nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2021‒06‒28
29 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Female labour force participation and household income inequality in Italy By Segato, Federico
  2. Does education predict gender role attitudes?: Evidence from European datasets By Deole, Sumit S.; Zeydanli, Tugba
  3. Employee training and firm performance: Evidence from ESF grant applications By Pedro S. Martins
  4. The Heterogeneous Impact of Short-Time Work: From Saved Jobs to Windfall Effects By Pierre Cahuc; Francis Kramarz; Sandra Nevoux
  5. Even more discouraged? The NEET generation at the age of COVID-19 By Aina, Carmen; Brunetti, Irene; Mussida, Chiara; Schicchitano, Sergio
  6. Market Power and the Volatility of Markups in the Food Value Chain: The Role of Italian Cooperatives By Hyejin Lee; Johan Swinnen; Patrick Van Cayseele
  7. Technological breakthroughs in European regions: the role of related and unrelated combinations By Ron Boschma; Ernest Miguélez; Rosina Moreno; Diego B. Ocampo-Corrales
  8. When Need Meets Merit: The Effect of Increasing Merit Requirements in Need-Based Student Aid By Agasisti, Tommaso; Bratti, Massimiliano; Minaya, Veronica
  9. Does it pay to say “I do”? Marriage bonuses and penalties across the EU By CHRISTL Michael; DE POLI Silvia; IVASKAITE-TAMOSIUNE Viginta
  10. Does Pain Lead to Job Loss? A Panel Study for Germany By Alan Piper; David G. Blanchflower; Alex Bryson
  11. Modelling sector-specific employment shocks with EUROLAB, a multidimensional behavioural model By NARAZANI Edlira; COLOMBINO Ugo
  12. The effects of cross-border acquisitions on firms’ productivity in the EU By Gregori, Wildmer Daniel; Martinez Cillero, Maria; Nardo, Michela
  13. More Opportunity, More Cooperation? The Behavioral Effects of Birthright Citizenship on Immigrant Youth By Christina Felfe; Martin G. Kocher; Helmut Rainer; Judith Saurer; Thomas Siedler
  14. Speed limits and vehicle accidents in built-up areas: The impact of 30 km/h zones By Davide Cerruti; Massimo Filippini
  15. Does Tax Policy Work When Consumers Have Imperfect Price Information? Theory and Evidence By Felix Montag; Alina Sagimuldina; Monika Schnitzer
  16. Active labour market policies for the long-term unemployed: New evidence from causal machine learning By Goller, Daniel; Harrer, Tamara; Lechner, Michael; Wolff, Joachim
  17. Vacancies, Employment Outcomes and Firm Growth: Evidence from Denmark By Bagger, Jesper; Fontaine, Francois; Galenianos, Manolis; Trapeznikova, Ija
  18. Communication Barriers and Infant Health: Intergenerational Effects of Randomly Allocating Refugees Across Language Regions By Auer, Daniel; Kunz, Johannes S.
  19. Local Public Goods and the Spatial Distribution of Economic Activity By Arthur Guillouzouic--Le Corff; Emeric Henry; Joan Monras
  20. New Evidence of Health State Dependent Utility of Consumption: A combined survey and register study By Fink Simonsen, Nicolai; Kjær, Trine
  21. Can European businesses achieve productivity gains from investments in energy efficiency? By Kalantzis, Fotios; Niczyporuk, Hanna
  22. Public Pension Design and Household Retirement Decisions: A Comparison of the United States and Germany By David Knapp; Jinkook Lee; Maciej Lis; Drystan Phillips
  23. Green Mobility and Well-Being By Echeverría, Lucía; Gimenez-Nadal, J. Ignacio; Molina, José Alberto
  24. Finding transport projects with high value for money : what are the socio-geographic determinants? By Jussila Hammes, Johanna; Volden, Gro Holst; Welde, Morten; Börjesson, Maria; Odeck, James
  25. roductivity Slowdown and MNEs' Intangibles: where is productivity measured? By Jean-Charles Bricongne; Samuel Delpeuch; Margarita Lopez Forero
  26. This Time is Not so Different: Income Dynamics During the COVID-19 Recession By Brian D. Bell; Nicholas Bloom; Jack Blundell
  27. Efficiency and effectiveness of the COVID-19 government support: Evidence from firm-level data By Lalinsky, Tibor; Pál, Rozália
  28. Happy to Help: The Welfare Effects of a Nationwide Micro-Volunteering Programme By Dolan, Paul; Krekel, Christian; Shreedhar, Ganga; Lee, Helen; Marshall, Claire; Smith, Allison
  29. The COVID-19 Pandemic and Entrepreneurship in Germany: First Observations and Interpretations By Michael Fritsch; Maria Greve; Michael Wyrwich

  1. By: Segato, Federico
    Abstract: This study contributes in investigating how female participation in the workforce, together with main related socio-demographic changes, has affected household incomes and their distribution in Italy. The Italian case has been investigated again, relying on theoretical and methodological knowledge of previous researches in the field of female employment and income inequality. The data employed in the analysis belong to the Bank of Italy’s Historical Archive of the Survey on Household Income and Wealth (SHIW) for years between 2000 and 2016. From a methodological point of view the approach has been complemented and has enabled to fill previous research gaps. Not only married women have been considered and they are no more divided between working women and inactive one. The choice of consider existing heterogeneity in working hours has allowed to examine part-time role in inequality increase. How female employment increase has affected income inequality has been analysed first at individual level and only later at the household one. The first analysis level has been performed with descriptive statistics and the second with two different decomposition methods, one for income sources and one for household types. To these a shift-share analysis and a counterfactual analysis have been applied. In Italy, even with regional differences, female employment has continued to grow with overall equalizing effects on household income distribution. With regard to socio-demographic changes, male breadwinner households reduction and single households increase have contributed in household income inequality drop. For the Italian case, part-time can contribute in inequality decline only in the case of female breadwinner households.
