nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2023‒10‒02
twelve papers chosen by
Giuseppe Marotta, Università degli Studi di Modena e Reggio Emilia

  1. Women in Management and the Gender Pay Gap By Virginia Sondergeld; Katharina Wrohlich
  2. Do Teachers' Labor Contracts Matter? By Aparicio Fenoll, Ainoa; Quaranta, Roberto
  3. Is working enough to escape poverty? Evidence on low-paid workers in Italy By Michele Bavaro; Michele Raitano
  4. Predicting Re-Employment: Machine Learning versus Assessments by Unemployed Workers and by Their Caseworkers By van den Berg, Gerard J.; Kunaschk, Max; Lang, Julia; Stephan, Gesine; Uhlendorff, Arne
  5. Can Policy Reforms Enhance Fertility? An Ex-Ante Evaluation through Factorial Survey Experiments By Raffaele Guetto; Giammarco Alderotti; Daniele Vignoli
  6. From Patriarchy to Partnership: Gender Equality and Household Finance By Luigi Guiso; Luana Zaccaria
  7. Reconciling estimates of the long-term earnings effect of fertility By Simon Bensnes; Ingrid Huitfeldt; Edwin Leuven
  8. The Intergenerational Transmission of Housing Wealth By Daysal, N. Meltem; Lovenheim, Michael F.; Wasser, David N.
  9. Safety net or helping hand? The effect of job search assistance and compensation on displaced workers By Fackler, Daniel; Stegmaier, Jens; Upward, Richard
  10. Gender differences in management styles during crisis and the effect on firm performance By Valerija Botric; Sonja Radas; Bruno Skrinjaric
  11. Assessing the Impact of Artificial Intelligence on Germany's Labor Market: Insights from a ChatGPT Analysis By Oschinski, Matthias
  12. Income-Based Family Typology and Child Development: Evidence from the UK By Elena Claudia Meroni; Francesca Verga

  1. By: Virginia Sondergeld; Katharina Wrohlich
    Abstract: We analyze the impact of women’s managerial representation on the gender pay gap among employees on the establishment level using German Linked-Employer-Employee- Data from the years 2004 to 2018. For identification of a causal effect we employ a panel model with establishment fixed effects and industry-specific time dummies. Our results show that a higher share of women in management significantly reduces the gender pay gap within the firm. An increase in the share of women in first-level management e.g. from zero to above 33 percent decreases the adjusted gender pay gap from a baseline of 15 percent by 1.2 percentage points, i.e. to roughly 14 percent. The effect is stronger for women in second-level than first-level management, indicating that women managers with closer interactions with their subordinates have a higher impact on the gender pay gap than women on higher management levels. The results are similar for East and West Germany, despite the lower gender pay gap and more gender egalitarian social norms in East Germany. From a policy perspective, we conclude that increasing the number of women in management positions has the potential to reduce the gender pay gap to a limited extent. However, further policy measures will be needed in order to fully close the gender gap in pay.
    Keywords: Gender pay gap, women in management, board diversity, two-way fixed effects, linked employer-employee data
    JEL: J16 J31 J71
    Date: 2023
  2. By: Aparicio Fenoll, Ainoa (University of Turin); Quaranta, Roberto (Collegio Carlo Alberto)
    Abstract: Previous literature on the effect of tenured and tenure-track vs. non-tenure-track professors on students' performance at university finds contrasting results. Our paper is the first to test whether tenured/tenure-track and non-tenure-track teachers differently affect students' performance at school. We use data on standardized test scores of a representative sample of primary and secondary school students in Italy and information on their Italian and mathematics teachers' labor contracts. Controlling for class- and subject-fixed effects, we find that non-tenure-track teachers decrease students' performance by 0.21 standard deviation. This detrimental effect is fully explained because non-tenure-track teachers are less experienced. In line with previous findings on the adverse effects of teachers' absences, non-tenure-track teachers are also associated with 0.1 standard deviation worse student performance when their contracts last less than a year.
