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on Microeconomic European Issues |
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Issue of 2019‒11‒18
28 papers chosen by Giuseppe Marotta Università degli Studi di Modena e Reggio Emilia |
| By: | Emanuele Ciani (Bank of Italy); Adele Grompone (Bank of Italy); Elisabetta Olivieri (Bank of Italy) |
| Abstract: | We provide new evidence on the effectiveness of hiring subsidies that target the long-term unemployed, analysing a generous policy that was in force until the end of 2014 in Italy. Unlike others of its kind, this policy was particularly ambitious as it encouraged only permanent employment, which at the time still benefited from strong employment protection legislation. To achieve identification, we use a triple difference estimator, where we exploit three sources of variation: (i) the subsidy was only for the long-term unemployed and not for the short-term unemployed; (ii) it was significantly more generous in the South; (iii) it was in place until 2014. We find that the relative probability of eligible individuals in the southern regions of finding a permanent job dropped after the program terminated. This effect does not seem to be driven by substitutions over time, across contracts or among jobseekers. A cost-benefit analysis shows that the policy was globally in surplus. |
| Keywords: | long-term unemployment, triple difference estimator, employment subsidies, place-based policy, regional disparities |
| JEL: | H25 J08 J64 R23 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1249_19&r=all |
| By: | Salvador Barrios (European Commission - JRC); Cecile Denis; Viginta Ivaskaite-Tamosiune (European Commission - JRC); Adriana Reut; Estefania Vazquez Torres (European Commission - JRC) |
| Abstract: | Tax incentives favouring homeownership are widely used in developed economies. Homeownership is often thought to bring a number of positive contributions, from the promotion of households´ saving to enhanced community engagement. However, housing tax incentives are also considered as a major source of distortions for households´ decisions, especially in absence of taxation of in-kind services related to housing consumption (i.e. imputed rents) and in presence of mortgage interest payment deductibility. These distortions can have wide-ranging consequences for investment, consumption and public finances. Housing tax distortions have rarely been analysed from a cross-country perspective over time, however, not least because of the absence of comparable data and the difficulty to gather detailed information on the specific tax treatment of homeownership. In this paper we aim to fill this gap by providing comparable time series on the main features of housing taxation in European countries. Our database includes information on transfer taxes incurred when buying a house, implicit recurrent property taxes owed by households, capital gain taxes, imputed rent taxation and mortgage interest tax reliefs. The data is provided for the period 1995-2017 by the time of writing this paper and will be updated annually and made available at the following website: https://ec.europa.eu/jrc/en/thematic-research-fiscal-policy/housing-taxation. We use this data to estimate the user cost of owner-occupied housing (UCOH) following the approach proposed by Poterba, (1992) and Poterba and Sinai (2008), which provides a synthetic indicator on the distortions exerted by the tax system on households´ housing investment choices. A number of additional data used to calculate the UCOH indicator, such as maximum loan to value ratio and maximum loan duration, interest rate for long-term government bonds, interest income tax and house price are also provided. |
| Keywords: | Housing taxation, database, user costs of housing, transfer tax, capital gains tax, mortgage interest tax relief, recurrent property tax, imputed rent taxation |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:taxref:201908&r=all |
| By: | Andrea Lamorgese (Bank of Italy); Dario Pellegrino (Bank of Italy) |
| Abstract: | Several stylized facts, such as the correlation between house prices and sales volumes, suggest the existence of downward price rigidity in real estate markets. In this paper we explore a potential explanation for this behaviour by testing whether initial purchase prices and homeowners’ appraisals of their dwellings show reference dependence. Using data from a sample of Italian households, we test whether - conditional on both observable and unobservable characteristics - homeowners appraise the value of their main dwelling differently depending on the price at which they purchased it. We find that homeowners expecting a loss do not adjust their appraisals significantly in response to downward market conditions while, for those expecting a gain, the appraisals are independent of the price at which they bought the home. While loss aversion is mildly higher among poorer and less educated households, we find strong evidence of it across all demographic groups in our sample. |
| Keywords: | loss aversion, prospect theory, housing market |
| JEL: | L10 R21 R31 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1248_19&r=all |
| By: | Lichter, Andreas; Löffler, Max; Siegloch, Sebastian |
