nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2019‒11‒04
35 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Adoption of retrofit measures among home-owners in EU countries: The effects of access to capital and debt aversion By Schleich, Joachim; Faure, Corinne; Meissner, Thomas
  2. Types of Institutions and Well-Being of Self-Employed and Paid Employees in Europe By Michael Fritsch; Alina Sornger; Michael Wyrwich
  3. Does unemployment worsen babies' health? A tale of siblings, maternal behaviour and selection By De Cao, Elisabetta; McCormick, Barry; Nicodemo, Catia
  4. The Heterogeneous Impact of Market Size on Innovation: Evidence from French Firm-Level Exports By Philippe Aghion; Antonin Bergeaud; Matthieu Lequien; Marc Melitz
  5. On Aging Cannabis Users: a Welfare Economics Analysis By Marco Rossi
  6. Earning dynamics in Sweden: The recent evolution of permanent inequality and earnings volatility By Gustafsson, Johan; Holmberg, Johan
  7. Rent control, market segmentation, and misallocation: Causal evidence from a large-scale policy intervention By Mense, Andreas; Michelsen, Claus; Cholodilin, Konstantin
  8. Berlin calling - Internal migration in Germany By Bauer, Thomas K.; Rulff, Christian; Tamminga, Michael M.
  9. On the economic geography of dual distribution - The case of McDonald’s in Germany By Freiwald, Nisa E.; Juranek, Steffen; Walz, Uwe
  10. Mafia Firms and Aftermaths By Maria Rosaria Alfano; Claudia Cantabene; Damiano Bruno Silipo
  11. Service Imports, Workforce Composition, and Firm Performance: Evidence from Finnish Microdata By Ariu, Andrea; Nilsson Hakkala, Katariina; Jensen, J. Bradford; Tamminen, Saara
  12. Credit scoring in SME asset-backed securities: An Italian case study By Bedin, Andrea; Billio, Monica; Costola, Michele; Pelizzon, Loriana
  13. The Relevance of Wholesale Electricity Market Places: The Nordic Case By Spodniak, Petr; Ollikka, Kimmo; Honkapuro, Samuli
  14. On income tax avoidance - the case of Germany revisited By Fauser, Hannes
  15. Pharmaceutical Prices: The Impact of the Launch Strategy - An Analysis of German Data By Yvonne-Beatrice Böhler; Christian Lamping; Philipp Christoph Wichard; Philipp Christoph Wichardt
  16. Import competition and firm productivity: Evidence from German manufacturing By Bräuer, Richard; Mertens, Matthias; Slavtchev, Viktor
  17. Summertime and the drivin’ is easy? Daylight Saving Time and Vehicle Accidents By Laliotis, I.; Moscelli, G.; Monastiriotis, V.
  18. Heterogeneous effects of agglomeration on firm innovation in Germany By Niebuhr, Annekatrin; Peters, Jan Cornelius; Schmidke, Alex
  19. Pension Incentives and Labor Force Participation: Evidence from the Introduction of Universal Old-Age Assistance in the UK By Jäger, Philipp; Giesecke, Matthias
  20. Does the German minimum wage benefit low income households? By Backhaus, Teresa; Müller, Kai-Uwe
  21. Regional disparities in the effect of training on employment By Iammarino, Simona; Guy, Frederick; Filippetti, Andrea
  22. Early child care and maternal employment: empirical evidence from Germany By Zimmert, Franziska
  23. Health Effects of Labor Market Policies: Evidence from Drug Prescriptions By Caliendo, Marco
  24. Explaining low economic return on road investments. New evidence from Norway By Halse, Askill Harkjerr; Fridstrøm, Lasse
  25. Does it really get better with age? Life-cycle patterns of confidence in Germany By Pannenberg, Markus; Friehe, Tim
  26. Does Accrual Accounting Alter Fiscal Policy Decisions? - Evidence from Germany By Christofzik, Désirée
  27. A shot in the dark? Policy influence on cluster networks By Holger Graf; Tom Broekel
  28. From housewives to employees? How mandatory kindergarten affects mothers' labour supply in Switzerland By Gangl, Selina; Huber, Martin
  29. Catching up or Lagging Behind? The Long-Term Business and Innovation Potential of Subsidized Start-Ups out of Unemployment By Marco Caliendo; Steffen Künn; Martin Weißenberger
  30. Impact of the German Real Estate Transfer Tax on the Commercial Real Estate Market By Frenzel Baudisch, Coletta; Dresselhaus, Carolin
  31. The evolution of tax implicit value judgements, redistribution and income inequality in the UK: 1968 to 2015 By Justin van de Ven; Nicolas Hérault
  32. Fathers' Multiple-Partner Fertility and Children’s Educational Outcomes By Donna K. Ginther; Astrid L. Grasdal; Robert A. Pollak
  33. Thou shalt not bear false witness against your customers: Cultural norms and the Volkswagen scandal By Hasan, Ifthekhar; Noth, Felix; Tonzer, Lena
