nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2023‒09‒11
eleven papers chosen by
Giuseppe Marotta, Università degli Studi di Modena e Reggio Emilia

  1. The interplay between refugee inflows and media coverage in determining attitudes towards immigration in Germany By Chia-Jung Tsai; R. Gordon Rinderknecht; Emilio Zagheni
  2. The Welfare Economics of Reference Dependence By Daniel Reck; Arthur Seibold
  3. Are Campaign Promises Effective? By Ganslmeier, Michael
  4. When It Hurts the Most: Timing of Parental Job Loss and a Child's Education By Bingley, Paul; Cappellari, Lorenzo; Ovidi, Marco
  5. Parental separation and children’s education – changes over time? By Sanna Kailaheimo-Lönnqvist; Marika Jalovaara; Mikko Myrskylä
  6. Lost female talent: Gender differences in college aspirations and expectations in Germany By Erdmann, Melinda; Helbig, Marcel; Jacob, Marita
  7. The gender composition of supervisor-worker dyads: Career blocks and gender pay gap By Paola Profeta; Giacomo Pasini; Valeria Maggian; Ludovica Spinola
  8. The scale and drivers of ethnic wealth gaps across the wealth distribution in the UK: evidence from Understanding Society By Karagiannaki, Eleni
  9. Do Remote Workers Deter Neighborhood Crime? Evidence from the Rise of Working from Home By Jesse Matheson; Brendon McConnell; James Rockey; Argyris Sakalis
  10. Micro vs Macro Labor Supply Elasticities: The Role of Dynamic Returns to Effort By Henrik Kleven; Claus Thustrup Kreiner; Kristian Larsen; Jakob Egholt Søgaard
  11. Minimum Wage and Skills -Evidence from Job Vacancy Data By Elodie Andrieu; Malgorzata Kuczera

  1. By: Chia-Jung Tsai (Max Planck Institute for Demographic Research, Rostock, Germany); R. Gordon Rinderknecht (Max Planck Institute for Demographic Research, Rostock, Germany); Emilio Zagheni (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: In this study, we examined the role media plays in moderating the relationship between refugee influx and anti-immigration attitudes across German regions. Specifically, we focused on the salience of refugees in local news media in each region, and we explored the extent to which such attention heightened the connection between increasing refugees in an area and growth in anti-immigration views. We conducted this analysis using data from the German Socio-Economic-Panel (2011-2017), asylum applications data from the Federal Office of Statistics, and the Gdelt database, which is a real-time news database. Using a mixed effect approach, we found that the effect of refugee influx on anti-immigration attitudes across regions was moderated as expected by the salience of refugees in local news, albeit in former East Germany but not in former West Germany. We contend that this difference between East and West Germany relates to East Germany’s relatively stronger ethnonationalist attitudes. Based on this, we conclude that refugee salience in media plays an essential, albeit inconsistent, role in characterizing changes in population composition as threatening, and thus in triggering anti-immigration attitudes.
    Keywords: Germany, attitude, immigration, media, refugees
    JEL: J1 Z0
    Date: 2023
  2. By: Daniel Reck; Arthur Seibold
    Abstract: Empirical evidence suggests that individuals often evaluate options relative to a reference point, especially seeking to avoid losses. We undertake the first welfare analysis under reference-dependent preferences. We characterize the welfare impact of changes in reference points and prices, decomposing these into direct and behavioral effects. The sign of direct and behavioral effects depends on the form of reference-dependent payoffs; which of these effects matter for welfare depends on whether reference dependence reflects a bias or a normative preference. We derive sufficient statistics formulas quantifying the social welfare effects of changes in reference points and prices in terms of estimable reduced-form parameters and normative judgments. We illustrate these findings with an empirical application to reference dependence exhibited in German workers’ retirement decisions. We find positive social welfare effects of increasing the Normal Retirement Age, but ambiguous effects of financial incentives to postpone retirement.
    Keywords: reference-dependent preferences, loss aversion, welfare, pension reform
    JEL: D91 D60 H55 J26
    Date: 2023–08
  3. By: Ganslmeier, Michael
    Abstract: In democracies, political parties promise to expand social benefits to attract voters in the lead-up to elections. However, we know relatively little whether such campaign promises effectively sway benefiting voters. Using a regression-discontinuity design, we estimate the causal effects of an electoral pledge made by the German conservative party to expand pension benefits ahead of the parliamentary election in 2013. The results show that the promise increased alignment with the pledge-making party by 12.2% among eligible beneficiaries. These gains originate from the re- alignment of individuals who traditionally support left-wing platforms, while it had no mobilizing effect on inactive voters. In addition, we find that the pledge effect is larger among individuals with lower economic and social security. Finally, the policy-induced alignment gain is transitory as it disappears once the pledge is fulfilled. Overall, our paper shows that electoral pledges related to social benefits are rather temporarily persuasive than permanently mobilizing.
