nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2017‒12‒18
29 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Linguistic Distance, Networks and Migrants’ Regional Location Choice By Julia Bredtmann; Klaus Nowotny; Sebastian Otten
  2. Ownership and Hospital Behaviour: Employment and Local Unemployment By Andrew E. Clark; Carine Milcent
  3. The Expenditure of Tourist at the level of Destinations: An application of Spatial Econometrics By Andrés Artal-Tur; Luisa Alamá-Sabater
  5. Latitudinal Effect on Energy Savings from Daylight Savings Time By Bergland, Olvar; Mirza, Faisal
  6. Barriers to European cross-border E-commerce By Alex Coad; Nestor Duch-Brown
  7. Investments, financial constraints in non-quoted Swedish Firms By Dastory, Linda; Eklund, Johan; Numminen, Emil
  8. Decentralization and Public Procurement Performance: New Evidence from Italy By Olga Chiappinelli
  9. The impact of multinational R&D spending firms on job polarization and mobility By Jacob Rubak Holm; Bram Timmermans; Christian Richter Ostergaard
  10. International Migration and Regional Housing Markets: Evidence from France By Hippolyte D'Albis; Ekrame Boubtane; Dramane Coulibaly
  11. Is inequality of opportunity robust to the measurement approach? By Xavier Ramos\\ Dirk Van de gaer; Dirk Van de gaer
  13. Does hospital competition improve efficiency? The effect of the patient choice reform in England By Francesco Longo; Luigi Siciliani; Giuseppe Moscelli; Hugh Gravelle
  14. Determinants of residential heating system choice: an analysis of Irish households By Curtis, John; McCoy, Daire; Aravena Novielli, Claudia
  15. The Changing Returns to Crime: Do Criminals Respond to Prices? By Draca, Mirko; Koutmeridis, Theodore; Machin, Stephen
  16. How Does Firm Performance Affect Wages? Evidence from Idiosyncratic Export Shocks By Andrew Garin; Filipe Silverio
  17. Do Individual Heterogeneity and Spatial Correlation Matter? An Innovative Approach to the Characterisation of the European Political Space By Giovanna, Iannantuoni; Elena, Manzoni; Francesca, Rossi;
  18. Ensuring a dynamic skills-training and life-long learning system in Switzerland By Petar Vujanovic; Christine Lewis
  19. How do firms adjust to rises in the minimum wage? Survey evidence from Central and Eastern Europe By Katalin Bodnár; Ludmila Fadejeva; Stefania Iordache; Liina Malk; Desislava Paskaleva; Jurga Pesliakaite; Nataša Todorovic Jemec; Peter Tóth; Robert Wyszynski
  20. Quality and cost-effectiveness in long-term care and dependency prevention: the Polish policy landscape By Stanislawa Golinowska; Agnieszka Sowa-Kofta
  21. Learning Intensity Effects in Students' Mental and Physical Health - Evidence from a Large Scale Natural Experiment in Germany By Hofmann, Sarah; Mühlenweg, Andrea
  22. Fiscal Redistribution in Comparative Perspective: Recent Evidence from the Luxembourg Income Study (LIS) Datacenter By David Jesuit; Vincent Mahler
  23. How returns to skills depend on formal qualifications: Evidence from PIAAC By Jan Paul Heisig; Heike Solga
  24. Formal search and referrals from a firm's perspective By Rebien, Martina; Stops, Michael; Zaharieva, Anna
  25. Does Class Size Matter for School Tracking Outcomes After Elementary School? Quasi-Experimental Evidence Using Administrative Panel Data from Germany By Bethlehem Argaw; Patrick Puhani
  26. i-FRAME – Assessing impacts of social policy innovation in the EU: Proposed methodological framework to evaluate socio-economic returns on investment of social policy innovations By Gianluca Misuraca; Luigi Geppert; Cristiano Codagnone
  27. The Productivity Puzzle and Misallocation: an Italian Perspective By S. Calligaris; M. Del Gatto; F. Hassan; G. I.P. Ottaviano; F. Schivardi
  28. Trading firms and trading costs in services: Firm-level analysis By Dorothée Rouzet; Sebastian Benz; Francesca Spinelli
  29. Policy making as collective bricolage: the role of the electricity sector in the making of the European carbon market By Mélodie Cartel; Franck Aggeri; Eva Boxenbaum; Jean-Yves Caneill

  1. By: Julia Bredtmann (RWI, IZA, CReAM); Klaus Nowotny (University of Salzburg, Austrian Institute of Economic Research WIFO); Sebastian Otten (University College London, CReAM, RWI)
    Abstract: This paper analyzes the interaction between migrant networks and linguistic distance in the location choice of migrants to the EU at the regional level. We test the hypothesis that networks and the ability to communicate in the host country language, proxied by linguistic distance, are substitutes in the location decision. Based on individual level data from a special evaluation of the European Labour Force Survey (EU-LFS) and a random utility maximization framework, we find that networks have a positive effect on the location decisions while the effect of linguistic distance is negative. We also find a strong positive interaction effect between the two factors: networks are more important the larger the linguistic distance between the home country and the host region, and the negative effect of linguistic distance is smaller the larger the network size. In several extensions and robustness checks, we show that this substitutable relationship is extremely robust.
