negotiated and the use made of the policy space that it freed up.
    Keywords: Brexit; competition; income levels; SingleMarket; trade costs. JEL Classification: F15; N14; N74.
    Date: 2016
  4. By: Lekfuangfu, Warn N.; Powdthavee, Nattavudh; Clark, Andrew E.; Ward, George
    Abstract: We analyse the relationship between early maternal employment and child emotional and behavioural outcomes in early childhood and adolescence. Using rich data from a cohort of children born in the UK in the early 1990s, we find little evidence of a strong statistical relationship between early maternal employment and any of the emotional outcomes. However, there is some evidence that children whose mother is in full-time employment at the 18th month have worse behavioural outcomes at ages 4, 7, and 12. We suggest that these largely insignificant results may in part be explained by mothers who return to full-time work earlier being able to compensate their children: we highlight the role of fathers’ time investment and alternative childcare arrangements in this respect.
    Keywords: child outcomes; maternal employment; well-being; conduct; ALSPAC
    Date: 2016–04
  5. By: Yekaterina Chzhen; Sudhanshu Handa; Emilia Toczydlowska; Zlata Bruckauf; UNICEF Innocenti Research Centre
    Abstract: With income inequality increasing and children exposed to higher risks of poverty and material deprivation than the population as a whole in the majority of European countries, there is a concern that income inequality among children has worsened over the financial crisis. This paper presents results on the levels of bottom-end inequality in children’s incomes in 31 European countries in 2013 and traces the evolution of this measure since 2008. The relative income gap worsened in 20 of the 31 European countries between 2008 and 2013. Social transfers play a positive role in reducing income differentials, as post-transfer income gaps are smaller than those before transfers, especially in countries like Ireland and the United Kingdom. Countries with greater bottom-end income inequality among children have lower levels of child well-being, and higher levels of child poverty and material deprivation.
    Keywords: child poverty; child well-being; income distribution; income groups;
    Date: 2016
  6. By: Edouard Civel; Jérémy Elbeze
    Abstract: A strong cut in heat consumption can be realized by the thermal renovation of buildings: this article gives an assessment of energy savings achievable in the French residential stock and their associated investment costs. A bottom-up approach, using a dataset on material and labor costs for renovations and a thermal model (including a representation of the “rebound effect”) is applied to a description of existing dwellings in France. Renovation investment costs increase with the efficiency target of the housing stock: two inflection points are identified, for 40% and 60% reduction targets. If the first inflection is driven by a quantity effect, the second one is pushed by a price effect. Specificities of the thermal renovation market imply a lock-in risk: at the micro-scale, the discount rate could induce households to realize low ambition renovations, whereas at the macro-scale, having successive short-term objectives triggers important over-costs, above 15% of the optimized investment costs. We suggest that policy-makers take the risk of low ambition renovations into account, as it may nip the potential of energy savings in the bud. Relevant policies would set today the long-term efficiency target and earmark public incentives, like tax credits or interest-free loans, to ambitious renovations.
    Keywords: Energy efficiency, Renovation, Residential sector, Public policy.
    JEL: Q47 Q48
    Date: 2016
  7. By: Zlata Bruckauf; UNICEF Innocenti Research Centre
    Abstract: Early identification of students who fail to reach basic, age-appropriate literacy skills is the first step to ensure timely support of their learning. Understanding those drivers of low achievement that are beyond students’ control enables policy makers to foster equal opportunity for achievement. Drawing on the OECD Programme for International Student Assessment (PISA) 2000 to 2012 data, this paper examines the risk factors of low achievement, defined here as scoring below the 10th percentile of the distribution, and their evolution over time, across 39 industrialized nations. These include an aggregate measure of socio-economic status (SES), immigration background, non-test language spoken at home, living in a single parent household, and gender. We find that family SES, is one of the most consistent predictors of low-achievement (across a diverse range of educational systems) and most persistent (across time). Amongst other results, we also find no evidence that the gender gap in reading – in favour of girls – narrowed over time, leaving boys at risk of educational disadvantage in the majority of countries.
