nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2021‒09‒06
fifteen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. The well-being age U-shape effect in Germany is not flat By Blanchflower, David G.; Piper, Alan
  2. Quality of government and regional trade: evidence from European Union regions By Barbero, Javier; Mandras, Giovanni; Rodríguez-Crespo, Ernesto; Rodríguez-Pose, Andrés
  3. COVID-19 and (gender) inequality in income: the impact of discretionary policy measures in Austria By Christl, Michael; De Poli, Silvia; Kucsera, Dénes; Lorenz, Hanno
  4. The Role of the Workplace in Ethnic Wage Differentials By John Forth; Nikolaos Theodoropoulos; Alex Bryson
  5. The impact of digitalisation on productivity: Firm-level evidence from the Netherlands By Martin Borowiecki; Jon Pareliussen; Daniela Glocker; Eun Jung Kim; Michael Polder; Iryna Rud
  6. Addressing the gaps in market diffusion modeling of electrical vehicles: A case study from Germany for the integration of environmental policy measures By Van, Tien Linh Cao; Barthelmes, Lukas; Gnann, Till; Speth, Daniel; Kagerbauer, Martin
  7. Wage Differences According to Workers' Origin: The Role of Working More Upstream in GVCs By Fays, Valentine; Mahy, Benoît; Rycx, François
  8. Wage Inequality, Selection and the Evolution of the Gender Earnings Gap in Sweden By Ahrsjö, Ulrika; Niknami, Susan; Palme, Mårten
  9. Does EU Cohesion Policy affect territorial inequalities and regional development? By Lionel Vedrine; Julie Le Gallo
  10. Spillover Effects in Firms' Bank Choice By Palma Filep-Mosberger; Attila Lindner; Judit Rariga
  11. City-wide effects of new housing supply: Evidence from moving chains By Bratu, Cristina; Harjunen, Oskari; Saarimaa, Tuukka
  12. Emerging 21st Century technologies: Is Europe still falling behind? By Hugo Confraria; Vitor Hugo Ferreira; Manuel Mira Godinho
  13. Is happiness u-shaped in age everywhere? A methodological reconsideration for Europe By David Bartram
  14. Sluggish Investment, Crisis and Firm Heterogeneity By Arrighetti, Alessandro; Landini, Fabio
  15. Adverse Working Conditions and Immigrants' Physical Health and Depression Outcomes. A Longitudinal Study in Greece By Drydakis, Nick

  1. By: Blanchflower, David G.; Piper, Alan
    Abstract: Kassenboehmer and DeNew (2012) claim that there is no well-being age U-shape effect for Germany, when controlling for fixed effects and respondent experience and interviewer characteristics in the German Socio-Economic Panel, 1994-2006. We re-estimate with a longer run of years and restrict the age of respondents to those under seventy and find the well-being age U-shape effect is neither flat nor trivial.
    Keywords: age,ageing,life satisfaction,interviewer characteristics,interviewee experience,fixed effects,panel analysis,GSOEP
    JEL: I31 J14 C42
    Date: 2021
  2. By: Barbero, Javier; Mandras, Giovanni; Rodríguez-Crespo, Ernesto; Rodríguez-Pose, Andrés
    Abstract: Using a novel database of regional trade flows between 267 European regions for 2013, this paper examines how government quality affects trade between European Union (EU) regions. The results of a structural gravity cross-sectional analysis of trade show that trade across EU regions is highly influenced by differences in regional government quality. This influence varies by both sector of economic activity and the level of economic development of the region. The results indicate that if the less developed regions of the EU want to engage in greater interregional trade, improving their institutional quality is a must.
    Keywords: quality of government; institutions; regional policy; gravity model of trade; structural estimation
    JEL: L81
    Date: 2021–07–03
  3. By: Christl, Michael; De Poli, Silvia; Kucsera, Dénes; Lorenz, Hanno
    Abstract: This paper analyzes the impact of the COVID-19 crisis on household income in Austria, using detailed administrative labor market data, in combination with micro-simulation techniques, that enable specific labor market transitions to be modeled. We find that discretionary fiscal policy measures in Austria are key to counteracting the inequality- and poverty-enhancing effect of COVID-19. Additionally, we find that females tend to experience a greater loss in terms of market income. The Austrian tax-benefit system, however, reduces this gender differences. Disposable income has dropped by around 1% for both males and females. By comparison, males profit mainly from short-time work scheme, while females profit especially from other discretionary policy measures, such as the one-off payment for children.
