nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2017‒09‒10
twenty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Education, labour, and the demographic consequences of birth postponement in Europe By Hippolyte D'Albis; Angela Greulich; Grégory Ponthière
  2. Endogenous technology, matching, and labor unions: Does low-skilled immigration affect the technological alignment of the host country? By Cords, Dario
  3. You’ve got mail: A randomised Field experiment on tax evasion. By Bott, Kristina Maria; Cappelen, Alexander W.; Sørensen, Erik Ø.; Tungodden, Bertil
  4. Shacklean Uncertainty and Cultural Embeddedness as Innovation Constraints in the UK By Tubadji, Annie; Nijkamp, Peter; Santarelli, Enrico
  5. Measuring Productivity Dispersion: Lessons from counting one-hundred million ballots By Ethan Ilzetzki; Saverio Simonelli
  6. Housing Allowance and Rents: Evidence from a Stepwise Subsidy Scheme By Essi Eerola; Teemu Lyytikäinen
  7. Impact of innovation policy on firm innovation – A comparison of Finland and Sweden, 1970-2013 By Torregrosa, Sara; Pelkonen, Antti; Oksanen, Juha; Kander, Astrid
  8. The puzzle of older workers' employment: Distance to retirement and health effects By Bérangère Legendre; Mareva Sabatier
  9. The effect of supranational economic constraints on MPs issue attention: the case of France By Cal Le Gall; Corentin Poyet
  10. Labour market entry of non-Labour migrants – Swedish evidence By Åslund, Olof; Forslund, Anders; Liljeberg, Linus
  11. Data science for assessing possible tax income manipulation: The case of Italy By Marcel Ausloos; Roy Cerqueti; Tariq A. Mir
  12. Market design for a high-renewables European electricity system By Newbery, D.; Pollitt, M.; Ritz, R.; Strielkowski, W.
  13. Savvy parent, savvy child? Intergenerational correlations in returns to financial wealth By Knüpfer, Samuli; Rantapuska, Elias; Sarvimäki, Matti
  14. Learning from the field: analysing foreign experience feedbacks to enrich the development of a programme for the renovation of multifamily housing in Geneva By Christian Freudiger; Jean-Sébastien Broc; Jean-Marc Zgraggen; Catherine Lavallez
  15. Household Labour Supply and the Marriage Market in the UK, 1991-2008 By Marion Goussé; Nicolas Jacquemet; Jean-Marc Robin
  16. Raising the take-up of social assistance benefits through a simple mailing: evidence from a French field experiment By Sylvain Chareyron; David Gray; Yannick L'Horty
  17. Heat or power: how to increase the use of energy wood at the lowest costs? By Vincent Bertrand; Sylvain Caurla; Elodie Le Cadre; Philippe Delacote
  18. Going Fast or Going Green? Evidence from Environmental Speed Limits in Norway. By Folgerø, Ingrid Kristine; Harding, Torfinn; Westby, Benjamin
  19. Intergenerational Educational Mobility in Europe By Orhan Torul; Oguz Oztunali
  20. Working at a different level? Curriculum differentiation in Irish lower secondary education By Smyth, Emer

  1. By: Hippolyte D'Albis (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Angela Greulich (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Grégory Ponthière (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12)
    Abstract: Background: This article questions the demographic consequences of birth postponement in Europe. Objective: Starting from the fact that there is no obvious link between the timing of first births and fertility levels in Europe, we find that under certain circumstances, birth postponement potentially facilitates rather than impedes starting a family. Methods: We apply a synthetic cohort approach and distinguish between different socioeconomic determinants of the timing of first births by using the European Union Statistics on Income and Living Conditions (EU-SILC). Data is compiled specifically to reduce endogeneity and to eliminate structure effects. Results: We find that the probability of becoming a mother is higher for women who postpone first childbirth due to education and career investment than for women who postpone due to unrealized labour market integration. Conclusions: Educated and economically active women certainly postpone first childbirth in comparison to women who are less educated and who are not working, but they end up with a higher probability of starting a family. Contribution: The article contributes to the academic discussion of circumstances that may lead to birth postponement resulting in higher fertility for younger cohorts in European countries.
    Keywords: Labour,Demographic,Education
    Date: 2017
  2. By: Cords, Dario
    Abstract: In recent years, Germany and other European countries face the strongest immigration flow in their history. Experts unanimously agree that one of the core factors of a successful social integration is the labor market participation of the new arrivals. This paper investigates the impact of low-skilled immigration on a unionized economy with labor market frictions. It especially examines how immigration affects the technology choice of firms and, thereby, the technological alignment of the host country. The labor market is characterized by heterogeneity on both sides of the market. Within this framework, it can be shown that low-skilled immigration encourages firms to invest more in a basic technology, which leads to a deterioration of the technology level in the whole economy. It can be further shown that policies, which improve the access of already existing low-skilled immigrants to the labor market counteract the effect that is triggered by an increase in low-skilled immigration.
