nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2023‒08‒14
23 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. The Effects of Cash for Clunkers on Local Air Quality By Ines Helm; Nicolas Koch; Alexander Rohlf
  2. How institutions shape the economic returns of public investment in European regions By Inmaculada C. Alvarez; Inmaculada C. Alvarez; Luis Orea; Andrés Rodríguez-Pose
  3. Working conditions and disabilities in French workers: a career-long retrospective study By Thomas Barnay; Éric Defebvre
  4. (Breaking) Intergenerational Transmission of Mental Health By Bütikofer, Aline; Ginja, Rita; Karbownik, Krzysztof; Landaud, Fanny
  5. Accident-Induced Absence from Work and Wage Ladders By Anikó Bíró; Márta Bisztray; João G. da Fonseca; Tímea Molnár
  6. German Firms in International Trade: Evidence from Recent Microdata By Matthias Fauth; Benjamin Jung; Wilhelm Kohler
  7. The Oral Contraceptive Pill and Adolescents' Mental Health By Costa-Ramón, Ana; Daysal, N. Meltem; Rodríguez-González, Ana
  8. Are the Upwardly-Mobile More Left-Wing? By Clark, Andrew E.; Cotofan, Maria
  9. Firm expectations and news: Micro v macro By Born, Benjamin; Enders, Zeno; Menkhoff, Manuel; Müller, Gernot J.; Niemann, Knut
  10. Nobody’s gonna slow me down? The effects of a transportation cost shock on firm performance and behavior By Branco, Catarina; Dohse, Dirk C.; Pereira dos Santos, João; Tavares, José
  11. A college on every cape: Gender equality, gender segregation and higher educational expansion By Rogne, Adrian F.; Knutsen, Tora Kjærnes; Modalsli, Jørgen
  12. Tightening Access to Early Retirement: Who Can Adapt? By Boockmann, Bernhard; Kroczek, Martin; Laub, Natalie
  13. "Risk of admission to intensive care units due to Covid-19: comparative analysis between European countries". By Manuela Alcañiz; Marc Estévez; Miguel Santolino
  14. The fallacy in productivity decomposition By Bruhn, Simon; Grebel, Thomas; Nesta, Lionel
  15. Multistate analysis and decomposition of disability-free life expectancy trends in Italy 2004-2019 By Margherita Moretti; Timothy Riffe; Angelo Lorenti
  16. Post-growth and the demand-pull hypothesis of innovation: Biting the hand that feeds you? By Jasny, Johannes; Schubert, Torben
  17. The Incentive Effects of Sickness Benefit for the Unemployed – Analysis of a Reduction in Potential Benefit Duration By Márton Csilalg; Lili Márk
  18. Universities that matter for regional knowledge base renewal - the role of multilevel embeddedness By Nils Grashof; Holger Graf
  19. Natural disasters and voter gratitude: What is the role of prevention policies? By Carla Morvan; Sonia Paty
  20. Turning no tides: Union effects on partisan preferences and the working-class metamorphosis By Hadziabdic, Sinisa
  21. The fall and rebound of average establishment size in West Germany By Kovalenko, Tim; Sauerbier, Timo; Schröpf, Benedikt
  22. New technologies and jobs in Europe By Albanesi, Stefania; Da Silva, António Dias; Jimeno, Juan F.; Lamo, Ana; Wabitsch, Alena
  23. Labour costs and the decision to hire the first employee By Bart Cockx; Sam Desiere

  1. By: Ines Helm; Nicolas Koch; Alexander Rohlf
    Abstract: We study the effects of a large car scrappage scheme in Germany on new car purchases and local air quality by combining vehicle registration data with data on local air pollutant emissions. For identification we exploit cross-sectional variation across districts in the number of cars eligible for scrappage. The scheme had substantial effects on car purchases and did not simply reallocate demand across time in the short-term. Nevertheless, about half of all subsidized buyers benefited from windfall gains. The renewal of the car stock improved local air quality suggesting substantial mortality benefits that likely exceed the cost of the policy. While policy take-up is somewhat smaller in urban districts, improvements in air quality and health tend to be larger due to a higher car density.
