nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2018‒01‒08
33 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Older People in Sweden Without Means: On the Importance of Age at Immigration for Being 'Twice Poor' By Gustafsson, Björn Anders; Mac Innes, Hanna; Österberg, Torun
  2. Temporary agency employment in Germany: A strategic "buffer" for firms and regions in the crisis? By Neumann, Uwe
  3. Measuring the fiscal and equity impact of tax evasion: evidence from Denmark and Estonia By Salvador Barrios; Bent Greve; M. Azhar Hussain; Alari Paulus; Fidel Picos; Sara Riscado
  4. Mobility Assistance Programmes for Unemployed Workers, Job Search Behaviour and Labour Market Outcomes By Caliendo, Marco; Künn, Steffen; Mahlstedt, Robert
  5. The Short-Run Employment Effects of the German Minimum Wage Reform By Caliendo, Marco; Fedorets, Alexandra; Preuß, Malte; Schröder, Carsten; Wittbrodt, Linda
  6. Linguistic distance, networks and migrants' regional location choice By Bredtmann, Julia; Nowotny, Klaus; Otten, Sebastian
  7. Eco-strategies and firm growth in European SMEs By Elisenda Jové-Llopis; Agustí Segarra-Blasco
  8. The Determinants of Islamophobia - An Empirical Analysis of the Swiss Minaret Referendum By Olga Orlanski; Günther G. Schulze
  9. Who benefits from GRW? Heterogeneous employment effects of investment subsidies in Saxony Anhalt By Dettmann, Eva; Titze, Mirko; Weyh, Antje
  10. Local Border Reforms and Economic Activity By Peter H. Egger; Marko Köthenbürger; Gabriel Loumeau
  11. The Impact of Parenthood on the Gender Wage Gap – a Comparative Analysis of 26 European Countries By Ewa Cukrowska-Torzewska; Anna Lovasz
  12. Highways, Market Access, and Spatial Sorting By Stephan Fretz; Raphael Parchet; Frédéric Robert-Nicoud
  13. Not All Silver Lining? The Great Recession and Road Traffic Accidents By Paola Bertoli; Veronica Grembi; Judit Vall Castello
  14. The relationship between nurse staffing levels and objective and subjective quality of care: A panel data approach for Germany By Augurzky, Boris; Bünnings, Christian; Wübker, Ansgar
  15. Cost-Sharing Design Matters : A Comparison of the Rebate and Deductible in Healthcare By Remmerswaal, Minke; Boone, Jan; Bijlsma, Michiel; Douven, R.C.M.H.
  16. History dependence in wages and cyclical selection: Evidence from Germany By Bauer, Anja; Lochner, Benjamin
  17. The Granular Origins of Macroeconomic Fluctuations in Europe By Christian H Ebeke; Kodjovi M. Eklou
  18. Gender Quota and Inequalities inside the Boardroom By Antoine Rebérioux; Gwenael Roudaut
  19. Compensating households from carbon tax regressivity and fuel poverty: a microsimulation study By Audrey Berry
  20. Self-employment and Okun’s Law relationship: the Spanish case By Porras, María Sylvina; Martín-Román, Ángel L.
  21. Fertility effects of college education: Evidence from the German educational expansion By Kamhöfer, Daniel A.; Westphal, Matthias
  22. Lorenz versus Zenga Inequality Curves: a New Approach to Measuring Tax Redistribution and Progressivity By Francesca Greselin; Simone Pellegrino; Achille Vernizzi
  23. Heterogeneity in residential electricity consumption: A quantile regression approach By Frondel, Manuel; Sommer, Stephan; Vance, Colin
  24. Improving productivity and job quality of low-skilled workers in the United Kingdom By Sanne Zwart; Mark Baker
  25. Bunching on the Autobahn? Speeding Responses to a 'Notched' Penalty Scheme By Christian Traxler; Franz Westermaier; Ansgar Wohlschlegel
  26. The output employment elasticity and the increased use of temporary contracts: evidence from Poland By Krzysztof Bartosik; Jerzy Mycielski
  27. Financial literacy and voluntary savings for retirement in Slovakia By Zuzana Brokesova; Andrej Cupak; Gueorgui Kolev
  28. Diagnosing unhappiness dynamics: Evidence from Poland and Russia By Michal Brzezinski
  29. Credit Supply Shocks, Network Effects, and the Real Economy By Laura Alfaro; Manuel García; Enrique Moral-Benito
  30. The Effect of an Education-driven Labor Supply Shock on Firms' R&D Personnel By Patrick Lehnert; Curdin Pfister; Uschi Backes-Gellner
  31. Cohesion Policy Incentives for Collaborative Industrial Research. The Evaluation of a Smart Specialisation Forerunner Programme By Riccardo Crescenzi; Guido de Blasio; Mara Giua
  32. Consumer Preferences and Soft Load Control on the Swedish Electricity Market By Broberg, Thomas; Brännlund, Runar; Persson, Lars
  33. The parental home as labor market insurance for young Greeks during the crisis By Christopoulou, Rebekka; Pantalidou, Maria

  1. By: Gustafsson, Björn Anders (University of Gothenburg); Mac Innes, Hanna (University of Gothenburg); Österberg, Torun (University of Gothenburg)
    Abstract: This paper examines immigrant poverty at an older age in Sweden with an emphasis on late-in-life immigrants. We analyse tax data for the entire Swedish-born and non-Swedish-born population. The poverty status of a household is assessed using two criteria. First, the disposable income of the household in which the person lived in 2007 must be below 60 per cent of the median equivalent in-come in Sweden as a whole. Second, to be classified as 'twice poor' a household net assets must be below SEK 10,000. The results indicate that three out of four Swedish-born older persons were not classified as poor by either of the criteria, and only one per cent by both criteria. In contrast, among older persons born in low-income countries almost three out of four were classified as poor according to one of the criteria and not fewer than one in three according to both. Results of estimating logistic models indicate that the risk of being considered poor according to both criteria is strongly positively related to one's age at immigration. Our results indicate that it is crucial that migrants, particularly those who arrive after age 40, be better integrated into the Swedish labour market. To alleviate pov-erty among those migrants who are already of older age, increased transfers are probably the only possible alternative.