    Keywords: Location choice, ethnic networks, linguistic distance, EU migration,multilateral resistance
    JEL: F22 J61 R23
    Date: 2017–12
  2. By: Andrew E. Clark (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); Carine Milcent (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)
    Abstract: We here use 2006-2010 French panel data to ask i) how hospital employment changes with local unemployment, according to the type of hospital ownership, and ii) whether this relationship changed after the implementation of a pro-competitive reform that made hospitals more similar. Our panel data allows us to consider within-hospital employment changes. We first find that higher local unemployment is associated with greater employment in State-owned hospitals, but not for any other hospital ownership type: French local authorities then seem to respond to depressed local labour markets by increasing employment in State -owned hospitals. After the full implementation of the pro-competitive reform hospital funding became based only on activity and no longer on some historical budget. Theoretically, the new reimbursement system should break the relationship between public-hospital employment and local unemployment. Our results reveal that the reform worked as expected in less-deprived areas: reducing employment and eliminating the correlation between local unemployment and State-owned hospital employment. However, in higher-unemployment areas, public-hospital employment remains counter-cyclical.
    Keywords: Hospitals,Management,Competition,Public Employment,Unemployment
    Date: 2017–11
  3. By: Andrés Artal-Tur (Economics Department, Technical University of Cartagena, Spain); Luisa Alamá-Sabater (Iidl and Economics Department, Universitat Jaume I, Castellón, Spain)
    Abstract: In this paper we introduce the geographical dimension in the study of tourist expenditure. By relying on spatial statistics and spatial econometrics framework, we account for spatial dependence patterns arising in the modelling of factors driving spendings of tourists at destinations. In doing so, we extend the scope in traditional microeconometric models, also computing indirect effects arising in the spatial model. We provide evidence on the performance of the spatial expenditure approach by using a data set of around 100000 questionnaires of international visitors reaching 1872 destinations in Spain in year 2014. We employ five types of spatial model specifications when testing our tourist expenditure function. We also account for endogeneity issues by running GS2SLS and SPGMM spatial equations. Results confirm the relevance of the proposed methodology in the study of tourist expenditure behaviour in space. Regarding the main results of the econometric modeling section, length of stay appears to be the most important determinant of tourist expenditure, as well as trip characteristics and the type of accommodation chosen. The relevance of spatial effects also are being explained by the indirect spillovers that have shown that agglomeration and spatial interaction effects in tourist expenditure clusters in Spain would be responsible of around 15% of average direct spending.
    Keywords: tourist expenditure, spatial dependence, endogeneity, spillover effects, tourism policy.
    JEL: C31 R12
    Date: 2017
  4. By: Liis Roosaar, Jaan Masso, Urmas Varblane
    Abstract: This paper aims to clarify how changes in the age and wage composition of the labour force are related to the productivity of firms over the business cycle. Based on a matched employer-employee database of Estonian firms from 2006–2014, we decompose changes in the labour force and distinguish between hired, separated and staying workers. Considering the age and wage of workers, we link changes in the labour force to changes in productivity. Using fixed effect panel data analysis we indicate that among high-waged employees middle-aged are the most productive, the productivity decreases with age but remains higher for old compared to young. the increase in labour productivity is supported by the decreasing share of employees with the lowest productivity. The share of high-income employees was reduced in the crisis and later mostly low-income employees were hired. In addition, structural changes have accelerated the process of ageing. There are, however, sector-specific differences because in knowledge intensive services, ageing is not as prevalent as in industry. We also show that labour productivity is higher in the youngest quartile than in the oldest quartile of enterprises in all four periods.
