nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2021‒11‒01
fifteen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Effects of Motherhood and Selection into Motherhood: Revisiting the 2007 Parental Benefits Reform in Germany By Seidlitz, Arnim; Fitzenberger, Bernd
  2. A micro-founded climate stress test on the financial vulnerability of Italian households and firms By Ivan Faiella; Luciano Lavecchia; Alessandro Mistretta; Valentina Michelangeli
  3. Intergenerational transmission in regulated professions and the role of familism By Omar Bamieh; Andrea Cintolesi
  4. Local Public Goods and the Spatial Distribution of Economic Activity By Arthur Guillouzouic--Le Corff; Emeric Henry; Joan Monras
  5. Skill-biased acquisitions? Human capital and target employee mobility in small technology firms By Xiao, Jing; Lindholm Dahlstrand, Åsa
  6. The Effects of the Covid-19 Pandemic on the Mental Health and Subjective Wellbeing of Workers: An Event Study Based on High-Frequency Panel Data By Schmidtke, Julia; Hetschko, Clemens; Schöb, Ronnie; Stephan, Gesine; Eid, Michael; Lawes, Mario
  7. Geographic Price Granularity and Investments in Wind Power: Evidence From a Swedish Electricity Market Splitting Reform By Lundin, Erik
  8. Pecunia olet. Cash usage and the underground economy By Michele Giammatteo; Stefano Iezzi; Roberta Zizza
  9. The redistributive effects of enfranchising non-citizens. Evidence from Sweden By Iñigo Iturbe-Ormaetxe; Santiago Sanchez-Pages; Angel Solano-Garcia
  10. Service level provision in municipalities: a flexible directional distance composite indicator By Giovanna D'Inverno; Kristof De Witte
  11. The Distribution of Energy Efficiency and Regional Inequality By Singhal, Puja; Hobbs, Andrew
  12. The Origins of Gender Differences in Competitiveness and Earnings Expectations: Causal Evidence from a Mentoring Intervention By Teodora Boneva; Thomas Buser; Armin Falk; Fabian Kosse
  13. How deep are the deep parameters? By Andrea Passalacqua; Paolo Angelini; Francesca Lotti; Giovanni Soggia
  14. The Dynamics of Multidimensional Poverty in a Cohort of Irish Children By David (David Patrick) Madden
  15. The Importance of Capital in Closing the Entrepreneurial Gender Gap: A Longitudinal Study of Lottery Wins By Sarah Flèche; Anthony Lepinteur; Nattavudh Powdthavee

  1. By: Seidlitz, Arnim; Fitzenberger, Bernd
    JEL: J08 J13 J16 J22
    Date: 2021
  2. By: Ivan Faiella (Bank of Italy); Luciano Lavecchia (Bank of Italy); Alessandro Mistretta (Bank of Italy); Valentina Michelangeli (Bank of Italy)
    Abstract: This study presents a novel methodological framework for assessing the exposure of the Italian financial system to climate policy risks, using a micro-founded approach. By combining survey and administrative data with energy accounts and energy prices, we estimate the energy demand elasticity of Italian households and firms at the micro-level and we use this information to simulate the effects of four one-off carbon taxes (corresponding to €50, €100, €200 and €800 per ton of CO2) on their income and profits. To compute if (and how) carbon taxes might affect the share of financially vulnerable agents and the debt at risk, these estimates are used as an input for the microsimulation models used to monitor financial stability at the Bank of Italy. According to our results, a level of carbon taxation within the range of €50-200 per ton does not have a sizeable effect on the share of financially vulnerable agents. The micro approach allows us to take into account the heterogeneous transmission channels of climate risks and indicates that the financial risks stemming from climate shocks are limited overall and specific to individual households and industries.
