nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2020‒11‒09
28 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Technological Complexity and Economic Growth of Regions By Michael Fritsch; Michael Wyrwich; ; ;
  2. Heterogeneity in effective VAT rates across native and migrant households in France, Germany and Spain By Michael Christl; Andrea Papini; Alberto Tumino
  3. Compliance with the EU Waste Hierarchy: A matter of stringency, enforcement, and time By Egüez, Alejandro
  4. Productivity Drivers: Empirical Evidence on the Role of Digital Capital, FDI and Integration By Amat Adarov; David Klenert; Robert Marschinski; Robert Stehrer
  5. Tastes for Discrimination Monopsonistic in Labour Markets. By Bernardo Fanfani
  6. Empirical methodology for the evaluation of collusive behaviour in vertically-related markets: an application to the "yogurt cartel" in France By Céline Bonnet; Zohra Bouamra-Mechemache
  7. Are carbon prices redundant in the 2030 EU climate and energy policy package? By Finn Roar Aune; Rolf Golombek
  8. Reference Points for Retirement Behavior: Evidence from German Pension Discontinuities By Arthur Seibold
  9. The Employment E ects of Collective Bargaining. By Bernardo Fanfani
  10. Information Integration, Coordination Failures, and Quality of Prescribing By Böckerman, Petri; Laine, Liisa T.; Nurminen, Mikko; Saxell, Tanja
  11. How rankings disguise gender inequality: a comparative analysis of cross-country gender equality rankings based on adjusted wage gaps By Karolina Goraus; Joanna Tyrowicz; Lucas van der Velde
  12. Peer Gender and Mental Health By Getik, Demid; Meier, Armando N.
  13. The Impact of All-Day Schools on Student Achievement - Evidence from Extending School Days in German Primary Schools By Arnim Seidlitz; Larissa Zierow
  14. Austerity and Distributional Policy By Matteo Alpino; Zareh Asatryan; Sebastian Blesse; Nils Wehrhöfer
  15. Impacts of a French Urban Renewal Program on Local Housing Markets By Sylvain Chareyron; Florence Goffette-Nagot; Lucie Letrouit
  16. Lost opportunities: Market work during high school, establishment closures and the impact on career prospects By Müller, Dagmar
  17. Crisis, adjustment and resilience in the Greek labor market: an unemployment decomposition approach By Monastiriotis, Vassilis; Martelli, Angelo
  18. The Role of Information Provision for Attitudes Towards Immigration: An Experimental Investigation. By Patrick Bareinz; Silke Uebelmesser
  19. Evaluating the Effectiveness of Policies Against a Pandemic By Christian Alemán; Christopher Busch; Alexander Ludwig; Raül Santaeulàlia-Llopis
  20. Multiple jobholding in Europe: Structure and dynamics By Conen, Wieteke
  21. Happy Families: types, ties and multidimensional wellbeing By Dalila de Rosa; Pierluigi Murro; Matteo Rizzolli
  22. The Effect of Information on Market Activity; Evidence from Vehicle Recalls By Inge van den Bijgaart; Davide Cerruti
  23. Intra-Country comparisons of Poverty Rate By Gaia Bertarelli; Luigi Biggeri; Caterina Giusti; Stefano Marchetti; Monica Pratesi
  24. The Dynamic Impact of Exporting on Firm R&D Investment By Maican, Florin; Orth, Matilda; Roberts, Mark J.; Anh Vuong, Van
  25. How inequality shapes political participation: The role of spatial patterns of political competition. By Francesc Amat; Pablo Beramendi; Miriam Hortas-Rico; Vicente Rios
  26. Contrasting Incentives for Earnings Management: Board Activity and Board Remuneration in Spanish Firms By McWay, Ryan; Saona, Paolo; Muro, Laura; Jara, Mauricio
  27. COVID-19 and Educational Inequality: How School Closures Affect Low- and High-Achieving Students By Elisabeth Grewenig; Philipp Lergetporer; Katharina Werner; Ludger Woessmann; Larissa Zierow
  28. School Selectivity, Peers, and Mental Health By Bütikofer, Aline; Ginja, Rita; Landaud, Fanny; Løken, Katrine

  1. By: Michael Fritsch; Michael Wyrwich; ; ;
    Abstract: We investigate how initial conditions that existed in East Germany at the end of the socialist regime impact regional development during the turbulent shock transition to a market economic system. Our investigation spans a period of almost 30 years. Both the self-employment rate (an indication of the existence of a pre-socialist entrepreneurial tradition) and the share of the workforce with a tertiary degree have a strong positive effect on regional development. We conclude that knowledge and a tradition of entrepreneurship have long-run positive effects on development in regions that face disruptive shocks. Entrepreneurship and knowledge play a less important role for development across West German regions, where no significant shocks occurred.
