nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2018‒02‒26
thirty-six papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Occupational mobility in Europe: Extent, determinants and consequences By Bachmann, Ronald; Bechara, Peggy; Vonnahme, Christina
  2. The Effect of Computer Use on Job Quality: Evidence from Europe By Menon, Seetha; Salvatori, Andrea; Zwysen, Wouter
  3. Cohesion Policy Meets Heterogeneous Firms By Lorendana Fattorini; Mahdi Ghodsi; Armando Rungi
  4. The effect of schooling age on fertility By Schaffner, Sandra; Siebert-Meyerhoff, Andrea
  5. The Motivation of Temporary Agency Workers: An Empirical Analysis By Grund, Christian; Minten, Axel; Toporova, Nevena
  6. The Short-Term Distributional Effects of the German Minimum Wage Reform By Caliendo, Marco; Fedorets, Alexandra; Preuß, Malte; Schröder, Carsten; Wittbrodt, Linda
  7. Is the Impact of Employment Uncertainty on Fertility Intentions Channeled by Subjective Well-Being? By Daniele Vignoli; Letizia Mencarini; Giammarco Alderotti
  8. What accounts for the increase in female labor force participation in Spain By Osuna, Victoria
  9. Parental Beliefs about Returns to Child Health Investments By Pietro Biroli; Teodora Boneva; Akash Raja; Christopher Rauh
  10. Internationalisation, innovation and productivity in services: Evidence from Germany, Ireland and the United Kingdom By Peters, Bettina; Riley, Rebecca R.; Siedschlag, Iulia; Vahter, Priit; McQuinni, John
  11. Consumers' attitudes on carbon footprint labelling: Results of the SUSDIET project By Feucht, Yvonne; Zander, Katrin
  12. Long-Term Effects of Childhood Nutrition: Evidence from a School Lunch Reform By Alex-Petersen, Jesper; Lundborg, Petter; Rooth, Dan-Olof
  13. Explaining wage losses after job displacement: Employer size and lost firm rents By Fackler, Daniel; Müller, Steffen; Stegmaier, Jens
  14. Interaction of Public and Private Employment: Evidence from a German Government Move By Giulia Faggio; Teresa Schlüter; Philipp vom Berge
  15. The Effect of Self-Employment on Health: Evidence from Longitudinal Social Security Data By Goncalves, Judite; Martins, Pedro S.
  16. Does Early Child Care Affect Children's Development? By Felfe, Christina; Lalive, Rafael
  17. Does Labor Market Tightness Affect Ethnic Discrimination in Hiring? By Carlsson, Magnus; Fumarco, Luca; Rooth, Dan-Olof
  18. Intergenerational Spillovers in Disability Insurance By Gordon B. Dahl; Anne C. Gielen
  19. Social media, sentiment and public opinions: Evidence from #Brexit and #USElection By Yuriy Gorodnichenko; Tho Pham; Oleksandr Talavera
  20. The minimum wage effects on skilled crafts sector in Saxony-Anhalt By Brautzsch, Hans-Ulrich; Schultz, Birgit
  21. Follow The Money: Online Piracy and Self-Regulation in the Advertising Industry By Michail Batikas; Jörg Claussen; Christian Peukert
  22. The Effectiveness of Hiring Credits By Cahuc, Pierre; Carcillo, Stéphane; Le Barbanchon, Thomas
  23. The Effect of Relative School Starting Age on Having an Individualized Curriculum in Finland By Kivinen, Aapo
  24. Firm Wage Premia, Industrial Relations, and Rent Sharing in Germany By Hirsch, Boris; Müller, Steffen
  25. Employment Protection, Temporary Contracts and Firm-provided Training: Evidence from Italy By G. Sulis; M. Conti; M. Bratti
  26. Static or dynamic efficiency: Horizontal merger effects in the wireless telecommunications industry By Michał Grajek; Klaus Gugler; Tobias Kretschmer; Ion Mişcişin
  27. Aggregate risks, intergenerational risk-sharing and fiscal sustainability in the Finnish earnings-related pension system By Lassila, Jukka
  28. Hospital Choice in the NHS By Dardanoni, V.;; Laudicella, M.;; Li Donni, P.;
  29. Identifying Age Penalty in Women's Wages: New Method and Evidence from Germany 1984-2014 By Tyrowicz, Joanna; Van der Velde, Lucas; van Staveren, Irene
  30. Intergenerational Effects of Incarceration By Bhuller, Manudeep; Dahl, Gordon B.; Loken, Katrine Vellesen; Mogstad, Magne
  31. Long-Term-Unemployed hirings: Should targeted or untargeted policies be preferred? By Alessandra Pasquini; Marco Centra; Guido Pellegrini
  32. Intra-Household Income Inequality and Preferences for Redistribution By Tina Haussen
  33. Understanding the Effects of Legalizing Undocumented Immigrants By Joan Monras; Javier Vázquez-Grenno; Ferran Elias
  34. Immigrant Entrepreneurs, Diasporas and Exports By Bratti, Massimiliano; De Benedictis, Luca; Santoni, Gianluca
  35. The Impact of High School Financial Education on Financial Knowledge and Choices: Evidence from a Randomized Trial in Spain By Bover, Olympia; Hospido, Laura; Villanueva, Ernesto
  36. The Effect of the First Italian Research Evaluation Exercise on Student Enrolment Choices By Biancardi, Daniele; Bratti, Massimiliano

  1. By: Bachmann, Ronald; Bechara, Peggy; Vonnahme, Christina
    Abstract: We examine occupational mobility and its link to wage mobility across a large number of EU countries using worker-level micro data. In doing so, we document the extent, the individual-level determinants and the consequences of occupational mobility in terms of wage outcomes and structural change across the EU. In addition, we identify potential explanations for the observed cross-country variation. Our results show that on average, 3% of European workers change their occupation per year, and that the extent of occupational mobility differs strongly by country. Individual characteristics play an important role for person-specific occupational mobility, but have little explanatory power for differences between countries. Occupational mobility is strongly associated with earnings mobility, and occupation movers are more likely than job movers to experience a downward rather than an upward earnings transition; by contrast, changing occupation voluntarily is more often followed by an upward wage transition. As opposed to composition effects, labour-market institutions, especially employment protection legislation, seem to play an important role for explaining crosscountry differences in occupational mobility.
