nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2021‒04‒05
24 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Real Exchange Rates and the Earnings of Immigrants By Christian Dustmann; Hyejin Ku; Tanya Surovtseva
  2. Regional multipliers across the Italian regions By Sergio Destefanis; Mario Di Serio; Matteo Fragetta
  3. Land Use and Fiscal Competition By Thiess Büttner
  4. Labor Demand Response to Labor Supply Incentives: Lessons from the German Mini-Job Reform By Gabriela Galassi
  5. The Innovation-Sales Growth Nexus in Europe By Costantiello, Alberto; Laureti, Lucio; De Cristoforo, Gianluca; Leogrande, Angelo
  6. The spatial dimension of productivity in Italian co-operatives By OECD
  7. Trade Liberalization along the Firm Size Distribution: The Case of the EU-South Korea FTA By Sonali Chowdhry; Gabriel J. Felbermayr
  8. Does a Wealth Tax Improve Equality of Opportunity? Evidence from Norway By Kristoffer Berg; Shafik Hebous
  9. Differences in work conditions between natives and immigrants: preferences vs. outside employment opportunities By Eva Moreno Galbis
  10. Labour supply and informal care responses to health shocks within couples: evidence from the UKHL By Annarita Macchioni Giaquinto; Andrew M. Jones; Nigel Rice; Francesca Zantomio
  11. Investigating factors influencing quality-of-life effects of home care services in Austria, England, and Finland: a comparative analysis By Trukeschitz, Birgit; Hajji, Assma; Kieninger, Judith; Malley, Juliette; Linnosmaa, Issmo; Forder, Julien
  12. Trade Shocks, Fertility, and Marital Behavior. By Osea Giuntella; Lorenzo Rotunno; Luca Stella
  13. Differentiating Retirement Age to Compensate for Career Arduousness By Vandenberghe, Vincent
  14. The effect of being awardees for academic careers. ERC and FIRB recipients’ outcomes compared to ordinary academics – performances and promotions By Giulio Marini; Viviana Meschitti
  15. Kindergarten Proximity and the Housing Market Price in Italy By Angela Stefania Bergantino; Antonella Biscione; Annunziata de Felice; Francesco Porcelli; Riccardo Zagaria
  16. Information Frictions among Firms and Households By Sebastian Link; Andreas Peichl; Christopher Roth; Johannes Wohlfart
  17. Granular credit risk By Sigurd Galaasen; Rustam Jamilov; Hélène Rey; Ragnar Juelsrud
  18. The Role of Education and Income Inequality on Environmental Quality. A Panel Data Analysis of the EKC Hypothesis on OECD By Maranzano, Paolo; Cerdeira Bento, Joao Paulo; Manera, Matteo
  19. The Mortgage Piggy Bank: Building Wealth through Amortization By Asaf Bernstein; Peter Koudijs
  20. Escaping Social Pressure: Fixed-Term Contracts in Multi-Establishment Firms By Andrea Bassanini; Eve Caroli; François Fontaine; Antoine Reberioux
  21. Asymmetric Information and Corporate Lending: Evidence from SMEs Bond Markets By Alessandra Iannamorelli; Stefano Nobili; Antonio Scalia; Luana Zaccaria
  22. Women in Distress: Mental Health and the COVID-19 Pandemic By Barili, E.; Grembi, V.; Rosso, A.C.
  23. Overqualification as Moderator for the Link Between Job Changes and Job Satisfaction Among Immigrated and Native-born People in Germany By Khalil, Samir; Lietz, Almuth; Mayer, Sabrina Jasmin
  24. Unequal Learning and Labour Market Losses in the Crisis: Consequences for Social Mobility By Lee Elliot Major; Andrew Eyles; Stephen Machin

  1. By: Christian Dustmann (University College London, Department of Economics and CReAM); Hyejin Ku (University College London, Department of Economics and CReAM); Tanya Surovtseva (Universitat Pompeu Fabra, Department of Economics and Business and CReAM)
    Abstract: Higher price levels in the destination relative to the origin increase the effective real wages of immigrants, thereby affecting immigrants’ reservation and entry wages as well as their subsequent career trajectories. Based on micro-level longitudinal administrative data from Germany and exploiting within-country and across-cohort variations in the real exchange rate (RER) between Germany and countries that newly joined the European Union in the 2000s, we find that immigrants arriving with high RERs initially settle for lower paying jobs than comparable immigrants arriving with low RERs. In subsequent periods, however, wages of high RER arrivals catch up to that of their low RER counterparts, convergence achieved primarily through changes to better paying occupations and firms. Our findings thus point to the persistent regional price differences as one possible reason for immigrants’ downgrading, with implications for immigrants’ career profiles and the assessment of labor market impacts of immigration.
