nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2018‒09‒03
23 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Information on biodiversity and environmental behaviors: a European study of individual and institutional drivers to adopt sustainable gardening practices By Coisnon, Thomas; Rousselière, Damien; Rousselière, Samira
  2. Working Beyond 65 in Ireland By Nolan, Anne; Barrett, Alan
  3. The Effects of Large Universal Child Benefits on Female Labour Supply By Magda, Iga; Kiełczewska, Aneta; Brandt, Nicola
  4. Field of Study and Family Outcomes By Artmann, Elisabeth; Ketel, Nadine; Oosterbeek, Hessel; van der Klaauw, Bas
  5. When Short-Time Work Works By Cahuc, Pierre; Kramarz, Francis; Nevoux, Sandra
  6. Triple Disadvantage?: A first overview of the integration of refugee women By Thomas Liebig
  7. Monetary Policy Effects on Wage Inequality Between and Within Firms By Christian Moser; Benjamin Wirth; Farzad Saidi
  8. Farm heterogeneity and agricultural policy impacts on size dynamics: evidence from France By Saint-Cyr, Legrand D. F.
  9. Human Capital and Income Differences: Germany's Reunification as a Natural Experiment By Wolfgang Dauth; Sang Yoon (Tim) Lee; Sebastian Findeisen
  10. House Prices, Home Equity, and Personal Debt Composition By Jieying Li; Xin Zhang
  11. The financial structure of Italian start-ups, in good and bad times By Emilia Bonaccorsi di Patti; Valentina Nigro
  12. The role of indirect woody biomass sources in the Italian energy sector By Andrighetto, N.; Masiero, M.; Pettenella, D.
  13. Still Attached? Are Social Safety Nets Working? Labor Force Participation in European Regions By Benjamin Hilgenstock; Zsoka Koczan
  14. Coordinated Work Schedules and the Gender Wage Gap By German Cubas; Chinhui Juhn; Pedro Silos
  15. Knowledge convergence in European regions: Towards cohesion? By Akcomak, Semih; Erdil, Erkan; Cetinkaya, Umut Yılmaz
  16. The Effect of Labour Cost Reduction on Employment of Vulnerable Groups — Evaluation of the Hungarian Job Protection Act By Svraka, András
  17. Household willingness to pay for green electricity in Poland By Anna Kowalska-Pyzalska; David Ramsey
  18. Exploring how innovation strategies at time of crisis influence performance: a cluster analysis perspective By Marcel Ausloos; Francesca Bartolacci; Nicola G. Castellano; Roy Cerqueti
  19. The Curious Incident of Luxury Imports during the Top-Income Surge By Stephanie Houle; Pau S. Pujolas; Michael R. Veall
  20. Off to a Bad Start? The Role of Leverage for Start-Up Productivity during the Financial Crisis By Vincent Sterk; Jasper De Winter; Neeltje van Horen; Ralph De Haas
  21. Connecting to Power: Political Connections, Innovation, and Firm Dynamics By Salome Baslandze
  22. Does a farm household income problem still exist in the European Union? By Rocchi, B; Marino, M; Severini, S
  23. Knowledge intensive business services and urban areas: an analysis of localization and productivity on Italian data By valter di Giacinto; Giacinto Micucci; Alessandro Tosoni

  1. By: Coisnon, Thomas; Rousselière, Damien; Rousselière, Samira
    Abstract: The identification of individual and institutional drivers regarding ecological transition of individual behaviors has been widely studied in the literature. However, few studies report the specific case of private gardening practices, even though it is particularly relevant when discussing lifestyle habits and ecological transition, due to the wide range of positive and negative environmental externalities private gardens may generate. Using a European database (Eurobarometer 83.4), we estimate individual and institutional drivers of sustainable gardening practices. Our econometric approach takes the specificities of our data into account, by using a two-step approach combining a generalized Heckman model and a meta-regression, and allows us to highlight the importance of the accessibility to biodiversity-related information in the adoption of environmentally friendly behaviors. Differentiated trends between European countries are tested using indicators on economic development, social capital and environmental performances. In conclusion, we provide some recommendations in terms of public policies.