    Keywords: Entrepreneurship, knowledge, economic development, history, transformation, East Germany
    JEL: L26 R11 N93 N94
    Date: 2020–10
  2. By: Michael Christl (European Commission - JRC); Andrea Papini (European Commission - JRC); Alberto Tumino (European Commission - JRC)
    Abstract: This paper contributes to the literature on the distributional properties of VAT analysing who bears higher VAT payments between native and migrant household in France, Germany and Spain. The question is of interest both from a distributional and fiscal perspective, fitting the ongoing debate of the net fiscal impact of immigration. Using data from the 2010 EU HBS and a simple VAT calculator we show the existence of gaps in effective VAT rates between native and migrant households in France and in Spain, while no significant gap is observed in Germany. Our results also confirm the existing evidence on the regressivity of VAT with respect to income. These findings suggest that the fairness consequences of VAT reforms should be carefully assessed and advocate for the importance of considering indirect taxation when assessing the fiscal cost of migration.
    Keywords: VAT, redistribution, migration
    JEL: H24 R20 D12
    Date: 2020–10
  3. By: Egüez, Alejandro (Department of Economics, Umeå University)
    Abstract: This paper assesses whether and to what extent income and the stringency and enforcement (S&E) of environmental regulation influence compliance with the EU Waste Hierarchy (EWH), i.e., how EU member states treat waste. The EWH prioritizes waste prevention and re-use over recycling, which is ranked above waste to energy (WtE), while incineration and landfilling are the least preferred options. Biennial panel data for the period 2010–2016 is used to create a compliance index based on the waste treatment alternatives in the EWH. The waste (excluding major mineral waste) of 26 European Union countries is examined. This study is the first of its kind to regress an EWH compliance index on income, the stringency and enforcement of environmental regulation, and other variables that are also expected to affect the relative benefits and costs of waste treatment, such as population density, heating demand, and electricity prices. The shares of landfilling, incineration, WtE, and recycling are also modeled to capture the effect of these variables in the waste treatment mix. The stringency and enforcement of environmental regulation are found to have a positive effect on compliance with the EWH, which has increased over time.
    Keywords: EU waste hierarchy; waste treatment ladders; income; policy stringency; policy enforcement
    JEL: O44 Q53 R11
    Date: 2020–10–23
  4. By: Amat Adarov (The Vienna Institute for International Economic Studies (wiiw)); David Klenert (European Commission - JRC); Robert Marschinski (European Commission - JRC); Robert Stehrer (The Vienna Institute for International Economic Studies (wiiw))
    Abstract: There are marked differences in productivity dynamics between countries as well as industries, often leading to substantial performance gaps, such as the gap in labour productivity between the EU and the US. In this article, we use the 2019 release of the EU KLEMS database to look into the drivers of productivity. In particular, we analyse how different types of capital (including intangible capital), foreign direct investment, integration into global value chains and EU integration affect labour productivity. Key findings are that intangible Information and Communication Technology (ICT) capital is a strong driver of productivity both at sectoral and aggregate levels, even more so than tangible ICT capital. Furthermore, backward global value chain integration and EU integration are positively associated with labour productivity. Contrary to expectations, we do not find evidence of a productivity-enhancing effect of foreign direct investment. Finally, we estimate by how much the productivity gap between the EU and the US could be reduced through different ICT investment policies.
