nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2018‒07‒09
thirty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Has Eastern European Migration Impacted UK-born Workers? By Becker, Sascha O.; Fetzer, Thiemo
  2. Do digital information technologies help unemployed job seekers find a job? Evidence from the broadband internet expansion in Germany By Gürtzgen, Nicole; Nolte, André; Pohlan, Laura; van den Berg, Gerard J.
  3. Euroscepticism and EU Cohesion Policy: The Impact of Micro-Level Policy Effectiveness on Voting Behaviour By Julia Bachtrögler; Harald Oberhofer
  4. Do Working Hours Affect Health? Evidence from Statutory Workweek Regulations in Germany By Kamila Cygan-Rehm; Christoph Wunder
  5. Regional economic disparities in Finland By Fornaro, Paolo
  6. Older Men’s Labor Force Participation in Belgium By Alain Jousten; Mathieu Lefebvre
  7. Health and income: testing for causality on European elderly people By Amélie Adeline; Eric Delattre
  8. Light cannabis and organized crime. Evidence from (unintended) liberalization in Italy By Carrieri, V.;; Madio, L.;; Principe, F.;
  9. An empirical investigation on the distributional impact of network charges in Germany By Schlesewsky, Lisa; Winter, Simon
  10. Working Moms, Childlessness, and Female Identity By Andreas Steinhauer
  11. Duration dependence as an unemployment stigma: Evidence from a field experiment in Germany By Nüß, Patrick
  12. Grants-in-aid and the prospect of re-election: The impact of EU funds on mayoral elections in Poland By Monika Banaszewska; Ivo Bischoff
  13. Labor Market and Distributional Effects of an Increase in the Retirement Age By Johannes Geyer; Peter Haan; Anna Hammerschmid; Michael Peters
  14. Unemployment and Marital Breakdown: The Spanish Case By González-Val, Rafael; Marcén, Miriam
  15. Inter-ethnic Relations of Teenagers in England’s Schools: the Role of School and Neighbourhood Ethnic Composition By Simon Burgess; Lucinda Platt
  16. Long-run Effects of Lottery Wealth on Psychological Well-being By Erik Lindqvist; Robert Östling; David Cesarini
  17. Understanding the gender wage gap differential between public and private sector in Italy: A quantile approach for panel data By Carolina Castagnetti; Maria Letizia Giorgetti
  18. Technology, business model, and market design adaptation toward smart electricity distribution: Insights for policy making By Pereira, Guillermo Ivan; Specht, Jan Martin; Pereira da Silva, Patrícia; Madlener, Reinhard
  19. Do Electoral Rules Matter for Female Representation? By Paola Profeta; Eleanor Woodhouse
  20. The Role of Financial Literacy and Money Education on Wealth Decisions By Alessandro Bucciol; Martina Manfre'; Marcella Veronesi
  21. The Effects of Highway Tolls on Private Business Activity – Results from a Natural Experiment By João Pereira dos Santos; David B. Audretsch; Dirk Christian Dohse
  22. Social distance, immigrant integration, and welfare chauvinism in Sweden By Goldschmidt, Tina; Rydgren, Jens
  23. Historical Roots of Entrepreneurial Culture and Innovation Activity - An Analysis for German Regions By Michael Fritsch; Michael Wyrwich; Martin Obschonka
  24. Price strategies of independent and branded dealers in retail gas market. The case of a contract reform in Spain By Pilar Cuadrado; Aitor Lacuesta; María de los Llanos Matea; F. Javier Palencia-González
  25. Cross-border Electricity Interconnectors in the EU: the Status Quo By Gert Brunekreeft; Roland Meyer
  26. How EU Markets Became More Competitive Than US Markets: A Study of Institutional Drift By Gutierrez, German; Philippon, Thomas
  27. The Gender Gap in Wage Expectations: Do Young Women Trade off Higher Wages for Lower Wage Risk? By Vaishali Zambre
  28. Fear the walking dead: Zombie firms, spillovers and exit barriers By Ana Fontoura Gouveia; Christian Osterhold
  29. Faces of Joblessness in Spain: A People-centred perspective on employment barriers and policies By Rodrigo Fernandez; Herwig Immervoll; Daniele Pacifico; James Browne; Dirk Neumann; Céline Thévenot
  30. The Long-term Effects of Long Terms: Compulsory Schooling Reforms in Sweden By Fischer, Martin; Karlsson, Martin; Nilsson, Therese; Schwarz, Nina

  1. By: Becker, Sascha O. (University of Warwick); Fetzer, Thiemo (University of Warwick)
    Abstract: The 2004 accession of 8 Eastern European countries to the European Union (EU) was accompanied by fears of mass migration. The United Kingdom - unlike many other EU countries - did not opt for temporary restrictions on the EU’s free movement of labour. We document that following EU accession more than 1 million people (ca. 3% of the UK working age population) migrated from Eastern Europe to the UK. We show that they mostly settled in places that had limited prior exposure to immigration. We provide evidence that these areas subsequently saw smaller wage growth at the lower end of the wage distribution and increased pressure on the welfare state, housing and public services. Using novel geographically disaggregated data by country-of-origin, we measure the effects of Eastern European migration on these outcomes for the UK-born and different groups of immigrants. Our results are important in the context of the UK’s Brexit referendum and the ongoing EU withdrawal negotiations in which migration features as a key issue.