  34. Preferences over Taxation of High Income Individuals: Evidence from a Survey Experiment By Engelmann, Dirk; Janeba, Eckhard; Mechtenberg, Lydia; Wehrhöfer, Nils
  35. Does admission to elite engineering school make a difference? By Kuuppelomäki, Tiina; Kortelainen, Mika; Suhonen, Tuomo; Virtanen, Hanna

  1. By: Schleich, Joachim; Faure, Corinne; Meissner, Thomas
    Abstract: Energy efficiency policies often involve low-interest loans for retrofit measures in private buildings; the main target of these loans are meant to be households with otherwise poor access to capital. However, such programs can only be successful if the targeted households also take up these loans. This paper stud-ies the relation between access to capital and debt aversion and the adoption of retrofit measures in European Union countries, employing a demographically representative household survey including about 6,600 homeowners in France, Germany, Italy, Poland, Romania, Spain, Sweden, and the United Kingdom. The findings suggest that debt aversion negatively affects the adoption of retro-fit measures by homeowners. In particular, debt-averse homeowners with poor access to capital are less likely to have adopted retrofit measures than non-debt-averse homeowners with poor access to capital. The findings further pro-vide evidence that low-interest loan programs should be targeted at younger homeowners with lower income and less formal education.
    Keywords: energy efficiency,debt aversion,soft loans,energy policy,econo-metrics
    Date: 2019
  2. By: Michael Fritsch (Friedrich Schiller University Jena, and Halle Institute for Economic Research (IWH), Germany); Alina Sornger (John Cabot University Rome, Italy, and Kiel Institute for the World Economy (IfW), and Institute of Labor Economics (IZA Bonn), Germany); Michael Wyrwich (University of Groningen, The Netherlands)
    Abstract: This paper analyzes the role of different types of institutions, such as entre- preneurship-facilitating entry conditions, labor market regulations, quality of government, and perception of corruption for individual well-being among self-employed and paid employed individuals. Well-being is operationalized by job and life satisfaction of individuals in 32 European countries measured by data from EU Statistics on Income and Living Conditions (EU-SILC). We find that institutions never affected both occupational groups in opposite ways. Our findings indicate that labor market institutions do not play an im- portant role well-being. The results suggest that fostering an entrepreneurial society in Europe is a welfare enhancing strategy that benefits both, the self- employed and paid employees.
    Keywords: Entrepreneurship, institutions, well-being, life satisfaction, job satisfaction
    JEL: L26 I31 D01 D91 P51
    Date: 2019–05–02
  3. By: De Cao, Elisabetta; McCormick, Barry; Nicodemo, Catia
    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 procyclical. 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 takeup 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
    JEL: E24 I10 I12
    Date: 2019–08
  4. By: Philippe Aghion; Antonin Bergeaud; Matthieu Lequien; Marc Melitz
    Abstract: We analyze how demand conditions faced by a firm impacts its innovation decisions. To disentangle the direction of causality between innovation and demand conditions, we construct a firm-level export demand shock which responds to aggregate conditions in a firm's export destinations but is exogenous to firm-level decisions. Using exhaustive data covering the French manufacturing sector, we show that French firms respond to exogenous growth shocks in their export destinations by patenting more; and that this response is entirely driven by the subset of initially more productive firms. The patent response arises 3 to 5 years after a demand shock, highlighting the time required to innovate. In contrast, the demand shock raises contemporaneous sales and employment for all firms, without any notable differences between high and low productivity firms. We show that this finding of a skewed innovation response to common demand shocks arises naturally from a model of endogenous innovation and competition with firm heterogeneity. The market size increase drives all firms to innovate more by increasing the innovation rents; yet by inducing more entry and thus more competition, it also discourages innovation by low productivity firms.
