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on Microeconomic European Issues |
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Issue of 2016‒07‒16
twenty papers chosen by Giuseppe Marotta Università degli Studi di Modena e Reggio Emilia |
| By: | Joan Costa-Font (Department of Social Policy, London School of Economics and Political Science (LSE), UK); Gilberto Turati (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy) |
| Abstract: | Does regional decentralization threaten the commitment to regional equality in government outcomes? We attempt to shed light on this question by drawing on unique evidence from the largest European unitary states to have engaged in countrywide health system decentralization: Italy and Spain. We estimate, decompose, and run counterfactual analysis of regional inequality in government output (health expenditure per capita) and outcome (health system satisfaction) during expansion of health care decentralization in both countries. We find no evidence of increase in regional inequalities in outcomes and outputs in the examined period. Inequalities are accounted for by differences in health system design. |
| Keywords: | Health Care Decentralization, Regional Inequality, Health Care, Oaxaca Decomposition |
| JEL: | H7 I18 I3 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:tur:wpapnw:037&r=eur |
| By: | Fiorillo, Damiano; Nappo, Nunzia |
| Abstract: | In this paper, we study the effect of formal and informal volunteering on self-perceived health across 9 European countries after controlling, amongst other things, for socio-economic characteristics, social and cultural participation. We employ the 2006 wave of EU-SILC for estimating recursive trivariate probit models with instrumental variables. Our results show that although formal and informal volunteering are correlated with each other, they have a different impact on health. Formal volunteering has a significant positive effect on self-perceived health in the Netherlands, but none in other countries. By contrast, informal volunteering has a significant negative effect on self-perceived health in Austria, Finland, France, the Netherlands, Spain, and Italy. |
| Keywords: | Self-perceived health, formal and informal volunteering, social and cultural participation, recursive trivariate probit model, European countries |
| JEL: | C3 D64 I1 P5 Z10 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72313&r=eur |
| By: | De Agostini, Paola; Paulus, Alari; Tasseva, Iva Valentinova |
| Abstract: | We apply microsimulation techniques to estimate the first-order effects of tax-benefit policy changes since the beggining of the financial and economic crisis in 2008. Using the EU tax-benefit model EUROMOD in combination with the EU-SILC 2012 micro-data, we provide comparative estimates for EU-27 in 2008-2014 as well as for 21 EU member states in 2014-2015. The analysis covers direct tax and cash benefit changes and evaluates their effects on the income distribution, poverty and inequality levels, holding population characteristics and market incomes constant, thereby, isolating direct policy effects from other factors shaping the income distribution. Two different indexation approaches are used to adjust benchmark policies over time – prices and market incomes – and explore the sensitivity of results. We find substantial cross-national variation throughout the whole period. At the EU level, policy changes in the first half of the period (2008-2011) were poverty-reducing and had a positive effect on mean incomes, while the effects were the opposite in the later period (2011-2014); and inequality-reducing in both periods. |
| Date: | 2016–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:ese:emodwp:em6-16&r=eur |
| By: | Thais Nuñez-Rocha (Centre d'Economie de la Sorbonne) |
| Abstract: | A new branch of the literature on international trade and environment suggests that developing countries are becoming waste havens for their developed counterparts, due to environmental regulation differences with trade partners. This paper analyses the effectiveness of the Basel Convention formalisation in the European Union (EU-WSR), by studying the impact of the EU-WSR on hazardous waste trade, first on the less developed EU countries, and then on regions of developing countries. It does so, by means of a gravity model framework applied to a panel data-set. Results show that there is no enough evidence to call for waste haven effect in the less developed EU countries, with both aggregated and disaggregated measures of environmental regulations, but increasing institution efficiency differences could lead to increasing imports of waste. In the regional analysis, there is no evidence of the efficacy of the EU-WSR. These findings provide insights into the efficacy of European engagements on waste trade, indicating that there is no simple answer as to its effect |
| Keywords: | Hazardous waste; waste haven effect; international trade; international environmental agreements; difference-in-differences; log-linear and ppml gravity model |