    Keywords: productivity, productivity gap, digitalisation, ICT capital, FDI, global value chains, intangible capital
    Date: 2020–10
  5. By: Bernardo Fanfani (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: This paper presents a model where wage di erences between men and women arise from taste-based discrimination and monopsonistic mechanisms. We show how preferences against women a ect heterogeneity in firms' pay policies in the context of an imperfect labour market, deriving a test for the presence of taste-based discrimination and of other firm-level mechanisms driving the gender wage gap, in particular compensating wage differentials. These results inform an analysis of sex pay di erences in the Italian manufacturing sector showing that preferences for workplaces providing more exible schedules are a significant determinant of the gender wage gap. Taste-based discrimi- nation mechanisms appear to be significant as well, but small in size.
    Keywords: Gender Wage Gap, Taste-Based Discrimination, Monopsonistic Discrimination, CompensatingWage Di erentials, FirmWage Policy, Matched Employer-Employee Data.
    JEL: J00 J16 J31 J71
    Date: 2020–10
  6. By: Céline Bonnet (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Zohra Bouamra-Mechemache (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: The paper proposes a five-step methodology based on the estimation of demand and supply models to test the existence of manufacturers' collusive behaviour and evaluate its impact on market and welfare. This methodology allows for the estimation of profit sharing in vertical chains by properly modelling the contracting stage between manufacturers and retailers. We apply this methodology to analyse the effects of the "yogurt cartel" that prevailed in the French dairy dessert market between private label providers during the period 2006-2012. We find that data supports collusive behaviour between private label manufacturers, and lead to average price increase varying from 7.3% and 11.3%, according to the product category. We found an umbrella effect on dairy products sold under national brands at the wholesale level but not at the retail level. The cartel benefits manufacturers both for the sales of the national brand and private label products, while retailers lost profits over the private label products but gained profits over the national brand products. The cartel implies a relatively low decrease in consumer welfare —lower than the gain for the industry—such that the overall welfare effect of the cartel is positive.
    Keywords: cartel,collusion,profit sharing,Bargaining,private label
    Date: 2020
  7. By: Finn Roar Aune (Statistics Norway); Rolf Golombek
    Abstract: In 2018, an agreement between the key EU institutions – the Commission, the European Parliament, and the European Council – was reached after a long-lasting discourse over the 2030 EU climate and energy policy package. This paper offers a comprehensive assessment of the EU package, with its three main targets: lower greenhouse gas emissions, higher renewable share in final energy consumption, and improved energy efficiency. We find that the renewable and energy efficiency targets have been set so high that the derived emissions reduction (50 percent) exceeds the EU climate target (40 percent). Hence, there is no need for an EU climate policy, for example, to use carbon prices to reach the EU climate goals. It is, however, not cost-efficient to achieve the climate target by imposing the three EU targets. We demonstrate that a cost-efficient policy that obtains a 50 percent GHG emissions reduction would increase annual welfare (relative to the Reference scenario) by an amount corresponding to 0.6 percent of GDP in Europe.
    Keywords: climate policy; renewables; energy efficiency; energy modeling; EU 2030
    JEL: Q28 Q41 Q48 Q54
    Date: 2020–10
  8. By: Arthur Seibold
    Abstract: This paper studies the large concentration of retirement behavior around statutory retirement ages, a puzzling stylized fact. To investigate this fact, I estimate bunching responses to 644 pension benefit discontinuities, using administrative data on the universe of German retirees. Financial incentives alone cannot explain retirement patterns, but there is a large direct effect of statutory retirement ages. I argue that the framing of statutory ages as reference points for retirement provides a plausible explanation. Simulations based on a model with reference dependence highlight that shifting statutory ages via pension reforms is an effective policy to influence retirement behavior.