    Keywords: occupational mobility,job mobility,wage mobility,European labour markets,EU-SILC,cross-country study
    JEL: J62 J63 P52
    Date: 2017
  2. By: Menon, Seetha (European University Institute); Salvatori, Andrea (OECD); Zwysen, Wouter (ISER, University of Essex)
    Abstract: This paper studies changes in computer use and job quality in the EU-15 between 1995 and 2015. We document that while the proportion of workers using computers has increased from 40% to more than 60% over twenty years, there remain significant differences between countries even within the same occupations. Several countries have seen a significant increase in computer use even in low-skilled occupations generally assumed to be less affected by technology. Overall, the great increase in computer use between 1995 and 2015 has coincided with a period of modest deterioration of job quality in the EU-15 as whole, as discretion declined for most occupational and educational groups while intensity increased slightly for most of them. Our OLS results that exploit variation within country-occupation cells point to a sizeable positive effect of computer use on discretion, but to small or no effect on intensity at work. Our instrumental variable estimates point to an even more benign effect of computer use on job quality. Hence, the results suggest that the (moderate) deterioration in the quality of work observed in the EU-15 between 1995 and 2015 has occurred despite the spread of computers, rather than because of them.
    Keywords: job polarisation, job quality, tasks, discretion, intensity
    JEL: J21 J23 J24 O33
    Date: 2018–01
  3. By: Lorendana Fattorini (IMT School for advanced studies); Mahdi Ghodsi (The Vienna Institute for International Economic Studies); Armando Rungi (IMT School for advanced studies)
    Abstract: In this paper, we empirically test the effects of the EU ‘cohesion policy’ on the performance of about 500,000 European manufacturing firms after combining regional policy data at NUTS- 2 level with firm-level data. In a framework of heterogeneous firms and different absorptive capacity of regions, we show that financing of ‘cohesion policy’ by European Regional Development Fund (ERDF) aimed at direct investments in R&D correlates with improvement of firms’ productivity in a region. Conversely, funding designed at overall Business Support correlates with negative productivity growth rates. In both cases, we registered an asymmetric impact along the firms’ productivity distribution, where a stronger impact can be detected in the first quartile, i.e. less efficient firms in a region. We finally argue that considering the heterogeneity of firms allows a better assessment of the impact of ‘cohesion policy’ measures.
    Keywords: firm performance, total factor productivity, cross-country analysis, convergence, regional policy
    JEL: D22 D24 E23 F15 L25
    Date: 2018–02
  4. By: Schaffner, Sandra; Siebert-Meyerhoff, Andrea
    Abstract: Fertility rates decline in most developed countries. This is especially true for Germany. Fertility is highly correlated with the skill level of women. The age at school enrolment and therefore the age at graduation depends on the month of birth. Children born before the cut-off date start school earlier than children born after the cut-off date. Therefore, there are also age differences at graduation. These differences can have an effect on the age at first birth and therefore the number of children. We analyze the effects of age at school enrolment on fertility in Germany. Our results suggest that women that are older at graduation are somewhat older at the age of first birth but do not have less children than younger women. Although, the effects on fertility are small we observe negative life-time earning effects of late enrolment for women in East-Germany.
    Keywords: fertility,education,regression discontinuity
    JEL: I21 J13
    Date: 2017
  5. By: Grund, Christian (RWTH Aachen University); Minten, Axel (RWTH Aachen University); Toporova, Nevena (Technische Universität München)
    Abstract: We are investigating the relationship between individual and job-related characteristics and the motivation of temporary agency workers. To do so, we are using a unique dataset from one of Germany's largest temporary work agencies. For 3,000 temporary agency workers, a subjective motivation appraisal is provided by the respective direct manager within the hiring company. It is possible to observe a positive relationship between the decision on transition to regular employment and the motivation of temporary agency workers. Women in temporary agency work demonstrate a higher degree of motivation than men. However, in the case of men a clearer correlation can be observed between project duration and motivation. A change of hiring company with follow-up projects has a negative effect on the temporary agency worker's motivation.
