nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2023‒10‒09
twelve papers chosen by
Giuseppe Marotta, Università degli Studi di Modena e Reggio Emilia

  1. More education does make you happier - unless you are unemployed By Bertermann, Alexander; Kamhöfer, Daniel A.; Schildberg-Hörisch, Hannah
  2. Working More for Less: Part-time Penalties Across the Working Hours Distribution? By Tom Günther; Ulrich C. Schneider; Fabian Stürmer-Heiber
  3. Overeducation, Performance Pay and Wages: Evidence from Germany By Mehrzad B. Baktash
  4. Health and labor market impacts of twin birth: Evidence from a Swedish IVF policy By Bhalotra, Sonia; Clarke, Damian; Mühlrad, Hanna; Palme, Mårten
  5. Immigration, Female Labour Supply and Local Cultural Norms By Jessen, Jonas; Schmitz, Sophia; Weinhardt, Felix
  6. The Micro-Foundations of Employment Systems: An Empirical Case Study of Britain and France By Amossé, Thomas; Bryson, Alex; Forth, John; Petit, Héloïse
  7. The parenthood penalty in mental health: Evidence from Austria and Denmark By Alexander Ahammer; Ulrich Glogowsky; Martin Halla; Timo Hener
  8. Resource Misallocation in the Presence of R&D Spillovers By Li, Kun; Azacis, Helmuts; Luintel, Kul B
  9. The Effects of COVID-19 Pandemic on (New) Life Insurances By Ropponen, Olli; Kuusi, Tero; Valkonen, Tarmo
  10. Dynamics of life course family transitions in Germany: Exploring patterns, process and relationships By Maurer, Raimond; Usman, Sehrish
  11. Fertility, employment and family policy: A cross-country panel analysis By Jonas Fluchtmann; Violetta van Veen; Willem Adema
  12. Households' response to the wealth effects of inflation By Schnorpfeil, Philip; Weber, Michael; Hackethal, Andreas

  1. By: Bertermann, Alexander; Kamhöfer, Daniel A.; Schildberg-Hörisch, Hannah
    Abstract: This paper investigates the causal effect of education on life satisfaction, exploring effect heterogeneity along employment status. We use exogenous variation in compulsory schooling requirements and the build-up of new, academically more demanding schools, shifting educational attainment along the entire distribution of schooling. Leveraging plant closures and longitudinal information, we also address the endogeneity of employment status. We find a positive effect of education on life satisfaction for employed individuals, but a negative one for those without a job. We propose an aspiration-augmented utility function as a unifying explanation for the asymmetric effect of education on life satisfaction.
    Keywords: Education, Life satisfaction, Employment status, Compulsory schooling reforms, School openings, Instrumental variable estimation
    JEL: I31 C26
    Date: 2023
  2. By: Tom Günther; Ulrich C. Schneider; Fabian Stürmer-Heiber
    Abstract: We use German administrative and survey data to investigate the heterogeneity of part-time penalties in hourly wages and growth rates. Exploiting tax reforms for identification, we find substantial heterogeneity in part-time wage penalties from −28.3% to −7.2% compared to full-time. The heterogeneity in wage growth penalties is less pronounced. Both penalties do not decrease linearly with additional working hours. More weekly working hours might result in a higher hourly wage penalty. The shape of the penalties is driven by workers with non-demanding tasks and professions where working around 30 weekly hours is uncommon, and relatively many females work.
    Keywords: part-time employment, wage dynamics, female labor supply
    JEL: J16 J24 J31
    Date: 2023–09–15
  3. By: Mehrzad B. Baktash
    Abstract: Overeducated workers are more productive and have higher wages in comparison to their adequately educated coworkers in the same jobs. However, they face a series of challenges in the labor market, including lower wages in comparison to their similarly educated peers who are in correctly matched jobs. Yet, less consensus exists over the adjustment mechanisms to overcome the negative consequences of overeducation. This study examines the hypotheses that overeducated workers sort into performance pay jobs as an adjustment mechanism and that performance pay moderates their wages. Using German Socio-Economic Panel, I show that overeducation associates with a higher likelihood of sorting into performance pay jobs and that performance pay moderates the wages of overeducated workers positively. It also holds in endogenous switching regressions accounting for the potential endogeneity of performance pay. Importantly, the positive role of performance pay is particularly larger for the wages of overeducated women.
