nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2020‒09‒07
27 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Do unions and works councils really dampen the gender pay gap? Discordant evidence from Germany By Oberfichtner, Michael; Schnabel, Claus; Töpfer, Marina
  2. An assessment of wealth taxes in a joint income-wealth perspective By Sarah Kuypers; Francesco Figari; Gerlinde Verbist
  3. The Effect of Real Estate Purchase Subsidies on Property Prices By Carla Krolage
  4. The ifo Tax and Transfer Behavioral Microsimulation Model By Maximilian Blömer; Andreas Peichl; Maximilian Joseph Blömer
  5. Do short-term rentals increase housing prices? Quasi-experimental evidence from Lisbon By Susana Peralta; João Pereira dos Santos; Duarte Gonçalves
  6. The Problem of Earlier Rights: Evidence from the European Trademark System By Georg von Graevenitz; Stuart J.H. Graham; Amanda Myers
  7. Are temporary value-added tax reductions passed on to consumers? Evidence from Germany's stimulus By Felix Montag; Alina Sagimuldina; Monika Schnitzer
  8. Corporate taxes and high-quality entrepreneurship: evidence from a tax reform By Ana Venâncio; Victor Barros; Clara Raposo
  9. Exploring the Relationship between Care Homes and Excess Deaths in the COVID-19 Pandemic: Evidence from Italy By Alacevich, Caterina; Cavalli, Nicolò; Giuntella, Osea; Lagravinese, Raffaele; Moscone, Francesco; Nicodemo, Catia
  10. Modelling COVID-19 mortality at the regional level in Italy By Ugofilippo Basellini; Carlo Giovanni Camarda
  11. Financial Support to Innovation: the Role of European Development Financial Institutions By Stefano CLÃ’; Marco FRIGERIO; Daniela VANDONE
  12. When should infrastructure assets be renewed?: the economic impact of cumulative tonnes on railway infrastructure By Nilsson, Jan-Eric; Odolinski, Kristofer
  13. Do Women Face a Glass Ceiling at Home? The Division of Household Labor among Dual-Earner Couples By Tomas Lichard; Filip Pertold; Samuel Skoda
  14. The economics of low emission zones By Börjesson, Maria; Bastian, Anne; Eliasson, Jonas
  15. Fathers Matter: Intra-Household Responsibilities and Children's Wellbeing during the COVID-19 Lockdown in Italy By Mangiavacchi, Lucia; Piccoli, Luca; Pieroni, Luca
  16. The spatial distribution of population in Spain: an anomaly in european perspective By Eduardo Gutiérrez; Enrique Moral-Benito; Roberto Ramos; Daniel Oto-Peralías
  17. Can Subsidized Employment Tackle Long-Term Unemployment? Experimental Evidence from North Macedonia By Armand, Alex; Carneiro, Pedro; Tagliati, Federico; Xia, Yiming
  18. Intangible investments and productivity performance By Michele Cincera; Julie Delanote; Pierre Mohnen; Anabela Santos; Christoph Weiss
  19. Internal migration and the spread of Covid-19 By Michele Valsecchi; Ruben Durante
  20. Vehicle Tax Design and Car Purchase Choices: A Case Study of Ireland By L. (Lisa B.) Ryan; Ivan Petrov
  21. Built Like a House of Cards? - Corporate Indebtedness and Productivity Growth in the Portuguese Construction Sector By José Santos; Nuno Tavares; Gabriel Osório de Barros
  22. Employee Training and Firm Performance: Quasi-experimental evidence from the European Social Fund By Pedro S. Martins
  23. The Decline of Small Cities: Increased Competition from External Shopping Malls or Long-Term Negative Trends? By Daunfeldt, Sven-Olov; Mihaescu, Oana; Rudholm, Niklas
  24. Are the Losers of Communism the Winners of Capitalism? The Effects of Conformism in the GDR on Transition Success By Max Deter
  25. Minimum Wage and Financially Distressed Firms: Another One Bites the Dust By Alexandre, Fernando; Bação, Pedro; Cerejeira, João; Costa, Hélder; Portela, Miguel
  26. The Impact of Social Security on Pension Claiming and Retirement: Active vs. Passive Decisions By Rafael Lalive; Arvind Magesan; Stefan Staubli
  27. Real-time estimation of the short-run impact of COVID-19 on economic activity using electricity market data By Carlo Fezzi; Valeria Fanghella

  1. By: Oberfichtner, Michael; Schnabel, Claus; Töpfer, Marina
    Abstract: Using a large employer-employee dataset, we provide new evidence on the relationship between the gender pay gap and industrial relations from within German workplaces. Controlling for unobserved workplace heterogeneity, we find no evidence that introducing or abandoning collective agreements or works councils affects the gender pay gap. This result holds at the mean and along the distribution, challenging the stylized fact that unions and works councils dampen the gender pay gap.
