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on Microeconomic European Issues |
| By: | Cygan-Rehm, Kamila (Dresden University of Technology) |
| Abstract: | This study estimates the lifetime effects of lost classroom instruction on labor market performance. For identification, I use historical shifts in the school year schedule in Germany, which substantially shortened the duration of the affected school years without adjusting the core curriculum. The loss of classroom instruction was mainly compensated for by assigning additional homework. Applying a difference-in-differences design to social security records, I find adverse effects of the policy on earnings and employment over almost the entire occupational career. Plausible mechanisms behind the deteriorated labor market outcomes include unfavorable effects on human capital and a differential occupational sorting. |
| Keywords: | instructional time, education, earnings, skills, Germany |
| JEL: | I21 I26 J24 J17 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17253 |
| By: | Jose Garrido (Concordia University [Montreal], Chaire DIALog); Xavier Milhaud (AMU - Aix Marseille Université, Chaire DIALog); Anani Olympio (CNP Assurances, Chaire DIALog); Max Popp (EcoAct France) |
| Abstract: | This book presents an introduction for beginners to climate science from an insurance perspective. The focus is on the measurement of climate change and of its impact on policyholders and their insurers. Climate change presents several challenges for society, endangering food supply and water security, affecting human health, and threatening transportation systems (Dundon et al., 2016) as well as property (Warren-Myers et al., 2018; Miljkovic et al., 2018). It also affects the economy (Pryor, 2017). The consequences of this environmental change are expected to be deep and far-reaching, particularly in insurance sectors such as agriculture, property-casualty, health and life. As a result, climate change can threaten the sustainability of insurance programs, in different ways. First, because the increase in total losses may require hikes in premiums and solvency capital. A precise quantitative assessment of this increase is not yet determined, but it is clear that both recent and future costs are a serious threat; according to Munich Re (2024), losses caused by natural disasters in 2023 reached US250bn, withUS 95 bn of which being insured. Although no disasters of the magnitude of Hurricane Ian occurred in 2023, a fair share of the losses were associated with several severe storms occurred in the US and Europe. These related events are considered as evidence of the global warming trend, with a potential impact particularly on property and casualty insurance (Gupta and Venkataraman, 2024; Golnaraghi, 2021). In this particular insurance sector, Swiss Re (2021) forecasts increased frequency and severity of events due to climate change that will cost 30%-63% more in insured catastrophe losses by 2040. This cost increase could even reach 90%-120% in specific markets, such as China, the UK, France and Germany. Secondly, climate change puts into question some fundamental principles of insurance, such as risk insurability, pooling, diversification, and risk transfer. The literature discusses the possible outcomes and implications for the insurance industry (Charpentier, 2008; Thistlethwaite and Wood, 2018; Courbage and Golnaraghi, 2022). Other, more optimistic perspectives suggest that far from being the victim of climate change the insurance business could find in it an opportunity, through the development of new technical solutions (Rao and Li, 2023; Savitz and Dan Gavriletea, 2019; Wagner, 2022). For now, climate change already has forced the strategic withdrawal of insurers in certain markets in the USA (California, 2023). The general objective of this book is to present an actuarial perspective on the study of climate change and its impact on the insurance industry. Actuaries are experts at measuring and managing risks. The DIALog Research Chair team regroups several members, both from industry and academia, with ample actuarial expertise. Hence it was natural for the DIALog team to tackle this project and explore the impact of climate change on the insurance industry, more particularly in health and life insurance. This study starts by exploring the need for a standardized method to measure climate change. This is crucial in order to compare different regions and periods in a standardised analysis. In recent years the actuarial community has developed actuarial climate indices to measure climate change in an factual, objective and consistent way. First, Chapter 1 reviews the recent scientific literature on the few actuarial climate indices that have been defined so far and extends the existing methodology to calculate an actuarial index for climate data in France. Then Chapter 2 describes how climate science can be used to link a physical climate risk to insurance costs. In particular it focuses on the impact of heat waves on excess mortality. A deterministic and a stochastic model are proposed to link the Heat Index to excess mortality. The chapter includes a frank discussion of the advantages and difficulties with the approach. Finally Chapter 3 further explores the link between extreme temperatures and excess mortality in France. A more technical exposure is used, in order to propose a new mortality forecasting model that includes explanatory terms capturing the correlation between temperature and mortality, as well as the effect of high temperature anomalies. |
