nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2018‒05‒21
thirty-one papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Equalization transfers and the pattern of municipal spending: An investigation of the flypaper effect in Germany By Langer, Sebastian; Korzhenevych, Artem
  2. Health status, mental health and air quality: evidence from pensioners in Europe By Giovanis, Eleftherios; Ozdamar, Oznur
  3. Voluntary Quits: Do Works Councils Matter? An Analysis of the Reform of the German Works Constitution Act 2001 By Julian B. Adam
  4. Do Working Hours Affect Health? Evidence from Statutory Workweek Regulations in Germany By Kamila Cygam-Rehm; Christoph Wunder
  5. The Impact of Minimum Wages on Well-Being: Evidence from a Quasi-Experiment in Germany By Filiz Gülal; Adam Ayaita
  6. Financial literacy and inclusive growth in the European Union By Uuriintuya Batsaikhan; Maria Demertzis
  7. Slovak electricity market and the merit order effect of photovoltaics By Karel Janda
  8. Judgement Day: Algorithmic Trading Around the Swiss Franc Cap Removal By Francis Breedon; Louisa Chen; Angelo Ranaldo; Nicholas Vause
  9. How Should Capital be Taxed? Theory and Evidence from Sweden By Spencer Bastani; Daniel Waldenström
  10. Countercyclical School Attainment and Intergenerational Mobility By Andreu Arenas, Clément Malgouyres
  11. Choice and Competition in the Welfare State: Home Care as the Ideal Quasi-market By Bergman, Mats A.; Jordahl, Henrik; Lundberg, Sofia
  12. Public Health and Economic Implications of the United Kingdom Exiting the EU and the Single Market By Maignen, F.; Berdud, M.; Hampson, G.; Lorgelly, P.
  13. The greening of jobs in Germany : First evidence from a text mining based index and employment register data By Janser, Markus
  14. Heterogeneous Foreign Direct Investment and Local Innovation in Italian Provinces By Andrea Ascani; Pierre-Alexandre Balland
  15. Exploring Digital Time Measurement in the Public Sector: Labor Productivity and Service Quality in Home Care By Jordahl, Henrik; Persson, Lovisa
  16. Great Expectations: Reservation Wages and the Minimum Wage Reform By Alexandra Fedorets; Alexey Filatov; Cortnie Shupe
  17. Why Do Firms (Dis)Like Part-Time Contracts? By Francesco Devicienti; Elena Grinza; Davide Vannoni
  18. Energy behaviour in offices and the impact on pricing decisions By Jorn van de Wetering; Franz Fuerst
  19. A Mechanism for Institutionalised Threat of Regulation: Evidence from the Swedish District Heating Market By Bonev, Petyo; Glachant, Matthieu; Söderberg, Magnus
  20. The best of the two worlds: assessing the use of administrative data for the study of employment. By Cristina Lafuente
  21. Immigration And The Displacement of Incumbent Households By Zeno Adams; Kristian Blickle; ;
  22. Review of CRA's Report "Assessing the Economic Impacts of Changing Exemption Provisions During Patent and SPC Protection in Europe" By Mestre-Ferrandiz, J.; Berdud, M.; Towse, A.
  23. Reallocation and productivity during the Great Recession:evidence from French manufacturing firms By Giacomo Domini; Daniele Moschella
  24. The Debate on Indication-Based Pricing in the U.S. and Five Major European Countries By Towse, A.; Cole, A.; Zamora, B.
  25. FREQUENT USE OF EMERGENCY DEPARTMENTS: AN APPLICATION TO THE PAEDIATRIC CONTEXT By Lucia Leporatti; Enrico di Bella; Luca Gandullia; Walter Locatelli; Marcello Montefiori; Roberta Zanetti
  26. Investment subsidies and regional welfare: A dynamic framework By Korzhenevych, Artem; Bröcker, Johannes
  27. Testing Theoretical Explanations for Investment Behaviour in the Dutch Beam Trawler Fishery in the North Sea By Frank Jensen; Christian Elleby; Katell G. Hamon; Jos op de Weegh
  28. Food waste as a (negative) measure of social capital. A study across Italian Provinces By Simone Piras; Francesca Pancotto; Simone Righi; Matteo Vittuari; Marco Setti
  29. The microeconomic origins of the Spanish boom By Enrique Moral-Benito
  30. Income Inequality in France, 1900-2014: Evidence from Distributional National Accounts (DINA) By Bertrand Garbinti, Jonathan Goupille-Lebret & Thomas Piketty
  31. The Impact of Sickness Absenteeism on Productivity: New Evidence from Belgian Matched Panel Data By Elena Grinza; Francois Rycx

  1. By: Langer, Sebastian; Korzhenevych, Artem
    Abstract: We investigate how lump-sum equalization transfers affect expenditures and taxes in the municipalities of the largest German state North Rhine-Westphalia. In general, those general-purpose transfers cannot be treated as exogenous variables. Thus, for the identification of causal effects, two exogenous adjustments in the transfer allocation formula are used as instrumental variables. Findings suggest the existence of the "flypaper effect" - municipalities use transfers to increase expenditures but do not reduce tax rates. Extra money from transfers is mainly used to finance social expenditures and public facilities. A set of robustness checks, including a spatial dependence model, confirm the results.
