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on Microeconomic European Issues |
| By: | Bossler, Mario (Institute for Employment Research (IAB), Nuremberg); Chittka, Lars (Destatis); Schank, Thorsten (University of Mainz) |
| Abstract: | We present the first empirical evidence on the 22 percent increase in the German minimum wage, implemented in 2022, raising it from € 9.82 to € 10.45 in July and to € 12 in October. Leveraging the German Earnings Survey, a large and novel data source comprising around 8 million employee-level observations reported by employers each month, we apply a difference-in-difference-in-differences approach to analyze the policy's impact on hourly wages, monthly earnings, employment, and working hours. Our findings reveal significant positive effects on wages, affirming the policy's intended benefits for low-wage workers. Interestingly, we identify a negative effect on working hours, mainly driven by minijobbers. The hours effect results in an implied labor demand elasticity in terms of the employment volume of −0.2 which only partially offsets the monthly wage gains. We neither observe a negative effect on the individual's employment retention nor the regional employment levels. |
| Keywords: | minimum wage, labor market effects, empirical evaluation, Germany |
| JEL: | J38 J31 J21 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17575 |
| By: | Sallam, Hend; Christl, Michael |
| Abstract: | This study quantifies the direct average net fiscal impact (ANFI) of migration in Germany, taking into account both indirect taxes and in-kind benefits such as health and education spending. Using a status quo approach with data from the German Socio-Economic Panel (SOEP) for 2018 and microsimulation techniques to impute both indirect taxes and in-kind benefits, our results show that migrants, especially first-generation migrants, have a more favorable net fiscal impact on average compared to natives. However, we demonstrate that this result is mainly driven by the favourable age structure of migrants. When controlling for demographic differences between these groups, we show that second-generation migrants contribute very similarly to natives to the German welfare state. Nevertheless, both natives and second-generation migrants, respectively, contribute more than first-generation migrants. These differences persist even when we do not account for indirect taxes and benefits-in-kind. |
| Keywords: | immigration, net fiscal impact, public finances, tax-benefit system |
| JEL: | F22 H24 H50 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1530 |
| 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 |
| By: | Courtney Coile (Institute for Fiscal Studies); Jonathan Cribb (Institute for Fiscal Studies); Carl Emmerson (Institute for Fiscal Studies); Laurence O'Brien (Institute for Fiscal Studies) |
| Date: | 2025–01–06 |
| URL: | https://d.repec.org/n?u=RePEc:ifs:ifsewp:25/01 |
| By: | Hugo Reis; Pedro Carneiro; Alessandro Toppeta |
| Abstract: | Generous maternity leave, affordable daycare, extensive social safety nets, excellent universal health care, and high-quality public schools, are all notable features of Nordic countries. There is a widespread belief that such strong public investments in children contribute to a levelled playing field and promote social mobility. However, gaps in learning outcomes between children of rich and poor parents remain as high in Nordic countries as elsewhere in Europe. One explanation for this paradox is that the equalizing impacts of public investments are undone by parental investments in children of rich and poor families, which are as unequal in Nordic countries as in the rest of the European continent. |
| JEL: | J62 D63 I21 J24 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ptu:wpaper:w202407 |
| By: | Mr. Luis Brandão-Marques; Hasan H Toprak |
| Abstract: | Industrial policy is once again at the forefront of the policy debate around the world. However, state aid is a contentious issue in the European Union given the need to maintain a level playing in its single market. This paper estimates the effects of state aid between 2016 and 2023 on listed nonfinancial firms in Belgium, France, Germany, the Netherlands, Spain, and the United Kingdom (until 2020) using a high-frequency identification approach to address endogeneity. It finds that firms that receive state aid increase employment and revenue, but not investment or labor productivity. Moreover, it finds that there are adverse spillover effects to competing firms that significantly undo any positive own effects. These findings suggest that, should there be a case for providing state aid to firms in the European Union, this should be done at the European level instead of the member state level to mitigate adverse spillovers. Pooling resources and competitively allocating aid across the Union could preserve market competition, encourage firm entry, and ensure a more efficient distribution of funds. |
