nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2018‒10‒01
27 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Young SMEs: Driving innovation in Europe? By Veugelers, Reinhilde; Ferrando, Annalisa; Lekpek, Senad; Weiss, Christoph T.
  2. Poverty among the elderly: The role of public pension systems By JACQUES Philippe,; LEROUX Marie-Louise,; STEVANOVIC Dalibor,
  3. Healthcare Utilization at Retirement: The Role of the Opportunity Cost of Time By Lucifora, Claudio; Vigani, Daria
  4. The Wage Premium from Foreign Language Skills By Liwiński, Jacek
  5. From the cradle to the grave : the influence of family background on the career path of italian men By Michele Raitano; Francesco Vona
  6. Long-term Changes in Married Couples' Labor Supply and Taxes: Evidence from the US and Europe Since the 1980s By Alexander Bick; Bettina Brüggemann; Nicola Fuchs-Schündeln; Hannah Paule-Paludkiewicz
  7. The cultural origin of saving behavior By Costa-Font, Joan; Giuliano, Paola; Özcan, Berkay
  8. Tobacco Control Policies and Smoking Behavior in Europe: More Than Trends? By Odermatt, Reto; Stutzer, Alois
  9. Political parties and climate change policy: why do parties sometimes talk about it, but sometimes keep silent By Baiba Witajewska-Baltvilka
  10. Inefficient Short-Time Work By Pierre Cahuc; Sandra Nevoux
  11. Training in the Great Recession: Evidence from an individual perspective By Dietz, Daniel; Zwick, Thomas
  12. The Impact of the Announcement of Temporary Building Sites for Refugees on House Prices in Gothenburg By Kjellander, Josef; Nilsson, Viktor; van Vuuren, Aico
  13. Switching on electricity demand response: Evidence for German households By Frondel, Manuel; Kussel, Gerhard
  14. Unmet health care needs among the working-age population. Evidence from the great recession in Spain. By Carla Blázquez-Fernández; David Cantarero-Prieto; Patricio Pérez-González
  15. Interpregnancy intervals and perinatal and child health in Sweden: a comparison within families and across social groups By Kieron J. Barclay; Anna Baranowska-Rataj; Martin Kolk; Anneli Ivarsson
  16. Impact of beliefs about negative effects of wind turbines on preference heterogeneity regarding renewable energy development in Poland By Anna Bartczak; Wiktor Budziński; Bernadeta Gołębiowska
  17. Students' Behavioural Responses to a Fallback Option: Evidence from Introducing Interim Degrees in German Schools By Obergruber, Natalie; Zierow, Larissa
  18. Optimal taxation under different concepts of justness By Jessen, Robin; Metzing, Maria; Rostam-Afschar, Davud
  19. The German productivity paradox: Facts and explanations By Elstner, Steffen; Feld, Lars P.; Schmidt, Christoph M.
  20. Royalty Taxation under Tax Competition and Profit Shifting By Steffen Juranek; Dirk Schindler; Andrea Schneider
  21. The Wider Benefits of Adult Learning: Work-Related Training and Social Capital By Ruhose, Jens; Thomsen, Stephan L.; Weilage, Insa
  22. Does the European Union achieve comprehensive blue growth? Progress of EU coastal states in the Baltic and North Sea, and the Atlantic Ocean against sustainable development Goal 14 By Rickels, Wilfried; Weigand, Christian; Grasse, Patricia; Schmidt, Jörn Oliver; Voss, Rüdiger
  23. Foreign competition and executive compensation in the manufacturing industry: A comparison between Germany and the U.S. By Dyballa, Katharina; Kraft, Kornelius
  24. Does FDI crowd out domestic investment in transition countries? By Cristina Jude
  25. Higher taxes on less elastic goods? Evidence from German municipalities By Blesse, Sebastian; Doerrenberg, Philipp; Rauch, Anna
  26. Unfair trading practices in the dairy farm sector: Insights from an EU field survey By Di Marcantonio, F.; Ciaian, P.; Castellanos, V.
