nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2021‒10‒11
ten papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. The Dynamics of the Gender Gap at Retirement in Italy: Evidence from SHARE By ABATEMARCO, Antonio; RUSSOLILLO, Maria
  2. The struggle of small firms to retain high-skill workers: Job duration and importance of knowledge intensity By Hugo Castro-Silva; Francisco Lima
  3. How Effective Are Hiring Subsidies to Reduce Long-Term Unemployment among Prime-Aged Jobseekers? Evidence from Belgium By Sam Desiere; Bart Cockx
  4. Do Targeted R&D Grants Towards Potential Highgrowth Firms Increase Employment and Demand for High Human Capital Workers? By Daunfeldt, Sven-Olov; Halvarsson, Daniel; Gustavsson Tingvall, Patrik; McKelvie, Alexander
  5. Pro-environmental Attitudes, Local Environmental Conditions and Recycling Behavior By Luisa Corrado; Andrea Fazio; Alessandra Pelloni
  6. Income Risk Inequality: Evidence from Spanish Administrative Records By Manuel Arellano; Stéphane Bonhomme; Micole De Vera; Laura Hospido; Siqi Wei
  7. Students’ Preferences, Capacity Constraints and PostSecondary Achievements in a NonSelective System By N. BECHICHI; G. THEBAULT
  8. The Swedish consumer market for organic and conventional milk: A demand system analysis By Lindström, Hanna
  9. Routine-biased technical change can fail: Evidence from France By Fana Marta; Giangregorio Luca
  10. Substitution Effects in College Admissions By Gandil, Mikkel Høst

  1. By: ABATEMARCO, Antonio (Department of Economics and Statistics and CELPE, University of Salerno - Italy); RUSSOLILLO, Maria (Department of Economics and Statistics, University of Salerno and Bayes Business School - City (formerly CASS), University of London - UK)
    Abstract: We investigate the dynamics of the gender gap at retirement in Italy -- by cohort and year of retirement -- for individuals retiring from 1980 to 2027 using data from SHARELIFE (Wave 7). Most importantly, we disentangle the opposite effects on the gender gap originating respectively from (i) improving labor market conditions for women from the sixties, and (ii) increasing actuarial fairness of the pension plan due to the progressive transition from a defined-benefit to a notional defined-contribution scheme. To capture the impact of these two driving forces, we implement a counterfactual analysis by which the gender gap at retirement -- in terms of gender gap in pension (GGP) and between-group inequality (GE) -- is measured both in the actual and in the virtual distribution of pension benefits, with the latter being obtained under the hypothesis of an actuarially fair pension scheme. We observe a U-shaped pattern since the actual gender gap at retirement is found to be decreasing up to 2020 but increasing after this date. Specifically, the increasing pattern for the gender gap at retirement after 2020 is shown to be driven by (i) the loss of redistributive power of the pension scheme, and (ii) women's penalization in the pro-rata mechanism due to lower contributions paid in the early working life.
    Keywords: gender gap; pension; redistribution; actuarial fairness
    JEL: H55 J16 J26
    Date: 2021–09–30
  2. By: Hugo Castro-Silva (Universidade de Lisboa); Francisco Lima (Universidade de Lisboa)
    Abstract: In the knowledge economy, skilled workers play an important role in innovation and economic growth. However, small firms may not be able to keep these workers. We study how the knowledge-skill complementarity relates to job duration in small and large firms, using a Portuguese linked employer-employee data set. We select workers displaced by firm closure and estimate a discrete-time hazard model with unobserved heterogeneity on the subsequent job relationship. To account for the initial sorting of displaced workers to firms, we introduce weights in the model according to the individual propensity of employment in a small firm. Our results show a lower premium on skills in terms of job duration for small firms. Furthermore, we find evidence of a strong knowledge-skill complementarity in large firms, where the accumulation of firm-specific human capital also plays a more important role in determining the hazard of job separation. For small firms, the complementarity does not translate into longer job duration, even for those with pay policies above the market. Overall, small knowledge-intensive firms struggle to retain high skill workers and find it harder to leverage the knowledge-skill complementarity.