| Keywords: | Industrial policy; firm performance; state aid; spillovers |
| Date: | 2024–12–16 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/250 |
| By: | Hugo Reis; Joop Hartog; Pedro Raposo |
| Abstract: | We estimate a dynamic model of individual labour market careers (turnover and search, wage development) on Portuguese panel data of graduates from vocational and general secondary education. We find that vocational graduates benefit more from the internal labour market than from the external market. This holds even more for mature than for young individuals. This hurts as among the mature, vocational has higher lay-off probability. To the common result that vocational education trades early employment advantage for later disadvantage we add a decomposition of employment status in its dynamic components. To the literature on wage effects we add a breakdown of variances in heterogeneity and risk. |
| JEL: | J3 J64 I26 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ptu:wpaper:w202405 |
| By: | Kagerl, Christian (Institute for Employment Research (IAB), Nuremberg, Germany) |
| Abstract: | "I study the ramifications of the German short-time work (STW) scheme using novel administrative data on STW and drawing on evidence from establishment surveys that are linked to the administrative data. I show that, besides financial reasons, firms value and use STW because it allows them to hoard labor in a tight labor market. During the pandemic, I document a strong negative selection into STW based on measures of firm quality and productivity, a pattern not observed during the financial crisis. This selection pattern is explained by the differing types of crises and their impact on establishments. Adjusting for selection, I then investigate the employment effects of STW in the pandemic and find 3-4% higher employment levels for firms utilizing STW. This relationship, however, vanishes quickly after firms exit STW, a result driven by outflows among STW firms being initially lower, but being higher after the end of STW. Partly due to eased access rules, I additionally find that the policy’s windfall effects, or deadweight losses, are large: While back-of-the-envelope calculations suggest that up to half a million jobs were saved by STW in 2020, millions of jobs were supported in total, indicating an insufficient degree of targeting." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | Bundesrepublik Deutschland ; Pandemie ; IAB-Datensatz BeCovid ; IAB-Open-Access-Publikation ; Auswirkungen ; Beschäftigungseffekte ; Beschäftigungsentwicklung ; Determinanten ; Finanzkrise ; IAB-Betriebs-Historik-Panel ; IAB-Betriebspanel ; Kurzarbeit ; Kurzarbeitergeld ; Mitnahmeeffekte ; Arbeitskräftehortung ; Umsatzentwicklung ; Unternehmen ; Arbeitsplatzsicherheit ; Arbeitsproduktivität ; 2009-2022 |
| JEL: | E24 J20 J65 J68 |
| Date: | 2024–11–12 |
| URL: | https://d.repec.org/n?u=RePEc:iab:iabdpa:202414 |
| By: | Herget, Anna (University of Erlangen-Nuremberg); Riphahn, Regina T. (University of Erlangen-Nuremberg) |
| Abstract: | Many countries subsidize low-income employments or small jobs. These subsidies and their phasing out can generate labor market frictions and distort incentives. The German Minijob program subsidizes low-income jobs. It generates a 'Minijob trap' with substantial bunching along the earnings distribution. Since 2003, the newly introduced Midijob subsidy aims to reduce the Minijob-induced notch in the net earnings distribution. Midijobs reduce payroll taxes for employments above the Minijob earnings ceiling. We investigate whether introducing Midijobs reduced the Minijob trap. We apply a regression discontinuity design using administrative data and a difference-in-differences estimation using survey data. While in both cases our results show a small positive overall effect of Midijobs on transitions out of Minijobs, they are effective only for a narrow treatment group. |
| Keywords: | Midijobs, Minijobs, payroll tax subsidy, causal effects, difference-in-differences, regression discontinuity, SOEP, SIAB |
| JEL: | J21 J38 H24 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17587 |
| By: | MARIOTTI Ilaria; SASSO Simone (European Commission - JRC) |
