nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2023‒01‒09
35 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. The Health-Consumption Effects of Increasing Retirement Age Late in the Game By Eve Caroli; Catherine Pollak; Muriel Roger
  2. The Labour Market Returns to Sleep By Joan Costa-Font; Sarah Fleche; Ricardo Pagan; Joan Costa-i-Font
  3. Mental health and productivity: evidence for the UK By Dacheng Huo; Nigel Rice; Jennifer Roberts; Cristina Sechel
  4. The Impact of Immigration and Integration Policies On Immigrant-Native Labor Market Hierarchies By Guzi, Martin; Kahanec, Martin; Kureková, Lucia Mýtna
  5. The diffusion of digital skills across EU regions:structural drivers and polarization dynamics By Serenella Caravella; Valeria Cirillo; Francesco Crespi; Dario Guarascio; Mirko Menghini
  6. The socio-cultural integration of immigrants in Germany: Changes across generations By Giovanis, Eleftherios; Akdede, Sacit Hadi
  7. Job Insecurity and Health: Evidence from Older European Workers By Suari-Andreu, Eduard; Schwartz, Tim; van Lent, Max; Knoef, Marike
  8. Citizenship and Integration By Gathmann, Christina; Garbers, Julio
  9. First union formation in Italy: The role of micro- and macro-level economic conditions By Silvia Meggiolaro; Fausta Ongaro; Elena Pirani
  10. Evidence from the UK Millennium Cohort Study. Teenage children of mothers who experienced out-of-home care: How are they doing? By Sam Parsons; Ingrid Schoon; Emla Fitzsimons
  11. Do public scholarships crowd out parental transfers? Evidence at the intensive margin from France By Sébastien Grobon; François-Charles Wolff
  12. Investment Grants and Firms' Productivity: How Effective Is a Grant Booster Shot? By Alexandre, Fernando; Chaves, Miguel; Portela, Miguel
  13. Effect of early parenthood on parents' earnings in the Baltics By Nerijus Èerniauskas
  14. The Impact of ICT and Robots on Labour Market Outcomes of Demographic Groups in Europe By Albinowski, Maciej; Lewandowski, Piotr
  15. The Influence of Start-up Motivation on Entrepreneurial Performance By Caliendo, Marco; Kritikos, Alexander S.; Stier, Claudia
  16. The Effects of Heterogeneous Sanctions on Exporting Firms —Evidence from Denmark By Ina C. Jäkel; Søren Østervig; Erdal Yalcin
  17. The Long-Term Impact of Housing Subsidies on the Rental Sector: the French Example By Céline Grislain-Letrémy; Corentin Trevien
  18. The gender gap in top jobs – the role of overconfidence By Anna Adamecz-Völgyi; Nikki Shure
  19. Does Ethnic Diversity in Schools Affect Occupational Choices? By Pregaldini, Damiano; Balestra, Simone; Backes-Gellner, Uschi
  20. The impact of automatic enrolment on the mental health gap in pension participation: evidence from the UK By Arulsamy, Karen; Delaney, Liam
  21. Social Restrictions and Well-Being: Disentangling the Mechanisms By Foliano, Francesca; Tonei, Valentina; Sevilla, Almudena
  22. Reducing the gender gap in parental leave through economic incentives? – Evidence from the gender equality bonus in Sweden By Rosenqvist, Olof
  23. Does Children’s Education Improve Parental Longevity? Evidence From Two Educational Reforms in England By Madia, Joan Eliel; Präg, Patrick; Monden, Christiaan Willem Simon
  24. Stable marital histories predict happiness and health across educational groups By Miika Mäki; Anna Erika Hägglund; Anna Rotkirch; Sangita Kulathinal; Mikko Myrskylä
  25. Performance-related Pay and the UK Gender Pay Gap By Jones, Melanie; Kaya, Ezgi
  26. The Role of Firm Dynamics in the Green Transition: Carbon Productivity Decomposition in Finnish Manufacturing By Kuosmanen, Natalia; Maczulskij, Terhi
  27. An Evaluation of the French Innovation Tax Credit By Simon Bunel; Benjamin Hadjibeyli
  28. When Immigrants Meet Exporters: A Reassessment of the Immigrant Wage Gap By Léa Marchal; Guzman Ourens; Giulia Sabbadini
  29. Lost in transition? Earnings losses of displaced petroleum workers By Jon Ellingsen; Caroline Espegren
  30. High-Pressure, High-Paying Jobs? By Markus Nagler; Johannes Rincke; Erwin Winkler
  31. Do Job Seekers Understand the UI Benefit System (And Does It Matter)? By Altmann, Steffen; Cairo, Sofie; Mahlstedt, Robert; Sebald, Alexander
  32. Changing childbearing age norms in Europe in times of fertility postponement By Lazzari, Ester; Compans, Marie-Caroline; Beaujouan, Eva
  33. Procuring Survival By Matilde Cappelletti; Leonardo M. Giuffrida; Gabriele Rovigatti; Leonardo Maria Giuffrida
  34. Tax and Occupancy of Business Properties : Theory and Evidence from UK Business Rates By Lockwood, Ben; Simmler, Martin; Tam, Eddy H.F.