    Keywords: flypaper effect,local government expenditure,transfers,local taxation,Flypaper Effekt,Regionalregierung,Transfers,regionale Steuern
    JEL: H21 H70 H71 H72 H77
    Date: 2018
  2. By: Giovanis, Eleftherios; Ozdamar, Oznur
    Abstract: Environmental quality is an important determinant of individuals’ well-being and one of the main concerns of the governments is the improvement on air quality and the protection of public health. This is especially the case of sensitive demographic groups, such as the old aged people. However, the question this study attempts to answer is how do individuals value the effects on the environment. The study explores the effects of old and early public pension schemes, as well as the impact of air pollution on health status of retired citizens. The empirical analysis relies on detailed micro-level data derived from the Survey of Health, Ageing and Retirement in Europe (SHARE). As proxies for health, we use the general health status and the Eurod mental health indicator.We examine two air pollutants: the sulphur dioxide (SO2) and ground-level ozone (O3). Next, we calculate the marginal willingness-to-pay (MWTP) which shows how much the people are willing to pay for improvement in air quality. We apply various quantitative techniques and approaches, including the fixed effects ordinary least squares (OLS) and the fixed effects instrumental variables (IV) approach. The last approach is applied to reduce the endogeneity problem coming from possible reverse causality between the air pollution, pensions and the health outcomes. For robustness check, we apply also a structural equation modelling (SEM) which is proper when the outcomes are latent variables. Based on our favoured IV estimates and the health status, we find that the MWTP values for one unit decrease in SO2 and O3 are respectively €221 and €88 per year. The respectiveMWTP values using the Eurod measure are €155 and €68. Overall, improvement of health status implies reduction in health expenditures, and in previous literature, ageing has been traditionally considered the most important determinant. However, this study shows that health lifestyle and socio-economic status, such as education and marital status, are more important, and furthermore, air pollution cannot be ignored in the agenda of policy makers.
    Keywords: Air pollution; Early retirements; Health status; Old age pensions; Structural equation modelling
    JEL: H0 H00 I10 Q51 Q53
    Date: 2018–03–10
  3. By: Julian B. Adam
    Abstract: Most of the literature on the effects of German works councils doesnot deal with the issue of potential endogeneity of works council existence. Exploiting exogenous variation in works council authority stemming from a 2001 reform of the German Works Constitution Act, I apply a regression difference-in-difference using establishment panel data. I find that increasing works council size and the introduction of one full-time councilor causally reduces the number of voluntary quits by about 30 percent. This decline is driven entirely by collective voice effects and there is no evidence for monopoly effects in place. Similar to the findings of previous research, the effect is significant only in establishments which are subject to a collective agreement. The results suggest that the effectiveness of works councils either heavily relies on the support of unions, or that works councils mainly serve as a guardian of collective agreements.
    Keywords: works councils, codetermination, industrial relations, quits, collective bargaining
    JEL: J51 J53 J63
    Date: 2018–05
  4. By: Kamila Cygam-Rehm; Christoph Wunder
    Abstract: This study estimates the causal effect of working hours on health. We deal with the endogeneity of working hours through instrumental variables techniques. In particular, we exploit exogenous variation in working hours from statutory workweek regulations in the German public sector as an instrumental variable. Using panel data, we run two-stage least squares regressions controlling for individual-specific unobserved heterogeneity. We find adverse consequences of increasing working hours on subjective and several objective health measures. The effects are mainly driven by women and parents of minor children who generally face heavier constraints in organizing their workweek.
