nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2021‒11‒22
twenty-one papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. The COVID-19 Curtain: Can Past Communist Regimes Explain the Vaccination Divide in Europe? By Berniell, Maria Ines; Fawaz, Yarine; Laferrere, Anne; Mira, Pedro; Pronkina, Elizaveta
  2. Tax evasion, behavioral microsimulation models and flat-rate tax reforms. Analysis for Italy By Andrea Albarea; Michele Bernasconi; Anna Marenzi; Dino Rizzi
  3. Administrative border effects in Covid-19 related mortality By Berta, P.; Bratti, M.; Fiorio, C.V.; Pisoni, E.; Verzillo, S.
  4. Gathering Support for Green Tax Reform: Evidence from German Household Surveys By Rick van der Ploeg; Armon Rezai; Miguel Tovar
  5. A Hard Look at “Soft” Cost‐control Measures in Healthcare Organizations: Evidence from Preferred Drug Policies in Germany By Avdic, Daniel; Blankart, Katharina
  6. "Are you in the right job?" Human Capital Mismatch in the UK By Galanakis, Yannis
  7. The career costs of children's health shocks By Anne-Lise Breivik; Ana Costa-Ramón
  8. The intergenerational transmission of cognitive skills: an investigation of the causal impact of families on student outcomes By Hanushek, Eric A.; Jacobs, Babs; Schwerdt, Guido; van der Velden, Rolf; Vermeulen, Stan; Wiederhold, Simon
  9. The Effect of Repeated Lockdowns during the Covid-19 Pandemic on UK Mental Health Outcomes By Lindley, Joanne; Rienzo, Cinzia
  10. Exploring the uncharted waters of educational mobility: The role of key skills By Jacobs, Babs; van der Velden, Rolf
  11. Work and children in Spain: challenges and opportunities for equality between men and women By Hupkau, Claudia; Ruiz-Valenzuela, Jenifer
  12. Wage Effects of Educational Mismatch According to Workers’ Origin: The Role of Demographics and Firm Characteristics By Valentine Jacobs; François Rycx; Mélanie Volral
  13. Are incentive effects from fiscal equalization underestimated? Evidence from a Swiss reform By Nicola Mauri
  14. The role of risk attitudes and expectations in household borrowing in Estonia By Eva Brandten
  15. Potential efficiency gains and expenditure savings in the Italian Regional Healthcare Systems By Dino Rizzi; Michele Zanette
  16. Women’s economic rights in developing countries and the gender gap in migration to Germany By Neumayer, Eric; Plumper, Thomas
  17. Education and COVID-19 excess mortality By Bello, Piera; Rocco, Lorenzo
  18. The Psychological Gains from COVID-19 Vaccination : Who Benefits the Most? By Bagues, Manuel; Dimitrova, Velichka
  19. Learning the Right Skill: The Returns to Social, Technical and Basic Skills for Middle-Educated Graduates By Cnossen, Femke; Piracha, Matloob; Tchuente, Guy
  20. Labor Market Consequences of Antitax Avoidance Policies By Katarzyna Bilicka
  21. Motherhood, Pregnancy or Marriage Effects? By Berniell, Maria Ines; Berniell, Lucila; De la Mata, Dolores; Edo, María; Fawaz, Yarine; Machado, Matilde P.; Marchionni, Mariana

  1. By: Berniell, Maria Ines (University of La Plata); Fawaz, Yarine (CEMFI, Madrid); Laferrere, Anne (Université Paris-Dauphine); Mira, Pedro; Pronkina, Elizaveta (Université Paris-Dauphine)
    Abstract: As of November 2021, all former Communist countries from Central and Eastern Europe exhibit lower vaccination rates than Western European countries. Can institutional inheritance explain, at least in part, this heterogeneity in vaccination decisions across Europe? To study this question we exploit novel data from the second wave of the SHARE (Survey of Health, Ageing, and Retirement in Europe) Covid-19 Survey fielded in Summer 2021 that covers 27 European countries and Israel. First, we document lower Covid-19 vaccine take-up amongst individuals above 55 years old who were born under Communism in Europe. Next, we turn to reunified Germany to get closer to a causal effect of exposure to Iron curtain regimes. We find that exposure to the Communist regime in East Germany decreases one's probability to get vaccinated against Covid-19 by 8 percentage points, increases that of not wanting the vaccine by 4 percentage points. Both effects are quite large and statistically significant, and they hold when controlling for individual socio-economic and demographic characteristics. We identify low social capital -measured as voluntary work, political engagement, trust in people- as a plausible channel through which past Communist regimes would still affect individuals' preferences for Covid-19 vaccination.
