nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2020‒08‒10
35 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Unemployment benefit duration and startup success By Camarero Garcia, Sebastian; Murmann, Martin
  2. Combining Microsimulation and Optimization to Identify Optimal Flexible Tax-transfer Rules By Colombino, Ugo; Colombino, Ugo; Islam, Nizamul; Islam, Nizamul
  3. Labor Market Effects of COVID-19 in Sweden and its Neighbors: Evidence from Novel Administrative Data By Juranek, Steffen; Paetzold, Jörg; Winner, Hannes; Zoutman, Floris T.
  4. Dismissal Protection and Long-term Sickness Absence - First Evidence from Germany By Gürtzgen, Nicole; Hiesinger, Karolin
  5. Health and aging before and after retirement By Abeliansky, Ana; Strulik, Holger
  6. Understanding pay gaps By Amadxarif, Zahid; Angeli, Marilena; Haldane, Andrew G; Zemaityte, Gabija
  7. The Economic Effects of COVID-19 and Credit Constraints: Evidence from Italian Firms’ Expectations and Plans By Pierluigi Balduzzi; Emanuele Brancati; Marco Brianti; Fabio Schiantarelli
  8. Labor Market Frictions and Lowest Low Fertility By Guner, Nezih; Kaya, Ezgi; Sánchez-Marcos, Virginia
  9. The cost of Brexit uncertainty: missing partners for French exporters By Julien Martin; Alejandra Martinez; Isabelle Mejean
  10. Does later retirement change your healthcare consumption ? Evidence from France By Elsa Perdrix
  11. Driven to succeed? Teenagers' drive, ambition and performance on high-stakes examinations By John Jerrim; Nikki Shure; Gill Wyness
  12. Regulations and technology gap in Europe: the role of firm dynamics By Sara Amoroso; Roberto Martino
  13. Decoupling of Labour Productivity Growth from Median Wage Growth in Central and Eastern Europe By Joris M. Schröder
  14. Parental Well-Being in Times of Covid-19 in Germany By Mathias Huebener; Sevrin Waights; C. Katharina Spiess; Nico A. Siegel; Gert G. Wagner
  15. Robots and the rise of European superstar firms By Stiebale, Joel; Südekum, Jens; Woessner, Nicole
  16. The Influence of Personality Traits on University Performance: Evidence from Italian Freshmen Students By Luca Corazzini; Silvia D’Arrigo; Emanuele Millemaci; Pietro Navarra
  17. More than one red herring? Heterogeneous effects of ageing on healthcare utilisation By Costa-I-Font, Joan; Vilaplana-Prieto, Cristina
  18. The Role of Technology and Relatedness in Regional Trademark Activity By Kyriakos Drivas; ; Raphaël
  19. Linking excess mortality to Google mobility data during the COVID-19 pandemic in England and Wales By Ugofilippo Basellini; Diego Alburez-Gutierrez; Emanuele Del Fava; Daniela Perrotta; Marco Bonetti; Carlo Giovanni Camarda; Emilio Zagheni
  20. DOES PERSISTENCE IN USING R&D TAX CREDITS HELP TO ACHIEVE PRODUCT INNOVATIONS? By José M. Labeaga; Juan A. Ester Martínez-Ros; Amparo Sanchis-Llopis; Juan A. Sanchis-Llopis
  21. A Structural Microsimulation Model for Demand-Side Cost-Sharing in Healthcare By Minke Remmerswaal; Jan Boone
  22. House Price Cycles, Wealth Inequality and Portfolio Reshuffling By Clara Toledano
  23. Peer Gender Composition and Mental Health: Evidence from Administrative Data By Getik, Demid
  24. Regional differences in diabetes across Europe –regression and causal forest analyses By Péter Elek; Anikó Bíró
  25. Credit demand vs. supply channels: Experimental- and administrative-based evidence By Michelangeli, Valentina; Sette, Enrico; Peydró, José-Luis
  26. Locus of Control, Savings and Propensity to Save By Bucciol, Alessandro; Trucchi, Serena
  27. How Climate-Friendly Behavior Relates to Moral Identity and Identity-Protective Cognition: Evidence from the European Social Surveys By Heinz Welsch
  28. Nominal Wage Adjustments and the Composition of Pay: New Evidence from Payroll Data By Daniel Schäfer; Carl Singleton
  29. Financial inclusion and poverty transitions: an empirical analysis for Italy By Giulia Bettin; Claudia Pigini; Alberto Zazzaro
  30. No Experience, No Employment: The Effect of Vocational Education and Training Work Experience on Labour Market Outcomes after Higher Education By Maria Esther Oswald-Egg; Ursula Renold
  31. COVID-19 and Mental Health Deterioration among BAME groups in the UK By Eugenio Proto; Climent Quintana-Domeque
  32. Spatial Effects of Price Regulations and Competition. A Dynamic Approach to the German Retail Pharmacy Market. By Robert Aue
  33. Liberté, Egalité, Fraternité... Contaminé? Estimating the impact of French municipal elections on COVID-19 spread in France By Guilhem Cassan; Marc Sangnier
  34. Minimum wage and financially distressed firms: another one bites the dust By Fernando Alexandre; Pedro Bação; João Cerejeira; Hélder Costa; Miguel Portela
  35. How effective has been the Spanish lockdown to battle COVID-19? A spatial analysis of the coronavirus propagation across provinces By Orea, Luis; Álvarez, Inmaculada C.

