nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2017‒11‒05
thirty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Abuse of Dominance and Antitrust Enforcement in the German Electricity Market By Tomaso Duso; Florian Szücs; Veit Böckers
  2. Asymmetries in Earnings, Employment and Wage Risk in Great Britain By Konstantinos Angelopoulos; Spyridon Lazarakis; Jim Malley
  3. The Rise of Precarious Employment in Germany By David Brady; Thomas Biegert
  4. International Transfer Pricing and Tax Avoidance: Evidence from Linked Trade-Tax Statistics in the UK By Li Liu; Tim Schmidt-Eisenlohr; Dongxian Guo
  5. Distributive Politics inside the City? The Political Economy of Spain's Plan E By Felipe Carozzi; Luca Repetto
  6. Equity Crowdfunding in Germany and the UK: Follow-up Funding and Firm Survival By Lars Hornuf; Matthias Schmitt
  7. Price and Quantity Effects of the German Real Estate Transfer Tax By Kunka Petkova; Alfons J. Weichenrieder
  8. Does Marketing Widen Borders? Cross-Country Price Dispersion in the European Car Market By Eyal Dvir; Georg Strasser
  9. An Up-to-Date Joint Labor Supply and Child Care Choice Model By Thor O. Thoresen; Trine Engh Vattø
  10. Do EU regional funds hamper or foster interregional migration? A panel data analysis for Poland By Zukowska-Gagelmann, Katarzyna
  11. The dynamics of online hotel prices and the EU case By Andrea Mantovani; Claudio Piga; Carlo Reggiani
  12. Having a Second Child and Access to Childcare: Evidence from European Countries By Hippolyte d'Albis; Paula Gobbi; Angela Greulich
  13. Can Financial Incentives Reduce the Baby Gap? Evidence from a Reform in Maternity Leave Benefits By Anna Christina Raute
  14. Love your Leave, Don't Leave your Love! Paid Parental Leave and Children's Living Arrangements By Kamila Cygan-Rehm; Daniel Kühnle; Regina T. Riphahn
  15. Can Television Reduce Xenophobia? The Case of East Germany By Lars Hornuf; Marc Oliver Rieger
  16. Explaining Spatial Patterns of Foreign Employment in Germany By Robert Lehmann; Wolfgang Nagl
  17. Recent trends in the use of temporary contracts in Spain By Florentino Felgueroso; José-Ignacio García-Pérez; Marcel Jansen; David Troncoso-Ponce
  18. Valuating the environmental impact of debit card payments By Erik Roos Lindgreen; Milan van Schendel; Nicole Jonker; Jorieke Kloek; Lonneke de Graaff; Marc Davidson
  19. Better with Bologna? Tertiary education reform and student outcomes By Hahm, Sabrina; Kluve, Jochen
  20. Do Economic Recessions ‘Squeeze the Middle-Class’? By Alberto Batinti; Joan Costa-i-Font
  21. Do Parties Punish MPs for Voting Against the Party Line? By Björn Kauder; Niklas Potrafke; Marina Riem
  22. Delivering Affordable Housing and Neighborhood Quality: A Comparison of Place- and Tenant-Based Programs By Essi Eerola; Tuukka Saarimaa
  23. From Dawn till Dusk: Implications of Full-Day Care for Children's Development By Christina Felfe; Larissa Zierow
  24. Performance Pay May Not Raise Performance – A Cautionary Tale Based On Evidence from Large Scale Field Experiments in a Retail Chain By Manthei, Kathrin; Sliwka, Dirk; Vogelsang, Timo
  25. Conservative Politicians and Voting on Same-Sex Marriage By Björn Kauder; Niklas Potrafke
  26. How voters use grade scales in evaluative voting By Antoinette Baujard; Frédéric Gavrel; Herrade Igersheim; Jean-François Laslier; Isabelle Lebon
  27. Do mergers of large local governments reduce expenditures? - Evidence from Germany using the synthetic control method By Roesel, Felix
  28. Wealth Inequality and Externalities from Ex Ante Skill Heterogeneity By Konstantinos Angelopoulos; Spyridon Lazarakis; Jim Malley
  29. Fiscal Measures and Corporate Investment in France By Jean-Charles Bricongne; Lucia Granelli; Susanne Hoffmann
  30. How Do Banks and Households Manage Interest Rate Risk? Evidence from the Swiss Mortgage Market By Christoph Basten; Benjamin Guin; Cathérine Tahmee Koch

  1. By: Tomaso Duso; Florian Szücs; Veit Böckers
    Abstract: In 2008, the European Commission investigated E.ON, a large and vertically integrated electricity company, for the alleged abuse of a joint dominant position by strategically withholding generation capacity. The case was settled after E.ON agreed to divest 5,000 MW generation capacity as well as its extra-high voltage network. We analyze the effect of these divestitures on German wholesale electricity prices. Our identification strategy is based on the observation that energy suppliers have more market power during peak periods when demand is high. Therefore, a decrease in market power should lead to convergence between peak and off-peak prices. Using daily electricity prices for the 2006 - 2012 period and controlling for cost and demand drivers, we find economically and statistically significant convergence effects after the implementation of the Commission’s decision. Furthermore, the price reductions appear to be mostly due to the divestiture of gas and coal plants, which is consistent with merit-order considerations. Placebo regressions support a causal interpretation of our results.
