nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2018‒08‒27
forty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Does Subsidized Care for Toddlers Increase Maternal Labor Supply?: Evidence from a Large-Scale Expansion of Early Childcare By Kai-Uwe Müller; Katharina Wrohlich
  2. Objective vs. Subjective Fuel Poverty and Self-Assessed Health By Llorca, M.; Rodriguez-Alvarez, A.; Jamasb, T.
  3. Do hospitals respond to decreasing prices by supplying more services? By Salm, M.;; Wübker, A.;
  4. The Health Effects of Smoking Bans: Evidence from German Hospitalization Data By Kvasnicka, Michael; Siedler, Thomas; Ziebarth, Nicolas R.
  5. On the Direct and Indirect Real Effects of Credit Supply Shocks By Laura Alfaro; Enrique Moral-Benito; Manuel Garcia-Santana
  6. A firm-level perspective on micro- and macro-level uncertainty; An analysis of business expectations and uncertainty from the UK Management and Expectations Survey By Gaganan Awano; Nicholas Bloom; Ted Dolby; Paul Mizen; Rebecca Riley; Tatsuro Senga; John Van Reenen; Jenny Vyas; Philip Wales
  7. Estimating the Effect of an Increase in the Minimum Wage on Hours Worked and Employment in Ireland By McGuinness, Seamus; Redmond, Paul
  8. The State of the Economy at Graduation, Wages, and Catch-up Paths: Evidence from Switzerland By Shvartsman, Elena
  9. Financial literacy and socialist education: Lessons from the German reunification By Davoli, Maddalena; Hou, Jia
  10. Earnings Dynamics and Firm-Level Shocks By Benjamin Friedrich; Costas Meghir; Lisa Laun; Luigi Pistaferri
  11. Use of extra-school time and child behaviours. Evidence from the UK. By Meroni, Elena Claudia; Piazzalunga, Daniela; Pronzato, Chiara
  12. Child care, parental labor supply and tax revenue By Martin Eckhoff Andresen; Tarjei Havnes
  13. Infant Health Care and Long-Term Outcomes By Aline Bütikofer; Katrine V. Løken; Kjell Salvanes
  14. Public R&D Support and Firms' Performance: A Panel Data Study By Nilsen, Øivind Anti; Raknerud, Arvid; Lancu, Diana-Cristina
  15. Long-term Changes in Married Couples' Labor Supply and Taxes: Evidence from the US and Europe Since the 1980s By Alexander Bick; Bettina Brueggemann; Hannah Paule-Paludkiewicz; Nicola Fuchs-Schündeln
  16. The determinants of children's use of extra-school time in Europe. By Labriola, Silvia; Pronzato, Chiara
  17. Every crisis has a silver lining? Unravelling the pro-cyclical pattern of health inequalities by income By Max Coveney; Pilar (P.) Garcia-Gomez; Eddy (E.K.A.) van Doorslaer; Tom (T.G.M.) van Ourti
  18. Drivers of Renewable Technology Adoption in the Household Sector By Anke Jacksohn; Peter Grösche; Katrin Rehdanz; Carsten Schröder
  19. Après nous le déluge? Perceived distance of climate change impacts and pro-environmental behaviour By Benjamin Volland
  20. Skills, Scope, and Success: An Empirical Look at the Start-up Process in Creative Industries in Germany By Kohn, Karsten; Wewel, Solvejg A.
  21. Educational Inequality and Public Policy Preferences: Evidence From Representative Survey Experiments By Lergetporer, Philipp; Werner, Katharina; Woessmann, Ludger
  22. The Lifecycle Wage Growth of Men and Women: Explaining Gender Differences in Wage Trajectories By Mary Ann Bronson
  23. The Impact of Immigration on Firm Level Offshoring By Olney , William W.; Pozzoli , Dario
  24. Top incomes and subjective well-being By Michal Brzezinski
  25. Do German Works Councils Counter or Foster the Implementation of Digital Technologies? By Genz, Sabrina; Bellmann, Lutz; Matthes, Britta
  26. Naturalization and labor market performance of immigrants in Germany By Regina T. Riphahn; Salwan Saif
  27. Fertility Discrimination in Hiring? Evidence from a Field Experiment By Sascha O. Becker; Ana Fernandes; Doris Weichselbaumer
  28. Optimal Taxation with On-the-Job Search By Jesper Bagger; Espen Moen; Rune Vejlin
  29. Political Turnover and the Performance of Local Public Enterprises By Andrea De Meo; Lorenzo Ferrari
  30. Workload, staff composition, and sickness absence. Findings from employees in child care centers By Trude Gunnes; Nina Drange; Kjetil Telle
  31. Deep-Rooted Culture and Economic Development: Taking the Seven Deadly Sins to Build A Well-Being Composite Indicator By Luis Cesar Herrero-Prieto; Ivan Boal-San Miguel; Mafalda Mafalda Gomez-Vega
  32. Love and money with inheritance: Marital sorting by labor income and inherited wealth in the modern partnership By Pasteau, Etienne; Zhu, Junyi
  33. State Substitution for the Trade Union Good: The Case of Paid Holiday Entitlements By Forth, John; Bryson, Alex
  34. Sectoral and regional distribution of export shocks: What do two hundred thousand UK firm observations say? By Rafal Kierzenkowski; Peter Gal; Gabor Fulop; Dorothee Flaig; Frank van Tongeren
  35. Using online job vacancies to understand the UK labour market from the bottom-up By Turrell, Arthur; Thurgood, James; Djumalieva, Jyldyz; Copple, David; Speigner, Bradley
  36. Do we measure employment durations correctly? : The case of German administrative employment data By Jaenichen, Ursula
  37. EU labour in agricultural sector of the United Kingdom By Barathova, Katarina
  38. The Triple Trigger? Negative Equity, Income Shocks and Institutions as Determinants of Mortgage Default By Andrew Lynn; Ronan C Lyons
  39. Origins of gender norms: sibling gender composition and women's choice of occupation and partner By Anne Ardila Brenøe
  40. The Role of Hours Changes for the Increase in German Earnings Inequality By Biewen, Martin; Plötze, Daniela

  1. By: Kai-Uwe Müller; Katharina Wrohlich
    Abstract: Expanding public or publicly subsidized childcare has been a top social policy priority in many industrialized countries. It is supposed to increase fertility, promote children's development and enhance mothers' labor market attachment. In this paper, we analyze the causal effect of one of the largest expansions of subsidized childcare for children up to three years among industrialized countries on the employment of mothers in Germany. Identification is based on spatial and temporal variation in the expansion of publicly subsidized childcare triggered by two comprehensive childcare policy reforms. The empirical analysis is based on the German Microcensus that is matched to county level data on childcare availability. Based on our preferred specification which includes time and county fixed effects we find that an increase in childcare slots by one percentage point increases mothers' labor market participation rate by 0.2 percentage points. The overall increase in employment is explained by the rise in part-time employment with relatively long hours (20-35 hours per week). We do not find a change in full-time employment or lower part-time employment that is causally related to the childcare expansion. The effect is almost entirely driven by mothers with medium-level qualifications. Mothers with low education levels do not profit from this reform calling for a stronger policy focus on particularly disadvantaged groups in coming years.