    Keywords: Immigration,Technology Choice,Search and Matching,Labor Unions,Skillheterogeneity
    JEL: F22 J24 J31 J51 J61 J64
    Date: 2017
  3. By: Bott, Kristina Maria (Dept. of Economics, Norwegian School of Economics and Business Administration); Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: We report from a large-scale randomized field experiment conducted on a unique sample of more than 15 000 taxpayers in Norway, who were likely to have misreported their foreign income. We find that the inclusion of a moral appeal or a sentence that increases the perceived probability of detection in a letter from the tax authorities almost doubled the average self-reported foreign income. The moral letter mainly works on the intensive margin, while the detection letter mainly works on the extensive margin. We also show that the detection letter has large long-term effects on tax compliance.
    Keywords: Taxation; tax evasion; field Experiment.
    JEL: C93 D63 H26
    Date: 2017–06–11
  4. By: Tubadji, Annie; Nijkamp, Peter; Santarelli, Enrico
    Abstract: We focus on both individual and local uncertainty to explain the innovation potential of entrepreneurs in the NUTS1 UK regions in 2005 and 2009. The ‘potential surprise function’ (Shackle, 1949) clarifying why sometimes promising business choices are truncated is taken as a determinant of an entrepreneur’s innovation decision. GEM (Global Entrepreneurship Monitor) data and data on psychological types are used in the empirical analysis. The econometric estimation strategy addresses both the issue of selection bias (due to uncertainty) and that of zero-inflated data (i.e., presence of only a few highly innovative actors in comparison to the majority in our sample). Findings suggest that local uncertainty is the predominant determinant of individual entrepreneurial choice. The regional effect appears to amount to about 4% of the innovation differences across NUTS1 UK regions, while almost one third of it is determined by the local level of uncertainty bias. Thus, the novelty of the present study is that it shows how differences in local cultural tolerance to uncertainty may explain differences in the quantity of truncated innovative ideas among localities.
    Keywords: potential surprise function,entrepreneurship,innovation,knowledge,epistemic uncertainty,cultural embeddedness,Culture Based Development,quality ladder
    JEL: Z10 D81 R11
    Date: 2017
  5. By: Ethan Ilzetzki (London School of Economics (LSE); Centre for Macroeconomics (CFM)); Saverio Simonelli (University of Naplpes Federico II; enter for Studies in Economics and Finance)
    Abstract: We measure output per worker in nearly 8,000 municipalities in the Italian electoral process using ballot counting times in the 2013 general election and two referenda in 2016. We document large productivity dispersion across provinces in this very uniform and low-skill task that involves nearly no technology and requires limited physical capital. Using a development accounting framework, this measure explains up to half of the firm-level productivity dispersion across Italian provinces and more than half the north-south productivity gap in Italy. We explore potential drivers of our measure of labor efficiency and find that its association with measures of work ethic and trust is particularly robust.
    Keywords: Labor productivity, Development accounting, Work ethic, Cultural economics
    JEL: O47 E24 J24 Z10
    Date: 2017–08
  6. By: Essi Eerola; Teemu Lyytikäinen
    Abstract: This paper studies the effect of housing demand subsidies on rents using discontinuities in the Finnish housing allowance system as a quasi-experimental setting. The stepwise dependence of housing allowance on the floor area of the dwelling and the year of construction of the building causes economically and statistically significant discontinuities in the amount of housing allowances. However, our results show that there are no discontinuities in rents of the recipient households at these cut-offs. Instead, differences in the amount of the housing allowance are translated roughly one-to-one into differences in the rent net of housing allowance.
    Keywords: housing demand subsidies, housing allowance, incidence, rents
    JEL: H22
    Date: 2017–08
  7. By: Torregrosa, Sara (Department of Economic History, Lund University); Pelkonen, Antti (VTT Technical Research Centre of Finland); Oksanen, Juha (VTT Technical Research Centre of Finland); Kander, Astrid (Department of Economic History, Lund University)
    Abstract: To what extent have public policies contributed to the innovation performance of Finland and Sweden in the period 1970-2013? This paper aims to assess the share of innovations stimulated by the public sector, specifically because of receiving public funding or being the result of research collaboration with public institutions. We combine survey and LBIO results on these variables, to overcome reporting biases found in the two methods. The main data comes from the new UDIT dataset, which gathers the most significant innovations of both countries for the period, in total about 4,100 Swedish and 2,600 Finnish innovations. It has been constructed following the LBIO method (Literature Based Innovation Output), which obtains information on relevant commercialized innovations from general technology journals as well as industry specific trade journals. Our results indicate that Finland had a substantially larger public involvement in these innovations than Sweden. This is specially true in the years between 1990 and 2000, when we see a drop in the relative role of the Swedish public sector in innovation output, while the Finnish trends are constant or slightly increasing over the period. However, in both countries public policies lie behind a significant share of the innovations (30-50% in Finland, 15-35% in Sweden), and in the Swedish case we can further assess that the publicly stimulated innovations were more often found among the most significant new products (written about in several articles).