    Keywords: Environmental Economics and Policy
    Date: 2018
  2. By: Nolan, Anne (ESRI, Dublin); Barrett, Alan (ESRI, Dublin)
    Abstract: Extending working lives is often proposed as one route through which the costs associated with population ageing can be managed. In that context, understanding who currently works for longer can help policymakers to design policies to facilitate longer working. In particular, it is important to know if longer working is a choice or a necessity, where necessity arises from a lack of pension income. In this paper, we use data from the first four waves of the Irish Longitudinal Study of Ageing (TILDA), covering the period 2010-2016, to examine patterns of labour force participation among men and women aged 65+. We find that a lack of pension income is an important determinant of later-life working and that this applies for both men and women. Although older women are significantly less likely to work than older men, we find few differences in the pattern of determinants of longer working among older men and women. However, while women are significantly less likely to work than men, this effect is stronger among married women compared to single women. This suggests that older women without immediate access to family-provided financial support may need to work to support themselves. This adds to the picture of later life work being a necessity as opposed to a choice. However, an alternative explanation is that older married women may also have caring responsibilities that reduce their labour force participation.
    Keywords: retirement, pensions, older workers, Ireland
    JEL: D14 H55 J14 J26
    Date: 2018–07
  3. By: Magda, Iga (Warsaw School of Economics); Kiełczewska, Aneta (Institute for Structural Research (IBS)); Brandt, Nicola (OECD)
    Abstract: In 2016 the Polish government introduced a large new child benefit, called "Family 500+", with the aim to increase fertility from a low level and reduce child poverty. The benefit is universal for the second and every further child and means-tested for the first child. Increasing out-of-work income significantly, the transfer can reduce incentives to participate in the labour market. We study the impact of the new benefit on female labour supply, using Polish Labour Force Survey data. Based on a difference-in-differences methodology we find that the labour market participation rates of women with children decreased after the introduction of the benefit compared to childless women. The estimates suggest that by mid-2017 the labour force participation rate of mothers dropped by 2-3 percentage points, depending on the estimation specification, as a result of the "Family 500+" benefit. The effect was higher among women with lower levels of education and living in small towns.
    Keywords: child allowance, social transfers, family policy, labour market participation
    JEL: E24 H53 I38 J13 J21 J22
    Date: 2018–07
  4. By: Artmann, Elisabeth (Free University Amsterdam); Ketel, Nadine (University of Gothenburg); Oosterbeek, Hessel (University of Amsterdam); van der Klaauw, Bas (Vrije Universiteit Amsterdam)
    Abstract: This paper uses administrative data from 16 cohorts of the Dutch population to study the relationship between field of study and family outcomes. We first document considerable variation by field of study for a range of family outcomes. To get to causal effects, we use admission lotteries that were conducted in the Netherlands to allocate seats for four substantially oversubscribed studies. We find that field of study matters for partner choice, which for women also implies an effect on partners' earnings. Fertility of women is not affected and evidence for men is mixed, but we find evidence for intergenerational effects on children's education. This means that field of study does not only affect individual labor market outcomes but also causally influences other important dimensions of a person's life.
    Keywords: higher education, study choice, returns to education, assortative matching, intergenerational mobility
    JEL: J12 J13
    Date: 2018–07
  5. By: Cahuc, Pierre (Ecole Polytechnique, Paris); Kramarz, Francis (CREST (ENSAE)); Nevoux, Sandra (CREST (ENSAE))
    Abstract: Short-time work programs were revived by the Great Recession. To understand their operating mechanisms, we first provide a model showing that short-time work may save jobs in firms hit by strong negative revenue shocks, but not in less severely-hit firms, where hours worked are reduced, without saving jobs. The cost of saving jobs is low because short-time work targets those at risk of being destroyed. Using extremely detailed data on the administration of the program covering the universe of French establishments, we devise a causal identification strategy based on the geography of the program that demonstrates that short-time work saved jobs in firms faced with large drops in their revenues during the Great Recession, in particular when highly levered, but only in these firms. The measured cost per saved job is shown to be very low relative to that of other employment policies.