| JEL: | F13 F18 Q53 Q56 Q58 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:16047&r=eur |
| By: | Cinzia Di Novi; Anna Marenzi; Dino Rizzi |
| Abstract: | In several countries, personal income tax permits tax credits for out-of-pocket healthcare expenditures. Tax credits produce two effects on taxpayers’ disposable income. On the one hand, they benefit taxpayers at all income levels by reducing their net tax liability; on the other hand, they modify the price of out-of-pocket expenditure and, to the extent that consumer demand is price elastic, they may influence the amount of eligible healthcare expenditure for which taxpayers may claim a credit. These two effects influence, in turn, income redistribution and may affect taxpayers’ health status and therefore income-related inequality in health. Redistributive consequences of tax credits have been widely investigated; however, little is known about the ability of tax credits to ensure a more equitable distribution of healthcare expenditure and, consequently, to alleviate health inequality. In this paper, we study the potential effects that tax credits for health expenses may have on health-related inequality with reference to the Italian institutional setting. The analysis is performed using a tax-benefit microsimulation model which reproduces the personal income tax and incorporates taxpayers’ behavioural responses to changes in tax credit rate. Our results suggest that a healthcare tax credit design that does not rely on income, like the one implemented in the Italian personal income tax, is not effective in improving equity in health and tends to favour the richest part of the population. |
| Keywords: | personal income tax, health-related tax credit, health inequality |
| JEL: | I10 I14 H24 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2016:16&r=eur |
| By: | Bernd Hayo (University of Marburg); Florian Neumeier (University of Marburg) |
| Abstract: | In this paper, we utilise data from a German population survey to test the validity of the Ricardian equivalence theorem (RET). In 2013, 2,000 representatively chosen people were asked whether they have altered their consumption and saving behaviour in response to the significant increase in public debt that occurred between 2008 and 2012. Our findings suggest that, in general, RET does not hold. Only 7% of our respondents state that they consume a smaller proportion of their income and save a larger proportion in response to public debt accumulation. Moreover, using multinominal logit regressions, we find that individuals’ consumption responses are significantly related to their economic situation, time preferences, education, and age. |
| Keywords: | Ricardian equivalence; public debt; private consumption; private saving; survey; Germany |
| JEL: | D12 D91 E21 H31 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201611&r=eur |
| By: | El-Sahli, Zouheir (Department of Economics, Lund University); Gullstrand, Joakim (Department of Economics, Lund University); Olofsdotter, Karin (Department of Economics, Lund University) |
| Abstract: | Using Swedish firm-level data on all firms and their affiliates abroad, we investigate what observable firm and country characteristics affect the size of affiliate firms in a particular destination. We employ the richness of the data to investigate the importance of destination country factors in explaining firm outward FDI activities and distinguish between the factors that affect such activities in manufacturing versus services firms as well as vertical versus horizontal investments. Our results lend support to existing theories of multinational activity, including observable differences between vertical and horizontal manufacturing firms, as well as between services and manufacturing FDI firms. |
| Keywords: | outward FDI; globalization; FDI destination; heterogeneous firms |
| JEL: | F10 F20 |
| Date: | 2016–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2016_016&r=eur |
| By: | Paolo Brunori (Università degli Studi di Bari "Aldo Moro") |
| Abstract: | Does the way scholars measure inequality of opportunity correspond to how people perceive it? What other factors influence individual perception of this phenomenon? To answer these questions we must first clarify how scholars define and measure inequality of opportunity. We discuss the possible mechanisms linking objective measures to subjective perception of the phenomenon, then propose a measure of perceived inequality of opportunity, and finally test our hypothesis by merging data coming from two sources: the European Union Statistics on Income and Living Conditions (2011) and the International Social Survey Programme (2009). We suggest that the prevailing perception of the degree of unequal opportunity in a large sample of respondents is only weakly correlated with its objective measure. We estimate a multilevel model considering both individual and country level controls to explain individual perception of unequal opportunity. Our estimates suggest that the two most adopted measures of inequality of opportunity have not clear role in explaining its perception. Conversely, other country level variables and personal experiences of intergenerational social mobility are important determinants of how inequality of opportunity is perceived. |
