nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2022‒08‒22
eighteen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. The lock-in effect of marriage: Work incentives after saying, “Yes, I do.†By Michael Christl; Silvia De Poli; Viginta Ivaskaite-Tamosiune
  2. Skill Downgrading among Refugees and Economic Immigrants in Germany: Evidence from the Syrian Refugee Crisis By Nikolov, Plamen; Salarpour Goodarzi, Leila; Titus, David
  3. At the intersection of adverse life course pathways: the effects on health by nativity By Silvia Loi; Peng Li; Mikko Myrskylä
  4. Preferred field of study and academic performance By Berlingieri, Francesco; Diegmann, André; Sprietsma, Maresa
  5. Regional structural change and the effects of job loss By Arntz, Melanie; Ivanov, Boris; Pohlan, Laura
  6. Early Childcare Duration and Students’ Later Outcomes in Europe By Daniela Del Boca; Chiara Monfardini; Sarah Grace See
  7. What has been the Impact of COVID-19 on Self-employment Relative to Paid Employment in the UK By Alexander Bowyer; Richard Dorsett
  8. PATENTS, FAMILY, AND SIZE. EVIDENCE FROM ITALIAN MANUFACTURING FIRMS By Francesco Aiello; Paola Cardamone; Lidia mannarino; Valeria Pupo
  9. Centre-based care and parenting activities By Jessen, Jonas; Spieß, Christa Katharina; Waights, Sevrin
  10. How important is neighbourhood labour structure in the spread of COVID-19? Within-city evidence from England By Carlo Corradini; Jesse Matheson; Enrico Vanino
  11. Household indebtedness according to the Spanish Survey of Household Finances and the Central Credit Register: a comparative analysis By Olympia Bover; Laura Crespo; Sandra García-Uribe
  12. Sitting Next to a Dropout: Academic Success of Students with More Educated Peers By Goller, Daniel; Diem, Andrea; Wolter, Stefan C.
  13. Worker Mobility and Productivity Spillovers By Ohlsbom, Roope
  14. Corporate management boards’ information security orientation: an analysis of cybersecurity incidents in DAX 30 companies By L Georg-Schaffner; Enrico Prinz
  15. Quota vs Quality? Long-Term Gains from an Unusual Gender Quota By Ursina Schaede; Ville Mankki
  16. Organisational Gender Pay Gaps in the UK: What Happened Post-transparency? By Jones, Melanie K.; Kaya, Ezgi
  17. Does ethnic heterogeneity decrease workers' effort in the presence of income redistribution? An experimental analysis By Schütt, Christoph; Pipke, David; Detlefsen, Lena; Grimalda, Gianluca
  18. How do firms respond to demand and supply shocks? By Michał Gradzewicz

  1. By: Michael Christl (European Commission, Joint Research Centre (JRC-Seville)); Silvia De Poli (European Commission, Joint Research Centre (JRC-Seville)); Viginta Ivaskaite-Tamosiune (European Commission, Joint Research Centre (JRC-Seville))
    Abstract: In this paper, we use EUROMOD, the tax-benefit microsimulation model of the European Union,to investigate the impact of marriage-related tax-benefit instruments on the labour supply of married couples. For each married partner, we estimate their individual marginal effective tax rateand net replacement rate before and after marriage. We show that the marriage bonus, which iseconomically significant in eight European countries, decreases the work incentives for womenand, particularly, on the intensive margin. In contrast, the incentives on the intensive marginincrease for men once they are married, pointing to the marriage-biased and gender-biased taxbenefit structures in the analysed countries. Our results suggest that marriage bonuses contributeto a lock-in effect, where second earners, typically women, are incentivised to work less, withnegative economic consequences.