    Keywords: Pensions, retirement, reference dependence
    JEL: H55 J26 D91
    Date: 2020–10
  9. By: Bernardo Fanfani (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: This paper studies the wage and employment e ects of Italian collective bargaining, analysing monthly data on the population of private-sector employees matched with information on contractual pay levels settled in industry-wide agreements bargained by trade unions' and employers' representatives at the national level. The research design exploits the generalised wage growth induced by changes in contractual pay levels, whose timing and size di ers across collective agreements, and it compares the outcomes of interest within sectors and geographical locations between workers subject to di erent contracts. The specification adopted controls for space-specific sectoral unobserved time-varying disturbances in a fully non-parametric way. Results show that a growth in contractual wages increases actual pay levels, determining at the same time negative effects on employment. The confidence interval of the implied own-price labour demand elasticity ranges between -0.4 and -1.2 in the preferred model specification. The interactions of this parameter with firm-level outcomes {value added per worker, size, the labour share and capital intensity{ are broadly consistent with Hicks-Marshall laws and with traditional models of centralized wage bargaining. Further analyses carefully document the dynamics of employment adjustments to contractual wage levels across time and assess the overall robustness of the results.
    Keywords: collective bargaining, labour demand, employment, industrial relations, minimum wage.
    JEL: J01 J08 J21 J23 J38 J52
    Date: 2020–10
  10. By: Böckerman, Petri; Laine, Liisa T.; Nurminen, Mikko; Saxell, Tanja
    Abstract: Poor information flows hamper coordination, potentially leading to suboptimal decisions in health care. We examine the effects of a nationwide policy of information integration on the quality of prescribing. We use the rollout of an electronic prescribing system in Finland and prescription-level administrative data. We find no effect on the probability of co-prescribing harmful drug combinations in urban regions. In rural regions, this probability reduces substantially, by 35 percent. The effect is driven by prescriptions from unspecialized physicians and from multiple physicians. Improving the local information environment thus enhances coordination and narrows differences in the quality of prescribing.
    Keywords: health information technology, digitalization, e-prescribing, integration, quality of prescribing, public policy, Local public finance and provision of public services, H51, H75,
    Date: 2020
  11. By: Karolina Goraus (The World Bank; University of Warsaw); Joanna Tyrowicz (Group for Research in Applied Economics (GRAPE); University of Warsaw; Institute of Labor Economics (IZA)); Lucas van der Velde (Group for Research in Applied Economics (GRAPE); Warsaw School Economics)
    Abstract: In the case of gender wage gaps, adjusting adequately for individual characteristics requires prior assessment of several important deficiencies, primarily whether a given labor market is characterized by gendered selection into employment, gendered segmentation and whether these mechanisms differ along the distribution of wages. Whether a country is perceived as more equal than others depends on the interaction between the method of adjusting gender wage gap for individual characteristics and the prevalence of these deficiencies. We make the case that this interaction is empirically relevant by comparing the country rankings for the adjusted gender wage gap among 23 EU countries. In this relatively homogeneous group of countries, the interaction between method and underlying deficiencies leads to substantial variation in the extent of unjustified inequality. A country may change its place in the ranking by as much as ten positions – both towards greater equality and towards greater inequality.
    Keywords: comparative analyses, inequality, rankings
    JEL: J31 J71
    Date: 2020
  12. By: Getik, Demid; Meier, Armando N.
    Abstract: Adolescent mental health is key for later well-being. Yet, causal evidence on environmental drivers of adolescent mental health is scant. We study how an important classroom feature---the gender composition in compulsory-school---affects mental health. We use Swedish administrative data (N=576,285) to link variation in gender composition across classrooms within cohorts to mental health. We find that a higher share of female peers in a classroom increases the incidence of mental health diagnoses, particularly among boys. The effect persists into adulthood. Peer composition is thus an important and persistent driver of mental health.
