nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2016‒12‒11
24 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. The contribution of different public innovation funding programs to SMEs' export performance By Liu, Rebecca; Rammer, Christian
  2. Tempora mutantur, nos et mutamur in illis: religion and female employment over time By Fischer, Justina A.V.; Pastore, Francesco
  3. History dependence in the housing market By Bracke, Philippe; Tenreyro, Silvana
  4. France’s Almost Public Private Schools. By Bertola, Giuseppe
  5. Harmonised Standards and Firm Productivity: Difference-in-Differences Evidence By Vojtech Olbrecht
  6. Effects of Policy and Market on Relative Income Deprivation of Agricultural Labour By Czyżewski, Bazyli; Poczta-Wajda, Agnieszka
  7. Disability Discrimination in the Rental Housing Market – A Field Experiment on Blind Tenants By Fumarco, Luca
  8. Estimation of Joint Income‐Wealth Poverty: A Sensitivity Analysis By Kuypers, Sarah; Marx, Ive
  9. Heterogeneity of the Carnegie Effect By Erlend E. Bø; Elin Halvorsen; Thor O. Thoresen
  10. Accounting for Business Income in Measuring Top Income Shares: Integrated Accrual Approach Using Individual and Firm Data from Norway By Annette Alstadsæter; Martin Jacob; Wojciech Kopczuk; Kjetil Telle
  11. Overview of Czech and German Renewable Energy Policies By Janda, Karel; Tyuleubekov, Sabyrzhan
  12. 'The Resilience of UK Regional Employment Cycles' By Marianne Sensier; Michael Artis
  13. Measuring competition in the UK deposit-taking sector By J A de-Ramon, Sebastian; Straughan, Michael
  14. The path of labor supply adjustment. Sources of lagged responses to tax-benefit reforms By Zhiyang Jia; Trine E. Vattø
  15. Which degrees do students prefer during recessions? By Megalokonomou, Rigissa; Goulas, Sofoklis
  16. Will you still need me, will you still feed me when I’m 64? The Health Impact of Caregiving By P.L. de Zwart; P. Bakx; E.K.A. van Doorslaer
  17. The Production Function for Housing: Evidence from France By Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent
  18. Dynastic inequality compared: Multigenerational mobility in the US, the UK, and Germany By Neidhöfer, Guido; Stockhausen, Maximilian
  19. Natives’ attitudes and immigrants’ unemployment durations By Sekou KEITA; Jérome VALETTE
  20. OECD Anti-Bribery Policy and Structural Differences Inside the EU By Michal Paulus; Eva Michalikova
  21. Exploring the effect of financial literacy courses on student achievement: a cross-country approach using PISA 2012 data By Cordero, José Manuel; Gil, María; Pedraja Chaparro, Francisco
  22. Immigrants and Legal Status: Do Personal Contacts Matter? By Simone Cremaschi; Carlo Devillanova
  23. Inter-Enterprise Credit and Adjustment During Financial Crises: The Role of Firm Size By Coricelli, Fabrizio; Frigerio, Marco
  24. Import, Export and Multinationality. Evidence from Swedish Firms By Castellani, Davide; Fassio, Claudio

  1. By: Liu, Rebecca; Rammer, Christian
    Abstract: This paper studies the effects of different public innovation funding programs on the innovation output and export performance of small and medium-sized enterprises (SMEs). We evaluate the effectiveness of regional, national and European funding programs implemented in Germany for both product and process innovations. Our panel study shows that public financial support contributes to higher innovation outputs, which in turn translates into higher export success in later years. This relation however only holds for certain sources of public funding and certain types of innovation output. Innovation support from the European Union and national programs for cutting-edge technology that results in higher sales with new-to-market products shows a significant positive effect on SMEs' export performance. For funding programs run by regional authorities, we find similar though relatively smaller impacts on both innovation output and exporting. Bottom-up funding at the national level-which allows firms to freely define the design of the funded innovation projects in terms of content and cooperation-increases sales with innovations that are only new to the firm, but these innovations have limited impacts on export success. Our results suggest that public innovation programs should challenge SMEs to go for more ambitious innovations in order to strengthen their competitiveness.