    Keywords: older people, poverty, immigrants, Sweden
    JEL: I32 J14 J15
    Date: 2017–11
  2. By: Neumann, Uwe
    Abstract: In many European countries the number of employees hired via temporary work agencies has increased considerably over the past two decades, up to around 2% of the total workforce in the European Union today. Different studies have found the demand for agency employment to precede GDP growth. This paper explores to what extent firms utilised agency work as a strategic 'buffer' to adapt to variation in labour demand in Germany over the period 2006-2014, i.e. before, during and after the crisis of 2008/2009. Drawing on microdata from a representative employer survey (IAB Establishment Panel) and statistics on regional labour markets, the analysis finds only limited evidence on a systematic firm-level buffer function of temporary agency work. Rather, in many firms hiring from agencies is possibly part of a business strategy relying on flexible recruitment. An analysis of the average treatment effect on the treated (ATT) using a propensity score matching procedure suggests that particularly in regions with high unemployment, such flexibility during the crisis supported adaptation of client firms to economic change, since they were less reluctant than non-clients to hire after the crisis.
    Keywords: Temporary agency work,regional labour markets,establishment data,propensity score matching
    JEL: L25 J23 M54 R11
    Date: 2017
  3. By: Salvador Barrios (European Commission - JRC); Bent Greve (Roskilde University); M. Azhar Hussain (Roskilde University); Alari Paulus (University of Essex); Fidel Picos (European Commission - JRC); Sara Riscado (European Commission - JRC)
    Abstract: In the European context where fiscal consolidation is required in many countries, tax non-compliance behaviour becomes a very relevant issue for governments and policy makers. In this paper, we aim at contributing to the assessment of tax non-compliance, by estimating individual measures of tax evasion, focusing on employment earnings for two countries, Denmark and Estonia. Additionally, we simulate two different scenarios – a "true world" where some individuals underreport their income to the tax authorities and a "perfect world" where everyone reports truthfully their incomes – in the European microsimulation model EUROMOD, allowing us to obtain the fiscal and distributional effects of taking into account evaded employment income. Furthermore, the Estonian country case allows us to illustrate the importance of linking survey and administrative data not only to accurately estimate tax evasion, but also to correct survey income amounts for measurement error. Preliminary findings indicate that taking into account non-reported incomes has non-negligible fiscal and distributional effects when these are taken into account to compute tax liabilities and benefits, even in a country where estimated non-reported income represent a low percentage of earnings, such as Denmark.
    Keywords: Tax evasion, microsimulation
    Date: 2017–12
  4. By: Caliendo, Marco (University of Potsdam); Künn, Steffen (Maastricht University); Mahlstedt, Robert (University of Copenhagen)
    Abstract: The appealing idea of geographically relocating unemployed job seekers from depressed to prosperous regions and hence reducing unemployment leads to industrialised countries offering financial support to unemployed job seekers when searching for and/or accepting jobs in distant regions. In this paper, we investigate the impact of the existence of these mobility assistance programmes (MAPs) on the job search behaviour of unemployed workers and how this affects their labour market outcomes. While job search theory predicts a shift in individuals' search effort from local to distant labour markets, consequences for other dimensions of the search behaviour, e.g. reservation wages or the overall search effort, and job-finding probabilities remain theoretically ambiguous. We use survey data on German unemployed job seekers and apply an instrumental variable approach to empirically identify the causal impact of an increased search radius, due to the availability of MAPs, on job search strategies and subsequent labour market outcomes. The results show that the existence of MAPs shifts individuals' search effort from local to distant regions without affecting the total number of job applications. The increase in search radius causes a higher geographical mobility and hence higher employment probabilities and wages.