    Keywords: adolescents; disadvantaged children; immigration; low income; socio-economic background;
    Date: 2016
  8. By: UNICEF Office of Research - Innocenti
    Abstract: This Report Card presents an overview of inequalities in child well-being in 41 countries of the European Union (EU) and the Organisation for Economic Co-operation and Development (OECD). It focuses on ‘bottom-end inequality’ – the gap between children at the bottom and those in the middle – and addresses the question ‘how far behind are children being allowed to fall?’ in income, education, health and life satisfaction.Across the OECD, he risks of poverty have been shifting from the elderly towards youth since the 1980s. These developments accentuate the need to monitor the well-being of the most disadvantaged children, but income inequality also has far-reaching consequences for society, harming educational attainment, key health outcomes and even economic growth. A concern with fairness and social justice requires us to consider whether some members of society are being left so far behind that it unfairly affects their lives both now and in the future.This Report Card asks the same underlying question as Report Card 9, which focused on inequality in child well-being, but uses the most recent data available and includes more countries.
    Keywords: child poverty; child well-being; inequality; social inequality;
    JEL: I3
    Date: 2016
  9. By: Giovanni Gallo; Costanza Torricelli; Arthur van Soest
    Abstract: We use the Elaboration Likelihood Model (ELM) to explain how communication influences the heterogeneity in pension choices. To this end we exploit the 2007 Italian reform that allowed transferring future severance pay contributions into a pension fund and was accompanied by an information campaign with a clear message. According to ELM, individuals follow either a “central route” or a “peripheral route” depending on their motivation and ability to think, and eventually change or retain their initial attitude. Based on Logit models and data from the Bank of Italy Survey on Household Income and Wealth, we find that the decision to transfer the severance pay into a pension fund was taken by more educated and older individuals, with high household income. Since the reform was mainly directed at low income and younger individuals, this result suggest that the information campaign was not very effective. Moreover, our findings show that generic financial literacy does not significantly affect decision consciousness, pointing at a more relevant role in the elaboration process for: the individual’s comprehension of the specific choice object (pension funds), cognitive skills, and influential contextual factors (i.e., unions and employer’s pressure).
    Keywords: pension choices, Elaboration Likelihood Model, financial literacy
    JEL: D14 D03
    Date: 2016–03
  10. By: Monica Brezzi; Patrizia Luongo
    Abstract: This paper investigates regional disparities in access to healthcare, measured by self-reported unmet medical needs. It looks at disparities across 86 regions in 5 European countries: Czech Republic, France, Italy, Spain and the United Kingdom. The results show that in addition to individual factors, such as age, gender, health status, or education, the characteristics of the region where people live, such as the average skill endowment or employment rate, have a significant impact on the probability of unmet medical needs. Individual and regional determinants play different roles across regions in these five countries. Moreover, in three of these countries (Czech Republic, Italy and Spain), age and chronic illness have different impacts on unmet medical needs depending on the region of residence, when all the other conditions are kept the same. The result calls for further investigation on regionalspecific factors that could be modified with targeted policies in order to reduce the probability of foregone health care.
    Keywords: health, access to health care, regional inequality, multilevel logistic analysis
    JEL: C14 I14 R11 R12
    Date: 2016–04–14
  11. By: Filer, Randall K.; Hanousek, Jan; Lichard, Tomáš; Torosyan, Karine
    Abstract: We analyze the response of tax evasion to the introduction of a flat tax in several transition economies. Using a novel estimator based on household level data, we show that in most of the studied countries there was no discernible effect on the measured size of unreported income following flat tax reform. This may imply that decreases in marginal tax rate may frequently have been accompanied by parallel deterioration in attitudes towards public services and these countries' government in general as the only countries that show a response to the flat tax reform appear to be those where satisfaction with government services increased. Additionally, our results show a pro-cyclicality of the size of the shadow economy that is in line with previous research.
