nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2023‒06‒26
twenty-six papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Healthy immigrants, unhealthy ageing? analysis of health decline among older migrants and natives across European countries By Su Yeon Jang; Anna Oksuzyan; Mikko Myrskylä; Frank J. van Lenthe; Silvia Loi
  2. What determines the shape of migrant and non-migrant populations’ attitudes toward immigration in Europe? By Michaela Šedovič; Lenka Dražanová
  3. How does exposure to COVID-19 influence health and income inequality aversion? By Asaria, Miqdad; Costa-Font, Joan; Cowell, Frank
  4. Tracking in Context: Variation in the Effects of Reforms in the Age at Tracking on Educational Mobility By Grätz, Michael; Heers, Marieke
  5. Intergenerational Scars: The Impact of Parental Unemployment on Individual Health Later in Life By Ubaldi, Michele; Picchio, Matteo
  6. Opening doors for immigrants: The importance of occupational and workplace-based cultural skills for successful labor market entry By Chiara Zisler; Damiano Pregaldini; Uschi Backes-Gellner
  7. Public Opinion and Immigration in Europe: Can Regional Migration Flows Predict Public Attitudes to Immigration? By Lenka Dražanová; Jérôme Gonnot
  8. ‘Earned, Not Given’? The Effect of Lowering the Full Retirement Age on Retirement Decisions By Mathias Dolls; Carla Krolage
  9. Child Health, Parental Well-Being, and the Social Safety Net By Achyuta Adhvaryu; N. Meltem Daysal; Snaebjorn Gunnsteinsson; Teresa Molina; Herdis Steingrimsdottir
  10. Who is to suffer? Quantifying the impact of sanctions on German firms By Görg, Holger; Jacobs, Anna; Meuchelböck, Saskia
  11. Discrimination on the child care market: A nationwide field experiment By Hermes, Henning; Lergetporer, Philipp; Mierisch, Fabian; Peter, Frauke; Wiederhold, Simon
  12. Pension Reforms and Couples’ Labour Supply Decisions By Hamed Moghadam; Patrick Puhani; Joanna Tyrowicz
  13. The Employment Effects of a Wage Subsidy for the Young during an Economic Recovery By Kunze, Astrid; Palczyńska, Marta; Magda, Iga
  14. Parenthood and the Gender Gap in Commuting By Bütikofer, Aline; Karadakic, René; Willén, Alexander
  15. The Career Effects of Union Membership By Dodini, Samuel; Salvanes, Kjell G.; Willén, Alexander; Zhu, Li
  16. Career Preferences and Socio-Economic Background By Paul Schüle
  17. The Effect of Financial Constraints on Inventory Holdings By Bustos, Emil
  18. Re-partnering and fertility By LUPPI, FRANCESCA; Migheli, Matteo; Pronzato, Chiara
  19. How Resilient is Public Support for Carbon Pricing? Longitudinal Evidence from Germany By Sommer, Stephan; Konc, Théo; Drews, Stefan
  20. Managerial Practices and Student Performance: Evidence from Changes in School Principals By Di Liberto, Adriana; Giua, Ludovica; Schivardi, Fabiano; Sideri, Marco; Sulis, Giovanni
  21. EU structural funds and GDP per capita: spatial VAR evidence for the European regions By Sergio Destefanis; Valter Di Giacinto
  22. Employment and Reallocation Effects of Higher Minimum Wages By Moritz Drechsel-Grau
  23. Competition and risk taking in local bank markets: evidence from the business loans segment By Canta, Chiara; Nilsen, Øivind A.; Ulsaker, Simen A.
