nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2019‒05‒06
35 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Spatial variations and clustering in the rates of youth unemployment and NEET By Steve Bradley; Giuseppe Migali; Maria Navarro Paniagua
  2. The Effect of Employment Protection on Firms' Worker Selection By Butschek, Sebastian; Sauermann, Jan
  3. Wages of migrant and native employees in Germany: new light on an old issue By Brunow, Stephan; Jost, Oskar
  4. Shocks and labour cost adjustment: evidence from a survey of European firms By Mathae, Thomas Y; Millard, Stephen; Rõõm, Tairi; Wintr, Ladislav; Wyszyński, Robert
  5. Have the log-population processes stationary and independent increments? Empirical evidence for Italy, Spain and the USA along more than a century. By Arturo, Ramos
  6. Do Direct Elections Matter? Quasi-experimental Evidence from Germany By Stefanie Gäbler; Felix Rösel
  7. Does progressivity always lead to progress? The impact of local redistribution on tax manipulation By Tommaso Giommoni
  8. Gender Identity and Wives' Labor Market Outcomes in West and East Germany between 1984 and 2016 By Sprengholz, Maximilian; Wieber, Anna; Holst, Elke
  9. The Causal Effects of Education on Adult Health, Mortality and Income: Evidence from Mendelian Randomization and the Raising of the School Leaving Age By Neil M. Davies; Matt Dickson; George Davey Smith; Frank Windmeijer; G.J. van den Berg
  10. Preventing criminal minds: early education access and adult offending behavior By Zelda Brutti; Daniel Montolio
  11. Cloud computing and firm growth By Timothy DeStefano; Richard Kneller; Jonathan Timmis
  12. Transaction-tax evasion in the housing market By José G. Montalvo; Amedeo Piolatto; Josep Raya
  13. Falling through the social safety net? Analysing non-take-up of minimum income benefit and monetary social assistance in Austria By Fuchs, Michael; Hollan, Katarina; Gasior, Katrin; Premrov, Tamara; Scoppetta, Anette
  14. Matching in Cities By Dauth, Wolfgang; Findeisen, Sebastian; Moretti, Enrico; Suedekum, Jens
  15. Earnings Dynamics and Firm-Level Shocks By Benjamin Friedrich; Lisa Laun; Costas Meghir; Luigi Pistaferri
  16. Income redistribution and self-selection of immigrants By Corneo, Giacomo; Neidhöfer, Guido
  17. Education-health relationship: New evidence from a distributional perspective By KYZYMA Iryna; PI ALPERIN Maria Noel
  18. Life Expectancy and Parental Education By Huebener, Mathias
  19. What Kind of Inequality Do You Prefer? Evaluating Measures of Income and Health Inequality Using Choice Experiments By Hardardottir, Hjördis; Gerdtham, Ulf-G.; Wengström, Erik
  20. The social cost of unemployment in Spain: who are the losers? By Lucía Gorjón; Sara de la Rica; Antonio Villar
  21. Ethnic Minority Youths in the Labour Markets in Denmark, Finland, Norway and Sweden By Niknami, Susan; Schröder, Lena; Wadensjö, Eskil
  22. The disciplinary effect of post-grant review - causal evidence from European patent opposition By Markus Nagler; Stefan Sorg
  23. Magnitude, structure and dynamics of chronic unemployment in Denmark, Finland and Germany By Aho, Simo; Konle-Seidl, Regina; Norup, Iben; Rhein, Thomas; Rothe, Thomas
  24. Wages, Experience and Training of Women over the Lifecycle By Richard Blundell; Monica Costa Dias; David A. Goll; Costas Meghir
  25. The effect of local growth in antidepressant consumption on mental health outcomes By Giuliano Masiero; Fabrizio Mazzonna; Sandro Steinbach; Olaf Verbeek
  26. Zero Hours Contracts and Their Growth By Farina, Egidio; Green, Colin; McVicar, Duncan
  27. Dynastic Human Capital, Inequality and Intergenerational Mobility By Adermon, Adrian; Lindahl, Mikael; Palme, Mårten
  28. Universal family background effects on education across and within societies By Michael Grätz; Kieron J. Barclay; Øyvind Wiborg; Torkild Lyngstad; Aleksi Karhula; Jani Erola; Patrick Präg; Thomas Laidley; Dalton Conley
  29. Distressed Banks, Distorted Decisions? By Gareth Anderson; Rebecca Riley; Garry Young
  30. Wages, Experience and Training of Women over the Lifecycle By Blundell, Richard; Goll, David; Costa Dias, Monica; Meghir, Costas
  31. Cyclical income risk in Great Britain By Konstantinos Angelopoulos; Spyridon Lazarakis; Jim Malley
  32. Like (Grand)Parent, like Child? Multigenerational Mobility across the EU By Colagrossi, Marco; d'Hombres, Beatrice; Schnepf, Sylke V.
