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

  1. Gender Gaps in Political Careers: Evidence from Competitive Elections By Davide Cipullo
  2. The Sectoral Innovation Database, 1994-2016.Methodological Notes By Mario Pianta; Andrea Coveri; Jelena Reljic
  3. Parents under Stress - Evaluating Emergency Childcare Policies during the First Covid-19 Lockdown in Germany By Simone Schüller; Hannah S. Steinberg
  4. Airbnb and Rental Markets: Evidence from Berlin By Tomaso Duso; Claus Michelsen; Maximilian Schäfer; Kevin Ducbao Tran
  5. Women's Representation in Politics and Government Stability By Antonio Acconcia; Carla Ronza
  6. Intangible Capital and Firm-Level Productivity – Evidence from Germany By Roth, Felix; Sen, Ali; Rammer, Christian
  7. Occupational Licensing and the Gender Wage Gap By Koumenta, Maria; Pagliero, Mario; Rostam-Afschar, Davud
  8. The Role of Short-Time Work and Discretionary Policy Measures in Mitigating the Effects of the Covid-19 Crisis in Germany By Michael Christl; Silvia De Poli; Tine Hufkens; Andreas Peichl; Mattia Ricci
  9. The Effects of Shortening Potential Benefit Duration: Evidence from Regional Cut-Offs and a Policy Reform By Galecka-Burdziak, Ewa; Góra, Marek; Jessen, Jonas; Jessen, Robin; Kluve, Jochen
  10. Work, care and gender during the Covid-19 crisis By Hupkau, Claudia; Petrongolo, Barbara
  11. Neither Backlash nor Convergence: Dynamics of Intracouple Childcare Division after the First Covid-19 Lockdown and Subsequent Reopening in Germany By Christina Boll; Dana Müller; Simone Schüller
  12. The consumption response to borrowing constraints in the mortgage market By Tracey, Belinda; Van Horen, Neeltje
  13. "Too Shocked to Search": The COVID-19 Shutdowns' Impact on the Search for Apprenticeships By Goller, Daniel; Wolter, Stefan C.
  14. Maternal Labor Supply: Perceived Returns, Constraints, and Social Norms By Boneva, Teodora; Kaufmann, Katja Maria; Rauh, Christopher
  15. Agglomeration Spillover Effects in German Land and House Prices at the City and County Levels By Gabriel S. Lee; Stefanie Braun
  16. Firm-level heterogeneity in the impact of the COVID-19 pandemic By Alejandro Fernández-Cerezo; Beatriz González; Mario Izquierdo; Enrique Moral-Benito
  17. Why Time Cannot Heal All Wounds: Personal Wealth Trajectories of Divorced and Married Men and Women By Nicole Kapelle
  18. Why a Labour Market Boom Does Not Necessarily Bring Down Inequality: Putting Together Germany's Inequality Puzzle By Biewen, Martin; Sturm, Miriam
  20. Promotion Ban and Heterogeneity in Retail Prices during the Great Lockdown By Jean Hindriks; Leonardo Madio; Valerio Serse
  21. Dark Passage: Mental Health Consequences of Parental Death By Petri Bockerman; Mika Haapanen; Christopher Jepsen
  22. Grandparents, Moms, or Dads? Why children of teen mothers do worse in life By Aizer, Anna; Devereux, Paul J.; Salvanes, Kjell G
  23. Tapping into Talent: Coupling Education and Innovation Policies for Economic Growth By Akcigit, Ufuk; Pearce, Jeremy; Prato, Marta
  24. Affinity, Trust, and Information By Guiso, Luigi; Makarin, Alexey

  1. By: Davide Cipullo
    Abstract: This paper investigates the impact of voter support on the representation of women in the political profession. The empirical analysis exploits two-stage elections in the United States and Italy to hold the selection of candidates constant. In two-stage elections, candidates are admitted to the second round of voting based on the outcome of the first round. I find that among candidates who marginally qualify for the final round, women are 20 percent less likely than men to be elected to the US House of Representatives and 40 percent less likely to be elected mayor in Italian municipalities. Using a difference-in-discontinuities design, I then show that the gender gap in the probability of being elected has long-lasting effects on career trajectories. Women are substantially less likely than men to win future elections and to climb the political hierarchy. My findings suggest that one of the reasons that few women reach the top in politics is that female candidates face hurdles at the beginning of their careers.