    Keywords: school, gender, peer effects, mental health
    JEL: I12 I19 I21 I31 J16 J24
    Date: 2020–10
  13. By: Arnim Seidlitz; Larissa Zierow
    Abstract: This paper studies the effect of longer school days — induced by voluntary all-day programs in German primary schools — on school performance. We combine data from the National Educational Panel Study covering 5771 primary school students with municipality-level information on all-day school investments. Facing the challenge of selection into all-day school programs, we instrument all-day school expansion with construction subsidies from a large federal investment project. Results imply that all-day programs lead to improvements in language and math skills as measured by teacher assessments and to a higher probability of being recommended for the academic track after primary school. The heterogeneity analysis reveals that boys benefit more than girls from all-day programs in terms of the assessment by their math teacher. Furthermore, there is a significant negative effect on non-native speakers’ math and German test scores.
    Keywords: all-day school, skill development, educational inequality
    JEL: J13 I28 I24
    Date: 2020
  14. By: Matteo Alpino; Zareh Asatryan; Sebastian Blesse; Nils Wehrhöfer
    Abstract: What are the effects of austerity on distributional policy? We exploit the autonomy of Italian municipalities in setting non-linear income taxes and the exogenous introduction of a fiscal rule to show that austerity increases tax progressivity. Consistent with this evidence, we find that in a panel of countries austerity correlates with higher marginal tax rates on top, but not on average earners. The increase in progressivity in Italy is driven by mayors having college-degree or working in high-skill occupations, while less-educated or lower-skilled mayors raise taxes uniformly. In the first post-reform election, mayors of former type have higher reelection odds.
    Keywords: austerity, fiscal rules, non-linear income taxation, difference-in-discontinuity
    JEL: D78 H24 H70
    Date: 2020
  15. By: Sylvain Chareyron (Université Paris-Est Créteil, ERUDITE, TEPP, France); Florence Goffette-Nagot (Univ Lyon, CNRS, GATE UMR 5824, F-69130 Ecully, France); Lucie Letrouit (Paris School of Economics, Ecole des Ponts ParisTech, 48 boulevard Jourdan 75014 PARIS, France)
    Abstract: Urban renewal programs have been implemented in many countries to fight housing decay, poverty concentration, and associated social ills in the last decades. In this paper, we propose an evaluation of a large-scale urban renewal program launched in France in 2004. Using a novel estimator aimed at avoiding bias in the estimation of treatment effects heterogeneous across treatment groups or time periods, and complementing its results with a more precise double fixed effects difference-in-differences estimator, we find no significant effect of the program on housing values and transaction volume. However, we do find a significant impact on the social profile of housing buyers and sellers: an increased number of upward transitions of housing units, from blue-collar sellers to intermediate category buyers or from intermediate category sellers to executive buyers, and reduced housing transactions among executives. Altogether, our findings suggest a renewed interest of upper socio-professional categories to invest or keep their property in the renovated neighborhoods.
    Keywords: Place-based policies, urban renewal, housing prices, housing spillovers, difference-in-differences
    JEL: D62 H23 R21 R31
    Date: 2020
  16. By: Müller, Dagmar (Research Institute of Industrial Economics (IFN),)
    Abstract: In this paper, I study the importance of market work during high school for graduates’ school-towork transition and career prospects. Relying on Swedish linked employer-employee data over a 30-year period, I show that market work during school provides students with an important job search channel, accounting for 30 percent of direct transitions into regular employment. I use the fact that some graduates are deprived of this channel due to establishment closures just prior to graduation and labor market entry. I compare classmates from vocational tracks with the same field of specialization to identify the effects of the closures and show that lost job-finding opportunities due to an establishment closure lead to an immediate and sizable negative effect on employment after graduation. The lost employer connection have also persistent, but diminishing negative effects on employment and earnings for up to 10 years, but are not permanent. Parts of the effect appear to be driven by a process where graduates who are subject to a closure of a relevant employer before graduation have to find employment in an industry which is less relevant to their education.