    Keywords: Political Economy ; Migration ; Globalization ; EU
    JEL: R23 N44 Z13
    Date: 2018
  2. By: Gürtzgen, Nicole; Nolte, André; Pohlan, Laura; van den Berg, Gerard J.
    Abstract: This paper studies effects of the introduction of a new digital mass medium on reemployment of unemployed job seekers. We combine data on high-speed (broadband) internet availability at the local level with individual register data on the unemployed in Germany. We address endogeneity by exploiting technological peculiarities in the network that affected the roll-out of high-speed internet. The results show that high-speed internet improves reemployment rates after the first months of the unemployment spell. This is confirmed by complementary analysis with individual survey data suggesting that online job search leads to additional formal job interviews after a few months in unemployment.
    Keywords: unemployment,online job search,information frictions,matching technology,search channels
    JEL: J64 K42 H40 L96 C26
    Date: 2018
  3. By: Julia Bachtrögler (WIFO); Harald Oberhofer (WIFO)
    Abstract: This study investigates whether there is a link between the successful implementation of European co-hesion policy and the voters' attitudes towards the EU. Using the French presidential elections in 2017 as a case study, we do not solely consider regional funds expenditures but also its induced effects in a re-gion as further potential determinant of pro-European or eurosceptic voting behaviour. In order to measure the effectiveness of EU structural funds and Cohesion Fund assignment, firm-level employ-ment effects in French NUTS-2 regions stemming from project allocation during the multi-financial framework 2007-2013 are estimated. The obtained average treatment effects are, in a next step, used together with other regional characteristics to capture the citizens' perceived exposure to the EU in an empirical voting model for the French presidential election in 2017. The estimation results reveal a sig-nificant negative relationship between the effectiveness of EU funds allocation and the vote share of the eurosceptic candidate Marine Le Pen.
    Date: 2018–06–20
  4. By: Kamila Cygan-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: Fornaro, Paolo
    Abstract: In this note, I study the Finnish regional dispersion of economic indicators such as the GDP per capita, labour productivity, the employment rate and the compensation of employees. Moreover, I examine the regional-level correlation between these variables. The results are then compared with what has been found for the German and Italian economies. Finnish regional economies display substantial variation, but their GDP per capita, productivity and employment rate have converged. However, the compensation of employees has diverged. Compared to Germany and Italy, the Finnish economy has a lower regional dispersion, with a similar convergence process as in Germany. The correlation between regional productivity and the employment rate is lower than what is found in Italy and Germany, and the same holds for productivity and wages. The picture gathered from this analysis is mixed. Convergence of economic conditions is certainly positive, but the divergence of the compensation of employees can be problematic for the long-term sustainability of the Finnish regional markets. If well-paid jobs concentrate in richer regions, there will be higher incentives for young and well-educated workers to move away from peripheral (in economic terms) areas, which would be at risk of stagnation.
