nep-eec New Economics Papers
on European Economics
Issue of 2005‒09‒29
37 papers chosen by
Giuseppe Marotta
Universita di Modena e Reggio Emilia

  1. Low-pay higher pay and job satisfaction within the European Union: empirical evidence from fourteen countries By Luis Diaz-Serrano; Jose A. Cabral Vieira
  2. Has the Stability and Growth Pact Impeded Political Budget Cycles in the European Union? By Mark Mink; Jakob de Haan
  3. The effect of the Euro on country versus industry portfolio diversification By Thomas Flavin
  4. The European Consumer: United In Diversity? By Lemmens, A.; Croux, C.; Dekimpe, M.G.
  5. Trade Spillovers of Fiscal Policy in the European Union: A Panel Analysis By Beetsma, Roel; Giuliodori, Massimo; Klaassen, Franc
  6. M&As Performance in the European Financial Industry By Campa, José Manuel; Hernando, Ignacio
  7. Business Cycle Sychronization in the Enlarged EU By Darvas, Zsolt; Szapáry, György
  8. Monetary policy predictability in the euro area: An international comparison By Bjørn-Roger Wilhelmsen; Andrea Zaghini
  9. Bank Finance versus Bond Finance: What Explains the Differences Between the US and Europe? By De Fiore, Fiorella; Uhlig, Harald
  10. Convergence of Electricity Wholesale Prices in Europe? : A Kalman Filter Approach By Georg Zachmann
  11. Decomposing European bond and equity volatility By Christiansen, Charlotte
  12. Does it matter where patent citations come from? Inventor versus examiner citations in European patents By Criscuolo,Paola; Verspagen ,Bart
  13. The current state of accounting harmonization: impediments to and benefits from harmonization By V. VANSTEEGER
  14. The Making of Cultural Policy: A European Perspective By Frederick van der Ploeg
  15. Regional Versus Global Integration of Euro Zone Retail Banking Markets: Understanding the Recent Evidence from Price-Based Integration Measures By Kleimeier,Stefanie; Sander,Harald
  16. Income Volatility and Residential Mortgage Delinquency: Evidence from 12 EU countries By Luis Diaz-Serrano
  17. The stability pact pains : a forward-looking assessment of the reform debate By Buti,Marco; Eijffinger,Sylvester; Franco,Daniele
  18. Capital Structure Policies in Europe: Survey Evidence By Brounen, D.; Jong, A. de; Koedijk, C.G.
  19. The Obesity Epidemic in Europe By Anna Sanz De Galdeano
  20. How Domestic is the Fama and French Three-Factor Model? An Application to the Euro Area By Moerman, G.A.
  21. Indirect investment in real estate: Listed companies and funds By Suarez, Jose L.; Vassalo, Amparo
  22. Turbulence and Unemployment in a Job Matching Model By Wouter J. Den Haan; Christian Haefke; Garey Ramey
  23. Price setting in the euro area: Some stylized facts from Individual Consumer Price Data By Emmanuel Dhyne; Luis J. Álvarez; Hervé Le Bihan; Giovanni Veronese; Daniel Dias; Johannes Hoffmann; Nicole Jonker; Patrick Lünnemann; Fabio Rumler; Jouko Vilmunen
  24. Time-varying Beta Risk of Pan-European Sectors: A Comparison of Alternative Modeling Techniques By Sascha Mergner
  25. Exchange-Rate Pass-Through to Import Prices in the Euro Area By José Manuel Campa; Linda S. Goldberg; José M. González-Mínguez
  26. Effects of Employment Protection on Worker and Job Flows: Evidence from the 1990 Italian Reform By Kugler, Adriana D.; Pica, Giovanni
  27. The wage penalty induced by part-time work: the case of Belgium By Maria Jepsen; Sile O'Dorchai; Robert Plasman; François Rycx
  28. Do Foreign Investors Care about Labor Market Regulations? By Beata Smarzynska Javorcik; Mariana Spatareanu
  29. The Curse and Blessing of Training the Unemployed in a Changing Economy: the Case of East Germany after Unification By Lechner, Michael; Miquel, Ruth; Wunsch, Conny
  30. What Is Behind Stagnant Unemployment in Ukraine: The Role of the Informal Sector By Olga Kupets
  31. Determinants of Foreign Direct Investment in Iceland By Helga Kristjánsdóttir
  32. Corporate Growth and Industrial Dynamics: Evidence from French Manufacturing By Giulio Bottazzi; Alex Coad; Nadia Jacoby; Angelo Secchi
  33. Single Mothers and Incentives to Work: The French Experience By Libertad González Luna
  34. Fiscal Divergence and Business Cycle Synchronization: Irresponsibility is Idiosyncratic By Darvas, Zsolt; Rose, Andrew K; Szapáry, György
  35. Everything you Always Wanted to Know about Inventors (but Never Asked): Evidence from the PatVal-EU Survey By Paola Giuri; Myriam Mariani; Stefano Brusoni; Gustavo Crespi; Dominique Francoz; Alfonso Gambardella; Walter Garcia-Fontes; Aldo Geuna; Raul Gonzales; Dietmar Harhoff; Karin Hoisl; Christian Lebas; Alessandra Luzzi; Laura Magazzini; Lionel Nesta; Önder Nomaler; Neus Palomeras; Pari Patel; Marzia Romanelli; Bart Verspagen
  36. Faculty Retention factors at European Business Schools. How Deans and Faculty Perceptions Differ. By Moratis, L.; Baalen, P.J. van; Teunter, L.H.; Verhaegen, P.H.A.M.