    Keywords: gender pay gap,industrial relations,works council,collective bargaining,Germany
    JEL: J31 J50
    Date: 2020
  2. By: Sarah Kuypers; Francesco Figari; Gerlinde Verbist
    Abstract: Over the last decades many researchers and policymakers have made strong arguments for broadening the taxes on wealth and its returns. Although the theoretical literature on (optimal) wealth taxation is growing, there exists a large void in empirical research. In this paper we address this void by analysing the redistributive and budgetary impact of wealth taxes in six European countries. We use data from the Eurosystem Household Finance and Consumption Survey (HFCS) which have been included in the tax-benefit model EUROMOD. In a first step we analyse wealth taxes against their main tax base, i.e. net wealth. In a second step we adopt a more integrated perspective by studying taxes on income and wealth jointly and assessing their redistributive effects against a broader measure of ability to pay, i.e. the joint distribution of income and wealth. We show that existing wealth taxes do not achieve any significant redistribution. Although they are in most cases strongly progressive, the low redistributive effect is mainly due to their small size. Moreover, there is a lack of neutrality in the tax system with regard to the source from which households draw their financial living standard, income or wealth. Hence, existing wealth taxes score badly on both vertical and horizontal equity grounds.
  3. By: Carla Krolage
    Abstract: This paper assesses to which degree housing purchase subsidies are capitalized into property prices. Using a large-scale micro data set on German house prices, I exploit the introduction of a new subsidy scheme in the state of Bavaria. My difference-indifference estimations at the Bavarian interstate border indicate that the prices of single-family homes increased by about 3.4% more in Bavarian border regions. This is consistent with a full capitalization of the subsidy. No effect is found for apartments, whose purchasers seldom qualify for the subsidy. A heterogeneity analysis confirms that the price effect is larger in segments of the real estate market with a higher exposure to the subsidy scheme. I also provide suggestive evidence that the subsidy scheme slightly stimulated construction activity. Overall, my results indicate that instead of making house purchases more affordable for families, the subsidy scheme led to a rise in house prices and mainly benefited sellers of properties.
