nep-eec New Economics Papers
on European Economics
Issue of 2005‒04‒24
fourteen papers chosen by
Giuseppe Marotta
Universita di Modena e Reggio Emilia

  1. The role of ICT in the global investment cycle By Michael McMahon; Gabriel Sterne; Jamie Thompson
  2. Changing Composition of Human Capital: The Czech Republic, Hungary, and Poland By Byeongju Jeong; Michal Kejak; Viatcheslav Vinogradov
  4. Are EU Environmental Policies Too Demanding for New Members States? By Lorenzo Pellegrini; Reyer Gerlagh
  5. Emissions Trading, CDM, JI, and More – The Climate Strategy of the EU By Gernot Klepper; Sonja Peterson
  6. Do Benefit Hikes Damage Job Finding? Evidence from Swedish Unemployment Insurance Reforms By Bennmarker, Helge; Carling, Kenneth; Holmlund, Bertil
  7. Low Pay, Higher Pay and Job Satisfaction within the European Union: Empirical Evidence from Fourteen Countries By Luis Diaz-Serrano; Jose A. Cabral Vieira
  8. Are There Differences in the Health-Socioeconomic Status Relationship over the Life Cycle? Evidence from Germany By Keith A. Bender; Steffen Habermalz
  9. Inter-Industry Wage Differentials and the Gender Wage Gap: Evidence from European Countries By Brenda Gannon; Robert Plasman; François Rycx; Ilan Tojerow
  10. The Establishment-Size Wage Premium: Evidence from European Countries By Thierry Lallemand; Robert Plasman; François Rycx
  11. Where Are the Babies? Labor Market Conditions and Fertility in Europe By Alicia Adsera
  12. Platform Competition and Broadband Uptake: Theory and Empirical Evidence from the European Union By Walter Distaso; Paolo Lupi; Fabio M. Manenti
  13. Nascent and infant entrepreneurs in Germany. Evidence from the Regional Entrepreneurship Monitor (REM) By Joachim Wagner

  1. By: Michael McMahon; Gabriel Sterne; Jamie Thompson
    Abstract: Most macroeconomic forecasters underestimated global investment during the late 1990s. One potential reason was that the models they were using were insufficiently disaggregated. In this paper, an empirical model is estimated whose out-of-sample forecasts largely predicted the global investment boom of the late 1990s. The main factor behind the improved model performance is the distinction between investment in ICT assets and investment in other assets, using disaggregated investment data provided by the OECD. In line with previous studies on US and UK investment performance, ICT investment is estimated to be much more responsive to changes in the real user cost of capital. In particular, panel and seemingly unrelated regression (SUR) estimates suggest very strong relative price effects on ICT investment for all G7 countries and Australia. The data also allow an examination of the effects of possible deflator mismeasurement; but within our framework, the measurement of investment using harmonised, rather than national, deflators is not found to have a material impact on forecasting performance.
  2. By: Byeongju Jeong; Michal Kejak; Viatcheslav Vinogradov
    Abstract: We show that the business education/occupations have expanded and that the technical education/occupations have contracted in the Czech Republic and Poland since 1990. We interpret these changes as an adjustment necessary for their transition to a market economy. We do not find the same pattern in Hungary, which we attribute to its earlier timing of transition. We construct an aggregate model in which labor reallocates in response to changing demand structure. When calibrated to the Czech and Polish data, the model generates a large movement of workers with technical education and experience into business occupations in the early 1990s. The discounted sum of output loss due to the gap between the demand structure and the composition of existing human capital amounts to 20 to 40 percent of 1990 GDP.
    Keywords: Human capital; Composition; Occupation; Education; Mobility; Transition.
    JEL: J31 J62 P23 E13
    Date: 2005–01
  3. By: F. Alfonso Arellano
    Abstract: This study analyses the effects on unemployment and the quality of employment of the Spanish labour market reform in 2001 for the most important age groups. The content of the reform was based on the implementation of two policies: (i) a new permanent contract with lower firing costs than the ordinary one, and (ii) the reduction of the payroll taxes paid by firms to foster creation/ conversion of/ into permanent contracts. This reform extended to further groups of workers similar measures adopted in a previous reform in 1997. Using a data base of unemployed workers in the region of Madrid from January 1997 up to September 2003, and methods for non-experimental data, the results suggest that, regardless of gender, workers below 30 years are negatively affected by the reform, and workers above 55 years show positive but small effects. The influence of the reform for workers between 45 and 50 years is negligible. As regards education, graduates are more sensitive to the reform than workers with a lower level of education (primary and secondary education).
    Date: 2005–02
  4. By: Lorenzo Pellegrini (Vrije Universiteit); Reyer Gerlagh (Vrije Universiteit)
    Abstract: In 2004, ten new states entered the European Union. Relative to the pre-2004 member states, these accession states have lower environmental standards, and some worry that it will be too demanding for these new EU members to fully comply with European environmental provisions. In this paper, we assess one rationale for such harmonization. Specifically, we analyze the determinants of environmental policies’ stringency, and show that differences in corruption levels are more important as explanatory factor when compared to income differentials. Since high levels of corruption characterize some countries in the enlarged EU, we argue that this is a good reason for an upward harmonization of environmental policies at the EU level.
