nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2017‒10‒15
34 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. UK national minimum wage and labor market outcomes of young workers By Fidrmuc, Jan; Tena, Juan de Dios
  2. European Disparities in Regional Health R&I Performance By Monica Plechero; Claudio Cozza; Raquel Ortega-Argiles
  3. The transient and persistent efficiency of Italian and German universities: A stochastic frontier analysis By Agasisti, Tommaso; Gralka, Sabine
  4. Firm heterogeneity and aggregate business services exports : Micro evidence from Belgium, France, Germany and Spain By Andrea Ariu; Elena Biewen; Sven Blank; Guillaume Gaulier; María Jesus González,; Philipp Meinen,; Daniel Mirza; Cesar Martín,; Patry Tello
  5. Knowledge accumulation from public renewable energy R&D in the European Union: Converging or diverging trends? By Grafström, Jonas; Söderholm, Patrik; Gawel, Erik; Lehmann, Paul; Strunz, Sebastian
  6. Duration Dependence as an Unemployment Stigma: Evidence from a Field Experiment in Germany By Partick Nüß
  7. Recent Trends and Developments in European Mortgage Markets By Bouyon, Sylvain
  8. Hours Worked in Europe and the US: New Data, New Answers By Fuchs-Schündeln, Nicola; Bick, Alexander; Brüggemann, Bettina
  9. Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany By Clemens Fuest; Andreas Peichl; Sebastian Siegloch
  10. Impact of a Tertiary Eligibility Threshold on Tertiary Education and Earnings: A Discontinuity Approach By Nordin , Martin; Heckley , Gawain; Gerdtham , Ulf-G
  11. Where the minimum wage bites workers. Factor substitutability and innovativeness at the workplace By Müller, Kai-Uwe; Fedorets, Alexandra
  12. Liberalization, hysteresis, and labor relations in Western European commercial aviation By Reale, Filippo Gian-Antonio
  13. Location Choices of Graduate Entrepreneurs By Larsson, Johan P; Wennberg, Karl; Wiklund, Johan; Wright, Mike
  14. Regulating Child Care Markets. Center-based Care vs. Family Day-Care in Germany By Zierow, Larissa
  15. I Can't Sleep! Relative Concerns and Sleep Behavior By Akay, Alpaslan; Martinsson, Peter; Ralsmark, Hilda
  16. How Entry into Parenthood Shapes Gender Role Attitudes:​ ​New Evidence from Longitudinal UK Data By Elena Grinza; Francesco Devicienti; Mariacristina Rossi; Davide Vannoni
  17. Interactions in Swiss Households' Energy Demand: A Holistic Approach By Ivan Tilov; Benjamin Volland; Mehdi Farsi
  18. The Interaction of Pension System and Unemployment Insurance - Evidence from two Reforms By Endler, Johannes; Geyer, Johannes
  19. Who buffers income losses after job displacement? The role of alternative income sources, the family, and the state By Hank, Eva; Fackler, Daniel
  20. Remarks on the German Regulation of Crowdfunding By Tröger, Tobias H.
  21. Liberalization of European migration and the immigration of skilled people to Sweden By Ejermo, Olof; Zheng, Yannu
  22. German robots - the impact of industrial robots on workers By Dauth, Wolfgang; Findeisen, Sebastian; Südekum, Jens; Wößner, Nicole
  23. Household Debt and Monetary Policy: Revealing the Cash-Flow Channel By Flodén, Martin; Kilström, Matilda; Sigurdsson, Jósef; Vestman, Roine
  24. Fiscally Responsible Mafia-clans By Sergio Beraldo; Massimo Bordignon; Simone Pellegrino; Massimiliano Piacenza; Gilberto Turati
  25. International Transfer Pricing and Tax Avoidance : Evidence from Linked Trade-Tax Statistics in the UK By Li Liu; Tim Schmidt-Eisenlohr; Dongxian Guo
  26. Homeownership, Social Insurance, and Old-Age Security in the United States and Europe By Stipica Mudrazija; Barbara A. Butrica
  27. Changes in the Cost of Bank Equity and the Supply of Bank Credit By Kick, Thomas; Celerier, Claire; Ongena, Steven
  28. Regional Effects of Publicly Sponsored R&D Grants on SME Performance By Gustavsson Tingvall, Patrik; Videnord, Josefin
  29. Business Cycles and Start-ups across Industries: an Empirical Analysis for Germany By Alexander Konon; Michael Fritsch; Alexander Kritikos
  30. Who benefits from GRW? Heterogeneous effects of investment subsidies in Saxony Anhalt By Dettmann, Eva; Weyh, Antje; Titze, Mirko
  31. Subjective Well-being and Partnership Dynamics; Are Same-sex Relationships Different? By Chen, Shuai; van Ours, Jan
  32. Economic Governance, Regulation and Services Trade Liberalization By Matteo Fiorini; Bernard Hoekman
  33. Lowering the minimum age of criminal responsibility: Consequences for juvenile crime and education By Anna Piil Damm; Britt Østergaard Larsen; Helena Skyt Nielsen; Marianne Simonsen
  34. Do Local Governments Tax Homeowner Communities Differently? By Lerbs, Oliver; Füss, Roland

  1. By: Fidrmuc, Jan; Tena, Juan de Dios
    Abstract: The UK national minimum wage (NMW) is age-specific with the most important threshold at the age of 22 (lowered to 21 from 2010 onwards) when workers become eligible for the adult rate. The authors estimate the impact of this threshold on employment by means of a regression discontinuity analysis. Because this threshold is known in advance, they investigate the presence of discontinuities in both the level and the slope of employment probabilities at different ages around the threshold. Their results indicate that turning 22 does not significantly change the employment probability. However, they find a significant change in the slope of the probability of being employed around one year before, suggesting a smooth deterioration of employment probability before turning 22 rather than a sudden change at a particular age. This finding is confirmed by a differencein- difference analysis. However, no such effect can be found during the period preceding the introduction of the NMW.
