nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2023‒06‒19
28 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Ethnic spatial dispersion and immigrant identity By Constant, Amelie F.; Schüller, Simone; Zimmermann, Klaus F.
  2. Educational disparities in disability-free life expectancy across Europe: a focus on the East-West gaps from a gender perspective By Donata Stonkute; Angelo Lorenti; Jeroen Spijker
  3. Temperature and Fertility: Evidence from Spanish Register Data By Keivabu, Risto Conte; Cozzani, Marco; Wilde, Joshua
  4. Longer Careers: A Barrier to Hiring and Coworker Advancement? By Ferrari, Irene; Kabátek, Jan; Morris, Todd Stuart
  5. The Geography of Intergenerational Education Mobility in Italy: Trends and Mediating Factors By Debora Di Gioacchino; Laura Sabani; Stefano Usai
  6. 'Earned, Not Given'? The Effect of Lowering the Full Retirement Age on Retirement Decisions By Dolls, Mathias; Krolage, Carla
  7. Robots, Occupations, and Worker Age: A Production-Unit Analysis of Employment By Deng, Liuchun; Müller, Steffen; Plümpe, Verena; Stegmaier, Jens
  8. Too worried about the environment to have children? Or more worried about the environment after having children? The reciprocal relationship between environmental concerns and fertility By Steffen Peters; Erich Striessnig; Maria Rita Testa; Alessandra Trimarchi; Natalie Nitsche
  9. Inheritance of fields of study By Altmejd, Adam
  10. Negative labor supply shocks and adjustments of training in firms: Evidence from worker outflows from German border regions By Caroline Neuber-Pohl; Damiano Pregaldini; Uschi Backes-Gellner; Sandra Dummert; Harald Pfeifer
  11. Individualized benefits and access to active labor market programs boost refugee women’s economic integration By Bratu, Cristina; Martén, Linna; Ottosson, Lillit
  12. Unsafe temperatures, unsafe jobs: The impact of weather conditions on work-related injuries By Filomena, Mattia; Picchio, Matteo
  13. Forward-Looking Labor Supply Responses to Changes in Pension Wealth: Evidence from Germany By Artmann, Elisabeth; Fuchs-Schündeln, Nicola; Giupponi, Giulia
  14. Child Health, Parental Well-Being, and the Social Safety Net By Adhvaryu, Achyuta; Daysal, N. Meltem; Gunnsteinsson, Snaebjorn; Molina, Teresa; Steingrimsdottir, Herdis
  15. Employing the Unemployed of Marienthal: Evaluation of a Guaranteed Job Program By Kasy, Maximilian; Lehner, Lukas
  16. Relational Skills and Corporate Productivity in a Comparative Size Class Perspective By Leonardo Becchetti; Sara Mancini; Nazaria Solferino
  17. Dual labor markets in Spain:a firm-side perspective By Iván Auciello-Estévez; Josep Pijoan-Mas; Pau Roldan-Blanco; Federico Tagliati
  18. What if she earns more? Gender norms, income inequality, and the division of housework. By Iga Magda; Ewa Cukrowska-Torzewska; Marta Palczyńska
  19. Mapping educational disparities in life-cycle consumption By Svend E. Hougaard Jensen; Sigurdur P. Olafsson; Thorsteinn S. Sveinsson; Gylfi Zoega
  20. Minimum wages, productivity, and reallocation By Hälbig, Mirja; Mertens, Matthias; Müller, Steffen
  22. Workers' behavior after safety regulations: Impact evaluation of the Spanish Occupational Safety and Health Act By Delgado-Cubillo, Pablo; Martín Román, Ángel L.
  23. Does a Flexible Parental Leave System Stimulate Maternal Employment? By Ziegler, Lennart; Bamieh, Omar
  24. Precautionary Fertility: Conceptions, Births, and Abortions around Employment Shocks By Anna Bárdits; Anna Adamecz; Márta Bisztray; Andrea Weber; Ágnes Szabó-Morvai
  25. The different returns to cognitive ability in the labor and capital markets By Bastani, Spencer; Karlsson, Kristina; Waldenström, Daniel
  26. Neutralizing the Tentacles of Organized Crime. Assessment of the Impact of an Anti-Crime Measure on Mafia Violence in Italy By Anna Laura Baraldi; Erasmo Pagani; Marco Stimolo
  27. Labour costs and the decision to hire the first employee By Bart Cockx; Sam Desiere
  28. The price of flexible jobs: Wage differentials between permanent and flexible jobs in The Netherlands By Cindy Biesenbeek; Maikel Volkerink

