nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2019‒02‒18
28 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Wage differentials by bargaining regime in Spain (2002-2014). An analysis using matched employer-employee data By Raul Ramos; Esteban Sanromá; Hipólito Simón
  2. Cluster externalities, firm capabilities, and the recessionary shock: How the macro-to-micro-transition shapes firm performance during stable times and times of crisis By Christian Hundt; Linus Holtermann; Jonas Steeger; Johannes Bersch
  3. Does childcare improve the health of children with unemployed parents? Evidence from Swedish childcare access reform. By Aalto, Aino-Maija; Mörk, Eva; Sjögren, Anna; Svaleryd, Helena
  4. Higher Education Supply, Neighbourhood Effects and Economic Welfare By Elena Cottini; Paolo Ghinetti; Simone Moriconi
  5. Are “happy” firms all alike? A comparative analysis of Italian and German manufacturing systems By A. Arrighetti; F. Landini
  6. Expected Effects of the US Tax Reform on Other Countries: Global and Local Survey Evidence By Dorine Boumans; Clemens Fuest; Carlo Krolage; Klaus Wohlrabe
  7. Assessing the innovation capability of EU companies in developing dual use technologies By Federico Caviggioli; Antonio De Marco; Giuseppe Scellato
  9. Gender wage gap in the workplace: Does the age of the firm matter? By Iga Magda; Ewa Cukrowska-Torzewska
  10. Use of extra-school time and child behaviours Evidence from the UK By Elena Claudia Meroni; Daniela Piazzalunga; Chiara Pronzato
  11. Product Innovation and Educational Diversity in Top and Middle Management Teams By Schubert, Torben; Tavassoli, Sam
  12. Utilitarian and Ideological Determinants of Attitudes toward Immigration: Germany before and after the “Refugee Crisis” By Heinz Welsch
  13. Local territorial reform and regional spending efficiency By António Afonso; Ana Venâncio
  14. On the Political Feasibility of Increasing the Legal Retirement Age By Benjamin Bittschi; Berthold U. Wigger
  15. 2019/01 Merging city and suburban governments: A public choice perspective on the Norwegian local government reform By Fitjar, Rune Dahl
  16. Communal fees and election cycles: Evidence from German municipalities By Manuela Krause
  17. Parental leave benefits, household labor supply, and children's long-run outcomes By Rita Ginja; Jenny Jans; Arizo Karimi
  18. The impact of higher education on the living standards of female graduates By Chris Belfield; Laura van der Erve
  19. The evolution of the occupational structure in Italy in the last decade By Gaetano Basso
  20. The French 2016 SMEs hiring subsidy, an evaluation based on pre-hiring declarations By P. BEAUMONT; A. LUCIANI
  22. Media's Role in the Making of a Democrat: Evidence from East Germany By Tim Friehe; Helge Müller; Florian Neumeier
  23. Tax Haven Investors and Corporate Profitability - Evidence of Profit Shifting by German-Based Affiliates of Multinational Firms By Sarah Godar
  24. The return to work and how it is taxed: a dynamic perspective By Mike Brewer; Monica Costa Dias; Jonathan Shaw
  25. Marginal costs for railway level crossings in Sweden By Jonsson, Lina; Björklund, Gunilla; Isacsson, Gunnar
  26. Zombie firms in Italy: a critical assessment By Giacomo Rodano; Enrico Sette
  27. “Technological cooperation and R&D outsourcing at the firm level: The role of the regional context ” By Damián Tojeiro-Rivero; Rosina Moreno
  28. Consumption inequality in France between 1995 and 2011 By Ch.-M. CHEVALIER

  1. By: Raul Ramos (AQR-IREA, Universitat de Barcelona); Esteban Sanromá (Universitat de Barcelona & Institut d’Economia de Barcelona (IEB)); Hipólito Simón (Universidad de Alicante & Institut d’Economia de Barcelona (IEB))
    Abstract: This research examines wage differentials associated to different collective bargaining regimes in Spain and their evolution over time based on matched employer-employee microdata. The primary objective is to analyse the wage differentials associated to the presence of a firm-level agreement and how they have evolved, taking into account the changes in the economic cycle and the recent labour reform of 2012. The second objective of the study is to examine the impact on wages of an absence of a collective agreement. This regime has become more prevalent due to the regulatory changes associated to the labour reform. From the evidence obtained it may be concluded that, although the higher wages observed in company-level agreements are systematically explained by the better characteristics of firms with labour agreements, there is a positive wage premium that favours workers mostly in the middle and upper-middle end of the wage distribution. This premium has remained relatively stable over time and does not seem to have been affected by the reform, although a degree of cyclical evolution cannot be ruled out. With respect to the impact on wages of the absence of a collective agreement, the results suggest that this level of bargaining, which is still fairly scarce, despite displaying an increasing trend, is associated, on average, to comparatively low wages, and, consequently, to higher wage flexibility. The principal explanatory cause for this wage differential is the existence of a negative wage premium for workers of firms covered by sectoral agreements, particularly those at the lower end of the distribution.