    Keywords: electricity, wholesale prices, EU Commission, abuse of dominance, ex post evaluation, E.ON
    JEL: K21 L41 L94
    Date: 2017
  2. By: Konstantinos Angelopoulos; Spyridon Lazarakis; Jim Malley
    Abstract: This paper examines the relationship between idiosyncratic risk in labour income and fluctuations in aggregate labour market quantities for Great Britain. We use data from the British Household Panel Survey (BHPS) for 1991-2008 and from the BHPS sub-sample of Understanding Society for 2010-2014. We measure idiosyncratic risk in labour income by the relevant moments of the distributions of earnings, employment and wage shocks across individuals. Our main finding is that idiosyncratic risk increases during contractions in the labour market. Furthermore, we find evidence of insurance, both at the household level and in the form of public insurance. However, private and public insurance mechanisms against an increase in idiosyncratic risk are less e¤ective for households whose head does not hold a University degree.
    Keywords: idiosyncratic income risk, employment, social insurance policy
    JEL: D31 E24 J31
    Date: 2017
  3. By: David Brady; Thomas Biegert
    Abstract: Long considered the classic coordinated market economy featuring employment security and relatively little employment precarity, the German labor market has undergone profound changes in recent decades. We assess the evidence for a rise in precarious employment in Germany from 1984 to 2013. Using data from the German Socio-Economic Panel (SOEP) through the Luxembourg Income Study, we examine low-wage employment, working poverty, and temporary employment. We also analyze changes in the demographics and the education/skill level of the German labor force. Although employment overall has increased, there has been a simultaneous significant increase in earnings and wage inequality. Moreover, there has been a clear increase in all three measures of precarious employment. The analyses reveal that models including a wide variety of independent variables – demographic, education/skill, job/work characteristics, and region – cannot explain the rise of precarious employment. Instead, we propose institutional change is the most plausible explanation. In addition to reunification and major social policy and labor market reforms, we highlight the dramatic decline of unionization among German workers. We conclude that while there are elements of stability to the German coordinated market economy, Germany increasingly exhibits substantial dualization, liberalization, inequality, and precarity.
    Date: 2017
  4. 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
  5. By: Felipe Carozzi; Luca Repetto
    Abstract: We study distributive politics inside cities by analysing how local governments allocate investment projects to voters across neighbourhoods. In particular, we ask whether politicians use investment to target their own supporters. To this aim, we use detailed geo-located investment data from Plan E, a large fiscal stimulus program carried out in Spain in 2009-2011. Our empirical strategy is based on a close-elections regression-discontinuity design. In contrast to previous studies – which use aggregate data at the district or municipal level – we exploit spatial variation in both investment and voter support within municipalities and find no evidence of supporter targeting. Complementary results indicate that voters may be responding to investment by increasing turnout. Overall, our findings suggest that distributive politics only play a minor role inside the city.