  35. Income inequality and entrepreneurship: Lessons from the 2020 COVID-19 recession By Christoph Albert; Andrea Caggese; Beatriz González; Victor Martin-Sanchez

  1. By: Eve Caroli (Legos - Laboratoire d'Economie et de Gestion des Organisations de Santé - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Catherine Pollak (DREES - Centre de Recherche du DREES - Ministère de l'Emploi et de la Solidarité, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Muriel Roger (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Using the differentiated increase in retirement age across cohorts introduced by the 2010 French pension reform, we estimate the health-consumption effects of a 4-month increase in retirement age. We focus on individuals who were close to retirement age but not retired yet by the time the reform was passed. Using administrative data on individual sick-leave claims and nonhospital health-care expenses, we show that the probability of having at least one sickness absence increases for all treated groups, while the duration of sick leaves remains unchanged.Delaying retirement does not increase the probability of seeing a GP, except for men in the younger cohorts. In contrast, it raises the probability of having a visit with a specialist physician for all individuals, except men in the older cohorts. Delaying retirement also increases the probability of seeing a physiotherapist among women from the older cohorts. Overall, itincreases health expense claims, in particular in the lower part of the expenditure distribution.
    Keywords: Pension reform, Retirement age, Health, Health-care consumption
    Date: 2022–12–15
  2. By: Joan Costa-Font; Sarah Fleche; Ricardo Pagan; Joan Costa-i-Font
    Abstract: The proportion of people sleeping less than the daily-recommended hours has increased. Yet, we know little about the labour market returns to sleep. We use longitudinal data from Germany and exploit exogenous variation in sleep duration induced by time and local variations in sunset time. We find that a 1-hour increase in weekly sleep increases employment by 1.6 percentage points and weekly earnings by 3.4%. Most of this earnings effect comes from productivity improvements, while the number of working hours decreases with sleep time. We identify one mechanism driving these effects, namely the better mental health workers experience from sleeping more hours.
    Keywords: sleep, employment, productivity, mental health, sunset times
    JEL: I18 J12 J13
    Date: 2022
  3. By: Dacheng Huo (Centre for Health Economics, University of York, UK); Nigel Rice (Centre for Health Economics, Department of Economics and Related Studies, University of York, UK); Jennifer Roberts (Department of Economics, University of Sheffield, UK); Cristina Sechel (Department of Economics, University of Sheffield, UK)
    Abstract: Understanding the drivers of productivity is fundamental to securing future wellbeing, but there are still large gaps in our knowledge concerning the relationship between productivity and the health of the labour force. We explore whether changes in mental health contribute to changes in labour market productivity. We exploit the COVID-19 modules of the UK Household Longitudinal Study, which include a direct (self-reported) measure of productivity change relative to pre-COVID levels, as well as a clinically validated measure of mental health. To overcome endogeneity problems we use an instrumental variable approach implemented in an ordered probit model using two-stage residual inclusion. Our results show a strong positive relationship between mental health and productivity. At an individual level a unit decrease in mental health leads to an expected loss in productivity of approximately 4 minutes per working day. In our sample the average decrease in mental health over the period we study is -1.675, which predicts a reduction in productivity of 2,531 minutes for each hour that the sample works. Scaled up to the entire population of workers in June 2020, then total productivity losses would have been substantial.
    Keywords: mental health, productivity, work from home, COVID-19, UKHLS
    JEL: I12 J14 J24
    Date: 2022–12
  4. By: Guzi, Martin (Masaryk University); Kahanec, Martin (Central European University); Kureková, Lucia Mýtna (Slovak Academy of Sciences)
    Abstract: Across European Union (EU) labor markets, immigrant and native populations exhibit disparate labor market outcomes, signifying widespread labor market hierarchies. While significant resources have been invested in migration and integration policies, it remains unclear whether these contribute to or mitigate labor market hierarchies between natives and immigrants. Using a longitudinal model based on individual-level EU LFS and country-level DEMIG POLICY and POLMIG databases, we explore variation in changes of immigration and integration policies across Western EU member states to study how they are associated with labor market hierarchies in terms of unemployment and employment quality gaps between immigrant and native populations. Our findings imply that designing less restrictive policies may help mitigate immigrant-native labor market hierarchies by reducing existing labor market disadvantages of immigrants and making the most of their potential.
