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on Microeconomic European Issues |
| By: | Coen van de Kraats (Erasmus University Rotterdam and Tinbergen Institute); Titus Galama (University of Southern California, Center for Economic and Social Research and Department of Economics, Vrije Universiteit Amsterdam, Erasmus University Rotterdam and Tinbergen Institute); Maarten Lindeboom (Vrije Universiteit Amsterdam, Centre for Health Economics, Monash University, Tinbergen Institute and IZA); Zichen Deng (School of Economics, University of Amsterdam; FAIR Centre) |
| Abstract: | We provide evidence that the social norm (expectation) that adults work has a substantial detrimental causal effect on the mental well-being of unemployed men in mid-life, as substantial as, e.g., the detriment of being widowed. As their peers in age retire and the social norm weakens, the mental well-being of the unemployed improves. Using data on individuals aged 50+ from 10 European countries, we identify the social norm of work effect using exogenous variation in the earliest eligibility age for old-age public pensions across countries and birth cohorts. |
| Keywords: | mental well-being, social norm of work, retirement institutions |
| JEL: | I10 I31 J60 D63 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:mhe:chemon:2025-04 |
| By: | Ulrika Ahrsjš (Stockholm School of Economics); Costas Meghir (Cowles Foundation, Yale University); MŒrten Palme (Stockholm University); Marieke Schnabel (University College London) |
| Abstract: | We study the intergenerational effect of education policy on crime. We use Swedish administrative data that links outcomes across generations with crime records, and we show that the comprehensive school reform, gradually implemented between 1949 and 1962, reduced conviction rates both for the generation directly affected by the reform and for their sons. The reduction in conviction rates occurred in many types of crime. The key mediators of this reduction in child generation are an increase in education and household income and a decrease in crime among their fathers. |
| Date: | 2025–02–16 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2356r1 |
| By: | Julia Mink |
| Abstract: | I estimate the causal impact of short-term exposure to nitrogen dioxide (NO2), ground-level ozone (O3), and particulate matter (PM) on healthcare costs in France. I construct a large-scale dataset by linking administrative healthcare expenditures for a nationally representative sample with high-resolution air pollution and meteorological data. To address endogeneity concerns related to economic activity, I implement an instrumental variable (IV) strategy that exploits weekly variations in altitude atmospheric conditions—such as thermal inversions, wind speed, and the height of the planetary boundary layer—that predict local pollutant concentrations yet are unlikely to affect healthcare utilization except through pollution. My findings reveal that air pollution, even at concentrations below current European air quality standards, imposes annual healthcare costs that exceed earlier estimates by a factor of ten. Heterogeneity analyses show that pollution affects multiple medical specialties, including cardiology, pulmonology, and ophthalmology, while placebo specialties, such as trauma surgery, exhibit no significant effects. Contrary to prior work focusing on children and the elderly, I find that adverse health outcomes extend across all age groups, demonstrating broader population vulnerability. Moreover, marginal effects prove larger at lower pollution levels, implying a concave doseresponse function that underscores the potential for substantial cost savings from even modest pollution abatement in relatively clean areas. These results suggest that earlier cost-benefit analyses likely undervalue the societal gains from stricter environmental regulation. |
| Keywords: | Air pollution, healthcare cost, instrumental variables |
| JEL: | Q51 Q53 I12 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_650 |
| By: | Robayo, Monica; Cabrera, Maynor Vinicio |