  1. By: Camarero Garcia, Sebastian; Murmann, Martin
    Abstract: Despite the importance of business creation for the economy and a relevant share of new firms being started out of unemployment, most research has focused on analyzing the effect of unemployment insurance (UI) policies on reemployment outcomes that ignore self-employment. In this paper, we assess how UI benefit duration affects the motivation for creating a startup while unemployed and the subsequent firms' success. To do so, we create a comprehensive dataset on founders in Germany that links administrative social insurance with survey data. Exploiting reform- and age-based exogenous variations in potential benefit duration (PBD) within the German UI system, we find that longer PBD leads to longer actual unemployment duration for those becoming self-employed. Furthermore, the UI duration elasticity for these individuals is higher than common estimates for those individuals becoming re-employed. With increasing unemployment benefit duration, the founders' outcomes in terms of self-assessed motivation, sales, and employment growth lessen. This overall causal effect of PBD can be rationalized with a mix of composition and individual-level duration effects. Therefore, our findings suggest that it is important to consider the fiscal externality of UI on startup success when it comes to the (optimal) design of UI systems.
    Keywords: entrepreneurship,unemployment insurance,fiscal externality
    JEL: D22 J21 J23 J44 J62 J64 J65 L11 L25 L26 M13
    Date: 2020
  2. By: Colombino, Ugo; Colombino, Ugo; Islam, Nizamul; Islam, Nizamul
    Abstract: We use a behavioural microsimulation model embedded in a numerical optimization procedure in order to identify optimal (social welfare maximizing) tax-transfer rules. We consider the class of tax-transfer rules consisting of a universal basic income and a tax defined by a 4th degree polynomial. The rule is applied to total taxable household income. A microeconometric model of household, which simulates household labour supply decisions, is embedded into a numerical routine in order to identify – within the class defined above – the tax-transfer rule that maximizes a social welfare function. We present the results for five European countries: France, Italy, Luxembourg, Spain and United Kingdom. For most values of the inequality aversion parameter, the optimized rules provide a higher social welfare than the current rule, with the exception of Luxembourg. In France, Italy and Luxembourg the optimized rules are significantly different from the current ones and are close to a Negative Income Tax or a Universal basic income with a flat tax rate. In Spain and the UK, the optimized rules are instead close to the current rule. With the exception of Spain, the optimal rules are slightly disequalizing and the social welfare gains are due to efficiency gains. Nonetheless, the poverty gap index tends to be lower under the optimized regime.
    Date: 2020–07–22
  3. By: Juranek, Steffen (Dept. of Business and Management Science, Norwegian School of Economics); Paetzold, Jörg (Dept. of Economics and Social Sciences, University of Salzburg); Winner, Hannes (Dept. of Economics and Social Sciences, University of Salzburg); Zoutman, Floris T. (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: This paper studies the labor market effects of non-pharmaceutical interventions (NPIs) to combat the COVID-19 pandemic. We focus on the Nordic countries which showed one of the highest variations in NPIs despite having similar community spread of COVID-19 at the onset of the pandemic: While Denmark, Finland and Norway imposed strict measures (‘lockdowns’), Sweden decided for much lighter restrictions. Empirically, we use novel administrative data on weekly new unemployment and furlough spells from all 56 regions of the Nordic countries to compare the labor market outcomes of Sweden with the ones of its neighbors. Our evidence suggests that the labor markets of all countries were severely hit by the pandemic, although Sweden performed slightly better than its neighbors. Specifically, we find the worsening of the Swedish labor market to occur around 2 to 3 weeks later than in the other Nordic countries, and that its cumulative sum of new unemployment and furlough spells remained significantly lower during the time period of our study (up to week 21 of 2020).
    Keywords: COVID-19 pandemic; lockdown; labor market effects
    JEL: I18 J64
    Date: 2020–07–24
  4. By: Gürtzgen, Nicole (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Hiesinger, Karolin (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This paper analyses the causal effects of weaker dismissal protection on the incidence of long-term sickness (> six weeks). We exploit a German policy change, which shifted the threshold exempting small establishments from dismissal protection from five to ten workers. Using administrative data, we find a significantly negative reform effect on transitions into long-term sickness in the second year after a worker has entered an establishment. This response is due to a behavioural, rather than a compositional effect and is mainly driven by less skilled workers. Our results further indicate that the reform did not alter the probability of involuntary unemployment after sickness." (Author's abstract, IAB-Doku) ((en))
    JEL: D02 I12 J28 J38 J88 J63 K31
  5. By: Abeliansky, Ana; Strulik, Holger
    Abstract: In this paper, we investigate health and aging before and after retirement for specific occupational groups. We use five waves of the Survey of Health, Aging, and Retirement in Europe (SHARE) dataset and construct a frailty index for elderly men and women from 10 European countries. We classify occupation by low vs. high education, blue vs. white collar color, and by high vs. low physical or psychosocial job burden. Controlling for individual fixed effects, we find that, regardless of the used classification, workers from the first (low status) group display more health deficits at any age and accumulate health deficits faster than workers from the second (high status) group. We instrument retirement by statutory retirement ages ("normal" and "early") and find that the health of workers in low status occupations benefits greatly from retirement, whereas retirement effects for workers in high status occupations are small and frequently insignificant. We also find that workers from low status occupations accumulate health deficits faster after retirement, i.e. we find evidence for an occupational health gradient that widens with increasing age, before and after retirement.
