nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2021‒04‒26
39 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Combining microsimulation and optimization to identify optimal flexible tax-transfer rule By Ugo Colombino; Nizamul Islam
  2. Divided We Survive? Multi-Level Governance and Policy Uncertainty during the First Wave of Covid-19 By Marta Angelici; Paolo Berta; Joan Costa-i-Font; Gilberto Turati
  3. The Concentration of Personal Wealth in Italy 1995–2016 By Acciari, Paolo; Alvaredo, Facundo; Morelli, Salvatore
  4. A General Methodology to Measure Labour Market Dynamics By Fiaschi, Davide; Tealdi, Cristina
  5. “The Impact of Combining Work with Study on the Labour Market Performance of Graduates: the Joint Role of Work Intensity and Job-Field Match” By Antonio Di Paolo; Alessia Matano
  6. Innovation in Malmö after the Öresund Bridge By Ejermo, Olof; Hussinger, Katrin; Kalash, Basheer; Schubert, Torben
  7. Platform Work and Economic Insecurity: Evidence from Italian Survey Data By Cirillo, Valeria; Guarascio, Dario; Parolin, Zachary
  8. Changes in fertility plans during the COVID-19 pandemic in Italy: the role of occupation and income vulnerability By Arpino, Bruno; LUPPI, FRANCESCA; Rosina, Alessandro
  9. Joining the European Union as an advantage in science performativity. A quasi-experimental study By Giulio Marini
  10. The COVID-19 Pandemic's Effects on Voter Turnout By Picchio, Matteo; Santolini, Raffaella
  11. Identifying urban features for vulnerable road user safety in Europe By Klanjčić, Marina; Gauvin, Laetitia; Tizzoni, Michele; Szell, Michael
  12. Inter-cohort risk sharing with long-term guarantees: Evidence from German participating contracts By Hombert, Johan; Möhlmann, Axel; Weiß, Matthias
  13. The Role of SMEs in extra-EU Exports: Key performance indicators By Cernat, Lucian; Jakubiak, Malgorzata; Preillon, Nicolas
  14. Labour mobility in transnational Europe: between depletion, mitigation and citizenship entitlements harm By Plomien, Ania; Schwartz, G
  15. Do You Really Want to Share Everything? The Wellbeing of Work-Linked Couples By Juliane Hennecke; Clemens Hetschko
  16. Platform Work and Economic Insecurity: Evidence from Italian Survey Data By Valeria Cirillo; Dario Guarascio; Zachary Parolin
  17. The Changing Distribution of the Male Ethnic Wage Gap in Great Britain By Clark, Ken; Nolan, Steve
  18. Turnout in Concurrent Elections : Evidence from Two Quasi-Experiments in Italy By Cantoni, Enrico; Gazzè, Ludovica; Schafer, Jerome
  19. Do Supplementary Jobs for Welfare Recipients Increase the Chance of Welfare Exit? Evidence from Germany By Mosthaf, Alexander; Schank, Thorsten; Schwarz, Stefan
  20. Social origins and social mobility: the educational and labour market outcomes of the children of immigrants in the UK By Carolina Zuccotti; Lucinda Platt
  21. Trade Shocks, Fertility, and Marital Behavior By Osea Giuntella; Lorenzo Rotunno; Luca Stella
  22. Foreign investors and target firms’ financial structure: cavalry or locusts? By Lorenzo Bencivelli; Beniamino Pisicoli
  23. Distressed Acquisitions Evidence from European Emerging Markets By Iwasaki, Ichiro; Kočenda, Evžen; Shida, Yoshisada
  24. The Effect of Parental and Grandparental Supervision Time Investment on Children's Early-Age Development By Milovanska-Farrington, Stefani
  25. The Role of Environmental and Financial Concerns on Energy-Saving Investments: A Stochastic Dominance Analysis By Canepa, Alessandra; Fontana, Magda; Chersoni, Giulia
  26. The Comparative Legitimacy of Arms Exports - A Conjoint Experiment in Germany and France By Rudolph, Lukas; Freitag, Markus; Thurner, Paul
  27. The decision to enrol in higher education By Hügle, Dominik
  28. Immigration and electoral outcomes: Evidence from the 2015 refugee inflow to Germany By Bredtmann, Julia
  29. Parental Assortative Mating and the Intergenerational Transmission of Human Capital. By Paul Bingley; Lorenzo Cappellari; Konstantinos Tatsiramos
  30. Labor Demand Response to Labor Supply Incentives: Lessons from the German Mini-Job Reform By Galassi, Gabriela
  31. Financial education and savings and investment decisions: An analysis of the Survey of financial competences (ECF) By Anna Ispierto Maté, Irma Martínez García, Gloria Ruiz Suárez
  32. The effect of labor market shocks on mental health outcomes: evidence from the Spanish Great Recession By Eduardo Ignacio Polo-Muro
  33. Tax-induced Investments in Tax Havens by Spanish Multinationals By Ángela Castillo-Murciego; Julio López-Laborda
  34. Terrorism and Political Attitudes: Evidence from European Social Surveys By Giovanni Peri; Daniel I. Rees; Brock Smith
  35. The importance of capital in losing the entrepreneurial gender gap: a longitudinal study of lottery wins By Sarah Flèche; Anthony Lepinteur; Nattavudh Powdthavee
  36. Worker Commitment and Establishment Performance By John T. Addison; Paulino Teixeira
  37. Female participation in EU exporting activities: jobs and wages By Rueda-Cantuche, Jose Manuel; Kutlina-Dimitrova, Zornitsa; Sousa, Nuno
  38. Can the Mafia’s Tentacles Be Severed? The Economic Effects of Removing Corrupt City Councils By Alessandra Fenizia; Raffaele Saggio
  39. Wage Flexibility under Sectoral Bargaining By Card, David; Cardoso, Ana Rute

  1. By: Ugo Colombino; Nizamul Islam
    Abstract: We use a behavioural microsimulation model embedded in a numerical optimization procedure in order to identify optimal (social welfare maximizing) tax-transfer rules. We consider the class of tax-transfer rules consisting of a universal basic income and a tax defined by a 4th degree polynomial. The rule is applied to total taxable household income. A microeconometric model of household, which simulates household labour supply decisions, is embedded into a numerical routine in order to identify – within the class defined above – the tax-transfer rule that maximizes a social welfare function. We present the results for five European countries: France, Italy, Luxembourg, Spain and United Kingdom. For most values of the inequality aversion parameter, the optimized rules provide a higher social welfare than the current rule, with the exception of Luxembourg. In France, Italy and Luxembourg the optimized rules are significantly different from the current ones and are close to a Negative Income Tax or a Universal basic income with a flat tax rate. In Spain and the UK, the optimized rules are instead close to the current rule. With the exception of Spain, the optimal rules are slightly disequalizing and the social welfare gains are due to efficiency gains. Nonetheless, the poverty gap index tends to be lower under the optimized regime.
