nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2019‒04‒15
29 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  2. Presence of language-learning opportunities and migration By Matthias Huber; Silke Übelmesser
  3. Can a Green Tax Reform Entail Employment Double Dividend in European and non-European Countries? A Survey of the Empirical Evidence By Maxim, Maruf Rahman; Zander, Kerstin
  4. Promoting Breast Cancer Screening Take-Ups with Zero Cost: Evidence from an Experiment on Formatting Invitation Letters in Italy By Bertoni, Marco; Corazzini, Luca; Robone, Silvana
  5. Living Conditions and the Mental Health and Well-being of Refugees: Evidence from a Representative German Panel Study By Lena Walther; Lukas M. Fuchs; Jürgen Schupp; Christian von Scheve
  6. A Comparison of Earnings Related to Higher Level Vocational/Technical and Academic Education By Hector Espinoza; Stefan Speckesser
  7. Refugees Welcome? Understanding the Regional Heterogeneity of Anti-Foreigner Hate Crimes in Germany By Entorf, Horst; Lange, Martin
  8. "And Yet It Moves": Intergenerational Mobility in Italy By Paolo Acciari; Alberto Polo; Giovanni L. Violante
  9. Out-Of-Partnership Births in East and West Germany By Jirjahn, Uwe; Struewing, Cornelia
  10. Adjusting to minimum wage regulation: Evidence from a direct-democracy experiment in Switzerland By Marius Berger; Bruno Lanz
  11. Policy in the Pipeline: Identifying Regional Public Investment Priorities Using a Natural Experiment By Myck, Michal; Najsztub, Mateusz
  12. The Causal Effects of Education on Adult Health, Mortality and Income: Evidence from Mendelian Randomization and the Raising of the School Leaving Age By Davies, Neil; Dickson, Matt; Smith, George Davey; Windmeijer, Frank; van den Berg, Gerard J.
  13. Does combining different types of collaboration always benefit firms? Collaboration, complementarity and product innovation in Norway By Silje Haus-Reve; Rune Dahl Fitjar; Andrés Rodríguez-Pose
  14. The Institutional Adjustment Margin to Import Competition: Evidence from Italian Minimum Wages By Alessia Matano; Paolo Naticchioni; Francesco Vona
  15. Does Low Skilled Immigration Increase Profits? Evidence from Italian Local Labour Markets By Brunello, Giorgio; Lodigiani, Elisabetta; Rocco, Lorenzo
  16. Tobacco Sales Prohibition and Teen Smoking By Meier, Armando N.; Odermatt, Reto; Stutzer, Alois
  17. Implications of the Polish 1999 Administrative Reform for Regional Socio-Economic Development By Myck, Michal; Najsztub, Mateusz
  18. Who Founds? An Analysis of University and Corporate Startup Entrepreneurs Based on Danish Register Data By Kaiser, Ulrich; Kuhn, Johan Moritz
  19. Ethnicity and tax filing behavior By Spencer Bastani; Thomas Giebe; Chizheng Miao
  20. Marriage market equilibrium, qualifications, and ability By Dan Anderberg; Jesper Bagger; V. Bhaskar; Tanya Wilson
  21. Accounting for the distributional effects of the 2007-2008 crisis and the Economic Adjustment Program in Portugal. By SOLOGON Denisa; ALMEIDA Vanda; VAN KERM Philippe
  22. Crisis, adjustment and resilience in the Greek labour market: an unemployment decomposition approach By Monastiriotis, Vassilis; Martelli, Angelo
  23. Market Heterogeneity and the Distributional Incidence of Soft-drink Taxes: Evidence from France By Fabrice Etilé; Sebastien Lecocq; Christine Boizot-Szantai
  24. The price and employment response of firms to the introduction of minimum wages By Sebastian Link
  25. Understanding the Sharing Economy By Diane Coyle; Shane O'Connor
  26. Do Parents Work More When Children Start School? Evidence from the Netherlands By Swart, Lisette; Van den Berge, Wiljan; van der Wiel, Karen
  27. Tax Professionals: Tax-Evasion Facilitators or Information Hubs? By Battaglini, Marco; Guiso, Luigi; Lacava, Chiara; Patacchini, Eleonora
  28. Selecting or Rewarding Teachers? International Evidence from Primary Schools By Braga, Michela; Checchi, Daniele; Garrouste, Christelle; Scervini, Francesco
  29. 25 Years of European Merger Control By Pauline Affeldt; Tomaso Duso; Florian Szücs

  1. By: Francesco Aiello (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Paola Cardamone (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Valeria Pupo (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)
    Abstract: This paper investigates the determinants of university-industry links in five European countries (France, Germany, Italy, Spain and the UK), using internationally comparable firm-level data for the period 2007-2009. Besides the usual firm-specific variables, it examines the role of meritocratic management practices in firms’ decisions to collaborate in R&D. Firm innovative efforts, the export status and the R&D government support are positively related to business-university links in almost all countries, human capital and firms’ size in two out of five countries under scrutiny, while belonging to science-based sectors does not seem to play a significant role. Importantly, we find that meritocratic managerial practices positively affect the firm-university nexus in Germany, France and UK, while meritocracy does not appear to enhance businesses’ R&D collaboration in Italy and in Spain.
