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on Microeconomic European Issues |
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Issue of 2022‒03‒07
24 papers chosen by Giuseppe Marotta Università degli Studi di Modena e Reggio Emilia |
| By: | Di Novi, C.; Paruolo, P.; Verzillo, S. |
| Abstract: | This study exploits individual data from the 8th wave of the Survey of Health, Ageing and Retirement in Europe (SHARE) and the SHARE Corona Survey to investigate the mental health consequences of COVID-19 job disruption across different European countries. It focuses on older workers (aged 50 and over) who were exposed to a higher risk of infection from COVID-19 and were also more vulnerable to the risk of long-term unemployment and permanent labour market exits during economic downturns. The relationship between job disruption in times of COVID-19 and older workers' mental health is investigated using differences in country-level employment legislation regimes. European countries are clustered into three macro-regions with high, intermediate and low employment regulatory protection regulations, using the Employment Protection Legislation (EPL) aggregate score proposed by the OECD. Results reveal a clear EPL gradient: job disruption has a positive and significant impact on older workers’ psychological distress especially in those countries where EPL is more binding. The present findings suggest possible mitigating measures for older unemployed in the European countries with higher Employment Protection legislation. |
| Keywords: | european countries; covid-19 pandemic; job disruption; mental health; older workers; EPL; |
| JEL: | I14 I18 J08 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:22/03&r= |
| By: | Arpino, Bruno; LUPPI, FRANCESCA; Rosina, Alessandro (Catholic University of the Sacred Heart) |
| Abstract: | Early evidence shows mixed effects of the COVID-19 pandemic on births in Europe. This study examines changes in births at the regional level in the four European countries that have been affected by the pandemic earlier and to a larger extent. It is also investigated the association between birth changes and some labour market characteristics, the pandemic impact in terms of COVID-deaths, and the share of population at risk of poverty. Results show considerable within-country heterogeneity in birth changes after the pandemic and that higher share of poverty, worse labour market performance, and higher excess mortality are associated with births decline. |
| Date: | 2021–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:mnwh8&r= |
| By: | Barili, E.; Bertoli, P.; Grembi, V.; Rattini, V. |
| Abstract: | Using a unique survey of more than 7,000 respondents conducted immediately after the first wave of the COVID-19 pandemic in Italy, we investigate potential drivers of the job satisfaction of healthcare workers. Relying on a representative sample of Italian physicians and nurses, we show that, besides personal characteristics (e.g., age, gender, health status), contextual factors (i.e., working conditions) play the leading role in explaining variation in the level of satisfaction (58%). In particular, working in a high-quality facility increases worker satisfaction and willingness to remain in the profession, and in the current medical specialization, while working in a province with a perceived shortage of medical personnel brings the opposite result. Direct experience with COVID-19 (e.g., having tested positive) is not significantly correlated with the level of job satisfaction, which is instead significantly reduced by changes in the working conditions caused by the health emergency. |
| Keywords: | healthcare workers; job satisfaction; COVID-19 pandemic; |
| JEL: | I10 J28 Z12 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:22/04&r= |
| By: | Juan Ignacio Pe\~na; Rosa Rodriguez |
| Abstract: | We study time-zero efficiency of electricity derivatives markets. By time-zero efficiency is meant a sequence of prices of derivatives contracts having the same underlying asset but different times to maturity which implies that prices comply with a set of efficiency conditions that prevent profitable time-zero arbitrage opportunities. We investigate whether statistical tests, based on the law of one price, and trading rules, based on price differentials and no-arbitrage violations, are useful for assessing time-zero efficiency. We apply tests and trading rules to daily data of three European power markets: Germany, France and Spain. In the case of the German market, after considering liquidity availability and transaction costs, results are not inconsistent with time-zero efficiency. However, in the case of the French and Spanish markets, limitations in liquidity and representativeness are challenges that prevent definite conclusions. Liquidity in French and Spanish markets should improve by using pricing and marketing incentives. These incentives should attract more participants into the electricity derivatives exchanges and should encourage them to settle OTC trades in clearinghouses. Publication of statistics on prices, volumes and open interest per type of participant should be promoted. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2202.01737&r= |
| By: | Herault, Nicolas; Jenkins, Stephen P. |