    Keywords: Public Funding,SMEs,Innovation Outputs,Exporting,Panel Study,Matching
    JEL: O32 O38 F14
    Date: 2016
  2. By: Fischer, Justina A.V.; Pastore, Francesco
    Abstract: This study analyzes whether the role of religion for employment of women in Europe has changed over time and along women’s life cycles. Using information on 44’000 married European women from the World Values Survey, spanning more than thirty years (1981-2013), we find that over time the impact of religion on female employment has been changing. In Western Europe, behavioral differences across denominations seem to have disappeared since roughly 1997. In contrast, for Eastern Europe, we find that differences by religion have reemerged again particularly among young women. However, for women in Eastern Europe who are older than 40 years, religion plays no role – a finding that we attribute to an upbringing under secular communist regimes that strongly promoted gender equality in the labor market. Only Muslim women show a lower employment probability that persists across time, across regions, and across life cycles.
    Keywords: religion; labor market participation; secularization; modernization; gender; Europe; transition countries; Eastern Europe; OECD; World Values Survey
    JEL: J16 J22 N34 Z12 Z13
    Date: 2016–11–22
  3. By: Bracke, Philippe (Bank of England); Tenreyro, Silvana (London School of Economics, Centre for Macroeconomics, and CEPR.)
    Abstract: Using the universe of housing transactions in England and Wales in the last 20 years, we document a robust pattern of history dependence in housing markets. Sale prices and selling probabilities today are affected by aggregate house prices prevailing in the period in which properties were previously bought. We investigate the causes of history dependence, with its quantitative implications for the post-crisis recovery of the housing market. To do so we complement our analysis with administrative data on mortgages and online house listings, which we match to actual sales. We find that high leverage in the pre-crisis period and anchoring (or reference dependence) both contributed to the collapse and slow recovery of the volume of housing transactions. We find no asymmetric effects of anchoring to previous prices on current transactions; in other words, loss aversion does not appear to play a role over and above simple anchoring.
    Keywords: Housing market; fluctuations; down-payment effects; reference dependence; anchoring; loss aversion
    JEL: D03 E32 R31
    Date: 2016–12–02
  4. By: Bertola, Giuseppe (University of Turin)
    Abstract: This paper uses a large and detailed dataset to characterize the enrolment and educational performance of regulated and subsidized French private schools. Individual ability reduces the probability of private secondary schooling. Structural models indeed find that both observable and unobservable initial ability matter less in private than in State schools for successful secondary school completion and access to tertiary education.
    Date: 2016–12
  5. By: Vojtech Olbrecht (Department of Business Economics, Faculty of Business and Economics, Mendel university in Brno, Zemedelska 1, 613 00 Brno, Czech Republic)
    Abstract: One of the main objectives of the European Union is to enhance the competitiveness of companies within its Member States and that may be supported by further development of the Single Market. Introduction of harmonized standards for production of goods and services encourages companies to take advantage of the Single Market by reducing transaction costs. In other words, the EU is adjusting the economic and legal framework in which companies operate in order to remove existing barriers to its vision of a well-functioning Single Market. This paper researches the relationship between these changes and productivity of microeconomic agents – firms. The analysis uses a panel data regression model with difference-in-differences research design built on a sample of affected and unaffected firms as control groups to be able to extract effect caused by the regulation. The article provides evaluation of individual standards and states the direction of effect at each of those. It can be said that while some standards (mostly those with wide applicability) have a positive relation with productivity and some are insignificant. There can be found also one that has a robust significant negative correlation with productivity.
    Keywords: harmonised standards, productivity, difference-in-differences, law and economics, European Union, legislation
    JEL: K20 K33 O12 O24
    Date: 2016–12
  6. By: Czyżewski, Bazyli; Poczta-Wajda, Agnieszka
    Abstract: The average incomes in the agricultural sector are still much lower than the average wages in non-agricultural sectors in the most of the European MS, which is not in line with one of the CAP initial objectives of “ensuring fair standard of living for the agricultural community”. The main aim of this paper is to verify, whether the membership in the EU and utilization of the CAP founds help to reduce relative income gap of farmers. The second aim is to analyse which factors influence this income gap and how. In our study we exploit EAA data from 27 EU MS for the period 1995-2015 and estimate three panel data regression models for all MS, “old” MS and “new” MS. Our results prove that the social goals of the CAP support are not being achieved in the EU-15, however they are achieved under the SAPS in the EU-12.