    Keywords: industry-university links, European countries, R&D, manufacturing firms, meritocratic managerial practices
    JEL: O31 D21 C25
    Date: 2019–04
  2. By: Matthias Huber; Silke Übelmesser
    Abstract: This paper analyses the effect of the presence of German language learning opportunities abroad on migration to Germany. We use information on the presence of the Goethe-Institut (GI), which is an association that promotes German culture and offers language courses and standardized exams. Our unique dataset covers 69 countries for the period 1977 to 2014. In this multiple-origin and single-destination framework, we estimate fixed-effects models as our basic specification. We find evidence that the number of language institutes of the GI in a country is positively correlated with migration from that country to Germany. The correlation is higher for countries with lower income, larger linguistic distance and without wars. To establish causality, we consider Switzerland as an alternative destination country as the decision to open a language institute in a country is exogenous to migration flows from that country to Switzerland. We find that the institutes of the GI also affect migration flows to the German-speaking part of Switzerland, but not to the French- and Italian-speaking part. Backed by further extensions which control for the presence of multilateral resistance and omitted variable bias, we interpret our results as presenting a causal effect from language learning opportunities to migration flows.
    Keywords: language skills, language learning, international migration, panel data
    JEL: F22 O15 J61
    Date: 2019
  3. By: Maxim, Maruf Rahman; Zander, Kerstin
    Abstract: This paper synthesises the simulation studies concerning green tax reform (GTR) and employment double dividend (EDD) in European and non-European countries. The studies included investigate the effect of GTR on employment. We compared the simulation results between European and non-European countries to understand the impact of study region and our findings are fivefold. First, the simulation results suggest that GTR-driven EDD is observed in both European and non-European countries, but the average effect on employment in European countries (0.67%) is significantly greater than in non-European countries (0.18%). Second, optimal tax and tax revenue recycling policies in European and non-European countries for EDD are not identical. Reducing employers’ social security contributions (SSC) has the potential to generate EDD in both countries. However, a reduction in value added tax has the highest average effect on employment in European countries (1.62%), which negatively affects employment in non-European countries (−0.02%). Third, a reduction in personal income tax as a tax recycling method creates a marginally average employment dividend in non-European countries (0.16%) but is counterproductive in European countries (−0.15%). Fourth, other taxes, which predominantly represent mixed taxes, exhibit the highest EDD potential in both European (1.01%) and non-European (0.46%) countries. Finally, employment dividend diminishes over time, but a weak quadratic pattern has been observed that reveals an accelerating effect on employment in the long term. These reflections should be considered before employing GTR in non-European countries in order to yield EDD.
    Keywords: Green Tax Reform, Double Dividend, Employment
    JEL: E24 H21 H23
    Date: 2019–04–08
  4. By: Bertoni, Marco (University of Padova); Corazzini, Luca (Ca' Foscari University of Venice); Robone, Silvana (University of Insubria)
    Abstract: We ran a randomized field experiment to ascertain whether a costless manipulation of the informational content (restricted or enhanced information) and the framing (gain or loss framing) of the invitation letter to the breast cancer screening program in Messina, Italy, affects the take-up rate. We show that giving enhanced loss-framed information about the risks of not having a mammography increases the take-up. This manipulation is especially effective among subjects with lower baseline take-ups – those living farther away from the screening site, residing in municipalities with low education, or with no recent screening experience – contributing to reduce socio-economic inequalities in screening. When we investigate the mechanisms behind our findings, we show that subjects exposed to our proposed manipulation are also less likely to postpone the appointment, signaling enhanced awareness about the risks related with delayed participation.
