nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2020‒03‒09
nineteen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Income Distribution and the Fear of Crime: Evidence from Germany By Michelle Acampora; Conchita D'Ambrosio; Markus M. Grabka
  2. Fertility Decisions and Employment Protection: The Unintended Consequences of the Italian Jobs Act By De Paola, Maria; Nistico, Roberto; Scoppa, Vincenzo
  3. Measuring Unfair Inequality: Reconciling Equality of Opportunity and Freedom from Poverty By Paul Hufe; Ravi Kanbur; Andreas Peichl
  4. Energy use patterns in German manufacturing since 2003 By von Graevenitz, Kathrine; Rottner, Elisa
  5. Organized crime and women in politics: Evidence from a quasi-experiment in southern Italy By Baraldi, Anna Laura; Ronza, Carla
  6. Does retirement decrease the familiarity with ICT of older individuals? By Danilo Cavapozzi; Chiara Dal Bianco
  7. NEET rates convergence in Europe: A regional analysis By Laia Maynou; Javier Ordóñez; José Ignacio Silva
  8. Beware of the employer: Financial incentives for employees may fail to prolong old age employment By Lorenz, Svenja; Pfister, Mona; Zwick, Thomas
  9. Do Non-Resident Parents with Lower Labor Market Attachment React to Institutional Changes in Child Support Obligations? Evidence from IAB-PASS By Schaubert, Marianna; Hänisch, Carsten
  10. The Impact of the Bono Social de Electricidad on Energy Poverty in Spain By Guillermo García Alvarez; Richard S.J. Tol
  11. Heterogeneity and state dependence in firms’ access to credit: Microevidence from the euro area By Gabriele Angori; David Aristei
  12. Short-term Impacts of the GDPR on Firm Performance By Koski, Heli; Valmari, Nelli
  13. Firms Default Prediction with Machine Learning By Tesi Aliaj; Aris Anagnostopoulos; Stefano Piersanti
  14. Siblings' Effects on College and Major Choices: Evidence from Chile, Croatia and Sweden By Christopher Neilson; Adam Altmejd; Andres Barrios-Fernandez; Marin Drlje; Dejan Kovac
  15. The effects of the increase in the retirement age in the Netherlands By Egbert Jongen; Simon Rabaté; Tilbe Atav
  16. Local knowledge spillovers and innovation persistence of firms By Holl, Adelheid; Peters, Bettina; Rammer, Christian
  17. Employer provided training in Europe: Determinants and obstacles By Brunello, Giorgio; Wruuck, Patricia
  18. How do occupational relatedness and complexity condition employment dynamics in periods of growth and recession? By Emelie Hane-Weijman; Rikard H. Eriksson; David Rigby
  19. The Italian startup act: A microeconometric program evaluation By Biancalani, Francesco; Czarnitzki, Dirk; Riccaboni, Massimo

  1. By: Michelle Acampora; Conchita D'Ambrosio; Markus M. Grabka
    Abstract: We here explore the link between individual concerns about crime and the distribution of income in Germany. We make use of 1995-2017 microdata from the German Socio-Economic Panel (SOEP) to show that both individual polarization and relative deprivation have statistically-significant effects on reported concerns about crime, while relative satisfaction plays no role. At the aggregate level, the main driver is equally income polarization, whereas the standard measure of inequality, the Gini index, plays no significant role.
    Keywords: Concerns about crime, deprivation, inequality, polarization, SOEP
    JEL: I31 I32 D60
    Date: 2020
  2. By: De Paola, Maria (University of Calabria); Nistico, Roberto (University of Naples Federico II); Scoppa, Vincenzo (University of Calabria)
    Abstract: We study the effect of a reduction in employment protection on fertility decisions. Using data from the Italian Labor Force Survey for the years 2013-2018, we analyze how the propensity to have a child has been affected by the 2015 Labor Market Reform, the so-called "Jobs Act", which has essentially reduced the employment protection for large-firm employees and leaved largely unchanged that for small-firm ones. We employ a Difference-in-Differences identification strategy and compare the average change over time in fertility decisions of women employed in large firms with the average change experienced by women employed in small firms. We find that women exposed to the reduction in employment protection have a 1.4 percentage point lower probability of having a child than unexposed women. A battery of robustness checks confirms this finding. We document large heterogeneous effects by marital status, parity, geographic areas as well as by the level of education and wage. Our findings help understand the potential unintended consequences that reforms introducing more labor market flexibility have on fertility decisions by increasing insecurity on career prospects.
