nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2021‒08‒16
thirty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Do Firms Hire More Older Workers? Evidence from Germany By Fabian Busch; Robert Fenge; Carsten Ochsen
  2. Local government and innovation: The case of Italian provinces By Fortuna Casoria; Marianna Marino; Pierpaolo Parrotta; Davide Sala
  3. Culture, Children and Couple Gender Inequality By Jonas Jessen
  4. Welfare resilience at the onset of the COVID-19 pandemic in a selection of European countries: impact on public finance and household incomes By Cantó, Olga; Figari, Francesco; Fiorio, Carlo V.; Kuypers, Sarah; Marchal, Sarah; Romaguera-de-la-Cruz, Marina; Tasseva, Iva V.; Verbist, Gerlinde
  5. On the Right Track? – The Role of Work Experience in Migrant Mothers’ Current Employment Probability By Christina Boll; Andreas Lagemann
  6. Social Mobility in Germany By Majed Dodin; Sebastian Findeisen; Lukas Henkel; Dominik Sachs; Paul Schüle
  7. How Does Reducing the Intensity of Tracking Affect Student Achievement? Evidence from German State Reforms By Marc Piopiunik
  8. Firm Relocations, Commuting and Relationship Stability By Kristina Hrehova; Erika Sandow; Urban Lindgren
  9. Choose the school, choose the performance. New evidence on the determinants of student performance in eight European countries By Bonacini, Luca; Brunetti, Irene; Gallo, Giovanni
  10. Does it pay to say "I do"? Marriage bonuses and penalties across the EU By Christl, Michael; De Poli, Silvia; Ivaškaitė-Tamošiūnė, Viginta
  11. The Long-Term Effects of Hospital Deliveries By Fischer, Martin; Karlsson, Martin; Prodromidis, Nikolaos
  12. The Effects of the COVID-19 Pandemic on the Mental Health and Subjective Well-Being of Workers: An Event Study Based on High-Frequency Panel Data By Schmidtke, Julia; Hetschko, Clemens; Schöb, Ronnie; Stephan, Gesine; Eid, Michael; Lawes, Mario
  13. The Cultural Roots of Firm Entry, Exit, and Growth By Katharina Erhardt; Simon Haenni
  14. Supporting residential energy conservation under constrained public budget: Cost-effectiveness and redistribution analysis of public financial schemes in France By Chlond, Bettina; Gavard, Claire; Jeuck, Lisa
  15. Health, Retirement and Economic Shocks By Martinez-Jimenez, Mario; Hollingsworth, Bruce; Zucchelli, Eugenio
  16. Is 'Employment during Motherhood' a 'Value Changing Experience'? By Mireia Borrell-Porta; Valentina Contreras; Joan Costa-i-Font
  17. Mothers at Work: How Mandating Paid Maternity Leave Affects Employment, Earnings and Fertility By Girsberger, Esther Mirjam; Hassani Nezhad, Lena; Karunanethy, Kalaivani; Lalive, Rafael
  18. Low-Skilled Jobs, Language Proficiency and Refugee Integration: An Experimental Study By Ek, Simon; Hammarstedt, Mats; Skedinger, Per
  19. Pension Wealth and the Gender Wealth Gap By Karla Cordova; Markus M. Grabka; Eva Sierminska
  20. A new universal child allowance in Italy: equity and efficiency concerns By Nicola Curci; Marco Savegnago
  21. Intergenerational Educational Mobility – The Role of Non-cognitive Skills By Adamecz-Völgyi, Anna; Henderson, Morag; Shure, Nikki
  22. Internal Labor Markets: A Worker Flow Approach By Ingrid Huitfeldt; Andreas R. Kostol; Jan Nimczik; Andrea Weber
  23. Regional policies and sectoral outputs in the Italian regions. A multi-input multi-output counterfactual approach. By Gianluigi Coppola; Sergio Destefanis; Giorgia Marinuzzi; Walter Tortorella
  24. Search and Reallocation in the COVID-19 Pandemic: Evidence from the UK By Carrillo-Tudela, Carlos; Comunello, Camila; Clymo, Alex; Jäckle, Annette; Visschers, Ludo; Zentler-Munro, David
  25. Education, routine, and complexity-biased Knowledge Enabling Technologies: Evidence from Emilia-Romagna, Italy. By Roberto Antonietti; Luca Cattani; Francesca Gambarotto; Giulio Pedrini
  26. Where cities fail to triumph: the impact of urban location and local collaboration on innovation in Norway By Fitjar, Rune Dahl; Rodríguez-Pose, Andrés
  27. Getting Warmer: Fuel Poverty, Objective and Subjective Health and Well-Being By Davillas, Apostolos; Burlinson, Andrew; Liu, Hui-Hsuan
  28. How Do Workers Adjust When Firms Adopt New Technologies? By Genz, Sabrina; Gregory, Terry; Janser, Markus; Lehmer, Florian; Matthes, Britta
  29. Labor Market Discrimination and Statistical Differences in Unobserved Characteristics of Applicants By Ayaita, Adam
  30. The impact of borrower-based instruments on household vulnerability in Germany By Barasinska, Nataliya; Ludwig, Johannes; Vogel, Edgar

  1. By: Fabian Busch; Robert Fenge; Carsten Ochsen
    Abstract: This paper analyses how demographic changes of the labour force affect labour demand. Do firms adjust their hiring behaviour to an ageing society? Combining data at the firm level and the administrative district level, we analyse the hiring behaviour of firms. Our findings suggest that firms with an ageing workforce hire relatively more older workers. Since the willingness to hire older workers also increases with the share of older unemployed, the propensity to employ older people does generally rise with an ageing labour force. Also, part-time employment induces firms to engage more older workers but this effect disappears for large firms. In contrast, partial retirement regulations have a negative effect on hiring older workers which reveals unintended incentives of the German law on this matter. Finally, firms with a higher share of educated personnel demand more older workers.