    Keywords: Corruption, European union, Environmental policy
    JEL: C31 K00 Q53
    Date: 2005–03
  5. By: Gernot Klepper (Kiel Institute for World Economics); Sonja Peterson (Kiel Institute for World Economics)
    Abstract: The objective of this paper is to assess the likely allocation effects of the current cli-mate protection strategy as it is laid out in the National Allocation Plans (NAPs) for the European Emissions Trading Scheme (ETS). The multi-regional, multi-sectoral CGE-model DART is used to simulate the effects of the current policies in the year 2012 when the Kyoto targets need to be met. Different scenarios are simulated in order to highlight the effects of the grandfathering of permits to energy-intensive installations, the use of the project-based mechanisms (CDM and JI), and the restriction imposed by the supplementarity criterion.
    Keywords: Kyoto targets, EU, EU emissions trading scheme, National allocation plans, CDM and JI, Computable general equilibrium model, DART
    JEL: D58 F18 Q48 Q54
    Date: 2005–04
  6. By: Bennmarker, Helge (Institute for Labour Market Policy Evaluation); Carling, Kenneth (Institute for Labour Market Policy Evaluation); Holmlund, Bertil (Department of Economics)
    Abstract: In 2001 and 2002, Sweden introduced several unemployment insurance reforms. A major innovation in the first reform was the introduction of a two-tiered benefit structure for some unemployed individuals. This system involved supplementary compensation during the first 20 weeks of unemployment. The 2002 reform retained the two-tiered benefit structure but involved also substantial benefit hikes for spells exceeding 20 weeks. This paper examines how these reforms affected transitions from unemployment to employment. We take advantage of the fact that the reforms had quasi-experimental features where the “treatments” differed considerably among unemployed individuals. We find that the reforms had strikingly different effects on job finding among men and women. The two reforms in conjunction are estimated to have increased the expected duration of unemployment among men but to have decreased the duration of unemployment among women. The overall effect on the duration of unemployment is not statistically different from zero. However, the reforms reduced job finding among males who remained unemployed for more than 20 weeks.
    Keywords: Unemployment duration; Unemployment benefits
    JEL: J64 J65
    Date: 2005–03–29
  7. By: Luis Diaz-Serrano (National University of Ireland Maynooth, CREB and IZA Bonn); Jose A. Cabral Vieira (University of the Azores and CEEAplA)
    Abstract: We examine differences in job satisfaction between low- and higher-paid workers within the European Union (EU). To do so The European Community Household Panel Data covering the period 1994-2001 is used. Our results indicate that low paid workers report a lower level of job satisfaction when compared with their higher paid counterparts in most countries, except in the UK. This supports the idea that low-wage employment in these countries mainly comprises low quality. The results also indicate that gap in average job satisfaction between low- and higher-paid workers is markedly wider in the Southern European countries than in the rest of EU. Finally, there are significant differences in the determinants of job satisfaction across countries. It seems then that a homogeneous policy may be inappropriate to increase satisfaction, and hence labour productivity, in the EU as a whole. Hence, an improvement of the quality of the jobs in the EU may require different policies. In particular, in some countries such as the United Kingdom removing low employment, namely through regulation, may worsen the workers’ well-being, although in other cases such a policy may lead to a totally different outcome.
    Keywords: job satisfaction, job quality, low-wage employment
    JEL: J28
    Date: 2005–04
  8. By: Keith A. Bender (University of Wisconsin-Milwaukee); Steffen Habermalz (University of Nebraska at Kearney and IZA Bonn)
    Abstract: Most research on the relationship between health and socioeconomic status (SES) controls for changing age or investigates the relationship for a particular age range. This paper, however, examines changes in the relationship across ages, as well as controls for potential endogeneity in the health-SES relationship. Using data from German Socio Economic Panel, we find that the health-SES relationship does vary across the life cycle and that endogeneity is an important influence on the relationship. We also find tentative evidence that universal access to health care reduces the impact of income on self-reported health satisfaction.
    Keywords: health, socioeconomic status, endogeneity, life cycle, Germany
    JEL: I0 I12 J0 J60 C13
    Date: 2005–04
  9. By: Brenda Gannon (Economic and Social Research Institute (ESRI)); Robert Plasman (Université Libre de Bruxelles, DULBEA); François Rycx (Université Libre de Bruxelles, DULBEA and IZA Bonn); Ilan Tojerow (Université Libre de Bruxelles, DULBEA)
    Abstract: This study analyses the interaction between inter-industry wage differentials and the gender wage gap in six European countries using a unique harmonised matched employer-employee data set, the 1995 European Structure of Earnings Survey. Findings show the existence of significant inter-industry wage differentials in all countries for both sexes. While their structure is quite similar for men and women and across countries, their dispersion is significantly larger in countries with decentralised bargaining. These differentials are significantly and positively correlated with industry profitability. The magnitude of this correlation, however, is lower in countries with centralised and coordinated collective bargaining. Further results show that in all countries more than 80% of the gender wage gaps within industries are statistically significant. Yet, industries having the highest and the lowest gender wage gaps vary substantially across European countries. Finally, results indicate that industry effects explain between 0 and 29% of the overall gender wage gap.
