nep-eec New Economics Papers
on European Economics
Issue of 2004‒12‒20
twelve papers chosen by
Giuseppe Marotta
Universitá di Modena e Reggio Emilia

  1. Determinants Of Entrepreneurship In Europe By Grilo, I.; Thurik, A.R.
  2. Building a Panel Survey on Health, Aging and Retirement in Europe By Axel Börsch-Supan, Hendrik Jürges and Oliver Lipps
  3. Unemployment, wages and collective bargaining in the European Union By Eckhard Hein; Thorsten Schulten
  4. A Joint Estimation of Price-Cost Margins and Sunk Capital - Theory and Evidence from the European Electricity Industry By Roeger, Werner; Warzynski, Frédéric
  5. Assessing the economic implications of Turkish accession to the EU By A.M. Lejour; R.A. de Mooij; C.H. Capel
  6. Legislating for Equality:The Implementation of the EU Equality Acquis in Central and Eastern Europe By Amanda Sloat
  7. Employment and Population in European Union: Econometric Models and Causality Tests. By Aguayo, Eva; Guisan, Maria-Carmen
  8. Wage trends and deflation risks in Germany and Europe By Eckhard Hein; Thorsten Schulten; Achim Truger
  9. Economic Growth and Cycles in Poland, Hungary, Czech Republic, Slovakia and Slovenia: A comparison with Spain, Austria and other EU countries, 1950-2002 By Guisan, Maria-Carmen; Aguayo, Eva; Carballas, David
  10. Are There Gender and Country of Origin Differences in Immigrant Labor Market Outcomes across European Destinations? By Adsera, Alicia; Chiswick, Barry R.
  12. Multilateral Aggregation-Theoretic Monetary Aggregation over Heterogeneous Countries By William A. Barnett

  1. By: Grilo, I.; Thurik, A.R. (Erasmus Research Institute of Management (ERIM), Erasmus University Rotterdam)
    Abstract: This paper uses an Eclectic Framework explaining entrepreneurship incorporating different streams of literature and spanning different disciplines. The Eclectic Framework integrates factors shaping the demand for entrepreneurship on the one hand, with those influencing the supply of entrepreneurs on the other hand. It also creates insight into the role of public policy identifying the channels through which the demand or the supply of entrepreneurship can be shifted. In its empirical part the present paper estimates a multinomial logit using survey data from the 15 EU member states, Norway, Iceland, Liechtenstein and the US to establish the effect of demographic and other variables on various entrepreneurial engagement levels. Data of two Entrepreneurship Flash Eurobarometer surveys (2003 and 2004) containing over 20,000 observations are used. Other than demographic variables, the set of explanatory variables used includes the perception by respondents of administrative complexities, of availability of financial support, a rough measure of risk tolerance, the respondents? preference for self-employment and country specific effects. The most striking result is that the perception of lack of financial support has no discriminative effect across the various levels of entrepreneurial engagement.
    Keywords: Entrepreneurship;determinants;nascent entrepreneurship;multinomial logit;barriers to entry;
    Date: 2004–12–10
  2. By: Axel Börsch-Supan, Hendrik Jürges and Oliver Lipps (Mannheim Research Institute for the Economics of Aging (MEA))
    Abstract: Ageing is one of the greatest social and economic challenges of the 21st century in Europe. SHARE, a EU-sponsored project that will build up a Survey of Health, Aging and Retirement in Europe, will be a fundamental resource for science and public policy to help mastering this unprecedented challenge. The main aim of SHARE is to create a pan-European interdisciplinary panel data set covering persons aged 50 and over. The project brings together many disciplines, including epidemiology, sociology, statistics, psychology, demography, and economics. Scientists from some 15 countries work on feasibility studies, experiments, and instrument development, culminating in a survey of about 22.000 individuals. The multidisciplinary nature of the data will provide new insights in the complex interactions between economic, health, psychological and social factors determining the quality of life of the elderly.
    Date: 2003–07–05
  3. By: Eckhard Hein (WSI in der Hans Boeckler Stiftung); Thorsten Schulten (WSI in der Hans Boeckler Stiftung)
    Abstract: The paper questions the predominant view on unemployment and wages in the European Un-ion according to which high unemployment is primarily caused by labour market rigidities, i.e. social institutions and regulations which prevent “market-clearing” real wage levels and structures. It is shown that the foundations of that view coming either from neo-classical or new-Keynesian theory are not convincing, neither theoretically nor empirically. Analysing the developments in the EU during the last four decades, no strictly inverse relationship between real wage growth and unemployment can be found. On the contrary, persistently high unem-ployment has had strong adverse effects on nominal wage growth and on the labour income share. Weakened labour union bargaining power and changing collective bargaining strategies have contributed to this result. It is therefore concluded that the current EU economic and employment policies aiming at further wage restraint, wage differentiation and decentralisa-tion of collective bargaining are deeply misguided and have to be replaced by an alternative wage policy in Europe as part of a growth and employment oriented coordination of macro-economic policies.