  33. Gender Differences in Optimism By Bjuggren, Carl Magnus; Elert, Niklas
  34. Marital Status and Retirement: An Empirical Study for France By Doorley, Karina; Stancanelli, Elena G. F.
  35. Political donations, public procurement and government efficiency By Vitezslav Titl; Kristof De Witte; Benny Geys

  1. By: Steve Bradley; Giuseppe Migali; Maria Navarro Paniagua
    Abstract: We investigate the ‘determinants’ of spatial variations in youth unemployment and NEET rates, and the presence of spatial clusters, for Italy, Spain and the UK. Using Labour Force Survey data for the period 1993-2011 at a ‘regional’ level we obtain broadly consistent measures of quarterly youth unemployment and NEET rates. Our findings suggest that youths are sensitive to aggregate labour market conditions with older youths being more cyclically sensitive than are teenagers. We find a discouraged worker effect, again larger for older youths than for teenagers. In the UK and Spain, temporary jobs are preferred to part-time jobs, perhaps as a way of avoiding unemployment, whereas in Italy the opposite occurs. There is evidence of spatial clustering of youth unemployment and NEET rates. Our paper concludes with a discussion of the implications for regional and labour market policies.
    Keywords: Youth unemployment, Regions, NEET, Clusters
    JEL: R11 R23 J40 J60
    Date: 2019
  2. By: Butschek, Sebastian (University of Cologne); Sauermann, Jan (SOFI, Stockholm University)
    Abstract: To estimate the causal effect of employment protection on firms' worker selection, we study a policy change that reduced dismissal costs for the employers of over a tenth of Sweden's workforce. Our difference-in-differences analysis of firms' hiring uses individual ability measures including estimated worker fixed effects and cognitive test scores. We find that the reform reduced minimum hire quality by 5% of a standard deviation, half of which we can attribute to firms' hiring becoming more selective. Our results help discriminate between existing theories, supporting the prediction that firms shift their hiring standards in response to changes in dismissal costs.
    Keywords: worker selection, screening, hiring standard, employment protection, dismissal costs
    JEL: M51 D22 J24 J38
    Date: 2019–04
  3. By: Brunow, Stephan; Jost, Oskar (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "The German workforce is expected to decline in future and labour-oriented immigration should counteract labour shortages. Fair wages in Germany set incentives for foreigners to immigrate there. Therefore this paper aims to shed new light on the decomposition of the wage gap between foreign and native full-time employees. Using the Mincerian wage equation and the threefold Oaxaca-Blinder decomposition reveals that the wage gap is mostly explained by observable characteristics (endowments), especially location, labour market experience and firm characteristics. Productivity differences can be disregarded with the exception of labour market experience, as foreigners have much flatter experience profiles than native workers. This effect holds for several specifications and potential selectivity and vanishes for foreigners that have resided in Germany for at least ten years and naturalised foreigners. Our results lead to the conclusion that 'discrimination' is negligible from an economic point of view and foreigners receive equal pay." (Author's abstract, IAB-Doku) ((en))
    JEL: J31 J60 R23
    Date: 2019–04–23
  4. By: Mathae, Thomas Y (Banque centrale du Luxembourg); Millard, Stephen (Bank of England); Rõõm, Tairi (Eesti Pank); Wintr, Ladislav (Banque centrale du Luxembourg); Wyszyński, Robert (Narodowy Bank Polski)
    Abstract: We use firm-level survey data from 25 EU countries to analyse how firms adjust their labour costs (employment, wages and hours) in response to shocks. We develop a theoretical model to understand how firms choose between different ways to adjust their labour costs. The basic intuition is that firms choose the cheapest way to adjust labour costs. Our empirical findings are in line with the theoretical model and show that the pattern of adjustment is not much affected by the type of the shock (demand shock, access-to-finance shock, ‘availability of supplies’ shock), but differs according to the direction of the shock (positive or negative), its size and persistence. In 2010–13, firms responding to negative shocks were most likely to reduce employment, then hourly wages and then hours worked, regardless of the source of the shock. Results for the 2008–09 period indicate that the ranking might change during deep recession as the likelihood of wage cuts increases. In response to positive shocks in 2010–13, firms were more likely to increase wages, followed by increases in employment and then hours worked suggesting an asymmetric reaction to positive and negative shocks. Finally, we show that strict employment protection legislation and high centralisation or coordination of wage bargaining make it less likely that firms reduce wages when facing negative shocks.