    Keywords: climate change, carbon tax, climate stress test, financial vulnerability
    JEL: Q41 Q54 Q58
    Date: 2021–10
  3. By: Omar Bamieh (University of Vienna); Andrea Cintolesi (Bank of Italy)
    Abstract: We measure the extent to which familism accounts for the intergenerational transmission of jobs in regulated professions. Before 2004, local committees graded the Italian bar exams for lawyers, and after 2004, exams were randomly assigned to external committes for grading. We proxy for family ties with the number of successful candidates sharing a family name and law firm address with an already registered lawyer. We estimate that the number of new entrants with a family tie drops by at least 10 percent, while the number of new lawyers does not change, showing that familism accounts for an important part of the intergenerational transmission in our setting. While we do not find significant differences by gender, familism is stronger in areas with low social capital, which also feature lower rents from licenses.
    Keywords: lawyers, regulated professions, familism.
    JEL: J44 J62
    Date: 2021–10
  4. By: Arthur Guillouzouic--Le Corff; Emeric Henry (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Joan Monras (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, UPF - Universitat Pompeu Fabra [Barcelona])
    Abstract: Using French data, we provide: a) causal evidence that a drop in local public goods provision decreases private sector activity, and b) evidence consistent with monopsony power of the public sector in local labor markets. We introduce a public sector with these two key characteristics in an otherwise standard spatial equilibrium model, and show that it delivers the main stylized facts established in our data, in particular, that the share of the public sector relative to the private is independent of the productivity of the city. We emphasize the tradeoffs between allowing governments to freely choose local public employment and wages (as in most of the US public sector), versus imposing rules that constrain public sector pay with some indexation to the local cost of living (as in many European countries). We show that wage indexation limits monopsony power – leading to a larger public sector – and is optimal if the indexation is sufficiently strong.
    Keywords: Local public goods,Public service,Market power,Spatial economics
    Date: 2021–06–01
  5. By: Xiao, Jing (CIRCLE, Lund University); Lindholm Dahlstrand, Åsa (CIRCLE, Lund University)
    Abstract: The purpose of this study is to investigate the relationship between acquisitions and mobility of knowledge workers and managers in small technology companies and how individual skills and capabilities moderate the relationship. Relying on the matched employer-employee data of the Swedish high-tech sectors from 2007 to 2015, we find that acquisitions increase the likelihood of employee departures, mainly in the form of switching to another employer, but that these acquisition effects are weaker for employees with technological competences. Moreover, we also find that managers, compared to other employees, are more likely to exit from the (national) labor market after acquisitions. Our results show that acquiring firms tend to gain access to and retain knowledge workers with engineering background.
    Keywords: Acquisitions; Target employee mobility; High-tech sectors; Knowledge workers; Technological capabilities; Managerial capabilities
    JEL: C23 G34 J63 L26
    Date: 2021–10–22
  6. By: Schmidtke, Julia (Institute for Employment Research (IAB), Nuremberg, Germany); Hetschko, Clemens (University of Leeds); Schöb, Ronnie (FU Berlin); Stephan, Gesine (Institute for Employment Research (IAB), Nuremberg, Germany ; FAU); Eid, Michael (FU Berlin); Lawes, Mario (FU 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 adaptation 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." (Author's abstract, IAB-Doku) ((en))
    JEL: I19 I31
    Date: 2021–10–15
  7. By: Lundin, Erik (Research Institute of Industrial Economics (IFN))
    Abstract: I evaluate the effect of the 2011 Swedish electricity market splitting reform on the allocation of wind power, exploiting a unique data set of all Swedish applications for wind power since 2003. By comparing investments in each price zone before and after the reform using a difference-in-differences (DiD) estimator, I find that 18 percent of all projects constructed by large firms after the reform were allocated to the high price zone due to the reform. This effect is not driven by geographic differences in approval rates, suggesting that the estimated effect also reflects investor preferences. <p> Small, sometimes locally owned firms, did not react to the reform. A likely reason is that the locational choice set of small firms usually only include one of the price zones. A triple differences estimator using small firms as a control group, and a nearest neighbor matching estimator comparing areas with similar prerequisites for wind power, largely confirm the main DiD results. However, due to the comparatively few applications submitted prior to the announcement of the reform, the parallel trends assumption cannot be entirely verified, suggesting that results should be interpreted with care.