    Keywords: decomposition, immigrant-native gaps, labor market, DEMIG POLICY database, immigrant integration, hierarchies
    JEL: J15 J18 J61 K37
    Date: 2022–11
  5. By: Serenella Caravella; Valeria Cirillo; Francesco Crespi; Dario Guarascio; Mirko Menghini
    Abstract: The digital transformation is an important driver of long-run productivity growth and, as such, it has the potential to promote a more inclusive and sustainable growth. However, digital capabilities, crucial to develop and govern new digital technologies, are unevenly distributed across European regions increasing the risk of divergence and polarization. By taking advantage of a set of original indicators capturing the level of digital skills in the regional workforce, this work analyzes the factors shaping the process of digital skill accumulation in the EU over the period 2011-2018. Relying on transition probability matrices and dynamic random effects probit models, we provide evidence of a strong and persistent regional polarization in the adoption and deployment of digital skills. Further, we investigate whether European Funds (European Regional Development Fund, Cohesion Funds, and European Social Funds) are capable to shape the digitalization process and to favor regional convergence
    Keywords: Digital transition; Skills; Labour markets; Persistence; Regional development; EU policies
    JEL: O14 O30 O38
    Date: 2022–10
  6. By: Giovanis, Eleftherios; Akdede, Sacit Hadi
    Abstract: Previous studies have used language proficiency, citizenship, labour indicators, educational outcomes, and political rights as measures of migrants’ socio-cultural integration. However, little is known about the migrants’ participation in volunteering activities, music concerts, theatrical plays, and artistic activities, among others, and how this is compared to the participation of natives, defined as people of German descent and born in Germany. The study aims to investigate and compare the cultural and social involvement between migrants and natives. The analysis relies on information from the German Socio-Economic Panel Survey (GSOEP). Panel data models, in particular, the random-effects ordered Logit model, are utilised because the investigated outcomes are recorded in frequency and are ordered variables. We compare the participation in socio-cultural activities among immigrants of the first, second, and 2.5 generations. Our findings indicate that first-generation immigrants are less likely to engage in various socio-cultural activities. However, the 2.5 generation immigrants are more active than the native population, as this generation of immigrants participates more frequently. The findings highlight the importance of fostering interaction between natives and immigrants in the workplace and the social and cultural realms. Participation in social and cultural activities may increase intercultural awareness and contribute to the eradication of bias and prejudice.
    Keywords: International Migration; First and Second-Generation Immigrants; Panel Data; Socio-Cultural Participation
    JEL: Z11 Z13
    Date: 2022–12–14
  7. By: Suari-Andreu, Eduard (University of Leiden); Schwartz, Tim (SEO Amsterdam); van Lent, Max (Leiden University); Knoef, Marike (Leiden University)
    Abstract: A rich literature has studied the effect of job insecurity on health. However the causal link between these two variables remains unclear. We study the relationship between perceived job insecurity and health using longitudinal data on around 30 thousand older workers from 20 European countries covering a period of 14 years. The unprecedented size and nature of the dataset compared to previous studies on job insecurity and health allows us to apply different estimation methods and compare the results obtained. We do so using a wide range of health outcomes that include objective and subjective measures. Using pooled OLS, we estimate a strong association between job insecurity and health outcomes. A fixed effect estimator yields precisely estimated zeros with the exception of a few mental conditions. Additionally, we test the robustness of an IV strategy that uses an index for employment protection legislation (EPL) as an instrument for job insecurity. We conclude that the direct causal link between job insecurity and health for older workers is in any case rather weak and discuss several reasons for our findings.
    Keywords: job insecurity, health, older workers, employment protection legislation
    JEL: I10 I18 J28 J81
    Date: 2022–11
  8. By: Gathmann, Christina (LISER); Garbers, Julio (LISER)
    Abstract: Several European countries have reformed their citizenship policies over the past decades. There is much to learn from their experience of how citizenship works; for whom it works; and what rules and policies matter for integration. The article surveys recent quasi-experimental evidence and field experiments from the social sciences on the link between eligibility rules, take-up and integration outcomes. Across countries and reforms, the evidence shows that faster access to citizenship increases take-up and improves the economic, educational, political and social integration of immigrants. Other eligibility rules like civic knowledge tests or application fees also impact who naturalizes and therefore benefits from citizenship. Birthright citizenship, which is much less common in Europe, turns out to be a powerful tool for getting second-generation immigrants off to a good start. Together, citizenship acts as a powerful catalyst benefiting immigrants as well as host countries.
    Keywords: citizenship, integration, immigration
    JEL: J15 J2 J31 J61 K37
    Date: 2022–12
  9. By: Silvia Meggiolaro (Department of Statistical Sciences, University of Padua, Italy); Fausta Ongaro (Department of Statistical Sciences, University of Padua, Italy); Elena Pirani (Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti", Università di Firenze)
    Abstract: In this paper, we use data from the ‘Families and Social Subjects’ survey conducted by the Italian National Institute of Statistics (ISTAT) in 2016 to study the impact of micro- and macro-level economic conditions on first co-residential union formation. We aim to determine if and to what extent the probability of forming the first union is entirely explained by individual labour market positions (e.g. being unemployed or having non-standard employment), or whether adverse macro-economic conditions – which arguably increase the personal perception of uncertainty – also play a role. We differentiate by union type – marriage and cohabitation – known to be characterised by different levels of union commitment, as well as address potential gender differences by conducting separate analyses on men and women. Our results suggest that while both micro- and macro-level economic factors matter in the union formation process, their effect varies by gender and union type. Individual economic vulnerability has a greater impact on marriage than on cohabitation. Meanwhile, contextual economic uncertainty plays a relevant role in the transition to cohabitation (for both men and women) and, to a lesser extent, in the transition to marriage (for women).