| Abstract: | Ce livre présente une introduction pour non-initiés à la science du climat du point de vue de l'assurance. L'accent est mis sur la mesure du changement climatique et de son impact sur les assurés et leurs assureurs. Le changement climatique présente plusieurs défis pour la société, menaçant l'approvisionnement alimentaire et la sécurité de l'eau, affectant la santé humaine, et menaçant les systèmes de transport (Dundon et al., 2016) ainsi que les biens immobiliers (Warren-Myers et al., 2018; Miljkovic et al., 2018). Il affecte également l'économie (Pryor, 2017). Les conséquences de ce changement environnemental devraient être profondes et étendues, en particulier dans les secteurs de l'assurance tels que l'agriculture, les biens et responsabilités, la santé et la vie. Le changement climatique représente une menace pour la durabilité de certains programmes d'assurance, de différentes façons. Premièrement, parce que l'augmentation des pertes totales peut nécessiter des hausses de primes et de capital de solvabilité. Une évaluation quantitative précise de cette augmentation n'a pas encore été déterminée, mais il est clair que les coûts récents et futurs représentent une menace sérieuse ; selon Munich Re (2024), les pertes causées par des catastrophes naturelles en 2023 ont atteint 250 milliards de dollars, dont 95 milliards de dollars étaient assurés. Bien qu'aucune catastrophe de l'ampleur de l'ouragan Ian ne se soit pas produite en 2023, une part importante des pertes était associée à plusieurs tempêtes sévères survenues aux États-Unis et en Europe. Ces événements connexes sont considérés comme des preuves de la tendance au réchauffement climatique, avec un impact potentiel notamment sur l'assurance des biens et des responsabilités (Gupta and Venkataraman, 2024; Golnaraghi, 2021). Dans ce secteur particulier de l'assurance, Swiss Re (2021) prévoit une augmentation de la fréquence et de la gravité des événements due au changement climatique, qui coûterait 30% à 63% de plus en pertes assurées par catastrophes d'ici 2040. Cette augmentation des coûts pourrait même atteindre 90% à 120% dans certains marchés, tels que la Chine, le Royaume-Uni, la France et l'Allemagne. Deuxièmement, le changement climatique remet en question certains principes fondamentaux de l'assurance, tels que l'assurabilité des risques, la mutualisation, la diversification et le transfert des risques. La littérature discute des résultats et implications possibles pour l'industrie de l'assurance (Charpentier, 2008; Thistlethwaite and Wood, 2018; Courbage and Golnaraghi, 2022). D'autres perspectives, plus optimistes, suggèrent que loin d'être victime du changement climatique, le secteur de l'assurance pourrait y trouver une opportunité, grâce au développement de nouvelles solutions techniques (Rao and Li, 2023; Savitz and Dan Gavriletea, 2019; Wagner, 2022). Pour l'instant, le changement climatique a déjà forcé le retrait stratégique des assureurs de certains marchés aux États-Unis (California, 2023). L'objectif général de ce livre est de présenter une perspective actuarielle sur l'étude du changement climatique et son impact sur l'industrie de l'assurance. Les actuaires sont des experts dans la mesure et la gestion des risques. L'équipe de la Chaire de recherche DIALog regroupe plusieurs membres, à la fois de l'industrie et du milieu universitaire, possédant une expertise actuarielle. Il était donc naturel pour l'équipe DIALog de s'attaquer à ce projet et d'explorer l'impact du changement climatique sur l'industrie de l'assurance, plus particulièrement en assurance santé et en assurance vie. Cette étude commence par explorer la nécessité d'une méthode standardisée pour mesurer le changement climatique. Cela est crucial pour comparer différentes régions et périodes dans une analyse commune. Ces dernières années, la communauté actuarielle a développé des indices climatiques actuariels pour mesurer le changement climatique de manière factuelle, objective et cohérente. D'abord, le chapitre 1 passe en revue la littérature scientifique récente sur les quelques indices climatiques actuariels qui ont été définis jusqu'à présent, et étend la méthodologie existante pour calculer un indice actuariel basé sur les données climatiques en France. Ensuite, le chapitre 2 décrit comment la science du climat peut