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Productivity gains from services liberalization in Europe
Bena, Jan ; Ondko, Peter ; Vourvachaki, E.
As part of the Single Market Program the European Commission commanded the liberalization and regulatory harmonization of utilities, transport and telecommunication services. This paper investigates whether and how this process affected the productivity of European network firms. Exploiting the variation in the timing and degree of liberalization efforts across countries and industries, we find that liberalization increased firm-level productivity but had no reallocation impact. Based on our estimates, the average firm-level productivity gain from liberalization amounts to 38 percent of the average total within-firm productivity gain in network industries. The results underscore the growth-promoting role of liberalization efforts.
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Why don’t migrants with secondary education return?
Ivanova, Renata ; Jeong, Byeongju
The paper attempts to explain a U-shaped pattern of return migration rates with respect to educational attainment. We develop a two period OLG model with emigration and return migration decisions undertaken by agents heterogeneous in terms of educational attainment. The immigration policy is considered as an additional determinant for the migration decision. The model predicts that the combination of two forces - relative returns to schooling and uncertain opportunities for status adjustment - results in favorable conditions for migrants with secondary education to remain abroad permanently.
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The effect of low corporate tax rate on payroll tax evasion
Madzharova, Boryana
It is a commonly held view that the widespread policy of cutting the corporate income tax has a positive effect on taxable income through decreasing firms' incentive to hide profits. A neglected side of this policy, however, is its potential to trigger more evasion in other tax bases, such as the social security base, especially if the corporate income tax rate is low compared to the payroll rate. We develop a model in which employers and employees cooperate in declaring lower wages to the tax authorities in order to evade payroll contributions.
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Understanding the resource impact using matching
Aliyev, Ilkin
We investigate the resource impact on economic growth using matching. Using a nonparametric minimum-distance matching method, we match the countries according to their observable characteristics, and estimate the relative growth rates of each matched pair. This way we are able to analyze the impact of the resources on relative growth rates, rather than on absolute growth rates as it has been done in the literature. Assuming correlation between observables and unobservables, the matching based on observables may control for unobservables as well. If this assumption is satisfied, matching allows us to control for more variables and to single out the direct effect of the resource abundance variable.
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Effects of parental background on other-regarding preferences in children
Bauer, Michal ; Chytilová, J. ; Pertold-Gebicka, Barbara
Other-regarding preferences are central for the ability to solve collective action problems and thus for society’s welfare. We study how the formation of other-regarding preferences during childhood is related to parental background. Using binary-choice dictator games to classify subjects into other-regarding types, we find that children of less educated parents are less altruistic and more spiteful. This link is robust to controlling for a range of child, family, and peer characteristics, and is attenuated for smarter children. The results suggest that less educated parents are either less efficient to instill social norms or their children less able to acquire them.
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Rational inattention to discrete choices: a new foundation for the multinomial logit model
Matějka, Filip ; McKay, A.
Often, individuals must choose among discrete alternatives with imperfect information about their values, such as selecting a job candidate, a vehicle or a university. Before choosing, they may have an opportunity to study the options, but doing so is costly. This costly information acquisition creates new choices such as the number of and types of questions to ask the job candidates. We model these situations using the tools of the rational inattention approach to information frictions (Sims, 2003).
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