    Keywords: breast cancer screening, framing, information provision, randomized field experiment
    JEL: C93 H51 I11 I18
    Date: 2019–03
  5. By: Lena Walther; Lukas M. Fuchs; Jürgen Schupp; Christian von Scheve
    Abstract: The mental health and well-being of refugees are both prerequisites for and indicators of social integration. Using data from the first wave of a representative prospective panel of refugees living in Germany, we investigated how different living conditions, especially those subject to integration policies, are associated with experienced distress and life satisfaction in newly-arrived adult refugees. In particular, we investigated how the outcome of the asylum process, family reunification, housing conditions, participation in integration and language courses, being in education or working, social interaction with the native population, and language skills are related to mental health and well-being. Our findings show that negative and pending outcomes of the asylum process and separation from family are related to higher levels of distress and lower levels of life satisfaction. Living in communal instead of private housing is also associated with greater distress and lower life satisfaction. Being employed, by contrast, is related to reduced distress. Contact to members of the host society and better host country language skills are also related to lower levels of distress and higher levels of life satisfaction. Our findings offer insights into correlates of refugees’ well-being in the first years after arrival in a host country, a dimension of integration often overlooked in existing studies, thus having the potential to inform decision-making in a highly contested policy area.
    Date: 2019
  6. By: Hector Espinoza; Stefan Speckesser
    Abstract: We use the earliest cohort of English secondary school leavers with newly available Longitudinal Education Outcomes data (622,000 pupils in 2002/03) to compare earnings of people with higher vocational/technical qualifications to those of degree holders. The unusually rich data allow us to estimate earnings differentials until the age of 30, controlling for a wide array of characteristics and full education trajectories. Our results show that initially higher earnings observed for people achieving higher vocational education disappear when people are in the mid-twenties. Depending on the type of university attended, male degree holders earn up to 18% more by age 30, while female graduates earn around 40% more. However, there is considerable heterogeneity by gender and subject area. There are high returns related to higher vocational/technical education in STEM subjects, which remain significantly above those of many degree holders by age 30.
    Keywords: returns to education, Tertiary Education, High-Level Technical Education, Vocational Education, Administrative Data
    JEL: I21 I24 J64
    Date: 2019–04
  7. By: Entorf, Horst (Goethe University Frankfurt); Lange, Martin (ZEW Mannheim)
    Abstract: In this article, we examine anti-foreigner hate crime in the wake of the large influx of asylum seekers to Germany in 2014 and 2015. By exploiting the quasi-experimental assignment of asylum seekers to German regions, we estimate the causal effect of an unexpected and sudden change in the share of the foreign-born population on anti-foreigner hate crime. Our county-level analysis shows that not simply the size of regional asylum seeker inflows drives the increase in hate crime, but the rapid compositional change of the residential population: Areas with previously low shares of foreign-born inhabitants that face large-scale immigration of asylum seekers witness the strongest upsurge in hate crime. Economically deprived regions and regions with a legacy of anti-foreigner hate crimes are also found to be prone to hate crime against refugees. However, when we explicitly control for East-West German differences, the predominance of native-born residents at the local level stands out as the single most important factor explaining the sudden increase in hate crime.
    Keywords: hate crime, immigration, natural experiment, regional conditions
    JEL: J15 R23 K42
    Date: 2019–03
  8. By: Paolo Acciari; Alberto Polo; Giovanni L. Violante
    Abstract: We link administrative data on tax returns across two generations of Italians to study the degree of intergenerational mobility. We estimate that a child with parental income below the median is expected to belong to the 44th percentile of its own income distribution as an adult, and the probability of moving from the bottom to the top quintile of the income distribution within a generation is 0.10. The rank-rank correlation is 0.25, and rank persistence at the top is significantly higher than elsewhere in the income distribution. Upward mobility is higher for sons, first-born children, children of self-employed parents, and for those who migrate once adults. The data reveal large variation in child outcomes conditional on parental income rank. Part of this variation is explained by the location where the child grew up. Provinces in Northern Italy, the richest area of the country, display upward mobility levels 3-4 times as large as those in the South. This regional variation is strongly correlated with local labor market conditions, indicators of family instability, and school quality.