    Keywords: empirical optimal taxation, microsimulation, microeconometrics, evaluation of tax-transfer rules.
    Date: 2020
  2. By: Marta Angelici; Paolo Berta; Joan Costa-i-Font; Gilberto Turati
    Abstract: We compare health system responses to the first wave of COVID-19 pandemic in Italy and Spain. In both countries, healthcare is managed at the regional level, but the central government behaved differently in the uncertainty surrounding the first wave, leaving more autonomy to regional governments in Italy than in Spain. Upon documenting national and regional health system responses, we show evidence of a significant gap in the number of infected cases, alongside regular and emergency hospital admissions, and mortality in the two countries, both at the national and at the regional level. We then discuss several potential mechanisms, such as policy stringency, the localization of the pandemic and mobility restrictions, measurement error, and especially the regional autonomy, enjoyed by Italian regions but not by Spanish regional governments amidst a state of alarm in both countries. We find that, given the strong localized effect of the pandemic, allowing more autonomy, and fostering experimentation and local solutions explains the gap between Italy and Spain in the first wave of the pandemic.
    Keywords: regional health systems, decentralization, policy stringency, health care, Covid-19, Italy, Spain
    JEL: H75 I18
    Date: 2021
  3. By: Acciari, Paolo; Alvaredo, Facundo; Morelli, Salvatore
    Abstract: Italy is one the countries with the highest wealth-to-income ratio in the developed world. Yet, despite the growing policy interest, knowledge about the size distribution of wealth is currently limited. In this paper we expand our windows of observation on the distribution of personal wealth using a novel source on the full record of inheritance tax files. The data cover up to 63% of the deceased population and are available between 1995 and 2016, a period of substantial economic turbulence and structural reform for the Italian economy. Our benchmark results rely on the distribution of the net wealth observed in the National Accounts balance sheets. Unlike available statistics estimated from household survey data, our results point to a strong rise in wealth concentration and inequality since the mid-1990s. Whereas the level of wealth concentration in Italy is in line with those of other European countries, its time trend appears more in line with the U.S. experience. Moreover, Italy stands out as one of the countries with the strongest decline in the wealth share of the bottom 50% of the adult population. We explore the role of household wealth portfolios, accumulation patterns during the life cycle, and inheritance flows, its concentration, and taxation patterns as main drivers of the trends observed. A range of alternative series of wealth concentration helps us better understand the role of adjustments and imputations and is based on a multi-series approach, i.e., comparing the pieces of information given by different and competing sources. (Stone Center on Socio-Economic Inequality Working Paper)
    Date: 2021–04–19
  4. By: Fiaschi, Davide (University of Pisa); Tealdi, Cristina (Heriot-Watt University, Edinburgh)
    Abstract: We propose a general methodology to measure labour market dynamics, inspired by the search and matching framework, based on the estimate of the transition rates between labour market states. We show how to estimate instantaneous transition rates starting from discrete time observations provided in longitudinal datasets, allowing for any number of states. We illustrate the potential of such methodology using Italian labour market data. First, we decompose the unemployment rate fluctuations into inflow and outflow driven components; then, we evaluate the impact of the implementation of a labour market reform, which substantially changed the regulations of temporary contracts.
    Keywords: labour market flows, instantaneous transition rates, Markov process in continuous time, labour market forecasting, policy evaluation
    JEL: C18 C53 E32 E24 J6
    Date: 2021–04
  5. By: Antonio Di Paolo (AQR-IREA, University of Barcelona); Alessia Matano (University of Rome “La Sapienza”)
    Abstract: This paper investigates the effects of working during university education on students’ labour market performance. We jointly consider the role of work intensity and the relationship with the field of study in a framework that accounts for self-selection into different types of jobs. The empirical analysis draws on data from three successive cohorts of graduates from the Spanish region of Catalonia. Our results point out that the probability of being employed four years after graduation is significantly higher for students who have worked in jobs well-matched with their degree relative to both full-time students and students who have worked in unrelated jobs. Further, the probability of having a permanent job is generally higher for those who worked before graduation, especially in the case of jobs related to the degree. However, the likelihood of early career job-qualification match is negatively affected by pre-graduation work experiences unrelated to degree’s contents.
