nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2023‒11‒20
twenty-one papers chosen by
Giuseppe Marotta, Università degli Studi di Modena e Reggio Emilia

  1. European Funds and Firm Performance: Evidence from a Natural Experiment By Mesquita, José; Pereira dos Santos, João; Tavares, José
  2. Long-Term Employment Effects of the Minimum Wage in Germany: New Data and Estimators By Marco Caliendo; Nico Pestel; Rebecca Olthaus
  3. The Dynamics of Automation Adoption: Firm-Level Heterogeneity and Aggregate Employment Effects By Laura Bisio; Angelo Cuzzola; Marco Grazzi; Daniele Moschella
  4. Intergenerational Transmission of Home-Leaving Patterns By Elia Moracci; Raffaele Guetto; Daniele Vignoli
  5. The dynamics of automation adoption: Firm-level heterogeneity and aggregate employment effects By Laura Bisio; Angelo Cuzzola; Marco Grazzi; Daniele Moschella
  6. Vacancy duration and wages By Ihsaan Bassier; Alan Manning; Barbara Petrongolo
  7. Distance Work and Life Satisfaction after the COVID-19 Pandemics By Leonardo Becchetti; Gianluigi Conzo; Fabio Pisani
  8. The Labor Market Effects of Restricting Refugees’ Employment Opportunities By Achim Ahrens; Andreas Beerli; Dominik Hangartner; Selina Kurer; Michael Siegenthaler
  9. Are the upwardly mobile more left-wing? By Andrew E. Clark; Maria Cotofan
  10. Lifelong learning and employment outcomes: evidence from Sweden By Heller-Sahlgren, Gabriel
  11. Pension Reform, Incentives to Retire and Retirement Behavior: Empirical Evidence from Swedish Micro-data By Lisa Laun; Mårten Palme
  12. Persistent and Transient Energy Poverty: A Multi-Level Analysis in Spain By Pourkhanali, Armin; Kholghi, Donya; Llorca, Manuel; Jamasb, Tooraj
  13. Deadwood Labor: The Effects of Eliminating Employment Protection By Emmanuel Saez; Benjamin Schoefer; David G. Seim
  14. Do wind turbines have adverse health impacts By Christian Krekel; Johannes Rode; Alexander Roth
  15. Unemployment Insurance with Response Heterogeneity By Conny Wunsch; Véra Zabrodina
  16. Life-Cycle Effects of Comprehensive Sex Education By Volha Lazuka; Annika Elwert
  17. The Missing Type: Where Are the Inequality Averse (Students)? By Thomas Epper; Julien Senn; Ernst Fehr
  18. The E-Word - On the Public Acceptance of Experiments By Mira Fischer; Elisabeth Grewenig; Philipp Lergetporer; Katharina Werner; Helen Zeidler
  19. When Institutions Interact: How the Effects of Unemployment Insurance are Shaped by Retirement Policies By Matthew Gudgeon; Pablo Guzman; Johannes F. Schmieder; Simon Trenkle; Han Ye
  20. Social Preferences and Redistributive Politics By Ernst Fehr; Thomas Epper; Julien Senn
  21. Are recruiters reluctant to hire part-time working men? Evidence from online labor market data By Daniel Kopp

  1. By: Mesquita, José (Universidade Nova de Lisboa); Pereira dos Santos, João (Queen Mary University of London); Tavares, José (Universidade Nova de Lisboa)
    Abstract: This paper analyses the impact of European Union (EU) funds on the performance of private firms. In particular, we examine a quasi-natural experiment consisting of a redrawing of administrative areas that expanded regional eligibility and led to a sudden increase in accessibility to EU grants for firms located in 33 Portuguese municipalities. Using a comprehensive linked employer-employee administrative dataset that covers the universe of private firms between 2003 and 2010, our difference-in-differences estimates uncover a significant and positive causal effect of increased eligibility on firms' sales, labour productivity, and average wages, while employment is not significantly altered. While firms' sales in the non-tradable sectors are positively impacted, firms' sales in more competitive, tradable, sectors remain unaffected by increased access to EU funds.