| Abstract: | We apply the Kakwani approach to decomposing redistributive effect into average rate, progressivity, and reranking components using yearly UK data covering 1977–2018. We examine cash and in-kind benefits, and direct and indirect taxes. In addition, we highlight an empirical implementation issue – the definition of the reference (‘pre-fisc’) distribution. Drawing on an innovative counterfactual approach, our empirical analysis shows that trends in the redistributive effect of cash benefits are largely associated with cyclical changes in average benefit rates. In contrast, trends in the redistributive effects of direct and indirect taxes are mostly associated with changes in progressivity. For in-kind benefits, changes in the average benefit rate and progressivity each played the major roles at different times. (Stone Center on Socio-Economic Inequality Working Paper) |
| Date: | 2021–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:x6z7b&r= |
| By: | Casi, Elisa (Dept. of Business and Management Science, Norwegian School of Economics); Gavrilova, Evelina (Dept. of Business and Management Science, Norwegian School of Economics); Murphy, David (Dept. of Business and Management Science, Norwegian School of Economics); Zoutman, Floris (Dept. of Business and Management Science, Norwegian School of Economics) |
| Abstract: | We study the effect of reforms that close loopholes in the enforcement of the dividend withholding tax (DWT). We focus on a Danish reform enacted in 2016, and compare Denmark to its Nordic neighbors. Our main outcome of interest is the quantity of stocks on loan. Before the reform all Nordic countries have a strong spike in stocks on loan centered around the ex-dividend day. The magnitude is large: on average excess stocks on loan peak at around 4 percent of the public float. The spike in lending is consistent with the most popular DWT arbitrage schemes. After the reform the spikes in Denmark disappear, but they continue in the other Nordics. We interpret this as evidence that the reform was successful at eliminating DWT arbitrage. We consider the welfare effects of the reform. Using synthetic difference-in-difference we find that stricter DWT enforcement resulted in a 130 percent (approx. 1.3 bln USD annually) increase in DWT revenue in Denmark. We detect no changes in foreign portfolio investment or dividend policy. We also consider DWT arbitrage among 15 European countries between 2010-2019. We find evidence of DWT arbitrage in all countries that levy DWT, though there is strong heterogeneity across countries. Importantly, similar to Denmark, Germany’s 2016 reform has eliminated the spikes in lending completely. We validate our identification strategy by showing that we find no evidence of DWT arbitrage in the UK, which does not levy a DWT. |
| Keywords: | Dividend Tax Arbitrage; Tax Enforcement; Financial Innovation; Welfare Analysis |
| JEL: | F38 H25 H26 O16 |
| Date: | 2022–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2022_007&r= |
| By: | Demetrio Guzzardi; Elisa Palagi; Andrea Roventini; Alessandro Santoro |
| Abstract: | This work reconstructs novel series on income distribution in Italy combining survey data, tax data and National Accounts both at the national and regional levels, and it analyzes the overall progressivity of the tax system. Our new Distributional National Accounts allow to correct for remarkable misreporting of capital income in surveys, to provide more accurate estimates of consumption, and to better account for the role of informal economy. Our fresh estimates show higher income concentration at the top 10%, 1% and 0.1% with respect to previous studies in order of 2 to 3 percentage points. Moreover, the share of national income of the richest top 10%, top 1% and top 0.1% has been steadily increasing after the 2008 crisis. Our results shed further light on the multifaceted nature of inequality in Italy: youngest individuals, women and inhabitants of Southern regions have been increasingly exposed to growing levels of inequality. Finally, the Italian tax system is only slightly progressive up to the 95th percentile of the income distribution, and regressive for the top 5%. Moreover, it is regressive throughout the whole distribution when individuals are ranked with respect to their net wealth. Simulation exercises show that radical measures, such as a wealth tax, are needed to eradicate the regressivity of the Italian tax system. |
| Keywords: | Income inequality; tax progressivity; tax; National Accounts; Italy. |
| Date: | 2022–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2022/06&r= |
| By: | Glaubitz, Rick; Harnack-Eber, Astrid; Wetter, Miriam |
| Abstract: | To obtain a more complete understanding of the persisting gender earnings gap in Germany, this paper investigates both the cross-sectional and biographical dimension of gender inequalities. Using an Oaxaca Blinder decomposition, we show that the gender gap in annual earnings is largely driven by women's lower work experience and intensive margin of labor supply. Based on a dynamic microsimulation model, we then estimate how gender differences accumulate over work lives to account for the biographical dimension of the gender gap. We observe an average gender lifetime earnings gap of 51.5 percent for birth cohorts 1964-1972. We show that this unadjusted gender lifetime earnings gap increases strongly with the number of children, ranging from 17.8 percent for childless women to 68.0 percent for women with three or more children. However, using a counterfactual analysis we find that the adjusted gender lifetime earnings gap of 10 percent differs only slightly by women's family background. |
