nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2023‒07‒24
twenty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Where Are the Fathers? The Effects of Earmarking Parental Leave on Fathers in France By Périvier, Hélène; Verdugo, Gregory
  2. The Impact of Parenthood on Labour Market Outcomes of Women and Men in Poland By Radost Waszkiewicz; Honorata Bogusz
  3. Politicians’ Incentives and the Congested Budget Effect: Evidence from Italian Municipalities By Luca Bellodi; Massimo Morelli
  4. The Effect of Increasing Retirement Age on Households’ Savings and Consumption Expenditures By Stefan Etgeton; Björn Fischer; Han Ye
  5. Gender and Career Progression in Academia: European Evidence By Morettini, Lucio; Tani, Massimiliano
  6. Political Backlash to Refugee Settlement: Cultural and Economic Drivers By Campo, Francesco; Giunti, Sara; Mendola, Mariapia; Tura, Giulia
  7. Crises in times of crisis. Employment vulnerability and couple instability during the Covid-19 pandemic in five European countries By LUPPI, FRANCESCA; Zanasi, Francesca; Rosina, Alessandro
  8. Quantifying the non-take-up of a need-based student grant in the Netherlands By Stef Konijn; Derk Visser; Maria Zumbuehl
  9. Working conditions and disabilities in French workers: a career-long retrospective study By Thomas Barnay; Éric Defebvre
  10. How Culture Shapes Choices Related to Fertility and Mortality: Causal Evidence at the Swiss Language Border By Lisa Faessler; Rafael Lalive; Charles Efferson
  11. De-Fueling Externalities: How Tax Salience and Fuel Substitution Mediate Climate and Health Benefits By Pier Basaglia; Sophie Behr; Moritz A. Drupp
  12. (Breaking) intergenerational transmission of mental health By Bütikofer, Aline; Ginja, Rita; Karbownik, Krzysztof; Landaud, Fanny
  13. Household and Individual Economic Responses to Different Health Shocks: The Role of Medical Innovations By Lazuka, Volha
  14. The Hidden Divide: School Segregation of Teachers in the Netherlands By Rafiq Friperson; Hessel Oosterbeek; Bas van der Klaauw
  15. The Rising Influence of Family Background on Early School Performance By Markussen, Simen; Røed, Knut
  16. How the Well-Being Function Varies with Age: The Importance ofIncome, Health, and Social Relations over the Life Cycle By Juergen Bitzer; Erkan Goeren; Heinz Welsch
  17. Do regional innovation strategies meet societal challenges? A comparative analysis across regions in Belgium, Germany, Netherlands and Finland By Suarsana, Laura; Schneider, Tina; Warsewa, Günter
  18. Energy price increases and mitigation policies: Redistributive effects on Italian households By Andrea Bonfatti; Elena Giarda
  19. Labor Supply Effects of a Universal Cash Transfer By Gromadzki, Jan
  20. Dynamic Causal Forests, with an Application to Payroll Tax Incidence in Norway By Evelina Gavrilova; Audun Langørgen; Floris T. Zoutman; Floris Zoutman

  1. By: Périvier, Hélène; Verdugo, Gregory (University of Evry)
    Abstract: Does providing nontransferable months of parental leave earmarked to fathers, as mandated by the European Union to its member countries since 2019, increase their participation? To answer that question, the authors investigate the consequences of a 2015 French reform that earmarked up to 12 months of paid leave for fathers while simultaneously reducing the maximum paid leave for mothers by the same number of months. While the benefits were low, parental leave could be taken part-time, which can be more attractive for fathers. Using administrative data and comparing parents of children born before and after the reform, the authors find that in response to a 25 p.p. decline in mothers' participation rate triggered by the reform, fathers' participation increased by less than 1 p.p., mostly through part-time leave. The reform increased mothers' labor earnings, but it had no significant impact on fathers' earnings.