    Keywords: temporary agency work, atypical employment relation, empirical study, motivation, work morale
    JEL: J5 J81 M5
    Date: 2017–12
  6. 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: This study quantifies the short-term distributional effects of the new statutory minimum wage in Germany. Using detailed survey data (German Socio-Economic Panel), we assess changes in the distributions of hourly wages, contractual and actual working hours, and monthly earnings. Our descriptive results indicate growth at the bottom of the hourly wage distribution in the post-reform year, but also considerable noncompliance among eligible employees. In a second step, we employ a difference-in-differences analysis and exploit regional variation in the "bite" of the intervention, measured by the share of employees in a geographical region with wages below the minimum wage prior to the reform. We document the reform's positive effect at the bottom of the wage distribution. However, we find a negative effect of the reform on contractual hours worked, which explains why there is no effect on monthly earnings. Given that actual hours worked decrease less than contractual hours, our evidence suggests an increase in unpaid overtime.
    Keywords: minimum wage, wage distribution, hourly wages, inequality
    JEL: J31 J38 J22
    Date: 2017–12
  7. By: Daniele Vignoli (Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti", Università di Firenze); Letizia Mencarini (Dondena Centre for Research on Social Dynamics and Public Policy, Università Commerciale Luigi Bocconi); Giammarco Alderotti (Sapenza, Università di Roma)
    Abstract: This article combines two apparently distinct strands of contemporary research on fertility: the literature on employment uncertainty and fertility and the literature on subjective well-being and fertility. We advance the hypothesis that the impact of term-limited work contracts and precarious jobs on fertility intentions is channeled by an individual’s level of subjective well-being. To test this hypothesis, we adopt a formal framework for causal inference and apply techniques of mediation analysis to data from two rounds of the European Social Survey (ESS 2004 and 2010). Our analysis clearly suggested that the impact of employment uncertainty on fertility intentions depended on the level of subjective well-being: the negative effect was found only when subjective well-being was relatively low (i.e. life satisfaction levels equal or below 6). Detailed results show that parents and younger individuals reduced their fertility intentions more than the childless and older individuals when experiencing employment uncertainty and facing low subjective well-being. We also found that in 2010 – while the economic crisis was underway – it was especially the deterioration in men’s position in the labor market that inhibited fertility planning.
    Keywords: Economic Uncertainty; Subjective Well-being; Fertility Intentions; Europe; Mediation Analysis; Causal Inference; Great Recession
    JEL: J13 J00 J21
    Date: 2018–02
  8. By: Osuna, Victoria
    Abstract: Over the last three decades, Spanish female labor force participation (LFP) has tremendously increased, particularly, that of married women. At the same time, the income tax structure, the fiscal treatment of families, policies to reconcile family and work, and the education distribution of married couples have substantially changed. By contrast, the gender wage gap has remained quite stable. In this paper the author investigates the relevance of these factors in accounting for the growth in Spanish married women labor force participation from 1994 to 2008. For that purpose, she uses Kaygusuz (Taxes and female labor supply, 2010) model of household labor market participation, and data from Eurostat to calibrate the model and evaluate its performance. The model successfully accounts for the rise in aggregate female labor force participation, and matches hours worked by males and females. The model is also able to replicate the pattern of female labor force participation by age and education. From this analysis we can conclude that changes in tax rates and in the education distribution are the main factors behind the increase in female LFP during the late nineties, while changes in child care costs and earning profiles are mainly responsible for the subsequent growth in the 2000s.
    Keywords: female labor force participation,gender wage gap,income tax,educational distribution,wage profiles,child care costs
    JEL: J11 J12 J13 J22 J31
    Date: 2018
  9. By: Pietro Biroli (University of Zurich); Teodora Boneva (University of Cambridge); Akash Raja (London School of Economics and Political Science); Christopher Rauh (University of Cambridge, INET Institute)
    Abstract: Childhood obesity has adverse health and productivity consequences and poses negative externalities to health services. Its increase in recent decades can be traced back to unhealthy habits acquired in the household. We investigate whether parental beliefs play a role by eliciting beliefs about the returns to a recommended-calorie diet and regular exercise using hypothetical investment scenarios. We show that perceived returns are predictive of health investments and outcomes, and that less educated parents perceive the returns to health investments to be lower, thus contributing to the socioeconomic inequality in health outcomes and the intergenerational transmission of obesity.
    Keywords: parental investments, Health, beliefs, Inequality, equality of opportunity, obesity
    JEL: D19 I10 I12 I14
    Date: 2018–02
  10. By: Peters, Bettina; Riley, Rebecca R.; Siedschlag, Iulia; Vahter, Priit; McQuinni, John
    Abstract: This paper examines the links between internationalisation, innovation and productivity in service enterprises. For this purpose, we use micro data from the Community Innovation Survey 2008 in Germany, Ireland and the United Kingdom, and estimate an augmented structural model. Our empirical evidence highlights the importance of internationalisation in the context of innovation outputs in all three countries. Our results indicate that innovation in service enterprises is linked to higher productivity. Among the innovation types that we consider, the largest productivity returns were found for marketing innovations.