| Abstract: | The European Commission has increasingly highlighted the importance of fostering conditions that support the emergence and flourishing of innovation and entrepreneurship across all regions. The Long-Term Vision for EU’s Rural Areas recognises the key role that innovation can play in revitalising these territories and transforming them into places of opportunity, while the New European Innovation Agenda emphasises the need to accelerate and strengthen innovation across the EU and thereby address the existing territorial innovation divide. This report, which is part of the Startup Village Forum’s research activities, analyses successful initiatives, supported by public policies or private efforts, which focus on attracting, training or retaining human capital to bolster entrepreneurial and innovation ecosystems in European non-urban areas. The analyzed initiatives - selected for their sustainability, resilience, replicability, inclusivity, cohesiveness, and urban-rural networks - have been promoted by public actors in Ireland (Connected Hubs), Spain (RAISE Youth) and Sweden (Lärcentrum), and by private ones in Portugal (Rural Move) and Italy (Incubatore SEI). They vary widely in terms of their typology, objectives, operational approaches, target groups, services provided, and implementation periods. They leverage urban-rural networks, thus enhancing brain circulation and brain bank. The countries hosting these initiatives present a heterogeneous distribution of tertiary education across cities, towns and suburbs, and rural areas, highlighting a north-south divide. The study shows that all the initiatives have been supported by urban-rural networks and have enhanced the inclusiveness of people coming from outside the area. Additionally, it reveals that key elements for their success, apart from the participation in urban-rural networks, include close collaboration with higher educational institutions, engagement with public institutions, and robust political support across different tiers of government. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc138968 |
| By: | Andersson, Fredrik W. (Statistics Sweden); Wadensjö, Eskil (Stockholm University) |
| Abstract: | The number of immigrants to Sweden has increased significantly in the last two decades. In 1990, 9 percent of the population was born abroad. Just over 60 percent of them were born in Finland, Norway and Denmark. Thirty years later, the corresponding figure of foreign born is 20 percent. The composition has also changed. Many have arrived as refugees mainly from countries outside Europe until the great wave of refugees from Ukraine in 2022. We concentrate in this article on one group, those who have come from Afghanistan, and examined how it has gone for them to establish themselves in the labour market in Sweden. |
| Keywords: | Swedish labour market, employment, migrants, Afghanistan |
| JEL: | F22 J15 J21 J60 J61 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17562 |
| By: | Sousso Bignandi (ULiège); Cédric Duprez (Economics and Research Department, National Bank of Belgium); Céline Piton (Economics and Research Department, National Bank of Belgium) |
| Abstract: | This paper investigates the effects of digitalisation on firm-level employment and workforce composition in Belgium from 2003 to 2019, using a novel dataset that merges ICT expense data with administrative employment records. We find that digitalised firms experienced higher employment growth relative to non-digitalised firms, driven by both increased hiring and higher retention rates. The effect is particularly pronounced in large firms and reflects both faster employment growth in expanding firms and slower declines in shrinking firms. Digitalisation also significantly altered workforce composition, leading to a decrease in the share of low-educated workers and an increase in the share of highly educated workers, alongside shifts in the age distribution towards middle-aged workers. Our analysis employs a long-difference regression approach, well suited to capturing the gradual nature of ICT investments. While endogeneity concerns prevent causal interpretation, we show robust correlations between digitalisation and employment growth. The study contributes to the literature by providing a granular measure of digitalisation at firm level, offering new insights into the dynamics of worker turnover and sectoral differences, and by shedding light on the heterogeneous impact of digitalisation across worker education levels and age groups. |
| Keywords: | Digitalisation, employment, firms |
| JEL: | D22 D25 J21 J24 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbb:reswpp:202410-463 |
| By: | Bagues, Manuel (University of Warwick); Villa, Carmen (University of Warwick and Institute for Fiscal Studies) |