    Keywords: grants, regional policy, private firm, municipalities, Portugal
    JEL: C21 R10
    Date: 2023–10
  2. By: Marco Caliendo; Nico Pestel; Rebecca Olthaus
    Abstract: We study the long-term effects of the 2015 German minimum wage introduction and its subsequent increases on regional employment. Using data from two waves of the Structure of Earnings Survey allows us to estimate models that account for changes in the minimum wage bite over time. While the introduction mainly affected the labour market in East Germany, the raises are also increasingly affecting low-wage regions in West Germany, such that around one third of regions have changed their (binary) treatment status over time. We apply different specifications and extensions of the classic difference-in-differences approach as well as a set of new estimators that enables for unbiased effect estimation with a staggered treatment adoption and heterogeneous treatment effects. Our results indicate a small negative effect on dependent employment of 0.5 percent, no significant effect on employment subject to social security contributions, and a significant negative effect of about 2.4 percent on marginal employment until the first quarter of 2022. The extended specifications suggest additional effects of the minimum wage increases, as well as stronger negative effects on total dependent and marginal employment for those regions that were strongly affected by the minimum wage in 2015 and 2019.
    Date: 2023–10
  3. By: Laura Bisio; Angelo Cuzzola; Marco Grazzi; Daniele Moschella
    Abstract: We investigate the impact of investment in automation-related goods on adopting and non- adopting firms in the Italian economy during 2011-2019. We integrate datasets on trade activities, firms’, and workers’ characteristics for the population of Italian importing firms and estimate the effects on adopters’ outcomes within a difference-indifferences design exploiting import lumpiness in product categories linked to automation and AI technologies. We find a positive average adoption effect on the adopters’ employment and on the value-added and average wage, whereas sales and productivity increase after an initial drop with a net positive effect five years after adoption. Crucially, the employment effect is heterogeneous across firms: a positive scale effect is predominant among small firms, whereas a negative displacement effect is predominant among medium and large firms. We complete the framework with a 5-digit sector-level analysis showing that adopting automation technologies has an overall negative effect on aggregate employment.
    Keywords: automation, employment, firm heterogeneity, imports, technology adoption
    JEL: D24 J23 L25 O33
    Date: 2023
  4. By: Elia Moracci (European University Institute and Luiss Guido Carli); Raffaele Guetto (Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti", Università di Firenze); Daniele Vignoli (Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti", Università di Firenze)
    Abstract: Exploiting intergenerationally linked data from the Survey of Health, Ageing and Retirement in Europe, we examine the association between the home-leaving ages of parents and those of their daughters and sons. We propose a framework in which intergenerational associations between nest-leaving patterns of successive generations might stem from three channels of transmission, and we rely on detailed information on three generations of individuals to establish the strength of each channel. We find that a 1-year increase in the age at which a parent left home is associated with children leaving the nest approximately 1 month later. We argue that the bulk of this association is due to direct cultural transmission of home-leaving ages stemming from the inheritance of preferences on the optimal timing of life-course events.
    Keywords: leaving the parental home, intergenerational persistence
    JEL: D10 J11 J12 J13
    Date: 2023–11
  5. By: Laura Bisio; Angelo Cuzzola; Marco Grazzi; Daniele Moschella
    Abstract: We investigate the impact of investment in automation-related goods on adopting and non-adopting firms in the Italian economy during 2011-2019. We integrate datasets on trade activities, firms', and workers' characteristics for the population of Italian importing firms and estimate the effects on adopters' outcomes within a difference-in-differences design exploiting import lumpiness in product categories linked to automation and AI technologies. We find a positive average adoption effect on the adopters' employment and on the value-added and average wage, whereas sales and productivity increase after an initial drop with a net positive effect five years after adoption. Crucially, the employment effect is heterogeneous across firms: a positive scale effect is predominant among small firms, whereas a negative displacement effect is predominant among medium and large firms. We complete the framework with a 5-digit sector-level analysis showing that adopting automation technologies has an overall negative effect on aggregate employment.