    Keywords: short-time work, unemployment, employment
    JEL: E24 J22 J65
    Date: 2018–07
  6. By: Thomas Liebig (OECD)
    Abstract: 45% of refugees in Europe are women, yet little is known on their integration outcomes and the specific challenges they face. This report summarises prior research on the integration of refugee women, both compared with refugee men and other immigrant women. It also provides new comparative evidence from selected European and non-European OECD countries. Refugee women face a number of particular integration challenges associated with poorer health and lower education and labour market outcomes compared to refugee men, who are already disadvantaged in comparison with other migrant groups. They also show a peak in fertility in the year after arrival. A large fraction has come from countries where gender inequality is high and employment of women tends to be low. However, there is little correlation between indicators such gender differences in participation and employment in the origin and in the host country, suggesting that the integration issues can be addressed by host-country employment and education policy instruments. The report also finds that building basic skills in terms of educational attainment and host-country language training bears a high return in terms of improving labour market outcomes. It also provides intergenerational pay-off for their children. Against this backdrop, structured integration programmes such as the ones in the Scandinavian countries seem to be a worthwhile investment.
    Keywords: Gender, Immigrants, Integration, Refugees, Women
    JEL: F22 J15 J16
    Date: 2018–08–30
  7. By: Christian Moser (Columbia University); Benjamin Wirth (IAB Nuremberg); Farzad Saidi (Stockholm School of Economics)
    Abstract: We study pass-through of negative interest rates to workers’ wages in the European currency union from 2014-16. To this end, we construct a novel dataset combining ad- ministrative linked employer-employee (IAB-LIAB) data with proprietary syndicated loans (Dealscan) and executive compensation (BoardEx) data from Germany. To identify monetary policy effects on wage inequality between and within firms, we exploit the interaction of nominal interest rate movements around the zero lower bound with variation in pre-determined balance sheet exposure of banks and their lending relations with firms. We find significant increases in credit supply of affected banks, leading to increased within-firm inequality. The results are driven by executives and highest- paid employees reaping relatively greater benefits from positive firm-level credit supply shocks. At the same time, low-paying firms increase their average pay in response to easier credit access.
    Date: 2018
  8. By: Saint-Cyr, Legrand D. F.
    Abstract: This article investigates the impact of agricultural policies on structural change in farming. Since not all farmers may behave alike, a non-stationary mixed-Markov chain modeling (M-MCM) approach is applied to capture unobserved heterogeneity in the transition process of farms. A multinomial logit specification is used for transition probabilities and the parameters are estimated by the maximum likelihood method and the Expectation-Maximization (EM) algorithm. An empirical application to an unbalanced panel dataset from 2000 to 2013 shows that French farming mainly consists of a mixture of two farm types characterized by specific transition processes. The main finding is that the impact of farm subsidies from both pillars of the Common Agricultural Policy (CAP) highly depends on the farm type. A comparison between the non-stationary M-MCM and a homogeneous non-stationary MCM shows that the latter model leads to either overestimation or underestimation of the impact of agricultural policy on change in farm size. This suggests that more attention should be paid to both observed and unobserved farm heterogeneity in assessing the impact of agricultural policy on structural change in farming.
    Keywords: Farm Management
    Date: 2017–06–23
  9. By: Wolfgang Dauth (University of Wuerzburg); Sang Yoon (Tim) Lee (Toulouse School of Economics); Sebastian Findeisen (University of Mannheim)
    Abstract: We exploit Germany's reunification as a natural experiment to study the contribution of human capital for income differences and the mechanisms behind it. Using a detailed administrative data set, which follows over 15 million workers over their life-cycle, we show that they are very strong cohort effects in the wages and earnings of Eastern Germans. We find clear graphical evidence and results from non-parametric models that these strong cohort effects are driven by the differential exposure of cohorts to the communist versus the decentralized market systems. Decomposition exercises show that such cohort effects are mostly driven by cohort-varying wage profiles, which can be explained by differences in the frequency of job switches across cohorts. Migration and education effects matter less.