    Keywords: political economy, distributive politics, partisan alignment, local governments
    JEL: H70 R53 D72
    Date: 2017
  6. By: Lars Hornuf; Matthias Schmitt
    Abstract: Today, start-ups often obtain financing via the Internet through many small contributions of non-sophisticated investors. Yet little is known about whether these start-ups can ultimately build enduring businesses. In this paper, we hand-collected data from 38 different equity crowdfunding (ECF) portals and 656 firms that ran at least one successful ECF campaign in Germany or the United Kingdom. The evidence shows that German firms that receive ECF stand a higher chance of obtaining follow-up funding through business angels or venture capitalists and have a relatively lower likelihood to survive. We find firm age, the average age of the management team, and excessive funding during the ECF campaign all have a negative effect on firms’ likelihood to obtain post-campaign financing. By contrast, the number of senior managers, registered trademarks, subsequent successful ECF campaigns, crowd exits, and the amount of the funding target all have a positive impact. Subsequent successful ECF campaigns, crowd exits, and the number of venture capital investors are significant predictors reducing firm failure. Finally, we find that some of these factors have a differential impact for Germany and the United Kingdom.
    Keywords: equity crowdfunding, follow-up funding, firm survival
    JEL: G24 M13
    Date: 2017
  7. By: Kunka Petkova; Alfons J. Weichenrieder
    Abstract: This paper analyzes the tax effects of the German real estate transfer tax (RETT). While the vast majority of single-family houses in Germany are owner-occupied, apartments are usually held by private and incorporated investors. For this reason, we conducted a regression analysis to determine the effects of increasing RETT on the number and the prices of transactions separately for these two market segments. Our findings suggest that increasing the RETT by 1% is associated with a decline in transactions by 0.23% for single-family houses, but with no significant effect on the prices of traded houses. Conversely, for apartments, we find no significantly negative effects on the transactions, but the price effect of the RETT tends to be negative. Finally, for vacant lots, we find even larger quantity effects than for single-family houses suggesting roughly an elasticity of -1. The results for this specific market segment indicate that the government operates near the top of a Laffer curve.
    Keywords: real estate transaction tax, stamp duty, housing market, taxation, financial transaction tax
    JEL: H24 R21
    Date: 2017
  8. By: Eyal Dvir; Georg Strasser
    Abstract: We study cross-country price differences in the European market for new passenger cars based on detailed pricing and technical data. Car prices in Europe converged until the year 2003, but not thereafter. Within the EU 15 countries the price range of the median model in 2004 was close to 20 percent. We document a source of international price differentiation, which is not related to distribution and border costs, but instead systematically linked to product features. Price dispersion increases with the market segment and varies significantly across models. Marketing appears to position identical goods differently in each country, for example by feature bundles tailored to local consumer preferences. Both the convergence before the actual reduction of barriers to arbitrage and the systematic international price differentiation by product feature point to active pricing-to-market strategies that treat countries as marketing regions.
    Keywords: arbitrage, European car market, international price dispersion, law of one price, market segmentation
    JEL: F15 F31 L11 L62 D22
    Date: 2017
  9. By: Thor O. Thoresen; Trine Engh Vattø
    Abstract: Norwegian parents of preschool children make their care choices from a completely different choice set compared to what their predecessor did, say, two decades ago. Now, there is essentially only one type of nonparental care, center-based care, and at the parental side fathers take a more pivotal role in the early childhood care. In the present paper we develop a joint labor supply and child care choice model that accounts for these new characteristics of the family choice set – only one nonparental care option and both mothers and fathers contributing to the production of nonparental care. Even though Norway may be seen as a frontrunner in terms of both publicly subsidized care and gender equality, we believe that the model points to current and future modeling directions for several other economies too. The model is estimated on data on working hours and families’ use of child care. We find that parents are not responsive to the price on center-based care, but respond more strongly to changes in wages. The average wage elasticity for mothers is in the range 0.25–0.30.
    Keywords: family policy, child care, structural labor supply model
    JEL: J13 J22 C25
    Date: 2017
  10. By: Zukowska-Gagelmann, Katarzyna
    Abstract: This paper studies the effects of the European Union (EU) regional policy transfers on internal migration across regions in Poland for the period 2004-2014. Based on a gravity model of migration, it tests empirically using the Poisson Pseudo-Maximum Likelihood (PPML) estimator whether EU transfers affect the level and the pattern of bilateral migration flows. For the first eleven years of the EU membership, the study finds no evidence of EU funding discouraging residents’ mobility. On the contrary, residents of regions with higher EU transfers attracted are relatively more likely to leave. This effect is especially significant in poorer regions. In addition, EU transfers help regions attract more migrants. Both the “push” and the “pull” effect of the EU transfers on migration intensified over time. Hence, EU regional funding did not hamper, but rather fostered internal migration in Poland leading to a higher regional concentration of population and prosperity. This, however, works against the objective of the EU regional policy, which is to promote economic and social convergence across regions.
