nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2017‒01‒29
thirteen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Quality of government and subjective poverty in Europe By Massimo Baldini; Vito Peragine; Luca Silvestri
  2. Locus of Control and Mothers' Return to Employment By Eva M. Berger; Luke Haywood
  3. Impact of Coordinated Capacity Mechanisms on the European Power Market By Michael Bucksteeg; Stephan Spiecker; Christoph Weber
  4. Cohort size and transitions into the labour market By Roth, Duncan
  5. Social selection in higher education. Enrolment, dropout and timely degree attainment in Italy By Contini, Dalit; Cugnata, Federica; Scagni, Andrea
  6. Distributional and revenue effects of a tax shift from labor to property By Paetzold, Jorg; Tiefenbacher, Markus
  7. The causal effects of retirement on mental health: Looking beyond the mean effects By Kolodziej, Ingo W.K.; García-Gómez, Pilar
  8. Bank lending technologies and credit availability in Europe. What can we learn from the crisis? By Giovanni Ferri; Pierluigi Murro; Valentina Peruzzi; Zeno Rotondi
  9. The Moldable Young: How Institutions Impact Social Trust By Bergh, Andreas; Öhrvall, Richard
  10. The Economic Consequences of Family Policies: Lessons from a Century of Legislation in High-Income Countries By Claudia Olivetti; Barbara Petrongolo
  11. Subjective Appraisals of Employee Potential: Do Gender and Managerial Level Matter? By Anica Rose
  12. Labour market segmentation and the financial situation of the pension system in Poland By Piotr Lewandowski; Jakub Sawulski; Kamil Stronski
  13. Innovation Effects on Employment in High-Tech and Low-Tech industries: Evidence from Large International Firms within the Triad By Aldieri, Luigi; Vinci, Concetto Paolo

  1. By: Massimo Baldini; Vito Peragine; Luca Silvestri
    Abstract: We study the effect of quality of government on subjective poverty across European countries and regions, taking advantage of recently released data on the quality of public institutions at the regional level, and of information on household subjective poverty. In the analysis we try to separate the effects of quantity and quality of public services on perceived well-being, controlling for the size of the local government and for the receipt of in-kind services by each household of the sample. Results suggest that good governance significantly reduces the probability of being subjectively poor, both over the whole population and also among households that are poor in terms of monetary income. We then estimate the greater cost that a family has to bear in order to achieve a given level of welfare, if it lives in a region with inefficient public institutions. Our measure of this inefficiency cost is around 6% of disposable income.
    Keywords: Quality of government, subjective poverty, minimum income, European regions, poverty line
    JEL: I32 H1 H7
    Date: 2017–01
  2. By: Eva M. Berger; Luke Haywood
    Abstract: This paper investigates the effect of locus of control (LOC) on the length of mothers’ employment break after childbirth. Using data from the German Socio-Economic Panel Study (SOEP), duration data reveals that women with an internal LOC return to employment more quickly than women with an external LOC.We find that this effect is particularly pronounced in jobs in which the penalties in terms of lower wage growth are highest. We thus argue that the effect of LOC on return is mainly related to differential appreciation of the career costs of longer maternity leave.
    Keywords: Locus of Control, Noncognitive Skills, Personality, Maternal Employment, Female Labor Supply, Survival Analysis
    JEL: J22 J24
    Date: 2016
  3. By: Michael Bucksteeg; Stephan Spiecker; Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen (Campus Essen))
    Abstract: There is an ongoing debate on the introduction of capacity markets in most European countries while a few of them have already established capacity markets. Since the implementation of independent national capacity markets is not in line with the target of a pan-European internal electricity market we investigate the impacts of uncoordinated capacity markets compared with coordinated capacity markets. A probabilistic approach for the determination of capacity requirements is proposed and a European electricity market model (E2M2s) is applied for evaluation. The model simultaneously optimizes investments and dispatch of power plants. Besides the impact on generation investments, market prices and system costs we analyse effects on production and security of supply. While coordinated capacity markets reveal high potentials for cross border synergies and cost savings, uncoordinated and unilateral implementations can lead to inefficiencies, in particular free riding effects and endanger security of supply due to adverse allocation of generation capacity.
