15.06.2021 • 16/2021
Increase in personal contacts spurs economic activity
This summer the economic outlook in Germany is bright. As the pandemic is in retreat, the restrictions that have hampered many service activities are likely to be gradually lifted, and a strong boost in private purchases can be expected. The Halle Institute for Economic Research (IWH) forecasts that gross domestic product will increase by 3.9% in 2021 and by 4.0% in 2022. Production in East Germany is expected to increase by 3% in both years, respectively.
Oliver Holtemöller
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European Firm Concentration and Aggregate Productivity
Tommaso Bighelli, Filippo di Mauro, Marc Melitz, Matthias Mertens
Abstract
This article derives a European Herfindahl-Hirschman concentration index from 15 micro-aggregated country datasets. In the last decade, European concentration rose due to a reallocation of economic activity towards large and concentrated industries. Over the same period, productivity gains from reallocation accounted for 50% of European productivity growth and markups stayed constant. Using country-industry variation, we show that changes in concentration are positively associated with changes in productivity and allocative efficiency. This holds across most sectors and countries and supports the notion that rising concentration in Europe reflects a more efficient market environment rather than weak competition and rising market power.
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European Firm Concentration and Aggregate Productivity
Tommaso Bighelli, Filippo di Mauro, Marc Melitz, Matthias Mertens
Abstract
This article derives a European Herfindahl-Hirschman concentration index from 15 micro-aggregated country datasets. In the last decade, European concentration rose due to a reallocation of economic activity towards large and concentrated industries. Over the same period, productivity gains from reallocation accounted for 50% of European productivity growth and markups stayed constant. Using country-industry variation, we show that changes in concentration are positively associated with changes in productivity and allocative efficiency. This holds across most sectors and countries and supports the notion that rising concentration in Europe reflects a more efficient market environment rather than weak competition and rising market power.
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Measuring and Accounting for Innovation in the Twenty-First Century
Carol Corrado, Jonathan Haskel, Javier Miranda, Daniel Sichel
NBER Studies in Income and Wealth,
2021
Abstract
Measuring innovation is challenging both for researchers and for national statisticians, and it is increasingly important in light of the ongoing digital revolution. National accounts and many other economic statistics were designed before the emergence of the digital economy and the growing importance of intangible capital. They do not yet fully capture the wide range of innovative activity that is observed in modern economies.
This volume examines how to measure innovation, track its effects on economic activity and prices, and understand how it has changed the structure of production processes, labor markets, and organizational form and operation in business. The contributors explore new approaches to, and data sources for, measurement—such as collecting data for a particular innovation as opposed to a firm, and the use of trademarks for tracking innovation. They also consider the connections between university-based R&D and business startups, and the potential impacts of innovation on income distribution.
The research suggests potential strategies for expanding current measurement frameworks to better capture innovative activity, such as more detailed tracking of global value chains to identify innovation across time and space, and expanding the measurement of the GDP impacts of innovation in fields such as consumer content delivery and cloud computing.
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Introduction to "Measuring and Accounting for Innovation in the Twenty-First Century"
Javier Miranda
Measuring and Accounting for Innovation in the Twenty-First Century,
NBER Studies in Income and Wealth, Vol 78 /
2021
Abstract
Measuring innovation is challenging both for researchers and for national statisticians, and it is increasingly important in light of the ongoing digital revolution. National accounts and many other economic statistics were designed before the emergence of the digital economy and the growing importance of intangible capital. They do not yet fully capture the wide range of innovative activity that is observed in modern economies. This volume examines how to measure innovation, track its effects on economic activity and prices, and understand how it has changed the structure of production processes, labor markets, and organizational form and operation in business. The contributors explore new approaches to, and data sources for, measurement—such as collecting data for a particular innovation as opposed to a firm, and the use of trademarks for tracking innovation. They also consider the connections between university-based R&D and business startups, and the potential impacts of innovation on income distribution. The research suggests potential strategies for expanding current measurement frameworks to better capture innovative activity, such as more detailed tracking of global value chains to identify innovation across time and space, and expanding the measurement of the GDP impacts of innovation in fields such as consumer content delivery and cloud computing.