  1. By: Constant, Amelie F.; Schüller, Simone; Zimmermann, Klaus F.
    Abstract: The role of ethnic clustering in ethnic identity formation has remained unexplored, mainly due to missing detailed data. This study closes the knowledge gap for Germany by employing a unique combination of datasets, the survey data from the German Socio-Economic Panel and disaggregated information at low geographical levels from the last two but still unexploited full German censuses, 1970 and 1987. Utilizing the exogenous placement of immigrants during the recruitment era in the 1960s and 1970s we find that local co-ethnic concentration affects immigrants' ethnic identity. While residential ethnic clustering strengthens immigrants' retention of an affiliation with their origin (minority identity), it weakens identification with the host society (majority identity). The effects are nonlinear and become significant only at relatively high levels of co-ethnic concentration for the minority identity and at very low levels of local concentration for the majority identity. The findings are robust to an instrumental variable approach.
    Keywords: ethnic minorities, residential segregation, ethnic identity, spatial dispersion, ethnic clustering, ethnic enclaves
    JEL: J15 R23 Z10
    Date: 2023
  2. By: Donata Stonkute (Max Planck Institute for Demographic Research, Rostock, Germany); Angelo Lorenti (Max Planck Institute for Demographic Research, Rostock, Germany); Jeroen Spijker
    Abstract: Education plays a crucial role in shaping the health outcomes of adults. This study examines the relationship between educational attainment and health across Europe. Using data from the Survey of Health, Ageing and Retirement in Europe, we estimate educational inequalities in disability-free life expectancy (DFLE) by gender in seven Western European (2004-2019) and three Central and Eastern European (CEE) (2010-2019) countries. We exploit a novel approach that combines the Sullivan method and multivariate life tables to calculate DFLE using SHARE data. We find that educational differences in DFLE favoring the better-educated exist in both CEE and Western European countries, but also that the differences across countries are more pronounced among the low-educated. While the absolute gaps in DFLE between low- and high-educated individuals in CEE and Western European countries are similar, the educational disparities in DFLE impose a more significant burden on the CEE populations due to their overall lower life expectancy. Educational inequalities are larger among women than among men in CEE countries, while the results for Western European countries are mixed. Our findings further highlight the important role of the institutional context in mitigating or exacerbating educational inequalities in health.
    JEL: J1 Z0
    Date: 2023
  3. By: Keivabu, Risto Conte (Max Planck Institute for Demographic Research); Cozzani, Marco (University of Florence); Wilde, Joshua (Max Planck Institute for Demographic Research)
    Abstract: In this paper, we combine administrative data for continental Spain from 2010 to 2018 with meteorological data to identify the effect of temperature on fertility. We demonstrate that warm (25-30°C) and hot days (>30°C) decrease total fertility rate (TFR) in Spain, and that the estimated decrease is higher than the effects estimated in previous literature for other countries. Moreover, we show that locations with a colder climate are more vulnerable to the impact of heat. Our results suggest that the global impact of climate change on population dynamics may be understated, especially without adaptation and mitigation measures, and that temperature increases may exacerbate the socio-economic consequences of low fertility such as population ageing.
    Keywords: fertility, TFR, temperature, heat, Spain
    JEL: J13 J11 J18 I12 Q54 Q56
    Date: 2023–05
  4. By: Ferrari, Irene (Ca' Foscari University of Venice); Kabátek, Jan (University of Melbourne); Morris, Todd Stuart (ARC Centre of Excellence in Population Ageing Research (CEPAR))
    Abstract: Government policies are encouraging older workers to delay retirement, which may curb younger workers' career advancement. We study a Dutch reform that raised the retirement age by 13 months and nearly tripled employment at age 66. Using monthly linked employer-employee data, we show that affected firms delay and decrease replacement hiring, and coworkers' earnings fall via reductions in hours worked, wages, and promotions. Combined, the hiring and coworker spillovers offset most of the additional hours worked by older workers, disproportionately affect career advancement for younger workers and women, and considerably increase the policy's ratio of welfare costs to fiscal savings.