    Keywords: Collective bargaining, wage differentials, decomposition methods, economic cycle
    JEL: J31 J51
    Date: 2018
  2. By: Christian Hundt; Linus Holtermann; Jonas Steeger; Johannes Bersch
    Abstract: In this paper, we examine the macro-to-micro-transition of cluster externalities to firms and how it is affected by the macroeconomic instability caused by the recessionary shock of 2008/2009. Using data from 16,166 manufacturing and business services firms nested in 390 German regions, we employ within-firm regression techniques to estimate the impact of cross-level interactions between firm- and cluster-level determinants on phase-related differences in firm performance between a pre-crisis (2004-2007) and a crisis period (2009-2011). The empirical results validate the existence of a macro-to-micro-transition that evolves best in the case of broad firm-level capabilities and variety-driven externalities. Furthermore, the results indicate that the transition strongly depends on the macroeconomic cycle. While the transition particularly benefits from a stable macroeconomic environment (2004-2007), its mechanisms are interrupted when being exposed to economic turmoil (2009-2011). Yet, the crisis-induced interruption of the transition is mainly restricted to the national recession in 2009. As soon as the macroeconomic pressure diminishes (2010-2011), we observe a reversion of the transmission mechanisms to the pre-crisis level. Our study contributes to the existing literature by corroborating previous findings that the economic performance of firms depends on a working macro-to-micro transition of external re-sources, which presupposes sufficient cluster externalities and adequate firm-level combinative capabilities. In contrast to previous studies on this topic, the transition mechanism is not modeled as time-invariant. Instead, it is coupled to the prevailing macroeconomic regime.
    Keywords: Macro-to-micro-transition, combinative capabilities, agglomeration economies, cluster-level externalities, unrelated variety, related variety, macroeconomic regimes, Great Recession, economic resilience
    JEL: C33 R11 R58
    Date: 2019–02
  3. By: Aalto, Aino-Maija (UCLS, Uppsala Universitet); Mörk, Eva (Uppsala universitet); Sjögren, Anna (IFAU - Institute for Evaluation of Labour Market and Education Policy); Svaleryd, Helena (Uppsala universitet)
    Abstract: We analyze how access to childcare affects the health outcomes of children with unemployed parents using a reform that increased childcare access in some Swedish municipalities. While we find no effects of childcare access on hospitalization for 2- to 3-year-olds, our results suggest that 4- to 5-year-olds were more likely to be hospitalized due to infections when they first gained access to childcare. Children aged 10 to 11 years who had access to childcare earlier in their childhood, while their parents were unemployed, were less likely to be prescribed medication for respiratory conditions and allergies. Taken together, our results suggest that the immediate health consequences of childcare access for children of unemployed parents are limited. Our findings support previous evidence that the greater exposure to microorganisms induced by childcare attendance may reduce the risk of developing allergies and asthma.
    Keywords: Childcare; Child health; Unemployment; Quasi-experiment
    JEL: I14 J13
    Date: 2019–02–08
  4. By: Elena Cottini; Paolo Ghinetti; Simone Moriconi
    Abstract: This paper uses an own built dataset on the history of universities in Italy during 1861-2010 to estimate neighbourhood effects in the local supply of higher education, and incorporate them in a welfare analysis. We implement an instrumental variables approach that exploits initial conditions in the pre-unitarian Italian states, interacted with post-unification university reforms. We provide robust evidence of local displacement between higher education supply in neighbouring provinces. These effects are mostly concentrated within the same field of study, the same region, and a spatial reach of 90 Km. We show that accounting for these displacement forces is important to evaluate the local economic returns related to higher education supply. On average, this explains more than 4% of local value added per capita. Economic returns are very localised, and larger in provinces that host university hubs.
