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on Microeconomic European Issues |
| By: | Balgova, Maria (Bank of England); Illing, Hannah (University of Bonn) |
| Abstract: | This paper examines the differential impact of job displacement on migrants and natives. Using administrative data for Germany from 1997–2016, we identify mass layoffs and estimate the trajectory of earnings and employment of observationally similar migrants and natives displaced from the same establishment. Despite similar pre-layoff careers, migrants lose an additional 9% of their earnings in the first five years after displacement. This gap arises from both lower re-employment probabilities and post-layoff wages and is not driven by selective return migration. Key mechanisms include sorting into lower-quality firms and depending on lower-quality coworker networks during job search. |
| Keywords: | Immigration; job displacement; job search |
| JEL: | J62 J63 J64 |
| Date: | 2024–12–06 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:1099 |
| By: | Ilmakunnas, Ilari (The Finnish Centre for Pensions); Sten-Gahmberg, Susanna; Hakola, Timopekka |
| Abstract: | In 2017, Finland introduced a partial old-age pension scheme, allowing individuals to claim either 25 or 50 percent of their old-age pension after turning 61, irrespective of their employment status. Claiming a partial pension before the statutory retirement age results in a permanent reduction of the full old-age pension. Due to the rapid rise in consumer prices in 2022, individuals who claimed their pension before the end of 2022 benefited from a three-percentage points higher index adjustment in 2023, resulting in a permanently higher pension compared to those who claimed their pension in early 2023. In this study, we assess the causal effect of the financial incentive arising from the exceptional index adjustment on pension take-up using regression discontinuity design and full population register data. We also analyse differences in responses by socioeconomic status and gender. The extraordinary pension index adjustment increased the probability of claiming the partial old-age pension in the first month after becoming eligible for it by around 8 percentage points, or around 80 per cent. The effect is explained by individuals claiming a pension sooner than they would have in the absence of the exceptional index adjustment. Individuals with a higher pension accrual, higher earnings, or with upper tertiary education were more likely than others to respond to the index adjustment. |
| Date: | 2025–02–12 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:n3t2s_v2 |
| By: | Ilmakunnas, Ilari (The Finnish Centre for Pensions); Sten-Gahmberg, Susanna; Hakola, Timopekka |
| Abstract: | In 2017, Finland introduced a partial old-age pension scheme, allowing individuals to claim either 25 or 50 percent of their old-age pension after turning 61, irrespective of their employment status. Claiming a partial pension before the statutory retirement age results in a permanent reduction of the full old-age pension. Due to the rapid rise in consumer prices in 2022, individuals who claimed their pension before the end of 2022 benefited from a three-percentage points higher index adjustment in 2023, resulting in a permanently higher pension compared to those who claimed their pension in early 2023. In this study, we assess the causal effect of the financial incentive arising from the exceptional index adjustment on pension take-up using regression discontinuity design and full population register data. We also analyse differences in responses by socioeconomic status and gender. The extraordinary pension index adjustment increased the probability of claiming the partial old-age pension in the first month after becoming eligible for it by around 8 percentage points, or around 80 per cent. The effect is explained by individuals claiming a pension sooner than they would have in the absence of the exceptional index adjustment. Individuals with a higher pension accrual, higher earnings, or with upper tertiary education were more likely than others to respond to the index adjustment. |
| Date: | 2025–01–03 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:n3t2s_v1 |
| By: | Bernard, Josef; Refisch, Martin; Grzelak, Anna; Bański, Jerzy; Deppisch, Larissa; Konopski, Michał; Kostelecký, Tomáš; Kowalski, Mariusz; Klärner, Andreas |