    JEL: J31 J61 J62 R1
    Date: 2019–04
  9. By: Jirjahn, Uwe (University of Trier); Struewing, Cornelia (University of Trier)
    Abstract: Using data from the German Socio-Economic Panel (SOEP), we show that single women in East Germany are significantly more likely to give birth to a child than single women in West Germany. This applies to both planned and unplanned births. Our analysis provides no evidence that the difference between East and West Germany can be explained by economic factors or the higher availability of child care in East Germany. This suggests that the difference in out-of-partnership births is rather driven by behavioral and cultural differences. However, these behavioral and cultural differences do not only reflect different gender role models that evolved under the former communist regime in East Germany and the democratic one in West Germany. Partly, they also reflect a long historical divide that predates the 1945 separation of Germany.
    Keywords: unpartnered birth, gender role models, culture, East Germany, West Germany, politico-economic systems
    JEL: J12 J13 P20
    Date: 2019–03
  10. By: Marius Berger; Bruno Lanz
    Abstract: We document firms' adjustment channels to minimum wage regulation, leveraging an unexpected Supreme Court ruling mandating the Swiss canton Neuchâtel to enforce a minimum hourly wage of around USD20 previously accepted via popular ballot. Given policy discontinuity at cantonal borders, we design a simple two-wave survey of restaurants to measure wages, employment, workers characteristics, and prices, and administer it in Neuchâtel as well as in geographically proximate districts of neighboring cantons. Our data covers pre- and post-enforcement outcomes for 113 restaurants, with information on more than 800 employees distributed over two survey waves. Difference-in-differences estimation on restaurant-level outcomes and on the distribution of wages in our sample indicate small and statistically insignificant impacts on employment and prices, although we find evidence of disemployment effects for restaurants with larger workforce and lower pre-treatment subminimum wages. Worker-level data further suggests that labor-labor substitution is at work, with an increase in the share of less-qualified workers and employment spillovers for workers with wages above the regulatory minimum.
    Keywords: Minimum wage regulation, Wage distribution, Workforce composition, Laborlabor substitution, Low-wage jobs, Restaurant industry
    JEL: J21 J23 J38 C83 R23
    Date: 2019–03
  11. By: Myck, Michal (Centre for Economic Analysis, CenEA); Najsztub, Mateusz (Centre for Economic Analysis, CenEA)
    Abstract: We identify regional public investment priorities by studying the development of the water pipe system in the largest district in Poland. For this purpose, we take advantage of a major administrative re-form, implemented on 1 January 1999, which substantially changed the structure of Polish local government and reduced the number of top-tier administrative regions from 49 to 16. We treat the reform as a natural experiment, and apply the difference-in-differences approach to study developments along the boundary of the new Mazovian voivodeship. We find strong and positive implications for the development of the water pipe system in municipalities within the Mazovian voivodeship compared with those just outside its boundaries. The overall post-reform difference in the length of the total water pipe network is 25% and the difference in the per-capita length of the network is 30%. Local public investment priorities at the voivodeship level, potentially related to effective use of EU funds, are the most likely determinants of these differences.
    Keywords: public investment policy, water pipe system, administrative reform
    JEL: H43 H73 P35
    Date: 2019–03
  12. By: Davies, Neil (University of Bristol); Dickson, Matt (University of Bath); Smith, George Davey (University of Bristol); Windmeijer, Frank (University of Bristol); van den Berg, Gerard J. (University of Bristol)
    Abstract: We compare estimates of the effects of education on health and health behaviour using two different instrumental variables in the UK Biobank data. One is based on a conventional natural experiment while the other, known as Mendelian randomization (MR), is based on genetic variants. The natural experiment exploits a compulsory schooling reform in the UK in 1972 which involved raising the minimum school leaving age (RoSLA). MR exploits perturbations of germline genetic variation associated with educational attainment, which occur at conception. It has been widely used in epidemiology and clinical sciences. Under monotonicity, each IV identifies a LATE, with potentially different sets of compliers. The RoSLA affected the amount of education for those at the lower end of the ability distribution whereas MR affects individuals across the entire distribution. We find that estimates using each approach are remarkably congruent for a wide range of health outcomes. Effect sizes of additional years of education thus seem to be similar across the education distribution. Our study corroborates the usefulness of MR as a source of instrumental variation in education.