    Keywords: Real estate market, housing subsidies, property prices
    JEL: H22 H24 H71 R31 R38
    Date: 2020
  4. By: Maximilian Blömer; Andreas Peichl; Maximilian Joseph Blömer
    Abstract: This paper describes the ifo Tax and Transfer Behavioral Microsimulation Model (ifo-MSM-TTL), a policy microsimulation model for Germany. The model uses household microdata from the German Socio-Economic Panel and firm data from the German Linked Employer-Employee Dataset. This microsimulation model consists of three components: First, a static module simulates the effects of a tax-benefit reform on the budget of the individual household. This includes taxes on income and consumption, social security contributions, and public transfers. Secondly, behavioral labor supply responses are estimated. Thirdly, a demand module takes into account possible restrictions of labor demand and identifies the partial equilibrium of the labor market after the supply reactions. The demand module distinguishes our model from most other microsimulation tools
    Keywords: Tax and benefit systems, labor supply, labor demand, Germany, policy simulation
    JEL: D58 H20 J22 J23
    Date: 2020
  5. By: Susana Peralta (Nova SBE); João Pereira dos Santos (Nova SBE); Duarte Gonçalves (Nova SBE)
    Abstract: We provide causal estimates of the impact of short-term rental regulations by exploiting a quasi-natural reform implemented in the city of Lisbon. In November 2018, the municipality of Lisbon banned the registry of new short-term rental properties in some neighborhoods. We rely on two administrative data sets on short-term rental registries, between 2015 and 2019, and house transactions between 2017 and 2019. We also use data on Airbnb rental prices since 2018. We employ a difference-in differences estimation taking advantage of the spatial discontinuity in the registry ban. We document a spike in new registries between the announcement and the implementation of the ban, driven by domestic incumbent owners. Airbnb prices do not seem to react to the ban. Both the number of transactions and house prices decreased after the reform, mostly in two-bedroom flats. Our findings confirm a sizeable impact of short-term rentals on real estate prices, concentrated in a segment of smaller houses.
    Keywords: Airbnb, Policy Analysis, Housing Market, Short-Term Rental, Portugal
    JEL: R12 R21 R30
    Date: 2020–07
  6. By: Georg von Graevenitz (Queen Mary University, CCP and CREATe); Stuart J.H. Graham (Georgia Institute of Technology); Amanda Myers (United States Patent and Trademark Office)
    Abstract: Laws protecting intellectual property rights balance interests of earlier and later rights holders. The tradeoffs are well established for patents. We argue that similar considerations apply to trademarks. Jurisdictions differ in how strongly they protect earlier rights, with EU trademark law protecting the registered use of an earlier right for much longer than US trademark law. Laws in both jurisdictions seek to eventually align registered use of earlier rights with their actual use, creating space on the trademark register for later rights. Data from a recent reform of trademark fees reveal that registered and actual use of EU marks frequently fail to align as intended. We analyse trademark opposition cases at EUIPO to test whether this creates costs for owners of later rights. We find that a subset of firms relies on the protection afforded to earlier rights to permanently expand the breadth of their marks beyond actual use, limiting access to trademarks for later applicants. We discuss policy implications.
    Keywords: Trademark, Clutter, Opposition, Non-use, Barriers to entry.
    Date: 2020–03–11
  7. By: Felix Montag; Alina Sagimuldina; Monika Schnitzer
    Abstract: This paper provides the first estimates of the pass-through rate of the ongoing temporary value-added tax (VAT) reduction, which is part of the German fiscal response to COVID-19. Using a unique dataset containing the universe of price changes at fuel stations in Germany and France in June and July 2020, we employ a difference-in-differences strategy and find that pass-through is fast and substantial but remains incomplete for all fuel types. Furthermore, we find a high degree of heterogeneity between the pass-through estimates for different fuel types. Our results are consistent with the interpretation that pass-through rates are higher for customer groups who are more likely to exert competitive pressure by shopping for lower prices. Our results have important implications for the effectiveness of the stimulus measure and the cost-effective design of unconventional fiscal policy.
    Date: 2020–08
  8. By: Ana Venâncio; Victor Barros; Clara Raposo
    Abstract: We examine the impact of corporate taxation on entrepreneurship, using a quasi-natural experiment, which substantially reduced the corporate tax rate for start-ups located in inland municipalities in Portugal. The combination of a high quality and universal firm level database for Portugal allows the detailed study of firm's behaviour. We use BPlim’s harmonized Central Balance Sheet panel for the period of 2006 to 2015 to evaluate the different behaviour of exporters and non-exporters in Portugal. We follow on the self-selection and learning-by-exporting literature, estimating several exporter productivity premiums. After finding solid evidence of a productivity advantage of exporters compared to non-exporters, which seems to emerge several years before firms start to export, we expand our study in order to explore the causality of the previous findings. Thus, we estimate a logit fixed effects model to assess the impact of several variables in the export propensity of a firm. We corroborate the self-selection theory, given the significance of labour productivity in probability of a firm exporting, as well, as significant effects of firm absolute size, relative market share, sector concentration and investment.