    Keywords: SHARELIFE, vaccination, Communism, COVID-19
    JEL: I15 I12 P36 Z18
    Date: 2021–11
  2. By: Andrea Albarea (Department of Economics, University Of Venice CÃ Foscari); Michele Bernasconi (Department of Economics, University Of Venice CÃ Foscari); Anna Marenzi (Department of Economics, University Of Venice CÃ Foscari); Dino Rizzi (Department of Economics, University Of Venice CÃ Foscari)
    Abstract: It is sometimes argued that a flat-rate tax reform can reduce tax noncompliance. The argument is, however, inconsistent with the so-called Yitzhaki’ s puzzle of the classical expected utility (EU) model. The latter predicts an increase, rather than a reduction, in tax evasion following a cut in the tax rates resulting from a flat-rate reform. We study the impact of a flat-rate tax in a microsimulation tax-benefit model of Italy which allows us to analyse various hypotheses of tax evasion behavior. In addition to the EU model, we analyse expected utility with rank dependent probabilities (EURDP) and the model of reference dependent (RD) preference, the most favourable to overturn Yitzhaki’ s puzzle. Our simulations show that a flat-rate tax would barely reduce overall evasion in Italy in all models considered. Redistributive effects are in all cases large.
    Keywords: Fiscal reforms, tax evasion, reference dependent preferences
    JEL: H20 H26 H30
    Date: 2021
  3. By: Berta, P.; Bratti, M.; Fiorio, C.V.; Pisoni, E.; Verzillo, S.
    Abstract: Does the organisation of healthcare systems affect health outcomes? To answer this question, we analysed the effects of the Covid-19 pandemic by focusing on mortality rate outcomes and exploited the heterogeneity of the healthcare organisational models among Italian regions, which makes Italy an ideal "laboratory". Within a common national healthcare system, Italian regions are allowed large autonomy to organise themselves as mixed-markets based on choice and competition, network or centralised leadership models, each delivering different responses to the Covid-19 emergency. Exploiting the discontinuity of healthcare organisational models across the Italian regional borders around Lombardy - the region that most convincingly embraced the mixed-market model fostering competition among health service providers - we applied a difference in geographic regression discontinuity design (DiD-GRDD) to compare mortality rates in 2020 of Lombardy's municipalities with that of neighbouring municipalities in other regions and also exploited the pre-crisis period (2017-2019). Our analysis shows that mortality rates in Lombardy during the first wave were higher by 1-2 percentage points among the population of residents aged 80 years or more, compared to the past, as opposed to regions adopting different organisational models. The mortality rate differential disappeared during the second wave following the implementation of a national policy based on risk zones, limiting mobility and taking stock of the experience developed during the first wave. Finally, by investigating the channels causing higher mortality during the first wave, we show that the role of organisational model differences vanishes, as differential mortality is mostly explained by the decision of the Lombardy regional government to use care homes for hosting Covid-19 patients and reduce the excess demand on the hospital system.
    Keywords: Covid-19; mortality; administrative borders; regions; Italy;
    JEL: I10 H12
    Date: 2021–11
  4. By: Rick van der Ploeg; Armon Rezai; Miguel Tovar
    Abstract: Green tax reform is unpopular because, typically, the poor are hurt most by the higher prices of carbon-intensive commodities. If revenues from a carbon tax are recycled, it may be feasible to gain popular support for green tax reform. To investigate this, we estimate an EASI demand system from German household data and a labour supply schedule, using wage data, and the German income tax schedule and let emission intensities decline in the carbon tax. If the revenue from a carbon tax is recycled via a lump-sum transfer to all households, this gives more equitable albeit less efficient outcomes, yet 70% of households are worse off. If the revenue is recycled via lower income taxes, there is more efficiency at the expense of more inequality, and about half of households benefit. With a recycling mix of lump-sum transfers and lower income taxes, popular support can be mustered without hurting equity too much. We also investigate the effects of Germany meeting its legal target for curbing emissions by 55% in 2030 relative to 1990 levels. We find that most of emission reductions are due to producers responding by lowering emission intensities rather than by consumers to less carbon-intensive consumption categories.
