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on Microeconomic European Issues |
| By: | BARRIOS Salvador (European Commission - JRC); DELIS Fotis (European Commission - JRC); LANDABASO ALVAREZ Mikel (European Commission - JRC) |
| Abstract: | We provide evidence on the differences in the effective tax rate by firm size, highlighting that effective tax rates tend to follow a bump-shaped curve, increasing from micro to small firms and then decreasing for medium to large firms. Our analysis, based on microdata from several EU countries, shows that both corporate and labour taxation follow this pattern. Econometric analysis reveals that a 1% increase in effective corporate taxation results in a 2.6% decrease in firm turnover growth, with new firms and micro firms being particularly affected. The negative impact of corporate taxation on firm growth is much larger for new firms compared to older firms, and this is especially pronounced in Spain, where a 1% tax hike leads to a turnover growth decrease of 8%. Examining the 2015 Spanish corporate tax reduction for new firms, we find that the reform's overall positive impact was insignificant for micro firms, suggesting the need for more targeted policies considering firm size, age, and ownership. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:taxref:202407&r= |
| By: | Maria del Sorbo (European Innovation Council, Bruxelles, Belgium); Carina Faber (European Innovation Council, Bruxelles, Belgium); Marco Grazzi (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy); Francesco Matteucci (European Innovation Council, Bruxelles, Belgium); Miriam Ruß (Wuppertal Institut für Klima, Umwelt, Energie gGmbH, Wuppertal, Germany) |
| Abstract: | A novel analysis of the European Innovation Council (EIC) Accelerator pilot is presented, marking the first extensive examination of its selection process and the impact of its funding on deep tech ventures, in comparison to its predecessor, the SME Instrument. Utilizing applicant data from both programs, the study assesses the EIC’s effectiveness in targeting firms that align with its objectives of driving breakthrough innovation. The research reveals that the EIC Accelerator pilot attracts younger and smaller firms, in comparison to its predecessor. A significantly higher proportion of applicants are high tech and medium high-tech, indicating a strategic shift towards supporting cutting-edge technologies. Despite this shift, the analysis of funding determinants demonstrates a consistent pattern across both programs, emphasizing the influence of firm size, age, and patent portfolio. Further, a regression discontinuity design analysis is used to estimate the impact of funding during the EIC accelerator pilot on firm-level outcomes, such as patenting, revenue, or employment growth. However, the very recent launch of the program shrinks both the observations and the ex-post window, and due to large standard errors the point estimates are not significant at conventional levels. |
| Keywords: | Innovation Policy, Industrial policy, deep-tech, start-up, regression discontinuity, patent, firm growth |
| JEL: | O3 O31 O32 O38 L25 L26 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ctc:serie5:dipe0037&r= |
| By: | Marco Clemens (Institute for Labour Law and Industrial Relations in the European Union (IAAEU), Trier University); Jan Sauermann (Institute for Evaluation of Labor Market and Education Policy (IFAU), Uppsala Center for Labor Studies (UCLS), and the Institute of Labor Economics (IZA)) |
| Abstract: | Performance pay has been shown to have important implications for worker and firm productivity. Although workers’ skills may directly matter for the cost of effort to reach performance goals, surprisingly little is know about the heterogeneity in the effects of incentive pay across workers. In this study, we apply a dynamic difference-in-differences estimator to the introduction of a generous bonus pay program to study how salient performance thresholds affect incentivized and non-incentivized performance outcomes for low- and high-skilled workers. While we do find that individual incentive pay did not affect workers’ performance on average, we show that this result conceals an underlying heterogeneity in the response to individual performance pay: individual performance pay has a significant effect on the performance of high-skilled workers but not for low-skilled workers. The findings can be rationalized with the idea that the costs of effort differ by workers’ skill level. We also explore whether agents alter their overtime hours and find a negative effect, possibly avoiding negative consequences of longer working hours. |
| Keywords: | performance pay, incentives, productivity, skills, panel data |
