nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2016‒06‒09
nineteen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Poverty Risk among Older Immigrants in a Scandinavian Welfare State By Jakobsen, Vibeke; Pedersen, Peder J.
  2. Measuring Dependency Ratios using National Transfer Accounts By Barslund, Mikkel; von Werder, Marten
  3. Fiscal sustainability and demographic change: a micro approach for 27 EU countries By Dolls, Mathias; Doorley, Karina; Paulus, Alari; Schneider, Hilmar; Siegloch, Sebastian; Sommer, Eric
  4. Do tax incentives for research increase firm innovation? An RD design for R&D By Antoine Dechezlepretre; Elias Einiö; Ralf Martin; Kieu-Trang Nguyen; John Van Reenen
  5. Distributional and Welfare Impacts of Renewable Subsidies in Italy By Roberta Distante; Elena Verdolini; Massimo Tavoni
  6. Scoping the Sharing Economy: Origins, Definitions, Impact and Regulatory Issues By Cristiano Codagnone; Bertin Martens
  7. Does Learning Beget Learning Throughout Adulthood? Evidence from Employees' Training Participation By Kramer, Anica; Tamm, Marcus
  8. Gender Differences in the Consequences of Divorce: A Multiple-Outcome Comparison of Former Spouses By Thomas Leopold
  9. Access to Health Care and the Out-of-Pocket Burden of the European Elderly By Veronika Krutilova
  10. Predictive Bookmaker Consensus Model for the UEFA Euro 2016 By Achim Zeileis; Christoph Leitner; Kurt Hornik
  11. Cutting Fertility? The Effect of Cesarean Deliveries on Subsequent Fertility and Maternal Labor Supply By Martin Halla; Harald Mayr; Gerald J. Pruckner; Pilar García-Gómez
  12. The Fickle Fringe and the Stable Core: Exporters' Product Mix Across Markets By Lionel Fontagné; Angelo Secchi; Chiara Tomasi
  13. Tie creation versus tie persistence in cluster knowledge networks By Sándor Juhász; Balázs Lengyel
  14. Introduction of a national minimum wage reduced depressive symptoms in low-wage workers: a quasi-natural experiment in the UK By Aaron Reeves; Martin McKee; Johan Mackenbach; Margaret Whitehead; David Stuckler
  15. ETLAnow: A Model for Forecasting with Big Data – Forecasting Unemployment with Google Searches in Europe By Tuhkuri, Joonas
  16. You're banned! the effect of sanctions on German cross-border financial flows By Besedeš, Tibor; Goldbach, Stefan; Nitsch, Volker
  17. Information Communication Technologies and Firm Performance: Evidence for UK Firms By Timothy De Stefano; Richard Kneller; Jonathan Timmis
  18. Job Polarization, Job Tasks and the Role of Firms By Heyman, Fredrik
  19. Zoon politikon or homo oeconomicus ? How do people vote? By Lionel Page; Paul Antoine-Chevalier

  1. By: Jakobsen, Vibeke (Danish National Centre for Social Research (SFI)); Pedersen, Peder J. (Aarhus University)
    Abstract: Focus in the paper is on poverty among immigrants and refugees 50 years and older coming to Denmark from countries outside the OECD, with main emphasis on immigrants coming as guest workers before 1974, as refugees and as family members and marriage partners – tied movers – relative to individuals coming as guest workers and as refugees. A major share of people in this group were fairly young at arrival to Denmark. Those arriving back in the 1970s and 1980s are now either close to or above the age of 60, with conditional eligibility to a labor market related early retirement program or the age 65 where you become eligible for State pension. Poverty rates by national background are described using alternative household concepts. Next, a number of background factors of relevance for poverty are summarized. We focus on age, gender, marital status, occupational status at age 55 and duration of residence. We find major differences between migrant groups and between migrants and natives regarding how income is composed at different ages on market income, pensions and benefits. Next, we present a number of regressions aiming at explaining differences in the poverty risk with differences in a number of background factors.
