nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2020‒04‒06
twenty-six papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Sustainable Banking; Evaluation of the European Business Models By Saeed Nosratabadi; Gergo Pinter; Amir Mosavi; Sandor Semperger
  2. Descriptive labor market outcomes of immigrant women across Europe By Adserà, Alícia; Ferrer, Ana M.; Herranz, Virginia
  3. Pensions and Household Savings: Cross-Country Heterogeneity in Europe By Anna d’Addio; Muriel Roger; Frédérique Savignac
  4. Estimating the extra costs of disability in European countries: Implications for poverty measurement and disability-related decommodification By Morris, Zachary A.; Zaidi, Asghar
  5. The Impact of the ‘Scellier’ Income Tax Relief on Building Land Prices in France By Pierre-Henri Bono; Alain Trannoy
  6. Housing supply elasticity and growth: evidence from Italian cities By Antonio Accetturo; Andrea Lamorgese; Sauro Mocetti; Dario Pellegrino
  7. Student segregation across and within schools. The case of the Portuguese public school system By Joao Firmino; Luis C. Nunes; Silvia de Almeida; Susana Batista
  8. Can Direct Innovation Subsidies Relax SMEs' Credit Constraints? By Raphaël Chiappini; Samira Demaria; Benjamin Montmartin; Sophie Pommet
  9. Exports of Spanish manufacturing firms and financial constraints By Juan A. Máñez Castillejo; Oscar Vicente-Chirivella
  10. Trends in intergenerational homeownership mobility in France between 1960-2015 By Barbara Castillo Rico
  11. Children’s socio-emotional skills: Is there a quantity–quality trade-off? By Simon Briole; Héléne Le Forner; Anthony Lepinteur
  12. Bayesian inference for TIP curves: an application to child poverty in Germany By Edwin Fourrier-Nicolai; Michel Lubrano
  13. The Heterogeneous Employment Outcomes of First- and Second-generation Immigrants in Belgium By Céline Piton; François Rycx
  14. A Freeway to Prosperity? Evidence from Calabria, South of Italy By Emanuele Ciani; Guido de Blasio; Samuele Poy
  15. The Timing of Early Interventions and Child and Maternal Health By Jonas Lau-Jensen Hirani; Hans Henrik Sievertsen; Miriam Wust
  16. The impact of automation on inequality across Europe By Kaltenberg, Mary; Foster-McGregor, Neil
  17. Smart-Working: Work Flexibility without Constraints By Marta Angelici; Paola Profeta
  18. Husband’s labour supply after a breast cancer diagnosis By Z.V. Kambourova; W.H.J. Hassink
  19. Household heterogeneity in valuing electricity demand flexibility services By Melkamu Daniel , Aemiro Melkamu Daniel
  20. Quantifying Sunk Costs and Learning Effects in R&D Persistence By Juan A. Máñez Castillejo; James H. Love
  21. Poor Laborers and Rich Capitalists? On the Evolution of Income Composition Inequality in Italy 1989-2016 By , Stone Center; Iacono, Roberto; Ranaldi, Marco
  22. RIOTs in Germany - constructing an interregional input-output table for Germany By Krebs, Oliver
  23. Know more, spend more? : The impact of financial literacy on household consumption By M. Dinkova; A.S. Kalwij; Rob Alessie
  24. International Patent Protection and Trade: Transaction-Level Evidence By Gaetan de Rassenfosse; Marco Grazzi; Daniele Moschella; Gabriele Pellegrino
  25. The trading response of individual investors to local bankruptcies By Laudenbach, Christine; Loos, Benjamin; Pirschel, Jenny; Wohlfart, Johannes
  26. Mothers working during preschool years and child skills. Does income compensate? By Cheti Nicoletti; Kjell Salvanes; Emma Tominey

  1. By: Saeed Nosratabadi; Gergo Pinter; Amir Mosavi; Sandor Semperger
    Abstract: Sustainable business models also offer banks competitive advantages such as increasing brand reputation and cost reduction. However, no framework is presented to evaluate the sustainability of banking business models. To bridge this theoretical gap, the current study using A Delphi-Analytic Hierarchy Process method, firstly, developed a sustainable business model to evaluate the sustainability of the business model of banks. In the second step, the sustainability performance of sixteen banks from eight European countries including Norway, the UK, Poland, Hungary, Germany, France, Spain, and Italy, assessed. The proposed business model components of this study were ranked in terms of their impact on achieving sustainability goals. Consequently, the proposed model components of this study, based on their impact on sustainability, are respectively value proposition, core competencies, financial aspects, business processes, target customers, resources, technology, customer interface, and partner network. The results of the comparison of the banks studied by each country disclosed that the sustainability of the Norwegian and German banks business models is higher than in other counties. The studied banks of Hungary and Spain came in second, the banks of the UK, Poland, and France ranked third, and finally, the Italian banks ranked fourth in the sustainability of their business models.