    Keywords: ageing labour force, hiring of older workers, panel data models
    JEL: J11 J23 C33
    Date: 2021
  2. By: Fortuna Casoria (University of Lyon); Marianna Marino (SKEMA Business School); Pierpaolo Parrotta (IESEG School of Management); Davide Sala (University of Passau)
    Abstract: This paper exploits quasi-natural experiments associated with three waves of reforms occurred in Italy in 1992, 2001 and 2004, to establish 8, 4, and 3 new provinces, respectively. Using a difference-in-difference approach, we find evidence of a significant detrimental effect of (further) decentralization on innovation in Northern and Central Italian provinces. We argue that this finding can be rationalized with the costs imposed by the “mafia transplantation†phenomenon, as we find that the new provinces that were more exposed to “mafiosi in confino†reduced their innovation output extensively. We perform a number of robustness checks that corroborate our main findings.
    Keywords: local government, decentralization, innovation, mafia transplantation, difference-in-difference
    JEL: D72 H72 K42 L20 O31
    Date: 2021–04
  3. By: Jonas Jessen
    Abstract: This paper examines how culture impacts within-couple gender inequality. Exploiting the setting of Germany's division and reunification, I compare child penalties of couples socialised in a more gender-egalitarian culture (East Germany) to those in a gender-traditional culture (West Germany). Using a household panel, I show that the long-run child penalty on the female income share is 26.9 percentage points in West German couples, compared to 15.5 in East German couples. I additionally show that among women in West Germany the arrival of a child leads to a greater increase in housework and a larger share of child care responsibilities than among women in the East. A battery of robustness checks confirms that differences between East and West socialised couples are not driven by current location, economic factors, day care availability or other smooth regional gradients. I add to the main findings by using time-use diary data from the German Democratic Republic (GDR) and reunified Germany, comparing parents with childless couples of similar age. This provides a rare insight into gender inequality in the GDR and allows to compare the effect of children in the GDR to the effects in East and West Germany after reunification. Lastly, I show that attitudes towards maternal employment are more egalitarian among East Germans, but that the arrival of children leads to more traditional attitudes for both East and West Germans. The findings confirm that socialisation has a strong impact on child penalties and thus on gender inequality as a whole.
    Keywords: cultural norms, gender inequality, child penalty
    JEL: J16 J22 D1
    Date: 2021
  4. By: Cantó, Olga; Figari, Francesco; Fiorio, Carlo V.; Kuypers, Sarah; Marchal, Sarah; Romaguera-de-la-Cruz, Marina; Tasseva, Iva V.; Verbist, Gerlinde
    Abstract: This paper assesses the impact on household incomes of the COVID-19 pandemic and governments’ policy responses in April 2020 in four large and severely hit EU countries: Belgium, Italy, Spain and the UK. We provide comparative evidence on the level of relative and absolute welfare resilience at the onset of the pandemic, by creating counterfactual scenarios using the European tax-benefit model EUROMOD combined with COVID-19-related household surveys and timely labor market data. We find that income poverty increased in all countries due to the pandemic while inequality remained broadly the same. Differences in the impact of policies across countries arose from four main sources: the asymmetric dimension of the shock by country, the different protection offered by each tax-benefit system, the diverse design of discretionary measures and differences in the household level circumstances and living arrangements of individuals at risk of income loss in each country.
