nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2019‒09‒09
33 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Reference Points for Retirement Behavior: Evidence from German Pension Discontinuities By Arthur Seibold
  2. Mothers’ and children’s employment in Europe. A comparative analysis By Gabriella Berloffa; Eleonora Matteazzi; Alina Şandor; Paola Villa
  3. The Design of Variable Water Fees and its Impact on Swiss Hydropower Companies and Resource Owners By Betz, Regina; Geissmann, Thomas; Kosch, Mirjam; Schillinger, Moritz; Weigt, Hannes
  4. Does Unemployment Worsen Babies' Health? A Tale of Siblings, Maternal Behaviour and Selection By De Cao, Elisabetta; McCormick, Barry; Nicodemo, Catia
  6. Environmental innovation and firm profitability: An analysis with respect to firm size By Axenbeck, Janna
  7. Inequalities in Student to Course Match: Evidence from Linked Administrative Data By Stuart Campbell; Lindsey Macmillan; Richard Murphy; Gill Wyness
  8. Does inequality reduce mobility? The Great Gatsby Curve and its mechanisms By Brandén, Gunnar
  9. Numeracy and Unemployment Duration By Dohmen, Thomas; van Landeghem, Bert
  10. Low Emission Zones for Better Health: Evidence from German Hospitals By Pestel, Nico; Wozny, Florian
  11. Assessing Financing, Innovation and Growth Linkage: New Evidence for Policy By Anabela Santos; Michele Cincera; Giovanni Cerulli
  12. Future competitive bioenergy technologies in the German heat sector: Findings from an economic optimization approach By Matthias Jordan; Volker Lenz; Markus Millinger; Katja Oehmichen; Daniela Thr\"an
  13. On the road to integration? Immigrant’s demand for informal (& formal) education By Coniglio, Nicola D.; Hoxhaj, Rezart; Jayet, Hubert
  14. Natural amenities and the spatial distribution of Swiss income By Joséphine Leuba
  15. Rigid Wages and Contracts: Time- versus State-Dependent Wages in the Netherlands By Grajales Olarte, A.; Uras, Burak; Vellekoop, N.
  16. What if dividends were tax-exempt? Evidence from a natural experiment By Isakov, Dusan; Pérignon, Christophe; Weisskopf, Jean-Philippe
  17. Labor Market Closure and the Stalling of the Gender Pay Gap By Lara Minkus
  18. Intended and unintended effects of public incentives for innovation. Quasi-experimental evidence from Italy By Mellace, Giovanni; Ventura, Marco
  19. The American Dream Lives in Sweden: Trends in intergenerational absolute income mobility By Liss, Erik; Korpi, Martin; Wennberg , Karl
  20. Household precariousness and youth living arrangements in Spain: evidence for a complete business cycle By Olga Cantó; Inmaculada Cebrián; Gloria Moreno
  21. Gains from Early Support of a New Political Party By Leonardi, Marco; Mossucca, Rossella; Schivardi, Fabiano; Severgnini, Battista
  22. Symbolism Matters: The Effect of Same-Sex Marriage Legalization on Partnership Stability By Chen, Shuai; van Ours, Jan C.
  23. Consequences of Parental Job Loss on the Family Environment and on Human Capital Formation: Evidence from Plant Closures By Mörk, Eva; Sjögren, Anna; Svaleryd, Helena
  24. Fiscal Windfall Curse By Simon Berset; Mark Schelker
  25. Perceived Immigration And Voting Behavior. By Bellucci, Davide; Conzo, Pierluigi; Zotti, Roberto
  26. Creative Destruction, Social Security Uptake and Union Networks By Dale-Olsen, Harald
  27. Selecting Talent: Gender Differences in Participation and Success in Competitive Selection Processes By Farré, Lídia; Ortega, Francesc
  28. Employment protection and firm-level job reallocation: Adjusting for coverage By Bendicta Marzinotto; Ladislacv Wintr
  29. Rain, Emotions and Voting for the Status Quo By Meier, Amando N.; Schmid, Lukas; Stutzer, Alois
  30. Determinants of Persistent and Transient Technical Efficiency of Austrian Crop Farms By Addo, Felicity; Salhofer, Klaus
  31. The dimension, nature and distribution of economic insecurity in European countries: A multidimensional approach By Olga Cantó; Carmelo García-Pérez; Marina Romaguera-de-la-Cruz
  32. Education and Gender Differences in Mortality Rates By Cristina Belles-Obrero; Sergi Jiménez-Martín; Judit Vall Castello
  33. Nurturing knowledge? The impact of funding and family on scientific performance. By Lawson, Cornelia; Geuna, Aldo; Finardi, Ugo

  1. By: Arthur Seibold
    Abstract: This paper documents and analyzes an important and puzzling stylized fact about retirement behavior: the large concentration of job exits at specific ages. In Germany, almost 30% of workers retire precisely in the month when they reach one of three statutory retirement ages, although there is often no incentive or even a disincentive to retire at these thresholds. To study what can explain the concentration of retirements around statutory ages, I use novel administrative data covering the universe of German retirees, and I exploit unique variation in financial retirement incentives as well as statutory ages across individuals in the German pension system. Measuring retirement bunching responses to 644 different discontinuities in pension benefit profiles, I first document that financial incentives alone fail to explain retirement patterns in the data. Second, I show that there is a large direct effect of “presenting” a threshold as a statutory retirement age. Further evidence on mechanisms suggests the framing of statutory ages as reference points for retirement as a potential explanation. A number of alternative channels including firm responses are also discussed but they do not seem to drive the results. Finally, structural bunching estimation is employed to estimate reference point effects. Counterfactual simulations highlight that shifting statutory ages via pension reforms can be an effective policy to increase actual retirement ages with a positive fiscal impact.