    Keywords: marriage, cohabitation, marriage bonus, work incentives, gender, tax-benefit system, labour supply, Europe
    JEL: H31 J12 J22
    Date: 2022–07
  2. By: Nikolov, Plamen (State University of New York); Salarpour Goodarzi, Leila (Binghamton University, New York); Titus, David (University of Victoria)
    Abstract: Upon arrival to a new country, many immigrants face job downgrading, a phenomenon describing workers being in jobs far below where they would be assigned based on their skills. Downgrading leads to immigrants receiving lower returns to the same skills than natives. The level of downgrading could depend on the type of immigrant and numerous factors. This study examines the determinants of skill downgrading among two types of immigrants – refugees and economic immigrants – in the German labor markets between 1984 and 2018. We find that refugees downgrade more than economic immigrants, and this discrepancy between the two groups persists over time. We show that language skill improvements exert a strong influence on subsequent labor market outcomes of both groups.
    Keywords: downgrading, immigrants, refugees, Germany, labor markets, wages, employment
    JEL: J11 J15 J61 F22 O15 J61
    Date: 2022–07
  3. By: Silvia Loi (Max Planck Institute for Demographic Research, Rostock, Germany); Peng Li (Max Planck Institute for Demographic Research, Rostock, Germany); Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Adverse life events are major causes of declining health and well-being, but the effects are not the same across subpopulations. We analyze how the intersection of nativity and two main adverse life events, job loss and divorce, affect individual health and well-being trajectories. Using data from the German Socio-Economic Panel (1984-2017), we apply descriptive techniques and individual fixed-effects regressions to analyze how job loss and divorce influence health. Our results support the hypothesis of the intersectional effects of disadvantage and adversities on health and well-being, with immigrants suffering more from adverse life events than natives in both the short and the long run. Compared to natives, immigrants have a health advantage at younger ages, which turns into a disadvantage at older ages. The observed health declines are particularly steep among immigrants who experienced adverse life events. These results help to explain the vanishing health advantage of immigrants by showing that they are exposed to a double disadvantage over the life course: i.e., immigrants are more likely than natives to suffer from adverse life events, and such events typically have a larger impact on the health of immigrants than of natives. Our findings are the first to provide evidence on the effects of different adverse life events intersecting with each other and with nativity. Moreover, our results highlight the importance of intersectional analyses in research on immigrant health.
    Keywords: Germany, health, inequality, migrants
    JEL: J1 Z0
    Date: 2022
  4. By: Berlingieri, Francesco; Diegmann, André; Sprietsma, Maresa
    Abstract: This paper investigates the impact of studying the first-choice university subject on dropout and switching field of study for a cohort of students in Germany. Using detailed survey data, and employing an instrumental variable strategy based on variation in the local field of study availability, we provide evidence that students who are not enrolled in their preferred field of study are more likely to change their field, delay graduation and drop out of university. The estimated impact on dropout is particularly strong among students of low socio-economic status and is driven by lower academic performance and motivation.
    Keywords: field of study,preferences,academic performance,university dropout
    JEL: I21 I23 J24
    Date: 2022
  5. By: Arntz, Melanie; Ivanov, Boris; Pohlan, Laura
    Abstract: Routine-intensive occupations have been declining in many countries, but how does this affect individual workers' careers if this decline is particularly severe in their local labor market? This paper uses administrative data from Germany and a matched difference-in-differences approach to show that the individual costs of job loss strongly depend on the task-bias of regional structural change. Workers displaced from routine manual occupations have substantially higher and more persistent employment and wage losses in regions where such occupations decline the most. Regional and occupational mobility partly serve as an adjustment mechanism, but come at high cost as these switches also involve losses in firm wage premia. Non-displaced workers, by contrast, remain largely unaffected by structural change.