    Keywords: childcare provision; mother's labor supply; generalized difference-in-difference
    JEL: J22 J13 H43
    Date: 2018
  2. By: Llorca, M.; Rodriguez-Alvarez, A.; Jamasb, T.
    Abstract: Policies towards fuel poverty often use relative or absolute measures. The effectiveness of the official indicators in identifying fuel poor households and assessing its impact on health is an emerging social policy issue. In this paper we analyse objective and perceived fuel poverty as determinants of self-assessed health in Spain. In 2014, 5.1 million of her population could not afford to heat their homes to an adequate temperature. We propose a latent class ordered probit model to analyse the influence of fuel poverty on self-reported health in a sample of 25,000 individuals in 11,000 households for the 2011-2014 period. This original approach allows us to include a ‘subjective’ measure of fuel poverty in the class membership probabilities and purge the influence of the ‘objective’ measure of fuel poverty on self-assessed health. The results show that poor housing conditions, fuel poverty, and material deprivation have a negative impact on health. Also, individuals who rate themselves as fuel poor tend to report poorer health status. The effect of objective fuel poverty on health is stronger when unobserved heterogeneity of individuals is controlled for. Since objective measures alone may not fully capture the adverse effect of fuel poverty on health, we advocate the use of approaches that allow a combination of objective and subjective measures and its application by policy-makers. Moreover, it is important that policies to tackle fuel poverty take into account the different energy vectors and the prospects of a future smart and integrated energy system.
    Keywords: Fuel poverty in Spain; self-assessed health; latent class ordered probit model.
    JEL: C01 C25 I14 I32 Q43
    Date: 2018–08–16
  3. By: Salm, M.;; Wübker, A.;
    Abstract: Regulated prices are common in markets for medical care. We estimate the effect of changes in regulated reimbursement prices on volume of hospital care based on a reform of hospital financing in Germany. Uniquely, this reform changed the overall level of reimbursement – with increasing prices for some hospitals and decreasing prices for others – without affecting the relative prices for different groups of patients or types of treatment. Based on administrative data, we find that hospitals react to decreasing prices by supplying more services. We interpret our findings as evidence for a negative income effect of lower prices on higher volume of care.
    Keywords: government expenditures and health; hospital care; procurement;
    JEL: I11 L10 L21
    Date: 2018–08
  4. By: Kvasnicka, Michael (Otto-von-Guericke University Magdeburg); Siedler, Thomas (University of Hamburg); Ziebarth, Nicolas R. (Cornell University)
    Abstract: This paper studies the short-term impact of public smoking bans on hospitalizations in Germany. It exploits the staggered implementation of smoking bans over time and across the 16 federal states along with the universe of hospitalizations from 2000-2008 and daily county-level weather and pollution data. Smoking bans in bars and restaurants have been effective in preventing 1.9 hospital admissions (-2.1%) due to cardiovascular diseases per day, per 1 million population. We also find a decrease by 0.5 admissions (-6.5%) due to asthma per day, per 1 million population. The health prevention effects are more pronounced on sunny days and days with higher ambient pollution levels.
    Keywords: smoking bans, health effects, hospital admissions, second-hand smoke
    JEL: D12 H19 I12 I18
    Date: 2018–06
  5. By: Laura Alfaro (Harvard Business School); Enrique Moral-Benito (Bank of Spain); Manuel Garcia-Santana (Universitat Pompeu Fabra)
    Abstract: We consider the real effects of bank lending shocks and how they permeate the economy through buyer-supplier linkages. We combine administrative data on all firms in Spain with a matched bank-firm-loan dataset incorporating information on the universe of corporate loans for 2003-2013. Using methods from the matched employer-employee literature for handling large data sets, we identify bank-specific shocks for each year in our sample. Combining the Spanish Input-Output structure and firm-specific measures of upstream and downstream exposure, we construct firm-specific exogenous credit supply shocks and estimate their direct and indirect effects on real activity. Credit supply shocks have sizable direct and downstream propagation effects on investment and output throughout the period but no significant impact on employment during the expansion period. Downstream propagation effects are quantitatively larger in magnitude than direct effects. The results corroborate the importance of network effects in quantifying the real effects of credit shocks and show that real effects vary during booms and busts.