    Date: 2018
  10. By: Jieying Li (Stockholm School of Economics); Xin Zhang (Sveriges Riksbank)
    Abstract: Using a monthly panel dataset of individuals' debt composition including mortgage and non-mortgage consumer credit, we show that house price changes can explain a significant fraction of personal debt composition dynamics. We exploit the variation in local house price growth as shocks to homeowners' housing wealth to study the consequential adjustment of personal debt composition. To account for local demand shocks and disentangle the housing collateral channel from the wealth effect, we use renters and non-equity-withdrawal homeowners in the same region as control groups. We present direct evidence that homeowners reoptimize their debt structure by using withdrawn home equity to pay down comparatively expensive short-term non-mortgage debt during a housing boom, unsecured consumer loans in particular. We also find that homeowners withdraw home equity to finance their entrepreneurial activities. Our study sheds new light on the dynamics of personal debt composition in response to changes in house prices.
    Date: 2018
  11. By: Emilia Bonaccorsi di Patti (Bank of Italy); Valentina Nigro (Bank of Italy)
    Abstract: We analyse the financing sources of over 360,000 Italian start-ups registered between 2003 and 2010. The data show that, before the Global Financial Crisis, 50 per cent of start-ups borrowed from banks when they were one year old, and that bank loans covered 16 per cent of total assets on average. In the post-crisis period we find that the frequency of borrowing by one-year-old start-ups declines by 5 percentage points, and the difference does not disappear as firms become older. We also document that the post-crisis decline in borrowing from banks is more marked than that observed for older firms, controlling for business characteristics.
    Keywords: start-ups, corporate finance, financial constraints
    JEL: D22 G32
    Date: 2018–07
  12. By: Andrighetto, N.; Masiero, M.; Pettenella, D.
    Abstract: This paper aims to describe and analyse available data on the main components stages of the wood energy value chain in Italy, highlighting discrepancies between data about woody biomass consumption and domestic supply. Discrepancies are probably connected to informal harvesting, historically a source if raw material not easily captured by official statistics, and to the lack of information regarding the energy utilization of sources not directly connected to forest operations, like, for example, residues from industrial processing, post-consumer recovered wood and biomass from urban forests. The paper focuses on the role played by these non-forest sources. In other European countries such as Germany, France and the United Kingdom, available information gives evidence that these resources cover an important share of woody biomass sources used for energy production, while in Italy, until now, there are no reliable data on the global availability of non-forest wood resources or their utilization for energy purposes. This paper aims to understand the main factors that can influence the utilization of these sources in Italy, analysing the legislative framework and competition with other market sectors for the same raw material. At the Italian level, the competition with panel production seems to strongly limit the use of recovered material for energy purposes. As in other EU countries, data on wood processing residues are scarce and not well organized, even if the utilization of woody biomass for energy production appears to be a rather common practice.
    Keywords: Agricultural and Food Policy
    Date: 2018–07–21
  13. By: Benjamin Hilgenstock; Zsoka Koczan
    Abstract: The paper examines the evolution and drivers of labor force participation in European regions, focusing on the effects of trade and technology. As in the United States, rural regions within European countries saw more pronounced declines (or smaller increases) in participation than urban regions. Unlike in the United States, however, trade and technology, captured here using novel measures of initial exposures to routinization and offshoring, did not result in detachment from the workforce in European regions. Instead, regions with high initial exposures to routinization and offshoring experienced so-far larger increases in participation, likely driven by an added second worker effect.
    Date: 2018–07–13
  14. By: German Cubas (University of Houston); Chinhui Juhn (University of Houston); Pedro Silos (Temple University)
    Abstract: Married women with kids that are full time workers work less and allocate more time to home production than their men counterparts. At the same time the labor market is characterized by occupations that differ in terms of the coordination of the work schedule. Workers that work in occupations that concentrate hours at peak times of the day are paid a higher wage, but relatively lower if they are women. The higher demand for family time women face restricts their occupational choice and thus drives a gap in their earnings relative to men. We incorporate these trade offs in an occupational choice model with home production in which workers have comparative advantages to work into different occupations. In the model, labor supply, the supply of family time and the occupational choice are intimately related. The effect of differences in household care responsibilities between men and women in their occupational choice explain half of the observed gender earnings gap.
