nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2023‒10‒23
twelve papers chosen by
Giuseppe Marotta, Università degli Studi di Modena e Reggio Emilia

  1. Taxation and Mobility: Evidence from Tax Decentralization in Italy By Enrico Rubolino; Tommaso Giommoni
  2. Inequality of Opportunity in Wealth: Levels, Trends, and Drivers By Daniel Graeber; Viola Hilbert; Johannes König
  3. Mafia infiltrations in times of crisis: Evidence from the Covid-19 shock By Marco Castelluccio; Lucia Rizzica
  4. Knowledge Transfers from Multinational to Domestic Firms: Evidence from Worker Mobility – A Replication-Robustness Study of Poole (2013) By Stefanie A. Haller; Eoin T. Flaherty; Ragnhild Balsvik; Stefanie Haller
  5. The importance of quality in austere times: University competitiveness and grant income By Ye Sun; Athen Ma; Georg von Graevenitz; Vito Latora
  6. Research Similarity and Women in Academia By Piera Bello; Alessandra Casarico; Debora Nozza
  7. Much Ado about Salary: A Comparison of Monetary and Non-Monetary Components of Job Satisfaction By Cristina Bernini; Alessandro Tampieri
  8. The effects of pension reforms on physician labour supply: Evidence from the English NHS By Carol Propper; George Stoye; Max Warner
  9. The labor market effects of disability benefit loss By Anikó Bíró; Cecília Hornok; Judit Krekó; Dániel Prinz; Ágota Scharle
  10. SME internationalisation: Do the types of innovation matter? By Boumediene Ramdani; Fateh Belaid; Stéphane Goutte
  11. Access to Language Training and the Local Integration of Refugees By Foged, Mette; van der Werf, Cynthia
  12. Distributional and climate implications of policy responses to energy price shocks By Fetzer, Thiemo; Gazze, Ludovica; Bishop, Menna

  1. By: Enrico Rubolino; Tommaso Giommoni
    Abstract: We study the impact of taxation on the location choices of individuals and tax bases in Italy. We exploit some recent tax decentralization reforms, which granted regions and municipalities greater power in setting income tax rates across brackets. Combining granular micro-level data on tax residence transfers with tax rate variations both within and across locations, we show that taxation significantly shapes location decisions. The mobility response greatly varies across the income distribution, with higher responsiveness among top incomes. Yet, our estimates imply that revenue losses due to tax-induced mobility are small, making local redistribution feasible at least over the medium-run.
    Keywords: local income taxation, migration, tax decentralization
    JEL: H24 H71 J61
    Date: 2023
  2. By: Daniel Graeber (DIW Berlin, IZA Bonn, CEPA); Viola Hilbert (DIW Berlin, BSE); Johannes König (DIW Berlin, BSE)
    Abstract: While inequality of opportunity (IOp) in earnings is well studied, the literature on IOp in individual net wealth is scarce to non-existent. This is problematic because both theoretical and empirical evidence show that the position in the wealth and income distribution can significantly diverge.We measure ex-ante IOp in net wealth for Germany using data from the Socio-Economic Panel (SOEP). Ex-ante IOp is defined as the contribution of circumstances to the inequality in net wealth before effort is exerted. The SOEP allows for a direct mapping from individual circumstances to individual net wealth and for a detailed decomposition of net wealth inequality into a variety of circumstances; among them childhood background, intergenerational transfers, and regional characteristics. The ratio of inequality of opportunity to total inequality is stable from 2002 to 2019. This is in sharp contrast to labor earnings, where ex-ante IOp is declining over time. Our estimates suggest that about 62% of the inequality in net wealth is due to circumstances. The most important circumstances are intergenerational transfers, parental occupation, and the region of birth. In contrast, gender and individuals’ own education are the most important circumstances for earnings.
    Keywords: inequality, wealth, inequality of opportunity, decomposition
    JEL: D63 J62 D31 J24
    Date: 2023–10
  3. By: Marco Castelluccio (Institute for Fiscal Studies); Lucia Rizzica (Bank of Italy)
    Abstract: We analyse the risk of mafia capture of firms operating in the legal economy. Specifically, we study the relationship between firm performance and mafia infiltration. To overcome possible endogeneity concerns we exploit the abrupt drop in revenues caused by the (unexpected) Covid-19 related closures imposed in Spring 2020 in Italy. Our estimates reveal that the induced sudden and significant worsening of affected firms financial conditions increased the likelihood of them being infiltrated by mafia-connected entrepreneurs. According to our preferred specification, a 10% drop in revenues leads to a 4.8% increase in the probability of a firm being infiltrated by the mafia compared to the baseline. These effects, however, were partly offset by the extraordinary measures put in place by the government to support financially distressed firms. Heterogeneity in the effectiveness of the different measures provides indirect evidence that firms are more likely to resort to mafia lending when they face temporary difficulties in repaying their debts.
