nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2018‒02‒12
29 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. What finance for what investment? Survey-based evidence for European companies By Ferrando, Annalisa; Preuss, Carsten
  2. Preferences for redistribution in the US, Italy, Norway: An experiment study By Grimalda, Gianluca; Farina, Francesco; Schmidt, Ulrich
  3. Higher Education Funding Reforms: A Comprehensive Analysis of Educational and Labour Market Outcomes in England By Ghazala Azmat; Stefania Simion
  4. Creative and science-oriented employees and firm-level innovation By Stephan Brunow; Antonia Birkeneder; Andrés Rodríguez-Pose
  5. Evaluating Public-Private Partnerships in Employment Services: The Case of the UK Work Programme By Danula K. Gamage; Pedro S. Martins
  6. Do Lower Minimum Wages for Young Workers Raise their Employment? Evidence from a Danish Discontinuity By Kreiner, Claus T.; Reck, Daniel; Skov, Peer Ebbesen
  7. Highways, market access and spatial sorting By Fretz, Stephan; Parchet, Raphaël; Robert-Nicoud, Frédéric
  8. Times are a changin'? The emergence of new firms and rank persistence By Schneck, Stefan
  9. The impact of progressive tuition fees on dropping out of higher education: a regression discontinuity design By José Garcia Montalvo
  10. A portrait of innovative start-ups across countries By Stefano Breschi; Julie Lassébie; Carlo Menon
  11. The effect of self-employment on health: Evidence from longitudinal social security data By Judite Goncalves; Pedro S. Martins
  12. The fall and rise of market power in Europe By John P. Weche; Achim Wambach
  13. Frictional Labor Mobility By Benoît Schmutz; Modibo Sidibé
  14. A Cross-Country Comparison of Dynamics in the Large Firm Wage Premium By Colonnelli, Emanuele; Tåg, Joacim; Webb, Michael; Wolter, Stefanie
  15. The Impact of Health on Labor Supply Near Retirement By Richard Blundell; Jack Britton; Monica Costa Dias; Eric French
  16. Immigrant entrepreneurs, diasporas and exports By Massimiliano Bratti; Luca De Benedictis; Gianluca Santoni
  17. Assessing the Economic and Social Impact of Tax and Transfer System Reforms: A General Equilibrium Microsimulation Approach By Peter, Benczur; Gabor, Katay; Aron, Kiss
  18. Do Alimony Regulations Matter inside Marriage? Evidence from the 2008 Reform of the German Maintenance Law By Schaubert, Marianna
  19. Optimal Taxation under Different Concepts of Justness By Robin Jessen; Maria Metzing; Davud Rostam-Afschar
  20. Minimum Wage Effects on Poverty and Inequality By Alexandros Karakitsios; Manos Matsaganis
  21. Poor Little Children: The Socioeconomic Gap in Parental Responses to School Disadvantage By Berniell, Inés; Estrada, Ricardo
  22. Parental Job Loss and Application Decisions in Finnish Post-Secondary Education By Laukkonen, Marja-Lisa
  23. Wage Dynamics and Financial Performance: Evidence from Czech Firms By Jan Babecky; Kamil Galuscak; Diana Zigraiova
  24. Geographical Indications: a first assessment of the impact on rural development in Italian NUTS3 regions By Lorenzo Cei; Gianluca Stefani; Edi Defrancesco; Ginevra Virginia Lombardi
  25. The mightier, the stingier: Firms’ market power, capital intensity, and the labor share of income By Adrjan, Pawel
  26. Science teachers’ satisfaction: Evidence from the PISA 2015 teacher survey By Tarek Mostafa; Judit Pál
  27. Do Company Builders Create Jobs? Examining the Rise of Incubation Finance in Germany By Scheuplein, Christoph; Kahl, Julian
  28. The social origins of inventors By Aghion, Philippe; Akcigit, Ufuk; Hyytinen, Ari; Toivanen, Otto
  29. Tax simplicity and heterogeneous learning By Aghion, Philippe; Akcigit, Ufuk; Lequien, Matthieu; Stantcheva, Stefanie

  1. By: Ferrando, Annalisa; Preuss, Carsten
    Abstract: We examine the link between corporate financing and investment decisions of European firms by using a novel firm-level survey of the European Investment Bank (EIBIS). The survey provides rich quantitative information of a wide range of financing sources and tangible and intangible investment types for a representative sample of EU28 firms in 2016. We provide new evidence and contribute to previous research in the following ways: first we consider the heterogeneous effect of internal and external finance on different tangible and intangible investment types. Second, our analysis focuses on a broad spectrum of nonfinancial corporations across size classes from different countries. By using a multinomial fractional response model to estimate the finance-investment link, we find that SMEs and large enterprises show a different financing behaviour for their investment activity. The results suggest that SMEs' tangible asset investment is positively related to the use of bank finance, whereas internal finance is preferred for intangible asset investments.
