nep-eec New Economics Papers
on European Economics
Issue of 2005‒01‒09
nine papers chosen by
Giuseppe Marotta
Universitá di Modena e Reggio Emilia

  1. Culture and institutions: economic development in the regions of Europe By Guido Tabellini
  2. Specialisation Patterns and the Synchronicity of Regional Employment Cycles in Europe By Belke, Ansgar; Heine, Jens M.
  3. In-Work Policies in Europe: Killing Two Birds with One Stone? By Bargain, Olivier; Orsini, Kristian
  4. Comparing Apples with Oranges: Revisiting the Gender Wage Gap in an International Perspective By Plasman, Robert; Sissoko, Salimata
  5. Structural VAR identification in asset markets using short-run market inefficiencies By Gultekin Isiklar
  6. Regulation, Competition and Investment in the German Electricity Market: RegTP or REGTP By Gert Brunekreeft; Sven Twelemann
  7. The Spanish Electricity Industry: Plus ça change … By Claude Crampes; Natalia Fabra
  8. The Making of Entrepreneurs in Germany: Are Native Men and Immigrants Alike? By Constant, Amelie; Zimmermann, Klaus F.
  9. Normative Evaluation of Tax Policies: From Households to Individuals By Bargain, Olivier

  1. By: Guido Tabellini
    Date: 2005–01–04
  2. By: Belke, Ansgar (University of Hohenheim and IZA Bonn); Heine, Jens M. (zeb/
    Abstract: This paper examines the degree of correlation of EU regional employment cycles and attempts to show whether these cycles reflect changing patterns of specialisation. By focusing on the regional level and by employing three different indicators of similarity of sectoral structure, it improves on existing studies. A dynamic panel data model is estimated pairs of regions by within groups, i.e., by a standard fixed effects estimator. Special attention is paid to capture the rich dynamics which are typical of employment data. The key finding is that employment growth is more synchronised when regions look alike in their sectoral structure.
    Keywords: regional employment, European Union, regional business cycles, specialisation, synchronicity
    JEL: E32 F15 R23
    Date: 2004–12
  3. By: Bargain, Olivier (IZA Bonn and DELTA, Paris); Orsini, Kristian (University of Leuven)
    Abstract: Earning an income is probably the best way of avoiding poverty and social exclusion, hence the recent trend of promoting employment through in-work transfers in OECD countries. Yet, the relative consensus on the need for ‘making work pay’ policies is muddied by a number of concerns relative to the design of the reforms and the treatment of the family dimension. Relying on EUROMOD, a EU-15 integrated tax-benefit microsimulation software, we simulate two types of in-work benefits. The first one is means-tested on family income, in the fashion of the British Working Family Tax Credit, while the second is a purely individualized policy. Both reforms are built on the same cost basis (after behavioral responses) and simulated in three European countries which experience severe poverty traps, namely Finland, France and Germany. The potential labor supply responses to the reforms and the subsequent redistributive impacts are assessed for each country using a structural discrete-choice model. We compare how both reforms achieve poverty reduction and social inclusion (measured as the number of transitions into activity). All three countries present different initial conditions, including institutional environment, existing tax-benefit systems and distribution of incomes and wages. These sources of heterogeneity are exploited together with different labor supply sensitivities to explain the cross-country differences in the impact of the reforms.
    Keywords: tax-benefit systems, in-work benefits, microsimulation, household labor supply, multinomial logit
    JEL: C25 C52 H31 J22
    Date: 2004–12
  4. By: Plasman, Robert (DULBEA, Université Libre de Bruxelles); Sissoko, Salimata (DULBEA, Université Libre de Bruxelles and IZA Bonn)
    Abstract: Using a rich and comparable micro-data set, we analyse international differences in gender pay gaps in the private sector for a sample of five European economies: Belgium, Denmark, Ireland, Italy and Spain. Using different methods, we examine how wage structure, differences in the distribution of measured characteristics, occupational and industrial segregation contribute to explain the pattern of international differences. Furthermore, we take into account indirect discrimination influencing female occupational and industrial distributions. We find significant impacts of those latter factors on gender differentials. However, the magnitude of their effects varies across countries.
    Keywords: gender wage gap, wage structure, occupational segregation, industrial segregation, discrimination
    JEL: J16 J31 J71
    Date: 2004–12
  5. By: Gultekin Isiklar (State University of New York at Albany)
    Abstract: We impose a structure on the short-run market inefficiencies in the asset markets and use this structure to identify a structural vector autoregressive model. This novel identification method is based on more reasonable assumptions than the standard approaches and also gives estimates for inefficiency measures in the markets, which are important on their own. Applying our method on the major European stock markets, we find that while the UK shocks were dominant in Europe until 1999, German innovations have been more important since 1999. We also find that the pattern of inefficiencies are consistent with the rational inattention model of Sims (2003).