    Date: 2023–10–09
  4. By: Stefanie A. Haller; Eoin T. Flaherty; Ragnhild Balsvik; Stefanie Haller
    Abstract: This paper replicates Poole (2013) using comprehensive Norwegian and Irish register data. Our results largely confirm the evidence documented in Poole for Brazil which suggests that when workers leave multinationals and are rehired at domestic establishments, the wages of their new coworkers who have already been present in the plant increase. However, unlike suggested in the original article there is little indication that these spillovers differ in a statistically significant way across various dimensions of heterogeneity for any of the three countries.
    Keywords: multinational firms, wage spillovers, worker mobility, replication
    JEL: F23 F61 J31
    Date: 2023
  5. By: Ye Sun; Athen Ma; Georg von Graevenitz; Vito Latora
    Abstract: After 2009 many governments implemented austerity measures, often restricting science funding. Did such restrictions further skew grant income towards elite scientists and universities? And did increased competition for funding undermine participation? UK science funding agencies significantly reduced numbers of grants and total grant funding in response to austerity, but surprisingly restrictions of science funding were relaxed after the 2015 general election. Exploiting this natural experiment, we show that conventional measures of university competitiveness are poor proxies for competitiveness. An alternative measure of university competitiveness, drawn from complexity science, captures the highly dynamical way in which universities engage in scientific subjects. Building on a data set of 43, 430 UK funded grants between 2006 and 2020, we analyse rankings of UK universities and investigate the effect of research competitiveness on grant income. When austerity was relaxed in 2015 the elasticity of grant income w.r.t. research competitiveness fell, reflecting increased effort by researchers at less competitive universities. These scientists increased number and size of grant applications, increasing grant income. The study reveals how funding agencies, facing heterogeneous competitiveness in the population of scientists, affect research effort across the distribution of competitiveness.
    Date: 2023–09
  6. By: Piera Bello; Alessandra Casarico; Debora Nozza
    Abstract: We investigate the extent to which research similarity between senior and junior researchers influences promotion in academia and study its implications in terms of gender diversity among faculty. Using data on the universe of job applications for tenure-track assistant professor positions in economics in Italy and exploiting NLP techniques (i.e., document embeddings) on the abstract of each publication of the scholars in our dataset, we propose a novel measure of research similarity, which can capture closeness in research topics, methodologies or policy relevance between candidates and members of selection committees. We show that the level of similarity is strongly associated with the winning probability. Moreover, while there are no gender differences in average similarity, maximum similarity with members of the selection committee is lower for female candidates. This gender gap disappears when similarity is calculated only focusing on female members of the committee. The results suggest that similarity bias in male-dominated environments can have implications for gender and research diversity.
    Keywords: cosine similarity, document embeddings, academia, economics, gender differences, labour force composition
    JEL: J16 J71 J82
    Date: 2023
  7. By: Cristina Bernini; Alessandro Tampieri
    Abstract: We investigate how specific components of job satisfaction influence overall work happiness. We use the British Household Panel Survey (BHPS), which includes measures of satisfaction with total pay, job security, the nature of work, and hours worked. Our analysis employs a multi-level model to assess the variations in job satisfaction among different types of occupations. This approach allows for a clear comparison of both monetary and non-monetary aspects of job satisfaction. Our findings indicate that the importance of satisfaction with salary in explaining overall satisfaction is lower compared to other non-monetary aspects. This result holds true even when we narrow down the sample by considering factors such as gender (males or females), employment type (full-time or part-time), further job satisfaction components (available for fewer years), and examining income as a second-level factor rather than job occupation.
    Keywords: subjective well-being, happiness function, job satisfaction.