| JEL: | M52 J33 C23 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iaa:dpaper:202405&r= |
| By: | Ferdinand Pot; Janez Šušteršič |
| Abstract: | This paper studies the differences between the organisation of budget management in selected government administrations in the Western Balkans and the Republic of Moldova and good practice across the European Union (EU). It observes that the ministry of finance (MoF) in these administrations typically engages in direct budget negotiations with a large number of budget organisations. This practice is in stark contrast with the budgeting approach observed in the EU, where the MoF only deals directly with government ministries and a limited number of constitutional bodies. The paper highlights the adverse consequences for the strategic role of the MoF for fiscal policy, the accountability of line ministries for budgeting and service delivery in their sector and the introduction of modern public financial management instruments such as medium-term budgeting and performance-based budgeting. This paper recommends that governments reduce the number of first-level budget organisations and give line ministries more responsibility for budget management in their sector. At the same time, the paper recommends strengthening line ministries’ accountability for budget management towards the parliament. |
| Keywords: | administrative budget classification, budget management, budget reform, first-level budget organisations, government and budgeting, medium-term budgeting, ministerial accountability, ministry of finance, performance-based budgeting |
| Date: | 2024–07–11 |
| URL: | https://d.repec.org/n?u=RePEc:oec:govaac:72-en&r= |
| By: | Cahuc, Pierre (Sciences Po, Paris) |
| Abstract: | This article provides an overview of the economic literature on short-time work. It presents the main characteristics of short-time work since its emergence in Germany in the 1930s. It analyzes its effectiveness as a job preservation mechanism, drawing on theoretical models and empirical studies. It concludes by highlighting the areas that future research could explore to address the most significant gaps in our understanding of short-time work. |
| Keywords: | short-time work, furlough, employment, working hours |
| JEL: | J23 J41 J63 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17111&r= |
| By: | Frondel, Manuel |
| Abstract: | Dieser Beitrag nimmt eine Kosten-Nutzen-Abwägung des Ausbaus der Erneuerbaren-Energietechnologien zur Stromerzeugung in Deutschland vor. Im Ergebnis zeigt sich, dass dieser Ausbau die Stromverbraucher seit Einführung des Erneuerbaren-Energien-Gesetz (EEG) im Jahr 2000 knapp 300 Mrd. Euro gekostet hat. Für die kommenden beiden Jahrzehnte stehen zudem Zahlungsverpflichtungen in ähnlicher Größenordnung bereits fest. Mit dem nach Russlands Angriff auf die Ukraine forcierten Erneuerbaren-Ausbau nimmt die Politik aber noch deutlich über diese rund 600 Milliarden hinaus gehende Kosten in Kauf. Eine Kosten-Nutzen-Analyse ist vor diesem Hintergrund unabdingbar, nicht zuletzt auch deshalb, weil weitere Kosten in dreistelliger Milliardenhöhe nicht in den 600 Milliarden enthalten sind, etwa die Kosten für den ohne Erneuerbare-Expansion nicht in so starkem Maße nötigen Netzausbau. Vor diesem Hintergrund sollte beim weiteren Erneuerbaren-Ausbau streng auf Kostendisziplin geachtet werden, indem die Bundesnetzagentur künftig ausschließlich technologieneutrale, statt technologiespezifischer Ausschreibungen für den Erneuerbaren-Ausbau vornimmt. Dadurch kommen zwar nur die kosteneffizientesten regenerativen Technologien zum Zuge, aber es bleiben im Klima- und Transformationsfonds Spielräume für Zukunftsinvestitionen, die das Wachstumspotential der deutschen Volkswirtschaft stärker beflügeln könnten als der Ausbau der erneuerbaren Energien. Im Gegensatz zu den hohen Kosten nimmt sich der Nutzen des Ausbaus der erneuerbaren Energien bescheiden aus. So belief sich der Anteil der Erneuerbaren am Primärenergieverbrauch im Jahr 2022 auf lediglich rund 17 %. Die Treibhausgasneutralität im Jahr 2045 allein mit Erneuerbaren erreichen zu wollen, erscheint bei einem solch geringen Anteil als eine schwer bewältigbare Herausforderung. |