| Keywords: | Inequality of opportunity, inequality perception, intergenerational mobility, attribution theory |
| JEL: | D63 A14 D31 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:bai:series:series_wp_04-2016&r=eur |
| By: | Riccardo Crescenzi; Kerwin Datu; Simona Iammarino |
| Abstract: | Although one of the core questions in the study of multinational enterprises (MNEs) has been typically that of where their different operations take place, the spatial dimension of MNE investments and functions is still relatively underexplored in the literature. This paper investigates the networks formed by Foreign Direct Investment (FDI) by applying network analysis techniques drawn from the world city network literature. Data is extracted from the fDi Markets database to describe and analyse the geography of FDI flows between a set of 3,500 cities and towns within the European Union (EU) Member States and their neighbourhood. The paper identifies hierarchical patterns of relations between different types of locations, and gains a finer-scaled appreciation of sectoral and functional specialisations of different regions within Europe. |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1616&r=eur |
| By: | Tyrefors Hinnerich, Björn (Department of Economics); Vlachos, Jonas (Department of Economics, Stockholm University) |
| Abstract: | Sweden has a school voucher system with universal coverage and full acceptance of corporate providers. Using a value added approach, we find that students at upper-secondary voucher schools on average score 0.06 standard deviations lower on externally graded standardized tests in first year core courses. The negative impact is larger among lower achieving students (but not among immigrant students), the same students who are most prone to attend voucher schools. For high achieving students, the voucher school impact is around zero. Comparing internal and external evaluations of the same standardized tests, we find that voucher schools are 0.14 standard deviations more generous than municipal schools in their internal test grading. The greater leniency in test grading is relatively uniform across different groups, but more pronounced among students at academic than vocational programs. The findings are consistent with voucher schools responding more to differences in educational preferences than municipal schools. |
| Keywords: | Voucher schools; Student achievement; Grading standards |
| JEL: | H40 I21 I22 |
| Date: | 2016–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1127&r=eur |
| By: | Costa-Font, J.; Sato, A. |
| Abstract: | Culture is an under-studied determinant of health production and seldom measured. This paper empirically examines the persistence and association of health capital assessments of first and second-generation migrants with that of their ancestral countries. We draw on European data from 30 countries, including over 90 countries of birth and control for timing of migration, selective migration and other controls including citizenship and cultural proxies. Our results show robust evidence of cultural persistence of health assessments. Culture persists, rather than fades, and further, appears to strengthen over generations. We estimate a one standard deviation increase in ancestral health assessment increases first generation migrant’s health assessments by an average of 16%, and that of second generation migrants between 11% and 25%. Estimates are heterogeneous by gender (larger for males) and lineage (larger for paternal lineage). |
| Keywords: | assimilation; health; health assessments; cultural persistence; first generation migrant; second generation migrant; |
| JEL: | I18 H23 Z13 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:16/09&r=eur |
| By: | Gaeta, Giuseppe Lucio (University of Naples L’Orientale); Lavadera, Giuseppe Lubrano (University of Salerno); Pastore, Francesco (University of Naples II) |
| Abstract: | This paper contributes to the literature on overeducation by empirically investigating its effects on wages among Ph.D. holders. We analyze data collected in 2009 by the Italian National Institute of Statistics (ISTAT) through a large cross-sectional survey of Ph.D. recipients that allowed us observing their work placement few years after the completion of their studies. We extend previous contributions by providing an analysis based on the identification of genuine overeducation as resulting from the interaction of respondents' assessments that concern the usefulness of their Ph.D. title in order to get and to carry out their current job. The potential endogeneity of self-reported genuine overeducation is corrected by using an instrumental variables approach where the provincial incidence of overeducation among those that share the same educational profile of respondents is used as instrument. Our results suggest that genuine over-education is particularly detrimental for individual wages. It leads to a wage penalty of about between 23% and 25%, more than twice bigger than average, a sizeable gap for the country's compressed wage structure. These results allow us to better understanding the effects of job-education mismatch and provide some useful insights into the evaluation of the career outcomes of doctoral graduates. |