    Keywords: gender inequality, labor supply, parental leave
    JEL: J16 D13 J18
    Date: 2023–06
  2. By: Radost Waszkiewicz; Honorata Bogusz
    Abstract: Poland records one of the lowest gender wage gaps in Europe. At the same time, it is a socially conservative country where women's rights have been on the decline. We argue that, in the Polish context, the gender gap in income is a more appropriate measure of gendered labour market outcomes than the gap in the hourly wage. We analyse the gender gap in income in Poland in relation to the parenthood status, using the placebo event history method, adjusted to low resolution data, and the two waves of the Polish Generations and Gender Survey (2010, 2014). Contrary to similar studies conducted in Western Europe, our analysis uncovers a large degree of anticipatory behaviour in both women and men who expect to become parents. We show that mothers' income decreases by about 20% after birth, but converges to the income trajectory of non-mothers after 15 years. In contrast, the income of eventual fathers is higher than that of non-fathers both before and after birth, suggesting that the fatherhood child premium might be driven primarily by selection. We also demonstrate a permanent increase in hours worked for fathers, as opposed to non-fathers and a decrease in hours worked for mothers who converge to the trajectory of non-mothers after 15 years from the birth. Finally, we compare the gender gaps in income and wages of women and men in the sample with those of individuals in a counterfactual scenario where the entire population is childless. We find no statistically significant gender gaps in the counterfactual scenario, thereby concluding that the gender gaps in income and wages in Poland are driven by parenthood and most likely, by differences in labour market participation and hours worked.
    Date: 2023–06
  3. By: Luca Bellodi; Massimo Morelli
    Abstract: Once in office, politicians propose policies and programmes aimed at winning the support of their constituencies. While this form of political activism increases with the number of politicians in government, it can also clash with capacity constraints, leading to a congestion effect whereby politicians’ plans are not enacted in practice. With novel data on Italian municipalities, we estimate the effect of the number of politicians on a battery of planned and actual budget outcomes. We leverage a reform that introduced a new temporary population threshold where the size of government bodies changed discontinuously and estimate treatment effects with a difference-in-discontinuities design. We find that more politicians plan to spend more but they do not do so in practice. The degree of this congestion decreases when bureaucratic capacity is high (i.e., larger share of bureaucrats with a university degree), suggesting administrative capacity deficits prevent politicians from implementing their proposed agenda.
    Date: 2023
  4. By: Stefan Etgeton; Björn Fischer; Han Ye
    Abstract: This paper examines how households adjust their savings and consumption expenditure in response to an anticipated increase in the early retirement age (ERA). We examine the 1999 pension reform in Germany, which increased the ERA for women born after 1951 by at least three years. First, we present suggestive evidence that women update their retirement planning in response to the reform. Using the German Income and Consumption Survey, we find a negative impact on private savings of 0.6 percentage points that is driven by households with married women. We show that households consisting of highly educated women and homeowners are more likely to reduce their savings rates. Furthermore, we find that the treated households increase their leisure spending while maintaining an unchanged level of disposable income. Our findings suggest that the households anticipate experiencing a lifetime income increase and reduce their savings rate to smooth consumption.
    Keywords: Pension Reform; Early Retirement Age; Savings; Pension Wealth; Consumption Expenditur
    JEL: D14 J14 J26
    Date: 2023–03
  5. By: Morettini, Lucio (National Research Council, Italy); Tani, Massimiliano (University of New South Wales)
    Abstract: We study career trajectories of university researchers in Europe, with a particular emphasis on the speed of career progression by gender. Using the panel data collected by the MORE project (Mobility Survey of the Higher Education Sector) - a longitudinal database that gathers survey responses from over 10, 000 university researchers across Europe - we find that women have a lower probability of promotion, but conditional on a career advance, their career development proceeds at a faster pace than that of comparable male researchers. Faster progression among women is positively influenced by the share of female researchers in the academic environment. Higher salaries in sectors outside academia appear to reinforce the positive selection of women preferring to stay in academia.