    Keywords: Shocks; firms; labour cost adjustment; wages; employment; hours; survey
    JEL: D21 D22 D24
    Date: 2019–04–18
  5. By: Arturo, Ramos
    Abstract: We review the classical Gibrat’s process for the population of city sizes. In particular, we are interested in whether the log-population process has stationary and independent (Gibrat’s Law for cities) increments. We have tested these characteristics for the case of the municipalities of Italy and Spain and the places of USA for a time span of more than one century. The results are clear: stationarity and independence are empirically rejected by standard tests. These results open theoretically the way for the observance of other city size distributions other than the lognormal and the double Pareto lognormal, something that in fact has already happened in the literature.
    Keywords: Gibrat’s process; log-population process; stationary increments; independent increments; Italian cities; Spanish cities; USA cities
    JEL: C46 R11 R12
    Date: 2019–04–29
  6. By: Stefanie Gäbler; Felix Rösel
    Abstract: We estimate the causal effect of direct elections on the economic performance of politicians. Candidates running in direct elections to head local governments in the German state of Brandenburg need an absolute majority, and votes for the winner must represent at least 15% of eligible voters. If the quorum is not reached, direct elections are suspended, and local councils appoint the head of government. We examine election outcomes around the quorum, where the form of government is arguably exogenous. Event study results show that the public employment service becomes somewhat more effective under directly elected politicians. However, directly elected politicians do not seem to attract more businesses or expedite administrative acts.
    Keywords: Direct elections, constitutions, government form, local government, economic performance, public services, Germany
    JEL: D72 H40 H75 R50
    Date: 2019
  7. By: Tommaso Giommoni
    Abstract: The goal of this paper is to study the effects of introducing income redistribution at the municipal level, with the adoption of local tax progressivity. In particular, we analyse whether this complex fiscal tool modifies the incentives of local politicians to be strategic leading to higher tax manipulation, in the form of political budget cycle. We exploit an Italian reform of the local personal income tax (PIT), which was flat before the intervention, that allows mayors to introduce progressive schemes. First, we make use of the staggered timing of local elections to estimate a Difference-in-Differences model and we find that the reform consistently amplifies political budget cycle of local PIT. In terms of mechanism, progressivity allows mayors to target diverse income groups and to play different strategies: high income rates, indeed, are subject to larger manipulation than the moderate ones. Second, we exploit the fact that income concentration level is a valid predictor for the introduction of progressivity. The main results are confirmed in a Triple-Differences analysis. And finally, we show that manipulation is rewarding from an electoral point of view. These results reveal a negative side of decentralizing income redistribution as it may lead to consistent tax manipulation and large distortions in fiscal policy.
    Keywords: tax progressivity, personal income tax, political budget cycle, tax manipulation, fiscal federalism
    JEL: D72 E62 H71 P16
    Date: 2019
  8. By: Sprengholz, Maximilian (DIW Berlin); Wieber, Anna (DIW Berlin); Holst, Elke (DIW Berlin)
    Abstract: We exploit the natural experiment of German reunification in 1990 to investigate if the institutional regimes of the formerly socialist (rather gender-equal) East Germany and the capitalist (rather gender-traditional) West Germany shaped different gender identity prescriptions of family breadwinning. We use data for three periods between 1984 and 2016 from the representative German Socio-Economic Panel (SOEP). Density discontinuity tests and fixed-effects regressions suggest that married couples in West (but not East) Germany diminished the wife's labor market outcomes in order to avoid situations where she would earn more than him. However, the significance of the male breadwinner prescription seems to decline in West Germany since reunification, converging to the more gender-egalitarian East Germany. Our work emphasizes the view that political and institutional frameworks can shape fairly persistent gender identity prescriptions that influence house-hold economic decisions for some time, even when these frameworks change.
    Keywords: gender identity, male breadwinner norm, institutions, female labor market outcomes, SOEP
    JEL: J16 J12 D10
    Date: 2019–04
  9. By: Neil M. Davies (University of Bristol); Matt Dickson (University of Bath); George Davey Smith (University of Bristol); Frank Windmeijer (University of Bristol); G.J. van den Berg
    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: 2019–04
  10. By: Zelda Brutti (Universitat de Barcelona & Institut d’Economia de Barcelona (IEB)); Daniel Montolio (Universitat de Barcelona & Institut d’Economia de Barcelona (IEB))
    Abstract: In this paper we estimate the impact of a nationwide public preschool expansion that took place in Spain over the 1990s on criminal behavior later in time. We exploit variation in enrollment rates across Spanish regions and birth-cohorts, and we link education data to a unique administrative crime dataset recording offenses committed in the region of Catalonia over the period 2009-2014. We find that for the average birth cohort, Catalan municipality and year, a 1 percentage point increase in preschool exposure at age 3 yields 1.6% fewer crime actions during youth and young adulthood. We are able to account for region of origin, birth cohort, time and local fixed effects, as well as several region and time-specific controls. Leveraging detailed information on types of crime committed, we propose a categorization of offenses into those likely to have been rationally planned and driven by economic motives, and those in which emotional factors and lack of self-control play a significant role. On average, we find the benefits of preschool to be larger and more robust on crimes belonging to the latter category, suggesting that non-cognitive skills play an important role in explaining the overall effect.