| Abstract: | This article weighs up the costs and benefits of the expansion of renewable energy technologies for electricity generation in Germany. According to calculations of the German Ministry of Economic Affairs, this expansion has cost electricity consumers almost 300 billion euros since the introduction of the Renewable Energy Sources Act (EEG) in 2000. Moreover, payment obligations of a similar magnitude are already in place for the next two decades. However, with the accelerated expan¬sion of renewables following Russia's attack on Ukraine, politicians are accepting costs well in excess of this approximately 600 billion. Given the costs already incurred, a cost-benefit analysis is imperative, not least because further costs in the three-digit billion range are not included in the 600 billion figure, such as the costs for grid expansion, which would not be necessary to the same extent without the expansion of renewables. Against this backdrop, strict attention should be paid to cost discipline in the further expansion of renewables by ensuring that the Federal Network Agency only issues technology-neutral rather than technology-specific tenders for the expansion of renewables in future. This means that only the most cost-efficient renewable technologies will be installed. Consequently, there will be budgetary scope for future investments that could boost the growth potential of the German economy more than the expansion of renewable energies. Contrasting with the high costs, the benefits of expanding renewable energies are modest. For example, the share of renewables in primary energy consumption in 2022 was only around 17 %. With such a low share, achieving greenhouse gas neutrality in 2045 with renewables alone appears to be a tremendous challenge. |
| Keywords: | Energiewende, Photovoltaik, Wärmewende |
| JEL: | Q21 I38 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwimat:300232&r= |
| By: | Rawaa Laajimi (INRAE); Laurence Delattre (LEM); Hubert Jayet (LEM) |
| Abstract: | If the characteristics and location of farms and consumers involved in short food supply chain (SFSC) are well studied, especially for on-farm sales, the location of off-farm points of sale—as interaction points between supply and demand—has not been much analyzed, especially from a quantitative perspective. Though, a better understanding of the factors favoring and impeding the emergence of such points of sale could be valuable for producers (farmers), sellers (farmers or intermediaries), consumers (through consumers driven initiatives), and also for policymakers. To fill this gap, we have compiled an original database from local, regional, and national websites for the year 2020 and geolocalized more than 500 points of sale (pick-up point for sale by internet, pick-up point for community supported agriculture, producers' collective stores, markets, and retail stores) in two French departments (Nord and Pas-de-Calais). We account for the local environment of each point of sales, both in terms of potential supply of agricultural products and potential food demand, by relying on distance-weighted variables (inspired by the concept of market potential). We then |
| Date: | 2024–06–29 |
| URL: | https://d.repec.org/n?u=RePEc:boc:fsug24:25&r= |
| By: | CALDAROLA Bernardo; MAZZILLI Dario; NAPOLITANO Lorenzo (European Commission - JRC); PATELLI Aurelio; SBARDELLA Angelica |
| Abstract: | Economic Complexity (EC) methods have gained increasing popularity across fields and disciplines. In particular, the EC toolbox has proved particularly promising in the study of complex and interrelated phenomena, such as the transition towards a greener economy. Using the EC approach, scholars have been investigating the relationship between EC and sustainability, proposing to identify the distinguishing characteristics of green products and to assess the readiness of productive and technological structures for the sustainability transition. This article proposes to review and summarize the data, methods, and empirical literature that are relevant to the study of the sustainability transition from an EC perspective. We review three distinct but connected blocks of literature on EC and environmental sustainability. First, we survey the evidence linking measures of EC to indicators related to environmental sustainability. Second, we review articles that strive to assess the green competitiveness of productive systems. Third, we examine evidence on green technological development and its connection to non-green knowledge bases. Finally, we summarize the findings for each block and identify avenues for further research in this recent and growing body of empirical literature. |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:wpaper:202401&r= |
| By: | Walwei, Ulrich (Institute for Employment Research (IAB), Nuremberg, Germany) |
