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on Microeconomic European Issues |
| By: | Enriques, Luca; Nigro, Casimiro A.; Tröger, Tobias |
| Abstract: | Policymakers around the globe have sought to stimulate Venture Capital (VC) investments, and an extensive literature has inquired into the institutional determinants of a vibrant VC market, including corporate law. We contribute to that literature by exploring the significance of corporate law for VC contracting and hence VC investments. Corporate law's relative rigidity or flexibility is key to the efficiency of the contractual technology governing VC deals. Importantly, it can hamper such transactions through a number of "constraints, " which we have identified in a companion paper. To illustrate our point, in another companion paper, we take German and Italian corporate laws as two case studies and show how they are largely averse to VC contracting. In addition, we show that the regulatory constraints they impose stem from blackletter corporate law much less often than from scholarly constructs and courts' interpretations. This chapter anticipates two objections that cast doubt over the importance of our findings as to the construction of vibrant VC markets in Germany and Italy. Specifically, the first of these objections is that VC funds and entrepreneurs planning to run their startups in Germany and Italy can circumvent the strictures of local corporate laws by incorporating abroad, and the other is that formal contracts are inconsequential in VC deals, meaning that the regulatory constraints we document are irrelevant. Meanwhile, the chapter also shows that the detailed understanding of regulatory constraints unveiled by our research can inform more effective policymaking. Ultimately, we make two policy recommendations: first, we propose the adoption of a statutory provision that would explicitly insulate the arrangements that typically shape U.S. VC deals from undue interventions; and, second, we argue in favor of a standard charter aligned with U.S. VC transactional practice that the law itself should declare entirely enforceable. |
| Keywords: | Comparative Corporate Law, Comparative Corporate Governance, Entrepreneurship, Financial Contracting, Private Ordering, Startups, Venture Capital, Entrepreneurial Finance |
| JEL: | G38 K22 L26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:lawfin:313660 |
| By: | Zainab Iftikhar (University of Bonn & CEPR); Anna Zaharieva (Bielefeld University) |
| Abstract: | In this study we evaluate the effects of low-skilled immigration on small businesses, wages and employment in Germany. We develop a search and matching model with heterogeneous workers, cross-skill matching, and endogenous entry into entrepreneurship. The model is calibrated using German Socio-Economic Panel (SOEP) data. Quantitative analysis shows that low-skilled immigration benefits high-skilled workers while negatively affecting the welfare of low-skilled workers. It leads to the endogenous expansion of immigrant entrepreneurial activities, generating positive spillovers for all demographic groups except native entrepreneurs. Overall, there is a marginal loss to the economy in terms of per worker welfare. This loss is mitigated with increased skilled migration from India. Policies restricting immigrant entrepreneurship relax competition for native small businesses but reduce welfare for all other worker groups. Ethnic segregation of small businesses benefits low-skill native entrepreneurs. |
| Keywords: | Entrepreneurship, small business, self-employment, search frictions, immigration |
| JEL: | J23 J31 J61 J64 L26 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:358 |
| By: | Iva Hasikova (Department of Department of Finance and Accounting, Faculty of Business and Economics, Mendel University in Brno, Czech Republic); Jan Hanousek (Department of Department of Finance and Accounting, Faculty of Business and Economics, Mendel University in Brno, Czech Republic) |
| Abstract: | This paper analyses factors affecting VAT compliance using a panel of 22 European countries from 2000 to 2021. In particular, we studied the influence of the shadow economy, macroeconomic conditions, quality and efficiency of public institutions, and the control of corruption influencing VAT compliance. The GDP growth proxying the phases of the business cycle has a stable and positive effect on VAT compliance. Similarly, the impact of the shadow economy has been negative, statistically, and economically significant. Also, we observe a substantial impact of the government quality indicators on reducing the VAT gap. We also examine the possible “import†of tax morale through foreign subsidiaries operating in the country, and the impact remains inconclusive. Likely positively induced VAT compliance is mitigated by a negative impact of possibly sizeable exports of foreign-owned subsidiaries. From the public administration perspective, we show that all factors that affect the shadow economy are almost at the same rate transferred into increasing VAT compliance, which could make the quest for policymakers more effective. |