    Keywords: fertility, employment protection legislation, labor market reform, difference-in-differences
    JEL: J13 J65 J41 M51 C31
    Date: 2020–02
  3. By: Paul Hufe; Ravi Kanbur; Andreas Peichl
    Abstract: Empirical evidence on distributional preferences shows that people do not judge inequality as problematic per se but that they take the underlying sources of income differences into account. In contrast to this evidence, current measures of inequality do not adequately reflect these normative preferences. In this paper, we address this shortcoming by developing a new measure of unfair inequality that reconciles two idely-held fairness principles: equality of opportunity and freedom from poverty. We provide two empirical applications of our measure. First, we analyze the development of inequality in the US from 1969 to 2014 from a normative perspective. Second, we conduct a corresponding international comparison between the US and 31 European countries in 2010. Our results document increasing unfairness in the US over time. This trend is driven by a strong decrease in social mobility that puts the “land of opportunity” among the most unfair countries in 2010.
    Keywords: Inequality, equality of opportunity, poverty, fairness, measurement
    JEL: D31 D63 I32
    Date: 2020
  4. By: von Graevenitz, Kathrine; Rottner, Elisa
    Abstract: The manufacturing sector accounts for a substantial share of German GDP, employment and carbon emissions. Therefore, the manufacturing sector's energy use and carbon emissions are of crucial importance for reaching Germany's climate goals. In this paper, we analyse energy use patterns in German manufacturing between 2003 and 2014, using rich administrative micro-data. We find that although the manufacturing sector has been faced with rising energy costs as a share of total costs, energy use has not declined except briefly during the economic crisis. We also find that energy intensity in the manufacturing sector has not decreased substantially. In contrast, carbon intensity has fallen slightly between 2003 and 2014. This can be attributed to changes in the fuel mix.
    Keywords: Energy use,Fuel mix,Energy intensity,Carbon emissions,Manufacturing
    JEL: D22 L60 Q41
    Date: 2020
  5. By: Baraldi, Anna Laura; Ronza, Carla
    Abstract: This paper provides new and unexplored evidence of a negative link between an increasing female participation in politics and the infiltration of organized crime in government. We perform an empirical analysis of about 1,700 Southern Italian municipalities between 1985 and 2013 exploiting two Italian laws: law no. 164/1991, which allows measure of mafia infiltration in the Italian municipalities, and law no. 81/1993, which creates an exogenous source of variation in the share of women on the council that allows for correction of endogeneity bias. Increasing the female proportion on the city council of 10 percentage points reduces the probability of dissolution for mafia infiltration of about 1.8 p.p.; the result is confirmed when considering a female mayor. This negative effect remains across several robustness checks. This research adds a further reason in favour of the reduction of the gender gap in politics. In fact, policies aimed at legitimizing democracy, such as gender quotas in electoral law, also have the effect of strengthening institutions in the fight against organized crime, which is always a key government agenda.
    Keywords: organized crime, gender gap, quasi-experiments, panel probit model
    JEL: D72 D78 J16 K42
    Date: 2019–12–01
  6. By: Danilo Cavapozzi (Department of Economics, University Of Venice Cà Foscari); Chiara Dal Bianco (University of Padua)
    Abstract: Inability to cope with Information and Communication Technology (ICT) might represent a threat for older individuals’ social inclusion. This paper analyses the effect of retirement on the familiarity with ICT of older individuals. To account for the potential endogeneity of retirement with respect to ICT knowledge we instrument retirement decision with the age-eligibility for early and statutory retirement pension schemes. Using data from the Survey of Health Ageing and Retirement in Europe we show that retirement reduces the computer literacy and the frequency of internet utilization for men and women. This effect is heterogeneous for women with respect to their propensity to opt for early or statutory retirement schemes. The exit from the labour market does not reduce ICT familiarity for the former, but it does for the latter. The negative retirement effect on ICT knowledge is stronger for white-collar workers, whose occupations require a more intense use of these skills as compared with blue-collar jobs.