| Abstract: | Bulgaria still ranks among the EU countries with the highest levels of poverty and inequality. Before 2023, Bulgaria's Social Assistance / Monthly Social Allowance scheme had limited coverage, strict eligibility criteria, and limited impact on poverty reduction. Additionally, it was not adjusted or linked to inflation. The Bulgarian government introduced a reform in 2022 aimed to increase the scope and access of individuals to social support by increasing the basis for determining the differentiated minimum income threshold (now 30 percent of the relative poverty line) and the parameters linked with age, health condition, and social status, affecting the social programs anchored to it, such as the Monthly Social Allowance and the heating allowance. This paper assesses this reform's potential ex-ante poverty and distributional impacts, relying on a comprehensive tax/benefit system assessment called the Commitment to Equity and microsimulation techniques. The changes in the legal basis for determining access to social assistance introduced with the reform are expected to create some relief from the indexation of the benefits over time. They will now be tied to the evolution of the relative poverty line and, therefore, linked to the evolution of median income. The results of the policy simulations show that the combined effect of the changes in the Monthly Social Allowance and the heating allowance contributes to a slight reduction in the poverty gap but not enough to move a sizable share of people out of poverty, as shown by the negligible impact on the at-risk-of-poverty rate. Inequality is barely affected. Compared with a Bulgarian food basket, the results show that eligibility thresholds are still restrictive. These results suggest further scope for improvement in the design of these programs, including anchoring them to an absolute poverty line or basic consumption basket. |
| Date: | 2024–06–24 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10817 |
| By: | Sara Riscado; Antonio F. Amores; Henrique Basso; Johannes Simeon Bischl; Paola De Agostini; Silvia De Poli; Emanuele Dicarlo; Maria Flevotomou; Maximilian Freier; Sofia Maier; Esteban Garcia-Miralles; Myroslav Pidkuyko; Mattia Ricci |
| Abstract: | Following the inflation surge in the aftermath of the pandemic crisis, governments adopted a large array of fiscal measures to cushion its impact on households and firms. In the euro area, discretionary fiscal measures are estimated to amount to around 2% of GDP, in both 2022 and 2023. In the analysis of the impact of inflation and related fiscal measures the distributional dimension is particularly relevant, since the sudden and strong increase in prices affected families differently depending on their position in the income distribution. Furthermore, the evaluation of the cost of fiscal measures and their targeting is fundamental to improve the efficiency and effectiveness of policy interventions. Using a microsimulation approach, this paper uncovers the aggregate and distributional impact of high consumer inflation, as well as the impact of the government measures aimed at supporting households and containing prices. This analysis is carried out for 2022 and includes Germany, France, Italy, Spain, Portugal and Greece, which together proxy for the euro area. Our work confirms that the purchasing power and welfare of lower-income households was more severely affected by the 2022 inflation surge than that of high-income households. Fiscal measures contributed significantly to closing the inflation gap, though with country differences. However, most fiscal measures were not particularly targeted to low-income households, implying a low cost-effectiveness in protecting the poorest in some countries. |
| JEL: | E31 D31 H12 H50 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ptu:wpaper:w202424 |
| By: | Jessen, Jonas; Jessen, Robin; Johnston, Andrew; Gałecka-Burdziak, Ewa |
| 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. |
| Abstract: | Wir nutzen politische Diskontinuitäten in der polnischen Arbeitslosenversicherung, um die kausale Wirkung von Änderungen der Leistungsdauer und -höhe zu untersuchen. Unter Verwendung eines Regressionsdiskontinuitätsansatzes kommen wir zu drei Ergebnissen: (1) Höhere Leistungsniveaus verzerren die Beschäftigung stärker als Leistungsverlängerungen. (2) Die Dauer der Leistungsgewährung und Niveaus interagieren: Längere Laufzeiten erhöhen die verzerrende Wirkung großzügigerer Zahlungen. (3) Höhere Zahlungen erhöhen den Übergang von Erwerbstätigen in die Arbeitslosigkeit. Wir entwickeln ein Modell für eine optimale Arbeitslosenversicherung, das das moralische Risiko sowohl bei Beschäftigten als auch bei Arbeitslosen und arbeitslosen Arbeitnehmern berücksichtigt. Bei einer Erhöhung des Niveaus sind die verzerrenden Kosten bei den Beschäftigten größer als bei Arbeitslosen. |
| Keywords: | Unemployment insurance, spell duration, regression discontinuity, endogenous separations |
| JEL: | H55 J20 J65 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwirep:312428 |
| By: | Faggio, Giulia; Schlüter, Teresa; Berge, Philipp vom |