    Keywords: internationalisation of services,innovation,productivity
    JEL: L25 O31
    Date: 2018
  11. By: Feucht, Yvonne; Zander, Katrin
    Abstract: The purchase of products labelled with Carbon footprints is one option for consumers to act climate-friendly and consumers frequently state that they are interested in this kind of labels. But even though various carbon footprint labelling schemes exist throughout Europe, their market relevance is low. In this context, the present research investigates preferences for climate-friendly food and identifies barriers for climate friendly food choices in the European market. Using a mixed methods approach combining an online survey (choice experiments and a questionnaire) with qualitative face-to-face interviews, the preferences and willingness to pay for different carbon labels and a climate-friendly claim were explored in six European countries. While the online survey mainly aimed at eliciting consumer preferences for different ways of communicating climate-friendliness, the face-to-face interviews which were based on the results of the online survey, deepened and broadened the quantitative results. Thereby, consumers' perceptions of climate-friendly food and their information needs with respect to climate-friendly food are elicited. Our results show that the presence of a carbon label on a product increases the purchase probability and that consumers are willing to pay a (small) price premium for a carbon label in all countries under investigation (France, Germany, Italy, Norway, Spain, Germany, UK). However, the contribution of a carbon label to a more climate-friendly consumption will be limited. Main reasons are the lack of knowledge of climate friendly actions, reluctance to change consumption habits (e.g. meat and dairy consumption), time preference and uncertainty regarding the relevance of climate change. Consumers appear to be frequently overstrained with respect to climate-friendly buying decisions. Policy makers and retailers are challenged to set appropriate structures to support climate-friendly consumption.
    Keywords: carbon footprint labelling,consumer research,climate change,climate-friendly food,mixed methods,choice experiments,CO2-Labels,Verbraucherforschung,Klimawandel,Klimafreundliche Lebensmittel,Mixed methods,Kaufexperimente
    Date: 2017
  12. By: Alex-Petersen, Jesper (Lund University); Lundborg, Petter (Lund University); Rooth, Dan-Olof (Stockholm University)
    Abstract: We examine the long-term impact of a policy that introduced free and nutritious school lunches in Swedish primary schools. For this purpose, we use historical data on the gradual implementation of the policy across municipalities and employ a difference- in-differences design to estimate the impact of this lunch policy on a broad range of medium and long-term outcomes, including lifetime income, health, cognitive skills, and education. Our results show that the school lunch program generated substantial long-term benefits, where pupils exposed to the program during their entire primary school period have 3 percent greater life-time earnings. In addition, we find the effect to be greater for pupils that were exposed at earlier ages and for pupils from poor households. Finally, exposure to the school lunch program had substantial effects on educational attainment and health and these effects can explain a large part of the return to school lunches.
    Keywords: nutrition, early life, childhood, long-term, income, causal
    JEL: I12 I38 J24
    Date: 2017–12
  13. By: Fackler, Daniel; Müller, Steffen; Stegmaier, Jens
    Abstract: Why does job displacement, e.g., following import competition, technological change, or economic downturns, result in permanent wage losses? The job displacement literature is silent on whether wage losses after job displacement are driven by lost firm wage premiums or worker productivity depreciations. We therefore estimate losses in wages and firm wage premiums. Premiums are measured as firm effects from a two-way fixed-effects approach, as described in Abowd, Kramarz, and Margolis (1999). Using German administrative data, we find that wage losses are, on average, fully explained by losses in firm wage premiums and that premium losses are largely permanent. We show that losses in wages and premiums are minor for workers displaced from small plants and strongly increase with pre-displacement firm size, which provides an explanation for the large and persistent wage losses that have been found in previous studies mostly focusing on displacement from large employers.
    Keywords: job displacement,wages,firm size,firm rents
    JEL: J31 J63 J65
    Date: 2017
  14. By: Giulia Faggio; Teresa Schlüter; Philipp vom Berge
    Abstract: We use the German government move from Bonn to Berlin in 1999 to test competing views about the impact of public employment on private sector activity in a local labor market. A relocated public sector job might create new jobs in an area as it increases demand for locally-produced goods and services, or crowd out existing jobs due to upward pressure on housing rents. Using employment data from a panel of a 50% sample of establishments across 190 Berlin postcodes, we apply a treatment intensity approach which takes the possibility of spillovers into account. Results indicate that the arrival of 100 public sector jobs into an area generates 55 additional jobs in the private sector. There is evidence of spillovers: relocations up to a distance of 1km from a postcode boundary increases employment in the private sector by 36 jobs. These effects are coming through job gains in the service sector, while manufacturing employment is not influenced by the relocation.