| Abstract: | Recently, the notion of left-behind places and regions has gained ground in academic debates on regional inequality and changing electoral landscapes. This paper proposes an approach to conceptualising and measuring regional “left-behindness” in three Central Eastern European countries that goes beyond a dichotomous division of regions into “left-behind” versus “not left-behind”. It understands left-behindness as a multi-dimensional continuum, representing regional disparities in living standards and socio-economic opportunities. Our understanding of left-behind plades is based to a large extent on the current economic conditions of the regions and their dynamics, but goes beyond them to include a wider range of socially relevant aspects of the living conditions, including educational attainment, poverty, and the attractiveness of places to live. The paper proposes an approach to measuring regional left-behindness and explores how it explains voting patterns. Thus, the paper is motivated by the seminal arguments of the 'geography of discontent' debate. Its proponents have argued that rising support for populist, right-wing nationalist-conservative and anti-system parties is often closely linked to spatial patterns of regional inequality. This argument has been repeatedly tested in Western European countries, but has remained under-researched in Central Eastern Europe. Using our approach, we were able to confirm the validity of the "geography of discontent" as a central thesis for all three countries studied. The novelty and added value of this study is that it extends the understanding of left-behindness and voting. Our multidimensional approach to left-behindness allows for a comprehensive interpretation of spatial patterns of populist voting in Central Eastern Europe. The relationship between regional left-behindness and voting behaviour varies in strength across different countries. In Czechia, there are strong associations for the parties ANO and SPD, but not for the KSČM. In eastern Germany, the association between left-behindness and support for the AfD is weaker, as is the case in Poland for the PiS. Another contribution of the multidimensional concept of left-behindness is the finding that different dimensions of left-behindness have different electoral effects. There appears to be a systematic influence of economic prosperity and relative expansion, which primarily captures the contrast between metropolitan areas and their hinterlands on the one hand, versus the rest of the country on the other—not only in terms of economic prosperity and relative expansion, but also in terms of a significant social status hierarchy. Poverty, however, shows a less stable relationship. |
| Keywords: | Community/Rural/Urban Development |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:jhimwp:350171 |
| By: | Nolan, Brian; C. Palomino, Juan |
| Abstract: | Research on gender wealth gaps is hampered by the fact that most surveys gather information on wealth at the household or family level rather than for individuals. It is also limited in coverage, often not including pension wealth. Here we exploit the rich data on individual wealth including pension wealth obtained by the British Wealth and Assets Survey (WAS) to assess the gender wealth gap in Great Britain between 2006-08 and 2018-20, with a particular focus on the prominent role of private pension wealth. We find that in 2018-20 mean wealth for women was 29.5% lower than for men when pension wealth was included versus only 12.6% lower when it was not. Decomposition analysis shows that differences between men's and women's observed socioeconomic characteristics account for about 45% of the private pension wealth gap, with differences in labour market experiences (labour income, career gaps and part-time jobs) playing a key role. We also find an increase in the gender pension gap over time that is associated with the increasing proportion of pension wealth in Defined Contribution rather than Defined Benefit schemes. Financial and business wealth is also an important contributor to the overall wealth gap, and like pension wealth its contribution increases towards the top of the distribution. |
| Keywords: | wealth, gender gap, pension |
| JEL: | D31 D63 D64 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:amz:wpaper:2024-03 |
| By: | Benjamin Cornejo Costas; Nicola Cortinovis; Andrea Morrison; |
| Abstract: | This paper investigates the relationship between migrant inventors, informal institutions and the development of green technologies in European regions. We argue that migrant inventors act as an unlocking mechanism that transfers external knowledge to host regions, and that informal institutions (i.e. social capital, migrant acceptance) mediate this effect. The work is based on an original dataset of migrant inventors covering 271 NUTS2 regions in the 27 EU countries, the UK, Switzerland, and Norway. The analysis shows that migrant inventors help their host regions to diversify into green technologies. The regions with the highest levels of both measures of social capital show a higher propensity of migrant inventors to act knowledge brokers. Conversely, regions with lower levels of migrant acceptance and social capital do not seem to contribute to this effect. |