    Keywords: popular support, carbon tax, revenue recycling, equity, EASI demand system, labour supply
    JEL: D12 D31 D62 D63 H23 J22 Q50
    Date: 2021
  5. By: Avdic, Daniel; Blankart, Katharina
    Abstract: Cost‐control interventions that target physicians’ clinical discretion are common in healthcare, but evidence on their efficacy is scarce; in particular for “soft” policies when liability is unlikely to be enforced by the regulator. We study the effectiveness of preferred drug policies (minimum prescription quotas of specific “preferred” drugs) in altering physicians practice styles within the high volume drug class of HMG‐CoA‐reductase inhibitors (statins) in the German statutory health insurance system. Using a nationally representative panel of ambulatory care physicians between 2011 and 2014, we exploit the decentralized institutional setting to estimate physician responses to variation in preferred drug policies across regional physician associations over time in a generalized difference‐in‐differences design. Results show that although the cost‐control mechanism increases average policy adherence, this effect is mainly driven by physicians with initially high use rates of preferred drugs. We argue that such misdirection may limit the policy’s usefulness in reducing inappropriate practice variation among healthcare providers.
    Keywords: Cost-control, Healthcare, Practice Style, Difference-in-differences
    Date: 2021–11–10
  6. By: Galanakis, Yannis
    Abstract: This paper examines a problem of worker misallocation into jobs. A theoretical model, allowing for heterogeneous workers and firms, shows that job search frictions generate mismatch between employees and employers. In the empirical analysis, the British Household Panel Survey (BHPS), the UK household Longitudinal Study (UKHLS) and British Cohort Study 1970 (BCS70) data are used to measure the incidence of mismatch, how it changes over time and whether it can be explained by unobserved ability. Results show that (i) the incidence of mismatch increases after the Great Recession. (ii) Individual transitions to/from matching take place due to workers' occupational mobility and over-time skills development. (iii) Employees can find better jobs or their mobility occurs earlier than the aggregate change of skills. (iv) Controlling for individual heterogeneity, measured by cognitive and non-cognitive skill test scores throughout childhood, does not decrease the incidence of mismatch. This suggests that unobserved productivity does not generate mismatch in the labour market.
    Keywords: Human Capital Mismatch,frictions,individual heterogeneity
    JEL: I26 J24 J31 J64
    Date: 2021
  7. By: Anne-Lise Breivik; Ana Costa-Ramón
    Abstract: We provide novel evidence on the impact of a child's health shock on parental labor market outcomes. To identify the causal effect, we leverage long panels of high-quality Finnish and Norwegian administrative data and exploit variation in the timing of the health shock. We do this by comparing parents across families in similar parental and child age cohorts whose children experienced a health shock at different ages. We show that these families have very similar characteristics and were following parallel trends before the event. This allows us to use a simple difference-in-differences model: we construct counterfactuals for treated households with families who experience the same shock a few years later. We find a sharp break in parents' earnings trajectories that becomes visible just after the shock. The negative effect is persistent and stronger for mothers than for fathers. We also document a substantial impact on parents' mental well-being. Our results suggest that the effect on maternal labor earnings results from the combination of the increased time needed to care for the child and the worsening of mothers' mental health.
    Keywords: Children, health, mortality, parents, earnings, labor supply, mental health
    JEL: I10 I12
    Date: 2021–11
  8. By: Hanushek, Eric A.; Jacobs, Babs (ROA / Education and transition to work, RS: GSBE other - not theme-related research); Schwerdt, Guido; van der Velden, Rolf (ROA / Education and transition to work, RS: GSBE Theme Learning and Work); Vermeulen, Stan (ROA / Education and transition to work, RS: GSBE Theme Learning and Work); Wiederhold, Simon
    Abstract: The extensive literature on intergenerational mobility highlights the importance of family linkages but fails to provide credible evidence about the underlying family factors that drive the pervasive correlations. We employ a unique combination of Dutch survey and registry data that links math and language skills across generations. We identify a causal connection between cognitive skills of parents and their children by exploiting within-family between-subject variation in these skills. The data also permit novel IV estimation that isolates variation in parental cognitive skills due to school and peer quality. The between-subject and IV estimates of the key intergenerational persistence parameter are strikingly similar and close at about 0.1. Finally, we show the strong influence of family skill transmission on children’s choices of STEM fields.
