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on Microeconomic European Issues |
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Issue of 2023‒01‒16
twenty-one papers chosen by Giuseppe Marotta Università degli Studi di Modena e Reggio Emilia |
| By: | Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Olsson, Martin (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This paper examines whether recent advancements in automation and robotics have affected intergenerational income mobility. Using detailed data on all individuals and firms registered in Sweden, we study whether parental exposure to robots at the occupational level and heterogeneous adoption of robots across industries and regions influence children’s outcomes in adulthood. We find that occupational exposure to robots is associated with lower income mobility for children. Based on a shift-share IV approach, we show that the lower intergenerational income mobility originates from industry-regions with a relatively large increase in robot adoption. In addition, we show that these children are worse off in a number of labor market and family-related outcomes. Our results indicate a new channel through which technological changes affect intergenerational mobility and that automation and exposure to new technologies can have long-lasting effects. |
| Keywords: | Intergenerational Mobility; Automation; Robots; Matched Employer-Employee Data |
| JEL: | J24 J31 J62 O33 |
| Date: | 2022–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1451&r=eur |
| By: | Lars Dommermuth (Statistics Norway); Adrian Farner Rogne; Astri Syse |
| Abstract: | Cash-for care policies are contested in many contexts, as they represent an incentive for childrearing over work that may reduce labour market participation, especially among immigrant women. From 1 July 2017, immigrants (both the mother and the father) from outside the European Economic Area must have at least 5 years of residence in Norway to be entitled to cash-for-care benefits. Previous research indicates that this reform did not lead to increased labour market participation of mothers and fathers treated by the reform. In this article, we examine whether the changes in the cash-forcare benefits policy have resulted in a substantive change in income and if the reform had an impact on the childbearing behaviour among those affected by the reform. Our descriptive analyses indicate no change in employment rates and household income. To detect possible changes in fertility, we employ a Difference-in-Difference approach, in which we compare the treatment group with four comparison groups. Overall, we find no substantial effect of the cash-for-care reform on childbearing behaviour. |
| Keywords: | Fertility; cash-for-care; immigrant fertility |
| JEL: | J13 J6 J15 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:993&r=eur |
| By: | Kevin André Pineda-Hernández; François Rycx; Mélanie Volral |
| Abstract: | As immigrants born in developing countries and their descendants represent a growing share of the working-age population in the developed world, their labour market integration constitutes a key factor for fostering economic development and social cohesion. Using a granular, matched employer-employee database of 1.3 million observations between 1999 and 2016, our weighted multilevel log-linear regressions first indicate that in Belgium, the overall wage gap between workers born in developed countries and workers originating from developing countries remains substantial: it reaches 15.7% and 13.5% for first- and second-generation immigrants, respectively. However, controlling for a wide range of observables (e.g. age, tenure, education, type of contract, occupation, firm-level collective agreement, firm fixed effects), we find that, whereas first-generation immigrants born in developing countries still experience a sizeable adjusted wage gap (2.7%), there is no evidence of an adjusted wage gap for their second-generation peers. Moreover, our reweighted, recentered influence function Oaxaca-Blinder decompositions agree with these findings. Indeed, while the overall wage gap for first-generation immigrants born in developing countries is driven by unfavourable human capital, low-paying occupational/sectoral characteristics, and a wage structure effect (e.g. wage discrimination), the wage gap for their second-generation peers is essentially explained by the fact that they are younger and have less tenure than workers born in developed countries. Furthermore, our results emphasize the significant moderating role of geographical origin, gender, and position in the wage distribution. |
| Keywords: | Immigrants; intergenerational studies; labour market integration; wage decompositions; unconditional quantile regressions; employer-employee data |
| JEL: | J15 J16 J21 J24 J31 J61 |
| Date: | 2022–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/352284&r=eur |
| By: | Golin, Marta (University of Zurich); Romarri, Alessio (University of Milan) |