    Keywords: gender gaps, self-selection, political careers, voting
    JEL: C24 D02 D72 J16
    Date: 2021
  2. By: Mario Pianta (Scuola Normale Superiore, Florence); Andrea Coveri (Department of Economics, Society & Politics, Università di Urbino Carlo Bo); Jelena Reljic (Sapienza Università di Roma)
    Abstract: The Sectoral Innovation Database (SID) has been developed at the University of Urbino over the last 20 years and combines several major sources of industry-level data, shedding light on the dynamics of structural change, the nature and impact of innovation, the internationalisation of production, the evolution of the quantity and quality of employment, income distribution patterns and the role of digitalization. The database covers six major European countries – France, Germany, Italy, the Netherlands, Spain and the United Kingdom (representing 75% of EU28’s GDP) – from 1994 to 2016, considering six time periods corresponding to upswings and downswings of business cycles. The first version of the SID provides data for 21 manufacturing and 17 service sectors for two-digit NACE Rev. 1 classes. As statistical surveys have moved to the twodigit NACE Rev. 2 classification, a second version of the Sectoral Innovation Database was produced, providing data for 18 manufacturing and 23 service sectors for two-digit NACE Rev. 2 classes. Major sources of data include the Community Innovation Surveys provided by Eurostat, the OECD’s STAN database, the WIOD database, the Eurostat’s EU Labour Force Surveys, and the EU KLEMS data on digitalization. The integrated information provided by the Sectoral Innovation Database offers a comprehensive view of industries’ dynamics in Europe and allows for an in-depth investigation of key research questions related to technological change, economic performance, international production, income distribution and employment.
    Keywords: Innovation, Industries, Databases, Demand, Offshoring, Labour market
    JEL: F15 J31 J51 L16 O33
    Date: 2021
  3. By: Simone Schüller; Hannah S. Steinberg
    Abstract: What are the effects of school and daycare facility closures during the COVID-19 pandemic on parental well-being and parenting behavior? Can emergency childcare policies during a pandemic mitigate increases in parental stress and negative parenting behavior? To answer these questions, this study leverages cross-state variation in emergency childcare eligibility rules during the first COVID-19 lockdown in Germany and draws on unique data from the 2019 and 2020 waves of the German AID:A family panel. Employing a DDD and IV approach we identify medium-term ITT and LATE effects and find that while emergency care policies did not considerably affect parents’ life satisfaction, partnership satisfaction or mental health, they have been effective in diminishing harsh parenting behavior. We find partly gendered effects, specifically on paternal parenting behavior. Our results suggest that decreasing parental well-being likely constitutes a general effect of the pandemic, whereas the observed increase in negative and potentially harmful parenting behavior is largely directly caused by school and daycare facility closures.
    Keywords: parental well-being, harsh parenting, Covid-19, policy evaluation, school and daycare closures, AID:A, difference-in-difference-in-differences, instrumental variable estimation
    JEL: D04 D13 I18 I31 J13
    Date: 2021
  4. By: Tomaso Duso; Claus Michelsen; Maximilian Schäfer; Kevin Ducbao Tran
    Abstract: We exploit two policy interventions in Berlin, Germany, to causally identify the impact of Airbnb on rental markets. While the first intervention significantly reduced the number of high-availability Airbnb listings bookable for most of the year, the second intervention led to the exit of mostly occasional, low-availability listings. We find that the reduction in Airbnb supply has a much larger impact on rents and long-term rental supply for the first reform. This is consistent with more professional Airbnb hosts substituting back to the long-term rental market. Accordingly, we estimate that one additional nearby high-availability Airbnb listing crowds out 0.6 long-term rentals and, consequently, increases the asked square-meter rent by 1.8 percent on average. This marginal effect tends to be smaller in districts with a higher Airbnb density. However, these district experienced a larger slowdown in rent increases following the reform due to larger reductions in Airbnb supply.