    Keywords: European employment policy, wage theory, wage trends, collective bargaining
    JEL: E24 J50
    Date: 2004–12–10
  4. By: Roeger, Werner (European Commission); Warzynski, Frédéric (Department of Economics, Aarhus School of Business)
    Abstract: In this paper, we propose a new methodology to jointly estimate market power and the importance of sunk capital extending the work of Hall (1988) and Roeger (1995). We then apply this new technique to the European electricity industry using firm level data for the period 1994-1999, and analyze the impact of the 1996 European directive to liberalize electricity markets. We find that the average price cost margin has declined from 0.29 in 1994 to 0.22 in 1999. Moreover, the magnitude of the decline is linked to firm size: the largest firms have experienced a larger percentage fall. The variable cost parameter has increased from 0.36 in 1994 to 0.56 in 1999. The main reason of the change is the switch of the relationship between real labor productivity and the share of variable capital. Our results therefore document a more competitive electricity market and a more flexible and more efficient use of capital.
    Keywords: market power; fixed capital; liberalization; electricity market
    JEL: D24 D40 L94
    Date: 2004–12–10
  5. By: A.M. Lejour; R.A. de Mooij; C.H. Capel
    Abstract: We explore the economic implications of the possible Turkish accession to the European Union. We focus on three main changes associated with Turkish membership: (i) accession to the internal European Market; (ii) institutional reforms in Turkey triggered by EU membership; and (iii) migration in response to the free movement of workers. <P> Overall, the macroeconomic implications for EU countries are small but positive. This is caused by cheaper imports and the benefits from trade creation. Dutch exports increase by around 20% (550 million euro). Turkey experiences larger economic gains than the EU: consumption per capita is estimated to rise by about 4% as a result of accession to the internal market and free movement of labour. <P> If Turkey would succeed in reforming its domestic institutions in response to EU membership, economic growth in Turkey could increase more. In particular, tentative estimates suggest that consumption per capita in Turkey could raise by an additional 9%. These benefits would spill over to the EU. For instance, Dutch exports to Turkey would rise by another 1.8 billion euro and income by 500 million euro.
    Keywords: Turkey; europe; EU; EU enlargement; trade; gravity equation; applied general equilibrium model; AGE model; migration; regional economics; regional economic integration
    JEL: F13 F15 F22
    Date: 2004–03
  6. By: Amanda Sloat
    Abstract: The most recent enlargement of the European Union, which incorporated post-communist countries from Central and Eastern Europe (CEE), placed relatively little emphasis on the equal opportunities of men and women. However, acceding countries were required to implement Chapter 13 (&lsquo;Employment and social affairs&rsquo;) of the acquis communautaire , which includes legislative provisions promoting gender equality in the workplace. This paper considers the extent to which the equality acquis has been transposed, implemented, and enforced in ten CEE countries. It begins by examining the pre-89 equality infrastructure, which provides a comparative basis for the paper&rsquo;s substantive analysis of the implementation of the ten equality directives. In particular, it discusses the legal mechanisms used to implement the legislation, evaluates whether pre-89 provisions have been strengthened or weakened, and highlights remaining problems in harmonisation. Next, the paper evaluates awareness of the equality directives among women, employers and judges. It analyses the enforcement of these directives by labour inspectorates and ombudspersons, while also noting the limited case law. It then examines relations between CEE governments and both NGOs and trade unions, considering whether these bodies are promoting awareness and enforcement of the equality legislation. In conclusion, the paper argues that legislative harmonisation has legitimised women&rsquo;s claim to genuine equality but has made only a marginal change in practice as women remain numerically weaker than men and hold less favourable positions in most areas.
    Keywords: Europeanization; implementation; post-Communism; transition processes; acquis communautaire; directives; harmonisation; gender policy; employment policy; EU-East-Central Europe; enlargement; law; political science; Czech Republic; Estonia; Hungary; Latvia; Lithuania; Poland; Romania; Slovakia; Slovenia
    Date: 2004–12–09
  7. By: Aguayo, Eva; Guisan, Maria-Carmen
    Abstract: We analyse the interdependence between non-agrarian employment, real value-added and population in 98 European regions, by means of a pool of data for the period 1985-1995, and in 5 EU countries with a pool for 1961-97. We test causality by means of Hausman´s test in these three equations models. Besides we test causality by means of Granger´s test and with time series of each country for 1961-2000. The main conclusion is that there is some degree of interdependence among the three variable: 1) Population moves towards employment. 2) Production increases with population and with social and institutional factors (human capital and other ones). 3) Employment increases with production and population.. The results agree with the Freeman´s conclusions for regional employment and population movements in the USA.