| Abstract: | In this paper, we empirically evaluate the effect of exposure to broadband Internet on attitudes towards immigrants. We combine innovative survey data from Spain with information on the characteristics of the Spanish telephony infrastructure. To address the endogeneity of Internet availability, we exploit the fact that high-speed Internet in its early phases was supplied through the existing fixed telephone lines. We use landlines penetration as an instrument for broadband diffusion at the municipality level, and use data from both the pre- and post-Internet period to estimate a difference-in-difference instrumental variable model. We document a positive effect of broadband Internet penetration on attitudes towards immigrants at the municipality level. This result is particularly strong among young and urban individuals. Looking at mechanisms, we find that broadband Internet is associated with a better knowledge of (national) immigration dynamics and smaller concerns about the effects of migration on the labor market. Finally, using a combination of survey and electoral data, we find that broadband Internet penetration reduces political support for the Partido Popular, Spain's traditional right-wing party. |
| Keywords: | internet, attitudes, immigration |
| JEL: | D72 D83 J15 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15804&r=eur |
| By: | Bremer, Björn (Max Planck Institute for the Study of Societies); Bürgisser, Reto (University of Zurich) |
| Abstract: | It is commonly assumed that voters favor lower taxes, which undermines the ability of governments to raise revenues. How does the demand for lower taxes change when it involves fiscal trade-offs? Who supports tax cuts at all costs? We use a survey experiment conducted in four European countries (Germany, Italy, Spain, and the UK) to answer these questions, studying preferences on income taxes, value added taxes (VAT), and top income taxes. The results show that support for income tax and VAT cuts drops profoundly when it implies lower government spending or higher government debt. Lower top income taxes are always unpopular. Both interest and ideology influence preferences, but for cross-pressured people, ideology dominates: high-income voters that are left-wing oppose tax cuts. The results are important because they suggest that a progressive coalition against lower taxes – including low-income voters and the high-income left – is possible. |
| Date: | 2022–12–27 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:e6ds9&r=eur |
| By: | Schmid, Ramona |
| Abstract: | With its introduction in 2015, the statutory minimum wage in Germany intends to benefit primarily low-wage workers. Thus, this paper aims at estimating the effectiveness of the im- plemented wage floor on gender wage gaps in the lower half of the wage distribution. Using administrative data, distinct regional differences regarding magnitudes of wage differentials and responses to the minimum wage are identified. Overall, wage gaps between men and women at the 10th percentile decrease by 2.46 and 6.34 percentage points respectively in the West and East of Germany after 2015. Applying counterfactual wage distributions, the study provides new evidence that around 60% and even 95% of the decline result from the introduction of the minimum wage in each region. Further, group-specific analyses identify concrete responses on the basis of age, educational level and occupational activity. Having yearly data, the study ad- ditionally reveals new results on the impact of the successive minimum wage raises in 2017 and 2019. Counterfactual aggregate decompositions of gender wage gaps finally indicate a decrease in discriminatory remuneration structures in the West of Germany due to the introduced wage floor. |
| Keywords: | Gender Wage Gap, Minimum Wage, Germany |
| JEL: | J16 J31 J38 J71 J78 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hohdps:062022&r=eur |
| By: | Luigi Biagini; Federico Antonioli; Simone Severini |
| Abstract: | Total factor productivity (TFP) is a key determinant of farm development, a sector that receives substantial public support. The issue has taken on great importance today, where the conflict in Ukraine has led to repercussions on the cereal markets. This paper investigates the effects of different subsidies on the productivity of cereal farms, accounting that farms differ according to the level of TFP. We relied on a three-step estimation strategy: i) estimation of production functions, ii) evaluation of TFP, and iii) assessment of the relationship between CAP subsidies and TFP. To overcome multiple endogeneity problems, the System-GMM estimator is adopted. The investigation embraces farms in France, Germany, Italy, Poland, Spain and the United Kingdom using the FADN samples from 2008 to 2018. Adding to previous analyses, we compare results from different countries and investigate three subsets of farms with varying levels of TFP. The outcomes confirm how CAP negatively impacts farm TFP, but the extent differs according to the type of subsidies, the six countries and, within these, among farms with different productivity groups. Therefore there is room for policy improvements in order to foster the productivity of cereal farms. |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2212.03503&r=eur |
| By: | Ingwersen, Kai (Leibniz University of Hannover); Thomsen, Stephan L. (Leibniz University of Hannover) |