    Keywords: real exchange rate, reservation wage, immigrant downgrading, earnings assimilation
    JEL: J24 J31 J61 O15 O24
    Date: 2021–03
  2. By: Sergio Destefanis (Università di Salerno); Mario Di Serio (Università di Salerno); Matteo Fragetta (Università di Salerno)
    Abstract: This paper estimates the multipliers of different types of government spending in the 20 Italian administrative regions throughout 1994–2016. We estimate region-specific multipliers through a Bayesian random effect panel vector autoregressive model. We find that the EU structural funds, compared to the other types of government spending, provide the largest and most pervasively significant GDP multipliers, whereas the effectiveness of nationally funded government investment and government consumption shocks is limited to certain regions. We also find substitutability between EU structural funds and other expenditure variables, which runs counter to the principle of additionality of the EU cohesion policy. An exploratory analysis of the distribution of multipliers across regions and expenditure types suggests that multiplier values are positively associated with the amount of unused resources as well as with the region size.
    Keywords: EU structural funds, government consumption, government investment, Bayesian Vector Autoregressive Model
    JEL: C33 E62 H50
    Date: 2020–07
  3. By: Thiess Büttner
    Abstract: This paper explores the effects of fiscal competition on local land use. A theoretical analysis considers the tradeoff faced by a local government deciding about the amount of land made available for commercial or residential uses, when its expansion has adverse effects on the quality of life. The analysis shows that, in an environment with mobile tax bases, jurisdictions are subject to fiscal incentives to expand this land use. Fiscal redistribution through equalization grants, however, reduces these incentives. Based on the theoretical analysis, the effect of fiscal competition on commercial and residential land use is investigated empirically using a large dataset of German municipalities. In order to identify differences in the exposure to fiscal competition, I exploit institutional characteristics of the system of fiscal equalization to which these municipalities are subjected. This enables me to provide causal evidence using a regression discontinuity analysis. The results show that commercial and residential land use is expanded 2-3 times faster and agricultural land use declines more rapidly in municipalities exposed to fiscal competition.
    Keywords: land use policy, natural amenities, urban sprawl, fiscal competition, fiscal equalization, regression discontinuity analysis
    JEL: H71 R14 R52 Q26
    Date: 2021
  4. By: Gabriela Galassi
    Abstract: This paper analyzes how firms respond to changes in tax benefits for low-earning workers and how, through equilibrium effects, such policies also affect non-targeted, high-earning workers. I explore establishment-level outcomes around Germany’s 2003 Mini-Job Reform, which entailed a significant expansion of tax benefits for low-earning workers. Firms’ responses are decomposed in terms of the scale effects that arise from lower labor costs and the substitution effects that are due to changes in the relative prices of low- and high-earning employment post-reform. Using a differences-in-differences approach, I document that highly exposed establishments—those with a high proportion of low-earning workers pre-reform—expand their number of employees relative to non-exposed establishments–those with a low proportion of such workers. Importantly, this relative expansion is tilted towards high-earning workers, a group that is not the target of the tax benefits. In addition, non-exposed establishments substitute employment towards low-earning workers without expanding at the same pace. My findings are consistent with a model of the labor market that features tax sharing between workers and firms and simultaneous shifts in labor supply and demand after changes in tax benefits for low-earning workers. In this setting I illustrate that the employment growth the policy intended is accompanied by a reallocation of employment and production between highly exposed firms and non-exposed firms, and this may result in an efficiency loss.