    Keywords: Firm entry; Job creation; Tax policy; Corporate taxes; High-quality entrepreneurship
    JEL: H24 H26 J24 L26 M13 H25
    Date: 2020–01
  9. By: Alacevich, Caterina (Pompeu Fabra University); Cavalli, Nicolò (Bocconi University); Giuntella, Osea (University of Pittsburgh); Lagravinese, Raffaele (University of Bari); Moscone, Francesco (Brunel University); Nicodemo, Catia (University of Oxford)
    Abstract: We explore the relationship between the spatial distributions of excess deaths and care home facilities during the COVID-19 outbreak in Italy. Using registry-based mortality data (January 1st- March 31st, 2015-2020) for Lombardy, one of the areas hit most severely, we estimate that municipalities with care homes present significantly higher excess death rates among the elderly (+41%). We find that this effect is not driven by the size of care homes and of the vulnerable population that they host. Rather, our results suggest that the excess deaths did not occur only within care homes and these facilities acted as one of the possible catalysts in the diffusion of COVID-19 in the whole elderly population of their surrounding territory.
    Keywords: care homes, COVID-19, excess mortality
    JEL: I10 I18 I30
    Date: 2020–07
  10. By: Ugofilippo Basellini; Carlo Giovanni Camarda
    Abstract: Italy was harshly hit by COVID-19, registering more than 35,000 deaths between February and July, 2020. The virus spread unequally across the country, with northern regions witnessing more cases and deaths than those in the centre and south. We investigate demographic and socio-economic factors that contributed to the diverse regional impact of the virus in Italy. Within a smoothing framework, we divide regions into three well-defined groups of High, Middle and Low mortality by cluster analysis. Extending the Poisson regression model to account for regional clusters, we find that COVID-mortality is positively associated with the share of ICU utilization, GDP per capita, proportion of the older population and the number of COVID-19 positive cases, while it is negatively associated with the delay of region-specific outbreaks and the number of tests performed. Our results have relevant policy implications for potential resurgence of COVID-19 infections in Italy and across the world.
    Keywords: COVID-19, SARS-CoV-2, Mortality modelling, Cluster analysis, Poisson regression, Demographic factors, Socio-economic determinants, regional level, Italy, MORTALITE / MORTALITY, ITALIE / ITALY, EPIDEMIE / EPIDEMICS, DISPARITE REGIONALE / REGIONAL DISPARITY, ANALYSE DES DONNEES / DATA ANALYSIS, DECES / DEATH
    Date: 2020
  11. By: Stefano CLÃ’; Marco FRIGERIO; Daniela VANDONE
    Abstract: This paper explores the role of Development Financial Institutions (DFIs) in supporting innovation by facilitating the access to finance for start-ups and high-growth small and medium enterprises. After having mapped the population of DFIs in Europe, we benchmark their portfolio of equity deals to those of other European financial institutions (venture capital and private equity). We build a unique sample of European 12,437 Mergers and Aquisitions within the 2008–2017 period and for each target company we match the related patenting and economic data. We obtain a dataset of 80,713 yearly observations which allows us to empirically analyse the pre and post-deal patenting activity of companies targeted by both DFIs and other financial institutions. Our findings show that the target company patenting performance improves after receiving the support of financial institutions, and this effect is on average higher when DFIs participate to the equity deal. We also find that partnerships among DFIs and other financial institutions are associated with the best patenting performance of the target companies. These results are confirmed when a propensity score matching technique is adopted to address biases associated to the potential endogenous selection of the target company.