    Date: 2018
  6. By: Gaganan Awano; Nicholas Bloom; Ted Dolby; Paul Mizen; Rebecca Riley; Tatsuro Senga; John Van Reenen; Jenny Vyas; Philip Wales
    Abstract: In the current climate, it is difficult to over-state the importance of improving our understanding of the economic impact of uncertainty. While it is widely accepted that uncertainty depresses economic activity, there is scarce quantitative evidence, particularly at the firm-level, to examine this relationship. This paper exploits a new data source on business-level expectations – the Management and Expectations Survey conducted by the Office for National Statistics (ONS) in collaboration with the Economic Statistics Centre of Excellence (ESCoE) – to give insight into British firms’ expectations and uncertainty concerning their turnover, expenditure, investment and employment growth for 2017 and 2018, as well as real UK GDP growth for 2018. Our results suggest that firms’ expectations of UK GDP growth for 2018 are more pessimistic, compared with recent trends and professional forecasters. We find that younger businesses and those with more structured management practices are more optimistic of their future turnover growth, while foreign-owned firms are more pessimistic than domestically-owned firms. We measure the uncertainty that businesses have around these expectations, and find that firms that are smaller, younger, domestically-owned, family- owned-and-family-managed and less productive display higher levels of uncertainty. We also identify a relationship between firms’ micro- and macro-economic expectations: firms that are more optimistic of future GDP growth are also more optimistic of their own future performance, and firms that are more uncertain of future GDP growth are also more uncertain of their own future performance. We establish a relationship between firms’ past experiences and their uncertainty for the future: firms that operate in industries with typically volatile growth are more uncertain of their future growth.
    Keywords: Expectations, uncertainty, productivity, management practices
    JEL: L2 M2
    Date: 2018–07
  7. By: McGuinness, Seamus (Economic and Social Research Institute, Dublin); Redmond, Paul (ESRI, Dublin)
    Abstract: On the 1st of January 2016 the Irish National Minimum Wage increased from €8.65 to €9.15 per hour, an increase of approximately six percent. We use a difference-in-differences estimator to evaluate whether the change in the minimum wage affected the hours worked and likelihood of job loss of minimum wage workers. The results indicate that the increase in the minimum wage had a negative and statistically significant effect on the hours worked of minimum wage workers, with an average reduction of approximately 0.5 hours per week. The effect on minimum wage workers on temporary contracts was higher at 3 hours per week. We found a corresponding increase in part-time employment of 2 percentage points for all minimum wage workers and 10 percentage points for those on temporary contracts. We find no clear evidence that the increase in the minimum wage led to an in-creased probability of becoming unemployed or inactive in the six-month period following the rate change.
    Keywords: minimum wage, hours of work, employment, unemployment
    JEL: E24 J22 J23 J31 J42
    Date: 2018–06
  8. By: Shvartsman, Elena (University of Basel)
    Abstract: This paper analyses whether the short- and mid-term labour market outcomes of Swiss university graduates are affected by the state of the domestic economy at the time of labour market entry, where the economic conditions are captured by the regional unemployment rate at the time of graduation. This analysis contributes to the question as to whether labour market outcomes are determined inter alia by luck even under fairly stable labour market conditions. The study provides empirical evidence demonstrating that less favourable economic conditions at the time of labour market entry have a negative impact on the individuals' wages one year after graduation. However, there appears to be a partial catchup towards luckier cohorts in the subsequent four years, which is primarily explained by higher job mobility with respect to the number of jobs an individual has held since his graduation as well as tenure with the first job. Finally, there is strong evidence in favour of heterogeneous effects with respect to, for instance, individuals employed in part-time, for whom the negative effects appear to be most pronounced, while at the same time it is found that the probability of part-time employment rises under less favourable entry conditions.
    Keywords: labour market entry conditions, wages, job mobility
    JEL: J31 J39
    Date: 2018–06
  9. By: Davoli, Maddalena; Hou, Jia
    Abstract: A growing body of literature shows the importance of financial literacy in house-holds' financial decisions. However, fewer studies focus on understanding the determinants of financial literacy. Our paper fills this gap by analyzing a specific determinant, the educational system, to explain the heterogeneity in financial literacy scores across Germany. We suggest that the lower financial literacy observed in East Germany is partially caused by a different institutional framework experienced during the Cold War, more specifically, by the socialist educational system of the GDR which affected specific cohorts of individuals. By exploiting the unique set-up of the German reunification, we identify education as a channel through which institutions and financial literacy are related in the German context.
    Keywords: financial literacy determinants,socialist education,German reunification,DiD
    Date: 2018
  10. By: Benjamin Friedrich (Northwestern Unversity); Costas Meghir (Yale University); Lisa Laun (Institute for Evaluation of Labour Marke); Luigi Pistaferri (Stanford University)
    Abstract: In this paper we use matched employer employee data from Sweden to study the role of the firm in affecting the stochastic properties of the wage process. We consider two ways in which the firm may induce variations in pay across workers and over time: match effects (allowed to vary over time), and the transmission of firm-specific productivity shocks. In both cases we separate temporary from more persistent effects. Our statistical model accounts for endogenous participation and mobility decisions and thus deals with the potential truncation in the impact of productivity on wages that is induced by people quitting into unemployment or changing employer. We document a number of key findings. First, firm-specific permanent productivity shocks transmit to individual wages, but the effect is mostly concentrated among the high-skilled workers; the opposite pattern is found for firm-specific temporary shocks. Moreover, we find only modest updates in match effects over the life of a firm-worker relationship. Finally, we estimate a significant role for permanent individual shocks that stick with the worker. However, a substantial part of the growth in earnings variance over the life cycle for high-skilled workers is driven by firms. By age 55, 44% of the cross-sectional variance is attributable to firm-level shocks.
    Date: 2018
  11. By: Meroni, Elena Claudia; Piazzalunga, Daniela; Pronzato, Chiara (University of Turin)
    Abstract: In this paper, we study the effects of extra-school activities on children’s non-cognitive development, using data from the Millennium Cohort Study (UK) and focusing on children aged 7-11 years old. We classify the time spent out of school into six homogenous groups of activities, using principal component analysis, and estimate the relationship thereof with five behavioural dimensions drawn from the Strength and Difficulties questionnaire, exploiting the panel structure of the data. Results show the beneficial effects on children’s behaviour of sports, school-related activities, time with parents and household chores, while a small detrimental effect of video-screen time is detected. We test the robustness of our estimates against omitted variable bias, and the results are confirmed. We also observe that children from more advantaged backgrounds have easier access to more beneficial activities. Overall, our results suggest that different uses of time may reinforce inequalities across children from different backgrounds.
