Template-type: ReDIF-Paper 1.0 Author-Name: Delia Furtado Author-Name: Kerry L. Papps Author-Name: Nikolaos Theodoropoulos Title: Who Goes on Disability when Times are Tough? The Role of Work Norms among Immigrants Classification-JEL: H55, J61, I18, J15 Keywords: Disability Insurance; Social Norms; Unemployment Rates; Immigrants Abstract: We examine how work norms affect Social Security Disability Insurance (SSDI) take-up rates in response to worsening economic conditions. By focusing on immigrants in the US, we can consider the influence of work norms in a person’s home country, which we argue are exogenous to labor market prospects in the US. We find that the probability of receiving SSDI is more sensitive to economic downturns among immigrants from countries where people place less importance on work. We also provide evidence that this result is not driven by differential sensitivities to the business cycle or differences in SSDI eligibility. Length: 53 pages Creation-Date: 2021-03 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/01-2021.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:01-2021 Template-type: ReDIF-Paper 1.0 Author-Name: Panayiota Lyssiotou Title: Can Targeted Child Benefits Affect Fertility? Evidence from a Natural Experiment Classification-JEL: D12, J13, J18, H31, J11 Keywords: fertility, child benefits, financial incentives, unbalanced sex ratios, female labour force participation Abstract: This paper contributes to the literature on whether targeted cash child benefits can affect fertility and, specifically, induce families to have more than two children. We exploit the introduction of a monthly non-means tested cash child benefit paid only to families with at least four children. We apply a quasi experimental methodology since the reform is expected to have increased births of fourth child relative to births of third child or higher than four. We find robust evidence that the reform increased significantly the treated family’s probability to have a (fourth) child by about 5% and had no effect on births greater than four. In the post reform period, the control group’s probability to have a (third) child was not significantly different than before the reform. In particular, the finding that the probability of birth among parities greater than four was not affected by the reform supports that what we are estimating is a response of the targeted family to the introduction of the child benefit and not a change in the fertility preferences of families with many children. Other changes (besides the reform) had a negative effect on the probability to have a child that was reversed only for the birth of fourth child among treated families due to the economic incentives created by the reform. Length: 45 pages Creation-Date: 2021-04 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/02-2021.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:02-2021 Template-type: ReDIF-Paper 1.0 Author-Name: Snezana Eminidou Author-Name: Martin Geiger Author-Name: Marios Zachariadis Title: Public Debt and state-dependent Effects of Fiscal Policy in the Euro Area Classification-JEL: E62, E3, H63, H3 Keywords: government spending, shock, debt-to-gdp, output, consumption, inflation, credit constraints, expectations Abstract: We investigate public debt related state dependencies in the impact of fiscal policy shocks on the macroeconomy for a panel of fifteen euro area economies during the period from 2000:Q1 to 2019:Q4. Our estimated impulse response functions suggest that the impact of fiscal policy shocks varies depending on the level of public debt characterizing an economy. We observe that differences in the time-serial as well as in the cross-sectional dimension play an important role driving the impact of fiscal policy. In the high-debt cross sectional state, output, consumption and inflation, as well as consumption intentions and inflation expectations, go up in response to a positive government spending shock, and these responses are distinctly different from those in the low-debt state. Using an extended model that considers simultaneously time-serial and cross-sectional high- and low-debt states, our results suggest that cross-sectional debt variation is more important in driving cross-country differences in the responses to expenditure shocks across the euro area. Length: 43 pages Creation-Date: 2021-05 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/03-2021.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:03-2021 Template-type: ReDIF-Paper 1.0 Author-Name: Stylianos Papageorgiou Author-Name: Dimitrios Xefteris Title: A Collective Investment in Financial Literacy by Heterogeneous Households Classification-JEL: G53, D72, H52 Keywords: financial literacy, electoral competition, ends-against-the-middle, differentiated candidates Abstract: Skills obtained by a national strategy, plus intrinsic skills, contribute to each household's financial literacy, which is shown to determine whether and to what extent a household invests. Ends-against-the-middle preferences arise as to the strategy's funding: Households with too low or too high total skills have a decreasing utility, as opposed to households with moderate skills. Moreover, the property of single-peaked preferences is violated. Our central result is that, despite the lack of well-behaved preferences, competing office-motivated political candidates propose the same-efficient-funding level under plausible assumptions, including that they are sufficiently differentiated about issues other than financial literacy. Length: 31 pages Creation-Date: 2021-07 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/04-2021.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:04-2021 Template-type: ReDIF-Paper 1.0 Author-Name: Panayiota Lyssiotou Author-Name: Elena Savva Title: Labor Supply Responses to Income Tax Free and Bracket Expansions Classification-JEL: H24, H31, J16, J22, J38, J61 Keywords: labor supply of men and women, income taxation, foreign workers, gender equality; labor market integration Abstract: This paper contributes to the labor supply literature by focusing on how middle earners respond to financial incentives and whether the responses are different between men and women. We exploit substantial expansions in the level of individual income exempt from taxation and taxed at a lower marginal tax rate while the schedule of marginal tax rates remained the same. These tax revisions improved the financial incentives to work, in particular for individuals in the middle of the income distribution. We find robust evidence that the tax reforms increased significantly the wages of medium and high educated married males and females. They also had a positive impact on work participation that was more substantial for married women, especially the medium educated. We estimate significant positive own wage labor supply elasticities that are about the same for men and women when we condition on the labor outcome effects of inflows of EU and non-EU foreign workers, which changed the skill distribution of the economy and had a more significant impact on female labor outcomes. Length: 38 pages Creation-Date: 2021-10 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/05-2021.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:05-2021 Template-type: ReDIF-Paper 1.0 Author-Name: David M. Brasington Author-Name: Marios Zachariadis Title: Government spending and economic activity: Regression discontinuity evidence from voting on renewals of tax levies Classification-JEL: E62, H72, R11 Keywords: Fiscal policy, balanced budget, redistribution, inequality Abstract: We estimate the impact of plausibly exogenous changes in taxes and government spending on income by utilizing regional data and a regression discontinuity design. More specifically, we identify an exogenous cut in local taxes accompanied by an equivalent reduction in local government spending by exploiting voting on renewals of tax levies of local governments in Ohio from 1991 to 2018, using a unique database that tracks city and village-level incomes and local election outcomes over time for the complete census of cities and villages in the state. We find that such “balanced budget” reductions in taxes and spending cause a large drop in local incomes that persists for two or three years before petering out. Importantly, this effect of local tax-financed government spending is present in locations with above average income inequality but not in those with low income inequality. Our results regarding the effect of locally tax-financed government spending on income are suggestive of the importance of mechanisms related to the prevalence of income heterogeneity and liquidity constrained agents in the local economy. Length: 45 pages Creation-Date: 2021-11 Revision-Date: 2020-12-06 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/06-2021.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:06-2021