| Keywords: | Lifetime Earnings,Gender Inequality,Parenthood,Dynamic Microsimulation |
| JEL: | D31 J13 J16 J31 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:20223&r= |
| By: | Alessandra Faggian (Department of Social Sciences, Gran Sasso Science Institute, Italy); Alessandra Michelangeli (Department of Economics, Management and Statistics, University of Milan-Bicocca, Italy; CefES; CISEPS; Rimini Centre for Economic Analysis); Kateryna Tkach (Department of Economics, Management and Statistics, University of Milan-Bicocca, Italy) |
| Abstract: | Is actual inequality accurately translated into people’s perceptions, and what are the genuine hopes of citizens? Our contribution offers insights into how the reality and two subjective dimensions of inequality, namely perceptions, and desires, interact. Using data from the Eurobarometer, we study the main patterns of different “types” of inequality in the European NUTS2 regions. Considering the role of attitudes and beliefs, the residents of the same region are typically found to hold a similar perception of how unequal their society is. Moreover, and somewhat surprisingly, the reality is contrary to people’s perception since low (high) actual inequality in the region is often reflected in its overestimated (underestimated) perception. We also show that perceived, and desired inequality are distinct metrics as commonly applied determinants of perceptions are rather weakly associated with desired inequality, probably due to the normative nature of the latter. The evidence presented here implies that objective measures of inequality should be used in conjunction with subjective ones to gain a complete picture of the phenomenon. Our findings may assist policy-makers and other interested stakeholders in designing dedicated policies to counteract inequality in all its forms. |
| Keywords: | income inequality, inequality perceptions, desired inequality, Europe |
| JEL: | D31 D63 D83 I31 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:22-03&r= |
| By: | Delanote, Julie; Rückert, Désirée |
| Abstract: | Using survey data on climate innovation, we map climate innovation patterns across different regions and technologies, and study the cooperation, protection and reach of climate innovation. Our analysis confirms that there is a strong link between climate innovation and firm performance. We nevertheless observe that European firms seem to suffer from the availability of finance. If European policymakers want to create more successful firms in the climate sector, they should strengthen policies that aim to reduce regulatory uncertainty and work actively to improve access-to finance conditions, in particular for start-ups. |
| Keywords: | Climate action and environment,Economics |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eibwps:202202&r= |
| By: | Williams, Jenny (University of Melbourne); Bretteville-Jensen, Anne Line (Norwegian Institute for Alcohol and Drug Research (SIRUS)) |
| Abstract: | This research provides the first evidence on the impacts of waiting times for treatment for a substance use disorder (SUD). Using rich linked administrative information from Norway, we study the impact of waiting time on health-care utilization, employment and crime for patients who enter outpatient treatment for cannabis use disorder. Confounding due to unobserved severity of illness is addressed using an instrumental variables strategy that exploits plausibly exogenous variation in congestion in Norway's health-care system. We find that waiting to access treatment increases the use of health-care services at both the extensive and intensive margins, measured by the duration of a treatment episode and the number of consultations within a treatment episode, respectively. Waiting time also has spill-over effects, reducing employment after entering treatment and increasing crime both before and after treatment begins. Together, these findings suggest that waiting times to access treatment for a SUD imposes significant costs on patients, health-care systems, and on society more broadly. |
| Keywords: | waiting times, cannabis, substance use treatment, employment, crime |
| JEL: | I12 J22 K42 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15083&r= |
| By: | Sergio Mayordomo; Mar\'ia Rodriguez-Moreno; Juan Ignacio Pe\~na |
| Abstract: | This paper studies the investment decision of the Spanish households using a unique data set, the Spanish Survey of Household Finance (EFF). We propose a theoretical model in which households, given a fixed investment in housing, allocate their net wealth across bank time deposits, stocks, and mortgage. Besides considering housing as an indivisible and illiquid asset that restricts the portfolio choice decision, we take into account the financial constraints that households face when they apply for external funding. For every representative household in the EFF we solve this theoretical problem and obtain the theoretically optimal portfolio that is compared with households' actual choices. We find that households significantly underinvest in stocks and deposits while the optimal and actual mortgage investments are alike. Considering the three types of financial assets at once, we find that the households headed by highly financially sophisticated, older, retired, richer, and unconstrained persons are the ones investing more efficiently. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2202.02280&r= |