    Keywords: productivity, labour productivity, ageing, Estonia
    JEL: J23 J24 J31 J63 M51
    Date: 2017
  5. By: Bergland, Olvar (School of Economics and Business, Norwegian University of Life Sciences); Mirza, Faisal (Department of Economics, University of Gujrat)
    Abstract: This paper looks at the potential systematic variation in energy savings resulting from daylight saving time(DST)in a number of geographic areas varying in latitude ranging from Northern to Southern Europe. We are using the same econometric specification and estimation method for a consistent dataset of electricity load covering 35 countries in Europe. Thus our results provide a comprehensive set of consistent and comparable estimates of the DST effect. The average treatment effect results obtained from difference-in-difference regression for 46 electricity load zones ranges from zero in northern most parts of Norway and Sweden to more than 2.5 % in a number of locations. We find some evidence that energy savings from DST decreases with latitude, and especially for homogeneous groups of countries. The diversity in estimated effects cuts across geographical, cultural and economic factors.
    Keywords: daylight savingstime; electricityconsumption; di erence-in-di erence
    JEL: C21 C24 Q40
    Date: 2017–12–07
  6. By: Alex Coad (European Commission – JRC); Nestor Duch-Brown (European Commission – JRC)
    Abstract: We analyse survey data to investigate the main barriers to European cross-border e-commerce. We investigate the determinants of selling online, as well as the frequency and determinants of cross-border e-commerce, and the role of barriers. Large firms, which are part of a group, are more likely to sell online. Firms generally make most of their online sales to their home country, although EU firms are more likely to engage in cross-border online trade with EU countries than non-EU countries. Firms report that they are facing a variety of barriers to e-commerce. Regulatory barriers are negatively associated with online sales. There is weak evidence that firms which use their own websites are more vulnerable to financial, market and information barriers. Firms that use a large platform experience fewer financial and market barriers. On the positive side, we find that small and young firms do not seem to be more vulnerable to barriers than large or more experienced firms.
    Keywords: digital single market, e-commerce, cross-border trade
    JEL: D23 K11 K12 L86
    Date: 2017–11
  7. By: Dastory, Linda (Royal Institute of Technology); Eklund, Johan (Department of Industrial Economics, Blekinge Inst of Technology); Numminen, Emil (Department of Industrial Economics, Blekinge Inst of Technology)
    Abstract: Using panel data from 10 573 non-quoted Swedish SMEs over the period 2006-2014, we examine how dependent investments made by Swedish SMEs are of internally generated cash-flows. To control for investment opportunities, we use an accelerator model. Applying a static accelerator model our result shows that, investment levels are in fact affected by the availability of internal funding. It takes between 2-2.5 years for the capital stock to adjust to shocks in demand. As the speed of the adjustment rate increases firms’ investment levels become more dependent on internal funding, indicating high adjustment costs. Finally, as firms become larger their investment level becomes less dependent on internal funding, indicating that it may be easier for larger firms to attract external funding.
    Keywords: Non-quoted SMEs; Cash flow; Investments; Financial Constraints; Accelerator model.
    JEL: D92 E22
    Date: 2017–12–12
  8. By: Olga Chiappinelli
    Abstract: We exploit a new dataset based on EU procurement award notices to investigate the relationship between the degree of centralization of public procurement and its performance. We focus on the case of Italy, where all levels of government, along with a number of other public institutions, are involved in procurement and are subject to the same EU regulation. We find that i) municipalities and utilities, which currently award the largest shares of contracts, perform worse than all other institutional categories; and ii) decentralization implies lower performance only when it comes with weak competences of procurement officials. The evidence seems to suggests that a re-organization of the procurement system, both in terms of partial centralization and better professionalization of procurement officials, would help improve overall procurement performance.
    Keywords: Public Procurement, Decentralization, Procurement performance, Public works
    JEL: H11 H57 H71 H77
    Date: 2017
  9. By: Jacob Rubak Holm (Aalborg University); Bram Timmermans (Aalborg University); Christian Richter Ostergaard (Aalborg University)
    Abstract: This report analyses the role of multinational R&D intensive firms in job polarization. It also investigates how these firms affect the labour market in terms of wage growth and labour mobility. Firms appearing on the EU Industrial R&D Investment Scoreboard account for a significant share of economic activity in Denmark measured by employment, innovation activity, and R&D expenditures. Domestic firms listed on the scoreboard are the largest and most innovative, but subsidiaries of foreign scoreboard firms are still larger and more innovative compared to non-scoreboard firms. Relying on information from register data the report demonstrates that R&D spending among scoreboard firms is a complement to high skill jobs, while it substitutes low skill jobs. Thus, scoreboard firms are more involved in upgrading than polarization. Organisational change has an effect similar to that of R&D, while there is indication that innovation is a complement for low skilled jobs. Labour flows, particularly of high skilled workers, are stronger among scoreboard firms than between scoreboard firms and other firms. Thus, labour flows in networks instead of appearing in labour market pools, and non-scoreboard firms are kept out of the "knowledge spill-over" loops, providing them with fewer opportunities to learn from the scoreboard firms.
