nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2021‒07‒12
forty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Young People between Education and the Labour Market during the COVID-19 Pandemic in Italy By Fiaschi, Davide; Tealdi, Cristina
  2. The consequences of EU eastern enlargement on human capital accumulation and wages in Germany By Bernhard H. Wittek; Samuel Muehlemann
  3. The drivers of SME innovation in the regions of the EU By Jose Luis Hervas-Oliver; Mario Davide Parrilli; Andres Rodriguez-Pose; Francisca Sempere-Ripoll
  4. Retrospective Causal Inference via Matrix Completion, with an Evaluation of the Effect of European Integration on Cross-Border Employment By Poulos, Jason; Albanese, Andrea; Mercatanti, Andrea; Li, Fan
  5. Productivity and human capital: The Italian case By Camilla Andretta; Irene Brunetti; Anna Rosso
  6. Did COVID-19 Affect the Division of Labor within the Household? Evidence from Two Waves of the Pandemic in Italy By Del Boca, Daniela; Oggero, Noemi; Profeta, Paola; Rossi, Maria Cristina
  7. Active Labour Market Policies for the Long-Term Unemployed: New Evidence from Causal Machine Learning By Goller, Daniel; Harrer, Tamara; Lechner, Michael; Wolff, Joachim
  8. R&D Tax Credits across the European Union:Divergences and convergence By Laurence Jacquet; Stéphane Robin
  9. Labor-saving technological change? Sectoral evidence for Germany By Ferschli, Benjamin; Rehm, Miriam; Schnetzer, Matthias; Zilian, Stella
  10. Deeds or words? The local influence of anti-immigrant parties on foreigners’ flows in Italy By Cerqua, Augusto; Zampollo, Federico
  12. Living on my own: the impact of the Covid-19 pandemic on housing preferences By Elisa Guglielminetti; Michele Loberto; Giordano Zevi; Roberta Zizza
  13. Local inequalities of the COVID-19 crisis By Cerqua, Augusto; Letta, Marco
  14. Income support to families with children in Spain By HERNANDEZ MARTIN Adrian; PICOS SANCHEZ Fidel
  15. Top Income Adjustments and Inequality: An Investigation of the EU-SILC By Rafael Carranza; Marc Morgan; Brian Nolan
  16. Coronagraben in Switzerland: Culture and social distancing in times of COVID-19 By Deopa, Neha; Fortunato, Piergiuseppe
  17. Cracking under Pressure? Gender Role Attitudes toward Maternal Employment in Times of a Pandemic By Danzer, Natalia; Huebener, Mathias; Pape, Astrid; Spiess, C. Katharina; Siegel, Nico A.; Wagner, Gert G.
  18. The grocery trolley race in times of Covid-19. Evidence from Italy By Emanuela Ciapanna; Gabriele Rovigatti
  19. Equality of Opportunity and the Expansion of Higher Education in the UK By Carrieri, Vincenzo; Davillas, Apostolos; Jones, Andrew M.
  20. Incentives, Health, and Retirement: Evidence from a Finnish Pension Reform By Ollonqvist, Joonas; Kotakorpi, Kaisa; Laaksonen, Mikko; Martikainen, Pekka; Pirttilä, Jukka; Tarkiainen, Lasse
  21. For whom the bell tolls: the firm-level effects of automation on wage and gender inequality By Giacomo Domini; Marco Grazzi; Daniele Moschella; Tania Treibich
  22. Financial distress and the role of management in micro and small-sized firms By Fernando Alexandre; Sara Cruz; Miguel Portela
  23. Investigating neighbourhood effects in welfare-to-work transitions By Vincent Dautel; Alessio Fusco
  24. Demand for rent-regulated apartments:The case of Sweden By Wilhelmsson, Mats
  25. The CoViD-19 pandemic and mental health: Disentangling crucial channels By Siflinger, Bettina; Paffenholz, Michaela; Seitz, Sebastian; Mendel, Moritz; von Gaudecker, Hans-Martin
  26. Working from home during COVID-19 and beyond: Survey evidence from employers By Erdsiek, Daniel
  27. Searching through the Haystack: The relatedness and complexity of priorities in smart specialisation strategies By Jason Deegan; Tom Broekel; Rune Dahl Fitjar
  28. Consumption and saving patterns in Italy during Covid-19 By Elisa Guglielminetti; Concetta Rondinelli
  29. Sharing the Caring? The Gender Division of Care Work during the COVID-19 Pandemic in Germany By Jessen, Jonas; Spiess, C. Katharina; Waights, Sevrin; Wrohlich, Katharina
  30. Entry regulation and competition evidence from retail and labor markets of pharmacists By Rostam-Afschar, Davud; Unsorg, Maximiliane
  31. Information or persuasion in the mortgage market: the role of brand names By Agnese Carella; Valentina Michelangeli
  32. A Firm-Side Perspective on Parental Leave By Huebener, Mathias; Jessen, Jonas; Kühnle, Daniel; Oberfichtner, Michael
  33. Extending alcohol retailers' opening hours: Evidence from Sweden By Daniel Avdic; Stephanie von Hinke
  34. Pay Gaps in the National Health Service: Observability and Disclosure By Mumford, Karen A.; Aguirre, Edith; Einarsdóttir, Anna; Lockyer, Bridget; Sayli, Melisa; Smith, Benjamin A.
  35. Run, graduate, run: Internationally mobile students' reactions to changing political landscapes in Europe By Weisser, Reinhard A.