| Abstract: | We investigate the long-run effects of government surveillance on civic capital and economic performance, studying the case of the Stasi in East Germany. Exploiting regional variation in the number of spies and administrative features of the system, we combine a border discontinuity design with an instrumental variables strategy to estimate the long-term, post-reunification effect of government surveillance. We find that a higher spying density led to persistently lower levels of interpersonal and institutional trust in post-reunification Germany. We also find substantial and long-lasting economic effects of Stasi surveillance, resulting in lower income, higher exposure to unemployment, and lower self-employment. |
| Keywords: | civic capital,government surveillance,trust,economic performance,East Germany |
| JEL: | H11 N34 N44 P20 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:19049&r=all |
| By: | Hellwig, Michael; Laser, Falk Hendrik |
| Abstract: | We analyze a large merger in the Dutch banking market during the financial crisis using disaggregated data. Based on a merger simulation model, we evaluate merger-induced changes in the interest rates for savings accounts. We find that the merging banks decreased interest rates by 3 to 5 percent and competitors by up to 1 percent. These anti-competitive effects translate into a loss of consumer welfare by roughly 69 million euros in 2010. We identify heterogeneous effects indicating that less educated consumers with lower savings are most affected. Our findings highlight the important role of competition policy during financial crisis mitigation. |
| Keywords: | antitrust,competition policy,merger analysis,state aid,retail banking,random-coefficients logit models,differentiated products |
| JEL: | D22 G21 G34 L11 L25 L40 L41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:19047&r=all |
| By: | Gerald J. Pruckner; Nicole Schneeweis; Thomas Schober; Martina Zweimüller |
| Abstract: | Research has shown that cognitive and non-cognitive skills, education and earnings decrease with birth order. Less is known about birth order effects on health. This paper provides a comprehensive analysis of the relationship between birth order, health at birth and in childhood, and parental health investment. High-quality administrative data on children born in Austria between 1984 and 2015 allow us to exploit within-family variation in birth order to account for confounding familylevel factors. In a sample of families with two to four children, we find statistically significant and quantitatively important birth order effects on health at birth and in primary school. These birth order effects are positive, in that later-born siblings are healthier than the first-born child, and increase with birth order. Consequently, first-born children are more likely to consume medical drugs and to utilize inpatient and outpatient medical services. We also find significant birth order differences in parental health investment. Compared to their later-born siblings, first-born children are more likely to receive preventive medical care and immunization against measles, mumps, and rubella. |
| Keywords: | Birth order, parental health investment, parental health behavior, health at birth, health in childhood, health care utilization |
| JEL: | I10 I12 I14 J12 J13 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2019_16&r=all |
| By: | Nicola Curci (Bank of Italy); Marco Savegnago (Bank of Italy) |
| Abstract: | We assess how a tax shift from labour to consumption affects the Italian tax-benefit system in terms of the efficiency-equity trade-off. We designed three budget-neutral scenarios, where the revenues generated by increasing VAT rates are used to finance some alternative cuts in direct taxes. In all the scenarios, the trade-off is confirmed: efficiency increases but equity decreases. However, the scenario best positioned in the trade-off is the one providing an increase in labour income tax credits: in this case, the increase in efficiency is the highest and the decrease in equity is the lowest. We also account for the distribution of winners and losers following this reform. We show that, even if the losers are mostly concentrated in the lowest part of the equivalent income distribution, the recently introduced minimum income schemes provide these households with a benefit that is much higher than the loss generated by the tax shift. |
| Keywords: | microsimulation model, redistribution, efficiency, taxation, progressivity |
| JEL: | H22 H23 H31 C15 C63 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1244_19&r=all |
| By: | Michele Belloni (University of Turin; NETSPAR; CeRP-Collegio Carlo Alberto); Irene Simonetti (Department of Economics, University Of Venice Cà Foscari); Francesca Zantomio (Department of Economics, University Of Venice Cà Foscari; CRIEP; Health Econometrics and Data Group (York)) |
| Abstract: | Based on administrative data covering employment, social security and hospital record histories, we investigate the effect of acute cardiovascular health shocks resulting in unplanned hospitalisation, on blue collars’ long-term labour outcomes in Italy. The Italian institutional setting, characterised by a highly regulated labour market and high job protection, is different from that of countries – mainly Nordic and Anglo-Saxon – covered in previous studies. We apply matching and parametric regression techniques to remove possible bias arising from observable and time-invariant unobservable confounders. Results point at sizeable and persistent reductions in employment and labour income, while hours and wage adjustments appear limited. Whereas a relatively generous social insurance system might compensate the earnings loss, our findings question the appropriateness of existing labour inclusion policies. |