| Abstract: | Over the past decades, many European countries have raised the minimum legal drinking age (MLDA) from 16 to 18 years. This study provides novel evidence of the impact of this policy on educational outcomes by exploiting the staggered timing of MLDA changes across Spanish regions. Raising the MLDA decreased alcohol consumption among adolescents aged 14–17 by 8 to 18% and improved their exam performance by 4% of a standard deviation. This effect appears driven by alcohol’s direct impact on cognitive ability, as we find no significant changes in potential mediators like use of other substances or time spent on leisure activities, including socialising, sports, gaming, or internet use. We also observe a decrease in tranquilliser and sleeping pill use, suggesting improved mental health. Our findings indicate that reducing teenage alcohol consumption represents a significant opportunity to improve educational outcomes in Europe, where youth drinking rates remain notably high. |
| Keywords: | alcohol ; adolescence ; minimum legal drinking age ; PISA JEL Codes: I18 ; I12 ; I21 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1529 |
| By: | Flintz, Joschka |
| Abstract: | This study quantifies the effect of train station openings on residential house prices across Germany over a 12-year period to provide generalizable evidence on the valuation of access to passenger rail by households. It is based on data on about 90 train station openings between 2009 and 2020 in Germany and a Differencein-Differences model that uses three different control group variants to cover alternative assumptions about unobserved regional heterogeneity to mitigate problems arising from endogenous transport infrastructure provision. The results indicate that train station openings increase residential house prices on average by 5% (€18, 000) within a distance of up to two to three kilometers. Notably, these positive effects are observed exclusively for properties without prior access to passenger rail services, and are significantly larger in more densely populated and urban areas. |
| Abstract: | Diese Studie quantifiziert die Auswirkungen von Bahnhofseröffnungen auf die Wohnimmobilienpreise in Deutschland über einen Zeitraum von 12 Jahren, um verallgemeinerbare Erkenntnisse über die Bewertung des Zugangs zum Schienenpersonenverkehr durch Haushalte zu gewinnen. Sie basiert auf Daten zu etwa 90 Bahnhofseröffnungen zwischen 2009 und 2020 in Deutschland und einem Differenz-in-Differenzen-Modell, das drei verschiedene Kontrollgruppenvarianten verwendet, um alternative Annahmen über unbeobachtete regionale Heterogenität abzudecken und Probleme, die sich aus der endogenen Bereitstellung von Verkehrsinfrastruktur ergeben, zu mildern. Die Ergebnisse zeigen, dass die Eröffnung von Bahnhöfen die Preise für Wohnimmobilien in einer Entfernung von bis zu zwei bis drei Kilometern im Durchschnitt um 5 % (18.000 €) erhöht. Bemerkenswert ist, dass diese positiven Effekte ausschließlich für Immobilien ohne vorherigen Zugang zum Schienenpersonenverkehr beobachtet werden und in dichter besiedelten und städtischen Gebieten deutlich größer sind. |
| Keywords: | Public transportation, regional passenger rail, hedonic price model, difference-in-differences, spatio-temporal analysis |
| JEL: | C23 R21 R40 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwirep:306843 |
| By: | Andrew Hodge; Mr. Roberto Piazza; Fuad Hasanov; Xun Li; Maryam Vaziri; Mr. Atticus Weller; Yu Ching Wong |
| Abstract: | European countries are increasingly turning to industrial policy to address the challenge of geopolitical fragmentation, enhance productivity, and accelerate the green transition. Well-targeted industrial policy has the potential to correct market failures and support production efficiency by exploiting scale effects and internalizing knowledge externalities. But even the most carefully designed unilateral industrial policies risk generating negative production externalities in other countries, and, under certain conditions, may not even be welfare-enhancing for the implementing country. The reason is that negative externalities of unilateral industrial policy can drive European and international production patterns away from underlying comparative advantages, create regional or global over-supply, and result in changes in terms of trade that reduce domestic welfare. This suggests significant benefits from coordination. Structural modeling and case studies show that a coordinated approach within the European Union and with international trading partners on a narrowly defined and carefully designed set of industrial policies could unlock untapped benefits. Closer European integration would facilitate the adjustment of firms and workers to coordinated and well-targeted industrial policies and amplify their benefits. |
| Keywords: | Industrial policy; European Single Market; State Aid |
| Date: | 2024–12–16 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/249 |