    Keywords: returns to education, health, instrumental variables, RoSLA, genomic confounding, LATE
    JEL: H52 I12 I21 I28
    Date: 2019–03
  13. By: Silje Haus-Reve; Rune Dahl Fitjar; Andrés Rodríguez-Pose
    Abstract: Product innovation is widely thought to benefit from collaboration with both scientific and supply-chain partners. The combination of exploration and exploitation capacity, and of scientific and experience-based knowledge, are expected to yield multiplicative effects. However, the assumption that scientific and supply-chain collaboration are complementary and reinforce firm-level innovation has not been examined empirically. This paper tests this assumption on an unbalanced panel sample of 8337 firm observations in Norway, covering the period 2006?2010. The results of the econometric analysis go against the orthodoxy. They show that Norwegian firms do not benefit from doing "more of all" on their road to innovation. While individually both scientific and supply-chain collaboration improve the chances of firm-level innovation, there is a significant negative interaction between them. This implies that scientific and supply-chain collaboration, in contrast to what has been often highlighted, are substitutes rather than complements. The results are robust to the introduction of different controls and hold for all tested innovation outcomes: product innovation, new-to-market product innovation, and share of turnover from new products.
    Keywords: Innovation, firms, scientific and supply-chain collaboration, interaction, Norway
    JEL: O31 O32 O33
    Date: 2019–04
  14. By: Alessia Matano; Paolo Naticchioni; Francesco Vona
    Abstract: A growing body of research has contributed to understanding the labor market and political effects of globalization. This paper explores an overlooked aspect of trade-induced adjustments in the labor market: the institutional aspect. We take advantage of the two-tier collective bargaining structure of the Italian labor market, whereby the first tier entails setting minimum wages at the contract level. Using an instrumental variable strategy and exploiting variations in contract-level exposure to trade, we find for the 1995-2003 period that on average, the surge in imports decreased contractual minimum wages by 1.5%. This impact increased with the increase in the share of unskilled workers employed in the contract. This negative institutional effect contrasts with a nonsignificant effect of trade on total wages, with the latter becoming positive and large only for highly skilled workers.
    Keywords: bargained minimum wages; import competition; labor market institutions; skills.
    Date: 2019–04–06
  15. By: Brunello, Giorgio (University of Padova); Lodigiani, Elisabetta (University of Padova); Rocco, Lorenzo (University of Padova)
    Abstract: We estimate the (causal) effects of low skill immigration on the performance of Italian manufacturing firms. We find that an increase of the local supply of low skilled immigrants by one thousand units – which corresponds to 8.5 percent of the mean value - raises profits on average by somewhat less than half a percentage point, reduces average labour costs by about 0.1 percent and has no effect on TFP. The positive effects on profits are larger for small firms operating in low tech sectors and for firms located in areas specializing in low skill productions. Our evidence suggests that the recent waves of low skilled immigration in Italy may have hampered the transition to an economic structure characterized by high productivity and wage growth.
    Keywords: low skilled immigration, profits, Italy
    JEL: J61
    Date: 2019–03
  16. By: Meier, Armando N. (University of Basel); Odermatt, Reto (University of Basel); Stutzer, Alois (University of Basel)
    Abstract: We evaluate one of the most prevalent prohibitory policies: banning the sales of tobacco to teens. We exploit the staggered introduction of sales bans across Switzerland and the European Union from 1990 to 2016. The estimates indicate a less than 1 percentage point reduction in teen smoking because of the bans. The reduction is substantially lower than the 5 percentage point reduction expected by health officials. We examine additional outcomes relevant to assessing any prohibitory policy. We find that teens circumvent the bans through peers. Moreover, they consider smokers less cool but do not think smoking is more dangerous.