    Keywords: retirement, reference points
    JEL: D03 H55 J26
    Date: 2019
  2. By: Gabriella Berloffa; Eleonora Matteazzi; Alina Şandor; Paola Villa
    Abstract: This paper presents a comparative analysis using EU-SILC data of the correlation between mothers’ employment during adolescence and their children’s probability of being workless (i.e. either unemployed or inactive) at about 30 years of age in 19 European countries. By estimating various multilevel logit models, the paper shows that, on average, having had a working mother is associated with a reduction in the probability of being workless of about 25 to 35 percent for daughters and 20 to 25 percent for sons. Cross-country differences in these correlations are much larger for daughters than for sons, in particular for daughters with children, and do not reflect the usual country groupings. Our results suggest that mothers’ employment not only influences preferences for labor market participation, but also some attitudes or skills that favor their children’s successful integration into the labor market. Moreover, the observed correlation between mothers’ employment and their daughters’ labor market outcomes is lower in contexts where the burden of childcare falls more on women, highlighting that the presence of constraints on women’s choices may conceal mothers’ influence on daughters’ preferences.
    Keywords: young adults’ worklessness, mothers’ employment, intergenerational correlation, gender norms, Europe
    JEL: J16 J62 D19
    Date: 2019
  3. By: Betz, Regina (University of Basel); Geissmann, Thomas; Kosch, Mirjam; Schillinger, Moritz (University of Basel); Weigt, Hannes (University of Basel)
    Abstract: Water fees are a remuneration to be paid by the operators of hydropower plants to the owners of the water resource right. In Switzerland the fee is based on the gross capacity of the plant and independent from market conditions. This regulation implies that cantons and municipalities have a constant income from water fees, because the whole market risk lies with the producers. As revenues of hydropower companies have dropped after 2012 due to low electricity prices Swiss hydropower producers have been calling for a change in the water fee regime. The currently most probable policy change is a flexibilization of water fees. Within this paper we analyse the impacts of different water fee reform options - and how they depend on market conditions - from the hydropower producers (companies) and resource owners (cantons and municipalities) perspective. We find that electricity market price developments dominate the water fees in most cases, but for a range of electricity prices between 40 and 60 CHF/MWh water fees can make a difference. However, there is a larger variability between plants than between market scenarios, i.e., in every scenario, we find plants that make profits and others that make losses. We also show that a uniform water fee favors storage/pump-storage plants, whereas a differentiation of the water fee level by plant type favors run-of-river units.
    Keywords: hydropower ; Switzerland ; water fees
    Date: 2019–08
  4. By: De Cao, Elisabetta (London School of Economics); McCormick, Barry (Nuffield College, Oxford); Nicodemo, Catia (University of Oxford)
    Abstract: We study the effect of unemployment on birth outcomes by exploiting geographical variation in the unemployment rate across local areas in England, and comparing siblings born to the same mother via family fixed effects. Using rich individual data from hospital administrative records between 2003 and 2012, babies' health is found to be strongly pro-cyclical. A one-percentage point increase in the unemployment rate leads to an increase in low birth weight and preterm babies of respectively 1.3 and 1.4%, and a 0.1% decrease in foetal growth. We find heterogenous responses: unemployment has an effect on babies' health which varies from strongly adverse in the most deprived areas, to mildly favourable in the most prosperous areas. We provide evidence of three channels that can explain the overall negative effect of unemployment on new-born health: maternal stress; unhealthy behaviours - namely excessive alcohol consumption and smoking; and delays in the take-up of prenatal services. While the heterogenous effects of unemployment by area of deprivation seem to be explained by maternal behaviour. Most importantly, we also show for the first time that selection into fertility is the main driver for the previously observed, opposite counter-cyclical results, e.g., Dehejia and Lleras-Muney (2004). Our results are robust to internal migration, different geographical aggregation of the unemployment rate, the use of gender-specific unemployment rates, and potential endogeneity of the unemployment rate which we control for by using a shift-share instrumental variable approach.