    Keywords: marriage, cohabitation, Italy, uncertainty
    Date: 2022–12
  10. By: Sam Parsons (Social Research Institute, UCL); Ingrid Schoon (Social Research Institute, UCL); Emla Fitzsimons (Social Research Institute, UCL)
    Abstract: It is well documented that care-leavers tend to experience more problematic post-16 transitions and outcomes compared to their peers, but less is known about the intergenerational transmission of disadvantages to their children. This research addresses several of the key areas of concern identified in the 2013 Care Leaver Strategy – education, employment, health including health- and risky-behaviours, crime – to help inform strategies to assist agencies working with care-leavers, in particular care-leavers who became parents and who might be struggling across domains. This study draws on the UK Millennium Cohort Study to examine the experiences of 16-18-year-old children of mothers who experienced out-of-home care during their childhoods (n=305) in comparison to children whose mothers were not in care (n=18,505). After accounting for the teenager’s sex, age, ethnicity, results in public examinations at age 16 and family socio-economic background measures together with the level of area deprivation they encounter, we find that the teenage children of care-experienced mothers have similar aspirations regarding attending university or entering a professional occupation, and they were just as likely to be in employment, education or training at age 17 as their peers. However, they were more likely than their peers to experience a range of poorer health outcomes and health behaviours: they reported higher levels of behavioural and mental health problems, including self-harm and suicide attempts; higher levels of illegal drug use and more had been cautioned by the police. The wellbeing of the most disadvantaged families in our society clearly needs to be better addressed if we are to minimise the intergenerational transmission of disadvantage associated with care experience being passed on to children in future generations.
    Keywords: out-of-home care; mothers; disadvantage; intergeneration transmission
    JEL: D22 D24 F14 L11 L60
    Date: 2022–12–01
  11. By: Sébastien Grobon (Centre d'Economie de la Sorbonne & Conseil d'Orientation des Retraites (COR)); François-Charles Wolff (LEMNA, université de Nantes & TEPP)
    Abstract: This paper investigates the extent to which means-tested scholarships received by higher education students crowd out parental financial support at the intensive margin. We estimate a private transfer function using survey data completed in 2014 in France on a sample of students aged between 18 and 24 and receiving public scholarships. When introducing the amount of public transfer as exogenous covariate, we find that one additional euro of scholarship is associated with a decrease in parental transfers of 0.40-0.55 euro. When considering an instrumental variable strategy which exploits the non-linear schedule of the scholarship amount, we find a larger effect with a decrease of 0.50-0.65 euros. Our results suggest that a substantial part of student scholarship benefits low-income parents through a reduction in the money they give to their student children
    Keywords: public scholarship; students; parental transfers; crowding-out effect; altruism
    JEL: D64 I2 I3 L38 J13 D10
    Date: 2022–03
  12. By: Alexandre, Fernando (University of Minho); Chaves, Miguel (University of Minho); Portela, Miguel (University of Minho)
    Abstract: This paper investigates the effect of awarding a second investment grant to the same firm. We implement a Regression Discontinuity Design strategy using a very rich firm-level administrative database, which allows us to link applications to grants and their scores to firms' performance. Overall, our results show a positive and significant impact of an investment grant booster shot on firms' labour productivity. This effect is significantly larger than the effect of a single grant. A more granular analysis shows a strong impact of awarding a second grant to small-sized firms. However, we found no effect on micro, medium and large-sized firms. Our results suggest that the characteristics of the targeted firms, namely firm size, matter for the effectiveness of awarding a second grant to the same firm.
    Keywords: industrial policy, investment grants, multiple treatments, productivity
    JEL: D22 H25 L25 L52
    Date: 2022–12
  13. By: Nerijus Èerniauskas (Vilniaus Universitetas)
    Abstract: Parenthood, especially in the first years after childbirth, is unevenly split between genders and varies by country. In countries like the three Baltic states, with relatively generous parental leave benefits compared to the EU and norms encouraging mothers to care for children, females' earnings are more affected than their male counterparts. I carry out an event study to estimate the effect of having a child on the earnings of both genders and find that the earnings of females reduce by half in the first calendar year after childbirth and by 20% to 33% in the second, while male earnings do not change in either period. This results in a widening earnings gap in the Baltics, more so than in several comparison countries (Denmark, Finland, Sweden, the Netherlands, and Norway), in the first two years after the birth of the first child.
    Keywords: parenthood, earnings, Baltics, early childhood care, family benefits, child upbringing norms
    JEL: J13 J31 I24 D31
    Date: 2022
  14. By: Albinowski, Maciej (Institute for Structural Research (IBS)); Lewandowski, Piotr (Institute for Structural Research (IBS))
    Abstract: We study the age- and gender-specific labour market effects of two key modern technologies, Information and Communication Technologies (ICT) and robots, in 14 European countries between 2010 and 2018. To identify the causal effects of technology adoption, we utilise the variation in technology adoption between industries and apply the instrumental variables strategy proposed by Acemoglu and Restrepo (2020). We find that the exposure to ICT and robots increased the shares of young and prime-aged women in employment and the wage bills of particular sectors, but reduced the shares of older women and prime-aged men. The adverse effects were particularly pronounced for older women in cognitive occupations, who had relatively low ICT-related skills; and for young men in routine manual occupations, who experienced substitutions by robots. Between 2010 and 2018, the growth in ICT capital played a much larger role than robot adoption in the changes in the labour market outcomes of demographic groups.