    Keywords: MNC, R&D, employment, skill, job polarization
    Date: 2017–11
  10. 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); Ekrame Boubtane (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique); Dramane Coulibaly (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This article examines the causal relations between immigration and the characteristics of the housing market in host regions. We constructed a unique database from administrative records and used it to assess annual migration flows into France's 22 administrative regions from 1990 to 2013. We then estimated various panel VAR models, taking into account GDP per capita and the unemployment rate as the main regional economic indicators. We find that immigration has no significant effect on property prices but that higher property prices significantly reduce immigration rates. We also find no significant relationship between immigration and social housing supply.
    Keywords: Immigration,Property Prices,Social Housing,Panel VAR
    Date: 2017–11
  11. By: Xavier Ramos\\ Dirk Van de gaer (Universitat Autonoma de Barcelona); Dirk Van de gaer (Ghent University)
    Abstract: Recent literature has suggested many ways of measuring equality of opportunity. We analyze in a systematic manner the various approaches put forth in the literature to show whether and to what extent different choices matter empirically. We use EU-SILC data for most European countries for 2005 and 2011. The choice between ex-ante and ex-post approaches is crucial and has a substantial influence on inequality of opportunity country orderings. Growth regressions also illustrate the relevance of conceptual choices. We only find significant negative effects for some direct parametric ex-ante measures.
    Keywords: Equality of opportunity, measurement, ex-ante, ex-post, direct approach, indirect approach, responsibility, effort, income, EU-SILC.
    JEL: D3 D63
    Date: 2017–11
  12. By: Baum, Christopher F (Department of Economics, Boston College, Chestnut Hill, MA and Department of Macroe- conomics, DIW Berlin); Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Nabavi, Pardis (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper studies firms' capability to recombine internal and local knowledge. It measures the outcome in terms of total productivity growth.Using Swedish data on commuting time for face-to-face contacts across all 290 municipalities, we employ a time sensitive approach for calculating localized knowledge within a municipality and and its close neighbors. Internal knowledge is captured by register data on firms' innovation intensity. The two sources of knowledge are modeled in a production function setting by discrete composite variables with different combinations of input factors. Applying the model on Swedish firm level panel data, we find strong evidence of differences in the capacity to benefit from external knowledge among persistent innovators, temporary innovators and non-innovators. The results are consistent regardless of whether innovation efforts are measured in terms of the frequency of patent applications or the level of R&D investment.
    Keywords: Innovation strategies; localized knowledge; patents; TFP growth; panel data
    JEL: C23 O31 O32
    Date: 2017–12–12
  13. By: Francesco Longo (Centre for Health Economics, University of York, York, UK.); Luigi Siciliani (Department of Economics and Related Studies, University of York, York, UK.); Giuseppe Moscelli (Centre for Health Economics, University of York, York, UK.); Hugh Gravelle (Centre for Health Economics, University of York, York, UK.)
    Abstract: We use the 2006 relaxation of constraints on patient choice of hospital in the English NHS to investigate the effect of hospital competition on dimensions of efficiency including indicators of resource management (admissions per bed, bed occupancy rate, proportion of day cases, cancelled elective operations, proportion of untouched meals) and costs (cleaning services costs, laundry and linen costs, reference cost index for overall and elective activity). We employ a quasi difference-indifference approach and estimate seemingly unrelated regressions and unconditional quantile regressions with data on hospital trusts from 2002/03 to 2010/11. Our findings suggest that increased competition had mixed effects on efficiency. An additional equivalent rival increased admissions per bed and the proportion of day cases by 1.1 and 3.8 percentage points, and reduced the proportion of untouched meals by 3.5 percentage points, but it also increased the number of cancelled elective operations by 2.6%. Unconditional quantile regression results indicate that hospitals with low efficiency, as measured by few
    Keywords: competition, efficiency, choice, hospital, difference-in-difference
    JEL: C21 H51 I11 I18 L1
    Date: 2017–11
  14. By: Curtis, John; McCoy, Daire; Aravena Novielli, Claudia
    Abstract: The paper uses a multinomial logit model to study the determinants of domestic space heating systems in Ireland. Nine types of heating systems are considered, classified by fuel type (liquid, electric, gas and solids or combinations thereof). Heating system choice is modelled as a function of household socio-demographic variables and dwelling attributes; information on occupants’ knowledge of fuel costs, energy efficiency, and fuel emissions; as well as actual environmental behaviours. Key findings are that environmental concerns, including knowledge of fuel costs, emissions, or engagement in environmentally sustainable behaviours, are not an important determining factor in heating system choice across the majority of households. No clear trend emerges on the likelihood of specific heating systems being associated with a broad range of socio-demographic variables, including age, income, and working status. Certain building attributes are associated with specific heating system types, with analyses segregated by new build properties, properties with their original heating system, and also by tenure type (i.e. mortgage, rental, etc.). For example, we find public sector landlords’ properties have a substantially higher likelihood that the heating system is solid fuel based compared to other heating systems, which identifies an obvious opportunity to target de-carbonisation of heating systems.