    Keywords: COVID-19,EUROMOD,micro-simulation,STW,automatic stabilizers
    JEL: D31 E24 H24
    Date: 2021
  4. By: John Forth (Bayes Business School, City, University of London, UK); Nikolaos Theodoropoulos (University of Cyprus); Alex Bryson (University College London, UK)
    Abstract: Using matched employer-employee data for Britain, we examine ethnic wage differentials among full-time employees. We find substantial ethnic segregation across workplaces: around three-fifths of workplaces in Britain employ no ethnic minority workers. However, this workplace segregation does not contribute to the aggregate wage gap between ethnic minorities and white employees. Instead, most of the ethnic wage gap exists between observationally equivalent co-workers. Lower pay satisfaction and higher levels of skill mismatch among ethnic minority workers are consistent with discrimination in wage-setting on the part of employers. The use of job evaluation schemes within the workplace is shown to be associated with a smaller ethnic wage gap.
    Keywords: ethnic wage gap; workplace segregation; skill mismatch; pay satisfaction; job evaluation
    JEL: J16 J31 M52 M54
    Date: 2021–09–01
  5. By: Martin Borowiecki; Jon Pareliussen; Daniela Glocker; Eun Jung Kim; Michael Polder; Iryna Rud
    Abstract: This paper analyses the role of intangibles and digital adoption for firm-level productivity in the Netherlands drawing on a newly constructed panel data set of Dutch enterprises. It provides robust evidence on productivity effects of intangibles and digital adoption using firms’ exposure to sector-wide advances in intangible intensity and digital adoption as an instrument. Results show that intangibles as measured by levels of digital skill intensity have a positive and statistically significant impact on firm-level productivity growth in the service sector and for younger firms. Productivity benefits from software investment are strong for low productivity firms. Together, these findings highlight the potential of intangibles to support the productivity catch-up of laggard enterprises. The evidence also suggests that productivity benefits from ICT hardware investment and the uptake of high-speed broadband are positive and sizeable.
    Keywords: digitalisation, intangibles, productivity, skills
    JEL: D24 E22 J24 O33
    Date: 2021–09–08
  6. By: Van, Tien Linh Cao; Barthelmes, Lukas; Gnann, Till; Speth, Daniel; Kagerbauer, Martin
    Abstract: Electric vehicles (EVs) can help to reduce greenhouse gas emissions of the transportation sector. Therefore, the German government has defined various measures and targets to promote the diffusion of EVs. However, factors influencing the market diffusion of EVs as well as interdependencies between policy measures and vehicle diffusion are often unclear and hence, diffusion simulations are probably inaccurate. At the same time, a precise simulation of EV diffusion is a relevant parameter in travel demand models building the base for transportation planning. This paper addresses the gaps in current market diffusion models for EVs with a particular focus on environmental effects as additional influencing factors of the market diffusion. Results will be drawn for the German car market with a market diffusion simulation until 2050. The market diffusion model ALADIN is applied and energy prices are extended by a CO2 price to improve the consideration of environmental factors in the market diffusion modelling. The effectiveness of environmental policy measures is assessed in scenarios with three different CO2 prices and their impact on the diffusion of EVs. The results show that the market diffusion is highly dependent on the evolution of external factors. A CO2 price of at least 150 €/t of CO2 by 2030 can have a significant impact on the market diffusion of EVs and may as well lead to changes in the drive mix for both, electric and conventional drives within the German passenger car fleet. The German government's target of seven to ten million EVs registered by 2030 seems in general achievable, if currently adopted purchase bonuses and expected cost degression for EVs also take effect. Until 2050, we find large effects with CO2 prices up to 500 €/t, yet limited growth in market share above that threshold.