  36. Subjective income risk and precautionary saving By Castaldo, Stefano; Tirelli, Mario
  37. Turning a "Blind Eye"? Compliance with Minimum Wage Standards and Employment By Garnero, Andrea; Lucifora, Claudio
  38. The return on human (STEM) capital in Belgium By Gert Bijnens; Emmanuel Dhyne
  39. Bye, bye, Hotel Mama, bye, bye good grades? Living in a student room and exam results in tertiary education By Simon Amez; Stijn Baert
  40. Occupation flexibility and the graduate gender wage gap in the UK By Benny, Liza; Bhalotra, Sonia; Fernández, Manuel

  1. By: Fiaschi, Davide (University of Pisa); Tealdi, Cristina (Heriot-Watt University, Edinburgh)
    Abstract: We analyse the distribution and the flows between different types of employment (self-employment, temporary, and permanent), unemployment, education, and other types of inactivity, with particular focus on the duration of the school-to-work transition (STWT). The aim is to assess the impact of the COVID-19 pandemic in Italy on the careers of individuals aged 15-34. We find that the pandemic worsened an already concerning situation of higher unemployment and inactivity rates and significantly longer STWT duration compared to other EU countries, particularly for females and residents in the South of Italy. In the midst of the pandemic, individuals aged 20-29 were less in (permanent and temporary) employment and more in the NLFET (Neither in the Labour Force nor in Education or Training) state, particularly females and non Italian citizens. We also provide evidence of an increased propensity to return to schooling, but most importantly of a substantial prolongation of the STWT duration towards permanent employment, mostly for males and non Italian citizens. Our contribution lies in providing a rigorous estimation and analysis of the impact of COVID-19 on the carriers of young individuals in Italy, which has not yet been explored in the literature.
    Keywords: labour market flows, transition probabilities, first passage time, school-to-work transition, NLFET, COVID-19
    JEL: C18 C53 E32 E24 J6
    Date: 2021–06
  2. By: Bernhard H. Wittek; Samuel Muehlemann
    Abstract: The eastward enlargement rounds of the European Union (EU) between 2004 and 2007 represent a broad regulatory expansion of the European labor market that facilitated the recruitment of individuals from new member states. We focus on the effects of EU enlargement on human capital accumulation and wages in Germany. The analysis employs linked employer-employee data from 2004 to 2017 to investigate the association between the immigration of apprentices from new eastern and central European member states and wages in the German labor market. Descriptive statistics reveal a clear and continuous increase in the number of foreign apprentices from new member states in the years following the removal of transitional restrictions. We find strong positive selection effects, as these immigrants were better educated and subsequently employed in higher-paying establishments compared to individuals who entered the German apprenticeship market prior to EU enlargement. Moreover, the study provides the first extensive evidence of apprentice wage developments in the context of immigration. As apprenticeship graduates eventually become skilled workers, we also analyze indirect effects of migration on the labor market, highlighting the temporal dimension of considerations around the substitutability between foreign and domestic workers.
    Keywords: wages, immigration, vocational education and training, apprenticeship, firm-sponsored training
    JEL: J24 J31 J61 M53
    Date: 2021–06
  3. By: Jose Luis Hervas-Oliver; Mario Davide Parrilli; Andres Rodriguez-Pose; Francisca Sempere-Ripoll
    Abstract: European Union (EU) innovation policies have for long remained mostly research driven. The fundamental goal has been to achieve a rate of R&D investment of 3% of GDP. Small and medium-sized enterprise (SME) innovation, however, relies on a variety of internal sources —both R&D and non-R&D based— and external drivers, such as collaboration with other firms and research centres, and is profoundly influence by location and context. Given this multiplicity of innovation activities, this study argues that innovation policies fundamentally based on a place-blind increase of R&D investment may not deliver the best outcomes in regions where the capacity of SMEs is to benefit from R&D is limited. We posit that collaboration and regional specificities can play a greater role in determining SME innovation, beyond just R&D activities. Using data from the Regional Innovation Scoreboard (RIS), covering 220 regions across 22 European countries, we find that regions in Europe differ significantly in terms of SME innovation depending on their location. SMEs in more innovative regions benefit to a far greater extent from a combination of internal R&D, external collaboration of all sorts, and non-R&D inputs. SMEs in less innovative regions rely fundamentally on external sources and, particularly, on collaboration with other firms. Greater investment in public R&D does not always lead to improvements in regional SME innovation, regardless of context. Collaboration is a central innovation activity that can complement R&D, showing an even stronger effect on SME innovation than R&D. Hence, a more collaboration-based and place-sensitive policy is required to maximise SME innovation across the variety of European regional contexts.
    Keywords: regional innovation; SMEs; R&D; place-based; collaboration; EU regions
    JEL: O31 O32 L11
    Date: 2021–06
  4. By: Poulos, Jason (Duke University); Albanese, Andrea (LISER); Mercatanti, Andrea (LISER); Li, Fan (Duke University)
    Abstract: We propose a method of retrospective counterfactual imputation in panel data settings with later-treated and always-treated units, but no never-treated units. We use the observed outcomes to impute the counterfactual outcomes of the later-treated using a matrix completion estimator. We propose a novel propensity-score and elapsed-time weighting of the estimator's objective function to correct for differences in the observed covariate and unobserved fixed effects distributions, and elapsed time since treatment between groups. Our methodology is motivated by studying the effect of two milestones of European integration—the Free Movement of persons and the Schengen Agreement— on the share of cross-border workers in sending border regions. We apply the proposed method to the European Labour Force Survey (ELFS) data and provide evidence that opening the border almost doubled the probability of working beyond the border in Eastern European regions.
    Keywords: causal inference, cross-border employment, European integration, matrix completion, panel data
    JEL: C21 C31 J21 J61
    Date: 2021–06
  5. By: Camilla Andretta; Irene Brunetti; Anna Rosso
    Abstract: This paper investigates whether and how worker composition, ownership and management affect the productivity of firms. To this aim, we use a dataset obtained by integrating the micro-data drawn from Rilevazione su Imprese e Lavoro (RIL), a survey conducted by Inapp in 2010 and 2015 on a representative sample of Italian limited liability and partnership firms, with the AIDA archive containing comprehensive information on the balance sheets of almost all the Italian corporations. We apply different regression models and the findings reveal that a higher share of skilled workers within firms and more experienced managers are associated with higher productivity levels. In addition, firms run by managers with higher education are more likely to introduce innovation. Finally, family ownership and the coincidence of management with ownership are negatively related with firm productivity.