    Keywords: health deficits,occupation,retirement,frailty index,Europe
    JEL: I10 I19 J13
    Date: 2020
  6. By: Amadxarif, Zahid (Bank of England); Angeli, Marilena (Bank of England); Haldane, Andrew G (Bank of England); Zemaityte, Gabija (Bank of England)
    Abstract: In this paper, we use micro-data from the UK Labour Force Survey to estimate unconditional and conditional pay gaps for gender and ethnicity groups since the mid-90s. Both types of gender pay gap have decreased over the sample, but remain in double digits. For ethnicity, the unconditional pay gap has been materially lower, compared to the gender pay gap, while the conditional pay gap is of similar magnitude to the gender one. These trends are apparent not only at the mean but also at the lower and upper ends of the distributions. Interaction effects between gender and ethnicity reveal that female ethnic minority workers experience a larger pay gap than both ethnic minority male, and white female workers. Half of the gender pay gap can be accounted for by compositional effects, such as the individual’s age, education, and the nature of their job, such as occupation and sector, while half remains unaccounted for. We find that the minimum wage leads to a decrease in the gender pay gap. Compositional effects for ethnicity suggest that ethnic minorities should be earning more than their white counterparts, with the unaccounted for factors driving the positive ethnicity pay gap. We find that compositional effects are heterogeneous across gender and ethnic minority groups. We assert that there is a strong case to extend compulsory pay gap reporting to ethnicity. There is also a case to extend compulsory reporting from firms with more than 250 employees to those with around 30 or more, to increase the coverage of the UK employed population.
    Keywords: Gender; ethnicity; pay gap; inequality; minimum wage
    JEL: J15 J16 J31 J38
    Date: 2020–07–03
  7. By: Pierluigi Balduzzi (Boston College); Emanuele Brancati (Sapienza University of Rome); Marco Brianti (Boston College); Fabio Schiantarelli (Boston College; IZA)
    Abstract: We investigate the economic effects of the COVID-19 pandemic and the role played by credit constraints in the transmission mechanism, using a novel survey of expectations and plans of Italian firms, taken just before and after the outbreak. Most firms revise downward their expectations for sales, orders, employment, and investment, while prices are expected to increase at a faster rate than previously anticipated, but there is geographical and sectoral heterogeneity in the magnitude of the effects. Importantly, we show that credit constraints amplify the effects on factor demand and sales of the shocks associated with COVID-19. Moreover, credit-constrained firms expect to charge higher prices, relative to unconstrained firms. The search for and availability of liquidity is a key determinant of firms’ plans. Finally, there is evidence that both supply and demand shocks play a role in shaping firms’ expectations and plans, with supply shocks being slightly more important in the aggregate.
    Keywords: COVID-19, pandemic, firms’ expectations, firms’ plans, credit constraints, prices, employment, investment, sales, orders
    JEL: E2 E3 G30 I10
    Date: 2020–07–27
  8. By: Guner, Nezih; Kaya, Ezgi; Sánchez-Marcos, Virginia
    Abstract: The total fertility rate is well below its replacement level of 2.1 children in high-income countries. Why do women choose such low fertility levels? We study how labor market frictions affect the fertility of college-educated women. We focus on two frictions: uncertainty created by dual labor markets (the coexistence of jobs with temporary and open-ended contracts) and inflexibility of work schedules. Using rich administrative data from the Spanish Social Security records, we show that women are less likely to be promoted to permanent jobs than men. Temporary contracts are also associated with a lower probability of first birth. With Time Use data, we also show that women with children are less likely to work in jobs with split-shift schedules, which come with a fixed time cost. We then build a life-cycle model in which married women decide whether to work or not, how many children to have, and when to have them. In the model, women face a trade-off between having children early and waiting and building their careers. We show that reforms that reduce the labor market duality and eliminate split-shift schedules increase the completed fertility of college-educated from 1.52 to 1.88. These reforms enable women to have more children and have them early in their life-cycle. They also increase the labor force participation of women and eliminate the employment gap between mothers and non-mothers.
    Keywords: Fertility; Labor market frictions; Split-Shift Schedules; Temporary contracts
    JEL: E24 J13 J21 J22
    Date: 2019–11
  9. By: Julien Martin (UQAM - Université du Québec à Montréal = University of Québec in Montréal); Alejandra Martinez (University of Warwick [Coventry]); Isabelle Mejean (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, X - École polytechnique)
    Abstract: More than three years after the unexpected Brexit vote of June 2016, there is still no exit agreement between the United Kingdom and the European Union. Although the conditions of Brexit and the corresponding economic consequences are still unknown, the referendum has already had a real economic impact. The long discussion surrounding Brexit can be seen as a long-lasting uncertainty shock, whiach has affected firms' investment decisions. In this note we use highly detailed customs data before and after the vote to measure the impact of Brexit on French firms' exports to the UK. We find that the referendum had no effect on average on the value of exports but depressed export growth in sectors such as transportation or chemical industries which are more upstream in value chains. The number of new trade relationships involving French exporters and British importers has significantly declined after the Brexit vote, in comparison with other destinations. This is consistent with the uncertainty shock reducing French firms' investment in their customer base, which is likely to penalize French exporters in the future. These results are suggestive evidence that uncertainty has a real cost and that any decision of delaying the Brexit further should compare the benefit of reaching a better deal with the economic cost induced by uncertainty. It is also important that the next EU-UK trade agreement should guarantee the stability and predictability of the trade policy that European exporters will have to face.
    Date: 2019–12
  10. By: Elsa Perdrix (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris School of Economics, IPP - Institut des politiques publiques)
    Abstract: This paper examines the causal impact of later retirement on doctor visits among the French elderly. This question is of interest since spillover effects may arise if later retirement increases healthcare expenditure. I exploit the 1993 French pension reform in a two-stage least square to deal with the endogeneity of retirement. This reform leads to a progressive increase in claiming age, cohort by cohort from 1934 to 1943. I use a two-part model to disentangle between extensive and intensive margin. I use the administrative data HYGIE to observe both healthcare consumption between 2005 and 2015 and past careers. I find that an increase in retirement by four months decreases significantly the probability to have at least one doctor visit per year by 0.815 percentage point and decreases the number of doctor visits by 1.14% between ages 67 and 75. This effect is driven by the consumption of generalist doctor visits, and tends to be stronger for the first ages of consumption observed.
