nep-eec New Economics Papers
on European Economics
Issue of 2006‒02‒12
thirty-one papers chosen by
Giuseppe Marotta
Universita di Modena e Reggio Emilia

  1. European Financial Market Integration in the Gruenderboom and Gruenderkrach: Evidence from European Cross-Listings By Markus Baltzer
  2. In Search for Determinants of Intra-Industry Trade within an Enlarged Europe By José Manuel Martins Caetano; Aurora Galego
  3. Assessing ECB?s Credibility During the First Years of the Eurosystem: A Bayesian Empirical Investigation By Gianni Amisano; Marco Tronzano
  4. Five Lisbon highlights; the economic impact of reaching these targets. By George Gelauff; Arjan Lejour
  5. Trend in European Manufacturing Location: Country versus Region By Eleonora CUTRINI
  6. Investing in European Stock Markets for High-Technology Firms By Christian Pierdzioch; Andrea Schertler
  7. The Market for Patents in Europe By Alfonso Gambardella; Paola Giuri; Alessandra Luzzi
  8. Can we afford to live longer in better health? By Ed Westerhout; Frank Pellikaan
  9. Projecting OECD health and long-term care expenditures: What are the main drivers? By OECD
  10. Lessons from Italian Monetary Unification By James Foreman-Peck
  11. EU Integration and its Implications for Asian Economies – What we Know and What Not By Rolf J. Langhammer; Rainer Schweickert
  12. Public sector efficiency: evidence for new EU member states and emerging markets By António Afonso; Ludger Schuknecht; Vito Tanzi
  13. British Interest Rate Convergence between the US and Europe: A Recursive Cointegration Analysis By Enzo Weber
  14. From Transition Crises to Macroeconomic Stability? Lessons from a Crises Early Warning System for Eastern European and CIS Countries By Kristina Kittelmann; Marcel Tirpak; Rainer Schweickert; Lúcio Vinhas de Souza
  15. Foreign Banks in Eastern Europe: Mode of Entry and Effects on Bank Interest Rates By Sophie Claeys; Christa Hainz
  16. Foreign Investment, Supermarkets, and the Restructuring of Supply Chains: Evidence from Eastern European Dairy Sectors By Johan F.M. Swinnen; Liesbeth Dries; Nivelin Noeva; Etleva Germenjia
  17. To concentration of reproduction in cohorts of US and European women By Vladimir M. Shkolnikov; Evgueni M. Andreev; René Houle; James W. Vaupel
  18. Profitability of foreign and domestic banks in Central and Eastern Europe: does the mode of entry matter? By Olena Havrylchyk; Emilia Jurzyk
  19. Dependent Forms of Self-employment in the UK: Identifying Workers on the Border between Employment and Self-employment By René Böheim; Ulrike Muehlberger
  20. American exceptionalism in a new light: a comparison of intergenerational earnings mobility in the Nordic countries, the United Kingdom and the United States By Jäntti, Markus; Bratsberg, Bernt; Røed, Knut; Raaum, Oddbjørn; Naylor, Robin; Österbacka, Eva; Bjørklund, Anders; Eriksson, Tor
  21. Hungarian Inflation Dynamics By Júlia Lendvai
  22. Why does Sweden have such high fertility? By Jan M. Hoem
  23. A study on policies and practices in selected countries that encourage childbirth: the case of Sweden By Gunnar Andersson
  24. The Third Child - A comparison between West Germany and Norway By David Alich
  25. Social segregation in secondary schools: How does England compare with other countries? By Stephen P. Jenkins; John Micklewright; Sylke V. Schnepf
  26. Single Motherhood and (Un)Equal EducationalOpportunities: Evidence for Germany By Philippe Mahler; Rainer Winkelmann
  27. Liberalisation of the Dutch notary profession; reviewing its scope and impact. By Nicole Kuijpers; Joëlle Noailly; Ben Vollaard
  28. Early retirement behaviour in the Netherlands; evidence from a policy reform. By Rob Euwals; Daniël van Vuuren; Ronald Wolthoff
  29. Human Capital Externalities and Growth of High- and Low-Skilled Jobs By Jens Suedekum
  30. Economic Growth of Agglomerations and Geographic Concentration of Industries – Evidence for Germany By Kurt Geppert; Martin Gornig; Axel Werwatz
  31. Comparable Estimates of Intergenerational Income Mobility in Italy By Patrizio Piraino

  1. By: Markus Baltzer (Department of Economics, University of Tuebingen)
    Date: 2006–01–13
  2. By: José Manuel Martins Caetano (Department of Economics, University of Évora); Aurora Galego (Department of Economics, University of Évora)