  37. The European Social Survey. Methodological Aspects By Anna Cuxart; Clara Riba

  1. By: Luis Diaz-Serrano (National University of Ireland Maynooth, IZA and CREB); 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. Then we test for differences in reported job satisfaction between low- and higher-paid workers. We also explain the existence of differences in the determinants of job satisfaction between these two types of workers and across countries. 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
  2. By: Mark Mink; Jakob de Haan
    Abstract: This paper examines whether there is a political budget cycle (PBC) in countries in the euro area. Using a multivariate model for the period 1999-2004 and various election indicators we find strong evidence that the Stability and Growth Pact has not restricted fiscal policy makers in the euro area in pursuing expansionary policies before elections. In an election-year – but not in the year prior to the election – the budget deficit increases. This result is in line with third generation PBC models, which are based on moral hazard. We also find a significant but small partisan effect on fiscal policy outcomes.
    Keywords: fiscal policy, political budget cycle, Stability and Growth Pact
    JEL: D72 D78 E62
    Date: 2005
  3. By: Thomas Flavin (National University of Ireland, Maynooth)
    Abstract: We examine the relative benefits of industrial versus geographical diversification in the Euro zone before and after the introduction of the common currency. A priori, one may expect that increased stock market correlation would precipitate a move from geographical towards industrial diversification. We employ the empirical model of Heston and Rouwenhorst but show that adopting a panel data approach is a more efficient estimation method. We find evidence of a shift in factor importance; from country to industry. However, this is not exclusive to the Euro zone but is also present for non-EMU European countries. Therefore, fund managers should pursue industrial rather than geographical diversification strategies.
    Keywords: Portfolio diversification,industry and country effects, Euro,
    JEL: F36 G11 G15
    Date: 2004–10
  4. By: Lemmens, A.; Croux, C.; Dekimpe, M.G. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The ongoing unification which takes place on the European political scene, along with recent advances in consumer mobility and communication technology, raises the question whether the European Union can be treated as a single market to fully exploit the potential synergy effects from pan-European marketing strategies. Previous research, which mostly used domain-specific segmentation bases, has resulted in mixed conclusions. In this paper, a more general segmentation base is adopted, as we consider the homogeneity in the European countries’ Consumer Confidence Indicators. Moreover, rather than analyzing more traditional static similarity measures, we adopt the concepts of dynamic correlation and cohesion between countries. The short-run fluctuations in consumer confidence are found to be largely country specific. However, a myopic focus on these fluctuations may inspire management to adopt multicountry strategies, foregoing the potential longer-run benefits from more standardized marketing strategies. Indeed, the Consumer Confidence Indicators become much more homogeneous as the planning horizon is extended. However, this homogeneity is found to remain inversely related to the cultural, economic and geographic distances among the various Member States. Hence, pan-regional rather pan-European strategies are called for.
    Keywords: Consumer Confidence;Dynamic Correlation;European Unification;
    Date: 2005–04–07
  5. By: Beetsma, Roel; Giuliodori, Massimo; Klaassen, Franc
    Abstract: We explore the international spillovers from fiscal policy shocks via trade in Europe. A fiscal expansion stimulates domestic activity, which leads to more foreign exports and, hence, higher foreign output. To quantify this, we combine a panel VAR model in government spending, net taxes and GDP with a panel trade model. On average, a public spending increase equal to 1% of GDP implies 2.3% more foreign exports over the first two years. The corresponding figure for an equal-size net tax reduction is 0.6%. Both estimates are statistically significant. As far as the effect on foreign activity is concerned, a 1% of GDP spending increase (net tax reduction) in Germany on average raises GDP of trading partners by 0.23% (0.06%) over the first two years. These figures are likely to form lower bounds for the actual effects and suggest that it may be worthwhile to further investigate the benefits from coordinated fiscal expansions (contractions) in response to European-wide cyclical downturns (upswings)
    Keywords: coordination; European Union; Fiscal shocks; impulse responses; trade spillovers
    JEL: E62 F41 F42
    Date: 2005–09
  6. By: Campa, José Manuel; Hernando, Ignacio
    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 the merger. Merger announcements implied positive excess returns to the shareholders of the target company around the date of the announcement, with a slight positive excess-return on the 3-months 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 both targets and acquirers. The paper also provides evidence on changes in the operating performance for the subsample of merges involving banks. M&As usually involved targets with lower operating performance than the average in their sector. The transaction 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 these firms also experience efficiency improvements.