    Keywords: Economic models; Firm dynamics; Labour markets
    JEL: H32 E64 I38 J38
    Date: 2021–03
  5. By: Costantiello, Alberto; Laureti, Lucio; De Cristoforo, Gianluca; Leogrande, Angelo
    Abstract: In this article we investigate the innovation-sales growth nexus in Europe. We use data from European Innovation Scoreboard of the European Commission in the period 2000-2019 for 36 countries. Data are analyzed using Panel Data with Random Effects, Fixed Effects, Dynamic Panel at 1 Stage, Pooled OLS, WLS. Results show that the impact of innovation on sales in Europe is positively associated with “Share Knowledge-Intensive Services”, “Turnover of Share Large Enterprises”, “Employment Impacts”, “Innovators”, “Intellectual Assets”, “Linkages” and is negatively associated with “Enterprise Births”, “Government Procurement of Advanced Technology Products”, “Share of Employment in High and Medium high-tech Manufacturing”.
    Keywords: Innovation, Open Innovation, Research and Development, Sales Growht, Firm Performance
    JEL: O30 O31 O32 O33 O34 O35
    Date: 2021–03–28
  6. By: OECD
    Abstract: This report explores the spatial dimension of productivity in the co-operatives of Italy, a country where they make up a relatively large share of total national employment. Co-operatives play a countercyclical role in job creation during crises. In a post-pandemic world, they could make a major contribution to steering the economy towards inclusiveness and sustainability. Productivity growth ensures that co-operatives can achieve both economic and social goals in the future. This report applies a place-based approach to investigate the issue of productivity in co-operatives, given their many interdependencies with local communities. Novel evidence points to the local factors that are linked with the concentration and productivity of co-operatives across regions, sectors and firm size classes in Italy. A comparison with other Italian firms as well as with Spanish co-operatives and other Spanish firms serves to illustrate how productivity performance varies across space and firm types. This report constitutes an empirical test for the analytical approach developed by the OECD Spatial Productivity Lab.
    Keywords: cooperatives, Italy, productivity, regional economics, social economy, Spain
    JEL: D24 E24 J54 L31 O32 O35 P13 Q13 R12
    Date: 2021–03–30
  7. By: Sonali Chowdhry; Gabriel J. Felbermayr
    Abstract: In 2011, the EU-South Korea Free Trade Agreement (EUKFTA) entered into force. With its focus on non-tariff barriers (NTBs), it is a leading example of a deep new generation agreement. Using detailed French customs data for the period 2000 to 2016, we investigate how exporters of different size have benefitted from the agreement. Applying a diff-in-diff strategy that makes use of the rich dimensionality of the data, we find that firms with larger pre-FTA sizes benefit more from the FTA than firms at the lower end of the size distribution, both at the extensive (product) and the intensive margins of trade. The latter finding is in surprising contrast to leading theories of firm-level behavior. Moreover, we find that our main result is driven by NTB reductions rather than tariff cuts. In shedding light on the distributional effects of trade agreements within exporters, our findings highlight the need for effective SME-chapters in FTAs.
    Keywords: trade policy, firm heterogeneity, firm size distribution, non-tariff barriers
    JEL: F13 F14
    Date: 2021
  8. By: Kristoffer Berg; Shafik Hebous
    Abstract: Does parental wealth inequality impact next generation labor income inequality? And does a tax on parental wealth affect the labor income distribution of the next generation? We tackle both questions empirically using detailed intergenerational data from Norway, focusing on effects on wages rather than capital income. Results suggest that a net wealth of NOK 1 million increases wages of the children by NOK 14,000. Children of wealthy parents also have a higher labor income mobility. The estimated hypothetical wage distribution without the wealth tax is more unequal. Moreover, suggestive evidence indicates parental wealth is associated with higher labor risk taking.