    Date: 2020–03
  2. By: Adserà, Alícia; Ferrer, Ana M.; Herranz, Virginia
    Abstract: We consider the job progression of immigrant women in five European countries: France, Italy, Spain, Sweden and the UK. We complement data from the European Labour Force Survey (2005-2015), with information about the skills contained in the jobs held by women, using data from the O*Net. In particular, we focus on analytical and strength skills in immigrant's jobs and compare them to those required by jobs held by similar native women. Even though immigrants experience upon arrival a gap in participation relative to the native born, they gradually increase participation during the first ten years spent in the country (approximately, 1% per year in Spain, Italy and the UK, and 2% and 4 % per year in France and Sweden respectively). Our results reveal significant differences across countries of origin as well as differences within countries over the period of analysis. Recent immigrant women show relatively large gaps in the analytical skill content of the jobs they held relative to native-born women across our host countries. Further, with the exception of immigrants to Spain, they also work jobs with higher requirements of strength than their native-born counterparts do. Although educated immigrants show a different pattern in most countries (included Spain). We find differences within countries over the period of analysis that may be consistent with the variation of incentives to move depending on the business cycle at arrival - particularly given the meager opportunities in many destination countries during aftermath of the recent great recession.
    Date: 2020
  3. By: Anna d’Addio; Muriel Roger; Frédérique Savignac
    Abstract: We address the question of whether the heterogeneity in savings is partly due to differences in pension wealth across individuals and across countries, using a European harmonised wealth survey (HFCS) combined with estimates of pension wealth (OECD). First, we find significant displacement effects of mandatory pension wealth on non-pension financial wealth at the mean, and a statistically significant crowd-out estimate on the probability of owning real estate property. Second, there is heterogeneity in the mean savings offset depending on age, risk attitudes and country. Third, the offset follows different patterns along the non-pension wealth distribution across countries.
    Keywords: : Wealth, Pensions, Life Cycle.
    JEL: D31 D91 H55
    Date: 2019
  4. By: Morris, Zachary A.; Zaidi, Asghar
    Abstract: It is widely accepted that people with disabilities incur additional expenditures on transport, heating, equipment and other items. In this article, we estimate the magnitude of these extra costs of living for adults with disabilities aged 50–65 across 15 countries of Europe using the Survey of Health, Aging, and Retirement in Europe (SHARE) data. Drawing on the standard of living approach of Zaidi and Burchardt, we compare the incomes required by households with and without adults with disabilities to obtain an equivalent standard of living. We advance upon this research by drawing on the cross-nationally harmonized data of adults aged 50+ from the SHARE. The results suggest that there are substantial extra costs of disability in these countries: around 44 percent of income for a household with an adult reporting a work-related disability and somewhat less than 30 percent of income for a household with an adult who receives disability benefits. Applying an equivalization scale based on these figures increases the overall poverty incidence rate, especially for households with disabled adult members. These findings thus have implications for analysing the entitlement and benefit levels for disability support programmes and for devising accurate poverty estimates concerning persons with disabilities.
    Keywords: costs of disability; disability insurance; poverty measurement; standard of living; work-disability
    JEL: N0
    Date: 2020–01–20
  5. By: Pierre-Henri Bono (CEVIPOF - Centre de recherches politiques de Sciences Po - CNRS - Centre National de la Recherche Scientifique - Sciences Po - Sciences Po); Alain Trannoy (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This study assesses the impact of a tax incentive scheme to boost private rental investment in force in France from 2009 to 2012, called the "Scellier scheme" (after the name of the minister who promoted it), on changes in the price of building land. A difference in differences estimation is implemented, drawing on data from the BNDP database covering the period 2004 2010. The definition of the control and treatment groups is based on the boundary between municipalities which are eligible for the Scellier scheme and municipalities which are not. The estimation results suggest that the scheme had an inflationary effect and point to land price capitalisation, with an increase in the price per square metre of around 7 euros in the first year and of 8 to 9 euros over 2009 and 2010, without a significant rise of the phenome¬non in the second year, i.e. an increase of 8% in the first year and of 9 to 10% after two years. The regions where the market was the tightest saw the most rapid price increase, particularly the Mediterranean region.