    Keywords: knowledge intensity, technology, firm size, small firms, job duration, skills
    JEL: A1
    Date: 2021
  3. By: Sam Desiere; Bart Cockx
    Abstract: Hiring subsidies are widely used to create (stable) employment for the long-term unemployed. This paper exploits the abolition of a hiring subsidy targeted at long-term unemployed jobseekers over 45 years of age in Belgium to evaluate its effectiveness in the short and medium run. Based on a triple difference methodology the hiring subsidy is shown to increase the job finding rate by 13% without any evidence of spill-over effects. This effect is driven by a positive effect on individuals with at least a bachelor’s degree. However, the hiring subsidy mainly created temporary short-lived employment: eligible jobseekers were not more likely to find employment that lasted at least twelve consecutive months than ineligible jobseekers.
    Keywords: hiring subsidies, long-term unemployment, prime-aged jobseekers, triple difference, temporary help agencies
    JEL: H22 J08 J18 J23 J38 J64 J65 J68
    Date: 2021
  4. By: Daunfeldt, Sven-Olov (Institute of Retail Economics (Handelns Forskningsinstitut)); Halvarsson, Daniel (the Ratio Institute); Gustavsson Tingvall, Patrik (Södertörn University Stockholm, Sweden); McKelvie, Alexander
    Abstract: Most previous studies on the employment effects of government R&D grants targeting SMEs are characterized by data-, measurement-, and selection problems, making it difficult to construct a relevant control group of firms that did not receive a R&D grant. We investigate the effects on employment and firm-level demand for high human capital workers of two Swedish programs targeted towards growth-oriented SMEs using Coarsened Exact Matching. Our most striking result is the absence of any statistically significant effects. We find no robust evidence that the targeted R&D grant programs had any positive and statistically significant effects on the number of employees recruited into these SMEs, or that the grants are associated with an increase in the demand for high human capital workers. The lack of statistically significant findings is troublesome considering that government support programs require a positive impact to cover the administrative costs associated with these programs.
    Keywords: Innovation policy; R&D grants; Matching grants; Statistical matching methods; High human capital; Firm growth; Outcome additionality
    JEL: H81 L25 L26 O38
    Date: 2021–10–01
  5. By: Luisa Corrado (DEF and CEIS, Università di Roma "Tor Vergata"); Andrea Fazio (Università di Roma La Sapienza); Alessandra Pelloni (DEF, Università di Roma "Tor Vergata")
    Abstract: We investigate some motivations of recycling, using Italian survey data. We find that people declaring an interest in environmental issues or belonging to an environmental association are more likely to recycle. This suggests that the motivations for behaving pro-environmentally have an expressive and noninstrumental motivation. However, we also find that if people perceive to live in a deteriorated environment, they are less likely to recycle. We discuss possible explanations for this finding.
    Keywords: Pro-Environmental Behavior, Intrinsic Motivation, Recycling, Environmental Degradation
    JEL: Q57 Q53 R11 D91
    Date: 2021–09–02
  6. By: Manuel Arellano (CEMFI, Centro de Estudios Monetarios y Financieros); Stéphane Bonhomme (University of Chicago); Micole De Vera (CEMFI, Centro de Estudios Monetarios y Financieros); Laura Hospido (Banco de España); Siqi Wei (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: In this paper we use administrative data from the social security to study income dynamics and income risk inequality in Spain between 2005 and 2018. We construct individual measures of income risk as functions of past employment history, income, and demographics. Focusing on males, we document that income risk is highly unequal in Spain: more than half of the economy has close to perfect predictability of their income, while some face considerable uncertainty. Income risk is inversely related to income and age, and income risk inequality increases markedly in the recession. These findings are robust to a variety of specifications, including using neural networks for prediction and allowing for individual unobserved heterogeneity.
    Keywords: Spain, income dynamics, administrative data, income risk, inequality.