    Keywords: banking; European integration; mergers and acquisitions
    JEL: G21 G34
    Date: 2005–08
  7. By: Darvas, Zsolt; Szapáry, György
    Abstract: This paper analyses the synchronization of business cycles between new and old EU members using various measures. The main findings are that Hungary, Poland and Slovenia have achieved a high degree of synchronization for GDP, industry and exports, but not for consumption and services. The other CEECs have achieved less or no synchronization. There has been significant increase in synchronization of GDP and its major components within EMU. This lends support to the argument of OCA endogeneity but there is also evidence of a world cycle. The consumption-correlation puzzle remains, but its magnitude has greatly diminished in the EMU members.
    Keywords: business cycle synchronization; consumption-correlation puzzle; EMU; new EU members; OCA endogeneity
    JEL: E32 F41
    Date: 2005–08
  8. By: Bjørn-Roger Wilhelmsen (Norges Bank); Andrea Zaghini (Banca d’Italia)
    Abstract: The paper evaluates the ability of market participants to anticipate monetary policy decisions in the euro area and in 13 other countries. First, by looking at the magnitude and the volatility of the changes in the money market rates we show that the days of policy meetings are special days for financial markets. Second, we find that the predictability of the ECB’s monetary policy is fully comparable (and sometimes slightly better) to that of the FED and the Bank of England. Finally, an econometric analysis of the ability of market participants to incorporate in the current money rates the expected changes in the key policy rate shows that in the euro area policy decisions are anticipated well in advance.
    Keywords: Monetary policy, Predictability, Money market rates
    JEL: E4 E5 G1
    Date: 2005–09–02
  9. By: De Fiore, Fiorella; Uhlig, Harald
    Abstract: We present a dynamic general equilibrium model with agency costs, where heterogeneous firms choose between two alternative instruments of external finance - corporate bonds and bank loans. We characterize the financing choice of firms and the endogenous financial structure of the economy. The calibrated model is used to address questions such as: What explains differences in the financial structure of the US and the euro area? What are the implications of these differences for allocations? We find that a higher share of bank finance in the euro area relative to the US is due to lower availability of public information about firms' credit worthiness and to higher efficiency of banks in acquiring this information. We also quantify the effect of differences in the financial structure on per-capita GDP.
    Keywords: agency costs; financial structure; heterogeneity
    JEL: C68 E20
    Date: 2005–09
  10. By: Georg Zachmann
  11. By: Christiansen, Charlotte (Department of Accounting, Aarhus School of Business)
    Abstract: No abstract
    Keywords: European Asset Markets; GARCH; International Finance; Volatility Spillover
    Date: 2005–09–20
  12. By: Criscuolo,Paola; Verspagen ,Bart (MERIT)
    Abstract: This paper investigates whether the distinction between patent citations added by the inventor or the examiner is relevant for the issue of geographical concentration of knowledge flows (as embodied in citations). The distinction between inventor and examiner citations enables us to work with a more refined citation indicator of knowledge flows. We use information in the search reports of patent examiners at the European Patent Office to construct our dataset of regional patenting in Europe, and apply various econometric models to investigate our research question. The findings point to a significant localization effect of inventor citations, after controlling for various other factors, and hence suggest that knowledge flows are indeed geographically concentrated. This holds true also for a sub-sample of patents owned by 169 large multinational enterprises (MNEs). The results for the sample of MNEs suggest that multinational firms seek out specific regional knowledge specializations (and hence at least partly reinforce geographical concentration), but are also able to transfer knowledge "easier" over larger distances.