    Keywords: land price,income tax deduction,private rental investment,Scellier scheme
    Date: 2019–07
  6. By: Antonio Accetturo (Banca d'Italia); Andrea Lamorgese (Banca d'Italia); Sauro Mocetti (Banca d'Italia); Dario Pellegrino (Banca d'Italia)
    Abstract: The paper examines the impact of housing supply elasticity on urban development. Using data for a sample of around one hundred Italian main cities observed over 40 years, we first estimate housing supply elasticities at the city level. Second, we show that differences in the elasticity of housing supply may determine the extent to which a demand shock translates into more intense employment growth or more expensive houses. To address endogeneity of housing supply elasticity, we exploit a synthetic measure of physical constraints to residential development as an instrumental variable. We find that an exogenous increase in labour demand determines a rise in employment and housing prices; however, in cities with a less elastic housing supply the impact on economic growth is significantly lessened while the effects on house prices are greater.
    Keywords: housing supply elasticity, city growth, house prices, physical constraints
    JEL: R11
    Date: 2020–03
  7. By: Joao Firmino; Luis C. Nunes; Silvia de Almeida; Susana Batista
    Abstract: We provide the most comprehensive description of student segregation in the Portuguese public school system to date, a system that exhibits interesting institutional features potentially linked with the student segregation issue (e.g. school catchment areas, course tracking, and almost no central regulations regarding class composition). The analysis uses the entire regular student population enrolled in all public schools of continental Portugal (grades 1 to 12, from 2006/07 to 2016/17). Looking at three segregation dimensions – economic, academic, and immigrant – at both between and within-school levels, and using a novel dissimilarity index recently proposed in the literature aimed at better capturing systematic segregation, we find that segregation, on median, is mild, across time, grades, and regions. The most important exception is the case of within-school academic segregation. During upper-secondary schooling, in particular, when students are divided across classes according to own course-tracking decisions, it doubles. Moreover, within-school academic segregation estimates have the largest interquartile ranges, within a given year, grade, or region, pointing to heterogeneity in the way different schools set up classes internally in terms of students’ academic characteristics. Academic and economic segregation are positively associated, at both between and within school levels. The Portuguese segregation insights are also compared to those from other geographies.
    Keywords: Segregation, dissimilarity index, municipalities, schools, classes
    JEL: I24 I38 J15
    Date: 2020
  8. By: Raphaël Chiappini (Université de Bordeaux; LAREFI); Samira Demaria (Université Côte d'Azur, France; GREDEG CNRS); Benjamin Montmartin (SKEMA Business School; Université Côte d'Azur, France); Sophie Pommet (Université Côte d'Azur, France; GREDEG CNRS)
    Abstract: Credit constraints hamper the ability of SMEs to undertake innovative activities. Promoting access to external funding for SMEs represents therefore an important challenge for policymakers. This paper investigates whether innovation subsidies provided by the French public investment bank to SMEs have translated into better access to bank and other external financing through an indirect certification effect. We exploit a unique database covering the period 2000-2010 to construct a quasi-natural experiment and evaluate the causal impact of these subsidies on SMEs' financial constraints. If we find a significant improvement in the access to bank financing for subsidized firms, the effect is heterogeneous and mainly concentrated on small firms operating in high-tech sectors. Moreover, such public support does not seem to improve the access to other external sources of financing which can be explained by the low development risk-capital markets in France.