    Keywords: job search, active labour market policy, labour market mobility, instrumental variable approach
    JEL: J61 J68 D04 C21
    Date: 2017–11
  5. By: Caliendo, Marco (University of Potsdam); Fedorets, Alexandra (DIW Berlin); Preuß, Malte (Freie Universität Berlin); Schröder, Carsten (DIW Berlin); Wittbrodt, Linda (University of Potsdam)
    Abstract: We assess the short-term employment effects of the introduction of a national statutory minimum wage in Germany in 2015. For this purpose, we exploit variation in the regional treatment intensity, assuming that the stronger a minimum wage "bites" into the regional wage distribution, the stronger the regional labour market will be affected. In contrast to previous studies, we draw upon detailed individual wage data from the Structure of Earnings Survey (SES) 2014 and combine it with administrative information on regional employment. Moreover, using the Socio-Economic Panel (SOEP), we are able to affirm the absence of anticipation effects and verify the assumption of a common trend in wages before the reform. Based on hourly wages, we compute two regional bite indicators – the share of affected employees and the Kaitz index – for 141 regional labour markets. In order to get a broader picture, we construct and compare a variety of these measures, including a bite based on full-time workers only. All of these display a considerably strong correlation. Overall, we do not find a pronounced significant effect on regular (full- and part-time) employment in most specifications, although some estimations yield a small significant reduction amounting to 78,000 (roughly 0.3% of all regular jobs). The results concerning marginal employment are more pronounced. We find evidence that mini-jobs dropped substantially from 2014 to 2015, making for a reduction of about 180,000 jobs (about 2.4% of all mini-jobs). This result is robust to a variety of sensitivity tests.
    Keywords: minimum wage, regional bite, employment effects
    JEL: J23 J31 J38
    Date: 2017–12
  6. By: Bredtmann, Julia; Nowotny, Klaus; Otten, Sebastian
    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
  7. By: Elisenda Jové-Llopis (Department of Economics – CREIP, Universitat Rovira i Virgili); Agustí Segarra-Blasco (Research Group of Industry and Territory, Universitat Rovira i Virgili)
    Abstract: This study investigates the effects of eco-strategies on firm performance in terms of sales growth in an extensive sample of 11,336 small and medium-sized enterprises (SMEs) located in 28 European countries. Our empirical results suggest that not all eco-strategies are positively related to better performance, at least not in the short term. We find that European companies using renewable energies, recycling or designing products that are easier to maintain, repair or reuse perform better. Those that aim to reduce water or energy pollution, however, seem to show a negative correlation to firm growth. Our results, also, indicate that high investment in eco-strategies improves firm growth, particularly in new members that joined the EU from 2004 onwards. Finally, we observe a U-shaped relationship between eco-strategies and firm growth, which indicates that a greater breadth of eco-strategies is associated with better firm performance. However, few European SMEs are able to either invest heavily or undertake multiple eco-strategies, thus leaving room for policy interventions.
    Keywords: eco-strategy, firm growth, Europe, SMEs
    Date: 2017–12
  8. By: Olga Orlanski; Günther G. Schulze
    Abstract: We analyze the determinants of Islamophobia using the only nation-wide anti-Islam referendum ever, which was held in Switzerland in 2009 and led to the prohibition of minarets. We find economic, environmental, and cultural factors as well as the presence of Muslims to determine voting behavior. Approval rates for the bill rise with unemployment and decrease with education, income, and the attractiveness of the location. Approval is higher in rural areas, in municipalities with a higher share of men, and in the Italian and German speaking parts of Switzerland. It is higher in municipalities with a higher share of Muslims, which strongly supports the ’religious threat’ hypothesis. We compare the voting behavior in the minaret referendum with the referendum “for democratic naturalizations”, held in 2008, in order to disentangle determinants of Islamophobia from those of xenophobia. We show that our results are robust to the estimation with ecological inference.
    Keywords: referendum, minaret referendum islamophobia, xenophobia, ecological fallacy
    JEL: D72 D78 J15
    Date: 2017
  9. By: Dettmann, Eva; Titze, Mirko; Weyh, Antje
    Abstract: The paper estimates the plant level employment effects of investment subsidies in one of the most strongly subsidized German Federal States. We analyze the treated plants as a whole, as well as the influence of heterogeneity in plant characteristics and the economic environment. Modifying the standard matching and difference-in-difference approach, we develop a new procedure that is particularly useful for the evaluation of funding programs with individual treatment phases within the funding period. Our data base combines treatment, employment and regional information from different sources. So, we can relate the absolute effects to the amount of the subsidy paid. The results suggest that investment subsidies have a positive influence on the employment development in absolute and standardized figures - with considerable effect heterogeneity.
    Keywords: evaluation,industrial policy,matching,difference-in-difference
    JEL: A11 D61 H20 Z0
    Date: 2017
  10. By: Peter H. Egger; Marko Köthenbürger; Gabriel Loumeau
    Abstract: In this paper, we study how local border reforms affect economic activity. To do so, we make use of large-scale municipal merger reforms in Germany to assess the effect of local border changes on the distribution of activity in space, an issue that has not been addressed in existing literature. To allow for a comparison of economic activity within unique geographical units over time, we use geo-coded light data as well as local land-use data. Adopting a difference-in-differences approach, we find evidence that municipalities absorbing their merger partners and hosting the new administrative center experience a significant increase in local activity, while the municipalities that are being absorbed and are losing the administrative center experience a decrease in such activity. The difference between the gains in activity from absorbing municipalities and the losses from absorbed ones appears positive. These hitherto undocumented results point to the importance of distance to the administrative center as a determinant of the spatial distribution of economic activity.