    Keywords: Universal child care, adult crime, education reform
    JEL: I28 K42 J13
    Date: 2019
  11. By: Timothy DeStefano; Richard Kneller; Jonathan Timmis
    Abstract: The arrival of the cloud has enabled a shift in the nature of ICT use, from investment in sunk capital to a pay-on-demand service that allows firms to rapidly scale up. This paper uses new firm-level data to examine the impact of cloud on firm growth in the UK, using zipcode-level instruments of the timing of high-speed fibre availability and expected speeds. We find cloud leads to the growth of young firms in terms of employment and productivity, but they become more concentrated in fewer plants. For older firms we find no scale or productivity growth, but instead disperse activity by closing plants and moving employment further from the headquarters. In addition, the plants that close tend to be those without access to fibre broadband.
    Keywords: firm growth; the cloud; ICT use; employment; productivity
    Date: 2019
  12. By: José G. Montalvo (Universitat Pompeu Fabra-ICREA, BGSE); Amedeo Piolatto (Universitat Autònoma de Barcelona, Institut d’Economia de Barcelona (IEB), BGSE, MOVE); Josep Raya (Universitat Pompeu Fabra, ESCSE (Tecnocampus))
    Abstract: We model the behaviour of a buyer trying to evade the real estate transfer tax. We identify over-appraisal as a key, easily-observable element that is inversely related with tax evasion. We conclude that the tax authority could focus auditing efforts on low-appraisal transactions. We include ‘behavioural’ components (shame and stigma) allowing to introduce buyers' (education) and societal (social capital) characteristics that explain individual and idiosyncratic variations. Our empirical analysis confirms the predictions using a unique database, where we directly observe: real payment, value declared to the authority, appraisal, buyers' educational level and local levels of corruption and trust.
    Keywords: Transfer tax, tax evasion, second-hand housing market, overappraisal, Loan-To-Value, corruption, social capital, stigma, shame, education
    JEL: G21 H26 R21
    Date: 2019
  13. By: Fuchs, Michael; Hollan, Katarina; Gasior, Katrin; Premrov, Tamara; Scoppetta, Anette
    Abstract: Non-take-up of means tested benefits is a wide spread phenomenon in European welfare states. The paper assesses whether the reform that replaced the monetary social assistance benefit by the minimum income benefit in Austria has succeeded in increasing take up rates. We use EU-SILC register data together with the tax-benefit microsimulation model EUROMOD/SORESI. The results show that the reform led to a significant decrease of non-take-up from 53% to 30% in terms of the number of households and from 51% to 30% in terms of expenditure. Estimates of a two-stage Heckman selection model show that pecuniary determinants (higher degree of need), lower applications costs (unemployment, low education, renting one’s home) and lower psychological barriers (size of municipality and lone-parenthood) are predictors of taking up the benefit.
    Date: 2019–04–24
  14. By: Dauth, Wolfgang (University of Würzburg); Findeisen, Sebastian (University of Mannheim); Moretti, Enrico (University of California, Berkeley); Suedekum, Jens (Heinrich Heine University Düsseldorf)
    Abstract: In most countries, average wages tend to be higher in larger cities. In this paper, we focus on the role played by the matching of workers to firms in explaining geographical wage differences. Using rich administrative German data for 1985-2014, we show that wages in large cities are higher not only because large cities attract more high-quality workers, but also because high-quality workers are significantly more likely to be matched to high-quality plants. In particular, we find that assortative matching—measured by the correlation of worker fixed effects and plant fixed effects—is significantly stronger in large cities. The elasticity of assortative matching with respect to population has increased by around 75% in the last 30 years. We estimate that in a hypothetical scenario in which we keep the quality and location of German workers and plants unchanged, and equalize within-city assortative matching geographical wage inequality in Germany would decrease significantly. Overall, assortative matching magnifies wage differences caused by worker sorting and is a key factor in explaining the growth of wage disparities between communities over the last three decades. If high-quality workers and firms are complements in production, moreover, increased assortative matching will increase aggregate earnings. We estimate that the increase in within-city assortative matching observed between 1985 and 2014 increased aggregate labor earnings in Germany by 2.1%, or 31.32 billion euros. We conclude that assortative matching increases earnings inequality across communities, but it also generates important efficiency gains for the German economy as a whole.