    Keywords: teachers, labor contracts, students' performance, standardized tests
    JEL: J41 H52
    Date: 2023–08
  3. By: Michele Bavaro (University of Oxford); Michele Raitano (Sapienza University of Rome)
    Abstract: We investigate the dynamics of incidence, intensity and persistence of low pay in Italy from 1990 to 2018 by exploiting a large administrative sample of employees in the private sector. We refer to various relative and absolute low pay thresholds and assess workers’ conditions according to annual earnings, weekly wages and full-time-equivalent (FTE) weekly wages, to depurate low pay dynamics from the influence of changes in worked weeks and hours. Regardless of the chosen threshold, we find that the incidence of low pay is high and steeply increased in the last decades when the focus is on annual earnings and weekly wages. A flat trend emerges instead when low pay is assessed according to FTE weekly wages, signalling that a major role in the low pay dynamics is played by the reduction in the number of hours worked by low-paid individuals because of the increasing spread of part-time contracts. Nevertheless, the share of low-paid workers is rather high even when the focus is on FTE weekly wages. Furthermore, low pay is a persistent status for a large and rising share of workers. These findings reveal a clear worsening of workers’ conditions at the bottom of the earnings distribution in Italy.
    Keywords: Low pay; Earnings; Working Poverty; Minimum wage; Italy
    JEL: J3 J6 I3
  4. By: van den Berg, Gerard J. (University of Groningen); Kunaschk, Max (Institute for Employment Research (IAB), Nuremberg); Lang, Julia (Institute for Employment Research (IAB), Nuremberg); Stephan, Gesine (Institute for Employment Research (IAB), Nuremberg); Uhlendorff, Arne (CREST)
    Abstract: Predictions of whether newly unemployed individuals will become long-term unemployed are important for the planning and policy mix of unemployment insurance agencies. We analyze unique data on three sources of information on the probability of re-employment within 6 months (RE6), for the same individuals sampled from the inflow into unemployment. First, they were asked for their perceived probability of RE6. Second, their caseworkers revealed whether they expected RE6. Third, random-forest machine learning methods are trained on administrative data on the full inflow, to predict individual RE6. We compare the predictive performance of these measures and consider whether combinations improve this performance. We show that self-reported and caseworker assessments sometimes contain information not captured by the machine learning algorithm.
    Keywords: unemployment, expectations, prediction, random forest, unemployment insurance, information
    JEL: J64 J65 C55 C53 C41 C21
    Date: 2023–09
  5. By: Raffaele Guetto (Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti"); Giammarco Alderotti (Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti"); Daniele Vignoli (Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti")
    Abstract: This paper contributes to the literature on the family policies-fertility nexus by assessing the potential role of parental leaves, childcare services, and child benefits on fertility through the use of factorial survey experiments (FSE). We focus on Italy, a country whose lowest-low fertility is often traced back to its familistic and sub-protective welfare state. We collected data on 4, 022 respondents aged 20-44 and exposed them to several scenarios characterised by different family policy packages. We asked them to ascribe short-term fertility intentions to a fictitious couple under these different policy scenarios, in a sort of ex-ante evaluation of possible policy reforms. Results show that each of the family-friendly policies we envisioned in the experiment positively impacts ascribed fertility intentions. The availability of full-time, public childcare services seems more relevant than higher child benefits, whereas more generous and gender-equal parental leaves are perceived as less relevant. However, results suggest that only a consistent mix of financial benefits, parental leave schemes, and childcare provisions can potentially boost fertility intentions, whereas marginal changes in single policy levers are most likely ineffective. The results of our FSE point out that a couple’s socioeconomic status is perceived as more important than family policies for fertility decisions, as ascribed fertility intentions increase substantially when both partners of the fictitious couple are employed and household income is high. We conclude by discussing the implications of our findings for policymaking.