    Keywords: neighbourhood effects, higher education supply, historical data, initial conditions, economic welfare
    JEL: I23 I28 N00 R10
    Date: 2019
  5. By: A. Arrighetti; F. Landini
    Abstract: Recent works in the socio-economic and comparative political economy literature suggest the emergence of a predominant neoliberal model of capitalism, which is gradually being adopted by most advanced countries. A similar trend is present in the management literature where competitive advantages are increasingly being associated with a predominant strategic paradigm (integrated global engagement) leaning on the complementarities among R&D, human capital and entry into foreign markets, regardless of the country and industry a firm belongs to. While both views imply a growing tendency towards institutional and strategic homologation, other studies show only a partial convergence in institutional settings and highlight the presence of considerable heterogeneity in managerial conducts. In this paper we explore these contrasting interpretations by comparing the characteristics of manufacturing firms in Italy and Germany. The analysis suggests that (a) independently of the country of origin, globally engaged firms are relatively similar in characteristics that are usually positively correlated with economic performance such as size, age and innovation, but remain highly differentiated in terms of institutions-related variables; b) firms that have not adopted a strategy of global engagement are markedly heterogeneous in terms of both structural characteristics and institutions-related variables. In other words, global engagement is associated with a lower degree of the differentiation between Italian and German firms, but the variety of institutional settings continues to affect the evolution of businesses. Policy implications are discussed.
    Keywords: varieties of capitalism; business strategy; global engagement, firm heterogeneity; Italy; Germany
    JEL: P51 B52 L25 D22 F23
    Date: 2018
  6. By: Dorine Boumans; Clemens Fuest; Carlo Krolage; Klaus Wohlrabe
    Abstract: The Tax Cuts and Jobs Act constitutes the largest change to the US tax system since the 1980s and thoroughly alters the way in which multinational companies are taxed. Cur-rent assessments on the reform’s international impact vary widely. This article sheds light on the tax reform’s expected effects on other countries. We first use representative German business survey data to analyse the impact of the reform on German firms. Many firms with substantial US revenues or production capacities in the US intend to expand US investment in response to the reform, in particular large firms and manufacturing companies. The effects on investment in Germany are ambiguous: While some firms substitute between investment locations, others expand in both countries. We subsequently extend our analysis to the global level using worldwide survey data. The results suggest a negative impact on tax revenues and investment in countries with close economic ties to the US.
    Keywords: US tax reform, corporate tax, firm responses, survey, Germany
    JEL: H25 H32 H71 E62
    Date: 2019
  7. By: Federico Caviggioli (Politecnico di Torino – Department of Management and Production Engineering); Antonio De Marco (Politecnico di Torino – Department of Management and Production Engineering); Giuseppe Scellato (Politecnico di Torino – Department of Management and Production Engineering)
    Abstract: This study proposes a framework to identify and analyse the European defence innovation ecosystem and to investigate the relevance of dual use inventions, extending previous empirical approaches. 63,714 defence inventions in the decade 2002-2012 were analysed by taking several dimensions into consideration: time, geography, technology, type of innovator. The main findings indicate an increasing trend of patented inventions covering a wide range of technological fields not only in the traditional defence areas, but also in Information and Communication Technology (ICT) and in instruments for measurement and control. The innovations seem to be quite concentrated: the twenty largest patent holders (firms and government agencies) account for 40% of total defence inventions. The largest geographical source of innovations is the USA, but South Korea has increased significantly in recent years. Dual use innovations, i.e. military patents subsequently cited by a civilian invention, are identified using a novel method employing patent citations. The proportion of dual use inventions in the whole dataset is 41%, but the value has been decreasing in recent years and shows heterogeneity across technological sectors and geographical areas (the USA reports the highest share, 63.9%). Analysis of knowledge flows suggests significant heterogeneity in the share of intra-border innovations: the European defence innovations are largely cited by US inventions, especially when considering dual use cases.
    Keywords: Dual use, innovation, patents, defence, technology
    Date: 2018–12
  8. By: Ilya Stepanov (National Research University Higher School of Economics); Johan Albrecht (National Research University Higher School of Economics)
    Abstract: The issue of instrument choice is vital for climate policy. Carbon pricing is used next to a range of traditional energy taxes and renewable energy policies such as feed-in tariffs and minimal renewable generation targets. Several countries introduced carbon taxes alongside existing energy taxes such as excise duties on vehicle fuels. Since 2005, the EU Emissions Trading Scheme (EU ETS) has attached a direct price to the GHG emissions of ETS companies. The combination of multiple instruments and explicit and indirect carbon price signals created a complex and frequently changing institutional landscape that blurs the contribution of each policy instrument. Can the decarbonization of the European economy be attributed to carbon price instruments or to renewable energy policies together with other fiscal instruments? This paper clarifies the relative impact of explicit carbon price instruments (carbon taxes and EU ETS) compared to other instruments, namely renewable energy policies and indirect carbon price signals (general energy taxes). The methodology is based on the calculation of the implicit carbon price in existing fiscal systems. On the basis of panel data for 30 European countries 1995–2016, several fixed-effect regression estimations were performed. The results indicate a greater but decreasing impact of price instruments on carbon intensity compared to renewable energy policies and a greater but decreasing relative impact of indirect price signals compared to explicit ones.