    Keywords: tangible and intangible investment,internal and external finance,R&D investment,SME finance,multivariate fractional response model
    JEL: D22 E22 G32 L25
    Date: 2018
  2. By: Grimalda, Gianluca; Farina, Francesco; Schmidt, Ulrich
    Abstract: We examine experimentally individual preferences for redistributions in the US, Italy, and Norway. Twenty-one subjects were assigned initial earnings from a discrete uniform distribution. The source of earnings was manipulated and depended either on luck or on individual relative performance in some tasks. All subjects chose a redistribution rate to be applied to group members' earnings. One choice was then randomly selected to determine final earnings. Four different experimental decisions altered whether subjects' choice applied only to others, thus making self-interest irrelevant (impartial decision), and the degree of information over one's earnings. Norwegian subjects demanded significantly higher levels of redistribution both in the impartial decision and when self-interest offered the most clear-cut prescription, as uncertainty over one's earnings was removed. The demands for redistributions by US and Italian participants were instead similar. Conversely, country differences disappeared in decisions where earnings were uncertain. Contrary to widely held views, no evidence was found that US subjects were more "meritocratic" than others. Italian subjects reacted the most to the source of inequality, decreasing demand for redistribution in Performance treatments compared to Luck treatments. While behaviour of subjects whose earnings were above the median level (the "rich") did not differ significantly across countries, large differences emerged for people below the median level (the "poor") in the fourth decision. Italian "poor" were agreeable to let the "rich" receive a large share of their earnings, particularly so in Performance treatments. Conversely, Norwegians "poor" demanded full earnings equalisation. The behaviour of US subjects fell between these two extremes. This evidence shows the existence of relevant cross-country difference in demand for redistribution and opens new perspectives on what may be considered "fair" or "unfair" inequality in Western countries.
    Keywords: inequality,Redistribution,individual merit,cross-country experiments
    JEL: D63 D71 C92
    Date: 2018
  3. By: Ghazala Azmat; Stefania Simion
    Abstract: This paper investigates the impact of changes in the funding of higher education in England on students' choices and outcomes. Over the last two decades - through three major reforms in 1998, 2006 and 2012 - undergraduate university education in public universities moved from being free to students and state funded to charging substantial tuition fees to all students. This was done in conjunction with the government offering generous means-tested maintenance grants and loans. Using detailed longitudinal micro-data that follows all students attending state schools in England (more than 90 percent of all school-aged children) from lower education to higher education, we document the socio-economic distributional effects of the 2006 and 2012 policy reforms on a comprehensive set of outcomes, including enrolment, relocation decisions, selection of institution, program of study, and performance within university. For a subset of students, we track them after completing higher education, allowing us to study the labour market effects of the policy reforms. Despite the substantial higher education funding reforms, we do not find large aggregate effect on student enrolment or on other margins. Moreover, the small negative impacts found on enrolment were largely borne on those in higher parts of the wealth distribution - reducing the enrolment gap across socioeconomic groups.