    Abstract: Most trade between the European Union (EU) and the Central and Eastern European Countries (CEEC) is inter-industrial in nature, based on comparative advantages. However, recent studies have uncovered structural changes in the nature of trade, the most unexpected being the rapid increase in Intra-industry trade (IIT). In this paper we characterise the dynamics of the CEEC-EU trade using several methodologies that evaluate the type of trade and price-quality ranges. The analysis confirms that there was a significant decline in inter-industrial trade and an increasing specialisation in vertical IIT. Moreover, we found substantial differences in the unit values of exported and imported goods, which suggest that the increasing weight of IIT in the EU-CEEC trade does not result from the factorial contents convergence of the traded goods. Therefore, these trends indicate the emergence of a new division of labour in the enlarged EU. Using a panel data approach we also identify the determinants of vertical and horizontal IIT. The results allow us to conclude that there are some differences in the determinants of these types of trade, although both seem to have a statistically significant relationship with country’s size and Foreign Direct Investment flows.
    Keywords: Intra-industry Trade, European Union enlargement, panel data
    JEL: F14 F15
    Date: 2006
  3. By: Gianni Amisano; Marco Tronzano
    Abstract: This paper extends Svensson (1994) ?simplest test?of in?ation target credibility inside a Bayesian econometric framework. We apply this approach to the initial years of the Eurosystem and obtain various estimates of ECB?s monetary policy credibility. Overall, our empirical evidence is robust to alternative prior assumptions, and suggests that the strategy followed by the ECB was successful in building a satisfactory degree of reputation. However, we ?nd some signi?cant credibility reversals concerning both anti-in?ationary and anti-de?ationary credibility. These reversals, in turn, are closely related to the evolution of the cyclical macroeconomic conditions in the Euro area.
  4. By: George Gelauff; Arjan Lejour
    Abstract: The Lisbon strategy could reinvigorate Europe's economy and boost employment. In 2000 the European leaders agreed to stimulate economic growth and employment and make Europe's economy the most competitive in the world. If Europe would really reach the goals they set, Europe's Gross Domestic Product could increase by 12 to 23% and employment by about 11%. This paper draws this conclusion after having analysed five of the most important Lisbon goals: the internal market for services, the reduction of administrative burdens, goals on improving human capital, the 3% target on research and development expenditures, and the 70% target on the employment rate. Using CPB's general equilibrium model for the world economy we have simulated the consequences for Europe of reaching the Lisbon targets in these fields.
    Keywords: Jobs creation and economic growth; Lisbon agenda; general equilibrium model
    JEL: E20 E61 D58 O52
    Date: 2006–01
  5. By: Eleonora CUTRINI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Abstract: The purpose of this paper is to investigate whether and to what extent European manufacturing location has been driven by regional localisation or national comparative advantages during the period 1985-2001. To this end, the relative concentration pattern of each industry is disentangled into within and between country components. The original methodology adopted is based on the use of the Theil dissimilarity entropy index allowing to handle two geographical levels of analysis. The evidence suggests that the agglomeration of manufacturing industries is more likely to find expression between the internal regions of each country rather than across countries. Counterintuitively, after the completion of the Single European Market the relevance of national border remains stable or even increase in the localisation of the majority of the sectors considered.
    Keywords: Theil dissimilarity entropy index, comparative advantages, european economic integration, european internal geography, relative concentration
    JEL: L16 L60 O18 O52 R12
    Date: 2005–12
  6. By: Christian Pierdzioch; Andrea Schertler
    Abstract: We used a recursive modeling approach to study whether investors could, in real time, have used information on the comovement of stock markets to forecast stock returns in European stock markets for high-technology firms. We used weekly data on returns in the Neuer Markt, the Nouveau Marché, the Alternative Investment Market, and the NASDAQ. We found substantial changes over time in the usefulness of the inter-European and cross-Atlantic comovement of stock markets for predicting stock returns. We also studied how monitoring the comovement of stock markets would have affected the performance of simple trading rules and investor’s markettiming skills.