    Keywords: technological change, automation, ICT, robots, employment, wages, Europe
    JEL: J24 O33 J23
    Date: 2022–11
  15. By: Caliendo, Marco (University of Potsdam); Kritikos, Alexander S. (DIW Berlin); Stier, Claudia (University of Potsdam)
    Abstract: Predicting entrepreneurial development based on individual and business-related characteristics is a key objective of entrepreneurship research. In this context, we investigate whether the motives of becoming an entrepreneur influence the subsequent entrepreneurial development. In our analysis, we examine a broad range of business outcomes including survival and income, as well as job creation, expansion and innovation activities for up to 40 months after business formation. Using self-determination theory as conceptual background, we aggregate the start-up motives into a continuous motivational index. We show – based on a unique dataset of German start-ups from unemployment and non-unemployment – that the later business performance is better, the higher they score on this index. Effects are particularly strong for growth oriented outcomes like innovation and expansion activities. In a next step, we examine three underlying motivational categories that we term opportunity, career ambition, and necessity. We show that individuals driven by opportunity motives perform better in terms of innovation and business expansion activities, while career ambition is positively associated with survival, income, and the probability of hiring employees. All effects are robust to the inclusion of a large battery of covariates that are proven to be important determinants of entrepreneurial performance.
    Keywords: entrepreneurship, push and pull theories, start-up motivation, survival, job creation, firm growth, innovation
    JEL: L26 C14
    Date: 2022–12
  16. By: Ina C. Jäkel; Søren Østervig; Erdal Yalcin
    Abstract: Sanctions encompass a wide set of policy instruments restricting cross-border economic activities. In this paper, we study how different types of sanctions affect the export behaviour of firms to the targeted countries. We combine Danish register data, including information on firm-destination-specific exports, with information on sanctions imposed by Denmark from the Global Sanctions Database. Our data allow us to study firms’ export behaviour in 62 sanctioned countries, amounting to a total of 453 country-years with sanctions over the period 2000-2015. Methodologically, we apply a two-stage estimation strategy to properly account for multilateral resistance terms. We find that, on average, sanctions lead to a significant reduction in firms’ destination-specific exports and a significant increase in firms’ probability to exit the destination. Next, we study heterogeneity in the effects of sanctions across (i) sanction types and sanction packages, (ii) the objectives of sanctions, and (iii) countries subject to sanctions. Results confirm that the effects of sanctions on firms’ export behaviour vary considerably across these three dimensions.
    Keywords: sanctions, firm exports, trade margins
    JEL: F51 F13 F14 F52
    Date: 2022
  17. By: Céline Grislain-Letrémy; Corentin Trevien
    Abstract: In many countries, housing subsidies to tenants are one of the main tools for housing policy but have an inflationary impact in the short term. For the first time, by taking the French example, we assess the long-term impact of housing subsidies on price, quantity, and quality in the private rental sector. We show that housing subsidies have a long-term overall upward impact on rents, even for tenants who do not benefit from subsidies. This inflationary impact is accompanied by an increase in quantity; no impact on quality is detected. These effects are heterogeneous. For small dwellings, a few years after the extension of housing subsidies, rents stopped increasing significantly and the quantity of one-room dwellings, including new buildings, increased.
    Keywords: Public Policy Evaluation, Social Benefits, Housing Subsidies, Tax Incidence
    JEL: H22 R21 R31
    Date: 2022
  18. By: Anna Adamecz-Völgyi (Centre for Economic and Regional Studies, UCL Social Research Institute, University College London); Nikki Shure (UCL Social Research Institute, University College London, Institute of Labor Economics (IZA))
    Abstract: There is a large gender gap in the probability of being in a “top job” in mid-career. Top jobs bring higher earnings, and also have more job security and better career trajectories. Recent literature has raised the possibility that some of this gap may be attributable to women not “leaning in” while men are more overconfident in their abilities. We use longitudinal data from childhood into mid-career and construct a measure of overconfidence using multiple measures of objective cognitive ability and subjective estimated ability. Our measure confirms previous findings that men are more overconfident than women. We then use linear regression and decomposition techniques to account for the gender gap in top jobs including our measure of overconfidence. Our results show that men being more overconfident explains 5-11 percent of the gender gap in top job employment. This indicates that while overconfidence matters for gender inequality in the labor market and has implications for how firms recruit and promote workers, other individual, structural, and societal factors play a larger role.
    Keywords: gender gaps, inequality, overconfidence, labor market
    JEL: I24 I26 J24
    Date: 2022–10
  19. By: Pregaldini, Damiano (University of Zurich); Balestra, Simone (University of St. Gallen); Backes-Gellner, Uschi (University of Zurich)
    Abstract: We study how two distinct dimensions of peer ethnic diversity (ethnic fractionalization and ethnic polarization) affect occupational choice. Using longitudinal administrative data and leveraging variation in ethnic composition across cohorts within schools, we find evidence for two opposing effects. Ethnic fractionalization increases the likelihood of students sorting into people-oriented occupations while ethnic polarization reduces this likelihood. Using data on social and cognitive skills, we provide evidence that exposure to higher levels of ethnic fractionalization enhances the students' formation of social skills and increases the likelihood of students sorting into people-oriented occupations where the returns to these skills are higher.