    Keywords: retirement reform, labor demand, internal labor markets, firms, coworker spillovers
    JEL: H55 J23 J26 J63
    Date: 2023–04
  5. By: Debora Di Gioacchino; Laura Sabani; Stefano Usai
    Abstract: Using survey data, we contribute to the literature on temporal evolution of educational attainment by parental background by providing the estimates of the intergenerational education mobility in Italian regions across seven birth cohorts. Results of intergenerational correlation between parents and children’s education show that in the last fifty years mobility increased in almost all regions, although for the youngest cohorts this decline seems to have ended. Northeast regions and Central regions are the most mobile, followed by Northwest and South regions. This pattern is robust to alternative measures of relative mobility. As expected, we find that - at least for the youngest cohorts - there is a negative correlation between mobility and economic factors such as unemployment and poverty. This suggests that credit constraints explain bottom tail persistence in education. A positive correlation between the intergenerational education mobility and the degree of inequality as measured by the GINI coefficient exists across Italian regions, consistent with the "Great Gatsby curve" documented across countries. In addition, we find a positive association between mobility, indexes of social capital and the number of graduates in the regions. Measures of school quality (PISA test) are positively correlated with regional educational mobility.
    Keywords: EIntergenerational Mobility; Education and Inequality; Italy; Geography
    JEL: J62 I21 I28
    Date: 2023–02
  6. By: Dolls, Mathias (Ifo Institute for Economic Research); Krolage, Carla (Ifo Institute for Economic Research)
    Abstract: This paper analyzes behavioral responses to a 2014 reform in the German public pension system that lowered the full retirement age (FRA) of individuals with a long contribution history by up to two years and framed the new FRA as reference age for retirement. Using administrative data from public pension insurance accounts, we first document a substantial bunching response at the FRA exceeding the control group's bunching by 83%. Second, we show in a difference-in-difference setting that a 1.0 year decrease in the FRA leads to a reduction in the average pension claiming age by 0.3-0.4 years. Treated individuals neither have poorer health nor are more likely to be liquidity-constrained than individuals in the control group. Our results suggest that the strong responses to the reform are driven both by the new FRA serving as a reference point and by financial incentives. Estimated fiscal costs of the reform are at the upper end of the range of previous back-of-theenvelope calculations.
    Keywords: retirement age, early retirement, pension reform
    JEL: H55 J14 J18 J26
    Date: 2023–05
  7. By: Deng, Liuchun (Yale-NUS College); Müller, Steffen (IWH Halle); Plümpe, Verena (IWH Halle); Stegmaier, Jens (Institute for Employment Research (IAB), Nuremberg)
    Abstract: We analyze the impact of robot adoption on employment composition using novel micro data on robot use of German manufacturing plants linked with social security records and data on job tasks. Our task-based model predicts more favorable employment effects for the least routine-task intensive occupations and for young workers, the latter being better at adapting to change. An event-study analysis for robot adoption confirms both predictions. We do not find decreasing employment for any occupational or age group but churning among low-skilled workers rises sharply. We conclude that the displacement effect of robots is occupation-biased but age neutral whereas the reinstatement effect is age-biased and benefits young workers most.
    Keywords: robots, jobs, occupation, worker age
    JEL: J23
    Date: 2023–05
  8. By: Steffen Peters (Max Planck Institute for Demographic Research, Rostock, Germany); Erich Striessnig; Maria Rita Testa (Max Planck Institute for Demographic Research, Rostock, Germany); Alessandra Trimarchi (Max Planck Institute for Demographic Research, Rostock, Germany); Natalie Nitsche (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: -Climate change is one of the central challenges for contemporary societies. It is widely discussed as triggering “climate anxiety, ” and as dampening the desire to reproduce, particularly among young people. Conversely, parenthood could affect people’s attitudes and behaviors toward the environment. Empirically, however, little is known about this potentially reciprocal relationship due to the lack of longitudinal data of sufficient temporal scope. Our study extends this debate using unique data from the German Socio-Economic Panel Study (GSOEP), which contains both full fertility histories and yearly measures of environmental concerns (1984 to 2020). We follow individuals born between 1965 and 2000 through time and investigate a) whether environmental concerns predict first birth quantum and timing, and b) whether environmental concern trajectories vary between eventual parents and the childless. Results show no significant relationship between environmental concerns early in or throughout the life course and first birth timing or quantum, except for individuals born before 1970, who delayed parenthood if they had substantial environmental concerns. Moreover, while some differences in environmental concern trajectories between eventual parents and the childless are found, they seem to be largely rooted in unobserved heterogeneity.