    Keywords: cash for clunkers, local air quality, car scrappage schemes, emissions, car rebate
    JEL: H20 H23 Q53 Q58
    Date: 2023
  2. By: Inmaculada C. Alvarez; Inmaculada C. Alvarez; Luis Orea; Andrés Rodríguez-Pose
    Abstract: In this paper, we examine the impact of institutional quality on the returns of key drivers of economic growth in 230 European Union (EU) NUTS-2 regions from 2009 to 2017. To estimate region-specific elasticities, we employ a latent class modelling approach, considering the quality of government and the degree of authority in each region as mediators. Our findings reveal significant variation in the returns to education, physical capital investment, and innovation across regions. Moreover, we observe that changes in government quality and regional authority influence the ability of EU regions to leverage different types of investment effectively. These results emphasize the importance of considering the government quality in regions where investments are made in order to maximize the returns on European Cohesion investment
    Date: 2023
  3. 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
  4. By: Bütikofer, Aline (Norwegian School of Economics); Ginja, Rita (University of Bergen); Karbownik, Krzysztof (Emory University); Landaud, Fanny (INSEAD)
    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
  5. By: Anikó Bíró (Centre for Economic and Regional Studies); Márta Bisztray (Centre for Economic and Regional Studies); João G. da Fonseca (Université de Montréal); Tímea Molnár (Central European University and IZA)
    Abstract: How do temporary spells of absence from work affect individuals’ labor trajectory? To answer this question, we augment a `wage ladder' model, in which individuals receive alternative takeit-or-leave-it wage offers from firms and potentially suffer accidents which may push them into temporary absence. In such an environment, during absence, individuals do not have the opportunity to receive alternative wage offers that they would have received had they remained present. To test our model's predictions and to quantify the importance of foregone opportunities to climb the wage ladder, we use linked employer-employee administrative data from Hungary, that is linked to rich individual-level administrative health records. We use unexpected and mild accidents with arguably no permanent labor productivity losses, as exogenous drivers of short periods of absence. Difference-in-Differences results show that, relative to counterfactual outcomes in the case of no accidents, (i) even short (3-12-months long) periods of absence due to accidents decrease individuals' wages for up to two years, by around 2.5 percent; and that (ii) individuals reallocate to lower-paying employers. The share of wage loss due to missed opportunities to switch employers is between 7-20 percent over a two-year period after returning to work, whereas at most 2 percent is due to occupation switches. Our results are robust to (a) instrumenting absence with having suffered an accident, (b) exploiting the random nature of the time of the accident, and (c) within-firm matching of individuals with and without an accident and subsequent absence spell.
    Keywords: Keywords: wage ladder; accidents; health shocks; temporary absence from work
    JEL: J22 J23 I10
    Date: 2023–07
  6. By: Matthias Fauth; Benjamin Jung; Wilhelm Kohler
    Abstract: In this paper, we zoom in on the firm level of German merchandise foreign trade, using a novel data base with information on the export and import value by firm, country, product and year for the period 2011-2019. Problems arising from the consolidated reporting of taxable entities and the reporting thresholds present in intra-EU trade have been largely eliminated through redistributions conducted by DESTATIS. Using the data, we examine how global German firms are by looking at the joint distribution of the number of products they trade and the number of countries they trade with. Moreover, we examine the importance of firms mainly engaged in trade intermediation, as opposed to production. Most importantly, we provide a rich description of heterogeneity among German firms by decomposing their trade relationships into intensive margins (value of trade) and extensive margins (number of firms, products and countries). We describe the distributions for each margin, distinguishing intra-EU and extra-EU trade as well as different firm types (producers, wholesalers, retailers). Finally, we reveal strong positive correlations between and within importing and exporting margins, supporting the presence of firm-level complementarities implied by recent theory.
    Keywords: trade statistics, firm-level data, trade intermediation, Germany
    JEL: F14 F23
    Date: 2023
  7. By: Costa-Ramón, Ana (University of Zurich); Daysal, N. Meltem (University of Copenhagen); Rodríguez-González, Ana (Lund University)
    Abstract: What is the impact of the oral contraceptive pill on the mental health of adolescent girls? Using administrative data from Denmark and exploiting the variation in the timing of pill initiation in an event study design, we find that the likelihood of a depression diagnosis and antidepressant use increases shortly after pill initiation. We then uncover substantial variation in primary care providers' tendency to prescribe the pill to adolescents, unrelated to patient characteristics. Being assigned to a high prescribing physician strongly predicts pill use by age 16 and leads to worse mental health outcomes between ages 16-18.
