nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2017‒07‒16
27 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Active labour market policies and short-time work arrangements: Evidence from a survey of Luxembourg firms By Konstantinos Efstathiou; Thomas Y. Mathä; Cindy Veiga; Ladislav Wintr
  2. The Impact of Competition Policy Enforcement on the Functioning of EU Energy Markets By Tomaso Duso; Jo Seldeslachts; Florian Szücs
  3. Parental Leave, (In)formal Childcare and Long-term Child Outcomes By Martin Halla; Nicole Schneeweis; Martina Zweimüller; Natalia Danzer
  4. Introducing Risk Adjustment and Free Health Plan Choice in Employer-Based Health Insurance: Evidence from Germany By Pilny, Adam; Wübker, Ansgar; Ziebarth, Nicolas R.
  5. Does Random Selection of Commissioners Improve the Quality of Selected Candidates? An Investigation in the Italian Academia By Checchi, Daniele; De Poli, Silvia; Rettore, Enrico
  6. The effects of paternity leave on fertility and labor market outcomes By Libertad González Luna; Lidia Farré
  7. Access to and Returns from Unpaid Graduate Internships By Holford, Angus J.
  8. Over-qualification and dimensions of job satisfaction By Inmaculada García-Mainar; Victor M. Montuenga-Gómez
  9. How Do Entrepreneurial Portfolios Respond to Income Taxation? By Frank M. Fossen; Ray Rees; Davud Rostam-Afschar; Viktor Steiner
  11. Towards an East German Wage Curve - NUTS Boundaries, Labour Market Regions and Unemployment Spillovers By Reinhold Kosfeld; Christian Dreger
  12. Dissolving the entrepreneurship puzzle: Applying Fréchet distributions to Lazear’s occupational choice model By Hårsman, Björn; Mattsson, Lars-Göran
  13. Public employment services under decentralization: evidence from a natural experiment By Lukas Mergele, Michael Weber
  14. An analysis of the Excellence Initiative and its effects on the funded universities By Frietsch, Rainer; Schubert, Torben; Rothengatter, Oliver
  15. Early diagnosis of chronic conditions and lifestyle modification By Paul Andres Rodriguez-Lesmes
  16. Working from Home and the Willingness to Accept a Longer Commute By de Vos, Duco; Meijers, Evert J.; van Ham, Maarten
  17. Exploring Variations in Healthcare Expenditures – What is the Role of Practice Styles? By Alexander Ahammer; Thomas Schober
  18. The impact of Solvency II regulations on life insurers’ investment behaviour By Douglas, Graeme; Noss, Joseph; Vause, Nicholas
  19. A Spatial Analysis of Innovation in Europe By Tonnerre, Antoine
  20. The Difficult School-To-Work Transition of High School Dropouts: Evidence from a Field Experiment By Cahuc, Pierre; Carcillo, Stéphane; Minea, Andreea
  21. M&As, investment and financing constraints By Stiebale, Joel; Wößner, Nicole
  22. Upstreamness of employment and global financial crisis in Poland: the role of position in the global value chains By Jan Hagemejer; Joanna Tyrowicz
  23. The Assimilation of Young Workers into the Labour Market in France: A Stochastic Earnings Frontier Approach By Bazen, Stephen; Waziri, Khalid Maman
  24. Dark pools in European equity markets: emergence, competition and implications By Petrescu, Monica; Wedow, Michael
  25. Pension Rules and Labour Market Mobility By Lammers, Marloes; Bloemen, Hans; Hochguertel, Stefan
  26. Understanding Society Innovation Panel Wave 9: Results from Methodological Experiments By Benzeval, Michaela; Bianchi, Annamaria; Brewer, Mike; Burton, Jonathan; Cernat, Alexandru; Creighton, Mathew; Crossley, Thomas F.; Delavande, Adeline; Fisher, Paul; Gaia, Alessandra; Jäckle, Annette; Jamal, Amaney; Oberski, Daniel; Popham, Frank; Whitley, Elise; Winter, Joachim; Zafar, Basit
  27. Pricing decisions under financial frictions: evidence from the wdn survey By José Manuel Montero

  1. By: Konstantinos Efstathiou; Thomas Y. Mathä; Cindy Veiga; Ladislav Wintr
    Abstract: We analyse the use of active labour market policy (ALMP) measures and short-time work arrangements (STWAs) by Luxembourg firms during the years of economic and financial crisis (2008-09) and the subsequent European sovereign debt crisis (2010-13). About 34% of Luxembourg firms used ALMPs between 2008 and 2013. Economy-wide, use of ALMPs increased along both the extensive margin (more firms) and the intensive margin (more measures per firm). The likelihood that a firm hired with recourse to ALMPs is greater for large, domestically oriented, multiple establishment firms, firms facing strong demand, with concerns about labour cost pressures and unavailability of skilled labour. The crisis saw a surge in firms using STWAs. The likelihood of applying for STWAs increases with demand volatility, the share of workers with permanent contracts, export orientation and the inability to shift workers between establishments. Firms reported that 20-25% of jobs in STWAs were saved by this measure.
