nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2018‒11‒12
38 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Moving Beyond the Valley of Death: Regulation and Venture Capital Investments in Early-Stage Biopharmaceutical Firms By Yujin Kim; Chirantan Chatterjee; Matthew J. Higgins
  2. Understanding the Role of the Public Employment Agency By Holzner, Christian; Watanabe, Makoto
  3. Income protection of atypical workers in the event of unemployment in Europe By Holguer Xavier JARA TAMAYO; Alberto Tumino
  4. Social Networks and Tax Avoidance: Evidence from a Well-Defined Norwegian Tax Shelter By Annette Alstadsæter; Wojciech Kopczuk; Kjetil Telle
  5. Is additional schooling worthless? Revising the zero returns to compulsory schooling in Germany By Cygan-Rehm, Kamila
  6. Economic integration and growth at the margin: A space-time incremental impact analysis By Mitze, Timo; Breidenbach, Philipp
  7. The Wider Benefits of Adult Learning: Work-Related Training and Social Capital By Ruhose, Jens; Thomsen, Stephan L.; Weilage, Insa
  8. Broadband Internet and Social Capital By Geraci, Andrea; Nardotto, Mattia; Reggiani, Tommaso G.; Sabatini, Fabio
  9. Economic impact of STEM immigrant workers By Christopher F. Baum; Hans Lööf; Andreas Stephan
  10. Entrepreneurship and social networks in Spain By Iñiguez, David; Ortega, Raquel; Rivero, Alejandro; Velilla, Jorge
  11. How effective is an incremental ACE in addressing the debt bias? Evidence from corporate tax returns By Branzoli Nicola; Caiumi Antonella
  12. Inequality in Life Expectancies across Europe By Radim Bohácek; Jesús Bueren; Laura Crespo; Pedro Mira; Josep Pijoan-Mas
  13. Italian “Homicide Road Law”: Evidence of a Puzzle? By Marcello Basili; Filippo Belloc
  14. Performance Pay and Prior Learning: Evidence from a Retail Chain By Manthei, Kathrin; Sliwka, Dirk; Vogelsang, Timo
  15. Operationalizing Seasonal Work in Germany By Jochen Späth; Tobias Brändle; Stefan Preuss; Marcel Reiner
  16. The Role of Exporters and Domestic Producers in GVCs: Evidence for Belgium based on Extended National Supply-and-Use Tables Integrated into a Global Multiregional Input-Output Table By Bernhard Michel; Caroline Hambÿe; Bart Hertveldt
  17. Educational Inequality and Public Policy Preferences: Evidence from Representative Survey Experiments By Lergetporer, Philipp; Werner, Katharina; Woessmann, Ludger
  18. Entry Barriers and the Labor Market Outcomes of Incumbent Workers: Evidence from a Deregulation Reform in the German Crafts Sector By Lergetporer, Philipp; Ruhose, Jens; Simon, Lisa
  19. Unsuccessful subjective well-being assimilation among immigrants: The role of faltering perceptions of the host society By Martijn Hendriks; Martijn (M.J.) Burger
  20. A New Measure of Intra-generational Redistribution within PAYG Pension Schemes and its Application to German Micro-data By Klos, Jonas; Krieger, Tim; Stöwhase, Sven
  21. Early Determinants of Work Disability in an International Perspective By Axel Börsch-Supan; Tabea Bucher-Koenen; Felizia Hanemann
  22. Homeownership, Labour Market Transitions and Earnings By Thierry Kamionka; Guy Lacroix
  24. Fatal Attraction? Extended Unemployment Benefits, Labor Force Exits, and Mortality By Kuhn, Andreas; Staubli, Stefan; Wuellrich, Jean-Philippe; Zweimüller, Josef