| By: | Malo, Miguel A.; Vanesa, Rodríguez |
| Abstract: | This article presents an updated review of the employment policy of sheltered employment for people with disabilities. We review the international literature, focusing on the European Union and especially on Spain, because of the great importance of sheltered employment centres in this country. Studies have increasingly questioned sheltered employment’s ability to promote labour market integration, mainly compared with supported employment. However, we lack clear causal evidence, as these arguments are largely based on descriptive evidence. In addition, sheltered employment centres have shifted to focus on people with physical disabilities rather than those with mental and cognitive disabilities, which was the predominant focus until the 2000s |
| Keywords: | Disability; sheltered employment centre; integration; European Union; Spain |
| JEL: | J14 J41 |
| Date: | 2022–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:111861&r= |
| By: | van den Berg, Gerard J. (University of Groningen); Janys, Lena (University of Bonn); Christensen, Kaare (University of Southern Denmark) |
| Abstract: | We examine the effects of a major national schooling reform in Denmark in 1903, opening up access to secondary and higher education for poorer and for female children, on mortality, using individual-level records of Danish twins. We digitized education out-comes from historical registers and augmented these with data we digitized on parental socioeconomic status. The study design is combined with an exogenous indicator of economic conditions at birth to investigate whether education mitigates mortality effects of adverse conditions at birth. We find that the reform reduces mortality rates among males, notably those with a middle-class family background. Also, secondary education is less beneficial if conditions at birth are adverse. In general, the reform effect does not seem to be driven by improved information on healthy living but rather by a shift in social classes among the inflow into higher education. |
| Keywords: | health, inequality, schooling, Correlated Frailty Model, twins |
| JEL: | I1 I14 I20 N33 C41 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15064&r= |
| By: | Raphael Auer; Ariel Burstein; Sarah M Lein; Jonathan Vogel |
| Abstract: | What are the unequal effects of changes in consumer prices on the cost of living? In the context of changes in import prices, most analyses focus on variation across households in initial expenditure shares on imported goods. However, the unequal welfare effects of non-marginal foreign price changes also depend on differences in how consumers substitute between imported and domestic goods, on which there is scant evidence. Using data from Switzerland surrounding the 2015 appreciation of the Swiss franc, we provide evidence that lower income households have higher price elasticities. These differences in elasticities contribute significantly to the unequal welfare effects of large import price changes. |
| Keywords: | expenditure switching, large exchange rate shocks, gains from trade. |
| JEL: | E3 F1 F41 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1001&r= |
| By: | Rahal, Charles; Mohan, John |
| Abstract: | The role of external suppliers across statutory health insurance procurement processes varies widely and is a source of political contention throughout the modern world. We comprehensively examine the role of non-profit organisations in public health procurement within publicly funded healthcare which runs parallel to private provision in a 'two-tier' system. We build a unique 'Big Data' based pipeline which scrapes tens of thousands of heterogeneous accounting datasets from across a commissioning hierarchy. These datasets provide granular information on every element of procurement at the micro-level (where the value of a transaction is greater than twenty-five thousand pounds), mandated by transparency requirements introduced by David Cameron in 2010. We develop tools to scrape, parse, and reconcile suppliers with institutional registers. The processed dataset contains over four hundred and forty-five billion pounds worth of commissioning across over 1.9 million rows of clean data. Approximately 1% at each level of procurement comes from institutions listed on the Charity Commission for England and Wales: a number relatively consistent across time, despite contractual patterns. We show a slight regional variation and analyse the 'North-South' divide. Linking to the International Classification of Non-profit Organizations, we show involvement of multiple different types of charity, with more payments going to the 'Social Services' aggregate, but the highest cumulative values going to the 'Health' aggregate. We analyse the distribution across various sizes and ages, from grassroots to 'Super Major' non-profits, and analyse variation over time. We conclude with a re-evaluation of the effects of the controversial Health and Social Care Act of 2012 and the integration of the free market and volunteerism, otherwise known as the 'Big Society'. |