    Date: 2018–06
  12. By: Martin Eckhoff Andresen; Tarjei Havnes (Statistics Norway)
    Abstract: We study the impact of child care for toddlers on the labor supply of mothers and fathers in Norway. For identification, we exploit the staggered expansion across municipalities following a large reform from 2002. Our IV-estimates indicate that child care use causes an increase in the labor supply of mothers. Results suggest that cohabiting mothers move towards full time employment, while single mothers move to part time. Meanwhile, we find no impact for fathers or grandparents. We also find an increase in the taxes paid from cohabiting mothers, lending some support to the argument that parts of the cost of child care is offset by increased taxes.
    Keywords: Child care; female labor supply; tax revenue; instrumental variables
    JEL: H24 H52 J13 J22
    Date: 2018–08
  13. By: Aline Bütikofer (Norwegian School of Economics); Katrine V. Løken (Norwegian School of Economics); Kjell Salvanes (Norges Handelshøyskole)
    Abstract: A growing literature documents the positive long-term effects of policy-induced improvements in early-life health and nutrition. However, there is still scarce evidence on early-life health programs targeting a large share of the population and the role of such programs in increasing intergenerational mobility. This paper uses the rollout of mother and child health care centers in Norway, which commenced in the 1930s, to study the long-term consequences over the whole life cycle of increasing access to well-child visits in the first year of life. These well-child visits included a physical examination and the provision of information about adequate infant nutrition. Our first results show that access to mother and child health care centers in the first year of life increased the completed years of schooling by 0.15 years and earnings by two percent. Our second set of results reveals that these effects were stronger for children from a low socioeconomic background and contribute to a 10 percent reduction in the persistence of educational attainment across generations. Our third set of findings suggest that better nutrition within the first year of life is a likely mechanism. In particular, we find positive effects on adult height and that individuals suffer from fewer health risks at age 40. In addition, we show that access to well-child visits decreased infant mortality from diarrhea whereas infant mortality from pneumonia, tuberculosis, or congenital malformations are not affected. Finally, we investigate the costs of the program and show that investments in mother and child health care centers pass a simple cost–benefit analysis.
    Keywords: infant health, early life nutrition, child physical health, life cycle
    JEL: J13 I14 H75
    Date: 2018–07
  14. By: Nilsen, Øivind Anti (Norwegian School of Economics); Raknerud, Arvid (Statistics Norway); Lancu, Diana-Cristina (Statistics Norway)
    Abstract: We analyse all the major sources of direct and indirect R&D subsidies in Norway in the period 2002-2013 and compare their effects on individual firms' performance. Firms that received support are matched with a control group of firms that did not receive support using a combination of stratification and propensity score matching. Changes in performance indicators before and after support in the treatment group are compared with contemporaneous changes in the control group. We find that the average effects of R&D support among those who obtained grants and/or subsidies are positive and significant in terms of performance indicators related to economic growth: value added, sales revenue and number of employees. The estimated effects are larger for start-up firms than incumbent firms when the effects are measured as relative effects (in percentage points), but smaller when these effects are translated into level effects. Finally, we do not find positive effects on return to total assets or productivity for firms who received support compared with the control group.
    Keywords: public policy, firm performance, treatment effects, stratification, propensity score matching, productivity
    JEL: C33 C52 D24 O38
    Date: 2018–06
  15. By: Alexander Bick (Arizona State University); Bettina Brueggemann (McMaster University); Hannah Paule-Paludkiewicz (Goethe University Frankfurt); Nicola Fuchs-Schündeln (Goethe University Frankfurt)
    Abstract: We document the time-series of employment rates and hours worked per employed by married couples in the US and seven European countries (Belgium, France, Germany, Italy, the Netherlands, Portugal, and the UK) from the early 1980s through 2016. Relying on a model of joint household labor supply decisions, we quantitatively analyze the role of non-linear labor income taxes for explaining the evolution of hours worked of married couples over time, using as inputs the full country- and year-specific statutory labor income tax codes. We further evaluate the role of consumption taxes, gender and educational wage premia, the educational distribution, and the degree of assortative matching into couples. The model is quite successful in predicting the time series behavior of hours worked per employed married woman, with labor income taxes being the key driving force. It also explains part of the secular increase in married women's employment rates, but the large increases among European married women in the 1980s and early 1990s are not driven by the factors considered in our study. We will make the non-linear tax codes used as an input into the analysis available as a user-friendly and easily integrable set of Matlab codes.
    Date: 2018
  16. By: Labriola, Silvia; Pronzato, Chiara (University of Turin)
    Abstract: In this paper, we describe what children do in their extra-school time in Europe, and explore the determinants of the use of their time in order to assess whether differences exist across families with different characteristics, as well as between European countries. Using data for the Multinational Time Use data, we analyse children’s time engaged in sports and games, as well as social, cultural, and religious events. We also observe the time spent with parents, both playing and studying. We find parental background and family characteristics to be important: parental education increases the time spent together in both educational and playing activities, while parental work – probably as a proxy of income – increases children’s time in sports, social and cultural events.
    Date: 2018–06
  17. By: Max Coveney (Erasmus University Rotterdam); Pilar (P.) Garcia-Gomez (Erasmus University Rotterdam); Eddy (E.K.A.) van Doorslaer (Erasmus University Rotterdam); Tom (T.G.M.) van Ourti (Erasmus University Rotterdam)
    Abstract: It is well known that income and health are positively associated. Much less is known about the strength of this association in times of growth and recession. We develop a novel decomposition method that focuses on isolating the roles played by government transfers versus market transfers on changes in income-related health inequality (IRHI) in Europe. Using European Union Survey of Income and Living Conditions (EU-SILC) panel data for 7 EU countries from 2004 to 2013, we decompose the changes in IRHI while focusing on possible effects of the 2008 financial crisis. We find that such inequalities rise in good economic times and fall in bad economic times. This pattern can largely be explained by the relative stickiness of old age pension benefits compared to the market incomes of younger groups. Austerity measures are associated with a weakening of the IRHI reducing effect of government transfers.