  27. Immigration and far-right voting: Evidence from Greece By Chletsos, Michael; Roupakias, Stelios

  1. By: Veugelers, Reinhilde; Ferrando, Annalisa; Lekpek, Senad; Weiss, Christoph T.
    Abstract: Using large scale EIB Investment Survey evidence for 2016 covering 8,900 non-financial firms from all size and age classes across all sectors and all EU Member States, we identify different innovation profiles based on a firm's R&D investment and/or innovation activities. We find that "basic" firms - i.e. firms that do not engage in any type of R&D or innovation - are more common among young SMEs, while innovators - i.e. firms that do R&D and introduce new products, processes or services- are more often old and large firms. This hold particularly for "leading innovators", ie those introducing innovations new to the market. To further explore why young SMEs are not more active in innovation, we explore their access to finance. We confirm that young small leading innovators are the most likely to be credit constrained. Grants seem to at least partly addressing the external financing access problem for leading innovators, but not for young SMEs.
    Keywords: young small companies,innovation,access to finance
    JEL: G24 O31 O38
    Date: 2018
  2. By: JACQUES Philippe, (Analysis Group, Montréal); LEROUX Marie-Louise, (Université du Québec à Montréal); STEVANOVIC Dalibor, (Université du Québec à Montréal)
    Abstract: The objective of this paper is to measure the impact of first-pillar public pensions spending on the prevalence of poverty among the elderly. Using data from 27 European countries from 1995 to 2014, we estimate the elasticity of the poverty rate among individuals aged over 65 years to per capita public pension spending. We show the existence of a nonlinear relationship between these two variables. The elasticity is negative and statistically different from 0 only beyond a level of spending of 685€ per capita. At the average value of 2,819€, it is estimated that the elasticity is about -1.45. This nonlinear relation is robust to the treatment of possible endogeneity and to different robustness checks like the variation of the poverty line, and the inclusion of country-specific differences in public pension plans.
    Keywords: ageing, poveorty, income inequalities, public pension systems, panel data
    JEL: H55 I32 I38
    Date: 2018–08–31
  3. By: Lucifora, Claudio (Università Cattolica del Sacro Cuore); Vigani, Daria (Università Cattolica del Sacro Cuore)
    Abstract: We investigate the causal impact of retirement on healthcare utilization using SHARE data for 10 European countries. We show that the number of doctor's visits and the probability of visiting a doctor more than four times a year (our measures of healthcare utilization) increase after retirement. The increase in healthcare utilization is found to depend mainly on the years spent in retirement, suggesting that adjustment may take time. We find evidence of heterogeneous effects by gender and across different patterns of time use prior to retirement (i.e., working long hours, and combined work and out-of-work activities). Overall, the empirical findings suggest that the increase in healthcare utilization is consistent with the decrease in the opportunity cost of time faced by individuals when they retire.
    Keywords: retirement, health, healthcare utilization
    JEL: J26 I10 C26
    Date: 2018–08
  4. By: Liwiński, Jacek
    Abstract: The globalization of labour markets makes language skills one of the key competences required by employers nowadays. Our purpose is to estimate the wage premium from foreign language skills (FLS) earned by the Poles. We also want to find out whether this premium is affected by the fact of working in Poland or abroad. The Poles seem to be a good case study, because the Polish language is not used for international communication, while as much as 58% of Poles command at least one foreign language and 5% of Poles earn their income abroad. We use data from three waves (2012-2014) of the Human Capital Balance survey with a pooled sample of about 35,000 individuals. We estimate wage equation with the Heckman correction for selection to employment and we check for robustness with propensity score matching. We find that the advanced command of a foreign language bring a 6% wage premium to individuals working in Poland and 22% to those working abroad. Interestingly, those working in Poland earn a much higher wage premium from proficiency in Spanish (29%), Italian (20%) or French (19%) than from proficiency in English (8%). But the English language is the only foreign language that brings a wage premium to Poles working abroad.