    Keywords: Convergence, regional inequalities, productivity, wages
    JEL: O47 R11 R23
    Date: 2018–06–25
  6. By: Alain Jousten; Mathieu Lefebvre
    Abstract: The paper studies the labor market participation of older workers in Belgium over the last 3 decades. It outlines the changes to the institutional framework of relevance for labor market participation and employment. Drawing on data from the European Union Labour Force Survey (LFS) over the period 1983-2013, we provide evidence of the trends in participation in (early-) retirement routes. We also explore how the jobs occupied by older workers have changed over time, both in terms of their “quality” and the “quantity” of work involved. Part-time work is found to become more common, though with different attributes for men and women.
    JEL: H55 J11 J21 J26 I38
    Date: 2018–05
  7. By: Amélie Adeline; Eric Delattre (Université de Cergy-Pontoise, THEMA)
    Abstract: Socioeconomic status and health are positively related, also known as the "healthincome gradient". However, when considering the causal impact of income on health, the reverse causality might be at play. Income inequalities are an important factor in health inequality such that policy makers who aim at improving general health or narrowing inequalities using public policies, need to understand the sources and the direction of the causality between income and health. We thus investigate bivariate causal effects between the two by highlighting the Granger causality. Using the Survey of Health, Aging and Retirement in Europe (SHARE), we find evidence of persistent causal effects running from income to health and from health to income. Results, using a Full Information Maximum Likelihood estimator (FIML), suggest that considering a simultaneous equations approach is required because there are unobservable factors common to both equations in the individual e ects (statistically significant correlation between the two equations).
    Keywords: Granger causality; income; simultaneity; self-assessed health; FIML.
    JEL: C32 C33 D31 I10 J14
    Date: 2018
  8. By: Carrieri, V.;; Madio, L.;; Principe, F.;
    Abstract: The effect of marijuana liberalization on crime is object of a large interest by social scientists and policy-makers. However, due to the scarcity of relevant data, the displacement effect of liberalization on the supply of illegal drugs remained substantially unexplored. This paper exploits the unintended liberalization of cannabis light (C-light, i.e. with low THC) occurred in Italy in December 2016 by means of a legislative gap, to assess its effect in a quasi-experimental setting. Although the liberalization interested all the Italian territory, the intensity of liberalization in the short-run varied according to the pre-liberalization market configuration of grow-shops, i.e. shops selling industrial canapa-related products that have been able to first place the canapa flowers (C-light) on the new market. We exploit this variation in a Differences-in-Differences design using a unique dataset on monthly confiscations of drugs at province level (NUTS-3 level) over the period 2016-2018 matched with data on the geographical location of shops and socio-demographic variables. We find that the legalization of C-light led to a reduction of 11-12% of confiscation of marijuana per each pre-existing grow-shop and a significant reduction of other canapa-derived drugs (plants of cannabis and hashish). Back-to-envelope calculations suggest that forgone revenues for criminal organizations amount to at least 160-200 million Euros per year. These results support the argument that, even in a short period of time and with an imperfect substitute, the organized crime’s supply of illegal drugs is displaced by the entry of official and legal retailers.
    Keywords: cannabis; marijuana light; crime; illegal market; diff-in-diff;
    JEL: K23 K42 H75 I18
    Date: 2018–06
  9. By: Schlesewsky, Lisa; Winter, Simon
    Abstract: The increase in network costs within the German electricity grid, due to a rising share of renewable energy generation, has led to higher network charges in recent years. We use socioeconomic data in order to investigate distributional effects within the period 2010-2016, and employ three different inequality metrics - the Gini coefficient, the Theil index and the Atkinson index - all of which unambiguously indicate regressive effects of network charges. The three metrics show an increase of economic inequality of at least 0.6 % when accounting for network charges. This finding is due to 1. the relative inferiority of electricity, 2. the regressive impact of a fixed component of network charges, 3. considerable regional disparities, and 4. the higher prevalence of prosumers within high-income households.