| Abstract: | "In Germany, as in many other countries in the western world, the baby boomers are reaching retirement age. As fewer young workers are entering the labour market than older workers are leaving due to low birth rates, the labour force workers is falling, all other things being equal. At the same time, the funding problems in the pension insurance system are growing, as fewer and fewer people are paying into the pension scheme, particularly in the internationally widespread pay-as-you-go systems. At the same time the proportion of pensioners is growing. Against this backdrop, the labour market participation of older people is increasingly coming into focus. The report begins with an overview of older people's labour force participation in a broader international comparison. This is followed by a description of the situation in Germany. A closer look will then be taken at the countries that are at the forefront of older people's labour force participation. The aim is to obtain indications of the factors that may have contributed to the high level of employment among older people in these countries. The Federal Republic of Germany has clearly caught up in the employment of older people in recent decades. This applies in particular to the 50-64 age group. Compared to the leading countries, Germany is only a few percentage points behind. However, the 65-74 age group is still lagging further behind. The future gap to other countries in this age group will be influenced by opposing developments. The further steps towards "retirement at 67" are likely to reduce it further, but the "retirement at 63" will slow it down. However, Germany is still outperformed by some countries in terms of the employment rates of older people. This raises the question of what factors could be behind the favourable development of the labour market for older people in these countries. For the purposes of comparison, this report takes a closer look at the situation in Japan, New Zealand, Iceland, Norway and Sweden, all of which have even higher employment rates for older people than Germany. Various aspects that are important for the employment of older people are analysed in turn from an international comparative perspective. The country comparison reveals a number of important points that could be considered in Germany. The high level of employment among older people in Iceland, Sweden and Norway is linked to the high female labour force participation rate in both countries and continuous improvements in the educational level of the population, including further vocational training. New Zealand has a low pay gap between older and younger workers and comparatively high hiring rates for older workers, following a consistent and publicly visible anti-discrimination policy. In Japan, demographic pressure on labour demand and income requirements at the individual level is of significant importance. High and even higher employment rates for older people are not an automatic mechanism. They require good education and qualifications at the individual level as well as the opportunity and ability to engage in lifelong learning. Preventive healthcare is also required for a long working life, which, like education, is best started as early as possible. High employment rates among older people are not only favoured by individual employability, but also by the attractiveness of the labour market and thus the availability of employment for older workers. The more it is possible to address the skills and abilities of older workers, organise age-appropriate work and respond flexibly to employees' wishes, the greater the chance of retaining older workers in the labour market or of winning them back. Finally, regulations and support programmes that provide incentives for employment in old age should also be considered. These include the flexibility of pension entitlement, more favourable labour law provisions for continued employment in old age, the longer period of unemployment benefit for older people, their inclusion in active labour market policy and a review of the regulations in the citizen's allowance that favour early retirement, such as the waiting periods for assets and housing." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | IAB-Open-Access-Publikation |
| Date: | 2024–07–09 |
| URL: | https://d.repec.org/n?u=RePEc:iab:iabfob:202414&r= |
| By: | Lionel Fontagné; Yoto V. Yotov; Lionel Gérard Fontagné |
| Abstract: | European integration, which culminated in the completion of the Single Market, the single currency and successive enlargements, is now faced with the question of strategic autonomy. Against this backdrop, the present paper has three objectives. First, it assesses the benefits of EU membership based on new, disaggregated trade and production data and using established and cutting-edge empirical methods. Second, it evaluates the costs of strategic autonomy – implying not trading with “riskier” partners. Third, it asks whether further deepening of the Single Market can alleviate these costs. The paper shows that the gains from European integration are substantial, albeit heterogeneous across Member States and sectors, and that the cost of strategic autonomy can be offset by deeper, but comparatively more modest, integration efforts within the European Single Market. |