    JEL: J1 Z0
    Date: 2023
  9. By: Altmejd, Adam (SOFI, Stockholm Universit)
    Abstract: University graduates are more than three times as likely to hold a degree in the field that their parent graduated from. To estimate how much of this association is caused by the educational choices of parents, I exploit admission thresholds to university programs in a regression discontinuity design. I study individuals who applied to Swedish universities between 1977 and 1992 and evaluate how their enrollment in different fields of study increases the probability that their children later study the same topic. I find strong causal influence. At the aggregate level, children become 50% more likely to graduate from a field if their parent has previously enrolled in it. The effect is positive for most fields, but varies substantially in size. Technology, engineering, medicine, business exhibit the largest, significant, effects. For these fields, parental enrollment increases child graduation probability with between 2.0 and 12.8 percentage points. I show that the parent’s labor market experience plays an important role in explaining the results, but parental field enrollment does not increase subject-specific skills, nor is it associated with higher returns to earnings. I find little evidence for comparative advantage being the key driver of field inheritance. Rather, parents seem to function as role models, making their own field choice salient. This is indicated by the fact that children become less likely to follow parents with weak labor market prospects, and that children are more likely to follow the parent with the same gender.
    Keywords: intergenerational transmission; fields of study;
    JEL: I24 J62
    Date: 2023–04–28
  10. By: Caroline Neuber-Pohl; Damiano Pregaldini; Uschi Backes-Gellner; Sandra Dummert; Harald Pfeifer
    Abstract: By exploiting a sharp outflow of German workers to Switzerland after the opening of borders, we examine the impact of an exogenous negative labor supply shock on training in firms. In Germany this training takes place in the form of apprenticeships. Using detailed administrative data for both sides of the border, we find that the negative supply shock of skilled workers leads to an increase in the number of apprentices in firms in Germany despite a significant decrease in apprentice wages. These two effects can be explained with a standard two-factor production model. Our results suggest that firms react by substituting outflowing skilled workers with newly trained apprentices. Moreover, the apprentice supply increased because adolescents react to the better employment prospects due to the open borders. The results complement recent studies on the effects of negative labor supply shocks and provide important empirical evidence for the functioning of training markets.
    Keywords: Negative labor supply shock, wage effects, training incentives, apprenticeship training supply and demand
    JEL: J21 J22 J61 R23
    Date: 2023–05
  11. By: Bratu, Cristina; Martén, Linna (Swedish Institute for Social Research, Stockholm University); Ottosson, Lillit (Swedish Institute for Social Research, Stockholm University)
    Abstract: The economic and social integration of refugees is a key policy concern. The situation of refugee women is particularly challenging, as many never enter the labor force. We study a reform of the Swedish integration program that aimed to tackle this issue by increasing women’s participation in and access to active labor market programs. Using administrative data and a regression discontinuity design, we show that the reform resulted in lasting improvements in women’s earnings and employment. We find no effects for men. Additional analyses suggest that individualizing benefits and early registration with the Public Employment Service are key mechanisms.
    Keywords: Refugees; Integration; Active Labor Market Program
    JEL: J08 J15 J61
    Date: 2023–05–23
  12. By: Filomena, Mattia; Picchio, Matteo
    Abstract: We estimate the impact of temperatures on work-related accident rates in Italy by using daily data on weather conditions matched to administrative daily data on work-related accidents. The identification strategy of the causal effect relies on the plausible exogeneity of short-term daily temperature variations in a given spatial unit. We find that both high and cold temperatures impair occupational health by increasing workplace injury rates. The positive effect of warmer weather conditions on work-related accident rates is larger for men, in manufacturing and service sectors, and for workplace injuries. Colder temperatures lead to a substantial increase in commuting accidents, especially during rainy days.