    JEL: I24 J12 J24 J62
    Date: 2021–11–15
  9. By: Lindley, Joanne; Rienzo, Cinzia
    Abstract: This paper assesses the impact of the Covid-19 lockdown measures on the mental health of individuals in the UK, starting from the early restrictions in April 2020, and covering three subsequent lockdowns, up until March 2021. It also considers three aspects of mental health; that is 'anxiety and depression', 'social dysfunction', and 'loss of confidence', in order to identify which specific dimensions of respondents' psychology have been adversely affected. Our findings show that women appear to be more sensitive to the effect of the pandemic, and report much higher levels of anxiety and depression than males; whilst social dysfunction appears to be a more permanent fixture. Initially, social dysfunction was higher for women and younger workers, but it remained high for women and the over 55s. Consequently, our evidence supports targeted policies aimed at reducing social isolation for women and older workers. Finally, we show that financial difficulties had a growing impact on all mental health outcomes, as the pandemic progressed.
    Keywords: Covid-19,mental health,subjective financial wellbeing
    JEL: I30 I10
    Date: 2021
  10. By: Jacobs, Babs (ROA / Education and transition to work, RS: GSBE other - not theme-related research); van der Velden, Rolf (ROA / Education and transition to work, RS: GSBE Theme Learning and Work)
    Abstract: For decades, researchers tried to get a deeper understanding of the intergenerational transmission of education to shed light on inequality of educational opportunities (IEO) that determine social mobility. The underlying drivers of IEO can stem from three types of parental resources: parent’s key skills (i.e., proficiency in important domains like math and language), parent’s soft skills (i.e., the skills needed to navigate successfully in education), and parent’s financial resources. Previous research was not able to accurately distinguish between the contributions of these different resources, mainly because adequate data on the intergenerational transmission of key skills was missing. This study aims to fill this gap. We developed a unique and unparalleled dataset, the Intergenerational Transmission of Skills (ITS) dataset, combining key skills of more than 25,000 Dutch parents and their children measured with the same test at age 12 with detailed information on the educational pathways and household income. We demonstrate that parent’s key skills is the most important mechanism driving IEO. One standard deviation increase in parent’s key skills is associated with almost one-third of a standard deviation increase in the key skills of their offspring. The intergenerational transmission of key skills accounts for 50-60% of the effect of all measured resources available in the family. The role of financial resources available to the family is a bit stronger than the role of parent’s soft skills, accounting for some 25-30% of the total effect of family resources, with parent’s soft skills taking up some 20-25%.
    JEL: I24 J12 J24 J62
    Date: 2021–11–11
  11. By: Hupkau, Claudia; Ruiz-Valenzuela, Jenifer
    Abstract: Over the past decades, Spain has seen a striking convergence between women’s and men’s participation in the labour market. However, this convergence has stalled since the early 2010s. We show that women still fare worse in several important labour market dimensions. Gender inequalities are further aggravated among people with children. Women with children under 16 are much more likely to be unemployed, work part-time or on temporary contracts than men with children of the same age. We show that it is unlikely that preferences alone can account for these gaps. A review of the evidence shows that family policies, such as paternity leave expansions, financial incentives in the form of tax credits for working mothers and subsidised or free childcare for very young children, could help reduce the motherhood penalty. However, such policies are likely to be more effective if combined with advances in breaking up traditional gender roles.
    Keywords: family policy; gender gaps; inequality; motherhood penalty
    JEL: R14 J01
    Date: 2021–10–04
  12. By: Valentine Jacobs (Université de Mons (humanOrg) and Université libre de Bruxelles (CEBRIG and DULBEA)); François Rycx (Université libre de Bruxelles (CEBRIG and DULBEA), GLO, humanOrg, IRES and IZA); Mélanie Volral (Université de Mons (humanOrg) and DULBEA)
    Abstract: This paper examines the influence of educational mismatch on wages according to workers’ region of birth, taking advantage of our access to rich matched employer-employee data for the Belgian private sector for the period 1999-2010. Using a fine-grained approach to measuring educational mismatch and controlling for a large set of covariates, we first find that workers born in developed countries benefit from positive wage returns to their years of attained-, required and over-education, and that these returns are significantly higher for them than for their peers born in developing countries. Second, our results show that the wage return to a year of over-education is positive but lower than that to a year of required education. This suggests that over-educated workers suffer a wage penalty compared to their well-matched former classmates (i.e. workers with the same level of education in jobs that match their education). However, the magnitude of this wage penalty is found to vary considerably depending on the origin of the workers. Indeed, all else being equal, our estimates show that it is much greater for workers from developing countries – especially for those born in Africa and the Middle and Near East – than for those from developed countries. Regardless of workers’ origin, our estimates further indicate that the wage penalty associated with over-education is higher for workers who: i) have attained tertiary education, ii) are male, iii) have more seniority in employment, iv) are employed in smaller firms, and v) are covered by a collective agreement at the firm level. Yet, whatever the moderating variable under consideration, the estimates also show that the wage penalty associated with over-education remains higher for workers born in developing countries.