    Keywords: capacity markets, system adequacy, market design
    JEL: Q40
    Date: 2017–01
  4. By: Roth, Duncan (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This paper estimates the effect that the size of an individual's labour-market entry cohort has on the subsequent duration of search for employment. Survival-analysis methods are applied to empirically assess this relationship using a sample of apprenticeship graduates who entered the German labour market between 1999 and 2012. The results suggest that apprentices from larger graduation cohorts take less time to find employment, but this effect appears to be significant only for a period of up to six months after graduation. These results therefore do not support the cohort-crowding hypothesis that members of larger cohorts face depressed labour-market outcomes. Moreover, there is no evidence that shorter search durations are the result of graduates being pushed into lower-quality employment. The finding that graduating as part of a larger cohort leads to shorter search durations is in line with those parts of the cohort-size literature that find larger youth cohorts being associated with lower unemployment rates. A possible explanation is that firms react to an anticipated increase in the number of graduates by creating jobs." (Author's abstract, IAB-Doku) ((en))
    Keywords: Kohortenanalyse, Berufseinmündung, Ausbildungsabsolventen, Integrierte Erwerbsbiografien, junge Erwachsene, berufliche Integration, Bevölkerungsstruktur, Erwerbsquote
    JEL: J21 J64 R23
    Date: 2017–01–17
  5. By: Contini, Dalit; Cugnata, Federica; Scagni, Andrea (University of Turin)
    Abstract: In this paper, we provide a picture of social selection throughout higher education in Italy, analysing a retrospective survey held in 2011 on the cohort of high school graduates 2007. We study enrolment, university system dropout and timely completion. Firstly, we model each outcome with separate logistic regressions, to examine the direct and indirect role of socioeconomic background via prior schooling. Secondly, we jointly analyse these results: by plotting the estimates of the retention probability (given enrolment) against the enrolment probability for subgroups of children by socio-demographic characteristics and prior schooling, we visualize the degree to which the disadvantage related to university enrolment also relates to retention, and acknowledge the existence of impressive inequalities. Thirdly, we jointly analyse retention and timely completion, and find that these two outcomes are affected differently by individual factors. Lastly, we examine the role of labour market conditions on higher education outcomes at the onset of the recent economic crisis: youth unemployment rates were negatively related to enrolment, timely completion and retention. The negative relation with retention suggests that there is little evidence in favour of explanations of dropout referring to labour market “pulling out” students from the university system.
    Date: 2016–05
  6. By: Paetzold, Jorg; Tiefenbacher, Markus
    Abstract: Contrary to frequent recommendations of the public finance literature and international institutions, a persistently high tax wedge on labor is observed in Europe. Simultaneously, the scope for shifting taxes to more growth-friendly revenue sources appears underused. This motivates our simulation of a tax shift from labor to property for Germany, a country where property tax revenues are particularly low and the tax wedge on labor income is among the highest in industrialized countries. We simulate a reform where property is no longer taxed by its (often) outdated cadastral value but by its market value, using the additional revenue to reduce social insurance contributions (SIC). To make such a simulation possible, we match property-related information with the input data of the tax-benefit microsimulation model EUROMOD. We find a considerable increase in property tax revenues, allowing to reduce the implicit tax rate on labor from 37.2% to 36.5%. Distributive effects tend to be modest, and depend critically on the design of the SIC reduction. Overall, our results suggest that more households would gain than lose from the tax shift, with gainers mostly situated in the middle of the income distribution.
    Date: 2016–12–30
  7. By: Kolodziej, Ingo W.K.; García-Gómez, Pilar
    Abstract: We analyze the causal effect of retirement on mental health, exploiting differences in retirement eligibility ages across countries and over time using data from the Survey of Health, Ageing and Retirement in Europe. We estimate not only average effects, but also use distributional regression to examine whether these effects are unequally distributed across the mental health distribution. We find unequally distributed protective effects of retirement on mental health. These gains are larger among those above the clinically defined threshold of being at risk of depression. The preserving effects are larger for women, blue collar workers and those in social networks.
    Keywords: retirement,mental health,economics of the elderly,distributional regression
    JEL: I10 J14 J26
    Date: 2017
  8. By: Giovanni Ferri (LUMSA University); Pierluigi Murro (LUMSA University); Valentina Peruzzi (Università Politecnica delle Marche); Zeno Rotondi (UniCredit Bank)
    Abstract: Using a unique sample of European manufacturing firms, we empirically investigate how differences in main banks’ lending technology and use of soft information affected firms’ credit availability during the 2007-2009 crisis. We find that the probability of credit rationing was higher for firms matching with transactional – i.e., using transactional lending technologies – banks. However, we show that soft information marginally reduced that probability in those firm-bank matches. Soft information would bene?t most the small and medium enterprises and ?rms relating with large banks. Thus, reducing credit exclusion during crises requires either relationship lending or enticing transactional banks to use soft information.
    Keywords: Lending technologies, Credit rationing, Financial crisis, Soft information
    JEL: G21 D82 G30 O16
    Date: 2017–01
  9. By: Bergh, Andreas (Research Institute of Industrial Economics (IFN)); Öhrvall, Richard (Research Institute of Industrial Economics (IFN))
    Abstract: Social trust is linked to many desirable economic and social outcomes, but the causality between trust and institutions is debated. Using new data from a representative sample of 2,668 Swedish expatriates (surveyed in the SOM Institute’s Swedish Expatriate Survey 2014), we use variation in time spent in the new country to infer about the effect of country level institutions and norms (such as corruption perceptions, average trust levels and various aspects of economic freedom) on social trust. The results suggest that individual trust suffers in countries with high corruption, low trust and low legal quality. The effect is relatively small, occurs mainly during the first 3 to 10 years and is observed only among those aged less than 30 at the time of arrival in the new country. The results are robust to controlling for a large array of individual characteristics (including age), and support the view that social trust is sensitive to events that occur early in life. In contrast, after the age of approximately 30, trust seems to be a highly resilient personal trait.