    Keywords: University Graduates, Pre-graduation Jobs, Employability, Job Quality, Self-Selection JEL classification: I23, J24, J22
    Date: 2021–04
  6. By: Ejermo, Olof (Lund University); Hussinger, Katrin (University of Luxembourg); Kalash, Basheer (SciencesPo OFCE); Schubert, Torben (CIRCLE, Lund University)
    Abstract: We analyse the effect of the Öresund Bridge, a combined railway and motorway bridge between Swedish Malmö and the Danish capital Copenhagen, on inventive activity in the region of Malmö. Applying difference-in-difference estimation on individual level data, our findings suggest that the Öresund Bridge has led to a significant increase in the number of patents per individual with a background prone to patenting in the Malmö region as compared to the Gothenburg and Stockholm regions. Further, we show that the dominating mechanism is the attraction of highly qualified workers to the Malmö region following the construction of the bridge.
    Keywords: transport infrastructure; innovation; Öresund Bridge; cross-border regions; patents; inventors; agglomeration effects
    JEL: L91 O31 O33 R11
    Date: 2021–04–22
  7. By: Cirillo, Valeria; Guarascio, Dario; Parolin, Zachary
    Abstract: The emergence of the platform economy has served as a defining feature of increasing fragmented labour markets in modern economies. Recent research on platform work, however, has struggled to quantify the socio-economic conditions of platform workers relative to other occupation groups. Moreover, it remains unclear if the socio-economic disadvantages that platform workers are likely to face are primarily channeled through lower incomes or their more precarious working conditions. This study uses representative survey data of platform workers in Italy to investigate their size, composition, and socio- economic conditions relative to individuals in other occupations. Our findings reveal that platform workers tend to be students and of younger age, but are diverse with respect to sex, educational attainment, and native-born status. We find that platform workers face greater economic insecurity relative to all other occupation classes. Strikingly, they also feature a rate of economic insecurity that is not significantly different from that of unemployed adults. Moreover, we find that the higher levels of insecurity are not primarily channeled through lower incomes; instead, higher rates of insecurity persist even when taking family incomes into account, suggesting that the precarity and volatility of platform work matter as much as income differences in shaping economic disadvantage. Results hold under analyses that account for selection into platform work. Our findings carry important consequences for understandings of the intensity and sources of socio- economic disadvantage of individuals engaged in platform work.
    Keywords: platform work,non-standard work,economic insecurity
    JEL: J40 J80 J81
    Date: 2021
  8. By: Arpino, Bruno; LUPPI, FRANCESCA; Rosina, Alessandro (Catholic University of the Sacred Heart)
    Abstract: The health and economic crisis generated by the COVID-19 pandemic is unprecedented in recent human history. We investigate the role of objective and subjective indicators of economic uncertainty due to the COVID-19 crisis in young Italians’ fertility plans during the year 2020. We use unique repeated cross-sectional data, collected at different time points during the pandemic (March and October/November 2020) together with pre-COVID data (2016). The data offer a standard fertility intention question pre- and during-COVID, and also a direct question on whether pre-COVID fertility plans have been confirmed, postponed or abandoned. We find that individuals with more vulnerable occupations show a lower probability of definitely intending to have a(nother) child in the short-term and a higher probability of having abandoned their pre-COVID fertility plan in March 2020, while in October 2020 changes in fertility plans did not vary by occupation. Instead, those who suffered from a negative income shock and those with negative expectations on their future income and occupation are more likely to abandon their pre-pandemic fertility plan compared to their better off counterparts, and these differences hold both in March and October. Overall, economic uncertainty generated by the pandemic seems to have similarly affected men and women’s fertility intentions. Our findings point to the fact that the unequal economic consequences of the pandemic also produced and will produce heterogeneous effects on fertility intentions.
    Date: 2021–04–14
  9. By: Giulio Marini (Quantitative Social Science, UCL Social Research Institute, London, UK)
    Abstract: The paper investigates the issue of increasing international co-authored publications, comparing countries that accessed the Europe-an Union (EU) in 2004 (EU04) against other Central-Eastern European Countries (othEast-ERA), adopting a scientometrical approach. This comparison is interesting to check whether to be part of the EU is dif-ferent from being part of the European Research Area (ERA) – being both entities aimed at fostering more international collaborations. The hypothesis is that EU might convey more opportunities for the sake of international publications, although ERA assures access to European funding schemes anyway. Analysing the census of internationally co-authored publications from 1995 to 2015, difference-in-differences regressions show that Countries that joined EU in 2004 performed better than other Central-Eastern ones. Implications for the public policies in science are discussed.
    Keywords: Scientometric; European Research Area, European Union, Funding Agency, Central Eastern Europe, international collaborations; difference-in-difference
    JEL: C55 C81 I23 O32 O35 O36 O38
    Date: 2021–04–01
  10. By: Picchio, Matteo (Università Politecnica delle Marche, Ancona); Santolini, Raffaella (Marche Polytechnic University)
    Abstract: The COVID-19 pandemic has increased the risk of participating in public events, among them elections. We assess whether the voter turnout in the 2020 local government elections in Italy was affected by the COVID-19 pandemic. We do so by exploiting the variation among municipalities in the intensity of the COVID-19 outbreak as measured by the mortality rate among the elderly. We find that a 1 percentage point increase in the elderly mortality rate decreased the voter turnout by 0.5 percentage points, with no gender differences in the behavioural response. The effect was especially strong in densely populated municipalities. We do not detect statistically significant heterogeneous effects between the North and the South or among different levels of autonomy from the central government.