    Keywords: rents, housing market, short-term rental regulation, sharing economy, Airbnb
    JEL: R21 R31 R52 Z30
    Date: 2021
  5. By: Antonio Acconcia (Università di Napoli Federico II and CSEF); Carla Ronza (Università di Napoli Federico II)
    Abstract: Evidence from Italian municipalities indicates that government stability enhances when the share of female councillors increases while it weakens when that share is reduced. Results related to the 2012 gender quota imply that a higher share by 10 percentage points decreases the probability of early termination by 3 percentage points. This effect holds true even controlling for education levels of councillors, party concentration within the council, sex of the Mayor, and unobserved municipal characteristics; it becomes stronger when the municipality is headed by a female Mayor. Results obtained by exploiting the abolition of the 1993 gender quota confirm the relationship between government stability and females' representation. Taken together, our evidence suggests more willingness of females to settle disagreements and foster cooperation.
    Keywords: Government Stability, Women in Politics, Cooperation, Gender Quotas.
    JEL: D74 J16 D72
    Date: 2021–05–11
  6. By: Roth, Felix; Sen, Ali; Rammer, Christian
    Abstract: This paper analyses the impact of intangible capital on firm-level productivity for Germany using panel data from the Community Innovation Survey for the time period 2006 to 2018. Our paper presents three novel results. First, we find a highly significant positive relationship between intangible capital and firm-level productivity with elasticities overall in line with previous findings reported for other large EU economies. Second, our results show that both manufacturing and services are highly intangible-capital intensive, and that intangibles have a greater impact on firm-level productivity in services - particular in the business services sector. Third, our results show that intangible capital investments in German firms are equal to investments in tangible capital since the early 2000s. Overall, the evidence presented in our paper indicates that Germany - in line with other advanced economies - has undergone a structural transition into a knowledge economy in which intangibles act as an important driver of firm-level productivity.
    Keywords: Intangible capital,firm-level productivity,panel data,Germany
    JEL: D24 O30 L22 C33
    Date: 2021
  7. By: Koumenta, Maria; Pagliero, Mario; Rostam-Afschar, Davud
    Abstract: We use a unique survey of the EU labor force to investigate the relationship between occupational licensing and the gender wage gap. We find that the gender wage gap is canceled for licensed self-employed workers. However, this closure of the gender wage gap is not mirrored by significant changes in the gender gap in hours worked. Our results are robust using decomposition methods, quantile regressions, different datasets, and selection correction.
    Keywords: Gender Gap; Occupational Licensing; wages
    JEL: J16 J31 J44 J71
    Date: 2020–10
  8. By: Michael Christl; Silvia De Poli; Tine Hufkens; Andreas Peichl; Mattia Ricci
    Abstract: In this paper, we investigate the impact of the COVID-19 pandemic on German household income using a micro-level approach. We combine a microsimulation model with labour market transition techniques to simulate the COVID-19 shock on the German labour market. We find the consequences of the labour market shock to be highly regressive with a strong impact on the poorest households. However, this effect is nearly entirely offset by automatic stabilisers and discretionary policy measures. We explore the cushioning effect of these policies in detail, showing that short-time working schemes and especially the one-off payments for children are effective in cushioning the income loss of the poor.
    Keywords: Covid-19, EUROMOD, microsimulation, STW, automatic stabilisers
    JEL: D31 E24 H24
    Date: 2021
  9. By: Galecka-Burdziak, Ewa (Warsaw School of Economics); Góra, Marek (Warsaw School of Economics); Jessen, Jonas (DIW Berlin); Jessen, Robin (RWI); Kluve, Jochen (KfW Development Bank)
    Abstract: This paper quantifies labour market effects of changes in the potential benefit duration (PBD). The empirical approach uses a particular unemployment insurance set-up from Poland that generates two sources of identifying variation: individual workers' PBD depends directly on the county unemployment rate relative to the national average—12 months of PBD above a cut-off of 125 per cent and 6 months below. In addition, this cut-off shifted from 125 to 150 per cent in a 2009 reform. We use i) the natural experiment generated by this reform, and ii) the sharp discontinuity generated by the cut-offs to estimate effects of shortening PBD on exit from benefit receipt, exit from unemployment, and entry into employment. The analysis is based on administrative data covering unemployment spells for prime age workers during the years 2006-2018. A one-month shorter PBD decreases average benefit duration by 0.5 months and average unemployment duration by 0.4 months. The PBD reduction by six months increased the job finding rate within the first 9 months by 6 percentage points. Using the stock of unemployed per county, we find evidence for positive market-level employment effects.