    Keywords: higher education, tuition fees, means-tested support, career choices, career outcomes
    JEL: I22 I23 I29 J30
    Date: 2018–02
  4. By: Stephan Brunow; Antonia Birkeneder; Andrés Rodríguez-Pose
    Abstract: This paper examines the link between innovation and the endowments of creative and science-oriented STEM - Science, Technology, Engineering and Mathematics ? workers at the level of the firm and at the city-/regional-level in Germany. It also looks into whether the presence of these two groups of workers has greater benefits for larger cities than smaller locations, thus justifying policies to attract these workers in order to make German cities 'smarter'. The empirical analysis is based on a probit estimation, covering 115,000 firm-level observations between 1998 and 2015. The results highlight that firms that employ creative and STEM workers are more innovative than those that do not. However, the positive connection of creative workers to innovation is limited to the boundaries of the firm, whereas that of STEM workers is as associated to the generation of considerable innovation spillovers. Hence, attracting STEM workers is more likely to end up making German cities smarter than focusing exclusively on creative workers.
    Keywords: Innovation, Creative workers, STEM workers, Smart Cities, Spillover, Germany
    JEL: D22 J82 R12 J21 J24 R23
    Date: 2018–02
  5. By: Danula K. Gamage; Pedro S. Martins
    Abstract: Although there are many public-private partnerships in employment services around the world, relatively little is known about the link between the design and structures of these partnerships and their labour market effects. Here we examine the case of the UK Work Programme (WP), which features considerable flexibility in interventions and offers financial incentives that vary strongly with jobseeker profiles and outcomes. We draw on data on all two million WP participants between 2011 and 2016 and exploit the programme's structure to disentangle the role of the different providers and jobseeker profiles from business cycle and other confounding effects. Our main results are: 1) the WP has a much stronger effect in increasing transitions out of unemployment than increasing transitions to employment, even if its incentives are related to the latter outcomes; 2) the performance differences across providers are small, despite their large number and the flexibility in interventions; 3) although transitions to employment of harder-to-help jobseekers are significantly better rewarded, these individuals still performed significantly worse than participants closer to the labour market.
    Keywords: Public employment services, job search, public policy evaluation
    JEL: J64 J68 J22
    Date: 2018–01
  6. By: Kreiner, Claus T.; Reck, Daniel; Skov, Peer Ebbesen
    Abstract: We estimate the impact of youth minimum wages on youth employment by exploiting a large discontinuity in Danish minimum wage rules at age 18, using monthly payroll records for the Danish population. The hourly wage jumps up by 40 percent at the discontinuity. Employment falls by 33 percent and total input of hours decreases by 45 percent, leaving the aggregate wage payment almost unchanged. We show theoretically how the discontinuity may be exploited to evaluate policy changes. The relevant elasticity for evaluating the effect on youth employment of changes in their minimum wage is in the range 0.6-1.1.
    Keywords: employment; minimum wage policy; Regression Discontinuity
    JEL: H2 J2 J3
    Date: 2017–12
  7. By: Fretz, Stephan; Parchet, Raphaël; Robert-Nicoud, Frédéric
    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 outcommuters. Highways also contributed to job and residential urban sprawl
    Keywords: transportation; highway; market access; income sorting
    JEL: D31 H54 O18 R11 R23
    Date: 2017–11–01
  8. By: Schneck, Stefan
    Abstract: Young firms are known to grow at a faster rate than incumbents. With administrative firm data from Germany, we show that the higher growth rates indeed translate into upward mobility within the firm size distribution. Young firms are therefore not only able to catch up, but also to grow larger in absolute values. Recentered influence function regression results reveal that young firms cause significant rank mobility within the stock of firms, which even holds when the local skewness of the firm size distribution is accounted for. The results clearly indicate a Schumpeterian growth process where young firms challenge established ones.
    Keywords: competition,entrepreneurship,firm entry,firm growth,sales mobility
    JEL: L10 L25 L26
    Date: 2018
  9. By: José Garcia Montalvo
    Abstract: In recent years, and under the pressure of increasing public deficits, a number of countries have decided to increase university fees to compensate for reductions in teaching subsidies financed by taxpayers. Perhaps the best known case is that of the UK. In this paper we analyze a similar policy adopted in Catalonia, Spain. Tuition fees increased 66 percent in the 2012-2013 academic year to compensate for the reduction in public subsidies used to finance Catalan university teaching activities. Interestingly, the increase in fees was progressive, meaning that there was a fee waiver in function of family income. We analyze the distributional impact of this policy change, showing that this progressive tuition fee does not have a differential impact on the dropout rate of students of di erent socioeconomic status. Since eligibility for the full tuition waiver is determined by a sharp cut-off on household income, we use a regression discontinuity design to analyze the effect of the new tuition fees around the full tuition waiver. We nd no evidence of any adverse impact of the new fees on the drop out rates.