    Keywords: prohibition, tobacco sales bans, youth smoking, attitudes toward smoking, tobacco prevention
    JEL: D12 I12 I18 K42
    Date: 2019–03
  17. By: Myck, Michal (Centre for Economic Analysis, CenEA); Najsztub, Mateusz (Centre for Economic Analysis, CenEA)
    Abstract: On 1 January 1999, four major reforms took effect in Poland in the areas of health, education, pensions and local administration. After 20 years, only in the last case does the original structural design remain essentially unchanged. We examine the implications of this reform from the perspective of the distance of municipalities from their regional administrative capital. We show that despite fears of negative consequences for peripheral regions, the reform did not result in slower socio-economic development for those municipalities that found themselves further from the new administrative centres. We argue that regional inclusiveness in the process of development is likely to be an important factor behind the stability of Poland's administrative design.
    Keywords: regional development, administrative reform, distance to capitals, differences in differences
    JEL: P30 R11 R50
    Date: 2019–03
  18. By: Kaiser, Ulrich (University of Zurich); Kuhn, Johan Moritz (EPAC)
    Abstract: We compare individuals presently employed either at an university or at a firm from a R&D intensive sector and analyze which of their personal-specific and employer-specific characteristics determine their choice of subsequently founding a startup. Our data set is unusually rich and combines the population of Danish employees with their present employers. We focus on persons who at least hold a Bachelor's degree in engineering, sciences and health and track them over the time period 2001-2012. We show that (i) there are overall little differences between the characteristics of university and corporate startup entrepreneurs, (ii) common factors triggering startup activity of both university and corporate employees are education, top management team membership, previous job mobility and being male, (iii) it is exclusively human capital-related characteristics that affect startup choice of university employees while (iv) the characteristics of the present workplace constitute major factors of entrepreneurial activity.
    Keywords: university startups, corporate startups, founder characteristics
    JEL: L26 I23 O31 O32
    Date: 2019–03
  19. By: Spencer Bastani; Thomas Giebe; Chizheng Miao
    Abstract: We analyze differences in tax filing behavior between natives and immigrants using population-wide Swedish administrative data, focusing on two empirical examples. First, controlling for a rich set of variables, we compare deduction behavior of immigrants and natives with the same commuting patterns within Sweden’s largest commuting zone. We find that newly arrived immigrants file fewer deductions than natives, that immigrants with a longer duration of stay in the host country behave more like natives, and that immigrants with the longest stay file the most, even more than natives. Second, we analyze bunching behavior among the self-employed at the salient first kink point of the Swedish central government income tax schedule, located in the upper middle part of the income distribution. We find that self-employed immigrants exhibit significantly less bunching behavior than natives, even after a long time in the host country. We highlight residential segregation as a main driver of the observed behavioral differences.
    Keywords: deductions, tax filing, bunching, immigrants, natives, integration
    JEL: D31 H21 H24 H26 J22 J61
    Date: 2019
  20. By: Dan Anderberg; Jesper Bagger; V. Bhaskar; Tanya Wilson
    Abstract: We study marital sorting on academic qualifications and latent ability in an equilibrium marriage market model using the 1972 UK Raising of the School-Leaving Age (RoSLA) legislation as a natural experiment that induced a sudden, large shift in the distribution of academic qualifications in affected cohorts, but plausibly had no impact on the distribution of ability. We show that a Choo and Siow (2006) model with sorting on cohort, qualifications, and latent ability is identified and estimable using the RoSLA-induced population shifts. We find that the RoSLA isolated low ability individuals in the marriage market, and affected marital outcomes of individuals whose qualification attainment were unaffected. We also decompose the difference in marriage probabilities between unqualified individuals and those with basic qualifications into causal effects stemming from ability and qualification differences. Differences in marriage probabilities are almost entirely driven by ability.