    Keywords: Causality tests, Models of Employment and Population, Models of Employment and Production, European Economic, Regional Development
    JEL: C5 C51 J2 O18 O52 R23
    Date: 2004
  8. By: Eckhard Hein (WSI in der Hans Boeckler Stiftung); Thorsten Schulten (WSI in der Hans Boeckler Stiftung); Achim Truger (WSI in der Hans Boeckler Stiftung)
    Abstract: Based on a post-Keynesian model of the relationship between wages, prices and employment, this paper begins by studying the extent to which unit labour cost trends have been responsible for disinflation and deflationary tendencies in Germany and Europe. Thereafter, the reasons for the deflationary development of unit labour costs in recent years, in particular in Germany, are analysed. Finally, the impact of deflationary wage policies on German and European stagnation are discussed and it is concluded that the excessive wage restraint in Germany not only exacerbates stagnation and deflationary tendencies in Germany but might also have a deflationary impact on the other EMU countries.
    Keywords: Wage trends, deflation, collective bargaining
    JEL: E31 E50
    Date: 2004–12–10
  9. By: Guisan, Maria-Carmen; Aguayo, Eva; Carballas, David
    Abstract: We present an international comparison of economic development of 5 Central European countries, with special reference to Poland and Hungary, with some European Union Countries for the period 1950-2002. We analyse different stages of their evolution: 1) In 1950-60 the evolution of production per inhabitant and rates of growth of this variable, in comparison with Spain, where very alike. 2) In 1960-75 the differences increased dramatically in favour of Spain. 3) In 1975-85 the differences diminished with a better performance of Hungary in comparison with Poland. 4) In 1985-91 the differences in the evolution of economic development increased again in favour of Spain. 5) Since 1991 to 2002 the evolution of these Central European countries generally improved and their rates of growth were more similar to those of Spain. We analyse the main factors that have explained the lower average rate of growth of production per inhabitant in Central Europe as a whole in comparison with Spain, Austria and other EU countries. We focus on human capital, manufacturing capacity, foreign trade and other relevant factors of production, mainly from a supply side approach. We also analyse the differences among Central European countries, outstanding the special case of Slovenia, country which has reached a position very similar to that of Spain in the level of income per inhabitant.
    Keywords: Growth, Development and Cycles in Central Europe
    JEL: C5 C51 O52 O57
    Date: 2004
  10. By: Adsera, Alicia (University of Illinois at Chicago, University of Chicago and IZA Bonn); Chiswick, Barry R. (University of Illinois at Chicago and IZA Bonn)
    Abstract: The paper uses the 1994-2000 waves of the European Community Household Panel to conduct a systematic analysis of the earnings of immigrants as compared to native workers, in particular to test whether there is any systematic variation in the labor market performance of immigrants across gender related to duration in the destination, schooling, age at immigration, country of origin, or country of destination. We find a significant negative effect of immigrant status on individual earnings of around 40% at the time of arrival in the pooled sample, although the difference is somewhat smaller for women. Those differences, however, vary greatly across countries with migrants in Germany and Portugal faring best relative to natives, and those in Sweden, Denmark, Luxembourg or Spain the worst, particularly among non-EU born migrants. Gender differences are more important among those born outside the European Union, with women doing relatively better than men. Among men, those from Asia, Latin-America and Eastern Europe receive the lowest earnings. Latin- American and Eastern European women are at the bottom of the women’s distribution. Earnings increase with duration in the destination and the foreign born "catch-up" to the native born, others variables being the same, at around 18 years in the destination among both men and women. Education matters more for women in terms of explaining earnings, whereas language skills are relatively more important for men.
    Keywords: immigrants, earnings, gender, countries of birth and destination, language
    JEL: J1 J61 F22
    Date: 2004–12
  11. By: Janek Uiboupin
    Abstract: The purpose of this paper is to estimate empirically the short-term effects of foreign banks entry on bank performance in the Central and Eastern European (CEE) Countries. A sample of 219 banks from ten CEE countries (Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovenia, Slovakia) is used in the analysis. The research results show that foreign banks entry affects negatively domestic banks’ revenues from interest-earning assets, non-interest income, and profitability. Foreign banks entry can also raise the overhead costs of the local banks in short term. The general conclusion is that foreign banks entry is likely to increase competition in the host country.
    Date: 2004
  12. By: William A. Barnett (University of Kansas)
    Abstract: We derive fundamental new theory for measuring monetary service flows aggregated over countries within a multicountry economic union. We develop three increasingly restrictive approaches: (1) the heterogeneous agents approach, (2) the multilateral representative agent approach, and (3) the unilateral representative agent approach. Our heterogeneous agents approach contains our multilateral representative agent approach as a special case. These results are being used by the European Central Bank in the construction of its Divisia monetary aggregates database, with convergence from the most general to the more restrictive approaches expected as economic convergence within the euro area proceeds. Our theory is equally as relevant to other economic unions, with or without a common currency. We use a stochastic approach to aggregation across countries over heterogeneous representative agents. Our theory permits monitoring the effects of policy at the aggregate level over a multicountry economic union, while also monitoring the distribution effects of policy among the countries of the multicountry area. The resulting index number theory assures internal consistency of the data construction methodology with the theory used in applications of the data in modeling and policy.
    Keywords: multilateral aggregation, Divisia monetary aggregates, ECB, EMU, Euro area, aggregation over countries, heterogeneous agents, distribution effects
    JEL: E41 G12 C43 C22
    Date: 2004–12–10

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