    Keywords: foreign language skills,wage premium,wage equation
    JEL: J24
    Date: 2018
  5. By: Michele Raitano (Sapienza Università di Roma); Francesco Vona (Observatoire français des conjonctures économiques)
    Abstract: Using a longitudinal data set that contains detailed information on working histories of Italian men, we investigate the relationship between parental background and sons’ earnings profiles. We find that the parental influence on sons’ earnings persists over the career and that the direct influence controlling for sons’ education is large and grows during the working career. After twenty years of experience, our baseline specification indicates that an additional year of parental education is associated with a 2.0% increase in sons’ wages, while an additional year of son's education is associated with a 4.8% increase. We use educational mobility between parents and sons to disentangle this influence into a glass ceiling effect – a premium for well‐off children who have high educational attainments – and a parachute effect – a premium for well‐off children who acquire less education than their parents. We find that both effects contribute to explain the steeper earnings profiles of the well‐off sons, consistently with the idea that family ties play a crucial allocative role in the Italian labour market.
    Date: 2018–10
  6. By: Alexander Bick; Bettina Brüggemann; Nicola Fuchs-Schündeln; Hannah Paule-Paludkiewicz
    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, and the educational composition. The model is quite successful in replicating the time series behavior of hours worked per employed married woman, with labor income taxes being the key driving force. It does however capture only part of the secular increase in married women’s employment rates in the 1980s and early 1990s, suggesting an important role for factors not considered in this paper. 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.
    JEL: E24 H24 J22
    Date: 2018–09
  7. By: Costa-Font, Joan; Giuliano, Paola; Özcan, Berkay
    Abstract: Traditional economic interpretations have not been successful in explaining differences in saving rates across countries. One hypothesis is that savings respond to cultural specific social norms. The accepted view in economics so far is that culture does not have any effect on savings. We revisit this evidence using a novel dataset, which allows us to study the saving behavior of up to three generations of immigrants in the United Kingdom. Against the backdrop of existing evidence, we find that cultural preferences are an important explanation for cross-country differences in saving behavior, and their relevance persists up to three generations.
    JEL: N0
    Date: 2018–09–12
  8. By: Odermatt, Reto (University of Basel); Stutzer, Alois (University of Basel)
    Abstract: In many European countries, there is an unmissable trend towards stricter tobacco control policies and a parallel reduction in the prevalence of smoking. The extent to which policies promote this latter trend, however, is less clear. We therefore analyze the staggered introductions of smoking bans and the variation in cigarette taxes over more than twenty years. After taking into account unobserved country- and time-specic eects as well as country-specic trends, we nd no clear evidence that smoking bans are associated with lower levels of smoking. In contrast, higher cigarette prices tend to be negatively related to smoking, in particular for men and people under the age of 30. However, price elasticities are small. Overall, the results suggest that only about one sixth of the decline in the prevalence of smoking in Europe can be explained by our policy variables.
    Keywords: Smoking bans; cigarette taxes; smoking behavior; tobacco control policies
    JEL: D12 H31 I18 K32
    Date: 2018–09–12
  9. By: Baiba Witajewska-Baltvilka
    Abstract: The paper studies the factors that shape party issue competition on climate change and environmentalism. It covers the quantitative study on political parties' positions in 22 European countries during electoral campaigns between 1990 and 2016, as well as two case studies: Polish electoral campaign in 2011 and German electoral campaign in 2013. The paper concludes that more favourable public opinion towards environment, lower socio-economic inequality and weaker trade unions are associated with high party competition on climate change and environmentalism.
    Keywords: party competition, issue salience, climate change, environmentalism, elections
    JEL: C33 Q50 Q58
    Date: 2018–09
  10. By: Pierre Cahuc; Sandra Nevoux
    Abstract: This paper shows that the reforms which expanded short-time work in France after the great 2008-2009 recession were largely to the benefit of large firms which are recurrent short-time work users. We argue that this expansion of short-time work is an inefficient way to provide insurance to workers, as it entails cross-subsidies which reduce aggregate production. An efficient policy should provide unemployment insurance benefits funded by experience rated employers’ contributions instead of short-time work benefits. We find that short-time work entails significant production losses compared to an unemployment insurance scheme with experience rating.
    Keywords: Short-time work, unemployment insurance, experience rating.