    Keywords: Development banking;Development Financial Institutions;public-private partnership; equitydeals; patenting activity; financial support to innovation
    Date: 2020
  12. By: Nilsson, Jan-Eric (Research Programme in Transport Economics); Odolinski, Kristofer (Research Programme in Transport Economics)
    Abstract: This paper provides empirical evidence on the optimal timing of rail infrastructure renewal. Using an econometric approach on data from the Swedish railway network, we establish a relationship between cumulative tonnes and maintenance costs, as well as between cumulative tonnes and infrastructure failures that cause train delays. Together with average values on delay hours per failure and assumptions on passengers per train, we perform example calculations on the optimal timing for a track renewal. This timing will depend on the case considered, such as whether traffic intensity is high or low. Empirical evidence on the relationship between line capacity utilisation and delay time can provide more robust estimates for the different cases considered by an infrastructure manager. Still, the results in this paper is a significant step towards a usable cost-benefit analysis model for the timing of rail infrastructure renewals.
    Keywords: Railway; Infrastructure; Optimization; Renewal; Maintenance; Train Delays
    JEL: H54 L92 R49
    Date: 2020–08–28
  13. By: Tomas Lichard; Filip Pertold; Samuel Skoda
    Abstract: In this paper we ask how the division of household labor varies across heterosexual dual-earner couples with different relative wages with a focus on differences between Southern and Western Europe. Using the EU Statistics on Income and Living Conditions we first show that high income married or cohabiting women do twice as much housework as single women in Southern Europe. Further, their time spent in household production relative to their spouses’ time in Southern Europe is the same regardless of their relative wages, while in Western Europe we find positive elasticity of substitution in household production with respect to relative wages. We thus present positive evidence for the presence of a “second-shift” that women face in Southern Europe, which may stem from regional gender norms. Our findings hold after instrumenting for relative wages using the relative wages of similar socio-economic groups in other countries.
    Keywords: household production; division of labor; gender gap; elasticity of substitution;
    JEL: J12 J16 D13
    Date: 2020–08
  14. By: Börjesson, Maria (Swedish National Road & Transport Research Institute (VTI)); Bastian, Anne (City of Stockholm); Eliasson, Jonas (Linköping University)
    Abstract: This paper provides two micro-economic models that derive the social cost of a low emission zone (LEZ) for light vehicles. We apply the models to a proposed LEZ for light vehicles in Stockholm, which would prohibit diesel cars of Euro 5 or lower and gasoline cars of Euro 4 or lower in the inner city (25 km2 ). The first model is based on how an increase in user cost impacts traffic volumes in the inner city. This rather conventional user cost calculation of drivers’ loss requires however some strong assumptions. The second model shows that drivers’ losses can be calculated based on price changes observed on the used car market. Our empirical results indicate that the second model yields a twice as large welfare loss as the first. The forecasted benefits of the LEZ consist primarily of air quality improvements leading to health benefits. The empirical results must be interpreted with caution, but we find that the social benefit of air quality improvements is less than a tenth of the social cost.
    Keywords: Dieselgate; Low emission zones; Environmental zones; Cost-benefit analysis; Car market
    JEL: D61 H54 R41 R48
    Date: 2020–08–28
  15. By: Mangiavacchi, Lucia; Piccoli, Luca; Pieroni, Luca (University of Perugia)
    Abstract: The lockdown declared during the Spring 2020 because of the COVID-19 outbreak caused a reallocation of market and household work. A the same time school closures in many countries impacted on children's lives and their learning process. In Italy, schools and nurseries have been closed during three months and the incidence and quality of distant learning activities has been hetero-geneous over education levels and among schools. Using a real time survey data collected in April 2020 on children's wellbeing, and parents' market and household work, we estimate how the reallocation of intra-household responsibilities during the lock-down has affected children's use of time, their emotional status and their home learning. We find that changes in the parental division of household tasks and childcare are mostly due to the labor market restrictions imposed during the lockdown and that this reallocation increases fathers involvement in childcare and homeschooling. This positive variation in fathers involvement is accompanied by an increase in children's emotional wellbeing while the quality of children's home learning is mostly determined by distant learning activities proposed by their teachers.