    Keywords: Recursive modeling approach; Comovement of returns; Hightechnology firms learning by exporting, total factor productivity, export destination, quantile regression, instrumental variables
    JEL: B22 C32 E24
    Date: 2006–01
  7. By: Alfonso Gambardella; Paola Giuri; Alessandra Luzzi
    Abstract: By using the PatVal-EU dataset we find that the most important determinant of patent licensing is firm size. Patent breadth, value, protection, and other factors suggested by the literature also have an impact, but not as important. In addition, most of these factors affect the willingness to license, but not whether a license actually takes place. We discuss why this suggests that there are transaction costs in the markets for technology. The issue is important because many potential licenses are not licensed suggesting that the markets for technology can be larger, with implied economic benefits.
    Keywords: Licensing, Patent scope, Complementary assets, Firm size, Markets for technology
    Date: 2006–02–09
  8. By: Ed Westerhout; Frank Pellikaan
    Abstract: This document analyses the effects of ageing populations upon public finances. More specifically, it focuses on the implications of ageing for acute health care, long-term care, and public pension expenditure. It does so for 15 EU countries. It pays particular attention to three novel insights: <UL> <LI>a large part of health care spending relates to time to death rather than to age <LI>life expectancy may increase much faster than current demographic projections suggest, and <LI>the average health status may continue to improve in the future. </UL> It adopts a generational accounting model that incorporates health care costs during the last years of life, decomposed into an acute health care component and a long-term care component. <P> The projections show that gains in life expectancy increase age-related expenditure; better health has the opposite effect. Combined, these trends reduce health care expenditure and increase pension expenditure. Their joint effect upon public finance is rather modest, however. Hence, the assessment of public finances in most EU15 countries does not change: even if a faster increase in life expectancy should combine with an improvement in health, current fiscal and social security institutions are unsustainable.
    Keywords: ageing populations; fiscal sustainability
    JEL: H62 I10 J11
    Date: 2005–06
  9. By: OECD
    Abstract: This paper proposes a comprehensive framework for projecting public heath and long-term care expenditures. Notably, it considers the impact of demographic and non-demographic effects for both health and long-term care. Compared with other studies, the paper extends the demographic drivers by incorporating death-related costs and the health status of the population. Concerning non-demographic drivers of health care, the projection method accounts for income elasticity and a residual effect of technology and relative prices. For long-term care, the effects of increased labour participation, reducing informal care, and wage inflation are taken into account. Using this integrated approach, public health and long-term care expenditure are projected for all OECD countries for the years 2025 and 2050. Alternative scenarios are simulated, in particular a 'cost-pressure' and 'cost-containment' scenario, together with sensitivity analysis. Depending on the scenarios, the total health and long-term care spending is projected to increase on average across OECD countries in the range of 3.5 to 6 percentage points of GDP for the period 2005-2050. Cette étude propose un cadre assez complet pour effectuer des projections de dépenses de soins de santé et de soins de long terme. Notamment, à la fois pour les dépenses de santé et les soins de long terme, les effets des facteurs démographiques et non démographiques sont considérés dans l'analyse. En comparaison avec d'autres études, les effets démographiques ont été élargis pour incorporer les coûts liés à la mortalité et à l'état de santé de la population. Pour ce qui concerne les facteurs non démographiques des dépenses de santé, la méthode de projection incorpore un effet d'élasticité-revenu et l'effet résiduel de la technologie et des prix relatifs. Pour les soins de long terme, l'effet d'une participation accrue dans le marché du travail diminuant l'offre de soins informels, et de l'inflation des salaires ont été pris en compte. Sur la base de cette approche intégrée, les dépenses publiques de santé et des soins de long terme sont projetées pour tous les pays de l'OCDE et pour les années 2025 et 2050. Des scénarios alternatifs ont été simulés, en particulier un "scénario de pression sur les coûts" et un "scénario de contention des coûts", ainsi qu’une analyse de sensitivité. En fonction des scénarios, le total des dépenses de santé et des soins de long terme est projeté d'augmenter pour la moyenne de l’OCDE entre 3.5 et 6 points de PIB pour la période 2005-2050.