    Keywords: public policy; innovation; LBIO method
    JEL: I28 N70 O38 O57
    Date: 2017–04–26
  8. By: Bérangère Legendre (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Mareva Sabatier (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)
    Abstract: This article investigates the extent to which the distance to retirement affects low employment rates among European older workers, taking into account a key but often neglected determinant: health status. To begin, the study amends McCall's job search model, in which the job search behavior is treated as age dependent. Agents are heterogeneous according to two attributes: distance to retirement and health. This model leads to clear predictions, such that the closer the retirement, the greater the reservation wage and the lower people's search effort. Older workers also exhibit lower exit rates from unemployment , an effect that gets enhanced by health problems. This empirical work, based on a French survey, confirms the existence of a distance effect but also puts the greater impact of health status into perspective. The distance effect explains only part of the puzzle of older workers' employment.
    Keywords: distance to retirement,older workers' employment,health
    Date: 2017
  9. By: Cal Le Gall (PACTE - Politiques publiques, ACtion politique, TErritoires - UPMF - Université Pierre Mendès France - Grenoble 2 - UJF - Université Joseph Fourier - Grenoble 1 - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Corentin Poyet (PACTE - Politiques publiques, ACtion politique, TErritoires - UPMF - Université Pierre Mendès France - Grenoble 2 - UJF - Université Joseph Fourier - Grenoble 1 - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes)
    Abstract: Research on the determinants of the issue content of parliamentary activities is recent but offers clear empirical results: opposition status, media salience and party issue ownership are the main predictors of MPs' questioning in the parliament. In this paper, we argue that integration into international markets and into the European Union should also affect issue attention by constraining national governments' abilities to influence the economy. All things being held equal, we thus expect economic integration to provide MPs incentives to deempha-size economic issues, who should then prefer to stress non-economic issues in the Parliament. To test this assumption, we selected the French case because integration within the world markets has significantly increased since the eighties, eventually providing us with a good case study. Using data from the Comparative Agenda Project (CAP) which provides oral questions and interrogations in the French Parliament from 1988 to 2007, we are able to look at the variation over time of parliamentary questioning on both economic and non-economic matters. To measure the degree of (European) economic integration,
    Keywords: Parliament,Member of parliament,Globalization,Economic integration
    Date: 2017–06–15
  10. By: Åslund, Olof (IFAU - Institute for Evaluation of Labour Market and Education Policy); Forslund, Anders (IFAU - Institute for Evaluation of Labour Market and Education Policy); Liljeberg, Linus (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: We describe the short- and long-term patterns of labour market entry and integration among Non-Western, predominantly non-labour, immigrants to Sweden. Our main sample considers the 1990-2014 period. The patterns of time to first contact and labour market entry vary with business cycle conditions, country of origin and other background characteristics. But the main message is the remarkable stability of a relatively slow entry process and long-term outcomes below those of the average worker. The number of jobs before the “first real job” (entry) is limited and the first employer contact is for many a port to a more stable position. First jobs are comparatively often found in small, low-wage firms, which over time have become increasingly present in service industries. Our discussion of policy experiences suggests several margins and factors affecting the labour market outcomes of recent migrants, but also indicates that no single reform or measure is likely to in itself radically change the patterns.
    Keywords: immigration; Labour market entry; integration policy
    JEL: J61 J68
    Date: 2017–08–29
  11. By: Marcel Ausloos; Roy Cerqueti; Tariq A. Mir
    Abstract: This paper explores a real-world fundamental theme under a data science perspective. It specifically discusses whether fraud or manipulation can be observed in and from municipality income tax size distributions, through their aggregation from citizen fiscal reports. The study case pertains to official data obtained from the Italian Ministry of Economics and Finance over the period 2007-2011. All Italian (20) regions are considered. The considered data science approach concretizes in the adoption of the Benford first digit law as quantitative tool. Marked disparities are found, - for several regions, leading to unexpected "conclusions". The most eye browsing regions are not the expected ones according to classical imagination about Italy financial shadow matters.