| Abstract: | We use the German government move from Bonn to Berlin in 1999 to explore the interaction between public and private sector employment within a local labor market. Our findings show a positive effect of public sector expansion on private sector employment, with a local multiplier of 1.32–1.35, mainly driven by the service sector. The policy impact is highly localized, strongest within 300 m of a relocation site, and evident one year after the relocation. Three quarters of new private sector jobs were created by establishments that did not exist before 1998. These newly created jobs disproportionally employ women, younger workers, individuals in managerial and professional roles, and those with lower levels of education. |
| Keywords: | economic development; job displacement; regional government policy; regional labor markets |
| JEL: | J1 R14 J01 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127211 |
| By: | João Amador; Paulo Barbosa; Esmeralda Arranhado |
| Abstract: | This paper estimates the impact on firms’ goods exports of two key policies implemented by export promotion agencies (EPAs): matchmaking in international markets and financial grants for internationalization. We merge Portuguese rich firm-level data on exports of goods, balance sheets, and income statements, with detailed information on the activity of the EPA between 2012 and 2021. The empirical exercise estimates the causal effect of these policies with a staggered difference-in-difference estimator. We conclude that the support provided to Portuguese firms significantly and positively affected their exports of goods. Financial grants for internationalization led to a significant increase in firms’ goods exports, with a greater effect on micro and small firms and in the sectors of “Wholesale of household goods” and “Manufacture of wearing apparel”. Similarly, matchmaking activities led to a significant increase in exports. In France, the country for which Portuguese companies request the most matching support, the effect is greater for micro and small firms and in the sector of “Manufacturing of other textiles”. |
| JEL: | D22 F13 F14 L25 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ptu:wpaper:w202421 |
| By: | Cusolito, Ana Paula; Fattal Jaef, Roberto N.; Mare, Davide Salvatore; Singh, Akshat Vikram |
| Abstract: | This paper leverages the novel methodology by Whited and Zhao (2021) to identify financial distortions and applies it to a sample of 24 European countries. The analyses reveal that less developed economies face more severe financial misallocation. Distortions in the allocation of financial resources raise the relative cost of finance for younger, smaller, and more productive firms. Counterfactual analysis indicates that alleviating financial distortions could boost aggregate productivity by approximately 30-70 percent. On average, 75 percent of these gains across countries result from better access to finance, with the remainder from optimizing the debt-to-equity ratio. The paper also quantifies the link between financial misallocation and real-input allocative inefficiency, showing that reducing financial misallocation from the median to the 25th percentile of the cross-industry distribution can increase aggregate productivity by an average of 5.2 percent. The effect is larger, at 6.4 percent, for industries heavily reliant on external finance. |
| Date: | 2024–06–20 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10811 |
| By: | Bredtmann, Julia; Otten, Sebastian; Rammert, Timo |
| Abstract: | We analyze the impact of occupational deregulation on the wages of licensed workers. To do so, we exploit a deregulation policy in the German craft sector that removed the master certificate as a requirement for starting a business in about half of the craft occupations. Specifically, we examine the impact of this deregulation policy on the wage premium of incumbent master craftsmen. Our results indicate that the reform led to a 3% increase in the wage premium of masters in deregulated relative to regulated occupations. This effect is primarily driven by a substantial increase in the wages of masters in deregulated occupations. We attribute this increase to heightened competition for highly skilled workers in the affected occupations, stemming from a sharp decline in the number of craftsmen pursuing a master craftsmen degree after the reform. We further show that the increase in the wage premium of master craftsmen was particularly pronounced in East Germany, which experienced a large outflow of skilled workers after reunification. This general shortage of skilled labor, exacerbated by the increased scarcity of master craftsmen, is likely to have intensified competition for their expertise. |