  24. 2022 Klein lecture. Parental education and invention: the Finnish enigma By Aghion, Philippe; Akcigit, Ufuk; Hyytinen, Ari; Toivanen, Otto
  25. Housing Prices, Airport Noise and an Unforeseeable Event of Silence By Breidenbach, Philipp; Thiel, Patrick
  26. Coworker Networks and the Labor Market Outcomes of Displaced Workers: Evidence from Portugal By Jose Garcia-Louzao; Marta Silva

  1. By: Su Yeon Jang (Max Planck Institute for Demographic Research, Rostock, Germany); Anna Oksuzyan (Max Planck Institute for Demographic Research, Rostock, Germany); Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany); Frank J. van Lenthe; Silvia Loi (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Immigrants face a particularly high risk of unhealthy ageing. It is well-known that the probability of having multiple chronic conditions simultaneously, or multimorbidity, tends to increase with age. This study investigates the immigrant-native disparities in age-related health decline, focusing on the number of chronic health conditions; and considers the heterogeneity of this decline within immigrant populations by origin and receiving country. We use data from the Survey of Health, Ageing and Retirement in Europe on adults aged 50 to 79 from 28 European countries, and employ fixed-effects regression models to account for the unobserved heterogeneity related to individual characteristics, including migration background. Our results indicate that immigrants have a higher number of chronic conditions at all ages relative to their native-born peers, but also that the immigrant-native differential in the number of chronic conditions decreases from age 65 onwards. When considering differences by origin country, we find that the speed of chronic disease accumulation is slower among immigrants from the Americas and the Asia and Oceania country groups than it among natives. When looking at differences by receiving country group, we observe that the speed of health decline is slower among immigrants in Eastern Europe than among natives, particularly at older ages. Our findings suggest that age-related trajectories of health vary substantially among immigrant populations by origin and destination country, which underscore that individual migration histories play a persistent role in shaping the health of ageing immigrant populations throughout the life course.
    JEL: J1 Z0
    Date: 2023
  2. By: Michaela Šedovič; Lenka Dražanová
    Abstract: Attitudes toward immigration are usually investigated from the non-migrant residents’ perspective. Much less is known about how perceptions of immigration policy and immigrants vary across immigration background lines, especially in the wider European context, and whether migrants´ attitudes toward immigration are affected by the same factors and in the same way as those of the nonmigrant population. With still-growing populations of migrants and their descendants in Europe, it is, however, crucial to study interethnic relations not only between migrant and non-migrant populations but also among different immigrant groups. Firstly, we investigate whether immigration attitudes among European migrants are based on intergroup solidarity or, rather, an intergroup threat toward new immigrants and whether minority-specific characteristics have differential effects across the (non-)migrant populations. Employing nine rounds of the European Social Survey from 20 European countries and by estimating multilevel regression models of individual factors affecting (non-)migrants’ attitudes we uncover that first- and second-generation immigrants’ attitudes toward immigration are mostly guided by intergroup solidarity with other immigrants. We further show that minority-specific characteristics work differently across our three sub-samples and that first-generation immigrants’ attitudes become more negative the longer they stay in the host country. The findings contribute to our broader understanding of social cohesion, social inclusion, and intergroup conflict.
    Keywords: attitudes toward immigration, interethnic relations, group membership, diversity, immigrants’ integration
    Date: 2023–01
  3. By: Asaria, Miqdad; Costa-Font, Joan; Cowell, Frank
    Abstract: We study individual aversion to health and income inequality in three European countries (the United Kingdom, Germany, and Italy), its determinants and especially, the effects of exposure to three types of COVID-19 specific shocks affecting individuals’ employment status, their income and health. Using evidence of representative samples of the population in the UK, we compare levels of health- and income-inequality aversion in the UK between the years 2016 and 2020 we find a significant increase in inequality aversion in both income and health domains. We show evidence suggesting that inequality aversion is higher in the income domain than in the health domain. Furthemore, we show that inequality aversion in both domains increases in age and education and decreasing in income and risk appetite. However, people directly exposed to major health shocks during the COVID-19 pandemic generally exhibited lower levels of aversion to both income and health inequality. Finally, we show that inequality aversion was significantly higher among those at higher risk of COVID-19 mortality who experienced major health shocks during the pandemic.