    Keywords: contraceptive pill, mental health, adolescents, prescribing practices
    JEL: I12 J13
    Date: 2023–07
  8. By: Clark, Andrew E. (Paris School of Economics); Cotofan, Maria (King's College London)
    Abstract: It is well-known that the wealthier are more likely to have Right-leaning political preferences. We here in addition consider the role of the individual's starting position, and in particular their upward social mobility relative to their parents. In 18 waves of UK panel data, both own and parental social status are independently positively associated with Rightleaning voting and political preferences: given their own social status, the upwardly-mobile are therefore more Left-wing. We investigate a number of potential mediators: these results do not reflect the relationship between well-being and own and parents' social status, but are rather linked to the individual's beliefs about how fair society is.
    Keywords: social mobility, voting, redistribution, satisfaction, fairness
    JEL: A14 C25 D31 D63 J28 J62
    Date: 2023–07
  9. By: Born, Benjamin; Enders, Zeno; Menkhoff, Manuel; Müller, Gernot J.; Niemann, Knut
    Abstract: Using firm-level data, we study how firm expectations adjust to news while accounting for a) the heterogeneity of news and b) the heterogeneity of firms. We classify news as either micro or macro, that is, information about firm-specific developments or information about the aggregate economy. Survey data for German and Italian firms allows us to reject rational expectations: Both types of news predict forecast errors at the firm level. Yet while firm expectations overreact to micro news, they underreact to macro news. We propose a general-equilibrium model where firms suffer from 'island illusion' to explain these patterns in the data.
    Keywords: Survey data, salience, overreaction, underreaction, micro news, macro news, island illusion, business cycle
    JEL: D84 C53 E71
    Date: 2023
  10. By: Branco, Catarina; Dohse, Dirk C.; Pereira dos Santos, João; Tavares, José
    Abstract: We study the firm-level responses to a substantial increase in transportation costs in the wake of a quasi-experiment that introduced tolls in a subset of Portuguese highways. Exploiting a unique dataset encompassing the universe of Portuguese private firms, we find that the introduction of tolls caused a substantial decrease in turnover (−10.2%) and productivity (−4.3%) in treated firms vis-à-vis firms in the comparison group. In response to the tolls, firms substantially cut employment-related expenses and purchases of other inputs. Labor costs were reduced by both employment cuts and a decrease in average wages. While firms did not increase inventory, there is some evidence for increased firm exit, in particular by firms in tradables sectors.
    Keywords: Road tolls, Infrastructure, Firm performance, Firm behavior, Location, Portugal
    JEL: R48 L25 R12
    Date: 2023
  11. By: Rogne, Adrian F.; Knutsen, Tora Kjærnes; Modalsli, Jørgen
    Abstract: The great expansion of higher educational systems in Western countries in the latter half of the 20th century had a profound impact on educational opportunities and is central to understanding the reversal of the gender gap in higher education. In Norway, major educational reforms starting in the late 1960s aimed at making higher education more accessible for large segments of the population, particularly young women who were graduating from high school at an increasing rate. This occurred through the upgrading, establishment, and gradual expansion of local and regional colleges across the country, especially in female-dominated fields associated with work in expanding public welfare sectors. Theories and previous research have suggested that the gendered profile of educational expansions contributed to the cementing of horizontal gender segregation patterns in education and the labor market. We shed light on these processes using new and detailed data on the establishment and upgrading of higher educational institutions between 1969 and 1993. Linking these data to individual-level register data allows us to study how regional variation in educational opportunities affected the educational attainment and field of study choices of young women and men, using a difference-in-differences (DiD)/event study approach. While increased access to college education was a prerequisite for the reversal of the gender gap, our findings suggest that the location of colleges mattered very little. Colleges had, at most, a very modest impact on local educational attainment and gendered field of study choices. We discuss the implications of these findings for policy and sociological theory.