    Keywords: ageing populations, vieillissement de la population, longevity, longévité
    JEL: H51 I12 J11 J14
    Date: 2006–02
  10. By: James Foreman-Peck (Cardiff Business School)
    Abstract: This paper examines whether the states brought together in the Italian monetary union of the nineteenth century constituted an optimum monetary area, either before or after unification. Interest rate shocks indicate close relations between states in northern Italy but negative correlations between the North and the South before unification, suggesting some advantages of continued Southern monetary independence. The proportion of Southern Italian trade with the North was small, in contrast to intra- Northern trade, and therefore monetary independence imposed a light burden. Changes in the wheat market indicate that the South and North after unification (though not probably because of it) increasingly specialised according to their comparative advantages. Coupled with differences in economic behaviour of the Southern economy, this meant that monetary policies appropriate for the North were less so for the South. In the face of agricultural shocks originating in the New World and in France, the South would have gained from depreciating its exchange rate against the North or against the non-Italian world. As it was, nineteenth century Italian monetary union did not create the conditions for its own success, contrary to the findings of Frankel and Rose (1998) for the later twentieth century.
    Date: 2006–01–23
  11. By: Rolf J. Langhammer; Rainer Schweickert
    Abstract: In this paper, we analyse effects of EU integration on Asian countries. Since the early 1990s, it is especially the trade creation effect of monetary integration (so-called Rose effect) which is heavily debated in the literature. Recent papers seem to indicate that the Rose effect seems to be significant especially for countries like the old EU members which are already highly integrated in terms of trade and factor mobility. The potential discrimination effect against trade with third countries tends to increase with new member states entering EMU and could also affect Asian economies’ exports to Europe. At the same time, so-called overlap or similarity indices for trade patterns show an increasing similarity between EU, US, and Japanese exports to Asia on the one hand and Asian and European exports to industrialized countries on the other hand. These observations are consistent with recent policy responses, i.e., the focus of European contingent protection on Asian competitors, the desire of Asian countries to negotiate free trade agreements (FTA) with the US and Japan, and the EU’s response by probably entering into FTA negotiations with Asian countries, including ASEAN.
    Keywords: Trade, Monetary Integration, Protection, FTA, Overlap Index, Europe, Asia
    JEL: F13 F15 F31 O52 O53
    Date: 2006–01
  12. By: António Afonso (European Central Bank, Kaiserstrasse 29, Postfach 16 03 19, 60066 Frankfurt am Main, Germany.); Ludger Schuknecht (European Central Bank, Kaiserstrasse 29, Postfach 16 03 19, 60066 Frankfurt am Main, Germany.); Vito Tanzi (Inter-American Development Bank, 1300 New York Avenue, NW Washington, DC 20577, USA.)
    Abstract: In this paper we analyse public sector efficiency in the new member states of the European Union compared to that in emerging markets. After a conceptual discussion of expenditure efficiency measurement issues, we compute efficiency scores and rankings by applying a range of measurement techniques. The study finds that expenditure efficiency across new EU member states is rather diverse especially as compared to the group of top performing emerging markets in Asia. Econometric analysis shows that higher income, civil service competence and education levels as well as the security of property rights seem to facilitate the prevention of inefficiencies in the public sector.
    Keywords: Interest rate pass-through; euro area countries; panel cointegration
    JEL: E43 G21
    Date: 2006–01
  13. By: Enzo Weber
    Abstract: This paper addresses the question of the British state of convergence towards the Euro area, compared to the USA. Economically, the analysis is based on dependences in the money and capital markets, namely the uncovered interest parity (UIP) and the expectation hypothesis of the term structure (EHT). The econometric procedure consists of backward recursive calculations carried out in a cointegration framework. As the evidence for the single parities remains unconvincing, UIP and EHT are combined in a common model. Generally, the results are in favour of a growing British integration into the European Currency Union.