    Keywords: local labor markets, agglomeration
    JEL: J20
    Date: 2019–04
  15. By: Benjamin Friedrich; Lisa Laun; Costas Meghir; Luigi Pistaferri
    Abstract: We use matched employer-employee data from Sweden to study the role of the firm in affecting the stochastic properties of wages. Our model accounts for endogenous participation and mobility decisions. We find that firm-specific permanent productivity shocks transmit to individual wages, but the effect is mostly concentrated among the high-skilled workers; firm-specific temporary shocks mostly affect the low-skilled. The updates to worker-firm specific match effects over the life of a firm-worker relationship are small. Substantial growth in earnings variance over the life cycle for high-skilled workers is driven by firms accounting for 44% of cross-sectional variance by age 55.
    JEL: I18 J24 J31 J63
    Date: 2019–04
  16. By: Corneo, Giacomo; Neidhöfer, Guido
    Abstract: We analyze the effects of governmental redistribution of income on migration patterns using an Italian administrative dataset that includes almost every Italian citizen living abroad. Since Italy takes a middle ground in terms of redistribution, both the welfare-magnet effect from more redistributive countries and the propensity of the high-skilled to settle in countries with lower taxes can be empirically studied. Our findings confirm the hypothesis that destination countries with more redistribution receive a negative selection of Italian migrants. Policy simulations are run in order to gauge the magnitude of those migration effects. Based on estimated elasticities, we find that sizable increases in the amount of redistribution in Italy have small effects on the skill composition of the resident population.
    Keywords: redistribution; Roy model
    JEL: D31 H23
    Date: 2019–04
  17. By: KYZYMA Iryna; PI ALPERIN Maria Noel
    Abstract: Using data from the Survey of Health, Ageing and Retirement in Europe (SHARE), this paper identifies the education gradient in health and explores its underlying factors using a distributional approach. We start by constructing a separate health distribution for two education subgroups - the lower and higher educated - and compare the difference in the level of health between them at each point of the distribution. As a next step, we perform a semi-parametric decomposition exercise to explore which factors lie behind the observed health differential. In line with previous studies we find that, on average, higher educated people enjoy better health than those who are lower educated. We show, however, that the difference is not constant along the health distribution, with the gap being several times bigger at the top of the distribution than at its bottom. We also find that around 65 percent of the health gap between the lower and higher educated can be explained by the subgroup differences in demographic, labor market, and behavioral characteristics.
    Keywords: health inequality; educational gradient; health differential; distributional approach; decomposition
    JEL: D30 I10
    Date: 2019–04
  18. By: Huebener, Mathias (DIW Berlin)
    Abstract: This study analyses the relationship between life expectancy and parental education. It extends the previous literature that focused mostly on the relationship between individuals' own education and their life expectancy. Based on data from the German Socio-Economic Panel Study and survival analysis models, we show that maternal education is related to children's life expectancy - even after controlling for children's own level of education. This applies equally to women and men as well as to further life expectancies examined at age 35 to age 65. This pattern is more pronounced for younger cohorts. In most cases, the education of the father is not significantly related to children's life expectancy. The vocational training and the occupational position of the parents in childhood, which both correlate with household income, cannot explain the link. Children's health behaviour and the health accumulated over the life course appear as important channels. The findings imply that the link between education and life expectancy is substantially stronger and that returns to education are higher if intergenerational links are considered.
    Keywords: health inequality, returns to education, mortality, parental background, human capital, survival analysis
    JEL: I12 I14
    Date: 2019–04
  19. By: Hardardottir, Hjördis (Department of Economics, Lund University); Gerdtham, Ulf-G. (Department of Economics, Lund University); Wengström, Erik (Department of Economics, Lund University)
    Abstract: When measuring inequality using conventional inequality measures, ethical assumptions about distributional preferences are often implicitly made. In this paper, we ask whether the ethical assumptions underlying the concentration index for income-related inequality in health and the Gini index for income inequality are supported in a representative sample of the Swedish population using an internet-based survey. We find that the median subject has preferences regarding income-related inequality in health that are in line with the ethical assumptions implied by the concentration index, but put higher weight on the poor than what is implied by the Gini index of income inequality. We find that women and individuals with a poorer health status put higher weight on the poor than men and healthier individuals. Ethically flexible inequality measures, such as the s-Gini index and the extended concentration index, imply that researchers have to choose from a toolbox of infinitely many inequality indices. The results of this paper are indicative of which indices (i.e. which parameter values) reflect the views of the population regarding how inequality should be defined.
    Keywords: Socioeconomic inequality in health; Income inequality; Extended concentration index; S-Gini index; Distributional preferences
    JEL: D31 D63 D90 I14
    Date: 2019–04–26
  20. By: Lucía Gorjón; Sara de la Rica; Antonio Villar
    Abstract: The social cost of unemployment is an evaluation protocol proposed by Gorjón, de la Rica & Villar (2018) that integrates into a single indicator three different dimensions of this phenomenon: incidence (the conventional unemployment rate), severity (depending on the unemployment duration and the lost income) and hysteresis (the probability of remaining unemployed). This indicator corresponds to the aggregate disutility of unemployed workers and can thus be regarded as a measure of the social welfare loss due to unemployment. We apply here this evaluation protocol to the Spanish labour market, using the official register of unemployed workers compiled by the Public Employment Service, focusing on the differences among the types of unemployed workers that can be defined according to gender, age, level of studies, unemployment duration, and type of compensation received. Then we identify the population subgroups that suffer most the impact of unemployment.