    Keywords: immigrants, old age poverty, family structure
    JEL: F22 H55 I32 J14
    Date: 2016–05
  2. By: Barslund, Mikkel; von Werder, Marten
    Abstract: Future older generations will have increasingly better health and are likely to work longer. It is now widely recognised that the socio-economic changes that ageing societies will bring about are poorly captured by the traditional demographic dependency ratios (DDRs), such as the old-age dependency ratio that relates the number of people aged 65+ to the working-age population. In this paper the authors combine population projections and National Transfer Accounts (NTA) data for seven European countries, project the quantitative impact of ageing on public finances until 2040 and compare it to projected DDRs. They then simulate the public finance impact of changes in three key indicators related to the policy responses to population ageing: net immigration, healthy ageing and longer working lives, by linking age-specific public health transfers and labour market participation rates to changes in mortality. Four main findings emerge: first, the simple old-age dependency ratio overestimates the future public finance challenges faced by the countries studied – significantly so for some countries, namely Austria, Finland and Hungary. Second, healthy ageing has a modest effect (on public finances) except in the case of Sweden, where it is substantial. Third, the long-run effect of immigration is well captured by the simple DDR measure if immigrants are similar to the native population. Finally, the authors find that increasing the length of working lives is key to addressing the public finance challenge of ageing; extending working lives by three to four years over the next 25 years – equivalent to the increase in life expectancy – severely limits the impact of ageing on public transfers.
    Date: 2016–04
  3. By: Dolls, Mathias; Doorley, Karina; Paulus, Alari; Schneider, Hilmar; Siegloch, Sebastian; Sommer, Eric
    Abstract: The effect of demographic change on the labor force and on fiscal revenues is topical in light of potential pension shortfalls. This paper evaluates the effect of demographic changes between 2010 and 2030 on labor force participation and government budgets in the EU-27. Our analysis involves the incorporation of population projections, and an explicit modeling of the supply and demand side of the labor market. Our approach overcomes a key shortcoming of most existing studies that focus only on labor supply when assessing the effects of policy reforms. Ignoring wage reactions greatly understates the increase in fiscal revenues, suggesting that fiscal strain from demographic change might be less severe than currently perceived. Finally, as a policy response to demographic change and worsening fiscal budgets, we simulate the increase in the statutory retirement age. Our policy simulations confirm that raising the statutory retirement age can balance fiscal budgets in the long run.
    Date: 2016–01–06
  4. By: Antoine Dechezlepretre; 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: J24 M0
    Date: 2016–03
  5. By: Roberta Distante (Maersk Line); Elena Verdolini (Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC) and Fondazione Eni Enrico Mattei); Massimo Tavoni (Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC), Fondazione Eni Enrico Mattei and Politecnico di Milano)
    Abstract: We empirically assess the distributional impacts and welfare effects of policies to incentivize renewable electricity production for the case of Italy. We use data from the Household Budget Survey between 2000 and 2010 to estimate a demand system in which energy goods' shares of expenditure are modelled using different empirical approaches. We show that the general Exact Affine Stone Index (EASI) demand system provides more robust estimates of price elasticities of each composite good than the commonly used Almost Ideal Demand System (AIDS). The estimated coefficients are used to perform a welfare analysis of the Italian renewable electricity production incentive policy. We show that different empirical approaches give rise to significantly different estimates of price elasticities and that methodological choices are the reasons for the very high elasticities of substitutions estimated using similar data by previous contributions. We find no evidence of regressivity of the incidence of the Italian renewable incentive scheme in the period under consideration. The renewable subsidies act as a middle-class tax, with the higher welfare losses experienced by households in the second to fourth quintiles of the expenditure distribution.
    Keywords: Energy taxes, Consumer Demand System, Welfare Effects, Equity
    JEL: D12 H22 Q48
    Date: 2016–05
  6. By: Cristiano Codagnone (European Commission – JRC - IPTS); Bertin Martens (European Commission – JRC - IPTS)
    Abstract: This report selectively draws on the systematic review of a large set of data sources, which is presented elsewhere, and comprises 430 secondary sources (Codagnone, 2016). The report also provides a critical overview of key analytical, empirical, and normative dimensions of the ‘sharing economy’. It reviews both the rhetorical and controversial debates currently surrounding the topics and the available empirical evidence in order to sharpen our understanding of relevant policy and regulatory issues. The broad umbrella term 'sharing economy' is critically assessed and a typology developed that identifies the commercial 'peer to peer' sharing economy as the main focus of both controversies and policy-relevant issues. Empirical evidence of the benefits and costs of the sharing economy and its implications for sustainability and employment is very limited and inconclusive, particularly as regards the European landscape. This critical review, hence, shows that, as yet, there are no unambiguous answers to some of the fundamental questions about the ‘sharing economy’. The available research is too limited and patchy to give us a comprehensive and coherent picture. This report’s main contribution is to clear some of the conceptual and empirical fog around the ‘sharing economy’ and to identify where possible answers might be found in the future. It is suggested that the definition of sharing platforms should focus on P2P activities, as most of the policy concerns are found there. These include regulatory and consumer protection issues resulting from the informal production of services, potentially unfair competition with formal B2C service providers, and questions related to dominance and market power of P2P platform operators as commercial businesses.