    JEL: J63 J65
    Date: 2018
  11. By: Dietz, Daniel; Zwick, Thomas
    Abstract: This paper analyses the effect of the economic crisis in 2008 and 2009 on individual training activities of different employee groups within establishments. We use a unique German linked employer-employee panel data set with detailed information on individual training history (WeLL-ADIAB). The so-called Great Recession can be seen as an exogenous, unexpected, and time-limited shock. Therefore, our quasi-experimental setting using Diff-in-Diff analyses reveals the causal impact of the crisis on the training participation and the number of training measures. We find a direct negative effect of the crisis on individual training activities in 2009 and 2010. The negative effect therefore sets in with a time lag and lasts until after the recession. Furthermore, the recession effect is stronger for employees in unskilled jobs than for employees in skilled jobs.
    Keywords: Training,Financial Crisis,Linked Employer Employee Data Set
    JEL: M53 O16
    Date: 2018
  12. By: Kjellander, Josef (University of Gothenburg); Nilsson, Viktor (University of Gothenburg); van Vuuren, Aico (University of Gothenburg)
    Abstract: We evaluate the price development of apartments in neighborhoods surrounding temporary housing for refugees using the unpredicted announcement of three building sites, targeting refugees, in Gothenburg. More in particular, we look at the price development in the year after the announcement. We use a causal outcome model that takes account of time and postal-code fixed effects and we define an area to be affected by the announcement based on walking distance. We find support for a small and significant price effect. In addition, we find that the price effect of the neighborhood depends on the income level of the neighborhood. We interpret this as evidence for the fact that not having to live close to refugees can be seen as a luxury good.
    Keywords: house prices, migration
    JEL: O15 O18 R31
    Date: 2018–08
  13. By: Frondel, Manuel; Kussel, Gerhard
    Abstract: Empirical evidence on households' awareness of electricity prices and potentially divergent demand responses to price changes conditional on price knowledge is scant. Using panel data originating from Germany's Residential Energy Consumption Survey (GRECS), we fill this void by employing an instrumental-variable (IV) approach to cope with the endogeneity of the consumers' tariff choice. By additionally exploiting information on the households' knowledge about power prices, we combine the IV approach with an Endogenous Switching Regression Model to estimate price elasticities for two groups of households, finding that only those households that are informed about prices are sensitive to price changes, whereas the electricity demand of uninformed households is entirely price-inelastic. Based on these results, to curb the electricity consumption of the household sector and its environmental impact, we suggest implementing low-cost information measures on a large scale, such as improving the transparency of tariffs, thereby increasing the saliency of prices.
    Keywords: price elasticity,switching regression model,information
    JEL: Q41 D12
    Date: 2018
  14. By: Carla Blázquez-Fernández; David Cantarero-Prieto; Patricio Pérez-González
    Abstract: In this paper we tested the hypothesis that unmet health care needs can be interpreted in terms of employment status of individuals. The latest cross-sectional health surveys for Spain (2006 and 2011-2012) were used. The econometric approach is based on a Probit model estimation. When controlling for differences in other socioeconomic characteristics, our results for Spain supported stronger association for health status than for employment status. Moreover, empirical evidence was found that working-age people reported less unmet needs in the Great Recession than previously. Findings should be considered first in light of the Spanish National Health Service, completely decentralized to regions, which provides universal coverage for all residents. Second in terms of the likely worsening health-care-attendance experienced throughout the crisis.
    Keywords: Health care; Unmet needs, Spain, Discrete choice models, Employment.