    Date: 2018
  15. By: Akcomak, Semih (UNU-MERIT, and Middle East Technical University); Erdil, Erkan (Middle East Technical University); Cetinkaya, Umut Yılmaz (Middle East Technical University)
    Abstract: In a knowledge economy, it is interesting to see that the concept of knowledge cohesion is a fertile soil for research. Despite the ongoing interest in investigating whether economic cohesion has been achieved in Europe there is no research that looks at knowledge cohesion. Though it is difficult to investigate such an abstract concept one can look at a more concrete concept such as convergence. Using the European Union Framework Programme data from 1984 to 2016 and simple network analysis and regressions we show that there are signs of knowledge convergence within the NUTS2 regions of Europe. Despite the fact that the top performers persist over the years convergence is much stronger among the less developed regions.
    Keywords: knowledge, convergence, cohesion, diffusion, Europe
    JEL: D83 O33 R11
    Date: 2018–06–21
  16. By: Svraka, András
    Abstract: In 2013 Hungary introduced large scale targeted employers' social security contribution cuts for the young, old, low-skilled, and other marginally attached workforce, called the Job Protection Act (JPA). In this paper I estimate the employment effects of the programme for the main target groups using the discontinuities in the JPA's design in a differences in differences framework on administrative datasources. My estimates show robust and economically significant employment effects for the JPA, a total 1.2% point increase in employment rate three years after the introduction. The JPA was highly effective in the young and low-skilled target groups, with high self-financing ratios, while it was only marginally effective in the old target group. The results suggests that targeted tax incentives can be a cost-efficient way of increasing employment in vulnerable groups.
    Keywords: Job Protection Act, targeted tax incentives, differences in differences
    JEL: H24 J21 J23
    Date: 2018–08–02
  17. By: Anna Kowalska-Pyzalska; David Ramsey
    Abstract: This paper analyses the willingness to pay (WTP) for green electricity among residential consumers in Poland. The current share of renewable energy sources (RES) in energy consumption is around 13.5% and is expected to increase. Data were collected through a telephone survey of a representative sample of Poles. The results obtained indicate that - above all - age, income, environmental attitudes, peer support, but also, education and knowledge about RES play the most important role in explaining consumers' WTP for green electricity. Statistical analyses indicate that the mean WTP of Polish consumers is currently very low (around 0.5 USD), which is due to the relatively low GDP per capita, the lack of knowledge about green energy and no past experience with green electricity tariffs.
    Keywords: Green energy; Green electricity tariffs; Willingness to pay; Telephone survey; Contingent valuation method (CVM); Logit regression
    JEL: D12 D90 Q20 Q42 Q48 Q56
    Date: 2018–07–12
  18. By: Marcel Ausloos; Francesca Bartolacci; Nicola G. Castellano; Roy Cerqueti
    Abstract: This paper analyzes the connection between innovation activities of companies -- implemented before crisis -- and their performance -- measured at time of crisis. The companies listed in the STAR Market Segment of the Italian Stock Exchange are analyzed. Innovation is measured through the level of investments in total tangible and intangible fixed assets in 2006-2007, while performance is captured through growth -- expressed by variations of sales, total assets and employees -- profitability -- through ROI or ROS -- and productivity -- through asset turnover or sales per employee in the period 2008-2010. The variables of interest are analyzed and compared through statistical techniques and by adopting cluster analysis. In particular, a Voronoi tessellation is also implemented in a varying centroids framework. In accord with a large part of the literature, we find that the behavior of the performance of the companies is not univocal when they innovate.
    Date: 2018–08
  19. By: Stephanie Houle; Pau S. Pujolas; Michael R. Veall
    Abstract: Atkinson, Piketty, and Saez [2011] find a post-1979 surge in taxfiler top income shares in “English speaking countries” (surge countries) but not in “continental European countries and Japan” (no-surge countries). We find the puzzle that Comtrade import-to-GDP ratios and import-to-total-import ratios for apparent luxuries pearls, precious stones, diamonds, works of art, jewellery, furs and coins do not increase post-1979 in surge countries relative to no-surge countries. Explanations could include issues with the taxfiler or import data or that top income individuals do not have a particularly high marginal to propensity to consume these luxury goods, at least within their own country. Overall, this is a fragment of evidence that there may not have been a large post-1979 increase in top-end domestic consumption inequality in surge countries compared to no-surge countries.