    Keywords: Firms, survey, crisis, active labour market policy, short-time work arrangements
    JEL: C25 J63 J68
    Date: 2017–06
  2. By: Tomaso Duso; Jo Seldeslachts; Florian Szücs
    Abstract: We investigate the impact of competition policy enforcement on the functioning of European energy markets, and how sectoral regulation influences these outcomes. For this purpose, we compile a new dataset on the European Commission’s (EC) and EU member states’ competition policy decisions, and combine it with firm- and sector-level data. We find that EC merger policy has a positive and robust impact on (i) the level of competition; (ii) investment; and (iii) productivity. This impact, however, only shows up in low-regulated sectors. Other competition policy decisions – EC state aid and anti-trust interventions; as well as all individual Member State policy variables – do not have a uniform effect on energy markets’ functioning. Our findings are consistent with the idea that the EC’s merger policy actions have been used to overcome significant obstacles to a well-functioning EU energy sector and may well have shaped the overall development of gas and electricity markets in Europe.
    Keywords: Ex-post evaluation, energy markets, competition policy
    JEL: D24 L4 L98 Q4
    Date: 2017
  3. By: Martin Halla; Nicole Schneeweis; Martina Zweimüller; Natalia Danzer
    Abstract: We provide a novel interpretation of the estimated treatment effects from evaluations of parental leave reforms. Accounting for the counterfactual mode of care is crucial in the analysis of child outcomes and potential mediators. We evaluate a large and generous parental leave extension in Austria exploiting a sharp birthday cutoff-based discontinuity in the eligibility for extended parental leave and geographical variation in formal childcare. We find that estimated treatment effects on long-term child outcomes differ substantially according to the availability of formal childcare and the mother’s counterfactual work behavior. We show that extending parental leave has significant positive effects on children’s health and human capital outcomes only if the reform induces a replacement of informal childcare with maternal care. We conclude that care provided by mothers (or formal institutions) is superior to informal care-arrangements.
    Keywords: : Parental leave, formal childcare, informal childcare, child development, maternal labor supply, fertility
    JEL: J13 H52 J22 J12 I38
    Date: 2017–06
  4. By: Pilny, Adam (RWI); Wübker, Ansgar (RWI); Ziebarth, Nicolas R. (Cornell University)
    Abstract: To equalize differences in health plan premiums due to differences in risk pools, the German legislature introduced a simple Risk Adjustment Scheme (RAS) based on age, gender and disability status in 1994. In addition, effective 1996, consumers gained the freedom to choose among hundreds of existing health plans, across employers and state-borders. This paper (a) estimates RAS pass-through rates on premiums, financial reserves, and expenditures and assesses the overall RAS impact on market price dispersion. Moreover, it (b) characterizes health plan switchers and investigates their annual and cumulative switching rates over time. Our main findings are based on representative enrollee panel data linked to administrative RAS and health plan data. We show that sickness funds with bad risk pools and high pre-RAS premiums lowered their total premiums by 42 cents per additional euro allocated by the RAS. Consequently, post-RAS, health plan prices converged but not fully. Because switchers are more likely to be white collar, young and healthy, the new consumer choice resulted in more risk segregation and the amount of money redistributed by the RAS increased over time.