    Keywords: Pension reform,Health,Healthcare consumption
    Date: 2020–07
  11. By: John Jerrim (Department of Social Science, UCL Institute of Education, University College London); Nikki Shure (Department of Social Science, UCL Institute of Education, University College London); Gill Wyness (Centre for Education Policy and Equalising Opportunities, UCL Institute of Education, University College London)
    Abstract: There has been much interest across the social sciences in the link between young people's socio- emotional (non-cognitive) skills and their educational achievement. But much of this research has focused upon the role of the Big Five personality traits. This paper contributes new evidence by examining two inter-related non-cognitive factors that are rarely studied in the literature: ambition and drive. We use unique survey-administrative linked data from England, gathered in the lead-up to high-stakes compulsory school exams, which allow us to control for a rich set of background characteristics, prior educational attainment and, unusually, school fixed effects. Our results illustrate substantial gender and immigrant gaps in young people's ambitiousness, while the evidence for socio-economic differences is more mixed. Conversely, we find a strong socio-economic gradient in drive, but no gender gap. Both academically ambitious and driven teenagers achieve grades around 0.36 standard deviations above their peers, even controlling for prior academic attainment and school attended.
    Keywords: socio-economic gaps, gender gaps, aspirations, secondary school, higher education
    JEL: I24 J24
    Date: 2020–07
  12. By: Sara Amoroso (European Commission - JRC); Roberto Martino (European Commission - RTD)
    Abstract: In this paper, we develop a new firm-level measure of distance to the productivity frontier that accounts for international technology spillovers stemming from the use of imported intermediate goods. The trade-weighted technological distance to frontier is matched with sector- and country-level data on regulation and firm dynamics (entry and exit rates) of 16 European countries. Using our measure of trade-adjusted technology gap, we investigate the role of labour, capital, and product market regulatory frameworks in the technology catch-up process, gauging the effect of firms' dynamics in mediating and moderating the impact of regulation on the technology gap. Our study offers a novel perspective and insights to the analysis of the link between framework conditions and technological distance to frontier. While most scholars argue that less regulation always favours productivity growth and the diffusion of technology, our results provide a more nuanced picture. Deregulation is not a one-size-fits-all solution that leads to faster technology diffusion, instead heterogeneity in business dynamism and countries' regulatory structures need to be considered.
    Keywords: Innovation diffusion, Framework conditions, Business dynamics, Technological frontier
    JEL: L16 L50 M21 O33
    Date: 2020–07
  13. By: Joris M. Schröder
    Abstract: The US-centred debate on the decoupling of productivity from workers’ compensation has given rise to the question whether this decoupling has also taken place in other countries, and if so, to what degree. However, in-depth analyses of the extent and the underlying causes of wage-productivity decoupling within Europe are still sparse. This is particularly the case for the Central and East European members of the EU (EU-CEE11), where trickle down of increased labour productivity to local workers in the form of compensation and wage growth has been questioned. Existing analyses provide little explanation as to why the gains in productivity are (not) fully passed on in the form of higher compensation, and why this is more pronounced in some countries than in others. This study thus provides an overview of the extent and underlying factors of wage-productivity decoupling with a focus on the EU-CEE11 countries. In general, the results reveal strong cross-country variation in the amount and underlying reasons for decoupling. Further, we find that the extent of decoupling within the EU-CEE11 is strongly related to the industry structures of these countries, as it is mostly a phenomenon which occurs in countries that have followed an export- and manufacturing-focused development path, while other countries have experienced “reverse decoupling”. We provide further insights into this finding by contrasting productivity and compensation developments in industry and construction with those in the service sector and by looking at each EU-CEE11 country individually.
    Keywords: Labour productivity, compensation, wages, economic growth, wage inequality, labour share
    JEL: E24 J3 D3 J24
    Date: 2020–07
  14. By: Mathias Huebener; Sevrin Waights; C. Katharina Spiess; Nico A. Siegel; Gert G. Wagner
    Abstract: We examine the differential effects of Covid-19 and related restrictions on individuals with dependent children in Germany. We specifically focus on the role of school and day care center closures, which may be regarded as a “disruptive exogenous shock” to family life. We make use of a novel representative survey of parental well-being collected in May and June 2020 in Germany, when schools and day care centers were closed but while other measures had been relaxed and new infections were low. In our descriptive analysis, we compare well-being during this period with a pre-crisis period for different groups. In a difference-in-differences design, we compare the change for individuals with children to the change for individuals without children, accounting for unrelated trends as well as potential survey mode and context effects. We find that the crisis lowered the relative well-being of individuals with children, especially for individuals with young children, for women, and for persons with lower secondary schooling qualifications. Our results suggest that public policy measures taken to contain Covid-19 can have large effects on family well-being, with implications for child development and parental labor market outcomes.
    Keywords: Well-being, Covid-19, Corona virus, day care closures, school closures, COMPASS, SOEP
    JEL: D1 H12 H75 I2
    Date: 2020
  15. By: Stiebale, Joel; Südekum, Jens; Woessner, Nicole
    Abstract: We study the impact of a recent digital automation technology - industrial robotics - on the distribution of sales, productivity, markups, and profits within industries. Our empirical analysis combines data on the industry-level stock of industrial robots with firms' balance sheet data for six European countries from 2004 to 2013. We find that robots disproportionally raise productivity in those firms that are already most productive to begin with. Those firms are able to increase their markups and overall profits, while they tend to decline for less profitable firms within the same industry, country and year. We also show that robots contribute to the falling aggregate labor income share through a rising concentration of industry sales in highly productive firms with low firm-specific labor shares. In sum, our paper suggests that robots boost the emergence of superstar firms within European manufacturing, and thereby shifts the functional income distribution away from wages and towards profits.