    Keywords: energy taxes, carbon tax, cap-and-trade, renewable energy policy, climate change, climate policy
    JEL: Q52 Q58 Q48
    Date: 2019
  9. By: Iga Magda; Ewa Cukrowska-Torzewska
    Abstract: We contribute to the literature on firm-level determinants of gender wage inequalities by studying the link between a firm’s age and the size of its gender pay gap. Using European Structure of Earnings data for eight European countries, we find that in all of these countries, the gender wage gaps are smallest in the youngest firms. Our results also show that in Central European countries, the size of the gender pay gap clearly increases with the age of the company; whereas there is no such link in the older EU member states. Levels of gender wage inequality appear to be highest in companies that were previously state-owned, but were privatized during the transition. We interpret our findings with the support of competition and monopsony theories.
    Keywords: gender wage gap, wage inequalities, transition, age of firms
    JEL: J16 J31 J45
    Date: 2019–01
  10. By: Elena Claudia Meroni; Daniela Piazzalunga; Chiara Pronzato
    Abstract: In this paper, we study the effects of extra-school activities on children’s non-cognitive development, using data from the Millennium Cohort Study (UK) and focusing on children aged 7-11 years old. We classify the time spent out of school into six homogenous groups of activities, using principal component analysis, and estimate the relationship thereof with five behavioural dimensions drawn from the Strength and Difficulties questionnaire, exploiting the panel structure of the data. Results show the beneficial effects on children’s behaviour of sports, school-related activities, time with parents and household chores, while a small detrimental effect of video-screen time is detected. We test the robustness of our estimates against omitted variable bias, and the results are confirmed. We also observe that children from more advantaged backgrounds have easier access to more beneficial activities. Overall, our results suggest that different uses of time may reinforce inequalities across children from different backgrounds.
    Keywords: child time use, extra-curricular activities, Strengths and Difficulties questionnaire, longitudinal data, Millennium Cohort Study, non-cognitive development, omitted variable bias
    Date: 2018
  11. By: Schubert, Torben (CIRCLE, Lund University); Tavassoli, Sam (RMIT University)
    Abstract: The effects of diversity in management teams on firm innovation have become an important topic in strategic management. With a few exceptions, however, the literature has focused on diversity in Top Management Teams (TMTs), while the role of lower management levels, particularly in Middle Management Teams (MMTs), has usually been neglected. In this paper, we intend to fill this gap by explicitly differentiating between the effects of diversity in TMTs and MMTs. By matching various firm-level and individual-level datasets, we compiled a linked employer-employee panel dataset for Sweden for the period 2004–2012. Focusing on measures of educational diversity, we find that the effects differ considerably between MMTs and TMTs. TMTs diversity determines whether firms engage in innovation activities at all (strategic decision), while MMTs diversity affects the actual outcome of innovation processes (successful product innovations and their degree of market novelty).
    Keywords: Product innovation; diversity; middle management; top management; firm performance
    JEL: M12 M14 O30
    Date: 2019–02–12
  12. By: Heinz Welsch (University of Oldenburg, Department of Economics)
    Abstract: Previous studies on the determinants of attitudes toward immigration can be classified into those that take a utilitarian perspective, focusing on individuals’ perceptions of real-world impacts of immigration, and those that look at immigration attitudes from the point of view of ideological orientation, focusing on broad political norms and values. While utilitarian and ideological determinants have largely been studied separately, the present paper sets out to disentangle their role, placing an emphasis on possible interconnections between them. Specifically, the paper studies whether and to what extent individuals’ perception of the impacts of immigration is related to their ideological orientation, implying an indirect channel through which ideology may shape attitudes toward immigration policies. Focusing on Germany before and after the so-called refugee crisis of 2015, it is found that while perceptions of economic and cultural impacts are more important than ideological position, perceptions of impacts increasingly depend on ideology. Ideology-dependence of perceptions is stronger with respect to cultural than with respect to economic impacts. While the importance of perceived economic impacts has decreased, cultural impacts have become the dominant concern after the crisis. Ideological position is more important with respect to immigrants of a different race or ethnic group than the majority and immigrants from poorer countries outside Europe than with respect to immigrants of the same race or ethnic group. The relationship between ideology and immigration attitudes rests mainly on the identity/homogeneity domain of ideological position rather than the equity/solidarity domain.