    Keywords: unemployment rate, birth outcomes, birth weight, fertility, England
    JEL: E24 I10 I12 J13
    Date: 2019–08
  5. By: Daunfeldt, Sven-Olov (Institute of Retail Economics (Handelns Forskningsinstitut)); Westerberg, Hans (Institute of Retail Economics (Handelns Forskningsinstitut))
    Abstract: The number of refugees in Europe has increased dramatically in recent years, and many countries are facing great challenges to integrating these refugees into their societies. A small group of high-growth firms have at the same time attracted attention because they create the most new jobs at any given point in time. Using matched employer-employee data from Statistics Sweden, we find that these high-growth firms in general are more likely to recruit first-generation immigrants that are unemployed. This provides support for the hypothesis that managers in high-growth firms, to greater extents, recruit marginalized individuals because they want to take advantage of their growth opportunities and therefore do not wait for the best match. Rapidly growing firms are thus less selective in their hiring decisions, and policies that are focused on increasing the number of high-growth firms might also help immigrants who face difficulties entering the labor market.
    Keywords: Firm growth; Gazelles; High-growth firms; Immigration; Integration; Labor market; Matching models; Resource based theory; Interaction effects; Logit; Odds ratio
    JEL: D22 J15 L25 L26
    Date: 2019–08–30
  6. By: Axenbeck, Janna
    Abstract: This paper investigates the effect of environmental innovations on firm profitability with respect to differences between small and medium-sized (SME) and large (LE) enterprises. Using data from the Mannheim Innovation Panel (MIP) 2015, results show that, in general, SME benefit more from environmental innovations than LE. This effect is particularly strong for resource efficiency-improving innovations induced by regulation. These environmental innovations are significantly related to an increase in profits of SME, whilst related to a decrease in profits of LE. A robustness check with data from the MIP 2009, however, does not confirm this result as the effect for LE is insignificant and differences between the two groups cannot be found in this survey wave. A reason why negative effects for LE are observed in the MIP 2015 - but not in the MIP 2009 - might be that most LE had already exploited the potentials of environmental innovations when they were surveyed in the MIP 2015. This is supported by evidence suggesting that size-related differences in the MIP 2015 are driven by a negative relationship between LE's profits and environmental innovations related to externalities that were reduced by innovations in periods before.
    Keywords: Firm Behavior,Firm Size,Porter hypothesis,Environmental Technology Adaption,Technological Innovation,Environmental Regulation
    JEL: D22 L25 Q52 Q55 Q58
    Date: 2019
  7. By: Stuart Campbell; Lindsey Macmillan; Richard Murphy; Gill Wyness
    Abstract: This paper examines inequalities in the match between student quality and university quality using linked administrative data from schools, universities and tax authorities. We analyse two measures of match at the university-subject (course) level, based on student academic attainment, and graduate earnings. We find that students from lower socio-economic groups systematically undermatch for both measures across the distribution of attainment, with particularly stark socio-economic gaps for the most undermatched. While there are negligible gender gaps in academic match, high-attaining women systematically undermatch in terms of expected earnings, largely driven by subject choice.
    Keywords: higher education, educational economics, college choice, mismatch, undermatch
    JEL: I22 I23 I28
    Date: 2019–08
  8. By: Brandén, Gunnar (Umeå University)
    Abstract: A body of evidence has emerged in the literature on intergenerational mobility documenting that countries with large income differences also have less intergenerational mobility: a relationship known as the Great Gatsby Curve. In this paper, I estimate the Great Gatsby Curve within Sweden exploiting both cross-sectional and longitudinal variation. I find that men who grew up in regions or periods with high levels of income inequality experienced less intergenerational mobility as adults, thereby confirming the existence of a Great Gatsby Curve in Sweden. I also present new evidence on the underlying mechanisms of the Great Gatsby Curve. By decomposing intergenerational mobility into separate transmission channels, I find that the mediating effects that educational attainment and cognitive and non-cognitive skills have on the persistence of socioeconomic status across generations drive the Great Gatsby Curve.
    Keywords: Intergenerational mobility; equality of opportunity; inequality
    JEL: D31 I24 J62 R00
    Date: 2019–09–04
  9. By: Dohmen, Thomas (University of Bonn and IZA); van Landeghem, Bert (University of Sheffield)
    Abstract: Governments are showing an increasing interest in quantitative models that give insights into the determinants of unemployment duration. Yet, these models oftentimes do not explicitly take into account that unemployment prospects are influenced by personality characteristics that are not being fully captured by variables in administrative data. Using German survey data linked with administrative data, we show that numeracy skills are strongly related to unemployment duration, while at the same time we confirm well-established patterns documented in the literature. Low numeracy is strongly related to a longer unemployment duration of workers below median age (33) in our sample, even after including a rich set of controls. We find that unrealistic reservation wages are not the main driver, nor do results seem to be driven by locking-in effects caused by programme participation. On the other hand, the absence of a relationship between numeracy and unemployment duration for older workers might well be driven by a locking-in effect for those with high numeracy, as they tend to commit more often to intensive training programmes. Another tentative explanation, which is supported by the data, is that younger people have fewer signals to send such that their cognitive abilities may have a higher relative signalling value.