    Date: 2023–07–04
  12. By: Boockmann, Bernhard (Institut für Angewandte Wirtschaftsforschung (IAW)); Kroczek, Martin (Institut für Angewandte Wirtschaftsforschung (IAW)); Laub, Natalie (Institut für Angewandte Wirtschaftsforschung (IAW))
    Abstract: We study heterogeneity in the effects of two pension reforms in Germany that closed pathways into early retirement: the abolition of an old-age pension scheme for women and the abolition of a pension after unemployment or part-time work. We focus on heterogeneity with respect to several occupational characteristics. Both reforms had significant effects on individual employment states, and in both cases the effects differ significantly by occupation. The positive effect on employment is smaller in occupations with higher job strain and, in case of the old-age pension for women, the effect on unemployment is larger. The effects also differ by occupational tasks, PC use and the introduction of new technologies.
    Keywords: pension reforms, effect heterogeneity, occupational demands, occupational tasks
    JEL: J18 J22 J26
    Date: 2023–07
  13. By: Manuela Alcañiz (Riskcenter-IREA, Universitat de Barcelona, Spain.); Marc Estévez (Riskcenter-IREA, Universitat de Barcelona, Spain.); Miguel Santolino (Riskcenter-IREA, Universitat de Barcelona, Spain.)
    Abstract: Background: The Covid-19 epidemic has posed an unprecedented challenge to the European healthcare system, which has had to cope with a much higher than usual demand for hospitalization. This work is devoted to the construction and comparison of risk indicators of admission to intensive care units (ICU) for Covid-19 for eight European countries. Materials and methods: Using data from July 1, 2020, to January 16, 2022, the weekly percentage of ICU admissions with respect to hospitalizations was calculated and its trend was estimated; tests for differences in means were performed in order to classify the countries into two groups depending on their risk. Results: The proportion of ICU admissions remained relatively stable in each of the countries. The most southern countries (Italy, Spain and Greece) registered lower ICU risk, but higher hospitalization risk depending on the number of diagnosed cases. Vaccination contributed to reduce hospitalization and death risks, but not ICU risk. Conclusions: The pressure to the ICU caused by the pandemic has differed between the analysed countries. Mild winters in southern Europe could have worked out well for minor propagation and severity of the virus. Advance in population vaccination rates seems to have reduced the severity of the illness, but the percentage of hospitalizations that require ICU remains unchanged.
    Keywords: Covid-19, Vaccination, Hospitalization, Intensive care units, Europe. JEL classification: I18
    Date: 2023–07
  14. By: Bruhn, Simon; Grebel, Thomas; Nesta, Lionel
    Abstract: This paper argues that the typical practice of performing growth decompositions based on log-transformed productivity values induces fallacious conclusions: using logs may lead to an inaccurate aggregate growth rate, an inaccurate description of the microsources of aggregate growth, or both. We identify the mathematical sources of this log-induced fallacy in decomposition and analytically demonstrate the questionable reliability of log results. Using firm-level data from the French manufacturing sector during the 2009-2018 period, we empirically show that the magnitude of the log-induced distortions is substantial. Depending on the definition of accurate log measures, we find that around 60-80% of four-digit industry results are prone to mismeasurement. We further find significant correlations of this mismeasurement with commonly deployed industry characteristics, indicating, among other things, that less competitive industries are more prone to log distortions. Evidently, these correlations also a affect the validity of studies that investigate the role of industry characteristics in productivity growth.
    Keywords: productivity decomposition, growth, log approximation, geometric mean, arithmetic mean
    Date: 2023
  15. By: Margherita Moretti (Max Planck Institute for Demographic Research, Rostock, Germany); Timothy Riffe (Max Planck Institute for Demographic Research, Rostock, Germany); Angelo Lorenti (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Italy has witnessed increases in life expectancy and severe population ageing, raising concerns about their impact on population health. Disability status greatly affects the participation of older adults in various aspects of life. This study examines the long-term trend of disability-free life expectancy (DFLE) in Italy and explores the drivers in terms of disability onset and recovery dynamics, as well as changes in disability-specific mortality. By using IT-SILC longitudinal data (2004-2019), transition probabilities and DFLE between ages 50 and 79 are calculated, and the drivers of DFLE evolution are analysed through decomposition. DFLE among mid-to-older Italians has progressed overall over the last decades, albeit not as favourably as life expectancy. The trends indicate compression of disability in recent years. Changes in disability transitions have the greatest influence on DFLE patterns, while less the changes in disability-specific mortality. The greatest contributions come from increases in the probability of recovery from disability.