    Keywords: Crisis; inequalities; health; income; decomposition
    JEL: D30 D63 I14 I15
    Date: 2018–08–17
  18. By: Anke Jacksohn; Peter Grösche; Katrin Rehdanz; Carsten Schröder
    Abstract: Using representative household survey panel data from Germany, we undertake a simultaneous assessment of the importance of factors that have individually been found significant for the adoption of renewable energy systems but have never been tested jointly. These are sociodemographic and housing characteristics, environmental concern, personality traits, and economic factors, i.e. the expected costs of and revenue from the investment. Our results suggest that household decisions to invest in photovoltaic systems and solar thermal facilities are mainly driven by the economic factors. Taking account of sociodemographic and housing characteristics, environmental concern or personality traits has comparatively little relevance, while the quantitative nexus between the decision to invest and returns on the investment is robust to their inclusion.
    Keywords: renewable technology adoption; investment decision; solar energy; household sector
    JEL: C25 D12 Q55
    Date: 2018
  19. By: Benjamin Volland
    Abstract: This research addresses the role of perceived distance of climate change impacts as an antecedent of pro-environmental behaviour using data from a large, representative survey. Doing so, it complements existing research that has largely concentrated on environmental concerns, beliefs and behavioural intentions. Focusing on temporal and spatial distance dimensions, it finds that differences in perceptions are reflected in differences in self-reported pro-environmental behaviours but that the relevance of perceived distance rapidly vanishes as this distance increases. Little systematic evidence emerges that individuals take climate impacts into account when these impacts are not anticipated to produce personal consequences. Some implications for the promotion of pro-environmental behaviour relying on “proximising” climate change impacts are discussed.
    Keywords: Psychological distance, Discounting, Proenvironmental behaviour, UK
    JEL: D91 Q54
    Date: 2018–07
  20. By: Kohn, Karsten (KfW Bankengruppe); Wewel, Solvejg A. (Boston College)
    Abstract: Creative industries comprise enterprises focusing on the creation, production, and distribution of creative or cultural goods and services. Following an explorative empirical approach, we analyze start-ups in creative industries regarding three issues along the start-up process: (1) personal characteristics of creative entrepreneurs, (2) their use of labor and capital as input factors, and (3) start-up success as measured by start-up survival, degree of innovativeness, and change in household income. Based on individual-level data from the KfW Start-up Monitor, a large-scale survey on entrepreneurship in Germany, our regression results show that entrepreneurs in creative industries tend to be younger and better educated than entrepreneurs in other economic sectors. Businesses in creative industries are prevalently started on a small scale, as part-time occupations, and with less financial resources. Yet they show a higher persistence and an above-average degree of innovativeness.
    Keywords: creative industries, cultural industries, entrepreneurship, business start-ups, start-up decision, start-up success, innovation
    JEL: L26 M13 J21
    Date: 2018–06
  21. By: Lergetporer, Philipp (ifo Institute); Werner, Katharina (ifo Institute); Woessmann, Ludger (ifo Institute and LMU)
    Abstract: To study how information about educational inequality affects public concerns and policy preferences, we devise survey experiments in representative samples of the German population. Providing information about the extent of educational inequality strongly increases concerns about educational inequality but only slightly affects support for equity-oriented education policies, which is generally high. The small treatment effects are not due to respondents\' failure to connect policies with educational inequality or aversion against government interventions. Support for compulsory preschool is the one policy with a strong positive information treatment effect, which is increased further by informing about policy effectiveness.
    Keywords: inequality; education; information; survey experiment;
    JEL: D30 H52 I24 H11 D63 D83 D72 P16
    Date: 2018–08–03
  22. By: Mary Ann Bronson (Georgetown University)
    Abstract: Why do women's wages grow more slowly than men's? Theory indicates that wages grow both as workers progress up an internal "career ladder," and as they switch firms and move up the "job ladder" to higher-paying firms. In this paper, we use employer-employee linked data from Sweden to non-parametrically decompose cumulative wage growth of men and women at each age into wage gains associated with firm changes, and within-firm growth. We then decompose within-firm growth into (1) large wage increases relative to one's co-workers, or promotions, and (2) interim (non-promotion) growth. We find that Swedish women switch firms at almost identical rates as men over the lifecycle, and upgrade to higher-paying firms at only slightly lower rates as men. However, they have substantially lower promotion rates at all ages, even accounting for firm, major, and occupation. Though relatively rare, promotions are the largest driver of wage growth by 45 for both men and women. Gender differences in promotion-related growth account for around 73 to 83% of the differences in lifecycle wage growth of college-educated men and women from ages 25 to 45. Differences in wage growth associated with firm changes account for 28%, while interim, non-promotion growth is slightly higher for women. Gender differences in sorting across firms with steeper vs. flatter wage structures explain only about 10% of differences in promotion probability. Lastly, we study hours worked and the evolution of the promotion gap with time to first birth. We use our findings to explain why childbirth penalties for women are so large, immediate and persistent; why gender wage differentials vary across professions; and what contributes to gender differences in firm wage premiums estimated using AKM.
    Date: 2018
  23. By: Olney , William W.; Pozzoli , Dario (Department of Economics, Copenhagen Business School)
    Abstract: This paper studies the relationship between immigration and offshoring by examining whether an influx of foreign workers reduces the need for firms to relocate jobs abroad. We exploit a Danish quasi-natural experiment in which immigrants were randomly allocated to municipalities using a refugee dispersal policy and we use the Danish employer-employee matched data set covering the universe of workers and firms over the period 1995-2011. Our findings show that an exogenous influx of immigrants into a municipality reduces firm-level offshoring at both the extensive and intensive margins. The fact that immigration and offshoring are substitutes has important policy implications, since restrictions on one may encourage the other. While the multilateral relationship is negative, a subsequent bilateral analysis shows that immigrants have connections in their country of origin that increase the likelihood that firms offshore to that particular foreign country.