| Date: | 2022–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:t4x52&r= |
| By: | Lorenzo Cresti; Giovanni Dosi; Giorgio Fagiolo |
| Abstract: | This work addresses the role of inter-sectoral innovation flows, which we frame as technological interdependencies, in determining sectoral employment dynamics. This purpose is achieved through the construction of an indicator capturing the amount of R&D expenditures embodied in the backward linkages of industries. We aim to find out whether having a more integrated production in terms of requiring more technological inputs is related to a lower demand for workers within the sector. We refer to the literature on innovation-employment nexus, inter-sectoral knowledge spillovers and Global Value Chains, building upon structuralist and evolutionary theoretical considerations. We track the flows of embodied technological change between industries taking advantage of the notion of vertically integrated sectors. The relevance of this vertical technological dimension for determining employment dynamics is then tested on a panel data of European industries over the 2008-2014 period. Results show a statistically significant and negative employment impact of the degree of vertical integration in terms of acquisitions of R&D embodied inputs. Combining the role of demand, the double nature of innovation - as product and as process -, together with intersectoral linkages, this work shows that the dependence of a sector from innovation performed by other ones - a proxy for input embodied process innovations - exert a negative effect upon employment. |
| Keywords: | Input-Output; Sectoral Interdependencies; Employment; Embodied Technological Change; Innovation Diffusion. |
| Date: | 2022–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2022/05&r= |
| By: | Juan Ignacio Pe\~na; Rosa Rodriguez |
| Abstract: | This paper studies the realizability and compatibility of the three CEP2020 targets, focusing on electricity prices. We study the impact of renewables and other fundamental determinants on wholesale and household retail electricity prices in ten EU countries from 2008 to 2016. Increases in production from renewables decrease wholesale electricity prices in all countries. As decreases in prices should promote consumption, an apparent contradiction emerges between the target of an increase in renewables and the target of a reduction in consumption. However, the impact of renewables on the non-energy part of household wholesale electricity prices is positive in six countries. Therefore, decreases in wholesale prices, that may compromise the CEP2020 target of decrease in consumption, do not necessarily translate into lower household retail prices. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2202.01720&r= |
| By: | Ji, Sisi (Cardiff Business School); Zhu, Zheyi (Cardiff Business School) |
| Abstract: | Using 6 sweeps from 1958 British NCDS data we adopt a quasi-parametric approach of propensity score matching to estimate causal effects of higher education attainment on a wide range of cohorts’ health-related outcomes at ages 33, 42 and 50. The non-pecuniary benefits to HE attainments on health are substantial. Higher educated cohorts are more likely to report better health, maintain a healthy weight, be non-smokers and to have a higher sense of control on drinking alcohol and are less likely to be obese. We also highlight the importance of investigating incremental returns to HE within the lifetime of cohorts. Effects on self-reported health (SRH), BMI, drinking alcohol increase with age but continuously decrease with smoking frequency. When taking into account gender heterogeneity, HE has a larger effect on BMI and likelihood of being obese for males and a greater effect on SRH and drinking alcohol and smoking frequencies for females. Furthermore, we find no significant evidence that HE reduces the likelihood of depression, both for males and females. |
| Keywords: | Casual effect; Health; Higher Education; Propensity Score matching |
| JEL: | C21 I12 I23 I26 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2022/4&r= |
| By: | Anne Duquerroy; Clément Mazet-Sonilhac; Jean-Stéphane Mésonnier; Daniel Paravisini |
| Abstract: | Using micro-data on bank-SME relationships in France, we show that banks specialize locally by industry and that this specialization shapes the equilibrium amount of lending. We use the reallocation of firms’ accounts from closed branches to nearby branches of the same bank, as a source of quasi-random variation in the match between a firm’s industry and the industry of specialization of its bank. Reallocation is associated with a significant and persistent drop in credit, the magnitude of which doubles for firms transferred to a branch less specialized in their industry. |
| Keywords: | Bank Specialization, SMEs, Relationship Banking, Branch Closures |
| JEL: | G21 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:865&r= |