    Keywords: border effects, centripetal forces, nightlight data, administrative center, municipal mergers
    JEL: H70 R11 R12
    Date: 2017
  11. By: Ewa Cukrowska-Torzewska (Faculty of Economic Sciences, University of Warsaw); Anna Lovasz (Institute of Economics, Centre for Economic and Regional Studies of the Hungarian Academy of Sciences)
    Abstract: We use cross-national data on 26 EU countries to assess how much children and the responsibilities related to them contribute to the gender wage gap, and how institutional elements - especially family policies - affect this relationship. Our analysis is based on a decomposition that reveals what portion of the gender wage gap may be attributed to: (1) the motherhood wage penalty, (2) the fatherhood wage premium, and (3) the gender wage gap among childless individuals. Our findings suggest that the variability in the magnitude of the gaps is closely related to the institutional context, pointing to different reasons behind the gender wage gap and policy implications. Southern EU countries have low gender wage gaps and low motherhood penalties or even premiums. Short leaves, low childcare coverage, and traditional norms do not support maternal labor supply, but mothers who work do not face a wage penalty. Western EU countries with higher childcare coverage, moderate length leaves, supportive norms, and flexible jobs have relatively high maternal employment and mothers are not faced with significant wage penalties. The highest motherhood penalties are found in CEE countries, where long leaves, low childcare availability under age 3, and preferences for within-family care lead to long absences from the labor market. In all countries, irrespective of cultural norms and policies, we find high positive family gaps among men, which drive men’s average wages up, and lead to gender wage inequality.
    Keywords: Family Gap, Gender Wage Gap, Family Policies
    JEL: J13 J22
    Date: 2017
  12. By: Stephan Fretz; Raphael Parchet; Frédéric Robert-Nicoud
    Abstract: We design a spatial model featuring workers embodied with heterogeneous skills. In equilibrium, locations with improved market access become relatively more attractive to the high-skilled, high-income earners. We then empirically analyze the effects of the construction of the Swiss highway network between 1960 and 2010 on the distribution of income at the local level, as well as on employment and commuting by education level. We find that the advent of a new highway access within 10km led to a long-term 19%-increase of the share of high-income taxpayers and a 6%-decrease of the share of low-income taxpayers. Results are similar for employment data decomposed by education level, as well as for in- and out-commuters. Highways also contributed to job and residential urban sprawl.
    Keywords: transportation, highway, market access, income sorting
    JEL: D31 O18 H54 R11 R23
    Date: 2017
  13. By: Paola Bertoli; Veronica Grembi; Judit Vall Castello
    Abstract: We provide new evidence on the impact of recessions on traffic accidents, by exploiting the case of Spain, where the effects of the 2008 economic crisis have been among the strongest in the developed world. We exploit differences in the incidence of the recession across Spanish provinces due to the unequal evolution of the real estate bubble across the territory. We use a unique dataset on the universe of traffic accidents in Spain between 2004 and 2011. We first follow the literature on the topic and examine the impact of the economic crisis on the probability of having a traffic accident. However, we also go one step further, as we are able to identify any changes in the composition of both victims and driving behaviors as a result of the crisis. First, our results show that the Great Recession reduced traffic accidents in Spain. Second, for the compositional effects, we report decreased probabilities of dying or reporting a serious injury. More importantly, we also detect an increase in the probability that people involved in an accident abuse alcohol and drugs. Our results are robust to different measures of the treatment (i.e., employment in the construction sector) and the use of a spatial fixed effects model and are not biased by anticipatory effects. Finally, we show that our findings are driven by less-populated areas. Thus, we suggest that alcohol and drug control measures be reinforced during recessions and more attention should be devoted to rural areas to to strengthen the reduction of road traffic accidents.
    Keywords: recession, traffic accidents; Spain; economic crisis; spatial fixed effects model
    Date: 2017–12
  14. By: Augurzky, Boris; Bünnings, Christian; Wübker, Ansgar
    Abstract: In this study we investigate the relationship between nursing staffing levels and hospital quality in Germany. We use administrative data from almost all German hospitals from 2002 to 2013 and link it to mortality rates and patient satisfaction measures. To analyze the association between nursing staffing levels and hospital quality indicators empirically, we estimate linear regression models and control for a wide range of hospital and patient characteristics that might bias the results. In addition, we exploit the longitudinal structure of the data and rule out potential bias due to time-invariant unobserved heterogeneity. The estimation results indicate a positive relationship between nurse staffing levels and hospital quality for both subjective and objective quality measures. Increasing nurse staffing levels by 10 percent reduces the mortality rate by 0.05 percent and increases patient satisfaction by around 0.7 percent, on average. Although we find some of these relationships to be statistically significant, at least marginally, the absolute magnitudes of the estimated coefficients are rather small.
    Keywords: Hospital quality,nurse staffing,patient satisfaction,mortality rate
    JEL: C23 I11 I18
    Date: 2017
  15. By: Remmerswaal, Minke (Tilburg University, Center For Economic Research); Boone, Jan (Tilburg University, Center For Economic Research); Bijlsma, Michiel (Tilburg University, Center For Economic Research); Douven, R.C.M.H.