    Keywords: network charges,renewable energies,economic inequality
    JEL: D63 Q40 Q42
    Date: 2018
  10. By: Andreas Steinhauer (University of Edinburgh)
    Abstract: In this paper I provide empirical evidence that the strength of beliefs regarding the harm children suffer when their mothers work plays an important role in explaining gender gaps in labor market outcomes and fertility trends. I exploit a unique setting in Switzerland and compare outcomes of one cohort of Swiss women born in the 1950s either into the French or German ethno-linguistic group. This allows me to compare outcomes of women exposed to different norms regarding working mothers while holding constant typical confounding factors such as composition, labor market opportunities, and work-family policies. Consistent with the strong belief that children suffer with working mothers in the German region, I find that German-born women are 15-25% less likely to work as mothers and 20-20% more likely to remain childless compared to their French-born peers. Only the extensive margins show marked differences and especially among the highly educated. I argue that an identity framework along the lines of Akerlof and Kranton (2000) can rationalize these patterns in a tractable way.
    Keywords: famale employment; childlessness; famale identity
    Date: 2018–05
  11. By: Nüß, Patrick
    Abstract: Based on a correspondence experiment covering 3,124 fictitious job applications, the paper identifies and quantifies duration dependence in Germany, with a particular emphasis on company and vacancy characteristics as potential determinants. The experiment reveals that duration dependence manifests itself in a sharp decline of 26% to 35% in callbacks when an individual has been unemployed for 10 months, pointing to the existence of an unemployment stigma for Germany. The results are driven by labor market tightness, companies' access to applicants and screening behavior related to company size, with no evidence for an unemployment stigma determined by the contract type.
    Keywords: Field Experiments,Public Policy,Labor Demand,Unemployment Duration,Labor Discrimination
    JEL: C93 J68 J23 J64 J71
    Date: 2018
  12. By: Monika Banaszewska (Poznan University of Economics and Business); Ivo Bischoff (University of Kassel)
    Abstract: We want to find out whether grants-in-aid help the recipient government to get re-elected. We take Poland as our testing ground and analyze the impact of EU funds spent within a municipality on mayoral elections in 2010 and 2014. We employ an instrumental variables approach to account for the endogeneity of EU funds. Our results show that EU funds do not generally increase the mayors’ chance of reelection. This result holds for total EU funds spent as well as for funds spent on investments. We test whether the impact of EU funds is moderated by municipal characteristics. We find no effect for the economic or fiscal situation of municipalities, a positive but economically negligible effect for human capital endowment and a substantial effect for the share of pro-European citizens. Spending EU funds increases incumbent mayors’ chance of re-election in municipalities with a large share pro-EU citizens and reduces it in municipalities dominated by EU sceptics.
    Keywords: grants-in-aid, EU, Poland, local elections, instrumental variable regressions
    JEL: D72 H77
    Date: 2018
  13. By: Johannes Geyer; Peter Haan; Anna Hammerschmid; Michael Peters
    Abstract: We evaluate the labor market and distributional effects of an increase in the early retirement age (ERA) from 60 to 63 for women. We use a regression discontinuity design which exploits the immediate increase in the ERA between women born in 1951 and 1952. The analysis is based on the German micro census which includes about 370,000 households per year. We focus on heterogeneous labor market effects on the individual and on the household level and we study the distributional implications using net household income. In this respect we extend the previous literature which mainly studied employment effects on the individual level. Our results show sizable labor market effects which strongly differ by subgroups. We document larger employment effects for women who cannot rely on other income on the household level, e.g. women with a low income partner. The distributional analysis shows on average no significant effects on female or household income. This result holds as well for heterogeneous groups: Even for the most vulnerable groups, such as single women, women without higher education, or low partner income, we do not find significant reductions in income. One reason for this result is program substitution.
    Keywords: retirement age, pension reform, labor supply, early retirement, distributional effects, spillover effects, household
    JEL: J14 J18 J22 J26 H31
    Date: 2018
  14. By: González-Val, Rafael; Marcén, Miriam
    Abstract: This paper explores the relationship between a job loss and marital breakdown using Spanish panel data. The Great Recession in Spain has had severe consequences, representing an interesting framework to analyse the relationship between job loss and marital breakdown. Not only do we study whether being unemployed is associated with marital breakdown but, also, we examine the effect of job losses. In contrast with other papers examining this issue for other countries, results reveal that in Spain it is the working status of women which plays a role in the marital break-up decision. Results suggest that the probability of marital breakdown decreases when women are non-working. The same is observed when we consider a change in the working status of women from employed to unemployed and from employed to inactive. For men, only the change from employed to inactive appears to be negatively related to the probability of marital breakdown.