être utilisée pour lier un risque climatique physique aux coûts de l'assurance. En particulier, il se concentre sur l'impact des vagues de chaleur sur l'excès de mortalité. Un modèle déterministe et un modèle stochastique sont proposés pour lier l'indice de chaleur à la surmortalité. Le chapitre inclut une discussion des avantages et des difficultés de l'approche. Enfin, le chapitre 3 explore plus en détail le lien entre les températures extrêmes et la surmortalité en France. Une présentation plus technique est utilisée, afin de proposer un nouveau modèle de prévision de la mortalité incluant des termes explicatifs qui puissent capturer la corrélation entre la température et la mortalité, ainsi que l'effet des anomalies de température élevée. |
| Keywords: | Climate change, Actuaries Climate Index™, European actuarial climate indices, Physical climate risk, Geographical grid, Heat waves, Excess mortality |
| Date: | 2024–07–12 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04684634 |
| By: | Anja Janischewski (Faculty of Economics and Business Administration, Chemnitz University of Technology); Katharina Bohnenberger (German Institute for Interdisciplinary Social Policy Research, University of Bremen, SOCIUM and Institute for Socio-Economics, University of Duisburg-Essen); Matthias Kranke (Freiburg Institute for Advanced Studies); Tobias Vogel (Department for Philosophy, Politics and Economics, Faculty of Economy and Society, Witten/Herdecke University); Riwan Driouich (Institut de Ci\`encia i Tecnologia Ambientals); Tobias Froese (Chair for Corporate Sustainability, ESCP Business School); Stefanie Gerold (Institute of Philosophy and Social Science, Brandenburg University of Technology Cottbus-Senftenberg); Raphael Kaufmann (ZOE Institute for Future-Fit Economies); Lorenz Key{\ss}er (Institute of Geography and Sustainability, Faculty of Geosciences and Environment, University of Lausanne); Jannis Niethammer (ICLEI European Secretariat); Christopher Olk (Otto Suhr Institute for Political Science, Freie Universit\"at Berlin); Matthias Schmelzer (Norbert-Elias-Center for Transformation Design and Research, University of Flensburg, Germany and Friedrich-Schiller-University Jena); Asl{\i} Y\"ur\"uk (Urban Transformation and Global Change Laboratory); Steffen Lange (Centre for Pluralist Economics, University of Siegen) |
| Abstract: | Many socio-economic systems require positive economic growth rates to function properly. Given uncertainty about future growth rates and increasing evidence that economic growth is a driver of social and environmental crises, these growth dependencies pose serious societal challenges. In recent years, more and more researchers have thus tried to identify growth-dependent systems and develop policies to reduce their growth dependence. However, the concept of 'growth dependence' still lacks a consistent definition and operationalization, which impedes more systematic empirical and theoretical research. This article proposes a simple but powerful framework for defining and operationalizing the concept of 'growth dependence' across socio-economic systems. We provide a general definition consisting of four components that can be specified for different empirical cases: (1) the system under investigation, (2) the unit of measurement of growth, (3) the level of growth and (4) the relevant functions or properties of the system under investigation. According to our general definition, a socio-economic system is growth-dependent if it requires a long-term positive growth rate in terms of a unit of economic measurement to maintain all its functions or properties that are relevant within the chosen normative framework. To illustrate the usefulness of our scheme, we apply it to three areas at the heart of the existing literature on growth dependence: employment, social insurance systems and public finance. These case studies demonstrate that whether or not a system is growth-dependent hinges not only on the empirical properties of the system itself but also on the specification of the concept of growth dependence. Our framework enables coherent, robust and effective definitions and research questions, fostering comparability of findings across different cases and disciplines. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2409.12109 |
| By: | Jaromir Baxa (Institute of Economic Studies of the Faculty of Social Sciences, Charles University; Prague, Czech Republic & The Czech Academy of Sciences, Institute of Information Theory and Automation, Prague, Czech Republic); Tomas Sestorad (aInstitute of Economic Studies of the Faculty of Social Sciences, Charles University; Prague, Czech Republic & The Czech Academy of Sciences, Institute of Information Theory and Automation, Prague, Czech Republic & The Czech National Bank, Prague, Czech Republic) |