    Keywords: income distribution, taxfiler data, luxury goods
    JEL: D12 D31 D63 F19 N30
    Date: 2018–08
  20. By: Vincent Sterk (University College London); Jasper De Winter (De Nederlandsche Bank); Neeltje van Horen (Bank of England); Ralph De Haas (European Bank for Reconstruction and Dev)
    Abstract: We study the channels via which start-ups have contributed to aggregate productivity growth, before and during the financial crisis of 2008. We propose a novel productivity decomposition method, building on Melitz and Polanec (2015), which we apply to administrative micro data on the population of Dutch start-ups. Exploiting detailed balance sheet information, we document striking differences between the contributions of high- and low-leverage start-ups. Moreover, the arrival of the crisis triggered came with a collapse in productivity growth. We interpret these findings through the lens of a firm dynamics model with financial constraints and real adjustment frictions.
    Date: 2018
  21. By: Salome Baslandze (EIEF - Einaudi Institute for Economics a)
    Abstract: We study the Italian firms and their workers to answer this question. Our analysis uses a brand-new data spanning the period from 1993 to 2014 where we merge: (i) firm-level balance sheet data, (ii) the social security data on the universe of workers, (iii) patent data from the European Patent Office, (iv) registry of local politicians, and (v) detailed data on local elections in Italy. We find that firm-level political connections are widespread, especially among large firms, and that industries with a larger share of politically connected firms feature worse firm dynamics. Market leaders are much more likely to be politically connected and less likely to innovate, compared to their competitors. In addition, connections relate to higher survival and growth in employment and revenue but not in productivity – the result that we also confirm using regression discontinuity design. We build a firm dynamics model where we allow firms to invest in innovation and/or political connection to advance their productivity and to overcome certain market frictions. The model highlights the new interaction between static gains and dynamic losses from rent-seeking for aggregate productivity.
    Date: 2018
  22. By: Rocchi, B; Marino, M; Severini, S
    Abstract: This paper compares income condition of farm and non-farm households using a single, harmonized database, the European Union Statistics on Income and Living Conditions (EU-SILC), a survey collecting information on income and well-being of a representative sample of all European households. We adopt approaches that are currently used in the literature on income analysis outside the specific field of agriculture and rooted within the family of the quasi- experimental methods. Starting from a simple comparison of income levels, we move to Regression Adjusted (RA) methods and to Covariate Matching (CM) techniques that are based on a "counterfactual" logic. The analysis produces two main results. The first shows that on average, considering the whole European Union, a negative differential between farming and non-farming households exists. The gap is estimated after controlling for differences between farm and nonfarm households in family size, age, marital status, education, health, rural residence and country belonging. The result is robust to different empirical approaches and, in our opinion, represents a policy relevant outcome of the study. The second main achievement of the study refers to the heterogeneityof income differentials across countries and household groups. Within the group of self-employed households, the farming ones earn on average a lower income, but they show an income level above the average of the total populationin the Western Continental country.
    Keywords: Agricultural and Food Policy
    Date: 2018–07–21
  23. By: valter di Giacinto (Bank of Italy); Giacinto Micucci (Bank of Italy); Alessandro Tosoni (Bank of Italy)
    Abstract: We analyse the geographic localization and the productivity of knowledge-intensive business services (KIBS) in Italy, using both census data and balance-sheet data at the firm level. We find that KIBS are generally agglomerated in urban areas where they attain significantly higher labour productivity levels. Urban productivity advantages are found to be strongly associated with the local availability of human capital and to standard proxies of Marshall-Arrow-Romer and Jacobs agglomeration economies. Forward demand linkages and some factors impacting on the thickness of the local labour market also appear to be relevant. On the whole, the set of explanatory factors considered could explain the entire urban productivity premium estimated for Italian KIBS firms.
    Keywords: knowledge-intensive business services (KIBS); urban areas; agglomeration economies.
    JEL: J24 L84 R30
    Date: 2018–07

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