  25. Top Incomes in Germany, 1871-2014 By Bartels, Charlotte
  26. Food waste due to coercive power in agri-food chains: Evidence from Sweden By Ghosh, R.K.; Eriksson, M.; Istamov, A.
  27. Ride with Me - Ethnic Discrimination, Social Markets and the Sharing Economy By Tjaden, Jasper; Schwemmer, Carsten; Khadjavi, Menusch
  28. Switching to Territorial Taxation: FDI Effects for Host-Countries of Foreign Subsidiaries By Holzmann, Carolin; Büttner, Thiess
  29. Grandparents, Moms, or Dads? Why Children of Teen Mothers Do Worse in Life By Anna Aizer; Paul J. Devereux; Kjell G. Salvanes
  30. The Gender Gap in Attitudes and Test Scores: A New Construct of the Mathematical Capability By Di Tommaso, Maria Laura; Maccagnan, Anna; Mendolia, Silvia
  31. The Effects of a Household Income Shock on Infant Health. Evidence from a Welfare Benefits Reform By Janssen, Simon
  32. Closing the Gender Gap: Gender Based Taxation, Wage Subsidies or Basic Income? By Ugo Colombino; Edlira Narazani
  33. Drink, death and driving: do BAC limit reductions improve road safety? By Benjamin Cooper; Markus Gehrsitz; Stuart McIntyre
  34. Netflix and the Demand for Cinema Tickets - An Analysis for 19 European Countries By Parlow, Anton; Wagner, Sabrina
  35. Regional alignement and productivity growth By Ludovic Dibiaggio; Benjamin Montmartin; Lionel Nesta
  36. Can households see into the future? Survey evidence from the Netherlands By Massenot, Baptiste; Pettinicchi, Yuri
  37. Explaining Divorce Gaps in Cognitive and Noncognitive Skills of Children By Gloria Moroni
  38. What is the cost of grade retention? By Asma Benhenda

  1. By: Yujin Kim; Chirantan Chatterjee; Matthew J. Higgins
    Abstract: Venture capitalists (VCs) traditionally invest in risky, early-stage innovations. Recent research suggests, however, that VCs may be herding into less risky, later-stage projects. Such a shift can create funding gaps for early-stage firms. Can regulation reverse this trend by providing information that may reduce the risk of early-stage investments? Using the regulatory setting of the European Union and the passage of the Orphan Drug Act (EU-ODA), we examine this question in the biopharmaceutical industry. We provide causal evidence that VCs are more likely to invest in early-stage biopharmaceutical firms operating in sub-fields disproportionately affected by EU-ODA. We also find that the level of syndication declined for early-stage investments and exit performance improved. Importantly, the shift towards early-stage investment did not lead to any higher proportion of bankruptcies. Collectively, our results suggest that the information provided by EU-ODA helped alleviate information asymmetries faced by VCs investing in early-stage biopharmaceutical firms. We conclude by discussing implications for entrepreneurial finance and innovation policy.
    JEL: G24 L51 L65
    Date: 2018–10
  2. By: Holzner, Christian; Watanabe, Makoto
    Abstract: The Public Employment Agency (PEA) provides intermediation services in the labor market. We investigate the implications of having such an additional market place using a tractable search model. The intermediation services enable registered firms to pay lower wages compared to the private market. Paying lower wages leads to adverse selection. When deciding whether or not to register with the PEA firms have to trade off the negative selection of applicants coming through the PEA with the lower wages possible at the PEA. This explains why only a fraction of firms use the PEA as search channel although it is free of charge. Our model also suggests which job-types are more likely to be registered with the PEA. We test these theoretical predictions empirically using the German Job Vacancy Survey and the German Socio Economic Panel and find strong support for them.
    Keywords: Intermediation,Public Employment Agency,Labor Search
    JEL: J6
    Date: 2018
  3. By: Holguer Xavier JARA TAMAYO; Alberto Tumino (European Commission - JRC)
    Abstract: This paper evaluates the degree of income protection the tax-benefit system provides to atypical workers in the event of unemployment, comparing them to standard employees. Our approach relies on EUROMOD, the EU tax-benefit microsimulation model, to simulate transitions from employment to unemployment for the entire workforce and to compare household financial circumstances before and after the transition. Our results show that coverage rates of unemployment insurance are low among atypical workers. These workers are also significantly more exposed to the risk of poverty than standard employees, both while in work and in the event of unemployment. Our analysis also shows that low-work intensity employees are characterised by higher net replacement rates than other groups. However, this is due to the major role played by the market incomes of other household members. Finally, we show that in countries where self-employed workers are not eligible for unemployment insurance benefits, extending the eligibility to this group of workers would increase their replacement rates significantly and make them less likely to fall into poverty in the event of unemployment.
    Keywords: income protection, atypical work, microsimulation
    Date: 2018–10
  4. By: Annette Alstadsæter; Wojciech Kopczuk; Kjetil Telle
    Abstract: In 2005, over 8% of Norwegian shareholders transferred their shares to new (legal) tax shelters intended to defer taxation of capital gains and dividends that would otherwise be taxable in the aftermath of 2006 reform. Using detailed administrative data we identify family networks and describe how take up of tax avoidance progresses within a network. A feature of the reform was that the ability to set up a tax shelter changed discontinuously with individual shareholding of a firm and we use this fact to estimate the causal effect of availability of tax avoidance for a taxpayer on tax avoidance by others in the network. We find that take up in a social network increases the likelihood that others will take up. This suggests that taxpayers affect each other's decisions about tax avoidance, highlighting the importance of accounting for social interactions in understanding enforcement and tax avoidance behavior, and providing a concrete example of “optimization frictions” in the context of behavioral responses to taxation.
    JEL: D22 D23 H25 H26 H32
    Date: 2018–10
  5. By: Cygan-Rehm, Kamila
    Abstract: This study estimates the effect of compulsory schooling on earnings. For identification, I exploit a German reform that extended the duration of secondary schooling in the 1960s. I find that hourly wages increase by 8% per additional year of schooling. This result challenges a study by Pischke and von Wachter (2008) who find zero returns to schooling using the same survey data and reform. I show that their small and insignificant estimates suffer from unconsidered institutional details. A complementary analysis using social security records confirms significant effects on earnings, but yields no effects on employment and eligibility for public transfers.