    Keywords: Automation,Robots,Productivity,Markups,Labor share,Superstar firms
    JEL: D4 L11 O33
    Date: 2020
  16. By: Luca Corazzini (Department of Economics, University Of Venice Cà Foscari); Silvia D’Arrigo (Department of Economics and Business, University of Sassari); Emanuele Millemaci (Department of Economics, University of Messina); Pietro Navarra (Department of Economics, University of Messina)
    Abstract: Despite several attempts to provide a definite pattern regarding the effects of personality traits on performance in higher education, the debate over the nature of the relationship is far from being conclusive. The use of different subject pools and sample sizes, as well as the use of identification strategies that either do not adequately account for selection bias or are unable to establish causality between measures of academic performance and noncognitive skills, are possible sources of heterogeneity. This paper investigates the impact of the Big Five traits, as measured before the beginning of the academic year, on the grade point average achieved in the first year after the enrolment, taking advantage of a unique and large dataset from a cohort of Italian students in all undergraduate programs containing detailed information on student and parental characteristics. Relying on a robust strategy to credibly satisfy the conditional independence assumption, we find that higher levels of conscientiousness and openness to experience positively affect student score.
    Keywords: Noncognitive skills; Personality traits; Educational attainment; Economic Psychology
    JEL: I21 J24 D90
    Date: 2020
  17. By: Costa-I-Font, Joan; Vilaplana-Prieto, Cristina
    Abstract: We study the effect of ageing, defined as an extra year of life, on health care utilisation. We disentangle the direct effect of ageing, from other alternative explanations such as the presence of comorbidities and endogenous time to death (TTD) that are argued to absorb the effect of ageing (so‐called ‘red herring’ hypothesis). We exploit individual level end of life data from several European countries that record the use of medicine, outpatient and inpatient care and long‐term care. Consistently with the ‘red herring hypothesis’, we find that corrected TTD estimates are significantly different from uncorrected ones, and their effect size exceeds that of an extra year of life, which in turn is moderated by individual comorbidities. Corrected estimates suggest an overall attenuated effect of ageing, which does not influence outpatient care utilisation. These results suggest the presence of ‘more than one red herring’ depending on the type of health care examined.
    Keywords: ageing; cormorbidities; endogeneous time to death (TTD); health care utilisation; home help use and comorbidity; hospital care; medicines use; time to death
    JEL: I18
    Date: 2020–07–17
  18. By: Kyriakos Drivas; ; Raphaël
    Abstract: This paper provides insights on trademark activity at the regional level via two objectives. First, it examines the relationship between technological capabilities and new trademark applications. Second, it examines whether regions branch out to new trademark specializations that are related to their existing specializations. We employ EUIPO’s data to study 218 European NUTS-2 regions (16 countries) over the period 2000-2016. Results show that increased technological stock is associated with more trademark applications and that existing trademark relatedness induces new specializations. These findings contribute to better understanding of trademark activity and policies related to regional diversification including Smart Specialization.
    Keywords: Technological capabilities, Marketing activities, Trademark applications, Regional diversification, Relatedness, EUIPO
    JEL: O34 O38 R11
    Date: 2020–08
  19. By: Ugofilippo Basellini; Diego Alburez-Gutierrez; Emanuele Del Fava; Daniela Perrotta; Marco Bonetti; Carlo Giovanni Camarda; Emilio Zagheni
    Abstract: Following the outbreak of COVID-19, a number of non-pharmaceutical interventions have been implemented to contain the spread of the pandemic. Despite the recent reduction in the number of infections and deaths in Europe, it is still unclear to which extent these governmental actions have contained the spread of the disease and reduced mortality. In this article, we estimate the effects of reduced human mobility on excess mortality using digital mobility data at the regional level in England and Wales. Specifically, we employ the Google COVID-19 Community Mobility Reports, which offer an approximation to the changes in mobility due to different social distancing measures. Considering that changes in mobility would require some time before having an effect on mortality, we analyse the relationship between excess mortality and lagged indicators of human mobility. We find a negative association between excess mortality and time spent at home, as well as a positive association with changes in outdoor mobility, after controlling for the time trend of the pandemic and regional differences. We estimate that almost 130,000 excess deaths have been averted as a result of the increased time spent at home. In addition to addressing a key scientific question, our results have important policy implications for future pandemics and a potential second wave of COVID-19.
    Date: 2020
  20. By: José M. Labeaga (UNED); Juan A. Ester Martínez-Ros (Universidad Carlos III de Madrid); Amparo Sanchis-Llopis (University of Valencia and ERICES); Juan A. Sanchis-Llopis (University of Valencia and ERICES)
    Abstract: Despite the generosity of its tax system, Spain is far from EU neighbouring countries in terms of R&D spending, and in innovation outcomes. A policy instrument commonly used to foster firms’ investment in R&D are tax incentives. The use of this instrument is not generalized in firms spending on R&D, and only a fraction of firms are regular claimants. In this paper we investigate whether persistence in using tax credits is positively related to the achievement of product innovations, beyond R&D investments. We consider that firms investing in qualified R&D spending and making a regular use of tax credits are likely to be firms aiming at innovating. By contrast, occasional tax credit users are probably firms seeking to reduce their corporate tax burden, and not prioritizing the achievement innovations. Using a sample of Spanish manufacturing firms spanning 2001-2014, we first estimate persistence using a duration model accounting for firm observed and unobserved heterogeneity. Our results are consistent with negative duration dependence, indicating that the probability of ceasing in claiming tax credits decreases with the passage of time. Second, we estimate a count-data model and find that the number of product innovations positively depends on tax credit persistence only for SMEs.