    Date: 2019–04
  21. By: Niknami, Susan (SOFI, Stockholm University); Schröder, Lena (SOFI, Stockholm University); Wadensjö, Eskil (Stockholm University)
    Abstract: This paper uses administrative data to in detail document how the share of youths not in employment, education or training has evolved over time in the Scandinavian countries. We study both first- and second-generation immigrant youths as well as natives to explore whether the pattern differ depending on the region of origin. We show that the NEET rates are higher among youths with an immigrant background compared to youths with a native background in all countries. Even when controlling for youth background characteristics, first- and second-generation immigrant youths have significantly higher probability of being in NEET compared to native youths.
    Keywords: ethnic minority youths, NEET, Nordic countries
    JEL: J15 J13 J61 J64
    Date: 2019–04
  22. By: Markus Nagler; Stefan Sorg
    Abstract: We study the causal impact of invalidating marginally valid patents during post-grant opposition at the European Patent Office on affected inventors’ subsequent patenting. We exploit exogenous variation in invalidation by leveraging the participation of a patent’s original examiner in the opposition division as an instrument. We find a disciplinary effect of invalidation: Affected inventors file 20% fewer patent applications in the decade after the decision. This effect is entirely driven by a reduction in low-quality filings, i.e., filings that examiners associate with prior art that threatens the application’s novelty or inventive step. We do not observe shifts into national patenting.
    Keywords: inventors, marginal patents, patent invalidation, patent opposition, post-grant review, EPO, innovation
    JEL: O31 O34
    Date: 2019
  23. By: Aho, Simo; Konle-Seidl, Regina (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Norup, Iben; Rhein, Thomas; Rothe, Thomas (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Individual unemployment spells are frequently interrupted by short casual employment, by participation in active labour market policy (ALMP) measures or by periods outside the labour force. Such episodes end unemployment spells but afterwards the person gets often unemployed again, and the conventional statistics do not capture the actual length of the individual problem of being without a 'real' job in the longer run. To better grasp this problem of repeated unemployment we analyse unemployment trajectories of individuals with weak links to the labor market in the longer run. For this purpose, we introduce the concept of 'chronic unemployment' (CU). Our empirical analysis applies unique comparable and very detailed longitudinal register data to study the CU problem in Denmark, Finland and Germany. We find that chronically unemployed make up about one third of all unemployed in all three countries. This means that a substantial part of the unemployed has not gained a stable foothold in the open labour market for a long time. Individual factors strongly influence the probability of being chronically unemployed. CU becomes more common with age and decreases as the level of education increases. Although persistence in CU is highest in Germany, the country realizes higher transition rates into stable employment than the Nordic countries. Active labour market policy measures have a positive impact on the transition from chronic unemployment to non-subsidized employment, particularly wage subsidies in the private sector and occupational training and qualification." (Author's abstract, IAB-Doku) ((en))
    Keywords: Arbeitslosigkeit - Konzeption, Arbeitslose - internationaler Vergleich, Langzeitarbeitslose, berufliche Reintegration, arbeitsmarktpolitische Maßnahme, Erwerbsunterbrechung, Beschäftigungsdauer, Bundesrepublik Deutschland, Finnland, Dänemark, Bundesrepublik Deutschland
    JEL: C E J J
    Date: 2019–04–23
  24. By: Richard Blundell; Monica Costa Dias; David A. Goll; Costas Meghir
    Abstract: We investigate the role of training in reducing the gender wage gap using the UK-BHPS which contains detailed records of training. Using policy changes over an 18 year period we identify the impact of training and work experience on wages, earnings and employment. Based on a lifecycle model and using reforms as a source of exogenous variation we evaluate the role of formal training and experience in defining the evolution of wages and employment careers, conditional on education. Training is potentially important in compensating for the effects of children, especially for women who left education after completing high school.