    Keywords: Marital breakdown,unemployment,job loss,inactivity
    JEL: J12 J20
    Date: 2018
  15. By: Simon Burgess; Lucinda Platt
    Abstract: The paper presents an empirical analysis of inter-ethnic relations among adolescents in England’s schools, the first national study of schools throughout England to relate inter-ethnic attitudes to both school and area ethnic composition. We combine survey data on ‘warmth’ of feeling for specific ethnic groups, friendships and attitudes with administrative data on the shares of those groups at school and area level. We confirm that the pupils have warmer feelings for their own ethnic group than for others. Second, we show that in schools with more pupils from another ethnic group the gap between a pupil’s views of those from her own group and from another ethnic group is smaller. This is true for attitudes of the majority and of minority ethnic groups. Third, we show that school composition (interpreted as contact) mitigates area composition (interpreted as exposure).
    Date: 2018–05–30
  16. By: Erik Lindqvist; Robert Östling; David Cesarini
    Abstract: We surveyed a large sample of Swedish lottery players about their psychological well-being and analyzed the data following pre-registered procedures. Relative to matched controls, large-prize winners experience sustained increases in overall life satisfaction that persist for over a decade and show no evidence of dissipating with time. The estimated treatment effects on happiness and mental health are significantly smaller, suggesting that wealth has greater long-run effects on evaluative measures of well-being than on affective ones. Follow-up analyses of domain-specific aspects of life satisfaction clearly implicate financial life satisfaction as an important mediator for the long-run increase in overall life satisfaction.
    JEL: D69 I31
    Date: 2018–05
  17. By: Carolina Castagnetti (Department of Economics and Management, University of Pavia); Maria Letizia Giorgetti (Department of Economics, Management and Quantitative Methods, University of Milano)
    Abstract: This paper analyzes the gender wage gaps across the wage distribution in both the private and public sectors in Italy for the years 2005-2010. We use quantile regression methods to estimate and decompose the gender wage gap at different points of the wage distribution. We find in both sectors a consistent level of gender wage gap (lower in the public sector) and an increasing path along the wage distribution. Counterfactual decomposition analysis supports the idea of a sticky floor mechanism in action in the private sector and of a glass ceiling in the public sector. In addition to standard decomposition techniques we propose a two step procedure that relies on a novel approach to estimating fixed effects quantile regressions. Its main advantage is that it allows the estimation of the marginal effect of the employment sector on wages at different points of the distribution, while accounting for both observable and time-invariant unobservable factors. When we control for employees’ observed and unobservable individual characteristics, the main finding is that the gender wage gap substantially decreases in both sectors. A second evidence is that the sticky floor effect in the private sector vanishes, while the glass ceiling effect in the public sector remains. The evidence from the longitudinal analysis amplifies the differences of the wage-setting mechanisms in the two sectors.
    Keywords: Gender wage gap, quantile regression for panel, public-private wage differential
    JEL: J3 J45
    Date: 2018–06
  18. By: Pereira, Guillermo Ivan (University of Coimbra); Specht, Jan Martin (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Pereira da Silva, Patrícia (University of Coimbra); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: The ongoing European Union sustainable energy transition has a disruptive potential regarding the role of infrastructure and utilities in the electricity sector. The increased spread of digital technologies, renewable energy sources, and prosumers calls for a swift and well-guided adaptation of the electricity distribution industry towards a smart grids context. We analyze the challenges and opportunities associated with this adaptation through nine multi-stakeholder workshops, held in Germany and Portugal in 2016-2017, engaging distribution system operators (DSOs), researchers, academics, and integrated utility companies to obtain up-to-date insights. Our results indicate uncertainty regarding the value of large-scale rollout of smart meters for DSOs. Also, a corporate culture with resistance to change is observed, challenging the integration of novel technologies and processes. Traditional regulation is seen as a barrier to smart grid investments, is associated with job losses, and knowledge destruction. Policy-makers can benefit from these insights by taking them into account in policy design and market restructuring.