    Keywords: climate change, temperatures, weather conditions, work-related accidents, job safety
    JEL: J28 J81 Q52 Q54
    Date: 2023
  13. By: Artmann, Elisabeth (Institute for Employment Research (IAB), Nuremberg); Fuchs-Schündeln, Nicola (Goethe University Frankfurt); Giupponi, Giulia (Bocconi University)
    Abstract: We provide new evidence of forward-looking labor supply responses to changes in pension wealth. We exploit a 2014 German reform that increased pension wealth for mothers by an average of 4.4% per child born before January 1, 1992. Using administrative data on the universe of working histories, we implement a difference-in-differences design comparing women who had their first child before versus after January 1, 1992. We document significant reductions in labor earnings, driven by intensive margin responses. Our estimates imply that, on average, an extra euro of pension wealth in a given period reduces unconditional labor earnings by 54 cents.
    Keywords: labor supply, social security, pension wealth
    JEL: H55 J22 J26
    Date: 2023–05
  14. By: Adhvaryu, Achyuta (University of San Diego); Daysal, N. Meltem (University of Copenhagen); Gunnsteinsson, Snaebjorn (Independent Researcher); Molina, Teresa (University of Hawaii at Manoa); Steingrimsdottir, Herdis (Copenhagen Business School)
    Abstract: How do parents contend with threats to the health and survival of their children? Can the social safety net mitigate negative economic effects through transfers to affected families? We study these questions by combining the universe of cancer diagnoses among Danish children with register data for affected and matched unaffected families. Parental income declines substantially for 3-4 years following a child's cancer diagnosis. Fathers' incomes recover fully, but mothers' incomes remain 3% lower 12 years after diagnosis. Using a policy reform that introduced variation in the generosity of targeted safety net transfers to affected families, we show that such transfers play a crucial role in smoothing income for these households and, importantly, do not generate work disincentive effects. The pattern of results is most consistent with the idea that parents' preferences to personally provide care for their children during the critical years following a severe health shock drive changes in labor supply and income. Mental health and fertility effects are also observed but are likely not mediators for impacts on economic outcomes.
    Keywords: child health, income, labor supply, safety net, cash transfers, disincentive effects, long-run effects, mental health, childhood cancers, Denmark
    JEL: I10 J13 J22
    Date: 2023–05
  15. By: Kasy, Maximilian (University of Oxford); Lehner, Lukas (University of Oxford)
    Abstract: We evaluate a guaranteed job program launched in 2020 in Austria. Our evaluation is based on three approaches, pairwise matched randomization, a pre-registered synthetic control at the municipality level, and a comparison to individuals in control municipalities. This allows us to estimate direct effects, anticipation effects, and spillover effects. We find positive impacts of program participation on economic and non-economic well-being, but not on physical health or preferences. At the municipality level, we find a large reduction of long-term unemployment, and no negative employment spillovers. There are positive anticipation effects on subjective well-being, status, and social inclusion for future participants.
    Keywords: job guarantee, pairwise matched randomization, synthetic control
    JEL: I38 J08 J45
    Date: 2023–04
  16. By: Leonardo Becchetti (CEIS & DEF, University of Rome "Tor Vergata"); Sara Mancini (University of Rome "Tor Vergata"); Nazaria Solferino (Università della Calabria)
    Abstract: Based on results from the different fields of the game theoretic literature on strategic interactions and social dilemmas, gift exchange and procedural utility, we argue that corporate social responsibility and relational skills i) with other firms; ii) between employers and workers iii) among workers and iv) with stakeholders are associated to positive effects on productivity. We test our research hypothesis in a comparative perspective on small, medium and large sized Italian firms. We find that size matters when investigating the impact of relational skills on added value per worker after controlling for relevant concurring factors. The identified significant skill related components are: i) corporate policies considering strategic workers’ wellbeing; ii) team working attitudes considered as priority soft skills when hiring workers; iii) initiatives in favour of the productive network operating in the same local area; iv) involvement of stakeholders in CSR projects. Our findings show that the fourth component (stakeholder involvement) is positive and significant for all (small, medium and large) size classes, while the first (workers wellbeing) for small and medium firms, the second (team working) applies mainly to medium firms, and the third (initiative for the local productive network) to medium and large firms. Instrumental variable estimates on the relational skill principal component suggest that a causality link exists beyond these significant correlations. Our conclusion is that scale has an inverse U-shaped effect on the impact of team skills, weakens the impact of gift exchange mechanisms, while it reinforces those of investment in the local productive environment on added value per worker
    Keywords: social dilemma, gift exchange, procedural utility, corporate social responsibility, corporate size
    Date: 2023–05–29
  17. By: Iván Auciello-Estévez (Banco de España); Josep Pijoan-Mas (CEMFI AND CEPR); Pau Roldan-Blanco (Banco de España); Federico Tagliati (Banco de España)
    Abstract: Using comprehensive balance-sheet data for Spain, we document the use of fixed-term and open-ended contracts by firms over the period 2004-2019. We show that the use of temporary contracts is very heterogeneous across firms, with the distribution of the temporary share being severely right-skewed: the median share of temporary employment is only 3%, while the average is 18%. Part of this variation is related to the sector and region where firms operate as well as to the macroeconomic cycle. However, around 80% of the variation reflects differences across firms operating in the same industry, in the same location and at the same point of the business cycle. At the individual level, even after controlling for sector and region, we observe that larger and younger firms make more extensive use of temporary contracts.