    Keywords: ethnic diversity, fractionalization, polarization, school, occupational choice
    JEL: H75 I21 J18 J24
    Date: 2022–12
  20. By: Arulsamy, Karen; Delaney, Liam
    Abstract: A large body of evidence shows that individuals with poor mental health have lower income over the lifespan but a dearth of evidence exists on how poor mental health affects savings behaviour. In this paper, we provide novel evidence of a mental health gap in pension participation in the UK using nationally representative longitudinal data from Understanding Society (UKHLS). Beginning in 2012, the UK government introduced automatic enrolment enabling us to assess the impact of one of the largest pension policy reforms in the world on this mental health gap. We measure mental health using the General Health Questionnaire (GHQ-12) which is a commonly used tool for measuring psychological distress. Prior to automatic enrolment, we find that male private sector employees with poor mental health are 3.7 percentage points less likely to participate in a workplace pension scheme while female private sector employees with poor mental health are 2.9 percentage points less likely to participate after controlling for key observables including age, education, race, marital status, number of children, occupation type, industry type, presence of a physical health condition and cognitive ability. The implementation of automatic enrolment removes the mental health gap in pension participation, equalising the pension participation rates of individuals with and without poor mental health in the private sector.
    Keywords: automatic enrolment; financial security; longitudinal studies; mental health; pensions; psychological distress; savings; Economic and Social Research Council and various Government Departments; with scientific leadership by the Institute for Social and Economic Research; University of Essex; and survey delivery by NatCen Social Research and Kantar Public.
    JEL: J32 D91
    Date: 2022–12–01
  21. By: Foliano, Francesca (UCL Institute of Education); Tonei, Valentina (University of Southampton); Sevilla, Almudena (London School of Economics)
    Abstract: Using a nationally representative 24-hour diary survey covering the first two years of the pandemic, we explore the mechanisms underlying the changes in wellbeing for men and women. We exploit the variation in the stringency of social restrictions implemented by the UK government during this period and use an event-study methodology to net out the impact of social restrictions from other pandemic effects. We find that well-being dropped by 47% (men) and 70% (women) of a standard deviation during the strictest lockdown, and this effect survives after accounting for financial conditions and changes in local infection and death rates. Our data on time allocation and individual preferences over the activities undertaken throughout the day reveal that the drop in well-being is primarily driven by a drastic reduction in time spent in leisure with non-household members or outside the home.
    Keywords: well-being, social isolation, time use, instantaneous enjoyment, COVID-19
    JEL: I10 I14 I18 I30
    Date: 2022–11
  22. By: Rosenqvist, Olof (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: Using administrative data from Sweden, I study an internationally unique parental leave policy that rewarded parents with a financial bonus as a function of their division of paid parental leave. Results from a birthdate based regression discontinuity design show that the policy significantly reduced the absolute difference in days of paid leave between the parents. Since parents started earning bonus only after the exhaustion of the 60 reserved days for each parent, the response to the bonus was completely driven by the roughly 55 % of the couples who exhausted all reserved days. Within this group, the effect of the policy was particularly strong in the small group of parents where the father had the highest uptake, causing the effect on the mother-father difference in uptake to be insignificant. Labor market earnings and temporary parental leave (i.e., caring for the child when he/she is too sick to be in school/daycare center), which has been argued to be a good proxy for a parent’s general childcare involvement beyond the first years after childbirth, were not significantly affected by the bonus. However, mothers who lowered (increased) their uptake of parental leave in response to the bonus policy displayed negative (positive) point estimates for temporary parental leave and positive (negative) point estimates for labor earnings. While a corresponding pattern for fathers could not be observed, for mothers, the results suggest a potentially important link between the length of the early parental leave and later allocation of time between home and market production.
    Keywords: Parental leave; gender equality bonus; home production; regression discontinuity
    JEL: D13 J13 J16
    Date: 2022–12–02
  23. By: Madia, Joan Eliel; Präg, Patrick; Monden, Christiaan Willem Simon (University of Oxford)
    Abstract: Parents of better-educated children are healthier and live longer. Is this a non-monetary return to education which crosses generational boundaries, or is this the consequence of unobserved factors (e.g. shared genes or living conditions) driving both children’s education and parental health? Using data from the English Longitudinal Study of Aging (ELSA) and two educational reforms that raised the mandatory school-leaving age from age 14 to 15 years in 1947 and from age 15 to 16 years in 1972, we investigate the causal effect of children’s education on parental longevity. Results suggest that both one-year increases in school-leaving age significantly reduced the hazard of dying for fathers as well as for mothers. We do not find a consistent pattern when comparing differences in the effects of daughters’ and sons’ education. Lower class parents benefitted more from the 1972 reform than higher class parents. We discuss these results against the backdrop of generational conflict and the specific English context.
    Date: 2022–12–06
  24. By: Miika Mäki; Anna Erika Hägglund; Anna Rotkirch; Sangita Kulathinal; Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Couple relations are a key determinant of mental and physical well-being in old age. However, we do not know how the advantages and disadvantages associated with partnership histories vary between socioeconomic groups. We create relationship history typologies for the cohorts 1945-1957 using the Survey of Health, Ageing, and Retirement in Europe, and examine, for the first time, how relationship histories relate to multiple indicators of well-being by educational attainment. Results show that stable marriages co-occur with higher well-being, compared to single and less stable partnership histories. All educational groups experience clear and similar benefits from stable unions. The adverse outcomes of union dissolution are more pronounced for those with lower education. The larger drawbacks on well-being among the less educated, especially among men, suggest that those with fewer resources suffer more from losing a partner. The findings underscore that current and past romantic relations predict well-being in old age and help policymakers in identifying vulnerable subgroups among the aging population. Keywords: partnership history, cumulative disadvantage, health, quality of life, aging
    JEL: J1 Z0
    Date: 2022
  25. By: Jones, Melanie; Kaya, Ezgi
    Abstract: This paper explores the role of performance-related pay to the UK gender pay gap at the mean and across the earnings distribution. Applying decomposition methods to data from the Annual Survey of Hours and Earnings, we find that performance-related pay is an important but neglected factor, with the lower probability of females being employed in performance-related pay jobs explaining 12 per cent of the observed mean gender pay gap and making a larger contribution than many work-related characteristics routinely included in studies of this nature. Driven by its influence in the private sector, employment in performance-related pay jobs is more important in explaining the gender pay gap at the top end of the wage distribution, consistent with gender differences in receipt of bonus payments. Gender differences in the reward to performance-related pay jobs have a further, but more modest, role in widening the national and private sector mean gender pay gap.