    Keywords: employer-based health insurance, free health plan choice, risk adjustment, health plan switching, adverse selection, German sickness funds, SOEP
    JEL: D12 H51 I11 I13 I18
    Date: 2017–06
  5. By: Checchi, Daniele (University of Milan); De Poli, Silvia (FBK-IRVAPP); Rettore, Enrico (University of Trento)
    Abstract: We study a reform occurred in Italy in 2008 in the formation of selection committees for qualifying as university professor. Prior to the reform members of the selection committees were elected by their peers, after the reform they have been randomly drawn. This policy was intended to increase the equality of opportunities of candidates via a reduction of the role played by connections to commissioners. Results show that the reform was ineffective in reducing the probability contribution of being an insider, but attenuated the impact of being connected to a commissioner without significantly raising the impact of scientific quality of candidates on the outcome of competitions. We also find that candidates internalised the changed environment and adapted their strategy of application.
    Keywords: university recruitment, incentives, negotiation, formal procedures
    JEL: M51 I23 D82 J45
    Date: 2017–06
  6. By: Libertad González Luna; Lidia Farré
    Abstract: This paper studies the effects of a father quota in the parental leave period on households' labor market and fertility decisions. Identification is based on the 2007 reform of the Spanish family benefit system, which extended the sixteen weeks of paid parental leave by two additional weeks exclusively reserved for fathers and nontransferable to mothers. Using a regression discontinuity design, we show that the reform substantially increased the take-up rate of fathers (by as much as 400%), as well as the re-employment probability of mothers shortly after childbirth (by about 11%). However, it did not affect parents' longer-term leave-taking or employment behavior. We also find that the introduction of the two weeks of paternity leave delayed higherorder births and reduced subsequent fertility among older women (by about 15%). These results suggest a limited scope for the father quota to alter household behaviors beyond the parental leave period and reduce gender inequality at the workplace.
    Keywords: Natural experiment, paternity leave, fertility, labor market and gender.
    JEL: J48 J13 J16
    Date: 2017–06
  7. By: Holford, Angus J. (University of Essex)
    Abstract: We use the Destination of Leavers from Higher Education Survey (DLHE) to estimate the socio-economic gradient in access to unpaid internships among English and Welsh graduates six months after completing their first degree, and the return to this internship experience 3 years later in terms of salary, occupation, contract type and career satisfaction. We show a significant salary penalty at 3.5 years after graduation compared with those going straight into paid work or further study, but also that graduates from higher socio-economic status have an advantage in accessing internships while being significantly insulated from their negative effects.
    Keywords: higher education, internships, human capital, job satisfaction
    JEL: J24 J28 J31
    Date: 2017–06
  8. By: Inmaculada García-Mainar (University of Zaragoza); Victor M. Montuenga-Gómez (University of Zaragoza)
    Abstract: Over-qualification may arise from voluntary decisions of individuals to acquire more qualifications than those required at the job place. In these cases, mismatch may have a role allowing workers to compensate the lack of some other skills, or to gain access to the labour market. Consequently, workers may feel no less satisfied, at least in some domains, than adequately matched workers. The aim of this paper is to analyse the relationship between over-qualification and different domains of job satisfaction in Spain, a country characterised by a strongly segmented labour market with high unemployment level, and a large number of mismatched. Using micro data for a representative sample of Spanish workers, we employ an IV estimation procedure to control for potential endogeneity arising from reverse causation or unobserved heterogeneity. Results obtained provide apparent evidence on that mismatched workers do not necessarily feel less satisfied than adequately matched workers in all domains of job satisfaction.