    Keywords: Automation; Employment; Firm heterogeneity; Imports; Technology adoption.
    Date: 2023–10–26
  6. By: Ihsaan Bassier; Alan Manning; Barbara Petrongolo
    Abstract: We estimate the elasticity of vacancy duration with respect to posted wages, using data from the near-universe of online job adverts in the United Kingdom. Our research design identifies duration elasticities by leveraging firm-level wage policies that are plausibly exogenous to hiring difficulties on specific job vacancies, and control for job and market-level fixed-effects. Wage policies are defined based on external information on pay settlements, or on sharp, internally-defined, firm-level changes. In our preferred specifications, we estimate duration elasticities in the range -3 to -5, which are substantially larger than the few existing estimates.
    Keywords: vacancy duration, wages, monopsony, employment
    Date: 2023–08–18
  7. By: Leonardo Becchetti (CEIS & DEF, University of Rome "Tor Vergata"); Gianluigi Conzo (University of Rome "Tor Vergata"); Fabio Pisani (University of Rome "Tor Vergata")
    Abstract: We use data of the 10th European Social Survey containing information on COVID-19 and work at distance. We find that working with employers that accept working from home or place of choice less than before the COVID-19 period impacts negatively and significantly on respondents’ wellbeing. We calculate that the reduction of this opportunity produces a fall of 5.6 percent in the probability of declaring high life satisfaction, the effect being concentrated in the subsample of respondents with work-life balance problems where the magnitude of the impact goes up to a maximum of 11 percent. Our findings contribute to explain the COVID-19 Easterlin paradox (contemporary occurrence of a sharp fall in GDP and non decrease/increase, in life satisfaction in the first 2020 COVID-19 year in many countries) and the great resignation - the rise of quit rates after COVID-19, partly motivated by absence of offers of hybrid contracts allowing a mix of work in presence and work at distance
    Keywords: distance work, life satisfaction, COVID-19
    JEL: I31 J08
    Date: 2023–11–07
  8. By: Achim Ahrens (Public Policy Group, ETH Zurich, Switzerland); Andreas Beerli (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Dominik Hangartner (Public Policy Group, ETH Zurich, Switzerland); Selina Kurer (Public Policy Group, ETH Zurich, Switzerland); Michael Siegenthaler (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Refugees, and immigrants more generally, often do not have access to all jobs in the labor market. We argue that restrictions on employment opportunities help explain why immigrants have lower employment and wages than native citizens. To test this hypothesis, we leverage refugees’ exogenous geographic assignment in Switzerland, within-canton variation in labor market restrictions, and linked register data 1999–2016. We document large negative employment and earnings effects of banning refugees from working in the first months after arrival, from working in certain sectors and regions, and from prioritizing residents over refugees. Consistent with an effect of outside options on wages, removing 10% of jobs reduces refugees’ hourly wages by 2.8% and increases the wage gap to similar host-country citizens in similar jobs by 2.2%. Furthermore, we show that restrictions reduce refugees’ earnings even after they cease applying. Restrictions do not spur refugee emigration nor improve earnings of non-refugee immigrants.
    Keywords: Labor market integration, migration, labor market policies, labor market institutions, monopsony, refugees, employment, wages, outside options, employment opportunities
    JEL: J08 J31 J42 J68
    Date: 2023–01
  9. By: Andrew E. Clark; Maria Cotofan
    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 Right-leaning 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, Technological change, Wellbeing
    Date: 2023–07–21
  10. By: Heller-Sahlgren, Gabriel
    Abstract: We study the relationship between adult education and training (AET) and employment in Sweden. Exploiting rich data from the Programme for the International Assessment of Adult Competencies, and using an inverse-probability weighted regression-adjustment estimator, we find that AET is positively related to the probability of doing paid work. This relationship is driven by non-formal, job-related AET, such as on-the-job training. We also find that the relationship–the strength of which increases with training intensity–is similar across different types of non-formal, job-related AET. The results suggest that policies stimulating relevant AET take-up have promise to secure higher employment.