    Keywords: unemployment benefits, extended benefits, spell duration
    JEL: H55 J20 J65
    Date: 2021–04
  10. By: Hupkau, Claudia; Petrongolo, Barbara
    Abstract: We explore impacts of the pandemic crisis and associated restrictions to economic activity on paid and unpaid work for men and women in the UK. Using data from the Covid-19 supplement of Understanding Society, we find evidence that labour market outcomes of men and women were roughly equally affected at the extensive margin, as measured by the incidence of job loss or furloughing, but if anything women suffered smaller losses at the intensive margin, experiencing slightly smaller changes in hours and earnings. Within the household, women provided on average a larger share of increased childcare needs, but in an important share of households fathers became the primary childcare providers. These distributional consequences of the pandemic may be important to understand its inequality legacy over the longer term.
    Keywords: COVID-19; gender gaps; Home Production
    JEL: J13 J16 J22 J31
    Date: 2020–10
  11. By: Christina Boll; Dana Müller; Simone Schüller
    Abstract: Using unique monthly panel data from the Institute for Employment Research (IAB) covering the immediate postlockdown period from June to August 2020, we investigate the opposing claims of widening/closing the gender gap in parental childcare during the COVID-19 pandemic in Germany. We contribute to the current literature by analyzing the medium-term dynamics of couples’ childcare division and by considering the prepandemic division rather than providing merely snapshots during lockdown. Our results suggest a slight shift toward a more egalitarian division in June that, however, faded out in subsequent months. Starting from a fairly “traditional” prepandemic childcare division, the lockdown stimulus was not nearly strong enough to level the playing field. A subgroup analysis differentiating between parents’ individual lockdown-specific work arrangements shows that the drivers of the observed shift were mothers who worked more than 20 hours a week and for whom remote work was not possible. Fathers’ work arrangement instead did not play a significant role. We conclude that the shift emerged out of necessity rather than opportunity, which makes it likely to fade once the necessity vanishes, thereby catapulting parents back to their initial childcare arrangements.
    Keywords: Covid-19, intracouple division of unpaid work, childcare, gender, working from home, IAB-HOPP
    JEL: D13 J13 J16
    Date: 2021
  12. By: Tracey, Belinda (Bank of England); Van Horen, Neeltje (Bank of England)
    Abstract: This paper shows that relaxing borrowing constraints positively affects household consumption in addition to stimulating housing market activity. We focus on the UK Help-to-Buy (HTB) program, which provided a sudden relaxation of the down payment constraint by facilitating home purchases with only a 5% down payment. Our research design exploits geographic variation in exposure to HTB and uses administrative data on mortgages and car sales in combination with household survey data. We estimate that the program increased total home purchases by 11%, and the increase was driven almost entirely by first-time and young buyers. Regions that were more exposed to the program experienced a rise in non-durable consumption unrelated to the home and in loan-financed car purchases, in addition to an increase in home-related expenditures. These results are independent of changes in regional house prices. Our findings point to a further link between the housing market and household consumption that does not operate through the home purchase and housing wealth channels.
    Keywords: Borrowing constraints; consumption; housing market; mortgage market
    JEL: E21 G21 R21 R28
    Date: 2021–05–07
  13. By: Goller, Daniel (University of St. Gallen); Wolter, Stefan C. (University of Bern)
    Abstract: This study is, to the best of our knowledge, the first analysis of apprenticeship supply that allows us to analyse the effects of the shutdowns triggered by the COVID-19 pandemic before, during and after these shutdowns by means of daily searches for vacant apprenticeships. Analysing over 10 million search queries on the national administrative platform for apprenticeship offers from February 2020 until April 2021 we find a sharp reduction of up to 40% in the daily number of search queries associated to the first shutdown in March 2020, followed by some catch-up effect thereafter. Although we find a strong relationship between the intensity of the politically imposed restrictions due to the COVID-19 pandemic and daily search queries, this relationship weakens over time as the pandemic progresses. Finally, we find a large heterogeneity of effects, but all regions and occupational groups studied show a statistically significant negative effect of the measures on the search intensity for apprenticeships.