    Keywords: firm, Human capital, productivity
    JEL: J24 D24
    Date: 2021–07–08
  6. By: Del Boca, Daniela (University of Turin); Oggero, Noemi (University of Turin); Profeta, Paola (Bocconi University); Rossi, Maria Cristina (University of Turin)
    Abstract: The COVID-19 pandemic has had a dramatic impact on families' lives, with parents all over the world struggling to meet the increased demands of housework, childcare and home-schooling. Much of the additional burden has been shouldered by women, particularly in countries with a traditionally uneven division of household labor. Yet the dramatic increase in remote work from home since the pandemic also has the potential to increase paternal involvement in family life and thus to redress persistent domestic gender role inequalities. This effect depends on the working arrangements of each partner, whether working remotely, working at their usual workplace or ceasing work altogether. We examine the role of working arrangements during the pandemic on the traditional division of household labor in Italy using survey data from interviews with a representative sample of working women conducted during the two waves of COVID-19 (April and November 2020). Our data show that the gender gap in household care related activities was widest during the first wave of the pandemic, and although it was less pronounced during the second wave, it was still higher than pre-COVID-19. The time spent by women on housework, childcare, and assisting their children with distance learning did not depend on their partners' working arrangements. Conversely, men spent fewer hours helping with the housework and distance learning when their partners were at home. It is interesting, however, that although men who worked remotely or not at all did devote more time to domestic chores and child care, the increased time they spent at home did not seem to lead to a reallocation of couples' roles in housework and child care. Finally, we find that working arrangements are linked to women's feelings of uncertainty, with heterogeneous effects by level of education.
    Keywords: COVID-19, work arrangements, housework, childcare, distance learning
    JEL: J13 J16 J21
    Date: 2021–06
  7. By: Goller, Daniel (University of St. Gallen); Harrer, Tamara (Institute for Employment Research (IAB), Nuremberg); Lechner, Michael (University of St. Gallen); Wolff, Joachim (Institute for Employment Research (IAB), Nuremberg)
    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
  8. By: Laurence Jacquet; Stéphane Robin (CY Cergy Paris Université, THEMA)
    Abstract: We examine the R&D, innovation and productivity effects of R&D tax credits (R&DTC) in 8 EU countries, in the context of a proposed EU-wide "super deduction" on R&D expenditures. Our econometric analysis, performed on industry-level panel data, shows that past R&D feeds current R&D, whether it is conducted under an R&DTC or not. Our estimate of additionality during an R&DTC phase is generally close to 1. R&D intensity also affects patenting intensity positively in Belgium, Czech Republic, France, Spain and the UK, but this relationship is R&DTC-related only in Belgium, France and Spain. Only in France and the UK do we observe a full (yet fragile) R&D – innovation – productivity relationship. In the UK, this relationship is not affected by the R&DTC scheme. In France, a 1% increase in R&D conducted under the second to fourth phases of R&DTC (1999-2017) entails a cumulated 0.37% increase in patenting intensity, which translates to a 0.16% increase in productivity. The main policy implication of these results is that a "super-deduction" on R&D is likely to help the EU reach its "R&D at 3% of GDP" objective, but only time will tell how generous it must be to really spur innovation and productivity.
    Keywords: R&D Tax Credits, Public Support to R&D, Science and Technology Policy, European Policy
    JEL: O38 H25 H54
    Date: 2021
  9. By: Ferschli, Benjamin; Rehm, Miriam; Schnetzer, Matthias; Zilian, Stella
    Abstract: This paper investigates the links between digitalization, market concentration, and labor productivity at the sectoral level in Germany. Combining data for digitalization and labor productivity from the EU KLEMS database with firm-level data from the CompNet and Orbis Bureau Van Dijk databases to construct market concentration measures between 2000 to 2015, we show that (1) the German economy appears to have digitized since 2000, and (2) there is no clear-cut relationship between digitalization and market concentration at the sectoral and descriptive level. Using a time and sector fixed effects model, however, we find evidence for (3) a positive relationship of productivity to both market concentration and digitalization at the sectoral level in Germany. This finding is robust to alternative measures of digitalization and market concentration, but sensitive to the sector sample. We therefore cautiously conclude that recent technological change appears to have been labor-saving, and that productivity-enhancing "superstar firm" effects seem to exist in Germany.
    Date: 2021
  10. By: Cerqua, Augusto; Zampollo, Federico
    Abstract: We investigate the influence of anti-immigrant parties on foreigners' location choices in Italy. Considering municipal elections from 2000 to 2018, we create a database that includes a scientific-based classification on the anti-/pro-immigration axis of all Italian political parties based on experts' opinions. Via the adoption of a regression discontinuity design, we find that the election of a mayor supported by an anti-immigrant coalition significantly affect immigrants' location choices only when considering the most recent years. This finding does not appear to be driven by the enactment of policies against immigrants but by an 'inhospitality effect', which got stronger over time due to the exacerbation of political propaganda at the national and local level.
    Keywords: immigration,political parties,regression discontinuity design
    JEL: D72 J61 C13
    Date: 2021
  11. By: Ilona Pavlenkova; Luca Alfieri; Jaan Masso
    Abstract: This paper investigates how investments in automation-intensive goods affects the gender pay gap. The evidence on the effects of automation on the labour market is growing; however, little is known about the implications of automation for the gender pay gap. The data used in the paper are from a matched employer-employee dataset incorporating detailed information on firms, their imports, and employee-level data for Estonian manufacturing and services employers for 2006–2018. We define automation using the imports of intermediates embedding automation technologies. The effect of automation is estimated using simple Mincerian wage equations and the causality of the effect is validated using propensity score matching. We find that introducing automation enlarges the gender pay gap. The negative effect of importing automation-intensive goods for female employees is about two to four percentage points larger than for male employees. The propensity score matching confirms that the introduction of automation has a higher causal effect on the wages of male employees than female employees.
    Keywords: Automation, Technological change, Robotization, Gender pay gap
    Date: 2021
  12. By: Elisa Guglielminetti (Bank of Italy); Michele Loberto (Bank of Italy); Giordano Zevi (Bank of Italy); Roberta Zizza (Bank of Italy)
    Abstract: We quantify the impact of the Covid-19 pandemic on housing demand of Italian households by exploiting new information on their search activity on the market. The data comes from two unique datasets: the Italian Housing Market Survey, conducted quarterly on a large sample of real estate agents, and the universe of weekly housing sales advertisements taken from, a popular online portal for real estate services in Italy. The latter includes high-frequency and house-specific measures of online interest of potential home buyers. The pandemic induced a large increase in demand for houses located in areas with lower population density, mainly driven by a significant shift in preferences towards larger, single-family housing units, endowed with outdoor spaces. Fear of contagion, lockdown measures and the rise of remote working arrangements all likely shaped the evolution of housing demand, with potential long-lasting consequences on the housing market.