    Keywords: COVID-19, outbreak, pandemic, voter turnout, mortality rate, Italian municipalities
    JEL: D72 D81 H70
    Date: 2021–04
  11. By: Klanjčić, Marina; Gauvin, Laetitia; Tizzoni, Michele (ISI Foundation); Szell, Michael (IT University of Copenhagen)
    Abstract: One of the targets of the UN Sustainable Development Goals is to substantially reduce the number of global deaths and injuries from road traffic collisions. To this aim, European cities adopted various urban mobility policies, which has led to a heterogeneous number of injuries across Europe. Monitoring the discrepancies in injuries and understanding the most efficient policies are keys to achieve the objectives of Vision Zero, a multi-national road traffic safety project that aims at zero fatalities or serious injuries linked to road traffic. Here, we identify urban features that are determinants of vulnerable road user safety through the analysis of inter-mode collision data across European cities. We first build up a data set of urban road crashes and their participants from 24 cities in 5 European countries, using the widely recommended KSI indicator (killed or seriously injured individuals) as a safety performance metric. Modelling the casualty matrices including road infrastructure characteristics and modal share distribution of the different cities, we observe that cities with the highest rates of walking and cycling modal shares are the safest for the most vulnerable users. Instead, a higher presence of low-speed limited roads seems to only significantly reduce the number of injuries of car occupants. Our results suggest that policies aimed at increasing the modal share of walking and cycling are key to improve road safety for all road users.
    Date: 2021–04–14
  12. By: Hombert, Johan; Möhlmann, Axel; Weiß, Matthias
    Abstract: Long-term minimum return guarantees sold by European life insurers increasingly become binding as interest rates decline. While participating contracts embedding these guarantees are designed to share market risk across investor cohorts when guarantees are not binding, we study how binding guarantees distort inter-cohort risk sharing. Using regulatory data on participating contracts in Germany, we find that binding guarantees reduced inter-cohort transfer by 10 basis points per year in the period 2000{2018. This is modest compared to the average transfer, which is in the range of 40{150 basis points. However, the effect is concentrated in the recent period of ultra-low interest rates and may grow larger if interest rates remain persistently low.
    Keywords: Life insurers,Participating contracts,Long-term investment,Inter-cohort risk sharing,Minimum return guarantees
    JEL: G22 G52
    Date: 2021
  13. By: Cernat, Lucian (DG Trade); Jakubiak, Malgorzata (DG Trade); Preillon, Nicolas (DG Trade)
    Abstract: This paper examines the growing importance of EU exporting small and medium enterprises (SMEs) for EU exports in recent years in terms of standard metrics (the number of exporting SMEs, their share in total EU exports) but also in respect to several key performance indicators, such as export competitiveness, digital intensity of their exports, greenhouse gas (GHG) emissions and jobs supported by EU exporting SMEs. The empirical evidence suggests that the number of EU exporting SMEs has grown steadily over time. EU exporting SMEs seem to perform better than the OECD average in sectors of medium digital intensity. In particular, SMEs are competitive in digitally intensive goods, where EU large firms do not seem to be equally successful. SME exports have also lower GHG emissions than average levels, with 70% of SME exports belonging to low and medium-low emission intensity. Finally, yet importantly, EU SME exports are a major driver for export-led job creation: over 13 million jobs in Europe depend on EU SME exports.
    Keywords: SMEs; international trade; performance indicators
    JEL: F13
    Date: 2020–04–09
  14. By: Plomien, Ania; Schwartz, G
    Abstract: This article examines how transnational labour mobility in uneven and combined Europe has emerged as a critical response to the problems of capitalist production and social reproduction. Analysing the interconnected mobilities of labour between Ukraine, Poland and the UK in the food production, care provision and housing construction sectors, the article examines how states benefit from lower unemployment and reduced labour shortages, employers profit from qualified and reliable workers, and households gain access to jobs and incomes. It argues that transnational labour mobility is constitutive of the inherently interdependent production–reproduction processes. In this constellation, transnational labour mobility becomes a form of mitigation of depletion through social reproduction. However, it further argues that such a mitigation strategy is unbalanced and unsustainable as its costs and benefits are unequally distributed, forestalling resource inflows that could attenuate outflows. Therefore, harms – in particular, the harm to citizenship entitlements – emerge despite labour mobility mitigating depletion.
    Keywords: citizenship entitlements; depletion; gendered harms; labour mobility; social reproduction
    JEL: R14 J01
    Date: 2020–06–01
  15. By: Juliane Hennecke; Clemens Hetschko
    Abstract: Work as well as family life are crucial sources of human wellbeing, which however often interfere. This is especially so if partners work in the same occupation or industry. At the same time, being work-linked may benefit their career success. Still, surprisingly little is known about the wellbeing of work-linked couples. Our study fills this gap by examining the satisfaction differences between work-linked and non-work-linked partners. Using data from the German Socio-Economic Panel (SOEP, 2019), we estimate the effect of working in the same occupation and/or industry on life satisfaction as well as satisfaction with four areas of life: income, work, family and leisure. In the process, we employ pooled OLS estimations and instrumental variable strategies, for instance based on the gender disparity in industries and occupations. Our results suggest that being work-linked increases satisfaction with life as well as income and job satisfaction. These findings are consistent with positive assortative matching and mutual career support between work-linked partners. Our conclusions concern hiring couples as a means of recruiting exceptional talent.