    Keywords: over-qualification, domains of job satisfaction, Spain
    JEL: D82 I26 J24 J28 J62
    Date: 2017–05
  9. By: Frank M. Fossen; Ray Rees; Davud Rostam-Afschar; Viktor Steiner
    Abstract: We investigate how personal income taxes affect the portfolio share of personal wealth that entrepreneurs invest in their own business. In a reformulation of the standard portfolio choice model that allows for underreporting of private business income to tax authorities, we show that a fall in the tax rate may increase investment in risky entrepreneurial business equity at the intensive margin, but decrease entrepreneurial investment at the extensive margin. To test these hypotheses, we use household survey panel data for Germany eliciting the personal wealth composition in detail in 2002, 2007, and 2012. We analyze the effects of personal income taxes on the portfolio shares of six asset classes of private households, including private business equity. In a system of simultaneous demand equations in first differences, we identify the tax effects by an instrumental variables approach exploiting tax reforms during our observation period. To account for selectioninto entrepreneurship, we use changes in entry regulation into skilled trades. Estimation results are consistent with the predictions of our theoretical model. An important policy insight is that lower taxes drive out businesses that are viable only due to tax avoidance or evasion, but increase investment in private businesses that are also worthwhile in the absence of taxes.
    Keywords: Taxation, entrepreneurship, portfolio choice, investment
    JEL: H24 H25 H26 L26 G11
    Date: 2017
  10. By: Claus Thustrup Kreiner (Department of Economics, University of Copenhagen); Søren Leth-Petersen (Department of Economics, University of Copenhagen); Louise C. Willerslev-Olsen (Department of Economics, University of Copenhagen)
    Abstract: Do people end up in financial trouble simply because of adverse shocks to income and wealth, or is financial trouble related to persistent differences in financial attitudes and behavior that may be transmitted from generation to generation? We address this question using a new administrative data set with longitudinal information about defaults for the universe of personal loans in Denmark. We provide non-parametric evidence showing that the default propensity is more than four times higher for individuals with parents who are in default compared to individuals with parents not in default. This intergenerational relationship is apparent soon after children move into adulthood and become legally able to borrow. The intergenerational relationship is remarkably stable across age groups, levels of loan balances, parental income levels, childhood school performance, time periods and different measures of financial trouble. Basic theory points to three possible explanations for the correlation across generations in financial trouble: (i) children and parents face common shocks; (ii) children and parents insure each other against adverse shocks; (iii) financial behavior differs across people and is transmitted across generations. Our evidence indicates that the last explanation is the most important. Finally, we show that the intergenerational correlation in financial trouble is not fully incorporated in interest setting on loans, pointing to the existence of an interest rate externality in the market for personal loans.
    Keywords: Household borrowing decisions, default, intergenerational dependency
    JEL: D12 D91 G20
    Date: 2017–03
  11. By: Reinhold Kosfeld; Christian Dreger
    Abstract: The relevance of spatial effects in the wage curve can be rationalized by the model of monopsonistic competition in regional labour markets. However, distortions in extracting the regional unemployment effects arise in standard regional (i.e. NUTS) classifications as they fail to adequately capture spatial processes. In addition, the nonstationarity of wages and unemployment is often ignored. Both issues are particularly important in high unemployment regimes like East Germany where a wage curve is difficult to establish. In this paper, labour market regions defined by economic criteria are used to examine the existence of an East German wage curve. Due to the nonstationarity of spatial data, a global panel cointegration approach is adopted. By specifying a spatial error correction model (SpECM), equilibrium adjustments are investigated in time and space. The analysis gives evidence on a locally but not a spatially cointegrated wage curve for East Germany.
    Keywords: Wage curve, labour market regions, global cointegration, spatial error-correction model
    JEL: J30 J60 C33 R15
    Date: 2017
  12. By: Hårsman, Björn (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Mattsson, Lars-Göran (Royal Institute of Technology, Department of Transport Science)
    Abstract: The paper deals with the selection into entrepreneurship and more precisely with Lazear’s model of occupational choice between entrepreneurship and paid employment. The basic aim is to show that lower expected income for entrepreneurs vs. wage-employed is fully compatible with Lazear’s assumption that the selection into entrepreneurship is based upon income maximization – there is no “return to entrepreneurship puzzle”. We will prove this by deriving the theoretical implications that follow from the assumption that skills are Fréchet distributed. Another aim is to shed some empirical light on the resulting theoretical results. This is done by using individual level data from the Swedish employment register for 2004-2008 to compute the parameters of the Fréchet distribution and the corresponding income distributions for self-owners and wage employed. The paper contributes to earlier literature by resolving the so called income paradox and by demonstrating the rich possibilities for empirical studies inherent in the Lazear model.