| Keywords: | lock-in, international migration, green innovation, social capital, acceptance, regional diversification, EU regions |
| JEL: | F22 J61 O30 R12 Q55 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2503 |
| By: | Stefania Albanesi; António Dias da Silva; Juan F. Jimeno; Ana Lamo; Alena Wabitsch |
| Abstract: | We examine the link between the diffusion of artificial intelligence (AI) enabled technologies and changes in the female employment share in 16 European countries over the period 2011-2019. Using data for occupations at the 3-digit level, we find that on average female employment shares increased in occupations more exposed to AI. Countries with high initial female labor force participation and higher initial female relative education show a stronger positive association. While there exists heterogeneity across countries, almost all show a positive relation between changes in female employment shares within occupations and exposure to AI-enabled automation. |
| JEL: | J23 O33 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33451 |
| By: | Bruno Merlevede; Annelies Van Maele (-) |
| Abstract: | This paper documents how the composition of value added per worker in Europe is distributed over manufacturing, services, and other industries based on a large panel of firmlevel data. We show that a non-negligible part of value added is accounted for by services industries. We then explore how micro-data at the firm level can be used to analyse this important component of aggregate productivity growth. We further discuss and explore using our data whether semi-parametric estimators of total factor productivity that are commonly found in the literature and typically tailored towards manufacturing are fit for analysing firms services sectors. |
| Keywords: | Productivity slowdown, firm-level data, services industries |
| JEL: | E24 J24 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:rug:rugwps:25/1109 |
| By: | Julien Albertini; Arthur Poirier; Anthony Terriau |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tep:teppwp:wp25-01 |
| By: | Morten Bennedsen; Antoine Bertheau; Marianna Kudlyak; Birthe Larsen |
| Abstract: | We use a novel large-scale survey of firms, implemented in Denmark in 2021 and linked to administrative data, to study why firms lay off workers instead of cutting wages. Our questions on layoffs, wage cuts, and the link between them provide new insights into firms’ strategies for adjusting labor in response to adverse shocks. We find that layoffs are more prevalent than wage cuts, but wage cuts are not rare in firms experiencing revenue reduction and were used by 15% of such firms. Employers are hesitant to cut wages in many instances because they see wage cuts as a poor substitute for layoffs. First, firms report that lowering wages triggers costs through the impact on morale and quits. Comparing these costs with potential savings from wage cuts, most employers in the survey agree that a wage reduction would not have saved jobs. Second, firms report that a crisis is an opportune time for layoffs because of lower opportunity costs of restructuring and because layoffs during a crisis are perceived by workers as more fair. We find that firms that report such opportunistic layoffs are less likely to implement wage cuts. |
| Keywords: | wage rigidity; layoffs |
| JEL: | D22 J30 J63 J23 |
| Date: | 2025–02–07 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedfwp:99558 |
| By: | Jonas Jessen; Robin Jessen; Andrew C. Johnston; Ewa Gałecka-Burdziak |
| Abstract: | We exploit policy discontinuities in Poland's unemployment insurance to examine the causal effect of changes to both benefit durations and levels. Using a regression discontinuity approach, we uncover three findings: (1) Higher benefit levels distort employment more than benefit extensions. (2) Benefit durations and levels interact: Longer durations substantially increase the distortionary effect of more generous payments. (3) Higher payments increase the transition of employed workers into unemployment. We develop a model of optimal unemployment insurance that accounts for moral hazard among both employed and unemployed workers. Notably, for level increases, distortionary costs are larger among the employed than unemployed. |
| JEL: | H0 H53 J65 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33450 |
| By: | Restrepo, Laura; Fulton, Lewis; Wernert, Lukas |