    Keywords: work-linked couples, wellbeing, assortative matching, relationship quality, work-life balance, copreneurs, occupational gender disparity, dual career support
    JEL: I31 J12 J21 J44 M51
    Date: 2021
  16. By: Valeria Cirillo; Dario Guarascio; Zachary Parolin
    Abstract: The emergence of the platform economy has served as a defining feature of increasing fragmented labour markets in modern economies. Recent research on platform work, however, has struggled to quantify the socio-economic conditions of platform workers relative to other occupation groups. Moreover, it remains unclear if the socio-economic disadvantages that platform workers are likely to face are primarily channeled through lower incomes or their more precarious working conditions. This study uses representative survey data of platform workers in Italy to investigate their size, composition, and socio-economic conditions relative to individuals in other occupations. Our findings reveal that platform workers tend to be students and of younger age, but are diverse with respect to sex, educational attainment, and native-born status. We find that platform workers face greater economic insecurity relative to all other occupation classes. Strikingly, they also feature a rate of economic insecurity that is not significantly different from that of unemployed adults. Moreover, we find that the higher levels of insecurity are not primarily channeled through lower incomes; instead, higher rates of insecurity persist even when taking family incomes into account, suggesting that the precarity and volatility of platform work matter as much as income differences in shaping economic disadvantage. Results hold under analyses that account for selection into platform work. Our findings carry important consequences for understandings of the intensity and sources of socio-economic disadvantage of individuals engaged in platform work.
    Keywords: Platform work; non-standard work; economic insecurity.
    Date: 2021–04–16
  17. By: Clark, Ken (University of Manchester); Nolan, Steve (University of Manchester)
    Abstract: We decompose the ethnic pay gap in Great Britain across the distribution of hourly wages, yielding a detailed insight into differences between groups and how these vary over pay percentiles and through time. While some groups experience reductions in the pay gap consistent with lower discrimination, including relatively well paid Indian workers and relatively poorly paid Bangladeshis, others - specifically Black groups - face an apparent glass ceiling barring access to well paid jobs. The increasing educational attainment of Britain's ethnic groups provides some optimism around narrowing pay differentials, particularly at the top of the distribution, while the introduction and uprating of the National Minimum/Living Wage has contributed to improvements at the lower end.
    Keywords: ethnic pay gap, race discrimination, minimum wages, decomposition
    JEL: D31 J15 J31 J38
    Date: 2021–04
  18. By: Cantoni, Enrico (University of Bologna); Gazzè, Ludovica (University of Warwick); Schafer, Jerome (University of Munich)
    Abstract: We study the effects of different types of concurrent elections using individual-level administrative and survey data from Italy. Exploiting different voting ages for the two Houses of Parliament in a voter-level Regression Discontinuity Design, we find no effect of Senate voting eligibility on voter turnout or information acquisition. We also estimate city-level Differences-in-Differences showing that concurrent high-salience municipal elections increase turnout in lower-salience provincial and European elections, but not vice-versa. These concurrency effects are concentrated in municipalities in the South of Italy, possibly due to weaker political parties and lower levels of social capital.
    Keywords: turnout ; concurrent elections ; regression discontinuity design ; Italy.
    Date: 2021
  19. By: Mosthaf, Alexander (University of Mainz); Schank, Thorsten (University of Mainz); Schwarz, Stefan (Institute for Employment Research (IAB), Nuremberg)
    Abstract: Welfare recipients in Germany are allowed to take up supplementary jobs while receiving welfare. The possibility of having a supplementary job was introduced to reduce welfare dependency and facilitate successful labor market integration. In the present study, we use the German Panel Study "Labour Market and Social Security" (PASS) for the years 2006-2014 to analyze the impact of supplementary jobs on the chances of welfare exit. Dynamic multinomial logit models controlling for unobserved heterogeneity and the problem of initial conditions reveal that (part- and full-time) employed males are more likely to exit welfare receipt into employment than their non-employed counterparts. This effect is not driven by household composition changes or earnings increases of household members. For women, however, we find only stepping stone effects for full-time supplementary jobs during welfare receipt. Women having a supplementary part-time job have an even lower probability of leaving welfare into full-time employment.
    Keywords: supplementary jobs, labor market mobility, state dependence, stepping stone effect, dynamic panel data models
    JEL: C33 J60 I38
    Date: 2021–04
  20. By: Carolina Zuccotti (CONICET-UdeSA); Lucinda Platt (London School of Economics)
    Abstract: Despite lower social class origins, children of immigrants in the UK are now attaining high levels of education. However, they experience poorer labour market outcomes, often attributed in part to disadvantaged origins. This paper engages with this paradox. We posit two potential mechanisms for second-generation educational success—social class misallocation and immigrant advantage—and discuss how far these sources of advantage might be replicated in labour market outcomes. We substantiate our discussion with empirical analyses. Drawing on a unique longitudinal study of England and Wales spanning 40 years and encompassing one percent of the population, we present new evidence on the educational and occupational social mobility of men and women from four immigrant-origin groups and the white British majority. We demonstrate that ethnic minorities’ educational advantage is only partially reflected in the labour market. We reflect on the implications of our findings for research on ‘ethnic penalties’ and social mobility.
    Date: 2021–04
  21. By: Osea Giuntella; Lorenzo Rotunno; Luca Stella
    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 J14
    Date: 2021
  22. By: Lorenzo Bencivelli (Bank of Italy); Beniamino Pisicoli (University of Rome Tor Vergata)
    Abstract: We study how FDI affects the financial structure of targeted firms, by looking at a sample of foreign acquisitions that occurred in Italy between 1998 and 2016. We show that the entry of foreign investors promotes the diversification of financing sources. Moreover, foreign acquisitions lower investment sensitivity to the availability of bank credit and the cash flow sensitivity of cash, allowing targeted firms to rely more on non-bank external financing channels. Importantly, these effects are stronger for investment in intangible assets. These findings suggest that the positive productivity effects of FDI emphasized in the literature are, at least in part, traceable to enhanced investment in capital that is harder to finance through the banking sector.
