September, 15th - Cristina Bratu (visiting @DEMM)

Firm productivity and immigrant - native earnings disparity

We study the role of firm productivity in explaining earnings disparities between immigrants and natives using population-wide matched employer-employee data from Sweden. We find substantial earnings returns to working in firms with higher persistent productivity, with greater gains for immigrants from non-Western countries. Moreover, the pass-through of within-firm productivity variation to earnings is stronger for immigrants in low-productive, immigrant-dense firms. But immigrant workers are underrepresented in high-productive firms and less likely to move up the productivity distribution. Thus, sorting into less productive firms decreases earnings in poor-performing immigrant groups that would gain the most from working in high-productive firms.

 

September, 22nd - Anita Quas (Università di Milano)

The Role of Governmental Venture Capital in the Regional Ecosystem of Innovative Start-ups

This paper analyses the impact of government venture capital (GVC) intervention on a number of features of regional ecosystems for innovative start-ups, including the availability of private VC investments, entrepreneurial activity, employment growth and innovation. Focussing on 11 European countries in the 2003-2020 period, we find a positive relationship between GVC activity and PVC activity at the regional (NUTS2) level, which is especially strong when a region has set up its own regional GVC programme. Instead, we find that the GVC activity organized by national governments are more effective when it comes to spur regional entrepreneurial activity and sustain regional employment, especially in science and technology. We do not find distinctive effect for EU-level GVC initiatives, probably due to their very recent introduction. These results provide relevant insights into how policymakers could design GVC initiatives, with the ultimate goal of effectively support innovative start-ups.

 

October, 13th - Daniele Checchi (Università di Milano)

Hours Inequality

The vast literature on earnings inequality has so far largely ignored the role played by hours of work. This paper argues that in order to understand earnings dispersion we need to consider not only the dispersion of hourly wages but also inequality in hours worked as well as the correlation between the two. We use data for the US, the UK, France, and Germany to examine the evolution of hours inequality and of the correlation between individual hours and wages, and assess their contribution to recent trends in earnings inequality. We find that, other than in the US, hours inequality is an important force, which has changed over the period under analysis (1990-2016). The elasticity of hours with respect to wages has also played a key role in the European economies. This elasticity used to be negative, thus tending to reduce inequality as those with lower hourly wages worked longer hours, but has increased over the past decades, becoming nil or positive, and hence eroding an important equalizing force. The paper examines which are the potential causes behind the change in the elasticity, notably the role of trade and labour market institutions.

 

November, 3rd - Domenico Massaro (Università di Milano)

The Impact of Growth on the Transmission of Patience

Patience affects economic growth, no news. This paper investigates the opposite causal relationship, i.e., how growth influences patience. We propose a simple theoretical framework where heterogeneous parents may choose to transmit their cultural trait - patience - to their offspring. Our model shows that parental effort to educate children to patience positively depends on economic growth. We test empirically this result using both country-level and individual data and show that, coherently with the model's prediction, growth has a significant impact on the effort to teach patience.

 

November, 17th - Lorenzo Zirulia (Università di Milano)

Social innovation as the community provision of public goods

The aim of this paper is to develop a model to analyze social innovation as the community provision of a group-specific public good. On the “demand” side, we interpret social innovation as an imperfect substitute for a “traditional” group-specific public good, produced by the government and financed by taxes. On the “supply side”, social innovation is co-produced by “suppliers” (social innovators) and “consumers” (the members of the target group) with the former being motivated by altruism in favor of the target group. Therefore, the social aspect in our view of social innovation appears both in individual preferences and in production function of social innovation, consistently with the extant literature.

 

December, 1st - Simona Gamba (Università di Milano)

Spillovers of pharmaceutical Price Regulations: evidence from the AMNOG reform in Germany

In years of growing pharmaceutical spending, regulators have exerted substantial effort in reducing the impact of this tendency. As part of their strategy, several countries have introduced External Reference Pricing (ERP). This is a mechanism through which the domestic price is linked to a benchmark price, based on publicly available pricing data from a number of foreign countries where a price has already been set. This creates potentially complex mechanisms of strategic interaction at the international level. The focus of this paper is on the spillover effects of the introduction of ERP in one country, and specifically on the impact on early adopters. We use a simple theoretical model to show that the introduction of ERP in one country may increase prices in those countries that adopt the new drug before that country and are included in its reference basket. Our empirical analysis uses a dataset of 73 cancer drugs in 21 countries, and exploits the introduction of ERP in Germany in 2011 as part of the AMNOG bill. The results confirm our theoretical predictions, thus showing that the introduction of ERP in one country may have relevant spillover effects, with the size of price increases estimated to be between 8% and 13%.

 

December, 15th - Carlo Fiorio (Università di Milano)

One step forward and three steps back: pros and cons of a flat tax reform

We use a rich administrative dataset on individual tax returns from 2008 to 2015 to analyse the behavioural and distributive effects of a flat tax (FT) reform introduced in 2011 for residential property income in Italy replacing the progressive personal income tax. Linking a panel of individual tax data with cadastral property records, and using a difference-in-difference identification strategy, we address five research questions: (i) does a FT increase the probability of declaring a positive rental income to the tax authorities? (ii) does the FT increase the declared tax base? (iii) is the reduced tax burden shared with the tenant? (iv) does the FT affect the overall tax revenue? (v) who are the gainers of the policy? The estimated intention-to-treat effects suggest that the decrease of tax evasion is limited whereas tax reduction is large, it is not shared with tenants and it mostly benefits top-income taxpayers. Overall, top 1% of property owners reap about 20% of the overall lost tax revenues.

