nep-eec New Economics Papers
on European Economics
Issue of 2005‒05‒14
seventeen papers chosen by
Giuseppe Marotta
Universita di Modena e Reggio Emilia

  1. European Productivity Gaps: Is R&D the Solution? By Christoph Meister; Bart Verspagen
  2. M&AS performance in the European financial industry By Campa, Jose M.; Hernando, Ignacio
  3. Common Currencies and FDI Flows By Stefano Schiavo
  4. Commercialisation Strategies of Technology based European SMEs: Markets for Technology vs. Markets for Products By Paola Giuri; Alessandra Luzzi
  5. European integration: the third step By Bowen, H.; Sleuwaegen, L.
  6. Les difficultés de la stabilisation économique en Europe : un révélateur de l'inachèvement institutionnel de l'Union Economique. By Robert Boyer
  7. The trade-off between agglomeration forces and relative costs: EU versus the “world” Evidence from firm-level location data 1974-1998 By Braunerhjelm, Pontus; Thulin, Per
  8. Wage Growth and Job Mobility in the U.K. and Germany By Christian Dustmann; Sonia C. Pereira
  9. The Impact of Tax and Transfer Systems on Children in the European Union By Miles Corak; Christine Lietz; Holly Sutherland
  10. Nominal wage rigidity in Europe: estimates and institutional caus es By Orietta DESSY
  11. What a Difference Immigration Law Makes: PISA results, migration background, socioeconomic status and social mobility in Europe and traditional countries of immigration By Horst Entorf; Nicoleta Minoiu
  12. What ever happened to Germany? Is the decline of the former European key currency country caused by structural sclerosis or macroeconomic mismanagement? By Eckhard Hein; Achim Truger
  13. La place de la Russie dans l'approvisionnement gazier européen By Catherine Locatelli
  14. De URBAN I à URBAN III : un point de vue économique sur la politique de cohésion en Europe By Mehdi Abbas
  15. Characterizing the Production Process: A Disaggregated Analysis of Italian Manufacturing Firms By Giulio Bottazzi; Marco Grazzi; Angelo Secchi
  16. Structural changes and competitiveness in Spanish manufacturing industry: Analysis of some relationships By Antonio Fonfría; Isabel Alvarez; Carlos Díaz de la Guardia
  17. Women's Labour Supply after Childbirth: An Empirical Analysis for Switzerland By Dragana Djurdjevic

  1. By: Christoph Meister; Bart Verspagen
    Abstract: This paper investigates the potential impact of increased business R&D efforts in Europe on the total factor productivity gap between European and U.S. industry. The paper addresses Europe’s ambition, expressed at the 2000 Lisbon Summit to become “the most competitive and dynamic knowledge-based economy in the world”, and the 3% R&D intensity target for Europe formulated at the 2002 Barcelona Summit. Based on existing empirical models from the literature on productivity and R&D expenditures, we provide projections on the expected productivity impacts of increased R&D in manufacturing industries. The results suggest that raising European R&D is not a complete solution to the European productivity backlog relative to the U.S. We also find that the most dramatic impacts may be expected from raising R&D in so-called low-tech sectors.
    Keywords: Technology, Economic growth, R&D, Europe, United States
    JEL: O38 O47 P52
    Date: 2005
  2. By: Campa, Jose M. (IESE Business School); Hernando, Ignacio (Banco de España)
    Abstract: This paper looks at the performance record of M&As that took place in the European Union financial industry in the period 1998-2002. First, the paper reports evidence on shareholder returns from mergers. Merger announcements brought positive excess returns to the shareholders of the target company around the date of the announcement, with a slight positive excess return in the 3-month period prior to announcement. Returns to shareholders of the acquiring firms were essentially zero around announcement. One year after the announcement, excess returns were not significantly different from zero for either targets or acquirers. The paper also provides evidence on changes in operating performance for the subsample of mergers involving banks. M&As usually involved targets with lower-than-average operating performance for their sector. The transactions resulted in significant improvements in the target banks' performance, beginning on average two years after the transaction was completed. Return on equity of the target companies increased by an average of 7%, and the same firms also experienced efficiency improvements.
    Keywords: mergers and acquisitions; financial industry;
    Date: 2005–04–10
  3. By: Stefano Schiavo
    Abstract: The paper investigates the impact of EMU on foreign direct investment flows. Using the option value approach to investment decisions, it is possible to show how exchange rate uncertainty hinders cross-border investment flows. By permanently fixing bilateral exchange rates, a currency union can then be expected to spur international investment. Results from a gravity model on a sample of OECD countries confirm the hypothesis that currency unions have a positive impact on FDI; moreover, adopting the same currency appears to do more than merely eliminating exchange rate volatility. These findings closely resemble those recently obtained in the trade literature.