    Keywords: Italy, ageing, demographic models, disability
    JEL: J1 Z0
    Date: 2023
  16. By: Jasny, Johannes; Schubert, Torben
    Abstract: The post-growth discourse emphasizes the role need to limit economic growth as a primary means to stop continuous environmental degradation associated with production induced overexploitation of natural resources. A criticism of the post-growth discourse is, however, that innovation is known to be demand-driven implying that limiting growth may then undermine incentives to innovate. This may reduce the speed with which new environmentally friendly technologies are developed. Empirical analysis of this claim however do not exist. Relying on data from the European Manufacturing Survey 2018 for Germany, we match macroeconomic sector-growth statistics from the German Statistical Office and analyse how firm-level and sector level growth drive firms' innovation activities with a specific focus to environmental innovations. We find that while firm-level growth is strongly associated with all kinds of innovation activities, sector-level growth is not. Our results suggest that limiting overall economic growth may not undermine incentives to innovate as long as growth is still feasible on the level of the firm.
    Keywords: Economic growth, Innovation, Post-growth, Demand pull hypothesis, Green growth
    Date: 2023
  17. By: Márton Csilalg (Centre for Economic and Regional Studies, Budapest Institute for Policy Analysis); Lili Márk (Central European University)
    Abstract: In Hungary, employees could claim sickness insurance benefit within 3 days of job-loss, which would enable them to extend their benefit duration by up to 90 days. The maximum number of days of this ‘passive sickness benefit’ was halved in 2007. We first investigate whether claiming passive sickness benefit was related to the monetary advantage relative to claiming unemployment insurance benefits. Then, we explore the effect of potential benefit duration on the transitions to stable employment relying on the variation induced by the policy change. Relying on high quality longitudinal matched administrative data we can estimate these relationships while using controls for employment histories and healthcare spending. On the one hand, we find that passive sickness benefit claiming behavior was indeed correlated with the financial gains. On the other hand, we find only a very small and insignificant immediate effect on transitions to employment when maximum benefit duration was cut by 45 days. However, we find that job finding hazard on the week after benefit exhaustion increased more for individuals who were not on sick leave just prior to job-loss. Our finding is suggestive that a non-negligible proportion of this group were subject to moral hazard.
    Keywords: sickness absence; statutory long-term sick pay; difference-in-difference methods
    JEL: I18 J22 J32
    Date: 2023–06
  18. By: Nils Grashof (Friedrich Schiller University Jena, School of Economics and Business Administration); Holger Graf (Friedrich Schiller University Jena, School of Economics and Business Administration)
    Abstract: We analyze the role of universities or, more generally higher education institutions (HEIs), in terms of their regional and international embeddedness for regional knowledge base renewal. We assume that the introduction of radical patents in the sense of novel technological combinations contributes to the renewal of the knowledge base. For our empirical study, we combine information from patent applications, scientific publications and higher education statistics. We find that HEIs contribute most to knowledge base renewal if they have a strong research output and are locally embedded. International research embeddedness of HEIs benefits regional development only if combined with a central position in the regional network.