    Keywords: tax credits; persistence; duration dependence; count-data
    JEL: C41 H25 H32
    Date: 2020–07
  21. By: Minke Remmerswaal (CPB Netherlands Bureau for Economic Policy Analysis); Jan Boone (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: Demand-side cost-sharing schemes reduce moral hazard in healthcare at the expense of out-of-pocket risk and equity. With a structural microsimulation model, we show that shifting the starting point of the deductible away from zero to 400 euros for all insured individuals, leads to an average 4 percent reduction in healthcare expenditure and 47 percent lower out-of-pocket payments. We use administrative healthcare expenditure data and focus on the price elastic part of the Dutch population to analyze the differences between the cost-sharing schemes. The model is estimated with a Bayesian mixture model to capture distributions of healthcare expenditure with which we predict the effects of cost-sharing schemes that are not present in our data. DOI:
    JEL: I11 I13 I14
    Date: 2020–07
  22. By: Clara Toledano (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, WIL - World Inequality Lab)
    Abstract: Business cycle dynamics can shape the wealth distribution through asset price changes, saving responses, or a combination of both. This paper studies the implications of housing booms and busts for wealth inequality, examining two episodes over the last four decades in Spain. I combine fiscal data with household surveys and national accounts to reconstruct the entire wealth distribution and develop a new asset-specific decomposition of wealth ac- cumulation to disentangle the main forces behind wealth inequality dynamics (e.g., capital gains, saving rates). I find that the top 10% wealth share drops during housing booms, but the decreasing pattern reverts during busts. Differences in capital gains across wealth groups appear to be the main drivers of the decline in wealth concentration during booms. In contrast, persistent differences in saving rates across wealth groups and portfolio reshuf- fling towards financial assets among top wealth holders are the main explanatory forces behind the reverting evolution during housing busts. I show that the heterogeneity in saving responses is largely driven by differences in portfolio adjustment frictions across wealth groups and that tax incentives can exacerbate this differential behavior. Using a novel personal income and wealth tax panel, I explore the role of tax incentives exploiting quasi-experimental variation created by a large capital income tax reform in a differences- in-differences setting. I find that capital income tax cuts, largely benefiting top wealth holders, explain on average 60% of the increase in the top 10% wealth share during the re- cent housing bust. These results provide novel empirical evidence to enrich macroeconomic theories of wealth inequality over the business cycle.
    Keywords: Wealth distribution,wealth concentration,Spain,inequality,asset,housing,wealth tax
    Date: 2020
  23. By: Getik, Demid (Department of Economics, Lund University)
    Abstract: Adolescent mental health is key for later well-being. Yet, causal evidence on environmental drivers of adolescent mental health is scant. I study how an important classroom feature - gender composition in compulsory-school - affects mental health. I exploit Swedish register data (N = 576,285) to link variation in gender composition across classrooms within cohorts to mental health diagnoses. The results indicate that a higher share of female peers in one's class reduces mental health, particularly among boys. The effects persist after students' transition to a different high-school class. Peer composition can thus be an important and persistent driver of early mental health.
    Keywords: gender; peer effects; mental health
    JEL: I19 I21 J16
    Date: 2020–07–17
  24. By: Péter Elek (Department of Economics, Eötvös Loránd University, 1112 Budapest, Pázmány Péter sétány 1/a and Health and Population Lendület Research Group, Centre for Economic and Regional Studies, 1097 Budapest, Tóth Kálmán u. 4.); Anikó Bíró (Health and Population Lendület Research Group, Institute of Economics, Centre for Economic and Regional Studies, Tóth Kálmán u. 4., H-1097 Budapest, Hungary)
    Abstract: We examine regional differences in diabetes within Europe, and relate them to variations in socio-economic conditions, comorbidities, health behaviour and diabetes management. Using SHARE (Survey of Health, Ageing and Retirement in Europe) data, first, we estimate multivariate regressions, where the outcome variables are diabetes prevalence, diabetes incidence, and weight loss due to diet as an indicator of management. Second, we study the heterogeneous impact of the risk factors on the regional differences in incidence with causal random forests. Compared to Western Europe, the transition odds to diabetes is 2.3-fold in Southern and 2.7-fold in Eastern Europe, which decreases to 2.0 and 2.1 after adjusting for individual characteristics. The remaining differences are explained by country-specific healthcare indicators. Based on the causal forest approach, the adjusted East-West difference is essentially zero for the lowest risk groups (tertiary education, no hypertension, no overweight) and increases substantially with these risk factors, but the South-West difference is much less heterogeneous. The prevalence of diet-related weight loss around the time of diagnosis also exhibits regional variation. The results suggest that more emphasis should be put on diabetes prevention among high-risk individuals in Eastern Europe.
    Keywords: causal forest, diabetes, Europe, health behaviour, SHARE data
    JEL: C21 C45 I10 I12 I14
    Date: 2020–06
  25. By: Michelangeli, Valentina; Sette, Enrico; Peydró, José-Luis
    Abstract: This paper identifies and quantifies –for the first time– the relative importance of borrower (credit demand) versus bank (supply) balance-sheet channels. We submit fictitious applications (varying households’ characteristics) to the major Italian online-mortgage platform. In this way we ensure that all banks receive exactly the same mortgage applications, and that –for each application– there are other identical ones except for one borrower-level characteristic. We find that: (i) Borrower and bank channels are equally strong in causing (and explaining) loan acceptance (each channel changes acceptance by 50 p.p. for the interquartile range and explains 29% of R-square). (ii) Differently, for pricing, borrower factors are much stronger. (iii) Banks supplying less credit accept riskier borrowers. Finally –exploiting administrative credit register data– we document borrower-lender assortative matching: safer banks have more credit relations with safer firms. Moreover, the measure of credit supply estimated in the experiment (differently from a very similar measure estimated from the observational mortgage data) determines bank credit supply to firms and risk-taking in administrative data.