    Keywords: Performance Pay; Overeducation; Wages; Educational Mismatch; Sorting
    JEL: I21 J24 J31 J33 M52
    Date: 2023
  4. By: Bhalotra, Sonia (Department of Economics, University of Warwick, CEPR, IEA, IZA, CAGE, IFS); Clarke, Damian (bDepartment of Economics, University of Chile and IZA); Mühlrad, Hanna (IFAU - Institute for Evaluation of Labour Market and Education Policy); Palme, Mårten (Stockholm University)
    Abstract: In vitro fertilization (IVF) has allowed women to delay birth and pursue a career, but it massively increases the risk of twin birth. We investigate the extent to which having twins hampers women’s careers after birth. To do this, we leverage a single embryo transfer (SET) mandate for IVF procedures implemented in Sweden in 2003, following which the share of twin births showed a precipitous drop of 70%. Linking birth registers to hospitalization and earnings registers, we identify substantial improvements in women’s earnings following IVF birth, alongside improvements in maternal and child health and an increase in subsequent fertility. We provide the first comprehensive evaluation of SET. This is relevant given the secular rise in IVF births and the broader rise in the risk of twin birth.
    Keywords: twins; IVF; single embryo transfer; career costs of children; gender wage gap; fertility; maternal health; neonatal health; gender
    JEL: I11 I12 I38 J13 J24
    Date: 2023–08–10
  5. By: Jessen, Jonas (IZA); Schmitz, Sophia (Federal Institute for Population Research); Weinhardt, Felix (European University Viadrina, Frankfurt / Oder)
    Abstract: We study the local evolution of female labour supply and cultural norms in West Germany in reaction to the sudden presence of East Germans who migrated to the West after reunication. These migrants grew up with high rates of maternal employment, whereas West German families mostly followed the traditional breadwinner-housewife model. We find that West German women increase their labour supply and that this holds within households. We provide additional evidence on stated gender norms, West-East friendships, intermarriage, and child care infrastructure. The dynamic evolution of the effects on labour supply is best explained by local cultural learning.
    Keywords: cultural norms, local learning, gender, immigration
    JEL: J16 J21 D1
    Date: 2023–09
  6. By: Amossé, Thomas (CNAM, Paris); Bryson, Alex (University College London); Forth, John (Cass Business School); Petit, Héloïse (CNAM, Paris)
    Abstract: Building on existing studies of national employment systems, we take a multi-dimensional approach to comparative employment relations where the national level remains meaningful but which emphasises within-country dynamics and heterogeneity. Analysing nationally representative workplace surveys for France and Great Britain we contrast the British model characterised by variability and heterogeneity with a French model characterised by stability and uniformity. We discuss ways in which these systems are shaped by differences in employer and employee networks, the financial and organisational links between firms, and other macro-institutions.
    Keywords: employment relations, survey, national models, employment regimes
    JEL: J21 J31 M51 P52
    Date: 2023–09
  7. By: Alexander Ahammer; Ulrich Glogowsky; Martin Halla; Timo Hener
    Abstract: Using Austrian and Danish administrative data, we examine the impacts of parenthood on mental health. Parenthood imposes a greater mental health burden on mothers than on fathers. It creates a long-run gender gap in antidepressant prescriptions of about 93.2% (Austria) and 64.8% (Denmark). These parenthood penalties in mental health are unlikely to reflect differential help-seeking behavior across the sexes or postpartum depression. Instead, they are related to mothers’ higher investments in childcare: Mothers who take extended maternity leave in quasi-experimental settings are more likely to face mental health problems.
    Keywords: Gender equality, fertility, parenthood, motherhood, mental health, parental leave
    JEL: D63 J13 I10 J16 J22
    Date: 2023–09
  8. By: Li, Kun (Cardiff Business School); Azacis, Helmuts (Cardiff Business School); Luintel, Kul B (Cardiff Business School)
    Abstract: We study resource misallocation by explicitly modelling R&D input and knowledge spillovers. The effects of R&D and spillovers on firm-level productivity are extensively studied in applied work, but not in the context of resource misallocation. We establish that, in the presence of spillovers, efficient resource allocation requires that more productive firms face higher R&D input prices. Analysing UK firm-level data, we find that the output gains from correcting misallocation are greatly overestimated when spillovers are ignored. Output losses due to capital distortions dominate those from labour and R&D inputs. Adopting a wrong R&D policy could lead to significant output losses.