    JEL: I10 I19
    Date: 2018–09
  15. By: Kieron J. Barclay (Max Planck Institute for Demographic Research, Rostock, Germany); Anna Baranowska-Rataj; Martin Kolk; Anneli Ivarsson
    Abstract: Until recently a large body of research conducted in high-income countries had shown that children born after an especially short or especially long birth interval are at an elevated risk of preterm birth, low birth weight, being small for gestational age, as well as other poor perinatal outcomes. However, a handful of recent studies that have adjusted for shared family background more effectively have cast doubt on that conclusion. We use Swedish population data on cohorts born 1981-2010 and sibling fixed effects models to examine whether the length of the birth interval preceding the index person has an impact on the risk of preterm birth, low birth weight, and hospitalization during childhood. We additionally present for the first time for this particular research question analyses stratified by salient social characteristics such as maternal educational level, and maternal country of birth. Overall, we find few effects of birth intervals on our outcomes except for very short birth intervals. Short interpregnancy intervals (<7 months) and very long intervals (>60 months) increase the probability of low birth weight and preterm birth. We also find that longer intervals (>42 months) decrease the probability of hospitalization during the first year of life, but interpregnancy intervals greater than 30 months increase the probability of hospitalization between ages 1-3. We find few differences in the patterns by maternal educational level, or by maternal country of origin after stratifying by the mother’s highest attained education. The results from this study contribute to the ongoing debate about whether the length of interpregnancy intervals matter for perinatal and child health in high-income countries.
    Keywords: Sweden, interpregnancy interval, siblings
    JEL: J1 Z0
    Date: 2018–09
  16. By: Anna Bartczak (University of Warsaw, Faculty of Economic Sciences); Wiktor Budziński (University of Warsaw, Faculty of Economic Sciences); Bernadeta Gołębiowska (University of Warsaw, Faculty of Economic Sciences)
    Abstract: We investigate individuals’ preferences for renewable energy development in Poland. Our main objective is to examine whether preferences for avoiding externalities from renewable energy development near respondents’ place of residence are influenced by their personal beliefs about the negative effects of wind turbine activity. We focus on attitudes towards wind power because it has had the most dynamic development among all renewable energy sources in Poland. To elicit values on avoiding renewable energy externalities, we use a choice experiment (CE) approach. To conduct our analysis we applied a theoretically robust econometric approach, the hybrid mixed logit model. From our analysis of data from a large sample of the Polish population, we find that beliefs about wind turbine have distinct negative effects on respondents’ preferences concerning renewable energy development. Respondents who generally have an opinion about potential wind turbine effects would like to have input on renewable energy development in their neighbourhood. Latent beliefs that wind power is not harmful enhance respondents’ preferences for implementing a wind energy project and enhance preferences against solar power development. These beliefs appears to be significantly correlated with respondents’ marginal utility of money.
    Keywords: beliefs about negative effects, choice experiment, preference heterogeneity, renewable energy externalities, stated preferences
    JEL: D12 H41 Q48 Q51
    Date: 2018
  17. By: Obergruber, Natalie (Ifo Institute for Economic Research); Zierow, Larissa (University of Munich)
    Abstract: Without a school degree, students can have difficulty in the labor market. To improve the lives of upper-secondary school dropouts, German states instituted a school reform that awarded an interim degree to high-track students upon completion of Grade 9. Using retrospective spell data on school and labor market careers from the National Educational Panel Study (NEPS), our difference-in-differences approach exploits the staggered implementation of this reform between 1965 and 1982. As intended, the reform reduced switching between school tracks. Surprisingly, it also increased successful high-track completion, university entrance rates, and later income, arguably by reducing the perceived risk of trying longer in the high-track school.
    Keywords: school dropout, school degree, school tracking
    JEL: I20 I24 I28
    Date: 2018–08
  18. By: Jessen, Robin; Metzing, Maria; Rostam-Afschar, Davud
    Abstract: A common assumption in the optimal taxation literature is that the social planner maximizes a welfarist social welfare function with weights decreasing with income. However, high transfer withdrawal rates in many countries imply very low weights for the working poor in practice. We extend the optimal taxation framework by Saez (2002) to allow for alternatives to welfarism. We calculate weights of a social planner's function as implied by the German tax and transfer system based on the concepts of welfarism, minimum absolute and minimum relative sacrifice. We find that the minimum absolute sacrifice principle is in line with social weights that decline with net income.