    Keywords: Minimum wage,employment,young workers,regression discontinuity design
    JEL: J21 J23
    Date: 2017
  2. By: Monica Plechero (Dept. of Management, Università Ca' Foscari Venice); Claudio Cozza (Istituto Ricerche, AREA Science Park); Raquel Ortega-Argiles (City-REDI, Birmingham Business School)
    Abstract: Health represents one of the thematic priorities for smart specialisation. Until now the difficulty in properly measuring research and innovation (R&I) in Health sector has represented a barrier to address specific policies in favour of less performing regions. This is due to two factors: a lack of available data particularly at regional level; and the difficulty in clearly defining the boundaries of the Health sector. Data provided by European Commission, focusing on Health as FP7 thematic priority, as well as recent data on ongoing clinical trials and Health infrastructure at regional level developed by university of Trieste allow the use of a novel regional and sectorial breakdown to deeper investigate the mechanisms supporting R&I in European Regions. The paper provides an analysis of possible determinants of EU regional Health R&I inequalities, disentangling the factors related to publications propensity from those related to patents propensity. The results show that despite one of the most relevant determinants of R&I in the Health sector remain the level of R&D expenditure, other factors such as the size or degree of Health specialisation of the region should also be taken into account. While patenting activity in this sector remains a prerogative of regions with already technological and industry capacity, publications activities result less context specific being present also in peripheral regions. Our results are in line with the new place-based smart specialisation- type policy thinking.
    Keywords: Health, patents, scientific publications, regions, smart specialisation, Europe
    JEL: O33 O34 R11 R58
    Date: 2017–10
  3. By: Agasisti, Tommaso; Gralka, Sabine
    Abstract: Despite measures on the European level to increase the compatibility between the HE sectors of the member states, the recent literature exposes variations in their efficiencies. To gain insights into these differences we split the efficiency term according to the two management levels each university is confronted with. Utilizing a recent advancement in the method to measure efficiency, we separate short-term (transient) and long-term (persistent) efficiency, while controlling for unobserved institution specific heterogeneity. While the first term reflects the efficiency of the individual universities working within the country, the second term echoes the influence of the country specific overall HE structure. The cross-country comparison displays if the overall efficiency difference between countries is related to individual performance of their universities or their HE structure. This allows more purposeful policy recommendation and expands the literature regarding the efficiency of universities in a fundamental way. Choosing Italy and Germany as two important illustrative examples we can take advantage of a novel dataset including characteristics of institutions in both countries for an exceptional long period of time from 2001 to 2011. We show that the Italian universities exhibit a higher overall efficiency value than their German counterparts. With the individual universities working at the upper bound of efficiency in both countries, the overall inefficiency as well as the gap between the countries is caused by persistent, structural inefficiency. To expedite a true European Area of Higher Education future measures should hence aim at the country specific structure, not solely at affecting the activities of single universities.
    Keywords: Stochastic Frontier Analysis,Persistent Inefficiency,Higher Education,Costfunction,Italy,Germany
    JEL: C14 C23 D61 I22 I23 H52
    Date: 2017
  4. By: Andrea Ariu (University of Geneva, Switzerland,Georgetown University, USA and CRENOS, Italy); Elena Biewen (Deutsche Bundesbank); Sven Blank (Deutsche Bundesbank); Guillaume Gaulier (Banque de France and CEPII); María Jesus González, (Banco de España); Philipp Meinen, (Deutsche Bundesbank); Daniel Mirza (University François Rabelais de Tours, LEO-CNRS (Orleans), Banque de France and CEPII.); Cesar Martín, (Banco de España); Patry Tello (Banco de España)
    Abstract: This paper uses detailed micro data on service exports at the firm-destination-service level to analyse the role of firm heterogeneity in shaping aggregate service exports in Belgium, France,Germany and Spain from 2003 to 2007. We decompose the level and the growth of aggregate service exports into different trade margins paying special attention to firm heterogeneity within countries. We find that the weak export growth of France is at least partly due to poor performance by small exporters. By contrast, small exporters are the most dynamic contributors to the aggregate exports of Belgium, Germany and Spain. Our results highlight the importance of firm heterogeneity in understanding aggregate export growth.