    Keywords: Enrollment rate, dropout behavior, tuition fees, scholarships, regression discontinuity design
    JEL: I22 I23 I24
    Date: 2018–01
  10. By: Stefano Breschi (OECD); Julie Lassébie (OECD); Carlo Menon (OECD)
    Abstract: The report presents new cross-country descriptive evidence on innovative start-ups and related venture capital investments drawing upon Crunchbase, a new dataset that is unprecedented in terms of scope and comprehensiveness. The analysis employs a mix of different statistical techniques (descriptive graphics, econometric analysis, and machine learning) to highlight a number of findings. First, there are significant cross-country differences in the professional and educational background of start-ups’ founders, notably the share of founders with previous academic experience and in the share of “serial entrepreneurs”. Conversely, the founders’ average age is rather constant across countries, but shows a fair degree of variability across sectors. Second, IP assets, and in particular the presence of an inventor in the team of founders, are strongly associated with start-ups’ success. Finally, female founders are less likely to receive funding, receive lower amounts when they do receive financing, and have a lower probability of successful exit, when other factors are controlled for.
    Date: 2018–02–08
  11. By: Judite Goncalves; Pedro S. Martins
    Abstract: The growth of novel flexible work formats raises a number of questions about their effects upon health and the potential required changes in public policy. However, answering these questions is hampered by lack of suitable data. This is the first paper that draws on comprehensive longitudinal administrative data to examine the impact of self-employment in terms of health. It also considers an objective measure of health -hospital admissions- that is not subject to recall or other biases that may affect previous studies. Our findings, based on a representative sample of over 100,000 individuals followed monthly from 2005 to 2011 in Portugal, indicate that the likelihood of hospital admission of self-employed individuals is about half that of wage workers. This finding holds even when accounting for a potential self-selection of the healthy into self-employment. Similar results are found for mortality rates.
    Keywords: Self-employment; hospitalization; sick leave; mortality
    JEL: I18 J24
    Date: 2018–01
  12. By: John P. Weche (Leuphana University Lueneburg, Germany; Monopolies Commission, Bonn, Germany); Achim Wambach (Monopolies Commission, Bonn, Germany; Centre for European Economic Research (ZEW), Mannheim, Germany)
    Abstract: This paper presents an analysis of the recent developments of average market power in Europe by using a broad firm-level database for EU member states. To indicate competitive pressure at the firm-level, markups are estimated following De Loecker (2011), and De Loecker and Warzynski (2012). The analysis reveals a sharp drop in markups during the crisis, followed by a post-crisis increase. The European average has not yet reached its pre-crisis level, which is in contrast to results for the US, where average markups have climbed to pre-crisis levels already in 2011. There is significant heterogeneity among European economies and the pre-crisis levels do have been exceeded in some countries.
    Keywords: Market Power, Markups, Europe, Crisis
    JEL: E2 D2 D4 L1
    Date: 2018–01
  13. By: Benoît Schmutz (Ecole Polytechnique; CREST); Modibo Sidibé (Duke University; CREST)
    Abstract: We build a dynamic model of migrationwhere, in addition to usual mobility costs,workers face spatial frictions that decrease their ability to compete for distant job opportunities. We estimate the model on a matched employer-employee panel dataset describing labor market transitions within and between the 100 largest French cities. Our identification strategy is based on the premise that frictions affect the frequency of job transitions, while mobility costs impact the distribution of acceptedwages. We find that: (i) controlling for spatial frictions reduces mobility cost estimates by one order of magnitude; (ii) the urban wage premium is driven by better opportunities for local job-to-job transitions in larger cities; (iii) migration dramatically reduces lifetime inequalities due to initial location; (iv) labor mobility policies based on relocation subsidies are inefficient, unlike switching from nationwide to local minimum wages.