    Keywords: EU regional policy,EU structural funds,internal migration,migration determinants,Poland,panel data,gravity model,PPML
    Date: 2017
  11. By: Andrea Mantovani (Department of Economics, University of Bologna, Strada Maggiore 45, 40125 Bologna, Italy.); Claudio Piga (Keele Management School, Keele University, Staffordshire ST5 5BG, United Kingdom.); Carlo Reggiani (Department of Economics, School of Social Sciences, University of Manchester, Manchester M13 9PL, United Kingdom.)
    Abstract: This paper analyses the dynamics of hotel prices listed on in the period 2014-16. This period is characterised by the most important antitrust decisions regarding the use of price parity clauses by online travel agencies (OTAs) in the EU. First, we document the dynamics of hotel prices on in tourism regions of three EU member states: France, Italy, and Spain. The evidence suggests that prices decreased in 2015, the year in which the major antitrust decisions took place, whereas they bounced back in 2016. Second, we provide both a comprehensive explanation of the previous evidence and a rationalisation based on a theoretical model of the OTA sector. Overall, our overarching analysis of the price dynamics on allows to explain both the impact of removing price parities and the possible response of the OTAs.
    Keywords: Price parity clauses; hotel booking; online travel agencies;
    JEL: D40 L42 L81
    Date: 2017–09
  12. By: Hippolyte d'Albis (Paris School of Economics - Centre d'Economie de la Sorbonne); Paula Gobbi (Université Catholique de Louvain); Angela Greulich (Centre d'Economie de la Sorbonne)
    Abstract: This paper shows that differences in fertility across European countries mainly emerge due to fewer women having two children in low fertility countries. It further suggests that childcare services are an important determinant for the transition to a second child to occur. The theoretical framework we propose suggests that: (i) in countries where childcare coverage is low, there is a U-shaped relationship between a couple's probability of having a second child and the woman's potential wage while (ii) in countries with easy access to childcare, this probability is positively related with the woman's potential wage. Data from the European Union Statistics on Income and Living Conditions (EU-SILC) confirm these implications when estimating a woman's probability of having a second child as a function of education. This implies that middle income women are the most affected ones by the lack of access to formal and subsidized childcare
    Keywords: Childcare; Education; Fertility; Female Employment
    JEL: J11 J13 J16 O11
    Date: 2016–02
  13. By: Anna Christina Raute
    Abstract: To assess whether earnings-dependent maternity leave positively impacts fertility and narrows the baby gap between high educated (high earning) and low educated (low earning) women, I exploit a major maternity leave benefit reform in Germany that considerably increases the financial incentives for higher educated and higher earning women to have a child. In particular, I use the large differential changes in maternity leave benefits across education and income groups to estimate the effects on fertility up to 5 years post reform. In addition to demonstrating an up to 22% increase in the fertility of tertiary educated versus low educated women, I find a positive, statistically significant effect of increased benefits on fertility, driven mainly by women at the middle and upper end of the education and income distributions. Overall, the results suggest that earnings-dependent maternity leave benefits, which compensate women commensurate with their opportunity cost of childbearing, could successfully reduce the fertility rate disparity related to mothers’ education and earnings.
    Keywords: fertility, fertility gaps, paid maternity leave
    JEL: J13 J16 J18
    Date: 2017
  14. By: Kamila Cygan-Rehm; Daniel Kühnle; Regina T. Riphahn
    Abstract: We examine how a German paid parental leave reform causally affected early childhood living arrangements. The reform replaced a means-tested benefit with a universal transfer paid out for a shorter period. Using a difference-in-differences design, we find that the reform increased the probability that a newborn lives with non-married cohabiting parents. This effect results from a reduced risk of single parenthood among women who gained from the reform. We reject the economic independence hypothesis and argue that the effects for reform winners are consistent with alternative hypotheses related to increased female financial attractiveness and increased paternal involvement in childcare.