    Keywords: innovation, export, demand shocks, patents
    JEL: D21 F13 F14 F41 O30 O47
    Date: 2019–10
  5. By: Marco Rossi (Department of Social Sciences and Economics, Sapienza University of Rome (IT))
    Abstract: In this paper we studied the implications for welfare of an increasing share of adults in the population of cannabis. This demographic process is already significant in Italy, which is leading European greying: a decrease in birth rate and youth, and an increasing proportion of older people in the general population. We make the hypothesis here that adult users are going through a process of social integration and normalization, by which they are changing their patterns of use and socio-economic status. In order to verify the empirical relevance of the share of adults and the above hypotheses, we interviewed a targeted, non- representative, sample of cannabis users, namely visitors at the biggest Italian cannabis fair. Our data suggest that the role and weight of adults in the cannabis market is quantitatively significant and qualitatively different from that of younger people. We analyzed the links between the aging issue and the views supporting cannabis market restrictions (defined as paternalism, economics externalities, and moral externalities). Finally, we developed a very stylized model to see how the benefit of cannabis market restrictions decreases as the share of adults in the cannabis user population increases.
    Keywords: cannabis, aging, normalization, social integration, paternalism, externalities, welfare, regulation.
    JEL: E31 E52 E64
    Date: 2019–11
  6. By: Gustafsson, Johan (Department of Economics, Umeå University); Holmberg, Johan (Department of Economics, Umeå University)
    Abstract: This paper analyzes the dynamics of earnings over the life-cycle, based on Swedish data, and the evolution of permanent and transitory earnings inequality for 2002-2015. We use data on earnings from administrative records gathered in the ASTRID database. We find that features of the data does not match the predictions of the heterogeneous or restricted income profile models commonly applied in the earning dynamics literature and estimate an alternative permanent- transitory (PT) error components model. Analyzing the covariance structure of both male and female earnings, controlling for educational background, we find that the upward trend in permanent earnings inequality observed in Sweden during the 1990s does not seem to continue during the 2000s, and the financial crisis of 2008 did not have any major impact on the variability of earnings. We further simulate the accumulation of income pension entitlements and find that variations in pension entitlements is smaller among college educated workers.
    Keywords: Permanent-transitory; Income pension entitlements; earning dynamics; life-cycle inequality
    JEL: D31 H55 J30
    Date: 2019–10–22
  7. By: Mense, Andreas; Michelsen, Claus; Cholodilin, Konstantin
    Abstract: This paper studies market segmentation that arises from the introduction of a price ceiling in the market for rental housing. When part of the market faces rent control, theory predicts an increase of free-market rents, a consequence of misallocation of households to housing units. We study a large-scale policy intervention in the German housing market in 2015 to document this mechanism empirically. To identify the effect we rely on temporal variation in treatment dates, combined with a difference-in-differences setup and a discontinuity-intime design. By taking a short-run perspective, we are able to isolate the misallocation mechanism from other types of spillovers. We find a robust positive effect on free-market rents in response to the introduction of rent control. Further, we document that rent control reduced the propensity to move house within rent controlled areas, but only among highincome households. Interpreted through the lens of our theoretical model, this spillover is a clear sign of misallocation. Further, we document that the spillover brings forward demolitions of old, ramshackle buildings.
    Keywords: misallocation,price ceilings,rent control,spillovers
    JEL: D2 D4 R31
    Date: 2019
  8. By: Bauer, Thomas K.; Rulff, Christian; Tamminga, Michael M.
    Abstract: This paper analyzes the determinants of internal migration in Germany. Using data on the NUTS-3 level for different age groups and Pseudo-Poisson Maximum Likelihood (PPML) gravity models, the empirical analysis focuses on the relevant push and pull factors of internal migration over the life cycle. Labor market variables appear to be most powerful in explaining interregional migration, especially for the younger cohorts. Furthermore, internal migrants show heterogeneous migration behavior across age groups. In particular the largest group, which is also the youngest, migrates predominantly into urban areas, whereas the oldest groups chose to move to rural regions. This kind of clustering reinforces preexisting regional heterogeneity of demographic change.