| Keywords: | European integration, trade costs, trade policy, risky suppliers |
| JEL: | F10 F14 F16 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11151&r= |
| By: | Jaume Borràs; Sergi Jimenez-Martin; Jose M. Labeaga |
| Abstract: | This paper investigates the effect of the lockdown on different consumption items using data from the Spanish Household Budget Survey. We rely on its panel data structure and on the observation of the two-week period when the household provide information to identify control and treatment groups. Then, we select several goods to estimate the causal effects of the lockdown on demand, both during the lockdown period and throughout 2020 as a whole. Our analysis reveals that the lockdown induced effects on the intratemporal distribution of total expenditure. Furthermore, the decline in total expenditure masks different changes in commodity groups and the distribution of expenditure as well as variations at different stages of the pandemic. Our findings also suggest that the lockdown measures, along with subsequent restrictions throughout 2020, engendered an unexpected and household-specific variation in savings rates. This, coupled with fluctuations in relative prices could influence other economic dimensions such as inequality and welfare. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:fda:fdaeee:eee2024-23&r= |
| By: | Laura Policardo; Edgar J. Sanchez Carrera |
| Abstract: | The lack of data has challenged the study of the effect of wealth inequality on economic growth despite it being at the core of the international debate. Scholars have not found a unanimous effect of wealth inequality on economic growth for the last few years. In this paper, we provide a possible explanation of why wealth inequality might have a different effect on growth in different countries. So, we claim that a possible reason for such different effects could be the different socio-economic structure of the population and, more precisely, the level of economic segregation. We prove this effect with numerical simulations calibrated on accurate data. |
| Keywords: | Economic Growth; Wealth Inequality; Luxury Non-productive Assets; United States; France; Residential Segregation. |
| JEL: | D31 O47 O51 O52 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:frz:wpaper:wp2024_09.rdf&r= |
| By: | Federico S. Mandelman; Yang Yu; Francesco Zanetti; Andrei Zlate |
| Abstract: | We document a steady decline in low-skilled immigration that began with the onset of the Great Recession in 2007, which was associated with labor shortages in low-skilled service occupations and a decline in the skill premium. Falling returns to high-skilled jobs coincided with a decline in the educational attainment of native-born workers. We develop and estimate a stochastic growth model with endogenous immigration and training to account for these facts and study macroeconomic performance and welfare. Lower immigration leads to higher wages for low-skilled workers and higher consumer prices. Importantly, the decline in the skill premium discourages the training of native workers, persistently reducing aggregate productivity and welfare. Stimulus policies during the COVID-19 pandemic, amid a widespread shortage of low-skilled immigrant labor, exacerbated the rise in consumer prices and reduced welfare. We show that the 2021-2023 immigration surge helped to partially alleviate existing labor shortages and restore welfare. |
| Keywords: | immigration, skill premium, task upgrading, heterogeneous workers |
| JEL: | F16 F22 F41 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2024-46&r= |
| By: | Gunther Capelle-Blancard (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Paris 1 Panthéon-Sorbonne) |
| Abstract: | Debates on the taxation of financial transactions (FTT) are longstanding and primarily focus on its effects on markets and the economy. In practice, however, the FTT is less of a regulatory tool and more of a fiscal instrument. This article examines the FTT from this perspective. Our contribution specifically aims to address two questions generally overlooked in previous studies: who pays the FTT and how? Our analysis focuses mainly on the FTT in force in France (FTT-F). In practice, the FTT-F is not a tax on transactions, but only on transfers OF SHARES that are recorded on a daily basis. A large portion of transactions is excluded from the scheme, which significantly reduces the tax base. It is estimated that the transactions actually taxed represent, in the end, only 15% of the total. The incidence of the FTT primarily impacts financial intermediaries, for whom the reduction in trades represents