    Keywords: Covid-19; cross-country comparison; household incomes; income protection; tax-benefit microsimulation; coronavirus
    JEL: D31 H55 I32
    Date: 2021–07–01
  5. By: Christina Boll; Andreas Lagemann
    Abstract: This paper investigates the role of work experience in migrant mothers’ current employment in Germany. Unlike previous papers, we focus on actual experience and add the motherhood aspect. To this end, we use data from the German Socio-Economic Panel 2013-2018 including the IAB-SOEP Migration Sample. Having immigrated to Germany and female sex are the two treatments of our sample of 491 migrant mothers, with 7,077 native mothers and 1,383 migrant fathers serving as control groups. Running LPM with individual FE and testing the robustness of the work experience estimators against a range of covariates and unobserved time-varying confounders with Oster bounds, we show that years of domestic part-time experience yield higher returns for migrant mothers compared to migrant fathers and non-migrant mothers. We conclude that current employment is significantly fueled by former employment; thus policies should be designed such that they help women to “get on the right track”.
    Keywords: migrant employment, maternal employment, LPM with individual FE, Oster test, actual work experience
    JEL: J61 J16 J24
    Date: 2021
  6. By: Majed Dodin; Sebastian Findeisen; Lukas Henkel; Dominik Sachs; Paul Schüle
    Abstract: We characterize intergenerational mobility in Germany using census data on educational attainment and parental income for 526,000 children. Our measure of educational attainment is the A-Level degree, a requirement for access to university. A 10 percentile increase in the parental income rank is associated with a 5.2 percentage point increase in the A-Level share. This parental income gradient has not changed for the birth cohorts of 1980-1996, despite a large-scale policy of expanding upper secondary education. At the regional level, there exists substantial variation in mobility estimates. Place effects, rather than sorting of households, account for most of these differences.
    Keywords: intergenerational mobility, educational attainment, local labor markets
    JEL: I24 J62 R23
    Date: 2021
  7. By: Marc Piopiunik
    Abstract: To investigate the effects of reducing the intensity of tracking, this study exploits reforms across German states which combined the two lower secondary school tracks, sometimes additionally offering the possibility to acquire a university entrance qualification. Using a difference-in-differences approach, we find that reducing the tracking intensity significantly improves students’ reading achievement. Lower-performing student groups – boys, students born abroad, and students from lower socio-economic status families – benefited in particular. In contrast, we find no effects on acquiring a middle school degree, attending the most academic track, or repeating a grade.
    Keywords: school tracking, student performance, NEPS
    JEL: I21 I24 I28
    Date: 2021
  8. By: Kristina Hrehova; Erika Sandow; Urban Lindgren
    Abstract: In this paper, we study the impact of firm relocations on commuting distance and the probability of married couples and cohabiting couples with children separating. We use Swedish register data for 2010-2016 and select employees of relocating firms with one workplace and more than 10 employees. Focusing on this sample allows us to use plausibly exogenous variation in the commuting distance arising from the relocation. We extend the literature on the effect of commuting on relationship stability by reducing the possibility for unobserved time-variant factors to bias our estimates. While previous literature has focused on the difference between short- and long-distance commuting, we focus on changes in the commuting distance that are externally induced by firm management. We find a small but statistically significant negative effect of increased firm relocation distance on family stability. A 10 km change in commuting distance leads to a 0.09 percentage point higher probability of separation if the commuter remains with the firm for the next 5 years.
    Keywords: separation; marriage; commuting time; commuting distance; quasi-experiment; spatial mobility;
    JEL: J32 J61 R23 R41
    Date: 2021–07
  9. By: Bonacini, Luca; Brunetti, Irene; Gallo, Giovanni
    Abstract: This study aims to identify the main determinants of student performance in reading and maths across eight European Union countries (Austria, Croatia, Germany, Hungary, Italy, Portugal, Slovakia, and Slovenia). Based on student-level data from the OECD’s PISA 2018 survey and by means of the application of efficient algorithms, we highlight that the number of books at home and a variable combining the type and location of their school represent the most important predictors of student performance in all of the analysed countries, while other school characteristics are rarely relevant. Econometric results show that students attending vocational schools perform significantly worse than those in general schools, except in Portugal. Considering only general school students, the differences between big and small cities are not statistically significant, while among students in vocational schools, those in a small city tend to perform better than those in a big city. Through the Gelbach decomposition method, which allows measuring the relative importance of observable characteristics in explaining a gap, we show that the differences in test scores between big and small cities depend on school characteristics, while the differences between general and vocational schools are mainly explained by family social status.
