by Sander Gerritsen, Mark Kattenberg, Sonny Kuijpers (February, 2019)
Given the importance of education and mental health for labor market performance, we study how these outcomes are affected by the age at which refugees arrive in the country. We identify the causal impact of age at arrival by comparing siblings who share the same family background characteristics, but arrive at different ages. We find significant and meaningful impacts of age at arrival on educational attainment, but not on mental health. Arriving one year earlier increases the probability to obtain a higher educational degree by 3.6 percentage points. We find this impact to be stronger for girls than for boys. We do not find evidence suggesting that the impact of age at arrival becomes more pronounced after a specific age. Our findings carry important policy implications for the allocation of scarce resources available for integration of refugees as we show that refugee children who arrive at an older age will have substantially reduced educational outcomes compared to those who arrive at a younger age. This also implies that child refugees arriving via family reunification would benefit substantially from reductions in asylum application processing time, even if realized reductions are small.
by Féidhlim McGowan, Pete Lunn, Deirdre Robertson (February, 2019)
People underestimate long-term growth in savings because they linearise exponential growth – a phenomenon known as exponential growth bias (EGB). This bias has implications for multiple financial decisions, particularly those relating to pensions. We hypothesised that underestimation might be even more severe for regular savings relative to lump sums, because savers need also to estimate accumulation. The additional cognitive load could strengthen EGB, or individuals might underestimate accumulation in addition to EGB. Four experiments investigated: (1) whether underestimation of money growth is greater for long streams of regular savings than for lump sums; (2) whether underestimation occurs when questions are framed intuitively as the cost of delaying starting a pension; and (3) whether practice with a calculator designed to illustrate the cost of delay attenuates underestimation. Individuals were more likely to underestimate money growth from regular savings than from lump sums, because they failed to accumulate contributions in addition to displaying EGB. Underestimation was substantial and persistent. Practice with a calculator partially attenuated underestimation, primarily among individuals with higher educational attainment and without a pension. Overall, these findings imply that across multiple judgements, decisions and frames, individuals substantially underestimate money growth, reducing the attractiveness of saving.
by Paolo Fornaro, Mika Maliranta, Petri Rouvinen (February, 2019)
We study immigrants’ effects on firm-level innovativeness. Managers, innovators, and other employees are considered as separate groups both in firm employment and in local areas. For each, we estimate the effects of foreignness, the share of immigrants in each group, and diversity, while controlling for an extensive set of employment and other firm characteristics.
Pooled cross-section estimates suggest that a higher initial share of immigrant innovators is associated with a subsequently higher probability of a product innovation; the reverse holds for process innovation. In other words, product innovation benefits from a wider spectrum of innovator perspectives brought about by foreign influence, while process innovation suffers from it. The estimated effect for product innovation is modestly large but nevertheless indicates that a host of other covariates besides immigration are important for innovation. When measured by a fractionalization index, diversity among innovators does not promote product innovation. However, culturally the closest groups of migrants have a positive effect, when considered independently. Thus, in our interpretation, diversity does offer some benefits, provided that enough cultural homogeneity of the group is retained.
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16TH EUROFRAME Conference on economic policy issues in the EU ‘Greater cohesion in an increasingly fractured world: Where now for the European project?’
Time and place: 07/06/2019 in Dublin, Ireland
The EUROFRAME group of research institutes (CASE, CPB, DIW, ESRI, ETLA, IfW, NIESR, OFCE, PROMETEIA, WIFO) will hold its sixteenth annual Conference on Economic Policy Issues in the European Union in Dublin on 7 June 2019. The aim of this conference is to bring together academics, and policy-oriented economists by providing a forum for debate … Continued
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