    Keywords: entrepreneurship; occupational choice; self-owning; skill distribution; Fréchet distribution; entrepreneurship puzzle
    JEL: J24 J30 L26 M13
    Date: 2017–07–07
  13. By: Lukas Mergele, Michael Weber (Humboldt-Universität zu Berlin)
    Abstract: This paper studies whether the decentralization of public employment services (PES) increases job placements among the unemployed. Decentralizing PES has been a widely applied reform used by governments aiming to enhance their efficacy. However, economic theory is ambiguous about its effects, and empirical evidence has been scarce. Using a difference-in-differences design, we exploit unique within-country variation in decentralization provided by the partial devolution of German job centers in 2012. We find that decentralization reduces job placements by approximately 10%. Decentralized providers expand the use of active labor market programs and monitoring strategies which diminish job seekers’ reemployment prospects but shift costs to higher levels of government.
    Keywords: decentralization, public employment services, job placements
    JEL: H11 H75 I38 J48
    Date: 2017–06–20
  14. By: Frietsch, Rainer; Schubert, Torben; Rothengatter, Oliver
    Abstract: Within this study we provide descriptive as well as multivariate evidence on the effects of the German Excellence Initiative on universities. Thereby, we will focus on the question whether the Excellence Initiative has led to a sharpening of the participating universities' scientific profiles in terms of technology fields they are active in. To this end, we have created an integrated panel dataset consisting of various indicators at the level of universities. The data for the panel was collected from various sources, e.g. DESTATIS, the DFG, Web of Science by Thomson Reuters as well as PATSTAT. The results show the funding by the Excellence Initiative has been relatively concentrated with about half of the universities. In the group of universities having received funding, a few universities, often conceived as top-performers, have been successful in acquiring a substantial number of projects in all three tracks of the Excellence Initiative. A breakdown of the graduate schools and the excellence clusters by field/subject shows that the largest share of projects was awarded mathematics/natural sciences. Although we there a considerable differences between the funded and non-funded universi-ties, only few effects seem to be causally driven by the funding of the Excellence Initiative, in particular as concerns quality-related bibliometric or patent indicators. We do, however, find strong evidence that the funding of the Excellence Initiative has strongly increased the subject concentration of students and the field concentration of scientific publications. It therefore stands to reason that the Excellence Initiative has contributed to sharpening the profiles of the funded universities.
    Date: 2017
  15. By: Paul Andres Rodriguez-Lesmes
    Abstract: This study estimates the potential impact of early diagnosis programmes on medication, subjective health and lifestyle. To deal with potential selection bias due to screening, I employ a feature of the English Longitudinal Study of Ageing that motivates a regression discontinuity design based on respondents’ blood pressure. If their measurements are above a threshold, individuals are advised to visit their family doctor to check for high blood pressure. There is evidence of a temporal increase in use of medication for treating the condition (6.6 percentage points), which almost doubled in the proportion of people taking medication for such blood pressure levels. At the same time, there is a permanent reduction of the probability of consuming alcohol twice a week (10 percentage points) and an increase in fruits consumption. However, there is also evidence of higher smoking frequency (eight cigarettes per week) in those above the threshold. Such lifestyle responses are not related to extra medication. However, no clear effects on either objective or subjective health were found after 4 years of intervention.
    Keywords: Hypertension; Biomarkers; Health behaviours; Health investment;Prevention
    Date: 2017–06–15
  16. By: de Vos, Duco (Delft University of Technology); Meijers, Evert J. (Delft University of Technology); van Ham, Maarten (Delft University of Technology)
    Abstract: It is generally found that workers are more inclined to accept a job that is located farther away from home if they have the ability to work from home one day a week or more (telecommuting). Such findings inform us about the effectiveness of telecommuting policies that try to alleviate congestion and transport related emissions, but they also stress that the geography of labour markets is changing due to information technology. We argue that estimates of the effect of working from home on commuting time are biased downward because most studies ignore preference based sorting (self-selection): workers who dislike commuting, and hence have shorter commutes, might also be more likely to work from home. In this paper we investigate to what extent working from home affects the willingness to accept a longer commute and we control for preference based sorting. We use 7 waves of data from the Dutch Labour Supply Panel and show that on average telecommuters have a 50 percent higher marginal cost of one-way commuting time, compared to non-telecommuters. We estimate the effect of telecommuting on commuting time using a fixed-effects approach and we show that preference based sorting biases cross-sectional results 27-28 percent downwards. Working from home allows people to accept 5.7 percent longer commuting times on average, and every additional 8 hours of working from home are associated with 3 percent longer commuting times.