    Keywords: Covid-19, housing market, real estate, online housing advertisements, survey data, working from home
    JEL: I18 O18 R21 R31
    Date: 2021–06
  13. By: Cerqua, Augusto; Letta, Marco
    Abstract: This paper assesses the impact of the first wave of the pandemic on the local economies of one of the hardest-hit countries, Italy. We combine quarterly local labor market data with the new machine learning control method for counterfactual building. Our results document that the economic effects of the COVID-19 shock are dramatically unbalanced across the Italian territory and spatially uncorrelated with the epidemiological pattern of the first wave. The heterogeneity of employment losses is associated with exposure to social aggregation risks and pre-existing labor market fragilities. Finally, we quantify the protective role played by the labor market interventions implemented by the government and show that, while effective, they disproportionately benefitted the most developed Italian regions. Such diverging trajectories and unequal policy effects call for a place-based policy approach that promptly addresses the uneven economic geography of the current crisis.
    Keywords: impact evaluation,counterfactual approach,machine learning,local labor markets,COVID-19,Italy
    JEL: C53 D22 E24 R12
    Date: 2021
  14. By: HERNANDEZ MARTIN Adrian (European Commission - JRC); PICOS SANCHEZ Fidel (European Commission - JRC)
    Abstract: Families with children receive support from the tax-benefit system to a different extent across countries. In Spain, child poverty remains high as compared to other EU countries, possibly pointing to a weaker role of the public sector in providing income support to families with children. In this paper we provide an in-depth assessment of the income support to families with children in Spain. We distinguish between three different forms of income support: (1) benefits aimed to ease the cost of raising children (child-related benefits); (2) supplements to other benefits due to having children (non-child-related benefits); and (3) tax reliefs (allowances and/or tax credits) reducing the tax burden of families with children (child-related tax reliefs). To measure these three dimensions, we use EUROMOD, the tax-benefit microsimulation model for the EU. We follow a similar methodological approach to Corak et al. (2005) and Figari et al. (2011), consisting in building a counterfactual scenario as if there were no children. For assessing the redistributive impact, we adapt the decomposition methodology of Onrubia et al. (2014), based in turn on Kakwani (1999). Our results suggest that the level of income support to families with children in Spain is low and mainly concentrated on tax reliefs, which are regressive in absolute terms. Nevertheless, the total income support to families with children is redistributive in relative terms, this effect being mainly dominated by the extent of supplements in unemployment and social assistance benefits due to having children. Child income support also reduces poverty intensity and incidence, although not to a large extent.
    Keywords: poverty, child poverty, family benefits, redistribution, microsimulation, EUROMOD
    Date: 2021–06
  15. By: Rafael Carranza (University of Oxford); Marc Morgan (Paris School of Economics and World Inequality Lab); Brian Nolan (University of Oxford)
    Abstract: In this paper we bridge the gap between two different approaches to measure inequality: one based on household surveys and summary measures such as the Gini, and the other focused on taxable income and top income shares. We explore how these approaches adjust the Gini for equivalised household income in 26 European countries over 2003-2017 using the EU-SILC, focusing on the World Inequality Database (WID) adjustment as proposed in Blanchet et al. (2020). On average, the Gini increases by around 2.4 points as a result of the WID adjustment, for both gross and disposable income, with notable differences across countries, affecting rankings, despite limited impact on trends. We find that differences in inequality depend less on the adjustment method and more on whether it relies on external data sources such as tax data. In fact, SILC countries that rely on administrative register data experience relatively small changes in inequality after the WID adjustment. For recent years, we find that the Gini for 'non-register' countries increases by 2.8 points on average while in 'register' countries it does so by 0.9 points. We conclude by proposing ways in which household surveys can improve their representativeness of income and living conditions.
    Keywords: Inequality, Reweighting, Survey Representativeness, Top incomes
    JEL: D31 D63 N30
    Date: 2021–06
  16. By: Deopa, Neha; Fortunato, Piergiuseppe
    Abstract: Social distancing measures help contain the spread of COVID-19 but the actual compliance has varied substantially across space and time. We ask whether cultural differences underlie this heterogeneity using mobility data across Switzerland between February and December 2020. We find that German-speaking cantons decreased their mobility for non essential activities significantly less than the French-speaking cantons. However, we find no such significant differences for the bilingual cantons. Contrary to the evidence in the literature, we find that within the Swiss context, high trusting areas exhibited a lower decline in mobility. Additionally, cantons supporting a limited role of the state in matters of welfare also displayed a lower mobility reduction.
    Keywords: COVID-19,culture,social distancing,trust,redistribution,mobility
    JEL: H12 Z1 D91
    Date: 2021
  17. By: Danzer, Natalia (Free University of Berlin); Huebener, Mathias (DIW Berlin); Pape, Astrid (Freie Universität Berlin); Spiess, C. Katharina (DIW Berlin); Siegel, Nico A. (Infratest Dimap); Wagner, Gert G. (Max Planck Institute for Human Development)
    Abstract: This paper studies the effects of Covid-19 related daycare and school closures on gender role attitudes toward maternal employment in Germany. We compare women and men with dependent children to those without children one year after the outbreak of the pandemic. Using data on gender role attitudes from 2008 through 2021, we find that fathers' egalitarian attitudes toward maternal employment dropped substantially in 2021. This drop is observed for men in West Germany, who showed a steady progression toward more egalitarian attitudes in the pre-pandemic period. Attitudes by women are not affected. These findings suggest that the pandemic not only affected the short-term allocation of housework and childcare, but also reversed recent trends toward more egalitarian gender roles.