    Keywords: regional government policy, regional labor markets, job displacement, economic development
    JEL: R58 R23 J61 O1
    Date: 2018–02
  15. By: Goncalves, Judite (Universidade Nova de Lisboa); Martins, Pedro S. (Queen Mary, University of London)
    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
  16. By: Felfe, Christina; Lalive, Rafael
    Abstract: We study how early child care (ECC) affects children's development in a marginal treatment effect framework that allows for rich forms of observed and unobserved effect heterogeneity. Exploiting a reform in Germany that induced school districts to expand ECC at different points in time, we find strong but diverging effects on children's motor and socio-emotional skills. Children who were most likely to attend ECC benefit in terms of their motor skill development. Children who were least likely to attend ECC gain in terms of their socio-emotional skill development, especially boys and children from disadvantaged families, such as those with low education or migration backgrounds. Simulating expansions of ECC, we find that a moderate expansion fosters motor skills for all children and language skills for boys and immigrant children. A progressive expansion of ECC improves all children's socio-emotional development but neither their motor skills nor their language skills.
    Keywords: child development; early child care; marginal treatment effects; rationing
    JEL: I21 I38 J13
    Date: 2018–02
  17. By: Carlsson, Magnus (Linnaeus University); Fumarco, Luca (Linnaeus University); Rooth, Dan-Olof (Stockholm University)
    Abstract: Several studies using observational data suggest that ethnic discrimination increases in downturns of the economy. We investigate whether ethnic discrimination depends on labor market tightness using data from correspondence studies. We utilize three correspondence studies of the Swedish labor market and two different measures of labor market tightness. These two measures produce qualitatively similar results, and, opposite to the observational studies, suggests that ethnic discrimination in hiring decreases in downturns of the economy.
    Keywords: hiring discrimination, ethnic discrimination, labor market tightness, the business cycle, correspondence studies, field experiments, ranking models, screening models
    JEL: C93 J15 J21 J71
    Date: 2018–01
  18. By: Gordon B. Dahl; Anne C. Gielen
    Abstract: Does participation in a social assistance program by parents have spillovers on their children's own participation, future labor market attachment, and human capital investments? While intergenerational concerns have figured prominently in policy debates for decades, causal evidence is scarce due to nonrandom participation and data limitations. In this paper we exploit a 1993 policy reform in the Netherlands which tightened disability insurance (DI) criteria for existing claimants, and use rich panel data to link parents to children's long-run outcomes. The key to our regression discontinuity design is that the reform applied to younger cohorts, while older cohorts were exempted from the new rules. We find that children of parents who were pushed out of DI or had their benefits reduced are 11% less likely to participate in DI themselves, do not alter their use of other government safety net programs, and earn 2% more in the labor market as adults. The combination of reduced government transfers and increased tax revenue results in a fiscal gain of 5,900 euros per treated parent due to child spillovers by 2014. Moreover, children of treated parents complete an extra 0.12 years of schooling on average, an investment consistent with an anticipated future with less reliance on DI. Our findings have important implications for the evaluation of this and other policy reforms: ignoring parent-to-child spillovers understates the long-run cost savings of the Dutch reform by between 21 and 40% in present discounted value terms.
    JEL: H53 I38 J62
    Date: 2018–02
  19. By: Yuriy Gorodnichenko; Tho Pham (School of Management, Swansea University); Oleksandr Talavera (School of Management, Swansea University)
    Abstract: This paper studies information diffusion in social media and the role of information dissemination in shaping public opinions. Using Twitter data on the 2016 EU Referendum and the 2016 US Presidential Election, we find that information about these two events is spread quickly on Twitter, most likely within 1-2 hours. There are also interactions among different types of Twitter agents in spreading information with a considerable spillover from bot to human tweeting activities. However, the degree of influence depends on whether bots provide consistent information with humans' priors. This finding lends support to the "echo chambers" effect on Twitter that Twitter users are more likely to expose to information supporting their own views while ignore the opposite information. Further examination shows that sentiment matters in information acquiring and sharing. Overall, our results suggest that the aggressive use of Twitter bots, coupled by the fragmentation of social media and the role of sentiment, increases the polarization of public opinions about the EU Referendum and the US Election.
    Keywords: Brexit, US Election, Information diffusion, Echo chambers, Political Bots, Twitter
    JEL: D70 D72 D86
    Date: 2018–01–25
  20. By: Brautzsch, Hans-Ulrich; Schultz, Birgit
    Abstract: This paper examines the effects of the minimum wage introduction in Germany in 2015 on the skilled crafts sector in Saxony-Anhalt. Using novel survey data on the skilled crafts sector in Saxony-Anhalt, we examine three questions: (1) How many employees are affected by the minimum wage introduction in the skilled crafts sector in Saxony- Anhalt? (2) What are the effects of the minimum wage introduction? (3) How have firms reacted to wage increase? We find that about 8% of all employees in the skilled crafts sector in Saxony-Anhalt are directly affected by the minimum wage introduction. A difference-in-difference estimation reveals no significant employment effects of the minimum wage introduction. We test for alternative adjustment strategies and observe a significant increase of output prices.