    Keywords: female employment, household income inequality, household composition
    JEL: D31 J12 J22
    Date: 2021–06
  2. By: Deole, Sumit S.; Zeydanli, Tugba
    Abstract: This paper presents the first empirical evidence of the causal impact of individuals' education on their attitudes towards traditional gender roles in Europe. We employ two national panel datasets from the UK and Switzerland and a repeated cross-sectional dataset with information from 13 Western European countries for the analysis. To estimate the causal impact of education on gender role attitudes, we exploit the exogenous variation in individuals' education induced by the compulsory school reforms implemented in European countries after World War II. Our results suggest that an additional year of education instigates egalitarian gender role attitudes equivalent of 0.1-0.3 of a standard deviation. While education's moderating effect is particularly prominent among women, we find no evidence of effect heterogeneity concerning individuals' religiosity. Our findings are robust to numerous checks performed and are briefly discussed for their policy relevance.
    Keywords: Gender role attitudes,education,compulsory schooling reforms,IV strategy
    JEL: J16 J78 C26
    Date: 2021
  3. By: Pedro S. Martins
    Abstract: As work changes, firm-provided training may become more relevant. However, there is little causal evidence about the effects of training on firms. This paper studies a large training grants programme in Portugal, supported by the European Social Fund, contrasting firms that received the grants and firms that also applied but were unsuccessful. Combining several rich data sets, we compare many potential outcomes of these firms, while following them over several years both before and after the grant decision. Our difference-in-differences models estimate significant positive effects on take up (training hours and expenditure), with limited deadweight; and that such additional training led to increased sales, value added, employment, productivity, and exports (although not profits). These effects tend to be of at least 5% and, in some cases, 10% or more, and are robust in multiple dimensions.
    Keywords: productivity, Programme evaluation, Training subsidies
    JEL: J24 H43 M53
    Date: 2021–07–08
  4. By: Pierre Cahuc (Département d'économie); Francis Kramarz (ENSAE ParisTech (ENSAE)); Sandra Nevoux (Banque de France)
    Abstract: To understand which firms take-up short-time work and which workers they enroll in this program, we provide a model which shows that short-time work may save jobs in firms hit by strong negative revenue shocks, but not in less severely-hit firms, where hours worked are reduced, without saving jobs. Using detailed data on the administration of the program covering the universe of French establishments in the 2008-2009 Great Recession, we find that short-time work did indeed save jobs and increase hours of work in firms faced with large negative shocks. These firms have been able to recover rapidly in the aftermath of the Recession thanks to short-time work. We also provide evidence of large windfall effects which significantly increased the cost of the policy per job saved; yet we also find that short-time work remains more cost-efficient at saving jobs than wage subsidies.
    Keywords: Short-time Work; Unemployement; Hours of work
    JEL: E24 J22 J65
    Date: 2021–05
  5. By: Aina, Carmen; Brunetti, Irene; Mussida, Chiara; Schicchitano, Sergio
    Abstract: This paper evaluates if and to what extend the risk of becoming Not in Employment, Education or Training (NEET) has worsened during the Covid-19 pandemic in Italy. The analysis is based on a unique dataset from the merging of two sample surveys, the Italian Labor Force Survey and the Institutional Quality Index dataset. We find that the probability of being NEET significantly increased during the pandemic, but heterogeneously between age cohorts and geographical areas. The most affected categories have been young people (aged 25-34) and those living in North-West regions. Females are mostly affected compared to males, especially those experiencing motherhood and living in a Southern province. Investment in education reduces the NEET status, mainly for age-group 25-34 in the South. Participation in the civil society significantly reduces the probability to being NEET. Finally, active policies conducted at regional level are a further educational investment that protect from becoming NEET, although their effectiveness is not significant in the Southern regions. We provide novel evidence to inform policymakers and help building evidence-based policies, tailored on local needs.