    Keywords: inequality aversion; income; health; COVID-19; attitudes to inequality; employment shocks; health shocks; difference-in-differences; coronavirus; LSE’s International Inequalities Institute which funded the 2016 survey.; Springer deal
    JEL: I18 I30 I38
    Date: 2023–05–19
  4. By: Grätz, Michael (University of Lausanne); Heers, Marieke
    Abstract: Previous research found that increasing the age at first tracking in an education system decreased educational mobility. This research has implicitly assumed that these effects do not vary across contexts. Contrary to this assumption, we develop two hypotheses predicting such variation. The first hypothesis predicts that changes in the age at tracking increase educational mobility more for larger than for smaller changes in the age at tracking. According to the second hypothesis, reforms in the age at tracking only increase educational mobility if they occur in societies which put a high emphasis on equality of opportunity as a policy aim. We test these hypotheses by estimating the effects of reforms in the age at tracking, which occurred in five European countries (Belgium, Denmark, Finland, France, and Italy) in the 20th century, on educational mobility. We use data from the European Social Survey (ESS) and the Survey of Health, Ageing and Retirement in Europe (SHARE). The effects of the reforms are identified using a regression discontinuity design (RDD). A third hypothesis tests if the reforms increase educational mobility more among women than among men and if this is particularly the case in countries with a more gender egalitarian climate. Overall, the results reveal little cross-country variation in the effects of reforms in the age at tracking on educational mobility. In all analyzed countries there is an increase in educational mobility due to the reform in the age at tracking. In most countries, these effects do not differ between men and women.
    Date: 2023–05–15
  5. By: Ubaldi, Michele (Marche Polytechnic University); Picchio, Matteo (Università Politecnica delle Marche, Ancona)
    Abstract: This paper studies whether individuals that experienced parental unemployment during their childhood/early adolescence have poorer health once they reach the adulthood. We used data from the German Socio-Economic Panel from 2002 until 2018. Our identification strategy of the causal effect of parental unemployment relied on plant closures as exogenous variation of the individual labor market condition. We combined matching methods and parametric estimation to strengthen the causal interpretation of the estimates. On the one hand, we found a nil effect for parental unemployment on mental health. On the other hand, we detected a negative effect on physical health. The latter is stronger if parental unemployment occurred in early periods of the childhood, and it is heterogeneous across gender. The negative effect of parental unemployment on physical health may be explained by a higher alcohol and tobacco consumption later in life.
    Keywords: parental unemployment, plant closure, mental health, physical health, health behaviors
    JEL: I14 J13 J62 J65
    Date: 2023–04
  6. By: Chiara Zisler; Damiano Pregaldini; Uschi Backes-Gellner
    Abstract: Young immigrants who often lack country-specific human capital face greater challenges in the transition from education to the labor market (e.g., lower employment probabilities, longer unemployment spells) than native adolescents. This paper analyzes the importance, for a successful transition, of occupational skills and workplace-based cultural skills that workers can acquire only at the work. We exploit the Swiss vocational education and training (VET) setting, in which students acquire occupational skills in one of two different types of vocational education programs: either dual programs with training in firms based on employment contracts and complemented by vocational schooling, or school-based programs without employment contracts. While well-defined curricula ensure identical occupational skills in both programs, the training of workplace-based cultural skills differs systematically. As young immigrants lack these essential workplace-related cultural skills compared to natives, we expect that additional workplace-based cultural skills training in dual VET improves immigrants' transition into the labor market and thereby their longer-term employment prospects. Using administrative data, we compare how both programs affect the labor market entry of immigrant groups with pronounced cultural disadvantages. To estimate causal effects on employment outcomes, we use differences in VET traditions across Swiss language regions as an instrument. Results show that completing dual VET leads to significantly reduced unemployment probabilities for young immigrants compared to natives in the first year after graduation, suggesting that beyond well-defined curricula for occupational skills, workplace-based cultural skills are crucial for immigrants' transitions from education into the labor market.
    Keywords: Age of arrival, Assimilation, Cultural distance, Immigrants, Labor market integration, Skills
    JEL: J24 J61
    Date: 2023–06
  7. By: Lenka Dražanová; Jérôme Gonnot
    Abstract: This article investigates how European public opinion has responded to short-term variations inregional foreign-born immigration over the past decade (2010-2019). Combining data from theEuropean Social Survey and the European Union Labour Force Survey, we test how natives’opinions over migration policy and the contribution of immigrants to society have changed with thenet rate of international migrants in 183 EU regions from 21 countries. We find that while EuropeanUnion natives living in regions with a higher share of foreign-born populations are generally less antiimmigrant, a short-term increase in the number of immigrants within a given region is associated withmore negative attitudes in Western Europe only. Moreover, our gender and origin decompositionindicate that male immigrants and those born outside of the European Union are driving most ofthe negative association between public opinion and changes in the level of immigration in WesternEuropean countries, while the educational attainment of migrants makes little difference. The scopeof our analysis for Central and Eastern Europe is more limited due to the smaller share of foreignbornimmigrants living in those regions. Despite this caveat, our analysis suggests that inflows ofEuropean migrants in Central and Eastern Europe are generally associated with more positiveviews towards immigration, regardless of their skill level. Our findings demonstrate the importanceof temporal dynamics for attitudes to immigration. They also point to the need to analyse not onlycross-country differences but also regional differences in those attitudes.