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International Emigrant Selection on Occupational Skills
Miguel Flores, Alexander Patt, Jens Ruhose, Simon Wiederhold
Journal of the European Economic Association,
No. 2,
2021
Abstract
We present the first evidence on the role of occupational choices and acquired skills for migrant selection. Combining novel data from a representative Mexican task survey with rich individual-level worker data, we find that Mexican migrants to the United States have higher manual skills and lower cognitive skills than nonmigrants. Results hold within narrowly defined region–industry–occupation cells and for all education levels. Consistent with a Roy/Borjas-type selection model, differential returns to occupational skills between the United States and Mexico explain the selection pattern. Occupational skills are more important to capture the economic motives for migration than previously used worker characteristics.
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Finance-Growth Nexus and Banking Efficiency: The Impact of Microfinance Institutions
Afsheen Abrar, Iftekhar Hasan, Rezaul Kabir
Journal of Economics and Business,
March-April
2021
Abstract
This paper investigates the relative importance of microfinance institutions (MFIs) at both the macro (financial development, economic growth, income inequality, and poverty) and micro levels (efficiency of traditional commercial banks). We observe a significant impact on most of the fronts. MFIs’ participation increases overall savings (total bank deposits) and credit allocation (loans to private sector) in the economy. Their involvement enhances economic welfare by reducing income inequality and poverty. Additionally, their active presence helps to discipline the traditional commercial banks by subjecting them to more competition triggering higher efficiency.
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Power Generation and Structural Change: Quantifying Economic Effects of the Coal Phase-out in Germany
Katja Heinisch, Oliver Holtemöller, Christoph Schult
Energy Economics,
2021
Abstract
In the fight against global warming, the reduction of greenhouse gas emissions is a major objective. In particular, a decrease in electricity generation by coal could contribute to reducing CO2 emissions. We study potential economic consequences of a coal phase-out in Germany, using a multi-region dynamic general equilibrium model. Four regional phase-out scenarios before the end of 2040 are simulated. We find that the worst case phase-out scenario would lead to an increase in the aggregate unemployment rate by about 0.13 [0.09 minimum; 0.18 maximum] percentage points from 2020 to 2040. The effect on regional unemployment rates varies between 0.18 [0.13; 0.22] and 1.07 [1.00; 1.13] percentage points in the lignite regions. A faster coal phase-out can lead to a faster recovery. The coal phase-out leads to migration from German lignite regions to German non-lignite regions and reduces the labour force in the lignite regions by 10,100 [6300; 12,300] people by 2040. A coal phase-out until 2035 is not worse in terms of welfare, consumption and employment compared to a coal-exit until 2040.
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Regional Effects of Professional Sports Franchises – Causal Evidence from Four European Football Leagues
Matthias Brachert
Regional Studies,
No. 2,
2021
Abstract
The locational pattern of clubs in four professional football leagues in Europe is used to test the causal effect of relegations on short-run regional development. The study relies on the relegation mode of the classical round-robin tournament in the European model of sport to develop a regression-discontinuity design. The results indicate small and significant negative short-term effects on regional employment and output in the sports-related economic sector. In addition, small negative effects on overall regional employment growth are found. Total regional gross value added remains unaffected.
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The Viral Effects of Foreign Trade and Supply Networks in the Euro Area
Virginia di Nino, Bruno Veltri
IWH-CompNet Discussion Papers,
No. 4,
2020
Abstract
Containment measures of COVID-19 have generated a chain of supply and demand shocks around the globe with heterogeneous fallout across industries and countries. We quantify their transmission via foreign trade with a focus on the euro area where deep firms integration within regional supply chains and strong demand linkages act as a magnification mechanism. We estimate that spillover effects in the euro area from suppression measures in one of the five main euro area countries range between 15-28% the size of the original shock; negative foreign demand shocks depress euro area aggregate activity by about a fifth the size of the external shock and a fourth of the total effect is due to indirect propagation through euro area supply chain. Last, reopening to regional tourism softened the contraction of aggregate activity due to travel and tourism bans by about a third in the euro area. Our findings suggest that enhanced coordination of recovery plans would magnify their beneficial effects.
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