    Keywords: internal migration,gravity model,demographic polarization
    JEL: R23 J11 O18
    Date: 2019
  9. By: Freiwald, Nisa E. (Goethe Business School, Goethe University Frankfurt); Juranek, Steffen (Dept. of Business and Management Science, Norwegian School of Economics); Walz, Uwe (Faculty of Economics and Business, Goethe University Frankfurt)
    Abstract: We analyze the allocation of ownership in a franchise system by focusing on location-specific characteristics of the outlets. This study uses a comprehensive data set on McDonald’s restaurants in Germany to investigate the drivers of the decision on whether outlets are companyowned or franchised. We find strong evidence for the repeat-customer hypothesis by showing that outlets are significantly more likely to be company-owned when they are located at places with relatively few repeat customers.We observe the same for outlets that are closer to McDonald’s headquarters. Finally, we find pronounced clustering of multi-unit franchisees.
    Keywords: Franchising; dual distribution; agency theory; geo-locational data; economic geography
    JEL: L24 L81
    Date: 2019–10–29
  10. By: Maria Rosaria Alfano (Università degli Studi della Campania); Claudia Cantabene (Università degli Studi della Campania); Damiano Bruno Silipo (Università della Calabria)
    Abstract: We use a unique and unexplored dataset to investigate the determinants and effects of mafia firms in Italy. Mafia may use several tools to expand its firms. However, in this paper, we show that they prefer political corruption to violence to expand mafia firms. In particular, they use the latter more to build up their reputation in new established regions. Mafia firms hamper entrepreneurial activity but they can have beneficial effects on unemployment if mafia firms add to not substitute current economic activities. Policy makers should take account of this twofold effects of mafia firms.
    Keywords: Organized Crime, Mafia Firm, Mafia and Development
    JEL: D02 K14 L11
    Date: 2019–10
  11. By: Ariu, Andrea; Nilsson Hakkala, Katariina; Jensen, J. Bradford; Tamminen, Saara
    Abstract: Abstract This paper uses unique Finnish firm-level micro data on service imports, workforce composition, and firm characteristics to examine changes in employment composition and performance of Finnish service importers during a period of a significant increase in services imports (2002–2012). We use world service export supply shocks, which we allocate to firms based on their highly specialized service input structure, as an instrument to identify the impact of service offshoring. We find that firms that increase imports of service inputs reduce employment of low-skill service workers, increase employment of (high-skilled) managers, and improve their performance in terms of sales (turnover), assets, service exports, and firm survival. The employment composition and performance responses to service imports differ across firms in the manufacturing sector and those in the service sector.
    Keywords: Service offshoring, Employment, Firm performance
    JEL: F10 F14 L80
    Date: 2019–10–30
  12. By: Bedin, Andrea; Billio, Monica; Costola, Michele; Pelizzon, Loriana
    Abstract: We investigate the default probability, recovery rates and loss distribution of a portfolio of securitised loans granted to Italian small and medium enterprises (SMEs). To this end, we use loan level data information provided by the European DataWarehouse platform and employ a logistic regression to estimate the company default probability. We include loan-level default probabilities and recovery rates to estimate the loss distribution of the underlying assets. We find that bank securitised loans are less risky, compared to the average bank lending to small and medium enterprises.
    Keywords: credit scoring,probability of default,small and medium enterprises,asset-backed securities
    Date: 2019
  13. By: Spodniak, Petr; Ollikka, Kimmo; Honkapuro, Samuli
    Abstract: Electricity wholesale markets are undergoing rapid transformation due to the increasing share of distributed and variable renewable energy sources (vRES) penetrating the market. The increasing shares of stochastic wind generation bring along greater deviations between the real time power generation and the day-ahead forecasts of power supply. It is therefore reasonable to assume that trading activity is shifting more from the traditionally dominant day-ahead market into the intra-day and regulating power markets. This is because predicting vRES power generation closer to the actual delivery is more reliable and because power generators are motivated to avoid high imbalance costs. We study price spreads between day-ahead, intra-day and regulating power markets in three Nordic countries (Denmark, Sweden and Finland) during 2013-2017. We estimate vector autoregressive (VAR) models to study the interrelationships between the price spreads and the effects of wind forecast and demand forecast errors, and other exogenous variables, such as transmission congestions and hydrological conditions, on price spreads in different Nord Pool bidding areas. We use the variation in the shares of wind power between bidding areas to analyse the impacts of increased shares of wind power on different market places. We find that wind forecast errors do affect price spreads in areas with large shares of wind power generation. Moreover, demand forecast errors have an impact on almost all price spreads, except in areas with relatively low consumption. Our results indicate that increasing shares of wind power are, indeed, changing the relevance of different market places. Markets closer to real time are playing more important role than in the past.