    Keywords: cognitive and noncognitive skills, unemployment duration, numeracy
    JEL: D04 D61 J64 J68
    Date: 2019–08
  10. By: Pestel, Nico (IZA); Wozny, Florian (IZA)
    Abstract: This paper studies health effects from restricting the access of high-emission vehicles to innercities by implementing Low Emission Zones. For identification, we exploit variation in the timing and the spatial distribution of the introduction of new Low Emission Zones across cities in Germany. We use detailed hospitalization data combined with geo-coded information on the coverage of Low Emission Zones. We find that Low Emission Zones significantly reduce levels of air pollution in urban areas and that these improvements in air quality translate into population health benefits. The number of diagnoses related to air pollution is significantly reduced for hospitals located within or in close proximity to a Low Emission Zone after it becomes effective. The results are mainly driven by reductions in chronic cardiovascular and respiratory diseases.
    Keywords: Low Emission Zone, air pollution, health, Germany
    JEL: I18 Q52 Q53
    Date: 2019–08
  11. By: Anabela Santos; Michele Cincera; Giovanni Cerulli
    Abstract: Financing, innovation and growth linkage is a multi-stage process. First, access to finance has a leverage effect on innovation and secondly this additional innovation has an impact on growth. However, few authors have assessed the effect of these three components at the same time. Furthermore, the scientific literature usually focuses more on assessing only the effect of one type of source of financing, such as public support or venture capital, on innovation or firm growth. The aim of the present study is to go further and to assess the effect of eight different sources of financing (internal funds, bank loan, credit line, trade credit, grants, equity, leasing and factoring) on innovation and then on firm growth. Using data from the Survey on the Access to Finance of Enterprises and a three-step econometric approach, the study provides evidence that external sources of financing have a positive effect on innovation and then an additional effect on firm growth (turnover and employment). However, not all sources of external financing have the same impact.Equity financing has a larger effect on the strategic decision to innovate, and the highest output additionality on firm turnover growth, when compared to the effects of other sources of financing.Grants registered a moderate effect on innovation and on output additionality on firm growth (both turnover and employment) and its effect does not appear to be statistically different from other financing instruments (excluding equity). Moreover, grants show higher employment growth than turnover. Furthermore, the number of financing instruments used together also seems to matter, revealing that a financing instrument used alone has no effect on innovation. Our findings suggest that state aid to promote R&D and innovation needs to rely on sounder public/private support integration for it to be successful. All these conclusions could be particularly useful for policy-makers since recommendations for a European Innovation CouncilKeywordsFinancing; Innovation; Firm growth; Europe
    Keywords: Innovation, Microfinance, Microfinance in Europe
    Date: 2019
  12. By: Matthias Jordan; Volker Lenz; Markus Millinger; Katja Oehmichen; Daniela Thr\"an
    Abstract: Meeting the defined greenhouse gas (GHG) reduction targets in Germany is only possible by switching to renewable technologies in the energy sector. A major share of that reduction needs to be covered by the heat sector, which accounts for ~35% of the energy based emissions in Germany. Biomass is the renewable key player in the heterogeneous heat sector today. Its properties such as weather independency, simple storage and flexible utilization open up a wide field of applications for biomass. However, in a future heat sector fulfilling GHG reduction targets and energy sectors being increasingly connected: which bioenergy technology concepts are competitive options against other renewable heating systems? In this paper, the cost optimal allocation of the limited German biomass potential is investigated under longterm scenarios using a mathematical optimization approach. The model results show that bioenergy can be a competitive option in the future. Especially the use of biomass from residues can be highly competitive in hybrid combined heat and power (CHP) pellet combustion plants in the private household sector. However, towards 2050, wood based biomass use in high temperature industry applications is found to be the most cost efficient way to reduce heat based emissions by 95% in 2050.
    Date: 2019–08
  13. By: Coniglio, Nicola D.; Hoxhaj, Rezart; Jayet, Hubert
    Abstract: In this paper we study the allocation of time devoted to informal learning and education, i.e. those activities carried out during leisure time and outside formal education courses which boost individuals’ human and social capital. For immigrants the private investment in these activities is likely to have relevant external effects as informal learning and education enhances the likelihood of greater socio-economic integration in the host society. We first develop a simple theoretical framework, which allows us to highlight the different constrains/opportunity costs faced by immigrants as compared with natives. Then, we empirically investigate the determinants of participation in informal education using the American Time Use Data (ATUS; period 2003-2015) which contains detailed information on daily time budgets of a large sample of immigrants and natives in the US. Consistently with a theoretical model of time allocation we find evidence that immigrants are more likely to engage in informal education and, conditionally on participation, they allocate more time to these activities. Over time, immigrants show a higher degree of assimilation into the host society. Our results also highlight heterogeneous patterns across gender.