    Keywords: agricultural labour factor, relative income gap, real productivity change, price scissors, Cochrane’s treadmill theorem, Agribusiness, Agricultural Finance, Community/Rural/Urban Development, Consumer/Household Economics, Financial Economics, Labor and Human Capital, Productivity Analysis,
    Date: 2016
  7. By: Fumarco, Luca
    Abstract: In this study, I show that with the appropriate experimental strategy, a correspondence test can be adapted to investigate disability discrimination in the rental housing market. I focus on discrimination against blind tenants assisted by guide dogs in Italy and obtain very robust results. The utilization of three fictitious household tenants (that is, a married couple, a married couple with a blind wife who owns a guide dog, and a married couple where the wife is normal sighted and owns a pet dog) allows me to investigate whether discrimination is due to the blindness or to the guide dog. I find that apartment owners discriminate blind tenants because of the presence of the guide dog alone. According to the Italian law, this is indirect discrimination, which in the US corresponds to the refusal to provide reasonable accommodation.
    Keywords: Disability; Discrimination; Housing Market; Field Experiment
    JEL: C93 I12 J14 R21
    Date: 2015
  8. By: Kuypers, Sarah (University of Antwerp); Marx, Ive (University of Antwerp)
    Abstract: Most poverty studies build on measures that take account of recurring incomes from sources such as labour or social transfers. However, other financial resources such as savings and assets also affect living standards, often in very significant ways. Previous studies that have sought to incorporate assets into poverty measures suggest that (1) poverty estimates including wealth are considerably lower than income‐based measures; (2) poverty rates of the elderly are more affected than those of the nonelderly and (3) poverty rates are especially affected by the household's main residence. This paper assesses the sensitivity of these conclusions to various plausible alternative assumptions, such as the poverty line calculation, the types of assets included in the wealth concept and choices with respect to the equivalence scale. Moreover, we check whether the impact of alternative assumptions is consistent across age and institutional settings. To that effect we compare Belgium and Germany, two countries with similar living standards and income poverty rates, but very different levels and distributions of wealth. Using data from the HFCS we show that accounting for wealth affects the incidence and age structure of poverty in a very substantial way. Country comparisons are also affected in very substantial ways.
    Keywords: income, wealth, poverty measurement, sensitivity analysis
    JEL: I32
    Date: 2016–11
  9. By: Erlend E. Bø; Elin Halvorsen; Thor O. Thoresen (Statistics Norway)
    Abstract: The Carnegie effect (Holtz-Eakin, Joualfaian and Rosen, 1993) refers to the idea that inherited wealth harms recipients work efforts, and possesses a key role in the discussion of taxation of intergenerational transfers. However, Carnegie effect estimates are few, reflecting that such effects are hard to trace in data. Most previous studies have relied on data from limited size sample surveys. Here we use information from a rich administrative data set covering the entire Norwegian population, which makes it possible to undertake a detailed examination of the Carnegie effect, including how it varies across groups of recipients. The estimation results show significant reductions in labor supply for recipients of large inheritances, in the range from 7 to 10 percent in the first six years after the transfer. Moreover, we find that the Carnegie effects differ according to the size of the transfer, the age of the recipients, the recipients eligibility to other transfer programs, and the existence of new heirs in the family chain.
    Keywords: inheritance; labor supply; heterogeneous responses
    JEL: D10 D80 D91 J22
    Date: 2016–12
  10. By: Annette Alstadsæter; Martin Jacob; Wojciech Kopczuk; Kjetil Telle
    Abstract: Business income is important in the upper tail of the personal income distribution, but the extent to which it is captured by measures of personal income varies substantially across tax regimes. Using linked individual and firm data from Norway, we are able to attribute business income to personal owners as it accrues rather than when it is realized. This adjustment leads to an increase in top income shares, and the size of this effect varies dramatically depending on the tax regime in place. After a tax reform in 2005 that created strong incentives to retain earnings within businesses, the increase was massive: accounting for earnings retained in the corporate sector leads to more than doubling of the share of income of top 0.1% in some years. Furthermore, adjusting for retained earnings stabilizes the composition of the top income group before and after the reform. We also show that the response is driven by majority owners in closely held firms and facilitated through indirect ownership. As the result, traditional measures of top income shares become misleadingly low (even when accounting for capital gains). We speculate on the implications of our findings for levels and trends in top income shares observed in other countries. In particular, we note that the major tax reforms of the 1980s in the United States correspond to a shift toward business income being passed through to personal owners, and argue that top income shares constructed using income tax statistics before 1987 are likely to be significantly understated relative to those afterwards.
