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on Microeconomic European Issues |
| By: | Christina Brinkmann (University of Bonn); Simon Jäger (Massachusetts Institute of Technology (MIT), NBER & CEPR); Moritz Kuhn (University of Mannheim & CEPR); Farzad Saidi (University of Bonn & CEPR); Stefanie Wolter (IAB Nuremberg) |
| Abstract: | Governments use short-time work (STW) schemes to subsidize job preservation during crises. We study the take-up of STW and its effects on worker outcomes and firm behavior using German administrative data from 2009 to 2021. Establishments utilizing STW tend to have higher wages, be larger, and have falling employment even before STW take-up. More adverse selection occurred during the COVID-19 pandemic. Within firms, STW is targeted towards workers likely to stay even in the absence of STW. To study the effects of STW, we examine two dimensions of policy variation: STW eligibility and extensions of potential benefit duration (PBD). Workers above retirement age, ineligible for STW, have identical employment trajectories compared to their slightly younger, eligible peers when their establishment takes up STW. A 2012 reform doubling PBD from 6 to 12 months did not secure employment at treated firms 12 months after take-up, with minimal heterogeneity across worker characteristics. However, treated and control firms experienced substantial and persistent differences in their wage trajectories, with control firms without extensions lowering wages compared to treated firms. Across cells, larger wage effects corresponded with smaller employment effects, consistent with downward wage flexibility preventing layoffs and substituting for the employment protection effects of STW. Our research designs reveal that STW extensions in Germany did not significantly improve short- or long-term employment outcomes. |
| Keywords: | Stabilization policies, short-time work, wage rigidity, labor market institutions, intra-firm insurance |
| JEL: | J01 J08 J30 J41 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:340 |
| By: | Erika Christie Berle; ; ; ; |
| Abstract: | The successful transition toward renewable energies requires public support in areas where their expansion may cause adverse effects. In this context, narratives are crucial as they shape people’s perceptions. This article examines the relationship between onshore wind power and related narratives in regions across Germany. We run a series of spatial regression models on regional newspaper data, and our findings suggest that wind-related topics are more prominent and more neutrally (less angrily) framed in regions with more wind turbines. Public attitudes supporting wind energy expansion correlate with the prominence of related topics in regions’ narrative landscapes. In contrast, support for anti-wind protests does not seem to correlate with the prominence of wind-energy-related topics in regions with higher wind turbine densities. |
| Keywords: | narrative landscapes, wind turbines, regional analysis, regional news, narratives, Germany |
| JEL: | R10 R12 R52 Q28 Q48 Q50 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2438 |
| By: | Christina M. Andersen; Jørgen Brandt; Jesper H. Christensen; Lise M. Frohn; Camilla Geels; Timo Hener; Marianne Simonsen; Lars Skipper |
| Abstract: | This paper examines the effects of daily outdoor air pollution variation on student test scores. Using Danish register data for all elementary and lower secondary students, we link home addresses to a 1 km x 1 km pollution grid to measure test day and lifetime pollution exposure. An increase in fine particles (PM2.5) from a very clean to an average day reduces math scores by 1.8% and reading by 0.9% of a standard deviation. Even at low pollution levels, student performance is harmed, especially in math. We find no evidence of heterogeneity by health, socio-economic status, or lifetime exposure. |
| Keywords: | air pollution, cognition, test scores |
| JEL: | Q53 I21 I18 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11434 |
| By: | Matthias Wrede |
| Abstract: | Housing cooperatives have a significant share in some countries, particularly in urban housing markets, and are supported by municipalities through tax breaks and preferential access to land. We examine the contribution of housing cooperatives to the provision of affordable housing and how they are affected by rent control. For Germany, we find that residents of cooperative housing pay lower rents than for-profit owners, but are still affected by rent control. In particular, we show that stricter limits on rent increases for existing residential leases in tight housing markets have the effect of lowering rents for housing cooperatives, while we find no such effect of rent regulation for for-profit landlords. |
| Keywords: | housing affordability, housing cooperatives, housing tenure, rent control |
| JEL: | P13 R21 R31 R38 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11452 |
| By: | Korneliusz Pylak; Jason Deegan; Tom Broekel; ; |