    Date: 2021–03–19
  9. By: Eva Moreno Galbis (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Immigrants are disproportionately employed in agriculture and construction, sectors with relatively high injury rates. What pushes immigrants to accept riskier and more strenuous work conditions? We propose a circular model and show that differences in average work conditions borne by natives and immigrants are driven by both preferences and unearned income. Using French data we find that, in line with the model's predictions, (i) rigid wages are associated with a larger immigrant-native gap in work conditions; (ii) high unearned income individuals benefit on average from better work conditions; (iii) for immigrants and natives with high unearned income, differences in demographic characteristics explain part of the immigrant-native gap in work conditions. In contrast, the gap largely persists among low unearned income people even once we have imposed identical demographic composition among them. This suggests that there must be other factors that influence preferences over work conditions and that are missing in our empirical analysis.
    Keywords: immigrants,work conditions,outside employment opportunities,preferences,composition effects
    Date: 2020–11
  10. By: Annarita Macchioni Giaquinto (Department of Economics, University Of Venice Cà Foscari; FAO); Andrew M. Jones (University of York; Monash University); Nigel Rice (University of York); Francesca Zantomio (Department of Economics, University Of Venice Cà Foscari; CRIEP, HEDG)
    Abstract: Shocks to health have been shown to reduce labour supply for the individual affected. Less is known about household self-insurance through a partner’s response to a health shock. Previous studies have presented inconclusive empirical evidence on the existence of a health-related `added worker effect’. We use UK longitudinal data to investigate within households both the labour supply and informal care responses of an individual to the event of an acute health shock to their partner. Relying on the unanticipated timing of shocks, we combine coarsened exact matching and entropy balancing algorithms with parametric analysis and exploit lagged outcomes to remove bias from observed confounders and time-invariant unobservables. We find no evidence of a health-related ‘added worker effect’. A significant and sizeable increase in spousal informal care, irrespective of spousal labour market position or household financial status and ability to purchase formal care provision, suggests a substitution to informal care provision, at the expense of time devoted to leisure activities.
    Keywords: Health shocks, added worker effect, labour supply, informal care, matching methods, panel data
    JEL: C14 I10 I13 J14 J22
    Date: 2021
  11. By: Trukeschitz, Birgit; Hajji, Assma; Kieninger, Judith; Malley, Juliette; Linnosmaa, Issmo; Forder, Julien
    Abstract: European countries have developed a range of long-term care (LTC) policy responses to support the increasing share of older people. However, little is known about the effectiveness of LTC services and benefits, particularly their impact on older peoples’ quality of life (QoL). This paper investigates the role of personal, care service and environmental characteristics on the effects of home care services on QoL across England, Finland and Austria. We used data from surveys conducted in England, Finland and Austria. In total, 811 older adults were included in the analysis. OLS regression including main effects and country-specific interactions was used to explore variation in gains in long-term care service-related quality-of-life (LTC-QoL). Explanatory variables were derived from the production of welfare framework and comprised home care service user socio-demographics, needs indicators, social support and environmental variables and characteristics of home care service provision. In all three countries, LTC-QoL gains increased with needs, indicating that home care services perform well, with additional gains declining the higher the needs. Also, better process quality contributed to LTC-QoL improvements in all three countries. In addition, the availability of informal care, social contact, financial household situation and living alone, were associated with changes in LTC-QoL only in one or two of the countries. Home care services increased service users’ QoL in all three European countries. The increase in QoL, however, varied across the countries. The results also provide insights into the benefits and limits of home care service provision and areas for future improvements.
    Keywords: ASCOT; Austria; England; Finland; comparative analysis; long-term care; 462-14-160
    JEL: I31 I38 J14
    Date: 2021–03–19
  12. By: Osea Giuntella; Lorenzo Rotunno; Luca Stella (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: Using longitudinal data from the German Socio-Economic Panel, we analyze the effects of exposure to trade on the fertility and marital behavior of German workers. We find that individuals working in sectors that were more affected by import competition from Eastern Europe and suffered worse labor market outcomes were less likely to have children. In contrast, workers in sectors that benefited from increased exports had better employment prospects and higher fertility. These effects are driven by low-educated and married men, and reflect changes in the likelihood of having any child (extensive margin). While among workers exposed to import competition there is evidence of some fertility postponement, we find a significant reduction of completed fertility. There is instead little evidence of any significant effect on marital behavior.
    Keywords: International Trade, Labor Market Outcomes, Fertility, Marriage.