    Keywords: mobility costs; spatial frictions;migration; local labor markets
    JEL: J61 J64 R12 R23
    Date: 2017–12–11
  14. By: Colonnelli, Emanuele (Stanford University); Tåg, Joacim (Research Institute of Industrial Economics (IFN)); Webb, Michael (Stanford University); Wolter, Stefanie (Institute for Employment Research)
    Abstract: We provide stylized facts on the existence and dynamics over time of the large firm wage premium for four countries. We examine matched employer-employee micro-data from Brazil, Germany, Sweden, and the UK, and find that the large firm premium exists in all these countries. However, we uncover substantial differences among them in the evolution of the wage premium over the past several decades. Moreover, we find no clear evidence of common cross-country industry trends. We conclude by discussing potential explanations for this heterogeneity, and proposing some questions for future work in the area.
    Keywords: ynamics; Large Firm Wage Premium
    JEL: E24 J01 J31 J33
    Date: 2018–01–19
  15. By: Richard Blundell (University College London); Jack Britton (Institute for Fiscal Studies); Monica Costa Dias (Institute for Fiscal Studies); Eric French (University College London)
    Abstract: Estimates of effect of health on employment differ from study to study due to differences in methods, data, institutional background and health measure. We assess the importance of these differences, using a unified framework to interpret and contrast estimate for the US and England. We find that subjective and objective health measures, and subjective measures instrumented by objective measures produce similar estimates but only if a sufficiently large number of objective measures is used. Otherwise, objective measures produce downward biased estimates. Failure to account for initial conditions produces upward biased estimates. We find that a single subjective health index yields similar estimates to multiple measures. Overall, declines in health explain up to 15% of the decline in employment between ages 50 and 70. The effects drop with education and are larger in the US than in England. Cognition has little added explanatory power once we control for health.
    Date: 2017–09
  16. By: Massimiliano Bratti; Luca De Benedictis; Gianluca Santoni
    Abstract: In this paper we highlight a new complementary channel to the business and social network effect à la Rauch (2001) through which immigrants generate increased export flows from the regions in which they settle to their countries of origin: they can become entrepreneurs. Using very small-scale (NUTS-3) administrative data on immigrants’ location in Italy, the local presence of immigrant entrepreneurs (i.e. firms owned by foreign-born entrepreneurs) in the manufacturing sector, and on trade flows in manufacturing between Italian provinces and more than 200 foreign countries, we assess the causal relationship going from diasporas and immigrant entrepreneurs towards export flows. Both the size of the diaspora and the number of immigrant entrepreneurs have a positive, significant and economically meaningful effect on exports. In particular, we find that increasing the stock of (non-entrepreneur) immigrants by 10% would lead to a 1.7% increase in exports in manufacturing, while increasing the number of immigrant entrepreneurs in manufacturing by 10% would raise exports by about 0.6%.
    Keywords: Exports;immigrants;gravity;immigrant entrepreneurs;Italy
    JEL: F10 F14 F22 R10
    Date: 2018–01
  17. By: Peter, Benczur (European Commission – JRC); Gabor, Katay (European Commission – JRC); Aron, Kiss (European Commission)
    Abstract: We present a general-equilibrium behavioural microsimulation model designed to assess long-run macroeconomic, fiscal and social consequences of reforms to the tax and transfer system. The behaviour of labour supply is assessed along both the extensive and intensive margins, by merging the discrete choice and the elasticity of taxable income approaches. General-equilibrium feedback effects are simulated by embedding microsimulation in a parsimonious macro model of a small open economy. We estimate and calibrate the model to Hungary, and then perform three sets of simulations. The first one explores the impact of personal income tax reductions that are identical in cost but different in structure. The second one compares three different tax shift scenarios, while the third one evaluates actual policy measures between 2008 and 2013. The results suggest that while a cut in the marginal tax rate of high-income individuals may boost output, it does not have a significant employment effect. On the other hand, programs like the Employee Tax Credit do have a significant employment effect. We find that the policy measures introduced since 2008 substantially increase income inequality in the long run; the contribution of the changes after 2010 are about four times that of the changes before 2010. Our results highlight that taking account of household heterogeneity is crucial in the analysis of the macroeconomic effects of tax and transfer reforms.