    Keywords: Attitudes to immigration, migration flows, public opinion, regions
    Date: 2023–03
  8. By: Mathias Dolls; Carla Krolage
    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-the-envelope calculations.
    Keywords: retirement age, early retirement, pension reform
    JEL: H55 J14 J18 J26
    Date: 2023
  9. By: Achyuta Adhvaryu; N. Meltem Daysal; Snaebjorn Gunnsteinsson; Teresa Molina; Herdis Steingrimsdottir
    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
  10. By: Görg, Holger; Jacobs, Anna; Meuchelböck, Saskia
    Abstract: In this paper, we use a novel firm level dataset for Germany to investigate the effect of sanctions on export behaviour and performance of German firms. More specifically, we study the sanctions imposed by the EU against Russia in 2014 in response to the annexation of Crimea and Russia's countermeasures. We find a substantial negative effect on both the extensive and intensive margin of German exports. While the negative effects are strongest for firms exporting products subject to trade restrictions, we provide further evidence on the indirect effects of sanctions. Analysing the impact on broader measures of firm performance, we document that the cost of sanctions is heterogeneous across firms but overall modest. Our results reveal that the negative impact of the shock was concentrated primarily among a small number of firms that were highly dependent on Russia as an export market and those directly affected by the sanctions.
    Keywords: sanctions, foreign policy, trade, firm behaviour, Germany
    JEL: F1 F14 F51 L25
    Date: 2023
  11. By: Hermes, Henning; Lergetporer, Philipp; Mierisch, Fabian; Peter, Frauke; Wiederhold, Simon
    Abstract: We provide the first causal evidence of discrimination against migrants seeking child care. We send emails from fictitious parents to > 18, 000 early child care centers across Germany, asking if there is a slot available and how to apply. Randomly varying names to signal migration background, we find that migrants receive 4.4 percentage points fewer responses. Responses to migrants also contain substantially fewer slot offers, are shorter, and less encouraging. Exploring channels, discrimination against migrants does not differ by the perceived educational background of the email sender. However, it does differ by regional characteristics, being stronger in areas with lower shares of migrants in child care, higher right-wing vote shares, and lower financial resources. Discrimination on the child care market likely perpetuates existing inequalities of opportunities for disadvantaged children.
    Keywords: child care, discrimination, field experiment, inequality, informationprovision
    JEL: C93 J13 J18 J22
    Date: 2023
  12. By: Hamed Moghadam (Leibniz Universit¨at Hannover); Patrick Puhani (Leibniz Universit¨at Hannover); Joanna Tyrowicz (University of Warsaw, Poland)
    Abstract: To determine how wives’ and husbands’ retirement options affect their spouses’ (and their own) labour supply decisions, we exploit (early) retirement cutoffs by way of a regression discontinuity design. Several German pension reforms since the early 1990s have gradually raised women’s retirement age from 60 to 65, but also increased ages for several early retirement pathways affecting both sexes. We use German Socio-Economic Panel data for a sample of couples aged 50 to 69 whose retirement eligibility occurred (i) prior to the reforms, (ii) during the transition years, and (iii) after the major set of reforms. We find that, prior to the reforms, when several retirement options were available to both husbands and wives, both react almost symmetrically to their spouse reaching an early retirement age, that is both husband and wife decrease their labour supply by about 5 percentage points when the spouse reaches age 60). This speaks in favour of leisure complementarities. However, after the set of reforms, when retiring early was much more difficult, we find no more significant labour supply reaction to the spouse reaching a retirement age, whereas reaching one’s own retirement age still triggers a significant reaction in labour supply. Our results may explain some of the diverse findings in the literature on asymmetric reactions between husbands and wives to their spouse reaching a retirement age: such reactions may in large parts depend on how flexibly workers are able to retire.