| Keywords: | job-education mismatch, genuine overeducation, overskilling, job satisfaction, wages, Ph.D. holders |
| JEL: | C26 I23 I26 J13 J24 J28 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10051&r=eur |
| By: | Di Tommaso, Maria Laura (University of Turin); Mendolia, Silvia (University of Wollongong); Contini, Dalit (University of Turin) |
| Abstract: | Gender differences in the STEM (Science Technology Engineering and Mathematics) disciplines are widespread in most OECD countries and mathematics is the only subject where typically girls tend to underperform with respect to boys. This paper describes the gender gap in math test scores in Italy, which is one of the countries displaying the largest differential between boys and girls according to the Programme for International Student Assessment (PISA), we use data from an Italian national level learning assessment, involving children in selected grades from second to tenth. We first analyse the magnitude of the gender gap using OLS regression and school fixed-effect models for each grade separately. Our results show that girls systematically underperform boys, even after controlling for an array of individual and family background characteristics, and that the average gap increases with children's age. We then study the gender gap throughout the test scores distribution, using quantile regression and metric-free methods, and find that the differential is small at the lowest percentiles of the grade distribution, but large among top performing children. Finally, we estimate dynamic models relating math performance at two consecutive assessments. Lacking longitudinal data, we use a pseudo panel technique and find that girls' average test scores are consistently lower than those of boys at all school years, even conditional on previous scores. |
| Keywords: | math gender gap, education, school achievement, inequalities, cross-sectional data, pseudo panel estimation, quantile regression |
| JEL: | J16 I24 C31 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10053&r=eur |
| By: | Kate Bayliss (School of Oriental and African Studies) |
| Abstract: | This is a Foresight paper prepared for the EU-funded research project, Financialisation, Economy, Society and Sustainable Development, FESSUD. Drawing on lessons from the provision of water in England, the paper anticipates future developments in the provision of health, exploring the increasing role of finance and financial cultures. This is captured in the term “financialisation” which has recently emerged in academic literature to account for the rapid expansion of financial assets and financial activity in the economy, and the expanding reach of the financial sector into traditionally non-financial areas of economic and social life. The paper starts with an overview of the context in which financialisation has evolved within, and impacted upon, the National Health Service (NHS). Two contextual elements stand out. First, since the 1980s, the NHS has been subject to incremental reforms to introduce market-mimetic structures. These reforms accelerated with the introduction of the 2012 Health and Social Care Act (HSCA). This legislation has only just begun to have an impact at the time of writing (December 2015), but the extent of private sector involvement in health provision is likely to increase rapidly as a result of the Act. The second significant aspect of the context for financialisation is the growing financial deficit in the NHS which creates an important backdrop to the HSCA reforms. Irrespective of the proximate as well as the deeper reasons for this, it provides for a narrative of “unaffordability” and “inefficiency”, itself taken as a rationale both for greater private sector intervention and as justification for NHS trusts to increase revenue from private sources. However, the paper shows that this narrative thread does not fit with global data which indicate that the NHS is broadly in line with OECD averages for spending on GDP, and health outcomes. The paper considers four mechanisms by which financialisation is affecting the health service in England. First, financing in the sector is allocated on the basis of internal “markets” which mimic financialised structures (regardless of ownership or provision). An institutional division between the “purchaser” and “provider” of health services within the NHS has been refined over the years since it was first introduced in the early 1990s. Health providers are remunerated via a complex “pricing” system known as Payment by Results (PBR) so that transactions