    Date: 2017–09
  12. By: Newbery, D.; Pollitt, M.; Ritz, R.; Strielkowski, W.
    Abstract: This paper presents a set of policy recommendations for the market design of a future European electricity system characterized by a dominant share of intermittent renewable energy supply (RES), in line with the stated targets of European governments. We discuss the market failures that need to be addressed to accommodate RES in liberalized electricity markets, review the evolution of the EU's RES policy mechanisms, and summarize the key market impacts of RES to date. We then set out economic principles for market design and use these to develop our policy recommendations. Our analysis covers the value of interconnection and market integration, electricity storage, the design of RES support mechanisms, distributed generation and network tariffs, the pricing of electricity and flexibility as well as long-term contracting and risk management.
    Keywords: Electricity markets, wholesale market design, renewable energy, interconnection, electricity storage, long-term contracts, capacity markets
    JEL: H23 L94 Q28 Q48
    Date: 2017–07–16
  13. By: Knüpfer, Samuli; Rantapuska, Elias; Sarvimäki, Matti
    Abstract: The returns individuals earn on financial wealth correlate positively across generations. We establish this result by analyzing the full population of household investors in Finland. The correlation extends to both historical and expected returns and the intergenerational spread in returns implies sizeable differences in wealth accumulation over time. Asset holdings reveal that returns correlate mostly because family members choose the same securities. An instrument using non-overlapping peer groups and a natural experiment based on mergers allow us to address causality. We find causal influence not only from parents to children but also in the opposite direction. Our findings have implications for understanding wealth inequality and portfolio heterogeneity.
    JEL: G11 D63
    Date: 2017–09–01
  14. By: Christian Freudiger (Office Cantonal de l'Energie (OCEN), Département de l'aménagement, du logement et de l'énergie (DALE)); Jean-Sébastien Broc (B R & C - Broc Research & Consulting - IEECP - Institute for European Energy and Climate Policy); Jean-Marc Zgraggen (SIG - Services Industriels de Genève); Catherine Lavallez (AMSTEIN+WALTHERT)
    Abstract: Local authorities or other local stakeholders are increasingly involved in the implementation of energy efficiency policies, and in particular for the renovation of buildings. They can have more flexibility in their action plans, compared to national institutions. They often take the lead to experiment new approaches and are therefore key sources of policy innovation. However their means are smaller and they encounter difficulties in transforming pilot projects into large dissemination schemes. This paper presents a detailed review of 9 local and/or innovative initiatives aimed at boosting the renovation of dwellings, and in particular of multifamily housing, mostly in France, but also in Austria, Germany, the Netherlands and Switzerland. This sample is not meant to be representative. The case studies were selected based on the interest they have raised in other local authorities or countries, and to have a diversity of approaches: from tailored support requiring a strong involvement of the homeowners to turnkey renovation services. The analysis is structured according to the support offered along the customer journey: 1) general information; 2) targeted technical advice; 3) financial engineering; 4) preparation of the works and selection of the professionals; 5) implementation of the works; 6) validation and follow-up. While in the past the initiatives tended to focus on some of these steps, the recent initiatives increasingly cover the whole journey. The case studies bring interesting experience feedback for each of these steps. Most of these schemes aimed at a renovation rate between one to ten thousand dwellings per year. The achievements vary and highlight key lessons learnt for experience sharing. This study was indeed made for the Public Energy Utility of Geneva and Geneva Cantonal Office of Energy in order to feed thoughts for the further deployment of an energy renovation programme.
    Keywords: refurbishment,renovation,multifamily buildings,collective housing,energy efficiency in buildings,local initiatives
    Date: 2017–05–29
  15. By: Marion Goussé (Département d'Economique, Université Laval - Université Laval); Nicolas Jacquemet (PSE - Paris School of Economics); Jean-Marc Robin (ECON - Département d'économie - Sciences Po)
    Abstract: We document changes in labour supply, wage and education by gender and marital status using the British Household Panel Survey, 1991-2008, and seek to disentangle the main channels behind these changes. To this end, we use a version of Goussé, Jacquemet, and Robin (2016)'s search-matching model of the marriage market with labour supply, which does not use information on home production time inputs. We derive conditions under which the model is identified. We estimate different parameters for each year. This allows us to quantify how much of the changes in labour supply, wage and education by gender and marital status depends on changes in the preferences for leisure of men and women and how much depends on changes in homophily.