    Abstract: Since 2006, the Dutch population has faced two different cost-sharing schemes in health insurance for curative care: a mandatory rebate of 255 euros in 2006 and 2007, and since 2008 a mandatory deductible. Using administrative data for the entire Dutch population, we compare the effect of both cost-sharing schemes on healthcare consumption between 2006 and 2013. We use a regression discontinuity design which exploits the fact that persons younger than eighteen years old neither face a rebate nor a deductible. Our fixed effect estimate shows that for individuals around the age of eighteen, a one euro increase of the deductible reduces healthcare expenditures 18 eurocents more than a euro increase of the rebate. These results demonstrate that differences in the design of a cost-sharing scheme can lead to substantial different effects on total healthcare expenditure.
    Keywords: deductible; rebate; cost-sharing; healthcare consumption; regression discontinuity; panel data
    Date: 2017
  16. By: Bauer, Anja; Lochner, Benjamin
    Abstract: Using employer-employee data from Germany, this paper analyzes the relationship between wages and past and contemporaneous labor market conditions. Specifically, we test the implications of implicit contract models (Beaudry and DiNardo, 1991) and an on-the-job search model (Hagedorn and Manovskii, 2013) for the wage formation of different worker types over the business cycle. The results are mixed: On the one hand, the data suggest that wages depend on labor market conditions when a match is formed - as contract theories postulate. On the other hand, past labor market conditions also affect contemporaneous wages through the evolution of match quality over a worker's job history - the main hypothesis of the on-the-job-search model. Using cyclical variation in labor market tightness to control for match quality, as in Hagedorn and Manovskii (2013), we find that previous evidence for the excess wage cyclicality of job changers can be entirely explained by cyclical variation of match quality. Refining the selection model by taking into account occupational mobility within employer-employee matches, we also find no excess wage cyclicality for new hires from unemployment - the key worker type's wage for understanding unemployment fluctuations in matching models.
    Keywords: Business Cycle,Wage,Wage Rigidity,Implicit Contracts,Match Quality
    JEL: E24 E32 J31 J41
    Date: 2017
  17. By: Christian H Ebeke; Kodjovi M. Eklou
    Abstract: This paper investigates the microeconomic origins of aggregate economic fluctuations in Europe. It examines the relevance of idiosyncratic shocks at the top 100 large firms (the granular shocks) in explaining aggregate macroeconomic fluctuations. The paper also assesses the strength of spillovers from large firms onto SMEs. Using firm-level data covering over 14 million firms and eight european countries (Austria, Belgium, Finland, France, Germany, Italy, Portugal and Spain), we find that: (i) 40 percent of the variance in GDP in the sample can be explained by idiosyncratic shocks at large firms; (ii) positive granular shocks at large firms spill over to domestic SMEs’ output, especially if SMEs’ balance sheets are healthy and if SMEs belong to the services and manufacturing sectors.
    Date: 2017–11–07
  18. By: Antoine Rebérioux (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Gwenael Roudaut (Department of Economics, Ecole Polytechnique - Polytechnique - X - CNRS - Centre National de la Recherche Scientifique)
    Abstract: – This paper examines the evolution of within-board gender inequality following the adoption of a board-level gender quota for French listed companies in 2011. We show that the quota has succeeded in opening the doors of boardrooms to new, unseasoned women, who present distinctive characteristics. However, conditional on these characteristics, we provide evidence that female new comers are less likely that their male counterparts (both seasoned and new comers) to hold key positions within boards (namely, audit, compensation and nominating committee membership and chairing). This positional segregation is the main driver of a within-firm gender fees gap that amounts to 5.5% post-quota, as against 3.3% pre-quota.
    Keywords: gender inequality,board gender quota,board committees,gender fees gap
    Date: 2017–10–18
  19. By: Audrey Berry (CIRED)
    Abstract: For households, taxing carbon raises the cost of the energy they use to heat their home and to travel. This paper studies the distributional impacts of the recently introduced French carbon tax and the design of compensation measures. Using a microsimulation model built on a representative sample of the French population from 2012, I simulate for each household the taxes levied on its consumption of energy for housing and transport. Without recycling, the carbon tax is regressive and increases fuel poverty. However, I show how compensation measures can offset these impacts. A flat cash transfer offsets tax regressivity by redistributing
    Keywords: Carbon tax, Distributional impacts, Fuel poverty, Revenue recycling, Microsimulation
    JEL: Q5 I3
    Date: 2017–12
  20. By: Porras, María Sylvina; Martín-Román, Ángel L.
    Abstract: The present research provides evidence on the determinants driving the differences in the unemployment-output relationship in Spanish regions. We followed a two-step approach. First, we estimated a set of time-varying Okun’s coefficients (rolling-window) for the autonomous communities in Spain (1981-2013) showing significant regional differences as well as important changes over time. At the second step, we estimated FMOLS and DOLS models to explain regional differences in Okun’s law. The results obtained lead to the conclusion that differences in the weight of self-employment and its variations over time prove relevant when accounting for differences in Okun’s law between Spanish regions, and its effect (in standard deviations) is greater than that of variations in labour productivity per worker, which so far had been considered the main driver of regional discrepancies. The economic policy implications of this outcome are huge due to the fact that Spanish regional and national authorities are promoting self-employment.