    JEL: I21 J31
    Date: 2018
  6. By: Mitze, Timo; Breidenbach, Philipp
    Abstract: We use the case of EU enlargement in 2004 to investigate the impact of economic integration on regional income growth. Being particularly interested in studying the effects 'at the margin', we track the relative performance of regions adjacent to both sides of the integration border vis-à-vis non-border regions. We use a space-time incremental difference-in-difference (IDiD) analysis to account for spatial spillovers, early anticipation and adjustment dynamics over time. Our findings indicate that EU-15 regions up to a distance of 100 km from the integration border experience positive integration effects, but we do not observe additional income growth effects for NMS-10 border regions compared to non-border regions. The results are found to be robust for alternative regression specifications including doubly robust estimation, varying sample settings and placebo tests. Country-specific estimates for the EU-15 finally indicate that in particular East German regions have benefited from EU enlargement potentially reflecting their proximity to Poland as largest NMS market, their favorable investment conditions, i.e. modern infrastructure, and preferential historical ties to the NMS-10.
    Keywords: economic integration,regional income growth,EU enlargement,spatial spillovers,space-time incremental difference-in-difference estimation
    JEL: C23 F15 O47 R11
    Date: 2018
  7. By: Ruhose, Jens (Leibniz University of Hannover); Thomsen, Stephan L. (Leibniz University of Hannover); Weilage, Insa (Leibniz University of Hannover)
    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: 2018–09
  8. By: Geraci, Andrea (University of Oxford); Nardotto, Mattia (KU Leuven); Reggiani, Tommaso G. (Masaryk University); Sabatini, Fabio (Sapienza University of Rome)
    Abstract: We study how the diffusion of broadband Internet affects social capital using two data sets from the UK. Our empirical strategy exploits the fact that broadband access has long depended on customers' position in the voice telecommunication infrastructure that was designed in the 1930s. The actual speed of an Internet connection, in fact, rapidly decays with the distance of the dwelling from the specific node of the network serving its area. Merging unique information about the topology of the voice network with geocoded longitudinal data about individual social capital, we show that access to broadband Internet caused a significant decline in forms of offline interaction and civic engagement. Overall, our results suggest that broadband penetration substantially crowded out several aspects of social capital.
    Keywords: ICT, broadband infrastructure, networks, Internet, social capital, civic capital
    JEL: C91 D9 D91 Z1
    Date: 2018–09
  9. By: Christopher F. Baum (Boston College; DIW Berlin; CESIS, KTH Royal Institute of Technology); Hans Lööf (CESIS, KTH Royal Institute of Technology); Andreas Stephan (Jönköping International Business School; DIW Berlin)
    Abstract: STEM-focused industries are critical to the innovation-driven economy. As many firms are running short of STEM workers, international immigrants are increasingly recognized as a potential for high-tech job recruitment. This paper studies STEM occupations in Sweden 2011–2015 and tests hypotheses on new recruitment and the economic impact of foreign STEM workers. The empirical analysis shows that the probability that a new employee is a STEM immigrant increases with the share of STEM immigrants already employed, while the marginal effect on average firm wages is positively associated with the share of immigrant STEM workers. We also document heterogeneity in the results, suggesting that European migrants are more attractive for new recruitment, but non-EU migrants have the largest impact on wage determination.
    Keywords: STEM; migration; employment; wages; correlated random effects
    JEL: C23 J24 J61 O14 O15
    Date: 2018–10–04
  10. By: Iñiguez, David; Ortega, Raquel; Rivero, Alejandro; Velilla, Jorge
    Abstract: The objective of the work is to know the behavior of new Spanish companies in social networks and the use they make of them, trying to establish relationships between the type of company and its behavior in the digital world. We obtain information on the almost 30,000 companies constituted between October 1, 2016 and September 30, 2017 from the Official Bulletin of the Mercantile Registry (BORME), using the classification of economic activities CNAE when defining the type of company. The newly created companies show interest in visualizing themselves in social networks, 36% in Facebook, 23% in LinkedIn and 15% in Twitter, detecting also activity in Instagram and YouTube for some particular niches, being the commercial activity (Group C of CNAE) the predominant in the presence of new Spanish companies in social networks.
    Keywords: Entrepreneurship, New Companies, Social Networks, Spain, Facebook, LinkedIn, Twitter
    JEL: L26
    Date: 2018
  11. By: Branzoli Nicola; Caiumi Antonella
    Abstract: The Allowance for Corporate Equity (ACE) introduced in Italy in 2011 has decreased the fiscal distortion between the costs of equity and debt by introducing the deductibility from taxable income of a notional return on capital increases. In this paper we estimate the impact of the ACE on the leverage ratio of Italian manufacturing firms. Using a novel instrumental variable approach to identify the causal effect, we find that the introduction of the incremental ACE has substantially reduced the leverage ratio of its beneficiaries. The effect of the reform increases with age and decreases with the size of the enterprise. These results suggest that an incremental ACE may be an effective policy tool to reduce the leverage ratio of European firms
    Keywords: Allowance for Corporate Equity, Corporate Leverage, Debt-Equity Bias
    JEL: G32 H25 H32
    Date: 2018–06
  12. By: Radim Bohácek (GERGE-EI); Jesús Bueren (European University Institute); Laura Crespo (Banco de España); Pedro Mira (CEMFI, Centro de Estudios Monetarios y Financieros); Josep Pijoan-Mas (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: We use harmonized household panel data from 10 European countries (SHARE) plus US (HRS) and England (ELSA) to provide novel and comparable measurements of education and gender differences in life expectancy and disability-free life expectancy, as well as in the underlying multi-state life tables. Common across countries we find significant interactions between socio-economic status and gender: (a) the education advantage in life expectancy is larger for males, (b) the female advantage in life expectancy is larger among the low educated, (c) education reduces disability years and this added advantage is larger for females, and (d) females suffer more disability years but this disadvantage is hardly present for the high educated. Common across countries we also find that the education advantage in disability years is due to better health transitions by the highly-educated, and that the female disadvantage in disability years is due to better survival in ill-health by females. Looking at the differences across countries, we find that inequalities are largest in Eastern Europe, lowest in Scandinavia, and that the education gradient in life expectancy for males correlates positively with income inequality and negatively with public health spending across countries.