    Keywords: COVID-19, Switzerland, stringency index, apprenticeship
    JEL: I20 J22
    Date: 2021–04
  14. By: Boneva, Teodora (University of Zurich); Kaufmann, Katja Maria (University of Mannheim); Rauh, Christopher (University of Cambridge)
    Abstract: We design a new survey to elicit quantifiable, interpersonally comparable beliefs about pecuniary and non-pecuniary benefits and costs to maternal labor supply decisions, to study how beliefs vary across and within different groups in the population and to analyze how those beliefs relate to choices. In terms of pecuniary returns, mothers' (and fathers') later-life earnings are perceived to increase the more hours the mother works while her child is young. Similarly, respondents perceive higher non-pecuniary returns to children's cognitive and non-cognitive skills the more hours a mother works and the more time her child spends in childcare. Family outcomes on the other hand, such as the quality of the mother-child relationship and child satisfaction, are perceived to be the highest when the mother works part-time, which is also the option most respondents believe their friends and family would like them to choose. There is a large heterogeneity in the perceived availability of full-time childcare and relaxing constraints could substantially increase maternal labor supply. Importantly, it is perceptions about the non-pecuniary returns to maternal labor supply as well as beliefs about the opinions of friends and family that are found to be strong predictors of maternal labor supply decisions, while beliefs about labor market returns are not.
    Keywords: labor supply, childcare, beliefs, child penalties
    JEL: J22 J13 I26
    Date: 2021–04
  15. By: Gabriel S. Lee; Stefanie Braun
    Abstract: We estimate spatial German land price e ects using the county-level residential land prices from 2014 to 2018. We show that county-level spatial agglomeration effects play a large and significant role in explaining the cross-county variations in land prices. For example, a 1 % increase in the median income has an increase of 3.45 % in land prices, whereas a 1 % increase in the population density accounts for an increase of 5.47 % increase in land prices. We find that similar empirical patterns also hold for house prices but less so for the seven major German cities. Moreover, housing supply factors such as the available land to build and housing stocks are crucial factors in explaining land and house prices. Furthermore, we show that the land price spillover effects are among the dominating factors in the formation of regional house prices. These results suggest that changes in agglomeration variables such as median income (productivity) and population density cannot completely explain disparate local land and house prices. Lastly, estimating two different land price measurements for Germany shows that direct and indirect agglomeration spillover effects can explain more variation in residential land prices than vacant land prices.
    Keywords: German Land prices; Land values; German Housing prices; Housing values; Spatial Effects.
    JEL: R0 R11 R14 R21
    Date: 2021–05
  16. By: Alejandro Fernández-Cerezo (Banco de España); Beatriz González (Banco de España); Mario Izquierdo (Banco de España); Enrique Moral-Benito (Banco de España)
    Abstract: This paper explores the heterogeneity across firms within each sector and region in the impact of and response to the COVID-19 shock. It relies on a survey conducted by Banco de España to 4,004 companies in November 2020 matched to very rich balance-sheet information on firm characteristics. According to our results, the impact of the COVID-19 shock was larger in the case of small, young and less productive firms located in urban areas within each sector-region pair. Moreover, these firms resorted relatively more to public-guaranteed loans, tax deferrals, and furlough schemes (ERTEs). More indebted companies, which were not hit relatively harder by the shock, also perceived public-guaranteed loans as very useful. Firms consider that uncertainty represents a key hindrance to the recovery, but observable characteristics do not explain the variation in the perception of uncertainty once the impact of the shock is accounted for. Finally, we use the announcement of the Pfizer vaccine on November 9th 2020 as a natural experiment to provide evidence that the vaccine announcement increased significantly firms’ subjective recovery expectations.