    Keywords: justness,optimal taxation,income redistribution,equal sacrifice,inequality,subjective preferences
    JEL: D63 D60 H21 H23 I38
    Date: 2018
  19. By: Elstner, Steffen; Feld, Lars P.; Schmidt, Christoph M.
    Abstract: Despite massive digitization efforts, the German economy has experienced a marked slowdown in its productivity growth. This paper analyzes the reasons behind this disconcerting development. A major factor is the turnaround of the labor market that commenced around 2005. The successful integration of five million predominantly low-productivity workers into the labor market induced an attenuating effect on productivity growth. This does not explain the slowdown entirely, however. As a potentially important countervailing force, technological advances associated with digitization would have had the potential to lift productivity growth more strongly, but they frequently translated into employment growth instead.
    Keywords: labor productivity,labor markets,technology shocks,digitalization,structural VARs
    JEL: O40 E24 C32
    Date: 2018
  20. By: Steffen Juranek; Dirk Schindler; Andrea Schneider
    Abstract: The increasing use of intellectual property as a means to shift profits to low-tax jurisdictions or jurisdictions with so-called ‘patent boxes’ is a major challenge for the corporate tax base of medium- and high-tax countries. Extending a standard tax competition model for capital-enhancing technology, royalty payments, and profit shifting, this paper suggests a simple fix: It is optimal to set a withholding tax on (intra-firm) royalty payments equal to the corporate tax rate and deny any deductibility of royalties. As the tax applies to the full payment, the problem of identifying the arm’s-length component in a digital economy (OECD BEPS Action 1) does not apply. Most importantly, the denial of royalty deductions is the Pareto-efficient solution under coordination and the unilaterally optimal policy under competition for mobile capital. In the latter case, a weakened thin capitalization rule is a crucial part of the policy package in order to avoid negative investment effects. Our results question the ban of royalty taxes in double tax treaties and the EU Interest and Royalty Directive.
    Keywords: source tax on royalties, tax competition, multinationals, profit shifting
    JEL: H25 F23
    Date: 2018
  21. By: Ruhose, Jens; Thomsen, Stephan L.; Weilage, Insa
    Abstract: We propose a regression-adjusted matched difference-in-differences framework to estimate non-pecuniary returns to adult education. This approach combines kernel matching with entropy balancing to account for selection bias and sorting on gains. Using data from the German SOEP, we evaluate the effect of work-related training, which represents the largest portion of adult education in OECD countries, on individual social capital. Training increases participation in civic, political, and cultural activities while not crowding out social participation. Results are robust against a variety of potentially confounding explanations. These findings imply positive externalities from work-related training over and above the well-documented labor market effects.
    Keywords: non-pecuniary returns,social capital,work-related training,matched difference-in-differences approach,entropy balancing
    JEL: J24 I21 M53
    Date: 2018
  22. By: Rickels, Wilfried; Weigand, Christian; Grasse, Patricia; Schmidt, Jörn Oliver; Voss, Rüdiger
    Abstract: The Sustainable Development Goal for the oceans and coasts (SDG 14) as part of the 2030 Agenda can be considered as an important step towards achieving more comprehensive blue growth. Here, we selected a set of 18 indicators to measure progress against SDG 14 for EU coastal states in the Baltic and the North Sea and the Atlantic Ocean since 2012. In our assessment we distinguish between a concept of weak and strong sustainability, assuming high and low substitution possibilities, respectively. Overall, we show that the majority of countries in our assessment fail to achieve comprehensive blue growth. Sweden, Spain, Ireland, and in particular Portugal experienced a considerable reduction in scores since 2012. The only exemption is Estonia which managed to improve its scores over time under both concepts of sustainability. The unsustainable development at the EU level is mainly driven by deteriorations in indicators related to fisheries.
    Keywords: Sustainable Development Goals,Blue Growth,European Union,Fisheries
    JEL: Q01 Q22 Q56
    Date: 2018
  23. By: Dyballa, Katharina; Kraft, Kornelius
    Abstract: In this study we use import penetration as a proxy for foreign competition in order to empirically analyze (1) the impact of foreign competition on managerial compensation, (2) differences in the impact between Germany and the U.S. and (3) whether the impact of import penetration is driven by implied efficiency effects. We use data from the manufacturing industry covering the period from 1984-2010 for Germany respectively 1992-2011 for the U.S. and apply system GMM in order to solve potential endogeneity problems. It turns out that foreign competition leads to an increase of average per capita executive compensation in both countries. The impact of foreign competition on payperformance sensitivity differs between the U.S. and Germany. A differentiation between imported intermediates (efficient sourcing strategy) and final inputs (competition) reveals that the impact of import penetration is not biased by efficiency effects.