    Keywords: service exports, firm heterogeneity, cross-country micro data study
    JEL: F14
    Date: 2017–09
  5. By: Grafström, Jonas; Söderholm, Patrik; Gawel, Erik; Lehmann, Paul; Strunz, Sebastian
    Abstract: Bottom-up processes of policy convergence are increasingly discussed as a substitute for the absence of supranational energy policy coordination and harmonization in the EU. The overall objective of this paper is to analyse the development of government support to renewable energy R&D across EU countries over time: does the empirical evidence suggest bottom-up convergence? In order to answer this question, we first construct country-specific R&D-based knowledge stocks, and then investigate whether the developments of these stocks tend to converge or diverge across EU countries. A data set covering 12 EU Member States over the time period 1990-2012 is employed to test for the presence of conditional â-convergence using a bias-corrected dynamic panel data estimator. The empirical results are overall robust and suggest divergence in terms of public R&D-based knowledge build-up in renewable energy technology. This finding is consistent with free-riding behavior on the part of some Member States, and the presence of industrial policy motives in other States in combination with agglomeration effects in the renewable energy sector. Energy import dependence and electricity regulation are found to influence the growth of the R&D-based knowledge stock, and the deregulation of the EU electricity markets has tended to contribute to a lower speed of divergence.
    Keywords: renewable energy sources,public R&D support,convergence,European Union
    JEL: O44 Q55
    Date: 2017
  6. By: Partick Nüß
    Abstract: Based on a correspondence experiment covering 3,124 fictitious job applications, the paper identifies and quantifies duration dependence in Germany, with a particular emphasis on company and vacancy characteristics as potential determinants. The experiment reveals that duration dependence manifests itself in a sharp decline of 26% to 35% in callbacks when an individual has been unemployed for 10 months, pointing to the existence of an unemployment stigma for Germany. The results are driven by labor market tightness, companies' access to applicants and screening behavior related to company size, with no evidence for an unemployment stigma determined by the contract type.
    Keywords: Field Experiments, Labor Demand, Unemployment, Unemployment Duration, Labor Discrimination
    JEL: C93 J23 J60 J64 J71
    Date: 2017
  7. By: Bouyon, Sylvain
    Abstract: In this ECRI Commentary, Sylvain Bouyon, Research Fellow at ECRI and CEPS, offers an up-to-date analysis of recent trends and developments in European mortgage markets. Ten years ago, persistent dysfunctionalities on mortgage markets inherited from the previous decade greatly contributed to the largest financial crisis in half a century. Since then, significant deleveraging processes have been observed in some EU markets, such as Ireland, Portugal and Spain, where the ratios of outstanding residential lending to household disposable income have contracted markedly. In these economies, the 2016 volumes recorded for both outstanding and gross residential lending were much below 2007 levels, although a timid recovery could be observed in recent years. By contrast, the volume of mortgage activities moved around significant upward paths in Belgium, France, Germany and Sweden, and stagnated somewhat in the Netherlands and Denmark. In terms of products, excluding Sweden, the share of adjustable-rate mortgages (ARMs) for gross residential lending has been moving along downward trends in all the analysed mortgage markets. And these downward trends have deepened in all countries (excluding the UK and Sweden) in the last three years. As a result, the aggregate ARM market share contracted markedly in the last decade. Whereas fluctuations in current spreads between ARM rates and fixed-rate mortgage (FRM) rates appeared overall to be a powerful driver behind the ARM market share over the last decade, this impact seemed to trail off in the last four years. In the current context where FRMs are considered to be historically low, many households are likely to anticipate increases in fixed interest rates on the foreseeable horizon, resulting in greater preference for FRMs, no matter the level of spreads. Other factors related to mortgage and household characteristics could also impact on this preference for FRMs: the average amount of mortgages, evolution of household income, etc. Finally, some encouraging signs of convergence in recent years in spreads, ARM market shares as well as ratios of household residential debt to disposable income could contribute somehow to reinforcing the consistency and efficiency of euro monetary policy.
    Date: 2017–05
  8. By: Fuchs-Schündeln, Nicola; Bick, Alexander; Brüggemann, Bettina
    Abstract: We use national labor force surveys from 1983 through 2011 to construct hours worked per person for 18 European countries and the US. We find that Europeans work 19% fewer hours than US citizens. Differences in weeks worked and in the educational composition each account for one third to one half of this gap. Lower hours per person than in the US are in addition driven by lower weekly hours worked in Scandinavia and Western Europe, but by lower employment rates in Eastern and Southern Europe.