| Abstract: | This paper explores the phenomenon of mimicry in the selection of economic domains for Smart Specialisation Strategies (S3) and discusses the regional policy implications of strategic mimicry. By analysing S3 documents from European regions, we identify and distinguish between two general types of mimicry: ‘Follow the Peers’ and ‘Follow the Role Models, ’ against the more desirable ‘Follow the Indicators’ priority selection strategy. Our findings reveal that although regions rely on their strengths by following the crucial indicators, thus exhibiting non-mimetic behaviour, there is a stronger tendency for regions to mimic popular domain portfolios, particularly those chosen by neighbouring regions and national strategies. Understanding these patterns in the selection of priority domains helps decision-makers balance mimicry and diversification, promoting specialization, new economic activities, and regional uniqueness. |
| Keywords: | smart specialisation, regional strategy, regional policy, innovation policy, mimicry |
| JEL: | O25 O38 R11 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2439 |
| By: | TORREJON PEREZ Sergio (European Commission - JRC); FERNANDEZ MACIAS Enrique (European Commission - JRC); GONZALEZ VAZQUEZ Ignacio (European Commission - JRC); MARQUÉS PERALES Ildefonso |
| Abstract: | The time Europeans devote to paid work has been consistently reduced since the Industrial Revolution. However, since the 1980s, the pace of this trend has slowed. The aim of this article is twofold: first, we develop a theoretical framework to account for the main factors determining the evolution and distribution of working hours in Europe; second, we exploit the EU-LFS data (1992-2022) to analyze the main factors explaining recent developments in working time. The results indicate: 1) that reductions in working time are primarily attributable to an increased prevalence of non-standard forms of work, mainly part-time work; 2) that part-time work has expanded mainly due to the feminization of employment and tertiarisation; 3) that full-time workers continue to work more or less the same hours as in the 1980s, given that there are countervailing effects pushing up (occupational upgrading and tertiarization) and down (the expansion of public services, the shrinking of the goods-producing sector, and self-employment becoming less time-intensive) the time they devote to work; and 4) that the self-employed work less because part-time self-employment has become more prevalent, although the self-employed continue doing the longest workweeks. Theoretical and empirical implications arising from these findings are discussed, as well as potential avenues for future research. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:laedte:202404 |
| By: | Matthias Kalkuhl (PIK Potsdam, MCC Berlin, University of Potsdam, CEPA); Maximilian Kellner (PIK Potsdam, MCC Berlin); Noah Kögel (PIK Potsdam, MCC Berlin, University of Potsdam); Lennart Stern (PIK Potsdam, MCC Berlin) |
| Abstract: | We build a dynamic model in which home owners decide when and how to switch to carbon-neutral heating. Agents differ with regard to carbon intensity and abatement costs, the latter being private information which is non-observable by the government. The heating-related investment model is nested in an overlapping generations Mirrlesian optimal taxation model with heterogeneous home ownership and labor productivity. We develop a compensation mechanism which guarantees a weak Pareto-improvement for every agent when aggregate benefits of climate policy exceed aggregate costs. The mechanism includes carbon pricing with category-based transfers, uniform ad-valorem subsidies on investments that are financed by public debt, and an income tax adjustment based on climate mitigation benefits, used to service debt. We show that exact compensation of homeowners’ dynamic abatement cost requires only minimal information: the interest rate and the future fossil fuel price path. By means of exact compensation, our model utilizes the income-tax system to redistribute heterogeneous transformation costs between households according to any number of normative considerations without efficiency losses. We numerically illustrate subsidy rates and income tax adjustments for Germany. |
| Keywords: | climate policy mix, building sector, heterogeneous abatement, Pareto improvement, compensation, income tax adjustment, subsidies |
| JEL: | H21 H23 Q58 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:pot:cepadp:82 |
| By: | Stefania Albanesi; Wabitsch Alena; António Dias da Silva; Juan F. Jimeno; Ana Lamo |
| Abstract: | We examine the link between labour market developments and new technologies such as artificial intelligence (AI) and software in 16 European countries over the period 2011-2019. Using data for occupations at the 3-digit level, we find that on average employment shares have increased in occupations more exposed to AI. This is particularly the case for occupations with a relatively higher proportion of younger and skilled workers. While there exists heterogeneity across countries, only very few countries show a decline in employment shares of occupations more exposed to AI-enabled automation. Country heterogeneity for this result seems to be linked to the pace of technology diffusion and education, but also to the level of product market regulation (competition) and employment protection laws. In contrast to the findings for employment, we find little evidence for a relationship between relative wages across occupations and potential exposures to new technologies |