    Keywords: parenting, childcare, children's education, emotional skills, COVID-19
    JEL: I21 I24 J13 J16
    Date: 2020–07
  16. By: Eduardo Gutiérrez (Banco de España); Enrique Moral-Benito (Banco de España); Roberto Ramos (Banco de España); Daniel Oto-Peralías (Universidad Pablo de Olavide)
    Abstract: We exploit the GEOSTAT 2011 population grid with a very high 1-km2 resolution to document that Spain presents the lowest density of settlements among European countries. We uncover that this anomaly cannot be accounted for by adverse geographic and climatic conditions. Using techniques from spatial econometrics, we identify the clusters that exhibit the lowest densities within Spain after controlling for geo-climatic factors: these areas mainly belong to Teruel, Zaragoza, Ciudad Real, Albacete, Sevilla and Asturias. We also explore the attributes that characterize the municipalities located in these low-density areas: larger population losses during the 1950-1991 rural exodus, higher shares of local-born inhabitants, longer distances to the province capital, higher shares of population employed in agriculture, and larger increases in regionalist vote after the Great Recession.
    Keywords: economic geography, Spain
    JEL: R10
    Date: 2020–08
  17. By: Armand, Alex (University of Navarra); Carneiro, Pedro (University College London); Tagliati, Federico (Bank of Spain); Xia, Yiming (University College London)
    Abstract: This paper examines the impact of an experiment in North Macedonia in which vulnerable unemployed individuals applying to a subsidized employment program were randomly selected to attend job interviews. Employers hiring a new employee from the target population receive a subsidy covering the wage cost of the worker for the first six months. Using administrative employment data, we find that attending the job interview led to an increase of 15 percentage points in the likelihood of being employed 3.5 years after the start of the intervention. We also find positive and statistically significant effects on individuals' non-cognitive and work-related skills.
    Keywords: active labor market policy, unemployment, wage subsidies, job search
    JEL: O15 J08 J68
    Date: 2020–07
  18. By: Michele Cincera; Julie Delanote; Pierre Mohnen; Anabela Santos; Christoph Weiss
    Abstract: Companies in advanced economies are facing new challenges. Investment in intangible assets – such as R&D expenditures, ICT activities, the cost of training employees and spending on improving the organizational process – has gained relevance to overcome market pressure. In the last decade, many studies discussed the impact of intangible investment on firms’ performance. However, comparison of the effect of different types of intangible investments is less well explored. The paper aims to fill this gap by assessing the impact of several intangible investments on productivity using for the first-time data from the EIB Survey on Investment (EIBIS) covering all 28 EU members, in the period 2015-2017. We allow intangible investments to affect productivity through innovation, using an augmented version of the Crépon-Duguet-Mairesse (1998) model. Our results show that all types of intangible investments positively impact labour productivity. However, ICT and acquisition of new skills are more important for explaining productivity gains than R&D investment and organizational improvements. Furthermore, R&D and ICT investments also affect productivity indirectly through their effects on innovation, which itself increases productivity.
    Keywords: R&D; ICT; Intangible investments; Innovation; Productivity
    JEL: O30 O44 O52
    Date: 2020–03
  19. By: Michele Valsecchi (New Economic School); Ruben Durante (Barcelona School of Economics and CEPR)
    Abstract: How does internal migration affect the spread of a pandemic? Looking at the case of Italy and using data on the province of origin of migrants located in outbreak areas, we document that provinces more exposed to the virus experience higher mortality in post-outbreak weeks, even when comparing provinces within the same region. We calculate that, had all non-outbreak provinces been as exposed as the one at the lowest decile of the exposure distribution, they would have experienced 60% fewer COVID-19 deaths. Additional evidence from phone records data confirms that the effect is mainly driven by increased mobility from outbreak areas.