    Keywords: J22, J26
    Date: 2023–06
  13. By: Kunze, Astrid (Norwegian School of Economics); Palczyńska, Marta (Institute for Structural Research (IBS)); Magda, Iga (Warsaw School of Economics)
    Abstract: This study investigates the employment effects of a large-scale wage subsidy programme for the young unemployed that was introduced in 2016, during a period of recovery in the Polish economy. The focus is on the question of whether the effects differed between men and women. The study employs a large population administrative data set from the unemployment register, and exploits for identification the fact that firms were only eligible to participate in the wage subsidy programme if the newly recruited worker was below age 30 and was previously unemployed. A challenge in this research is that before 2016, standard packages of active labour market programmes for all unemployed and specific programmes for unemployed below age 30 had been in place. Exploiting the long period and broad data coverage, we estimate the differential impact of the new programme using a difference-in-discontinuities design. The main finding is that over the medium term, the new wage subsidy programme was effective for low- and middle-skilled eligible young women, but not for men. We discuss the policy implications of such programmes targeting young unemployed people.
    Keywords: wage subsidy, youth unemployment, gender differences, difference-in-discontinuities, register data
    JEL: J08 J64 J68
    Date: 2023–05
  14. By: Bütikofer, Aline (Dept. of Economics, Norwegian School of Economics and Business Administration); Karadakic, René (Dept. of Economics, Norwegian School of Economics and Business Administration); Willén, Alexander (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: Childbirth increases the opportunity cost of commuting and makes it difficult for both parents to work far away from home. Using detailed Norwegian register data, we show that the commuting patterns of men and women diverge immediately after childbirth and that those differences persist for at least a decade. We show that this divergence in commuting exposes mothers to more concentrated labor markets with fewer job opportunities and establishments of lower quality. These findings help explain the child penalty documented in the prior literature and have important implications for the design of policies seeking to address the remaining gender wage gap.
    Keywords: Commuting; Gender Wage Gap; Parenthood
    JEL: J16 J22 J42 J61
    Date: 2023–05–25
  15. By: Dodini, Samuel (Dept. of Economics, Norwegian School of Economics and Business Administration); Salvanes, Kjell G. (Dept. of Economics, Norwegian School of Economics and Business Administration); Willén, Alexander (Dept. of Economics, Norwegian School of Economics and Business Administration); Zhu, Li (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: We combine exogenous variation in union membership with detailed administrative data and a novel field survey to estimate the career effects of labor union membership. In the survey, we show how workers perceive the role of unions in setting wages and determining work amenities. In the administrative data, we causally examine through which channels unions influence worker outcomes, whether unions influence workers differently across their careers, and what the overall long-run effects of individual union membership are. Our results highlight that the career effect of union membership differs greatly depending on the age at which workers enroll. In addition, we show that focusing on a restricted set of outcomes, such as wages and employment, generates a fractionalized understanding of the multidimensional career effect that union membership has on workers.
    Keywords: Unions; Wage Premiums; Job Protection; Work Environment
    JEL: J16 J31 J32 J51 J63 J65 J81
    Date: 2023–05–26
  16. By: Paul Schüle
    Abstract: Career decisions, that is educational and occupational choice, are not only made by comparing expected incomes, but also by considering non-monetary rewards like social impact, chances of promotion, or the compatibility of work and family. In this paper, I use rich panel data from Germany to show that preferences about such aspects of a career as stated at age 17 are strong predictors of future earnings in the labor market. At the same time, these preferences differ significantly by socioeconomic background, and intergenerational income persistence is reduced by 8–22 percent when accounting for career preferences.
    Keywords: Equality of opportunity, intergenerational mobility, occupational choice
    JEL: D01 D63 J24 J62 I38
    Date: 2023
  17. By: Bustos, Emil (Research Institute of Industrial Economics (IFN))
    Abstract: This paper investigates the impact of financial constraints on firms’ inventory holdings, an area of significant interest given that inventories are volatile over the business cycle. I use detailed data on Swedish firms’ balance sheets, income statements, and credit scores. I employ a regression discontinuity design and a difference-in-differences analysis to examine the causal effects of financial constraints on inventory management. Firms with relaxed financing constraints increase their inventories by 20% when they get a better credit score, yet there is no robust effect on inventories relative to firm size. This study offers new insights into the influence of financial constraints on firms’ inventory strategies amidst changing economic conditions.