    Keywords: routine-biased structural change,local labor markets,displacement,mass-layoffs,plant closures,matching,difference-in-differences,event study
    JEL: J24 J63 J64 J65 O33 R11
    Date: 2022
  6. By: Daniela Del Boca (University of Turin and Collegio Carlo Alberto); Chiara Monfardini; Sarah Grace See
    Abstract: The importance of investment in early childhood education (ECE) has been widely documented in the literature. Among the benefits, particularly for children from disadvantaged backgrounds, is its potential to mitigate educational inequality. However, some evidence also suggests that the positive effects of ECE on later outcomes tend to dissipate over time, leaving children who attended such programmes no better off academically than those who did not. This paper studies the relationship between students’ years spent in ECE and the results of their educational assessment outcomes at age 15. Using PISA survey data for fourteen European countries from 2015 and 2018, we conduct a cross- country comparison of student performance in reading, mathematics, and science, correlating the results to early childcare and pre-primary school attendance. Our findings show that participation in early childcare is associated with better assessments at age 15, but that the benefit is nonlinear and peaks at 3-4 years of childcare attendance. Examination of gender heterogeneity patterns reveals differences in girls’ and boys’ performance on the assessments; however, there are no gender differences in the relationship between childcare participation and test outcomes. We also explore differences related to the type of educational system attended and find distinct results for the unitary and separate settings.
    Keywords: early childhood education, pre-primary, early investments, human capital, assessments, gender, institution, unitary, separate, PISA
    JEL: J13 J16
  7. By: Alexander Bowyer; Richard Dorsett
    Abstract: In this paper, we use data from the Labour Force Survey (LFS) to document the changing nature and characteristics of the self-employed in the UK between 2001 and 2020. A particular focus is on how self-employment has changed under COVID-19 relative to paid employment. Overall, there has been a sharp drop in the number of people self-employed and results from the longitudinal LFS indicate a marked increase in individuals reporting a move from self-employment to employment in 2020. The fact that there was no accompanying increase in the number of people changing jobs at this time may lend support to the hypothesis (Leaker, 2021) that once self-employed workers who paid themselves through PAYE realised that they were eligible for employee furlough payments through the Coronavirus Job Retention Scheme they began to self-identify as employees despite no genuine change in their status. An econometric model is used to estimate the relative impact of the pandemic on self-employed people. The results suggest, first, that the self-employed were harder hit in respect of the probability of remaining in work. However, this relative effect was arguably quite small, at just 0.6 percentage points, although it was roughly twice that for certain occupations (managers (directors) and senior officials; associate, professional and technical) and for those working in banking, finance & insurance etc. For comparison, we show that it is a similar relative impact to that of the Great Recession. A more notable impact is found on the second outcome considered: hours worked. The pandemic reduced hours worked among self-employed people more than among employees. The relative impact of 3.7 hours per week reflects both the reduction in the proportion in work and reduced hours among those remaining in work. Again, there was considerable variation across individuals, with stronger effects among men, non-whites and those in their mid-forties, and a mixed pattern of impact variation by occupation and industry. The third outcome is the probability of working zero hours for those in work. The results suggest the pandemic increased this probability by 4.7 percentage points more among the self-employed than among employees.
    Keywords: covid-19, hours worked, labour supply, self-employment
    JEL: J21 J22 J63
    Date: 2022–07
  8. By: Francesco Aiello (Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy)); Paola Cardamone (Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy)); Lidia mannarino (Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy)); Valeria Pupo (Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy))
    Abstract: This study explores whether the probability to patent differ between family and non-family firms, and whether any potential difference between firm-type is moderated by size. The analysis is based on a large archive of patenting activities (Orbis–PATSTAT dataset) carried out by around 3700 Italian manufacturing firms over the 2010–2017 period. The results from a probability model show that, on average, family firms patent less than non-family firms (the estimated average marginal effect is -0.0325). Firm size matters, as its average marginal effect is 0.0212, suggesting that the probability of patenting increases with size, no matter the firm ownership. The size effect differs, however, between family and non-family firms. It is demonstrated not only that family firms remain less likely to patent than non-family firms, but also that their disadvantages increase as they grow in size: in large firms, the probability of patenting is 0.22 for family firms and 0.39 for non-family firms. Importantly, the results hold when considering patent counts, citations and a number of additional sensitivity tests.