    JEL: E24 J21 J22
    Date: 2017
  9. By: Clemens Fuest; Andreas Peichl; Sebastian Siegloch
    Abstract: This paper estimates the incidence of corporate taxes on wages using a 20-year panel of German municipalities exploiting 6,800 tax changes for identication. Using event study designs and differences-in-differences models, we find that workers bear about half of the total tax burden. Administrative linked employer-employee data allow us to estimate heterogeneous firm and worker effects. Our findings highlight the importace of labor market institutions and profit-shifting opportunities for the incidence of corporate taxes on wages. Moreover, we show that low-skilled, young and female employees bear a larger share of the tax burden. This has important distributive implications.
    Keywords: business taxation, incidence, administrative data, local taxation
    JEL: H20 H70 J30
    Date: 2017
  10. By: Nordin , Martin (Department of Economics, Lund University); Heckley , Gawain (Health Economics Unit, Lund University); Gerdtham , Ulf-G (Department of Economics, Lund University)
    Abstract: This study evaluates the impact of achieving tertiary eligibility in upper-secondary education on tertiary education and earnings in Sweden. Using a regression discontinuity design, we estimate the impact of tertiary eligibility and show that it has a substantial impact on the probability of enrolling in tertiary education. For students who achieve tertiary eligibility, the probability of enrolling in tertiary education increases by around 15 and 7 percentage points for an academic and vocational track, respectively. This implies (before age 30) around 8 percent higher earnings (at the intensive margin) for men on an academic track, while for women on an academic track it increases the probability of having positive incomes (the extensive margin) by around 3 percent. Thus, we conclude that (academic) students at the margin of eligibility for enrolling in tertiary education receive a substantial tertiary education payoff.
    Keywords: Tertiary education; upper-secondary education; earnings; eligibility; regression discontinuity design
    JEL: I21 I28
    Date: 2017–09–28
  11. By: Müller, Kai-Uwe; Fedorets, Alexandra
    Abstract: Exploiting variation in the bite of the German minimum wage we estimate its impact on employment. We break down effect heterogeneity for different degrees of labor substitutability based on admin data on job content and survey data on the workplace. While the average effect is insignificant, interacting treatment with substitutability, we get significantly effects on the probability of remaining employed and the transition to unemployment for employees more easily substitutable by capital.
    JEL: H22 J38 H55 J20
    Date: 2017
  12. By: Reale, Filippo Gian-Antonio
    Abstract: Airlines have reacted in many ways to the liberalization and privatization of commercial aviation in Western Europe, one of them being outsourcing. The labor unions, for their part, have reacted in unexpected ways to these developments, not cooperating as anticipated by various political theories and, conversely, collaborating surprisingly under other conditions. The paper, adopting the "institutional logics" perspective of institutional theory, seeks to outline the developments between the Spanish Union of Airline Pilots (SEPLA) and the Spanish airline Iberia. It shows that a specific protectionist-bureaucratic institutional logic has "sedimented" into a cultural-cognitive and normative framework among pilots in the incumbent airline, which leaves them in a state of "hysteresis," unable to react adequately to the increasingly marketized institutional logic of the field. The broader scope of the argument is demonstrated by the case of Switzerland. Overall, the argument seems to apply not only to unions in commercial aviation but also to formerly public airlines and, at a more abstract level, to privatized state companies generally.
    Keywords: commercial aviation,labor unions,privatization,institutional logics,Iberia,kommerzielle Luftfahrt,Gewerkschaften,Privatisierung,institutionelle Logiken
    Date: 2017
  13. By: Larsson, Johan P (Jönköping International Business School); Wennberg, Karl (The Ratio Institute); Wiklund, Johan (Whitman School of Management); Wright, Mike (Imperial College London South Kensington Campus)
    Abstract: We review complementary theoretical perspectives on location choices of university graduate entrepreneurs derived from the individual-opportunity nexus and local embeddedness perspectives on entrepreneurship. Analysis of the full population of 215,388 graduates from Swedish institutions of higher education between 2002 and 2006 provides support for both location choice perspectives. Overall, 63 % of graduate entrepreneurs start businesses locally in their region of graduation while 37 % start businesses elsewhere. The likelihood of starting locally is substantially higher in metropolitan regions, if the graduate was born locally or has university peer entrepreneurs and entrepreneurial family members in the region of graduation. Implications for theory and public policy are discussed.