| Abstract: | This paper reviews and analyzes the hydrogen-related targets and policies set for 2030 in California and the European Union, particularly related to the transportation sector. Both regions have strongly committed to decarbonizing transportation and transitioning toward clean energy sources, including hydrogen fuel cell vehicle technology. We examine the projected hydrogen demand for light and heavy-duty vehicles, plans for hydrogen production and use, and infrastructure needed, such as refueling stations. We also review announced policy frameworks and strategies driving the transition to clean hydrogen energy in California and the EU. We also consider the impact of US-level policies on California and its hydrogen/fuel cell vehicle efforts. This paper reflects the situation in these jurisdictions as of December 2024. Potential changes in policy given the change in US administration in January of 2025 are not considered. Our investigation finds that concerning vehicles, both jurisdictions have adopted an ambitious yet largely technology-neutral approach, allowing for the coexistence of battery-electric and fuel-cell electric vehicles. However, each has some policies and targets specific to promoting fuel cell vehicles; support for developing hydrogen systems is also typically fuel-specific in both jurisdictions and includes regulations and incentives. The policies address challenges such as sourcing low-carbon hydrogen, achieving cost competitiveness, and meeting the growing demand for clean electricity. Additionally, based on the targets set by California and the EU for 2030 regarding light and heavy-duty vehicles, buses, and hydrogen refueling stations (HRS), on a per-capita basis, California demonstrates somewhat greater ambition in both vehicles and HRS than the EU, by 2030. |
| Keywords: | Engineering, Social and Behavioral Sciences |
| Date: | 2025–02–18 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:itsdav:qt9ps607c7 |
| By: | Le blanc, Julia (European Commission - JRC); Slacalek, Jiri (European Central Bank); White, Matthew N. (Econ-ARK) |
| Abstract: | Homeownership rates and holdings of housing wealth differ immensely across countries. We specify and estimate a life cycle model with risky labor income and house prices in which households face a discreteâcontinuous choice between renting and owning a house, whose sale is subject to transaction costs. The model allows us to quantify three groups of explanatory factors for long-run, structural differences in the extensive and intensive margins of housing: the homeownership rate and the value of housing wealth of homeowners. First, in line with survey evidence, we allow for differences in expectations of house prices. Second, countries differ in the institutional set-up of the housing market: maximum loanâvalue ratio and costs of renting, maintaining, and selling a house. Third, we allow for differences in household preferences: the dispersion in discount factors, the share of housing expenditure, and the bequest motive. We estimate the model using micro data from five large economies and provide a decomposition to interpret what drives the cross-country differences in housing wealth. We find that all three groups of factors matter, although preferences less so. Differences in homeownership rates are strongly affected by (i) house price beliefs and (ii) therental wedge, the difference between rents and maintenance costs, which reflects the qualityof the rental market. Differences in the value of housing wealth are substantially driven by housing maintenance costs. |
| Keywords: | Housing, Homeownership, House Price Expectations, Housing Market Institutions, Cross-Country Comparisons |
| JEL: | D15 D31 D84 E21 G11 G51 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:jrs:wpaper:202501 |
| By: | Majchrowska, Aleksandra; Roszkowska, Sylwia |
| Abstract: | We examine how demographic changes impact the transmission of minimum wage increases to inflation. The minimum wage growth can raise the prices of goods and services and accelerate inflationary processes. At the same time, a shrinking workforce and changes in its structure could lead to changes in the impact of minimum wage increases on the economy. We use the minimum wage augmented Phillips curve framework extended with the demographic variables. We employ the sample of 21 European Union countries in 2003-2023 and panel data techniques. Our study proves that the strength of the minimum wage pass-through effects on inflation depends on demographic factors. Aging of the workforce and shrinking workforce size weakens the impact of minimum wage increase on inflation. Contrary, a lower proportion of the less educated working-age population strengthens the minimum wage pass-through effects on inflation. Our results have important implications for macroeconomic, minimum wage, and education policies. |
| Keywords: | population ageing, shrinking workforce, minimum wage, inflation |
| JEL: | J11 J31 J38 |
| Date: | 2025–01–21 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123506 |