    Keywords: NEET,Covid-19 pandemic,quality institutions,Italian provinces
    JEL: I20 J18 J21
    Date: 2021
  6. By: Hyejin Lee; Johan Swinnen; Patrick Van Cayseele
    Abstract: Agricultural cooperatives have often been promoted as a way to increase their market power and to obtain stability of profit against uncertainty. This paper estimates the firm-level markups and markup volatility to identify the countervailing market power of cooperatives in the Italian fruits and vegetable sector and the dairy sector. We use the firm-level data of Italian firms for the period 2007-2014. We find that, overall, there is a tradeoff in cooperatives’ role between obtaining market power and stability. Farmer cooperatives in both sectors gain stability in their markups but their markups are lower, on average, than those for non-cooperatives. For processor cooperatives, the fruits and vegetable sector obtains more market power. This appears to arise from the product differentiation strategy of the processors cooperative.
    Keywords: Cooperatives, market power, firm-level markups, volatility
    JEL: L44 Q13 D23
    Date: 2021
  7. By: Ron Boschma; Ernest Miguélez; Rosina Moreno; Diego B. Ocampo-Corrales
    Abstract: This paper analyzes if the emergence and occurrence of breakthrough technologies in 277 European regions in the period 1981 to 2010 is related to the existing technological portfolio of regions. The study shows that, by far, most combinations breakthrough inventions make are between related technologies: almost no breakthrough patent makes combinations between unrelated combinations only. We also find that breakthrough inventions primarily combine and cite technological classes that are present in the region. Regressions show that the occurrence of breakthrough patents in a technology in a region is positively affected by the local stock of technologies that is related to such technology, but we do not find such an effect for the local stock of unrelated technologies, in contrast to studies that suggest otherwise. However, the region’s ability to enter new breakthrough inventions in a technology relies on the combination of knowledge that is both related and unrelated to such technology.
    Keywords: relatedness, unrelatedness, technological breakthroughs, regional diversification, European regions
    JEL: O18 O31 O33 R11
    Date: 2021
  8. By: Agasisti, Tommaso (Politecnico di Milano); Bratti, Massimiliano (University of Milan); Minaya, Veronica (Columbia University)
    Abstract: Merit requirements in need-based student aid may exacerbate inequality in higher education but at the same time improve efficiency of aid expenditure by increasing on-time graduation, for instance. Disentangling the effect of the two building blocks of student aid ("need" and "merit") is therefore of key interest to policy makers. In this paper, we seek to estimate the causal effect of tightening the academic requirements embodied in need-based student aid on short-term and long-term student academic performance. This is done leveraging a reform in an Italian region that increased by 40% (i.e. from 25 to 35 out of a maximum of 60) the number of credits to be earned in the first academic year to maintain aid eligibility. Using administrative data from an Italian public university mainly offering STEM degrees, this study reveals that tightening merit requirements had a statistically significant, positive effect on various dimensions of performance of the "average" aid recipient. However, an analysis of treatment heterogeneity unveils winners and losers from the policy: the positive effects are indeed concentrated among higher and medium-ability students, while lower-ability students receiving financial assistance are discouraged from continuing in their studies.
    Keywords: university, merit-based requirements, student financial aid, difference-in-differences, Italy
    JEL: I21 I22 I28
    Date: 2021–05
  9. By: CHRISTL Michael (European Commission - JRC); DE POLI Silvia (European Commission - JRC); IVASKAITE-TAMOSIUNE Viginta (European Commission - JRC)
    Abstract: We analyse the different fiscal treatment of married and cohabiting couples across all EU Member States using microsimulation methods. Our paper highlights important differences across EU countries’ tax-benefit systems, where seven countries show substantial bonuses for married couples and four exhibit marriage penalties. On a micro level, we find that these marriage bonuses/penalties differ substantially across household types and income. From a policy point of view, our results suggest that the abolishment of marriage-related tax-benefit components in countries with marriage bonuses would leave some households financially worse off but would increase governments revenues that could be spent to targeted support of specific groups. From both an equity and a gender equality point of view, this abolishment would be desirable.