    Keywords: Life expectancy, healthy life expectancy, education gradient, gender gap.
    JEL: I14 I24 J14 J16
    Date: 2018–09
  13. By: Marcello Basili; Filippo Belloc
    Abstract: We analyse the effectiveness of Law 41/2016 (the so-called “homicide road law”), introduced in Italy in 2016 with the aim of reducing dangerous driving on Italian roads, through a system of escalating sanctioning, where the severity of the punishment is based on the type of injury caused by the road accident. We first explore theoretically the two-sided effect of Law 41/2016, in terms of general and marginal deterrence. Then, we exploit micro-data on the entire universe of road accidents in Italy in the period before and after Law 41/2016 and measure its effectiveness in reducing the number of fatal outcomes. The estimation results unveil that, after the introduction of Law 41/2016, both the extensive and the intensive margin of deaths in road accidents was not reduced, while, if anything, a weakly significant increase is observed in the extensive margin. The study may contribute to the optimal design of driving regulation both in Italy and in other countries.
    Keywords: Homicide Road Law, Vertical Deterrence, Marginal Deterrence, Escalating Penalties, Hybrid Sanctions
    JEL: K42
    Date: 2018–06
  14. By: Manthei, Kathrin (University of Cologne); Sliwka, Dirk (University of Cologne); Vogelsang, Timo (University of Cologne)
    Abstract: We run two field experiments within a large retail chain showing that the effectiveness of performance pay crucially hinges on prior job experience. Introducing sales-based performance pay for district- and later for store-managers, we find negligible average treatment effects. Based on surveys and interviews, we develop a formal model demonstrating that the effect of performance pay decreases with experience and may even vanish in the limit. We provide empirical evidence in line with this hypothesis, for instance, finding positive treatment effects (only) in stores with low job experience.
    Keywords: performance pay, incentives, learning, experience, insider econometrics, field experiment, randomized control trial (RCT)
    JEL: J33 M52 C93
    Date: 2018–09
  15. By: Jochen Späth; Tobias Brändle; Stefan Preuss; Marcel Reiner
    Abstract: Due to a lack of sector-overarching, frequent and representative data, only little is known about the prevalence of seasonal workers in the German labor market and, in particular, about their working conditions such as forms of employment, working hours or even wages. We estimate seasonal work in Germany using a custom, representative sample of the Employment History (BeH) of the Federal Employment Agency (BA) that encompasses information on short-term employees that are new to scientific research. We achieve a reasonable fit to the – less frequent and sectorally restricted – Farm Structure Survey by the German Federal Statistical Office suggesting our method for future analyses of seasonal work. Our analyses reveal large differences between economic sectors, the share of seasonal work being highest in agriculture and forestry, followed by hotels and restaurants. While in agriculture and forestry the vast majority of seasonal workers is given by short-term employment, in the hotel and restaurant industry marginally paid (part-time) employment is the dominant type. Since 2012, the number of seasonal workers has increased in all investigated economic sectors. That said, there are hardly any signs of significant spikes since the introduction of the general minimum wage in 2015.
    Keywords: Seasonal Work, agriculture and forestry, gardening and landscaping, hotels and restaurants, Beschäftigtenhistorik
    JEL: J21 J61 J43
    Date: 2018–09
  16. By: Bernhard Michel; Caroline Hambÿe; Bart Hertveldt
    Abstract: For a finer analysis of global value chain integration and competitiveness, we develop and apply a method for a micro-data based breakdown of manufacturing industries in the 2010 Belgian supply-and-use tables into export-oriented and domestic market firms. The former are defined as those firms that export at least 25% of their turnover. We then derive export-heterogeneous national input-output tables which we integrate into a global table. Our analyses reveal that: a) export-oriented manufacturers have lower value-added in output shares and import proportionally more of the intermediates they use; b) exports of export-oriented manufacturers generate substantial value added in other Belgian firms, in particular providers of services; c) Belgium’s backward participation in global value chains is mainly due to export-oriented manufacturers and its forward participation is due to other firms, d) export-oriented manufacturers participate in value chains that comprise, on average, a greater number of upstream and downstream production stages and of which a greater share is located abroad.