    Keywords: Okun’s Law,self-employment,unemployment,GDP,Spanish regions
    JEL: C23 R11 R23 E24 J64
    Date: 2017
  21. By: Kamhöfer, Daniel A.; Westphal, Matthias
    Abstract: We estimate the effects of college education on female fertility - a so far understudied margin of education, which we instrument by arguably exogenous variation induced through college expansions. While college education reduces the probability of becoming a mother, college-educated mothers have slightly more children than mothers without a college education. Unfolding the effects by the timing of birth reveals a postponement that goes beyond the time in college - indicating a negative earlycareer effect on fertility. Coupled with higher labor-supply and wage returns for nonmothers as compared to mothers the timing effects moreover suggest that career and family are not fully compatible.
    Keywords: Fertility,family planning,education
    JEL: C31 H52 I21 J12 J13
    Date: 2017
  22. By: Francesca Greselin (Department of Statistics and Quantitative Methods, University of Milan-Bicocca, Italy); Simone Pellegrino (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Achille Vernizzi (Department of Economics, Management and Quantitative Methods, University of Milan, Italy)
    Abstract: In this paper we introduce a new methodology to study the degree of progression as well as the redistributive and re-ranking effects of a personal income tax system by employing and extending the new inequality curve (and index) proposed by Michele Zenga. Given an income distribution, the Zenga curve compares the economic conditions of two exhaustive groups of population obtained by dividing the overall population at all possible percentiles, from the bottom to the top observed income. Since the recent literature underlines that the Zenga curve shows features that are different from the standard approach based on the Lorenz curves, we show the potentialities of the new curve when studying the effects exerted by a personal income tax. This new methodology is compared to the classical one by a stylized example and by developing an application to Italian personal income tax data.
    Keywords: Personal Income Tax, Gini Index, Microsimulation Models, Reynolds-Smolensky Index, Kakwani index, Zenga Index.
    JEL: H23 H24
    Date: 2017–12
  23. By: Frondel, Manuel; Sommer, Stephan; Vance, Colin
    Abstract: Drawing on the most recent wave of the German Residential Energy Survey (GRECS), this paper estimates the contribution of individual appliances to household electricity consumption. Moving beyond the standard focus of estimating mean effects, we combine the conditional demand approach with quantile regression methods to capture the heterogeneity in the contribution of each appliance to the distribution of household electricity consumption. While reflecting correlations, rather than causal relationships, our results indicate substantial differences in the end-use shares across households originating from the opposite tails of the electricity consumption distribution, highlighting the added value of applying quantile regression methods in estimating consumption rates of electric appliances.
    Keywords: Electricity consumption,conditional demand approach,quantile regression methods
    JEL: D12 Q41
    Date: 2017
  24. By: Sanne Zwart; Mark Baker
    Abstract: More than a quarter of adults in the United Kingdom have low basic skills, which has a negative impact on career prospects, job quality and productivity growth. Furthermore, unlike most other countries, young adults do not have stronger basic skills than the generation approaching retirement. The lack of skills development starts at young ages and continues in secondary education; despite a modest reduction in recent years, the educational attainment gap between disadvantaged and non-disadvantaged students remains high. The low participation in lifelong learning of low-skilled individuals puts them at risk of falling behind in meeting the changing skill demands of the dynamic labour market. Ongoing reforms to the vocational education and training (VET) system and apprenticeship system should have a positive impact on low-skilled productivity, enabling students to gain the necessary basic skills and for workers to find quality jobs. Improving the targeting of active labour market policies, and ensuring that the ongoing increases in the national living wage are delivered in a sustainable way will also play an important role in improving job quality and reducing the high rate of youth neither employed or in education or training. Policy responses to the rise of non-standard work will also be essential in improving the job quality of the low-skilled.
    Keywords: job quality, low-skilled, Productivity, social mobility
    JEL: E24 H75 J24 J62
    Date: 2018–01–10
  25. By: Christian Traxler; Franz Westermaier; Ansgar Wohlschlegel
    Abstract: This paper studies drivers’ responses to a ‘notched’ penalty scheme in which speeding penalties are stepwise and discontinuously increasing in speed. We present survey evidence suggesting that drivers in Germany are well aware of the notched penalty structure. Based on a simple analytical framework we analyze the impact of the notches on drivers’ optimal speed choices. The model’s predictions are confronted with data on more than 150,000 speeding tickets from the Autobahn and 290,000 speed measures from a traffic monitoring system. The data provide evidence on modest levels of bunching, despite several frictions working against it. We analyze the normative implications and assess the scope for welfare gains from moving from a simple, notched penalty scheme to a more complex but less salient Pigouvian scheme.