    JEL: D31 H24 H25
    Date: 2016–12
  11. By: Janda, Karel; Tyuleubekov, Sabyrzhan
    Abstract: This paper provides an overview of the renewable energy policies in Germany and Czech Republic. The description of major renewable policies in both countries is complemented with the description of financial support schemes for these policies. National renewable energy plans in both countries are discussed. The emphasis is on renewable electricity energy.
    Keywords: Renewable energy, feed-in tariff, Czech renewables, German Renewables
    JEL: Q28
    Date: 2016–12–05
  12. By: Marianne Sensier; Michael Artis
    Abstract: This paper dates the classical business cycle of quarterly UK GDP, unemployment, aggregate and regional employment to assess turning points in the economic cycle. We analyse synchronisation of the regions with UK employment and investigate which regions lead into recession. We perform the McNemar Test on groups of regions and arrive at Northern and Southern regional clusters. We find that the northern regions have had a greater incidence of recession with southern regions suffering more severe recessions (in terms of total jobs lost). Finally we compare the resilience of the regional employment cycle to UK employment. This most resilient region to the 2008 recession was London from our Southern grouping and the least resilient has been the Northern Ireland in our northern grouping.
    Date: 2016
  13. By: J A de-Ramon, Sebastian (Bank of England); Straughan, Michael (Bank of England)
    Abstract: We use a new regulatory dataset to measure the intensity competition in the UK deposit-taking sector. The novelty of this study is two-fold. First, the dataset allows us to explore trends in competition intensity over an extended, 24-year period from 1989 to 2013 using data for UK-regulated firms which encompasses a wider range of firms than for previous studies. Second, we take a portmanteau approach and estimate a number of different performance-based competition measures common in the literature to support conclusions on the intensity of competition over the period. Our estimates of the Lerner index, the Panzar-Rosse H-statistic and the Boone indicator suggest that competition intensity was strong at the beginning of our sample, but became less intense in the early 2000s. However, the deposit-taker business model bundles together activities in several markets simultaneously, so strong competition in some markets can be offset by the extraction of market rents in others. Importantly, competition intensity decreased (and the ability of UK deposit-takers to extract market rents from customers increased) in the period immediately ahead of the financial crisis (2003–07).
    Keywords: Competition; banks; deposit-takers
    JEL: D22 D24 G21 L11 N20
    Date: 2016–12–02
  14. By: Zhiyang Jia; Trine E. Vattø (Statistics Norway)
    Abstract: The standard static labor supply model ignores that it takes time for individuals to adjust to a taxbenefit reform. A labor supply decision model is developed that allows for lagged responses in terms of state dependence, stemming from preferences, labor market constraints and adjustment costs. The parameters of the model are estimated using panel data on working hours for Norwegian females. We find evidence of all three sources of state dependence, with adjustment costs as the most dominant component. When using the model to simulate the path of adjustment to a general tax cut, we find that state dependence brings down responses to only one third of the estimated full effect in the first year. The females reach the proximity of the full effect after about seven years.
    Keywords: labor supply; path of adjustment; state dependence; adjustment costs; discrete choice model; tax-benefit microsimulation
    JEL: C35 C51 H24 H31 J22
    Date: 2016–12
  15. By: Megalokonomou, Rigissa; Goulas, Sofoklis
    Abstract: We examine how changes in the unemployment rate affect demand for college education, demand for different fields of university study and degrees' admission thresholds. We use panel data for applications submitted to the universe of undergraduate programs in Greece that span seven rounds of admission cohorts combined with a degree-specific job insecurity index, and time series on youth (ages 18-25) unemployment. We find that degree- and major-specific job insecurity turns applicants away from degrees and majors that are associated with poor employment prospects. Results indicate that the steep increase in the unemployment rate that started in 2009 is associated with an increase in the number of college applicants. The effect is heterogeneous across fields, with an increase in the demand for degrees in Psychology as well as for entrance to Naval, Police and Military Academies, and a decrease in the demand for degrees in Business and Management. We also find that the business cycle changes degrees' admission thresholds by affecting their popularity.