    Keywords: Gelbach decomposition,Education inequalities,Machine learning,PISA,Schooling tracking,Student performance
    JEL: I21 I24 J24
    Date: 2021
  10. By: Christl, Michael; De Poli, Silvia; Ivaškaitė-Tamošiūnė, Viginta
    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
    JEL: H31 J12 J18
    Date: 2021
  11. By: Fischer, Martin (IFN - Research Institute of Industrial Economics); Karlsson, Martin (University of Duisburg-Essen); Prodromidis, Nikolaos (University of Duisburg-Essen)
    Abstract: This paper analyzes the long-term effects on mortality and socio-economic outcomes from institutional delivery. We exploit two Swedish interventions that affected the costs of hospital deliveries and the supply of maternity wards during the 1926–46 period. Using exogenous variation in the supply of maternity wards to instrument the likelihood of institutional delivery, we find that delivery in hospital has substantial effects on later-life outcomes such as education and mortality. We argue that a decrease in child morbidity due to better treatment of complications is a likely mechanism. This interpretation is corroborated by evidence from primary school performance, showing a large reduction in the probability of low performance. In contrast to an immediate and large take-up in hospital deliveries as response to an increase in the supply, we find no increase in hospital births from the abolishment of fees – but some degree of displacement of high-SES parents.
    Keywords: institutional delivery, diffusion of innovations, difference-in-discontinuities
    JEL: I18 I13 N34
    Date: 2021–07
  12. By: Schmidtke, Julia (Institute for Employment Research (IAB), Nuremberg); Hetschko, Clemens (University of Leeds); Schöb, Ronnie (Free University of Berlin); Stephan, Gesine (Institute for Employment Research (IAB), Nuremberg); Eid, Michael (Freie Universität Berlin); Lawes, Mario (Freie Universität Berlin)
    Abstract: Using individual monthly panel data from December 2018 to December 2020, we estimate the impact of the Covid-19 pandemic and two lockdowns on the mental health and subjective well-being of German workers. Employing an event-study design using individual-specific fixed effects, we find that the first and the second wave of the pandemic reduced workers' mental health substantially. Momentary happiness and life satisfaction also decline in response to Covid-19, but to a smaller extent. We observe adapation in our study outcomes between waves of the pandemic. This applies to a lesser extent to indicators of well-being in certain areas of life, such as satisfaction with the job and with leisure, which are negatively affected, too. Women do not seem to suffer greater well-being losses than men. However, workers in the German short-time work scheme are particularly negatively affected. Our results imply that increased anxiety about the future and restricted personal freedoms are among the drivers of the well-being impact of the pandemic.
    Keywords: Covid-19, life satisfaction, depression, affective well-being, app-based survey data, German Job Search Panel
    JEL: I31 I19
    Date: 2021–08
  13. By: Katharina Erhardt; Simon Haenni
    Abstract: Can culture explain persistent differences in economic activity among individuals and across regions? A novel measure of cultural origin enables us to contrast the entrepreneurial activity of individuals located in the same municipality but whose ancestors lived just on opposite sides of the Swiss language border in the 18th century. Individuals with ancestry from the German-speaking side create 20% more firms than those with ancestry from the French-speaking side. These differences persist over generations and independent of the predominant culture at the current location. Yet, founders’ ancestry does not affect exit or growth of newly-founded firms. A model of entrepreneurial choice and complementary survey evidence suggest that the empirical patterns are mainly explained by differences in preferences, rather than skill. The results have sizable economic implications, accounting for 120,000 additional jobs over a period of 15 years.
    Keywords: culture, entrepreneurship, natural experiment, spatial RDD
    JEL: D22 L26 O12 Z10
    Date: 2021
  14. By: Chlond, Bettina; Gavard, Claire; Jeuck, Lisa
    Abstract: In the context of tight public budgets and increasingly ambitious climate objectives, the performance of the support policies for residential energy conservation works needs to be assessed. We compare the performance of four types of support schemes in France, namely the income tax credit, a grant scheme, the reduction of the value-added tax, and the White Certificates scheme. The analysis employs a dataset covering close to 14,000 French households who conducted conservation works in France. To address self-selection bias and potential endogeneity concerns, we use a double-robust inverse probability weighting estimator, a method mostly used in epidemiology so far. We assess the effect of the adoption of each scheme on the funding acquired, the private investment, total investment and the reduction of the household energy expenses. We deduct metrics of cost-effectiveness, redistribution and the ability to trigger private investment and additional total investment in energy conservation works via the schemes. We find funding from the schemes to reduce energy expenses most cost-effectively via the White Certificates. Additional private and total investment is highest with the adoption of the VAT reduction. The redistribution of public funds to low-income households is highest with the grant scheme.