    Keywords: social contacts; young workers
    JEL: J01
    Date: 2020–10–22
  17. By: Monastiriotis, Vassilis; Martelli, Angelo
    Abstract: The crisis in Greece led to one of the largest economic shocks in European history. Drawing on micro-data from the Greek Labour Force Survey, we utilize standard micro-econometric methods and non-linear decomposition techniques to measure the size of the shock exerted on the Greek regional and national labor markets and the compositional and price adjustments in response to this. We find elements of economic dynamism, with some sizeable price adjustments in the economy of the Greek capital, Athens; but overall our results show that compositional adjustments (in labor quality/characteristics) have been partial and limited, becoming stronger only in the more recent recovery. Our results suggest a significant metropolitan advantage with regard to economic resilience, coming predominantly from a more efficient functioning of the labor market in metropolitan areas vis-a-vis other regions. Our use of the decomposition techniques for the analysis of macro-level developments in the labor market offers a novel perspective to the application of the decomposition methodology.
    Keywords: adjustment; Greek crisis; non-linear decomposition; shock; unemployment risk
    JEL: R14 J01 N0
    Date: 2020–10–06
  18. By: Patrick Bareinz; Silke Uebelmesser
    Abstract: We conduct a survey experiment on the effect of information provision on attitudes towards immigration in Germany. The focus lies on two theory-based economic channels, labor market and welfare state concerns, and immigration policy preferences. Using probability-based representative survey data, we experimentally vary the quantity and the type of information provided to respondents. We find that a bundle of information on both the share and the unemployment rate of foreigners robustly decreases welfare state concerns about immigration. There are slightly less pronounced effects on the labor market and policy channels. Further data-driven analyses reveal heterogeneity in treatment effects. Our findings therefore suggest that careful composition and targeting of information interventions can increase their effectiveness in the public debate on immigration.
    Keywords: immigration attitudes, survey experiment, information provision, belief updating, welfare state, labor market, machine learning
    JEL: C90 D83 F22 J15
    Date: 2020
  19. By: Christian Alemán (Universitat Autonoma de Barcelona); Christopher Busch (Universitat Autonoma de Barcelona); Alexander Ludwig (SAFE, University of Mannheim); Raül Santaeulàlia-Llopis (Universitat Autonoma de Barcelona)
    Abstract: We develop a novel empirical approach to identify the effectiveness of policies against a pandemic. The essence of our approach is the insight that epidemic dynamics are best tracked over stages, rather than over time. We use a normalization procedure, built around making the pre-policy paths of the epidemic identical across regions, to uncover regional variation in the stage of the epidemic at the time of policy implementation. This variation delivers clean identification of the policy effect based on the epidemic path of a leading region that serves as a counterfactual for other regions. We apply our method to evaluate the effectiveness of the nationwide stay-home policy enacted in Spain against the COVID-19 pandemic. We nd that the policy saved 15:9% of lives. Its effectiveness evolves with the epidemic and is larger when implemented at earlier stages.
    Keywords: macroeconomics, pandemic, stages, COVID-19, stay-home, policy effects, identification
    JEL: E01 E22 E25
    Date: 2020–10
  20. By: Conen, Wieteke
    Abstract: This study documents the results of a research project examining where, when and how multiple jobholding has changed in Europe over the past decades. The research was conducted by a research team from the University of Amsterdam (UvA AIAS-HSI) and addresses changes in individual and occupational features as well as the quality of multiple jobholders' work. The study describes multiple jobholding against the backdrop of an increasingly flexible and fragmented world of work, and, thus, relates the debate on multiple jobholders' motives, mobility and job out-comes to labour market flexibilisation and fragmentation. The project is part of the European research network "Hybridisation of Work", which is organized by the Economic and Social Science institute (WSI) of the Hans-Böckler-Foundation.