    Keywords: research and development ;
    Date: 2005
    Abstract: Although the EU has made progress towards harmonization of accounting law, this cannot hide the fact that the harmonization of the financial accounting information across Europe, through the accounting directives did not reach the intended level of comparability and transparency. Through the adoption of IFRS a higher level of harmonization has been pursued. Up to the present, the implementation of IFRS in many European countries is only required for the consolidated statement of listed companies. To this day, numerous studies have focused on harmonization and convergence of financial accounting information in Europe, addressing impediments to convergence and providing the level of adoption of IFRS in the consolidated statements of listed European companies. However, less attention has been paid to the impact of implementing IFRS in the consolidated accounts of listed companies on the statutory accounting of listed and non-listed companies. In this paper, the pros and cons of complete harmonization, i.e. the implementation of IFRS for the statutory accounts is discussed. In the last part, an illustrative case study compares the position taken by the IASB and the related treatments in Belgian GAAP and the fourth directive. Whether national GAAP is to converge towards IFRS, or IFRS will become mandatory for statutory accounts, it is important to highlight the particular differences between both sets of standards. Although we worked on a spot basis, as we only have treated the differences concerning tangible and intangible assets, this gives a good example of the particular harmonization difficulties most European countries will have to cope with.
    Keywords: harmonization, IFRS, SME, tangibles, intangibles, fiscal neutrality
    Date: 2005–08
  14. By: Frederick van der Ploeg
    Abstract: No good comparable data on sizes of cultural sectors of the countries of Europe exist. Still, local and national governments of Europe spend substantial resources on culture and cultural sectors contribute significantly to employment and national income. After briefly describing special features of cultural goods and clarifying some misconceptions about the value of culture, valid and invalid arguments for subsidising culture are discussed. Although it is easy to justify government support for preservation of heritage, this is more difficult for the performing arts. Due to changing technologies and advent of E-culture classic public-good arguments for government intervention in broadcasting and other cultural activities become less relevant. Different institutions varying from selection by arts councils, bureaucrats or politicians to less directed tax incentives lead to different cultural landscapes. Theories of delegation suggest delegating the judgement on artistic qualities and execution of cultural policy to an independent Arts Fund. The Minister of Culture should concentrate on formulating a mission for cultural policy and make sure it is implemented properly. The insights of the theories of local public goods and federalism are applied to the making of cultural policy in Europe. Different approaches to international cultural policy in Europe are discussed. The overview concludes with lessons for the making of cultural policy in Europe.
    Keywords: cultural policy, heritage, performing arts, museums, quality, participation, vouchers, tax incentives, quality, politicians, bureaucrats, delegation
    JEL: H20 H40 P51 Z11
    Date: 2005
  15. By: Kleimeier,Stefanie; Sander,Harald (METEOR)
    Abstract: This study investigates the current state of euro zone banking market integration by applying convergence and cointegration measures to mortgage and short-term corporate loan markets. These two measures of integration often lead to contradicting conclusions and are therefore comparatively analyzed. As an innovation to the literature, convergence measures are exposed to a difference-in-differences methodology which allows separating euro zone-specific from global integration effects. Our results show that euro zone-specific convergence exists mainly in the pre-EMU period whereas cointegration is especially prominent before 1993 and after 1998 but hardly present in between. Overall, we conclude that (1) in the presence of exchange rate uncertainty, cross-country convergence should focus on margins rather than rates, (2) convergence of retail banking interest rates is largely a result of integrating money and bonds markets in anticipation of the single currency and (3) a monetary union can produce (co)integration when retail rates react similarly to a single monetary policy rate. Thus, for the euro zone it appears that convergence measures provide the most information for the period leading up to the EMU whereas cointegration is more useful during the EMU period as well as prior to the ERM crisis in 1992.
    Keywords: monetary economics ;
    Date: 2005
  16. By: Luis Diaz-Serrano (National University of Ireland Maynooth, IZA Bonn, CREB Barcelona)
    Abstract: We investigate the socio-economic determinants of mortgage delinquency in 12 EU countries and observe that income volatility significantly increases the mortgage delinquency risk. This pattern even holds for borrowers with higher-income profiles if volatility in income is high enough. From this result we can draw the following conclusions i) mortgage protection insurance policies might be failing to cover those borrowers most in need ii) the existence of credit market imperfections, and iii) the inability for a number of borrowers most at income risk to accumulate precautionary savings in order to meet mortgage payments when shocks in income arise.
    Keywords: Income volatility,mortgage delinquency,mortgage insurance
    JEL: D1 R0 J0
    Date: 2005–02
  17. By: Buti,Marco; Eijffinger,Sylvester; Franco,Daniele (Tilburg University, Center for Economic Research)
    Abstract: The Stability and Growth Pact has been under fire ever since it was born. But is the Pact a flawed fiscal rule? Against established criteria for an ideal fiscal rule, its design and compliance mechanisms show strengths and weaknesses. The latter tend to reflect tradeoffs typical of supra-national arrangements. In the end, only a higher degree of fiscal integration would remove the inflexibility inherent in the recourse to predefined budgetary rules. No alternative solution put forward in the literature appears clearly superior. This does not mean that the original Pact of 1997 could not be improved. The debate on the SGP has shown that any reform should aim at overcoming the excessive uniformity of the rules, improving their transparency, correcting pro-cyclicality and strengthening enforcement. The reform of the Pact agreed in 2005 moves in this direction but leaves open a number of issues.