    Keywords: adult education and training; employment outcomes; PIAAC; ES/J500070/1
    JEL: I22 J24 M53
    Date: 2023–03–04
  11. By: Lisa Laun; Mårten Palme
    Abstract: This paper investigates to what extent the 1998 reform of Sweden’s public old-age pension system contributed to the increase in extensive margin labor supply among older workers seen in the country in recent decades. We use a large data set containing all males and females born in Sweden between 1927 and 1950 and observe their retirement behavior during 1991–2012. The data show that the reform changed the incentives to remain in the labor force ambiguously: although it induced an income effect towards later retirement through lower replacement levels, it also implied a lower price on leaving the labor market under some assumptions. We use an econometric model in which the economic incentives to stay in the labor market are measured by Social Security Wealth, defined at each hypothetical retirement age, and a variable measuring the implicit tax, imposed by the income security system, on staying in the labor force. The point estimates from our econometric model, which should be interpreted with caution, suggest that at most a small part of the increase in labor force participation of the elderly can be attributed to the pension reform.
    JEL: J2 J26
    Date: 2023–10
  12. By: Pourkhanali, Armin (Economics Finance & Marketing, Royal Melbourne Institute of Technology); Kholghi, Donya (Department of Mathematics, Institute for Advanced Studies in Basic Sciences); Llorca, Manuel (Department of Economics, Copenhagen Business School); Jamasb, Tooraj (Department of Economics, Copenhagen Business School)
    Abstract: This empirical analysis investigates the determinants and dynamics of energy poverty in Spain using a combination of traditional regression models and machine learning techniques. The study identifies significant determinants of energy poverty, including income, housing type, education level, and health conditions. Findings demonstrate that lower income, specific housing types, and lower education levels increase the likelihood of energy poverty. This study also investigates the dynamics of energy poverty, and the results show the coexistence of both transient and persistent aspects of energy poverty. 35% of Spanish households struggled to maintain adequate warmth in their homes during at least one period from 2016 to 2021. While a small portion (5%) experienced chronic energy poverty, indicating their inability to maintain their home adequate warmth throughout the 70% sample period. Finally, the study offers valuable insights into the dynamics and drivers of energy poverty. It underscores both its temporary and persistent characteristics, in addition to the impact of socioeconomic factors.
    Keywords: Transient and persistent energy poverty; Self-assessed health; Dynamic random effects probit; Machine learning
    JEL: C01 D63 I14 I32
    Date: 2023–10–17
  13. By: Emmanuel Saez; Benjamin Schoefer; David G. Seim
    Abstract: We study the role of employment protection legislation (EPL) in boosting employment among older workers. Our analysis juxtaposes the quantitative employment gains with the qualitative “deadwood labor” problem that such gains entail. We do so by conducting a comprehensive analysis of the sharp and complete elimination of EPL that occurs at age 67 in Sweden, as well as reform-driven shifts in this age cutoff. First, focusing on direct separation effects, we find that 8% of jobs separate in response to the elimination of EPL. Effects stem from jobs with stronger initial EPL (long-tenure, firms subject to “last in, first out” rules), and those in the public sector. Separations appear involuntary to workers, with firms targeting plausibly unproductive (sick) workers. Second, we focus on effects of continuing jobs. While wages appear rigid to EPL, we uncover novel, sizable intensive-margin hours reductions among continuing jobs, and an 8% drop in earnings conditional on staying on the job. Third, we estimate total equilibrium effects at the cohort level, where separations fully pass through into employment to population rate effects, with no offsetting effect from hiring. On a per-capita basis, total earnings of older workers causally drop by 21.5% due to EPL elimination. We validate these local effects by leveraging a reform-driven shift in the age cutoff from 67 to 68.
    JEL: J0
    Date: 2023–10
  14. By: Christian Krekel; Johannes Rode; Alexander Roth
    Abstract: While wind power is considered key in the transition towards net zero, there are concerns about adverse health impacts on nearby residents. Based on precise geographical coordinates, we link a representative longitudinal household panel to all wind turbines in Germany and exploit their staggered rollout over two decades for identification. We do not find evidence of negative effects on general, mental, or physical health in the 12-Item Short Form Survey (SF-12), nor on self-assessed health or doctor visits. We also do not find evidence for effects on suicides, an extreme measure of negative mental health outcomes, at the county level.