    Date: 2020
  21. By: Dalila de Rosa (University of Turin); Pierluigi Murro (LUISS University); Matteo Rizzolli (LUMSA University)
    Abstract: The literature has already highlighted the positive role of marriage on objective wellbeing. Indeed, married couples earn more, are less likely to be unemployed, live longer and healthier lives, and so on. Married couples also show higher levels of subjective wellbeing, as revealed in several happiness studies. These previous studies typically offer a single, often generic measure of happiness. The novel contribution of this paper is to offer a more comprehensive perspective of various dimensions of subjective wellbeing. The hypothesis under analysis concerns whether, and if so, how different family types (single, cohabiting, married) and stronger family ties (defined by the presence of children and religious observance) impact the dimensions of subjective wellbeing (satisfaction with economic resources, health, relations, leisure and labour) using Italian data between 2000 and 2015. Our findings shows that married subjects display a consistently higher probability of being satisfied with health, relationships among family and friends, whereas those defined as single display a higher probability of being satisfied with leisure time and to a lesser extent with their work. Finally, married couples also show a higher probability of being satisfied with their economic resources.
    Keywords: family, gender, happiness, wellbeing
    JEL: I31 J12 H12
    Date: 2019–11
  22. By: Inge van den Bijgaart; Davide Cerruti
    Abstract: We evaluate the effect of vehicle recalls on vehicle transactions in the second-hand market. Using a rich dataset of Dutch vehicle registrations, we exploit the quasi-experimental variation in recalls across nearly-identical cars. We find strong heterogeneities across market segment: vehicles with a lower (higher) list price or some (zero) defects experience an increase (decrease) in transactions after a recall. Based on our theoretical model, this suggests that recalls increase sorting in low-end markets, yet exacerbate adverse selection in high-end markets. Our results shed light on the effect of information arrival in markets subject to uncertainty and information asymmetries.
    Keywords: vehicles, recalls, adverse selection, sorting, information
    JEL: D12 D83 L15 L62
    Date: 2020
  23. By: Gaia Bertarelli; Luigi Biggeri; Caterina Giusti; Stefano Marchetti; Monica Pratesi
    Abstract: Reducing the inequality between member states is a target the European Union (EU) has set itself in its treaties and monitors through its cohesion reports. This has become a much debated and researched issue over the last decade. One result emerges clearly in the debate: this goal is far to be reached without a deeper studying of inequalities within each Member States. This paper describes a general approach to the previous issue proposing a set of statistical methods that can be applied in the almost totality of the EU countries. It is based on data from European current sample surveys on consumption expenditure (Household Budget Survey) and on income and living conditions (EUSILC - European Survey on Income and Living Conditions). It uses the most popular poverty indicator from the Laeken set, the At Risk of Poverty Rate (ARPR) or Head Count Ratio (HCR). The examples are built on Italian data. The sub national level used is defined on the basis of the NUTS classification used by Eurostat.
    Keywords: Inequality, Small Area Estimation, Laeken indicators
    JEL: C18 C80 C83
    Date: 2020–10–01
  24. By: Maican, Florin (University of Gothenburg); Orth, Matilda (Research Institute of Industrial Economics (IFN)); Roberts, Mark J. (Pennsylvania State University); Anh Vuong, Van (Maastricht University)
    Abstract: This article estimates a dynamic structural model of firm R&D investment in twelve Swedish manufacturing industries and uses it to measure rates of return to R&D and to simulate the impact of trade restrictions on the investment incentives. R&D spending is found to have a larger impact on firm productivity in the export market than in the domestic market. Export market profits are a substantial source of the expected return to R&D. Counterfactual simulations show that trade restrictions lower both the expected return to R&D and R&D investment level, thus reducing an important source of the dynamic gains from trade. A 20 percent tariff on Swedish exports reduces the expected benefits of R&D by an average of 32.2 percent and lowers the amount of R&D spending by 13.9 percent in the high-tech industries. The corresponding reductions in the low-tech industries are 30.4 and 8.9 percent, respectively. R&D adjustments in response to export tariffs mainly occur on the intensive, rather than the extensive, margin.