    Keywords: COVID-19, gender role attitudes, childcare, difference-in-difference, ALLBUS, COMPASS
    JEL: J13 J16 J18 J22
    Date: 2021–06
  18. By: Emanuela Ciapanna (Bank of Italy); Gabriele Rovigatti (Bank of Italy)
    Abstract: We study sales dynamics of grocery chain stores during the first wave of the COVID-19 pandemics in Italy. We document a sustained growth in revenues for storable products, such as food staples and household supplies, arising right before restrictions to mobility were introduced, and protracted throughout the whole lockdown period. We further look into the revenue surge, by disentangling the role of different types of stores. We find that the increase has been driven by the dynamics of smaller outlets, located in urban areas, closer to the city center, while hypermarkets faced a drop during the lockdown period, plausibly related to their more peripheral position. We also exploit both the remarkable granularity of scanner data, and the staggered implementation of restrictions across Italian regions to causally identify the short-term effects of mobility constraints on outlets' sales. According to our estimates, large grocery stores in areas subject to lockdown measures earned revenues around 10 percent lower than their control group's.
    Keywords: Covid-19, grocery retail trade, consumption hoarding, mobility restrictions, contagion risk
    JEL: D12 D18 I30
    Date: 2021–06
  19. By: Carrieri, Vincenzo (Magna Graecia University); Davillas, Apostolos (University of East Anglia); Jones, Andrew M. (University of York)
    Abstract: Using nine waves of data from Understanding Society (UKHLS), we study the expansion of higher education in the UK, since the landmark Robbins Report in 1963, and its consequences for levels of and inequalities in household income, physical and mental health. We estimate fixed effects models accounting for both cohort and lifecycle effects and use entropy balancing to build a counterfactual scenario that fixes the opportunity set, in terms of the likelihood of being a graduate, at pre-Robbins levels. We confirm that the university expansion was characterised by a large increase in the proportion of graduates, with higher rates of graduation among individuals from more advantaged socioeconomic backgrounds. Having controlled for birth cohort and lifecycle effects, there is evidence of significant inequality of opportunity in the actual outcomes. However, comparing actual outcomes with counterfactual projections, we do not detect an impact of the expansion of higher education on inequality of opportunity (IOp) in income and only small reductions in IOp in physical and mental health.
    Keywords: equality of opportunity, higher education, entropy balancing, high dimensional fixed effects, health, income
    JEL: C1 D63 I12 I14
    Date: 2021–06
  20. By: Ollonqvist, Joonas; Kotakorpi, Kaisa; Laaksonen, Mikko; Martikainen, Pekka; Pirttilä, Jukka; Tarkiainen, Lasse
    Abstract: We analyse the effects of changes in retirement incentives on retirement behaviour, and in particular whether individuals' health status modifes the effects of retirement incentives. We study these issues in the context of the Finnish pension reform of 2005, utilising detailed individual-level administrative data on health and retirement behaviour. Our results indicate that changes in economic incentives matter for retirement behaviour. Many types of individuals react to retirement incentives, and the reaction to economic incentives does not appear to vary according to the individuals' health status in a systematic way. Hence there does not seem to be a trade-off between providing incentives to postpone retirement and equal treatment of individuals with different health status.
    Keywords: pension reform, retirement incentives, health, Social security, taxation and inequality, H55, J26,
    Date: 2021
  21. By: Giacomo Domini; Marco Grazzi; Daniele Moschella; Tania Treibich
    Abstract: This paper investigates the impact of investment in automation- and AI- related goods on within-firm wage inequality in the French economy during the period 2002-2017. We document that most of wage inequality in France is accounted for by differences among workers belonging to the same firm, rather than by differences between sectors, firms, and occupations. Using an event-study approach on a sample of firms importing automation and AI-related goods, we find that spike events related to the adoption of automation- or AI-related capital goods are not followed by an increase in within-firm wage nor in gender inequality. Instead, wages increase by 1% three years after the events at different percentiles of the distribution. Our findings are not linked to a rent-sharing behavior of firms obtaining productivity gains from automation or AI adoption. Instead, if the wage gains do not differ across workers along the wage distribution, worker heterogeneity is still present. Indeed, aligned with the framework in Abowd et al. (1999b), most of the overall wage increase is due to the hiring of new employees. This adds to previous findings showing picture of a 'labor friendly' effect of the latest wave of new technologies within adopting firms.
    Keywords: Automation; AI; wage inequality; gender pay gap.
    Date: 2021–07–05
  22. By: Fernando Alexandre; Sara Cruz; Miguel Portela
    Abstract: In this paper, we focus on the managerial characteristics of micro and small-sized firms. Using linked employer-employee data on the Portuguese economy for the 2010-2018 period, we estimate the impact of management teams’ human capital on the probability of firms becoming financially distressed and their subsequent recovery. Our estimates show that the relevance of management teams’ formal education on the probability of firms becoming financially distressed depends on firms’ size and the type of education. We show that management teams’ formal education and tenure reduce the probability of micro and small-sized firms becoming financially distressed and increases the probability of their subsequent recovery. The estimates also suggest that those impacts are stronger for micro and small-sized firms. Additionally, our results show that functional experience previously acquired in other firms, namely in foreign-owned and in exporting firms and in the area of finance, may reduce the probability of micro firms becoming financially distressed. On the other hand, previous functional experience in other firms seems to have a strong and highly significant impact on increasing the odds of recovery of financially distressed firms. We conclude that policies that induce an improvement in the managerial human capital of micro and small-sized firms have significant scope to improve their financial condition, enhancing the economy’s resilience against shocks.
    Keywords: Financial distress, firm performance, human capital
    JEL: G32 J24 L25
    Date: 2021–07–08
  23. By: Vincent Dautel; Alessio Fusco
    Abstract: We analyse the existence and underlying mechanisms of neighbourhood effects in welfare-to-work transitions. The analysis is based on Luxembourg social security longitudinal data, which covers the period 2001-2015 and provides precise information at the postcode level, corresponding mostly to streets. Our identification strategy exploits plausible exogenous variations among neighbours provided by the thinness of the housing market once controlling for residential sorting. We first examine interactions among all neighbours using an individual-level analysis, before focusing on interactions among only welfare recipients using a matched-pair analysis. This second step allows us to deal with the mediating effect of welfare recipients' citizenship. The main findings highlight the existence of neighbourhood effects in welfare-to-work transitions, which are also affected by the characteristics of the neighbours, including their citizenship. These characteristics suggest that social norms and/or stigma prevail in welfare-to-work transitions over the support for welfare recipients to find a job, but not over the in-group support for welfare recipients. The matched-pair analysis provides contrasting results across citizenship for individuals from large-sized citizenship groups (interactions within the own group) and individuals from medium-sized groups (interactions between groups).