    Keywords: parental leave, living arrangements, marriage, cohabitation, single motherhood, child well-being, early childhood
    JEL: J12 J13 J18 I30
    Date: 2017
  15. By: Lars Hornuf; Marc Oliver Rieger
    Abstract: Can television have a mitigating effect on xenophobia? To examine this question, we exploit the fact that individuals in some areas of East Germany – due to their geographic location – could not receive West German television until 1989. We conjecture that individuals who received West German television were exposed more frequently to foreigners and thus have developed less xenophobia than people who were not exposed to those programs. Our results show that regions that could receive West German television were less likely to vote for right-wing parties during the national elections from 1998 to 2013. Only recently, the same regions were also more likely to vote for left-wing parties. Moreover, while counties that hosted more foreigners in 1989 were also more likely to vote for right-wing parties in most elections, we find counties that recently hosted more foreign visitors showed less xenophobia, which is in line with intergroup contact theory.
    Keywords: mass media, television, xenophobia, attitudes towards foreigners, East Germany, natural experiment
    JEL: D72 L82 P30
    Date: 2017
  16. By: Robert Lehmann; Wolfgang Nagl
    Abstract: This paper investigates the main determinants of the regional representation of foreign employees in Germany. Since migration determinants are not necessarily the same for workers of different nationalities, we explain spatial patterns not only for total foreign employment but also for the 35 most important migration countries to Germany. Based on a total census for all 402 districts in Germany, we find a large heterogeneity in migration determinants between nationalities. We identify three groups of countries for which labor market and economic conditions, amenities or cultural factors are more important. Geographical distance plays a major role in location decisions, a finding that is especially pronounced for workers from countries neighboring Germany.
    Keywords: foreign employment, migration determinants, distance, spatial models
    JEL: F22 J21 J61 O15 R12
    Date: 2017
  17. By: Florentino Felgueroso; José-Ignacio García-Pérez; Marcel Jansen; David Troncoso-Ponce
    Abstract: This paper documents recent trends in the use of temporary contracts in Spain. Until the outbreak of the recent economic and financial crisis, Spain was leading the ranking of countries with the largest share of temporary employees. During the crisis this share has fallen to its lowest level in decades, but in the recovery the share of temporary employees is on the rise again. Indeed, last year Spanish employers formalised more contracts than ever before. A particularly striking feature is the steep rise in fixed-duration contracts lasting less than a week. We document these trends and discuss the relevance of institutional factors for the high incidence of temporary employment in Spain. In addition, we perform various econometric exercises to assess whether the surge of short-duration contracts has led to a further deterioration in the access to permanent employment.
    Date: 2017–10
  18. By: Erik Roos Lindgreen; Milan van Schendel; Nicole Jonker; Jorieke Kloek; Lonneke de Graaff; Marc Davidson
    Abstract: Purpose: Consumers in the Netherlands made more than 3.2 billion debit card transactions at points-of-sale in 2015, corresponding to over half of all point-of-sale payments in that year. This study provides insights into the environmental impact of debit card transactions based on a life cycle assessment (LCA). In addition, it identifies several areas within the debit card payment chain where the environmental impact can be reduced. Conclusions: For the first time, the environmental consequences of electronic card payment systems are evaluated. The total environmental impact of debit card transactions in the Netherlands is relatively modest compared to the impact of cash payments, which are the closest substitute of debit card payments at the point-of-sale. Scenario analysis indicates that the environmental impact can be reduced by 44%.
    Keywords: Datacentre; Debit card payment system; Debit card; Environmental impact; LCA; Payment terminal
    JEL: E42 Q50
    Date: 2017–10
  19. By: Hahm, Sabrina; Kluve, Jochen
    Abstract: This paper analyzes impacts of the Bologna Reform for Germany by using unique micro data from Humboldt-Universität zu Berlin. Variation in treatment introduction generates exogenous assignment of students into a treatment (Bachelor) and control group (Diploma). We account for potentially remaining selection bias by estimating a 2SLS model. Our results indicate i.a. that the reform led to a significant and sizeable increase in the probability of graduating within planned instructional time.