    Keywords: campaign promises, electoral pledges, social benefits, policy feedbacks, prospective voting
    JEL: D72 D91 H55 I38
    Date: 2023
  4. By: Bingley, Paul (VIVE - The Danish Centre for Applied Social Science); Cappellari, Lorenzo (Università Cattolica del Sacro Cuore); Ovidi, Marco (Catholic University Milan)
    Abstract: We investigate the stages of childhood at which parental job loss is most consequential for their child's education. Using Danish administrative data linking parents experiencing plant closures to their children, we compare end-of-school outcomes to matched peers and to closures hitting after school completion age. Parental job loss disproportionally reduces test taking, scores, and high school enrolment among children exposed during infancy (age 0-1). Effects are largest for low-income families and low-achieving children. The causal chain from job loss to education likely works through reduced family income. Maternal time investment partially offsets the effect of reduced income.
    Keywords: parental labor market shocks, intergenerational mobility, child development
    JEL: J13 D10 I24
    Date: 2023–08
  5. By: Sanna Kailaheimo-Lönnqvist; Marika Jalovaara; Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Objective and background: The association between parental separation and children’s education has been widely studied, but mostly at a single time point, for one educational outcome at a time and for marital dissolution only. We examine whether the (generally negative) association has changed across cohorts for several educational outcomes and whether the association differs by parental union type (marriage, cohabitation) and family background (parental education). Due to high rates of separation, the association with children’s education could have weakened over time. Methods: We use Finnish total population register data. We focus on child cohorts born between 1987 and 2003 (N=1, 004, 823) and analyse grade point averages, secondary education and tertiary education using linear probability models with standard errors clustered within families. Results and conclusion: The association between parental separation and educational achievement is negative and has remained similar across the birth cohorts. Differences according to parental union type and socioeconomic family background are small and do not exhibit changes over time. The stability of the association over time suggests that the consequences of parental separation on children’s education have not changed, even though attitudes towards separation may have changed. Keywords: parental separation, parental divorce, children’s education, cohort differences
    JEL: J1 Z0
    Date: 2023
  6. By: Erdmann, Melinda; Helbig, Marcel; Jacob, Marita
    Abstract: Our study focuses on the gender gap in college aspirations and enrolment among high school students in Germany. We build on socialisation theory, rational choice theory, and formal restrictions to college access to explain gender differences in idealistic college aspirations, realistic college expectations, and the disparities between the two. Specifically, we examine the prevalence of 'pessimistic' college expectations, where college aspirations are higher than expectations, which we expect to be more likely among young women than young men. By analysing survey data from 1, 766 upper secondary students in Germany, we find that women are equally interested in pursuing higher education as their male counterparts. They even express higher aspirations for college enrolment. However, women are more pessimistic than men about realising their aspirations. While factors such as the subjective probability of success and perceived costs impact both genders, young women are also affected by formal restrictions limiting entry to their preferred fields of study.
    Date: 2023
  7. By: Paola Profeta (Bocconi University); Giacomo Pasini (Université de Venise Ca' Foscari); Valeria Maggian (Université de Venise Ca' Foscari); Ludovica Spinola (Université de Venise Ca' Foscari)
    Abstract: We present how the gender composition of supervisor–worker dyads affects workers' outcomes. We use fine-grained longitudinal personnel data on workers from an Italian insurance company over the period 2014–2021 and assign to each worker the gender of the direct supervisor. We implement an individual worker's fixed-effect model, together with a dichotomous variable that captures pre- and post- COVID-19 period and time-varying individual characteristics. Our findings show that, although both male and female managers evaluate similarly the performance of male and female workers, female supervisors grant-lower amount of one-off bonus than male managers to both male and female workers. Moreover, both male and female workers have a lower probability of receiving a promotion from an employee of level VI to middle-managers when the manager is a female.s When exploiting a heterogeneous analysis by gender, results confirm that the gender of the supervisors does not affect workers' performance assessments, while it negatively impacts the total amount of bonus of both male and female workers. We interpret these results as evidence either that female managers are more severe to conform to a masculine gender stereotype associated with a leadership position that female managers are at the head of marginal areas and offices and hence receive less funds to provide bonuses and promotions to workers they supervise.