    Keywords: Nominal Convergence, Cointegration, UIP, Term Structure, Euro Area
    JEL: E43 E44 C32
    Date: 2006–01
  14. By: Kristina Kittelmann; Marcel Tirpak; Rainer Schweickert; Lúcio Vinhas de Souza
    Abstract: This paper uses a Markov regime-switching model to assess the vulnerability of a series of Central and Eastern European countries (i.e. Czech Republic, Hungary, Slovak Republic) and two CIS countries (i.e., Russia and Ukraine) during the period 1993–2004. For the new EU member states in Central and Eastern Europe, the results of our model show that the majority of crises in those countries can be explained by inconsistencies in the domestic policy mix and by the deterioration of macroeconomic fundamentals, as emphasized by first generation crises models, while for the CIS countries analysed, financial vulnerability type indicators were the most relevant, i.e., indicators connected with the second and third generation of crisis model better explain the vulnerability of these countries. Additionally, the set of indicators choosen by our model is rather heterogenous, supporting the superiority of a country-by-country approach.
    Keywords: EU, Central and Eastern Europe, CIS, early warning system, currency crisis, Markov switching
    JEL: F47 P20 C22
    Date: 2006–02
  15. By: Sophie Claeys (Department of Financial Economics and CERISE, Ghent University, W. Wilsonplein 5D, B-9000 Ghent, Tel.: +32-9-264 34 91, Fax.: +32-9-264 89 95.; Christa Hainz (Department of Economics, University of Munich, Akademiestr. 1/III, 80799 Munich, Tel.: +49-89-2180 3232, Fax.: +49-89-2180 2767.
    Abstract: Credit markets in many Eastern European countries are now dominated by foreign-owned banks. We analyze the development for foreign ownership and its impact on lending rate in ten Eastern European countries between 1995 and 2003. Currently, the majority of loans from foreign banks is granted by acquired banks. The presence of foreign acquired banks as measured by their relative number among the banks in our dataset increased somewhat slower than that of foreign de novo banks. However, since market entry through acquisition allows acquiring a credit portfolio and a customer base, acquired banks were able to expand their market share much faster than the foreign de novo banks. Our results also show that the interest rate decreased after foreign bank entry. Moreover, while the reduction in interest rates of domestic banks is more pronounced in the case of foreign entry through a de novo investment, foreign de novo banks charge higher interest rates than foreign acquired banks.
    Keywords: SME, Banking, Foreign Entry, Mode of Entry, Interest Rate
    JEL: D4 G21
    Date: 2006–02
  16. By: Johan F.M. Swinnen; Liesbeth Dries; Nivelin Noeva; Etleva Germenjia
    Abstract: The combination of transition and globalization since the early 1990s has caused dramatic changes in supply chains globally. This paper uses survey evidence from several Eastern European countries (Albania, Bulgaria, Poland, Slovakia, Romania and Russia) on how these forces affect the dairy sector. In many countries dairy farms are small family farms. Investments by foreign companies in processing and retailing and the opening to international markets have introduced higher standards, leading, in turn, to extensive contracting and vertical coordination in the dairy chain. In countries close to the EU the restructuring of the dairy chain was mostly driven by investments in dairy processing, while in countries further from the EU, and less advanced in transition, retail investments are playing a more important role in driving change throughout the dairy chain. There have been significant efficiency gains, and the vertical coordination had positive effects on farm investments and productivity, especially since the late 1990s. Evidence suggests that small dairy farms have generally benefited from the vertical coordination processes.
    Date: 2006
  17. By: Vladimir M. Shkolnikov (Max Planck Institute for Demographic Research, Rostock, Germany); Evgueni M. Andreev (Max Planck Institute for Demographic Research, Rostock, Germany); René Houle (Max Planck Institute for Demographic Research, Rostock, Germany); James W. Vaupel (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: We study inter-individual variability in number of children among women. Concentration ratio (CR) and percentile measures are used. In most countries CR has increasing from cohorts of the 1930s-40s onward due to rise in childlessness. In cohorts of the early 1960s CR varies from 0.24 to 0.46 among 20 countries. West Germany and the USA have the lowest values of CR, while Eastern European countries have the highest. The US CPS and FFS allow further exploring the variability. Fertility strongly varies across socio-demographic groups. Advanced groups of women experience childlessness of 30%, average fertility of 1.3-1.5 and CR of 0.45-0.49. Groups with lower qualification experience childlessness of 10 percent, average fertility of 2.4-3.0, and CR of 0.30-0.34. The inter-group contrast can not explain high concentration of reproduction in the USA, since variability is high within each group. Concentration of reproduction could be driven by women’s preferences/orientations toward family vs. career.