    Keywords: Working time, health, standard workweek, Germany
    JEL: I10 J22 J81
    Date: 2018
  5. By: Filiz Gülal; Adam Ayaita
    Abstract: To analyze well-being effects of minimum wages, the introduction of a minimum wage in Germany in 2015 is used as a quasi-experiment. Based on the representative SOEP data, a difference-in-differences design compares the development of life, job, and pay satisfaction between those who are affected by the reform according to their pre-intervention wages and those who already have marginally higher wages so that they are not directly affected. The results show that the minimum wage has significantly positive effects on all considered dimensions of well-being, on average, with an increase in life satisfaction by 0.10 standard deviations (0.15 points on a ten-point Likert scale). Positive effects last at least until one year after the reform. Life satisfaction tends to increase particularly in the region that is overall economically less developed (East Germany). The results hold if those who are not employed anymore after the reform are included in the analysis.
    Keywords: Minimum wage, natural experiments, well-being, satisfaction
    JEL: I31 J28 J30 J31 J38 J60
    Date: 2018
  6. By: Uuriintuya Batsaikhan; Maria Demertzis
    Abstract: Growing financialization and complexity demands financial literacy to be an integral part of the research agenda and policy design globally. It applies particularly to developed countries, since research findings suggest that financial literacy becomes more important with higher levels of economic development. Financial literacy is financial education, such as basic economics, statistics and numeracy skills combined with the ability to employ these skills in making financial decisions. Research has shown that as people become more financially literate, they make better saving and borrowing decisions, are more likely to plan for retirement and hold more diverse assets in their balance sheet. As more and more households are asked to make their own decisions about such issues, financial illiteracy can become a serious threat to their life-time welfare. The European Union contains in itself the world’s best performers (Sweden, Denmark) as well as those that score below global average (Romania, Portugal) in financial literacy rankings. The findings for the EU echo those that are also applicable to other developed economies, namely that low-income individuals, women, young people and less educated people tend to consistently underperform in literacy tests. Financial literacy matters for the EU for three reasons - 1) in the face of rapidly ageing population, the pressure on the pension system could be mitigated through shifting towards more occupational and personal insurance systems. This shifts more and more responsibilities to the individual who can greatly enhance their decision-making with higher levels of financial literacy. 2) mortgage-debt makes up an overwhelming share of total debt of euro-area households. Understanding the implications of indebtedness and how financial literacy can help is especially important for young households, first-time homeowners and those at the lower end of the income distribution. 3) financial literacy is negatively associated with the main elements of inclusive growth in the EU, namely poverty, inequality, social exclusion and social immobility. Financial literacy can therefore help access the benefits of economic growth and contribute to the inclusive growth agenda in the EU. In light of these findings, the policy recommendations entail starting financial literacy programmes from a young age; promoting programmes that are tailored to the specific needs of communities, especially young people, women and low-income groups; providing targeted financial education for people on the verge of major financial decisions, such as the first mortgage, student loan, or retirement investment. However, at the same time it is important to resist information overload, support more research into financial literacy, especially behavioural aspects of financial decision-making, and increase private sector involvement since they are at the forefront of financial education and service provision.
    Date: 2018–05
  7. By: Karel Janda
    Abstract: This paper analyses Slovak electricity market with a focus on photovoltaic energy. It evaluates the impact of the solar electricity penetration into electricity mix on spot prices, seeks evidence of the merit order effect in the Slovak electricity market and quantifies it based on hourly data. The multivariate regression analysis covers the period 2011-2016. The rather small merit order effect estimated by an OLS time series model leads to the small decrease of Slovak electricity wholesale prices. This spot price reduction attributable to the photovoltaics does not outweigh the costs of the support scheme borne by end users what implies a consumer loss.
    Keywords: Slovakia, Photovoltaics, Energy policy, Merit order effect
    JEL: Q42 H23 M21
    Date: 2018–05
  8. By: Francis Breedon; Louisa Chen; Angelo Ranaldo; Nicholas Vause
    Abstract: A key issue raised by the rapid growth of computerised algorithmic trading is how it responds in extreme situations. Using data on foreign exchange orders and transactions that includes identification of algorithmic trading, we find that this type of trading contributed to the deterioration of market quality following the removal of the cap on the Swiss franc on 15 January 2015, which was an event that came as a complete surprise to market participants. In particular, we find that algorithmic traders withdrew liquidity and generated uninformative volatility in Swiss franc currency pairs, while human traders did the opposite. However, we find no evidence that algorithmic trading propagated these adverse effects on market quality to other currency pairs.
    Keywords: Swiss franc, algorithmic trading, liquidity, volatility, price discovery, arbitrage opportunities
    JEL: G14 G23
    Date: 2018–02
  9. By: Spencer Bastani; Daniel Waldenström
    Abstract: This paper presents a comprehensive analysis of the role of capital taxation in advanced economies with a focus on the Swedish experience. We synthesize the existing theoretical literature, present facts about the capital stock and its distribution, review current capital tax practices and empirical findings regarding their effects on economic activity. The paper also examines the political feasibility of capital taxation by presenting results from a unique attitude survey targeted to a large representative sample of the Swedish population. Finally, we tie together our findings and discuss their implications for tax policy.