    Keywords: fiscal rules;Economic and Monetary Union;Stability and Growth Pact; H7; EMS;fiscal policy
    JEL: E61 H3 H6
    Date: 2005
  18. By: Brounen, D.; Jong, A. de; Koedijk, C.G. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: In this paper we present the results of an international survey among 313 CFOs on capital structure choice. We document several interesting insights on how theoretical concepts are being applied by professionals in the U.K., the Netherlands, Germany, and France and we directly compare our results with previous findings from the U.S. Our results emphasize the presence of pecking-order behavior. At the same time this behavior is not driven by asymmetric information considerations. The static trade-off theory is confirmed by the importance of a target debt ratio in general, but also specifically by tax effects and bankruptcy costs. Overall, we find remarkably low disparities across countries, despite the presence of significant institutional differences. We find that private firms differ in many respects from publicly listed firms, e.g. listed firms use their stock price for the timing of new issues. Finally, we do not find substantial evidence that agency problems are important in capital structure choice.
    Keywords: International economics;financial economics;capital structure;debt maturity;equity issues;
    Date: 2005–02–01
  19. By: Anna Sanz De Galdeano (CSEF, University of Salerno)
    Abstract: This paper uses longitudinal micro-evidence from the European Community Household Panel to investigate the obesity phenomenon in nine EU countries from 1998 to 2001. The author documents cross-country prevalence, trends and cohort-age profiles of obesity among adults and analyses the socioeconomic factors contributing to the problem. The associated costs of obesity are also investigated, both in terms of health status, health care spending and absenteeism.
    Keywords: Obesity; Body mass index, Demand for health care
    JEL: I12 I18
    Date: 2004–09–01
  20. By: Moerman, G.A. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The euro area has faced a high number of monetary and policy changes in the recent past as a consequence of the European integration process and, naturally, these developments have important implications for portfolio diversification and asset pricing. Therefore, this paper concentrates on the performance of a specific asset pricing model: the Fama and French threefactor model. Griffin (2002) shows that the Fama and French factors are country specific for the U.S., the U.K, Canada, and Japan. We apply the same methodology to the euro area countries and find that even in this very integrated area the domestic three-factor model outperforms the euro area three-factor model. However, the relative performance of the euro area wide model is increasing, especially for countries with a high number of listed stocks. This could be interpreted as evidence of a higher level of equity market integration caused by lower investment barriers and a changing point of view of institutional investors. Furthermore, we extend the methodology and also test an industry-specific three-factor model. Our findings suggest that lower pricing can be acquired using an industry-specific model relative to the euro area three-factor model.
    Keywords: Asset pricing;Fama-French factors;industry factor model;European integration;euro area stock;
    Date: 2005–06–06
  21. By: Suarez, Jose L. (IESE Business School); Vassalo, Amparo (IESE Business School)
    Abstract: In Europe today, there are two main vehicles for indirect investment in real estate; real estate investment funds, on the one hand, and, on the other, listed real estate companies. With these instruments, not only does the investor take a position in the real estate market, he/she also acquires different risk/return structures which may vary according to the instrument being used. In some European countries, real estate companies have modified their financial structure and tax position by adopting a legal form based on REITs (Real Estate Investment Trusts), which originated in the US, which changes their position regarding real estate funds. In this document we shall compare real estate funds and listed real estate companies and analyse the appearance of REITs in Europe and their impact on the real estate industry.
    Keywords: real estate; real estate investment; real estate fund; real estate company;
    Date: 2005–07–25
  22. By: Wouter J. Den Haan; Christian Haefke; Garey Ramey
    Abstract: According to Ljungqvist and Sargent (1998), high European unemployment since the 1980s can be explained by a rise in economic turbulence, leading to greater numbers of unemployed workers with obsolete skills. These workers refuse new jobs due to high unemployment benefits. In this paper we reassess the turbulence-unemployment relationship using a matching model with endogenous job destruction. In our model, higher turbulence reduces the incentives of employed workers to leave their jobs. If turbulence has only a tiny effect on the skills of workers experiencing endogenous separation, then the results of Lungqvist and Sargent (1998, 2004) are reversed, and higher turbulence leads to a reduction in unemployment. Thus, changes in turbulence cannot provide an explanation for European unemployment that reconciles the incentives of both unemployed and employed workers.