    Keywords: Entrepreneurship; Location choice; Universities
    JEL: J61 M13 O18
    Date: 2017–08–07
  14. By: Zierow, Larissa
    Abstract: This paper uses child care reforms in Germany to investigate the effects of the legal and economic environment on publicly provided early child care quantity and quality. The analysis is based on administrative data covering all child care centers and family day carers in Germany and school entrance examination data. I find that regulations of staff quality have negative effects on the quantity of care. The results show that family day care is beneficial for children's development.
    JEL: J13 I21 I38 H75 L51
    Date: 2017
  15. By: Akay, Alpaslan (Department of Economics, School of Business, Economics and Law, Göteborg University); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Ralsmark, Hilda (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We investigate the effect of relative concerns with respect to income on the quantity and quality of sleep using a long panel dataset on the sleep behavior of people in Germany. We find that relative income has a substantial negative effect on number of hours of sleep on weekdays and overall satisfaction with sleep, i.e., sleep quality, whereas absolute income has no particular effect on sleep behavior. The findings are robust to several specification checks, including measures of relative concerns, reference group, income inequality, and local price differences. The paper also investigates the importance of the potential channels including working hours, time-use activities, and physical and mental health to explain how relative concerns relate to sleep behavior. The results reveal that while all of these channels partially contribute to the effect, it appears to be mainly driven by physical and mental health and overall and financial well-being/stress. We also use a subjective well-being valuation approach to calculate the monetary value of sleep lost due to income comparisons. The total cost is as high as about 2.6 billion euro/year (1.8% of the overall monetary value of sleep and 1.3% of total health expenditures) among the working-age population in Germany.
    Keywords: Relative Income; Sleeping Satisfaction; Hours of Sleep
    JEL: C35 C90 D60
    Date: 2017–10
  16. By: Elena Grinza (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Francesco Devicienti (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Mariacristina Rossi (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Davide Vannoni (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)
    Abstract: Attitudes of women and men about how paid and unpaid work should be divided in the couple largely determine women's earnings and career prospects. Hence, it is important to understand how people's gender role attitudes are formed and evolve over the lifetime. In this paper, we concentrate on one of the most path-breaking events in life: becoming a parent. Using longitudinal panel data for the UK, we first show that, in general, entry into parenthood significantly shifts women's attitudes toward more conservative views, while leaving men unaffected. We also show that the impact on women emerges only after some time from the childbirth, suggesting that attitudes change relatively slowly over time and do not react immediately after becoming a parent. Finally, we show that the impact gets large and strongly significant for women and men whose prenatal attitudes were progressive. In particular, we find that the change in attitudes for such individuals increases as the postnatal arrangements are more likely to be traditional. Overall, these findings suggest that the change in attitudes is mainly driven by the emergence of a cognitive dissonance. Broad policy implications are drawn.
    Keywords: Gender equality, Gender role attitudes, Entry into parenthood, Cognitive dissonance, Changes in the hormonal production, Understanding Society (US) dataset
    JEL: J16 J13
  17. By: Ivan Tilov; Benjamin Volland; Mehdi Farsi
    Abstract: This article explores the interactions between direct and embodied energy requirements of households in Switzerland in order to assess the net impacts of standard energy policies focusing exclusively on direct energy use. For this purpose, we estimate direct and embodied energy demand of Swiss households by combining consumption data of a national expenditure survey with corresponding data on energy intensity mainly from life-cycle analysis. We find strong evidence of complementarity between direct and grey energy by first estimating model parameters in a system of equations setup. In particular, the analysis of various socio-economic and psychological determinants allows us to identify a non-linear relationship between energy demand and income, which suggests that energy possesses certain "luxury features" that go beyond staple resources. An additional indication that households in Switzerland use direct and indirect energy in a complementary manner is provided by the coefficient of cross-equation correlation of residuals in our system. Finally, we analyze the causal relationship between both energy domains by the method of instrumental variables and find indicative evidence of a positive causal effect of embodied on direct energy demand, but not the other way round. From a policy perspective, our findings are important as they suggest that the wide-spread policies targeting direct energy consumption are unlikely to cause a substantial shift in household energy demand from the direct to the indirect domain.
    Keywords: Households Energy Requirements; Direct Energy; Embodied Energy; Interactions; Trade-offs; Complementarity.
    JEL: Q40 Q41 D12
    Date: 2017–10
  18. By: Endler, Johannes; Geyer, Johannes
    Abstract: Unemployment benefits are one important option to bridge time between employment exit and claiming retirement benefits for older workers. We develop an option value model that explicitly accounts for the pension system and unemployment insurance in Germany. We use administrative panel data and implement the model for female birth cohorts of 1940 to 1949, exploiting exogenous variation in social security wealth by the pension reform 1992 and the reform of unemployment benefits in 2004.