| Keywords: | Health shocks, employment, labour market institutions, administrative data |
| JEL: | I10 J22 J24 J31 C14 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2019:32&r=all |
| By: | An Thu Ta (Department of Economics, University of Sheffield) |
| Abstract: | Do people adapt to disability? Little work has examined hedonic adaptation to disability, especially by looking at physical and mental disability separately. This study is the first to investigate the effect of physical, mental, and general disability on subjective well-being (SWB) and focus on the phenomenon of hedonic adaptation, conditional on an observed reduction in SWB at onset of disability, and its heterogeneity across age at onset and gender. Using a fixed effects (FE) lag model, this study analyses data from the UK Household Longitudinal Study (UKHLS) 2009-2018. The main sample in this study is restricted to only those individuals who reported a drop in SWB at onset. Furthermore, the analysis looks at heterogeneity across genders and age at onset. The results show that mental disability has larger negative impacts on SWB than physical disability. There is evidence of partial adaptation (20% to 80%) to both physical and mental disability at three years or more after onset conditional on an observed reduction in SWB at onset. Regarding adaptation after onset, across most age groups, there is no evidence for adaptation to disability. The exception is the youngest onset group, which partially adapt to general disability after three or more years after onset. There appears to be no difference in hedonic adaptation to physical and mental disability by gender. |
| Keywords: | Adaptation; Well-being; Subjective Well-being; Disability; General Disability; Physical Disability; Mental Disability; Life Satisfaction |
| JEL: | D63 I3 I31 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2019020&r=all |
| By: | Maddalena Galardo (Bank of Italy); Maurizio Lozzi (Bank of Italy); Paolo Emilio Mistrulli (Bank of Italy) |
| Abstract: | Despite social capital being widely acknowledged as a key factor in the functioning of financial markets, the evidence on the channels through which it operates is still scant. In this paper we isolate one possible channel and investigate whether social capital plays a role in mitigating the impact of uncertainty shocks on bank credit supply. We exploit both the huge rise in the level of uncertainty that followed the Lehman Brothers default and a very granular and rich loan-level dataset from the Italian Credit register that allows us to clearly disentangle demand and supply factors. We find that social capital makes credit markets more resilient to uncertainty shocks, especially when informational asymmetries between banks and borrowers are more severe. |
| Keywords: | credit supply, uncertainty, social capital, trust, loan applications |
| JEL: | A13 G01 G2 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1245_19&r=all |
| By: | Adamopoulou, Effrosyni (University of Mannheim); Kaya, Ezgi (Cardiff Business School) |
| Abstract: | This paper explores the impact of the 2007 European Union enlargement on the consumption behavior of immigrant households. Using data from a unique Italian survey and a difference-in-differences approach, we find that the enlargement induced a significant consumption increase for the immigrant households from new member states both in the short- and in the medium-run. This enlargement effect cannot be attributed to the mere legalization as it concerns both undocumented and documented immigrants, albeit through different channels. Detailed information on immigrants' legal status (undocumented/documented) and sector of employment (informal/formal) allows us to shed light on the exact mechanisms. Following the enlargement, previously undocumented immigrants experienced an increase in the labor income by moving from the informal towards the formal economy, whereas immigrants who were already working legally in Italy benefitted from the increased probability of getting a permanent contract. Enhanced employment stability in turn reduced the uncertainty about future labor income leading to an increase in documented immigrants' consumption expenditure. |
| Keywords: | consumption; citizenship; informality; (un)documented immigrants; work permit |
| JEL: | D12 E21 F22 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2019/16&r=all |
| By: | Michał Brzeziński (Faculty of Economic Sciences, University of Warsaw); Michał Myck (Centre for Economic Analysis); Mateusz Najsztub (Centre for Economic Analysis) |
| Abstract: | We use Pareto imputation, survey reweighting, and microsimulation methods applied to combined household survey and tax return data to reevaluate distributional consequences of the post-socialist transition in Poland. Our approach results in the first estimates of top-corrected inequality trends for real equivalized disposable incomes over the years 1994-2015. We find that the top-corrected Gini coefficient grew by 14-26% more compared to the unadjusted survey-based estimates. This implies that over the last three decades Poland has become one of the most unequal European countries among those for which top-corrected inequality estimates exist. The highest-income earners benefited the most during the post-socialist transformation: the annual rate of in-come growth for the top 5% of the population exceeded 3.5%, while the median income grew by about 2.5%. |