    Keywords: immigrants,time use,education,human capital
    JEL: J15 J22 I20
    Date: 2019
  14. By: Joséphine Leuba
    Abstract: The present article describes how the spatial distribution of income in Switzerland is related to natural amenities. We explore the link between inequalities in Swiss municipalities and the presence of lakes, rivers, mountains, good accessibility and green amenities. By using fiscal data on average income, Gini index and density of taxpayers in different income brackets, we confirm that a larger variety of landscape is associated with larger spatial income differentials. We also show that inequalities are more pronounced within municipalities located in a particularly nice environment.
    Keywords: Spatial income distribution, natural amenities, income sorting, inequality
    JEL: D30 J31 J61 R12 R23
    Date: 2019–08
  15. By: Grajales Olarte, A. (Tilburg University, Center For Economic Research); Uras, Burak (Tilburg University, Center For Economic Research); Vellekoop, N. (Tilburg University, Center For Economic Research)
    Abstract: We study nominal wage rigidity in the Netherlands using administrative data, which has three key features: (1) high-frequency (monthly), (2) high-quality (administrative records), and (3) high coverage (the universe of workers and the universe of firms). We find wage rigidity patterns in the data that are similar to wage behavior documented for other European countries. In particular we find that the hazard function has two spikes, one at 12 months and another one at 24 months and wage changes have time and state dependency components. As a novel and important piece of evidence we also uncover substantial heterogeneity in the frequency of wage changes due to explicit terms of the labor contract. In particular, contracts featuring flexible hours, such as on-call contracts, exhibit a higher probability of a change in the contract wage compared to fixed hour contracts. Once we split the sample based on contract characteristics, we also find that the response of wage changes to the time and state component is heterogeneous across different type of contracts - with relatively more downward adjustments in flexible-hour contract wages in response to aggregate unemployment.
    Keywords: wage rigidity; microdata; time dependency; state dependency; flexible-hour contracts
    JEL: E24 J31
    Date: 2019
  16. By: Isakov, Dusan; Pérignon, Christophe; Weisskopf, Jean-Philippe
    Abstract: We study the effect of dividend taxes on the payout and investment policy of listed firms and discuss their implications for agency problems. To do so, we exploit a unique setting in Switzerland where some, but not all, firms were suddenly able to pay tax-exempted dividends to their shareholders following the corporate tax reform of 2011. Using a difference-in-differences specification, we show that treated firms increased their payout by around 30% compared to control firms after the tax cut. Differently, treated firms did not concurrently or subsequently increase investment. We show that the tax-inelasticity of investment was due to a significant drop in retained earnings ̶ as the rise in dividends was not compensated by an equally-sized reduction in share repurchases. Furthermore, treated firms did not raise more equity than control firms. Lastly, we show that an unintended consequence of cutting dividend taxes is to mitigate the agency problems that arise between insiders and minority shareholders.
    Keywords: corporate taxes; dividends; payouts; investment; agency problems.
    JEL: G35 G38 H25 K34
    Date: 2019–02–19
  17. By: Lara Minkus
    Abstract: The gender pay gap (GPG) remains a persistent phenomenon in contemporary labor markets. Despite a vast body of research examining its causes, as of today, unequal labor market power resources between men and women have remained an underappreciated factor in the literature. Drawing on the German Socio-economic Panel and the Microcensus, the association between the GPG and labor market closure – a crucial determinant of unequal power resources in labor markets – is followed from 1993-2011. Employing JMP decomposition, unionization, tertiary credentialing and part-time employment are found to exacerbate the overall wage differential by 41 percent. Part-time employment has been the only indictor that enlarged the gender pay gap (17 percent) between 1993 and 2011, while the remaining covariates contributed toward its convergence. These results advance our understanding of stalling GPGs by highlighting the so far widely neglected importance of power resources on the GPG.
    Keywords: gender pay gap; labor market closure; stalled gender revolution; JMP decomposition; dualism
    JEL: J2 J5 L1
    Date: 2019
  18. By: Mellace, Giovanni (Department of Business and Economics); Ventura, Marco (Department of Economics and Law)
    Abstract: This paper provides an extensive empirical evaluation of a policy introduced in Italy at the end of 2012 to incentivize young innovative start-up firms. Using a Regression Discontinuity Design (RDD) we estimate the causal effects of the policy on the firms’ share of intangible assets, turnover, number of employees, and number of partners. Our results indicate that two years after its implementation the policy was effective only in increasing the number of partners, thus attracting private investments, but failed, at least in the short run, in boosting innovation or increasing employment. It follows that the new investors generated by the policy might have been attracted only by the tax benefit and had little interest in innovation.