    Keywords: Structural VAR; Overreaction and Underreaction; Stock Market
    JEL: C32 G15 D84
    Date: 2005–01–01
  6. By: Gert Brunekreeft; Sven Twelemann
    Abstract: The German energy industries will be subjected to regulation of network access enforced by a sector-specific regulator. Whereas the gas industry broke the regime of negotiated third party access, in electricity nTPA ‘worked’, although it clearly resulted in a margin squeeze. The government currently discusses whether to use rate-of-return or incentive regulation, to allow ex-ante approval of charges, and the length of the regulatory lag. Close examination suggests that generation capacity still is adequate, but in the longer term there is reason to be alert. The regulatory changes and emission trading system can both contribute to retain supply security by increasing investment.
    Keywords: regulation, competition, emission trading, gas, electricity
    JEL: L42 L43 L94
    Date: 2005–01
  7. By: Claude Crampes; Natalia Fabra
    Abstract: In this paper we describe the Spanish electricity industry and its current regulatory regime. Special emphasis is given to the description and discussion of market design issues (including stranded cost recovery), the evolution of market structure, investment in generation capacity and network activities. We also provide a critical assessment of the 1997 regulatory reform, which did not succeed in introducing effective competition, but retained an opaque regulation which has been subject to continuous governmental interventionism. Furthermore, the implementation of the Kyoto agreement could show the lack of robustness of the regulatory regime.
    Date: 2005–01
  8. By: Constant, Amelie (IZA Bonn); Zimmermann, Klaus F. (IZA Bonn, University of Bonn and DIW Berlin)
    Abstract: This paper uses a state of the art three-stage technique to identify the characteristics of the self-employed immigrant and native men in Germany and to understand their underlying drive into self-employment. Employing data from the German Socioeconomic Panel 2000 release we find that self-employment is not significantly affected by exposure to Germany or by human capital. But this choice has a very strong intergenerational link and it is also related to homeownership and financial worries. While individuals are strongly pulled into selfemployment if it offers higher earnings, immigrants are additionally pushed into selfemployment when they feel discriminated. Married immigrants are more likely to go into selfemployment, but less likely when they have young children. Immigrants living with foreign passports in ethnic households are more likely self-employed than native Germans. The earnings of self-employed men increase with exposure to Germany, hours worked and occupational prestige; they decrease with high regional unemployment to vacancies ratios. Everything else equal, the earnings of self-employed Germans are not much different from the earnings of the self-employed immigrants, including those who have become German citizens. However, immigrants suffer a strong earnings penalty if they feel discriminated against while they receive a premium if they are German educated.
    Keywords: entrepreneurship, self-employment, occupational choice, immigrants, wage differentials
    JEL: J23 M13 J24 J61 J31
    Date: 2004–12
  9. By: Bargain, Olivier (IZA Bonn and DELTA, Paris)
    Abstract: In this paper, we analyze the impact of a tax policy change on social welfare by using jointly a collective model of household labor supply and a microsimulation program of the French taxbenefit system. The collective approach allows studying the intrahousehold distribution so that for the first time, social welfare can be characterized using individual utilities rather than an ambiguous concept of household welfare. This way, the planner’s preferences address not only inter-household inequalities but also intra-household inequalities often neglected in the literature. The other contribution of the paper derives from a larger interpretation of labor supply behaviors which represent more than the simple work duration and incorporate unobserved dimensions related to effort or intensity at work. We simulate an extended version of the British Working Family Tax Credit on married couples in France. Two types of conclusions emerge. First, the reform is not desirable for low values (utilitarian) or high values (rawlsian) of the social inequality aversion but rather for an intermediary range. In effect, on the efficiency side, the reform induces strong disincentive effects on the participation of second-earners while on the equity side, it does not specifically target the poorest households. Second, we show that the choice of unit – household or individual – strongly condition the results of the normative analysis when departing in a reasonable way from the assumption of equal sharing within the household.
    Keywords: collective model, intrahousehold distribution, social welfare, household labor supply, microsimulation, tax reform
    JEL: C71 D13 D31 D63 H21 H31 J22
    Date: 2004–12

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