    Keywords: multi-sided markets, collaborative economy, sharing economy, peer-to-peer markets
    JEL: F15
    Date: 2016–05
  7. By: Kramer, Anica (RWI); Tamm, Marcus (RWI)
    Abstract: Individuals with more years of education generally acquire more training later on in life. Such a relationship may be due to skills learned in early periods increasing returns to educational investments in later periods. This paper addresses the question whether the complementarity between education and training is causal. The identification is based on exogenous variation in years of education due to a reform of the schooling system and the buildup of universities. Results confirm that education has a significant impact on training participation during working life.
    Keywords: training, lifelong learning, returns to schooling
    JEL: I21 I24 I26 J24
    Date: 2016–05
  8. By: Thomas Leopold
    Abstract: This study examined gender differences in the consequences of divorce for multiple measures of psychological, economic, and domestic well-being. I used household panel data from the German SOEP, retaining the link between initially married couples (N = 755) to compare both spouses over a period of up to four years before and after divorce. Findings showed that men were more vulnerable to short-term declines in subjective measures of well-being, whereas women experienced longer-term disadvantages in objective economic status. Taken together, these results suggest that women’s disproportionate income strain is chronic, whereas men’s disproportionate psychological and domestic strain is not.
    Date: 2016
  9. By: Veronika Krutilova (Research Centre, Faculty of Business and Economics, Mendel University in Brno, Zemedelska 1, 61300 Brno)
    Abstract: Provision of access to health care is a desirable feature of health care systems. Access to health care is caused to be restricted whether out-of-pocket burden is too high. The paper focuses on the European elderly with restricted access to health care and evaluates their health care burden and determines factors affecting the burden. The data from the Survey of Health, Ageing and Retirement in Europe from the fifth wave is used. The methods of descriptive and multivariate analysis are applied. A linear regression model with a bootstrapped method is used. The results showed that inequalities in access to health care exist. Unmet need is a critical issue in Estonia and Italy. The highest burden is found in Estonia, Italy and Belgium. Chronic diseases and limitation in activities significantly contributes to health care burden. Expenditure on drugs, outpatient and nursing care have a significant effect on the burden. The effect is found to be insignificant for inpatient care. Income and the employment status is a preventing factor.
    Keywords: elderly, unmet need, health care, out-of-pocket payments, access to health care, health care burden, SHARE.
    JEL: I14 I18 J14
    Date: 2016–05
  10. By: Achim Zeileis; Christoph Leitner; Kurt Hornik
    Abstract: From 10 June to 10 July 2016 the best European football teams will meet in France to determine the European Champion in the UEFA European Championship 2016 tournament (Euro 2016 for short). For the first time 24 teams compete, expanding the format from 16 teams as in the previous five Euro tournaments. For forecasting the winning probability of each team a predictive model based on bookmaker odds from 19 online bookmakers is employed. The favorite is the host France with a forecasted winning probability of 21.5%, followed by the current World Champion Germany with a winning probability of 20.1%. The defending European Champion Spain follows after some gap with 13.7% and all remaining teams are predicted to have lower chances with England (9.2%) and Belgium (7.7%) being the "best of the rest". Furthermore, by complementing the bookmaker consensus results with simulations of the whole tournament, predicted pairwise probabilities for each possible game at the Euro 2016 are obtained along with "survival" probabilities for each team proceeding to the different stages of the tournament. For example, it can be determined that it is much more likely that top favorites France and Germany meet in the semifinal (7.8%) rather than in the final at the Stade de France (4.2%) - which would be a re-match of the friendly game that was played on 13 November 2015 during the terrorist attacks in Paris and that France won 2-0. Hence it is maybe better that the tournament draw favors a match in the semifinal at Marseille (with an almost even winning probability of 50.5% for France). The most likely final is then that either of the two teams plays against the defending champion Spain with a probability of 5.7% for France vs. Spain and 5.4% for Germany vs. Spain, respectively. All forecasts are the result of an aggregation of quoted winning odds for each team in the Euro 2016: These are first adjusted for profit margins ("overrounds"), averaged on the log-odds scale, and then transformed back to winning probabilities. Moreover, team abilities (or strengths) are approximated by an "inverse" procedure of tournament simulations, yielding estimates of probabilities for all possible pairwise matches at all stages of the tournament. This technique correctly predicted the winner of the FIFA 2010 and Euro 2012 tournaments while missing the winner but correctly predicting the final for the Euro 2008 and three out of four semifinalists at the FIFA 2014 World Cup (Leitner, Zeileis, and Hornik 2008, 2010a,b; Zeileis, Leitner, and Hornik 2012, 2014).