    Keywords: internal migration, mobility, health, epidemic, Covid-19
    JEL: J61 R23 H12 I10
    Date: 2020–08
  20. By: L. (Lisa B.) Ryan; Ivan Petrov
    Abstract: This paper utilises a difference-in-differences model to study the impact of a vehicle tax reform on purchasing choices over a period of 10 years. In line with many other European countries, on the 1st of July 2008 the motor taxation regime in the Republic of Ireland was reformed to try and stem rising CO2 emissions from the passenger car fleet. To achieve this, both vehicle purchase and circulation taxes switched from an engine capacity basis to a CO2 emissions rating per kilometre basis. The aim of this study is to quantify the effectiveness of this (and subsequent) vehicle policy changes at achieving this goal. Using a difference in differences quasi-experimental design, we attempt to recreate the missing counterfactual (in the absence of the policy change(s)) of vehicle purchasing patterns in Ireland using the trend in UK new passenger car emissions over the same period. The findings suggest that the initial taxation policy change reduced average rated CO2 emissions from new passenger cars by between 8 to 11 g CO2/km. Some subsequent policy changes, such as the introduction of a scrappage scheme in 2010 also had an impact at stimulating the purchase of lower-emitting vehicles. This effect however was achieved by a substantial switch towards diesel powered vehicles, with other consequences for the environment, and a significant drop in tax revenue for the exchequer.
    Keywords: Vehicle taxes; Externalities; Difference-in-differences models; Passenger cars; CO2 emissions
    Date: 2019–06
  21. By: José Santos; Nuno Tavares; Gabriel Osório de Barros
    Abstract: Productivity growth in southern European countries has been slowing down at least since the early 2000s. In this regard, Portugal has been no exception to this common trend as productivity growth has been sluggish since the beginning of the century, well before the global financial crisis. At the same time, corporate levels of indebtedness of Portuguese firms have built-up quite substantially until recent years. Although with different levels of intensity across sectors, this pattern was particularly prevalent in the construction sector, rendering it to be a compelling case to study the relation between debt and productivity. Using microdata from Portuguese construction firms, in this paper, we investigate the long-term impact of persistent corporate debt accumulation on total factor productivity growth. To do so, we rely on the framework provided by the estimation of heterogeneous dynamic-panel models. This framework allows us to account for dynamics, feedback effects, firm heterogeneity, and cross-sectional dependencies arising from unobserved common factors. After taking into account the effect of unobserved common factors affecting all firms in the sector as well as firm’s specific characteristics, we find a negative and significant effect of corporate debt-build up on total productivity growth in the industry. This result is robust to different measures of total factor productivity, labour productivity and firms’ indebtedness. Our results suggest that timely measures aiming to reduce debt overhangs by firms may be essential tools to boost productivity growth in the construction sector.
    Keywords: Portugal; construction sector; corporate debt; productivity; heterogeneous dynamic panel models
    JEL: D24 C23 C22
    Date: 2020–02
  22. By: Pedro S. Martins
    Abstract: As work changes, firm-provided training may become more relevant; however, there is little causal evidence about the effects of training on firms. This paper studies a large training grants programme in Portugal, contrasting successful firms that received the grants and unsuccessful firms that did not. Combining several rich data sets, we compare a large number of potential outcomes of these firms, while following them over long periods of time before and after the grant decision. Our difference-in-differences models estimate significant positive effects on take up (training hours and expenditure), with limited deadweight; and that such additional training led to increased sales, value added, employment, productivity, and exports. These effects tend to be of at least 5% and, in some cases, 10% or more, and are robust in multiple dimensions of the analysis.
    Keywords: Training subsidies, Productivity, Counterfactual evaluation.