    JEL: I31 R10
    Date: 2023
  8. By: Carol Propper (Institute for Fiscal Studies); George Stoye (Institute for Fiscal Studies); Max Warner (Institute for Fiscal Studies)
    Date: 2023–09–29
  9. By: Anikó Bíró (Institute for Fiscal Studies); Cecília Hornok (Institute for Fiscal Studies); Judit Krekó (Institute for Fiscal Studies); Dániel Prinz (Institute for Fiscal Studies); Ágota Scharle (Institute for Fiscal Studies)
    Abstract: Disability benefits provide social insurance against the risk of losing working capacity, as well as an important source of income for individuals with disabilities. They are also costly and tend to reduce labor supply. Although spending can be contained by careful targeting, correcting past flaws in eligibility rules or assessment procedures may entail welfare costs. This paper studies a major reform in Hungary that reassessed the health and working capacity of a large share of beneficiaries. Leveraging age and health cutoffs in the reassessment, the paper estimates employment responses to loss or reduction of benefits. The findings show that among those who left disability insurance due to the reform, 58 percent were employed in the primary labor market, 6 percent participated in public works, and 36 percent were out of work without benefits in the post-reform period. The consequences of leaving disability insurance differed sharply by pre-reform employment status. Among the beneficiaries who were employed in the pre-reform year, 81 percent worked, while only 33 percent of those without pre-reform employment did. The gains of the reform in activating beneficiaries were small and strongly driven by pre-reform employment status. This points to the importance of combining financial incentives with broader labor market programs that increase employability.
    Date: 2023–09–29
  10. By: Boumediene Ramdani; Fateh Belaid (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique); Stéphane Goutte (SOURCE - SOUtenabilité et RésilienCE - UVSQ - Université de Versailles Saint-Quentin-en-Yvelines - IRD [France-Nord] - Institut de Recherche pour le Développement)
    Abstract: Existing evidence suggest that innovative Small and Medium-sized Enterprises (or SMEs) are more likely to internationalise (i.e. have a greater propensity to export) than non-innovative SMEs. However, it is not yet clear whether and to what extent different types of innovation (i.e. product, service, and process) affect SME internationalisation. To address this issue, this study uses a research model that integrates the resource and institutional perspectives and empirically test it using data from the United Kingdom (UK) Longitudinal Small Business Survey. Our results confirm that SME internationalisation is more likely to occur in firms undertaking product innovation than process and/or service innovation, and a specific configuration of resource and institutional drivers influence SME internationalisation depending on the innovation type. These results lead to major policy and managerial implications in relation to promoting SME internationalisation through different types of innovation, given the UK withdrawal from the European Union.
    Keywords: Export, Innovation, Internationalisation, SME, UK
    Date: 2023
  11. By: Foged, Mette; van der Werf, Cynthia
    Abstract: This paper examines whether language classes raises refugees' language proficiency and improves their socio-economic integration. Our identification strategy leverages the opening, closing, and gradual expansion of local language training centers in Denmark, as well as the quasi-random assignment of the refugees to locations with varying proximity to a language training center. First, we show that refugees' distance from the assigned language training center is as good as random conditional on initial placement. Second, we show that a one-hour decrease in commuting time increases total hours of class attended by 46 to 71. Third, we use this novel identification strategy to show that 100 additional hours of language class increases fluency in the Danish language by 8-9 percent, post-language training human capital acquisition by 11-13 percent and improve the integration of the refugees in the communities where they were initially placed, as measured by the lower exit rates from those same communities and an almost 70 percent reduction in mobility to the largest, most immigrant-dense cities in Denmark.
    Keywords: Refugee Integration;Language Skills
    JEL: J60 J24
    Date: 2023–05
  12. By: Fetzer, Thiemo (University of Warwick); Gazze, Ludovica (University of Warwick); Bishop, Menna (University of Warwick)
    Abstract: Which households are most affected by energy price shocks? What can we learn about the distributional implications of carbon taxes? How do interventions in energy markets affect these patterns? This paper introduces a measurement framework that leverages granular property-level data representing more than 50% of the English and Welsh housing stock. We use this ex-ante measurement framework to investigate these questions and set out an empirical evaluation framework to study the causal effects of the energy crisis more broadly. We find that the energy price shock has a more pronounced effect on relatively more affluent areas highlighting the likely progressive impact of carbon taxation. We document that commonly used untargeted interventions in energy markets significantly weaken market price signals for able-to-pay households. Alternative, more targeted policies are cheaper, easily implementable, and could better align energy saving incentives.
    Keywords: Energy crisis, Carbon taxation, Climate change, Energy efficiency gap JEL Classification: Q48, C55
    Date: 2023

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