    Keywords: academic careers, career progression, promotion
    JEL: J20 J24 J62
    Date: 2023–06
  6. By: Campo, Francesco (University of Milan Bicocca); Giunti, Sara (University of Milan Bicocca); Mendola, Mariapia (University of Milan Bicocca); Tura, Giulia (University of Milan Bicocca)
    Abstract: The 2015 refugee crisis in Europe fueled anti-immigration sentiment in receiving areas, with potential unintended consequences for refugee integration. We investigate the heterogeneity of political backlash across Italian municipalities in the aftermath of the crisis and assess the role played by local conditions at the time of refugees' settlement, distinguishing between baseline economic and cultural factors. By leveraging the quasi- random dispersal policy and using causal forests, we find that the impact of refugee exposure on anti-immigration backlash is significantly higher in more affluent areas, with more bonding social capital. The opposite holds in contexts where there is meaningful intergroup contact with former immigrants (e.g mixed marriages). We exploit this pattern of heterogeneity to evaluate a matching model to optimally assign refugees to locations and deliver policy implications for novel refugee resettlement schemes that minimize anti-immigration backlash.
    Keywords: refugee social integration, dispersal policy, political preferences
    JEL: J15 H53 I38
    Date: 2023–06
  7. By: LUPPI, FRANCESCA; Zanasi, Francesca; Rosina, Alessandro (Catholic University of the Sacred Heart)
    Abstract: Couple stability at younger ages is a precondition for family formation and childbearing. While there is evidence that the Covid-19 crisis, bringing about a major economic recession, has impacted on union formation in high income countries, micro-level studies on union dissolution are almost absent. Our explorative research provides descriptive evidence on how employment vulnerability (e.g., holding temporary occupations) is associated with different chances of (intending to) breaking up before the Covid-19 pandemic. The analyses have been conducted on survey data collected in April/May and October/November 2021, on quota samples of young individuals (aged 18 to 34) in Italy, France, Germany, Spain, and UK. We find that employment vulnerability spills over into separation plans in times of economic recession, and in European regions reporting poorly performing labour markets (e.g., in terms of women employment and youth unemployment). On the contrary, among men with less vulnerable employment conditions, couple stability is less negatively affected by the recession, while they report higher chances to revise their pre-pandemic intention to break-up because of non-economic reasons.
    Date: 2023–06–28
  8. By: Stef Konijn (SEO); Derk Visser (CPB Netherlands Bureau for Economic Policy Analysis); Maria Zumbuehl (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: Students from lower income families are entitled to apply for a student grant. Not all entitled students do so. We estimate the non-take-up rate of the need-based student grant in the Netherlands and investigate which student characteristics correlate with the non-take-up. Using administrative data on students and their parents and data on student grants, we construct an eligibility proxy for first-year students in higher education. Our calculations suggest that around one-third of all students is eligible for a need-based grant, with 12% being eligible for the maximum amount. We find that 24% of all eligible students do not apply for the need-based student grant. The non-take-up among students eligible for the maximum amount is lower but still substantial at 12%. Remarkably about one-third of the non-claimants do take on a student loan while leaving the grant on the table. Our regression results show that the non-take-up of the grant is highest among students who belong to social groups which are overall less likely to be eligible. This indicates that information costs may be an important determinant of non-take-up among students.
    JEL: I22 I23 I24 I28
    Date: 2023–06
  9. By: Thomas Barnay (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel); Éric Defebvre (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This study aims to estimate the causal impact of detrimental working conditions on disabilities in France. Using a rebuilt retrospective lifelong panel and defining indicators for physical and psychosocial strains, we implement a mixed econometric strategy relying on difference-in-differences and matching methods to take into account for selection biases as well as unobserved heterogeneity. For men and women, deleterious effects of both types of working conditions on disability after exposure are found, with varying patterns of impacts according to the nature and magnitude of the strains. These results provide insights into the debate on legal retirement age postponement and justify not only policies being enacted early in individuals' careers in order to prevent subsequent mid-career health repercussions, but also schemes that are more focused on psychosocial risk factors.