| Keywords: | Value-added tax (VAT), VAT gap, Gross Value Added, Shadow Economy, Tax Collection, Policy and Governance, Economic sectors |
| JEL: | H26 C33 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:men:wpaper:100_2025 |
| By: | Filip, Marinela-Daniela; Setzer, Ralph |
| Abstract: | This paper investigates the impact of regional institutional quality on economic growth and economic resilience. Using data collected by the Quality of Government Institute, we conduct a two-way fixed effect panel regression model for around 200 European regions during the period 2010 to 2021. Our findings establish a positive relationship between institutional quality and medium-term GDP growth. This effect is more pronounced in regions with low-income per capita, highlighting the importance of asymmetries across European regions. A convergence of regions with low institutional quality to the EU median would increase annual GDP per capita growth by 0.5 percentage points over the medium-term. Additionally, regions with high quality institutions are more resilient to adverse shocks and have a lower incidence of crisis. Our results suggest that regional institutional reforms, such as increasing public sector efficiency or reducing corruption, would spur growth, resilience, and convergence in the European economy. JEL Classification: O43, E02, R11, R50, C23 |
| Keywords: | economic growth, EU, reforms, regional institutional quality, resilience |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253045 |
| By: | Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw); Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw); Maryna Tverdostup (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Labour shortages in Europe have led firms to adopt two key strategies automation and the employment of migrants. This study empirically examines the relationship between robot adoption and immigrant labour (differentiated by region of origin and education level) in Austrian firms using a novel dataset linking firm-level survey data on robotics adoption from Austria’s Information and Communication Technologies (IKTU ) surveys (waves 2018, 2020 and 2022) with registry-based employment records. Employing Poisson pseudo-maximum likelihood (PPML) estimations, we analyse firm-level employment decisions while controlling for firm characteristics, industry and region. Our findings show that firms adopting robots tend to employ more workers overall, particularly those with low and medium education levels. Notably, robot-adopting firms employ a higher share of low-educated migrants who are not from the European Economic Area (EEA), suggesting complementarity rather than substitution. However, automation appears to reduce the employment of highly educated migrant workers relative to natives. Distinguishing between industrial and service robots, we find that service robots have a stronger association with employment growth than industrial robots. The impact of robot adoption also differs by sector and is most pronounced in manufacturing, whereas its effects vary in the private service sectors. Our findings suggest that while automation can alleviate labour shortages, it may reinforce labour market segmentation. For EU policy makers, targeted interventions are needed to support the transition of migrant workers into higher-skilled occupations and to ensure that the benefits of automation are equitably distributed. Given the EU-wide relevance of automation and migration dynamics, these results provide insights that are also applicable beyond Austria. |
| Keywords: | Migration, automation, employment, firm- and worker-level analysis |
| JEL: | D22 J23 J24 J61 O33 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:wii:wpaper:262 |
| By: | Enrico Cavallotti (Trinity College Dublin, Department of Economics); Italo Colantone (Bocconi University, Department of Social and Political Sciences, GREEN Research Centre, Baffi Research Centre, CESifo & Fondazione Eni Enrico Mattei); Piero Stanig (Bocconi University, Department of Social and Political Sciences, GREEN Research Centre, & Dondena Research Centre); Francesco Vona (University of Milan, Department of Environmental Science and Policy & Fondazione Eni Enrico Mattei) |
| Abstract: | We study how occupation-related material interest affects environmental voting. Specifically, material interest hinges on the greenness vs. brownness of individual occupational profiles. That is, on the extent to which individuals are expected to benefit vs. lose in a greener economy. We employ individual-level data from 14 western European countries, over 2010-2019. To measure the greenness and brownness of occupational profiles, for each individual we compute predicted greenness and brownness scores based on the predicted probabilities to be employed in each possible occupation. These probabilities are combined with occupation-specific greenness and brownness scores. Individuals characterized by higher predicted brownness are less likely to vote for Green parties and for parties with a more environmentalist agenda, while the opposite holds for individuals characterized by higher predicted greenness. Voting preferences of brown profiles tend to converge towards those of greener profiles in regions that are better placed to gain from the green transition. |