    Keywords: gender pay gap, performance-related pay, earnings distribution, sector
    JEL: J31 J33 J45 J71
    Date: 2022
  26. By: Kuosmanen, Natalia; Maczulskij, Terhi
    Abstract: Abstract This paper investigates the importance of firm dynamics, including entry and exit and the allocation of carbon emissions across firms, on the green transition. Using the 2000–2019 firm-level register data on greenhouse gas emissions matched with the Financial Statement data in the Finnish manufacturing sector, we examine the sources of carbon-productivity growth and assess the relative contributions of structural change and firm dynamics. We find that continuing firms were the main drivers of carbon productivity growth whereas the contribution of entering and exiting firms was negative. In addition, the allocation of emissions across firms seems to be inefficient; its impact on carbon productivity growth was negative over the study period. Moreover, we find that there is a positive relationship between labor-intensive firms and carbon productivity but that firms with a larger market share tend to be less productive in terms of carbon use.
    Keywords: Carbon productivity, Decomposition, Firm dynamics, Firm-level data, Manufacturing
    JEL: D24 L60 Q54
    Date: 2022–12–13
  27. By: Simon Bunel; Benjamin Hadjibeyli
    Abstract: The Innovation tax credit (crédit d’impôt innovation, CII) is an extension of the Research tax credit (crédit d’impôt recherche, CIR) intended to boost the incentive effect of the latter on SMEs to encourage them to engage in the creation of new products via the development of prototypes or pilot plants. Introduced in 2013, it amounted to €120 million of tax credit in 2014 for some 5,300 recipients. This article seeks to measure the impact of the introduction of this scheme on its beneficiaries over the period from 2013 to 2016. Using a difference-in-differences method following propensity score matching, we find a greater increase in employment in the short term for firms benefiting from the scheme, along with a more pronounced increase in their sales turnover in the medium term. A greater increase in the number of new products produced by the beneficiaries is also observed. Finally, the introduction of the CII went along with a reduction in the research expenditure reported under the CIR.
    Keywords: Innovation, Tax credit, Evaluation, Products
    JEL: C21 D22 H32 L25 O31
    Date: 2022
  28. By: Léa Marchal (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, IC Migrations - Institut Convergences Migrations [Aubervilliers], UP1 - Université Paris 1 Panthéon-Sorbonne); Guzman Ourens (Tilburg University [Tilburg] - Netspar); Giulia Sabbadini (Institut de hautes études internationales et du développement - Graduate Institute of International and Development Studies [Geneva, Switzerland])
    Abstract: We use French employer-employee data to reassess the wage gap between native and foreign workers. We find that the wage gap varies with the export intensity of the firm and the occupation of the worker. A model with heterogeneous firms and workers shows that our findings are consistent with white-collar immigrants capturing an informational rent. The evidence supports this mechanism. First, we show that the wage gap is positively correlated with the complexity of the firm export activity. Second, we show that wages react to changes in export intensity when the export destination coincides with the origin of foreign workers.
    Keywords: export, firm, immigrants, wage inequality
    Date: 2022–12–18
  29. By: Jon Ellingsen; Caroline Espegren
    Abstract: We estimate the earnings losses of displaced petroleum workers using a matched employer-employee longitudinal data set from Norway, coupled with an event-study framework of the oil price drop in 2014. Displacement leads to sizable and persistent earnings losses, and the magnitudes are particularly large for petroleum workers moving to other industries. More importantly, we document that almost 70 percent of the earnings losses can be attributed to lost industry-specific earnings premiums caused by workers moving from an industry characterized by large resource rents. In contrast, worker-industry match effects are negligible.
    Keywords: Dutch disease, Resource Movements, Difference-in-Differences, Labor mobility, Displaced
    Date: 2022–12
  30. By: Markus Nagler; Johannes Rincke; Erwin Winkler
    Abstract: Work-related stress has reportedly increased over time. Using worker-level survey data, we build a measure of work pressure strongly associated with adverse health outcomes. In line with theories of compensating differentials, work pressure comes with a sizable earnings premium, even within narrowly defined occupations. As expected, we find no premium among civil servants who face strong labor market frictions. In complementary stated-choice experiments, we uncover a substantial willingness-to-pay to avoid work pressure. Our evidence is consistent with workers sorting into high- and low-pressure jobs. Differences in the prevalence and valuation of work pressure explain a substantial share of wage inequality.