    Keywords: immigration, attidude, utilitarianism, left right scale, equity, identity
    Date: 2019–02
  13. By: António Afonso; Ana Venâncio
    Abstract: We investigate the effect of a local territorial reform, which reduced the number of parishes, on municipality spending efficiency in the period 2011-2016. We build a composite output indicator and use Data Envelopment Analysis (DEA) to compute efficiency scores, which we then analyze through a second stage regression with socio-demographic, economic factors and the reform. We find efficiency gains for around 10% of municipalities overall. In Alentejo and in Centro, more than 50% of the municipalities improved efficiency. The second stage results show that the reform did not improve local spending efficiency in Mainland Portugal, particularly in the Norte region.
    Keywords: public spending efficiency, local government, data envelopment analysis (DEA), local organizational reform
    JEL: C14 H72 R50
    Date: 2019–02
  14. By: Benjamin Bittschi; Berthold U. Wigger
    Abstract: Within a politico-economic model we first establish three hypotheses: (i) Retirees generally prefer a higher retirement age than workers, whereby just retired individuals prefer the highest retirement age, (ii) in equilibrium the level of the legal retirement age is increasing in longevity and (iii) decreasing in the public pension replacement rate. We then test these hypotheses empirically. Employing micro data for Germany we corroborate the first hypothesis with descriptive regressions and a fuzzy regression discontinuity (FRD) design. We show that just retired individuals are indeed most in favor of an increase in the legal retirement age. On the basis of cross country panel IV regressions we provide evidence for the second and third hypothesis. We demonstrate that a one percentage point increase in the share of the elderly increases the legal retirement age by 0.3 to 0.5 years, and that a 10 percentage point increase in the replacement rate reduces the legal retirement age by 0.5 to 3 years. We conclude that if policy contains the generosity of public pensions, increasing the legal retirement age becomes politically more feasible.
    Keywords: retirement age, pension reform, longevity, replacement rate
    JEL: D72 H55 J26
    Date: 2019
  15. By: Fitjar, Rune Dahl (University of Stavanger)
    Abstract: The administrative boundaries of the central city almost universally cover a smaller area than its functional boundaries. As mobility patterns go mainly into the central city, local governments in central cities supply public goods beyond their own residents. They should want to extend their boundaries in order to internalize more of these externalities, while suburban municipalities should oppose this. This implication is clear from a theoretical perspective, but can rarely be tested given that local government reform is infrequent and typically top-down. However, the 2014-2017 Norwegian municipal reform offers a rare opportunity for empirical evidence to test this proposition. The paper examines the merger decisions made by municipalities in all city regions in Norway. The analysis provides support for the proposition that central cities want to internalize more of the externalities from their public goods production, while suburban municipalities oppose this: First, central cities tend to have higher property tax rates and to provide more public goods compared to suburban municipalities. Second, central cities were much more interested in merging than suburban municipalities: while the central cities wanted to merge with a total of 75 suburban municipalities, only 15 of the latter were positive to merging with the central city.
    Keywords: Municipal reform; city regional governance; Norway; interjurisdictional spillovers; city-suburb amalga
    JEL: H71 H73 H77 R51
    Date: 2019–01–22
  16. By: Manuela Krause
    Abstract: The political business cycle theories describe that election-motivated politicians manipulate economic policy-making. Election cycles occur in many fiscal variables, for example tax rates. I examine whether electoral motives influence communal fees in Germany. Fees have to be paid for the use of many public services, for example waste management or sewerage provisions. Fees should be equivalent to the costs of a public service and thus correspond to the benefit principle in public finance. The German municipalities, however, have a leeway to determine fees. I use revenue data for around 7,000 West German municipalities from seven states over the period 1992–2006. The results show that municipalities increase communal fees in election years to a smaller extent than in the middle of the legislative period, while they increase fees more directly after elections. Fees increase in election years by 0.94 euro per capita less and directly after elections by 1.74 euro per capita more than in the middle of the legislative period. The results thus corroborate the predictions of the political business cycle theories.
    Keywords: Electoral cycles, political business cycles, local government, communal fees, public utilities sector
    JEL: D72 H72 A13 R50 H27
    Date: 2019
  17. By: Rita Ginja (Institute for Fiscal Studies and University of Bergen); Jenny Jans (Institute for Fiscal Studies); Arizo Karimi (Institute for Fiscal Studies and Uppsala University)
    Abstract: We study how parental leave benefit levels affect household labor supply, family income, and child outcomes, exploiting the Speed Premium (SP) in the Swedish leave system. The SP grants mothers higher benefits for a subsequent child without re-establishing eligibility through market work, if two births occur within a pre-specified interval. We use the spacing eligibility cutoffs in a Regression Discontinuity framework and find that the SP improves educational outcomes of the older child, but not of the younger. Impacts are likely driven by increased maternal time and the quality of maternal time relative to the counterfactual mode of care.