    Keywords: marriage, cohabitation, marriage penalty, inequality, tax-benefit systems, Europe
    Date: 2021–06
  10. By: Alan Piper; David G. Blanchflower; Alex Bryson
    Abstract: The cross-sectional association between pain and unemployment is well-established. But the absence of panel data containing data on pain and labor market status has meant less is known about the direction of any causal linkage. Those longitudinal studies that do examine the link between pain and subsequent labor market transitions suggest results are sensitive to the measurement of pain and model specification. We contribute to this literature using large-scale panel data from the German Socio-Economic Panel (GSOEP) for the period 2002 to 2018. We show that pain leads to job loss. Workers suffering pain are more likely than others to leave their job for unemployment or economic inactivity. This probability rises with the frequency of the pain suffered in the previous month. The effect persists having accounted for fixed unobserved differences across workers, is apparent among those who otherwise report good general health and is robust to the inclusion of controls for mental health, life satisfaction and the employee’s occupation.
    JEL: J0 J64
    Date: 2021–05
  11. By: NARAZANI Edlira (European Commission - JRC); COLOMBINO Ugo
    Abstract: Little is known yet about the impact of the COVID crisis on household income and jobs in absence of real time information on these variables. A recent literature strand has sought to overcome data limitations to assess the distributional impact of policy measures taken in the EU using various empirical approaches. However, despite the importance of behavioural effects, transitions from work to unemployment or inactivity (or vice versa) are considered exogenously in this literature. This paper explains how EUROLAB, a multidimensional discrete choice labour supply model, can be used to take account of behavioural effects in the face of exogenous demand shocks. We show that it is possible to account for behavioural effects endogenously using a procedure permitting a consistent introduction of sectoral demand shocks and the assessment of COVID-19 related reforms under equilibrium conditions. We illustrate the use of our model considering the case of a simplified wage subsidy scheme using Italian SILC. Our empirical results support the theoretical model, showing in particular how sectoral demand shocks lower wages, employment and increase unemployment under equilibrium conditions. Furthermore, the results show that the labour market reacts differently to the introduction of the wage subsidy scheme, depending on whether the wage subsidy is allocated to potential beneficiaries before or after labour market equilibrium is achieved. In the short-run, a wage subsidy helps to preserve jobs. From a longer-term perspective, it should contribute to the recovery of the labour market although the return to pre-shock employment level depends on a number of factors related to the subsidy (such as duration and amount) and the potential of the labour market to create new jobs.
    Keywords: Labour supply, Labour market equilibrium, Short-time work schemes, Covid-19
    Date: 2021–06
  12. By: Gregori, Wildmer Daniel (European Commission); Martinez Cillero, Maria (European Commission); Nardo, Michela (European Commission)
    Abstract: This study empirically investigates the extent to which firms in the European Union, once acquired through a cross-border acquisition, show different productivity levels as compared to those firms that have not been acquired. Our identification strategy relies on the combination of Propensity Score Matching and the Staggered Difference-in-Difference estimator, using firms’ balance sheet for the years 2008-2018. We find that cross-border acquisitions decrease the productivity of the acquired firms, especially in the manufacturing and services sectors, as well as in less knowledge intensive activities. Firms targeted by acquirers originating in emerging market economies also experience a negative effect on productivity.
    Keywords: Cross-border M&As, FDI, TFP, European Union, Propensity Score Matching, DiD
    JEL: D24 F23 F60 G34
    Date: 2021–05
  13. By: Christina Felfe (University of Würzburg, CESifo); Martin G. Kocher (University of Vienna, IHS Vienna, University of Gothenburg); Helmut Rainer (University of Munich, ifo Institute, CESifo); Judith Saurer (University of Würzburg); Thomas Siedler (University of Potsdam, DIW Berlin, IZA)
    Abstract: Inequality of opportunity, particularly when overlaid with socioeconomic, ethnic, or cultural differences, may limit the scope of cooperation between individuals. A central question, then, is how to overcome such obstacles to cooperation. We study this question in the context of Germany, by asking whether the propensity of immigrant youth to cooperate with native peers was affected by a major integration reform: the introduction of birthright citizenship. Our unique setup exploits data from a large-scale lab-in-the-field experiment in a quasi-experimental evaluation framework. We find that the policy caused male, but not female, immigrants to significantly increase their cooperativeness toward natives. We show that the increase in out-group cooperation among immigrant boys is an outcome of more trust rather than a reflection of stronger other- regarding preferences towards natives. In exploring factors that may explain these behavioral effects, we present evidence that the policy also led to a near-closure of the educational achievement gap between young immigrant men and their native peers. Our results highlight that, through integration interventions, governments can modify prosocial behavior in a way that generates higher levels of efficiency in the interaction between social groups.