    Keywords: EMU, Currency Union, FDI, Uncertainty, Investment.
  4. By: Paola Giuri; Alessandra Luzzi
    Abstract: This paper focuses on European small-medium "serial innovators" at the beginning of the 1990s and provides an empirical basis to answer the following questions: who are the upstream specialized small-medium technology producers? How are they distributed across countries? Are there technologies in which they show a relative advantage? By focusing on firms? history, activities, and the description of events obtained by different data sources, we also investigates if technology based SMEs choose to implement a strategy based on the commercialisation of their technologies or if they invest in the complementary assets of production, marketing and distribution becoming micro-chandlerian firms. Through this analysis we are able to propose a taxonomy of technology based SMEs? strategies in the market for technology, in the market for embedded technologies and in the market for products.
    Keywords: SMEs, Technology Strategies, Licensing.
  5. By: Bowen, H.; Sleuwaegen, L.
    Abstract: A perception of declining EU competitiveness has intensified calls for structural reforms within the EU. This paper examines recent evidence on changes in relative EU competitiveness and considers the observed changes in relation to the evolving competitive environment facing EU firms during the past two decades. Our analysis suggests that recent declines in EU competitiveness reflect an adjustment (or lack thereof) within the EU in response to an evolutionary “Third Step†in the process of EU integration: global market integration. We find that, starting from the mid-1990s, the EU began to face unprecedented increases in external sources of competition. The rising competition from external sources has created pressures for EU firms to alter their organizational and product market strategies to meet the challenge of a globally integrating market. While many leading EU firms are found to have responded to this challenge, EU firms remain hampered by anachronistic EU product and labor market regulations. The growing calls for structural reform therefore reflect the increased external competitive pressure on EU firms as they attempt to respond to growing global competition and to thereby strengthen their global competitiveness.
    Keywords: Competitiveness, European Integration, Foreign Competition, Globalization
    JEL: D21 F02 F23 L10 O40
    Date: 2004–10–23
  6. By: Robert Boyer
    Abstract: The difficult implementation of the Stability and Growth Pact (SGP) during the 2000s can be explained by the low rank of the policy mix in the general process of European integration. Actually the coordination between a common monetary policy and a series of national budgetary policies has emerged rather recently, whereas the extension and deepening of competition on the single market has been the key principle governing the European integration. Since 1999, all the actors have had to readjust their anticipations and strategies about the consequence of the euro: they are in the process of learning how to manage a new policy mix. Various reform proposals of the SGP are presented and discussed. Finally they are related to the nature of the European institutional reforms. The agreement of the European council about the reform of the SGP on March 2005 is interpreted in the light of some major scenarios analyzing the medium-long term evolution of competences in the European Union.
    Date: 2005
  7. By: Braunerhjelm, Pontus (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Thulin, Per (The Center for Business and Policy Studies, Stockholm, and Linköping University)
    Abstract: The theoretical prediction of a trade-off between production costs and agglomeration economies advanced in recent “new economic” geography models has – despite its important policy implications – not been exposed to empirical testing. Based on a standard model where labor mobility is assumed to differ between two regions - the “European Union” (EU) and the “world” - the empirical analysis shows that a ten percent increase in relative wages decreases entry by MNCs by approximately nine percent in EU, but only by three percent in the “world.” Or, put differently, a ten percent increase in relative wages in EU requires an increase by 26 percent in agglomeration to keep production levels unaltered. To our knowledge, this is the first attempt to empirically estimate this trade-off.
    Keywords: FDI; agglomeration; relative costs
    JEL: F15 F20 F23
    Date: 2005–05–09
  8. By: Christian Dustmann (University College London and IZA Bonn); Sonia C. Pereira (University College London and Yale University)
    Abstract: This paper investigates job mobility and estimates the returns to tenure and experience in the United Kingdom and Germany. We show evidence that job mobility is higher in the UK than in Germany, and that job movers may be negatively selected in Germany, but not in the UK. Our findings suggest that returns to experience are substantially higher in the UK. According to our estimates, ten years of labour market experience are associated with average wage returns of around 70 percent in the UK and 30 percent in Germany. Separate estimates for different qualification groups show that in Germany, it is the group of workers with apprenticeship training that is driving the low returns to labour market experience, while wages growth due to labour market experience is similar between the two countries for the other skill groups. Furthermore, returns to tenure are close to zero in both countries, while wage growth due to the macro trend is markedly higher in Germany.