    JEL: F14 F16 J13
    Date: 2021–03
  13. By: Vandenberghe, Vincent
    Abstract: Population ageing in Europe calls for an overall rise in the age of retirement. However, many argue that this age should be differentiated to account for individuals' career arduousness. This paper explores the relevance of this idea. It combines the 7th wave of the SHARE panel data on health at an older age and US occupational O*NET data. With these unique data it first quantifies the impact of entire career arduous- ness on health at typical retirement age, relative to other key determinants (gender, childhood health, parental longevity). It then estimates the degree of retirement age differentiation that would be needed to compensate individuals for their career-related health handicap/advantage and get closer to "real" actuarial fairness. Using the age of 65 as a reference, results point at the need for differentiation ranging from 60 to 71. But the paper also shows that systematic retirement age differentiation would fail to match a significant portion of the full distribution of health at an older age. In a world where retirement policy compensates for career-related arduousness there would still be a lot of unaccounted health differences; in particular those related to health endow- ment. Using variance decomposition methods, we estimate that career-arduousness represents at most 5.83% of the model-explained variance of health at an older age.
    Keywords: Ageing,Health,Retirement Policy,SHARE,O*NET,Compensating Career Arduousness
    JEL: J14 I1 J26
    Date: 2021
  14. By: Giulio Marini (Social Research Institute IoE UCL, UK); Viviana Meschitti (Huddersfield Business School, University of Huddersfield, UK)
    Abstract: Some individual funding schemes aim at recognize excellence of early and/or mid-career researchers in order to allow them boost their potential. Some schemes are munificent endowments, assuring autonomy and security. This is the case of one of the European flagship schemes – the European Research Council (ERC). In Italy, a very similar scheme called FIRB has a similar rationale. Both schemes are supposed to make excellence “fly higher”. The paper checks whether such ERC and FIRB recipients are thereafter more productive in terms of quality and influence testing against a control group of Italian academics of similar age, rank and discipline who did not win such individual grants. Results show that ERC recipients ameliorate research performance more than FIRB recipients did, although differences with control group don’t show always a particular additional effect in research outputs when comparing with pre-awarding performances (difference-in-difference tests). On the other hand, we find a strong Matthew effect in promotions, being the credential of having recipient of an ERC or a FIRB per se the strongest predictor of promotion, other achievements being equal. Policy recommendations speculate whether an egalitarian non-stratified higher education system like the Italian one is ideal home for these schemes, and whether the Italian system can afford a national scheme overlapping international ones, considering long-lasting shortage of financial resources and the egalitarian structure of its system.
    Keywords: Policy effect; Grants recipients; European Research Council; FIRB; Early and mid-career researchers; Research performance; academic career; promotions
    JEL: C93 I23 M52 O32 O38
    Date: 2021–03–01
  15. By: Angela Stefania Bergantino (Department of Economics, Management and Business Law, University of Bari Aldo Moro); Antonella Biscione (Department of Bioeconomic Strategies in the European Union and in the Balkans CESPIC, Catholic University Our Lady of Good Counsel); Annunziata de Felice (Department of Law, University of Bari Aldo Moro); Francesco Porcelli (Department of Law, University of Bari Aldo Moro); Riccardo Zagaria (Italian National Institute of Social Security)
    Abstract: This paper investigates the impact of kindergarten proximity on housing market prices in the eleven major Italian Municipalities over the period 2004-2017. For this purpose, we employ a hedonic property price model. We also differentiate the impact of kindergarten proximity on houses' market price between state and non-state premises. The findings highlight that (i) the level of housing price depends on kindergarten proximity; (ii) some quality school characteristics played a crucial role and (iii) the distinction between public and non-state kindergartens shows that the vicinity of the latter generates a more significant capitalization effect.
    Keywords: house value, kindergarten, neighborhood, capitalization
    JEL: I22 R3
    Date: 2021–03
  16. By: Sebastian Link; Andreas Peichl; Christopher Roth; Johannes Wohlfart
    Abstract: We leverage survey data from Germany, Italy, and the US to document several novel stylized facts about the extent of information frictions among firms and households. First, firms’ expectations about the central bank policy rate, inflation, and aggregate unemployment are more aligned with expert forecasts and less dispersed than households’. Second, there is substantially more heterogeneity in information frictions within households than within firms. Third, consistent with firms having stronger priors, they update their policy rate expectations significantly less compared to households when provided with an expert forecast. Our results have important implications for modeling heterogeneity in macroeconomic models.