    Keywords: Skill loss, European unemployment puzzle
    JEL: E24 J64
    Date: 2004–11
  23. By: Emmanuel Dhyne (National Bank of Belgium, Research Department); Luis J. Álvarez (Banco de España); Hervé Le Bihan (Banque de France); Giovanni Veronese (Banca d'Italia); Daniel Dias (Banco de Portugal); Johannes Hoffmann (Deutsche Bundesbank); Nicole Jonker (De Nederlandsche Bank); Patrick Lünnemann (Banque Centrale du Luxembourg); Fabio Rumler (Oesterreichische Nationalbank); Jouko Vilmunen (Suomen Pankki)
    Abstract: This paper documents patterns of price setting at the retail level in the euro area, summarized in six stylized facts. First, the average euro area monthly frequency of price adjustment is 15 p.c., compared to about 25 p.c. in the US. Second, the frequency of price changes is characterized by substantial cross product heterogeneity - prices of oil and unprocessed food products change very often, while price adjustments are less frequent for processed food, non energy industrial goods and services. Third, cross country heterogeneity exists but is less pronounced. Fourth, price decreases are not uncommon. Fifth, price increases and decreases are sizeable compared to aggregate and sectoral inflation rates. Sixth, price changes are not highly synchronized across retailers. Moreover, the frequency of price changes in the euro area is related to several factors, such as seasonality, outlet type, indirect taxation, pricing practices as well as aggregate or product specific inflation.
    Keywords: Price-setting, consumer price, frequency of price change.
    JEL: E31 D40 C25
    Date: 2005–09
  24. By: Sascha Mergner (AMB Generali Asset Managers)
    Abstract: This paper investigates the time-varying behavior of systematic risk for eighteen pan-European industry portfolios. Using weekly data over the period 1987-2005, three different modeling techniques in addition to the standard constant coefficient model are employed: a bivariate t- GARCH(1,1) model, two Kalman filter based approaches as well as a bivariate stochastic volatility model estimated via the efficient Monte Carlo likelihood technique. A comparison of the different models' ex- ante forecast performances indicates that the random-walk process in connection with the Kalman filter is the preferred model to describe and forecast the time-varying behavior of sector betas in a European context.
    Keywords: Time-varying beta risk; Kalman filter; bivariate t-GARCH; stochastic volatility; efficient Monte Carlo likelihood; European industry portfolios
    JEL: C22 C32 G10 G12 G15
    Date: 2005–09–21
  25. By: José Manuel Campa; Linda S. Goldberg; José M. González-Mínguez
    Abstract: This paper presents an empirical analysis of transmission rates from exchange rate movements to import prices, across countries and product categories, in the euro area over the last fifteen years. Our results show that the transmission of exchange rate changes to import prices in the short run is high, although incomplete, and that it differs across industries and countries; in the long run, exchange rate pass-through is higher and close to one. We find no strong statistical evidence that the introduction of the euro caused a structural change in this transmission. Although estimated point elasticities seem to have declined since the introduction of the euro, we find little evidence of a structural break in the transmission of exchange rate movements except in the case of some manufacturing industries. And since the euro was introduced, industries producing differentiated goods have been more likely to experience reduced rates of exchange rate pass-through to import prices. Exchange rate changes continue to lead to large changes in import prices across euro-area countries.
    JEL: F3 F4
    Date: 2005–09
  26. By: Kugler, Adriana D.; Pica, Giovanni
    Abstract: This paper uses the Italian Social Security employer-employee panel to study the effects of the Italian reform of 1990 on worker and job flows. We exploit the fact that this reform increased unjust dismissal costs for firms below 15 employees, while leaving dismissal costs unchanged for bigger firms, to set up a natural experiment research design. We find that the increase in dismissal costs decreased accessions and separations for workers in small relative to big firms, especially in sectors with higher employment volatility. Moreover, we find that the reform reduced firms' employment adjustments on the internal margin as well as entry rates while increasing exit rates.
    Keywords: employment volatility; European unemployment; firms' entry and exit; unjust dismissal costs
    JEL: E24 J63 J65
    Date: 2005–09
  27. By: Maria Jepsen (DULBEA, Université libre de Bruxelles, Brussels,and European Trade Union Institute (ETUI).); Sile O'Dorchai (DULBEA, Université libre de Bruxelles, Brussels.); Robert Plasman (DULBEA, Université libre de Bruxelles, Brussels.); François Rycx (DULBEA, Université libre de Bruxelles, Brussels, and Institute for the Study of Labor (IZA, Bonn).)