between state agencies are delineated in financial terms. Second, financial processes have become embedded in the sector via the process of tendering to both NHS and private service providers. A growing proportion of services has been contracted to private companies, particularly in the wake of the 2012 HSCA. Aside from creeping privatization, this process brings financial practices into the provision of health services, with, for example, health commissioners required to observe competition law even where contracts are awarded to state organisations. Third, under the 2012 HSCA, the cap on the proportion of income that NHS providers can raise from private patients has increased from 2% to 49%, leading to an increase in private patient income within some NHS hospitals. Global finance is becoming more closely integrated with health provision as a result with new partnerships developing between NHS providers and private investors. Finally, since the early 1990s most new capital investment in the NHS has been undertaken through the Private Finance Initiative (PFI) where the private sector finances the design, build and operation of hospitals and these are then leased back to the NHS Trust over a period of decades. These contracts have proven to be costly for NHS hospitals but highly lucrative for (often institutional financial sector) investors in PFI contracts. The paper then considers the nature of the private companies that are involved in healthcare. Health providers are often owned by larger conglomerates for which health is one of many assets in a diverse investment portfolio. The paper compares the changes taking place in health with developments in the water sector in England which has been privatized since 1989 and where financial structures, processes motives and investors have long been established. In both sectors, processes associated with financialisation mean that services are increasingly distanced from the materiality of provision and instead are interpreted in terms of the revenue stream that they can provide to investors. Innovative financial practices have been adopted to boost shareholder returns. In terms of Foresight, health provision is in the process of a fundamental transition from a public service to a financial asset, as has happened in the provision of water in England. The result is expected to be a considerable deepening in the cultures of individualisation and commodification of the health system. This is likely to be associated with a fragmented service and greater inequality in a number of respects: government spending on health will be transferred ultimately to global private finance, boosting the earnings of financial investors; the state will be left with the most difficult (and expensive) to treat as these are of least interest to the private sector; a two-tier system will emerge, with the poorest left with a severely weakened second-rate health system; labour rights are expected to be weakened as employment structures become fragmented across different health providers. Such developments threaten to undermine the core principles on which the NHS was founded. Furthermore, these changes will be difficult to reverse as the ability of the public sector to pose an effective alternative to private and financialised provision of health will be considerably debilitated. |
| Keywords: | Health privatisation, NHS, financialisation |
| JEL: | B50 I18 I38 P16 L33 |
| Date: | 2016–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:fes:wpaper:wpaper131&r=eur |
| By: | Castillo Murciego, Ángela; López Laborda, Julio |
| Abstract: | In this paper the authors analyze the existence of profit shifting by companies located in Spain. Using a sample of 1,380 Spanish subsidiaries owned by foreign OECD and EU parent companies from the AMADEUS Database for the period 2005-2014 and a simple tax rate difference as a measure of the profit shifting tax incentive, the authors obtain a negative effect of corporate income taxes on reported profits, which is consistent with the profit shifting activity of corporations and matches the empirical results in the literature. Furthermore, they derive a negative effect from this profit shifting activity in terms of tax revenues for Spain. |
| Keywords: | profit shifting,multinational corporations,tax revenues,Spain |
| JEL: | F23 F69 H25 H26 H32 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201628&r=eur |
| By: | Massimiliano Vatiero (Institute of Law (IDUSI), and Institute of Economics (IdEP), Facoltà di Economia, Università della Svizzera italiana, Svizzera) |
| Abstract: | The Swiss economy represents an exception to the legal origin theory (e.g., Roe (2006)). Although Switzerland is a country belonging to the civil law family, many of its public companies have diffused corporate ownership, as do those in common law countries. This paper maintains that the Swiss exception relies on the complementarity between corporate ownership and policies addressing employment protection and innovation. The Swiss case presents two lessons: first, the current corporate governance is the result of a long and composite path in which politics plays a pivotal role; second, the institutional differences and similarities across countries, which one would try to explain along with the legal origin theory, can derive diversely from additional politics-based accounts, such as those referring to policies on employment protection and innovation. |