    Keywords: Immigrants, educational mismatch, wage gap, linked employer-employee data
    JEL: I24 I26 J15 J24 J31
    Date: 2021–10–27
  13. By: Nicola Mauri
    Abstract: This paper investigates incentive effects of fiscal equalization on local tax rates. I propose three refinements to current empirical estimations of these incentive effects. I show that local policy-makers may conceive changes in equalization transfers as stemming from discrete rather than marginal changes in the tax base, thus considering "supramarginal" equalization rates. Second, I study "effective" equalization rates which condition on the current tax rate. Third, I control for redistribution effects. I investigate the reform of an inter-municipal equalization scheme in Switzerland. My baseline estimate from supramarginal equalization rates is 2-3 times larger than found in previous studies.
    Keywords: fiscal equalization, tax competition, local public, finance, fiscal federalism, regional science
    JEL: H71 H77 R51
    Date: 2021–11
  14. By: Eva Brandten
    Abstract: This study investigates the relations between risk attitudes and expectations and different aspects of borrowing by households in Estonia. The central research question is whether risk aversion and optimism provide additional information beyond the main economic and sociodemographic characteristics in explaining borrowing behaviour. The paper uses microdata from the Estonian Household Finance and Consumption Survey (HFCS) to estimate probit and Heckman models. My analysis shows that risk-tolerant households apply for loans more often than risk-averse households do and that their loans are larger. For mortgage loans, risk aversion is related to the probability of having a loan, whereas for non-mortgage loans, risk aversion is related to the size of the outstanding liabilities. The variables describing the household’s expectations for its future financial situation are on their own related to the decision to apply for a loan, but they do not contain any relevant additional information beyond the main economic and sociodemographic characteristics of the household
    Keywords: household debt, mortgage loans, non-mortgage loans, borrowing decisions, income and price expectations, risk attitudes, Household Finance and Consumption Survey
    JEL: G51 D14
    Date: 2021–11–10
  15. By: Dino Rizzi (Department of Economics, University Of Venice CÃ Foscari); Michele Zanette (Department of Economics, University Of Venice CÃ Foscari)
    Abstract: The paper aims to analyse the extent to which the adoption of best practice policies could improve the efficiency of Italian Regional Healthcare Systems (RHSs) and reduce public healthcare expenditures. By means of a stochastic frontier model we estimate the RHSs’ technical inefficiency and its determinants using a panel data of 16 regions over the period 2010-2016. We use the Essential Levels of Care (LEA) scores computed by the Ministry of Health as a proxy for the RHSs’ output and public healthcare expenditure as the main input. The level of inefficiency is a function of a set of variables summarising the organisational arrangements implemented by RHS policymakers. The results allow us to identify the best-practice policy, defined as the set of observable organisational arrangements that maximises aggregate efficiency. Adoption of the best-practice policy by all RHSs leads to potential efficiency gains of 1.5 per cent on average (from 93.4 per cent to 94.9 per cent) and to potential healthcare expenditure savings of 1.8 billion euro in 2016 (1.77 per cent of current expenditures).
    Keywords: Healthcare expenditure, regional healthcare systems, efficiency, LEA scores
    JEL: H51 H75 I18 R50
    Date: 2021
  16. By: Neumayer, Eric; Plumper, Thomas
    Abstract: There is a large variation across countries of origin in the gender composition of migrants coming to Germany. We argue that women's economic rights in developing countries of origin have three effects on their migration prospects to a place like Germany that is far away and difficult to reach. First, the lower are women's economic rights the fewer women have access to and control over the resources needed to migrate to Germany. Second, the lower are the rights the lower is women's agency to make or otherwise influence migration decisions. These two constraining effects on the female share in migrant populations dominate the opposing third effect that stems from low levels of women's economic rights generating a potentially powerful push factor. We find corroborating evidence in our analysis of the gender composition of migration to Germany over the period 2009-2017.