    Keywords: minimum wage,employment,difference-in-differences estimations,Saxony-Anhalt
    JEL: C31 E24 J23 J38
    Date: 2017
  21. By: Michail Batikas; Jörg Claussen; Christian Peukert
    Abstract: In this paper, we study the effects of a self-regulatory effort, orchestrated by the European Commission, that aims to reduce advertising revenues for publishers of copyright infringing content. Historical data lets us follow how the third-party advertising and tracking services associated with a large number of piracy websites and a corresponding set of legitimate “placebo” websites change after the agreement to self-regulate went in place. We find that larger EU-based advertisers comply with the initiative and reduce their connections with piracy websites. We do not find reductions for other non-advertising services that track consumers, which has potentially important implications for the efficiency of targeted advertising.
    Keywords: piracy, copyright enforcement, online advertising, natural experiment
    JEL: K40 L50 L80
    Date: 2018
  22. By: Cahuc, Pierre (Ecole Polytechnique, Paris); Carcillo, Stéphane (OECD); Le Barbanchon, Thomas (Bocconi University)
    Abstract: This paper analyzes the effectiveness of hiring credits. Using comprehensive administrative data, we show that the French hiring credit, implemented during the Great Recession, had significant positive employment effects and no effects on wages. Relying on the quasi-experimental variation in labor cost triggered by the hiring credit, we estimate a structural search and matching model. Simulations of counterfactual policies show that the effectiveness of the hiring credit relied to a large extent on three features: it was non-anticipated, temporary and targeted at jobs with rigid wages. We estimate that the cost per job created by permanent hiring credits, either countercyclical or time-invariant, in an environment with flexible wages would have been much higher.
    Keywords: hiring credit, labor demand, search and matching model
    JEL: C31 C93 J6
    Date: 2017–12
  23. By: Kivinen, Aapo
    Abstract: In Finland, a child in special education receives an individualized curriculum when standard support does not suffice. One factor that may have an impact on the assignment of an individualized curriculum is the relative age of the child. Due to the cutoff date of school starting age, there is an age gap of roughly one year in each class. This difference in relative age can affect through few possible mechanisms: difference in absolute age, peer effects, and the optimal school starting age. In this paper, I study how relative school starting age affects the probability of having an individualized curriculum. I use regression discontinuity design and individual level register data for middle school graduates in 1998–2014 to estimate the causal effect of relative school starting age. Relatively younger graduates are 1.4 percentage points more likely to have a partially individualized curriculum than graduates who are a year older. Respectively, older graduates are 1.8 percentage points more likely to have a regular curriculum. The results are robust and they hold for multiple specifications. I also find that the relative age effect is stronger for girls and students with lower educated parents. Furthermore, when studying temporal variation of the effect, I observe a significant effect only from 2005 onwards. This may be partly explained by the curriculum reform in 2004. My research contributes to the areas of special education and relative age effect. The results are in line with prior literature of relative age.
    Keywords: Special Education, Relative Age Effect,
    Date: 2018
  24. By: Hirsch, Boris (Leuphana University Lüneburg); Müller, Steffen (IWH Halle)
    Abstract: This paper investigates the influence of industrial relations on firm wage premia in Germany. OLS regressions for the firm effects from a two-way fixed effects decomposition of workers' wages by Card, Heining, and Kline (2013) document that average premia are larger in firms bound by collective agreements and in firms with a works council, holding constant firm performance. RIF regressions show that premia are less dispersed among covered firms but more dispersed among firms with a works council. Hence, deunionization is the only among the suspects investigated that contributes to explaining the marked rise in the premia dispersion over time.
    Keywords: firm wage premium, industrial relations, trade unions, works councils, bargaining power, rent sharing, wage inequality, Germany
    JEL: J31 J52 J53
    Date: 2018–01
  25. By: G. Sulis; M. Conti; M. Bratti
    Abstract: In this study, we leverage on Italy's size-contingent firing restrictions to identify the causal effect of employment protection legislation (EPL) on firm-provided training using a regression discontinuity design. Our analysis demonstrates that higher levels of EPL reduce incentives for firms to invest in workers' training. The number of trained workers falls by about 1.5-1.9 units at the threshold - this is not a negligible effect, corresponding to a 16-20% reduction in the number of trained workers. The results are robust to several sensitivity checks and controls for potential confounding factors (e.g. work councils). The effect of EPL on training is not mediated by different levels of investment in physical capital or propensities to innovate, while it is mostly accounted for by higher worker turnover and more use of temporary contracts, which entail less training, in firms with higher firing costs. Our study highlights the potential adverse effects of EPL on worker training in dual labour markets, owing to larger firms seeking to avoid the higher costs of EPL by means of temporary contracts.
    Keywords: training;italy;firing costs;employment protection legislation
    Date: 2018
  26. By: Michał Grajek (ESMT European School of Management and Technology); Klaus Gugler (Vienna University of Economics and Business); Tobias Kretschmer (Ludwig Maximilian University of Munich); Ion Mişcişin (University of Vienna)
    Abstract: This paper studies five mergers in the European wireless telecommunication industry and analyzes their impact on prices and capital expenditures of both merging carriers and their rivals. We find substantial heterogeneity in the relationship between increases in concentration and carriers’ prices. The specifics of each merger case clearly matter. Moreover, we find a positive correlation between the price and the investment effects; when the prices after merger increase (decrease), the investments increase (decrease) too. Thus, we document a trade-off between static and dynamic efficiencies of mergers.