    JEL: J24 H43 M53
    Date: 2020–06
  23. By: Daunfeldt, Sven-Olov (Institute of Retail Economics (Handelns Forskningsinstitut)); Mihaescu, Oana (Institute of Retail Economics (Handelns Forskningsinstitut)); Rudholm, Niklas (Institute of Retail Economics (Handelns Forskningsinstitut))
    Abstract: We use the entry of 17 external shopping malls in Sweden to investigate how they have affected the performance of incumbent firms located in the city centres of small cities. We find that entry by external shopping malls decreased labour productivity for incumbent firms in city centres by -5.31%. However, when using time-specific fixed effects to control for common time trends in retailing in small cities, the impact on labour productivity, revenues, and number of employees due to the entry of external shopping malls becomes insignificant. The negative impact on incumbent firms is thus not due to the entry of external shopping malls but rather due to long-term negative economic trends in these cities.
    Keywords: external shopping malls; city centre; firm performance; agglomeration economies; competition; difference-in-differences
    JEL: D22 L25 P25 R12
    Date: 2020–08–24
  24. By: Max Deter
    Abstract: Following the fall of the Iron Curtain it was important for the acceptance of the new economic and political system that the former Communist elites did not maintain their privileges, and that protesters, who helped to overturn the old system, improved their situation. With newly available panel data on East Germany’s socialist past, the German Democratic Republic, we analyze how former Communist elites, dissidents, and the “silent majority” were affected by the transition from socialism into today’s market-based democracy. Applying random effects models, the results reveal that the transition reduced economic outcomes for former Communist elites in terms of life satisfaction, income, and employment. The transition had a positive impact on political dissidents and victims of repression. The transition success of the “silent majority” depended on the inner support of the system, that is, low support of the GDR predicts better outcomes in capitalism. Individual preferences for economic liberalism, risk, and trust in others can partly explain selection into Communist elites and dissidents, as well as differences in outcomes of the change from socialism to capitalism for these two groups.
    Keywords: East Germany, Communist elites, political resistance, autocracy, labor market, life satisfaction
    JEL: H10 N44 P20 D31
    Date: 2020
  25. By: Alexandre, Fernando (University of Minho); Bação, Pedro (University of Coimbra); Cerejeira, João (University of Minho); Costa, Hélder (University of Minho); Portela, Miguel (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: 2020–07
  26. By: Rafael Lalive; Arvind Magesan; Stefan Staubli
    Abstract: We exploit a unique Swiss reform to identify the importance of passivity, claiming social security benefits at the Full Retirement Age (FRA). Sharp discontinuities generated by the reform reveal that raising the FRA while imposing small early claiming penalties significantly delays pension claiming and retirement, but imposing large penalties and holding the FRA fixed does not. The nature of the reform allows us to identify that between 47 and 69% of individuals are passive, while imposing additional structure point identifies the fraction at 67%. An original survey of Swiss pensioners reveals that reference-dependent preferences is the main source of passivity.
    JEL: H55 J21 J26
    Date: 2020–07
  27. By: Carlo Fezzi; Valeria Fanghella
    Abstract: The COVID-19 pandemic has caused more than 8 million confirmed cases and 500,000 death to date. In response to this emergency, many countries have introduced a series of social-distancing measures including lockdowns and businesses' temporary shutdowns, in an attempt to curb the spread of the infection. Accordingly, the pandemic has been generating unprecedent disruption on practically every aspect of society. This paper demonstrates that high-frequency electricity market data can be used to estimate the causal, short-run impact of COVID-19 on the economy. In the current uncertain economic conditions, timeliness is essential. Unlike official statistics, which are published with a delay of a few months, with our approach one can monitor virtually every day the impact of the containment policies, the extent of the recession and measure whether the monetary and fiscal stimuli introduced to address the crisis are being effective. We illustrate our methodology on daily data for the Italian day-ahead power market. Not surprisingly, we find that the containment measures caused a significant reduction in economic activities and that the GDP at the end of in May 2020 is still about 11% lower that what it would have been without the outbreak.
    Date: 2020–07

This nep-eur issue is ©2020 by Giuseppe Marotta. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.