    Keywords: Electricity market, Nordic, Wind forecast, Demand forecast, Environment, energy and climate policy, D47, L94, Q41,
    Date: 2019
  14. By: Fauser, Hannes
    JEL: D12 D31 D63 H26
    Date: 2019
  15. By: Yvonne-Beatrice Böhler; Christian Lamping; Philipp Christoph Wichard; Philipp Christoph Wichardt
    Abstract: This paper reports the results from a statistical analysis of pharmaceutical price negotiations in Germany, where the pricing system was changed in 2011 in order to tie prices more to the benefits of the pharmaceuticals. A multiple linear regression of 187 pharmaceuticals which were assessed from 2011 to 2017 suggests that, despite the change, the manufacturers' launch strategy (freely chosen first year price) still has a major impact on pricing while the impact of the additional benefit remains comparably small. Moreover, the data suggest that the assessment of the Federal Joint Committee - while not yet existing at the point - best explains the manufacturer's launch strategy, indicating that manufacturers know more than they reveal.
    Keywords: AMNOG, early benefit, assessment, pharmaceuticals
    JEL: I10
    Date: 2019
  16. By: Bräuer, Richard; Mertens, Matthias; Slavtchev, Viktor
    Abstract: This study analyses empirically the effects of import competition on firm productivity (TFPQ) using administrative firm-level panel data from German manufacturing. We find that only import competition from high-income countries is associated with positive incentives for firms to invest in productivity improvement, whereas import competition from middle- and low-income countries is not. To rationalise these findings, we further look at the characteristics of imports from the two types of countries and the effects on R&D, employment and sales. We provide evidence that imports from high-income countries are relatively capital-intensive and technologically more sophisticated goods, at which German firms tend to be relatively good. Costly investment in productivity appears feasible reaction to such type of competition and we find no evidence for downscaling. Imports from middle- and low-wage countries are relatively labour-intensive and technologically less sophisticated goods, at which German firms tend to generally be at disadvantage. In this case, there are no incentives to invest in innovation and productivity and firms tend to decline in sales and employment.
    Keywords: productivity,multi-product firms,import competition
    JEL: D22 D24 F10 F14 F60 F61 L25
    Date: 2019
  17. By: Laliotis, I.; Moscelli, G.; Monastiriotis, V.
    Abstract: Although is commonly understood that light conditions affect driving behaviour, detailed evidence is scarce especially for EU countries. In this paper we use the exogenous variation in daylight caused by Daylight Saving Time (DST) shifts to examine the role of light conditions on vehicle accidents. We use a rich dataset from Greek administrative data covering the universe of all types of recorded vehicle accidents over the period between 01 January 2006 to 31 December 2016. Relying on a regression discontinuity design we attempt to provide a causal evaluation regarding the impact of exogenous time shifts on the number of vehicle crashes. Our results are supportive of an ambient light mechanism that reduces the counts of serious vehicle accidents during the Spring transitions and increases the count of minor ones during the Fall transition, especially during the most impacted hours within the day. We discuss the implications of our study both for the importance of light ambience conditions for car accidents and for the particular case of the adoption and preservation of DST policies.
    Date: 2019
  18. By: Niebuhr, Annekatrin; Peters, Jan Cornelius; Schmidke, Alex
    JEL: D22 O31 R12
    Date: 2019
  19. By: Jäger, Philipp; Giesecke, Matthias
    JEL: H24 H55 J14 J22 J26
    Date: 2019
  20. By: Backhaus, Teresa; Müller, Kai-Uwe
    JEL: J31 D31 J00
    Date: 2019
  21. By: Iammarino, Simona; Guy, Frederick; Filippetti, Andrea
    Abstract: This paper investigates one particular aspect of human capital formation: the relative effectiveness of training, as reflected in its effect on the probability of securing continued employment during the recent financial crisis. It uses a panel of 3983 individuals for the period 2008–11 and focuses on how the effects of training differ between the South and the North of Italy and across workers with different levels of education. The most striking result is that the effect of training on continued employment is notably stronger in the South than in the North of the country.