    Keywords: gender wage gap, inter-industry wage differentials, Europe
    JEL: J16 J31 J71
    Date: 2005–04
  10. By: Thierry Lallemand (Free University of Brussels, DULBEA and Centre de Comptabilité, Planning et Contrôle); Robert Plasman (Free University of Brussels and DULBEA); François Rycx (Free University of Brussels, DULBEA and IZA Bonn)
    Abstract: This study examines the magnitude and determinants of the establishment-size wage premium in five European countries using a unique harmonised matched employer-employee data set. Findings show the existence of a significant positive wage premium in all countries, even when controlling for labour quality, working conditions, monitoring, sectoral and regional effects, bargaining institutions, job stability, and concentration of skilled workers. In crossnational perspective, results support the existence of an inverse relationship between the size wage gap and the degree of corporatism. Final results indicate that the size wage premium is generally larger in the manufacturing sector and for blue-collar workers.
    Keywords: establishment-size and wages, matched employer-employee data, Europe
    JEL: J31
    Date: 2005–04
  11. By: Alicia Adsera (University of Chicago, University of Illinois at Chicago and IZA Bonn)
    Abstract: Cross-country differences in both the age at first birth and fertility are substantial in Europe. The paper uses the European Community Household Panel 1994-2000 to investigate the relationship between unemployment of both women (and their spouses) with the timing and number of children. Maternity postponement is acute in countries with high and persistent unemployment since the mid 1980s. Moreover, the paper examines how fertility varies, for a similar level of unemployment, as a function of country-specific institutional arrangements. Wide access to part-time and to permanent positions (such as those in the public sector) is correlated with faster transitions to births. Short-term contracts are associated with delayed fertility instead.
    Keywords: fertility, unemployment, public sector, part-time, short-term contracts, maternity benefits
    JEL: J13 J2 J6 H3
    Date: 2005–04
  12. By: Walter Distaso (Department of Economics, University of Exeter, UK); Paolo Lupi (Autorita per le garanzie nelle comunicazioni - AGCOM, Italy); Fabio M. Manenti (Dip. Scienze Economiche 'M. Fanno', Universita di Padova, Italy)
    Abstract: Broadband access provides users with high speed, always-on connectivity to the Internet. Due to its superiority, broadband is seen as the way for consumers and firms to exploit the great potentials of new applications. This has generated a policy debate on how to stimulate adoption of broadband technology. One of the most disputed issues is about competition policies: these may be intended to promote competition in the Digital Subscriber Line (DSL) segment of the market (intra- platform competition), or to stimulate entry into the market for alternative platforms such as cable access or fiber optics (inter- platform competition). Using a model of oligopoly competition between differentiated products, our paper explicitly studies the effect of inter and intra platform competition on the diffusion of broadband access. The implications of the model are then tested using data from 14 European countries. The econometric evidence confirms the results of the theoretical model and indicates that while inter-platform competition drives broadband adoption, competition in the market for DSL services does not play a significant role. The results also confirm that lower unbundling prices stimulate broadband uptake.
    Keywords: Broadband, inter-platform and intra-platform competition, local loop unbundling
    JEL: L86 L96
    Date: 2005–04–18
  13. By: Joachim Wagner (University of Lueneburg)
    Abstract: Based on data from a recent representative survey of the adult population in Germany this paper documents that the patterns of variables influencing nascent and infant entrepreneurship are quite similar and broadly in line with our theoretical priors – both types of entrepreneurship are fostered by the width of experience and a role model in the family, and hindered by risk aversion, while being male is a supporting factor. Results of this study using cross section data are in line with conclusions from longitudinal studies for other countries finding that between one in two and one in three nascent entrepreneurs become infant entrepreneurs, and that observed individual characteristics – with the important exception of former experience as an employee in the industry of the new venture - tend to play a minor role only in differentiating who starts and who gives up.
    Keywords: Nascent Entrepreneurs, Infant Entrepreneurs, Regional Entrepreneurship Monitor, REM, Germany
    JEL: J23
    Date: 2005–04–20
  14. By: CARLOS VIDAL-MELIÁ (University of Valencia Spain); INMACULADA DOMÍNGUEZ-FABIAN (University of Extremadura Spain)
    Abstract: There are two aims to this paper: firstly, to provide an objective technical assessment of the current situation of the contributory pension system in Spain and its prospects for the future, and secondly, to look at the issues surrounding the introduction of a system of notional defined contribution accounts. To this end we explain the basic elements upon which the current system is based and show its main indicators, then set out some of its fundamental problems. Following this we look at the most relevant research work, where forecasts can be found that will give us a clear idea of the system's financial sustainability. Finally we put forward an argument as to why a notional accounts system could be a valid alternative for reforming the current system, and suggest which formula or group of formulas would best fit the profile of contributor-beneficiary risk and what the transition process would be
    Keywords: Retirement, Pay-as-you-go, Internal Rate of Return (IRR), Financial sustainability.
    JEL: H55 J26
    Date: 2005–04–18

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