    Keywords: FDIs, firms’ financial structure, non-bank financing, investment
    JEL: F15 F21 F23 F61
    Date: 2021–04
  23. By: Iwasaki, Ichiro; Kočenda, Evžen; Shida, Yoshisada
    Abstract: We analyze factors behind 23,213 distressed acquisitions in European emerging markets from 2007–2019. Besides the impact of financial ratios, legal form, ownership structure, firm size, and age, we emphasize the role of institutions and channels of their propagation. We show that the quality and enforcement of insolvency laws are linked with the lower probability of distressed acquisitions, followed by corruption control and progress in banking reforms. The impact of institutions is larger in lessadvanced countries as compared to economically stronger ones. The effect of institutions increased after the financial crisis but declined as the economic situation improved.
    Keywords: distressed acquisitions, mergers, European emerging markets
    JEL: C35 D02 D22 E02 G34 K20 L22
    Date: 2021–04
  24. By: Milovanska-Farrington, Stefani (University of Tampa)
    Abstract: This article explores the impact of grandparents' supervision time input relative to the effect of parents' childcare provision on children's cognitive, social and behavioral development at an early age. We identify the effects of interest through panel data estimation methods. The findings provide evidence of complementarity between parental and grandparental involvement in the child-rearing process. Specifically, grandparental care has a stronger effect than parental intervention on the vocabulary skills of the child. However, parents' time input in the child has a larger impact than does the supervision time investment of grandparents on the socio-behavioral development and the picture similarities measure of cognitive ability of children between 3 and 6 years old.
    Keywords: cognitive, behavioral, development, grandchildren, early age
    JEL: J12 J13 J01 I21 I10 C33
    Date: 2021–04
  25. By: Canepa, Alessandra; Fontana, Magda; Chersoni, Giulia (University of Turin)
    Abstract: In this paper we investigate whether households’ environmental and financial concerns have any effect on their energy-saving investments. Exploiting a comprehensive dataset covering thirty European countries we investigate if financially concerned and environmentally minded households feature different adoption paths. The results show that environmental and financial concerns play an important role in the decision of adopting energy saving technologies, thus paving the way for policy actions targeted at enhancing consumer awareness. Our analysis also revealed that environmentally and financially concerned households exhibit different socio-economic profiles. We find that environmentally minded, highly educated households living in urban areas with large family size are more likely to adopt than their counterparts with low level of education living in rural areas. On the other side, income is an important factor explaining adoption of economically concerned household. From the methodological point of view our analysis is based on both parametric and non-parametric methods. Namely, we use stochastic dominance analysis to rank distribution functions of household behaviour and the logit model to investigate the socio-economic profile of different groups.
    Date: 2021–03
  26. By: Rudolph, Lukas (LMU Munich); Freitag, Markus; Thurner, Paul
    Abstract: Despite fierce politicization and heated public debates in arms-exporting democracies, systematic research on mass public preferences on arms trade is lacking. Combining political economy models of arms trade with the literatures on trade preferences and foreign policy attitudes, we argue that citizens trade off economic incentives, strategic interests and moral considerations when assessing arms trade and that deeply rooted `strategic cultures’ lead to differences in citizen preferences between countries. To derive the implicit weighting of different features of arms trade, we draw on population-representative conjoint survey experiments (N=6,617), fielded in November/December 2020 in two of the global top-5 exporting countries of major arms: Germany and France. We find that both country populations show structured preferences towards arms exports which predominantly center around their moral repercussions. However, German respondents place more weight on moral consequences and, compared to French respondents, a larger share is in fundamental opposition. We conclude that these diverging preferences potentially conflict with plans of a common European defense and security policy.
    Date: 2021–04–19
  27. By: Hügle, Dominik
    Abstract: In this paper, I analyze how the higher education decision of young adults in Germany depends on their expected future earnings. For this, I estimate a microeconometric model in which individuals maximize life-time utility by choosing whether or not to enter higher education. To forecast individual life cycles in terms of employment, earnings, and family formation under higher education and its alternative, vocational training, I use a dynamic microsimulation model and regression techniques. I take into account that while individuals generally choose between two options, higher education and vocational training, they are aware of multiple potential realizations under both options, such as leaving higher education with a bachelor degree or taking up higher education after first having earned a vocational degree. Using the estimates from the decision model, I simulate the introduction of different tuition fee and graduate tax scenarios. I find that the impact of these education policies on the higher education decision is limited and only few individuals would change their educational decisions as a reaction to these policies.
    Keywords: Educational choice,Higher education,Dynamic microsimulation
    JEL: C53 I23
    Date: 2021
  28. By: Bredtmann, Julia
    Abstract: This paper investigates the effects of the 2015 mass inflow of refugees to Germany on electoral outcomes. Specifically, using unique data on refugee populations and their type of accommodation, I analyze how local exposure to refugees affects the outcomes of the March 2016 state election - an election that was characterized by a strong surge in the electoral success of right-wing parties. For identification, I exploit quasi-random variation in the allocation of refugees across municipalities. The results show that an increase in the population share of refugees increases the vote share of right-wing parties and decreases the vote share of the incumbent federal government parties. The electoral effects, however, are solely driven by refugees living in centralized accommodation, and particularly by municipalities that host reception centers for refugees. These findings have important implications for the design of public policies in handling future receptions of refugees, as they reveal that an earlier transfer of refugees from centralized to decentralized accommodation could attenuate a growing support for right-wing parties.