    Keywords: structural estimation, collective labour supply, assortative matching, sorting,Search-matching
    Date: 2017–06–01
  16. By: Sylvain Chareyron (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique); David Gray (University of Ottawa [Ottawa], TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique); Yannick L'Horty (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper is related to the phenomenon puzzling unduly low take-up rate for social assistance benefits in France. In order to investigate this phenomenon, we conduct an experimental evaluation in the form of a randomized control trial involving the influences of informational availability and complexity. We examine the impact of a change in the information set which is sent to these households just after they claim the benefit, seeking a behavioral response to this particular ‘nudge’. Our findings suggest that a costless action on the part of program administrators is able to substantially increase take-up for certain types of beneficiaries. In order to be effective, these actions should target households according to their individual attributes.
    Keywords: non-take-up of social insurance benefits, RCT, informational nudge
    Date: 2017–04–20
  17. By: Vincent Bertrand (Université de Bourgogne Franche-Comté, CRESE); Sylvain Caurla (LEF, AgroParisTech, INRA, 54000, Nancy, France); Elodie Le Cadre (Climate Economics Chair, Univ. Paris Dauphine, Paris, France); Philippe Delacote (LEF, AgroParisTech, INRA, 54000, Nancy, France)
    Abstract: We compute the optimal subsidy level to fuelwood consumption that makes it possible to achieve the French biomass energy consumption target. In this view, we model the competitions and trade-offs between the consumption of fuelwood for heat (FW-H) and the consumption of fuelwood for power generation (FW-E). To do so, we couple a forest sector model with an electricity simulation model and we test different scenarios combining FW-H and FW-E that account for contrasted potential rise in carbon price and potential reduction in the number of nuclear plants. We assess the implications of these scenarios on (1) the budgetary costs for the Government, (2) the industrial wood producers’ profits, (3) the costs savings in power sector for the different scenarios tested and (4) the carbon balance. We show that the scenario with the highest carbon price and the lowest number of nuclear plants is the less expensive from a budgetary perspective. Indeed, when associated with a high carbon price, co-firing may increase FW-E demand with lower subsidy level, which enables reducing the cost of reaching the target. However, in this case, FW-E crowds-out part of FW-H which may cause political economy issues. From a carbon balance perspective, a FW-H only scenario better performs than any other scenario that combines FW-H and FW-E due to the relatively low emissions factors of alternative technologies for electricity generation, in particular nuclear energy.
    Keywords: Forestry sector, Bioenergy, Biomass-based electricity, Carbon pricing, Nuclear power
    JEL: Q41 Q48 Q23
    Date: 2017–08
  18. By: Folgerø, Ingrid Kristine (Dept. of Economics, Norwegian School of Economics and Business Administration); Harding, Torfinn (Dept. of Economics, Norwegian School of Economics and Business Administration); Westby, Benjamin (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: This paper studies the impact of speed limits on local air pollution, using a series of datespecific speed limit reductions in Oslo over the 2004-2015 period. We find that lowering the speed limit from 80 to 60 km/h reduces travel speed by 5.8 km/h, but we find no effect on local air pollution. A conservative cost–benefit calculation suggests a net social loss from the speed limit reductions of 0.52 billion USD each year. Our findings imply that policy makers need to consider other actions than speed limit reductions to improve local air quality.
    Keywords: Temporary speed limit; air pollution; travel time; cost-benefit; regression discontinuity design
    JEL: H23 Q53 Q58 R41
    Date: 2017–09–07
  19. By: Orhan Torul; Oguz Oztunali
    Date: 2017–03
  20. By: Smyth, Emer
    Abstract: Young people in Irish schools are required to choose whether to sit lower and upper secondary exam subjects at higher or ordinary level. This paper draws on a mixed methods longitudinal study of students in twelve case-study schools to trace the school and student factors influencing take-up of higher level subjects within lower secondary education. School organisation and process are found to shape the extent to which young people actually have a ‘choice’ or whether this is circumscribed by the school they attend or the class group to which they are allocated. Streaming practices, which are more prevalent in schools serving socioeconomically disadvantaged communities, constrain the degree of choice young people have over their subject levels, with those in lower stream classes usually allocated to ordinary level. Even where schools have mixed ability base classes, schools influence access to higher level subjects. In the middle-class and socially mixed schools, teachers are more likely to expect and encourage all students to take higher level, at least for as long as possible. In contrast, in working-class schools, there are sharp declines in the proportion taking higher level subjects as they approach the national exam taken at the end of lower secondary education. Early decisions about not pursuing higher level are found to have long-term consequences by closing off particular pathways for the future. These early decisions are often made in the absence of formal school-based guidance, thus contributing to social inequalities in young people’s destinations. The findings contribute to our understanding of how curriculum differentiation reinforces social class differences in educational pathways.

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