    Keywords: parental leave benefits, child outcomes, labour supply
    Date: 2018–10–25
  18. By: Chris Belfield (Institute for Fiscal Studies and Institute for Fiscal Studies); Laura van der Erve (Institute for Fiscal Studies and Institute for Fiscal Studies)
    Abstract: There have been many studies of the impact of higher education (HE) on the wages and earnings of graduates. However, for working women, the variation in wages only explains 30% of the variance in net family income. To understand the overall impact of HE on the living standards of female graduates, we explore the wider impact of HE. We exploit the rich cohort study data in the UK to show that, for women, acquiring HE quali cations increases net family income by around 20%. We fi nd that this increase is driven by higher wages, more working hours and assortative mating, which drives higher partner earnings. We show that the impact on women's own earnings is more important in their early 30s but the role of assortative mating becomes increasingly important at older ages. We compare two cohorts of women born 12 years apart and we show that the overall impact of HE on incomes has remained relatively unchanged. The impact on female labour supply has increased slightly, but this has been counteracted by a smaller wage effect. The role of assortative mating has become no less important. These results shed new light on the benefi ts for women of pursuing HE in the context of ever increasing participation rates.
    Keywords: Female employment, Higher education, Returns to education
    JEL: I23 I31 J16
    Date: 2018–10–24
  19. By: Gaetano Basso (Bank of Italy)
    Abstract: Many advanced economies have experienced significant job polarization in the last decades, with an increase in the employment share and relative wage of both low-wage and high-wage workers at the expense of middle-wage workers. This polarization has probably been spurred by the substitution of routine-intensive labour with automation and information and communication technologies. This note explores whether the Italian labour market has experienced similar patterns and, if so, whether they are the consequence of a pure technology-driven shock. The evidence is mixed. While the share of low-wage manual occupations has increased markedly, that of high-wage professional occupations has fallen slightly. The share of middle-wage jobs has declined significantly but, unlike the case of the US, the wages have not. Regression analyses based on occupational task characteristics (Goos et al., 2014) do not fully align with the routine-biased technical change hypothesis either, consistently with the limited adoption of automation technology in Italy. Among the most likely factors, cross-sector reallocation, which favoured the low value added service sector, and the rise of low skilled migrant and college graduate labour supply explain most of the observed occupational changes.
    Keywords: labour demand, occupational choice
    JEL: J23 J24
    Date: 2019–01
  20. By: P. BEAUMONT (Insee); A. LUCIANI (Insee)
    Abstract: The French hiring subsidy program for SMEs was implemented in January 2016 and financed the creation of new long-term contracts for workers earning less than 1.3 times the hourly minimum wage. This study is aims at evaluating this measure. It has been conducted using the pre-hiring declarations filled by French employers. The subsidies granted in 2016 amounted to 2.6 billion euros and financed 965 000 hires. About 55 % of the hires that qualified for the program actually benefited from a subsidy. Descriptive statistics suggest that the growth in hires in fixed-term contracts lasting at least 6 months was more pronounced for firms with less than 250 workers (treated firms). In order to see if this is a causal effect of the program, the discontinuity in the eligibility to the program at the 250 workers threshold is leveraged in difference-in-difference estimations. Results suggest that the program increased hires in permanent contracts. The impact on employment appears to be limited by substitution effects between permanent contracts and fixed-term contracts lasting less than 6 months. In an alternative identification setting, the effect of the program on firms with less than 50 workers is isolated using the heterogeneity of exposure to the measure across labor markets. The program seems to have increased hires in fixed-term contracts lasting at least 6 months, the effects being concentrated on firms having between 10 and 49 workers.
    Keywords: public policy evaluation, hire, SMEs, employment
    JEL: H25 J20
    Date: 2018
  21. By: Laura Helena Kivi
    Abstract: This study investigates the spatial dependence of unemployment and employment rates in Europe relying on Eurostat NUTS2 level data for 306 European regions. Spatial dependence is explored using spatial error, spatial lag and a spatial autoregressive model with spatial autoregressive disturbances. The findings show that regional labour markets in Europe cluster in space – regions with high (low) (un)employment rate are surrounded by regions with high (low) (un)employment rate. The study provides evidence that significant spillovers across regional labour markets exist. The (un)employment rate in one region is directly affected by (un)employment rate changes in other regions, but also by unobserved shocks in other regions. It was found that the spatial effects are not determined by differences in the share of the population of youth, differences in industrial structure or difference in human capital. The results of the study confirm the importance of close coordination between regions while developing labour market and regional policy measures.