| Abstract: | This paper proposes a novel approach to decompose the Economic Policy Uncertainty indices of European countries into the common and country-specific components using the time-varying total connectedness. Then, by employing a Bayesian panel VAR model, we assess how common and country-specific uncertainty shocks influence economic activity, prices, and monetary policy, with the shocks identified using zero and sign restrictions. Our results reveal that only common shocks have significant effects on all macroeconomic variables. This result is robust across alternative samples and structural identifications. Therefore, our findings imply that policymakers should focus on uncertainty shocks that are synchronized across countries. |
| Keywords: | Common uncertainty, economic policy uncertainty, panel VAR, spillovers |
| JEL: | C32 F42 F45 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2024_34 |
| By: | BATISTA E SILVA Filipe (European Commission - JRC); DIJKSTRA Lewis (European Commission - JRC); AUTERI Davide (European Commission - JRC); CURTALE Riccardo (European Commission - JRC); DORATI Chiara (European Commission - JRC); HORMIGOS FELIU Clara (European Commission - JRC); JACOBS-CRISIONI Chris; KOMPIL Mert; PERPIÑA CASTILLO Carolina; PIGAIANI Cristian (European Commission - JRC); RIBEIRO BARRANCO Ricardo; SCHIAVONE Matteo; SULIS Patrizia (European Commission - JRC) |
| Abstract: | This report assembles a series of separate scientific contributions to the European Commission’s Ninth Report on Economic, Social and Territorial Cohesion. The report includes seven short research papers providing background and insight under three broad topics with relevance to European regional and urban policy: Urbanisation and regional economic trends; Transport and digital accessibility; and Sectoral analyses (renewable energy and tourism). Each short paper documents a novel research or analysis based on the most recent data available, thus providing up-to-date and timely evidence on issues with a strong territorial dimension. Although covering a very diverse range of topics, the contributions articulate interrelated challenges and opportunities to promote territorial cohesion in Europe. These are related to, for example, the increasing urbanisation and implications for transport and mobility, population decline in rural areas, regional economic convergence/divergence trends, the improving access to broadband in the EU, the potential role of rural areas for the green transition and tourism as a heterogeneous but overall resilient industry contributing to many EU regional economies. An efficient Cohesion Policy should envisage targeted, place-based investments that consider these and other challenges and opportunities. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc138304 |
| By: | Silke Anger (Institute for Employment Research (IAB) / Otto-Friedrich University Bamberg); Bernhard Christoph (Institute for Employment Research (IAB)); Agata Galkiewicz (University of Potsdam); Shushanik Margaryan (University of Potsdam); Frauke Peter (German Centre for Higher Education Research and Science Studies); Malte Sandner (Technical University Nürnberg); Thomas Siedler (University of Potsdam) |
| Abstract: | Reading skills are crucial for academic success and long-term educational attainment. However, children from disadvantaged backgrounds read less than their more privileged peers. This study assesses the impact of a randomized reading intervention conducted in Germany targeting 11–12-year-olds from low-income households. The intervention involved distributing e-book readers, which provided free access to a large digital library of age-appropriate books, directly to the children's homes. Our results show that the intervention led to increased reading engagement among the children, which in turn improved their academic performance, particularly in reading comprehension and math. Additionally, we observe positive effects on their socio-emotional well-being. |
| Keywords: | randomized controlled trial, low socioeconomic status, reading comprehension, early education |
| JEL: | C93 I20 I24 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:hka:wpaper:2024-018 |
| By: | Valentin Burban (Banque de France and Aix-Marseille University, Aix-Marseille School of Economics); Andreaa Liliana Vladu (European Central Bank); Bruno De Backer (National Bank of Belgium, Economics and Research Department) |
| Abstract: | This article measures the degree of potential de-anchoring of inflation expectations in the euro area vis-à-vis the inflation objective of the European Central Bank (ECB). A no-arbitrage term structure model that allows for a time-varying long-term mean of inflation expectations, πt*, is applied to inflation-linked swap (ILS) rates, while taking into account survey-based inflation forecasts. Estimates of πt* have been close to 2 % since the mid-2000s, indicating that long-term inflation expectations have overall remained well anchored to the ECB’s inflation objective. As this objective is however related to the "medium term", expectations components of various forward ILS rates are extracted: they appear to have been broadly anchored, with tentative signs of de-anchoring up to the two-year horizon. Using backcasted ILS rates, estimates of πt* are much above 2 % in the early 1990s, but they converge to levels below 2 % by the end of the decade when the ECB was established. |