| By: | Davillas, Apostolos (University of East Anglia); de Oliveira, Victor Hugo (Instituto de Pesquisa e Estratégia Econômica do Ceará (IPECE)); Jones, Andrew M. (University of York) |
| Abstract: | We capitalise on an opportunity in the UK Household Longitudinal Study, which asks respondents the same SAH question with identical wording two times. This is done once with a self-completion and once with an open interview mode within the same household interview over four waves. We estimate multivariate models to explore which individual and household-level characteristics are systematically relevant for the likelihood and frequency of inconsistent reporting across the two modes. We find evidence of some inconsistency in reporting; 11%-24% of those who reported a particular SAH category in the self-completion mode reported inconsistently in the open interview. The probability of inconsistency is systematic and influenced by an individual's demographics, education, income, employment status, cognitive and non-cognitive skills. The same characteristics are also systematically associated with the frequency of inconsistent reporting across four UKHLS waves. Analysis of the implications of reporting inconsistencies shows no impact of SAH measurement on the magnitude of the association between income and health, estimated separately using the two SAH measures. A set of dimensions of people's physiological and biological health, captured using biomarkers, is associated equally with both SAH measures, suggesting that reporting inconsistencies in SAH may be driven by mechanisms other than people's underlying health. |
| Keywords: | measurement error, reporting bias, self-assessed health, UKHLS |
| JEL: | C10 C33 C83 I10 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15085&r= |
| By: | Gregg, Paul; Kanabar, Ricky |
| Abstract: | The rapid widening of intergenerational wealth inequalities has led to sharp differences in living standards in Great Britain. Understanding which components of wealth are driving such inequalities is important for improving wealth and social mobility. We show the change in the intergenerational persistence in wealth in Great Britain is due to inequality in offspring housing wealth and that offspring homeownership has become increasingly stratified by parental wealth even after controlling for individual’s own characteristics. Our findings imply the intergenerational wealth elasticity in housing wealth is set to double in approximately one century and highlight the increasingly important role parental wealth has for determining whether offspring hold and the rate at which they accumulate particular types of wealth. |
| Date: | 2022–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2022-02&r= |
| By: | Stefan Avdjiev; Maximilian Jager |
| Abstract: | We investigate the patterns and implications of bank opacity in Europe using a rich bank-level data set. Employing a novel event study methodology, we document that public data releases by the European Banking Authority (EBA) on banks' exposures to individual countries and sectors contained information that was not previously priced by equity and CDS markets. We demonstrate that the degree of bank opacity varied considerably across bank nationalities and counterparty sectors – it was highest for European periphery banks' sovereign exposures and European core banks' private sector exposures. Furthermore, we document that underestimations of banks' credit risk by markets were associated with lower funding costs and higher wholesale borrowing (for all banks) as well as with greater risk taking and higher profitability (for European periphery banks). |
| Keywords: | bank opacity, asymmetric information, event study, credit risk, asset markets. |
| JEL: | F34 G21 G28 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:992&r= |
| By: | Lukas Mahler; Minchul Yum |
| Abstract: | We document significant gaps in wealth across health status over the life cycle in Germany—a country with a universal healthcare system and negligible out-of-pocket medical expenses. To investigate the underlying sources of the empirical patterns in wealth-health gaps, we build a heterogeneous-agent life-cycle model in which health and wealth evolve endogenously. In the model, agents exert efforts to lead a healthy lifestyle, which helps maintain good health status in the future. Effort choices, or lifestyle behaviors, are subject to adjustment costs to capture various aspects of micro-level effort adjustment behaviors in the data. We find that our calibrated model generates around half of the wealth gaps by health observed in the German micro data, and that variations in health-related lifetime outcomes are largely explained by uncertainty realizations over the life cycle, rather than initial conditions at age 25. Our counterfactual experiments indicate that variations in individual health efforts account for over half of the model-generated wealth gaps by health status. Their importance is due not only to the fact that they affect labor income and savings rates, both of which influence wealth accumulation, but also because they act as an amplification device since richer households exert relatively more efforts to maintain a healthy lifestyle. |
| Keywords: | Health Inequality, Wealth Inequality, Healthy Lifestyle, Germany |
| JEL: | E2 D3 I1 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2022_338&r= |