    Keywords: Credit constraints, innovation policy, certification effect, Mahalanobis distance matching, difference-in difference
    JEL: O33 O38
    Date: 2020–03
  9. By: Juan A. Máñez Castillejo (Universitat de València and ERICES); Oscar Vicente-Chirivella (Universitat de València)
    Abstract: We investigate the role of financial constraints on firms’ exporting behaviour, including firms’ export decision, export intensity, firms starting to export decision and exports persistence. Our financial constraints variable is a synthetic variable that summarises information on different dimensions such as total assets, profitability, liquidity, solvency, repaying ability and (new in this type of analyses) the cost of external financing. Using data on Spanish manufacturing for the period 1992-2014, we find evidence supporting that financial health is relevant to explain SMEs exporting decisions and starting to export decisions but not those of large firms. Financial health does not seem to affect large firms’ export intensity and the results of the impact of financial health on SMEs export intensity are not conclusive. Nevertheless, financial health is a determinant of export persistence of large firms and SMEs.
    Date: 2019–12
  10. By: Barbara Castillo Rico (Aix-Marseille Univ, CNRS, EHESS, Ecole Centrale, AMSE, Marseille, France)
    Abstract: We study intergenerational wealth mobility and its evolution in France over the period 1960-2015. More precisely, we identify the persistence of homeownership between parents and children as indicator of wealth mobility in France. We also provide evidence about different sources of heterogeneity in intergenerational homeownership associations in terms of education and geographic areas. Finally, we study the main transmission mechanism: direct financial transfers. We use all available French wealth surveys since 1986 and perform a data panelization using retrospective information. We document multiple results. First, intergenerational correlation in homeownership status has dramatically increased, particularly since the 1990s. Second, this rise is concentrated among people aged between 20 and 39 years old. Third, we observe higher wealth persistence at the top. Four, we find a strong significant effect of direct wealth transfers on the probability of becoming homeowner, which lasts 5 years. Moreover, parental support is substantially more important for households with no diploma, suggesting a crucial role of human capital on wealth formation. Finally, this phenomenon is intensified in areas with high urban concentration; highlighting the potential role of house prices as determinant of wealth social determinism.
    Keywords: intergenerational mobility, homeownership, housing, wealth transmission
    JEL: D31 J62 R21
    Date: 2020–03
  11. By: Simon Briole (PSE - Paris School of Economics); Héléne Le Forner (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Anthony Lepinteur (University of Luxembourg [Luxembourg])
    Abstract: Although it is widely acknowledged that non-cognitive skills matter for adult outcomes, little is known about the role played by family environment in the formation of these skills. We use a longitudinal survey of children born in the UK in 2000–2001, the Millennium Cohort Study by the Centre for Longitudinal Studies, to estimate the effect of family size on socio-emotional skills, measured by the Strengths and Difficulties Questionnaire. To account for the endogeneity of fertility decisions, we use a well-known instrumental approach that exploits parents' preference for children's gender diversity. We show that the birth of a third child negatively affects the socio-emotional skills of the first two children in a persistent manner. However, we show that this negative effect is entirely driven by girls. We provide evidence that this gender effect is partly driven by an unequal response of parents' time investment in favour of boys and, to a lesser extent, by an unequal demand for household chores.
    Keywords: Non-cognitive skills,Family size,Birth order,Child development
    Date: 2020
  12. By: Edwin Fourrier-Nicolai (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Michel Lubrano (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, School of Economics, Jiangxi University of Finance and Economics)
    Abstract: TIP curves are cumulative poverty gap curves used for representing the three different aspects of poverty: incidence, intensity and inequality. The paper provides Bayesian inference for TIP curves, linking their expression to a parametric representation of the income distribution using a mixture of log-normal densities. We treat specifically the question of zero-inflated income data and survey weights, which are two important issues in survey analysis. The advantage of the Bayesian approach is that it takes into account all the information contained in the sample and that it provides small sample credible intervals and tests for TIP dominance. We apply our methodology to evaluate the evolution of child poverty in Germany after 2002, providing thus an update the portrait of child poverty in Germany given in Corak et al. (Rev. Income Wealth 54(4), 547–571, 2008).