| Abstract: | In der vorliegenden Studie untersuchen wir die Auswirkungen beruflicher Deregulierung auf die Löhne von Beschäftigten. Als Untersuchungsgegenstand dient eine Reform der beruflichen Regulierung im deutschen Handwerk, durch die in etwa der Hälfte der Handwerksberufe der Meisterbrief als Voraussetzung für eine Unternehmensgründung abgeschafft wurde. Konkret untersuchen wir die Auswirkungen dieser Deregulierungspolitik auf die Lohnprämie von angestellten Handwerksmeistern. Unsere Ergebnisse zeigen, dass die Reform zu einem Anstieg der Lohnprämie von Meistern in deregulierten Berufen um 3% im Vergleich zu reglementierten Berufen geführt hat. Dieser Effekt ist vor allem auf einen deutlichen Anstieg der Löhne von Meistern in deregulierten Berufen zurückzuführen. Dieser Anstieg lässt sich durch den verschärften Wettbewerb um hochqualifizierte Arbeitskräfte in den betroffenen Berufen erklären, der auf den starken Rückgang der Zahl der Handwerker zurückzuführen ist, die nach der Reform einen Meistertitel erworben haben. Darüber hinaus zeigen wir, dass der Anstieg der Lohnprämie von Handwerksmeistern in Ostdeutschland, das nach der Wiedervereinigung eine starke Abwanderung von Fachkräften erlebte, besonders ausgeprägt war. Der durch die Reform verstärkte allgemeine Fachkräftemangel dürfte den Wettbewerb um hochqualifizierte Arbeitskräfte intensiviert und damit zu einem deutlichen Anstieg der Lohnprämie für Meister geführt haben. |
| Keywords: | Occupational licensing, deregulation, labor supply, wages |
| JEL: | J24 J31 J44 L51 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwirep:312407 |
| By: | Robayo, Monica; Rude, Britta Laurin |
| Abstract: | This paper uses the introduction of preparatory school classes targeting six-year-old children in Romania to study whether universal, compulsory, public care provision could increase female employment. Results from difference-in-difference estimations show that the reform resulted in rising employment rates for mothers of six-year-old children. The effect is lower for mothers living in households with elderly people, but larger for those facing stronger trade-offs prior to the reform. Overall, investing in universal, compulsory, public childcare is beneficial and could significantly increase female employment and labor force participation rates. |
| Date: | 2023–12–11 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10638 |
| By: | Helmers, Viola; Van der Werf, Edwin |
| Abstract: | The taxation of aviation is a frequently discussed component of governments' efforts to mitigate greenhouse gas emissions. This study examines the impact of the German aviation tax on passenger numbers during the period 2011-2019 using five panel data estimators and a Specification Curve Analysis (SCA) to assess the robustness of the results to changes in the specifications of the econometric model. Employing five base models, we find that the tax induced a 6-11% reduction in the number of passengers departing annually from Germany in the first two years after implementation. For later years, estimated effects are more ambiguous. The SCA, comprising 175 alternative specifications, corroborates our main findings while showing a slightly wider range of effect sizes, especially on the upper bound. The results show that the choice of econometric method can affect research outcomes, especially for the fourth year of the tax and onward. |
| Abstract: | Die Besteuerung des Luftverkehrs ist eine häufig diskutierte Maßnahme von Regierungen zur Verringerung von Treibhausgasemissionen. Diese Studie untersucht die Auswirkungen der deutschen Luftverkehrsteuer auf Passagierzahlen im Zeitraum 2011-2019 mit Hilfe von fünf Paneldatenschätzern und einer Specification Curve Analysis (SCA), um die Robustheit der Ergebnisse gegenüber Änderungen in den Spezifikationen des ökonometrischen Modells zu bewerten. Unter Verwendung von fünf verschiedenen Schätzern stellen wir fest, dass die Steuer in den ersten beiden Jahren nach Einführung der Steuer zu einem Rückgang der Anzahl der jährlich aus Deutschland abfliegenden Passagiere um 6-11 % führte. Für die nachfolgenden Jahre sind die geschätzten Effekte uneindeutig. Die SCA, welche weitere 175 alternative Spezifikationen umfasst, bestätigt unsere Hauptergebnisse und zeigt eine etwas breitere Spanne von Effektgrößen, insbesondere im oberen Bereich. Unsere Ergebnisse zeigen, dass die Wahl der ökonometrischen Methode die Ergebnisse maßgeblich beeinflussen kann, in diesem Fall insbesondere für die Effekte ab dem vierten Jahr der Steuer. |
| Keywords: | Aviation policy, aviation tax, passenger tax, transport economics, dynamic panel model, specification curve analysis |
| JEL: | C21 C23 H23 R48 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwirep:312424 |
| By: | João Amador; Paulo Barbosa; João Cortes |