    Keywords: Immigration; Offshoring
    JEL: F16 F22 F23 J61
    Date: 2018–04–12
  24. By: Michal Brzezinski (Faculty of Economic Sciences, University of Warsaw)
    Abstract: We use data from the World Wealth & Income Database, the European Values Surveys and World Values Surveys to estimate the relationship between top income shares and subjective well-being in a sample of 35 countries observed between 1980s and 2010s (139 surveys and more than 200,000 respondents). Results show that top 1% income shares are positively associated with happiness, but not with life satisfaction. The effect is present in a subsample of Western countries. We discuss possible explanations for the positive association between top income shares and happiness.
    Keywords: top incomes, subjective well-being, life satisfaction, happiness, income inequality, World Wealth & Income Database
    JEL: D63 I31
    Date: 2018
  25. By: Genz, Sabrina (Institute for Employment Research (IAB), Nuremberg); Bellmann, Lutz (Institute for Employment Research (IAB), Nuremberg); Matthes, Britta (Institute for Employment Research (IAB), Nuremberg)
    Abstract: As works councils' information, consultation and co-determination rights affect the decision process of the management, works councils play a key role in the implementation of digital technologies in establishments. However, previous research focuses on the potential of digital technologies to sub-stitute for labor and its impact on labor market outcomes of workers. This paper adds the role of industrial relations to existing literature by analyzing the impact of works councils on the implementation of digital technologies. Theoretically, the role of works councils in the digital transformation is ambiguous. Using establishment data from the IAB Establishment Survey of 2016 combined with individual employee data from the Federal Employment Agency and occupational level data about the physical job exposure, empirical evidence indicates an ambivalent position of works councils to-wards digital technologies. The sole existence of works councils leads to statistically significant lower equipment levels with digital technologies. However, works councils foster the equipment with digital technologies in those establishments, which employ a high share of workers who are conducting physical demanding job activities. Thus, this study highlights the importance of establishment-level workforce representation for the digital adoption process within Germany.
    Keywords: co-determination, digital technologies, works councils, industrial relations, entropy balancing
    JEL: J50 J53
    Date: 2018–06
  26. By: Regina T. Riphahn; Salwan Saif
    Abstract: Naturalization may be a relevant policy instrument affecting immigrant integration in host-country labor markets. We study the effect of naturalization on labor market outcomes of immigrants in Germany. We apply recent survey data and exploit a reform of naturalization rules in an instrumental variable estimation. In our sample of recent immigrants, linear regression yields positive correlations between naturalization and beneficial labor market outcomes. Once we account for the endogeneity of naturalization most coefficients decline in magnitude and lose statistical significance: male immigrants' labor market outcomes do not benefit significantly from naturalization. Naturalization reduces the risks of unemployment and welfare dependence for female immigrants. For males and females, the propensity to hold a permanent contract increase as a consequence of naturalization. The results are robust to modifications of samples and the instrument.
    Keywords: citizenship, migration, naturalization, labor market outcomes, instrumental variables
    JEL: J61 J15 C26
    Date: 2018–08
  27. By: Sascha O. Becker (University of Warwick); Ana Fernandes (Berner Fachhochschule; University of Fri); Doris Weichselbaumer (University of Linz)
    Abstract: We conducted a large scale correspondence test in Switzerland, Germany, and Austria to examine whether employers discriminate among job candidates concerning family status. In German speaking countries, CVs routinely include detailed information about the job candidate's personal characteristics. We considered thirty-year-old job applicants seeking secretarial or accounting positions. We found that having a family (indicated by marriage and the presence of children and their ages, or by being married but childless) does not affect the job candidate's chances of being called back for an interview for a full-time job. However, women were significantly less likely to receive a callback compared to men if the applicant's skills were not a good fit for the advertised position, if they lived far from the workplace, or when applying to large companies. Such gender asymmetric callback decisions are likely the result of subconscious decision making. Our results remain even after controlling for differences in the variance of unobservable determinants of productivity across applicants with and without a family.
    Date: 2018
  28. By: Jesper Bagger (Royal Holloway, University of London); Espen Moen (Norwegian Business School); Rune Vejlin (Aarhus University)
    Abstract: We provide a theoretical and empirical study of the optimal taxation of labor income in the presence of search frictions and unobservable amenities using comprehensive Danish matched employer-employee data. Heterogeneous workers undertake costly search off- and on-the-job in order to locate more productive jobs that pay higher wages. More productive workers search harder, resulting in equilibrium sorting where low-type workers are overrepresented in low-wage jobs while high-type workers are overrepresented in high-wage jobs. Absent taxes, worker search effort is efficient, because the social and private gains from search coincide. The optimal tax system balance efficiency and equity concerns at the margin. Equity concerns make it desirable to levy low taxes on (or indeed, subsidize) low-wage jobs including unemployment, and levy high taxes on high-wage jobs. Efficiency concerns limit how much taxes an optimal tax system levy on high-paid jobs, as high taxes distort the workers' incentives to search. Using detailed micro data on wages, labor market transitions, and income tax filings we estimate the structural model and compare the the actual Danish tax regime with the optimal one. Preliminary results suggest the optimal tax schedule exhibits less progressivity than the actual tax system in place. The model allows us to quantify the welfare gains from adopting an optimal income tax schedule.
    Date: 2018
  29. By: Andrea De Meo (University of Rome "Tor Vergata"); Lorenzo Ferrari (University of Rome "Tor Vergata")
    Abstract: We study how political party turnover at the municipal level affects the economic performance of Italian Local Public Enterprises. To this end, we match data on municipal elections in Italy to the budget data of firms whose shares are owned by Italian municipalities. As political turnover and performance are likely to be jointly endogenous, we exploit the quasi-experimental nature of close electoral races to estimate the causal treatment effect. We find evidence that municipal party turnover disrupts investment and slows down productivity growth. At the same time, the probability of observing financial distress is larger. No significant effect can be established, on the other hand, in terms of profitability and employment growth. We link the effect of municipal party turnover to three mechanisms: first, the nature of close electoral races alters the incumbent party’s incentives to invest; second, turnover makes the appointment of new, less-experienced, board directors more likely; third, the new political leadership directly reduces the amount of resources transferred in order to signal its commitment to curb wasteful municipal expenditure. We finally set up a survival analysis, whose results show that municipal party turnover is associated to an increase in the likelihood to observe bankruptcy.