    Keywords: Immigration,refugees,political economy,voting
    JEL: D72 F22 J15 R23
    Date: 2020
  29. By: Paul Bingley; Lorenzo Cappellari (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Konstantinos Tatsiramos
    Abstract: We study the contribution of parental similarity in schooling levels to the intergenerational transmission of educational attainment. We develop an empirical model for educational correlations within the family in which parental sorting can translate into intergenerational transmission, or transmission can originate from each parent independently. Estimating the model using educational attainment from Danish population-based administrative data for over 400,000 families, we find that about 75 percent of the intergenerational correlation in education is driven by the joint contribution of the parents. We also document a sizeable secular decline of parental assortative mating in education, with a corresponding fall in joint intergenerational transmission from both parents; a fall compensated by an increase in parent-specific intergenerational transmission, leaving total intergenerational persistence unchanged. The mechanisms of intergenerational transmission have changed, with an increased importance of one-to-one parent-child relationships.
    Keywords: Assortative mating, intergenerational transmission, human capital, inequality.
    JEL: I24 J62
    Date: 2021–04
  30. By: Galassi, Gabriela (Bank of Canada)
    Abstract: This paper analyzes how firms respond to changes in tax benefits for low-earning workers and how such policies also affect high-earning workers. I explore establishment outcomes around Germany's 2003 Mini-Job Reform, which expanded tax benefits for low-earning workers. I document that highly exposed establishments–high proportion of low-earning workers–increase their employees relative to non-exposed establishments–low proportion of such workers. This relative expansion is tilted towards high-earning workers, not targeted by the tax benefits. Nonexposed establishments substitute employment towards low-earning workers without expanding at the same pace. My findings are consistent with a model in which employment growth the policy intended is accompanied by a reallocation of employment and production between highly exposed firms and non-exposed firms, resulting in an efficiency loss.
    Keywords: tax benefits, firm decisions, spillovers
    JEL: H20 H24 H32 E24 E64 I38 J23 J38
    Date: 2021–04
  31. By: Anna Ispierto Maté, Irma Martínez García, Gloria Ruiz Suárez
    Abstract: This paper is based on the results deriving from the Survey of Financial Competences (ECF) in an attempt to contribute to the improvement of financial education policy designs, and it pursues several objectives: (i) to quantify the financial knowledge of individuals, (ii) to relate this knowledge to available socio-economic characteristics, and (iii) to analyse the effect of financial education on savings and investment decision-making for a broad set of financial assets. The results reveal that financial education plays a particularly important role in the decision to acquire financial assets such as fixed income and equity securities and investment funds. Financial education determines investment decisions in which the valuation of return, risk and investment term predominate and not the decisions of saving or acquisition of assets strongly perceived as hedging products.
    Keywords: Financial Education, Investment, Saving.
    JEL: A20 G21 G23 I21 I22
    Date: 2021
  32. By: Eduardo Ignacio Polo-Muro (Department of Economics. Universidad Pablo de Olavide.)
    Abstract: This research examines the response in terms of demand for mental health care when individuals face a negative economic shock that impairs mental health. It exploits the sudden increase of the unemployment rate in Spain during the period 2007-2009 to analyze the long-run consequences of the labor market deterioration caused by the Great Recession on mental health. First, I analyze the impairment of self-evaluated mental health as a consequence of the Great Recession and if it prevails during the economic recovery. In addition, I estimate if the effect on self-reported mental health is reflected in the demand for mental health care. The results indicate that individuals displaced from their jobs are more likely to report worse mental health, to take drugs for mental illness, and to visit a mental health specialist. Using a labor market shock at the aggregate level, the findings from a differences-in-differences design show that the economic downturn increases the differences between employed and unemployed individuals in self-evaluated mental health. However, a recession reduces the prescription of mental health drugs, and the effect on medical attendance is insignificant. The opposite evidence regarding self-evaluated mental health and medical behavior might suggest the presence of a stigma associated with mental health.
    Keywords: Mental health, Health Care, Unemployment, Great Recession
    JEL: I12 I14 I18 J60
    Date: 2021
  33. By: Ángela Castillo-Murciego (Departamento de Economía y Empresa, Universidad de La Rioja); Julio López-Laborda (Departamento de Estructura e Historia Económica y Economía Pública, Universidad de Zaragoza)
    Abstract: Tax havens may play a key role in the profit-shifting activity of multinational companies (MNCs), since, among other characteristics, they are the territories with the most beneficial taxes for foreign investors. This paper shows that Spanish MNCs with higher average foreign non-haven tax rates are more likely to invest in tax havens. This outcome is robust to at least two different tax haven lists and various definitions of the average non-haven tax rate. The size of the foreign and domestic activity of the Spanish MNCs, as well as their use of intangible assets and the fact of belonging to the Ibex 35 index, also positively affect the probability of investing in tax havens. By economic sectors, once the endogeneity problem is controlled for, the incentive of third countries’ high taxes on investments in tax havens is greater for manufacturers than for service firms, but this effect is especially high for financial firms. Moreover, within the Ibex 35 index of companies, only the financial firms exert a positive effect on the likelihood of investing in these low-tax territories. Additionally, it seems that while foreign non-haven taxes positively influence the number of different tax havens used by Spanish firms, they have no effect on the number of affiliates located within them. The paper also estimates that Spanish MNCs have been able to save about 4 billion euros per year in corporate income tax in the period 2013-2018 as a result of these practices.
    Date: 2021–04
  34. By: Giovanni Peri; Daniel I. Rees; Brock Smith
    Abstract: Since the turn of the last century, nationalistic political parties have been gaining support in Europe. Over the same period, terror attacks have increased. Using data from European Social Surveys (ESS), we examine the effects of terror attacks involving at least one fatality on attitudes towards immigrants and government institutions. Comparing within-country responses to the ESS shortly before and after fatal terror attacks, we find little evidence of a shift in attitudes against immigrants. Consistent with “rally-around-the flag” effects documented by political scientists, ESS respondents living in the region that was attacked tend to express more trust in parliament and more satisfaction with the national government in the post- as compared to the pre-attack period. Similarly, we find evidence that particularly salient terror attacks can produce nationwide rally-around-the-flag effects.