    Date: 2017–12
  15. By: Draca, Mirko (University of Warwick and Centre for Economic Performance, London School of Economics); Koutmeridis, Theodore (University of Glasgow); Machin, Stephen (University College London and Centre for Economic Performance, London School of Economics)
    Abstract: In economic models of crime individuals respond to changes in the potential value of criminal opportunities. We analyse this issue by estimating crime-price elasticities from detailed data on criminal incidents in London between 2002 and 2012. The unique data feature we exploit is a detailed classification of what goods were stolen in reported theft, robbery and burglary incidents. We first consider a panel of consumer goods covering the majority of market goods stolen in the crime incidents and find evidence of significant positive price elasticities. We then study a particular group of crimes that have risen sharply recently as world prices for them have risen, namely commodity related goods (jewellery, fuel and metal crimes), finding sizable elasticities when we instrument local UK prices by exogenous shifts in global commodity prices. Finally, we show that changes in the prices of loot from crime have played a role in explaining recent crime trends.
    Keywords: : Crime; Goods Prices; Metal Crime; Commodity Prices JEL Classification: K42
    Date: 2017
  16. By: Andrew Garin; Filipe Silverio
    Abstract: In the canonical competitive labor market model, firms are wage-takers and idiosyncratic shocks to individual firms do not affect wages. However, when labor markets are frictional, wages may directly depend on firm-specific factors. We test how sensitive wages are to firm-level labor demand by estimating the incidence of idiosyncratic export demand shocks on the wages of incumbent workers in Portugal during the Great Recession (2008-2010). Using detailed export records, we construct measures of firm exposure to unanticipated shocks to the demands of different countries for specific products. The shocks predict changes in output and payroll at affected firms, but not at other similar firms. We combine the export demand measures with firm balance sheet data and matched longitudinal administrative employer-employee records to estimate the impact of idiosyncratic firm-level demand shocks on employee outcomes. We find that idiosyncratic shocks that decreased sales or value added by 10 percent caused wages to grow 1.5 percent less for incumbent workers who were employed by affected firms in 2007. Furthermore, we find that these pass-through effects are stronger in industries with higher durability of employment relationships and lower employee turnover rates. These results support a model in which barriers to replacing incumbent workers give rise to internal labor markets within the firm, exposing workers to their employersâ idiosyncratic conditions.
    JEL: J31 J23 M52
    Date: 2017–12–13
  17. By: Giovanna, Iannantuoni; Elena, Manzoni; Francesca, Rossi;
    Abstract: In this paper we refine the interpretation of the European two-dimensional political space and the investigation of its determinants compared to the approach commonly adopted in the spatial voting literature. Specifically, we take into account heterogeneity and cross-correlation among legislators by explicitly including into the model a spatial effect which, in turn, relies on new sets of linguistic, geographical, institutional and cultural metrics. We confirm that the first dimension of the European political space is mainly explained by the Members of European Parliament's ideological position on a left-right scale. We also find that correlation across legislators plays a significant role in explaining the first dimension when their pairwise distance is defined according to an individualism index, which turns out to be closely related to left-right ideology positioning. Even more interestingly, we show that "space" intended in a broad economic sense plays an important role in interpreting the second dimension of the political spectrum. The most relevant metric that induces spatial effects along the second dimension is based on an institutional index. Moreover, we also find that the second dimension is influenced by the gender composition of the political parties.