| Keywords: | green voting, material interests, green jobs, brown jobs, labour market effects of the green transition |
| JEL: | D72 Q52 P16 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2025.09 |
| By: | Robayo-Abril, Monica; Echeverría, Lucía |
| Abstract: | The European Union has improved living standards, yet welfare disparities persist across regions, countries, and demographic groups. This paper uses data from European Union Statistics on Income and Living Conditions cross-sectional and longitudinal surveys and the at-risk-of-poverty or social exclusion framework to analyze recent temporal trends in absolute multidimensional poverty across the 27 countries in the European Union and its subregions. The analysis quantifies the extent, composition, and factors associated with the higher risks of multidimensional poverty across four countries (Bulgaria, Romania, Croatia, and Poland) and extends the at-risk-of-poverty or social exclusion framework to consider other dimensions of deprivations. The paper analyzes the extent of multidimensional poverty among the Roma population in Bulgaria and assesses the extent of chronic income poverty and chronic material deprivation among this group. The analysis reveals that some European Union member states present strikingly divergent trends in multidimensional poverty compared to the European Union average, and there have been different rates of progress across subregions. Results of the analysis of the four countries of interest indicate that although monetary poverty risks are comparable across these countries, there are notable variations in the incidence of nonmonetary indicators and the intensity of deprivations. However, the likelihood of being multidimensionally poor is conditioned by similar individual, socioeconomic, and family characteristics across countries. The Roma population in Bulgaria encounters more concurrent disadvantages compared to the broader population and is significantly more likely to be disproportionately represented among those experiencing chronic poverty and material deprivations. These findings underscore the urgent need for targeted policy interventions that tackle the most pressing needs of disadvantaged populations. Finally, the study proposes a set of potential policy interventions to address structural inequalities and improve the well-being of vulnerable populations. |
| Keywords: | Pobreza; Medición; Unión Europea; |
| Date: | 2025–01–09 |
| URL: | https://d.repec.org/n?u=RePEc:nmp:nuland:4265 |
| By: | Vesterberg, Mattias (Department of Economics, Umeå University) |
| Abstract: | This study estimates the causal impact of the recent years’ high electricity prices on electric vehicle (EV) adoption. Utilizing Swedish registry data and leveraging regional discontinuities in electricity prices, I demonstrate that higher electricity prices reduce EV demand, but also the demand for combustion-engine vehicles. Additionally, the response to electricity prices varies across different types of EVs and socio-economic groups. Based on these findings, I explore a counterfactual policy that reduces electricity prices for EV buyers, and show that under plausible assumptions, this policy is less cost-effective in boosting EV demand compared to subsidies for EV purchases or charging infrastructure. |
| Keywords: | Electrification; Transportation; Regression discontinuity |
| JEL: | D12 Q41 R41 |
| Date: | 2025–03–07 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:umnees:1032 |
| By: | Botsari, Antonia; Gvetadze, Salome; Lang, Frank |
| Abstract: | This working paper provides an updated overview of the key markets the EIF focuses on, highlighting the challenges and opportunities in SME financing during these uncertain times. It reviews the overall market environment, explores developments in SME equity, guarantees, securitisation, and inclusive finance markets, and discusses how these areas are shaping the support available to SMEs. The paper reflects the EIF's commitment to addressing financing gaps and fostering sustainable growth across Europe. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:eifwps:313620 |
| By: | Lisandra Flach; Lisa Scheckenhofer |
| Abstract: | Key MessagesThe average tariff gap for traded products between the US and the EU is around 0.5 percentage points, which is relatively low compared to other US trade partners.US tariff changes aimed at closing the tariff gap between the US and the EU could affect 53% of German exports to the US and 6% of German global exports. While a wide range of products would be affected, the tariff increase would remain relatively small for three quarters of traded products, as their tariff gaps are below 2.3%.Our simulations show that higher US “reciprocal” tariffs reduce German exports to the US between 2.4% and 3.0% and decrease value added by 0.02%. These small effects for Germany, compared to scenarios with a flat 20% increase in US tariffs, are mostly due to the relatively low tariff gap between the US and the EU.However, the opposite scenario arises if the EU negotiates “full reciprocal tariffs” with the US – implying that the US also lowers tariffs when its own are higher. In this case, German value added and welfare increase. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:econpb:_71 |