    JEL: C67 D22 D57 F14 F15
    Date: 2018–10
  17. By: Lergetporer, Philipp (ifo Institute at the University of Munich; CESifo); Werner, Katharina (ifo Institute at the University of Munich); Woessmann, Ludger (University of Munich and ifo Institute; CESifo, IZA, and CAGE)
    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 Classification: D30, H52, I24, H11, D63, D83, D72, P16
    Date: 2018
  18. By: Lergetporer, Philipp (Ifo Institute for Economic Research); Ruhose, Jens (Leibniz University of Hannover); Simon, Lisa (CESifo)
    Abstract: We study the labor market outcomes of a deregulation reform in Germany that removed licensing requirements to become self-employed in some occupations. Using longitudinal social security data, we implement a matched difference-in-differences design with entropy balancing to account for observable characteristics and unobserved individual heterogeneity. The reform tripled the number of businesses within ten years and led to slower earnings growth and higher unemployment for incumbent workers in deregulated occupations. However, the reform effect seems rather small, which we attribute to the relatively low competitiveness of new businesses. Supporting this view, the reform did not lead to overall employment growth.
    Keywords: deregulation, entry barriers, self-employment, labor market outcomes, entropy balancing, matched difference-in-differences
    JEL: J31 J24 L11
    Date: 2018–09
  19. By: Martijn Hendriks (Erasmus University Rotterdam); Martijn (M.J.) Burger (Erasmus University Rotterdam)
    Abstract: Immigrants in developed countries typically fail to assimilate in terms of subjective well-being, meaning that their happiness and life satisfaction do not substantially increase with their length of stay or across generations, and therefore their subjective well-being remains lower than that of natives. This contrasts with migrants’ own expectations and the predictions of straight-line assimilation theory, along with the general improvement of immigrants’ objective living conditions with their length of stay. Using European Social Survey data, we show that the subjective well-being assimilation of first-generation immigrants in developed European countries is impaired by the gradual development of less positive perceptions of the host country’s economic, political, and social conditions. These faltering societal perceptions particularly affect immigrants whose societal conditions strongly improved by migration and immigrants who arrived after childhood. Faltering societal perceptions continue to impair subjective well-being assimilation across generations. However, compared with natives, first-generation immigrants derive a subjective well-being advantage from their more positive societal perceptions. We attribute these findings to immigrants’ growing aspirations and expectations that follow from their habituation to better conditions in their host country and fewer (more) comparisons to inferior (better) conditions of the people in their home (host) country. Our findings suggest that delaying or decelerating the process of immigrants’ faltering societal perceptions is a promising pathway to improved subjective well-being assimilation and reduced frustration about their perceived lack of progress.
    Keywords: subjective well-being; migration; assimilation; aspirations; expectations
    JEL: I31 F22
    Date: 2018–10–28
  20. By: Klos, Jonas; Krieger, Tim; Stöwhase, Sven
    Abstract: This paper proposes a new Index for measuring intra-generational redistribution in PAYG pension schemes. This index solely requires information on contributions and pension benefits of retirees, eliminating the involvement of the contribution side in a PAYG pension scheme. As an application, we use contribution records of new German retirees to measure intra-generational redistribution in the German statutory pension scheme and the importance of certain additional benefits.
    Keywords: PAYG pension systems,intra-generational redistribution,Beveridge vs. Bismarck,index,microdata,Germany
    JEL: H55 D31
    Date: 2018
  21. By: Axel Börsch-Supan; Tabea Bucher-Koenen; Felizia Hanemann
    Abstract: This paper studies the interrelated roles of health and welfare state policies in the decision to take up disability insurance (DI) benefits due to work disability (WD), defined as the (partial) inability to engage in gainful employment due to physical or mental illness. We exploit the large international variation of health, self-reported WD and the uptake of DI benefits in the US and Europe using a harmonized data set with life history information assembled from the Survey of Health Ageing and Retirement in Europe (SHARE), the English Longitudinal Study on Ageing (ELSA) and the Health and Retirement Study (HRS). Particular attention is given to the role of life-time health and other life-time experiences in explaining WD and DI uptake later in life. We find that while our large set of health measures explains a substantial share of the within-country variation in WD and DI, this is not the case for the variation across countries. Rather, most of the variation between countries is explained by differences in DI policies.
    JEL: H55 J21 J26
    Date: 2018–10
  22. By: Thierry Kamionka; Guy Lacroix
    Abstract: The paper investigates the links between homeownership, employment and earnings for which no consensus exists in the literature. Our analysis is cast within a dynamic setting and the endogeneity of each outcome is assessed through the estimation of a flexible panel multivariate model with random effects. The data we use are drawn from the French sample of the EU Survey on Income and Living Conditions for the years 2004–2013. The error terms are both correlated across equations and autocorrelated. Individual random effects are also correlated across equations. The model is estimated using a simulated maximum likelihood estimator and particular care is given to the initial conditions problem. Our results show that while homeowners have longer employment and unemployment spells, they must contend with lower earnings than tenants upon reemployment. They also stress the importance of unobserved heterogeneity in explaining the transitions on the labour and housing markets, and the relationship between earnings and the latter two. Failure to properly account for this is likely to yield biased parameter estimates.