    Keywords: Energy efficiency,energy conservation,residential retrofits,cost-effectiveness,re-distribution,inverse probability weighting
    JEL: H23 Q58
    Date: 2021
  15. By: Martinez-Jimenez, Mario (Lancaster University); Hollingsworth, Bruce (Lancaster University); Zucchelli, Eugenio (Universidad Autónoma de Madrid)
    Abstract: We explore the effects of retirement on both physical and mental ill-health and whether these change in the presence of economic shocks. We employ inverse probability weighting regression adjustment to examine the mechanisms influencing the relationship between retirement and health and a difference-in-differences approach combined with matching to investigate whether the health effects of retirement are affected by the Great Recession. We estimate these models on data drawn from the English Longitudinal Study of Ageing (ELSA) and find that retirement leads to a deterioration in both mental and physical health, however there seems to be considerable effect heterogeneity by gender and occupational status. Our findings also suggest that retiring shortly after the Great Recession appears to improve mental and physical health, although only among individuals working in the most affected regions. Overall, our results indicate that the health effects of retirement might be influenced by the presence of economic shocks.
    Keywords: retirement, health, Great Recession, ELSA
    JEL: J14 J26 I10
    Date: 2021–07
  16. By: Mireia Borrell-Porta; Valentina Contreras; Joan Costa-i-Font
    Abstract: Does employment during motherhood change peoples preferences? We study whether the experience of employment during motherhood exerts an effect on attitudes towards gender norms, and more specifically, attitudes towards the impact of women’s employment on children’s wellbeing (which proxy traditional gender attitudes). Drawing on a large, representative and longitudinal data and an instrumental variable (IV) strategy that exploits a Bartik instrument for employment, we find that, that non-mothers who work and mothers who do not work are more likely to agree that pre-school children suffer if mothers work, which we proxy as having more traditional views. However, this is not the case when women experience both working and motherhood it does not significantly change women's attitudes. These results suggest that exogenous changes in employment during motherhood confirm individuals priors, and point towards the critical role of early life value formation. That is, employment during motherhood is not a “value changing experience” but rather a “value preserving experience”. Hence, the so-called ‘motherhood penalty’ cannot be fully explained by a change in attitudes after employment during motherhood.
    Keywords: attitude formation, value changing experiences, confirmation bias, women employment attitudes, women employment after maternity, later life attitudes, children
    JEL: Z10 J22
    Date: 2021
  17. By: Girsberger, Esther Mirjam (University of Technology, Sydney); Hassani Nezhad, Lena (Royal Holloway, University of London); Karunanethy, Kalaivani (University of Lausanne); Lalive, Rafael (University of Lausanne)
    Abstract: In July 2005, Switzerland introduced the first federal paid maternity leave mandate, offering 14 weeks of leave with 80% of pre-birth earnings. We study the mandate's impact on women's employment and earnings around the birth of their first child, as well as on their subsequent fertility by exploiting unique, rich administrative data in a difference-in-differences set-up. Women covered by the mandate worked and earned more during pregnancy, and also had temporarily increased job continuity with their pre-birth employer after birth. Estimated effects on other labor market outcomes are small or absent, and all dissipate by five years after birth. The mandate instead persistently increased subsequent fertility: affected women were three percentage points more likely to have a second child in the next nine years. Women living in regions that had greater early child care availability experienced a larger increase in subsequent fertility following the mandate, suggesting that child care complements paid maternity leave in helping women balance work and family.
    Keywords: female labor supply, maternity leave, return-to-work, earnings, fertility
    JEL: J1 J2
    Date: 2021–07
  18. By: Ek, Simon (Department of Economics, Uppsala University, and); Hammarstedt, Mats (Department of Economics and Statistics, Linnaeus University, and); Skedinger, Per (Research Institute of Industrial Economics (IFN))
    Abstract: We study the causal effects of previous experience and language skills when newly arrived refugees in Sweden apply for job openings by means of a field experiment. Applications were sent from randomly assigned fictitious Syrian refugees with experience in jobs with low skill requirements and completed language training in Swedish to employers advertising low-skilled job vacancies. We find no evidence of sizeable effects from previous experience or completed language classes on the probability of receiving callback from employers. However, female applicants were more likely than males to receive a positive response. We conclude that previous experience and completed language training seem to provide at best a small positive signaling value when refugees apply for low-skilled jobs through formal channels.