    Keywords: work pressure, compensating differentials, working conditions, wage inequality, health
    JEL: I10 I31 J20 J31 J32 J81 M52
    Date: 2022
  31. By: Altmann, Steffen (IZA and University of Copenhagen); Cairo, Sofie (Harvard Business School); Mahlstedt, Robert (University of Copenhagen); Sebald, Alexander (University of Copenhagen)
    Abstract: We study how job seekers' understanding of complex unemployment benefit rules affects their labor market performance. Combining data from a large-scale scale field experiment, detailed administrative records, and a survey of unemployed job seekers, we document three main results. First, job seekers exhibit pronounced knowledge gaps about the prevailing unemployment benefit rules and their personal benefit entitlements. Second, we show that a low-cost information strategy using a personalized online tool increases job seekers' understanding of the rules and their personal benefit situation. Finally, we document heterogeneous labor-market effects of the intervention depending on job seekers' baseline knowledge and beliefs, their personal employment prospects, and the timing of the intervention during the benefit spell.
    Keywords: unemployment benefits, field experiments, information frictions, labor market policy, job search
    JEL: J68 J64 D83 C93
    Date: 2022–11
  32. By: Lazzari, Ester; Compans, Marie-Caroline; Beaujouan, Eva
    Abstract: While extensive literature documents the massive fertility postponement of the past few decades, knowledge about whether and how social age norms for childbearing have changed remains limited. Using data from two rounds of the European Social Survey, we investigate these changes and their association with macro-level fertility indicators in 21 countries. Between 2006–07 and 2018–19, consensus regarding the existence of age norms remained strong and became more in favour of later parenthood. Decomposition analyses show that shifts in age norms were only partially driven by the changing population composition, providing support to the idea that a general attitudinal change in favour of later childbearing is underway. Our findings support gender convergence in upper social age limits because of the increasing recognition of a deadline for men’s childbearing. Although shifts in age norms are occurring in times of fertility postponement, they are only loosely associated with changes in fertility behaviours.
    Date: 2022–12–15
  33. By: Matilde Cappelletti; Leonardo M. Giuffrida; Gabriele Rovigatti; Leonardo Maria Giuffrida
    Abstract: We investigate the impact of public procurement spending on business survival. Using Italy as a laboratory, we construct a large-scale dataset on firms—covering balance-sheet, income-statement, and administrative records—and match it with public contract data. Employing a regression discontinuity design for close-call procurement auctions, we find that winners are more likely to stay in the market than marginal losers after the award and that the boost in survival chances lasts longer than the contract duration. We document that this effect is associated with earnings substitution rather than increased business scale. Regardless of size, contracts that are long-lasting and awarded by decentralized buyers are more impactful for survival prospects. Survivors experience no productivity premium but rather an improvement in their credit position.
    Keywords: firm survival, firm dynamics, public demand, public procurement, demand shocks, productivity, credit, auctions, regression discontinuity design
    JEL: D25 D44 H32 H57
    Date: 2022
  34. By: Lockwood, Ben (University of Warwick and Oxford University Centre for Business Taxation); Simmler, Martin (Oxford University Centre for Business Taxation and Thuenen Institute of Rural Economics); Tam, Eddy H.F. (King's College London and Oxford University Centre for Business Taxation)
    Abstract: We study the impact of commercial property taxation on vacancy rates and rents in the UK, using a new data-set, and exploiting exogenous variations in property tax rates from reliefs in the UK system: small business rate relief (SBRR), retail relief and empty property relief. We estimate that the retail relief reduces vacancies by 85%, and SBRR relief by up to 49%, while empty property exemption increases them by up to 89%. The effect of retail relief on clusters of urban properties (the "High St") is no different to its overall effect. SBRR increases (decreases) the likelihood that a property is occupied by a small (large) business. We also use data on asking prices for rental properties to study the effect of reliefs on rental rates. Rental rates move in the opposite direction to vacancy rates, except in the case of empty property relief. All these findings are consistent with a novel model of directed search in the commercial property market, also presented in the paper.
    Keywords: Commercial Property ; Vacancy ; Occupancy ; Property Taxation JEL Codes: H25 ; H32 ; R30 ; R38
    Date: 2022
  35. By: Christoph Albert; Andrea Caggese; Beatriz González; Victor Martin-Sanchez
    Abstract: We study entry into entrepreneurship during the COVID-19 recession of 2020 using new data from an extensive survey of more than 24, 000 Spanish households, conducted between June and November 2020. We find that while the overall decline in the startup rate in 2020 was large, and of a similar magnitude as that during the Great Recession, the differential impact depending on ex ante income was starkly different. During 2020, the drop in firm entry was entirely concentrated among low -and medium- income households. We show that the entrepreneurship gap between these households and their high-income counterparts is not directly explained by social distancing, since it is mostly driven by the sectors not directly affected by lockdown measures, and it is larger among households that did not suffer a negative income shock during the pandemic. We instead find evidence indicating that high-income households performed relatively better during the COVID-19 recession because they had the means to exploit new business opportunities, thanks to their larger wealth and better access to external finance.
    Keywords: Recessions, financial crisis, entrepreneurship, firm dynamics, coronavirus, COVID-19
    JEL: E20 E32 D22 J23 M13
    Date: 2022–10

This nep-eur issue is ©2023 by Giuseppe Marotta. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.