    Keywords: Family policy; Fertility; Factorial Survey Experiments; Italy
    JEL: J13 J18
    Date: 2023–09
  6. By: Luigi Guiso; Luana Zaccaria
    Abstract: We obtain a model-driven measure of gender norms on intra-household financial decision making by leveraging dramatic variation across Italian cohorts and regions in the gender of the household head. We use these estimates to identify the effects of gender parity on household financial decisions. More egalitarian norms increase household participation in financial markets, equity holdings, asset diversification, and returns on investments.This evidence suggests that gender roles can have large economic costs. Consistent with this view, we show that patriarchal norms began receding in the early 1990s, when a pension reform made it too costly to comply with traditional roles
    Date: 2023–01
  7. By: Simon Bensnes; Ingrid Huitfeldt; Edwin Leuven (Statistics Norway)
    Abstract: This paper presents novel methodological and empirical contributions to the child penalty literature. We propose a new estimator that combines elements from standard event study and instrumental variable estimators and demonstrate their relatedness. Our analysis shows that all three approaches yield substantial estimates of the long-term impact of children on the earnings gap between mothers and their partners, commonly known as the child penalty, ranging from 11 to 18 percent. However, the models not only estimate different magnitudes of the child penalty, they also lead to very different conclusions as to whether it is mothers or partners who drive this penalty – the key policy concern. While the event study attributes the entire impact to mothers, our results suggest that maternal responses account for only around one fourth of the penalty. Our paper also has broader implications for event-study designs. In particular, we assess the validity of the event-study assumptions using external information and characterize biases arising from selection in treatment timing. We find that women time fertility as their earnings profile flattens. The implication of this is that the event-study overestimates women’s earnings penalty as it relies on estimates of counterfactual wage profiles that are too high. These new insights in the nature of selection into fertility show that common intuitions regarding parallel trend assumptions may be misleading, and that pre-trends may be uninformative about the sign of the selection bias in the treatment period.
    Keywords: Child penalty; female labor supply; event study; instrumental variable
    JEL: C36 J13 J16 J21 J22 J31
    Date: 2023–08
  8. By: Daysal, N. Meltem (University of Copenhagen); Lovenheim, Michael F. (Cornell University); Wasser, David N. (US Census Bureau)
    Abstract: Rising wealth inequality has spurred an increased interest in understanding how and why wealth is correlated across generations. We exploit plausibly exogenous variation in housing wealth driven by home price changes in different areas to isolate the causal impact of parental housing wealth during different childhood periods on children's long-run wealth accumulation. Using population-level Danish administrative data, we find that 27% and 25% of each Krone of parental housing wealth change during early-childhood is transmitted to children's overall and housing wealth in adulthood, respectively. The corresponding transmission rates for parental housing wealth changes during middle-childhood are 25% and 15%, with a transmission to non-housing wealth of 10%. There is little evidence of transmission of parental housing wealth changes that occur during the teenage years. Examining mechanisms, we find that parental housing wealth changes in early and middle-childhood lead to modest increases in adult children's home ownership, educational attainment, and earnings. However, earnings and education can explain only 20-30% of the intergenerational transmission of parental wealth gains during these periods. We argue that the transmission of parental housing wealth changes in childhood are driven in large part by changes to unobserved household environment and parental behaviors that are passed on to children and shape their savings behavior in adulthood.
    Keywords: intergenerational wealth transmission, housing wealth
    JEL: J62 D31
    Date: 2023–09
  9. By: Fackler, Daniel; Stegmaier, Jens; Upward, Richard
    Abstract: We provide the first systematic evidence on the effectiveness of a contested policy in Germany to help displaced workers. So-called 'transfer companies' (Transfergesellschaften) employ displaced workers for a fixed period, during which time workers are provided with job-search assistance and are paid a wage which is a substantial fraction of their pre-displacement wage. Using rich and accurate data on workers' employment patterns before and after displacement, we compare the earnings and employment outcomes of displaced workers who entered transfer companies with those that did not. Workers can choose whether or not to accept a position in a transfer company, and therefore we use the availability of a transfer company at the establishment level as an IV in a model of one-sided compliance. Using an event study, we find that workers who enter a transfer company have significantly worse post-displacement outcomes, but we show that this is likely to be the result of negative selection: workers who lack good outside opportunities are more likely to choose to enter the transfer company. In contrast, ITT and IV estimates indicate that the use of a transfer company has a positive and significant effect on employment rates five years after job loss, but no significant effect on earnings. In addition, the transfer company provides significant additional compensation to displaced workers in the first 12 months after job loss.