| Keywords: | income inequality, Gini index, top income shares, tax record, survey data, Pareto distribution, Poland |
| JEL: | D31 D63 C46 P36 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2019-18&r=all |
| By: | Pujol, Ferran Espuny; Hancock, Ruth; Hviid, Morten; Morciano, Marcello; Pudney, Stephen |
| Abstract: | We investigate the impact of exogenous local conditions which favour high market concentration on supply, price and quality in local markets for care homes for older people in England. We extend the existing literature in: (i) considering supply capacity as a market outcome alongside price and quality; (ii) taking account of the chain structure of care home supply and differences between the nursing home and residential care home sectors; (iii) introducing a new econometric approach based on reduced form relationships that treats market concentration as a jointly-determined outcome of a complex contested market. We find that areas susceptible to a high degree of market concentration tend to have greatly restricted supply of care home places and (to a lesser extent) a higher average public cost, than areas susceptible to low degree of market concentration. There is no significant evidence that conditions favouring high market concentration affect average care home quality. |
| Date: | 2019–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2019-10&r=all |
| By: | David L. Rigby; Christoph Roesler; Dieter Kogler; Ron Boschma; Pierre-Alexandre Balland |
| Abstract: | Smart specialization was conceived as a “bottom-up†framework to identify new growth paths connected to the existing knowledge cores of regions. Operationalization of smart specialization has proven difficult, though a recent “mapping†of technologies in terms of knowledge relatedness and complexity suggests a useful cost-benefit framework. We extend these ideas, locating EU cities in a smart specialization space and tracking their development of alternative technologies over the period 1981 to 2015. Panel models show employment growth and GDP growth are faster in cities that exhibit a logic of technological development consistent with the tenets of smart specialization. |
| Keywords: | smart specialization, policy, complexity, technological relatedness, European Union |
| JEL: | O25 O38 R11 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1931&r=all |
| By: | Colin Green; Likun Mao; Vincent O'Sullivan |
| Abstract: | Cognitive decline amongst older people is associated with poor health and lower quality of life. Previous studies demonstrate that retirement is a particularly critical period for cognitive decline and highlight the importance of post-retirement behaviours. Using longitudinal data from the Survey of Health, Ageing and Retirement in Europe, this study examines the effect of information technology usage on cognitive function, focusing on one specific form: internet usage. We demonstrate that post-retirement internet usage is associated with substantially higher scores on cognitive tests. To address the endogenous relationship between cognitive function and IT usage, we use pre-retirement computer exposure as a source of exogenous variation. Our IV results suggest smaller but still substantial moderating effects of IT usage on the cognitive decline of retirees. These results are concentrated amongst people who worked in middle-skill occupations that experienced large-scale computerisation. More broadly, our results suggest a causal effect of computer usage on the cognitive function of retirees. |
| Keywords: | Cognitive function, internet, computers |
| JEL: | J14 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:280067410&r=all |
| By: | Ivanov, Boris; Pfeiffer, Friedhelm; Pohlan, Laura |
| Abstract: | In this paper we analyze the effects of a German job creation scheme (JCS) on the social integration and well-being of long-term unemployed individuals. Using linked survey and administrative data for participants and a group of matched non-participants, we find significant positive effects of being employed within this program. They are larger for individuals with health impairments and above-average duration of welfare dependence. The program effects decline over time, which cannot be explained by decreasing levels of well-being and social integration of the participants. Instead, this decrease is driven by a rising share of controls who find a job and catch up to similar outcome levels as program participants. Overall, our results suggest that JCSs can be an efficient labor market policy instrument to improve the quality of life of the long-term unemployed. |
| Keywords: | unemployment,active labor market policy,job creation schemes,wellbeing,social integration,matching |
| JEL: | I31 J64 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:19048&r=all |
| By: | Kieren, Pascal; Weber, Martin |