    Keywords: marriage, qualifications, assortative mating, latent ability
    JEL: D10 D13 J12
    Date: 2019
  21. By: SOLOGON Denisa; ALMEIDA Vanda; VAN KERM Philippe
    Abstract: This paper develops a new method to model the household disposable income distribution and decompose changes in this distribution (or functionals such as inequality measures) over time. It integrates both a micro-econometric and microsimulation approaches, combining a flexible parametric modelling of the distribution of market income with the EUROMOD microsimulation model to simulate the value of taxes and benefits. The method allows for the quantification of the contributions of four main factors to changes in the disposable income distribution between any two years: (i) labour market structure; (ii) returns; (iii) demographic composition; and (iv) tax-benefit system. We apply this new framework to the study of changes in the income distribution in Portugal between 2007 and 2013, accounting for the distributional effects of the 2007-2008 crisis and aftermath policies, in particular the Economic Adjustment Program (EAP). Results show that these effects were substantial and reflected markedly different developments over two periods: 2007-2009, when stimulus packages determined important income gains for the bottom of the distribution and a decrease in income inequality; 2010-2013, when the crisis and austerity measures took a toll on the incomes of Portuguese households, particularly those at the bottom and top of the distribution, leading to an increase in income inequality.
    Keywords: income distribution; inequality; decompositions; microsimulation; tax-benefit policies; crisis; austerity; overtime comparison
    JEL: I38
    Date: 2019–04
  22. By: Monastiriotis, Vassilis; Martelli, Angelo
    Abstract: The crisis in Greece led to one of the largest economic shocks in European history, withunemployment increasing three-fold within the space of four years. Drawing on micro-datafrom the Greek Labour Force Survey, we utilise standard micro-econometric methods andnon-linear decomposition techniques to measure the size of the shock exerted on the Greeklabour market and the quantitative and price adjustments in response to this shock. We findelements of economic dynamism, with some sizeable price adjustments in the economy ofthe Greek capital, Athens; but overall our results show that adjustment has been partial andlimited, in terms of both labour quality (sorting, selection) and labour quantity (migration).Our use of the decomposition techniques for the analysis of macro-level developments in thelabour market offers a novel perspective to the application of the decompositionmethodology
    Keywords: unemployment risk; non-linear decomposition; Greek crisis; shock; adjustment
    JEL: N0 R14 J01
    Date: 2019–03–01
  23. By: Fabrice Etilé (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Sebastien Lecocq (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique); Christine Boizot-Szantai (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique)
    Abstract: Market heterogeneity may affect the distributional incidence of soft-drink taxes if households sort by income across markets with different characteristics. We use the Kantar Worldpanel homescan data to analyse the distributional incidence of the 2012 French soda tax on Exact Price Indices (EPIs) that measure consumer welfare from the price, availability and consumption of Sugar-Sweetened Beverages (SSBs) at a local market level. After correcting prices for consumer heterogeneity in preferences, we find that the soda tax had a significant but small national average impact corres- ponding to a pass-through of approximately 40%. Producers and retailers set significantly higher pass-throughs in low-income, less-competitive and smaller markets and for cheaper but less popular brands. Market heterogeneity ultimately has substantial distributional effects, as it accounts for approximately 35% of the difference in welfare variation between low- and high-income consumers.
    Keywords: Soft-drink tax,Nutrition,Tax incidence,Inequality,Market Structure,Consumer Price Index
    Date: 2019–03
  24. By: Sebastian Link
    Abstract: This paper studies the price and employment response of firms to the introduction of a nation-wide minimum wage in Germany. In line with previous studies, the estimated employment effect is only modestly negative and statistically insignificant. In contrast, affected firms increased prices much more frequently. The price effect is prevalent across different sectors of the economy including manufacturing and is thus not limited to low wage industries. I document that speed and degree of price pass-through were high and firms rolled over the lion’s share of the costs generated by the minimum wage to their customers. Consistent with the role of price pass-through, I find considerable heterogeneity in firms’ responses to the minimum wage depending on their own business expectations, product market competition, and local labor market conditions.
    Keywords: price pass-through, heterogeneity in minimum wage effects, firm data, Germany
    JEL: J38 J08 E31 J31
    Date: 2019
  25. By: Diane Coyle; Shane O'Connor
    Abstract: The sharing economy appears to have been growing rapidly. This paper contributes to the debate about its definition and measurement through an analysis of interviews conducted with UK platforms identifying themselves as part of the sharing economy. We conclude there are common features that enable a sufficiently clear definitional boundary, namely peer-to-peer digital matching and greater utilisation of under-used assets or skills. We find that the larger sharing economy platforms reduce costs and entry barriers for smaller platforms, contributing to a rich ecosystem. This implies a useful definition should include business-to-business peer-matching transactions, as well as business-to-consumer transactions. In addition to their economic impacts – transactions that would not otherwise occur, lower consumer prices and additional choice, the scope to earn additional income in a flexible manner, and the greater use of assets with spare capacity – all the interviewees expressed overt non-financial motivations, such as positive environmental impact, contributing to the community, and building trust. We argue this common intrinsic motivation means measurement of the sharing economy for some purposes should also include those platforms which enable free rather than monetary exchanges.