    Keywords: Bayesian inference,mixture model,survey weights,zero-inflatedmodel,poverty,inequality
    Date: 2020–03
  13. By: Céline Piton; François Rycx
    Abstract: This paper provides a comprehensive quantitative assessment of the employment performance of first- and second-generation immigrants in Belgium compared to that of natives. Using detailed quarterly data for the period 2008-2014, we find not only that first-generation immigrants face a substantial employment penalty (up to -36% points) vis-à-vis their native counterparts, but also that their descendants continue to face serious difficulties in accessing the labour market. The social elevator appears to be broken for descendants of two non-EU-born immigrants. Immigrant women are also found to be particularly affected. Among key drivers of access to employment, we find: i) education for the descendants of non-EU-born immigrants, and ii) proficiency in the host country language, citizenship acquisition, and (to a lesser extent) duration of residence for first-generation immigrants. Finally, estimates suggest that around a decade is needed for the employment gap between refugees and other foreign-born workers to be (largely) suppressed.
    Keywords: First- and second-generation immigrants; employment; moderating factors
    JEL: J15 J16 J21 J24 J61
    Date: 2020–03–16
  14. By: Emanuele Ciani; Guido de Blasio; Samuele Poy
    Abstract: This paper investigates the impact of the freeway “Salerno-Reggio Calabria” on long-term local economic development. Built between 1962 and 1974, the freeway connected the southernmost region of the Italian peninsula (Calabria) to the national highway network. According to the original plan, the freeway could have been built along three different routes. The final choice was mostly influenced by powerful politicians who lobbied in favor of the path crossing their constituency (the town of Cosenza). In a dif-in-dif framework, we compare the growth of “inconsequentially” treated municipalities – traversed only because they lie on the route connecting Cosenza – with the one of municipalities on the two discarded paths. Our results suggest that the freeway caused a significant reorganization of both economic activity and population from untreated to treated locations. At the same time, the infrastructure does not seem to have helped the convergence of the overall region
    Keywords: highways, transport infrastructure, local development
    JEL: H54 R12 R42
    Date: 2020–02
  15. By: Jonas Lau-Jensen Hirani; Hans Henrik Sievertsen; Miriam Wust
    Abstract: What is the impact of timing of early-life investment policies on child and maternal health? Exploiting variation from a 2008 Danish nurse strike, we study this question in the context of universal nurse home visiting. We show that early but not later strike exposure increases child (and mother) general practitioner contacts in the first four years after childbirth. Mothers, who forgo an early nurse visit (rather than a later one), have a higher probability of mental health specialist contacts in the first two years after childbirth. We highlight two channels for these results, screening and information provision: We show that nurses perform well in identifying maternal mental health risks during early home visits in control years (likely preventing longer-term problems). Finally, we show that first-born children and children of parents without a health-related education drive our results. A stylized calculation confirms that short- run health benefits from early universal home visiting outweigh costs.
    Date: 2020–03–30
  16. By: Kaltenberg, Mary (UNU-MERIT); Foster-McGregor, Neil (UNU-MERIT)
    Abstract: Existing research suggests that automation has the potential to impact inequality through two channels, either by changing the relative wage returns for different sets of tasks or by changing the composition of employment. This paper measures the relative importance of these two channels for a sample of European countries by decomposing the effects of a set of characteristics along these two dimensions using the structure of earnings survey (SES) and data for 2002 and 2014 Firpo et al. (2018). The approach isolates changes in the earnings distribution to identify the component that is due to changes in composition and to changes in the wage structure. We find that the risk of automation has the largest impact on inequality in our sample of European countries. The composition effect explains a large part of automation related inequality in all of the countries, but the wage effect is also relevant in half of the countries. These results confirm that the way in which technology is increasing inequality is largely due to the fact that there is a growing wage dispersion between jobs that are resilient to automation and those that are not.
    Keywords: Inequality, Technological Change, Labor Markets, Wage Structure
    JEL: J30 J31 D63
    Date: 2020–02–26
  17. By: Marta Angelici; Paola Profeta
    Abstract: Does removing the constraints of time and place of work increase the utility of workers and firms? We design a randomized experiment on a sample of workers in a large Italian company: workers are randomly divided into a treated group that engages in flexible space and time job (which we call “smart-working”) one day per week for 9 months and a control group that continues to work traditionally. By comparing the treated and control workers, we find causal evidence that the flexibility of smart-working increases the productivity of workers and improves their well-being and work-life balance. We also observe that the effects are stronger for women and that there are no significant spillover effects within workers of a team.