    Keywords: regional labour markets, spatial econometrics, spatial dependence, clustering, Europe
    Date: 2019
  22. By: Tim Friehe; Helge Müller; Florian Neumeier
    Abstract: This paper explores the causal influence of media content on voting behavior. We exploit a natural experiment involving access to West German TV within the German Democratic Republic. Focusing on federal and state election outcomes in the post-reunification decade (i.e., a time at which TV content was harmonized), we find that municipalities that had access to Western TV broadcasts before reunification have lower vote shares for left-wing and right-wing extremist parties. With regard to potential channels, we provide evidence based on survey data that GDR citizens with access to West German TV were less loyal to the socialist regime, less hostile toward foreigners, and exhibited higher levels of social capital. Our findings thus support the notion that access to free media influences political attitudes and facilitates the consolidation of democracy.
    Keywords: voting, extremism, television, media, natural experiment, Germany
    JEL: D72 L82 P30
    Date: 2019
  23. By: Sarah Godar (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic; Berlin School of Economics and Law)
    Abstract: This paper uses confidential firm-level panel data to provide new estimates on the extent of corporate profit shifting by German-based affiliates of multinational corporations. The estimated semi-elasticity of reported profits with regard to statutory foreign tax rates is 3.6, or 4.8 when allowing for a non-linear relationship. This is higher than most of the previous estimates of around 1. The case for a non-linear relationship is even stronger when average effective tax rates are used instead of statutory rates. In addition, the paper develops an alternative identification strategy suggesting that the first-time appearance of a tax-haven investor in the ownership chain reduces the reported profits of German-based affiliates by 61 percent if a majority of the affiliate is held by a single investor. The estimated effects are used to extrapolate the amount of shifted profits and associated revenue losses for all German-based foreign affiliates. The results suggest moderate but non-negligible revenue losses between 2.9 and 10.7 percent of corporate income tax revenues (or EUR 1.5-5.6 bn in 2015).
    Date: 2018–12
  24. By: Mike Brewer (Institute for Fiscal Studies and University of Essex); Monica Costa Dias (Institute for Fiscal Studies and Institute for Fiscal Studies); Jonathan Shaw (Institute for Fiscal Studies and Financial Conduct Authority)
    Abstract: This paper provides an empirical account of the dynamic return to work, and how this is affected by taxes and benefits. In doing so we bring the insights from the literature on dynamic labour supply to the issue of estimating the financial return to work and how it is taxed, where the past literature has focused on the current period return. We do this with two new summary measures: the forward-looking replacement rate (FLRR), which measures the dynamic return to working at all, and the forward-looking participation tax rate (FLPTR), which measures the impact of personal taxes and transfers on the dynamic return to work, and implement these using simulated data from a sophisticated, structural dynamic model of education and labour supply. We find that the dynamic return to work is much higher than a static measure would imply: at the start of working life, the expected FLRR and static RR differ by at least 5 percentage points for more than two thirds of women, and by over 10 percentage points for over a third of women. These results are driven by returns to experience. In contrast, we find a dynamic perspective makes relatively little difference to the extent to which personal taxes and transfers reduce the return to work, with the expected FLPTR and static PTR differing little for most women in our data. This mainly reflects the fact that that the UK tax and benefit system tends to treat the future returns to working today similarly to how it treats the current-period return.
    Keywords: labour supply, work incentives, replacement rate, participation tax rate, forwardlooking, lifecycle, taxes, human capital
    JEL: H21 H24 I38 J22 J24
    Date: 2018–10–31
  25. By: Jonsson, Lina (WSP); Björklund, Gunilla (CTS - Centre for Transport Studies Stockholm (KTH and VTI)); Isacsson, Gunnar (Trafikverket)
    Abstract: The purpose of the present study is to estimate accident risks and marginal costs for railway level crossings in Sweden. The marginal effect of train traffic on the accident risk is used to derive the marginal cost per train passage that is due to level crossing accidents. The estimations are based on Swedish data from 2000 to 2012 on level crossing accidents, train volume, and crossing characteristics. In this study we estimate the accidents risk for both motorized road traffic and vulnerable road users. As a proxy for road traffic flow we use three categories of road type, and to capture the influences of pedestrians and bicyclists we use information about the number of persons living nearby the level crossing. The results show that both protection device, road type, traffic volume of the trains, and number of persons living nearby the level crossing have significant influences on the accident probability. The marginal cost per train passage regarding motor vehicle accidents is estimated at SEK 1.51 on average in 2012. The corresponding number for accidents with vulnerable road users excluding suicides is SEK 0.79 or including suicides SEK 5.02. The cost per train passage varies substantially depending on type of protection device, road type, the traffic volume of the trains, and number of persons living nearby the crossing.