 

February, 2nd - Alessandro Corvasce (Università di Milano)

Gentrification & Crime: Empirical Investigation Across American Cities

Gentrification is nowadays transforming vast parts of modern cities. This phenomenon is associated with displacement of extant, poorer inhabitants and other negative byproducts of affluent in-movers, disrupting the economic and demographic fabric of a neighborhood. However, there is no clear consensus as some scholars and policy makers point toward the beneficial consequences of transformed neighbourhoods. This paper studies the dynamics of criminal activities in gentrified neighbourhoods, in order to determine whether this is an actual detrimental urban transformation. The analysis exploits a new and unique data-set of geo-referenced criminal reports from 14 major American cities. Exploiting Census Data I am able to determine which areas have gentrified in the second decade of the 2000s and I found that in these areas there is a positive and significant increase in the number of crimes committed. Moreover, I estimate the effect of gentrification with state of art event study models on different types of crimes and I show that are property crimes those who face the most significant increases. Hence, my results point towards a negative effect of gentrification on neighbourhoods.

 

Thursday, March 9th - Alessio Romarri (Università di Milano)

The Politics of Asylum Seekers Allocation? Evidence from the UK 

Will the recent European refugee crisis produce lasting political consequences for receiving countries? This paper investigates the relationship between politics and refugees in the UK context, a major destination country for refugees between 2002 and 2019. Over this period, asylum seekers are assigned to different districts through a dispersal policy and have no say in their allocation. Our empirical analysis is twofold. First, we investigate whether the central government acts strategically in the placement process by testing if local political outcomes matter in the future assignment of asylum seekers. Second, we analyze if refugees' presence impact on natives voting behavior and which, if any, layer of government (national vs. local) is punished.

 

Thursday, March 16th - Vojtech Bartos (Università di Milano)

Youngism: Experimental Evidence

Preferences over well-being of other generations shape family life, economic interactions, and political outcomes. This paper documents systematic preference-based discrimination against young adults, which we refer to as “youngism”, and shows that it is partly due to an inaccurate belief that young adults face relatively little hardship. Using controlled experimental tasks implemented among a nationally representative sample in the Czech Republic, we find that people allocate substantially less money to individuals who are relatively younger, as compared to their own age group or relatively older age groups. The observed discriminatory behavior, is widespread, particularly severe among seniors, and similar in size to discrimination against immigrants and foreigners. On the constructive side, we show that this inter-generational divide can be reduced by a low-cost intervention. Most people underestimate the prevalence of mental health problems among young adults, and exogenous provision of accurate information increases prosocial behavior toward this group.

 

Thursday, March 23rd - Daniel Kreisman (DEMM - Visiting Fellow)

Tuition, Graduation, Debt, and Earnings: Learning from Small Shocks and Big Data

We ask whether the price of college affects graduation and subsequent earnings. To do so, we exploit the fact that public universities in the U.S. have different tuition schedules for in-state and out-of-state students. Because tuition changes from one year to the next can vary widely for in-state and out-of-state students within institution and cohort, we can compare across students in the same school and cohort who faced different prices but similar conditions, conditional on enrollment. We estimate these relationships using data on over 2.5m students in four-year public universities in the U.S. linked to a credit panel which provides estimates of both debt and earnings.

 

Thursday, April 20th - Luca Rossini (UniMi)

Bayesian Multivariate Quantile Regression with alternative Time-varying Volatility Specifications

This article proposes a novel Bayesian multivariate quantile regression to forecast the tail behavior of US macro and financial indicators, where the homoskedasticity assumption is relaxed to allow for time-varying volatility. In particular, we exploit the mixture representation of the multivariate asymmetric Laplace likelihood and the Cholesky-type decomposition of the scale matrix to introduce stochastic volatility and GARCH processes, and we provide an efficient MCMC to estimate them. The proposed models outperform the homoskedastic benchmark mainly when predicting the distribution's tails. We provide a model combination using a quantile score-based weighting scheme, which leads to improved performances, notably when no single model uniformly outperforms the other across quantiles, time, or variables.

 

Thursday, May 25th - Michela Rancan (UniMi)

Floods and firms: vulnerabilities and resilience to natural disasters in Europe

Combining a rich database on natural hazards, granular flood hazard maps and detailed information on firm geolocalization, we study the dynamic impacts of floods on European manufacturing firms during the period 2007-2018. We find that water damages significantly and persistently worsen firms’ performance, and may endanger their survival. An average flood deteriorates total assets by about 2% in the year after the event, and up to 5% seven years out. The drop in sales and employment is comparable. We show how reallocation of economic activity within flooded regions can reconcile our results with the 'creative destruction' hypothesis for natural disasters.

 

Thursday, June 8th - Giovanni Puccetti (UniMi)

MinCovTarget: A New Standard for Fair Allocation

 The problem of the fair allocation of indivisible items is a relevant and challenging economic problem with several applications. For small dimensional frameworks, the problem can be solved exactly by full enumeration of all the possible allocations of the items. For higher dimensional scenarios, a numerical algorithm is called for.  In this talk we present the MinCovTarget+ algorithm, we compare it with its main competitor and show that it represents a new standard solution for the problem of fair allocation of indivisible items.