    JEL: C93 D90 J15 K37
    Date: 2021–06
  14. By: Davide Cerruti (CER–ETH – Center of Economic Research at ETH Zurich, Switzerland); Massimo Filippini (CER–ETH – Center of Economic Research at ETH Zurich and Facoltà di Scienze Economiche, Università della Svizzera Italiana, Switzerland)
    Abstract: Vehicle accidents represent an important source of externalities from driving. Using a detailed dataset on accident location and characteristics in Switzerland, we estimate the effect of switching from a 50 km/h speed limit to a 30 km/h limit on the probability of vehicle accident injuries. After an initial country-wide analysis, we exploit the quasi-experimental variation of the timing of introduction of 30 km/h zones in the municipality of Basel, using a difference in differences strategy. We find a significant reduction in accident severity due to lower speed limits, and substantial heterogeneities based on the circumstances of the accident.
    Keywords: Speed limits; vehicle accidents; 30 km/h zones; externalities; road transport; urban roads
    JEL: R41 R42 R48 H41
    Date: 2021–06
  15. By: Felix Montag; Alina Sagimuldina; Monika Schnitzer
    Abstract: We investigate how the pass-through rate of commodity taxes depends on competition in a setting where consumers have imperfect information about prices. We use a theoretical search model that has two key predictions: First, the larger the number of price sensitive consumers, the higher the pass-through rate. Second, there is a hump-shaped relationship between the average pass-through experienced by consumers and the number of sellers. We test our theoretical predictions by studying pass-through in the context of a tax decrease and increase in the German retail fuel market. We estimate pass-through of these tax changes to diesel and gasoline prices using a unique dataset containing the universe of price changes at fuel stations in Germany and France and a synthetic difference-in-differences strategy. Our empirical results are in line with our theoretical predictions. Finally, we show that our theoretical framework can encompass and reconcile a large number of empirical observations in previous studies.
    Keywords: pass-through, carbon tax, VAT, consumer search, competition
    Date: 2021
  16. By: Goller, Daniel; Harrer, Tamara; Lechner, Michael; Wolff, Joachim
    Abstract: We investigate the effectiveness of three different job-search and training programmes for German long-term unemployed persons. On the basis of an extensive administrative data set, we evaluated the effects of those programmes on various levels of aggregation using Causal Machine Learning. We found participants to benefit from the investigated programmes with placement services to be most effective. Effects are realised quickly and are long-lasting for any programme. While the effects are rather homogenous for men, we found differential effects for women in various characteristics. Women benefit in particular when local labour market conditions improve. Regarding the allocation mechanism of the unemployed to the different programmes, we found the observed allocation to be as effective as a random allocation. Therefore, we propose data-driven rules for the allocation of the unemployed to the respective labour market programmes that would improve the status-quo.
    Keywords: Policy evaluation, Modified Causal Forest (MCF), active labour market programmes, conditional average treatment effect (CATE)
    JEL: J08 J68
    Date: 2021–06
  17. By: Bagger, Jesper (Royal Holloway, University of London); Fontaine, Francois (Paris School of Economics); Galenianos, Manolis (University of London); Trapeznikova, Ija (Royal Holloway, University of London)
    Abstract: We use comprehensive data from Denmark that combine online job advertisements with a matched employer-employee dataset and a firm-level dataset with information on revenues and value added to study the relationship between vacancy-posting and various firm outcomes. Posting a vacancy is associated with a 4.5 percentage point increase in a firm's hiring rate and two-thirds of the additional hiring occurs within two months. The response of hiring from employment is twice as large as the response of hiring from non-employment. Firms that are smaller, low-wage and fast-growing are associated with larger hiring responses and that response materializes faster at larger firms, low-wage firms and fast-growing firms. We also find that separations are associated with subsequent vacancy posting and this effect is stronger for separations to employment, consistent with replacement hiring and the presence of vacancy chains. Growth in revenue and value added strongly predict vacancy-posting, with negative shocks having a stronger effect than positive shocks and larger shocks having less-than-proportional responses.
    Keywords: vacancies, hiring, separations, employment growth, firm growth, value added, revenue
    JEL: J23 J63
    Date: 2021–06
  18. By: Auer, Daniel; Kunz, Johannes S.
    Abstract: This paper investigates the intergenerational effect of communication barriers on child health at birth using a natural experiment in Switzerland. We leverage the fact that refugees arriving in Switzerland originate from places that have large shares of French (or Italian) speakers for historical reasons and upon arrival are by law randomly allocated across states that are dominated by different languages but subject to the same jurisdiction. Our findings based on administrative records of all refugee arrivals and birth events between 2010 and 2017 show that children born to mothers who were exogenously allocated to an environment that matched their linguistic heritage are on average 72 gram heavier (or 2.2%) than those that were allocated to an unfamiliar language environment. The differences are driven by growth rather than gestation and manifest in a 2.9 percentage point difference in low birth weight incidence. We find substantial dose-response relationships in terms of language exposure in both, the origin country and the destination region. Moreover, French (Italian) exposed refugees only benefit from French-(Italian-) speaking destinations, but not vice versa. Contrasting the language match with co-ethnic networks, we find that high quality networks are acting as a substitute rather than a complement.