    Keywords: R&D; Innovation; Trade policy; Productivity
    JEL: F13 L13 L60 O30
    Date: 2020–10–13
  25. By: Francesc Amat; Pablo Beramendi; Miriam Hortas-Rico; Vicente Rios
    Abstract: This study investigates how economic inequality shapes political participation and to what extent this relationship is moderated by political competition. In the case of Spain, the link between income inequality and turnout is negative, as expected, but rather weak, suggesting that local turnout rates do not depend exclusively on income inequality levels. We develop a theoretical model linking inequality, political competition and turnout. To test the validity of the theoretical model we derive a novel data set of inequality metrics for a sample of municipalities over the four local elections that took place between 2003 and 2015 and specify a spatial dynamic panel data model that allows us to account for serial dependence, unobserved spatial heterogeneity and spatial dependence. Our paper reveals two Spains: one in which high inequality and high levels of political competition yield relatively lower turnout rates, and one in which high levels of inequality and low levels of political competition yield relatively higher turnout rates. In addition, our _ndings suggest that this last result might be driven by a higher budgetary use of policies targeted to low income voters.
    Keywords: Dynamic Spatial Panels, Turnout, Income Inequality, Spanish Municipalities
    JEL: C1 H7
    Date: 2020–10
  26. By: McWay, Ryan (University of Michigan); Saona, Paolo; Muro, Laura; Jara, Mauricio
    Abstract: We analyze the effect board activity and board remuneration has on earnings management (EM). Our results show that more active boards are inefficient in preventing earnings manipulation. Regarding board compensation we find a U-shaped relation indicating that excessive remuneration will lead to more earnings management. Policy recommendations are derived from the findings.
    Date: 2019–12–01
  27. By: Elisabeth Grewenig; Philipp Lergetporer; Katharina Werner; Ludger Woessmann; Larissa Zierow
    Abstract: In spring 2020, governments around the globe shut down schools to mitigate the spread of the novel coronavirus. We argue that low-achieving students may be particularly affected by the lack of educator support during school closures. We collect detailed time-use information on students before and during the school closures in a survey of 1,099 parents in Germany. We find that while students on average reduced their daily learning time of 7.4 hours by about half, the reduction was significantly larger for low-achievers (4.1 hours) than for high-achievers (3.7 hours). Low-achievers disproportionately replaced learning time with detrimental activities such as TV or computer games rather than with activities more conducive to child development. The learning gap was not compensated by parents or schools who provided less support for low-achieving students. The reduction in learning time was not larger for children from lower-educated parents, but it was larger for boys than for girls. For policy, our findings suggest binding distance-teaching concepts particularly targeted at low-achievers.
    Keywords: educational inequality, COVID-19, low-achieving students, home schooling, distance teaching
    JEL: I24 J62 D30
    Date: 2020
  28. By: Bütikofer, Aline (Dept. of Economics, Norwegian School of Economics and Business Administration); Ginja, Rita (Department of Economics, University of Bergen); Landaud, Fanny (Dept. of Economics, Norwegian School of Economics and Business Administration); Løken, Katrine (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: Although many students suffer from anxiety and depression, and students often identify school pressure and concerns about their futures as the main reasons for their worries, little is known about the consequences of a selective school environment on students’ physical and mental health. In this paper, we draw on rich administrative data and the features of the high school assignment system in the largest Norwegian cities to consider the long-term consequences of enrollment in a more selective high school. Using a regression discontinuity analysis, we show that eligibility to enroll in a more selective high school increases the probability of enrollment in higher education and decreases the probability of diagnosis or treatment by a general medical practitioner for psychological symptoms and diseases. We further document that enrolling in a more selective high school has a greater positive impact when there are larger changes in the student–teacher ratio, teachers’ age, and the proportion of female teachers. These findings suggest that changes in teacher characteristics are important for better understanding the effects of a more selective school environment.
    Keywords: School selectivity; Mental health
    JEL: I00 I10 I20
    Date: 2020–10–14

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