    Keywords: randomized control trial, productivity, work-life balance, well-being
    JEL: J16 J22 J24 L20 M54
    Date: 2020
  18. By: Z.V. Kambourova; W.H.J. Hassink
    Abstract: This paper evaluates the spillover effects on the males’ labour supply after their partner was diagnosed with breast cancer. We use Dutch administrative monthly data for the period 2006-2012. The estimates indicate that husbands are 0.71 percentage points less likely to be employed due to the diagnosis of their wife. It implies that the negative caregiving effect is stronger than the positive income effect on the males’ labour supply. Furthermore, the estimates suggest that effect is related to the employment status of the women prior to the medical diagnosis. If the women were employed at the moment of the diagnosis of breast cancer, their husbands would reduce their employment on average by 0.86 percentage points after the diagnosis. In contrast, there was no change of the husbands’ employment in case their partner was not employed at the moment of the diagnosis of breast cancer. Those differences can be explained by the sickness leave arrangements in the Netherlands, which mitigate the negative consequences on the incomes of the women who become sick.
    Keywords: breast cancer, caregiving, added-worker effect, spouse, labour supply
    Date: 2019–07
  19. By: Melkamu Daniel , Aemiro Melkamu Daniel (CERE - the Center for Environmental and Resource Economics)
    Abstract: In this paper, we seek to investigate heterogeneity in households’ valuation of electricity contract attributes that reflect demand-side flexibility in the Swedish residential sector. Using stated preference data generated from a choice experiment, we estimate a mixed logit model in willingness-to-pay space and derive individual-specific conditional mean valuations for contract attributes which include various load controls and distribution of electricity consumption information. We perform a posterior analysis and identify different segments based on the monetary values households attach to the contract attributes. We find that a large proportion of households asks for substantial compensation to accept various load controls and to share their electricity consumption information. However, some households are willing to share their electricity consumption information and ask for relatively lower compensation to allow load controls. We also find that some households that accept load controls at a relatively low compensation require a sizeable compensation to share their electricity consumption information, and vice versa. From the perspective of the contract providers, these findings suggest that information-optional contracts can generate more customers than contracts that bundle households’ consumption information with various load controls.
    Keywords: Choice experiment; demand flexibility; direct load control; electricity contract; household heterogeneity
    JEL: D12 Q41 Q48 Q51
    Date: 2020–03–27
  20. By: Juan A. Máñez Castillejo (University of Valencia and ERICES); James H. Love (Unviersity of Leeds)
    Abstract: This paper analyzes and quantifies the fundamental factors that are likely to cause persistence in performing R&D activities: the existence of sunk costs associated with R&D activities and the process of learning that characterizes this type of activity. We estimate our model with Spanish manufacturing firms for the period 1991-2014. By decomposing the effects of sunk costs and learning effects, we find that both are important determinants of R&D persistence, and that failing to allow for learning systematically overestimates sunk cost effects. Both large firms and SMEs benefit from direct and indirect (via productivity) effects of R&D experience, but in large firms this is more likely to be manifest through productivity improvements while in smaller firms the effect is more skewed towards a direct effect on R&D likelihood. Further, our results suggest that whereas the impact of sunk costs in R&D persistence is greater for large firms than for SMEs, the scope for direct learning from continuous R&D engagement is greater for SMEs than for larger firms.
    Keywords: R&D persistence, sunk costs; learning effects
    JEL: O32 L60
    Date: 2019–12
  21. By: , Stone Center (The Graduate Center/CUNY); Iacono, Roberto (Norwegian University of Science and Technology); Ranaldi, Marco
    Abstract: We study the evolution of inequality in income composition in terms of capital and labor income in Italy between 1989 and 2016. We document a rise in the share of capital income accruing to the bottom of the distribution, whilst the top of the distribution increases its share of labor income. This implies a falling degree of income composition inequality in the period considered and, hence, the fact that Italy is moving away from being an economy composed of poor laborers and rich capitalists. This result is robust to the use of different definitions of capital and labor income. A falling degree of income composition inequality implies a weaker link between the functional and personal distributions of income. Therefore, fluctuations in the total factor shares of income are having an increasingly weaker impact on income inequality in Italy. Finally, we conceptualize a rule of thumb for policy makers seeking to reduce income inequality in the long run. This rule relates fluctuations in the total factor shares and the level of income composition inequality to the specific income source to be redistributed. (Stone Center on Socio-Economic Inequality Working Paper)
    Date: 2020–03–26
  22. By: Krebs, Oliver
    Abstract: This paper shows how to adapt recent methodological advances to derive a shipment based interregional input output table for 402 German counties and 26 foreign partners for 17 sectors that is, for national aggregates, cell-by-cell compatible with the WIOD tables. It far outperforms the standard approach of applying unit values to interregional shipments in replicating observed regional statistics and can be used for improved impact analysis and CGE model calibration. It thereby mitigates the surprising but problematic lack of regional German trade data in the analysis of both, regional effects of aggregate shocks such as trade agreements as well as network effects of regional policies. Moreover, the paper takes an in-depth look at the derived German production structure and trade network at the county level finding a surprisingly vast heterogeneity with respect to specialization, agglomeration and trade partners.