    Keywords: European political space, spatial autoregressions, NOMINATE, proximity matrices, economic distances
    JEL: D72 C21
    Date: 2017–12–06
  18. By: Petar Vujanovic; Christine Lewis
    Abstract: Switzerland makes more use of its human resources than most other OECD countries. Labour force participation is high and the unemployment rate low for most segments of society. This ensures a high standard of living for most Swiss people. Nevertheless, productivity growth is relatively slow. While this may in part be attributable to already being an advanced economy, it also means that Switzerland cannot be complacent with regard to education and skills. Its admirably low youth joblessness suggests that the transition from education to work is functioning soundly. However, there is mounting evidence that as the structure of industry is changing, due to globalisation and digitalisation for instance, vacancies and skills mismatches are spreading. The mix of skills being taught differs from those taught in most other high income OECD countries in which a common secondary school track predominates and the emphasis is on equipping young adults with academic tertiary qualifications. In this context, it is important that the system is flexible enough to respond to shifts in the demand for skills and that workers continue to learn. While the participation of women and immigrants in the economy compares relatively well, more can still be done to improve equity in the accumulation of skills. This Working Paper relates to the 2017 OECD Economic Survey of Switzerland ( c-survey-switzerland.htm).
    Keywords: skills, Switzerland, training, vocational education
    JEL: I24 I25 I28 J24 J48
    Date: 2017–12–12
  19. By: Katalin Bodnár (Magyar Nemzeti Bank); Ludmila Fadejeva (Latvijas Banka); Stefania Iordache (Banca Nationala a Romaniei); Liina Malk (Eesti Pank); Desislava Paskaleva (Bulgarian National Bank); Jurga Pesliakaite (Lietuvos Bankas); Nataša Todorovic Jemec (Banka Slovenije); Peter Tóth (Národná banka Slovenska); Robert Wyszynski (Narodowy Bank Polski)
    Abstract: We study the transmission channels for rises in the minimum wage using a unique firm-level dataset from eight Central and Eastern European countries.Representative samples of firms in each country were asked to evaluate the relevance of a wide range of adjustment channels following specific instances of rises in the minimum wage during the recent post-crisis period. The paper contributes to the literature by presenting the reactions of firms to rises in the minimum wage as a combination of strategies, and evaluates the relative importance of those strategies. Our findings suggest that the most popular adjustment channels are cuts in non-labour costs, rises in product prices, and improvements in productivity. Cuts in employment, which is the adjustment channel most commonly studied in the empirical literature, is less popular and occurs mostly through reduced hiring rather than direct layoffs. Our study also provides evidence of potential spillover effects that rises in the minimum wage can have on firms without minimum wage workers. Finally, we analyse the different firm-level characteristics that drive the choice of adjustment strategies.
    Keywords: minimum wages, adjustment channels, firm survey
    JEL: D22 E23 J31
    Date: 2017–12
  20. By: Stanislawa Golinowska; Agnieszka Sowa-Kofta
    Abstract: With the population ageing the development of sustainable long-term care institutions is of great importance in many European countries. In Poland, currently dominant, traditional and family based care will become insufficient with increasing cohorts of older people. Presented paper discusses recent developments in long-term care policy in the country. Long-term care institutions are separated in the two sectors, with little field for cooperation and coordination of activities. Over the past years policy addressing ageing related problems was developed, focusing on the active ageing instruments. Dependency prevention and active ageing are among goals of national policies formulated separately in the health and social sector. Information policy and monitoring long-term care services’ provision remains insufficient. Coordination of activities mainly takes place at the local level. Local governments and non-governmental organizations, often cooperating with representatives of older people, are active in providing services to older people in community and often incorporating innovative solutions in care.
    Keywords: long-term care policy, long-term care institutions, informal care, dependency prevention, ageing, older people
    JEL: I10 I18 I31 I38
    Date: 2017
  21. By: Hofmann, Sarah; Mühlenweg, Andrea
    Abstract: In this study, we analyze health effects of a recent education reform in Germany exposing students to increased schooling intensity. The reform shortened the higher secondary education track by one year. As the overall curriculum required for graduation was held constant, this led to an increase in instruction hours in the remaining school years. The reform has been introduced at different points in time across federal states, providing us with a difference-in-difference setup for analysis. Based on data from the German Socio-Economic Panel Study (SOEP), our results imply that the reform significantly reduced adolescents' self-rated mental health status. The overall effect on the mental component summary score (MCS) is about a quarter of a standard deviation. Examining MCS sub-dimensions, we find detrimental effects of the reform on vitality and on emotional balance. We also observe significant impacts on self-assessed general physical health.