    Keywords: sharing economy, digital platforms
    JEL: L22
    Date: 2019–02
  26. By: Swart, Lisette (CPB Netherlands Bureau for Economic Policy Analysis); Van den Berge, Wiljan (CPB Netherlands Bureau for Economic Policy Analysis); van der Wiel, Karen (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: When children start school, parents save time and/or money. In this paper, we empirically examine the impact of these changes to the family's budget constraint on parents' working hours. Labor supply is theoretically expected to increase for parents who used to spend time taking care of their children, but to decrease for fulltime working parents because of an income effect: child care expenses drop. We show that the effect of additional time dominates the income effect in the Netherlands, where children start school (kindergarten) for approximately 20 hours a week in the month that they turn 4. Using detailed administrative data on all parents, we find that the average mother's hours worked increases by 3% when her youngest child starts going to school. For their partners, who experience a much smaller shock in terms of time, the increase in hours worked is also much smaller at 0.4%.
    Keywords: labor supply, starting school, child care
    JEL: J13 J22
    Date: 2019–03
  27. By: Battaglini, Marco; Guiso, Luigi; Lacava, Chiara; Patacchini, Eleonora
    Abstract: To study the role of tax professionals, we merge tax records of 2.5 million taxpayers in Italy with the respective audit files from the tax revenue agency. Our data covers the entire population of sole proprietorship taxpayers in seven regions, followed over seven fiscal years. We first document that tax evasion is systematically correlated with the average evasion of other customers of the same tax professional. We then exploit the unique structure of our dataset to study the channels through which these social spillover effects are generated. Guided by an equilibrium model of tax compliance with tax professionals and auditing, we highlight two mechanisms that may be behind this phenomenon: self-selection of taxpayers who sort themselves into professionals of heterogeneous tolerance for tax evasion; and informational externalities generated by the tax professional activities. We provide evidence supporting the simultaneous presence of both mechanisms.
    Keywords: tax enforcement; tax evasion
    JEL: H26 K34
    Date: 2019–04
  28. By: Braga, Michela (University of Milan); Checchi, Daniele (University of Milan); Garrouste, Christelle (Paris 12 Val de Marne University); Scervini, Francesco (Istituto Universitario di Studi Superiori di Pavia (IUSS))
    Abstract: Using data from three waves of PIRLS, this paper examines the effect of teacher quality on fourth-grade students' literacy test scores by exploiting variations induced by reforms in teachers' selection and/or reward schemes. We construct an original data set of relevant reforms taking place at the national level over the last century and affecting the working conditions of primary school teachers, matching them by the year they entered the profession. After showing that teacher experience/age and qualification are significantly correlated with student competencies, we study the correlation between teacher working conditions (including recruitment, pay and retirement policies) and pupil achievement. Our identifying assumption is that the impact of reforms dissipates with the distance between the reform's introduction and entry into the profession. The results point to a more selective recruitment process and, to a lesser extent, more generous reward policies as effective ways to enhance student performance.
    Keywords: student achievements, PIRLS, teacher recruitment process, teacher pay
    JEL: H52 I21 I28 J44
    Date: 2019–03
  29. By: Pauline Affeldt; Tomaso Duso; Florian Szücs
    Abstract: We study the evolution of the EC’s merger decision procedure over the first 25 years of European competition policy. Using a novel dataset constructed at the level of the relevant markets and containing all merger cases over the 1990-2014 period, we evaluate how consistently arguments related to structural market parameters were applied over time. Using non-parametric machine learning techniques, we find that the importance of market shares and concentration measures has declined while the importance of barriers to entry and the risk of foreclosure has increased in the EC’s merger assessment following the 2004 merger policy reform.
    Keywords: Merger policy, DG competition, causal forests
    JEL: K21 L40
    Date: 2019

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