    Keywords: Policy evaluation; regression discontinuity design; incentives to innovations
    JEL: C21 H32 L52 O31
    Date: 2019–08–28
  19. By: Liss, Erik (The Ratio Institute); Korpi, Martin (The Ratio Institute); Wennberg , Karl (The Ratio Institute)
    Abstract: Despite a sizeable literature on relative income mobility across generations, there is a dearth of studies of absolute mobility across generations, i.e. whether current generations earn more or less than their parents did at the same age, as well as how to explain the level of absolute mobility. We use individual micro data to study the trend in intergenerational absolute income mobility measured as the share of sons and daughters earning more than their fathers and mothers, respectively, for eleven Swedish birth cohorts between 1970 and 1980. We find that absolute mobility in Sweden significantly exceeds that of the United States and is largely on par with Canada. The rate of absolute mobility for women exceeds that of men throughout the study period, however the trend has been stronger for men. Using an augmented decomposition model which supplements standard models by accounting for differences in the income distribution of every birth cohort’s parent generation, we find that heterogeneity in the parent income distribution strongly determines how much economic growth contributes to absolute mobility across birth cohorts. If income inequality is high in the parent generation, more growth is required if children that move downward in the relative income distribution are to earn more than their parents.
    Keywords: Absolute mobility; income decomposition; intergenerational income mobility; social mobility
    JEL: D31 D63 E24 J62
    Date: 2019–09–02
  20. By: Olga Cantó; Inmaculada Cebrián; Gloria Moreno (Universidad de Alcalá)
    Abstract: Economic difficulties during recessions affect young individuals’ life projects and may delay emancipation and childbearing. For a period of persistent growth, previous analyses on emancipation in Spain found a key role of the “adapting to circumstances” attitude in youth cohabiting living arrangements: a large number of young individuals reduce their poverty risk by remaining at their parental homes if both parents are employed, and at the same time, a significant number of households reduce their poverty risk by adding cohabiting young workers’ wages to their disposable income. Using individual and household employment deprivation information from an extensive dataset, we study the evolution and determinants of youth living arrangements for a complete business cycle. Our results show that in addition to individual labor market status, the employment deprivation levels of other active household members are important determinants of youth emancipation decisions along the cycle.
    Keywords: living arrangements, precariousness, poverty, Great Recession.
    JEL: D1 J12 I3
    Date: 2019–07
  21. By: Leonardi, Marco (University of Milan); Mossucca, Rossella (LearLab); Schivardi, Fabiano (LUISS Guido Carli University); Severgnini, Battista (Copenhagen Business School)
    Abstract: We study the potential benefits and mechanisms of firms' political connections by analyzing the Italian experience, where, in the early nineties, Silvio Berlusconi, a rich TV tycoon, became the leader of the conservative political coalition. Using firm-level data, we find that the 101 companies supporting Berlusconi's successful bid to become prime minister did better than controls in terms of sales and employment but not of productivity. The results are confirmed when we instrument the decision to support Berlusconi with electoral outcomes in the 1921 elections. We also find suggestive evidence that the supporters' superior performance is stronger in sectors with high external financial dependence and high advertising intensity.
    Keywords: political connections, productivity, policy regulation
    JEL: G32 G38 D72
    Date: 2019–08
  22. By: Chen, Shuai; van Ours, Jan C.
    Abstract: We study the effect of marriage on the stability of formal partnerships exploiting same-sex marriage legalization in the Netherlands as a natural experiment. Same-sex marriage legalization allowed registered partnerships to be transformed into marriage. Since registered partnerships and marriages are similar in terms of rights and obligations we can investigate the effect of marital symbolism on the partnership stability. Using rich administrative data, we find that same-sex marriage legalization had two different effects. First, it increased the separation rate of existing same-sex registered partnerships. Second, partnerships that were transformed into marriage had a substantially lower separation rate. We take the second finding as evidence of the symbolic effect of marriage stabilizing partnerships.
    Date: 2019–08
  23. By: Mörk, Eva (Uppsala University); Sjögren, Anna (IFAU); Svaleryd, Helena (Uppsala University)
    Abstract: We study the consequences of mothers' and fathers' job loss for parents, families, and children. Rich Swedish register data allow us to identify plant closures and account for non-random selection of workers to closing plants by using propensity score matching and controlling for pre-displacement outcomes. Our overall conclusion is positive: childhood health, educational and early adult outcomes are not adversely affected by parental job loss. Parents and families are however negatively affected in terms of parental health, labor market outcomes and separations. Limited effects on family disposable income suggest that generous unemployment insurance and a dual-earner norm shield families from financial distress, which together with universal health care and free education is likely to be protective for children.
    Keywords: parental unemployment, workplace closure, family environment, child health, human capital formation
    JEL: I12 J1
    Date: 2019–08
  24. By: Simon Berset; Mark Schelker
    Abstract: We study the impact of a one-off exogenous fiscal windfall on local public finances in the canton of Zurich in Switzerland. The windfall was due to the IPO of Glencore on the London Stock Exchange in 2011. As a result, its CEO paid an extraordinary tax bill of approximately CHF 360 million. About CHF 238 million of that extra tax revenue entered the municipal resource equalization scheme and rained down on the municipalities of the canton of Zurich. This quasi-experimental setup and our unusually rich dataset allow us to estimate the causal effect of this one-off windfall on all municipal accounting positions. We show that it triggered large expenditure increases targeting particular groups (e.g., salaries of public employees) at the same time as general tax cuts and user charge hikes (e.g., nursing home fees). The resulting imbalances caused a 7.5-fold increase in gross debt relative to the windfall. This massive overreaction hints at a substantial fiscal windfall curse.