    Keywords: Infant health,Language Proffciency,Refugee allocation,Networks
    JEL: F22 I12 J13 J24 J61 J62
    Date: 2021
  19. By: Arthur Guillouzouic--Le Corff; Emeric Henry (Département d'économie); Joan Monras (Universitat Pompeu Fabra (UPF))
    Abstract: Using French data, we provide: a) causal evidence that a drop in local public goods provision decreases private sector activity, and b) evidence consistent with monopsony power of the public sector in local labor markets. We introduce a public sector with these two key characteristics in an otherwise standard spatial equilibrium model, and show that it delivers the main stylized facts established in our data, in particular, that the share of the public sector relative to the private is independent of the productivity of the city. We emphasize the tradeoffs between allowing governments to freely choose local public employment and wages (as in most of the US public sector), versus imposing rules that constrain public sector pay with some indexation to the local cost of living (as in many European countries). We show that wage indexation limits monopsony power – leading to a larger public sector – and is optimal if the indexation is sufficiently strong.
    Keywords: Local public goods; Public service; Market power,; Spatial economics
    JEL: H41 J42 J45 R12
    Date: 2021–06
  20. By: Fink Simonsen, Nicolai (University of Southern Denmark, DaCHE - Danish Centre for Health Economics); Kjær, Trine (University of Southern Denmark, DaCHE - Danish Centre for Health Economics)
    Abstract: It is standard practice in the literature to assume that an individual’s marginal utility of consumption is independent of health status. If this assumption is not met, it could have important implications for welfare economic analyses. The aim of this paper is to provide new, more comprehensive empirical evidence of state dependence following the approach used by Finkelstein et al. (2013). We use a rich combination of longitudinal survey data and administrative register data. Survey data were obtained from the Survey of Health, Ageing and Retirement in Europe (SHARE) and combined with data from the comprehensive Danish registers, including individual income data and data on health care utilisation based on the universal ICD-10 classification system. Utility is measured in terms of subjective well-being attained from the SHARE survey. To further increase the power of our sample, we used a state-of-the-art prediction algorithm to enrich the register data with information on subjective well-being. With this approach, this paper also makes a general methodological contribution on the use of prediction models for data enrichment and imputation. We define a reduced form equation in which individual subjective well-being is regressed according to income and health with an interaction effect capturing state dependence. Our results show evidence of negative state dependence. From our baseline regression, the estimated magnitude suggests that marginal utility of consumption decreases by 14.6% when an individual becomes sick. The results are robust to different levels of risk aversion and to assumptions regarding the mapping of the latent utility onto observed utility.
    Keywords: utility; health risk; consumption
    JEL: C53 D12 I10 J14
    Date: 2021–06–15
  21. By: Kalantzis, Fotios; Niczyporuk, Hanna
    Abstract: Energy efficiency investments are essential for transitioning to a carbon-neutral economy. Nevertheless, despite being financially viable, many energy efficiency investment opportunities do not materialise. The existing literature attributes this situation to financial and non-financial factors. Research suggests that many firms focus only on direct energy savings and neglect non-energy benefits that include increased labour productivity. Up to date, due to lack of high-quality data, few studies attempted to quantify the effects of the energy efficiency investments on firm-level outcomes other than the reductions in energy consumption. This paper overcomes this barrier by using novel data from a firm-level survey conducted by the European Investment Bank that covers more than 15,000 firms in 27 European Union member states and the UK during 2018-2019. It studies the relationship between the energy efficiency investment and the labour productivity of the European firms, utilising instrumental variables methodology to account for potential endogeneity. The results show a positive and causal relationship between energy efficiency investment and labour productivity. The findings of the paper suggest that firms can benefit much more from the energy efficiency investment than what is often assumed, and highlight a need for government policies that would increase firms' awareness of the non-energy benefits.
    Keywords: Energy Efficiency,Climate Investment,Productivity
    Date: 2021
  22. By: David Knapp (University of Southern California and RAND); Jinkook Lee (University of Southern California); Maciej Lis (Organisation for Economic Co-operation and Development); Drystan Phillips (University of Southern California)
    Abstract: Social Security provides retirement benefits to age-eligible workers and their spouses. Benefits are permanently increased if initial receipt is delayed. For benefits paid to spouses, these incentives reflect a complex interaction of the worker’s and spouse’s earnings histories, benefit claiming decisions, and age difference. We demonstrate that the benefit increment from delaying initial receipt of spousal and survivor benefits is substantial for some households. Past studies find that workers respond to potential increments in their own benefit by delaying labor force exit. Using a nationally representative panel, we investigate whether an additional dollar in expected lifetime benefits paid to the worker directly is treated the same as an additional dollar paid to the worker’s spouse from spouse and survivor benefits. We find minimal evidence that workers or their spouses change retirement behavior in a way that is theoretically consistent with spouse and survivor benefit claiming incentives. The lack of responsiveness suggests that incentives to delay claiming for benefits other than the worker’s own are not salient in the worker’s decision-making. This may reflect the complexity of benefit rules or different preferences concerning benefits paid to others. A parallel analysis using German data, where rules surrounding survivor benefits are simpler, finds that workers respond in a theoretically consistent way, but small sample sizes prevent conclusive results. Our findings suggest models estimating the policy impact of reducing spousal and survivor benefits on female labor supply are likely overstated, and that a greater understanding of survivor benefits may lead to better claiming decisions for couples.