    Keywords: behavioural microsimulation; linked micro macro model; tax system; transfers
    JEL: H22 H31 C63
    Date: 2017–11
  18. By: Schaubert, Marianna
    Abstract: This study investigates how West German spouses have responded by adjusting their time allocation to the alimony reform introduced in 2008. This reform imposed financial self-responsibility after a finalized divorce. It weakened the relative bargaining position of the spouse with a claim for maintenance in the case of a potential divorce prior to the law change. Therefore, the present study helps to verify bargaining models by considering the 2008 policy change as a shift of spousal bargaining power. Estimating difference-in-differences models I find that, indeed, wives who face a potential low alimony loss might have increased their working hours as a result of the 2008 reform. To my knowledge, the present investigation is the first analysis of the behavioral response of individuals in longer marriages to the 2008 reform. Its approach to identifying those who have been (dis)advantaged by this reform is a new one, proposing a method that reflects the realities of alimony arrangements in Germany.
    Keywords: Alimony,Family,Bargaining,Institutional change,Labor supply,Time allocation
    JEL: D13 J12 J13 J22 K36
    Date: 2018
  19. By: Robin Jessen; Maria Metzing; Davud Rostam-Afschar
    Abstract: A common assumption in the optimal taxation literature is that the social planner maximizes a welfarist social welfare function with weights decreasing with income. However, high transfer withdrawal rates in many countries imply very low weights for the working poor in practice. We reconcile this puzzle by generalizing the optimal taxation framework by Saez (2002) to allow for alternatives to welfarism. We calculate weights of a social planner’s function as implied by the German tax and transfer system based on the concepts of welfarism, minimum absolute and relative sacrifice, as well as subjective justness. For the latter we use a novel question from the German Socio-Economic Panel. We find that the minimum absolute sacrifice principle is in line with social weights that decline with net income. Absolute subjective justness is roughly in line with decreasing social weights, which is reflected by preferences of men, West Germans, and supporters of the grand coalition parties.
    Keywords: Justness, Optimal Taxation, Income Redistribution, Equal Sacrifice, Inequality, Subjective Preferences
    JEL: D63 D60 H21 H23 I38
    Date: 2017
  20. By: Alexandros Karakitsios (Athens University of Economics and Business); Manos Matsaganis (Athens University of Economics and Business)
    Abstract: Minimum wage effect on employment is one of the mostly studied fields in labour economics. Minimum wage is also considered as a redistributive tool but its efficiency is strongly doubted due to potential disemployment effect that may cause. In the present paper, redistributive ability of minimum wage is studied through microsimulation techniques and under several scenarios of employment elasticity. The results indicate that minimum wage can reduce poverty even under the presence of a disemployment effect. Though, this anti-poverty effect is limited as employment elasticity is more negative. Similarly, inequality decreases when minimum wage increases are adopted, but the redistributive effect is weaker when they cause job losses. The above indicate that minimum wage policies should be used with caution and always take into account any possible impact on employment.
    Keywords: minimum wages, unemployment, poverty, inequality
    JEL: I38 J01 J08 J58
    Date: 2018–01
  21. By: Berniell, Inés; Estrada, Ricardo
    Abstract: In this paper, we study how parents react to a widely-used school policy that puts some children at a learning disadvantage. Specifically, we first document that, in line with findings in other countries, younger children in Spain perform significantly worse at school than their older peers and – key to causal interpretation – that for children born in winter this effect is not due to birth seasonality. Furthermore, the age of school entry effect is significantly greater among children from disadvantaged families. To understand why, we analyze detailed data on parental investment and find that college-educated parents increase their time investment and choose schools with better inputs when their children are the youngest at school entry, while non-college-educated parents do not.