    Date: 2021
  7. By: Fays, Valentine; Mahy, Benoît; Rycx, François
    Abstract: This paper is the first to investigate the role of firm-level upstreamness (i.e. the number of steps before the production of a firm meets final demand) in explaining wage differences according to workers' origin. Using unique linked employer-employee data relative to the Belgian manufacturing industry for the period 2002-2010, our estimates show that firms that are further up in the value chain pay significantly higher wages. However, the wage premium associated with upstreamness is also found to vary substantially depending on the origin of the workers. Unconditional quantile estimates suggest that those who benefit the most from being employed in more upstream firms are high-wage workers born in developed countries. In contrast, workers born in developing countries, irrespective of their earnings, appear to be unfairly rewarded. Quantile decompositions further show that, while differences in average values of upstreamness according to workers' origin play a limited role, differences in wage premia associated with upstreamness account for a substantial part of the wage gap between workers born in developed and developing countries, especially at the top of the earnings distribution. These results are shown to be robust to a number of sensitivity tests, including broader or narrower definitions of workers' wages and different firm environments in terms of technological and knowledge intensity.
    Keywords: Wage Gaps,Workers’ Origin,Global Value Chains,Upstreamness,Unconditional Quantile Estimates and Decompositions
    JEL: J15 J31 F16
    Date: 2021
  8. By: Ahrsjö, Ulrika (Dept. of Economics, Stockholm University); Niknami, Susan (Dept. of Economics, Stockholm University); Palme, Mårten (Dept. of Economics, Stockholm University)
    Abstract: We estimate the change in the gender wage gap between 1968 and 2010 in Sweden accounting for (1) changes in the intensive margin of labour supply; (2) changes in the overall wage inequality; (3) changes in selection into the labor market using parametric and non-parametric selection corrections. Our results show that between 1968 and 1991, about half of the changes in the gender wage gap can be attributed to changes in the overall wage distribution. Conversely, changes in the wage distribution in 1991-2010 masks a larger closure of the gender wage gap. Our corrections for selection into the labor force suggest that uncorrected estimates miss about half of the around 20 percentage points decrease in the gender wage gap over the 1968-2010 period.
    Keywords: Gender pay gap; wage gap; gender inequality; selective samples
    JEL: J16 J22 J31 J51 J71
    Date: 2021–08–25
  9. By: Lionel Vedrine (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Julie Le Gallo (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: We extend the literature on Cohesion Policy effectiveness by considering how the cohesion policy affects both within regional disparities and economic growth. For that purpose, a panel database of 205 NUTS2 regions of the UE-25 for 2000-2014 is used. We estimate panel data regressions with fixed effects and a spatial autoregressive term in order to control for unobservable characteristics and spatial dependence. Our results emphasize a trade-off between within and between regional disparities for EU-25 regions over the 2000-2014 period.
    Keywords: Cohesion Policy,Regional Development,Within regional disparities,Spatial Panel Econometrics
    Date: 2021
  10. By: Palma Filep-Mosberger (Magyar Nemzeti Bank (Central Bank of Hungary)); Attila Lindner (University College London, MTA KTI); Judit Rariga (Magyar Nemzeti Bank (Central Bank of Hungary))
    Abstract: In this paper, we study firm-bank relationship formation. Combining domestic inter-firm network data from value-added tax declarations and credit registry for Hungary, we estimate the spillover effects in bank choice, identifying from variation on the bank level. Having at least one peer in the network who has an existing loan with a bank increases the probability that the firm will borrow a new loan from the same bank. We provide suggestive evidence that the estimated spillover effect is due to firm-to-firm information transmission about banks. According to our results, firms can learn about banking practices from their peers but they also point to financial stability concerns in the event of shocks to domestic supply chains.
    Keywords: bank choice, firm network, spillover effects.
    JEL: G30 L14 D22
    Date: 2021
  11. By: Bratu, Cristina; Harjunen, Oskari; Saarimaa, Tuukka
    Abstract: We study the city-wide e ects of new, centrally-located market-rate housing supply using geo-coded total population register data from the Helsinki Metropolitan Area. The supply of new market rate units triggers moving chains that quickly reach middle- and low-income neighborhoods and individuals. Thus, new market-rate construction loosens the housing market in middle- and low-income areas even in the short run. Market-rate supply is likely to improve affordability outside the sub-markets where new construction occurs and to benefit low-income people.