    JEL: H56
    Date: 2021–04
  35. By: Sarah Flèche; Anthony Lepinteur; Nattavudh Powdthavee
    Abstract: Can capital constraints explain why there are more male than female entrepreneurs in most societies? We study this issue by exploiting longitudinal data on lottery winners. Comparing between large to small winners, we find that an increase in lottery win in period t-1 significantly increases the likelihood of becoming self-employed in period t. This windfall effect is statistically the same in magnitude for men and women; a one percent increase in exogenous income increases the probability of female self-employment by 0.6 percentage points, which is approximately 10% of the gender entrepreneurial gap. These results suggest that we can causally reduce the gender entrepreneurial gap by improving women's access to capital that might not be as readily available to the aspiring female entrepreneurs as it is to male entrepreneurs.
    Keywords: gender inequality, self-employment, lottery wins, BHPS
    JEL: J16 J21 J24
    Date: 2021–04
  36. By: John T. Addison; Paulino Teixeira
    Abstract: Using a cross section of matched data from the employee and management questionnaires of the European Company Survey, this paper investigates the determinants of worker commitment and the potential contribution of commitment to establishment performance. An index of worker commitment is constructed from employer perceptions of the motivation of workers and their retention and absenteeism propensities, while the determinants of commitment are fashioned from observations taken from the worker representation side ordered along dimensions such as perceived organizational trust and involvement. The commitment index is then linked to establishment performance outcomes. Key findings from the commitment equation are the positive role of trust in management, the quality of information exchanged, and the degree of worker representation influence in respect of major decisions taken by management. In turn, commitment emerges as a key correlate of establishment financial performance and labor productivity growth. Our supplemental sensitivity analysis is supportive of the interpretation of commitment as a driver of performance.
    Keywords: commitment, type of workplace representation, financial performance, labor productivity growth, European Company Survey
    JEL: J20 J50
    Date: 2021
  37. By: Rueda-Cantuche, Jose Manuel (JRC); Kutlina-Dimitrova, Zornitsa (DG Trade); Sousa, Nuno (DG Trade)
    Abstract: This analysis sheds new insights on the gender-balance of the employment opportunities supported by extra-EU exports. It shows that in 2017 more than 13 million female workers in the EU had jobs thanks to the exports of goods and services to the rest of the world. However, there is a gender gap when it comes to the employment prospects offered by extra-EU exports: only 38% of the jobs dependent on exports to the world are taken up by women. The analysis suggests that such gender gap is largely due to the concentration of female employment in the less export-oriented sectors, notably in services. Furthermore, the current note makes clear that labour compensation for female workers in exports-supported jobs stagnated in comparison to total employment over the time period considered. Although all exports-supported jobs benefit from a wage premium, there is a gender wage gap of 4 p.p.
    Keywords: international trade; gender; employment
    JEL: F13
    Date: 2019–09–09
  38. By: Alessandra Fenizia (George Washington University); Raffaele Saggio (University of British Columbia)
    Abstract: This paper evaluates the long-run economic impact of the fight against organized crime. It uses rich administrative data from Italy and studies one of the most aggressive policies aimed at combating criminal organizations: the city council dismissal. Under this policy, local administrations believed to be infiltrated by the Mafia are dismissed by the central government and the municipality is then administrated by a team of public servants appointed by the central government for approximately two years. Using a matched difference-in-differences design, we find that this policy fosters economic growth. Specifically, the city council dismissal increases formal employment by 16.9% nine years after the dismissal and this effect appears to be partially driven by the entry of new workers in the formal sector. Treated municipalities also display higher economic dynamism and a surge in industrial real estate prices in the aftermath of the intervention. These effects appear to be mediated by an increase in the quality of local politicians elected after the city council dismissal. We show that these newly elected politicians raise local tax compliance and were able to increase expenditures on roads and infrastructures. Overall, our results imply that there are significant long-run economic benefits associated with targeted law enforcement actions against criminal organizations.
    JEL: D73 G38 K42
    Date: 2020
  39. By: Card, David (University of California, Berkeley); Cardoso, Ana Rute (IAE Barcelona (CSIC))
    Abstract: Sectoral contracts in many European countries set wage floors for different occupation groups. In addition, employers often pay a wage premium (or wage cushion) to individual workers. We use administrative data from Portugal, linked to collective bargaining agreements, to study the interactions between wage floors and wage cushions and quantify the impact of sectoral wage floors. Although wages exhibit a "spike" at the wage floor, a typical worker receives a 20% premium over the floor, with larger cushions for older and better-educated workers and at higher-productivity firms. Cushions also allow wages to covary with firm-specific productivity, even within sectoral agreements. Contract negotiations tend to raise all wage floors proportionally, with increases that reflect average productivity growth among covered firms. As floors rise, however, cushions are compressed, leading to an average passthrough rate of only about 50%. We find no evidence of employment responses to floor increases. Finally, we use a series of counterfactual simulations to show that real wage reductions during the recent financial crisis arose through reductions in real wage floors, reductions in real cushions, and a re-allocation of workers to lower wage floors. Offsetting these effects was a rapid rise in education of new cohorts, which in the absence of other factors would have led to rising real wages.
    Keywords: sectoral bargaining, trade unions, wage flexibility
    JEL: J31 J41 J51
    Date: 2021–04

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