    Keywords: resource misallocation, productivity, R&D spillover, the UK manufacturing firms
    JEL: D24 D61 O30 O47
    Date: 2023–09
  9. By: Ropponen, Olli; Kuusi, Tero; Valkonen, Tarmo
    Abstract: Abstract This paper studies the life insurance demand responses to Covid-19 pandemic. It employs the unique individual-level daily data on new term life insurances together with both geographical and timely variation in the severity of the pandemic in Finland. These data are merged with the high-quality register data on the background characteristics of the customers and other Finnish population. First, we observe that the take-out of new life insurances increased by 20 % in the first half of 2020 among individuals of ages 21–60, compared to the corresponding time periods in years 2018 and 2019. The average sum insured increased at the same time by 16 %. Second, we find that the life insurance demand responds heavily to all Covid-measures, each of which may be considered as reflecting the change in the perceived death risk. We also find that the responses are larger to the country-level measures compared to the hospital district level measures. An increase in each country-level Covid-measure by 10 % implies on average an increase in the number of new life insurances by roughly 1 % (elasticity e=0.1). We also find that highly educated people and people with high life insurance deficit levels responded to Covid-pandemic more often than other people.
    Keywords: COVID-19, Life insurances, Households
    JEL: G22 H31
    Date: 2023–09–19
  10. By: Maurer, Raimond; Usman, Sehrish
    Abstract: This paper explores dynamics of family life events in Germany using discrete time event history analysis based on SOEP data. We find that higher educational attainment, better income level, and marriage emerge as salient protective factors mitigating the risk of mortality; better education also reduces the likelihood of first marriage whereas, lower educational attainment, protracted period, and presence of children act as protective factors against divorce. Our key finding shows that disparity in mean life expectancies between individuals from low- and high-income brackets is observed to be 9 years among males and 6 years among females, thereby illustrating the mortality inequality attributed to income disparities. Our estimates show that West Germans have low risk of death, less likelihood of first marriage, and they have a high risk of divorce and remarriage compared to East Germans.
    Keywords: Family dynamics, Life Events, Hazard estimation, Life course transitions
    JEL: C13 C34 J12
    Date: 2023
  11. By: Jonas Fluchtmann; Violetta van Veen; Willem Adema
    Abstract: This paper analyses the association of labour market outcomes and family policies with fertility trends between 2002 and 2019 in 26 OECD countries. While the average age of mothers at birth of their children continued to increase over the entire period, these years have been marked by an initial catching-up of total fertility rates after marked declines in previous decades. Furthermore, after peaking in 2008, total fertility rates declined substantially, fueling concerns about demographic, economic and fiscal implications. Using panel data models and building on prior work, this paper links these changes in fertility outcomes to changes in the labour market position of men and women as well as with changes in family policies, such as parental leaves and early childhood education and care. This paper provides insights into the complex dynamics between family policies, employment and fertility, shedding light on the factors influencing overall population dynamics in OECD countries.
    Keywords: Birth rates, Employment, Family Policy, Fertility
    JEL: J13 J18 J21 C33
    Date: 2023–09–21
  12. By: Schnorpfeil, Philip; Weber, Michael; Hackethal, Andreas
    Abstract: We study the redistributive effects of inflation combining administrative bank data with an information provision experiment during an episode of historic inflation. On average, households are well-informed about prevailing inflation and are concerned about its impact on their wealth; yet, while many households know about inflation eroding nominal assets, most are unaware of nominal-debt erosion. Once they receive information on the debt-erosion channel, households update upwards their beliefs about nominal debt and their own real net wealth. These changes in beliefs causally affect actual consumption and hypothetical debt decisions. Our findings suggest that real wealth mediates the sensitivity of consumption to inflation once households are aware of the wealth effects of inflation.
    Keywords: Inflation Beliefs, Information Treatment, Consumption, Monetary Policy
    JEL: D12 D14 D83 D84 E21 E31 E52
    Date: 2023

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