    Keywords: Working conditions, Disability, Matching, Difference in differences, France
    Date: 2023–07–04
  10. By: Lisa Faessler; Rafael Lalive; Charles Efferson
    Abstract: Results from cultural evolutionary theory often suggest that social learning can lead cultural groups to differ markedly in the same environment. Put differently, cultural evolutionary processes can in principle stabilise behavioural differences between groups, which in turn could lead selection pressures to vary across cultural groups. Separating the effects of culture from other confounds, however, is often a daunting, sometimes intractable challenge for the working empiricist. To meet this challenge, we exploit a cultural border dividing Switzerland in ways that are independent of institutional, environmental, and genetic variation. Using a regression discontinuity design, we estimate discontinuities at the border in terms of preferences related to fertility and mortality, the two basic components of genetic fitness. We specifically select six referenda related to health and fertility and analyse differences in the proportion of yes votes across municipalities on the two sides of the border. Our results show multiple discontinuities and thus indicate a potential role of culture to shape preferences and choices related to individual health and fertility. These findings further suggest that at least one of the two groups, in order to uphold its cultural values, has supported policies that could impose fitness costs on individuals in the group.
    Keywords: gene-culture coevolution, cultural evolution, social learning, cultural variation, fitness, cultural border, regression discontinuity design
    JEL: Z10 Z13 D72 I18
    Date: 2023
  11. By: Pier Basaglia; Sophie Behr; Moritz A. Drupp
    Abstract: This paper is the first to investigate the effectiveness of fuel taxation to jointly deliver climate and health benefits in a quasi-experimental setting. Using the synthetic control method, we compare carbon and air pollutant emissions of the actual and synthetic German transport sector following the 1999-2003 German eco tax reform. We demonstrate sizable average reductions in CO2 (12%), PM2.5 (10%) and NOX (6%) emissions between 1999 and 2009 across a range of specifications. Using official cost estimates, we find that the eco-tax saved more than 40 billion euros of external damages. More than half of the reductions in external damages are health benefits, highlighting the importance of accounting for co-pollution impacts of carbon pricing. Our fuel and emission specific tax elasticity estimates suggest much stronger demand responses to eco tax increases than to market price movements, primarily due to increases in tax salience, which we measure using textual analysis of newspapers. We further show that gasoline-to-diesel substitution substantially mediates the trade-off between climate and health benefits. Our results highlight the key roles of tax salience and fuel-substitution in mediating the effectiveness of fuel taxes to reduce climate and health externalities.
    Keywords: Environmental policy, carbon tax, eco tax, tax elasticity, tax salience, fuel consumption, fuel substitution, externalities, climate, pollution, health
    JEL: Q51 Q58 Q41 H23
    Date: 2023
  12. By: Bütikofer, Aline (Dept. of Economics, Norwegian School of Economics and Business Administration); Ginja, Rita (University of Bergen); Karbownik, Krzysztof (Emory University); Landaud, Fanny (CNRS and CY Cergy Paris University)
    Abstract: We estimate health associations across generations and dynasties using information on healthcare visits from administrative data for the entire Norwegian population. A parental mental health diagnosis is associated with a 9.3 percentage point (40%) higher probability of a mental health diagnosis of their adolescent child. Intensive margin physical and mental health associations are similar, and dynastic estimates account for about 40% of the intergenerational persistence. We also show that a policy targeting additional health resources for the young children of adults diagnosed with mental health conditions reduced the parent-child mental health association by about 40%.
    Keywords: Mental Health; Intergenerational Persistence; Dynastic Effects; Public Policy
    JEL: I14 I18 J12 J62
    Date: 2023–06–30
  13. By: Lazuka, Volha (Lund University)
    Abstract: This study provides new evidence regarding the extent to which medical care mitigates the economic consequences of various health shocks for the individual and a wider family. To obtain causal effects, I focus on the role of medical scientific discoveries and leverage the longitudinal dimension of unique administrative data for Sweden. The results indicate that medical innovations strongly mitigate the negative economic consequences of a health shock for the individual and create spillovers to relatives. Such mitigating effects are highly heterogeneous across diagnoses that cause health shocks. These results suggest that medical innovations substantially reduce the burden of welfare costs yet produce income inequalities.