    Keywords: COVID-19, firms, sales, employment, uncertainty
    JEL: D22 L20 L25
    Date: 2021–05
  17. By: Nicole Kapelle
    Abstract: Amid concerns of long-term economic consequences of divorce, cross-sectional research illustrated that ever-divorce men but particularly women hold less per capita wealth than continuously married spouses in older age. Using a longitudinal approach and unique personal-level wealth data from the German Socio-Economic Panel Study, the present study aims to understand how divorce stratifies men’s and women’s wealth trajectories. To this end, I apply a novel doubly robust estimation approach that combines propensity score and coarsened exact matching with random-effects growth models to provide causal comparisons of wealth trajectories. Results show that wealth differences between ever-divorce and continuously married individuals predominantly stem from persistent disadvantage generated immediately around divorce rather than a scarring of divorcees’ wealth accumulation over time, although remarriage is a relevant moderator of post-divorce wealth accumulation. Divorced women’s wealth disadvantage compared to men’s likely stems from a range of sources including the maintenance of within-couple wealth inequalities, biased property division processes, and lower wealth accumulation potentials after divorce. Comparatively, married women benefit from marital protection to compensate their lower wealth accumulation potential. Finally, selection into divorce is a relevant although secondary factor that needs to be considered in the explanation of divorce-related wealth stratification.
    Keywords: Divorce, Wealth stratification, Gender, Life course, Matching
    Date: 2021
  18. By: Biewen, Martin (University of Tuebingen); Sturm, Miriam (University of Tübingen)
    Abstract: After an economically tough start into the new millennium, Germany experienced an unprecedented employment boom after 2005 only stopped by the COVID-19 pandemic. Persistently high levels of inequality despite a booming labour market and drastically falling unemployment rates constituted a puzzle, suggesting either that the German job miracle mainly benefitted individuals in the mid- or high-income range or that other developments offset the effects of the drastically improved labour market conditions. The present paper solves this puzzle by breaking down the observed changes in the distribution of disposable incomes between 2005/06 and 2015/16 into the contributions of eight different factors, one of them being the employment boom. Our results suggest that, while the latter did have an equalising impact, it was partially offset by the disequalising impact of other factors and substantially dampened by the tax and transfer system. Our results point to a strong role of the German tax and transfer system as a distributional stabilizer implying that, if the COVID-19 shock were to persistently reverse all the employment gains that occurred during the boom, this would only have a moderately disequalising effect on the distribution of net incomes.
    Keywords: income distribution, employment, social insurance, labour market reform
    JEL: C14 D31 I30
    Date: 2021–05
  19. By: Oľga Pastiranová; Jiří Witzany
    Abstract: The purpose of this paper is to empirically analyse the behaviour of expected loan loss provisions during the economic cycle. Provisioning rules under IFRS 9 require creation of the expected credit losses, which have been anticipated to behave countercyclically, and so replaced the rules under IAS 39 widely presumed to have procyclical impact. Observing the dynamics of the economic cycle during the economic downturn resulting from the COVID restrictions, a panel regression has been performed to test the hypothesis that loan loss provisioning rules under IFRS 9 have procyclical impact. The hypothesis was confirmed within the period of 1Q 2015 – 3Q 2020 on the sample of the member countries of the European Union.
    Date: 2021–04–16
  20. By: Jean Hindriks; Leonardo Madio; Valerio Serse
    Abstract: We study the impact of the Belgium lockdown on retail prices using a unique dataset tracking daily prices and promotions for various products in different stores and retail chains. Two distinctive features of our analysis are the ban on promotions during the first two weeks of the lockdown, and the presence of local pricing retail chains (LP) competing with uniform (national) pricing retail chains (UP). We decompose the price changes into the regular price, the frequency, and the size of promotions. The sale price (i.e., the price paid by consumer purchasing on “sale”) increased by 7% within two weeks and by 2.5% within three months. We then provide an heterogeneity analysis of the regular price variation across stores, retailers, products, and over time. We show that LP chains reacted the most to the lockdown with spatial heterogeneity. The heterogeneity in price response also suggests that the price increase was not driven by cost inflation.