    Date: 2017
  20. By: Alberto Batinti; Joan Costa-i-Font
    Abstract: Economic downturns give rise to unexpected employment shocks that can reshape the distribution of population income, and hence produce a “middle-class squeeze”. However, there is limited empirical evidence testing the latter. This paper aims at testing the ‘middle-class squeeze’ hypothesis drawing from unique data from the Luxembourg Income Study (LIS) for several years, including the period of the Great Recession, and the Integrated Values Study (IVS) obtained by merging data from the World Value Survey (WVS) and the European Values Study (EVS). We examine the association between changes in unemployment in a recession drawing upon a heterogeneous set of both income and middle-class definitions as well as an extensive list of controls and different recession periods. Our findings suggest no robust evidence that recessions produce a middle-class squeeze, though they increase the share of the population regarding itself as ‘middle class’. The effect is heterogeneous to the baseline unemployment at the time of a recession, country spending on social protection and middle-class measurements and definitions. However, when we restrict our analysis to the recent Great Recession, we do find some evidence of a ‘middle-class squeeze’.
    Keywords: middle-class size, economic recessions, employment shocks, income distribution
    JEL: F22 I30 J64
    Date: 2017
  21. By: Björn Kauder; Niklas Potrafke; Marina Riem
    Abstract: We examine whether parties punish politicians who vote against the party line in roll-call votes. Using data of German members of parliament over the legislative period 2009-2013, we take into account that the effect of punishment differs along the list of candidates because a candidate is punished more when he loses positions at the threshold of promising list positions. The dataset includes the voting behavior of 257 MPs in 218 roll-call votes. Our results do not show that parties account for the voting behavior by punishing politicians who have voted against the party line. Political parties may attract different groups of voters by tolerating politicians who vote according to their own credo. Qualities other than the voting behavior seem to matter to political parties when nominating candidates.
    Keywords: voting against the party line, adherence to the party line, roll-call votes, proportional representation, party lists, selectorate
    JEL: D72 D78 P16
    Date: 2017
  22. By: Essi Eerola; Tuukka Saarimaa
    Abstract: This paper analyzes the relative merits of large place- and tenant-based housing programs in Finland in terms of housing affordability and neighborhood quality. Using hedonic regression methods and household micro data, we find that rent savings to public housing tenants are less targeted towards low-income households than housing allowance. In addition, low-income public housing tenants live in poorer, less educated and lower quality neighborhoods than similar low-income households in private rental housing. This suggests that place-based programs may lead to more segregation than tenant-based alternatives even when neighborhood mixing is an explicit aim of the program, as in Finland.
    Keywords: hedonic regression, housing allowance, place-based policy, public housing
    JEL: H22 R21 R23
    Date: 2017
  23. By: Christina Felfe; Larissa Zierow
    Abstract: A currently high-ranking question on the political agenda of many developed countries relates to the intensive margin of child care and thus to the effects of prolonging the opening hours of child care institutions. This study adds to the scarce literature on this question and investigates the consequences of expanding the supply of child care centers operating on a fullday basis on children’s skill development just before entering primary school. Identification relies on a substantial expansion of the number of full-day slots triggered by reforms of the German child care system. Using unique administrative data covering almost 100'000 children, we find positive effects on immigrant children’s school readiness. Yet, at the same time immigrant children suffer in terms of their socio-emotional development, a finding we also observe among native children from disadvantaged family backgrounds.
    Keywords: child care, child development
    JEL: J13 I21 I38
    Date: 2017
  24. By: Manthei, Kathrin; Sliwka, Dirk; Vogelsang, Timo
    Date: 2017
  25. By: Björn Kauder; Niklas Potrafke
    Abstract: We examine whether conservative politicians are less likely to support same-sex marriage when they run for office in safe districts using new data based on a roll-call vote in the national German parliament. The results show that the margin of the majority for the incumbent in the previous election was a strong predictor for supporting same-sex marriage. When the majority increased by one percentage point, the likelihood of voting in favour of same-sex marriage decreased by around 1.3 percentage points. We conjecture that politicians are election-motivated – even when submitting roll-call votes on a matter of conscience.