    Keywords: Railway; Marginal cost; Accident probability: Level crossings
    JEL: D62 H23 R41
    Date: 2019–02–13
  26. By: Giacomo Rodano (Bank of Italy); Enrico Sette (Bank of Italy)
    Abstract: This note shows the consequences of different methodological choices for the estimates of the incidence of zombie firms in Italy. We use as a benchmark the influential measure proposed by the OECD (Adalet McGowan et al. 2017a and 2017b) which identifies zombie firms based on a combination of firm age and values of the interest coverage ratio (operating profits to interest expenses). We show that a key decision is whether operating profits are taken before or after amortization and depreciation and we argue that using profits after amortization and depreciation has several undesirable characteristics: i) it overestimates the share of capital “trapped” into zombie firms, and, to a smaller extent, the share of zombie firms; ii) it is worse in predicting the future performance of firms; iii) it is more likely to classify as zombies in a given year firms which invested heavily in previous years and amortized that investment quickly (for example to enjoy tax breaks); iv) it is especially inappropriate for cross-country comparisons.
    Keywords: zombie firms, productivity, misallocation
    JEL: D24 L25 O47
    Date: 2019–01
  27. By: Damián Tojeiro-Rivero (AQR-IREA Research Group, University of Barcelona. Department of Econometrics, Statistics and Applied Economics. Av. Diagonal 690, 08034 Barcelona, Spain. Tel.(+34) 934 021 412.); Rosina Moreno (AQR-IREA Research Group, University of Barcelona. Av. Diagonal 690 - 08034 Barcelona (Spain). Tel. +34934021823 - Fax +34934021821.)
    Abstract: Much has been said about the role that technological networking activities play on the innovative performance of firms, but little is known about the relevance of the context where the firm is locate shaping the efficiency of such networking activities. In this article we hypothesize that the transformation of firms' networking activities into innovation may vary depending on the regional environment in which the firm is located. For Spanish manufactures in the period 2000-12 and through the use of a multilevel framework, we obtain that after controlling for the firm's characteristics, the regional context has not only a direct effect on firms' innovation performance, but it also conditions the returns to firms' networking activities, although differently in the case of cooperation and outsourcing. Cooperating in innovation activities is more beneficial for those firms located in a knowledge intensive region, whereas R&D outsourcing seems to be more profitable for firms in regions with a low knowledge pool.
    Keywords: Technological cooperation, R&D Outsourcing, Local Knowledge Spillovers; Multilevel; Panel data; Spanish Firms, Manufactures. JEL classification: D21, D22, O31, R10, R15
    Date: 2019–02
  28. By: Ch.-M. CHEVALIER (Insee)
    Abstract: How did consumption inequalities evolve in France over the last two decades, and notably compared to disposable income? For the United States in particular, while earliest long run measures of consumption inequalities displayed stability, this pattern has been challenged by a refined indicator mitigating under-reporting and depicting an increase of the same order of magnitude as for disposable income (Aguiar and Bils, 2015). Relying on the survey Budget de famille between 1995 and 2011, this work first develops standard inequality measures for France and derives them with respect to consumption categories, ages and household compositions. Under a standard sample and consumption bundle, consumption inequality did not track income inequality in France especially during the crisis. By consumption category, the level of consumption inequality is lower and increased for inferior goods. Second, to correct potential systematic under-reporting errors, an alternative indicator similar to Aguiar and Bils (2015) is built relying on differences in luxuries and necessities expenditures between high- and low-income households. Yet, there seems to be no problem due to mis-measurement related to specific income groups over the whole time period in France. Relatedly, the alternative indicator of consumption inequality depicts no rising pattern, such as the one observed for the United States due to large relative underreporting by high-income respondents. Thus, both the standard and alternative inequality indicators do not illustrate consumption inequalities rising as income inequalities. As the latter did not increase to a large extent, this slight difference does not reflect an alarming surge in household indebtedness such as for the US over the same period.
    Keywords: consumption, inequality, savings, life cycle
    JEL: D31 E21
    Date: 2018

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