| Abstract: | In this study, we investigate the wealth decumulation decision from the perspective of a retiree who is averse to the prospect of fully annuitizing her accumulated savings. We field a large online survey of hypothetical product choices for phased drawdown offerings and annuities. While the demand for annuities remains low in our sample, we find significant demand for phased withdrawal products with equity-based asset allocations and flexible payout structures. Consistent with the product choice, the most important self-reported considerations for the wealth decumulation decision are low default risk in the products they purchase, the size of the withdrawal rates, and flexibility in the timing of their withdrawal. As determinants of the decision of how much wealth individuals are willing to draw down, we identify consumers' attitudes towards future economic conditions, the extent to which they are protected against longevity risk, and their desire to leave bequests. Policy implications are discussed. |
| Keywords: | retirement planning,phased withdrawal accounts,annuity puzzle |
| JEL: | D14 G2 H55 J14 J26 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cfswop:634&r=all |
| By: | Dany Bahar (Center for International Development at Harvard University); Andreas Hauptmann; Cem Özgüzel; Hillel Rapoport |
| Abstract: | During the early 1990s Germany offered temporary protection to over 700,000 Yugoslavian refugees fleeing war. By 2000, many had been repatriated. We exploit this natural experiment to investigate the role of migrants in post-conflict reconstruction in the former Yugoslavia, using exports as outcome. Using confidential social security data to capture intensity of refugee workers to German industries–and exogenous allocation rules for asylum seekers within Germany as instrument—we find an elasticity of exports to return migration between 0.08 to 0.24. Our results are stronger in knowledge-intensive industries and for workers in occupations intensive in analytical and managerial skills. |
| Keywords: | migration, refugees, knowledge diffusion, management, exports, productivity |
| JEL: | F14 F22 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:cid:wpfacu:120a&r=all |
| By: | Arianna Gatta (European University Institute); Francesco Mattioli (Bocconi University); Letizia Mencarini (Bocconi University); Daniele Vignoli (University of Florence) |
| Abstract: | OBJECTIVE: In this study we test whether perceived stability of employment and perceived resilience to potential job loss affect fertility intentions, net of individual level risk attitudes and considering variation in the local macroeconomic conditions. BACKGROUND: The role of employment uncertainty as a fertility driver has been explored in a number of studies with a limited set of constructs, and with inconclusive results. A key reason for this heterogeneous pattern is that scholars did not recognize the multidimensionality and the prospective nature of employment uncertainty. We address these oversights by considering two key dimensions of employment uncertainty: perceived stability of employment and perceived resilience to potential job loss. METHOD: Our study is conducted using the newly-released 2017 OECD Italian Trustlab survey and its built-in module on self-assessed employment uncertainty (N=521). We perform multivariate analysis using ordered logistic regression. RESULTS: Perception of employment resilience is a powerful predictor of fertility intentions, whereas perception of employment stability has only a limited impact. The observed relationship between resilience and fertility intentions is robust to the inclusion of person-specific risk attitude and it does not depend on aggregate-level variables, such as unemployment and fixed-term contract rates in the area of residence. CONCLUSION: With this paper, we argue that the notion of resilience is crucial for making sense of economic prospects in connection to fertility planning. |
| Keywords: | Employment Uncertainty; Fertility Intentions; Resilience; Stability; Italy; Trustlab survey |
| JEL: | J13 J21 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:fir:econom:wp2019_12&r=all |
| By: | Spasova, Tsvetana (University of Basel) |
| Abstract: | This work studies trends in income distributions and inequality in the Euro- pean Union using data from the European Union Statistics on Income and Living Conditions. We model the income distribution for each country under a Dagum distribution assumption and using maximum likelihood techniques. We use pa- rameter estimates to form distributions for regions defined as finite mixtures of the country distributions. Specifically, we study the groups of new" and old" countries depending on the year they joined the European Union. We provide formulae and estimates for the regional Gini coefficients and Lorenz curves and their decomposition for all the survey years from 2007 through 2011. Our esti- mates show that the new" European Union countries have become richer and less unequal over the observed years, while the old" ones have undergone a slight increase in inequality which is however not significant at conventional levels. |
| Keywords: | income distribution ; finite mixtures ; inequality ; Gini decomposition ; European Union |
| JEL: | D31 D63 C13 |
| Date: | 2019–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2019/18&r=all |
| By: | Jordi Perdiguero Garcia (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona); Alex Sanz (Departament d'Economia i Història Econòmica, Universitat Autonoma de Barcelona) |