    Keywords: optimal taxation, capital taxation, wealth tax, inheritance tax, corporate tax, income equality, wealth inequality, political economy, preferences for redistribution
    JEL: D31 H21 H24
    Date: 2018
  10. By: Andreu Arenas, Clément Malgouyres
    Abstract: We study how economic conditions at the time of choosing post-compulsory education affect intergenerational mobility. Exploiting local variation in birthplace unemployment rate at age 16 across 23 cohorts in France, we find that cohorts deciding on post-compulsory education in bad economic times are more educationally intergenerationally mobile – their level of educational attainment is less related to having a white-collar father. These cohorts are also more occupationally intergenerationally mobile; and a large fraction of this effect is explained by business cycle-induced differences in educational attainment. Results are robust to accounting for differential spatial mobility between birth and age 16 by parental occupation. Finally, we provide additional evidence that high local unemployment at age 16 increases the relative school enrollment rate of children of blue collar workers the year after – at age 17.
    Keywords: Intergenerational mobility, business cycle, human capital, occupational choice
    JEL: J24 I21 E24
    Date: 2018
  11. By: Bergman, Mats A. (Södertörn University); Jordahl, Henrik (Research Institute of Industrial Economics (IFN)); Lundberg, Sofia (Umeå University)
    Abstract: We study a reform by which a standardized model of choice and competition was introduced in tax-financed home care in a majority of Swedish municipalities. The market for home care is of particular interest since it is close to the ideal quasi-market. For identification, we exploit the different timing of reform implementation across municipalities. We find that the introduction of free choice and free entry in home care increased perceived quality by about one quarter of a standard deviation without affecting costs. Since satisfaction is unrelated to the private market share, the underlying mechanism seems to be new choice opportunities rather than competition or an advantage of private providers.
    Keywords: Choice; Competition; Privatization; Elderly care; New public management
    JEL: H42 H75 I11 L33
    Date: 2018–05–03
  12. By: Maignen, F.; Berdud, M.; Hampson, G.; Lorgelly, P.
    Abstract: This report explores the consequences of the exit of the United Kingdom (UK) from the European Union (EU) on public health in the UK and in the EU. It also provides an estimate of the economic impact for pharmaceutical companies. The impact of Brexit will be highly dependent on the nature of any agreement resulting from the negotiations between the UK and the remaining countries of the EU, and the extent that the UK is involved in future EU public health activities. As such, the sensitivity of the various public health and economic impacts is assessed according to a number of different possible combinations of trade and regulatory agreements. We find that the public health implications of Brexit will become more severe as public health cooperation and trade relationships lessen between the EU and the UK. Importantly, the public health impacts may not just occur in the UK, but may also be significant in the remaining countries of the EU and the European Economic Area. This report contains a summary of our results based on a series of individual analyses. Detailed methods and results for each of the individual analyses presented in the [Technical Annex]( Technical%20Annex%20-%20final.pdf).
    JEL: I1
    Date: 2017–12–01
  13. By: Janser, Markus (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "The transition towards a greener, less carbon-intensive economy leads to a growing demand for green products, services and business processes. In theory, this trend should lead to a greening of jobs, i.e. to an increasing share of environmentally friendly requirements within occupations (greening of occupations) and to a rising labor demand for employees in these occupations (greening of employment). Due to a lack of measures, there is no empirical evidence on the relationship between the greening of jobs and the real labor market development so far. To fill this gap, the paper measures, describes and analyzes the greening of jobs and its associations with employment and wage growth. The cornerstone of this paper is the new task-based 'greenness-of-jobs index' (goji). The goji is derived by performing text mining algorithms on yearly data from 2006 and 2011 to 2016 of BERUFENET, an occupational data base provided by the German Federal Employment Agency. The descriptive results of the paper show that there is a notable greening of jobs which varies strongly between sectors and regions. The econometric analysis is based on employment register data from 2011 to 2016. The estimation results reveal that the overall level of greenness of occupations is positively correlated with employment growth. Furthermore, the increase of greenness is related to a slight increase in wage growth." (Author's abstract, IAB-Doku) ((en)) Additional Information Text mining and descriptives
    JEL: J23 J24 O33 Q55 R23
    Date: 2018–05–15
  14. By: Andrea Ascani; Pierre-Alexandre Balland
    Abstract: Countries and regions all over the world compete to attract Foreign Direct Investment (FDI) as a way to access knowledge, technology, and boost economic development. Although the literature shows a positive impact of FDI on local economies, little is known about (1) the impact on innovation of neighbouring regions and the type of FDI that generates the strongest learning effects. To fill this gap, this article investigates the relationship between FDI and the innovation capacity of Italian provinces (NUTS3). In order to capture the heterogeneity of FDI in terms of knowledge inputs, we apply the Pavitt categorisation of manufacturing sectors to inward FDI within Italian provinces, thus accounting for the nature and sources of knowledge in different sectors where foreign multinationals are active. Our results suggest that only some specific typologies of inward FDI, such as that in "Science based" sectors and to a lesser extent in "Specialised supplier" activities, benefit local economies. Nevertheless, other types of inward FDI can produce possible negative outcomes in terms of local innovation. We detect only weak evidence on the spatial implications of inward FDI.