    Keywords: local public finance, fiscal windfalls, fiscal policy
    JEL: D70 H11 H71 H72
    Date: 2019
  25. By: Bellucci, Davide; Conzo, Pierluigi; Zotti, Roberto (University of Turin)
    Abstract: A growing number of studies have found significant effects of inflows of migrants on electoral outcomes. However, the role of perceived immigration, which in many European countries is above official migration statistics, is overlooked. This paper investigates the effects of perceived threat of immigration on voting behavior, by looking at whether local elections in Italy were affected by sea arrivals of refugees before the election day. While, upon arrival, refugees cannot freely go to the destination municipality, landing episodes were discussed in the media especially before the elections, thereby influencing voters’ perceptions about the arrivals. We develop an index of exposure to arrivalsthat varies over time and across municipalities depending on the nationality of the incoming refugees. This index captures the impact of perceived immigration on voting behavior, on top of the effects of real immigration as proxied for by the stock of immigrants and the presence of refugee centers. Results show that, in municipalities where refugees are more expected to arrive, participationdecreases, whereas protest votes and support for extreme-right, populist and anti-immigration parties increase. Since these effects are driven by areas with fast broadband availability, we argue that antiimmigration campaigns played a key role.
    Date: 2019–06
  26. By: Dale-Olsen, Harald (Institute for Social Research, Oslo)
    Abstract: Does the creative destruction induced by unions entail increased social security uptake? Creative destruction implies the closures of less productive workplaces, and if the regional benefits from this process is not large enough, the displacements caused by workplace closures cause increased social security uptake. In this paper we apply a shift-share approach and historical unionisation data from 1918 to study the impact of regional unionisation changes in Norway on regional social security uptake during the period 2003-2012. As regional unionisation increases, inflows to regional unemployment and disability decrease, but the outflow to retirement increases.
    Keywords: trade unions, creative destruction, unemployment, disability insurance, retirement
    JEL: D24 J30 J51
    Date: 2019–08
  27. By: Farré, Lídia (University of Barcelona); Ortega, Francesc (Queens College, CUNY)
    Abstract: We investigate whether competitive selection processes generate gender inequality in the context of a prestigious graduate fellowship program. All applications are scored remotely by expert reviewers and the highest ranked are invited to an in-person interview. The data show a very large gender gap in success rates: women's success rate is 36% lower than men's. About one third of this gap is due to the lower grades of female candidates, which is surprising given women's higher GPA in the population of college graduates. Adjusting for GPA and a rich set of fixed-effects, women's success rate remains 16% lower than for comparable male candidates. We show that this gap is explained by reviewers engaging in gender balancing. Namely, reviewers favor the minority gender in each field of study but, except for STEM, all fields are female-dominated. Our simulations show that the interview plays an important role, but the quantitative scoring has a more profound effect on the award allocation. Merging administrative records on the population of graduates from a large university, we document an important gender gap in participation. We find that high-GPA female graduates are much less likely to apply to the fellowship program. The combination of the gender gaps in participation and success in the program imply that high-GPA female graduates are almost 50% less likely to obtain a fellowship than their male counterparts.
    Keywords: glass ceiling, gender, education
    JEL: J3 J7
    Date: 2019–08
  28. By: Bendicta Marzinotto; Ladislacv Wintr
    Abstract: This paper finds that employment protection legislation (EPL) had a significant impact on employment adjustment in Europe over 2001-2013, once we account for firm-size related exemptions to EPL. We construct a novel coverage-adjusted EPL indicator and find that EPL hinders employment growth at the firm level and increases the share of firms that remain in the same size class. This suggests that stricter EPL restrains job creation because firms fear the costs of shedding jobs during downturns. We do not find evidence that EPL has positive effects on employment by limiting job losses after adverse shocks. In addition to standard controls for the share of credit-constrained firms and the position in the business cycle, we also control for sizerelated corporate tax exemptions and find that these also significantly constrain job creation among incumbent firms.
    Keywords: employment protection; firm growth; job reallocation.; Employment protection; firm growth; job reallocation
    JEL: J08 D22
    Date: 2019–07
  29. By: Meier, Amando N.; Schmid, Lukas (University of Basel); Stutzer, Alois (University of Basel)
    Abstract: Do emotions aect the decision between change and the status quo? We exploit exogenous variation in emotions caused by rain and analyze data on more than 870,000 municipal vote outcomes in Switzerland to address this question. The empirical tests are based on administrative ballot outcomes and individual postvote survey data. We find that rain decreases the share of votes for political change. Our robustness checks suggest that this finding is not driven by changes in the composition of the electorate and changes in information acquisition. In addition, we provide evidence that rain might have altered the outcome of several high-stake votes. We discuss the psychological mechanism and document that rain reduces the willingness to take risks, a pattern that is consistent with the observed reduction in the support for change.