| Keywords: | Artificial intelligence; Employment; Occupations; Skills |
| JEL: | J23 O33 |
| Date: | 2024–11–18 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedmoi:99164 |
| By: | Kleine, Mareike |
| Abstract: | Transparency lies at the heart of canonical theories of international negotiations and institutions—yet it is rarely directly measured or explained. This paper explores the potential downsides of transparency reforms in intergovernmental negotiations and institutions. We argue that as formal international meetings open up to the public, negotiators face incentives to shift deliberations to more informal and opaque venues, especially for sensitive and domestically contested issues. To test when and why this occurs, we present new data on three decades of intergovernmental negotiations in the Council of the European Union (1990-2019), and in particular the use of informal breaks where no minutes are taken. We find that recourse to such breaks—especially at lunch time—has increased substantially, and that ministers often take these opportunities to discuss controversial topics. We deploy quantitative and qualitative analyses to show that variations in informal breaks correlate both with institutional enhancements to transparency and with specific concerns over antagonistic political mobilization at home, notably in the form of Euroscepticism. These findings challenge received positive and normative theories about transparency in international institutions, and contribute to the literature on informal governance, negotiation studies, EU politics, and the transnational democratic deficit. |
| Keywords: | transparency; secrecy; informal governance; intergovernmental negotiations; international organization; domestic politics; European Union; informality |
| JEL: | F50 D70 D82 |
| Date: | 2024–11–04 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124152 |
| By: | Börschlein, Erik-Benjamin (Institute for Employment Research (IAB), Nuremberg); Bossler, Mario (Institute for Employment Research (IAB), Nuremberg); Popp, Martin (Institute for Employment Research (IAB), Nuremberg) |
| Abstract: | Labor market tightness tremendously increased in Germany between 2012 and 2022. We analyze the effect of tightness on wages by combining social security data with unusually rich information on vacancies and job seekers. Instrumental variable regressions reveal positive elasticities between 0.004 and 0.011, implying that higher tightness explains between 7 and 19 percent of the real wage increase. We report greater elasticities for new hires, high-skilled workers, the Eastern German labor market, and the service sector. In particular, tightness raised wages at the bottom of the wage distribution, contributing to the decline in wage inequality over the last decade. |
| Keywords: | labor market tightness, wages, labor shortage, occupations, wage inequality |
| JEL: | J31 J63 J64 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17447 |
| By: | Yannick Bury; Lars P. Feld |
| Abstract: | In this paper, we study whether local spending of intergovernmental grants is influenced by mayoral elections in the grant receiving municipality. We exploit the implementation of the German federal government’s second economic stimulus package of 2009 (K2) in the state of Baden-Wuerttemberg as natural experiment. In the context of this package, all municipalities in Baden-Wuerttemberg received lump-sum grants for local public investment spending. Applying a difference-in-differences and instrumental variables approach to ensure exogeneity of the decision of mayors to run for re-election, we provide evidence that, in the absence of an election, K2 grants led to an increase in a municipality’s spending on long-run investment, while municipalities in which the incumbent mayor stood for re-election used grants to increase both, long-run and rapidly visible short-run investment expenditures. Moreover, we provide evidence in favor of the flypaper effect for all municipalities, except for those in which the incumbent mayor did not seek re-election. |
| Keywords: | intergovernmental grants, flypaper effect, political budget cycles |
| JEL: | H30 H72 H77 H81 E61 E62 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11457 |
| By: | Francois de Soyres; Simon Fuchs; Illenin O. Kondo; Helene Maghin |
| Abstract: | We show how local worker flow adjustment margins yield a theory-consistent sufficient statistic approximating the welfare effects of local shocks. Furthermore, we isolate a city’s insurance value as this approximation’s second-order term. Leveraging rich labor flows data across occupations, industries, and cities in France, we estimate spatial and non-spatial flows responses to local labor demand shocks. Less economically diverse French cities experience deeper contractions in gross outflows following negative shocks. In contrast, more economic concentration begets a modestly larger increase in gross worker flows following positive shocks. Altogether, we uncover a sizable welfare insurance gains from local economic diversity. |
| Keywords: | Sufficient statistics; Welfare; Concentration; Economic diversity; Labor flows |
| JEL: | J61 J62 J21 |
| Date: | 2024–11–22 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedmoi:99165 |