    Abstract: Substantial research has been devoted to the estimation and explanation of the gender wage gap. The effects of work status on wages have been studied somewhat less. This article draws on existing work to generate new estimates of the wage penalty associated with part-time employment in Belgium. Given the fact that women remain the primary caregivers, almost solely in charge of housework, part-time employment has often been presented as an ideal solution for those wanting to combine family and professional responsibilities. However, parttime employment has many flaws, not the least of which is the wage penalty it induces. On the basis of the 1995 Structure of Earnings Survey (SES), we estimate the wage gap between part-time and full-time work for a sample of women only. Based on our results, we advance explanations related to human capital and productivity differences, types of job and industry branches, personal characteristics of part-timers, etc. We also compare the results with earlier results for Belgium based on the European Community Household Panel (ECHP). The unexplained part of the part-time wage gap allows us to assess the degree to which labour markets discriminate against part-timers. The existence of such discrimination suggests that equal opportunities policies should focus not only on labour market conditions but also on a more equal sharing of domestic work between men and women.
    Keywords: female labour supply, work status, part-time employment, wage gap, decomposition
    JEL: J21 J22 J24 J31 J71 C31
    Date: 2005–09
  28. By: Beata Smarzynska Javorcik; Mariana Spatareanu
    Abstract: This study investigates whether labor market flexibility affects foreign direct investment (FDI) flows across 19 Western and Eastern European countries. The analysis uses firm level data on new investments undertaken during 1998-2001. The study employs a variety of proxies for labor market regulations reflecting the flexibility of individual and collective dismissals, the length of the notice period and the required severance payment along with controls for business climate characteristics. The results suggest that greater flexibility in the host country’s labor market in absolute terms or relative to that in the investor’s home country is associated with larger FDI inflows.
    Keywords: Foreign Direct Investment, Labor Market Regulation, Firm-level data
    JEL: F21 F23 J0
    Date: 2005–09
  29. By: Lechner, Michael; Miquel, Ruth; Wunsch, Conny
    Abstract: We analyse the effects of government sponsored training for the unemployed conducted during East German transition. For the microeconometric analysis, we use a new, large and informative administrative database that allows us to use matching methods to reduce potential selection bias, to study different types of programmes, and to observe interesting labour market outcomes over eight years. We find that, generally, all training programmes under investigation increase long-term employment prospects and earnings. However, as an important exception, the longer training programmes are on average not helpful for their male participants. At least part of the explanation for this negative result is that caseworkers severely misjudged the structure of the future demand for skills.
    Keywords: active labour market policy; causal effects; gender differences; matching estimation; nonparametric identification; panel data; programme evaluation
    JEL: J68
    Date: 2005–08
  30. By: Olga Kupets (National University "Kyiv-Mohyla Academy", Kiev and IZA Bonn)
    Abstract: In recent years there has been much policy discussion of the impact of unemployment benefits and other factors on unemployment duration in developed and transition countries. This paper presents first evidence on the determinants of unemployment duration in Ukraine. Using individual-level data from the first wave of the Ukrainian Longitudinal Monitoring Survey (ULMS -2003), which cover the period 1997-2003, we find no significant effect of benefit receipt on exits from unemployment. However, our survival analysis confirms the hypothesis that income from casual activities or subsidiary farming has strong disincentive effect on the hazard of re-employment in Ukraine. The results also indicate that individual’s age, marital status and gender, the level of education and place of residence are significantly related to the total time spent out of work. The estimates of the baseline hazard parameters do not suggest any marked negative duration dependence.
    Keywords: unemployment duration, casual work, transition countries, semiparametric duration analysis
    JEL: J64 J68 P23
    Date: 2005–09
  31. By: Helga Kristjánsdóttir (University of Iceland)
    Abstract: This paper investigates whether the low foreign direct investment in Iceland can be explained by its geographical location together with market size measures. The effects of these factors on inward FDI are analyzed by means of the gravity model. The model is also applied to analyze sector, trade bloc and country specific effects. The research is based on panel data, running over countries, sectors and years. Results indicate that distance negatively affects FDI and that FDI appears to be more driven by wealth effects than market size effects.