    Keywords: credit demand,credit supply,bank lending channel,household balance sheet channel,mortgages,SMEs,risk-taking
    JEL: G21 E51 C93
    Date: 2020
  26. By: Bucciol, Alessandro (University of Verona, Department of Economics); Trucchi, Serena (Cardiff Business School)
    Abstract: We study the relationship between saving choices and a key psychological characteristic such as locus of control using data from a longitudinal survey representative of the Dutch population. Locus of control measures the extent to which individuals perceive their life outcomes to be determined by their own actions, as opposed to external factors. Our findings show that those who believe to be in control of future outcomes save more, both at the extensive (probability to save) and intensive margins (amount of savings). We also investigate the mechanisms behind the relationship. Locus of control may affect both the propensity to save for general purposes and savings to achieve a specific purchase goal (e.g. buying a house). We find that both channels are significant, the latter being more sizeable.
    Keywords: Locus of Control; Saving decisions; Propensity to save; Mediation analysis.
    JEL: D14 D91
    Date: 2020–07
  27. By: Heinz Welsch (University of Oldenburg, Department of Economics)
    Abstract: The paper studies the role for climate-friendly behavior of individuals’ moral identity, conceptualized in terms of the moral foundations identified by moral psychologists (Care, Fairness, Liberty, Loyalty, Authority, and Sanctity). Two channels of influence are distinguished: a direct influence of moral identity at given cognitions of climate change impacts and effectiveness of individual action, and an indirect influence through the effect of moral identity on these cognitions. Using data from the European Social Surveys, the paper finds that endorsement of the individual-focused (universalist) moral foundations (Care, Fairness, Liberty) and endorsement of the group-focused moral foundations (Loyalty, Authority, Sanctity) both foster climate friendly behavior through the direct channel, the former 1.5 times stronger than the latter. In addition, individual-focused moral foundations enhance climate-friendly behavior by fostering the cognition of bad impacts of climate change and of effectiveness of own action. The indirect effect amounts to up to one third of the direct effect. Results suggest that climate-friendly behavior is to a considerable extent a matter of moral factors rather than consequentialist (benefit-cost) considerations.
    Keywords: climate-friendly behavior; moral identity; climate change cognition; moral foundations
    Date: 2020–07
  28. By: Daniel Schäfer (Economics Department at Johannes Kepler University); Carl Singleton
    Abstract: TWe use representative payroll data from Great Britain to document novel facts about nominal wage adjustments, focusing on workers who stayed in the same firm and job from one year to the next. The richness of these data allows us to analyse basic pay and the other components of earnings, such as overtime and incentive pay, while accounting for hours worked. Weekly and hourly basic pay show signs of downward nominal rigidity, but non-basic pay components adjust more commonly. Unusually, these payroll-based data also report the wage rates of hourly-paid employees. A quarter of these workers typically see no change in their wage rates from one year to the next in the same job, and very few experience wage cuts. We exploit the employer-employee link in the data and find evidence of state-dependent pay setting, depending on the business cycle and whether firms are shrinking or expanding. Finally, we show that the basic and non-basic wages of new hires and existing employees are similarly flexible.
    Keywords: downward nominal wage rigidity, components of pay, hourly pay rates, hiring wages, allocative wages
    JEL: E24 E32 J31 J33
    Date: 2020–06
  29. By: Giulia Bettin (Universita' Politecnica delle Marche and MoFiR (IT)); Claudia Pigini (Universita' Politecnica delle Marche); Alberto Zazzaro (Universita' degli Studi di Napoli Federico II)
    Abstract: We estimate the causal e ect of Financial inclusion on transition probabilities into and out of poverty. By exploiting a longitudinal sample from the Bank of Italy's Survey on Household Income andWealth between 2002 and 2016, we find that financial inclusion is effective in both reducing the likelihood of falling into poverty and helping poor people to improve economic conditions and get out of their poverty status. According to our baseline estimates, the access to a deposit account actually reduces the risk of falling below the poverty line by 3 percentage points and increases the chance of exiting poverty by 5 percentage points. The significance and the magnitude of such effects are confirmed also when considering alternative proxies for financial inclusion (availability of debit/credit/pre-paid cards, use of remote banking services) and are robust to alternative empirical strategies (bivariate model with overidentifying restrictions) and to misspeci cation problems related to omitted factors, such as the level of household indebtedness.
    Keywords: poverty, financial inclusion, state dependence
    JEL: C23 D14 I32
    Date: 2020–07
  30. By: Maria Esther Oswald-Egg (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Ursula Renold (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Higher education graduates with work experience enter the labour market more smoothly. This paper analyses how work experience from vocational education and training (VET) affects labour market outcomes after higher education. To account for selection into VET we use the regional enrolment rate as an instrument for upper-secondary VET. Results suggest that work experience gained during VET leads to significantly higher wages one year after graduation from higher education and less search time for first employment, but does not significantly lower the probability of an internship in the post-graduation year. However, these positive effects do not persist: the effect is no longer robustly significant for wages, unemployment, or employment position after five years. The effect operates through the human capital, social network, and screening channels, not the signalling channel. Our results suggest that upper-secondary VET is a good choice, not the second-best, for individuals planning on higher education.