| Abstract: | This paper studies firms’ distances to becoming successful exporters. The empirical exercise uses rich data on Portuguese firms and assumes that there are significant features distinguishing exporters from non-exporters. An array of machine learning models—Bayesian Additive Regression Tree (BART), Missingness Not at Random (BART-MIA), Random Forest, Logit Regression, and Neural Networks—are trained to predict firms’ export probability and to shed light on the critical factors driving the transition to successful export ventures. Neural Networks outperform the other models and remain highly accurate when export definitions and training and testing strategies are changed. We show that the most influential variables for prediction are labor productivity and the share of imports from the EU in total purchases. Additionally, firms at the median distance to sell in international markets operate with about twice the assets of the group in the decile more distance from exporting. Firms in the decile closest to the export market operate with around 12 times more assets than those in the decile more distant from exporting. |
| JEL: | C53 C55 L2 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ptu:wpaper:w202420 |
| By: | Wittmann, Florian; Schnabl, Esther; Zenker, Andrea |
| Abstract: | Policies aimed at supporting economically lagging regions have changed considerably in the past decades. This includes an increased link between innovation and regional policy, as well as more recently transformative policy. The WIR! Programme, funded by the Ministry of Research and Education in Germany, introduces several policy innovations in this regard, such as an explicit link between innovation and structural change, the emphasis on involving new (societal) actors, and a broad understanding of innovation. Although such innovations have the potential to provide a fresh start for policy-making, it remains an open question how applicants and programme administrations cope with a changing funding environment. This paper investigates - by examining applicant structure, project outlines, and funding decisions - how these new requirements are taken into account. While evidence in favour of a partial reorientation is found, the analysis reveals a strong continuity of established patterns and priorities, with many project outlines focusing mostly on technological innovation and relatively narrow stakeholder involvement. These findings suggest that while initiatives like WIR! may provide new impulses, it may take longer for applicants and programme management to adjust to changing policy paradigms. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:fisifr:312396 |
| By: | Orecchia, Carlo; Cala, Valerio Ferdinando; de Cristofaroa, Fabiana; Dudu, Hasan |
| Abstract: | One of Italy’s key objectives is to reform and modernize the tax system to increase tax efficiency and improve environmental sustainability and regional economic outcomes, in line with the European Union strategy. Within the framework of the European Green Deal, Italy is committed to contributing to the goal of becoming the first climate neutral region by 2050 (the “Fit for 55” package). As an intermediate step toward the 2050 target, the European Union must reduce greenhouse gas emissions by at least 55 percent by 2030 compared to 1990 levels. Carbon pricing is at the core of the proposal, but its full implementation is also expected to have regressive effects, harming poorer households, and adverse economic impacts, reducing firms’ competitiveness. This paper evaluates the effects of the carbon pricing proposal of the “Fit for 55” package on welfare, sectoral production, and income distribution. To tackle the adverse social and economic effects, it compares different revenue recycling schemes shifting the tax burden from major direct and indirect taxes to carbon emissions. It finds that well-targeted revenue recycling policies might significantly reduce the negative effects. The analysis adopts the Italian Regional and Environmental Computable General Equilibrium of the Department of Finance model, which is a new (recursive) dynamic computable general equilibrium model developed by the Italian Ministry of the Economy with technical assistance from the World Bank. It has a detailed energy specification that allows for capital/labor/energy substitution in production, intra-fuel energy substitution across all demand agents, a multi-output and multi-input production structure, an extended energy system with 11 different types of technologies, multiple households to address distributional impacts, and detailed information on the Italian tax system. |
| Date: | 2023–10–26 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10592 |