    Keywords: foreign direct investment, spillovers, Pavitt taxonomy, FDI heterogeneity
    JEL: O3 F23 R11
    Date: 2018–05
  15. By: Jordahl, Henrik (Research Institute of Industrial Economics (IFN)); Persson, Lovisa (Research Institute of Industrial Economics (IFN))
    Abstract: We measure labor productivity in home care using new data from the recent introduction of digital time measurement in Swedish municipalities. By measuring worker utilization (delivered hours as a share of worked hours) we avoid several problems that have plagued previous studies of public sector productivity. The time use measure exposes substantial variation in productivity between home care units, suggesting room for improvement. More productive units deliver a larger share of the hours approved by care managers and have equally satisfied users.
    Keywords: Public sector productivity; Digitalization; Time use; Choice reforms
    JEL: H42 H44 L33
    Date: 2018–05–03
  16. By: Alexandra Fedorets; Alexey Filatov; Cortnie Shupe
    Abstract: We use the German Socio-Economic Panel to show that introducing a high-impact statutory minimum wage causes an increase in reservation wages of approximately 4 percent at the low end of the distribution. The shifts in reservation wages and observed wages due to the minimum wage reform are comparable in their magnitude. Additional results show that German citizens adjust their reservation wages more than immigrants. Moreover, suggestive evidence points to a compensation mechanism in which immigrants trade wage growth against job security.
    Keywords: Minimum wage, reservation wage, labor supply
    JEL: J22 J3
    Date: 2018
  17. By: Francesco Devicienti (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Elena Grinza (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Davide Vannoni (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)
    Abstract: This paper investigates the full-time/part-time wage gap by using matched employer-employee data on the entire population of workers and firms in Italy over a 32-year period. Relying on regression models that control for worker, firm, and match fixed effects, we find that part-time work attracts a wage premium compared to full-time work. This finding, coupled with the detrimental effect of part-time work on productivity documented by Devicienti et al. (2018), explains why firms are often unwilling to concede part-time positions to employees asking for them.
    Keywords: Part-time/full-time wage gap, matched employer-employee panel data, multiple fixed effects regressions.
    JEL: J31 J22 J53
    Date: 2018–05
  18. By: Jorn van de Wetering; Franz Fuerst
    Abstract: Since 2008 in the UK the operational energy consumption of premises that are regularly accessed by members of the public has been assessed on an annual basis. Details of these assessments are published as Display Energy Certificates (DECs). A significant number of these premises can be categorized as commercial office space. This represents an opportunity to investigate the relationship between operational energy assessment ratings and value.By supplementing the energy assessment data recorded on DECs with market transaction data, this study investigates the effects of operational energy certification on rental values. DECs are annually assessed and the significance of the relationship between energy consumption and value can therefore be assessed over time. This research also applies hedonic price modelling techniques to control for other factors that affect office rental value in order to determine whether there is a significant relationship between operationally energy efficient buildings in the UK and values, particularly when compared to their relatively energy inefficient counterparts.
    Keywords: Commercial Office Space; Display Energy Certificate; Environmental Assessment Methods; Hedonic Pricing Method; Rateable value
    JEL: R3
    Date: 2017–07–01
  19. By: Bonev, Petyo; Glachant, Matthieu; Söderberg, Magnus
    Abstract: This is the first study that uses a natural experiment to test the Regulatory Threat Hypothesis. We use a unique novel dataset on unregulated Swedish local district heating monopolists and a new measure of threat - customer complaints. Our results support the Regulatory Threat Hypothesis: firms reduce prices when they feel threatened by price regulation. We also find evidence that (otherwise unrelated) monopolists homogenize locally prices to reduce complaints and thus to reduce threat of regulation. This mechanism is related to Yardstick competition and to behavioral theories of fair pricing.