| Abstract: | This paper investigates the effects of the introduction of a statutory minimum wage in Germany on the wages and employment of migrants. Migrants are an overrepresented group in the low-wage sector and can be expected to particularly benefit from a minimum wage. We combine a "differential trend adjusted difference-in-differences estimator" (DTADD) and descriptive evidence to evaluate the impact of the minimum wage introduction in 2015 on hourly wages, monthly salaries, working hours and changes in employment and wage distribution. Contrary to expectations, our results show that the introduction of the minimum wage has weakened the position of migrants in the low-wage sector compared to their native counterparts. We observe an increase in part-time employment, a less pronounced decline in unemployment and a greater reduction in weekly working hours among migrants. The introduction of the minimum wage caused a temporary convergence in hourly wages between migrants and natives, which subsequently turned into a wage divergence. Migrant men in the low-wage sector have been particularly negatively affected by the introduction of the minimum wage. Moreover, increasing hourly wages have not translated into higher monthly salaries, thus widening wage inequality between migrants and natives. |
| Keywords: | minimum wage, migrants, differential trend adjusted difference-in-differences, SOEP |
| JEL: | J31 J63 J38 J21 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15823&r=eur |
| By: | Berggren, Niclas (Research Institute of Industrial Economics (IFN)); Ljunge, Martin (Research Institute of Industrial Economics (IFN)); Nilsson, Therese (Research Institute of Industrial Economics (IFN)) |
| Abstract: | We highlight a new factor behind integration: tolerance in the immigrants’ background culture. We hypothesize that it is easier to partake of economic, civic-political, and social life in a new country for a person stemming from a culture that embodies tolerance towards people who are different. We test this by applying the epidemiological method, using a tolerance index based on two indicators from the World Values Survey – the share that thinks it important to teach children tolerance and the share that considers homosexuality justified – as our main independent variable. Our outcomes are indices of individual-level economic, civic-political, and cultural integration outcomes for immigrants of the second generation with data from the European Social Survey. The results indicate that tolerance in the background culture is a robust predictor of integration among children of immigrants in European societies. |
| Keywords: | Tolerance; Culture; Immigration; Integration; Values |
| JEL: | F22 F66 J15 Z13 Z18 |
| Date: | 2022–12–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1447&r=eur |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:648&r=eur |
| By: | Nicola Curci (Bank of Italy); Marco Savegnago (Bank of Italy); Giordano Zevi (Bank of Italy); Roberta Zizza (Bank of Italy) |
| Abstract: | We analyse the impact of the marked and unexpected increase in inflation recorded since the second half of 2021 on Italian households’ purchasing power. Exploiting microsimulation tools, we are able to quantify the extent to which government measures supporting households’ incomes and lessening energy price hikes, mitigated the distributional impact of the inflationary shock. According to our estimates, in 2022 the measures attenuated inflation on average by slightly less than 2 percentage points and reduced the impact of the shock on households’ purchasing power by almost €32 billion (from more than €80 billion to less than €50 billion). This implies that in 2022 government intervention reduced the expected drop in purchasing power from an average €3, 200 per household to about €2, 000, with a relatively more marked effect for low-income households. Evaluated on the basis of both their cost for the public finances and their impact on inequality, the strengthening of the electricity and gas social bonuses, targeted at less well-off households, was the most effective intervention while untargeted price reductions (such as the decrease in VAT rates on gas tariffs or lower excise duties on fuel) were the least effective. The one-off allowances (€200 and €150 bonuses) and the other measures affecting take-home pay (reduction of social security contributions paid by employees and the advance partial payment of pension revaluations) were only moderately effective since these measures, being conditional on individual income, also benefit wealthy households. |
| Keywords: | inflation, energy, redistribution, inequality, microsimulation |
| JEL: | E31 E21 D31 H23 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_738_22&r=eur |
| By: | Panagiotis Arsenis (University of Surrey); Miguel Flores (National College of Ireland) |
| Abstract: | We study whether the completion of an optional professional year placement during undergraduate studies enhances job quality, in terms of earnings, job security and career _t, for economics graduates from a UK university. Using linear and discrete choice models, we estimate the effect of doing a professional year placement on four graduate outcomes that capture job quality and use a rich data set to control for demographics, educational background, academic achievement, degree, and graduate job characteristics. To account for possible self-selection bias, we use propensity score matching. We find that graduates who did a professional year placement earn 6.5% higher salaries than non-placement graduates, but the salary gap becomes statistically insignificant once we control for self-selection. Similarly, a professional year placement has no effect on job security. However, we find a positive effect of professional year placement on career fit: placement graduates are more likely to find jobs that fit their career plans than non-placement graduates, which holds even after controlling for self-selection. The empirical findings also show that job characteristics, like location and type of industry, and school background are also important factors contributing to graduates' employment quality. Finally, we find no differences in job quality due to gender. |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:sur:surrec:0922&r=eur |