    Keywords: Integration of immigrants; Language skills; Job mobility
    JEL: J15 J24 J61
    Date: 2021–08–11
  19. By: Karla Cordova; Markus M. Grabka; Eva Sierminska
    Abstract: We examine the gender wealth gap with a focus on pension wealth and statutory pension rights. By taking into account employment characteristics of women and men, we are able and identify the extent to which the redistributive effect of pension rights reduces the gap. The empirical basis of this examination is the Socio-Economic Panel (SOEP), which is one of the few datasets where information on wealth as well as on pension entitlements is collected at the individual level. Pension wealth data is available for 2012 only. Individual level wealth data allows to analyze the gender wealth gap between women and men across all households. Due to the longitudinal character of the underlying data, detailed information on employment trajectories and family related events (such as childbirth, marriage, divorce, widowhood, etc.), which can have an effect on (public) pension entitlements are considered.
    Keywords: Gender Wealth Gap, pension entitlements, Germany, redistribution, SOEP
    JEL: H55 D31 J16
    Date: 2021
  20. By: Nicola Curci (Bank of Italy); Marco Savegnago (Bank of Italy)
    Abstract: The paper discusses a possible scheme for a new universal child allowance (assegno unico e universale per i figli, AUU) and evaluates its effects on income distribution (equity) and on financial disincentives to work (efficiency). The analysis, carried out using the Banca d'Italia tax-benefit microsimulation model BIMic, takes into account the principles defined in the enabling law recently approved by the Parliament and the budgetary resources set aside for this measure. The scheme envisaged in the paper differs from the proposals discussed so far in public debate about the AUU due to a significant innovation, namely the introduction of an in-work benefit component. The simulated reform would not only reduce the inequality of disposable income with respect to the current legislation scenario, but also – due to the above mentioned in-work benefit – would lessen the financial disincentives to labor market participation for potential female workers. The latter result is particularly strong for low-income households.
    Keywords: family policies, redistribution, equity, efficiency, microsimulation
    JEL: D31
    Date: 2021–07
  21. By: Adamecz-Völgyi, Anna (UCL Institute of Education); Henderson, Morag (UCL Institute of Education); Shure, Nikki (University College London)
    Abstract: While it has been shown that university attendance is strongly predicted by parental education, we know very little about why some potential 'first in family' or first-generation students make it to university and others do not. This paper looks at the role of non-cognitive skills in the university participation of this disadvantaged group in England. We find that conditional on national, high-stakes exam scores and various measures of socioeconomic background, having higher levels of non-cognitive skills, specifically locus of control, academic self-concept, work ethic, and self-esteem, in adolescence is positively related to intergenerational educational mobility to university. Our results indicate that having higher non-cognitive skills helps potential first in family university students to compensate for their relative disadvantage, and they are especially crucial for boys. The most important channel of this relationship seems to be through educational attainment at the end of compulsory schooling.
    Keywords: socioeconomic gaps, intergenerational educational mobility, higher education, non-cognitive skills
    JEL: I24 J24
    Date: 2021–07
  22. By: Ingrid Huitfeldt; Andreas R. Kostol; Jan Nimczik; Andrea Weber
    Abstract: This paper develops a new method to study how workers’ career and wage profiles are shaped by internal labor markets (ILM) and job hierarchies in firms. Our paper tackles the conceptual challenge of organizing jobs within firms into hierarchy levels by proposing a data-driven ranking method based on observed worker flows between occupations within firms. We apply our method to linked employer-employee data from Norway that records fine-grained occupational codes and tracks contract changes within firms. Our findings confirm existing evidence that is primarily based on case studies for single firms. We expand on this by documenting substantial heterogeneity in the structure and hierarchy of ILMs across a broad range of large firms. Our findings on wage and promotion dynamics in ILMs are consistent with models of careers in organizations.
    Keywords: internal labor markets, organization of labor, wage setting
    JEL: J31 J62 M50
    Date: 2021
  23. By: Gianluigi Coppola (University of Salerno); Sergio Destefanis (University of Salerno); Giorgia Marinuzzi (IFEL); Walter Tortorella (IFEL)
    Abstract: We assess the impact of various types of regional policies on the economies of the 20 Italian administrative regions for the 1994-2016 period. Differently from previous works, we assess the impact of various policy funds in four sectors (agriculture, industry, construction, services) through a multi-input multioutput transformation function, and we estimate the policies’ average partial effects through a control function approach incorporating the funds’ allocation rules. Our evidence implies that European Structural Funds had a significant impact on various sectoral components of regional GDP per capita, with the ERDF taking the strongest role. Furthermore, the effectiveness of European Structural Funds is weaker for services, and stronger for industry and (to a lesser extent) agriculture. Nationally funded regional policies do not have any aggregate impact but affect the sectoral composition of GDP.