    Keywords: returns to seniority, job mobility, asymmetric information
    JEL: J24 J31
    Date: 2005–05
  9. By: Miles Corak (UNICEF Innocenti Research Centre and IZA Bonn); Christine Lietz (University of Cambridge); Holly Sutherland (ISER, University of Essex)
    Abstract: The objective of this paper is to analyze the impact of fiscal policy on the economic resources available to children, and on the child poverty rate. A static microsimulation model specifically designed for the purposes of comparative fiscal analysis in the European Union, EUROMOD, is used to study the age incidence of government taxes and transfers in 2001 in 15 EU countries. Three related questions are addressed. First, what priorities are currently embodied in government budgets across age groups, and in particular to what degree do cash transfer and tax systems benefit children relative to older groups? Second, what fractions of the needs of children are supported by elements of the tax and transfer systems directed explicitly to them? And third, what impact do measures of public resources for children have on child poverty rates?
    Keywords: poverty, children, social policy
    JEL: I30 I32 I38
    Date: 2005–05
  10. By: Orietta DESSY
    Abstract: In this paper we construct and compare different measures of nomi nal wage rigidity for the EU countries using the 1994-2000 waves of the European Community Household Panel. The observed distribut ions of nominal wage changes show a relevant percentage of nomina l wage cuts and freezes across countries. When measurement error is taken into account in an econometric model of wage changes app ropriately estimated, it explains almost the totality of wage cut s observed. Therefore the extent of nominal wage rigidity is quit e high in Europe. Institutional causes of wage rigidity are inves tigated, finding an ''hump-shaped'' relationship between nominal wage flexibility and both employment protection legislation and c oordination. On the other hand, an ''u-shaped'' impact of union c overage on measures of downward wage rigidity is found
    Keywords: Nominal wage rigidity, measurement error, intercountry comparison, institutions in labor markets
  11. By: Horst Entorf (Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology)); Nicoleta Minoiu
    Abstract: The purpose of this article is to evaluate the importance of social class, migration background and command of national languages for the PISA school performance of teenagers living in European countries (France, Finland, Germany, United Kingdom, and Sweden) and traditional countries of immigration (Australia, Canada, New Zealand and the US). Econometric results show that the influence of the socioeconomic background of parents differs strongly across nations, with the highest impact found for Germany, the UK and US, whereas social mobility appears to be more likely in Scandinavian countries and in Canada. Further empirical results show that for students with a migration background a key for catching up is the language spoken at home. We conclude that educational policy should focus on integration of immigrant children in schools and preschools, with particular emphasis on language skills at the early stage of childhood.
    Date: 2004–01
  12. By: Eckhard Hein (WSI, Hands-Boeckler-Stiftung, Düsseldorf); Achim Truger (WSI, Hands-Boeckler-Stiftung, Düsseldorf)
    Abstract: This paper challenges the institutional sclerosis view of the German crisis according to which rigid labour markets and generous welfare state institutions have driven Germany into its position as "Europe's sick man". In general, the view is not convincing, because the underlying hypotheses about the effects of labour market regulation and welfare state institutions on employment and growth cannot unambiguously be derived from modern labour market theory and are at least partially at odds with accepted empirical findings. In particular, the explanation is unconvincing, because in international comparison Germany's labour market and welfare state institutions are simply not as sclerotic as often supposed. In most of the aggregate indicators for structural rigidities Germany is not worse than the average OECD or EU country. Moreover, there is a macroeconomic explanation focusing on the combined effects of restrictive and pro-cyclical monetary, fiscal and wage policies in Germany that is broadly consistent with modern macroeconomic theory and is supported by empirical data.