| Keywords: | Inflation-linked swap rates, surveys, no-arbitrage, shifting endpoint, inflation expectations |
| JEL: | E31 E43 E47 E58 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbb:reswpp:202409-457 |
| By: | Luca Benati, Juan-Pablo Nicolini |
| Abstract: | We revisit the estimation of the welfare costs of inflation originating from lack of liquidity satiation for 11 low-inflation and 5 high-inflation countries, and for Weimar Republic’s hyperinflation. Our evidence suggests that, contrary to the implicit assumption in much of the literature, these costs are far from negligible. For the U.S. our point estimates are equal to about one-third of those computed by Lucas (2000), and an order of magnitude larger than those obtained by Ireland (2009). Crucially, the most empirically plausible moneydemand functional form points towards sizeable ‘upward risks’ for these costs, with the 90% confidence interval associated with a 4% nominal interest rate stretching beyond 0.5 per cent of GDP. The welfare costs of inflation in the Euro area are about twice as large as in the U.S., thus suggesting that, ceteris paribus, the inflation target should be materially lower. At the peak of the inflation episodes, welfare costs had ranged between 0.3 and 1.9 per cent of GDP for low-inflation countries; between 4 and nearly 7 per cent for highinflation ones; and between 26 and 36 per cent for Weimar’s hyperinflation. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:ube:dpvwib:dp2408 |
| By: | Dorgyles C.M. Kouakou (Univ Rennes, CNRS, CREM – UMR6211, F-35000 Rennes France) |
| Abstract: | Using a large firm-level dataset from the World Bank Enterprise Surveys, which covers 134 countries from 2006 to 2023 and includes over 134, 000 observations, we examine whether past informality affects the credit constraints of registered firms. Estimations, based on the entropy balancing method, indicate that registered firms that began operations informally are more likely to be credit-constrained than those that started in the formal sector. This finding is extremely robust to a variety of robustness tests, including instrumental variables, propensity score matching, potential omitted variables, restricted samples, alternative measures of credit constraints, different specifications such as Linear Probability, Logit, and Probit models, and clustering standard errors at the country level. Heterogeneity analysis reveals that the detrimental impact of past informality lessens with firm size, firm age, and better structural factors like regulatory quality, trade openness, entrepreneurial dynamism, and public spending. Productivity, competition from the informal sector, and the quality of financial statements are key channels through which past informality increases credit constraints for registered firms. |
| Keywords: | Past informality status; Credit constraints; Entropy balancing |
| JEL: | G20 O12 O16 O17 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:tut:cremwp:2024-08 |
| By: | DIJKSTRA Lewis (European Commission - JRC); JACOBS-CRISIONI Chris |
| Abstract: | Functional Rural Areas describe central market towns and their hinterland. They allow for a better, i.e. more harmonised, comparison of socio-economic indicators. They are created as the rural counterpart of the Functional Urban Areas. Together they cover the entire territory. The methodology to create them is a draft, and feedback is warmly welcomed. This publication summarises the assumptions behind the delineation of Functional Rural Areas, and highlights some of the benefits of using them for statistical analysis. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc138561 |
| By: | TORRECILLAS CARO Cristina; MERIDA MARTIN Fernando (European Commission - JRC); SASSO Simone (European Commission - JRC) |
| Abstract: | Innovation and entrepreneurship can play a central role in revitalizing rural areas and turning them into places of opportunity. This report, part of the Startup Village Forum initiative’s research activities, explores four cases of rural villages or groups of villages on their journey toward fostering innovation and entrepreneurial ecosystems. Using the Startup Village Conceptualization framework, it assesses resource endowments, institutional arrangements, stakeholder engagement, and outcomes. The findings underscore the importance of institutional support, collaborative leadership, and skill development for successful startup villages, advocating for bottom-up governance and network establishment to drive rural development. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc137918 |