    Keywords: wind turbines, externalities, health, renewable energy, difference-in-differences, event study, Wellbeing
    Date: 2023–10–10
  15. By: Conny Wunsch; Véra Zabrodina
    Abstract: The generosity of social insurance coverage often increases with the beneficiary’s age and their contribution time to social security, but existing policies vary considerably. We study the differentiation of unemployment insurance (UI) generosity by evaluating how the insurance incentive trade-off varies with age and contribution time. We exploit numerous discontinuities in potential benefit duration in Germany. Contribution time in the last three years carries information on job search efforts, as it is associated with lower moral hazard responses and fiscal externality. We find no significant response heterogeneity in age or longer contribution time horizons. Contrasting these gradients with an approximated insurance value for four UI regimes, we document that steepening the potential benefit duration schedule in contribution time and flattening it in age would have increased welfare.
    Keywords: unemployment insurance, response heterogeneity, policy differentiation
    JEL: J08 J64 J65
    Date: 2023
  16. By: Volha Lazuka; Annika Elwert
    Abstract: Sex education can impact pupils sexual activity and convey the social norms regarding family formation and responsibility, which can have significant consequences to their future. To investigate the life-cycle effects of social norm transmission, this study drew on the introduction of comprehensive sex education in the curriculum of Swedish primary schools during the 1940s to the 1950s. Inspired by social-democratic values, sex education during this period taught students about abstinence, rational family planning choices, and the importance of taking social responsibility for their personal decisions. The study applied a state-of-the-art estimator of the difference-in-differences method to various outcomes of men and women throughout the life cycle. The results showed that the reform affected most intended outcomes for men and women, ultimately decreasing gender inequality in earnings. The effects of the reform also extended to the succeding generation of girls, encouraging them to choose a profession with prosocial responsibilities and engage in entrepreneurship. The findings suggest that social norms, internalized through school-based sex education, shape lifetime outcomes of individuals and their children in significant ways.
    Date: 2023–10
  17. By: Thomas Epper (IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie Management F-59000 Lille, France); Julien Senn (Department of Economics, Zurich University. Blümlisalpstrasse 10, 8006 Zurich, Switzerland); Ernst Fehr (Department of Economics, Zurich University. Blümlisalpstrasse 10, 8006 Zurich, Switzerland)
    Abstract: The empirical evidence on the existence of social preferences—or lack thereof—is predominantly based on student samples. Yet, knowledge about whether these findings can be extended to the general population is still scarce. In this paper, we compare the distribution of social preferences in a student and in a representative sample. Using descriptive analysis and a rigorous clustering approach, we show that the distribution of the general population’s social preferences fundamentally differs from the students’ distribution. In the general population, three types emerge: an inequality averse, an altruistic, and a selfish type. In contrast, only the altruistic and the selfish types emerge in the student population. The absence of an inequality averse type in the student population is particularly striking considering the fact that this type comprises about 50 percent of the individuals in the general population sample. Using structural estimation, we show that differences in age and education are likely to explain these results. Younger and more educated individuals—which typically characterize students— not only tend to have lower degrees of other-regardingness but this reduction in other-regardingness basically nullifies behindness aversion among students. Differences in income, however, do not seem to affect social preferences. These findings are important in view of the fact that almost all applications of social preference ideas involve the general population rather than students.
    Keywords: Social Preferences, Altruism, Inequality Aversion, Preference Heterogeneity, Subject pools, Sample Selection
    JEL: C80 C90 D30 D63
    Date: 2023–10
  18. By: Mira Fischer; Elisabeth Grewenig; Philipp Lergetporer; Katharina Werner; Helen Zeidler
    Abstract: Randomized experiments are often viewed as the “gold standard” of scientific evidence, but people’s scepticism towards experiments has compromised their viability in the past. We study preferences for experimental policy evaluations in a representative survey in Germany (N>1, 900). We find that a majority of 75% supports the idea of small-scale evaluations of policies before enacting them at a large scale. Experimentally varying whether the evaluations are explicitly described as “experiments” has a precisely estimated overall zero effect on public support. Our results indicate political leeway for experimental policy evaluation, a practice that is still uncommon in Germany.