    Keywords: dual labor markets, temporary contracts, unemployment
    JEL: D83 E24 J41 L11
    Date: 2023–04
  18. By: Iga Magda; Ewa Cukrowska-Torzewska; Marta Palczyńska
    Abstract: Using data from “Generation and Gender Survey†for Poland, we study the relationship between women’s relative income within the household, as measured by the female share of total household income, and women’s involvement in housework. We find that households in which the woman contributes more to the total household income are more likely to share housework equally. We also find that individual gender norms matter both for women’s involvement in unpaid work at home and for the observed link between the female share of income and inequality between the partners in the division of housework. Women from less traditional households are found to be more likely to share housework equally. However, this negative relationship between the female share of household income and female involvement in housework is not observed among more traditional couples.
    Keywords: household income, income inequality, housework, gender norms
    JEL: D10 D13 D31 J12 J16 J22
    Date: 2023–04
  19. By: Svend E. Hougaard Jensen; Sigurdur P. Olafsson; Thorsteinn S. Sveinsson; Gylfi Zoega
    Abstract: This paper uses data taken from the tax returns of all Icelandic taxpayers in 2005-2019, a period that saw large changes in disposable income around the country’s financial crisis in 2008, to plot the life-cycle path of consumption and income for different education groups and to estimate the level of consumption smoothing. We split households into three groups based on educational attainment: primary education, secondary school, and university. We find that the university educated engage in more consumption smoothing than those without a university degree. We also construct a measure for marginal propensity to consume (MPC) out of transitory income and find that the university educated tend to have a lower MPC than those with less education. This implies that investing in education is an investment not only in higher income and sometimes more fulfilling jobs but also a more stable standard of living. There is a corollary that a higher level of average education can be expected to reduce the magnitude of the business cycle through a lower multiplier.
    JEL: E21 E24
    Date: 2022–11
  20. By: Hälbig, Mirja; Mertens, Matthias; Müller, Steffen
    Abstract: We study the productivity effect of the German national minimum wage by applying administrative firm data. At the firm level, we confirm positive effects on wages and negative employment effects and document higher productivity even net of output price increases. We find higher wages but no employment effects at the level of aggregate industry × region cells. The minimum wage increased aggregate productivity in manufacturing. We do not find that employment reallocation across firms contributed to these aggregate productivity gains, nor do we find improvements in allocative efficiency. Instead, the productivity gains from the minimum wage result from within-firm productivity improvements only.
    Keywords: minimum wage, productivity, reallocation
    JEL: D24 J31 L11 L25
    Date: 2023
  21. By: DE POLI Silvia (European Commission - JRC); GIL-BERMEJO LAZO Celia (European Commission - JRC); LEVENTI Chrysa (European Commission - JRC); MAIER Sofia (European Commission - JRC); PAPINI Andrea (European Commission - JRC); RICCI Mattia (European Commission - JRC); SERRUYS Hannes (European Commission - JRC); ALMEIDA Vanda; CHRISTL Michael; CRUCES Hugo (European Commission - JRC); DE AGOSTINI Paola (European Commission - JRC); GRUNBERGER Klaus (European Commission - JRC); HERNANDEZ Adrian (European Commission - JRC); JEDRYCH VILLA Marta (European Commission - JRC); MANIOS Kostas (European Commission - JRC); MAZZON Alberto (European Commission - JRC); NAVARRO BERDEAL Silvia; PALMA FERNANDEZ Bianey (European Commission - JRC); PICOS Fidel (European Commission - JRC); TUMINO Alberto; VAZQUEZ TORRES Estefanía
    Abstract: This report provides a selection of baseline results and headline indicators from the latest public version (I5.0+) of EUROMOD, the tax-benefit microsimulation model for the EU. We begin by presenting indicators for income inequality and at-risk-of-poverty. We then provide a comparative decomposition of the redistributive effect of the tax-benefit systems across the EU. We study how different Member States achieve various degrees of redistribution through different combinations of progressivity and size of their tax-benefit systems. We then analyse various work incentive indicators both at the intensive and the extensive margin, discussing how effective marginal rates of taxation and replacement rates vary across countries. The report also describes the way EUROMOD can be used to simulate economic shocks leading to labour market transition through the LMA (Labour Market Adjustment) add-on. We illustrate this by simulating the impact of the COVID-19 pandemic and the cushioning effect of policy measures taken by EU Member States. Finally, we present the evolution of the income distribution over the post-financial crisis decade and we compare living standards across EU countries at the top and the bottom of the income distribution.