    Keywords: Regulatory Threat, Monopoly, Price Setting, Spatial Interaction, Natural Experiment
    JEL: L11 L12
    Date: 2018–05
  20. By: Cristina Lafuente
    Abstract: Social security administrative data are increasingly becoming available in many countries. These are very attractive data as they have a long panel structure (large N, large T) and allow to measure many different variables with higher precision. Because of their nature they can capture short, frictional unemployment which is usually hidden in survey data, due to design or timing of interviews. However, the definition of unemployment is also different in both datasets. As a result, the gap between total unemployment and registered unemployment is not constant neither across workers characteristics nor time. In this paper I augment the Spanish Social Security administrative data by adding missing unemployment spells using the institutional framework and the Labour Force Survey as a benchmark. I compare the resulting unemployment rate to that of the Labour Force Survey, showing that both are comparable and thus the administrative dataset is useful for labour market research. Administrative data can also be used to overcome some of the problems of the Labour Force survey such as changes in the structure of the survey. This paper aims to provide a comprehensive guide on how to adapt administrative datasets to make them useful for studying unemployment.
    Keywords: Administrative data, survey data, unemployment, temporary contracts
    JEL: J21 J60 J80
    Date: 2018–03
  21. By: Zeno Adams; Kristian Blickle; ;
    Abstract: We make use of the universe of immigrants who arrived in Switzerland between 1992 and 2013, granular community level house price and wage data as well as detailed information on the Swiss population to study the effects of immigration on the location choice of incumbent households. Immigration influences a household’s location choice through three distinct channels: house price changes, labor market competition, and households’ sentiment regarding immigration. We find evidence of all three channels. However, we show that the channel to which a household responds most strongly depends on the type of immigration and the characteristics of the household. Our research provides valuable insights into some of the effects of large scale immigration.
    Keywords: Immigration, house prices, wages, employment, gentrification,displacement
    JEL: D14 D9 J61 R21 R23
    Date: 2018–02
  22. By: Mestre-Ferrandiz, J.; Berdud, M.; Towse, A.
    Abstract: The CRA Report has an underlying assumption that the EU is as globally competitive in generics and biosimilars as it is in innovative products. There is no evidence to support this. The correct industrial strategy for the EU may well be to focus on the development, manufacture and export of innovative products, rather than on lower value generics where EU global competitiveness appears to be weaker. The CRA report makes estimates of effect using a number of assumptions, data and calculations that we do not find to be correct or which are not explained. Until these anomalies are addressed, our view is that the CRA analysis is not a fit basis for an impact assessment to guide policy.
    Keywords: Economics of Industry
    JEL: I1
    Date: 2018–01–01
  23. By: Giacomo Domini; Daniele Moschella
    Abstract: According to the `cleansing hypothesis', recessions are periods in which productivity-enhancing reallocation intensifies, shifting resources away from less efficient to more efficient firms at a greater pace. Does the Great Recession of 2008-2010 fit this view? We address this question, studying the case of the French manufacturing sector. Based on a panel of firms, built by matching data from several sources, we investigate the contribution of productivity to firm growth and survival over the period 2002-2013. Our results show that, during the recent global crisis, more productive firms decreased their advantage with respect to less productive firms, in terms of both employment growth and probability to survive, in disagreement with the cleansing hypothesis.
    Keywords: firm productivity, selection, employment growth, global crisis
    Date: 2018–05–15
  24. By: Towse, A.; Cole, A.; Zamora, B.
    Abstract: The notion that the price of a medicine should be linked in some way to value it generates for patients and the health system is generally accepted. Yet, how can this be achieved, when increasingly medicines are being developed that derive patient benefit across many different indications? Indication-based pricing (IBP) has been proposed as a way to tackle this issue, permitting price to vary according to indication and – critically – according to value. This OHE Consulting report, funded by AstraZeneca, provides an overview of the key literature that has contributed to this debate, and of how IBP has been implemented – in its various forms – to date in the U.S., France, Germany, Italy, Spain and the UK. IBP increases the potential number of patients who can benefit from a medicine and thus most economists regard it as efficient. It also sends the right signals for R&D investment. Differences of opinion remain, however, as to whether IBP is in the interests of payers. IBP may lead to some prices being higher than with a uniform price, as well as some prices being lower. The value at which prices are currently set in a single-price system will impact on the consequences of a move to a multiple-price system. A number of US payers see the potential for IBP to increase price competition in some indications, and the NHSE in England has used contracting by genotype in Hep C drug procurement to increase competition and help it get lower prices. The literature evaluated as part of this report demonstrates that most of the debate is in the realms of theory, with little evidence in practice. The barriers are numerous. These include legal or regulatory hurdles, data collection problems, as well as contractual or financial flow issues.