    JEL: H2 J16 J22 J24 J3 J31
    Date: 2019–04
  25. By: Giuliano Masiero (Department of Management, Information and Production Engineering, University of Bergamo, Italy; Institute of Economics (IdEP), Università della Svizzera italiana, Switzerland); Fabrizio Mazzonna (Institute of Economics (IdEP), Università della Svizzera italiana, Switzerland, and Munich Center for the Economics of Aging (MEA)); Sandro Steinbach (Department of Agricultural and Resource Economics, University of Connecticut, United States); Olaf Verbeek (Institute of Economics (IdEP), Università della Svizzera italiana, Switzerland)
    Abstract: Despite growing skepticism regarding the efficacy of antidepressants, global consumption is increasing at an unprecedented path with unknown implications for society. We estimate the causal effect of this increase on mental health outcomes using an IV strategy that exploits detailed drug sales data from Switzerland between 2002 and 2014. Our instrument, a modified version of the popular shift-share instrument, relies on the national growth in antidepressant sales for pharmaceutical companies (the shift) - mainly due to product innovation - and assigns it locally using regional non-antidepressant market shares. Our estimates show that an increase in antidepressants sales does not significantly affect suicide rates but cause an increase of hospital admissions for mental disorder and for depression. The causal effects prove to be resistant to several robustness checks.
    Keywords: Depression, Antidepressant treatment, Suicides, Mental health
    JEL: I12 I18
    Date: 2019–04
  26. By: Farina, Egidio (Queen's University Belfast); Green, Colin (Norwegian University of Science and Technology (NTNU)); McVicar, Duncan (Queen's University Belfast)
    Abstract: This paper studies the prevalence and nature of zero-hours contracts (ZHCs) in the UK labour market. The headline count of ZHC workers based on the Labour Force Survey has long underestimated and continues to underestimate the number of workers in ZHC or ZHC-like jobs. ZHC jobs and workers are heterogeneous, but ZHC jobs have become increasingly concentrated among young workers, full-time students, migrants, black and minority ethnic workers, in personal service and elementary occupations, and in the distribution, accommodation and restaurant sector over time. Compared to other forms of employment, median wages in ZHC jobs have also fallen over time. The most common prior labour market state for ZHC workers is non-ZHC employment, particularly part-time employment, and we cannot reject that part of the reported growth in ZHCs has been driven by reclassification of existing employment relationships. Similarly, we cannot reject that growth in public awareness of ZHCs contributed substantially to recent growth in reported ZHCs, particularly over the period 2013/14.
    Keywords: zero hours contracts, no guaranteed hours contracts, casual work, precarious employment, atypical employment
    JEL: J21 J48 M55
    Date: 2019–04
  27. By: Adermon, Adrian (IFAU); Lindahl, Mikael (University of Gothenburg); Palme, Mårten (Stockholm University)
    Abstract: We study the importance of the extended family – the dynasty – for the persistence in inequality across generations. We use data including the entire Swedish population, linking four generations. This data structure enables us to identify parents' siblings and cousins, their spouses, and the spouses' siblings. Using various human capital measures, we show that traditional parent-child estimates of intergenerational persistence miss almost one-third of the persistence found at the dynasty level. To assess the importance of genetic links, we use a sample of adoptees. We then find that the importance of the extended family relative to the parents increases.
    Keywords: intergenerational mobility, extended family, dynasty, human capital
    JEL: I24 J62
    Date: 2019–04
  28. By: Michael Grätz; Kieron J. Barclay (Max Planck Institute for Demographic Research, Rostock, Germany); Øyvind Wiborg; Torkild Lyngstad; Aleksi Karhula; Jani Erola; Patrick Präg; Thomas Laidley; Dalton Conley
    Abstract: The extent to which siblings resemble each other measures the total impact of family background in shaping life outcomes. We study sibling similarity in cognitive skills, school grades, and educational attainment in Finland, Germany, Norway, Sweden, the United Kingdom, and the United States. We also compare sibling similarity by parental education and occupation within these societies. The comparison of sibling correlations across and within societies allows us to characterize the omnibus impact of family background on education across social landscapes. We find similar levels of sibling similarity across social groups. Across countries, we find only small differences. In addition, rankings of countries in sibling resemblance differ across the three educational outcomes we study. We conclude that sibling similarity is largely similar across advanced, industrialized countries and across social groups within societies contrary to theories that suggest large cross-national differences and variation of educational mobility across social groups within societies.
    JEL: J1 Z0
    Date: 2019–04
  29. By: Gareth Anderson; Rebecca Riley; Garry Young
    Abstract: Exploiting differences in pre-crisis business banking relationships, we present evidence to suggest that restricted credit availability following the 2008 financial crisis increased the rate of business failure in the United Kingdom. But rather than "cleansing” the economy by accelerating the exit of the least productive businesses, we find that tighter credit conditions resulted in some businesses failing despite being more productive than their surviving competitors. We also find evidence that distressed banks protected highly leveraged, low productivity businesses from failure.
    JEL: D22 D24 G21 G30 L10
    Date: 2019–05
  30. By: Blundell, Richard (University College London); Goll, David (University College London); Costa Dias, Monica (Institute for Fiscal Studies, London); Meghir, Costas (Yale University)
    Abstract: We investigate the role of training in reducing the gender wage gap using the UK-BHPS which contains detailed records of training. Using policy changes over an 18 year period we identify the impact of training and work experience on wages, earnings and employment. Based on a lifecycle model and using reforms as a source of exogenous variation we evaluate the role of formal training and experience in defining the evolution of wages and employment careers, conditional on education. Training is potentially important in compensating for the effects of children, especially for women who left education after completing high school.