a loss of income, while individuals bear a minimal cost. Additionally, approximately half of the tax is collected from abroard, and the FTT-F has a strong redistributive aspect. The collection of the FTT-F is not carried out by the public administration but is delegated to Euroclear France, a private company subsidiary of an international group. We propose that the collection should instead be directly handled by the General Directorate of Public Finances (DGFiP), with the support of the Fiancial Markets Authority (AMF), which has the necessary data; there are real synergies between its activity of monitoring stock market transactions and the collection of the FTT-F. This, of course, implies that the human and financial resources of the AMF are increased accordingly. Changing the collection system would improve controls, broaden the tax base, and significantly increase tax revenues, while enhancing transparency and equity. |
| Abstract: | Les débats sur la taxation des transactions financières (TTF) sont anciens et portent surtout sur ses effets sur les marchés et l'économie. En pratique, toutefois, la TTF est moins un outil réglementaire qu'un instrument fiscal. C'est sous cet angle que la TTF est étudiée dans cet article. Notre contribution vise en particulier à examiner deux questions généralement ignorées dans les travaux antérieurs : qui paie la TTF et comment ? Notre analyse porte principalement sur la TTF en vigueur en France (TTF-F). En pratique, la TTF-F n'est pas une taxe sur les transactions, mais uniquement sur les transferts de propriété qui sont enregistrés à une fréquence quotidienne. Une très large part des transactions est exclue du dispositif, ce qui réduit considérablement l'assiette de la taxe. On estime que les transactions effectivement taxées ne représentent que 15% du total des transactions. L'incidence de la TTF pèse essentiellement sur les intermédiaires financiers, pour qui la baisse des échanges représente un manque à gagner, tandis que les particuliers supportent un faible coût. Par ailleurs, la moitié environ de la taxe est collectée auprès de contribuables étrangers. La TTF-F présente ainsi un fort caractère redistributif. Le recouvrement de la TTF-F n'est pas opéré par l'administration publique, mais délégué à Euroclear France, société privée filiale d'un groupe international. Ceci a potentiellement des conséquences importantes sur la collecte et les contrôles. Nous proposons que le recouvrement soit plutôt confié directement à la direction générale des Finances publiques (DGFiP), avec l'appui de l'Autorité des marchés financiers (AMF) qui dispose des données nécessaires ; il y a de réelles synergies entre son activité de surveillance des transactions boursières et la collecte de la TTF-F. Cela suppose bien sûr que les moyens humains et financiers de l'AMF soient augmentés en conséquence. Changer le dispositif de collecte permettrait d'améliorer les contrôles, d'élargir l'assiette et d'augmenter significativement les recettes fiscales, tout en renforçant la transparence et l'équité. |
| Keywords: | Financial transaction tax, Securities Transaction Tax, Tobin tax, Innovative financing, Taxe sur les transactions financières, Taxe Tobin, Financements innovants |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:hal:cesptp:halshs-04650041&r= |
| By: | Thierry Mayer; Vincent Vicard; Pauline Wibaux |
| Abstract: | The automotive industry faces two disruptions: China’s emergence as a leading global auto exporter, and the transition from internal combustion engine (ICE) to electric vehicles (EVs). Detailed data on sales by origin/destination/model show that the automotive market is primarily local or continental, with limited sales originating from distant countries for both ICE and EV. Accordingly, foreign direct investment (FDI) is an important mode of supply for foreign markets. Insights from Japanese and Korean brands’ market penetration in the 2000s and 2010s suggest that successful models are primarily sold through local assembly; the most successful Chinese EV models in Europe are close or above the investment threshold. Examination of potential differences between EV and ICE indicates evolving comparative advantages: while EVs are not inherently more traded compared to other vehicles, China currently leads in cells and modules, but not yet in assembly. Down the value chain, the median distance between battery production and assembly is 215 km in 2022, suggesting localized sourcing in EV similar to combustion engines and larger than ICE transmissions. |
| Keywords: | Automotive industry;Electric vehicles;China;Protectionism;Foreign direct investment;Industrial policy |
| JEL: | F10 L62 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:cii:cepipb:2024-45&r= |