    Date: 2004–08
  13. By: Catherine Locatelli (LEPII - Laboratoire d’Economie de la Production et de l’Intégration Internationale - - CNRS : FRE2664 - Université Pierre Mendès-France - Grenoble II)
    Abstract: L'Europe a de tous temps constitué le marché d'exportation privilégié et unique pour les exportations gazières russes. Toutefois, la problématique des échanges gaziers de la Russie avec l'Europe est susceptible d'être quelque peu bouleversée ou tout au moins contrainte par au moins deux facteurs. Il y a d'abord des contraintes internes. La logique de maximisation de la production gazière russe rencontre un certain nombre de limites qui devraient perdurer en l'absence d'une réforme sur grande échelle de l'industrie gazière. Il y a ensuite des « contraintes extérieures » à la Russie. Son principal marché d'exportation, le marché européen, connaît de profondes mutations dans son organisation, ses structures, ses règles, et ses institutions. Celles-ci supposent des adaptations dans la stratégie de Gazprom qui sont tout à la fois des contraintes mais aussi des opportunités. Les stratégies industrielles de Gazprom au regard des marchés d'Europe orientale et d'Europe du Sud en sont l'une d'elles. Ces pays sont, ainsi, des zones clés pour la Russie notamment pour le contrôle des hydrocarbures de la Caspienne à destination de l'Europe.
    Keywords: marché international;gaz naturel;Russie
    Date: 2004–07–01
  14. By: Mehdi Abbas (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - - CNRS : FRE2664 - Université Pierre Mendès-France - Grenoble II)
    Abstract: Fin 2006 s'achèvera le programme d'initiative communautaire Urban destiné à soutenir la réhabilitation économique et sociale des quartiers en crise. Ce programme constitue l'élément majeur de la politique de développement économique et de cohésion sociale de la Commission européenne. Cette contribution analyse le rapport de Commission relative à la préparation du programme Urban III (2007-2013). A l'aune des enseignements de la nouvelle géographie économique, cette contribution aborde la question de la redistribution spatiale et urbaine de la croissance dans le contexte de l'élargissement. L'hypothèse retenue considère l'élargissement comme un renforcement de la concurrence entre sites urbains. Le travail aborde ensuite, dans une approche d'économie politique, les conséquences socio-économiques de l'intégration spatiale régionale.
    Keywords: cohésion sociale;politique urbaine;Union européenne
    Date: 2004–08–30
  15. By: Giulio Bottazzi; Marco Grazzi; Angelo Secchi
    Abstract: This paper provides a description of the production process by comparing different frameworks in which to analyze the relations between inputs and output. The analysis is performed on a representative sample of Italian manufacturing firms. We employ both parametric and non-parametric analysis. The last allows to detect presence of heterogeneity in the way the production is carried out within each sector. We review some traditional issues in the econometrics of production function estimation and explain how some of them can be solved exploiting the cross-sectional time-series nature of data. Results of the econometric analysis show that coefficients estimates tend to be robust with respect to different models employed. Analysis of levels of labor productivity confirms presence of significant intra-sector heterogeneity which persists over time.
    Keywords: Input and output relation, Panel data, Returns to scale .
  16. By: Antonio Fonfría (Universidad Complutense de Madrid. Facultad de Ciencias Económicas y Empresariales. Dpto. Economía aplicada.); Isabel Alvarez (Universidad Complutense de Madrid. Facultad de Ciencias Económicas y Empresariales. Dpto. Economía aplicada.); Carlos Díaz de la Guardia (Universidad Complutense de Madrid. Facultad de Ciencias Económicas y Empresariales. Dpto. Economía aplicada.)
    Abstract: This paper analyses the main changes occurred in the productive structure of Spanish manufacturing industry in the last years, by relating them to variations in economic results observed therein and their realtionships. The analysis was carried out to three figures on the NACE and registers variables relative to the economic structure and performance of sectors.
    Date: 2005
  17. By: Dragana Djurdjevic (Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology))
    Abstract: In this paper, I investigate employment behaviour of women one year after childbirth. Since the study is based on a sample of mothers only, a corrective method for selection into motherhood has been applied. In the empirical work, I use the family sex composition as an instrument for fertility. The primary focus of this study is to investigate the regional differences in the labour supply of women after childbirth. In Switzerland, childcare policy is an area being the responsibility of cantons and communes. There are thus considerable geographical, linguistic and cultural differences in childcare provision within the country. For instance, childcare policy is more strongly integrated at the cantonal level in the French and Italian speaking regions ("Latin part") than in the German speaking regions ("German part") where communes operate at their own discretion. The federal structure of Switzerland poses thus issues of policy coherence. The main results of this paper indicate that Latin mothers are more likely to return to work and to report more hours of work than their German counterparts. As a consequence, a more coherent and more harmonised childcare policy at the federal level should prove worthwhile. Adopting measures that increase the availability and the quality of childcare is important to promote mother's full-time and continuous employment.
    Keywords: fertility, labour supply, selectivity, instrumental variables
    JEL: D1 J13 J21
    Date: 2005–01

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