    Keywords: notches, speeding tickets, stepwise penalty function, salience
    JEL: K40 D04
    Date: 2017
  26. By: Krzysztof Bartosik (Institute of Economics of the Polish Academy of Sciences); Jerzy Mycielski (Faculty of Economic Sciences, University of Warsaw)
    Abstract: The paper investigates how increased use of temporary contracts has affected employment elasticity with respect to output in Poland. Our empirical analysis covers the period of 1996-2016, with particular focus on the years 2001-2016. Several econometric tools are used to explore the relation between growth in GDP and employment. Our study shows that widespread adoption of temporary contracts contributes positively to total employment elasticity. However, what we have observed is that the share of temporary contracts has increased, but the total employment elasticity has decreased. We related this to an inverse relationship between the growth of permanent and temporary employment and the opposite trends in output elasticities of temporary and permanent employment.
    Keywords: labour demand, temporary contracts, economic growth, labour market institutions
    JEL: J21 J23 E32 J41
    Date: 2017
  27. By: Zuzana Brokesova (University of Economics in Bratislava); Andrej Cupak (National Bank of Slovakia); Gueorgui Kolev (Middlesex University London)
    Abstract: We utilise recent Household Finance and Consumption Survey microdata to report first causal effects of financial literacy on voluntary private pension schemes participation for Slovakia. Savings for retirement in the supplementary pension schemes are positively associated with financial literacy after controlling for a set of relevant socio-economic variables. One additional correctly answered financial literacy question leads to a 6 percentage points increase in the probability of having a voluntary pension savings plan in our ordinary least squares estimates. The causal impact of financial literacy increases to 16 percentage points when we address potential endogeneity problem by novel to the literature instrumental variables. Interestingly, we find less significant effects of financial literacy on the probability of individuals having employer-supported private pension savings plans. Our findings inform policy and suggest how policymakers can promote the voluntary retirement savings behaviour of individuals in Slovakia and in other Central and Eastern European countries in times of decreasing benefits of state pensions.
    Keywords: Financial literacy, Retirement savings, Survey data, Endogeneity, Instrumental variables, Slovakia
    JEL: D14 D91 I2
    Date: 2017–12
  28. By: Michal Brzezinski (Faculty of Economic Sciences, University of Warsaw)
    Abstract: This paper studies the determinants of changes in unhappiness rate (low happiness, poverty of happiness, misery) over time. We focus on two post-socialist countries, Poland and Russia, which experienced radical social and economic transformations since the collapse of communism. Using data from the Polish Social Diagnosis project for 1991-2015 and data from the Russian Longitudinal Monitoring Survey for 1994-2014, we investigate the microeconomic determinants of spectacular declines in unhappiness rates observed in the studied periods in Poland (a 56% fall in unhappiness) and Russia (a drop in the range from 46 to 75% depending on the unhappiness threshold chosen). Using a nonlinear decomposition methodology, we split the overall decreases in unhappiness rates into characteristics effects (related to the changing distribution of unhappiness-affecting factors) and coefficients effects (due to changing returns to the unhappiness-affecting factors). Our results show that unhappiness reductions in both countries were mostly driven by coefficient effects, while characteristics played a smaller, but a non-negligible role. In both countries, income growth accounted for about 15% of the total unhappiness reduction. In Russia, this effect was doubled by growing return to income as unhappiness-protecting factor, while in Poland income has been losing protecting power and in overall income had an unhappiness-increasing effect. For Russia, another strong unhappiness-protecting factor was return to employment. In case of Poland, good self-rated health and having children explains additional 15-20% of the unhappiness reduction.
    Keywords: Happiness, unhappiness, life satisfaction, decomposition, determinants, Poland, Russia
    JEL: I31 J17 J21 P36
    Date: 2017
  29. By: Laura Alfaro (Harvard Business School, Business, Government and the International Economy Unit); Manuel García (Universitat Pompeu Fabra); Enrique Moral-Benito (Banco de Espana)
    Abstract: We consider the real effects of bank lending shocks and how they permeate the economy through buyer-supplier linkages. We combine administrative data on all firms in Spain with a matched bank-firm-loan dataset incorporating information on the universe of corporate loans for 2003-2013. Using methods from the matched employer-employee literature for handling large data sets, we identify bank-specific shocks for each year in our sample. Combining the Spanish Input-Output structure and firm-specific measures of upstream and downstream exposure, we construct firm-specific exogenous credit supply shocks and estimate their direct and indirect effects on real activity. Credit supply shocks have sizable direct and downstream propagation effects on investment and output throughout the period but no significant impact on employment during the expansion period. Downstream propagation effects are quantitatively larger in magnitude than direct effects. The results corroborate the importance of network effects in quantifying the real effects of credit shocks and show that real effects vary during booms and busts.
    Keywords: bank-lending channel, matched employer-employee, input-output linkages.
    JEL: E44 G21 L25
    Date: 2017–12
  30. By: Patrick Lehnert (University of Zurich); Curdin Pfister (University of Zurich); Uschi Backes-Gellner (University of Zurich)
    Abstract: This paper examines the effect of an R&D-specific labor supply shock produced by the establishment of tertiary vocational education institutions teaching and conducting applied R&D, the Universities of Applied Sciences, on the R&D personnel of private firms. We apply a difference-in-differences model, exploiting a quasi-natural experiment in the 1990s in Switzerland, the staggered establishment of these institutions. Using repeated cross-sectional data from the Swiss Earnings Structure Survey, we can precisely measure the R&D personnel of private firms, i.e., how much R&D personnel a firm employs and how much a firm spends on its R&D personnel in terms of wages. The education-driven labor supply shock has positive effects on both the percentage of R&D personnel and the wages paid to this personnel. Our assessments of effect heterogeneity suggest that these effects are driven by firms with 50 to 99 employees and firms in the manufacturing sector increasing their R&D personnel.