    Keywords: higher education institutions, universities, knowledge base renewal, radical innovation, SNA, embeddedness
    JEL: I20 I23 I25 O3 R11
    Date: 2023–07–20
  19. By: Carla Morvan (Université Lyon 2, CNRS, Université Jean Monnet Saint-Étienne, GATE Lyon Saint-Étienne UMR 5824, F-69130, Ecully, FRANCE); Sonia Paty (Université Lyon 2, CNRS, Université Jean Monnet Saint-Étienne, GATE Lyon Saint-Étienne UMR 5824, F-69130, Ecully, FRANCE)
    Abstract: Natural disasters and related prevention policies can affect voter decisions. In this study, we analyze how the occurrence of natural disasters changes voters’ behavior at municipal elections and how prevention policies can mitigate the impact of such catastrophic events on budget accounts and might potentially be rewarded by citizens in upcoming elections. We exploit original data on French municipalities where incumbents sought reelection between 2008 and 2020. To estimate the probability of re-election at the municipal level in the event of a natural disaster we apply a Heckman model based strategy to avoid selection bias. We find that the occurrence of natural disasters significantly decreases the chances of reelection of incumbent mayors. However, although we show that natural hazard prevention plans significantly mitigate the impact of catastrophic events on budget accounts, citizens do not reward such prevention policies in upcoming elections. We confirm the hypothesis of myopia: voters reward incumbents for delivering investment spending or decreasing debt but not for investing in spending on disaster preparedness.
    Keywords: Elections, natural disasters, prevention policies, natural experiment
    JEL: D72 Q54
    Date: 2023
  20. By: Hadziabdic, Sinisa
    Abstract: Relying on panel data for Germany, Switzerland, the United Kingdom, and the United States, the paper examines the impact of union membership on partisan preferences. By leveraging panel data to control for time-invariant selection effects, we show that unions exert a small consistent left-wing influence on the average wage earner who becomes affiliated, but they are no longer able to modify the preferences of working-class members. A longitudinal approach reveals that changes in partisan preferences can be linked to members' preexisting predispositions and to the prevalent political views within unions. Unions mainly attract individuals who already share their political inclinations before joining. These preexisting left-wing convictions allow an additional left-wing shift to take place through a value congruence mechanism provoked by interactions with long-term union members who are even more left-wing oriented than the newcomers. Symmetrically, working-class joiners exhibit less pronounced left-wing inclinations before becoming affiliated, a gap that widens further after they join as a consequence of their unmet expectations.
    Keywords: Gewerkschaften, Klassen, Paneldaten, politische Parteien, vergleichende Politikwissenschaf, class, comparative politics, panel data, political parties, trade unions
    Date: 2023
  21. By: Kovalenko, Tim; Sauerbier, Timo; Schröpf, Benedikt
    Abstract: In West Germany, the average size of establishments declined during the 1990s and started to increase again in the late 2000s, while the employer size wage premium followed the opposite trajectory. In this paper, we show that these two developments are interrelated. More precisely, our results suggest that variations in the employer size wage premiums induced establishments to vary their employment level, consistent with monopsony power on the labor market. Moreover, our regional analyses show that average establishment size correlates positively with GDP per capita. We rationalize these findings with a heterogeneous firms model with monopsonistic competition in the labor market, stemming from the household's love-of-variety preferences for employers. Both empirics and theory reveal that higher size wage premiums decrease average establishment size by downsizing incumbent establishments and triggering the entry of small establishments, thus also negatively affecting aggregate productivity.
    Keywords: Establishment Size, Size Wage Premium, Productivity, Labor Market Power, Germany
    JEL: E24 J31 J42 L25
    Date: 2023
  22. By: Albanesi, Stefania; Da Silva, António Dias; Jimeno, Juan F.; Lamo, Ana; Wabitsch, Alena
    Abstract: We examine the link between labour market developments and new technologies such as artificial intelligence (AI) and software in 16 European countries over the period 2011-2019. Using data for occupations at the 3-digit level in Europe, we find that on average employment shares have increased in occupations more exposed to AI. This is particularly the case for occupations with a relatively higher proportion of younger and skilled workers. This evidence is in line with the Skill Biased Technological Change theory. While there exists heterogeneity across countries, only very few countries show a decline in employment shares of occupations more exposed to AI-enabled automation. Country heterogeneity for this result seems to be linked to the pace of technology diffusion and education, but also to the level of product market regulation (competition) and employment protection laws. In contrast to the findings for employment, we find little evidence for a relationship between wages and potential exposures to new technologies. JEL Classification: J23, O33
    Keywords: artificial intelligence, employment, occupations, skills
    Date: 2023–07
  23. By: Bart Cockx; Sam Desiere (-)
    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

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