    Keywords: telecom mergers, static and dynamic efficiency, difference-in-difference
    JEL: L22 O33 G34 L96
    Date: 2017–12–19
  27. By: Lassila, Jukka
    Abstract: We study how aggregate demographic and economic risks affect the finances of the Finnish earnings-related pension system and the different generations of the insured. As a partially funded defined-benefit system, demographic risks and asset yield risks directly affect the contributions. Our analysis, based on a general equilibrium overlapping-generations model, show that these risks also affect wages and thus pension benefits and replacement rates. Productivity growth also affects wages and thus both contributions and benefits. We also analyze quantitatively the use of pension funds with the aim of smoothing contributions over time and compare the outcomes of the current system to an alternative system with the same benefit rules but no funding. Smoothing is affected by the revisions in long-term forecasts and is thus imperfect. In addition, variation in asset yields often cause clashes with solvency limits. We find that funding results in more varying contributions over time than would be the case without funding. Concerning generational equity, young generations benefit from funding in the form of lower contributions and higher wages, and their consumption possibilities are further increased by the improved fiscal stance of the state and municipalities.
    Keywords: Pensions, funding, contribution smoothing, risks, generational fairness
    JEL: E17 H55 J11
    Date: 2018–02–21
  28. By: Dardanoni, V.;; Laudicella, M.;; Li Donni, P.;
    Abstract: We study hospital choice in the publicly funded National Health Service in England, using a two sample strategy to identify a structural model of demand for elective procedures. In the NHS patients are allowed to opt out from the market of free-of-charge public hospitals and choose a private provider; we find that the outside option has an important effect on competition, patient choice and elasticities compared with traditional models ignoring the private sector. Considering endogeneity of waiting-time, proper measures of quality and the existence of private sector, we find substantially different policy conclusions compared to existing hospital demand models.
    Keywords: hospital demand; patient choice; quality; NHS;
    JEL: D12 I11 I18 H51
    Date: 2018–02
  29. By: Tyrowicz, Joanna (University of Warsaw); Van der Velde, Lucas (Warsaw University); van Staveren, Irene (ISS, Erasmus University Rotterdam)
    Abstract: Given theoretical premises, gender wage gap adjusted for individual characteristics is likely to vary over age. We extend DiNardo, Fortin and Lemieux (1996) semi-parametric technique to disentangle year, cohort and age effects in adjusted gender wage gaps. We rely on a long panel of data from the German Socio-Economic Panel covering the 1984-2015 period. Our results indicate that the gender wage gap increases over the lifetime, for some birth cohorts also in the post-reproductive age.
    Keywords: gender wage gap, age, cohort, decomposition, non-parametric estimates, Germany
    JEL: J31 J71
    Date: 2018–01
  30. By: Bhuller, Manudeep (University of Oslo); Dahl, Gordon B. (University of California, San Diego); Loken, Katrine Vellesen (Norwegian School of Economics); Mogstad, Magne (University of Chicago)
    Abstract: An often overlooked population in discussions of prison reform is the children of inmates. How a child is affected depends both on what incarceration does to their parent and what they learn from their parent's experience. To overcome endogeneity concerns, we exploit the random assignment of judges who differ in their propensity to send defendants to prison. Using longitudinal data for Norway, we find that imprisonment has no effect on fathers' recidivism but reduces their employment by 20 percentage points. We find no evidence that paternal incarceration affects a child's criminal activity or school performance.
    Keywords: crime, employment, incarceration, recidivism
    JEL: K42 J24 J62
    Date: 2018–01
  31. By: Alessandra Pasquini (MEMOTEF Department Sapienza University of Rome, INAPP, Scienze Sociali ed Eonomiche Department Sapienza University of Rome); Marco Centra (MEMOTEF Department Sapienza University of Rome, INAPP, Scienze Sociali ed Eonomiche Department Sapienza University of Rome); Guido Pellegrini (MEMOTEF Department Sapienza University of Rome, INAPP, Scienze Sociali ed Eonomiche Department Sapienza University of Rome)
    Abstract: To what extent, hiring incentives targeting a specific group of vulnerable unemployed (i.e. long term unemployed) are more effective, with respect to generalised incentives (without a definite target), to increase hirings of the targeted group? Are generalized incentives able to influence hirings of the vulnerable group? Do targeted policies have negative side effects too important to accept them? Even though there is a huge literature on hiring subsidies, these questions remained unresolved. We tried to answer them, comparing the impact of two similar hiring policies, one oriented towards a target group and one generalised, implemented on the italian labour market. We used administrative data on job contracts, and counterfactual analysis methods. The targeted policy had a positive and significant impact, while the generalized policy didn't have a significant impact on the vulnerable group. Moreover, we concluded the targeted policy didn't have any indirect negative side effect.