    Keywords: medical innovation, health shock, family disposable income, income inequality, difference-in-differences-in-differences approach, machine learning
    JEL: I14 I18 J22 J24 J38 O31
    Date: 2023–06
  14. By: Rafiq Friperson (Vrije Universiteit Amsterdam); Hessel Oosterbeek (University of Amsterdam); Bas van der Klaauw (Vrije Universiteit Amsterdam)
    Abstract: We use Dutch register data to document the understudied phenomenon of teacher segregation. We show that teachers in primary and secondary schools in the four largest cities of the country – Amsterdam, Rotterdam, The Hague and Utrecht – are segregated in terms of their migration and social backgrounds. While segregation by social background is not much higher than what would be expected under random teacher-school assignment, segregation by migration background is substantial even after accounting for randomness. Relating schools’ teacher composition to their student composition, we find in most cases that schools with a high proportion of teachers from a particular background tend to have a high proportion of students from that same background.
    Date: 2023–06–22
  15. By: Markussen, Simen (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research)
    Abstract: We use administrative data from Norway to examine recent trends in the association between parents' prime age earnings rank and offspring's educational performance rank by age 15/16. We show that the intergenerational correlation between these two ranks has increased over the past decades, and that offspring from economically disadvantaged families have fallen behind. This has happened despite public policies contributing to leveling the playing field. In particular, we show that the expansion of universal childcare and, more recently, the increased teacher-pupil ratio in compulsory school, have disproportionally benefited lower class offspring. The rising influence of parents' earnings rank can partly be explained by a strengthened intragenerational association between earnings rank and education among parents, as educational achievement has an inheritable component. Yet a considerable unexplained rise in the influence of family background remains, pointing towards an impending decline in intergenerational economic mobility.
    Keywords: Intergenerational mobility, achievement gaps, parental influence, meritocracy, GPA
    JEL: I24 J62
    Date: 2023–06
  16. By: Juergen Bitzer (University of Oldenburg, Department of Economics); Erkan Goeren (university of Oldenburg, Department of Economics); Heinz Welsch (University of Oldenburg, Department of Economics)
    Abstract: Previous literature has identified income, poor health and social relationships as the most important predictors of subjective well-being (SWB). In addition, the literature has identified a non-linear relationship between age and SWB, with a dip in SWB in mid-life. Explanations of the non-linear age-SWB relationship include the notion of unmet aspirations and the idea that people’s emotional response to the drivers of SWB changes with age. Against this background, we use representative longitudinal data for Germany (1992- 2019) with about 570, 000 observations for more than 88, 000 individuals aged 16-105 years to investigate if and how the association between SWB and its main predictors changes over the life cycle. Using fixed effects estimation to control for cohort effects and unobserved personal characteristics, we find that the marginal effects of income and social relationships vary with age in a wave-like fashion, while the negative marginal effect of poor health increases monotonically and progressively with age. Our results are similar for alternative measures of SWB (life satisfaction and living in misery) and for men and women. The agerelated changes in the importance of income and social relationships for SWB found in this paper help to explain the relationship between age and SWB found in previous literature.