    Keywords: Educación, Economía, Equidad e inclusión social, Investigación socioeconómica, Pobreza, Políticas públicas, Familia,
    Date: 2017
  22. By: Laukkonen, Marja-Lisa
    Abstract: In Finland, there are no tuition or application fees for post-secondary education. However, the application and admission processes by which the educational institutions select new students may still generate inequalities between prospective applicants from different socioeconomic backgrounds. Institutions select their students based on school and program-specific entrance examinations that measure how well the applicants have mastered predetermined exam materials. Typically, preparing for the exams is time consuming and applicants focus on one entrance exam at a time. Selectivity varies between the schools and programs, depending on the exam performance of the competing applicants. As a result, it can be difficult for students to evaluate their chances of being selected. This uncertainty together with the limited number of applications introduces a strategic component to the application decisions. Furthermore, students from low-income families may not have the resources to take preparation courses or to cover the costs of spending gap years to prepare for the exam. To study the socioeconomic aspect of application decisions, I use information on the newly graduated Finnish general upper secondary school students between the years 2004 and 2013. First, I document differences in application behaviors between students from different family income groups. Students who have performed equally well on the Finnish language test in the national matriculation examination but come from different family income groups exhibit different application behaviors. Compared to their peers from high-income families, students from low-income families are less likely to apply to universities and more likely to apply to polytechnics, send fewer applications overall, and apply to less selective programs. Second, by exploiting information on parental job losses due to plant closures, I investigate the causal impact of family income on the application decisions. I find that parental job losses have no impact on the likelihoods of high school graduates applying to any post-secondary institution, to at least one university or to at least one polytechnic. Instead, the affected students change their application strategies by sending fewer applications and by choosing less selective programs.
    Keywords: Economics, post-secondary education, application strategies, parental job loss
    JEL: I23 I24
    Date: 2018–02–01
  23. By: Jan Babecky; Kamil Galuscak; Diana Zigraiova
    Abstract: This paper examines how the financial performance of a firm affects its wage policy. For this purpose, we match data on Czech firms from the Wage Dynamics Network survey covering the period 2010-2013 with balance sheet data. Controlling for a number of firm-specific characteristics and the environment in which firms operate, we find that financial performance matters for wage setting: contractual wages are more likely to grow in firms with a higher ratio of cash flow to total assets and in firms that invest more. Conversely, firms that froze or cut contractual wages during the survey period had lower cash flow over total assets, but not necessarily a lower investment ratio. The flexible wage component exhibits a similar pattern, but is more sensitive to demand shocks and firms' financial conditions.
    Keywords: Base wages, financial performance, flexible wage component, survey data, wage setting
    JEL: C83 J31 J41 L11
    Date: 2017–12
  24. By: Lorenzo Cei; Gianluca Stefani; Edi Defrancesco; Ginevra Virginia Lombardi (Dipartimento di Scienze per l'Economia e l'Impresa)
    Abstract: Geographical indications (GIs) are a 25 years old European policy instrument which have, among its objectives, to foster rural development. In this respect, very few studies quantitatively investigate to what extent this policy is effective. Literature is in fact mainly focused on specific GIs, studied through case studies, trying to identify which factors are responsible for the success or failure of specific initiatives. The aim of the present study is instead to quantify the impact of such policy instrument on a single indicator of rural development: agricultural value added. In order to assess the impact we firstly built an index measuring the number of GI schemes implemented at NUTS3 level in the Italian regions. Then, following a difference-in-difference evaluation strategy and relying on an explicit theoretical model, a fixed effect estimator was implemented. The choice of the model, as well as the variables to be considered, is specified using a directed acyclic graph. Results show that an overall positive effect of GI protection on agricultural value added could be identified in Italy, thus providing evidence of a positive impact of the European policy on rural development.
    Keywords: geographical indication; impact evaluation; rural development
    Date: 2017
  25. By: Adrjan, Pawel
    Abstract: What determines the proportion of a firm’s income that workers receive as compensation? This paper uses longitudinal firm data from a period of substantial labor share variation to understand the firm-level determinants of the labor share of income—a question that has so far only been addressed with country- and sector-level data. Firms with greater market power and a higher ratio of capital to labor allocate a smaller proportion of their value added to workers. These results suggest that firm-level drivers play a key role in the evolution of the aggregate labor share, which have declined significantly since the 1970s.