    Keywords: demand for education, college major, unemployment, job insecurity, admission thresholds
    JEL: I21 I23 I26 J44
    Date: 2016–12–01
  16. By: P.L. de Zwart (University Medical Center Groningen, The Netherlands); P. Bakx (Erasmus University Rotterdam, The Netherlands); E.K.A. van Doorslaer (Erasmus University Rotterdam, The Netherlands)
    Abstract: Informal care may substitute for formal long-term care that is often publicly funded or subsidized. The costs of informal caregiving are borne by the caregiver and may consist of worse health outcomes and, if the caregiver has not retired, worse labor market outcomes. We estimate the impact of providing informal care to one’s partner on the caregiver's health using data from the Survey of Health, Ageing and Retirement in Europe (SHARE). We exploit the panel structure of the data and use statistical matching to deal with selection bias and endogeneity. We find that in the short run caregiving has a substantial negative effect on the health of caregivers. These negative effects should be taken into account when comparing the costs and benefits of formal and informal care provision. These negative effects are potentially short-lived, however: we do not find any evidence that the health effects persist after 4 or 7 years.
    Keywords: long term care; informal caregiving; health; SHARE
    JEL: I12 I13 I19
    Date: 2016–12–02
  17. By: Combes, Pierre-Philippe (GATE, University of Lyon); Duranton, Gilles (University of Pennsylvania); Gobillon, Laurent (Paris School of Economics)
    Abstract: We propose a new nonparametric approach to estimate the production function for housing. Our estimation treats output as a latent variable and relies on the first-order condition for profit maximisation with respect to non-land inputs by competitive house builders. For parcels of a given size, we compute housing by summing across the marginal products of non-land inputs. Differences in non-land inputs are caused by differences in land prices that reflect differences in the demand for housing across locations. We implement our methodology on newly-built single-family homes in France. We find that the production function for housing is reasonably well, though not perfectly, approximated by a Cobb-Douglas function and close to constant returns. After correcting for differences in user costs between land and non-land inputs and taking care of some estimation concerns, we estimate an elasticity of housing production with respect to non-land inputs of about 0.80.
    Keywords: housing, production function
    JEL: R14 R31 R32
    Date: 2016–11
  18. By: Neidhöfer, Guido; Stockhausen, Maximilian
    Abstract: Using harmonized household survey data, we analyse long run social mobility in the US, the UK, and Germany and test recent theories of multigenerational persistence of socio-economic status. In this country comparison setting we find evidence against Gregory Clark's "universal law of social mobility". In general, our results show that the long run persistence of socio-economic status tends to vary with the institutional context. Our findings on the existence of a direct and independent effect of grandparents' social status on grandchildren's status are mixed.
    Keywords: dynastic inequality,intergenerational mobility,multigenerational persistence,three generations,grandparental effect
    JEL: D63 I24 J62
    Date: 2016
  19. By: Sekou KEITA; Jérome VALETTE
    Abstract: Which factors determine the performance of immigrants in the destination country labor market? Evidence in the literature suggests that discrimination may be a barrier to the economic assimilation of immigrants. However, depending on their country of origin, immigrants are heterogeneous with respect to the discrimination they face. This paper investigates how the attitude of natives affects immigrants’ unemployment duration in Germany. Using individual level panel data from the German Socio Economic Panel from 1984 to 2012, we employ survival analysis methods to model immigrants’ unemployment duration. We find that lower trust levels of natives towards the citizens of a given country, measured using Eurobarometer surveys, positively influence the unemployment duration of immigrants originating from this country. We show that this result is not driven by origin-specific unobserved heterogeneity, and that it is robust to different definitions of unemployment and different specifications. The results of our paper highlight the fact that immigrants face different obstacles depending on their origin when it comes to integrating destination country labor markets.
    Keywords: Immigrant workers, Unemployment duration, Discrimination.
    JEL: J71 J64 J61
    Date: 2016–12
  20. By: Michal Paulus (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic); Eva Michalikova (Brno University of Technology, Brno, Czech Republic; Anglo-American Univesity, Prague, Czech Republic)
    Abstract: We propose a novel application of a gravity model of trade as a policy preference mapping tool that reveals areas of potential interest groups formation. We examine a hypothesis that the EU’s inability of the coordinated anti-corruption effort is caused by its internal heterogeneity in preferences towards the anti-corruption policy. We focus only on anti-corruption effort against bribery in foreign transaction which is reflected in the effectiveness of the enforcement of the OECD anti-bribery convention. Using the gravity model, we estimate and compare preferences of western, eastern and Mediterranean EU members towards the enforcement of the convention. In addition to aggregate exports we estimate the model on disaggregated data and examine preferences across trading sectors and identify those industries which would support or oppose the anti-corruption policy. To analyse the hypothesis, we estimate a micro-founded augmented gravity model for bilateral exports of 131 countries within period 1995-2013. The results reveal significant differences between western and eastern EU members when the eastern countries are much more motivated to oppose the policy and to form a strong interest group also on the EU level. However, there are specific sectors which have potential to form a coalition towards the policy across all country groups. We have found out that the country origin (country group to which it belongs) is much better predictor of the policy preferences than exporting sector.