    Keywords: Electricity distribution; smart grid; technology; business model; market design; policy
    JEL: O18 O25 O33 Q41
    Date: 2018–03
  19. By: Paola Profeta; Eleanor Woodhouse
    Abstract: How do electoral rules affect the representation of women? We collect panel data on the universe of Italian politicians from all levels of government over the period 1987-2013 and obtain a complete picture of the career paths of male and female politicians across the whole arc of their careers in public office. We use our unique dataset to analyse the effects on female political representation of an Italian reform which, in 2005, changed the electoral rule for national elections from (mostly) majoritarian to proportional, but did not affect sub-national level elections. We find that proportional electoral rules favour the election of women. We propose a new channel through which this result is obtained, related to the different nature of political competition in the two electoral systems: under proportional rules, parties place women less frequently in competitive seats. This is consistent with the fact that proportional systems value gender diversity more than majoritarian ones, while majoritarian systems rely on head-to-head electoral races, which are not gender neutral. We also find that electoral rules have weaker effects on female representation in geographical areas where traditional gender roles are dominant.
    Keywords: electoral systems, majoritarian, proportional, difference-in-differences
    JEL: H70
    Date: 2018
  20. By: Alessandro Bucciol (Department of Economics (University of Verona)); Martina Manfre' (Department of Economics (University of Verona)); Marcella Veronesi (Department of Economics (University of Verona))
    Abstract: We investigate the impact of financial education on a wide range of wealth decisions using Dutch data from the DNB Household Survey. We consider two indexes representative of basic and advanced financial literacy acquired when adults, and money education received from the family during adolescence. Advanced financial literacy is a significant determinant of all the wealth outcomes under examination, while basic financial literacy affects only the propensity to plan for retirement and the likelihood of holding debt. Studying the individual components of financial literacy, the most relevant effects are associated with the understanding of numeracy and inflation, together with the correct knowledge of market mechanisms. Interestingly, money education received from the family during adolescence is as important as advanced financial literacy to foster individuals’ wealth decisions. We also find evidence of a gender gap, with males’ wealth decisions more affected by higher levels of financial education. Our results highlight the importance of improving financial knowledge not only through proper educational programs when adults, but also in the family environment during adolescence, where teens can learn positive attitudes towards money that are maintained throughout their life.
    Keywords: Financial literacy, Money education from family, Wealth decisions, Gender difference
    JEL: D14 I22
    Date: 2018–07
  21. By: João Pereira dos Santos (Nova School of Business and Economics, Universidade Nova de Lisboa, Campus de Campolide); David B. Audretsch (Institute for Development Studies, Indiana University, 1315 East 10th Street, SPEA Room 201, Bloomington); Dirk Christian Dohse (Kiel Institute for the World Economy, Kiellinie 66, 24105 Kiel, Germany)
    Abstract: The paper studies the impact of a switch from free to charged highway provision on firm numbers and private sector employment in a panel of Portuguese municipalities covering the period 2007–2013. It exploits the fact that tolls on certain highways in Portugal were unexpectedly introduced in reaction to the sovereign debt crisis to establish causality. Results from a difference-in-differences analysis indicate a significantly negative effect of highway tolls on number of firms and employment in treated municipalities vis-à-vis the comparison group. We also find negative effects of tolls in municipalities not directly traversed by the treated highways, with larger firms and manufacturing firms being most strongly affected.
    Keywords: infrastructure provision, highway tolls, regional economic development, natural experiment
    JEL: R48 L25
    Date: 2018–06
  22. By: Goldschmidt, Tina; Rydgren, Jens
    Abstract: Populist radical right-wing parties across Europe garner support for welfare chauvinistic promises to limit government spending on immigrants and focus on natives' welfare instead. However, most research on the so-called immigration-welfare nexus does not study welfare chauvinism but instead focuses on generalized support for the welfare state. Using Swedish register-linked survey data from 2013, we study three hypothetical pathways into welfare chauvinism: via ethnic prejudice, operationalized as a desire for social distance; via the direct experience of immigrant unemployment and putative welfare receipt in the neighborhood context; and via immigrant competition at the workplace. Based on our sample of native-born Swedes, we find that both negative prejudice and the share of unemployed immigrants among the neighborhood population provide two distinct and independent routes into chauvinism, while workplace competition does not.