    Date: 2018–02
  32. By: Tina Haussen (University of Jena, School of Economics)
    Abstract: We empirically analyze the relationship between income inequality and individual preferences for public redistribution, focusing on intra-household income inequality between spouses. Using data from the German Socio-Economic Panel, we find that both one's own earned income and earned intra-household income inequality are significantly negatively related to preferences for public redistribution. However, as the earned income inequality between partners increases, the poorer partner's preference for public redistribution declines while the richer partner's preference for public redistribution increases. The poorer partners' preferences may, in fact, indicate preferences for intra- household redistribution from the richer to the poorer partner. The richer partners' preferences may be explained by the fact that, when married, they can realize tax savings and, therefore, have to pay relatively less for public redistribution. Moreover, our results confirm previous findings regarding a partner's future social mobility prospects upon cohabitation ending, because they show that having a strong outside option, i.e., a high wage potential, is significantly negatively related to redistributive preferences, especially among those with an above-average future wage potential.
    Keywords: Redistributive preferences, intra-household income inequality, cohabitation, prospects of upward mobility
    JEL: D13 D31 D63 J12 H23
    Date: 2018–02–19
  33. By: Joan Monras (CEMFI and CEPR); Javier Vázquez-Grenno (Universitat de Barcelona and IEB); Ferran Elias (University of Copenhagen)
    Abstract: This paper investigates the consequences of the legalization of around 600,000 immigrants by the unexpectedly elected Spanish government of Zapatero following the terrorist attacks of March 2004 (Garcia-Montalvo, 2011). Using detailed data from payroll-tax revenues, we estimate that each newly legalized immigrant increased local payroll-tax revenues by 4,189 euros on average. This estimate is only 55 percent of what we would have expected from the size of the influx of newly documented immigrants, which suggests that newly legalized immigrants probably earned lower wages than other workers and maybe affected the labor-market outcomes of those other workers. We estimate that the policy change deteriorated the labor-market outcomes of some low-skilled natives and immigrants and improved the outcomes of high-skilled natives and immigrants. This led some low-skilled immigrants to move away from high-immigrant locations. Correcting for internal migration and selection, we obtain that each newly legalized immigrant increased payroll-tax revenues by 4,801 euros, or 15 percent more than the estimates from local raw payroll-tax revenue data. This shows the importance of looking both at public revenue data and the labor market to understand the consequences of amnesty programs fully.
    Keywords: Immigration, undocumented immigrants, public policy evaluation
    JEL: F22 J31 J61 R11
    Date: 2018–02
  34. By: Bratti, Massimiliano (University of Milan); De Benedictis, Luca (University of Macerata); Santoni, Gianluca (CEPII, Paris)
    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. We find that increasing the stock of (non-entrepreneur) immigrants by 10% would lead to a 1.7% increase in exports in manufacturing towards immigrants' countries of origin, while increasing the number of immigrant entrepreneurs in manufacturing by 10% would raise exports by about 0.6%. We also show that, besides these bilateral effects, the population of immigrant entrepreneurs raises a province's overall competitiveness and export flows towards all potential destinations.
    Keywords: exports, immigrants, gravity model, immigrant entrepreneurs, Italy
    JEL: F10 F14 F22 R10
    Date: 2018–01
  35. By: Bover, Olympia; Hospido, Laura; Villanueva, Ernesto
    Abstract: We conducted a randomized controlled trial where 3,000 9th grade students coming from 78 high schools received a financial education course at different points of the year. Right after the treatment, test performance increased by 16% of one standard deviation, treated youths were more likely to become involved in financial matters at home and showed more patience in hypothetical saving choices. In an incentivized saving task conducted three months after, treated students made more patient choices than a control group of 10th graders. Within randomization strata, the main impacts are also statistically significant in public schools, which over-represent disadvantaged students.
    Keywords: Financial Education; Impact Evaluation
    JEL: D14 D91 I22 J24
    Date: 2018–01
  36. By: Biancardi, Daniele (IRVAPP); Bratti, Massimiliano (University of Milan)
    Abstract: This paper studies the impact of the first Italian Research Evaluation Exercise (VTR 2001-2003) on university undergraduate students' enrolment choices. A before-after estimator with differential treatment intensities is used to investigate whether subject-group higher education institutions (HEIs) that had a higher performance in the VTR also benefited from more student enrolments and enrolment of students with better entry qualifications after the VTR. Our analysis demonstrates that increasing the percentage of "excellent" research products by one standard deviation (19 percentage points) increases student enrolment by 5.8%. The effects are larger for high-quality students, namely those with better high school final marks (8.3%) or coming from the academic track (12.2%), and they are larger for subject-group HEIs in the top quartile of the VTR quality distribution. The effects are of similar magnitude across all macro-regions (North, Centre and South and Islands), but they are precisely estimated only for universities in the North. When HEIs are divided into new and old universities, only the former, which have less established reputations in teaching and research, appear to have gained from good performance in the VTR.
    Keywords: research evaluation exercise, student enrolment, student quality, Italy, VTR
    JEL: I21 I23
    Date: 2018–01

This nep-eur issue is ©2018 by Giuseppe Marotta. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.