    JEL: H55 J14 J22 J26 J65
    Date: 2017
  19. By: Hank, Eva; Fackler, Daniel
    Abstract: Using the SOEP this paper analyses to what extent alternative income sources, reactions within the household context, and redistribution by the state attenuate earnings losses of displaced workers. Applying propensity score matching and FE estimations, we find that income from self-employment slightly reduces the earnings gap, severance payments buffer losses in the short run. At the household level, there is no added worker effect, but taxes and transfers mitigate income losses substantially.
    JEL: D10 I38 J63 J65
    Date: 2017
  20. By: Tröger, Tobias H.
    Abstract: Crowdfunding is a buzzword that signifies a sub-set in the new forms of finance facilitated by advances in information technology usually categorized as fintech. Concerns for financial stability, investor and consumer protection, or the prevention of money laundering or funding of terrorism hinge incrementally on including the new techniques to initiate financing relationships adequately in the regulatory framework. This paper analyzes the German regulation of crowdinvesting and finds that it does not fully live up to the regulatory challenges posed by this novel form of digitized matching of supply and demand on capital markets. It should better reflect the key importance of crowdinvesting platforms, which may become critical providers of market infrastructure in the not too distant future. Moreover, platforms can play an important role in investor protection that cannot be performed by traditional disclosure regimes geared towards more seasoned issuers. Against this background, the creation of an exemption from the traditional prospectus regime seems to be a plausible policy choice. However, it needs to be complemented by an adequate regulatory stimulation of platforms' role as gatekeepers.
    Keywords: crowdinvesting,crowdfunding,fintech,financial stability,market infrastructure,investor protection
    JEL: G23 G28 G38 K22 K23
    Date: 2017
  21. By: Ejermo, Olof (CIRCLE, Lund University); Zheng, Yannu (CIRCLE, Lund University)
    Abstract: Migration policies can have a strong impact on the selection of immigrants, who in turn can affect the host country’s innovation development. This paper examines the effects of the liberalization of migration on the skill composition of immigrants from the EU-15 to Sweden after the inception of the European Economic Area (EEA) in 1994. We examine its effect on immigrants’ education levels and probability of becoming an inventor, comparing immigrants from the EU-15 with those from other developed regions in difference-in-differences regressions. The results show that, the liberalization of migration had a negative effect on the educational profile of new EU-15 immigrants in the short run, but there is no such effect in the long run. Moreover, the liberalization of migration has no systematic effect on the EU-15 immigrants’ probability of becoming an inventor neither in the short nor the long run. These patterns are consistent with the theoretical implication that reduction in migration costs associated with the EEA mainly stimulated migration from the lower end of the education distribution.
    Keywords: Human capital; Immigration; Innovation; Selection; Skill level
    JEL: J15 J24 N30 O31
    Date: 2017–10–05
  22. By: Dauth, Wolfgang (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Findeisen, Sebastian; Südekum, Jens; Wößner, Nicole
    Abstract: "We study the impact of rising robot exposure on the careers of individual manufacturing workers, and the equilibrium impact across industries and local labor markets in Germany. We find no evidence that robots cause total job losses, but they do affect the composition of aggregate employment. Every robot destroys two manufacturing jobs. This accounts for almost 23 percent of the overall decline of manufacturing employment in Germany over the period 1994 - 2014, roughly 275,000 jobs. But this loss was fully offset by additional jobs in the service sector. Moreover, robots have not raised the displacement risk for incumbent manufacturing workers. Quite in contrast, more robot exposed workers are even more likely to remain employed in their original workplace, though not necessarily performing the same tasks, and the aggregate manufacturing decline is solely driven by fewer new jobs for young labor market entrants. This enhanced job stability for insiders comes at the cost of lower wages. The negative impact of robots on individual earnings arises mainly for mediumskilled workers in machine-operating occupations, while high-skilled managers gain. In the aggregate, robots raise labor productivity but not wages. Thereby they contribute to the decline of the labor income share." (Author's abstract, IAB-Doku) ((en))
    JEL: J24 O33 F16 R11
    Date: 2017–09–19
  23. By: Flodén, Martin (Sveriges Riksbank and CEPR); Kilström, Matilda (IIES, Stockholm University); Sigurdsson, Jósef (IIES, Stockholm University); Vestman, Roine (Stockholm University and SHoF)
    Abstract: We examine the cash-flow channel of monetary policy, i.e. the effect of monetary policy on spending when households hold debt linked to short-term rates such as adjustable rate mortgages (ARMs). Using registry-based data on Swedish households, we estimate substantial heterogeneity in consumption responses to a change in monetary policy through the cash-flow channel. Our findings imply that monetary policy has a stronger effect on real economic activity when households are highly indebted and have ARMs. For homeowners with a debtto- income ratio of around 3 and ARMs, the estimated response is equivalent to a marginal propensity to consume of 0.5.