    Keywords: Family firms, Patenting activities, Firm size
    JEL: D22 L25 L60 O30
    Date: 2022–07
  9. By: Jessen, Jonas; Spieß, Christa Katharina; Waights, Sevrin
    Abstract: We examine the relationship between parenting activities and centre-based care using time diary and survey data for mothers in Germany. While mothers using centre-based care spend significantly less time in the presence of their child, we find that differences in the time spent on specific activities such as reading, talking, and playing with the child are relatively small or zero. The pattern of results is more pronounced for lower education mothers. The lack of large decreases in activities is explained by two factors: (i) that centre care replaces time that parents spend with the child but are doing other things such as housework or leisure (a small direct effect), and (ii) that evenings become relatively more activity-rich (a compensating indirect effect). For the intensive margin (full-day vs. half-day), we find more additional reductions in parenting activities, but these are compensated for by lower education mothers during non-centre hours. Our findings represent novel evidence that activities in the home environment are a complement to centre-based care, highlighting a credible additional mechanism for child development effects of centre-based care.
    Keywords: Sevrin Waights acknowledges funding from a Marie Skłodowska-Curie Actions fellowship under the Horizon 2020 programme of the European Union (Project acronym: PAGE; Grant number: 752053).
    JEL: C1 J1
    Date: 2022–06–16
  10. By: Carlo Corradini (University of Birmingham, Birmingham, UK); Jesse Matheson (Department of Economics, University of Sheffield, UK); Enrico Vanino (Department of Economics, University of Sheffield, UK)
    Abstract: In this paper we estimate the importance of local labour structure in the spread of COVID19 during the first year of the pandemic. We build a unique data set across 6,700 neighbourhoods in England that allows us to distinguish between people living (residents) and people working (workers) in a neighbourhood, and to differentiate between jobs that can be done from home (homeworkers), jobs that likely continued on-site (keyworkers), and non-essential on-site jobs. We use these data to study the relationship between the within-city variation in neighbourhood population/employment structures and the within-city variation in COVID-19 spread. Neighbourhood labour structure is important, explaining approximately 9.5% of the within-city variation over-and-above population density and other confounders. Holding residential population constant, 50 more residents working from home decreases neighbourhood cases by almost one-third relative to the mean; having 50 more residents in keywork jobs increases neighbourhood cases by almost two-thirds. We find the magnitude of these results varies by neighbourhood deprivation levels. In high-deprivation neighbourhoods, the positive effect of keyworkers on cases is larger, while the protective effect of homeworkers is lower than in more affluent areas. We speculate on how the various types of occupations within these job categories drive the differences across neighbourhoods. These findings point to important asymmetries in the social justice of the policy response to COVID-19, providing useful insights for the design of future economic policies and public health strategies during the endemic phase of the disease.
    Keywords: Urban Density, Local Labour Market, Public Health Policy
    JEL: H12 I18 R12
    Date: 2022–08
  11. By: Olympia Bover (Banco de España); Laura Crespo (Banco de España); Sandra García-Uribe (Banco de España)
    Abstract: The aim of this study is to analyse the quality of the information on indebtedness gathered by the Spanish Survey of Household Finances (“EFF” by its Spanish initials). To this end, we match EFF data with the administrative data from the Central Credit Register (“CIR” by its Spanish initials), which every month details all outstanding loans in excess of €6,000 arranged by individuals with financial institutions in Spain. Given the differences between the two sources in terms of the information they gather, we construct and compare various measurements of household indebtedness. In order to minimise the differences associated with the discrepancies in household composition according to the municipal population register and the EFF, we analyse both the total linked sample and a subset of comparable households. Our findings show that, after controlling for the limitations of the link, indebtedness calculated with the EFF and the CIR is similar. 25.8% of households have mortgage debt according to the EFF, versus 29.9% according to the CIR. Within indebted households, the median mortgage debt recorded in the EFF is only 0.5% lower than the figure according to the CIR. Non-mortgage debt differences are bigger, but not substantial. 18% of households have non-mortgage debt according to the EFF, versus 23% according to the CIR, and the median debt is 10% lower in the EFF. Moreover, the detailed information provided by the survey on the characteristics of households and their respective debts makes it possible to identify the age of the reference person and the existence of debts shared with individuals who are not members of the household as being the characteristics that have the most bearing on the discrepancies between the EFF and the CIR. The findings of this analysis will help improve the gathering of information and the protocols for interviewing households for the EFF.