| By: | Daniela Del Boca; Chiara Daniela Pronzato; Lucia Schiavon |
| Abstract: | In this research, we analyze the impact of attending parenting courses on time use of parents and children, in different Italian municipalities. The courses were offered during the schooling year 2020- 21 within the framework of the social program “FA.C.E. Farsi Comunità Educanti†, supported by the Italian Government. The effect of the program was estimated through a before-after design with time controls for the period in which the course started or ended (the beginning and the end of the courses varied across cities). We find that attending the course increased the regular use of formal childcare together with parental awareness that child care services support working parents. Parents were more likely to watch cartoons with children and recognized indeed the educational contribution of TV but not of other digital devices. |
| Keywords: | parenting, use of time, digital devices, educational activities, childcare |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wchild:106&r=eur |
| By: | Bar-Haim, Eyal; Chauvel, Louis; Gornick, Janet C.; Hartung, Anne |
| Abstract: | Studying twelve countries over 30 years, we examine whether women’s educational expansion has translated into a narrowing of the gender gap in earnings when including persons with zero earnings. As educational attainment is cohort-dependent, an Age-Period-Cohort analysis is most appropriate in our view. Using the micro data from the Luxembourg Income Study (LIS) Database, we show that while, in terms of attainment of tertiary education, women have caught up and often even outperform men, substantial gender differences in our earnings measure persist in all countries. Using the Blinder-Oaxaca decomposition method in an innovative age-period-cohort approach, we demonstrate that the role of education in explaining gender earnings differences has been limited and even decreased over cohorts. We also conclude that, when including persons not receiving earnings, earnings differences at levels far from gender equality will likely persist in the future, even if the “rise of women” in terms of education continues – as the share of women in higher education increases and the returns to education in particular for women declines. (Stone Center on Socio-Economic Inequality Working Paper) |
| Date: | 2022–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:dkc76&r=eur |
| By: | Steffen Peters (Max Planck Institute for Demographic Research, Rostock, Germany) |
| JEL: | J1 Z0 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2022-037&r=eur |
| By: | Bustos, Emil (Research Institute of Industrial Economics (IFN)); Engist, Oliver (Stockholm School of Economics); Martinsson, Gustav (Royal Institute of Technology); Thomann, Christian (Royal Institute of Technology) |
| Abstract: | We study the impact of financing constraints on corporate risk management. Using data on credit scores matched with unique information on firm level commercial insurance purchases, we find that financing constraints lead to higher insurance spending. We adopt a regression discontinuity design and show that financially constrained firms spend 5–14% more on insurance than otherwise similar unconstrained firms. Our findings add new insights to the longstanding empirical puzzle of whether financially constrained firms engage more in risk management. Furthermore, our results shed light on risk management in smaller, mostly private firms. |
| Keywords: | Financing Constraints; Risk Management; Insurance Demand; Credit Scores |
| JEL: | D22 D25 G22 G32 |
| Date: | 2022–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1452&r=eur |
| By: | Jan Brzozowski (Jagiellonian University, Cracow, Poland.); Nicola Daniele Coniglio (University of Bari Aldo Moro, Italy) |
| Abstract: | International migration represents a potential channel for the transmission of norms, attitudes, and values back to the home countries. In this paper, we explore how the international migration of individuals affects tax morale and aversion to the free-riding of their household members left in the home country. We use a rich longitudinal household-level database which is representative of Polish society in the period 2007- 2015 — one of the most important countries of emigration in the EU — and allows us to observe social attitudes and values of individuals before and after the actual migration of a member of the household. Our results show that having a migrant in the household has a significant and positive effect on tax morale and increases aversion toward free-riding of those who stay put. We demonstrate that the transmission of this important form of social remittances crucially depends on the characteristics — gender, level of education, role in the household — of both those who migrate and those who stay put within the household. The identification of the effects relies on individual-level longitudinal data which allows us to rule out any time-constant confounding factor affecting both international migrations of family members and individual attitudes toward tax avoidance. |