    Keywords: gravity model; OECD anti-bribery convention; international conflict; policy preference mapping; EU heterogeneity
    JEL: F14 F42 F51 F53 F55 O17
    Date: 2016–11
  21. By: Cordero, José Manuel; Gil, María; Pedraja Chaparro, Francisco
    Abstract: The aim of this research is to explore whether the deployment of specialized courses on basic financial concepts at schools has a significant impact on how able students are to apply the knowledge and skills that they learn to real-life situations involving financial issues and decision making. To do this, we exploit the rich set of comparative data about the countries participating in the PISA 2012 financial literacy assessment. This includes 18 of the 70 countries participating in this wave of PISA. Our empirical analysis is based on a difference-in-differences approach comparing the results of the same students across two subjects (financial literacy and reading). We assume that the distribution of students across schools does not depend on the provision of financial education. Thus we can estimate the effect of the treatment as the difference between the performance of students at schools that offer or do not offer financial education courses. Our results suggest that such courses have a significant and positive effect on student achievement regardless of the strategy applied to teach financial concepts.
    Keywords: Education policy, Cross-country study, Financial literacy, Difference-in-differences
    JEL: C40 C55 I21
    Date: 2016–12
  22. By: Simone Cremaschi (European University Institute); Carlo Devillanova (Università Bocconi)
    Abstract: This paper addresses the effect of personal contacts on immigrants’ legal status by focusing particularly on the contacts’ direct links to legal status and indirect associations with the labor market. The overall effect of these contacts is theoretically unsigned and likely to vary across contact type and contextual factors. Our empirical analysis, based on unique Italian survey data on both documented and undocumented immigrants, tests two hypotheses regarding native contacts: (i) that they are more likely to be associated with a higher immigrant documentation probability and (ii) that they are more likely to introduce immigrants to jobs that facilitate access to employment-based legalization initiatives. Our results indicate that contacts with both natives and family members have a direct, positive, and quantitatively large effect on immigrant documentation probability, whereas contacts with members of the same ethnic group only indirectly increase documentation probability by raising the probability of employment. Our findings also support the hypothesis that native contacts connect immigrants with better jobs.
    Keywords: Immigrant integration; legal status; personal contacts; networks; labor market outcomes
    Date: 2016–12
  23. By: Coricelli, Fabrizio; Frigerio, Marco
    Abstract: Analyzing a large firm-level database for European countries, the paper shows that during the Great Recession trade credit amplified the liquidity squeeze on SMEs induced by the contraction of bank credit. Because of their generally weaker bargaining power in the inter-enterprise credit market, SMEs sharply increased their net trade credit and thus transferred financial resources to larger firms. The paper finds that the liquidity squeeze induced by trade credit had large negative effects on real activity by SMEs, contributing to the fall in employment, wages and investments.
    Keywords: Financial crises; SMEs; trade credit
    Date: 2016–12
  24. By: Castellani, Davide (Henley Business School, University of Reading); Fassio, Claudio (CIRCLE, Lund University)
    Abstract: This paper studies the role of imported inputs in explaining firms’ export behaviour. Unlike most of the existing literature we are also able to control for the participation of domestic firms to multinational networks. This allows us to test to what extent the recurrent evidence that importing foster exporting activity is instead a figment of the fact that importers are also part of multinational groups. Our evidence, based on Swedish manufacturing firms, suggests that imported inputs, rather than multinationality, are a key determinant of firms’ export propensity and product scope. This result is particularly strong for SMEs, and it is driven by imported intermediates and (to a lesser extent) capital goods.
    Keywords: importing; exporting; multinational enterprises; Sweden
    JEL: F14 F23 O52
    Date: 2016–12–02

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