    Keywords: training in employment; South and North of Italy; education; economic crisis; Intra-European Fellowship; FP7-PEOPLE-2011-IEF-298167-REGIO_SPIN; PIEF-GA-2011-298167
    JEL: J2 R1 R23
    Date: 2019–02–01
  22. By: Zimmert, Franziska
    JEL: J21 J22
    Date: 2019
  23. By: Caliendo, Marco
    JEL: J68 I12 I18 H51
    Date: 2019
  24. By: Halse, Askill Harkjerr; Fridstrøm, Lasse
    Abstract: Is regional policy to blame for the negative economic return on many road projects, or can road investments give value for money also in remote areas? In Norway, a large majority of planned road projects have negative net benefits according to cost-benefit analysis (CBA). In this paper, we point at geographic characteristics that can explain this, comparing Norway with its neighbors Sweden and Denmark. We then show econometric evidence that such factors also explain a substantial part of the variation in the benefit-cost ratio within Norway. Projects in areas that are far from the largest cities or have difficult topography have lower net benefits. This implies that there is a trade-off between economic efficiency and investing in roads in rural areas with difficult topography. We also discuss the role of road design requirements, decision-making processes and the electoral system for road investment policy.
    Keywords: Cost-benefit analysis, road investments, regional policy, distributive politics
    JEL: D61 D7 D72 R42
    Date: 2019–01–04
  25. By: Pannenberg, Markus; Friehe, Tim
    JEL: D01 D91 J14
    Date: 2019
  26. By: Christofzik, Désirée
    JEL: H83 H71 H72
    Date: 2019
  27. By: Holger Graf (Friedrich Schiller University Jena, Economics Department); Tom Broekel (University of Stavanger, Business School, Stavanger, Norway, and Centre for Regional and Innovation Economics, University of Bremen, Germany)
    Abstract: Cluster policies are often intended and designed to promote interaction in R&D among co-located organisations, as local knowledge interactions are perceived to be underdeveloped. In contrast to the popularity of the policy measure little is known about its impact on knowledge networks, because most scientific evaluations focus on impacts at the firm level. Using the example of the BioRegio contest, we explore cluster policy effects on local patent co-application and co-invention networks observed from 1985 to 2013, in 13 German regions. We find that the initiative increases network size and innovation activities during the funding period but not afterwards. The impact of the BioRegio contest on network cohesion is moderate. In contrast, general project-based R&D subsidisation is found to support cohesion more robustly.
    Keywords: Cluster Policy, Knowledge Networks, Network Analysis, Patent Data, Regional Innovation, Policy Evaluation
    JEL: O31 Z13
    Date: 2019–10–09
  28. By: Gangl, Selina; Huber, Martin
    JEL: J13 J18 J21 J22
    Date: 2019
  29. By: Marco Caliendo (University of Potsdam, IZA Bonn, DIW Berlin, IAB Nuremberg); Steffen Künn (Maastricht University and ROA, The Netherlands, IZA Bonn); Martin Weißenberger (University of Potsdam)
    Abstract: From an active labor market policy perspective, start-up subsidies for unemployed individuals are very effective in improving long-term labor market outcomes for participants. From a business perspective, however, the assessment of these public programs is less clear since they might attract individuals with low entrepreneurial abilities and produce businesses with low survival rates and little contribution to job creation, economic growth, and innovation. In this paper, we use a rich data set to compare participants of a German start-up subsidy program for unemployed individuals to a group of regular founders who started from nonunemployment and did not receive the subsidy. The data allows us to analyze their business performance up until 40 months after business formation. We find that formerly subsidized founders lag behind not only in survival and job creation, but especially also in innovation activities. The gaps in these business outcomes are relatively constant or even widening over time. Hence, we do not see any indication of catching up in the longer run. While the gap in survival can be entirely explained by initial differences in observable start-up characteristics, the gap in business development remains and seems to be the result of restricted access to capital as well as differential business strategies and dynamics. Considering these conflicting results for the assessment of the subsidy program from an ALMP and business perspective, policy makers need to carefully weigh the costs and benefits of such a strategy to find the right policy mix.