    Keywords: welfare-to-work transitions; neighbourhood effects; diversity; block-level data
    JEL: H53 I32 J21 J60 R23
    Date: 2021–06
  24. By: Wilhelmsson, Mats (Department of Real Estate and Construction Management, Royal Institute of Technology)
    Abstract: The Swedish rental housing market is characterised by, among other things, a form of rent control in which rents remain lower than market rate. This means that distribution of rental apartments is not based on the tenants' willingness to pay for a specific apartment. Instead, in most cases, distribution is based on a person's position in the housing agency queue. In Stockholm, many public and private housing rental contracts are set up via a common queue administered by the municipal housing agency. Individuals with much time in the queue can access a more extensive selection of rental apartments. The purpose of the following study is to estimate the demand for rent-regulated apartments. We do so by investigating the relationship between queue time and apartment attributes. A so-called hedonic waiting time equation will be estimated. The implicit prices of the rental apartment will be related to the tenant's income, and income elasticity will be estimated in a second step. The results indicate a significant willingness to pay for rent-regulated apartments, and that the demand for rental apartments can partly be explained by regulated rents, and partly by tenants' income.
    Keywords: Rental housing market; Queuing time; Waiting list; Excess demand; Controlled rents
    JEL: R21 R23 R31
    Date: 2021–07–01
  25. By: Siflinger, Bettina; Paffenholz, Michaela; Seitz, Sebastian; Mendel, Moritz; von Gaudecker, Hans-Martin
    Abstract: Since the start of the CoViD-19 pandemic, a major source of concern has been its effect on mental health. Using pre- pandemic information and have customized questionnaires in the Dutch LISS panel, we investigate how mental health in the working population has evolved along with the most prominent risk factors associated with the pandemic. Overall, mental health decreased sharply with the onset of the first lockdown but recovered fairly quickly. In December 2020, levels of mental health are comparable to those in November 2019. We show that perceived risk of infection, labor market uncertainty, and emotional loneliness are all associated with worsening mental health. Both the initial drop and subsequent recovery are larger for parents of children below the age of 12. Among parents, the patterns are particularly pronounced for fathers if they shoulder the bulk of additional care. Mothers' mental health takes a particularly steep hit if they work from home and their partner is designated to take care during the additional hours.
    Keywords: COVID-19,mental health,gender,lockdown,child care
    JEL: I10 I18 I30 J22
    Date: 2021
  26. By: Erdsiek, Daniel
    Abstract: Based on survey responses from more than 1,700 managers in Germany, this study elicits employers' perceptions of working from home during COVID-19 and their long-term expectations for the time after the pandemic. Based on employers' forecasts of the share of employees working from home post-COVID, the within-firm intensity of the expected shift is quantified. Many firms expect a persistent shift towards working from home induced by the COVID-19 pandemic. Larger firms and firms with pre-COVID use of working from home are most likely to expect a persistent and intensive shift. As the empirical results indicate, underlying mechanisms for the expected shift might include learning effects facilitating an improved perception of working from home, investments in physical and human capital, a general push in firms' digital progress, and the fact that most firms do not observe a reduction in productivity due to working from home during COVID-19.
    Keywords: COVID-19,working from home,digitalisation,firm-level,managers,survey
    JEL: D22 D23 L22 O33 M54
    Date: 2021
  27. By: Jason Deegan; Tom Broekel; Rune Dahl Fitjar
    Abstract: This paper examines which economic domains regional policy-makers aim to develop in regional innovation strategies, focusing in particular on the complexity of those economic domains and their relatedness to other economic domains in the region. We build on the economic geography literature that advises policy-makers to target related and complex economic domains (e.g. Balland et al. (2018a), and assess the extent to which regions actually do this. The paper draws on data from the smart specialisation strategies of 128 NUTS-2 regions across Europe. While regions are more likely to select complex economic domains related to their current economic domain portfolio, complexity and relatedness figure independently, rather than in combination, in choosing priorities. We also find that regions in the same country tend to select the same priorities, contrary to the idea of a division of labour across regions that smart specialisation implies. Overall, these findings suggest that smart specialisation may be considerably less place-based in practice than it is in theory. There is a need to develop better tools to inform regions’ priority choices, given the importance of priority selection in smart specialisation strategies and regional innovation policy more broadly.
    Keywords: Smart Specialisation, Regional Policy, Complexity, Relatedness, Innovation Policy, European Cohesion Policy
    JEL: O25 O38 R11
    Date: 2021–06
  28. By: Elisa Guglielminetti (Bank of Italy); Concetta Rondinelli (Bank of Italy)
    Abstract: Following the outbreak of the COVID-19 pandemic, household consumption fell dramatically and the propensity to save rose to unprecedented levels. In this paper we investigate the drivers of households' behaviour in Italy from a macro and microeconomic perspective. At the aggregate level, we find that only half of the slump in private consumption can be explained by the deterioration in economic conditions. The residual contribution can be traced back to other pandemic-related factors - such as the fear of infection, the lockdown policies and increased uncertainty about the future - whose relevance varies between expenditure categories. By complementing the macro analysis with microdata from the Bank of Italy's Special Survey of Italian Households, we find that, apart from any economic reasons, spending is held back more by fear of infection and uncertainty about the future than by the restrictive measures. Households where the head is self-employed are mainly discouraged by the fear of infection and uncertainty, whereas those where the head is unemployed are more concerned about their economic situation.