    Keywords: EUROMOD
    Date: 2023–05
  22. By: Delgado-Cubillo, Pablo; Martín Román, Ángel L.
    Abstract: While the 1995 Occupational Safety and Health Act (OSH) regulation transformed the outlook on workplaces in Spain, characterized by a lack of preventive protection, public statistics have reported an increasing trend in the postregulation workplace accident rates. This study uses microdata from official national statistics to examine the effect of the OSH regulation on the reported accidents while focusing on its severity. Accordingly, we apply a difference-in-difference assessment method where a comparable group is formed by the contemporaneous in itinere accidents (commuting), which are legally and statistically considered work-related accidents but not directly impacted by the OSH regulation, with a focus on the workplace environment. The results reveal that the nonfatal accident rate decreased after the implementation of the regulation. However, when we isolate the effect of the regulation on accidents that usually provoke hard-to-diagnose injuries (dislocations, back pain, sprains, and strains), we obtain a significant increase in the accident rate. Moral hazard mixed effects seem to have played a crucial role in these dynamics through overreporting and/or Peltzman effects, often offsetting accident reduction intended by the OSH regulation.
    Keywords: OSH, impact evaluation, moral hazard, difference-in-difference
    JEL: K31 I18 D04 H43 J28
    Date: 2023
  23. By: Ziegler, Lennart (University of Vienna); Bamieh, Omar (University of Vienna)
    Abstract: This study examines the effect of two recent parental leave reforms in Austria that allow parents to choose leave schemes with varying duration. Using a regression discontinuity design, we find that the introduction of more flexible scheme choices led mothers to take, on average, 1-2 months less of leave. This decrease in leave duration, however, was not accompanied by an employment increase of similar magnitude. To understand the absence of labor supply effects, we examine data on work preferences from the Austrian Microcensus. Child care duties are cited as the primary reason for not seeking work but few mothers indicate that they would start working if better access to formal childcare were available. Switching to the more flexible leave system had a minimal effect on the labor market choices of mothers, as the majority continue to prioritize child care responsibilities and do not consider nurseries as a desirable alternative.
    Keywords: parental leave, gender differences, child care, financial incentives, labor supply, return to work
    JEL: J12 J13 J18 J22 I38
    Date: 2023–05
  24. By: Anna Bárdits (KRTK KTI, Central European University); Anna Adamecz (KRTK KTI, UCL Social Research Institute); Márta Bisztray (KRTK KTI); Andrea Weber (Central European University, CEPR, IZA); Ágnes Szabó-Morvai (KRTK KTI, University of Debrecen)
    Abstract: This paper studies the effects of employment shocks on births and induced abortions. We are the first to show that abortions play a role in fertility responses to job displacement. Furthermore, we document precautionary fertility behavior: the anticipatory response of women to expected labor market shocks. Using individual-level administrative data from Hungary, we look at firm closures and mass layoffs as conditionally exogenous employment shocks in an event study design. After establishing that both shocks have a similarly large and persistent negative effect on employment and wages, we show that women already react to the anticipation of these shocks, and their fertility responses differ substantially for firm closures and mass layoffs. We find that abortions increase by 88% in the year before firm closures, while the number of births is not affected. Mass layoffs have no significant effect on abortions in the preceding year but increase the number of births by 44%. Mass layoffs and firm closures differ in one crucial aspect: pregnant women cannot be laid off until the firm exists, but no such dismissal protection is available in the case of firm closures. Thus, when dismissal protection is available, anticipated employment shocks increase the number of live births, whereas when it is not, they increase the number of abortions. These results suggest that dismissal protection has the potential to support women to keep pregnancies at times of economic shocks.