    Date: 2021–02
  23. By: Echeverría, Lucía (University of Zaragoza); Gimenez-Nadal, J. Ignacio (University of Zaragoza); Molina, José Alberto (University of Zaragoza)
    Abstract: Recent years have witnessed efforts worldwide to promote green mobility, aimed at boosting sustainable economic growth. However, how green mobility relates to travelers' well-being remains an open question. We explore whether "green" modes of transportation (public transit and walking/cycling) are associated with higher levels of well-being in comparison to private driving, placing special focus on different types of travel (related to paid work, unpaid work, personal care, childcare, and leisure). We use the UK Time Use Survey (UKTUS) from 2014-2015, and exploit information on self-reported enjoyment during travel, as a measure of experienced well-being. We estimate Ordinary Least Squares and Random Effects regressions for each travel category, and find relative, positive effects of physical transport on enjoyment, in terms of personal care and leisure, while the relative negative effects of public transport are observed for childcare and work/paid travel, in relationship to traditional driving modes. Our evidence suggests a need to develop strategies to effectively promote mobility by physical modes, while improving the experience of public transit users.
    Keywords: subjective well-being, green travelling, walking/cycling, public transport
    JEL: R4 J22
    Date: 2021–05
  24. By: Jussila Hammes, Johanna (Swedish National Road & Transport Research Institute (VTI)); Volden, Gro Holst (NTNU – Norwegian University of Science and Technology, 7491 Trondheim, Norway); Welde, Morten (NTNU – Norwegian University of Science and Technology, 7491 Trondheim, Norway); Börjesson, Maria (Swedish National Road & Transport Research Institute (VTI)); Odeck, James (Swedish National Road & Transport Research Institute (VTI))
    Abstract: We use cost-benefit data from 1052 projects in Norway and Sweden to analyse ex ante factors that can explain which characteristics of transport infrastructure projects explain high value for money. The aim is to identify characteristics that can be used in assessments of projects before a cost-benefit analysis is feasible. We find that in Norway, road toll financing is a good indicator of high value projects, especially in the poorer municipalities. In Sweden, co-financing serves to raise investment volumes, but tends to lead to worse value for money. In Sweden, congestion seems to be the biggest problem in medium-income municipalities, while there are traffic safety benefits to be obtained in the rural areas. A higher initial capacity on a link raises both benefits and costs, and costs are higher in more densely populated areas in both countries. We find diminishing economies of scale in Norway and increasing economies of scale in Sweden.
    Keywords: CBA; Transport infrastructure planning; Value for money
    JEL: R40 R42
    Date: 2021–06–16
  25. By: Jean-Charles Bricongne (Banque de France); Samuel Delpeuch (SciencesPo); Margarita Lopez Forero (Evry University/Paris-Saclay)
    Abstract: Based on French firm-level data over 15 years we evaluate the contribution of the microlevel profit shifting -through tax haven foreign direct investments (FDI), may it be in or outward- to the aggregate productivity slowdown in France and the role that intangible investments play in this relation. We show that firm productivity in France experiences a decline over the immediate years following the establishment in a tax haven, with an average estimated drop by 3.5% in labor productivity. We argue that this productivity decline, following a presence in a tax haven, is most likely explained by MNEs' fiscal optimization, where domestic productivity is underestimated as profits are not recorded anymore in the home country. The fall in productivity is especially strong for firms that are intensive in intangible capital and is equivalent to 4.1% (versus 2.7% for low intangible intensive firms), reflecting the fact that these types of assets are more easily transferred across countries and facilitate fiscal optimization. Our results additionally suggest that the mismeasurement has strong dynamic effects, as the decline becomes more important the longer the firm remains in a tax haven. Due to possible attenuation biases, we argue that our estimates provide a lower bound of the productivity mismeasurement. Finally, given these firms' weight in the economy, our results imply an 8% loss at the aggregate in terms of the level of the labor productivity throughout the whole sample period, which is equivalent to an annual loss of 9.7% in terms of the aggregate annual labor productivity growth.