    Keywords: Adolescent health; schooling intensity; school reform; natural experiment
    JEL: J24 I14
    Date: 2017–12
  22. By: David Jesuit; Vincent Mahler
    Abstract: This paper offers an overview of income inequality and government redistribution between the late 1960s and 2010 in 20 developed countries. Our primary data source is household-level income surveys available from the Luxembourg Income Study Database (LIS). These data allow us to measure overall redistribution; to explore whether redistribution has been achieved primarily through direct taxes or social transfers; to compare the redistributive effect of old-age pensions and transfers to those of working age; and to explore several approaches to second-order feedback effects whereby taxes and transfers affect private sector income. We find that there is substantial cross-national variation in overall fiscal redistribution and that transfers account for the majority of redistribution in the countries we examine. With respect to changes over time, we find that overall redistribution has increased steadily since the early 1970s in most countries and has largely, but not entirely, kept pace with a substantial growth of private sector inequality.
    Date: 2017–09
  23. By: Jan Paul Heisig; Heike Solga
    Abstract: Using PIAAC (Programme for the International Assessment of Adult Competencies) data for 21 countries, we study interrelationships between formal qualifications, cognitive skills, and labour market outcomes, focusing on comparisons between less and intermediate-educated adults (i.e. between adults with a degree below the upper secondary and at the upper secondary level). Less-educated adults tend to have lower cognitive skills than intermediate-educated adults, yet both groups are internally heterogeneous. In country-specific individual-level regressions, cognitive skills partly explain the lower occupational status of less-educated adults, but cross-national variation in their disadvantage remains substantial after accounting for skills. Country-level regressions show that the remaining disadvantage increases with the aggregate skills gap and with the internal homogeneity of the two educational groups. We further show that the association between skills and occupational attainment is weaker among the less educated than among the intermediate group. These findings are consistent with the idea that employers statistically discriminate on the basis of formal qualifications.
    Date: 2017–12–15
  24. By: Rebien, Martina (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Stops, Michael (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Zaharieva, Anna
    Abstract: "This study explores the relationship between firms' characteristics and their recruitment strategies. We propose a model based on a search and matching framework with two search channels: a formal channel which is costly for firms and a costless informal channel, i.e. referrals. There is a continuum of heterogeneous vacancies in our model where every firm with an open vacancy chooses an optimal search effort in order to attract job candidates. This search effort depends on the productivity of the firm and, contrary to the previous literature, workers send simultaneous applications to open vacancies. We assess the model predictions by using the IAB Job Vacancy Survey, a representative survey among human resource managers in Germany reporting information about their most recent recruitment case. Based on the finding that firm size and productivity are positively correlated we show that: (1) Larger firms invest more effort into formal search activities; (2) Firms invest more formal search effort in labour markets for more educated workers; (3) The positive relationship between firm's size and formal search intensity can also be observed for firms that don't use referrals; (4) Firms that use referrals as a search channel invest less effort into formal search compared to firms that don't use referrals; (5) Larger firms are less likely to hire an applicant by referral than smaller firms, and (6) More intensive search effort leads to a larger number of applications." (Author's abstract, IAB-Doku) ((en))
    Keywords: Personalbeschaffung, Personalauswahl, offene Stellen, Stellenbesetzung, Mitarbeiter, informelle Kommunikation, Unternehmensgröße, Suchverfahren, Qualifikationsanforderungen, qualifikationsspezifische Faktoren, IAB-Stellenerhebung
    JEL: J21 J23 J63 J64
    Date: 2017–11–30
  25. By: Bethlehem Argaw (Leibniz Universität Hannover); Patrick Puhani (Leibniz Universität Hannover)
    Abstract: We use administrative panel data on about a quarter of a million students in the German state of Hesse to estimate the causal effect of class size on school tracking outcomes after elementary school.Our identification strategy relies on the quasi-random assignment of students to different class sizes based on maximum class size rules.In Germany,students are tracked into more orless academic middle school types at about age ten based,to a large extent,on academic achievement in elementary school. We mostly find no or small effects of class size in elementary school on receiving a recommendation or on the actual choice to attend the more academic middle school type.For male students,we find that an increase in class size by 10 students would reduce their chance of attending the higher school track which more than 40 percent of students attend by 3 percentage points.