    Keywords: Covid-19, household consumption, saving, fear of contagion, uncertainty, lockdown policies
    JEL: D14 D15 E21
    Date: 2021–06
  29. By: Jessen, Jonas (DIW Berlin); Spiess, C. Katharina (DIW Berlin); Waights, Sevrin (DIW Berlin); Wrohlich, Katharina (DIW Berlin)
    Abstract: The COVID-19 pandemic and related closures of daycare centers and schools significantly increased the amount of care work done by parents. There is much speculation over whether the pandemic increased or decreased gender equality in parental care work. Based on representative data for Germany we present an empirical analysis that shows greater support for the latter rather than the former hypothesis. A key finding is that there is a significant increase in the number of couples where the mother is left completely or almost completely alone with the care work. We see only small increases in the prevalence of fathers doing more than mothers or in splitting these tasks 50:50. Additionally we find that the increase in mothers solely responsible for care work is greatest when the mother alone works from home. The division of care work is perceived very differently by mothers and fathers, a difference that also increased during the pandemic.
    Keywords: gender division, domestic work, child care, day care, COVID-19
    JEL: D13 J16 J22
    Date: 2021–06
  30. By: Rostam-Afschar, Davud; Unsorg, Maximiliane
    Abstract: We examine a deregulation of German pharmacists to assess its effects on retail and labor markets. From 2004 onward, the reform allowed pharmacists to expand their single-store firms and to open or acquire up to three a liated stores. This partial deregulation of multi-store prohibition reduced the cost of firm expansion substantially and provides the basis for our analysis. We develop a theoretical model that suggests that the general limitation of the total store number per firm to four is excessively restrictive. Firms with hig€h managerial e ciency will open more stores per firm and have higher labor demand. Our empirical analysis uses very rich information from the administrative panel data on the universe of pharmacies from 2002 to 2009 and their a liated stores matched with survey data, which provide additional information on the characteristics of expanding firms before and after the reform. We find a sharp immediate increase in entry rates, which continues to be more than five-fold of its pre-reform level after five years for expanding firms. Expanding firms can double revenues but not profits after three years. We show that the increase of the number of employees by 50% after five years and the higher overall employment in the local markets, which increased by 40%, can be attributed to the deregulation.
    Keywords: regulation,acquisitions,entry,market concentration,wages,employment,pharmacists
    JEL: L4 L5 L2 J44 J23
    Date: 2021
  31. By: Agnese Carella (Bank of Italy); Valentina Michelangeli (Bank of Italy)
    Abstract: The role, informative or persuasive, of brand names in driving purchasing decisions is very much under debate. We exploit the rebranding of a mortgage lender to analyse households’ choice behaviour in response to brand popularity. Loan-level data on new mortgages suggest that (1) brand awareness reduces the equilibrium price of residential mortgage contracts and (2) the reduction mainly reflects consumers’ selection of cheaper products due to better information. Our calibrated model implies an overall gain equal to 6 per cent of the initial loan amount and a roughly 10 percentage point increase in the share of households that shift to cheaper lenders.
    Keywords: brand, mortgages, household finance
    JEL: D12 D15 D83 G21 G51
    Date: 2021–06
  32. By: Huebener, Mathias (DIW Berlin); Jessen, Jonas (DIW Berlin); Kühnle, Daniel (University of Duisburg-Essen); Oberfichtner, Michael (Institute for Employment Research (IAB), Nuremberg)
    Abstract: Motherhood and parental leave interrupt employment relationships, likely imposing costs on firms. We document that mothers who are difficult to replace internally take shorter leave and that their firms hire replacements more often. Introducing more generous parental leave benefits erases the link between mothers' internal replaceability and their leave duration. In firms with few internal substitutes this reduces employment in the short-, but not longer-term. Firms respond by hiring fewer women of childbearing age into occupations where they are difficult to replace internally. Taken together, motherhood and generous parental leave policies burden firms that have few internal substitutes available.
    Keywords: parental leave, worker absences, firm-specific human capital, substitution, statistical discrimination
    JEL: J16 J18 J24
    Date: 2021–06
  33. By: Daniel Avdic; Stephanie von Hinke
    Abstract: Excessive alcohol use is associated with a wide range of adverse outcomes that inflict large societal costs. This paper investigates the impacts of increases in regulated opening hours of Swedish alcohol retailers on alcohol purchases, health and crime outcomes by relating changes in these outcomes in municipalities that increased their retail opening hours to those in municipalities whose opening hours remained unchanged. We show that extended opening hours led to statistically and economically significant increases in alcohol purchases by around two percent per weekly opening hour, but find no corresponding increases in adverse outcomes related to the consumption of alcohol. We study potential mechanisms, such as consumption spillovers and on and off-premise substitution, and we discuss policy implications of our findings.
    Date: 2021–06–24
  34. By: Mumford, Karen A. (University of York); Aguirre, Edith (ISER, University of Essex); Einarsdóttir, Anna (University of York); Lockyer, Bridget (University of York); Sayli, Melisa (University of Surrey); Smith, Benjamin A. (Rotherham NHS Foundation Trust)
    Abstract: Studies of the relationship between sexual orientation and pay have faced difficulties applying standard models of discrimination if orientation is not observable. Analogously, behavioural explanations of pay based on models of gender linked within-household specialization may not be as relevant in a nonheterosexual context. This article analyses pay gaps using information including earnings, gender, LGB identity, coupling status, and the disclosure of sexual orientation in English National Health Service (NHS) workplaces. The results reveal a robust gender pay gap of 4% in favour of males, but no overall LGB pay gap compared to heterosexuals. The latter is due to similar-sized offsetting effects from disclosure on LGB pay relative to comparable heterosexuals. Amongst LGB employees, disclosure is associated with 13% more pay, with three quarters of this gap related to unexplained differences in returns to observable characteristics. Supportive workplace practices are strongly associated with increased probability of disclosure, especially the availability of a LGB workplace network.