    Keywords: Computer use, internet, retirement, instrumental variables, compliers
    JEL: J14 J21 J24
    Date: 2020
  7. By: Laia Maynou (Department of Health Policy, London School of Economics and Political Science, UK); Javier Ordóñez (IEI and Department of Economics, Universitat Jaume I, Castellón, Spain); José Ignacio Silva (Department of Economics, Universitat de Girona, Spain)
    Abstract: In this paper, we study the convergence of the NEET rates (the rate of young people not in employment, education or training) across European regions between 2000 and 2015. First, we apply the Phillips and Sul (2007, 2009) convergence tests and identify the presence of four important clusters with different trends in the NEET rates. The first two clusters mainly include regions located in Western and Southern Europe and show an increase with respect to the average NEET but with different speed. The other two clusters mainly contain North and Central European regions showing constant NEET rates with respect but with different levels. Then, we use a spatial-temporal econometric model to confirm the presence of β–convergence in the NEET rates, identify their determinants in each cluster and calculate their long-run NEET rates. The young unemployment rate and the percentage of early leavers from education and training are the main determinants of the in all clusters.
    Keywords: convergence, European Union, youth unemployment, NEET
    JEL: C33 E23 J13
    Date: 2020
  8. By: Lorenz, Svenja; Pfister, Mona; Zwick, Thomas
    Abstract: This paper shows that increasing the normal retirement age and introducing pension deductions for retirement before normal retirement age in Germany did not prolong employment of older men. The reason for this surprising result is that employers encouraged their employees to use the bridge options unemployment or partial retirement instead of the early retirement option for the long-term insured. Bridge options allowed employers to terminate employment considerably earlier than the pension for long-term insured. Employers however had to compensate their employees for the substantially higher costs of the bridge options. Therefore mainly employers with high employment adaption costs induced employees to use a bridge option during the implementation phase of the pension reform.
    Keywords: cohort-specific pension reform,early retirement,partial retirement,unemployment,labor supply,labor demand
    JEL: J14 J18 J22 J26
    Date: 2020
  9. By: Schaubert, Marianna; Hänisch, Carsten
    Abstract: This paper investigates how parents who live apart from their children have responded to changes in the amount of the self-support reserves. Being financially able to pay maintenance is a precondition for the obligation to maintain children in Germany. Parents with incomes below the self-support reserve do not pay child support. In addition, the self-support reserve di ers for employed and unemployed parents. The difference between the two is considered to be a bonus for employment by competent courts, which they adjust over time. We exploited PASS panel data and individual fixed-effects models to observe parents' responses to these changes. We did not confirm the Higher Regional Courts' assertion that the increasing difference between the self-support reserves of employed and non-working parents is an incentive to work. Further, we found no evidence of any influence on attitudes towards the labor market or debt behavior.
    Keywords: Child support,low-income nonresidential fathers,child support guidelines,child support enforcement,labor supply,child support debt
    JEL: J08 J16 J18 K36
    Date: 2020
  10. By: Guillermo García Alvarez (Department of Economics, University of Sussex, Falmer, United Kingdom); Richard S.J. Tol (Department of Economics, University of Sussex, Falmer, United Kingdom)
    Abstract: The Bono Social de Electricidad (BSE) is a government programme, introduced in 2009, to reduce energy poverty in Spain. The BSE is a discount on the price of electricity, available to vulnerable households who applied. Applying differences-in-differences and propensity score matching to household data between 2008 and 2011, we find no statistically significant impact of the intention to treat on two indicators of energy poverty, viz. the ability to keep the house adequately warm, and the presence of damp walls, rotting windows and leaking roofs. This may be because eligible households did not apply. A third indicator, delays in paying electricity bills, showed a statistically significant deterioration. That is, the BSE has not reduced energy poverty, if anything it has made it worse. This is not because eligible households transferred income to relatives hit harder by the financial crises, but it may be because the BSE discount did not fully compensate for the cold of 2010.