    Keywords: Monetary policy; consumption; household debt; variable interest rates; adjustable rate mortgages
    JEL: D14 E21 E52 G11
    Date: 2017–09–01
  24. By: Sergio Beraldo (Department of Economics and Statistics, University of Naples “Federico II†(IT), Italy); Massimo Bordignon (Department of Economics and Finance, Catholic University, Milan, Italy); Simone Pellegrino (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Massimiliano Piacenza (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Gilberto Turati (Department of Economics and Finance, Catholic University, Rome, Italy)
    Abstract: To work as an accountability mechanism, fiscal decentralization requires the democratic mechanism to function well. This is generally not the case where the quality of the institutional environment is weak, and local governments might be captured by local oligarchs. We explore this issue by studying how Italian municipalities reacted to an unexpected tax reform reducing tax autonomy at the local level. Focusing on three Southern provinces, where some municipal governments are captured by Camorra clans, our estimates suggest that captured municipalities are less responsive to incentives stemming from re-centralization. We also observe a different recomposition of spending between the two groups, which we interpret - according to our theoretical model - considering the different degrees with which clans can extract rents from public expenditure.
    Keywords: Tax decentralization, Local government accountability, Institutional quality, Mafia-type organizations
    JEL: D73 H40 H71 H72
  25. By: Li Liu; Tim Schmidt-Eisenlohr; Dongxian Guo
    Abstract: This paper employs unique data on export transactions and corporate tax returns of UK multinational firms and finds that firms manipulate their transfer prices to shift profits to lower-taxed destinations. It uncovers three new findings on tax-motivated transfer mispricing in real goods. First, transfer mispricing increases substantially when taxation of foreign profits changes from a worldwide to a territorial approach in the UK, with multinationals shifting more profits into low-tax jurisdictions. Second, transfer mispricing increases with a firm's R&D intensity. Third, tax-motivated transfer mispricing is concentrated in countries that are not tax havens and have low-to-medium-level corporate tax rates.
    Keywords: Transfer pricing ; Corporate taxation avoidance ; Multinational firms
    JEL: F23 H25 H32
    Date: 2017–10–04
  26. By: Stipica Mudrazija; Barbara A. Butrica
    Abstract: Relatively few Americans have accumulated substantial savings outside of their employer-sponsored retirement plans, yet most own their homes. The traditional view of the retirement income system as a three-legged stool supported by Social Security, private pensions, and savings may be better viewed as being supported by Social Security, pensions, and homeownership. Country-specific economic, social, and political developments throughout modern history mean that homeownership rates and the relative importance of homeownership for old-age security vary widely across developed countries. Many countries, however, are increasingly promoting homeownership as an effective way of building assets, a de facto self-insurance mechanism for old-age security, and a substitute for various social transfers. This paper uses data from the Health and Retirement Study (HRS) and the Survey of Health, Ageing, and Retirement in Europe (SHARE) to better understand the role of homeownership in retirement before and after the Great Recession for the United States and nine Western European countries: Austria, Belgium, Denmark, France, Germany, Italy, the Netherlands, Spain, and Sweden. It begins by comparing trends in homeownership rates among older adults and the key characteristics of housing-related policies and regulations that potentially impact home acquisition. It then examines home equity trends, the prevalence and burden of housing debt, and the relative importance of housing as a source of retirement wealth. Next it provides an overview of equity release options and estimates how much older households could increase their incomes by fully monetizing their housing equity. Finally, the paper discusses the prospects for and limits of home equity release and asset-based welfare policies.
    Date: 2017–10
  27. By: Kick, Thomas; Celerier, Claire; Ongena, Steven
    Abstract: We explore the effect of tax reforms in Italy and Belgium, respectively that decrease the cost of equity on bank lending. Because local firms were also affected by these reforms, we em-ploy loan level data from the German credit register, to identify the differential impact on lending by banks that were 'treated'. We find that the decrease in the cost of equity leads banks to raise their equity ratio, and to expand their balance sheet by increasing the amount of credit supplied in Germany.
    JEL: E51 E58 G21 G28
    Date: 2017
  28. By: Gustavsson Tingvall, Patrik (The Ratio Institute); Videnord, Josefin (The Ratio Institite)
    Abstract: This paper explores regional variation in the effects of publicly sponsored R&D grants on SME performance. The results suggest that there is no guarantee that the grants will impact firm growth, either positive or negative. Studying the heterogeneity of the results, positive growth effects are most likely to be found for publicly sponsored R&D grants targeting SMEs located in regions abundant with skilled labor, whereas the opposite is found for SMEs located in regions with a limited supply of skilled workers.
