nep-eec New Economics Papers
on European Economics
Issue of 2005‒02‒27
nine papers chosen by
Giuseppe Marotta
Universita di Modena e Reggio Emilia

  1. Hartz IV - The German "Word of the Year 2004" and the Country's Hope to overcome its Problem of Unemployment By Lohse, Tim
  2. 09/11 on the USD/EUR Foreign Exchange Market By Mende, Alexander
  3. Income inequality and self-rated health status: Evidence from the European Community Household Panel By Hildebrand, Vincent; Van Kerm, Philippe
  4. Downward Nominal Wage Rigidity in Europe: An Analysis of European Micro Data from the ECHP 1994-2001 By Knoppik, Christoph; Beissinger, Thomas
  5. Product market regulation in OECD countries: 1998 to 2003 By Paul Conway; Véronique Janod; Giuseppe Nicoletti
  6. Scenarios for modelling trade policy effects on the multifunctionality of european agriculture By Janet Dwyer; David Baldock; Hervé Guyomard; Jerzy Wilkin; Dorota Klepacka
  7. Multilateral market-access reforms of the Doha Round: a preliminary assessment of implications for EU agricultural trade By Wusheng Yu; Hans G. Hensen
  8. Fertility and Social Security By Michele Boldrin; Mariacristina De Nardi; Larry E. Jones
  9. Different Roads to Liberalization: Scenarios for a Moroccan Case Study of the Euro-Mediterannean association agreements By Marijke Kuiper; Crescenzo dell' Aquila

  1. By: Lohse, Tim
    Abstract: When the centre-left government came into power in Germany in 1998, a core promise of the new Chancellor, Schroeder, was to reduce the lack of jobs and to increase welfare. Facing persistently increasing unemployment rates from then on, the government finally launched Hartz IV in 2004; the largest social reform project in the history of the Federal Republic. This reform, that took effect at the beginning of 2005, aims to increase employment in Europe's biggest but slowest growing economy, whilst avoiding the financial collapse of its social systems. Its main aim is to strengthen individual responsibility whilst lowering transfers for those unemployed individuals that are capable of work. Therefore, it is also the most disputed reform of the German social welfare system. By characterising effects and defects of the German welfare system, we identify some of the most important obstacles facing higher employment. We provide an outline of the government's endeavours to handle the problem of unemployment and of the main changes in the country's laws of social contributions. Particular focus is given to the newly established unemployment benefit II and to the reasonableness of work, which reflects a new social valuation of labour. To conclude, potential welfare and employment effects under the new system are discussed.
    Keywords: Welfare, Unemployment, Poverty.
    JEL: I38 J64
    Date: 2005–02
  2. By: Mende, Alexander
    Abstract: We study the relationship between foreign exchange trading activity and volatility on the USD/EUR foreign exchange market on the basis of a unique data set around the events of 09/11/2001. We find that volatility and bid-ask spreads are by far larger at that time, but the shock is not persistent. The positive correlation between volume and volatility does not break up, but intensifies strongly indicating the arrival of new information and increased price risk. We conclude that the USD/EUR foreign exchange market maintains its liquid structure and its efficient processing of exogenous shocks.
    Keywords: foreign exchange, market microstructure, liquidity, sudden events
    JEL: F31 G14 G15
    Date: 2005–02
  3. By: Hildebrand, Vincent (Department of Economics, Glendon College, York University, Canada and CEPS/INSTEAD, G.-D. Luxembourg); Van Kerm, Philippe (CEPS/INSTEAD, G.-D. Luxembourg)
    Abstract: We examine the effect of income inequality on individual self-rated health status in a pooled sample of 10 member states of the European Union using longitudinal data from the European Community Household Panel (ECHP) survey. Taking advantage of the longitudinal and cross-national nature of our data, and carefully modelling the self-reported health information, we avoid several of the pitfalls suffered by earlier studies on this topic. We calculate income inequality indices measured at two standard levels of geography (NUTS-0 and NUTS-1) and find consistent evidence that income inequality is negatively related to self-rated health status in the European Union for both men and women. However, despite its statistical significance, the magnitude of the impact of inequality on health is small.