| Abstract: | One of the main causes of mortality worldwide is air pollution. To tackle this problem, local, regional and national governments have implemented policies to reduce emissions from industrial and on-road sources. However, when these policies are being designed, shipping emissions are often overlooked. There has been a drastic increase in the demand for cruises and its economic relevance is also growing in port-cities. Barcelona is Europe’s leading cruise port, and it is located near the centre of the city. In this context, this paper analyses the impact of cruise ships in the air quality of the entire city of Barcelona using a dataset with information about pollutants and the number of cruises arriving to the port. We show that there is a direct impact between cruises staying at the port and city pollution. Additionally, the size and age of the cruise also affect air quality. The larger (or newer) the cruise is, the higher the emission generated. Moreover, our simulations show that the whole city is affected by these emissions. |
| Keywords: | Air pollution, Cruise ships emissions, Pollutants, Port externalities, Port of Barcelona, Urban air quality |
| JEL: | D62 L91 Q53 R49 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:uab:wprdea:wpdea1903&r=all |
| By: | R. deBruijne; G. M. Henley |
| Abstract: | This research investigated the impact of the Brexit Referendum on the value of real estate investment companies in the UK and the EU. In order to assess whether the Brexit Referendum imposed different effects between EU member states due to potential relocations from the UK to the EU, event studies are performed on a relocating sample and an on-relocating sample. There locating sample consists of companies from EU member states which are popular potential relocating locations. The non-relocating sample represents companies from the other EU member states. This study uses all publicly listed REIT sand REOCs in the UK and in the remaining 27 EU member states. In addition, the role of foreign exchange exposure on stock returns during the Brexit Referendum out comes is analysed. The results show that the Brexit Referendum imposed a significantly negative impact on companies incorporated in the UK. For EU incorporated companies no significant results have been found. In addition, no significant difference is observed for the potential relocating countries relative to the non-relocating countries. With respect to the role of foreign exchange exposure, the results show that geographic investment allocation and shareholder nationality significantly impacted the returns of real estate investment companies following the Brexit Referendum. |
| Keywords: | BREXIT; Event Study; real estate companies; referendum |
| JEL: | R3 |
| Date: | 2018–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:afr:wpaper:afres2018_115&r=all |
| By: | Liu, Lu (Imperial College and Bank of England) |
| Abstract: | This paper studies supply-side product pricing when consumers underreact to non-salient fees. Using comprehensive data on issued and offered mortgages in the UK, I document that lenders differ substantially in the fees they charge, and that borrowers appear less overall cost-sensitive to products with fees. In order to distinguish from demand factors such as unobservable preferences or product characteristics, I show that lenders pass on firm-specific funding cost shocks via fees, but not interest rates, consistent with strategic pricing of fees, and maintaining competitive prices in the salient price dimension, interest rates. I further find heterogeneity in pricing across lenders: those who rely on high fees tend to have higher funding cost, lower return on equity and larger branch networks, in line with a specialization equilibrium in which high-cost lenders are able to match with less cost-sensitive consumers. |
| Keywords: | Price dispersion; salience; strategic pricing; mortgages |
| JEL: | D12 D14 D18 G21 |
| Date: | 2019–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0819&r=all |
| By: | René Böheim; Christine Zulehner; Marian Fink |
| Abstract: | We examine the gender wage gap in Austria from 2005 to 2017 using data from EU-SILC. The raw wage gap declined from 18.6 log points in 2005 to 14.9 log points in 2017. We use standard decomposition techniques that correct for dierences in the distributions of human capital, and other variables, between men and women. All calculated decompositions indicate that the unexplained part of the gender wage gap decreased substantially over the last ten years. The decrease of the unexplained gender wage gap between the largest gap in this period (2006) and the most recent gap (2017) ranges from 3.7 log points to 8.5 log points depending on the decomposition approach. Using the approach developed by Neumark (1988), the corrected wage gap shrank from 8.7 (8.8) log points in 2005 (2006) to 5.1 log points in 2017. The main reason for the decline in wage dierences is the relative improvement of women's observed and unobserved characteristics. |
| Keywords: | gender wage dierentials, wage inequality, decomposition, EU-SILC |
| JEL: | J31 J71 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2019_18&r=all |
| By: | Mustafa Caglayan (Heriot Watt University, School of Social Sciences, Edinburgh, EH144AS, UK); Alessandro Flamini (University of Pavia); Babak Jahanshahi (University of Edinburgh) |