    Keywords: information frictions, firms, households, expectation formation, interest rates
    JEL: D83 D84 E71
    Date: 2021
  17. By: Sigurd Galaasen; Rustam Jamilov; Hélène Rey; Ragnar Juelsrud
    Abstract: What is the impact of granular credit risk on banks and on the economy? We provide the ?rst causal identi?cation of single-name counterparty exposure risk in bank portfolios by applying a new empirical approach on an administrative matched bank-?rm dataset from Norway. Exploiting the fat tail properties of the loan share distribution we use a Gabaix and Koijen (2020a,b) granular instrumental variable strategy to show that idiosyncratic borrower risk survives aggregation in banks portfolios. We also ?nd that this granular credit risk spills over from affected banks to ?rms, decreases investment, and increases the probability of default of non-granular borrowers, thereby sizably affecting the macroeconomy.
    Keywords: granular credit risk, credit concentration, granular borrowers, large exposures regulation, granular instrumental variable, granular hypothesis
    Date: 2020–10–15
  18. By: Maranzano, Paolo; Cerdeira Bento, Joao Paulo; Manera, Matteo
    Abstract: We study the impact of human capital and the level of education on the pollution-income relationship controlling for income inequality in 17 OECD countries. By applying an innovative approach to country grouping, based on the temporal evolution of income inequality and clustering techniques to feature the annual value of the Gini Index on disposable income from 1987 to 2015, we have estimated panel data models by distinguishing between low and high levels of income inequality country clusters. Robustness checks and endogeneity tests are further performed considering as the discriminant factor the income inequality aecting the countries in the sample. The findings highlight the role of the educational level and years of schooling in validating the EKC hypothesis. We recommend that this variable should not be neglected in future EKC studies. Therefore, any EKC theory should also acknowledge a new EKC model specification that we named the Educational EKC.
    Keywords: Environmental Economics and Policy
    Date: 2021–03–30
  19. By: Asaf Bernstein; Peter Koudijs
    Abstract: Mortgage amortization schedules are illiquid savings plans comparable in size to pension programs; however, little is known about their effects on wealth accumulation. Using individual administrative data and plausibly exogenous variation in the timing of home purchase (ex. childbirth-driven) around a 2013 Dutch reform, we find a near one-for-one rise in net worth for each dollar of amortization. Households leave other savings and liabilities unchanged, and instead increase labor supply and reduce consumption. Effects hold even for regular savers and older households. This has important macroprudential implications and suggests homeownership financed via amortizing mortgages is instrumental for household wealth building.
    JEL: D14 D15 E21 E6 G21 G4 G5 G51 J2 R3
    Date: 2021–03
  20. By: Andrea Bassanini (IZA - Institute for the study of labor - Institute for the Study of Labor - IZA, OECD - Organisation for Economic Cooperation and Development); Eve Caroli (IZA - Institute for the Study of Labor - IZA, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); François Fontaine (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - 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, IZA - Institute for the Study of Labor - IZA); Antoine Reberioux (LADYSS - Laboratoire Dynamiques Sociales et Recomposition des Espaces - UP1 - Université Paris 1 Panthéon-Sorbonne - UP8 - Université Paris 8 Vincennes-Saint-Denis - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique - UP - Université de Paris, UP - Université de Paris)
    Abstract: We develop a simple theoretical model showing that, by adding to the adjustment costs associated with permanent contracts, local social pressure against dismissals creates an incentive for CEOs to rely on fixed-term contracts, in an attempt to escape social pressure. Using linked employer-employee data, we show that establishments located closer to headquarters have higher shares of fixed-term contracts in hiring than those located further away whenever firms' headquarters are located in self-centered communities and the CEO not only works but also lives there. We show that these findings can only be explained by local social pressure.