    Keywords: telecommuting, commuting time, job search, job mobility, labour market area
    JEL: J32 R11 R41
    Date: 2017–07
  17. By: Alexander Ahammer; Thomas Schober
    Abstract: Variations in the use of medical resources, both across and within geographical regions, have been widely documented. Whenever these variations cannot be explained by differences in patient needs or preferences, they may result in some individuals being over-treated, while others are under-treated, thus raising questions on the equity and efficiency of healthcare systems. One explanation for these variations is differences in medical practice styles; that is, physicians may develop their own treatment patterns based on their beliefs about the efficacy of medical interventions. We use a large administrative data set from Upper Austria to study the practice styles among primary care physicians. We decompose the use of healthcare services into patient characteristics, patient and physician fixed effects, and stochastic health shocks. Physician fixed effects are interpreted as a measure of practice styles, which are then related to observable physician characteristics and to attributes of the local healthcare sector.
    Keywords: Health care expenditures, variation, practice styles, physician behavior
    JEL: I11 I12 C23
    Date: 2017–05
  18. By: Douglas, Graeme (Bank of England); Noss, Joseph (Bank of England); Vause, Nicholas (Bank of England)
    Abstract: This paper provides a means of estimating how ‘Solvency II’ regulations — introduced in the European Union in January 2016 — might affect UK life insurers’ incentives to hold different types of financial assets, and how these asset holdings are likely to vary in the face of hypothetical changes to market prices. To do so, it sets out a structural model of firms’ equity to assess their investment behaviour under different regulatory regimes. It finds that, while Solvency II may partly protect insurers’ solvency positions from falls in risky asset prices, the new regulations might encourage certain types of UK life insurers to de-risk — that is, move to holding safe assets in place of risky — following falls in risk-free interest rates. This behaviour is driven by changes in the so-called ‘risk margin’, which, under its current design within the Solvency II framework, reduces insurers’ solvency positions following falls in risk-free interest rates, thereby encouraging them to sell risky assets to reduce their probability of regulatory insolvency. The model also suggests that, once Solvency II is fully implemented by 2032, UK life insurers may have markedly reduced their holdings of long-term, risky assets. In the model, this behaviour is also driven by the risk margin, which, by increasing the volatility of insurers’ solvency, encourages them to de-risk to reduce the variance of their asset portfolios.
    Keywords: Insurance; procyclicality; regulation; Solvency II; liquidity
    JEL: G11 G12 G18 G22 G23
    Date: 2017–07–07
  19. By: Tonnerre, Antoine
    Abstract: The purpose of this paper is two-fold. Firstly, it surveys different works related to the analysis of Innovation and the way it spreads locally. We will see that theoretical predictions and empirical facts are rather contradictory. This will lead us, secondly, to shedding light towards the concentration of innovative activities in the European Union, at a more precise level of analysis: the NUTS2 nomenclature. We contradict the usually accepted empirical fact that innovative activities tend to be less and less concentrated, thus supporting the theory of knowledge spillovers, which is probably due to the important changes the European Union went through in terms of trade structure. This claim relies on a rather simple but well-founded analysis. Patent applications to the European Patent Office will be used as a proxy for the level of Innovation. These patent applications have a geographical component that will be exploited to determine whether spatial autocorrelation of innovative activities is present. After showing the importance of considering spatial autocorrelation in an analysis of Innovation, we will propose an empirical methodology to assess how it spreads. Regarding this, no results are presented, as it goes beyond the scope of the paper.
    Keywords: Innovation, knowledge spillovers, spatial concentration, spatial autocorrelation, empirics, patents, European Union, NUTS2.