    Keywords: Labor Share, Employee Compensation, Factor Income Distribution, Market Power, Capital Intensity
    JEL: D33 E25 J24 J30
    Date: 2018–01–13
  26. By: Tarek Mostafa (OECD); Judit Pál (OECD)
    Abstract: In 2015, for the first time in its history, PISA (the Programme for International Student Assessment) asked teachers to describe the various aspects of their working environment and teaching practices. This paper examines how teacher, student and school characteristics are related to science teachers’ satisfaction in 19 PISA-participating countries and economies. The findings show that the most satisfied science teachers tend to be those who are initially motivated to become teachers. The results also highlight the positive relationship between science teachers’ satisfaction and teacher collaboration, good disciplinary climate in science classes, availability of school resources, and the opportunity to participate in professional-development activities.
    Date: 2018–02–07
  27. By: Scheuplein, Christoph; Kahl, Julian
    Abstract: Over the past decade, new types of business incubation have been developed. One particularly prominent example is company builders, which use their own resources to build up companies, establishing numerous companies in a series. In doing so, this investor type facilitates internal and external business ideas. It offers a new organizational solution that combines both the innovative capacity of founders and the financial re-sources of a large company with the desire for long-term employment and corporate affiliation. This article examines the economic impact of company builders in Germany compared with other venture capital (VC) investor types on the basis of employment trends in the portfolio companies from 2011 to 2015. It is shown that company builders promote more dynamic employment growth than do other types of investors. This finding suggests that this type of investor is particularly well positioned to take advantage of the institutional deficiency in the German VC market. The results are also discussed in the context of the growth of the Berlin-based VC and start-up ecosystem.
    Keywords: venture capital,company builder,incubation,employment,Germany
    JEL: G24 M13 L22 R12
    Date: 2017
  28. By: Aghion, Philippe; Akcigit, Ufuk; Hyytinen, Ari; Toivanen, Otto
    Abstract: In this paper, we merge three datasets - individual income data, patenting data, and IQ data - to analyze the deterninants of an individual’s probability of inventing. We find that: (i) parental income matters even after controlling for other background variables and for IQ, yet the estimated impact of parental income is greatly diminished once parental education and the individual’s IQ are controlled for; (ii) IQ has both a direct effect on the probability of inventing an indirect impact through education. The effect of IQ is larger for inventors than for medical doctors or lawyers. The impact of IQ is robust to controlling for unobserved family characteristics by focusing on potential inventors with brothers close in age. We also provide evidence on the importance of social family interactions, by looking at biological versus non-biological parents. Finally, we find a positive and significant interaction effect between IQ and father income, which suggests a misallocation of talents to innovation
    Keywords: inventors; innovation; social mobility; IQ; education; parental background
    JEL: J18 O31
    Date: 2017–12–01
  29. By: Aghion, Philippe; Akcigit, Ufuk; Lequien, Matthieu; Stantcheva, Stefanie
    Abstract: We study the effects of fiscal incentives for self-employment using new French tax data from 1994 to 2012. France serves as a good quasi-laboratory: It has three fiscal regimes - or modes of taxation - for the self-employed, which differ in their financial payoffs and in their administrative simplicity. These regimes have changed extensively over time - offering the opportunity to study how people learn about them and understand them. We find that the self-employed respond to the tax and administrative notches created by the eligibility thresholds: there is strong bunching right before the eligibility thresholds, which we use to estimate self-employed taxable income elasticities and the value of administrative simplicity. Even a small preference for administrative simplicity could explain the bunching observed. There is a sizable cost of tax complexity; agents are not immediately able to understand what the right regime choice is and there is evidence for costly learning over time. The cost of complexity is regressive because it affects mostly the uneducated, low income, and low skill agents. Agents who can be viewed as more informed and knowledgeable (e.g., the more educated or high-skilled) are more likely to make the correct regime choice and to learn faster
    Keywords: self-employment; taxation; entrepreneurship
    JEL: H21
    Date: 2017–11–01

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