    JEL: D31 E24 E31 J31
    Date: 2021–09
  7. By: N. BECHICHI (Insee); G. THEBAULT (PSE – École d’économie de Paris)
    Abstract: Using rich administrative data on the French centralized assignment system of admission in higher education Admission Post Bac (APB) paired with data on university enrollment, this article provides new evidence on the impact of satisfying students’ stated preferences on their achievements in higher education. To do so, we exploit lotteries embedded in APB to prioritize applicants in oversubscribed university programs as an instrument for admission. Focusing on cohorts 2013 to 2016, we show that admission to one’s top-ranked program has a large impact on the pursuit of post-secondary education: on average, it increases students’ chances of enrollment into higher education by 10% from the baseline. It also affects other aspects of students’ educational pathways such as persistence in higher education, choice of major and degree completion. Effects are heterogeneous both by programs’ field of study and applicants’ profile. In particular, students at the margin of pursuing higher education are more sensitive to capacity constraints in their favorite program.
    Keywords: Centralized Matching Market, Higher Education, Preferences, Capacity Constraints,Randomized Control Trial
    JEL: I23 I28 C21 D81
    Date: 2021
  8. By: Lindström, Hanna (Department of Economics, Umeå University)
    Abstract: Increasing the production of organic food is becoming an important environmental target for many governments, and consumer demand for organic food is pivotal in reaching these targets. This paper studies consumer demand for organic and conventional milk, using weekly scanner data from the Swedish retail market for the years 2011–2017. Own- and cross-price elasticities of demand are estimated using a quadratic almost ideal demand system. While previous studies on this topic show that demand for organic milk is commonly more price elastic than for its conventional alternative, this paper complements previous literature by (i) studying a market with relatively small organic price premiums, (ii) using a highly representative sample of retailers, and (iii) differentiating between private labels and brands. Results show that demand for organic milk is relatively elastic, despite relatively small organic price premiums in the Swedish milk market. Results also show that demand for branded products is, generally, less elastic compared to private label products, suggesting that consumers have strong preferences for traditional, regional brands.
    Keywords: Environmental policy analysis; Organic food policy; Demand system analysis
    JEL: D12 Q11 Q18
    Date: 2021–10–05
  9. By: Fana Marta (European Commission – JRC); Giangregorio Luca (University Pompeu Fabra)
    Abstract: The paper studies the determinants of wage differentials over time within jobs in France, detailing the contribution of different set of explanatory factors by means of a Recentred Influence Function, to estimate the effect of a set of covariates at different point of the wage distribution. We simultaneously test the contribution of tasks performed by workers and organisational methods at the firm level, labour market institutions and individual characteristics. We do so by exploiting a unique database at the worker level, the French Enquête Complémentaire Emploi: Conditions de travail, between 2005 and 2016, which covers also monthly wages. Main findings support the hypothesis according to which wages differentials along the wage distribution are almost entirely explained by contractual and work arrangements rather than tasks and organisational practices. Overall evidence run against the main argument of the Routine Bias Technical Change hypothesis.
    Keywords: wage differentials, Recentred Influence Function, Routine Bias Technical Change
    Date: 2021–09
  10. By: Gandil, Mikkel Høst (Dept. of Economics, University of Oslo)
    Abstract: I show how local supply changes create ripple effects in a national educational market. Admitting an applicant to a program will free up a slot to be filled at her next-best alternative. To investigate such substitution effects I re-engineer the centralized admission system of the Danish tertiary education sector and simulate equilibria under counterfactual supply. I estimate potential earnings with a regression discontinuity design and quantify market clearings in terms of earnings. On average, a change of 10 slots leads to 15 applicants moving and substitution effects explain 40 percent of the variation in earnings. Substitution externalities are generally positive but vary in sign and magnitude. I document a trade-off between earnings and inequality.
    Keywords: Field of study; College admission; Program evaluation; RDD
    JEL: C63 H52 I21 I22 I24 I26 J24
    Date: 2021–09–06

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