    Keywords: Emotions ; voting ; status quo ; risk aversion ; rain ; direct democracy ; turnout
    JEL: D01 D02 D72 D91
    Date: 2019–08
  30. By: Addo, Felicity; Salhofer, Klaus
    Abstract: In the last two decades, the Common Agricultural Policy (CAP) of the European Union (EU) has experienced significant changes which has created a highly competitive market in which farmers operate. This is particularly challenging for countries with small-scaled agriculture like Austria, requiring farms to significantly improve technical efficiency in order to be competitive. In this paper, we apply a four-error component model to decompose technical efficiency into persistent inefficiency, which captures long run effects of farm management, and transient inefficiency, which accounts for how farms adjust to short run production shocks, while controlling for farm heterogeneity and a random error. We extend this model to include exogenous determinants for both types technical inefficiency. To do so, we estimate a translog stochastic production function for a panel of 231 Austrian crop farms for the period 2003-2016. We observe that though transient and persistent efficiency are similar on average, persistent efficiency is much more dispersed suggesting that persistent technical inefficiency poses a greater problem for Austrian crop farms than the transient component. Overall technical efficiency is estimated at 89%. Regarding persistent technical efficiency, we find that full time farms and medium to large scale farms are more efficient. However, we observe that older farmers and farms that employ a high proportion of family labour are less persistently efficient. With regards to transient technical efficiency, we find that farms that cultivate more on their own land are less transiently efficient compared to farms on rented land. Lastly, we observe that farm subsidies in general negatively affects both types of efficiency.
    Keywords: Agricultural and Food Policy, Production Economics, Productivity Analysis
    Date: 2019–08–26
  31. By: Olga Cantó (Universidad de Alcalá); Carmelo García-Pérez (Universidad de Alcalá); Marina Romaguera-de-la-Cruz (Universidad de Alcalá)
    Abstract: Economic insecurity is a key well-being outcome because the anticipation of future economic distress reveals itself as a true threat to current well-being. Insecurity has been shown to affect quality of life and to change an individual’s consumption, fertility, labor supply and even political support decisions to mitigate risk. This paper provides evidence on the dimension, nature and distribution of economic insecurity for 27 EU countries during a whole decade by using a multidimensional individual approach that considers both objective and subjective indicators. The young, the less educated and the unemployed living in households with dependent children have significantly higher levels of economic insecurity everywhere. However, insecurity affects the population in the middle-class only in some countries but not in others, and the level of insecurity in liberal regimes is more linked to large income losses than elsewhere. The role of objective versus subjective dimensions is larger in post-transition Eastern European regimes than in longstanding capitalist countries.
    Keywords: economic insecurity, welfare regimes, counting approach, multidimensional index, European countries.
    JEL: D63 I31
    Date: 2019–07
  32. By: Cristina Belles-Obrero; Sergi Jiménez-Martín; Judit Vall Castello
    Abstract: We examine the gender asymmetries in the health benefits of acquiring further education at a time of increasing gender equality and women’s greater access to economic opportunities. A labor market reform in Spain in 1980 raised the minimum legal working age from 14 to 16, while the school-leaving age remained at 14. We apply a difference-in-difference strategy to identify the reform’s within-cohort effects, where treated and control individuals differ only in their month of birth. Although the reform improved the educational attainment of both women and men, the long-term effects over mortality differ by gender. We find that the reform decreased mortality at young ages (14-29) by 6.3% among men and by 8.9% among women. This was driven by a decrease (12.2% for men, 14.7% for women) in the probability of dying from external causes of death (accidents). However, we also find that the child labor reform increased mortality for prime-age women (30-45) by 6.3%. This effect is driven by increases in HIV mortality (11.6%), as well as by diseases of the nervous and circulatory system (8.7%).This patter helps explain the narrowing age gap in life expectancy between women and men in Spain.
    Date: 2019–03
  33. By: Lawson, Cornelia; Geuna, Aldo; Finardi, Ugo (University of Turin)
    Abstract: This paper contributes to the literature on the individual and institutional factors explaining academic scientific productivity. On the basis of very detailed information for a sample of 262 academics at the University of Turin over a ten year period, we develop a robust new model to assess the impact of funding on productivity, controlling for gender and family related characteristics less frequently examined in the literature. Using a Two-Stage Least Square (2SLS) model in which we control for endogeneity of career progress and instrument national competitive funding with socio-political capital measure, we find that funding is no longer associated to higher research productivity. In the impact-quality estimation models, we find a “fatherhood bonus” and a “motherhood penalty” for having young children. In robustness checks we provide evidence of a causal effect of the latter, although it is possible that men have children once they are established on a high performance path. As in the previous literature, we find that after controlling for children, female researchers are less productive in terms of publications, but not in terms of research quality/impact.
    Date: 2019–06

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