    Keywords: disclosure, gender, LGB, NHS, pay
    JEL: J16 J31 J71
    Date: 2021–06
  35. By: Weisser, Reinhard A.
    Abstract: Over the last decades, Europe attracted an increasing number of internationally mobile students. The related influx of talent into European labour markets constituted an important factor to the knowledge economy. This research addresses the question whether changing political landscapes in Europe, e.g. an increasing scepticism concerning migrants or support for right-wing parties, translated into a diminishing attractiveness of European economies. To this end, international graduates' staying behaviour in 28 European destination countries is investigated based on bilateral stay rates for almost 150 countries of origin in the years 2009 to 2019. Controlling for various immigration regimes and institutional settings, international graduates are found to display a high level of sensitivity with respect to political dynamics: A distinct dominance of the right political spectrum may lower the number of international graduates willing to stay by up to 50%. The effect is particularly strong in election years when voters' political preferences become more salient. Eventually, this amounts to a considerable loss for European economies since international graduates have acquired destination country specific human capital and are easily integrated into host societies.
    Keywords: migration policies,graduate mobility,labour market integration,political preferences
    JEL: J61 D91 F22 I23
    Date: 2021
  36. By: Castaldo, Stefano; Tirelli, Mario
    Abstract: Econometric studies have produced conflicting results on the relevance of precautionary saving. This ambiguity has been often ascribed to i) the difficulty of measuring key variables, like households' subjective risk in income and permanent income; ii) the occurrence of certain kinds of endogeneity bias associated to the unobservability of individual characteristics, like preferences and insurance possibilities. In the present work we investigate these estimation problems exploiting a particular wave of the Italian Survey of Household Income and Wealth which contains both type of information. Our results quantify the average precautionary saving as 4-5 percent of total net wealth. Moreover, excluding illiquid assets like the primary home and business equities, a figure of about 5 percent is statistically invariant to the alternative measures of wealth considered. This 'invariance' reveals a tendency of households to respond to a change in their perceived income risk by rescaling their (liquid) portfolio. We also discuss how the use of richer information on the household characteristics unveils how various kinds of 'bias' might affect estimates in opposite directions and with different intensities.
    Keywords: Precautionary saving; wealth accumulation; preferences; liquidity constraints
    JEL: C21 D12 D91
    Date: 2021–06–10
  37. By: Garnero, Andrea (European Commission, Joint Research Centre); Lucifora, Claudio (Università Cattolica del Sacro Cuore)
    Abstract: Turning a "blind eye" to non-compliance with minimum wage standards is sometimes presented as a pragmatic way to accommodate higher wages while not harming employment opportunities for workers employed in marginal firms. In this paper, we model firms' wage and employment decisions, and show that there may be a trade-off between non-compliance and employment. The main prediction of the model are empirically tested using data from the Italian labour force survey. We find evidence of a positive employment non-compliance effect, though elasticities are smaller than typically thought as employers internalize the expected costs of non-compliance. We also show that employment effects are larger at low levels of non-compliance (when the risk of being referred to court is very low). The implications for policy and the role of regulators in monitoring and sanctioning non-compliance are discussed.
    Keywords: collective bargaining, sectoral minimum wages, compliance
    Date: 2021–06
  38. By: Gert Bijnens; Emmanuel Dhyne
    Abstract: Whilst overall productivity growth is stalling, firms at the frontier are still able to capture the benefits of the newest technologies and business practices. This paper uses linked employer-employee data covering all Belgian firms over a period of almost 20 years and investigates the differences in human capital between highly productive firms and less productive firms. We find a clear positive correlation between the share of high-skilled and STEM workers in a firm's workforce and its productivity. We obtain elasticities of 0.20 to 0.70 for a firm's productivity as a function of the share of high-skilled workers. For STEM (science, technology, engineering, mathematics) workers, of all skill levels, we find elasticities of 0.20 to 0.45. More importantly, the elasticity of STEM workers is increasing over time, whereas the elasticity of high-skilled workers is decreasing. This is possibly linked with the increasing number of tertiary education graduates and at the same time increased difficulties in filling STEM-related vacancies. Specifically, for high-skilled STEM workers in the manufacturing sector, the productivity gain can be as much as 4 times higher than the gain from hiring additional high-skilled non-STEM workers. To ensure that government efforts to increase the adoption of the latest technologies and business practices within firms lead to sustainable productivity gains, such actions should be accompanied by measures to increase the supply and mobility of human (STEM) capital. Without a proper supply of skills, firms will not be able to reap the full benefits of the digital revolution.
    Keywords: education, human capital, linked employer-employee data, productivity, Skills
    JEL: E24 I26 J24
    Date: 2021–07–08
  39. By: Simon Amez; Stijn Baert (-)
    Abstract: We study whether living in a student room as a tertiary education student (instead of commuting between one’s parental residence and college or university) affects exam results. To the best of our knowledge, we are the first to study this relationship beyond cross-sectional analysis. That is, we exploit rich longitudinal data on 1,653 Belgian freshmen students’ residential status and exam scores to control for observed heterogeneity as well as for individual fixed (or random) effects. We find that after correcting for unobserved heterogeneity, the association found in earlier contributions disappears. This finding of no significant impact of living in a student room on exam results is robust for other methods used for causal inference including instrumental variable techniques.
    Keywords: residential status, exam scores, longitudinal data, causality.
    JEL: I23 J24
    Date: 2021–07
  40. By: Benny, Liza; Bhalotra, Sonia; Fernández, Manuel
    Abstract: This paper examines the importance of gender differences in labour supply and demand for job flexibility to the growth of the gender wage gap over the life cycle and over time for graduates in the UK. We document that the graduate gender wage gap increases over the life cycle, especially between ages 25 and 40, to about 20% of real hourly male earnings by age 55. The share of women working in flexible occupations has grown over the life cycle, and especially substantially over time for successive cohorts, whereas men are less likely to work in flexible occupations at older ages. The wage penalty from working in flexible occupations increases both over the life cycle and over time. We estimate a model of labour supply and demand to quantify the importance of changes to preferences and relative demand for flexibility on the gender wage gap. Higher relative demand for male labour at older ages, and in in flexible occupations, explains almost all (96%) of the estimated life cycle increases in the gender wage gap, whereas women's higher preferences for working in flexible occupations drives the increases in sorting into flexible occupations over time, contributing to about 60% of the estimated increase in the gender wage gap over time.
    Date: 2021–07–01

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