    Keywords: Homeownership,Unemployment,Earnings,Heterogeneity,Simulation Based Estimation,Panel Data,
    JEL: J21 J64 J31 C33 C35
    Date: 2018–11–05
  23. By: Tanel Rebane
    Abstract: This paper examines the complementary relationship between product innovation, marketing innovation and cooperation with clients, based on data from Estonian firms. The author evaluated complementary relationship in terms of its effect on the firm’s total factor productivity. This study uses the Community Innovation Survey (CIS) and Estonian Business Register data from the years 2002–2012 and the Heckman selection model to research the complementarity effect between studied innovation activities using the supermodularity approach. The results show that product innovation and marketing innovation are complementary in the service industry, but in manufacturing industry there is lack of evidence for the effect of complementarity. Cooperation with clients showed inconclusive complementarity test results involving both innovation types in both industries. Using panel data as a robustness test showed more insights into the complementary effects between cooperation with clients and the studied forms of innovation. However, the results show a weak complementarity effect between cooperation and innovation and suggest that there is still no clear complementarity effect.
    Keywords: Product innovation, Marketing innovation, Cooperation with clients, Complementarity, Performance
    JEL: C13 D24 L25 O30
    Date: 2018
  24. By: Kuhn, Andreas (Swiss Federal Institute for Vocational Education and Training); Staubli, Stefan (University of Calgary); Wuellrich, Jean-Philippe (University of Zurich); Zweimüller, Josef (University of Zurich)
    Abstract: We estimate the causal effect of permanent and premature exits from the labor force on mortality. To overcome the problem of negative health selection into early retirement, we exploit a policy change in unemployment insurance rules in Austria that allowed workers in eligible regions to exit the labor force 3 years earlier compared to workers in non-eligible regions. Using administrative data with precise information on mortality and retirement, we find that the policy change induced eligible workers to exit the labor force significantly earlier. Instrumental variable estimation results show that for men retiring one year earlier causes a 6.8% increase in the risk of premature death and 0.2 years reduction in the age at death, but has no significant effect for women.
    Keywords: early retirement, mortality, health behavior, instrumental variable
    JEL: I10 I12 J14 J26
    Date: 2018–09
  25. By: Bartels, Charlotte (DIW Berlin)
    Abstract: This study provides new evidence on top income shares in Germany from the period of industrialization to the present. Income concentration was high in the nineteenth century, dropped sharply after World War I and during the hyperinflation years of the 1920s, and increased rapidly throughout the Nazi period beginning in the 1930s. Following the end of World War II, German top income shares returned to 1920s levels. The German pattern stands in sharp contrast to developments in France, the UK, and the US, where World War II brought a sizeable and lasting reduction in top income shares. Since the turn of the millennium, income concentration in Germany has been on the rise and is today among the highest in Europe. Regression analysis reveals that rising top income shares are positively associated with the capital share, trade and technological change.
    Keywords: welfare state, income inequality, income distribution, top incomes, Germany
    JEL: D31 D63 J31 N30
    Date: 2018–09
  26. By: Ghosh, R.K.; Eriksson, M.; Istamov, A.
    Abstract: Food produced but not consumed is one the greatest threats to sustainable food systems. While there is evidence in the literature to suggest that food is wasted at all stages of the agri-food chain, the role of take back agreements (TBAs) has not been emphasized. When market conditions are such that TBAs become a tool for the retailers to express coercive power over the supplier, there is an incentive to over-order and hence waste. In this study, a case-based approach was used to explore the existence and implications of coercive power at the retailer-supplier interface due to presence of TBAs in the context of Swedish bread suppliers. Specifically, company data for a medium-sized premium bread supplier in Sweden was analyzed. This supplier faced 30% returns of its total volume produced in the period 2011-15 and had to bear the entire cost of bread rejections, collection and disposal. It was paid only for the bread sold to end customers, and not for the contracted quantity. The findings indicate that TBAs are drivers of food waste at the supplier-retailer interface as it reduces the incentives for retailers to prevent waste. Our study confirms that it is a problem requiring serious policy attention. Acknowledgement : The study was funded by the European Union through the research programme ERA-Net SUSFOOD and the project COnsumers in a SUStainable food supply chain (COSUS). Primary data through interviews were provided by representatives of all major retailers and bread producers in Sweden, while detailed supply data were provided by the bread supplier Salt Kvarn. The company has allowed access to its data for the purposes of research without any anonymity conditions. The authors would like to thank the staff at all the companies involved for their help and cooperation.
    Keywords: Agribusiness
    Date: 2018–07
  27. By: Tjaden, Jasper; Schwemmer, Carsten; Khadjavi, Menusch
    Abstract: We study ethnic discrimination in the sharing economy using the example of Europe’s largest carpooling marketplace. Based on a unique dataset with more than 17,000 rides, we estimate the effects of drivers’ perceived name origins on the demand for rides. The results show sizable ethnic penalties. Further analyses suggest that additional information about actors in this market decreases the magnitude of ethnic discrimination. Our findings broaden the perspective of ethnic discrimination by shedding light on subtle, everyday forms of discrimination in social markets and informing ongoing discussions about ways to address discrimination in an era in which markets increasingly move online.