    Keywords: welfare chauvinism,government spending,immigration,integration,prejudice,Sweden
    Date: 2018
  23. By: Michael Fritsch (FSU Jena); Michael Wyrwich (FSU Jena); Martin Obschonka (Queensland University of Technology Business School Brisbane)
    Abstract: There is a research gap with respect to understanding the role of entrepreneurial culture and tradition for actual start-up behaviour. We combine historical self-employment data (entrepreneurial tradition) with a psychological measure for entrepreneurial attitudes (entrepreneurial culture). The results reveal a positive relationship between the historical level of self-employment in a region and the presence of people with an entrepreneurial personality structure today. Our measure for a regional culture of entrepreneurship is positively related not only to the level of new business formation but also the amount of innovation activity.
    Keywords: Entrepreneurship, self-employment, new business for mation, personality traits, culture, innovation
    JEL: L26 N94 O11 O30 R11
    Date: 2018–06–25
  24. By: Pilar Cuadrado (Banco de España); Aitor Lacuesta (Banco de España); María de los Llanos Matea (Banco de España); F. Javier Palencia-González (UNED)
    Abstract: This paper analyses how the contract structure between gas stations and the wholesale operator affects price strategies. Using daily data on prices of different gas stations the paper finds that independent dealers charge lower margins than other dealers with different contracts. One potential hypothesis is that this is the case because independent stations react more to the number of competitors. We use the introduction of a discretional regional excise duty (IVMDH) on gas stations to check the reaction of markups to changes in marginal costs of the actual number of competitors. Results are consistent with the idea that regardless the type of contract all dealers react notably to the increases in relative marginal costs by decreasing average markups. We use those results to interpret the inexistent reduction in markups that followed a change in the Spanish regulation that took place in 2013 fostering competition in the retail sector. One potential interpretation is that the big increase in independent stations following the reform was not considered an increase in actual competition for most of the incumbent stations.
    Keywords: competition, oligopoly, pass-through, gasoline, excise duty
    JEL: D40 H22 H23 L13 Q41
  25. By: Gert Brunekreeft; Roland Meyer
    Abstract: An important goal of the European Commission is the promotion of the internal energy market (here specifically electricity), which requires sufficient and adequate cross-border interconnector capacity. However, cross-border interconnector capacity is scarce and, more importantly, the progress of interconnector capacity expansion is too slow. As a result, the Commission has proposed several policy measures to accelerate interconnector investment. This paper provides an overview of the policy debate on interconnector expansion and studies two particular points. First, the effects of network regulation on the interconnector investment and the policy proposals to improve the investment incentives, and more specifically, how to deal with risks. Second, we study the policies and effects of capacity remuneration mechanisms (CRMs) on the use of and the need for cross-border interconnector capacity.
    Keywords: electric utilities, regulation, market design, capacity remuneration mechanisms
    JEL: L94 L51
    Date: 2018–02
  26. By: Gutierrez, German; Philippon, Thomas
    Abstract: Until the 1990's, US markets were more competitive than European markets. Today, European markets have lower concentration, lower excess profits and lower regulatory barriers to entry. We document this surprising outcome and propose an explanation using a model of political support. Politicians care about consumer welfare but also enjoy retaining control over industrial policy. We show that politicians from different countries who set up a common regulator will make it more independent and more pro-competition than the national ones it replaces. Our comparative analysis of antitrust policy reveals strong support for this and other predictions of the model.
    Date: 2018–06
  27. By: Vaishali Zambre
    Abstract: Several studies show that young women start with lower wage expectations than men, even before entering the labor market and that this partly translates into the actual gender wage gap through effects on educational choice and the formation of reservation wages. Building on the theoretical reasoning of compensating differentials proposing that the labor market compensates higher wage risk with higher wages, this study investigates whether the gender gap in wage expectations can be explained by individuals anticipating this form of risk compensation. Relying on a unique survey on German high school graduates in which we elicited information on the entire distribution of expected wages, this study documents that already at this early stage, female students expect to earn around 16% less than their male counterparts. At the same time, they expect lower wage risk as measured by the individual-specific dispersion in wage expectations. I decompose the gender gap into components attributable to socio-demographic factors, academic performance and skills, intended college major choice, career motives, personality traits, economic preferences, measures for students’ confidence and expected wage risk. The results indicate that anticipated compensation for wage risk plays a major role in explaining the gender gap in wage expectations suggesting that females have lower wage expectations because they are willing to trade off higher wages for lower wage risk. The results of this study shed light on why young women make different choices regarding education and careers, thereby enhancing our understanding of the observed gender wage gap.