    Keywords: Financial Constraints; Risk Management; Inventories; Credit Scores; Private Firms
    JEL: D22 D25 G32 G32
    Date: 2023–05–24
  18. By: LUPPI, FRANCESCA; Migheli, Matteo; Pronzato, Chiara
    Abstract: European divorce rates have been on the rise since the 1970s. At the same time, as more couples opt for cohabitation over marriage, there has been an increase in separations among cohabiting partners. Nearly 50% of separated individuals form new relationships within five years. These trends may have implications for fertility research. Are re-partnered mothers more likely to continue bearing children than never-separated mothers? Does quick re-partnering lead to the recovery of births “lost” due to separation? To answer these questions, we use longitudinal data from 2004 to 2018 for 32 European countries. We find that mothers in higher order unions are - on average – more likely to have one more child than those who already have children with their current partner. The former seem to be less burdened by already having children and less concerned about family income. Our data show that if separation occurs at a relatively young age and re-partnering occurs relatively quickly, then births lost to union dissolution can be recovered.
    Date: 2023–05–18
  19. By: Sommer, Stephan; Konc, Théo; Drews, Stefan
    Abstract: The success of climate policies depends crucially on the dynamics of public support. Using unique longitudinal data from three surveys conducted between 2019 and 2022, we study the variations of public support for carbon pricing in Germany. The period includes two relevant events: the introduction and ramping up of carbon pricing in Germany and the exogenous increase in energy prices following the Russian invasion of Ukraine. Using panel methods, we show that support is very persistent over time and might have increased slightly more recently. However, people who experience high energy costs display a lower support. Regarding revenue use, we detect that social cushioning has become more popular after the introduction of carbon pricing. Our findings suggest that it is crucial to gather enough support before implementing climate policies.
    Keywords: Climate change mitigation, political economy, panel methods
    JEL: D12 H23 Q58
    Date: 2023
  20. By: Di Liberto, Adriana (University of Cagliari); Giua, Ludovica (University of Cagliari); Schivardi, Fabiano (LUISS Guido Carli University); Sideri, Marco (University of Cagliari); Sulis, Giovanni (University of Cagliari)
    Abstract: We study how managerial practices of school principals affect student performance and aspirations. We link administrative data on secondary Italian students to the management scores of their school principals in 2011 and 2015 based on the World Management Survey methodology. The frequent turnover of school principals over this period allows us to causally interpret school-fixed-effect estimates. We find that management quality positively and substantially impacts standardized math and language tests and student desire to attend college. The comparison to pooled-OLS suggests that fixed effects correct for the downward bias arising from selection of better school principals into more difficult schools.
    Keywords: management, productivity, school principals, student outcomes
    JEL: L2 I2 M1 O32
    Date: 2023–06
  21. By: Sergio Destefanis (University of Salerno); Valter Di Giacinto (Bank of Italy)
    Abstract: This paper focuses on the impact of EU structural funds (SFs) on the GDP per capita of 183 European NUTS2 regions from 1990 to 2016. To allow for the endogeneity of funds allocation to regions, we estimate a bivariate structural panel VAR model, controlling for unobserved heterogeneity through a broad array of deterministic variables. Our main identifying restriction is rooted in the widely documented long lags affecting the implementation of the EU’s Cohesion Policy. Through a spatial VAR specification, we also estimate spillovers from local SF expenditure on other areas. We find significant multipliers measuring the local response of GDP to an exogenous shock in local SF expenditure, with a long-run value settling at 2.6. Spillovers for GDP from an exogenous shock to SFs are also positive and significant, but much smaller (about one fifth of within-region responses). When partitioning our sample according to features suggested by the literature (stage of development, EU funding regimes, size), we find that within-region multipliers are higher in lagging regions, especially in recipient countries of the Cohesion Fund, and in regions with a larger population. Spillovers are also heterogeneous across different groups of regions, turning out to be negative in regions in countries that are not recipients of the Cohesion Fund. All this evidence is validated in qualitative terms by robustness checks on model specification and the choice of spatial weights.