    Keywords: consensus, agreement, bookmakers odds, tournament, UEFA European Championship 2016
    JEL: C53 C40 D84
    Date: 2016–05
  11. By: Martin Halla; Harald Mayr; Gerald J. Pruckner; Pilar García-Gómez
    Abstract: The incidence of Cesarean deliveries (CDs) has been on the rise. The procedure's cost and benefits are discussed controversially; in particular, since non-medically indicated cases seem widespread. We study the effect of CDs on subsequent fertility and maternal labor supply. Identification is achieved by exploiting variation in the supply-side's incentives to induce non-medically indicated CDs across weekdays. On weekends and public holidays obstetricians' are less likely to induce CDs (due tighter capacity constraints in hospital). On Fridays and other days preceding a holiday, they face an increased incentive to induce CDs (due to their demand for leisure on non-working days). We use high-quality administrative data from Austria. Women giving birth on different weekdays are pre-treatment observationally identical. Our instrumental variable estimates show that a non-planned CD at parity one decreases life cycle fertility by almost 17 percent. This reduction in fertility translates into a temporary increase in maternal employment.
    Keywords: Caesarean delivery, Caesarean section, fertility, female labor supplyLength: 46 pages
    JEL: I12 J13 J11 J22 J21
    Date: 2016–05
  12. By: Lionel Fontagné (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Angelo Secchi (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Chiara Tomasi (Università di Trento - Dipartimento di Economia e Management)
    Abstract: Multi-product exporters choose their product mix focusing on their best-performing products. Although their product mix varies across countries (the fickle fringe), the interdependence in demand or production technology making vectors of products systematically co-exported leads to commonalities in this mix across destinations (the stable core). In order to uncover the determinants of the fickle and stable parts of firm export product mix, we use a cross section of firm-product-destination level French and Italian data, taking explicitly into account the choice of not exporting a product to a destination. Using dissimilarity measures instead of rank correlations, we observe a great deal of variability among the product-mixes a firm exports to different destinations. We show that market size, but also the market positioning of a firm and market structure explain part of this observed variability. At the same time, together with this fickle part, we highlight the existence of a stable component among the diverse product-mixes exported. The probability of exporting this core set of products increases with the size of the destination market and with the ability to match demand, but is inversely related to market concentration.
    Keywords: multi-product, multi-country firms, product vectors, demand and concentration
    Date: 2016–05–04
  13. By: Sándor Juhász; Balázs Lengyel
    Abstract: Knowledge networks in industrial clusters are frequently analyzed but we know very little about creation and persistence of ties in these networks. We argue that tie creation primarily depends on opportunities and thus the position ofactors in the network and in space; while tie persistence is influenced by the value of the tie. Accordingly, results from a Hungarian printing and paper product cluster suggest that reciprocity, triadic closure, and geographical proximity between firms increase the probability of tie creation. Tie persistence is positively affected by technological proximity between firms and the number of their extra-regional ties.
    Keywords: knowledge networks, clusters, network dynamics, stochastic actor-oriented models
    JEL: D85 L14 R11 O31
    Date: 2016–05
  14. By: Aaron Reeves; Martin McKee; Johan Mackenbach; Margaret Whitehead; David Stuckler
    Abstract: Does increasing incomes improve health? In 1999, the UK government implemented minimum wage legislation, increasing hourly wages to at least £3.60. This policy experiment created intervention and control groups that can be used to assess the effects of increasing wages on health. Longitudinal data were taken from the British Household Panel Survey. We compared the health effects of higher wages on recipients of the minimum wage with otherwise similar persons who were likely unaffected because (1) their wages were between 100 and 110% of the eligibility threshold or (2) their firms did not increase wages to meet the threshold. We assessed the probability of mental ill health using the 12-item General Health Questionnaire. We also assessed changes in smoking, blood pressure, as well as hearing ability (control condition). The intervention group, whose wages rose above the minimum wage, experienced lower probability of mental ill health compared with both control group 1 and control group 2. This improvement represents 0.37 of a standard deviation, comparable with the effect of antidepressants (0.39 of a standard deviation) on depressive symptoms. The intervention group experienced no change in blood pressure, hearing ability, or smoking. Increasing wages significantly improves mental health by reducing financial strain in low-wage workers. © 2016 The Authors. Health Economics published by John Wiley & Sons Ltd.