    Keywords: Economics of Industry; Economics of Health Care Systems
    JEL: I1
    Date: 2018–05–01
  25. By: Lucia Leporatti (University of Genoa - Department of Political Science ?); Enrico di Bella (University of Genoa ? Department of Economics); Luca Gandullia (University of Genoa - Department of Political Science ?); Walter Locatelli (Alisa Regione Liguria); Marcello Montefiori (University of Genoa ? Department of Economics); Roberta Zanetti (Alisa Regione Liguria)
    Abstract: Frequent users of Emergency Departments (EDs) represent a particularly interesting category of users since they account to a small percentage of patients but they affect considerably accesses, overcrowding and the overall costs of ED activities. The literature on the topic is vast and it allows to delineate a profile of frequent users identifying socio-demographic (age, gender, nationality) and clinical (chronic diseases, drugs and alcohol abuse; psychic illnesses) risk factors. However, most of the studies on the topic limit the analysis to one-year period or to a single study site and there is no consensus on the definition of frequent use. Frequent users are generally defined as those patients reporting a number of accesses per year beyond a certain threshold. The selection of the threshold is often based on previous literature or on percentiles but the definitions vary considerably and the choice tends to be subjective.In this study, the focus will be placed on paediatric patients, with reference to which the contributions in the literature are still very limited. The objective is to identify the most important drivers of ED frequent use in the 19 EDs of Liguria region (Italy) during a three-year period (2013-2015). The dataset contains 287,242 accesses referred to 144,895 under 14 patients and it includes information on patients? characteristics and on their clinical pathway. To overcome the limitations connected to previous definitions of frequent use, we exploit the availability of data on three years; this allows to define, not only frequent use, but also its duration (i.e. One-shot / Multiple shot frequent use) and intensity (Normal, High, Very high). By the use of logit and multinomial logit regressions we identify a set of risk factors associated to frequent use and to the different forms of frequent use. Results show that even if frequent users represent a small share of patients (9%) they contribute to roughly 25% of accesses. Chronic conditions are the most relevant determinants of frequent use (particularly mental disorders, diseases of the respiratory system) but also foreign nationality turns out to be an important predictor. Differences emerge in the impact of regressors on the different forms of frequent use defined according to its duration and intensity.The study represents an important tool to support policy-making and to discriminate between the potentially preventable frequent use (i.e. inappropriate use) and that associated to complex medical conditions, such as chronic conditions.
    Keywords: Frequent use, Emergency Departments, Risk factors, paediatric patients
    JEL: I10 C50 I18
    Date: 2018–04
  26. By: Korzhenevych, Artem; Bröcker, Johannes
    Abstract: Subsidising investment in lagging regions is an important regional policy instrument in many countries. Some argue that this instrument is not specific enough to concentrate the aid towards the regions that are lagging behind most, because investment subsidies benefit capital owners who might reside elsewhere, possibly in very rich places. Checking under which conditions this is true is thus highly policy relevant. The present paper studies regional investment subsidies in a multiregional neoclassical dynamic framework. We set up a model with trade in heterogeneous goods, with a perfectly integrated financial capital market and sluggish adjustment of regional capital stocks. Consumers and investors act under perfect foresight. We derive the equilibrium system, show how to solve it, and simulate actual European regional subsidies in computational applications. We find that the size of the welfare gains depends on the portfolio distribution held by the households. If households own diversified asset portfolios, we find that the supported regions gain roughly the amounts that are allocated to them in the form of investment subsidies. If they only own local capital stocks, a part of the money is lost through the drop in share prices. From the point of view of total welfare, the subsidy is not efficient. It can lead to a welfare loss for the EU as a whole and definitely leads to welfare losses in the rest of the world, from where investment ows to the supported EU regions.
    Keywords: Exporter wage premium,Heterogeneous firms,Ability differences of workers,Positive assortative matching,Trade and wage inequality
    JEL: C31 F12 F15 J31
    Date: 2018
  27. By: Frank Jensen (Department of Food and Resource Economics, University of Copenhagen); Christian Elleby (Department of Food and Resource Economics, University of Copenhagen); Katell G. Hamon (Wageningen Economic Research); Jos op de Weegh (Wageningen Economic Research)
    Abstract: In this study, we investigate whether neoclassical economic theory, capital market frictions or preference-based theory can explain investment behaviour in the Dutch beam trawler fishery in the North Sea. By presenting a number of estimations, we show that vessels conducting pulse fishing invest substantially more than similar vessels undertaking conventional fishing, even after controlling for differences in such variables as capital stock, prices, profits and quotas. One possible explanation for this result is that vessel owners may obtain a separate benefit from investing in pulse fishing.