    Keywords: gender wage gap, training, human capital, labor supply
    JEL: J22 J24 J31
    Date: 2019–04
  31. By: Konstantinos Angelopoulos; Spyridon Lazarakis; Jim Malley
    Abstract: This paper establishes new evidence on the cyclical behaviour of household income risk in Great Britain and assesses the role of social insurance policy in mitigating against this risk. We address these issues using the British Household Panel Survey (1991-2008) by decomposing stochastic idiosyncratic income into its transitory, persistent and fixed components. We then estimate how income risk, measured by the variance and the skewness of the probability distribution of shocks to the persistent component, varies between expansions and contractions of the aggregate economy. We first find that the volatility and left-skewness of these shocks is a-cyclical and counter-cyclical respectively. The latter implies a higher probability of receiving large negative income shocks in contractions. We also find that while social insurance (tax-benefits) policy reduces the levels of both measures of risk as well as the counter-cyclicality of the asymmetry measure, the mitigation effects work mainly via benefits.
    Keywords: household income risk, social insurance policy, aggregate fluctuations
    JEL: D31 E24 J31
    Date: 2019
  32. By: Colagrossi, Marco (European Commission, DG Joint Research Centre); d'Hombres, Beatrice (European Commission); Schnepf, Sylke V. (European Commission, DG Joint Research Centre)
    Abstract: This study shows that the intergenerational transmission of inequality in most of the 28 EU countries is higher than what a parent-to-child paradigm would suggest. While a strand of the literature claims that this is due to a direct grandparental effect, economic historian Gregory Clark maintains that multigenerational mobility follows a Markovian process. In his view, previous estimates of social status persistence are not only (severely) attenuated by an errors-in-variables problem, but are also constant across time and space. Using a survey covering all 28 EU countries, we provide evidence against such a "universal law of mobility". We show that, while in most EU countries traditional estimates of social status persistence are indeed downward biased, there are sizable differences across countries driven by country-specific factors. Further, for a few EU countries we cannot reject the hypothesis of a direct grandparental effect after accounting for a number of parents related covariates possibly affecting the multigenerational transmission process.
    Keywords: multigenerational mobility, education, inequality
    JEL: J62 I24
    Date: 2019–04
  33. By: Bjuggren, Carl Magnus (Research Institute of Industrial Economics (IFN)); Elert, Niklas (Research Institute of Industrial Economics (IFN))
    Abstract: This paper examines gender differences in optimism about the economy. We measure optimism using Swedish survey data in which respondents stated their beliefs about the country’s future economic situation. We argue that this measure of optimism is preferable to common measurements in the literature since it avoids confounding individuals’ economic situation with their perception of the future and it can be compared to economic indicators. In line with previous research, we find that men are more optimistic than women; however, men are also more prone to be wrong in their beliefs about the future economic situation. Furthermore, in sharp economic downturns, the gender differences in optimism disappear. This convergence in beliefs can be explained by the amount of available information on the economy.
    Keywords: Gender; Optimism; Perception of the future; Economic downturns
    JEL: D83 J16
    Date: 2019–04–25
  34. By: Doorley, Karina (Economic and Social Research Institute, Dublin); Stancanelli, Elena G. F. (Paris School of Economics)
    Abstract: We argue that retirement from work may affect marital status according to the predictions of quite standard economic models of marriage and divorce. Retirement may make singles less marriageable as well as impacting negatively marriage stability for married people. We exploit retirement laws in France to instrument the effect of retirement on individual marriage status, using Census data. While we cannot claim causality, we find that retirement correlates negatively with the marriage probability of men, and the more so for men with less than high school education.
    Keywords: ageing, retirement, divorce
    JEL: J12 J14 J22
    Date: 2019–04
  35. By: Vitezslav Titl; Kristof De Witte; Benny Geys
    Abstract: Firms’ political donations can induce distortions in the allocation of public procurement contracts. In this article, we employ an advanced non-parametric efficiency model to study the public sector (cost) efficiency implications of such distortions. Using a unique dataset covering the Czech regions over the 2007-2014 period, we find that the efficiency of public good provision is lower when a larger share of public procurement contracts is awarded to firms donating to the party in power (‘party donors’). We link this efficiency difference to two underlying mechanisms: i.e. shifts in procurement contract allocations from firms with previous procurement experience to party donors, and the use of less restrictive allocation procedures that benefit party donors.
    Keywords: political connections, non-parametric efficiency analysis, benefit-of-the-doubt
    JEL: H57 D72 C23
    Date: 2019

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