    Keywords: Self-rated health; Income inequality; European Union; Panel data
    Date: 2005–01
  4. By: Knoppik, Christoph (University of Regensburg); Beissinger, Thomas (University of Kaiserslautern, University of Regensburg and IZA Bonn)
    Abstract: This paper substantially extends the limited available evidence on existence and extent of downward nominal wage rigidity in the European Union and the Euro Area. For this purpose we develop an econometric multi-country model based on Kahn’s (1997) histogram-location approach and apply it to employee micro data from the European Community Household Panel (ECHP) for twelve of the EU’s current member states. Our estimates for the degree of downward nominal wage rigidity on the national as well as the EU-wide level point to marked downward nominal wage rigidity within the European Union.
    Keywords: downward nominal wage rigidity, wage stickiness, European Community Household Panel, ECHP, histogram-location approach; European Union, Euro area
    JEL: J30 E24
    Date: 2005–02
  5. By: Paul Conway; Véronique Janod; Giuseppe Nicoletti
    Abstract: This paper describes trends in product market regulation in OECD countries over the period 1998 to 2003. The analysis is based on summary indicators of product market regulation that measure the degree to which policies promote or inhibit competition. The results suggest that regulatory impediments to competition have declined in all OECD countries in recent years. Regulation has also become more homogenous across the OECD as countries with relatively restrictive policies have, in some areas, moved towards the regulatory environment of the more liberalized countries. Within some countries product market policies have become more consistent across different regulatory provisions, although relatively restrictive countries still tend to have a more heterogeneous approach to competition. In general, domestic barriers to competition tend to be higher in countries that have higher barriers to foreign trade and investment, and high levels of state control and barriers to competition tend to be associated with cumbersome administrative procedures and policies that reduce the adaptability of labour markets. Notwithstanding recent progress in product market reform, a 'hard core' of regulations that impede competition still persists in virtually all countries. <p> La réglementation des marchés de produits dans les pays de l'OCDE, 1998-2003 <p> Ce document décrit les évolutions de la réglementation encadrant les marchés de produits dans les pays de l'OCDE sur la période 1998-2003. L'analyse est basée sur des indicateurs synthétiques de la réglementation des marchés de produits qui mesurent l'intensité avec laquelle les politiques favorisent ou restreignent la concurrence. Les résultats suggèrent que les entraves à la concurrence résultant de la réglementation ont décliné dans tous pays de l'OCDE ces dernières années. La réglementation est aussi devenue plus homogène à travers l'OCDE, les pays disposant de politiques relativement restrictives, s'étant ralliés, dans certains domaines, à l'environnement réglementaire des pays plus libéraux. Dans certains pays, les politiques concernant les marchés de produits sont devenues plus cohérentes au regard des différents dispositifs réglementaires, même si les pays relativement restrictifs ont toujours tendance à disposer d'une approche plus disparate de la concurrence. De façon générale, les barrières à la concurrence résultant de politiques à vocation intérieure ont tendance à être plus importantes dans les pays disposant d'importants obstacles aux échanges internationaux et à l'investissement ; de même de hauts niveaux de contrôles étatiques et d'importants obstacles à la concurrence ont tendance à être associés avec d'encombrantes procédures administratives et des politiques qui réduisent la capacité d'adaptation du marché du travail. En dépit des récents progrès accomplis par les réformes des marchés de produits, un 'noyau dur' de règlements, entravant la concurrence, persiste toujours dans pratiquement tous les pays.