    Keywords: indebtedness, households, comparative analysis, survey data, administrative data
    JEL: C81 C83 G51
    Date: 2022–03
  12. By: Goller, Daniel (University of St. Gallen); Diem, Andrea (University of St. Gallen); Wolter, Stefan C. (University of Bern)
    Abstract: We investigate the impact of the presence of university dropouts on the academic success of first-time students. Our identification strategy relies on quasi-random variation in the proportion of returning dropouts. The estimated average zero effect of dropouts on first- time students' success masks treatment heterogeneity and non-linearities. First, we find negative effects on the academic success of their new peers from dropouts re-enrolling in the same subject and, conversely, positive effects of dropouts changing subjects. Second, using causal machine learning methods, we find that the effects vary nonlinearly with different treatment intensities and prevailing treatment levels.
    Keywords: university dropouts, peer effects, better prepared students, causal machine learning
    JEL: A23 C14 I23
    Date: 2022–06
  13. By: Ohlsbom, Roope
    Abstract: Abstract Using linked employer-employee data from Finland, we examine the mobility of workers between establishments as a source of productivity-affecting knowledge spillovers. We find evidence that hiring workers from more productive establishments leads to higher productivity in the following year. For an average establishment, this productivity increase amounts to 0.45 percent in our most conservative estimate. The observed productivity gains hold for a variety of specifications, and changes in the receiving establishments’ human capital stock are ruled out as an explanation.
    Keywords: Worker mobility, Spillovers, Productivity, Human capital
    JEL: D22 D62 J21 J24 J62 L25
    Date: 2022–08–05
  14. By: L Georg-Schaffner; Enrico Prinz (LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg)
    Abstract: Our study analyzes the impact of cybersecurity incidents (CSIs) at executive level in German blue-chip companies between 2005 and 2018. Using Upper Echelons Theory, we examine the effect of CSIs on both the composition of management boards as well as their members' profiles and related responsibilities, performing a qualitative in-depth analysis of the positive cases found. Our results show that while CSIs are a common problem for large German groups, only a few of them have addressed IT-related incidents directly through governance. Firms that reacted strongly went against the general trend, and either added a new functional unit to the management board or strengthened functions related to the issue. Our findings indicate that German blue-chip companies have not yet devised a common strategy to deal with CSIs. Firms that reshape their management boards tend instead to take a more compliance-oriented approach.
    Keywords: Security Management,Cybersecurity Incidents,Management Boards,Germany
    Date: 2021–06–19
  15. By: Ursina Schaede; Ville Mankki
    Abstract: We evaluate equity-efficiency trade-offs from admissions quotas by examining effects on output once beneficiaries start producing in the relevant industry. In particular, we document the impact of abolishing a 40% quota for male primary school teachers in Finland on their pupils’ long-run outcomes. The quota had advantaged academically lower-scoring male university applicants, and its removal cut the share of men among new teachers by half. We combine this reform with the timing of union-mandated teacher retirements to isolate quasi-random variation in the local share of male quota teachers. Using comprehensive register data, we find that pupils exposed to a higher share of male quota teachers during primary school transition more smoothly to post-compulsory education, have higher educational attainment, and labor force attachment at age 25. Pupils of both genders benefit similarly from exposure to male quota teachers. Our findings are consistent with the quota improving the allocation of talent over the unconstrained selection process.