    Keywords: foreign direct investment; gravity model
    JEL: F21 F23
    Date: 2005–09
  32. By: Giulio Bottazzi; Alex Coad; Nadia Jacoby; Angelo Secchi
    Abstract: We report several characteristics of industrial dynamics, including the firm size distribution, Gibrat's Law, and also the distribution of growth rates and their autocorrelation. We use a variety of econometric techniques, looking first at the aggregate and subsequently at a sectoral level. Many of our results corroborate previous findings, but there are also several surprises. For example, although previous findings on US and Italian data find that the growth rate distribution follows the Laplace density (i.e. is 'tent-shaped'), the French growth rates distribution has noticeably fatter tails. Growth rates depend negatively on size but the relationship does not seem to be linear, with larger firms possibly growing faster than medium-sized ones. It also appears that growth rate autocorrelation may vary with firm size: autocorrelation is negative for smaller firms, but the magnitude seems to decrease with size and becomes positive for larger firms.
    Keywords: Industrial dynamics, Gibrat's Law, Firm Growth, Aggregation.
    Date: 2005–09–11
  33. By: Libertad González Luna
    Abstract: This paper analyzes the effect of the 1998 reform of the French single parents allowance on the labor supply of single mothers with very young children. The reform aimed at encouraging participation by allowing eligible single parents to accumulate benefits and labor earnings for a limited period of time. Using data from the French Employment Survey, the analysis shows that single mothers affected by the reform had experienced a significant increase in their employment rate four years after the reform was implemented. During the same period, the employment rate of married mothers with young children did not experience a significant change, suggesting that at least part of the increase was a consequence of the reform. These results provide some evidence that benefit schedules that provide financial incentives to work can have significant effects in getting single moms back to work, even in the presence of very young children.
    Keywords: Single mothers, labor supply, welfare benefits
    JEL: I38 J21 H53
    Date: 2005–03
  34. By: Darvas, Zsolt; Rose, Andrew K; Szapáry, György
    Abstract: Using a panel of 21 OECD countries and 40 years of annual data, we find that countries with similar government budget positions tend to have business cycles that fluctuate more closely. That is, fiscal convergence (in the form of persistently similar ratios of government surplus/deficit to GDP) is systematically associated with more synchronized business cycles. We also find evidence that reduced fiscal deficits increase business cycle synchronization. The Maastricht 'convergence criteria', used to determine eligibility for EMU, encouraged fiscal convergence and deficit reduction. They may thus have indirectly moved Europe closer to an optimum currency area, by reducing countries' abilities to create idiosyncratic fiscal shocks. Our empirical results are economically and statistically significant, and robust.
    Keywords: criteria; European; Maastricht; monetary; Mundell; optimum; policy; union
    JEL: F42
    Date: 2005–08
  35. By: Paola Giuri; Myriam Mariani; Stefano Brusoni; Gustavo Crespi; Dominique Francoz; Alfonso Gambardella; Walter Garcia-Fontes; Aldo Geuna; Raul Gonzales; Dietmar Harhoff; Karin Hoisl; Christian Lebas; Alessandra Luzzi; Laura Magazzini; Lionel Nesta; Önder Nomaler; Neus Palomeras; Pari Patel; Marzia Romanelli; Bart Verspagen
    Abstract: By drawing information from a survey of inventors of 9,017 European patents (PatVal-EU), this paper provides novel and detailed data about the characteristics of the European inventors, the sources of their knowledge, the importance of formal and informal collaborations among researchers and institutions, the motivations to invent, and the actual use and economic value of the patents. This is important information as the unavailability of direct indicators has limited the scope and depth of the empirical studies on innovation.
    Date: 2005–09–10
  36. By: Moratis, L.; Baalen, P.J. van; Teunter, L.H.; Verhaegen, P.H.A.M. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Developments in the management education environment present business schools with several challenges. Among these, perhaps the most important to address relates to a mission-critical resource for business schools: faculty retention. In this paper, we position and examine this problem within the context of business schools. We present the results of a research project on faculty retention that was conducted in 2003-2004 among European business school faculty and deans. The results identify the most important factors for faculty retention and suggest that there are perception gaps between faculty and deans on these factors that could lead to distorted decision-making and suboptimal resource allocation.
    Keywords: European Business Schools;Retention Factors;Retention Strategies;Business Schools at Risk;Perception Gaps between Faculty and Deans;
    Date: 2005–06–01
  37. By: Anna Cuxart; Clara Riba
    Abstract: From a scientific point of view, surveys are undoubtedly a valuable tool for the knowledge of the social and political reality. They are widely used in the social sciences research. However, the researcher's task is often disturbed by a series of deficiencies related to some technical aspects that make difficult both the inference and the comparison. The main aim of the present paper is to report and justify the European Social Survey's technical specifications addressed to avoid and/or minimize such deficiencies. The article also gives a characterization of the non-respondents in Spain obtained from the analysis of the 2002 fieldwork data file.
    Keywords: European Social Survey, comparative studies, fieldwork, non-respondents
    JEL: C42
    Date: 2004–10

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