    Keywords: Housing supply, Housing affordability, Filtering, Local public finance and provision of public services, R31, R21, R23,
    Date: 2021
  12. By: Hugo Confraria; Vitor Hugo Ferreira; Manuel Mira Godinho
    Abstract: Firms and countries that specialise in emerging technologies tend to have a higher chance of becoming or remaining competitive in the future. This paper aims to analyse the most dynamic areas of technological competition between 2010 and 2019 and to identify which actors are leading in those areas. We analyse patenting dynamics in four major patent offices (USPTO, EPO, JPO, KIPO), to have a global landscape of technological dynamism, and we use the IPC patent classification system to proxy the technological areas. After examining patenting growth patterns in all 4-digit IPC classes, we built a score to classify the emergent technological areas across the four offices. Our results indicate twelve “emerging” IPC classes, which are related to software engineering, digital communication, IT methods for management, medical technology, pharmaceuticals, energy conservation, games, biotechnology and semiconductor devices. We find that European firms do not hold a leading share in any of these IPC classes. This is particularly true in emerging areas such as software engineering, energy conservation and semiconductor devices, which are likely to be critical to succeed in the new techno-paradigms related to digitalization and clean energy.
    Keywords: Emerging technologies; Technology policy; Technological competition; European Paradox; Matched patent-firm data
    Date: 2021–08
  13. By: David Bartram
    Abstract: A recent contribution to research on age and well-being (Blanchflower 2021) found that the impact of age on happiness is "u-shaped" virtually everywhere: happiness declines towards middle age and subsequently rises, in almost all countries. This paper evaluates that finding for European countries, considering whether it is robust to alternative methodological approaches. The analysis here excludes control variables that are affected by age (noting that those variable are not themselves antecedents of age) and uses data from the entire adult age range (rather than using data only from respondents younger than 70). I also explore the relationship via models that do not impose a quadratic functional form. The paper shows that these alternate approaches do not lead us to perceive a u-shape "everywhere": u-shapes are evident for some countries, but for others the pattern is quite different.
    Date: 2021–08
  14. By: Arrighetti, Alessandro; Landini, Fabio
    Abstract: The stagnation of investments and its causes have attracted great attention in the recent economic debate. In this paper we show that the flattening of the capital formation rate at the firm level is not due to lower average propensity to invest. Rather, it is the result of growing heterogeneity of choices among firms. While a subset of firms is oriented towards increasing investments, another group substantially divest. The result is a polarization of conducts that tend to cancel each other out, resulting in a flattening of aggregate investment. We argue that this asymmetry in firm's decisions depends on two main factors. The first one is the diversity of corporate strategies, which firms have developed in the past. The second driver is managerial discretion, that play an important role in the adoption of specific investment / divestment trajectories when faced with a recession. The results of our empirical analysis provide strong supports for our hypotheses: after controlling for contextual and firm-specific structural, financial and demographic variables, corporate strategies and managerial discretion in the allocation of liquid assets explain large part of the heterogeneity in investment decisions during the recession. Policy implications are discussed.
    Keywords: Fixed investments,Capital formation,Corporate strategies,Resorce based view,Firms heterogeneity,Managerial discretion,Great Recession,Manufacturing,Italy
    JEL: D22 D25 L22
    Date: 2021
  15. By: Drydakis, Nick
    Abstract: Τhe study examines whether adverse working conditions for immigrants in Greece bear an association with deteriorated physical health and increased levels of depression during 2018 and 2019. Findings indicate that workers with no written contract of employment, receiving hourly wages lower than the national hourly minimum wages, and experiencing insults and/or threats in their present job experience worse physical health and increased levels of depression. The study found that the inexistence of workplace contracts, underpayment, and verbal abuse in the workplace may coexist. An increased risk of underpayment and verbal abuse reveals itself when workers do not have a contract of employment and vice versa. Immigrant workers without a job contract might experience a high degree of workplace precariousness and exclusion from health benefits and insurance. Immigrant workers receiving a wage lower than the corresponding minimum potentially do not secure a living income, resulting in unmet needs and low investments in health. Workplace abuse might correspond with vulnerability related to humiliating treatment. These conditions can negatively impact workers' physical health and foster depression. Policies should promote written employment contracts and ensure a mechanism for workers to register violations of fair practices.
    Keywords: Adverse Working Conditions,Physical Health,Depression,Immigrants,Refugees, Minimum Wages,Written Contracts of Employment,Threats in job,Workplace precariousness
    JEL: J81 O15 E24 I14
    Date: 2021

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