    JEL: O31 R12
    Date: 2017–07–10
  20. By: Cahuc, Pierre (Ecole Polytechnique, Paris); Carcillo, Stéphane (OECD); Minea, Andreea (Sciences Po, Paris)
    Abstract: This paper investigates the effects of the labor market experience of high school dropouts four years after leaving school by sending fictitious résumés to real job postings in France. Compared to those who have stayed unemployed since leaving school, the callback rate is not raised for those with employment experience, whether it is subsidized or non-subsidized, in the market or non-market sector, if there is no training accompanied by skill certification. In particular, we find no stigma effect associated with subsidized or non-market sector work experience. Moreover, training accompanied by skill certification improves youth prospects only when the local unemployment rate is sufficiently low, which occurs in one fifth of the commuting zones only.
    Keywords: youth, unemployment, training
    JEL: J08 J60
    Date: 2017–06
  21. By: Stiebale, Joel; Wößner, Nicole
    Abstract: We use a panel data set of European firms to analyse the effects of domestic and international M&As on target firms' investment, growth and financial constraints. Combining propensity score matching with a difference-in-differences estimator, our results indicate that upon acquisition, target firms obtain better access to external finance, are characterized by higher levels of tangible and intangible assets, and display lower dependence of investments and cash savings to the availability of internal funds. We also provide evidence that these effects are concentrated among acquisitions during the 2007-2009 financial crisis, relatively small target firms, and domestic rather than foreign acquisitions.
    Keywords: Mergers and Acquisitions,Financial Constraints,Investment,Firm Growth,Financial Crisis,Foreign Ownership
    JEL: F61 F23 G01 G34 L25 D22 D24
    Date: 2017
  22. By: Jan Hagemejer (Narodowy Bank Polski; University of Warsaw; Group for Research in Applied Economics (GRAPE)); Joanna Tyrowicz (Group for Research in Applied Economics (GRAPE); University of Warsaw)
    Abstract: The emergence of global value chains leads to fragmentation of the production processes and reallocation of those processes across countries. With increasing number of production stages, the manufacturing process is located increasingly further away from the consumer. Literature suggests that fragmentation of production increases the international transmission of shocks. The global financial crisis is believed to lead to consolidation and shortening of global value chains and amplification of demand shocks along the global value chains, the so-called bullwhip effect. In this paper we study the effects of global financial crisis on employment, focusing specifically on the role of the distance from final demand (upstreamness) in this adjustment. We find that upstreamness matters for both labor demand and adjustment in employment during the periods of crisis, but this relationship is heterogeneous across countries. While the reaction to the crisis is indeed amplified further away from final demand, contrary to our expectations it is mostly channeled through lower job creation rates rather than faster job destruction. Moreover, the adverse effects of the crisis are lower in foreign firms, this difference does not depend on the distance from final demand.
    Keywords: upstreamness, global value chains, employment, global financial crisis
    JEL: F16 F62 F66
    Date: 2017
  23. By: Bazen, Stephen (Aix-Marseille University); Waziri, Khalid Maman (Aix Marseille University)
    Abstract: Stochastic earnings frontiers have been used in a relatively small number of papers to analyse workers' ability to capture their full potential earnings in labour markets where there is inefficient job matching (due to lack of information, discrimination, over-education or during process of assimilation of migrants). Using a representative survey of young persons having left full-time education in France in 1998 and interviewed in 2001 and 2005, this paper examines the process of their assimilation into normal employment and the extent to which job matches are inefficient in the sense that the pay in a job is below an individual's potential earnings (determined by education, other forms of training and labour market experience). Our results suggest that young workers manage to obtain on average about 82% of their potential earnings three years after leaving full-time education and earnings inefficiency had disappeared four years later. The results are robust to the treatment of selectivity arising from the exclusion of the unemployed in the estimation of the frontier.