    Keywords: Entrepreneurship, Start-up Subsidies, Business Growth, Innovation, Job Creation
    JEL: L26 M13 J68
    Date: 2019–10
  30. By: Frenzel Baudisch, Coletta; Dresselhaus, Carolin
    JEL: H20 H22 H77 R33
    Date: 2019
  31. By: Justin van de Ven (National Institute of Economic and Social Research (NIESR), London, UK); Nicolas Hérault (Melbourne Institute: Applied Economic & Social Research, The University of Melbourne)
    Abstract: An issue of interest in the literature that explores the drivers of inequality is the distributional bearing of tax and transfer policy, where an important theme concerns changes in the relative treatment of alternative population subgroups. We develop an empirical approach for quantifying the value judgements implicit in the relative treatment of demographic subgroups by a tax and transfer system. We apply this approach to UK data reported at annual intervals between 1968 and 2015, documenting remarkable improvements in tax and transfer treatment enjoyed by some population subgroups – particularly families with children and age pensioners – relative to the wider population. We show that accounting for the changing value judgements implicit in tax and transfer policy provides a fresh perspective on the evolution of income inequality and redistribution; one that departs from the prevailing view that UK inequality stopped rising from the early 1990s.
    Keywords: equivalence scale, inequality, redistribution, horizontal equity
    JEL: D31 H23 I38
    Date: 2019–06
  32. By: Donna K. Ginther; Astrid L. Grasdal; Robert A. Pollak
    Abstract: We find substantial and statistically significant detrimental effects of fathers' multiple-partner fertility (MPF) on children's educational outcomes. We focus on children in fathers’ “second families” when the second families are nuclear families – households consisting of a man, a woman, their joint children, and no other children. We analyze outcomes for almost 75,000 Norwegian children, all of whom, until they were at least age 18, lived in nuclear families. Controlling for a rich set of socioeconomic variables, we find that children who spent their entire childhoods in nuclear families but whose fathers had children from a previous relationship living elsewhere were 4 percentage points more likely to drop out of secondary school and 5 percentage points less likely to obtain a bachelor's degree than children in nuclear families without fathers’ MPF. Resource competition due to economic and caregiving responsibilities for children living elsewhere does not explain the differences in educational outcomes. We do find that children in nuclear families whose fathers had previous childless marriages have educational outcomes that are similar to those of fathers with MPF. Our analysis suggests that the effects of fathers' MPF are primarily due to selection.
    Keywords: family structure, nuclear families, complex families, siblings, educational outcomes
    Date: 2019–10
  33. By: Hasan, Ifthekhar; Noth, Felix; Tonzer, Lena
    Abstract: This paper investigates whether cultural norms shaped by religion drive consumer decisions after a corporate scandal. We exploit the unexpected notice of violation by the US Environmental Protection Agency in September 2015, accusing the car producer Volkswagen (VW) to have used software to manipulate car emission values during test phases. Using a difference-in-difference model, we show that new registrations of VW (diesel) cars decline significantly in German counties with a high share of Protestants following the VW scandal. Our results suggest that the enforcement culture rooted in Protestantism affects consumer decisions and penalises corporate fraud.
    Keywords: religion,corporate scandal,consumer choice,climate change
    JEL: D12 O30 Q50 Z12
    Date: 2019
  34. By: Engelmann, Dirk; Janeba, Eckhard; Mechtenberg, Lydia; Wehrhöfer, Nils
    JEL: H21
    Date: 2019
  35. By: Kuuppelomäki, Tiina; Kortelainen, Mika; Suhonen, Tuomo; Virtanen, Hanna
    Abstract: This paper explores the effects of university quality in STEM education by examining the consequences of admission to Finland’s most competitive engineering school for students' performance in their studies and the labor market. Using data from the centralized admission system for engineering degree programs, we estimate these effects for marginally admitted elite school applicants who also applied to and had the opportunity to be admitted to a less competitive engineering school. Our results show that being accepted by the elite engineering school leads to a more advantaged initial peer group and a sharply higher probability of eventually graduating from that elite school but does not, on average, result in significantly better early-career labor market outcomes. However, we find that admission to the elite school significantly increases the earnings of students whose parents are not highly educated.
    Keywords: return to school quality, higher education, STEM, regression discontinuity design, Labour markets and education, I23, I26, J24,
    Date: 2019

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