    Keywords: Germany,regional trade,input-output tables,unit values,proportionality
    JEL: R15 R12 F17
    Date: 2020
  23. By: M. Dinkova; A.S. Kalwij; Rob Alessie
    Abstract: This paper examines the relationship between household consumption and financial literacy for Dutch households. The economic framework is a simple life-cycle model of consumption in which financial literacy affects the rate of return on assets. The theoretical predictions are that financial literacy and consumption levels are positively correlated for plausible values of the intertemporal elasticity of substitution and that financial literacy and consumption growth are positively correlated. We use Dutch data from the LISS household panel to empirically test our theoretical predictions. Our results provide evidence for a strong positive association between couples’ non-durable consumption and the level of the male partner’s financial literacy. We did not find evidence for an association between consumption growth and financial literacy. Our results are robust to including household assets, interest in financial literacy and to examining different stages of the life-cycle.
    Keywords: life-cycle model, financial literacy, self-assessed financial literacy, household consumption
    Date: 2019–08
  24. By: Gaetan de Rassenfosse; Marco Grazzi; Daniele Moschella; Gabriele Pellegrino
    Abstract: This paper investigates the extent to which international trade hinges on patents. We analyze the export and patenting activities of the universe of French exporting firms over the period 2002-2011. The noticeable feature of our study is that we observe export and patenting activities worldwide and at the product level. We exploit how heterogeneity of patent coverageacross (and within) product-country relates to exports. We find a patent premium of at least 10 percent, which is mainly associated with a quantity effect. A modest price effect emerges in specific sectors, notably pharmaceuticals.
    Keywords: Export; Patents; Products; Intellectual property rights; Innovation.
    Date: 2020–03–30
  25. By: Laudenbach, Christine; Loos, Benjamin; Pirschel, Jenny; Wohlfart, Johannes
    Abstract: We use data from a German online brokerage and a survey to show that retail investors sharply reduce risk-taking in response to nearby firm bankruptcies, which are not predictive of returns. The e.ects on trading are spatially highly concentrated, immediate and not persistent. They seem to operate through more pessimistic expected returns and increased risk aversion and do not reflect wealth e.ects or changes in background risks. Investors learn about bankruptcies through immediate coverage in local newspapers. Our findings suggest that non-informative local experiences that make downside risks of stock investment more salient contribute to idiosyncratic short-term fluctuations in trading.
    Keywords: Individual investors,risk-taking,trading,experiences
    JEL: D14 G11
    Date: 2020
  26. By: Cheti Nicoletti (Department of Economics, University of York & ISER Univeristy of Essex & IZA); Kjell Salvanes (Norwegian School of Economics & CEPR & CESifo & HCEO & IZA); Emma Tominey (Department of Economics and Related Studies, University of York & HCEO & IZA)
    Abstract: Increasing mothers' labour supply in a child's preschool years can cause a reduction in time investments that lead to a negative direct effect on mid-childhood and teenage outcomes. But as mothers' work hours increase, income will rise. We ask whether income can compensate for the negative effect of hours by adopting a novel mediation analysis that exploits exogenous variation in both mothers' hours and family income in pre-school years. As expected we find a negative direct effect of an increase in mother's work hours on child test scores at age 11 and 15. However, income fully compensates for this negative direct effect. This is true for the full sample of children, for boys and girls and for children in households whose mother has a low and high level of education.
    Keywords: Child development, test scores, parental investments
    JEL: I22 I24
    Date: 2020–03

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