| Keywords: | international migration, social remittances, values’ transfer, tax morale |
| JEL: | D83 F22 F24 H26 P20 Z10 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:bai:egeiwp:egei_wp-3_2022&r=eur |
| By: | Breda, Thomas (Paris School of Economics); Haywood, Luke (Mercator Research Institute on Global Commons and Climate Change (MCC)); Wang, Haomin (University of Konstanz) |
| Abstract: | Recent empirical literature documents that targeted tax reductions or minimum wages can have unintended reallocation and spillover effects on workers not directly targeted by these policies. We quantify these effects using an equilibrium search-and-matching model estimated on French data before a low-wage payroll tax reduction in 1995; the model features heterogeneous workers and firms, labor taxation, and a minimum wage. Based on our model, the tax reduction led to changes in the vacancy distribution such that it becomes harder for workers to move up the job ladder in terms of firm productivity. We refer to this as the negative reallocation effect. The tax reduction also increased labor force participation of low-productivity workers, leading to a negative spillover effect because these workers create congestion in the labor market, lowering the job-finding rate for all workers. Given these unintended effects, low-wage tax reduction should cover jobs in a broad wage range. Finally, we find that the efficiency-maximizing policy mix involves moderately regressive payroll taxation and a low but binding minimum wage. |
| Keywords: | payroll tax, minimum wage, equilibrium job search, worker and firm heterogeneity |
| JEL: | J64 E24 H24 J38 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15810&r=eur |
| By: | Doris, Aedin (National University of Ireland, Maynooth); O'Neill, Donal (National University of Ireland, Maynooth); Sweetman, Olive (National University of Ireland, Maynooth) |
| Abstract: | This paper explores gender wage dynamics using an administrative dataset covering Irish graduate earnings from 2010-2020. Our data allows us to look at a broad range of degrees and compare workers who are identical in important observable characteristics. We find that although male and female graduates have similar returns to study field immediately after graduation, a substantial gap soon emerges. This is particularly true when considering women with children and is driven by a 27 percent fall in earnings immediately after childbirth. We find no striking differences between fields of study; there is a substantial and persistent motherhood effect for all field groupings. We examine and dismiss the possibility that the gender difference in earnings dynamics is driven by job mobility; in fact, almost all of the difference is accounted for by changes within a job. Although there is a large and persistent reduction in hours of work after childbirth, this does not seem to explain all of the reduction in earnings. |
| Keywords: | motehrhood penalty, gender pay gap, field of study |
| JEL: | J01 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15805&r=eur |
| By: | Altmann, Steffen (IZA and University of Copenhagen); Glenny, Anita Marie (Aarhus University); Mahlstedt, Robert (University of Copenhagen); Sebald, Alexander (Copenhagen Business School) |
| Abstract: | We study how online job search advice affects the job search strategies and labor market outcomes of unemployed workers. In a large-scale field experiment, we provide job seekers with vacancy information and occupational recommendations through an online dashboard. A clustered randomization procedure with regionally varying treatment intensities allows us to account for treatment spillovers. Our results show that online advice is highly effective when the share of treated workers is relatively low: in regions where less than 50% of job seekers are exposed to the treatment, working hours and earnings of treated job seekers increase by 8.5–9.5% in the year after the intervention. At the same time, we find substantial negative spillovers on other treated job seekers for higher treatment intensities, resulting from increased competition between treated job seekers who apply for similar vacancies. |
| Keywords: | unemployment, job search, job search assistance, public policy, field experiments, information frictions, occupational recommendations, online advice |
| JEL: | J62 J23 J68 D83 C93 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15830&r=eur |
| By: | Kyyrä, Tomi (VATT, Helsinki); Tuomala, Juha (VATT, Helsinki) |
| Abstract: | In Finland, large firms are partially liable for the costs of disability and unemployment benefits paid to their former workers. To estimate the effects of such costs, we exploit a reform that extended this cost-sharing to cover a new group of blue-collar workers. We show that experience rating in disability insurance reduces inflows to sickness and disability benefits and increases participation in vocational rehabilitation programs, whereas employers' unemployment insurance costs reduce excess layoffs of older workers who are eligible for extended unemployment benefits until retirement age. We find no evidence of spillover effects: employers' costs in one benefit type do not affect inflows to other types of the benefits. |
| Keywords: | experience rating, coinsurance, disability insurance, unemployment insurance |
| JEL: | J14 J26 H32 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15797&r=eur |