    Keywords: minimum wage; natural experiments; health policy; GHQ caseness
    JEL: R14 J01
    Date: 2016–04–04
  15. By: Tuhkuri, Joonas
    Abstract: In this report we document the ETLAnow project. ETLAnow is a model for forecasting with big data. At the moment, it predicts the unemployment rate in the EU-28 countries using Google search data. This document is subject to updates as the ETLAnow project advances.
    Keywords: Big Data, Google, Internet, Nowcasting, Forecasting, Unemployment, Europe
    JEL: C22 C53 C55 C82 E27
    Date: 2016–05–25
  16. By: Besedeš, Tibor; Goldbach, Stefan; Nitsch, Volker
    Abstract: This paper examines the effect of financial sanctions on cross-border capital flows. While sanctions can be expected to hinder international transactions, thereby putting political and economic pressure on a target country, we study the patterns of adjustment in bilateral financial relationships after the imposition of sanctions along various dimensions. Our analysis is based on highly disaggregated, monthly data from the German balance of payments statistics for the period from 2005 through 2014. During this time, Germany imposed financial sanctions on 20 countries; two of these sanctions have been lifted. Applying a differences-in-differences approach, we find two key results. First, financial sanctions have a strong and immediate negative effect on cross-border financial flows, with flows reduced in either direction. Second, sanctions imposed by the European Union alone, and therefore only enforced by their member countries instead of the United Nations, are possibly partly evaded.
    Keywords: sanction,restriction,cross-border transaction
    JEL: F20 F36 F38
    Date: 2016
  17. By: Timothy De Stefano; Richard Kneller; Jonathan Timmis
    Abstract: A recent literature has begun to recognise that ICT is heterogeneous and the effects from improving communication are distinct from those that improve the storage and processing of information. In this paper we use the arrival of a new communication technology, ADSL broadband internet, to study the effects of communication ICT on firm performance. To do so free from endogeneity bias, we construct instruments using the infrastructure underlying broadband internet - the pre-existing telephone network. We show that, after placing various restrictions on the sample, instruments based on the timing of ADSL broadband enablement and the cable distance to the local telephone exchange satisfy the conditions for instrument relevancy and validity for some types of ICT. We find in turn, that communication-ICT causally affects firm size (captured by either sales or employment) but not productivity.
    Keywords: ICT, firms, instrumental variable JEL codes: D22, D24, O3
    Date: 2016–04
  18. By: Heyman, Fredrik (Research Institute of Industrial Economics (IFN))
    Abstract: A large and growing empirical literature has presented evidence of job polarization, i.e. the simultaneous growth of high-wage jobs and low-wage jobs at the expense of middle-wage jobs. Thus far, the focus has been on employment in different occupations, without taking into account the role of firms in the labor demand process. The purpose of this paper is to bridge this knowledge gap by explicitly analyzing how firms influence the current process of job polarization. Using detailed Swedish matched employer-employee data for the 1997–2013 period, we present novel evidence on within-firm job polarization. Applying a decomposition framework, we also find that both within-firm and between-firm components are important for overall job polarization. We also show how the within-firm pattern is related to explanations for job polarization that have been proposed, i.e. the influence of routine-based technological change and the offshorability and automation of jobs. The results indicate that routineness of jobs seems to be the most important factor behind the observed pattern of within-firm job polarization.
    Keywords: Keywords: Job polarization; Job tasks; Routinization; Automation; Matched employer-employee data
    JEL: J24 J31 O33
    Date: 2016–05–16
  19. By: Lionel Page; Paul Antoine-Chevalier
    Abstract: Why people vote and how they decide to allocate their vote is still a challenging question for economic analysis. We investigate the extent to which voting decisions are determined by political values, economic interest or even simply candidates' individual characteristics. To do so, we use a large scale online survey recording social preferences and political choices of voters for candidates in the 2007 French Presidential election. We find that political values matter but that the effect of differences in political position is much smaller than the effect of the voters' perceived economic interest. We also find that the individual characteristics of the candidates play a significant role.
    Keywords: social preferences, voting behavior, online experiment
    JEL: A13 D72
    Date: 2016–05–30

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