    Keywords: Trust; Social norms; Institutions; Migration
    JEL: D13 D83 J62 Z13
    Date: 2016–09–07
  10. By: Claudia Olivetti; Barbara Petrongolo
    Abstract: We draw lessons from existing work and our own analysis on the effects of parental leave and other interventions aimed at aiding families. The outcomes of interest are female employment, gender gaps in earnings and fertility. We begin with a discussion of the historical introduction of family policies ever since the end of the nineteenth century and then turn to the details regarding family policies currently in effect across high-income nations. We sketch a framework concerning the effects of family policy to motivate our country- and micro-level evidence on the impact of family policies on gender outcomes. Most estimates of the impact of parental leave entitlement on female labor market outcomes range from negligible to weakly positive. The verdict is far more positive for the beneficial impact of spending on early education and childcare.
    Keywords: parental leave, childcare, family policies, gender gaps
    JEL: J13 J16 J18
    Date: 2017–01
  11. By: Anica Rose (Paderborn University)
    Abstract: While a growing number of empirical studies have analyzed gender differences at various career stages, there is a dearth of studies about formal appraisals of men’s and women’s career potential, i.e., their promotability. In this paper, I will empirically analyze whether female employees’ promotability assessments are systematically inferior to their equally qualified male colleagues. In doing so, I use detailed personnel data of a large global German company that has a formal promotability evaluation process in place. I consider a wide range of contextual variables that have been neglected in the past, such as information on employees’ demographic (i.e., gender, age, tenure) and job-related characteristics (i.e., pay grade, working hours, performance assessments), additional information on the employees’ direct supervisors, and the composition of the department. I find women’s likelihood of receiving an evaluation that qualifies them as promotable to be around 5 percentage points lower than for their male counterparts – the probability of receiving an outstanding assessment being only 20 percent per se. The gap is even more pronounced at around the age of 30, i.e., the average childbearing age in Germany. Furthermore, gender gaps persist at managerial levels, which points to the existence of systematic gender differences in formal promotability evaluation processes.
    Keywords: Gender, discrimination, promotion, promotability rating, field study
    JEL: J16 J71 M51
    Date: 2017–01
  12. By: Piotr Lewandowski; Jakub Sawulski; Kamil Stronski
    Abstract: Since 2014 Poland is the country with the highest share of temporary workers in the EU. Civil law contracts, a type of temporary contracts, allow payment of lower retirement pension contributions than implied by employment contracts. We use a cohort pension model to quantify the impact of civil law contract use on revenue from contributions and spending on pensions in Poland. Between 2005 and 2015, the rising incidence of civil law contracts reduced the revenue from contributions in the general pension system by PLN 2.4 billion per year on average. This widened the pension fund deficit by approx. 5%. In the future (2016-2050), the impact of civil law contracts on the revenue from contributions will wane because of demographic changes and rising educational attainment of the workforce. However, its impact on pension spending will increase with time, although it will be weaker than the effect on revenue from contributions. Hence, labour market segmentation will deteriorate the pension system balance. The obligation to pay contributions on all contracts of mandate from at least the minimum wage level, introduced in 2016, is not sufficient to balance out the impact of segmentation on the pension system balance.
    Keywords: labour market, pensions, public finance
    JEL: H55 H60 J26 J41 J42
    Date: 2016–12
  13. By: Aldieri, Luigi; Vinci, Concetto Paolo
    Abstract: In this paper we investigate the role of financial shocks, such as the economic crisis since 2006, in the reallocation process of employment flows in high-tech and low-tech industries. The contributions of the paper to the literature are threefold. First, a general framework of employment growth is estimated by using a dataset made of 879 large international firms observed for the period 2002-2010 and localized in three economic areas: USA, Japan and Europe. Second, we develop a database merging the firms’ data with EPO patents data. In particular, the innovation variable is proxied by the R&D capital stock. Third contribution to the literature is to analyse the extent to which the economic crisis may affect the sensitivity of employment with respect to own innovation but also with respect to outside innovation, the R&D spillovers, in high-tech and low-tech industries. The empirical results suggest some important and significant results. This comparative finding could be the source of relevant industrial policy implications.
    Keywords: Regional economics; Innovation; R&D spillovers; employment
    JEL: J20 O31 O33 R1
    Date: 2017–01

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