    JEL: D72 D73 H72 H76 L32
    Date: 2018–08–08
  30. By: Trude Gunnes; Nina Drange; Kjetil Telle (Statistics Norway)
    Abstract: Persistently high workload may raise sickness absence with associated costs to firms and society. We proxy workload by the number of adults per child in Norwegian child care centers, but do not find that centers with many adults per child have lower sickness absence than other centers. However, we do find that more college-educated teachers per child are associated with lower sickness absence, whereas more assistants (with low or no education) per child are associated with higher sickness absence, suggesting that the observed variation in sickness absence at the center level is mainly driven by compositional differences of the employees rather than workload. The importance of compositional effects is supported by findings from individual fixed effects models and a regression discontinuity approach relying on results from municipal elections.
    Keywords: Workload; sickness absence; child care centers; teachers per child; education level
    JEL: I1 I2
    Date: 2018–08
  31. By: Luis Cesar Herrero-Prieto (Department of Applied Economics, University of Valladolid); Ivan Boal-San Miguel (Department of Applied Economics, University of Valladolid); Mafalda Mafalda Gomez-Vega (Department of Applied Economics, University of Valladolid)
    Abstract: This work involves undertaking a reappraisal of the Seven Deadly Sins in order to construct synthetic indicators of well-being aimed at measuring spatial economic disparities and their link to economic development. The Seven Deadly Sins constitute a way of describing vices vis-Ã -vis Christian moral education. Yet they might also be viewed as general norms of social behaviour and interpreted today as notions related to the concept of well-being. For example, the level of concentration of wealth (greed), sustainability of resources (gluttony), safety index (wrath), problems adapting to the labour market or workplace absenteeism (sloth), etc. The Seven Deadly Sins have also yielded emblematic examples of artistic iconography and cultural production. How they are perceived and expressed may also differ depending on each group’s cultural idiosyncrasy, in the sense of a series of beliefs and attitudes forged over the centuries. Based on these premises, the current work first seeks to compile variables that reflect each conceptual dimension so as to later construct a synthetic indicator of well-being with territorial disaggregation. This enables us to explore spatial disparities and the extent to which they relate to economic development. This is applied to a group of countries in the European Union with NUTS 2 territorial disaggregation (regions). The sources of information are basically Eurostat. The method involves applying Data Envelopment Analysis to construct the synthetic indicator, and spatial econometrics to pinpoint spatial dependence effects.
    Keywords: cultural identity, welfare indicators, economic development, synthetic indicators, Deadly Sins, Europe
    JEL: Z11 Z13 R12 O12
    Date: 2018–07
  32. By: Pasteau, Etienne; Zhu, Junyi
    Abstract: As the importance of capital is resurging in rich countries, the dynamics of wealth inequality are being increasingly affected by inheritance distribution. The relative attraction derived from inherited wealth and acquired human capital in marital choices may be undergoing change. We expand the traditional dimension of assortative mating through labor income only, covering both labor income and inheritance. This paper studies the concentration and substitutability of these two traits in forming partnerships using data for Germany from the Panel on Household Finances (PHF). Relative to France, Germany's aristocratic wealth has experienced more negative shocks since WWII, social stratification is perceived as less acute, and half of the country went through decades of communism. However, our results come quantitatively close to the distributional outcomes seen in France. By assuming a sequential revelation of inheritance and labor income in marital sorting, we develop a stylized multidimensional matching model which adequately replicates the sorting pattern observed using marginal distributions of these two traits from either gender. Our estimate suggests inheritance is about two and a half times more important than labor income in explaining marriage choice. This quantitative result seems to characterize the expected lifetime inheritance and labor income after marriage for Germany under the actual rate of return, growth rate, demographics as well as rapid expansion of bequest flows in recent history.
    Keywords: Assortative mating,Inheritance,Labor income,Multidimensional matching
    JEL: D31 J12 D64 D83
    Date: 2018
  33. By: Forth, John (National Institute of Economic and Social Research (NIESR)); Bryson, Alex (University College London)
    Abstract: The literature on the union wage premium is among the most extensive in labour economics but unions' effects on other aspects of the wage-effort bargain have received much less attention. We contribute to the literature through a study of the union premium in paid holiday entitlements, using large-scale survey data for the UK. We find that the union premium on paid holidays is substantially larger than the union premium on wages. However, the premium fell with the introduction of a statutory minimum entitlement to paid leave. This is indicative of the difficulties that unions have faced in protecting the most vulnerable employees, and symptomatic of their decreasing regulatory role in the UK labour market.
    Keywords: trade unions, holidays, vacation, working time
    JEL: J51 J32 K31
    Date: 2018–06
  34. By: Rafal Kierzenkowski; Peter Gal; Gabor Fulop; Dorothee Flaig; Frank van Tongeren
    Abstract: This study explores the impact of export shocks on firms and re-aggregates results to derive distributional effects on sectors and regions. In a first step, firm level data are used to assess the empirical relationship between exports and three outcome variables – labour productivity, employment and wages. In a second step, an illustrative set of changes in trading relationships generate sectoral export shocks, which are simulated with the OECD METRO model of trade and subsequently fed into micro-level estimates. The method developed in this study can be applied to other countries, conditional on the availability of data. As an initial case study, the analysis is for the United Kingdom which has weak regional productivity outside London, partly related to sectoral and trade specialisation. In particular, the most productive regions are specialised in knowledge-intensive services and are more intensive in tradable services. The results suggest limited impacts of export shocks on sectoral employment, except for car and truck manufacturing, consistent with a high integration of the sector with European value chains. Labour productivity and wages are negatively affected across most sectors, but the effects are smaller on the services sector relative to the goods sector. Given that services activities are concentrated in more productive regions, these regions are more resilient to shocks. The United Kingdom has a strong comparative advantage in services sectors and promoting the opening of global services markets would be an important way to offset potential negative impacts of export shocks on the other sectors of the economy.