    Keywords: consumption-income gap; Flat tax; tax evasion; tax reform; underreporting
    JEL: C34 H26
    Date: 2016–04
  12. By: Rebérioux, Antoine; Roudaut, Gwenael
    Abstract: This paper examines whether women's situation within French boards has improved following the adoption of a board-level gender quota in 2011. To do so, we focus on the individual role of female directors as proxied by their fees. Our sample includes the listed companies belonging to the SBF120 index over the 2006-2014 period. We first show that the quota has succeeded in opening the doors of boardrooms to new, unseasoned female directors (not present on the director labor market before the regulation). These unseasoned female directors have distinctive characteristics (in terms of independence, experience, age, nationality, etc.) as compared to other board members. More importantly, we show that women, whether unseasoned or seasoned, experience an inner glass ceiling, with "positional" gender segregation within French boards. In particular, companies have failed so far to open the access of the most important board committees (namely monitoring committees: audit, compensation and nomination) to women. It results in within-firm gender fees gap of 5%. Overall, the quota has rather amplified this segregation process, with an increase in the average within-firm gender fees gap.
    Keywords: board; gender quota; segregation; director fees
    Date: 2016–04
  13. By: Dr. Thomas Drosdowski (GWS - Institute of Economic Structures Research); Britta Stöver (GWS - Institute of Economic Structures Research); Dr. Marc Ingo Wolter (GWS - Institute of Economic Structures Research)
    Abstract: The concept of participation can be used to evaluate and assess socioeconomic changes. Most analysis that apply participation as reference point for socioeconomic development concentrate on the individual level. We try to give evidence for reasons and explanations for accomplished or changing individual participation using socio-economic modelling on the meso and macro level. The proposed indicator measures the existing and changing conditions of participation. First results show that participation conditions have shown a general upward tendency since 2006. The projection results suggest that the improvement of participation conditions continues till the end of 2016. Afterwards, the indicator will gradually decline reaching the zero line in 2021, which is mainly caused by a slow-down of the initially very positive economic situation. However, participation conditions are not likely to decline to a level as low as in the mid-2000s.
    Keywords: participation, indicator set, modelling, capability, socio-economic development
    JEL: E17 E2 I31
    Date: 2016
  14. By: Rueda-Cantuche , José M. (JRC); Sousa, Nuno (DG Trade)
    Abstract: KEY FINDINGS • As trade agreements create the conditions for an increase in EU exports they also foster more and better job opportunities for European citizens. From 1995 to 2011 the number of jobs in the EU that were supported by exports of goods and services to the rest of the world increased by 67% to reach around 31 million. These represented 1 in 7 jobs across the 27 EU Member States (up from 1 in 11 jobs in 1995). They tended to be high-skilled and were on average better paid. • In order to remain competitive EU exporters increasingly rely also on foreign inputs. This means that the employment they support progressively spans beyond the EU's borders. In 2011 about 19 million jobs outside the EU depended on EU exports. This means that in 2011 a total of 50 million people around the world had jobs thanks to the EU exporting industries. • Exports are important for employment in all Member States. In 2011 only in Greece (7%), Portugal (8%) and Spain (9%) did the EU exports to the rest of the world support less than 10% of total employment. In Luxembourg they supported a third of all jobs; in Ireland 25%. • Increasingly the jobs supported by EU exports are related to services. Services exports are growing fast but that is not the whole story. The importance of services sectors as suppliers of inputs to the production of the goods for export (“mode 5 services” exports) also stands out from the data. In 2011, 40% of the employment supported by the exports of the primary and manufacturing sectors was in fact in services. • The sales of goods and services to the US market were responsible for 15% of the EU employment supported by EU exports; other key markets to sustaining export-related jobs in the EU were China (10%), Russia (6%) and Turkey (4%).