    Keywords: Electricity market design; Zonal market; Electricity market integration; Spatial price dispersion; Wind power; Wholesale electricity market; Nord Pool
    JEL: D22 D47 Q21 Q48
    Date: 2021–10–25
  8. By: Michele Giammatteo (Bank of Italy); Stefano Iezzi (Bank of Italy); Roberta Zizza (Bank of Italy)
    Abstract: This paper explores the role of cash usage in feeding the underground economy by using a unique dataset that combines, at province level, official estimates of Italian firms’ underreporting with data on cash transactions drawn from the aggregate anti-money laundering reports filed to the Italian Financial Intelligence Unit (UIF) by banks. In order to derive causal evidence, we apply two different econometric strategies: an instrumental variable approach and a difference-in-difference approach, which exploits the change in the maximum threshold for cash transactions introduced in 2016, thereby providing a measure of the effect of such policy on tax evasion. We find that an increase in cash usage translates, other things being equal, into a higher level of underreporting by firms, and that raising the cash threshold in 2016 – a measure motivated by the objective of boosting spending – had the side effect of leading to a larger underground economy.
    Keywords: shadow economy, tax evasion, cash threshold, bank branches, ATM, cashless payments
    JEL: O17 H26 E26 E42
    Date: 2021–10
  9. By: Iñigo Iturbe-Ormaetxe (: Departamento de Fundamentos del An·lisis EconÛmico (FAE), Universidad de Alicante.); Santiago Sanchez-Pages (King's College London.); Angel Solano-Garcia (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: We study theoretically and empirically the redistributive effects of extending voting rights to non-citizens. Our model predicts a tax increase when newly enfranchised voters represent a sufficiently large fraction of voters. We study the 1975 Swedish electoral reform that extended voting rights to non-citizens in municipal elections. In the first term after the reform, there was a tax increase that was not repeated in subsequent terms. This increase was stronger the greater the foreign population in the municipality. This effect was concentrated in municipalities where the size of the non-citizen population was large enough to upturn the previous electoral outcome.
    Keywords: : Immigration, Conflict, Income redistribution, Inequality, enfranchisement.
    JEL: D72 D74 F22
    Date: 2021–10–20
  10. By: Giovanna D'Inverno; Kristof De Witte
    Abstract: With increasing decentralization of public activities to the municipalities, it has become imperative to deploy an enhanced service provision analysis at the local level. This paper suggests the innovative use of a composite indicator to measure the multidimensional aspects of the local public provision comprising of several commonly administered municipal tasks. We propose a robust conditional version of a directional distance composite indicator with weight restrictions based on the municipal expenditure composition. Specifically, we deal with the presence of “undesirable” municipal service indicators and with the heterogeneity among the municipalities in their political preferences, priority public activities and operating environment characteristics. To illustrate the applicability of the suggested method, we show the construction of the municipal service provision composite indicator for 307 Flemish municipalities over the year 2006–2011.
    Keywords: Data envelopment analysis, Composite indicator, Weight restrictions, Undesirable indicators, Local governments
    Date: 2020
  11. By: Singhal, Puja; Hobbs, Andrew
    Abstract: This paper studies the long-term distribution of energy-efficiency outcomes in the German residential sector. To uncover the underlying energy efficiency of buildings, we estimate the causal response of building-level heat energy demand to variability in heating degree days. We examine heterogeneity in temperature response using both panel fixed-effects and causal forests. Our results suggest that the distribution of energy-efficiency is not equitable in the West of Germany, with buildings located in the South attaining the best energy performance standards. Although the housing stock in the East is significantly older and thus less subject to building standards, they perform better than the West counterpart, likely as a result of large investments in retrofitting post-reunification. Finally, we show that the regional distribution of energy-efficiency reflects differences in heating needs - thus, the poorer energy performance of buildings in the North-West should be weighed against the warmer climatic zone.