    Keywords: Ethnic discrimination,sharing economy,statistical discrimination,online markets,computational social science
    Date: 2018
  28. By: Holzmann, Carolin; Büttner, Thiess
    Abstract: The paper explores the effects of the switch to territorial taxation on outbound FDI. Rather than employing standard FDI statistics, the paper uses data which reports the location of the ultimate owner. We use a quasi-experimental approach that exploits the timing of reforms. In order to provide a counterfactual we employ synthetic-control methods. Our results document a substantial increase of Japanese FDI in Germany after the switch from worldwide to territorial taxation in Japan in 2009. In contrast, the switch in the UK in the same year is not found to exert any significant effects on investment of UK multinationals in Germany. These findings support the view that only the switch in relatively high-tax countries exerts FDI effects.
    Keywords: FDI,Dividend Exemption,Tax Competition,Synthetic Control Method
    JEL: H25 F23
    Date: 2018
  29. By: Anna Aizer; Paul J. Devereux; Kjell G. Salvanes
    Abstract: Women who give birth as teens have worse subsequent educational and labor market outcomes than women who have first births at older ages. However, previous research has attributed much of these effects to selection rather than a causal effect of teen childbearing. Despite this, there are still reasons to believe that children of teen mothers may do worse as their mothers may be less mature, have fewer financial resources when the child is young, and may partner with fathers of lower quality. Using Norwegian register data, we compare outcomes of children of sisters who have first births at different ages. Our evidence suggests that the causal effect of being a child of a teen mother is much smaller than that implied by the cross-sectional differences but that there are still significant long-term, adverse consequences, especially for children born to the youngest teen mothers. Unlike previous research, we have information on fathers and find that negative selection of fathers of children born to teen mothers plays an important role in producing inferior child outcomes. These effects are particularly large for mothers from higher socio-economic groups.
    JEL: I3 J13 J24
    Date: 2018–10
  30. By: Di Tommaso, Maria Laura (University of Turin); Maccagnan, Anna (University of Exeter); Mendolia, Silvia (University of Wollongong)
    Abstract: In most OECD countries, girls outperform boys in all subjects except mathematics. Usually, only test scores are utilised as a measure of mathematical skills. In this paper, we argue that in order to measure children's capability in mathematics we need to include some indicators of the attitudes of children towards the subject. This is particularly important when we analyse gender gaps, because attitudes towards mathematics differ by gender. We first describe the differences by gender both in test scores and attitudes utilising a model including school fixed effects. Next, we estimate a quantile regression in order to analyse how the gender gap varies across the distribution of the attitudes. Lastly, in addition to the test scores in mathematics, we use indicators of attitudes towards maths to estimate a Structural Equation Model, which takes into account that maths capability is a latent construct of which we only observe some indicators (test scores and attitudes). We use data from the Italian National Test (Invalsi) for year 5 and year 10 in 2014 and 2015. Results confirm that when we measure mathematics capability including attitudes in addition to test scores, the gap between boys and girls is even wider with respect to the analysis of test scores alone, and therefore educational policies aimed at reducing the gender gap in mathematics should address both attitudes and test scores.
    Keywords: maths gender gap, attitudes, structural equation models, school achievement
    JEL: J16 I24 C31
    Date: 2018–09
  31. By: Janssen, Simon
    Abstract: We investigate the effect of a large welfare benefits cut on child health. Our identification strategy exploits a policy reform of the German welfare system that reduced benefits for families with infants by about 30 percent of their previous household income. The empirical analysis relies on novel and unique register data that includes detailed information about hospitalization, doctor visits, and pharmacy use for about 45, 000 children who were born before or after the reform. Although children from welfare families are on average less healthy than children from non-welfare families, the welfare cut had no additional negative impact on child health.
    Keywords: Childhood Health,Socioeconomic Status,Household Income
    JEL: I14 J13
    Date: 2018
  32. By: Ugo Colombino; Edlira Narazani (European Commission - JRC)
    Abstract: Gender based taxation (GBT) has been recently proposed as a promising policy in order to close the gender gap, i.e. promote gender equality and improve women’s status in the labour market and within the family. We use a microeconometric model of household labour supply in order to evaluate, with Italian data, the behavioural and welfare effects of GBT as compared to other policies based on different optimal taxation principles. The comparison is interesting because GBT, although technically correct, might face implementation difficulties not shared by other policies that in turn might produce comparable benefits. Our results support to some extent the expectations of GBT’s proponents. However, it is not an unquestionable success. GBT induces a modest increase of women’s employment, but similar effects can be attained by universal subsidies on low wages. When the policies are evaluated in terms of welfare, GBT ranks first among single women but among couples and in the whole population the best policies are unconditional transfers and/or subsidies on low wages.