| By: | Abdoulaye Kané; Nadine Levratto |
| Abstract: | This paper investigates how local factors at the local and firm levels affect French construction firms' productivity (labour productivity and total factor productivity). We use a multilevel model to disentangle firm-specific and location-specific effects. The results cover the period 2009-2019 and confirm the importance of firm-specific determinants of productivity, mainly age and size. Our results also emphasise the influence of location and local characteristics. We find that the local unemployment rate hurts productivity, and our results bring some evidence of the existence of positive external agglomeration effects. These results remain robust to analysis by company size. |
| Keywords: | French construction firms; Heterogeneity of productivity; Localisation Factors; Multilevel Models |
| JEL: | C31 D24 L74 R15 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:drm:wpaper:2025-19 |
| By: | Lorena M. D’Agostino (University of Milano-Bicocca); Rosina Moreno (AQR-IREA, University of Barcelona); Damián Tojeiro-Rivero (ESADE-University Ramon Llull) |
| Abstract: | Taking the long-established evidence on knowledge spillovers that states that part of the new created knowledge spills over to other firms mostly located in the physical proximity, we aim at providing evidence on the role of green knowledge spillovers on firms’ innovation. We posit that in addition to internal factors, firm innovation is determined by external regional factors, among which we specifically focus on the spillovers generated by environmental EU-funded research at the regional level. The results indicate that the presence of partners engaged in EU-environmental projects in a region has a positive and significant effect on process innovation. |
| Keywords: | innovation; environment; EU-funded research; Framework Programme; region; firm JEL classification: R11; O31; O44 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:aqr:wpaper:202409 |
| By: | Alessandro Borin (Bank of Italy); Peonare Caka (Bank of Slovenia); Gianmarco Cariola (Bank of Italy); Dennis Essers (National Bank of Belgium); Elena Gentili (Bank of Italy); Laura Lebastard (Bank of Italy); Andrea Linarello (Bank of Italy); Michele Mancini (Bank of Italy); Tullia Padellini (Bank of Italy); Ludovic Panon (Bank of Italy); Francisco Requena (University of Valencia); Jacopo Timini (Bank of Spain) |
| Abstract: | We study how disruptions to the supply of foreign critical inputs (FCIs) —defined as vulnerable inputs and key inputs for the digital and green transition —may affect value-added at different levels of aggregation. Using firmlevel customs and balance sheet data for Belgium, France, Italy, Slovenia and Spain, our framework allows us to assess how geoeconomic fragmentation may affect European economies differently. Our baseline calibration suggests that a 50% reduction in imports of FCIs from China and other countries with a similar geopolitical orientation would result in sizable losses with significant heterogeneity across firms, sectors, regions, and countries, driven by the heterogeneous exposure of firms. Our findings highlight that the short-term costs of supply disruptions of FCIs can be substantial, especially when firms cannot easily substitute away from these products. |
| Keywords: | Geoeconomic fragmentation, global value chains, global sourcing, international trade, imported inputs. |
| JEL: | F10 F14 F50 F60 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:eec:wpaper:2506 |
| By: | Fontanelli, Luca; Guerini, Mattia; Miniaci, Raffaele; Secchi, Angelo |
| Abstract: | While artificial intelligence (AI) adoption holds the potential to enhance business operations through improved forecasting and automation, its relation with average productivity growth remain highly heterogeneous across firms. This paper shifts the focus and investigates the impact of predictive artificial intelligence (AI) on the volatility of firms’ productivity growth rates. Using firm-level data from the 2019 French ICT survey, we provide robust evidence that AI use is associated with increased volatility. This relationship persists across multiple robustness checks, including analyses addressing causality concerns. To propose a possible mechanisms underlying this effect, we compare firms that purchase AI from external providers (“AI buyers”) and those that develop AI in-house (“AI developers”). Our results show that heightened volatility is concentrated among AI buyers, whereas firms that develop AI internally experience no such effect. Finally, we find that AI-induced volatility among “AI buyers” is mitigated in firms with a higher share of ICT engineers and technicians, suggesting that AI’s successful integration requires complementary human capital. |
| Keywords: | Dairy Farming, Production Economics, Research and Development/Tech Change/Emerging Technologies, Resource/Energy Economics and Policy |
| Date: | 2025–04–07 |
| URL: | https://d.repec.org/n?u=RePEc:ags:feemwp:355806 |