    Keywords: European Structural Funds, control function approach, sectoral development, multi-output multiinput transformation functions
    JEL: C43 D24
    Date: 2021–05
  24. By: Carrillo-Tudela, Carlos (University of Essex); Comunello, Camila (University of Essex); Clymo, Alex (University of Essex); Jäckle, Annette (University of Essex); Visschers, Ludo (University of Edinburgh); Zentler-Munro, David (University of Essex)
    Abstract: The impact of the Covid-19 pandemic on the UK labour market has been extremely heterogeneous, with strong variation both by occupation and industrial sector. The extent to which workers adjust their job search behaviour in response to this reallocation of employment has an important bearing on the future course of the labour market. At an aggregate level we see evidence consistent with search responding to changes to the state of the economy. In particular, changes to job search by employees are closely linked to changes in vacancies, and we also see ows from unemployment to inactivity peak at the same time as vacancies bottom-out. A key novelty in this paper is that we can additionally see whether the link between job search and changing employment patterns holds at a micro level, using the COVID supplement of the UK Household Longitudinal Survey, which shows the industries and occupations targeted by job searchers. The vast majority of job searchers target growing occupations and industries, which suggests job searchers are responding to conditions at a micro as well as macro level. This is also suggested by the fact that job searchers who were in occupations that expanded in the pandemic seek to switch occupations less frequently than those in shrinking occupations.
    Keywords: job search, sectoral mobility, COVID-19
    JEL: E24 J23 J63
    Date: 2021–07
  25. By: Roberto Antonietti (University of Padova); Luca Cattani (University of Bologna); Francesca Gambarotto (University of Padova); Giulio Pedrini (Kore University of Enna)
    Abstract: We analyze the relationship between the use of Key Enabling Technologies (KETs) and the demand for occupations, tasks, and skills in the local labour market areas (LLMAs) of Emilia-Romagna, Italy. We merge three data sources, and we compute both the share of highly educated employees, or of employees accomplishing low- versus high-routine tasks, and three novel indicators measuring the complexity of occupations, tasks, and skills. Our panel estimates show that a larger share of KETs not only stimulates a higher demand for workers holding a tertiary education degree, or accomplishing less routinary tasks, but also a higher demand for a wider, and more exclusive, set of occupations, tasks, and skills. These results are also robust to unobserved heterogeneity and reverse causality.
    Keywords: key enabling technology, complexity, occupation, tasks, skills
    JEL: J24 O33 R10
    Date: 2021–05
  26. By: Fitjar, Rune Dahl; Rodríguez-Pose, Andrés
    Abstract: The role of cities in fostering innovation has for long been taken for granted. Agglomeration and the knowledge spillovers generated in dense urban environments have been considered fundamental drivers of innovation. This view has, however, become challenged by research questioning the returns to physical agglomeration and local networking, placing instead more emphasis on the importance of interregional and international collaboration, and on innovation in peripheral regions. This paper delves into the debate on the role of cities for innovation by examining the interplay between urban location and local collaboration in Norway. It uses data from the Community Innovation Survey for 2006–2010 to map out the geographical dimension of R&D collaboration in Norwegian firms with a view to assessing whether different types of R&D collaboration in urban and rural locations affect firms’ propensity to innovate. The results show that local collaboration is associated with increased process and organisational innovation, while it does not produce higher levels of product or marketing innovation. Conversely, international collaboration is connected with higher probabilities of product, new-to-market and marketing innovations. Furthermore, location in urban or rural areas makes no difference for most innovation outcomes in Norway when other characteristics are controlled for. Location in cities also does not shape the returns to local R&D collaboration. Hence, the role of cities for innovation in Norway, whether in themselves or as sites for dense local interaction, is less relevant than the urban innovation literature would predict.