    Keywords: Innovation incentives, R&D, research institutions, skills
    JEL: I23 J24 O31 O32
    Date: 2017–12
  31. By: Riccardo Crescenzi; Guido de Blasio; Mara Giua
    Abstract: This paper evaluates a program of subsidies for Collaborative Industrial Research (co-)funded by the EU Cohesion Policy in Italy mobilizing over 1 billion euros. This program anticipated in the 2007-2013 funding cycle some of the key features of Smart Specialization Strategy (S3) programmes, offering evidence-based insights on potential challenges to the practical application of the S3 approach. The programme was not successful in boosting investments, value added or employment of beneficiary firms. The collaborative dimension of the projects added limited value and a more generous level funding would have not improved effectiveness. However, positive impacts emerged in low tech sectors.
    Keywords: Cohesion Policy, Smart Specialisation, Policy Evaluation, Innovation, European Union
    JEL: O18 R11 R58
    Date: 2017–12
  32. By: Broberg, Thomas (CERE and the Department of Economics, Umeå University); Brännlund, Runar (CERE and the Department of Economics, Umeå University); Persson, Lars (CERE and the Department of Economics, Umeå University)
    Abstract: The main purpose of the present report is to present the results of the project "The electricity customer, a new power on the electricity market?" The main purpose of the project is to estimate lost values due to various restrictions on household electricity consumption, which gives us "prices" of schematic reductions in power through behavioral adaptations among Swedish households. Another purpose is to estimate households' costs for short power outages, which gives a "price" of a targeted disconnection of electricity. The willingness of households to adjust their electricity consumption is governed by several factors - both economic and non-economic. An additional objective is therefore to analyze the extent to which households are willing to adapt for non-economic reasons, for example, to facilitate the integration of renewable electricity production such as solar and wind power. To achieve the objectives of the project, we analyze household habits and preferences for electricity usage in connection with daily demand peaks during winter time in Sweden. We have chosen an empirical approach where households are subjected to choose between hypothetical electricity contracts where different types of restrictions in the use of large-scale household appliances are included. The different characteristics of the agreements or contracts relate to (1) maximum power usage in watts, (2) the duration of the restriction, (3) number of occasions of restriction and (4) the ability to change the selection of which electrical appliances to be used during the restriction. In addition to the above-mentioned approach, we also study how this relates to other electricity usage (e.g. heating, lighting, TV, etc.). This is done by asking households for compensation requirements to accept full power outages, i.e. black-outs. By studying the difference in compensation requirements between the "soft" limitation and the black-outs, the value of different loads can be estimated. The results reveal that households on average require a compensation of SEK 2000 - 3700 depending on the severity of electricity consumption constraint. Depending on how we define the potential loss in potential electricity usage for different scenarios, the results can be translated to be between SEK 20 and 40 per kWh. In the case of total power outages, the valuation is significantly higher and corresponds to SEK 3000 to 4600. This can in turn be translated to the equivalent of SEK 400 - 600 per kWh. The results thus indicate a significant difference between the value of the load in a soft control DSM program, and the remaining load (e.g. heating, lighting and TV). Compared to previous literature on the value of lost load, VOLL, our estimates fall in the higher range, especially compared to Swedish studies. We believe this is in line with the context outlined in the present study with rather many occasions of disruptions at the peak demand hour. The results also show that a pro-environmental cheap talk make people more likely to opt into a DSM program with load controlled at many occasions. It did not, however, make people see more lenient on hard load controls in general. An immediate policy implication from the results is that specific policies aiming at stimulating behavioral changes probably are very ineffective and/or costly. As a result, policies to affect demand response should focus on automatization and passive response. A related policy implication is that it is far from obvious that demand response is always more cost effective than supply response, i.e., increasing production of electricity.
    Keywords: Demand flexibility; choice experiment; electricity market; load control
    JEL: Q41 Q42 Q50
    Date: 2017–12–08
  33. By: Christopoulou, Rebekka; Pantalidou, Maria
    Abstract: Labor market conditions in Greece have severely deteriorated during the crisis, affecting youths the most. Using the Greek crisis as a case-study, this paper examines the role of the family as a social safety net for its young members. Specifically, we test the relationship between youth labor outcomes and parental co-residence, whether this relationship has become stronger during the crisis, and the degree to which the relationship is causal. Our results confirm that the parental home is a refuge both for jobless youth and for those in poorly paid, insecure jobs, and this role has intensified during the crisis. We find no reverse causality between co-residence and employment status for young men, and significant reverse causality for women. This finding implies that all youths live in the parental home when they are in need themselves, but it is young women not men who live with parents when parents are in need or for cultural reasons.
    Keywords: Living arrangements,parental coresidence,youth employment,great recession,Greece
    JEL: J12 J21
    Date: 2017

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