    Keywords: R&D grants; SME; Economic growth; Regional growth; Selective policies
    JEL: H81 O18 O38 O40 R11 R58
    Date: 2017–04–18
  29. By: Alexander Konon (German Institute for Economic Research (DIW Berlin)); Michael Fritsch (FSU Jena); Alexander Kritikos (German Institute for Economic Research (DIW Berlin), University of Potsdam, IZA, and IAB)
    Abstract: We analyze whether start-up rates in different industries systematically change with business cycle variables. We mostly find correlations that are consistent with counter-cyclical influences of the business cycle on entries in both innovative and non-innovative industries. Entries into the large-scale industries, including the innovative part of the manufacturing sector, are more strongly influenced by changes in the cyclical component of unemployment, while entries into small-scale industries, like the knowledge intensive services, are merely influenced by changes in the cyclical component of GDP. Business formation may therefore have a stabilizing effect on the economy.
    Keywords: New business formation, Entrepreneurship, business cycle, manu- facturing, services, innovative industries
    JEL: L26 E32 L16 R11
    Date: 2017–10–04
  30. By: Dettmann, Eva; Weyh, Antje; Titze, Mirko
    Abstract: We estimate causal employment effects of investment subsidies for treated firms as a whole as well as heterogeneous effects depending on firm characteristics and economic environment. We modify the standard matching and difference-in-difference approach by introducing a combined statistical distance function for matching and flexible durations for outcome differences. We find positive effects of the subsidies on the employment development. We also observe considerable effect heterogeneity.
    JEL: Z0 A11 D61 H20
    Date: 2017
  31. By: Chen, Shuai (Tilburg University, Center For Economic Research); van Ours, Jan (Tilburg University, Center For Economic Research)
    Abstract: Partnered individuals are happier than singles. This can be because partnership leads to more satisfactory subjective well-being or because happier people are more likely to find a partner. We analyze Dutch panel data to investigate whether there is a causal effect of partnership on subjective well-being. Our data allow us to distinguish between marriage and cohabitation and between same-sex partnerships and opposite-sex ones. Our results support the short-term crisis model and adaptation theory. We find that marital partnership improves well-being and that these benefits are homogeneous to sexual orientation. The well-being gains of marriage are larger than those of cohabitation. Investigating partnership formation and disruption, we discover that the well-being effects are symmetric. Finally, we find that marriage improves well-being for both younger and older cohorts while cohabitation only benefits younger cohort.
    Keywords: subjective well-being; Happiness; marriage; Cohabitation; sexuel orientation
    JEL: I31 J12 J16
    Date: 2017
  32. By: Matteo Fiorini; Bernard Hoekman
    Abstract: Many agreements to liberalize trade in services tend to be limited in scope. Concerns about possible negative regulatory consequences of services liberalization is one reason for this. In this paper we provide quantitative estimates of the impact of governance quality on the magnitude of the potential productivity gains of external services trade liberalization, and, in the context of the EU, their distribution across member states. Our findings suggest that greater effort to design trade agreements with a view to improving economic governance would benefit both the EU as well as its trading partners. There is significant scope to incorporate elements of the approaches that have been used in the EU single market context into external trade agreements, and to use the latter to further the realization of a single EU market for services.
    Keywords: trade in services, regulation, trade agreements, economic governance
    JEL: F13 F15 O43
    Date: 2017–05
  33. By: Anna Piil Damm (Department of Economics and Business Economics, Aarhus University, Denmark); Britt Østergaard Larsen (The Danish Centre for Applied Social Science); Helena Skyt Nielsen (Department of Economics and Business Economics, Aarhus University, Denmark); Marianne Simonsen (Department of Economics and Business Economics, Aarhus University, Denmark)
    Abstract: This paper exploits a Danish policy reform combined with population-wide administrative registers to investigate whether being above the minimum age of criminal responsibility deters juveniles from crime. We study young individuals’ tendency to commit crime as well as their likelihood of recidivism by exploiting police records on offenses committed by the population of children and youth, including those below the minimum age of criminal responsibility. The reform lowered the minimum age of criminal responsibility from 15 to 14 years. We find that the reform did not deter 14-year-olds from committing crime. Moreover, conditional on committing crime in the first place, youths affected by the lower minimum age of criminal responsibility were more likely to recidivate and less likely to be enrolled in the 9th grade, just as they have lower grades at the 9th grade exit exam, conditional on participating. The latter results are consistent with labeling effects of processing in the criminal justice system.
    Keywords: Juvenile delinquency, sanctions, general deterrence, individual deterrence, labeling effects
    JEL: K14 K42 I21
    Date: 2017–10–12
  34. By: Lerbs, Oliver; Füss, Roland
    Abstract: Using data from a complete housing inventory in the 2011 German Census and historical war damages as a source of exogenous variation in local homeownership, we provide evidence that otherwise identical jurisdictions charge lower property taxes when the share of homeowners in their population is higher. The result is independent of local market conditions, suggesting tax salience as key mechanism. We find positive spatial dependence in tax multipliers, indicative of property tax mimicking.
    JEL: D72 H20 H71 H72 H77
    Date: 2017

This nep-eur issue is ©2017 by Giuseppe Marotta. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.