    Keywords: cohesion policy, spatial structural VAR model, fiscal multipliers, spillovers, EU NUTS-2 regions
    JEL: C33 E62 H50
    Date: 2023–04
  22. By: Moritz Drechsel-Grau
    Abstract: This paper studies the employment and reallocation effects of minimum wages in Germany in a search-and-matching model with endogenous job search effort and vacancy posting, multiple employment levels, a progressive tax-transfer system, and worker and firm heterogeneity. I find that minimum wages up to 70% of the median wage significantly increase productivity, hours worked and output without reducing employment. In frictional labor markets, however, reallocation takes time whenever the minimum wage cuts deep into the wage distribution. I show that gradually implementing a high minimum wage is necessary to avoid elevated unemployment rates during the transition.
    Keywords: minimum wage, reallocation, employment, job search, worker and firm heterogeneity, hours worked, equilibrium search-and-matching model, transition dynamics
    JEL: E24 E25 E64 J20 J31 J38
    Date: 2023
  23. By: Canta, Chiara (TBS Business School); Nilsen, Øivind A. (Dept. of Economics, Norwegian School of Economics and Business Administration); Ulsaker, Simen A. (Telenor Research)
    Abstract: This paper studies empirically the relationship between competition and risk taking in banking markets. We exploit an unique dataset providing information about all bank loans to Norwegian firms over several years. Rather than relying on observed market shares, we use the distance between bank branches and firms to measure the competitiveness of local markets. The cross-sectional and longitudinal variation in competition in local markets are used to identify the relationship between competition and risk taking, which we measure by the non-performing loans and loss provision rates of the individual banks. We find that more competition leads to more risk taking. We also examine the effects of bank competition on the availability of loans. More competition leads to lower interest rates and higher loan volumes, but also makes it more difficult for small and newly established firms to obtain a loan.
    Keywords: Competition; risk
    JEL: G21 L11 L13
    Date: 2023–05–18
  24. By: Aghion, Philippe; Akcigit, Ufuk; Hyytinen, Ari; Toivanen, Otto
    Abstract: Why is invention strongly positively correlated with parental income not only in the United States but also in Finland, which displays low income inequality and high social mobility? Using data on 1.45 M Finnish individuals and their parents, we find the following: (i) the positive association between parental income and off-spring probability of inventing is greatly reduced when controlling for parental education; (ii) instrumenting for the parents having an MSc degree using distance to nearest university reveals a large causal effect of parental education on offspring probability of inventing; and (iii) the causal effect of parental education has been markedly weakened by the introduction in the early 1970s of a comprehensive schooling reform.
    Keywords: 786587
    JEL: J1
    Date: 2023–05–16
  25. By: Breidenbach, Philipp; Thiel, Patrick
    Abstract: To evaluate the causal impact of noise exposure on housing prices, we exploit a sudden and massive reduction in flight traffic that occurred with the onset of the Covid-19 measures in Germany. Comparing locations differently exposed to pre-pandemic noise with a differencein-difference approach, we detect a 2.3% increase in prices for apartments that experienced a noise reduction. Disentangling temporal dynamics, we find a peak effect in mid-2021 (up to 6%), which does not yet allow a statement on whether effects remain persistently. In contrast to most evaluations showing that the erection of a disamenity affects prices negatively, we show that lifting the burden enables neighborhoods to catch up again immediately. The immediate catch-up contradicts a stickiness of housing prices regarding (temporal) local factors. The temporal pattern shows a clear peak of the effects during the pandemic, which potentially hints at information asymmetries since buyers may not know the non-pandemic noise level during the pandemic.
    Keywords: Covid pandemic, aircraft noise, housing prices, hedonic function
    JEL: O18 Q53
    Date: 2023
  26. By: Jose Garcia-Louzao; Marta Silva
    Abstract: The use of social contacts in the labor market is widespread. This paper investigates the impact of personal connections on hiring probabilities and re-employment outcomes of displaced workers in Portugal. We rely on rich matched employer-employee data to define personal connections that arise from interactions at the workplace. Our empirical strategy exploits firm closures to select workers who are exogenously forced to search for a new job and leverages variation across displaced workers with direct connections to prospective employers. The hiring analysis indicates that displaced workers with a direct link to a firm through a former coworker are three times more likely to be hired compared to workers displaced from the same closing event who lack such a tie. However, we find that the effect varies according to the type of connection as well as firms’ similarity. Finally, we show that successful displaced workers with a connection in the hiring firm have higher entry-level wages and enjoy greater job security although these advantages disappear over time.
    Keywords: job displacement, coworker networks, re-employment
    JEL: J23 J63 L14
    Date: 2023

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