    Keywords: Gender based taxation, wage subsidies, basic income, guaranteed minimum income, labour supply, social welfare
    Date: 2018–10
  33. By: Benjamin Cooper (Department of Economics, University of Strathclyde); Markus Gehrsitz (Department of Economics, University of Strathclyde); Stuart McIntyre (Department of Economics, University of Strathclyde)
    Abstract: This study exploits a natural experiment in Scotland where the legal blood alcohol content (BAC) limit was reduced from 0.8mg to 0.5mg per 100ml of blood while staying constant in all other parts of the UK. Using a difference{in{differences design, we find that this change in the BAC level had no impact on either traffic accident or fatality rates
    Keywords: Road traffic fatalities, traffic accidents, diference-in-differences, blood alcohol
    JEL: I12 I18 K42
    Date: 2018–09
  34. By: Parlow, Anton; Wagner, Sabrina
    Abstract: Netflix, as a potential competitor to the cinema industry, was introduced in various European markets between 2012 and 2014. We use movie ticket sales from 2000 to 2016 for 19 European countries to estimate a causal effect of Netflix entering these markets. We find that Netflix has a positive effect on ticket sales. Thus, the Netflix experience can complement the cinema experience. However, preliminary descriptive statistics show, that this effect reverse starting 2016, when Netflix released more high quality and localized content. It is likely, that this development will continue to a trend, and movie tickets sales will decrease further.
    Keywords: Movie theater industry, Netflix, VoD
    JEL: L82
    Date: 2018–10–29
  35. By: Ludovic Dibiaggio (Histoire et Critique des Arts - Centre d'étude et de recherche d'archéologie méditerranéenne et atlantique. UHB); Benjamin Montmartin (Observatoire français des conjonctures économiques); Lionel Nesta (Observatoire français des conjonctures économiques)
    Abstract: We propose the concept of regional alignment to suggest that synergistic relations among the scientific expertise, technological specialization and industry composition of regions affect regional productivity growth. In this paper, we test an extended conditional β-convergence model using data on 94 French departments (NUTS3) for the period 2001-2011. Our results indicate that a conditional β-convergence is associated with a σ-divergence process in the total factor productivity (TFP) growth of French regions. This process is strongly affected by the level of regional alignment. Indeed, we find evidence that regional alignment both directly and indirectly influences regional productivity growth. The indirect effect of regional alignment materializes through its leverage on R&D investment, which is one of the most important drivers of productivity growth. Moreover, using a heterogeneous coefficients model, we show that the positive effect of regional alignment on TFP growth increases with the industrial diversity of regions, which suggests that regional alignment increases the value of Jacobs externalities more than Marshall-ArrowRomer (MAR) externalities. KEY
    Keywords: Regional alignement; β-convergence; Productivity growth; Multi-regional model
    JEL: O30 O40 R11
    Date: 2018–09
  36. By: Massenot, Baptiste; Pettinicchi, Yuri
    Abstract: This paper presents new evidence on the expectation formation process from a Dutch household survey. Households become too optimistic about their future income after their income has improved, consistent with the over-extrapolation of their experience. We show that this effect of experience is persistent and that households over-extrapolate income losses more than income gains. Furthermore, older households over-extrapolate more, suggesting that they did not learn over time to form more accurate expectations. Finally, we study the relationship between expectation errors and consumption. We find that more over-optimistic households intend to consume more and subsequently report higher consumption, even though they do not consume as much as they intended to. These results suggests that overextrapolation hurts consumers and amplify business cycles.
    Date: 2018
  37. By: Gloria Moroni
    Abstract: To what extent does parental selection into divorce explain the gap in skills between children of intact and disrupted families? Using the UK Millennium Cohort Study this paper shows that the disadvantage in skills typically found among children of divorce mainly reflects the selection effect, whereby more disadvantaged parents are more likely to divorce. In an Oaxaca-Blinder decomposition of children’s cognitive and noncognitive skills up until age 11, evidence indicates that pre-divorce characteristics, namely parents’ education, family financial resources and interparental conflicts are the most important factors accounting for the divorce gaps in children’s skills, implying a negligible impact of divorce itself. Interparental conflicts are often neglected in the literature but are shown to play a major role particularly for noncognitive skills of children. These results suggest that to reduce the disadvantage in skills among children of divorce, interventions targeting these pre-divorce characteristics would be potentially more effective than policies discouraging divorce.
    Keywords: Divorce, Interparental conflicts, Cognitive and Noncognitive skills, Decomposition
    JEL: J12 J13 J24 C21 D1
    Date: 2018–11
  38. By: Asma Benhenda (University College London, Institute of Education)
    Abstract: This paper offers a new method to estimate the budgetary cost of grade retention that takes into account a) the impact of grade retention on students' school path; b) the dynamic impact of variations in grade retention on the flow of student enrolment across grades. Using administrative data on students in French secondary schools, I instrument retention by students' date of birth and find that the marginal impact of one year of retention is to increase the number of years of schooling by exactly one year. Modelling student enrolment with a discrete Markov chain model, I simulate a counterfactual scenario where grade retention is completely abolished. I find that budgetary savings increase only gradually and reach a steady state only when students who were entering primary school at the time of the abolition have left high school.
    JEL: I21 I22 J20
    Date: 2018–09–01

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