    Date: 2023–08–11
  8. By: Karagiannaki, Eleni
    Abstract: Using data from Understanding Society, this paper investigates for the first time the scale and the drivers of ethnic disparities in wealth across the net worth distribution (until recently assessed at the mean or the median). The analysis reveals that apart from people in the Indian ethnic group, all other ethnic minority groups have substantially less net worth than the White British group across the distribution and are less likely to hold high-return assets and more likely to hold financial debt. The picture in terms of housing wealth is similar: the Indian ethnic group comes out as the group with the higher housing wealth than any other ethnic group. By contrast, in terms of net financial wealth all ethnic minority groups including the Indian ethnic group have substantially less wealth (including very high levels of indebtedness) than the White British group. The wealth disadvantage of ethnic minority groups with lower net worth holdings relative to the White British group, is reduced but remains substantial across the distribution, even after accounting for differences in observable characteristics. The scale of the differences that is explained by observable characteristics varies across the distribution and across groups but their effect is generally stronger at below the median. Analysis by wealth component shows that observable characteristics explain a larger share of the ethnic gaps in financial wealth than the ethnic gaps in housing wealth. This is especially the case at below the median financial wealth levels where the financial wealth disadvantage of most ethnic groups, is fully explained by differences in observable characteristics. By contrast, differences in observable characteristics have a negligible effect in explaining the lower net housing wealth of ethnic minority groups with lower housing wealth across the housing wealth distribution, suggesting that ethnic minority groups face unobserved disadvantages, which translate into lower housing wealth. By contrast, differences in observable characteristics fully explain the housing wealth advantage of people in the Indian ethnic group.
    Keywords: ethnic minority group; wealth; ousing; assets; debt; inequality; decomposition
    JEL: D31 E21 E24
    Date: 2023–07
  9. By: Jesse Matheson (Department of Economics, University of Sheffield, Sheffield S1 4DT, UK); Brendon McConnell (University of Southampton, UK); James Rockey (University of Birmingham, UK); Argyris Sakalis (Department of Economics, University of Sheffield, Sheffield S1 4DT, UK)
    Abstract: We examine the impact of the working from home (WFH) shift on neighborhood-level burglary rates, employing detailed street-level crime data and a neighborhood WFH measure. We find a one standard deviation increase in WFH (9.5pp) leads to a persistent 4% drop in burglaries. A spatial search model identifies two deterrence channels: occupancy, as burglars avoid occupied houses, and “eyes on the street”. We provide evidence supporting both channels. Despite crime displacement to low WFH areas offseting 30% of the burglary reduction, a hedonic pricing model reveals significant willingness to pay for high WFH areas, especially those with high ex-ante burglary risk.
    Keywords: Working From Home, Property Crime, Spatial Spillovers, Hedonic House Price Models
    JEL: H75 K42 R20
    Date: 2023–08
  10. By: Henrik Kleven; Claus Thustrup Kreiner; Kristian Larsen; Jakob Egholt Søgaard
    Abstract: A key contention in economics is the discrepancy between micro and macro elasticities of labor supply with respect to marginal tax rates. We revisit this question, focusing on the role of dynamic returns to effort among top earners. We develop a new model of earnings responses to taxes in the presence of dynamic returns. In this model, the returns to effort are delayed and mediated by job switches such as promotions within firms or movements between firms. Short-run micro elasticities are attenuated relative to the true long-run macro elasticity. We proceed by providing two main empirical analyses using rich administrative data from Denmark. The first part presents descriptive evidence on earnings and hours-worked patterns over the lifecycle that confirm the predictions of the theoretical model. The second part presents quasi-experimental evidence on earnings responses to taxes using discrete job switches. The empirical strategy is informed by the theoretical model, according to which job switches can be used to (partially) identify the macro elasticity of labor supply. The evidence shows that, at the top of the distribution, macro elasticities are much larger than micro elasticities due to dynamic compensation effects.
    JEL: C1 D6 E6 H2 H3 J2 J3
    Date: 2023–08
  11. By: Elodie Andrieu (Kings Business School, King's College London); Malgorzata Kuczera (University of Cambridge, Education Department)
    Keywords: minimum wage, job vacancy, labour hiring
    Date: 2023–07

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