    Keywords: Energy poverty, Spain, household data, policy evaluation, Bono Social de Electricidad
    JEL: I38 Q48
    Date: 2020–02
  11. By: Gabriele Angori (Università degli Studi di Ferrara); David Aristei (University of Perugia)
    Abstract: Using detailed firm-level longitudinal data, this paper analyses the main factors affecting firms’ access to bank credit in eleven euro area countries over the period 2014-2018. We focus on firms’ loan demand behaviour and on banks’ actual credit granting decision, using alternative measures of financing constraints and controlling for endogenous sample selection and individual heterogeneity. Furthermore, we explicitly analyse the dynamics of firms’ access to credit and account for state dependence in loan demand and credit rationing probabilities. Empirical results show that small and informationally opaque businesses, with deteriorated public support and credit history, experience greater difficulties in accessing to bank loans. Moreover, we provide evidence of significant state dependence in access to credit over time. In particular, firms having already experienced credit restrictions in the past are more likely to face further financing constraints, while enterprises that repeatedly recur to external financing seem to have an easier access to credit. Finally, focusing on the subset of firms that actually need bank financing, we find that previous credit restrictions significantly reduce current demand probability, thus providing evidence of a significant credit discouragement effect.
    Keywords: Access to credit; Financing constraints; State dependence; Sample selection; Unobserved heterogeneity; Panel data
    JEL: G32 G21 D22 C23 C34
    Date: 2020–02
  12. By: Koski, Heli; Valmari, Nelli
    Abstract: Abstract This paper uses extensive firm-level data on European and US companies from 2014–2018 to explore the short-term impacts of the General Data Protection Regulation (GDPR) on European companies’ financial performance. Our empirical analysis suggests that the costs of the GDPR during the first year of its implementation were substantial, at least for some European companies. The profit margins of the data-intensive firms increased, on average, by approximately 1.7 to 3.4 percentage points less than the profit margins of their US counterparts. The European data-intensive SMEs were the most disadvantaged group regarding their post-GDPR profit developments, while the large European data-intensive companies’ short-term post-GDPR profit margins dropped relatively less. We do not find any statistically significant difference in the profit margin developments of the very large European and US companies. This finding is consistent with the view that the very large, multinational US companies that often have European customers and deal with the personal data of EU citizens also faced substantial costs when they needed to comply with the GDPR.
    Keywords: Regulation, GDPR, Compliance costs, Firm profitability
    JEL: K2 L2 L5
    Date: 2020–02–25
  13. By: Tesi Aliaj; Aris Anagnostopoulos; Stefano Piersanti
    Abstract: Academics and practitioners have studied over the years models for predicting firms bankruptcy, using statistical and machine-learning approaches. An earlier sign that a company has financial difficulties and may eventually bankrupt is going in \emph{default}, which, loosely speaking means that the company has been having difficulties in repaying its loans towards the banking system. Firms default status is not technically a failure but is very relevant for bank lending policies and often anticipates the failure of the company. Our study uses, for the first time according to our knowledge, a very large database of granular credit data from the Italian Central Credit Register of Bank of Italy that contain information on all Italian companies' past behavior towards the entire Italian banking system to predict their default using machine-learning techniques. Furthermore, we combine these data with other information regarding companies' public balance sheet data. We find that ensemble techniques and random forest provide the best results, corroborating the findings of Barboza et al. (Expert Syst. Appl., 2017).
    Date: 2020–02
  14. By: Christopher Neilson (Princeton University); Adam Altmejd (Stockholm School of Economics and Stockholm University); Andres Barrios-Fernandez (London School of Economics); Marin Drlje (Center for Economic Research & Graduate Education - Economics Institute); Dejan Kovac (Princeton University)
    Abstract: While it is a widely held belief that family and social networks can influence important life decisions, identifying causal effects is notoriously difficult. This paper presents causal evidence from three countries at different stages of economic development that the educational trajectories of older siblings can signiï¬ cantly influence the college and major choice of younger siblings. We exploit institutional features of centralized college assignment systems in Chile, Croatia, and Sweden to generate quasi-random variation in the educational paths taken by older siblings. Using a regression discontinuity design, we show that younger siblings in each country are signiï¬ cantly more likely to apply and enroll in the same college and major that their older sibling was assigned to. These results persist for siblings far apart in age who are unlikely to attend higher education at the same time. We propose three broad classes of mechanisms that can explain why the trajectory of an older sibling can causally affect the college and major choice of a younger sibling. We ï¬ nd that spillovers are stronger when older siblings enroll and are successful in majors that on average have higher scoring peers, lower dropout rates and higher earnings from graduates. The evidence presented shows that the decisions, and even random luck, of your close family members and peer network, can have signiï¬ cant effects on important life decisions such as the choice of specialization in higher education. The results also suggest that college access programs such as affirmative action, may have important spillover effects through family and social networks.