    Keywords: innovation; firms; networking; collaboration; cities; Norway; 209761
    JEL: L25 O31 O33
    Date: 2020–01–01
  27. By: Davillas, Apostolos (University of East Anglia); Burlinson, Andrew (University of East Anglia); Liu, Hui-Hsuan (Royal Veterinary College)
    Abstract: This paper uses data from Understanding Society: the UK Household Longitudinal Study to explore the association between fuel poverty and a set of well-being outcomes: life-satisfaction, self-reported health measures and more objectively measured biomarker data. Over and above the conventional income–fuel cost indicators, we also use more proximal heating deprivation indicators. We create and draw upon a set of composite indicators that concomitantly capture (the lack of) affordability and thermal comfort. Depending on which fuel deprivation indicator is used, we find heterogeneous associations between fuel poverty and our well-being outcomes. Employing combined fuel deprivation indicators, which takes into account the income–fuel cost balance and more proximal perceptions of heating adequacy, reveals the presence of more pronounced associations with life satisfaction and fibrinogen, one of our biological health measures. The presence of these strong associations would have been less pronounced or masked when using separately each of the components of our composite fuel deprivation indicators as well as in the case of self-reported generic measures of physical health. Lifestyle and chronic health conditions plays a limited role in attenuating our results, while material deprivation partially, but not fully, attenuates our associations between fuel deprivation and well-being. These results remain robust when bounding analysis is employed to test the potential confounding role of unobservables. Our analysis suggests that composite fuel deprivation indicators may be useful energy policy instruments for uncovering the underlining mechanism via which fuel poverty may get "under the skin".
    Keywords: fuel poverty, biomarkers, health, well-being
    JEL: I12 I31 I32 Q4
    Date: 2021–08
  28. By: Genz, Sabrina (Institute for Employment Research (IAB), Nuremberg); Gregory, Terry (IZA); Janser, Markus (Institute for Employment Research (IAB), Nuremberg); Lehmer, Florian (Institute for Employment Research (IAB), Nuremberg); Matthes, Britta (Institute for Employment Research (IAB), Nuremberg)
    Abstract: We investigate how workers adjust to firms' investments into new digital technologies, including artificial intelligence, augmented reality, or 3D printing. For this, we collected novel data that links survey information on firms' technology adoption to administrative social security data. We then compare individual outcomes between workers employed at technology adopters relative to non-adopters. Depending on the type of technology, we find evidence for improved employment stability, higher wage growth, and increased cumulative earnings in response to digital technology adoption. These beneficial adjustments seem to be driven by technologies used by service providers rather than manufacturers. However, the adjustments do not occur equally across worker groups: IT-related expert jobs with non-routine analytic tasks benefit most from technological upgrading, coinciding with highly complex job requirements, but not necessarily with more academic skills.
    Keywords: technological change, artificial intelligence, employment stability, wages
    JEL: J23 J31 J62
    Date: 2021–08
  29. By: Ayaita, Adam
    Abstract: Labor market discrimination is a topic of considerable societal and economic relevance and may lead to suboptimal management decisions. Previous research indicates that labor market discrimination against applicants with an ethnic minority background is at least partly explained by employer beliefs about unobserved personality characteristics, such as lower conscientiousness or lower agreeableness. In this preregistered study, I investigate whether and to what extent these beliefs are statistically justified, as predicted by the theory of statistical discrimination (understood as discrimination based on statistically accurate beliefs). To this aim, I test differences in personality characteristics between individuals with an ethnic minority vs. majority background, using data from a large representative sample of the adult population in Germany. Analogously to field experiments showing ethnic discrimination, only individuals who have completed secondary schooling in Germany are considered and the qualification level is held constant between individuals. The results indicate that statistical ethnic differences are mostly insignificant and always estimated to be smaller than the experimentally observed discrimination. Therefore, there is only partial support for statistical discrimination, and the results suggest that mistaken or exaggerated stereotypes might contribute to ethnic discrimination in the labor market.
    Keywords: beliefs,bias,discrimination,ethnic background,labor market,statistical discrimination
    JEL: D83 D91 J15 J71 M51
    Date: 2021
  30. By: Barasinska, Nataliya; Ludwig, Johannes; Vogel, Edgar
    Abstract: Excessive household borrowing has been identified as an important determinant of financial crises. Borrower-based macroprudential instruments have been proposed as a possible remedy. In Germany, two instruments have been available to macroprudential supervisors since 2017: a cap on the loan-to-value (LTV) ratio and an amortization requirement, but none of them has been activated so far. Therefore, this paper presents a simulation tool that allows the impact of activating of borrower-based instruments to be evaluated ex ante. The simulation is based on microdata from the German Panel on Household Finances (PHF) and is at the same time calibrated to match aggregate developments in the residential real estate market. This micro-macro consistent simulation approach can be used to detect vulnerabilities in household balance sheets and perform an ex ante analysis of the activation and calibration of borrower-based macroprudential instruments. An illustrative example of a hypothetical activation shows that the introduction of a cap on the loan-to-value (LTV) ratio of new mortgage loans in Germany could improve important indicators of household vulnerability.
    Keywords: Household finance,mortgages,macroprudential policy,borrower-based instruments,financial stability
    JEL: D14 G17 G21 G28 R21
    Date: 2021

This nep-eur issue is ©2021 by Giuseppe Marotta. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.