    Date: 2019–12
  31. By: Eugenio Proto; Climent Quintana-Domeque
    Abstract: We use the UK Household Longitudinal Study and compare pre- (2017-2019) and post-COVID-19 data (April 2020) for the same group of individuals to assess and quantify changes in mental health among ethnic groups in the UK. We confirm the previously documented average deterioration in mental health for the whole sample of individuals interviewed pre- and post-COVID-19, and uncover four new facts. First, ethnicity predicts mental health deterioration when interacted with gender. Among men, BAME individuals experience a higher deterioration in mental health compared to British White individuals. However, among women, the deterioration in mental health is similar for both BAME and British White individuals. Second, the gender gap in mental health deterioration is only present among British White individuals and not among BAME individuals. Third, the drop in mental health among women and BAME men is very similar. Finally, there is substantial heterogeneity across BAME groups. The BAME group of Bangladeshi, Indian and Pakistani appears to be driving the difference in the gender gap in mental health deterioration between British White and BAME individuals. We call for additional research on the effects of the COVID-19 pandemic across different ethnic groups, and urge both policy makers and researchers to allocate resources to collect larger sample sizes of minority ethnic groups.
    Keywords: GHQ-12, wellbeing, mental health, mental distress, ethnicity, gender
    JEL: I1 J1 J15
    Date: 2020–07
  32. By: Robert Aue
    Abstract: This paper examines the e ect of price competition on the location choices of retail pharmacies in large cities. I exploit a regulatory change in 2004 that introduced price competition for non-prescription drugs to estimate the parameters of a dynamic spatial entry model, using a comprehensive panel dataset of retail pharmacy locations. The dynamic model is estimated by means of a nested xed point approach, because the asymmetric nature of the entry game renders conventional two-step estimators inapplicable. The computational burden of this approach is alleviated by tailoring the concept of oblivious equilibrium, developed by Weintraub et al. (2008), to the spatial nature of the game. I nd that the regulatory change lead to more intense local competition and lower entry costs. The estimated structural model is then used to decompose the e ects of the regulatory change on market structure and consumers' travel distances. I nd that one third of the total decline in the number of pharmacies between 2004 and 2016 is attributable to increased local interaction, whereas it caused the consumers' distance to the nearest pharmacy to increase only marginally. This suggests that price competition is bene cial for consumers not only because it lowers retail prices, but also because it leads to a more ecient spatial distribution of retail pharmacies.
    Keywords: spatial competition, oblivious Equilibrium, price Regulation
    JEL: L81 L50 R30
    Date: 2020–07
  33. By: Guilhem Cassan (University of Namur, DEFIPP, CRED, CEPREMAP); Marc Sangnier (University of Namur and Aix-Marseille Univ, CNRS, EHESS, Ecole Centrale, AMSE)
    Abstract: On March 15, about 20, 000, 000 voters cast their vote for the first round of the 2020 French municipal elections. We investigate the extent to which this event contributed to the COVID-19 epidemics in France. To this end, we first predict each département's own dynamics using information up to the election to calibrate a standard logistic model. We then take advantage of electoral turnout differences between départements to distinguish the impact of the election on prediction errors in hospitalizations from that of simultaneously implemented anti-contagion policies. We report a detrimental effect of the election in locations that were at relatively advanced stages of the epidemics by the time of the election. In contrast, we show that the election did not contribute to the epidemics in départements with lower infection levels by March 15. All in all, our estimates suggest that elections accounted for about 4, 000 excess hospitalizations by the end of March, which represents 15% of all hospitalizations by this time. They also suggest that holding elections in June may not be as detrimental.
    Keywords: COVID-19, hospitalizations, electoral turnout, municipal elections, prediction errors
    Date: 2020–06
  34. By: Fernando Alexandre (NIPE and University of Minho); Pedro Bação (University of Coimbra, CeBER, FEUC); João Cerejeira (NIPE and University of Minho); Hélder Costa (NIPE/University of Minho); Miguel Portela (NIPE and University of Minho)
    Abstract: Since late 2014, Portuguese Governments adopted ambitious minimum wage policies. Using linked employer-employee data, we provide an econometric evaluation of the impact of those policies. Our estimates suggest that minimum wage increases reduced employment growth and profitability, in particular for financially distressed firms. We also conclude that minimum wage increases had a positive impact on firms’ exit, again amplified for financially distressed firms. According to these results, minimum wage policies may have had a supply side effect by accelerating the exit of low profitability and low productivity firms and, thus, contributing to improve aggregate productivity through a cleansing effect.
    Keywords: minimum wage, financially distressed firms, productivity
    JEL: E24 J38 L25
    Date: 2020
  35. By: Orea, Luis; Álvarez, Inmaculada C.
    Abstract: This paper assesses the effectiveness of the Spanish lockdown of population on March 14th to battle the COVID-19 propagation, as well as the effect of bringing forward the date of this public intervention. We test not only whether the lockdown (and othercontrol measures) has prevented local contagion of the virus, but also whether it has prevented the inter-province spread of COVID-19. We find a drastic reduction in the propagation of coronavirus across the Spanish provinces since March 14th, indicating that the lockdown has been quite effective in preventing the between-province spread of the coronavirus. Regarding the propagation of the virus within each province, we find a significant contraction in the rates of growth of coronavirus cases (5.8% on average) attributed to the lockdown. A first counterfactual exercise shows that the lockdown implemented on March 14 has reduced the number of potential COVID-19 cases by 79.5%. The largest reductions in coronavirus cases are found in provinces that are either close to the epicentres of the coronavirus or adjacent to provinces with more advanced epidemics. A second counterfactual exercise shows, however, that the number of coronavirus cases would have been reduced by an additional 12.8% if the lockdown had been brought forward to March 7th, a reduction that likely would have prevented the collapse of many hospitals in Spain.
    Date: 2020

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