    JEL: I21 I24
    Date: 2020–01
  15. By: Egbert Jongen (CPB Netherlands Bureau for Economic Policy Analysis); Simon Rabaté (CPB Netherlands Bureau for Economic Policy Analysis); Tilbe Atav (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: The increase in the statutory retirement age reduced the number of pensioners. About one third of this drop results in additional employment. Net savings for the government are about 80% of direct savings on retirement (AOW) benefits. These are the main findings of the discussion paper ‘The effects of the increase in the retirement age in the Netherlands’. In this paper CPB studies the effects of the recent increases in the statutory retirement age. In the empirical analysis we use differences-in-differences, looking at the labour market outcomes of different birth cohorts that face different statutory retirement ages, and administrative data. The findings of this research have been used in the background document (in Dutch) `Arbeidsparticipatie en gewerkte uren tot en met 2060’.
    JEL: J14 J26
    Date: 2019–12
  16. By: Holl, Adelheid; Peters, Bettina; Rammer, Christian
    Abstract: Recent empirical evidence has shown that firm's innovation behavior exhibits high persistency but not much is known about potential contingencies affecting the degree of persistence. This paper focuses on the role of the local knowledge environment and asks how local knowledge spillovers affect firms' innovation persistence. The empirical analysis draws upon a representative panel data set of firms in Germany from 2002-2016, complemented by detailed geographic information of patent activity over discrete distances to proxy local knowledge spillovers. Based on correlated random effects probit models that control for state dependence, unobserved individual heterogeneity and endogenous initial conditions, our results corroborate former evidence that persistency in innovation is driven by true state dependence. More importantly, we find that the local patenting activity positively moderates firms' degree of persistency in innovation behavior. This is a novel firm-level mechanism that can explain the widening of spatial disparities in innovation performance. Estimations with different distance bands show that the strength of knowledge spillovers that contribute to innovation persistence via true state dependence declines rather rapidly with increasing distance.
    Keywords: innovation,persistence,location,knowledge spillovers
    JEL: O31 R1 D22
    Date: 2020
  17. By: Brunello, Giorgio; Wruuck, Patricia
    Abstract: This report looks at employer - provided training in Europe. We start with a brief outline of the economic theory of training. We then look at the recent facts, by combining data from two employer surveys, the European Investment Bank's Investment Survey (EIBIS) and Eurostat's Continuous Vocational Training Survey (CVTS). We review the recent empirical literature on the relationship between economic institutions and training and between training and productivity and consider whether financing constraints hamper the training provision by firms. The paper concludes by discussing policy implications.
    Keywords: EU Countries,Economics,Education and training
    Date: 2020
  18. By: Emelie Hane-Weijman; Rikard H. Eriksson; David Rigby
    Abstract: Related diversification has generated considerable interest in policy (smart specialisation) and academic (related branching) circles, linking regional path creation strategies to the capabilities of regions. While previous studies have tended to focus on knowledge- or industry-spaces in regions, we explore the occupation-space. Occupational relatedness and complexity indicators are deployed as independent variables in spatial panel models that account for annual variations in regional employment growth rates in Sweden between 2002 to 2013. Our findings show that in periods of economic expansion, exit from related occupations and entry into complex occupations decreases regional employment growth. These effects are dampened in periods of economic slowdown.
    Keywords: related branching, occupation-space, occupational relatedness, complexity, smart specialization, employment growth
    JEL: R11 J21 J24 J62
    Date: 2020–03
  19. By: Biancalani, Francesco; Czarnitzki, Dirk; Riccaboni, Massimo
    Abstract: This paper analyses the impact of the Italian Startup Act which entered into force in December 2012. This public policy provides a unique bundle of benefits, such as tax incentives, public loan guarantees, and a more flexible labor law, for firms registered as "innovative startups" in Italy. This legislation has been implemented by the Italian government to increase innovativeness of small and young enterprises by facilitating improved access to (external) capital and (highskilled) labor. Consequently, the goal of our evaluation is to assess the impact of the policy on equity, debt and employment. Using various conditional difference-in-difference models, we find that the Italian startup policy has met its primary objectives. The econometric results strongly suggest that firms operating under this program are more successful in obtaining equity and debt capital and they also hire more employees because of the program participation.
    Keywords: start up,innovation policy,firm subsidies,small firms
    JEL: M13 O38
    Date: 2020

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