    Keywords: Wage expectations, gender gap, wage risk, risk compensation
    JEL: I28 J18 D04
    Date: 2018
  28. By: Ana Fontoura Gouveia; Christian Osterhold
    Abstract: Productivity growth is slowing down among OECD countries, coupled with increased misallocation of resources. A recent strand of literature focuses on the role of non-viable firms (“zombie firms”) to explain these developments. Using a rich firm-level dataset for one of the OECD countries with the largest drop in barriers to firm exit and restructure, we assess the role of zombies on firm dynamics, both in the extensive and intensive margins. We confirm the results on the high prevalence of zombie firms, significantly less productive than their healthy counterparts and thus dragging aggregate productivity down. Moreover, while we find evidence of positive selection within zombies, with the most productive restructuring and the least productive exiting, we also show that the zombies' productivity threshold for exit is much lower than that of nonzombies, allowing them to stay in the market, distorting competition and sinking resources. Zombie prevalence curbs the growth of viable firms, in particular the most productive, harming the intra-sectoral resource reallocation. We show that a reduction in exit and restructuring barriers promotes a more effective exit channel and fosters the restructuring of the most productive. These results highlight the role of public policy in addressing zombies' prevalence, fostering a more efficient resource allocation and enabling productivity growth.
    Keywords: Firm Dynamics, Insolvency Frameworks, Labor Productivity, Resource Allocation, Zombie Firms
    JEL: D24 E22 E24 G33 J24 L25
    Date: 2018–06–25
  29. By: Rodrigo Fernandez (OECD); Herwig Immervoll (OECD); Daniele Pacifico (OECD); James Browne (OECD); Dirk Neumann (OECD); Céline Thévenot (OECD)
    Abstract: In the aftermath of the financial and economic crisis, large shares of working-age individuals in Spain either did not work or only to a limited extent. As the employment rate bottomed out in 2013, 30% were without employment during the entire year, and a further 15% had weak labour-market attachment, working only a fraction of the year, or on restricted working hours. This paper applies a novel method for measuring and visualising employment barriers of individuals with no or weak labour-market attachment, using household micro-data. It first develops indicators to quantify employment obstacles under three broad headings: (i) work-related capabilities, (ii) incentives, and (iii) employment opportunities. It then uses these indicators in conjunction with a statistical clustering approach to identify unobserved (“latent”) groups of individuals facing similar combinations of barriers. The resulting typology of labour-market difficulties provides insights on the most pressing policy priorities in supporting different groups into employment. A detailed policy discussion illustrates how these empirical results can inform people-centred assessments of existing labour-market integration measures and of key challenges across different policy areas and institutions. The most common employment obstacles in Spain were a lack of work experience, low education and skill levels, and scarce job opportunities. Although financial disincentives, health limitations and care responsibilities were less widespread overall, they remained important barriers for some groups. A striking finding is that 45% of jobless or low-intensity workers face three or more simultaneous barriers, highlighting the limits of narrow policy approaches that focus on subsets of these employment obstacles in isolation.
    JEL: C38 H31 J2 J6 J8
    Date: 2018–06–08
  30. By: Fischer, Martin (University of Duisburg-Essen, Essen); Karlsson, Martin (University of Duisburg-Essen, Essen); Nilsson, Therese (Research Institute of Industrial Economics (IFN)); Schwarz, Nina (University of Duisburg-Essen, Essen)
    Abstract: We evaluate the impact on earnings, pensions, and further labor market outcomes of two parallel educational reforms increasing instructional time in Swedish primary school. The reforms extended the annual term length and compulsory schooling by comparable amounts. We find striking differences in the effects of the two reforms: at 5%, the returns to the term length extension were at least half as high as OLS returns to education and bene ted broad ranges of the population. The compulsory schooling extension had small (2%) albeit significant effects, which were possibly driven by an increase in post-compulsory schooling. Both reforms led to increased sorting into occupations with heavy reliance on basic skills.
    Keywords: Educational reforms; Compulsory schooling; Term length; Returns to Education
    JEL: I28 J24 J31
    Date: 2018–06–25

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