    Keywords: Fisheries; Investments; Conventional Fishing; Pulse Fishing
    JEL: Q22 Q55 C23
    Date: 2018–05
  28. By: Simone Piras; Francesca Pancotto; Simone Righi; Matteo Vittuari; Marco Setti
    Abstract: Household food waste is a crucial problem in developed countries. Food waste behaviour is the result of complex interactions among economic factors, deeply rooted habits, and social norms. It can thus be considered a measure of the social capital characterizing a community. We test this hypothesis using a national-level dataset on household food-related behaviours and opinions in Italy gathered in 2016. This country is an ideal test bed for a comparative analysis on social capital. We find household food waste measures to be negatively related with the local level of social capital. This relationship is mediated by family income, as it becomes weaker for better-o families. Furthermore, we find that behaviours and opinions eliciting status concerns with respect to food, as well as lack of organisational abilities, generate increased food waste. In turn, these behaviours and opinions are more prevalent in areas with low social capital. Our results, captured by a simple model where food waste decisions are considered in the context of a modified public good game, allow to derive several policy implications for the reduction of food waste.
    Date: 2018–04
  29. By: Enrique Moral-Benito (Banco de España)
    Abstract: The Spanish growth experience over the 1995-2007 period was characterized by the remarkable surge in employment and investment as well as the dismal evolution of productivity. These macroeconomic fluctuations were coupled with an unprecedented credit boom fueled by a housing bubble. This article reviews a line of research that investigates the connection between these developments using micro-level data on Spanish firms and banks. The evidence suggests that the abundant availability of credit, partially induced by the real estate bubble, and its propagation through the Spanish production network explain a sizable part of the massive accumulation of labor and capital. Also, the deterioration in the allocation of resources across firms is the main responsible of the fall in aggregate productivity. The allocation of credit across firms and municipalities, the softening of banks lending standards, and the low productivity of Spanish firms can partly explain this deterioration.
    Keywords: Spain, firm level data, TFP, misallocation, input-output linkages
    JEL: D24 O11 O47 E44 G21 L25
    Date: 2018–05
  30. By: Bertrand Garbinti, Jonathan Goupille-Lebret & Thomas Piketty
    Abstract: We combine national accounts, tax and survey data in a comprehensive and consistent manner for France, to build homogenous annual series on the distribution of national income by percentiles, from 1900 to 2014, with detailed breakdown by age, gender and income categories over the 1970-2014 period. Our new series deliver higher inequality levels for the recent decades, because the usual tax-based series miss a rising part of capital income. Growth incidence curves look dramatically different for the 1950-1983 and 1983-2014 periods. We also show that it has become increasingly difficult to access top wealth groups with labor income only. Next, gender inequality in labor income declined in recent decades, albeit fairly slowly among top labor incomes. Finally, we compare the evolution of income inequality between France and the U.S.
    Keywords: income distribution, income inequality, national accounts
    JEL: D31 E01 H2 N34
    Date: 2018
  31. By: Elena Grinza (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Francois Rycx (Université Libre de Bruxelles, Belgium)
    Abstract: We investigate the impact of sickness absenteeism on productivity by using rich longitudinal matched employer-employee data on Belgian private firms. We deal with endogeneity, which arises from unobserved firm heterogeneity and reverse causality, by applying a modified version of the Ackerberg et al's (2015) control function method, which explicitly removes firm fixed effects. Our main finding is that, in general, sickness absenteeism substantially dampens firm productivity. An increase of 1 percentage point in the rate of sickness absenteeism entails a productivity loss of 0.24%. Yet, we find that the impact is much diversified depending on the categories of workers who are absent and across different types of firms. Our results show that sickness absenteeism is detrimental mainly when absent workers are high-tenure or blue-collar workers. Moreover, they show that sickness absenteeism is harmful mostly to industrial firms, high capital-intensive companies, and small- and medium-sized enterprises. This overall picture is coherent with the idea that sickness absenteeism is problematic when absent workers embed high levels of firm/task-specific (tacit) knowledge, when the work of absent employees is highly interconnected with the work of other employees (e.g., along the assembly line), and when firms face more limitations in substituting temporarily absent workers.
    Keywords: Sickness absenteeism, firm productivity, semiparametric methods for estimating production functions, longitudinal matched employer-employee data.
    JEL: D24 M59 I15
    Date: 2018–05

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