| Abstract: | We show that mafias harm technological development. We provide evidence that forced resettlement of bosses promoted mafias rooting in northern Italy. With forced resettlement as exogenous source of variation, we unveil that mafias cause a reduction in technology levels. Moving to a technology generating flow -innovation- we demonstrate that mafias stifle innovation. We argue that without mafia, Nature selects agents for their innovation capacity. Instead, with mafia, agents face an alternative strategy: relate with mafia; this strategy, infringing property rights and competition, hinders innovation. Using evolutionary dynamics, we show that while mafias decrease innovation, proper sanctions/indemnities can address the problem. |
| Keywords: | Organised crime, evolutionary game theory, innovation, technology |
| JEL: | O17 O30 C73 R11 K14 K42 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:2019-22&r=all |
| By: | Enrico Beretta (Banca d'Italia); Giovanna Firpo (Banca d'Italia); Andrea Migliardi (Banca d'Italia); Diego Scalise (Banca d'Italia) |
| Abstract: | The work analyses - using various domestic and international statistical sources - the structural characteristics of the vast Italian museum, monumental and archaeological heritage, comparing them with those of the other main European countries. The main critical issues in managing the heritage are illustrated, distinguishing between factors related to conservation, accessibility, orientation towards visitors and the ability to relate with external stakeholders. Employing the microdata made available by the Istat census surveys, we study the factors behind the performance of cultural institutions in different outcome areas. The results indicate first that, notwithstanding the improvement in recent years, the effectiveness of management of cultural heritage falls short of its potential. The econometric analysis of the determinants of museum performance suggests that greater autonomy (accounting, organizational, operational) tends to generally correspond to better results, regardless of the public or private nature of the institution. Net of the individual observable characteristics of cultural institutions, there is a positive correlation between the various performance indicators, indicating the absence of fundamental trade-offs between the various branches of activity of museum sites. The legislative measures that, since 2014, have conferred a special autonomy on some museums have contributed to improving the value and attractiveness of the sites concerned. |
| Keywords: | artistic heritage, museums performance |
| JEL: | L33 Z18 H42 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_524_19&r=all |
| By: | Ivlevs, Artjoms; Nikolova, Milena; Popova, Olga |
| Abstract: | After the collapse of Communism in Central and Eastern Europe, former party members were particularly likely to start businesses and become entrepreneurs. However, it remains unclear whether this entrepreneurial activity was driven by the resources, information and opportunities provided by former party membership or because people with specific individual attributes were more likely to become party members (self-selection). This study is the first to separate the causal effect of former Communist party membership from self-selection. Using individual-level Life in Transition–III survey and instrumental variables analysis, we find that, in Central and Eastern European countries, membership of former Communist party has facilitated business set-up but not business longevity. Our results also suggest evidence of negative self-selection, meaning that people who joined the former ruling party tended have fewer of the traits associated with entrepreneurship such as motivation, risk tolerance, and entrepreneurial spirit. We show that former Communist party membership still matters for business practices, business ethics, and the nature of doing business in transition economies. |
| Keywords: | communism,communist party,elite networks,entrepreneurship,post-socialist countries |
| JEL: | L26 P20 P31 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:423&r=all |
| By: | Sebastian Hinde (Centre for Health Economics, University of York, York, UK); Simon Walker (Centre for Health Economics, University of York, York, UK); Hugues Lortie-Forgues (Department of Education,University of York, York, UK) |
| Abstract: | In a UK policy context, education and healthcare sectors share many characteristics; however, the role of economic evaluation in informing policy making is very different. While in health it has become a key part of the deliberative processes of the National Institute for Health and Care Excellence (NICE) in their recommendations to the NHS, it has not played the same role in education. In this article we explore three key components that are required to underpin robust evaluations: a clear perspective, the identification of a single maximand, and recognition of the opportunity costs. We demonstrate the importance of each, how it has been applied in the NICE framework, and how it may be implemented in a UK education setting. We conclude that the failure in education to address the three components has reduced the ability to consider the cost-effectiveness of funding decisions, potentially resulting in inefficient use of educational funding. |
| Keywords: | Evaluation, economic evaluation, health economics, education, cost-effectiveness analysis |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:chy:respap:170cherp&r=all |