    Keywords: same-sex marriage, gay rights, safe districts, vote margins, supermajorities, roll-call votes
    JEL: D72 D78 P16
    Date: 2017
  26. By: Antoinette Baujard (Univ Lyon, UJM Saint-Etenne, GATE L-SE UMR 5824, F-42023 Saint- Etienne, France); Frédéric Gavrel (CREM (UMR CNRS 6211), University of Caen Normandie and Condorcet Center); Herrade Igersheim (CNRS and Beta (UMR 7522), University of Strasbourg); Jean-François Laslier (CNRS and Paris School of Economics (UMR 8545)); Isabelle Lebon (CREM (UMR CNRS 6211), University of Caen Normandie, and Condorcet Center)
    Abstract: During the first round of the 2012 French presidential election, participants in an in situ experiment were invited to vote according to “evaluative voting”, which involves rating the candidates using a numerical scale. Various scales were used: (0,1), (-1,0,1), (0,1,2), and (0,1,...,20). The paper studies scale calibration effects, i.e., how individual voters adapt to the scale, leading to possibly different election outcomes. The data show that scales are not linearly equivalent, even if individual ordinal preferences are not inconsistent. Scale matters, notably because of the symbolic power of negative grades, which does not affect all candidates uniformly.
    Keywords: Evaluative Voting, Range voting, Approval voting, In Situ Experiment, Calibration
    JEL: D72 C93
    Date: 2017
  27. By: Roesel, Felix
    Abstract: States merge local governments to achieve economies of scale. Little is known to which extent mergers of county-sized local governments reduce expenditures, and influence political outcomes. I use the synthetic control method to identify the effect of mergers of large local governments in Germany (districts) on public expenditures. In 2008, the German state of Saxony reduced the number of districts from 22 to 10. Average district population increased substantially from 113,000 to 290,000 inhabitants. I construct a synthetic counterfactual from states that did not merge districts for years. The results do neither show reductions in total expenditures, nor in expenditures for administration, education, and social care. There seems to be no scale effects in jurisdictions of more than 100,000 inhabitants. By contrast, I find evidence that mergers decreased the number of candidates and voter turnout in district elections while vote shares for populist right-wing parties increased.
    Keywords: Municipal mergers,Local government,Expenditures,Synthetic control method,Local elections,Voter turnout
    JEL: D72 H11 H72 R51
    Date: 2017
  28. By: Konstantinos Angelopoulos; Spyridon Lazarakis; Jim Malley
    Abstract: This paper develops an incomplete markets model with state dependent (Markovian) stochastic earnings processes and ex ante skill heterogeneity corresponding to being university educated or not. Using the Wealth and Assets Survey for Great Britain, we find that the university educated group has higher average wealth, higher earnings risk but lower within group wealth inequality. Using estimates of the earnings processes for each group to calibrate the model, we find wealth inequality within and between the groups that is consistent with the data. Moreover, the predictions for overall wealth inequality are closer to the data, compared to the benchmark model with ex ante identical households. In this framework, ex ante skill heterogeneity generates a between-group pecuniary externality which in turn leads to the predicted differences in wealth inequality between the groups and works as an amplification mechanism to increase overall wealth inequality.
    Keywords: incomplete markets, education differences, pecuniary externalities
    JEL: E21 E25 H23
    Date: 2017
  29. By: Jean-Charles Bricongne; Lucia Granelli; Susanne Hoffmann
    Abstract: The purpose of this paper is to assess the effect of fiscal measures on the investment decisions of French non-financial corporations. As a reference framework, we use the model developed by Eudeline et al. (2013). We extend this framework by introducing the effect of fiscal incentives on investments. We estimate the effect of a decrease in the corporate tax rate in France, which passed from 42 % in 1990 to 33.3 % nowadays and is planned to be reduced to 28 % by 2020 and to 25% in 2022. Fiscal measures are found to have a positive effect on investment, although the growth rate of economic activity and the corporate saving rate remain the main drivers of corporate investment.
    JEL: C22 E22 E62
    Date: 2017–07
  30. By: Christoph Basten; Benjamin Guin; Cathérine Tahmee Koch
    Abstract: We exploit a unique data set that features both un-intermediated mortgage requests and independent offers from multiple banks for each request. We show that households typically are not prudent risk managers but prioritize the minimization of current mortgage payments over the risk of possible hikes in future mortgage payments. We also provide evidence that banks do influence the contracted mortgage rate fixation periods, trading off their own exposure to interest rate risk against the borrowers’ affordability and credit risk. Our results challenge the implicit assumption of the existing mortgage choice literature whereby fixation periods are determined entirely by households.
    Keywords: Fixed-Rate Mortgage (FRM), Adjustable-Rate Mortgage (ARM), fixation period, maturity mismatch, interest rate risk, credit risk, duration
    JEL: D12 E43 G21
    Date: 2017

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