    Keywords: class size, panel, administrative data, education production
    JEL: I21 I28
    Date: 2017–12
  26. By: Gianluca Misuraca (European Commission – JRC); Luigi Geppert; Cristiano Codagnone
    Abstract: This report presents the final proposal for developing a methodological framework to assess the impacts generated by social policy innovations which promote social investment in the EU, in short i-FRAME. This framework has the objective to provide a structured approach that shall serve as a comprehensive framework for conducting analysis of the economic and social returns on investments of social policy innovations. It also aims to act as a guide to gather insights into replicability and transferability of initiatives which promote social investment across the EU. The report outlines the reviewed and improved theoretical and methodological approach developed by the JRC with help from external experts, and validated by testing the operational components proposed on a number of case studies and scenarios of use. After outlining the conceptual and methodological approach underpinning the i-FRAME (V1.0), the report discusses the proposal for building its operational components according to a structured theoretical framework of a dynamic simulation model for social impact assessment (V1.5). The final proposal for i-FRAME (V2.0) and an overview of the operational components for its implementation are then presented discussing the key elements that should be developed to build a comprehensive i-FRAME Web-Platform and simulator for social impact assessment. Conclusions are then offered in terms of implications for policy and directions for future research. These were drawn after consulting experts from different research disciplines, practitioners and representatives of relevant stakeholders and policymakers, and they include .recommendations for further developing the operational components proposed, paving the way towards building the i-FRAME (V3.0) and beyond.
    Keywords: Social policy, innovation, ICT, social investment, social policy innovation, SIP, Social Investment Package, social economy, social enterprise, ICT enabled social innovation, ICT, services, social protection, welfare, mapping, welfare reforms, wellbeing, resilience
    JEL: I31 I38 O33
    Date: 2017–11
  27. By: S. Calligaris; M. Del Gatto; F. Hassan; G. I.P. Ottaviano; F. Schivardi
    Abstract: Productivity has recently slowed down in many economies around the world. A crucial challenge in understanding what lies behind this " productivity puzzle" is the still short time span for which data can be analysed. An exception is Italy where productivity growth started to stagnate 25 years ago. Italy therefore offers an interesting case to investigate in search of broader lessons that may hold beyond local specificities. We find that resource misallocation has played a sizeable role in slowing down Italian productivity growth. If misallocation had remained at its 1995 level, in 2013 Italy's aggregate productivity would have been 18% higher than its actual level. Misallocation has mainly risen within sectors than between them, increasing more in sectors where the world technological frontier has expanded faster. Relative specialization in those sectors explains the patterns of misallocation across geographical areas and firm size classes. The broader message is that an important part of the explanation of the productivity puzzle may lie in the rising difficulty of reallocating resources between firms in sectors where technology is changing faster rather than between sectors with different speeds of technological change.
    Keywords: misallocation;tfp;productivity;Productivity Puzzle;italy
    Date: 2017
  28. By: Dorothée Rouzet; Sebastian Benz; Francesca Spinelli
    Abstract: This report presents evidence on how services trade restrictions influence the decisions and performance of firms engaged in international markets, drawing on micro-data from Belgium, Finland, Germany, Italy, Japan, Sweden, the United Kingdom, and the United States. It first describes the patterns of services exports and affiliate sales at the firm level, uncovering a number of stylised facts about the firms engaged in international trade in services, their choices of modes of supply and the links between services trade and manufacturing activities. The report then relates these outcomes to services trade policy barriers in destination markets as measured by the OECD STRI. It demonstrates that complex and restrictive regulatory environments limit the volume of services that firms are able to trade as well as the number of firms that engage with those markets. Hence services trade restrictions reflect not only ad valorem trade costs, but also fixed and sunk costs. Such barriers do not affect all firms equally. Restrictive services trade regulations disproportionately discourage SMEs. Size, productivity and previous exporting experience appear to be decisive factors in dealing with at-the-border and behind-the-border trade barriers. Finally, the cost of regulatory compliance is lower for foreign-owned firms with headquarters located in the export destination country and for firms that trade bundles of services and manufacturing products, than it is for pure services exporters.
    Keywords: competition, firm-level data, foreign affiliates, productivity, regulation
    JEL: D22 F13 F14 L22 L25 L8 L9
    Date: 2017–12–12
  29. By: Mélodie Cartel (GEM - Grenoble Ecole de Management - Grenoble École de Management (GEM)); Franck Aggeri (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Eva Boxenbaum (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Jean-Yves Caneill (EDF R&D - Electricité de France Recherche et Développement)
    Keywords: Carbon markets,Institutional innovation,Corporate political activity,climate change,Collective bricolage
    Date: 2017

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