    Keywords: EU exports; income; employment
    JEL: F16
    Date: 2016–02–01
  15. By: Müller, Tobias; Boes, Stefan
    Abstract: This paper explores the effects of disability insurance (DI) benefits on the labor market decision of existing DI beneficiaries using a fuzzy regression discontinuity (RD) design. We identify the effect of DI benefits on the decision of working full-time, part-time or staying out of the labor force by exploiting a discontinuity in the DI benefit award rate above the age of 55. Overall, our results suggest that the Swiss DI system creates substantial lock-in effects which heavily influence the labor supply decision of existing beneficiaries: the benefit receipt increases the probability of working part-time by about 41%-points, decreases the probability of working full-time by about 42%-points but has little or no effects on the probability of staying out of the labor force for the average beneficiary. Therefore, DI benefits induce a shift in the labor supply of existing beneficiaries in the sense that they reduce their work intensity from working full-time to part-time which adds a possible explanation for the low DI outflow observed all across the OECD.
    Keywords: Disability insurance benefits; Labor market participation; Fuzzy regression discontinuity design Endogenous switching models; Maximum simulated likelihood
    JEL: C35 C36 J22
    Date: 2016
  16. By: Vincenzo Merella (University of Cagliari and BCAM); Daniel Santabárbara (Banco de España)
    Abstract: Using average import prices (unit values) as proxies for quality, a large body of the international trade literature finds both theoretical and empirical support for the positive relationship between importer income and quality of imports. Several authors, however, argue that the empirical evidence of the link between income and product quality might be spurious, since import prices could be affected by other factors than product quality. This paper takes into account this issue with a new theoretical and empirical approach. Building on Khandelwal’s (2010) discrete choice model approach, where quality is inferred by quantitative market shares as well as unit values, we develop a model that allows for willingness to pay for quality to vary with income. We empirically validate the theoretical relationship between importer income and product quality by using the Eurostat’s COMEXT database, which collects customs data reported by EU countries at 8-digit disaggregation. Our estimations support the positive link between consumer income and product quality, which is also robust across sectors.
    Keywords: quality, consumer income, import shares, unit values, nested logit demand.
    JEL: F12 F14 L15
    Date: 2016–04
  17. By: Maria Chiara Morandini (Centre d'Economie de la Sorbonne)
    Abstract: This paper presents an explanatory analysis of the political economy of recent labour market reforms recently implemented in Italy. Analysing preferences for a general reduction in employment protection through 2011-13 ITANES survey data, results are partially in line with the insider-outsider theory: self-employed, retired people, managers, craft business and shop owners are in favour of such institutional change as are retired that are not concerned by this kind of reform. Support from “outsiders”, unemployed and atypical workers did not strongly emerge. Ideologically, positive opinions are widespread among right-wing voters whilst people feeling chose to trade unions oppose it. Geographically, consensus is greather in the industrialised North-East of the country. Comparing our results with findings on voting behaviour in 2013, we advance the hypothesis that the current incumbents' political strategy is not as paradoxical as it seems. At odds with the idea of socialist parties defending “insiders” unionised workers and in line with a generalised detachment between the working class and socialist parties, both the main leftist and centrist parties in the ruling coalition are in fact gaining consensus among the social groups that are the most favourable to labour market flexibilisation, making these policy consistent with an attempt to please these constituencies
    Keywords: labour market reforms; public preferences; survey analysis; italian capitalism
    JEL: P16 J08 D72
    Date: 2016–03
  18. By: Görlitz, Katja; Tamm, Marcus
    Abstract: To increase employee participation in training activities, the German government introduced a large-scale training voucher program in 2008 that reduces training fees by half. Based on a randomized field experiment, this paper analyzes whether providing information about the existence and the conditions of the training voucher had an effect on actual training activities of employees. Because the voucher was newly introduced, only one-fourth of the eligible employees knew the voucher exists at the time of the experiment. The information intervention informed a random sample of eligible employees by telephone about the program details and conditions. The results indicate that the information significantly increased treated individuals´ knowledge of the program but had no effect on voucher take-up or participation in training activities. Additional descriptive analyses suggest that the reasons for these zero effects are that the demand for self-financed training is low and that liquidity constraints do not discourage many employees from training participation.
    Keywords: training participation,voucher,financial aid,randomized field experiment,information treatment
    JEL: I22 D83 H52
    Date: 2016

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