| Keywords: | corporate governance and ownership, innovation, employment protection, institutional complementarity, Swiss economy |
| JEL: | G30 J50 P16 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:lug:wpidep:1606&r=eur |
| By: | Frauke H. Peter; Vaishali Zambre |
| Abstract: | Despite increasing access to university education, students from disadvantaged or non-academic family backgrounds are still underrepresented at universities. In this regard, the economic literature mainly studies the effect of financial constraints on post-secondary educational decisions. Our knowledge on potential effects of other constraints regarding university education is more limited. We investigate the causal relationship between information and educational expectations using data from a German randomized controlled trial in which students in high schools were treated with information on the benefits as well as on different funding possibilities for university education. We find that the provision of information increases intended college enrollment for students from a non-academic family background, while it leads students from academic backgrounds to lower their enrollment intentions. Our results suggest that educational inequality can be reduced by providing students with relevant information, while simultaneously improving post-secondary education matches. |
| Keywords: | Randomized controlled trial, information deficit, educational expectation, college enrollment, educational inequality |
| JEL: | I21 I24 J24 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1589&r=eur |
| By: | Michele Battisti; Giovanni Peri; Agnese Romiti |
| Abstract: | This paper investigates how the size of co-ethnic networks at arrival affected the economic success of immigrants in Germany. Applying panel analysis with a large set of fixed effects and controls, we isolate the association between initial network size and long-run immigrant outcomes. Focusing on refugees – assigned to an initial location independently of their choice – allows a causal interpretation of the estimated coefficient. We find that immigrants initially located in places with larger co-ethnic networks are more likely to be employed at first, but have a lower probability of investing in human capital. In the long run they are more likely to be mis-matched in their job and to earn a lower wage. |
| JEL: | J24 J61 R23 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22389&r=eur |
| By: | Cerqueiro, Geraldo; Ongena, Steven; Roszbach, Kasper |
| Abstract: | In this paper, we investigate the economy-wide effects of the collateral channel by exploiting: (i) a legal reform in Sweden in 2004 that reduced collateral values, and (ii) a dataset that covers all incorporated firms in Sweden over the period 2000-2006. We find that the loss in collateral value reduces both the amount and the maturity of firm debt and leads firms to contract investment, employment, and assets. The legal reform may distort investment and asset allocation decisions, as firms that reduce their holdings of assets with low collaterizable value and firms that hold more liquid assets consequently become less productive and innovative. Our results therefore document the potency of a collateral channel outside of a crisis. JEL Classification: D22, G31, G32 |
| Keywords: | collateral, differences-in-differences, financial constraints, floating lien, investment |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20161918&r=eur |
| By: | Gu, Grace (University of California, Santa Cruz); Malik, Samreen (New York University, Abu Dhabi); Pozzoli, Dario (Copenhagen Business School); Rocha, Vera (Copenhagen Business School) |
| Abstract: | We study how the skill distribution for the whole economy responds to changes in the skill premium which are induced by trade integration. Using administrative data for both Denmark (1993-2012) and Portugal (1993-2011), we perform a two-step empirical analysis. In the first stage we predict the skill premium changes which are triggered by exogenous trade shocks. In the second step we estimate the impact of such changes on the skill distribution. The main results for Denmark show that both the average and the standard deviation of skills increase as a result of trade integration. For Portugal we find instead that the impact of trade mediated by skill premium changes is negligible and not statistically significant. These results are rationalized by using the lens of a simple theoretical intuition. |
| Keywords: | skill premium, skill upgrading, trade integration, labor market frictions |
| JEL: | F16 J24 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10035&r=eur |