    Keywords: Foreign Competition,Outsourcing,Managerial Incentives,International Comparison,System GMM
    JEL: F16 F14 G30 J33
    Date: 2018
  24. By: Cristina Jude
    Abstract: The aim of this paper is to empirically investigate the relationship between FDI and domestic investment in a sample of 10 Central and Eastern European countries over the period 1995-2015. We find FDI to lead to a creative destruction phenomenon, with a short-term crowding out effect on domestic investment, followed by a long-term crowding in. Greenfield FDI develops stronger long run complementarities with domestic investment, while mergers and acquisitions do not show a significant effect on domestic investment. Financial development seems to mitigate crowding out pressures and even foster a crowding in for mergers and acquisitions.
    Keywords: investment, FDI, crowding-out, economic transition, financial development.
    JEL: E22 F21 F43 O52
    Date: 2018
  25. By: Blesse, Sebastian; Doerrenberg, Philipp; Rauch, Anna
    Abstract: German municipalities have substantial autonomy in setting taxes on two distinct tax bases: business profits and property values. We use this setting and a two-step approach to explore whether implemented tax policy is consistent with the seminal inverse-elasticity rule. First, we estimate the tax elasticity of the two tax bases using event-study and generalized differences-in-differences methods based on the universe of municipalities in 1995-2010. Second, we compare the ratio of the observed tax rates for the two tax bases to the ratio of their estimated elasticities. We find that property is not very responsive to variation in tax rates, whereas business profits respond significantly. While this would suggest that property should be taxed at a higher rate, the data show that this not the case: most municipalities impose relatively higher rates on business profits. This suggests that municipality-level taxation in Germany is inconsistent with the inverse-elasticity rule. We provide suggestive evidence that this finding is explained by politician's imprecise expectations about revenue elasticities as well as re-election concerns.
    Keywords: Inverse-elasticity rule,Property taxes,Business taxes,Municipality-level taxation,Elasticity of Corporate Taxable Income
    JEL: H2 H3 H7 R5
    Date: 2018
  26. By: Di Marcantonio, F.; Ciaian, P.; Castellanos, V.
    Abstract: This paper examines the incidence of unfair trading practices (UTPs) in the dairy food supply chain. Drawing insights from data collected through a field survey among dairy farmers in five selected EU regions (France, Germany, Poland and Spain) we seek to understand the presence of UTPs across different stages of contract formulation and execution. The survey data were collected in 2017 and gathered 1248 observations. We identify a total of 29 types of UTPs across all different phases of contract development. Results show that 93% of surveyed farmers have reported at least one UTP, whereas 46% of surveyed farmers have reported at least three UTPs. The highest share of UTPs was found in the contract content followed by contract negotiation and contract execution. Further, our results suggest that there is not a strong relationship between the occurrence of UTPs and contract completeness although it is heterogeneous between studied regions.
    Keywords: Food Consumption/Nutrition/Food Safety, International Relations/Trade, Livestock Production/Industries
    Date: 2018–07
  27. By: Chletsos, Michael; Roupakias, Stelios
    Abstract: In this paper we analyze the impact of immigration on Greek politics over the 2004-2012 period, exploiting panel data on 51 Greek regional units. We account for potential endogenous clustering of migrants into more “tolerant” regions by using a shift-share imputed instrument, based on their allocation in 1991. Overall, our results are consistent with idea that immigration is positively associated with the vote share of extreme-right parties. This finding appears to be robust to alternative controls, sample restrictions and different estimation methods. We do not find supportive evidence for the conjecture that natives “vote with their feet”, i.e. move away from regions with high immigrant concentrations. We also find that the political success of the far-right comes at the expense of “Leftist” parties. Importantly, concerns on criminality and competition for jobs and public resources appear to drive our findings.
    Keywords: Immigration, Elections, Political economy
    JEL: D72 J15 J61
    Date: 2018–08–18

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