    Keywords: Abortion, Birth, Pregnancy, Mass layoff, Firm closure
    JEL: I12 J13 J65
    Date: 2023–03
  25. By: Bastani, Spencer (IFAU - Institute for Evaluation of Labour Market and Education Policy); Karlsson, Kristina (Department of Economics, Uppsala University); Waldenström, Daniel (Research Institute of Industrial Economics (IFN))
    Abstract: We investigate the returns to cognitive ability in the labor and capital markets. Using population-wide Swedish military enlistment data and administrative tax records, we find that cognitive ability is much better at predicting capital income than labor earnings. The difference is almost a factor of three and remains substantial even after controlling for education, occupation, savings, inheritance, and parental background. Moreover, ability is significantly positively correlated with wealth returns. Our results provide new insights into why inequality in capital income is greater than in labor income and shed light on the drivers of economic mobility.
    Keywords: Ability; Skills; Education; Capital income; Wealth
    JEL: D31 H20 J24
    Date: 2023–03–31
  26. By: Anna Laura Baraldi (Department of Economics, University of Campania); Erasmo Pagani (Department of Law, University of Naples Federico II); Marco Stimolo (Department of Economic and Social Sciences, Università Politecnica delle Marche)
    Abstract: Organised crime tightens its corrupting influence on politics through violent intimidation. Anti-crime measures that increase the cost of corruption but not of the exercise of violence might accordingly lead mafia-style organizations to retaliate by resorting to violence in lieu of bribery. On the other hand, this kind of anti-crime measure might also induce criminal clans to go inactive, owing to the lower expected payoff from the “business” of influencing politics, which would reduce violence. To determine which of these possible effects is prevalent, we undertake an empirical assessment of the impact of city council dissolution for mafia influence in Italy as prescribed by Decree Law 164/1991 in discouraging violence against politicians in the period 2010-2019. Our difference-in-differences analysis shows that in the dissolved municipalities the enforcement of the Law reduces violence and that the effect persists (at least) for two electoral rounds. The most likely driving channel of this result is the renewed pool of politicians elected after compulsory administration. These findings are robust to a series of endogeneity tests.
    Keywords: Organized Crime, Violence, Anti-corruption measures, Spillovers
    JEL: C25 D73 D78 I38 K42
    Date: 2023–05
  27. By: Bart Cockx (IRES/LIDAM, UCLouvain. Department of Economics, Ghent University, Belgium. IZA, Bonn, Germany. CESIfo, Munich, Germany. ROA, Maastricht University, the Netherlands.); Sam Desiere (Department of Economics, Ghent University, Belgium. IZA, Bonn, Germany.)
    Abstract: Firms without paid employees account for up to 80% of all firms, but only a small minority ever hires. This paper investigates the relationship between labour costs and the decision to hire a first employee and become an employer. Leveraging a unique policy in Belgium that permanently reduced the labour cost of the first employee by 13%, we find that the number of new, first-time employers jumped by 31% immediately following the reform. The elasticity of the probability to hire the first employee with respect to the labour cost is −2.39 [95% CI: −3.45, −1.25].
    Keywords: nonemployers, hiring decisions, payroll taxes, small businesses
    JEL: D22 H25 J08 J23 L26 M13
    Date: 2023–05–17
  28. By: Cindy Biesenbeek; Maikel Volkerink
    Abstract: Employees with a flexible contract, i.e., those with either a temporary contract, temporary agency workers, or those on a contract with flexible working hours, face more job and income insecurity than employees with a permanent contract. In competitive labor markets, they should be compensated for this uncertainty. In most countries, however, wages of flexible jobs are lower than those of permanent jobs. We find that this is also the case for The Netherlands between 2006 and 2019, in particular for men and higher educated employees. A critique on wage comparisons is that sample selection may lead to biased results. We use two methods to control for sample selection - Regression Adjustment and Propensity Score Matching - and find wage differentials close to our baseline estimates.
    Keywords: Wage Gap; Flexible Employment; Earnings; Hourly wages;Wage differential; Non- standard work
    JEL: J31
    Date: 2023–06

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