    Keywords: Tax Havens, Profit shifting FDI, Productivity slowdown, Productivity mismeasurement, Intangible capital
    JEL: D33 F23 H26 H87 O47
    Date: 2021
  26. By: Brian D. Bell; Nicholas Bloom; Jack Blundell
    Abstract: We use a UK employer-employee administrative earnings dataset to investigate the response of earnings and hours to business cycles. Exploiting our long panel of data from 1975 to 2020 we find wide heterogeneity in the exposure of different types of workers to aggregate shocks. Employees who are younger, male, lower-skilled, non-union, and working in smaller private sector firms show the largest earnings response to recessions. The qualitative patterns of earnings changes across workers observed in the COVID-19 recession are broadly as predicted using the previously estimated exposures and size of the GDP shock. This suggests the COVID-19 recession in terms of its impact responses was relatively similar to those that have gone before, but the GDP shock was far larger in absolute size. Compared to aggregate shocks, we find a relatively small role of firm-specific shocks, suggesting macro shocks play an outsized role in individual earnings dynamics.
    JEL: J0
    Date: 2021–05
  27. By: Lalinsky, Tibor; Pál, Rozália
    Abstract: We utilize several unique firm-level datasets in order to assess the efficiency and effectiveness of the government support aiming to curb the economic consequences of the coronavirus (COVID19) pandemic. The results, drawing on the experience of a small open European country (Slovakia), suggest the distributed COVID-19 subsidies save non-negligible number of jobs and sustain economic activity during the first wave of the pandemic. General distribution rules designed on the fly may bring close to optimal results, as relatively more productive, privately owned, foreign-demand oriented firms are prioritized and firms with a higher environmental footprint or zombie firms record a relatively lower chance of obtaining government funding. By assuming constant cost elasticities to sales, we show that the pandemic deteriorates strongly firm profits and increases significantly the share of illiquid and insolvent firms. Government wage subsidies somewhat mitigate firm losses and have statistically significant effect, but relatively mild compared to the size of the economic shock. Our estimates also confirm that larger firms, receiving smaller relative size of the support, have more space to cover their additional liquidity needs by increasing trade liabilities or liabilities to affiliated entities, while SMEs face higher risk of insolvencies.
    Keywords: coronavirus,COVID-19,firm-level,policy measures,wage subsidies,profit,liquidity,solvency
    JEL: D22 H20 G32 G33 J38
    Date: 2021
  28. By: Dolan, Paul (London School of Economics); Krekel, Christian (London School of Economics); Shreedhar, Ganga (London School of Economics); Lee, Helen (National Health Service); Marshall, Claire (National Health Service); Smith, Allison (Royal Voluntary Service)
    Abstract: There is a strong suggestion from the existing literature that volunteering improves the wellbeing of those who give up their time to help others, but much of it is correlational and not causal. In this paper, we estimate the wellbeing benefits from volunteering for England's National Health Service (NHS) Volunteer Responders programme, which was set up in response to the Covid-19 pandemic. Using a sample of over 9,000 volunteers, we exploit the oversubscription of the programme and the random assignment of volunteering tasks to estimate causal wellbeing returns, across multiple counterfactuals. We find that active volunteers report significantly higher life satisfaction, feelings of worthwhileness, social connectedness, and belonging to their local communities. A social welfare analysis shows that the benefits of the programme were at least 140 times greater than its costs. Our findings advance our understanding of the ways in which pro-social behaviours can improve personal wellbeing as well as social welfare.
    Keywords: subjective wellbeing, volunteering, pro-social action, quasi-natural experiment, social welfare analysis, COVID-19
    JEL: I31 I38 D61 D64
    Date: 2021–05
  29. By: Michael Fritsch (Friedrich Schiller University Jena, Germany); Maria Greve (Friedrich Schiller University Jena, Germany and University of Groningen, The Netherlands); Michael Wyrwich (University of Groningen, The Netherlands and Friedrich Schiller University Jena, Germany)
    Abstract: The COVID-19 pandemic severely affected not only incumbent firms, but also the emergence of start-ups. This paper investigates and analyzes the pandemic's effect on new business formation, as well as business exits and insolvencies, in Germany. We find that the overall level of business registrations slightly decreased during the first year of the pandemic, but that the effect is specific to certain industries. Innovative manufacturing industries and technology-oriented services experienced an increase in numbers of start-ups. High subsidies and a temporary suspension of important criteria obliging firms to declare insolvency weakened market selection resulting in fewer exits in 2020. The relaxation of insolvency regulations may lead to considerable numbers of 'zombie' firms. Generally, the pandemic re-enforced ongoing structural change, but also exerted specific effects that may be temporary in nature.
    Keywords: COVID-19, entrepreneurship, new business formation, Germany
    JEL: L26 O52 I18
    Date: 2021–06–11

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