    Keywords: Covid-19, pricing, lockdown, retailers
    JEL: D22 E30 E31 L11
    Date: 2021
  21. By: Petri Bockerman (University of Jyvaskyla, Labour Institute for Economic Research, and IZA Institute of Labor Economics); Mika Haapanen (University of Jyvaskyla, School of Business and Economics); Christopher Jepsen (University College Dublin, School of Economics and Geary Institute, IZA Institute of Labor Economics, and CES-Ifo)
    Abstract: This paper studies the causal effect of parental death on children's mental health. Combining several nationwide register-based data for Finnish citizens born between 1971 and 1986, we use an event study methodology to analyze hospitalization for mental health-related reasons by the age of 30. We find that there is no clear evidence of increased hospitalization following the death of a parent of a different gender, but there are significant effects for boys losing their fathers and girls losing their mothers. Depression is the most common cause of hospitalization in the first three years following paternal death, whereas anxiety and, to a lesser extent, self-harm are the most common causes five to ten years after paternal death. We also provide descriptive evidence of an increase in the use of mental health-related medications and sickness absence, as well as substantial reductions in years of schooling, employment, and earnings in adulthood for the affected children.
    Keywords: parental death, mental health, hospitalization, depression, labor market
    JEL: I10 I12
    Date: 2021–03–11
  22. By: Aizer, Anna; Devereux, Paul J.; Salvanes, Kjell G
    Abstract: Women who give birth as teens have worse subsequent educational and labor market outcomes than women who have first births at older ages. However, previous research has attributed much of these effects to selection rather than a causal effect of teen childbearing. Despite this, there are still reasons to believe that children of teen mothers may do worse as their mothers may be less mature, have fewer financial resources when the child is young, and may partner with fathers of lower quality. Using Norwegian register data, we compare outcomes of children of sisters who have first births at different ages. Our evidence suggests that the causal effect of being a child of a teen mother is much smaller than that implied by the cross-sectional differences but that there are probably still significant long-term, adverse consequences, especially for children born to the youngest teen mothers. Unlike previous research, we have information on fathers and find that negative selection of fathers of children born to teen mothers plays an important role in producing inferior child outcomes. These effects are particularly large for mothers from higher socio-economic groups. Our data also enable us to examine the effect of age at first birth across a range of maternal ages. Importantly, while we find that child outcomes are worst for those born to teen mothers, outcomes improve with mothers' age at first birth until mothers are in their mid-20s and then flatten out.
    Keywords: Child outcomes; Human Capital; Teen Childbearing
    JEL: I31 I32 J12 J13
    Date: 2020–10
  23. By: Akcigit, Ufuk; Pearce, Jeremy; Prato, Marta
    Abstract: How do innovation and education policy affect individual career choice and aggregate productivity? This paper analyzes the various layers that connect R&D subsidies and higher education policy to productivity growth. We put the development of scarce talent and career choice at the center of a new endogenous growth framework with individual-level heterogeneity in talent, frictions, and preferences. We link the model to micro-level data from Denmark and uncover a host of facts about the links between talent, higher education, and innovation. We use these facts to calibrate the model and study counterfactual policy exercises. We find that R&D subsidies, while less effective than standard models, can be strengthened when combined with higher education policy that alleviates financial frictions for talented youth. Education and innovation policies not only alleviate different frictions, but also impact innovation at different time horizons. Education policy is also more effective in societies with high income inequality.
    Keywords: Education Policy; Endogenous Growth; inequality; Innovation; IQ; R&D policy
    JEL: J24 O31 O38 O47
    Date: 2020–09
  24. By: Guiso, Luigi; Makarin, Alexey
    Abstract: Mutually beneficial trades often rely on both trust and trustworthiness. In exchanges where no history of behavior is observable, however, where does trust come from? Recent evidence suggests that the level of affinity parties in an exchange feel for each other positively affects trustworthiness and can, therefore, affect trust. We propose a simple model that predicts a positive relationship between trust beliefs, affinity, and trustworthiness and a negative relationship between the dispersion of trust beliefs and affinity level. Furthermore, the model suggests that trust should be slower to update after a shock to trustworthiness when affinity is high. We show that the model's predictions are supported by data from two unrelated datasets-a proprietary survey of Italian entrepreneurs and an extensive international survey (Eurobarometer). Finally, using data on international trade, we show that, in line with our model, adverse shocks to trustworthiness cause a reallocation of trade from low-affinity to high-affinity partners, and especially so in trust-intensive industries.
    Keywords: Affinity; Information Acquisition; Trust; trustworthiness
    JEL: D8 D83 D9 F1 Z1
    Date: 2020–09

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