    Keywords: indicators; product market regulation
    JEL: K2 L5
    Date: 2005–02–14
  6. By: Janet Dwyer; David Baldock; Hervé Guyomard; Jerzy Wilkin; Dorota Klepacka (IEEP)
    Abstract: The ENARPRI partners agreed in February 2004 to prepare a precise specification for the scenarios that partners would attempt to model in their own national contexts, to examine the impacts of trade-related changes upon the multifunctionality of EU agriculture. This paper outlines a suite of five scenarios covering anticipated domestic (EU) policy under different possible outcomes from the Doha round, broadly based upon the status quo (with mid-term review), full decoupling of domestic support and full decoupling plus reductions in (decoupled) domestic support, with variants in relation to export subsidies and the scale of pillar 2 measures. In all cases it is recognised that national or sub-national models will require an additional level of national or regional specification before they can be run, and that each national team will be required to do this drawing upon their own domestic knowledge and discussion with relevant experts. Each of the models that will be used to undertake these analyses is then briefly reviewed to identify its general approach and the multifunctionality indicators that can be covered. These indicators are then set in the broader context that considers other potential indicators of multifunctionality and their rationales. The paper concludes with some additional commentary about the significant differences, and thus the difficulties, of attempting to undertake this exercise for any of the new member states.
    Date: 2005–01
  7. By: Wusheng Yu; Hans G. Hensen (FOI Food and Resource Economics Institute)
    Abstract: The July package of the Doha Round of trade negotiations stipulates that a tiered-formula approach should be used to significantly reduce market access barriers across countries, implying that the EU would have to make larger cuts to its high external tariffs, in comparison with many other WTO members such as the US. This paper provides a preliminary assessment of the likely impact of the tiered-formula reform approach on EU agricultural sectors. Numerical simulations of a multilateral market-access reform scenario show that such cuts would lead to across-the-board decreases in intra-EU trade flows, as compared with a baseline projection. While intra-EU trade flows would decrease, the EU’s trade with the rest of the world would increase. Yet such increases would not be symmetric – imports into the EU would increase more than exports, resulting in larger external trade deficits or smaller external trade surpluses in many EU agricultural products. Further, the resulting adjustments in member states’ production and net trade positions are not equal: the new member states would generally lose part of their export shares in the EU market to external competitors, as highlighted in the cases of bovine meat and dairy products. Finally, simulation results show that although EU welfare as a whole improves, the distribution of such gains across EU member states is uneven. EU-15 countries generally gain from improved efficiency as a result of the reform. The new member states, however, will only experience marginal efficiency improvements but will likely suffer terms-of-trade losses, thereby losing some of the related benefits of joining the EU (as projected in the baseline case).
    Date: 2005–01
  8. By: Michele Boldrin; Mariacristina De Nardi; Larry E. Jones
    Abstract: The data show that an increase in government provided old-age pensions is strongly correlated with a reduction in fertility. What type of model is consistent with this finding? We explore this question using two models of fertility, the one by Barro and Becker (1989), and the one inspired by Caldwell and developed by Boldrin and Jones (2002). In the Barro and Becker model parents have children because they perceive their children's lives as a continuation of their own. In the Boldrin and Jones' framework parents procreate because the children care about their old parents' utility, and thus provide them with old age transfers. The effect of increases in government provided pensions on fertility in the Barro and Becker model is very small, and inconsistent with the empirical findings. The effect on fertility in the Boldrin and Jones model is sizeable and accounts for between 55 and 65% of the observed Europe-US fertility differences both across countries and across time and over 80% of the observed variation seen in a broad cross-section of countries. Another key factor affecting fertility the Boldrin and Jones model is the access to capital markets, which can account for the other half of the observed change in fertility in developed countries over the last 70 years.
    JEL: E10 J10 J13 O10
    Date: 2005–02
  9. By: Marijke Kuiper; Crescenzo dell' Aquila (LEI Agricultural Economics Research Institute)
    Abstract: Based on an earlier study of existing analyses of the EMAAs, we defined two scenarios suited for a quantitative analysis of the EMAAs. Because of the need to rely on existing models, the focus is on analysing the impact of the EMAA on Morocco in detail. In a subsequent study we will use an aggregated representation of other North African MPCs as a reference point to assess whether the conclusions derived for Morocco may be extended to the MPCs as a whole. The two scenarios reflect the current focus on the economic interests of the EU and the political objectives served by the EMAAs. Comparison of these scenarios will provide an idea as to what extent the security concerns of the EU are in conflict with the economic interests of the different EU member states.
    Date: 2004–10

This nep-eec issue is ©2005 by Giuseppe Marotta. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.