    Keywords: earnings, employment, job loss, transfer companies
    JEL: J63 J65 J68
    Date: 2023
  10. By: Valerija Botric (The Institute of Economics, Zagreb); Sonja Radas (The Institute of Economics, Zagreb); Bruno Skrinjaric (The Institute of Economics, Zagreb)
    Abstract: This paper aims to shed light on gender differences in firm performance in a period that entails an unprecedented crisis with specific effects on gender roles, i.e., COVID-19. The analysis focuses on Croatian high-tech manufacturing and knowledge-intensive service sector SMEs. Previous literature indicates that the obstacles the SMEs face may be even more significant for women-owned firms. Specifically, women entrepreneurs find it more challenging to secure social and financial capital. Women often face restrictions on their working hours due to societal pressure and family obligations, and they are rarely well-connected because they are often not members of influential business networks. Literature also suggests that the usual pressures on female working hours have disproportionally increased during the COVID-19 imposed lockdowns, so the general expectation is that women entrepreneurs were not able to cope equally with the changed market circumstances. In this study, we consider a causation-effectuation management framework to investigate how women- and men-owned SMEs used these management styles to address the business challenges in the COVID-19 crisis. Our contribution aims explicitly to answer the invitation made in recent literature to explore how gender influences the effects of the four dimensions of effectuation on firm performance.
    Keywords: women entrepreneurship; firm performance; management styles; COVID-19
    JEL: B54 J16 L26
    Date: 2023–07
  11. By: Oschinski, Matthias
    Abstract: We assess the impact of artificial intelligence (AI) on Germany’s labour market applying the methodology on suitability for machine learning (SML) scores established by Brynjolfsson et al., (2018). However, this study introduces two innovative approaches to the conventional methodology. Instead of relying on traditional crowdsourcing platforms for obtaining ratings on automatability, this research exploits the chatbot capabilities of OpenAI's ChatGPT. Additionally, in alignment with the focus on the German labor market, the study extends the application of SML scores to the European Classification of Skills, Competences, Qualifications and Occupations (ESCO). As such, a distinctive contribution of this study lies in the assessment of ChatGPT's effectiveness in gauging the automatability of skills and competencies within the evolving landscape of AI. Furthermore, the study enhances the applicability of its findings by directly mapping SML scores to the European ESCO classification, rendering the results more pertinent for labor market analyses within the European Union. Initial findings indicate a measured impact of AI on a majority of the 13, 312 distinct ESCO skills and competencies examined. A more detailed analysis reveals that AI exhibits a more pronounced influence on tasks related to computer utilization and information processing. Activities involving decision-making, communication, research, collaboration, and specific technical proficiencies related to medical care, food preparation, construction, and precision equipment operation receive relatively lower scores. Notably, the study highlights the comparative advantage of human employees in transversal skills like creative thinking, collaboration, leadership, the application of general knowledge, attitudes, values, and specific manual and physical skills. Applying our rankings to German labour force data at the 2-digit ISCO level suggests that, in contrast to previous waves of automation, AI may also impact non-routine cognitive occupations. In fact, our results show that business and administration professionals as well as science and engineering associate professionals receive relatively higher rankings compared to teaching professionals, health associate professionals and personal service workers. Ultimately, the research underscores that the overall ramifications of AI on the labor force will be contingent upon the underlying motivations for its deployment. If the primary impetus is cost reduction, AI implementation might follow historical patterns of employment losses with limited gains in productivity. As such, public policy has an important role to play in recalibrating incentives to prioritize machine usefulness over machine intelligence.
    Keywords: Generative AI, Labour, Skills Suitability for Machine Learning, German labour market, ESCO
    JEL: A1 J0
    Date: 2023–08–14
  12. By: Elena Claudia Meroni; Francesca Verga
    Abstract: Our paper contributes to the literature studying how household conditions can influence children’s development, focusing on the type of family model where children grow up, defined on the basis of parental employment status and relative earnings. The traditional “male-breadwinner” model is no longer the only type of family that has been observed throughout recent decades; the “dual-breadwinner” family model is currently widespread across all developed countries and an additional household type is becoming more prevalent: the one in which the woman is the sole or main wage-earner, the so-called “female-breadwinner” arrangement. How do different family models influence the development of children’s skills? We use data from the Millennium Cohort Study (UK) to investigate the association between different typologies of families and cognitive and socio-emotional outcomes, focusing on children aged 7 and 11. We find that, compared to children growing up in male-breadwinner households, only children who have at least one parent who does not work at all are worse off in some socioemotional outcomes. Children growing up in other types of arrangements (equal earners or female-breadwinner) do not differ in their cognitive or socio-emotional outcomes.
    Keywords: Child development, female breadwinner, dual breadwinner, male breadwinner, household employment, Millennium Cohort Study
    JEL: J13 J24 D10
    Date: 2023

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