    Keywords: migration; economic rights; gender; resources; agency; Internal OA fund
    JEL: F22 O15
    Date: 2021–10–13
  17. By: Bello, Piera; Rocco, Lorenzo
    Abstract: We study the role of education during the COVID-19 epidemic in Italy. We compare the trends of mortality rates between municipalities with different shares of educated residents between 2012 and 2020, by means of a continuous event study model and controlling for many confounders. We find that education played a protective role, significantly reducing mortality rates, during the first wave of the pandemic (between March and May 2020), but not during the second wave (between October and December 2020). We tentatively interpret this finding as the outcome of the interplay between education and public health communication, whose coherence and consistency varied between the different stages of the epidemic.
    Keywords: COVID-19,education,excess mortality,municipality,parallel trend,public health communication
    JEL: I14 I18 I26 R00
    Date: 2021
  18. By: Bagues, Manuel (University of Warwick, CEPR, IZA and J-Pal); Dimitrova, Velichka (University of Warwick)
    Abstract: We quantify the impact of COVID-19 vaccination on psychological well-being using information from a large-scale panel survey representative of the UK population. Exploiting exogenous variation in the timing of vaccinations, we nd that vaccination increases psychological well-being by 0.12 standard deviation, compensating for around one half of the overall decrease caused by the pandemic. This effect persists for at least two months, and it is associated with a decrease in the perceived likelihood of contracting COVID-19 and higher engagement in social activities. The improvement is 1.5 times larger for mentally distressed individuals, supporting the prioritization of this group in vaccination roll-outs.
    Keywords: Psychological well-being ; COVID-19 ; vaccination JEL Classification: I18 ; I31
    Date: 2021
  19. By: Cnossen, Femke; Piracha, Matloob; Tchuente, Guy
    Abstract: Technological change and globalization have sparked debates on the changing demand for skills in western labour markets, especially for middle skilled workers who have seen their tasks replaced. This paper provides a new data set, which is based on text data from curricula of the entire Dutch vocational education system. We extract verbs and nouns to measure social, technical and basic skills in a novel way. This method allows us to uncover the skills middle-skilled students learn in school. Using this data, we show that skill returns vary across students specialized in STEM, economics or health, as well as across sectors of employment.
    Keywords: Curriculum skills,vocational education and training,skill returns
    JEL: J24 I26 I21
    Date: 2021
  20. By: Katarzyna Bilicka (Utah State University, NBER, and CEPR)
    Abstract: In this paper, I analyze the local labor market consequences of multinational firms reallocating employees across their affiliates in response to antitax avoidance policies. I leverage the introduction of a worldwide debt cap in 2010 in the United Kingdom as a quasi-natural experiment that limited one of the forms of profit shifting—debt shifting—for a group of multinational corporations (MNCs). Multinationals affected by the reform reallocated their employees from the United Kingdom to foreign locations. This affected London-based service sector firms the most. I show that this led to a reduction in the number of jobs available in regions exposed to the reform in the United Kingdom. In foreign countries, the initial reallocation of labor across firms resulted in a much larger expansion of the affected local labor markets. These results suggest that a reallocation of labor across firms generates asymmetries in how negative and positive firm-level shocks are amplified through regional markets.
    Keywords: Debt shifting, multinational companies, local labor markets
    JEL: H25 H26
    Date: 2021–10
  21. By: Berniell, Maria Ines (University of La Plata); Berniell, Lucila (Development Bank of Latin America); De la Mata, Dolores (Development Bank of Latin America); Edo, María (Universidad de San Andrés); Fawaz, Yarine (CEMFI, Madrid); Machado, Matilde P. (Universidad Carlos III de Madrid); Marchionni, Mariana (Universidad Nacional de la Plata)
    Abstract: The existence of large child penalties has been documented for multiple countries and time periods. In this paper, we assess to what extent marriage decisions and pregnancies (rather than live births), which tend to occur around the birth of the first child, explain part of the so-called motherhood effect in labor market outcomes. Using data for 29 countries drawn from SHARE, we show that although marriage has a negative effect on women's employment (3.3%), its magnitude is much smaller compared with the negative effect of a first child (23%). Moreover, we find that pregnancies that end in non-live births have non-statistically significant effects in employment in the following years, supporting the exogeneity assumption underlying identification in child penalty studies. These new results lend support to the hypothesis that childcare, rather than marriage or pregnancy, is responsible for women exiting the labor force upon motherhood.
    Keywords: pregnancy, non-live births, marriage, child penalty, motherhood, SHARE data
    JEL: J13 J16 J24
    Date: 2021–11

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