    Keywords: employment, European Union, exports, firms, productivity, regions, sectors, United Kingdom, wages
    JEL: D24 F14 F16 J21 J3 R12
    Date: 2018–08–08
  35. By: Turrell, Arthur (Bank of England); Thurgood, James (Bank of England); Djumalieva, Jyldyz (Nesta); Copple, David (Bank of England); Speigner, Bradley (Bank of England)
    Abstract: What type of disaggregation should be used to analyse heterogeneous labour markets? How granular should that disaggregation be? Economic theory does not currently tell us; perhaps data can. Analyses typically split labour markets according to top-down classification schema such as sector or occupation. But these may be slow-moving or inaccurate relative to the structure of the labour market as perceived by firms and workers. Using a dataset of 15 million job adverts posted online between 2008 and 2016, we create an empirically driven, ‘bottom-up’ segmentation of the labour market which cuts across wage, sector, and occupation. Our segmentation is based upon applying machine learning techniques to the demand expressed in the text of job descriptions. This segmentation automatically identifies traditional job roles but also surfaces sub-markets not apparent in current classifications. We show that the segmentation has explanatory power for offered wages. The methodology developed could be deployed to create data-driven taxonomies in conditions of rapidly changing labour markets and demonstrates the potential of unsupervised machine learning in economics.
    Keywords: Vacancies; classification; disaggregation
    JEL: J42
    Date: 2018–07–27
  36. By: Jaenichen, Ursula (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "German social security data on employment are based on compulsory notifications by employers on employees at least once a year. To compute individual employment durations, the employment episodes reported in successive notifications have to be concatenated. Several issues in this computation raise the question of whether the durations are measured precisely. Using IAB data on individual employment biographies, the relevance of these issues is demonstrated empirically." (Author's abstract, IAB-Doku) ((en)) Additional Information Stata do-files
    Keywords: Datengewinnung, Beschäftigungsdauer - Messung, sozialversicherungspflichtige Arbeitnehmer, Berufsverlauf
    Date: 2018–08–08
  37. By: Barathova, Katarina
    Abstract: Today, many EU states face labour shortages in different sectors of economy, including agricultural sectors. Labour migration represents the solution which enables countries to cope with this problem. This is also the case of agricultural sector of the United Kingdom. After the EU enlargement, out of all old Member States only the United Kingdom alongside with Ireland and Sweden granted people from the Central and Eastern Europe countries free access to their labour markets. In case of the UK this was seen as strategic step, since the government recognized the important role of migrant workers in the growth of the UK’s economy. Soon after enlargement, the UK became favourite destination of migrant workers from A-8 countries. In 2007, when another two countries – Bulgaria and Romania joined the EU, the economic situation was different and the UK decided to apply transitional arrangements. Despite this, there were a lot of migrants coming to the UK and most of them were working in agriculture, since for seasonal agricultural workers there was an exception. After the restrictions were removed in January, 2014, migration inflows from Bulgaria and Romania almost doubled. Before referendum in 2016, migration was an important issue and one of the main arguments of Leave campaign. Using available statistical data, the paper examines migration flows to the UK and describes key features of migration from EU with special focus on A-10 countries. The main objective is to evaluate the importance of migrant workers from these new Member States in the agriculture and food manufacturing industry of the UK and reveal possible implications associated with Brexit.
    Keywords: agriculture,migration,labour,horticulture,EU workers
    JEL: J61 F22 Q10
    Date: 2018
  38. By: Andrew Lynn (Bank of England); Ronan C Lyons (Trinity College Dublin)
    Abstract: In understanding the determinants of mortgage default, the consensus has moved from an 'option theory' model to the 'double trigger' hypothesis. Nonetheless, that consensus is based on within-country studies of default. This paper examines the determinants of mortgage default across five European countries, using a large dataset of over 2.3 million active mortgage loans originated between 1991 and 2013 across over 150 banks. The analysis finds support for the double trigger hypothesis: changes in unemployment are important determinants of default, while negative equity itself is a relatively small contributor to default. Nonetheless, the effect of variables such as the interest rate and unemployment is stronger for those in negative equity. The double trigger, however, varies by country: country-specific factors are found to have a large effect on default rates. For any given level of LTV, and as LTV changes, borrowers were more sensitive to the interest rate and unemployment in Ireland and Portugal than in the UK or the Netherlands.
    Keywords: mortgage default, negative equity, double trigger, European Union.
    JEL: G01 G21 D04 E58
    Date: 2018–08
  39. By: Anne Ardila Brenøe
    Abstract: I examine how one central aspect of the childhood family environment—sibling gender composition—affects women's gender conformity, measured through their choice of occupation and partner. Using Danish administrative data, I causally estimate the effect of having a second-born brother relative to a sister for first-born women. The results show that women with a brother acquire more traditional gender norms with negative consequences for their labor earnings. I provide evidence of increased gender-specialized parenting in families with mixed-sex children, suggesting a stronger transmission of traditional gender norms. Finally, I find indications of persistent effects to the next generation of girls.
    Keywords: Gender identity, sibling gender, occupational choice, family formation
    JEL: I2 J1 J3
    Date: 2018–07
  40. By: Biewen, Martin (University of Tuebingen); Plötze, Daniela (Wüstenrot & Württembergische)
    Abstract: Using data from the German Structure of Earnings Survey (GSES), this paper studies the role of changes in working hours for the increase in male and female earnings inequality between 2001 and 2010. We provide both classic decompositions of the variance of log earnings into the variances of hours, wage rates and their covariance, and decompositions based on reweighting the conditional hours distribution. Depending on the inequality measure considered, our results suggest that between 10 and 30 percent of the increase in male earnings inequality and 37 to 47 percent of the increase in female earnings inequality can be explained by changes in working hours. In addition, a large part of the inequality increase can be accounted for by changes in the composition of person and firm characteristics.
    Keywords: inequality, working hours, earnings, female labor market participation
    JEL: C14 J22 J31
    Date: 2018–06

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