    Keywords: Heat Demand,Energy Efficiency,Targeting,Regional Distribution,Climate Change
    JEL: H23 Q52 Q48 Q54
    Date: 2021
  12. By: Teodora Boneva (University of Bonn); Thomas Buser (University of Amsterdam); Armin Falk (briq and the University of Bonn); Fabian Kosse (LMU Munich)
    Abstract: We present evidence on the role of the social environment for the development of gender differences in competitiveness and earnings expectations. First, we document that the gender gap in competitiveness and earnings expectations is more pronounced among adolescents with low socioeconomic status (SES). We further document that there is a positive association between the competitiveness of mothers and their daughters, but not between the competitiveness of mothers and their sons. Second, we show that a randomized mentoring intervention that exposes low-SES children to predominantly female role models causally affects girls' willingness to compete and narrows both the gender gap in competitiveness as well as the gender gap in earnings expectations. Together, the results highlight the importance of the social environment in shaping willingness to compete and earnings expectations at a young age.
    Keywords: competitiveness, socioeconomic status, Inequality
    JEL: J16 J13 D63
    Date: 2021–10
  13. By: Andrea Passalacqua (Board of Governors of the Federal Reserve System); Paolo Angelini (Bank of Italy); Francesca Lotti (Bank of Italy); Giovanni Soggia (Bank of Italy)
    Abstract: We show that bank supervision reduces distortions in credit markets and generates positive spillovers for the real economy. Exploiting the quasi-random selection of inspected banks in Italy, we show that financial intermediaries are more likely to reclassify loans as non-performing after an audit. Moreover, they change their lending policies as the composition of new lending shifts toward more productive firms. As a result, productive firms invest more in labor and capital, while underperforming firms are more likely to exit the market. Taken together, our results show that bank supervision is an important complement to regulation in improving credit allocation.
    Keywords: bank supervision, inspections, credit allocation, real effects.
    JEL: G22 G28
    Date: 2021–10
  14. By: David (David Patrick) Madden
    Abstract: This paper examines multidimensional poverty for three waves of a cohort of Irish children ranging from ages 9 to 17. Poverty is measured over the dimensions of health, education and family resources and both unidimensional and multidimensional poverty is examined. Both show a clear gradient with respect to maternal education. The dynamics of both unidimensional and multidimensional poverty is also analysed. The greatest degree of mobility is observed with respect to family resources. Mobility also is higher for children whose mothers have lower levels of education, with net movements into rather than out of poverty.
    Keywords: Poverty; Multidimensional; Mobility; Dynamics
    JEL: I31 I32 J13 I14
    Date: 2021–08
  15. By: Sarah Flèche (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEP - LSE - Centre for Economic Performance - LSE - London School of Economics and Political Science); Anthony Lepinteur (Department of Behavioural and Cognitive Sciences); Nattavudh Powdthavee (WBS - Warwick Business School - University of Warwick [Coventry], IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics)
    Abstract: Would improving women's access to capital reduce the gender entrepreneurial gap? We study this issue by exploiting longitudinal data on lottery winners. Comparing between large to small winners, we find that an increase in lottery win in period t-1 significantly increases the likelihood of becoming self-employed in period t. This windfall effect is statistically the same in magnitude for men and women; the top 25% winners (an average win = £831.16) in year t-1 report a significant increase in the probability of self-employment in year t by approximately 2 percentage points, which is approximately 20-30% of the gender entrepreneurial gap. These results suggest that we can causally reduce the gender entrepreneurial gap by improving women's access to capital that might not be as readily available to the aspiring female entrepreneurs as it is to male entrepreneurs
    Keywords: lottery wins,self-employment,gender inequality,BHPS
    Date: 2021–06–15

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