    Keywords: CEO reputation,Adjustment costs,Employment contracts,Social pressure
    Date: 2021–03–23
  21. By: Alessandra Iannamorelli (Bank of Italy); Stefano Nobili (Bank of Italy); Antonio Scalia (Bank of Italy); Luana Zaccaria (EIEF)
    Abstract: Using a comprehensive dataset of Italian SMEs, we find that differences between private and public information on firm creditworthiness affect the decision to issue traded debt securities. Specifically, holding public information constant, firms with better private fundamentals are more likely to access bond markets. Additionally, credit conditions improve for issuers following the bond placement, compared with a matched sample of non-issuers. Thus, our evidence supports 'positive' (rather than adverse) selection in corporate bond markets. This is consistent with a model where banks offer more flexibility than markets during financial distress and firms use market lending to signal credit quality to outside stakeholders.
    Date: 2021
  22. By: Barili, E.; Grembi, V.; Rosso, A.C.
    Abstract: Relying on a survey of more than 4,000 female respondents, we investigate the main determinants of women's mental distress during the first wave of the COVID-19 pandemic in Italy. We focus on two groups of variables to capture both the health and the economic emergency: present concerns and future expectations. Our results show that the main predictors of mental health are future expectations, such as the fear of losing a job, which is more relevant than concerns related to the spread of the virus. Younger women (less than 35), those lacking a high school degree, and those working in education or in remote work with school-aged children are in most distress. Using a panel fixed effects model that includes respondents to a re-call run in February 2021, we show that there was no adjustment to the new normal. Finally, using data on gender norms, we show that where the role of women is conceived in a more traditional way, the level of mental distress as driven by future employment is lower, suggesting that women's expectations for their role in society do play a relevant role in self-assessed well-being.
    Keywords: mental health; COVID-19; expectations; gender stereotypes
    JEL: I1 I12 J16
    Date: 2021–03
  23. By: Khalil, Samir; Lietz, Almuth; Mayer, Sabrina Jasmin (University of Duisburg-Essen)
    Abstract: Job satisfaction is a major driver of an individual’s subjective well-being and thus affects public health, societal prosperity, and organizations, as dissatisfied employees are less productive and more likely to change jobs. However, changing jobs does not necessarily lead to higher job satisfaction in the long run: instead, previous studies have shown that changing jobs only increases job satisfaction for a shorter period of time before it gradually falls back to similar levels as before. This phenomenon is known as the honeymoon-hangover pattern. In our study, we identify an important new moderator of the relation between job changes and job satisfaction: the job-education match of job change. Based on relative deprivation theory, we argue that a job change out of overqualification lowers the likelihood of negative comparisons and thus increases the honeymoon period and lessens the hangover. In addition, we investigate whether this moderating effect is weaker for immigrants, since the phenomenon of overqualification occurs more frequently among them. We use data from the Socio-Economic Panel ranging from 1994-2018 and focus specifically on individual-periods of employees before and after job changes (N=134,417). Our results confirm that a change to a qualificationadequate job has a stronger and longer-lasting effect on job satisfaction which is lower for respondents born abroad.
    Date: 2021–03–20
  24. By: Lee Elliot Major (Graduate School of Education, University of Exeter; Centre for Economic Performance, London School of Economics); Andrew Eyles (Centre for Economic Performance, London School of Economics); Stephen Machin (Department of Economics and Centre for Economic Performance, London School of Economics)
    Abstract: The unequal learning and labour market losses arising in the UK due to the Covid-19 pandemic are used to assess the consequences for social mobility. Labour market and learning losses have been more pronounced for people from poorer families and this is incorporated into a generalisation of the standard, canonical social mobility model. A calibration shows a significantly higher intergenerational elasticity -- reflecting lower social mobility -- because of the uneven nature of losses by family income, and from dynamic scarring. Results from a randomised information experiment incorporated in a bespoke Social Mobility Survey corroborate this, as participants become more sceptical about the social mobility prospects of the Covid generation when given information about the losses that have occurred in the crisis.
    Keywords: learning loss, labour market loss, crisis, social mobility
    JEL: I24 J63 J21 J62
    Date: 2021–03

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