    Keywords: subjective well-being; life satisfaction; life cycle happiness; income; health;social relations; employment
    Date: 2023–07
  17. By: Suarsana, Laura; Schneider, Tina; Warsewa, Günter
    Abstract: In addition to traditional, cluster-oriented approaches, both cross-sectional technologies ("key enabling technologies") and societal challenges ("grand challenges") are becoming increasingly important for regional innovation strategies. A more complex, multi-dimensional approach of regional innovation strategies requires but a number of adaptations, which need to adjust to various, different regional preconditions. The article raises the research question how societal demands are considered and implemented by regional innovation strategies in four case study regions: Pirkanmaa/Tampere region in Finland, Groningen region in the Netherlands, West Flanders in Belgium, and the Federal State of Bremen in Germany. The four regional case studies are comparable European regions in terms of their innovation capacity and their level of innovation (all are classified "highly innovative" or "strong innovator" by the European Union). In order to address global societal goals and challenges - in particular climate change and its consequences as well as demographic change - a multidimensional innovation policy spanning sectors and technologies and a close interlinking of technological and societal innovation objectives and strategies, seems inevitable. The analyses revealed that governance structures and the innovation infrastructures in the regions indeed start to adapt to societal needs and to the increasing complexity of regional innovation strategies, though the speed as well as the intensity of transition and adjustment varies greatly across the regions. Interregional learning as is intended by the European Interreg programme could offer meaningful support for the progress of regional measures towards multi-dimensional innovation policies.
    Date: 2023
  18. By: Andrea Bonfatti; Elena Giarda
    Abstract: Since the second half of 2021, there has been a sharp increase in the prices of energy goods (electricity, heating gas, fuels) as well as of food, leading to inflation rates never experienced in Italy in the last forty years. Such high inflation rates prompted the Italian government to take measures to curb the prices of energy products, to increase social bonuses on electricity and gas bills, and to provide one-off allowances to households. The crucial question is what impact the price increases have had on households and whether the measures taken have protected the household sector from these increases. Therefore, we perform a microsimulation exercise on the period July 2021-March 2023 to quantify the effects of the price increases and of the measures on household expenditure and income. Our results indicate that the regressive impact of price increases was mitigated by the price containment measures due to their progressive nature and that the contribution of one-off allowances and social bonuses was very relevant. In 2022, the year in which households benefitted from the measures for twelve months, the fiscal policy interventions also succeeded in reducing inequality, the at-risk-of-poverty rate and energy poverty.
    Keywords: microsimulation; redistribution; energy prices mitigation policies; energy consumption; energy poverty
    JEL: D10 D30 H31 I32 Q48
    Date: 2023–06
  19. By: Gromadzki, Jan (Warsaw School of Economics)
    Abstract: I investigate the labor supply effects of the introduction of a large unconditional cash benefit. I exploit the unique design of the child benefit program in Poland to identify the income effects of the monthly transfer in a difference-in-differences design. On average, the marginal propensity to earn out of unearned income was equal to -0.14. For every extra 100 dollars in monthly child benefit transfers households receive, they spend 43 dollars on consumption and save 43 dollars. Additional evidence shows that the program had a positive impact on investments in human capital and home production efficiency.
    Keywords: unconditional cash transfer, income effects, labor supply, child benefit, poverty, difference-in-differences
    JEL: I38 J21 J22
    Date: 2023–05
  20. By: Evelina Gavrilova; Audun Langørgen; Floris T. Zoutman; Floris Zoutman
    Abstract: This paper develops a machine-learning method that allows researchers to estimate heterogeneous treatment effects with panel data in a setting with many covariates. Our method, which we name the dynamic causal forest (DCF) method, extends the causal-forest method of Wager and Athey (2018) by allowing for the estimation of dynamic treatment effects in a difference-in-difference setting. Regular causal forests require conditional independence to consistently estimate heterogeneous treatment effects. In contrast, DCFs provide a consistent estimate for heterogeneous treatment effects under the weaker assumption of parallel trends. DCFs can be used to create event-study plots which aid in the inspection of pre-trends and treatment effect dynamics. We provide an empirical application, where DCFs are applied to estimate the incidence of payroll tax on wages paid to employees. We consider treatment effect heterogeneity associated with personal- and firm-level variables. We find that on average the incidence of the tax is shifted onto workers through incidental payments, rather than contracted wages. Heterogeneity is mainly explained by firm-and workforce-level variables. Firms with a large and heterogeneous workforce are most effective in passing on the incidence of the tax to workers.
    Keywords: causal forest, treatment effect heterogeneity, payroll tax incidence, administrative data
    JEL: C18 H22 J31 M54
    Date: 2023

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