    Keywords: stochastic earnings frontier, job matching, youth employment, earnings determination, sample selection stochastic frontier
    JEL: J30 J13 J24 C24
    Date: 2017–06
  24. By: Petrescu, Monica; Wedow, Michael
    Abstract: This paper considers the growth of dark pools: trading venues for equities without pre-trade transparency. It first documents the emergence and expansion of dark pools in European equity markets in the context of regulatory changes and increased high-frequency trading (HFT). It finds that the market share of trading conducted in dark pools has stabilised below 10% and is similar across groups of stocks from different countries. Second, this paper assesses the nature of competition between dark pools, which is based on price and services offered to clients. It documents a substantial degree of horizontal differentiation among European dark pools, with venues providing different options for placing and processing orders likely to attract different types of traders. The hypothesis that most dark pools are primarily used to shield large orders from information leakage is not supported by evidence. This finding is based on a simple indicator that assesses different dark pools in terms of the level of protection from information leakage due to trading with HFT or predatory traders. Finally, this paper evaluates the benefits and costs of the use of dark pools from the perspective of individual traders as well as for market efficiency and financial stability. Recent evidence appears to reject the notion that dark pools adversely affect volatility in stock markets. JEL Classification: G10, G14, G18
    Keywords: dark pools, equity markets, financial stability, liquidity, market microstructure
    Date: 2017–07
  25. By: Lammers, Marloes (Vrije Universiteit Amsterdam); Bloemen, Hans (Vrije Universiteit Amsterdam); Hochguertel, Stefan (Vrije Universiteit Amsterdam)
    Abstract: This paper makes use of a natural experiment to examine effects of potential capital losses and general attractiveness of pension schemes on employees' propensity to change jobs. On January 1st 2004, the two largest pension funds in the Netherlands, for civil servants and for the health care sector, changed their pension scheme from a final salary to an average salary. This industry-level change excludes the possibility that a negative correlation between having a job with an attractive pension scheme and the number of labour market transitions is driven by self-selection of workers into jobs with an attractive pension arrangement. Using individual data covering the entire Dutch population, we estimate discrete choice models for job-to-job transitions. The results show that the number of job transitions of civil servants significantly increased at the onset of the new pension rules. The changing pension rules affected the propensity to change jobs for individuals working in the health care sector only to a smaller extent.
    Keywords: discrete choice models, policy evaluation, labour market flexibility, pension systems
    JEL: C35 J26 J32 J63
    Date: 2017–06
  26. By: Benzeval, Michaela; Bianchi, Annamaria; Brewer, Mike; Burton, Jonathan; Cernat, Alexandru; Creighton, Mathew; Crossley, Thomas F.; Delavande, Adeline; Fisher, Paul; Gaia, Alessandra; Jäckle, Annette; Jamal, Amaney; Oberski, Daniel; Popham, Frank; Whitley, Elise; Winter, Joachim; Zafar, Basit
    Abstract: This paper presents some preliminary findings from Wave 9 of the Innovation Panel (IP9) of Understanding Society: The UK Household Longitudinal Study. Understanding Society is a major panel survey in the UK. IP9 included experiments on the use mixed mode data collection, the value of respondent incentives, targeted timing of email invitations, measurement of household finances, subjective expectations about returns to schooling, people’s assessment of what constitutes “successful ageing†, format of response options, use of multiple measurements to improve measurement of attitudes, and measurement of sensitive topics. This paper describes the design of IP9, the experiments carried and the preliminary findings from early analysis of the data.
    Date: 2017–07–07
  27. By: José Manuel Montero (Banco de España and Universidad Complutense de Madrid)
    Abstract: I test the predictions from Duca, Montero, Riggi and Zizza (2017), who develop a customermarket model with consumer switching costs and capital-market imperfections in which price-cost markups behave countercyclically, with a subsample of European firms participating in the Wage Dynamics Network 2014 survey. I use a novel empirical approach developed by Aakvik, Heckman and Vytlacil (2005) for estimating discrete choice models with binary endogenous regressors that allows for selection on unobservables. Results show that firms subject to financial constraints had a significantly higher probability of raising markups than in a counterfactual scenario without such constraints. Moreover, the estimated partial effects for the main variables are in overall accordance with the predictions from the theoretical model.
    Keywords: markups, financial frictions, customer market, discrete-choice models
    JEL: C25 C26 D22 L11
    Date: 2017–07

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