    Keywords: experiment aversion, policy experimentation, education
    JEL: I28 H40 C93
    Date: 2023
  19. By: Matthew Gudgeon; Pablo Guzman; Johannes F. Schmieder; Simon Trenkle; Han Ye
    Abstract: This paper shows empirically that the non-employment effects of unemployment insurance (UI) for older workers depend in a first-order way on the structure of retirement policies. Using German data, we first present reduced-form evidence of these interactions, documenting large bunching in UI inflows at the age that allows workers to claim their pension following UI expiration. We then estimate a dynamic life-cycle model and use it to directly quantify how the effects of UI vary with retirement policies. Accounting for interactions across UI and retirement institutions also helps explain otherwise difficult-to-explain trends in the unemployment rate of older German workers.
    JEL: E24 J2 J26 J6 J63 J64 J65 J68
    Date: 2023–10
  20. By: Ernst Fehr (Department of Economics, Zurich University. Blümlisalpstrasse 10, 8006 Zurich, Switzerland); Thomas Epper (IESEG School of Management, Univ. Lille, CNRS, UMR 9221- LEM - Lille Economie Management F-59000 Lille, France); Julien Senn (Department of Economics, Zurich University. Blûmlisalpstrasse 10, 8006 Zurich, Switzerland)
    Abstract: Increasing inequality and associated egalitarian sentiments have put redistribution on the political agenda. In this paper, we take advantage of Swiss direct democracy, where people voted several times on strongly redistributive policies in national plebiscites, to study the link between social preferences and a behaviorally validated measure of support for redistribution in a broad sample of the Swiss population. Using a novel nonparametric Bayesian clustering algorithm, we uncover the existence of three fundamentally distinct preference types in the population: predominantly selfish, inequality averse and altruistic individuals. We show that inequality averse and altruistic individuals display a much stronger support for redistribution, particularly if they are more affluent. In addition, we show that previously identified key motives underlying opposition to redistribution – such as the belief that effort is an important driver of individual success – play no role for selfish individuals but are highly relevant for other-regarding individuals. Finally, while inequality averse individuals display strong support for policies that primarily aim to reduce the incomes of the rich, altruistic individuals are considerably less supportive of these policies. Thus, knowledge about the qualitative properties of social preferences and their distribution in the population also provides insights into which preference type supports specific redistributive policies, which has implications for how policy makers may design redistributive packages to maximize political support for them.
    Keywords: Social Preferences, Altruism, Inequality Aversion, Preference Heterogeneity, Demand for Redistribution
    JEL: D31 D72 H23 H24
    Date: 2023–10
  21. By: Daniel Kopp (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Part-time work is a popular way to reconcile work and family obligations. This study uses large-scale observational data from an online recruitment platform and an online job board to examine how easy it is to get a part-time job and whether this depends on the gender of a jobseeker. First, I relate the number of hours stated on job advertisements to the gender preferences of firms indicated in a confidential online form. Second, I analyze hiring decisions of recruiters who navigate through jobseeker profiles. I estimate contact penalties for male and female jobseekers looking for part-time jobs by applying supervised machine learning to control for all relevant jobseeker characteristics visible to recruiters and by exploiting within jobseeker changes of hours preferences over time. I find that recruiters prefer full-time over part-time workers and that the part-time penalty is much more pronounced for men than for women, even when comparing applicants for the same position. Hence, the gender differences cannot be explained by differences in job or workplace characteristics. Instead, the preponderance of evidence points towards bias coming.
    Keywords: Recruitment, part-time, gender equality, hiring, online labor markets
    JEL: J16 J23 M51
    Date: 2022–12

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