    Keywords: quota, education, affirmative action, gender, productivity
    JEL: J70 I20 M50
    Date: 2022
  16. By: Jones, Melanie K. (Cardiff University); Kaya, Ezgi (Cardiff University)
    Abstract: Since April 2017 UK employers with over 250 employees have been required to publicly report their gender pay gap each year. We exploit this recent source of panel data on employer-level gender pay gaps to provide new insights for the established literature on the gender pay gap based predominately on employee information. More specifically, we explore the factors associated with changing organisational gender pay gaps in the period immediately following transparency. Consistent with information, reflection and pressure brought by the legislation, we find greater narrowing of gender pay gaps in organisations with a larger initial gender pay gap. Moreover, this relationship is magnified over time, consistent with gradual and longer-term adjustment. We further find evidence that interorganisational comparisons matter. For organisations with higher gender pay gaps than the average of their intra-industry comparators, lower comparator gender pay gaps are associated with further narrowing, suggesting relative comparisons enabled by transparency per se provide a channel through which the impact of the legislation operates.
    Keywords: gender pay gap, pay transparency, equality legislation
    JEL: J31 J38 J78
    Date: 2022–05
  17. By: Schütt, Christoph; Pipke, David; Detlefsen, Lena; Grimalda, Gianluca
    Abstract: Ethnic discrimination is ubiquitous, and it has been shown to exert adverse effects on income redistribution. The reason is that a country's ethnic majority, if richer than the average, may be unwilling to transfer resources to the country's ethnic minorities if poorer than the average. A yet untested mechanism is that a country's ethnic majority may reduce their work effort knowing that their income will finance redistribution to ethnic minorities. We test for this mechanism experimentally in triadic interactions. A German citizen acting as a worker is randomly matched with a recipient who can be another German, an economic migrant, or an asylum seeker in Germany. Workers know that another German citizen may transfer part of their earnings to the recipient. The recipient does not exert any work effort. Even if the recipient's identity does not affect effort in the aggregate, social identity strongly moderates this relationship. Participants with a strong German identity, i.e., who report feeling close to other Germans, exert significantly less effort than other participants if the recipient is an asylum seeker. They also exert more effort when matched with a German recipient than an asylum seeker, while participants with a less strong German identity do the opposite. Moreover, participants with a strong German identity exert slightly more effort when matched with economic migrants than with asylum seekers, while others tend to do the opposite, albeit statistically insignificantly. Workers' beliefs over the third party's redistribution rate do not mediate such results and are generally inaccurate.
    Keywords: Redistribution,Discrimination,Taxes,Beliefs,Real effort,Experiment
    JEL: C91 H23 I31 J15 J30
    Date: 2022
  18. By: Michał Gradzewicz (National Bank of Poland and SGH Warsaw School of Economics)
    Abstract: The study aims to identify the granular demand and productivity shocks, their properties, and the responses of the important firm-level variables to these shocks. We use comprehensive data from the Polish enterprise sector that cover the 2002-2019 period. As the data do not include prices, the identification of the demand shocks relies on the information on inventory changes. We utilize the control function approach to estimate the parameters of the production function and to identify productivity shocks. We use projection methods with granular data to identify the dynamic impulse-response function. We show that the distributions of the two shocks differ: i.e., supply (productivity) shocks are symmetrically distributed, and the distribution of demand shocks is negatively skewed. Moreover, both distributions have fat tails. Productivity shocks have much more persistent effect on firms’ outcomes than demand shocks. Following demand shocks, there are short-lived increases in output, market share, productivity, real wages and markups; whereas investment and employment demand remain elevated for a longer period. We also find a very limited transmission of productivity into wages and we showed that proxies for prices increase after demand shocks, and they decrease after the supply shock, in a theory-consistent way.
    Keywords: demand shocks, supply shock, granular impulse response function, granular local projections
    JEL: D22 D24 D4 J42 L11
    Date: 2022

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