    Keywords: Europe, United States, fertility measurements, fertility schedules, gini's index
    JEL: J1 Z0
    Date: 2004–10
  18. By: Olena Havrylchyk; Emilia Jurzyk
    Abstract: Using data for 265 banks in the Central and Eastern European Countries for the period of 1995-2003, this paper analyses the differences in profitability between domestic and foreign banks. We show that foreign banks, especially greenfield institutions, earn higher profits than domestic banks. However, this effect is acquired, rather than inherited, since there is evidence that foreign banks tend to take over less profitable institutions. Profits of foreign banks in the CEEC also exceed profits of their parent banks, explaining the reasons for their entry. Further, we study benefits and costs of foreign ownership by analyzing determinants of profitability for domestic, takeover, and greenfield banks. Profits of foreign banks are less affected by macroeconomic conditions in their host countries. However, greenfield banks are sensitive to the situation of their parent banks. Only domestic banks enjoy higher profits in more concentrated banking markets, whereas takeover banks suffer from diseconomies of scale due to the fact that they acquired large institutions.
    Keywords: Foreign banks, Bank profits, Multinational banking, Transition economies
    JEL: G15 G21 F36
    Date: 2006
  19. By: René Böheim (Johannes Kepler University of Linz and IZA Bonn); Ulrike Muehlberger (Vienna University of Economics and B.A.)
    Abstract: We analyse the characteristics of workers who provide work on the basis of a civil or commercial contract, but who are dependent on or integrated into the firm for which they work. We argue that these dependent self-employed lose their rights under labour law, receive less favourable benefits from social security protection and are often beyond trade union representation and collective bargaining. Using data from the British Labour Force Survey we test two hypotheses: (1) Dependent self-employed workers are significantly different from both employees and (independent) self-employed individuals, thus forming a distinct group. (2) Dependent self-employed workers have lower labour market skills, less labour market attachment and, thus, less autonomy than self-employed workers. The data support our hypothesis that dependent self-employed workers are a distinct labour market group which differs from both employees and independent self-employed individuals. Men, older workers, those with low education and a low job tenure have greater odds of working in dependent self-employment than their counterparts. Our results suggest that dependent forms of self-employment are used by firms to increase labour flexibility.
    Keywords: self-employment, dependency, outsourcing
    JEL: K31 J21 L22
    Date: 2006–02
  20. By: Jäntti, Markus (Department of Economics and Statistics, Åbo Akademi University, Finland.); Bratsberg, Bernt (The Ragnar Frisch Centre for Economic Research); Røed, Knut (The Ragnar Frisch Centre for Economic Researc); Raaum, Oddbjørn (The Ragnar Frisch Centre for Economic Researc); Naylor, Robin (University of Warwick, Economics Department); Österbacka, Eva (Åbo Akademi University,Department of Economics and Statistics); Bjørklund, Anders (Swedish Institute for Social Research at Stockholm University); Eriksson, Tor (Aarhus School of Business, Department of Economics)
    Abstract: We develop methods and employ similar sample restrictions to analyse differences in intergenerational earnings mobility across the United States, the United Kingdom, Denmark, Finland, Norway and Sweden. We examine earnings mobility among pairs of fathers and sons as well as fathers and daughters using both mobility matrices and regression and correlation coefficients. Our results suggest that all countries exhibit substantial earnings persistence across generations, but with statistically significant differences across countries. Mobility is lower in the U.S. than in the U.K., where it is lower again compared to the Nordic countries. Persistence is greatest in the tails of the distributions and tends to be particularly high in the upper tails: though in the U.S. this is reversed with a particularly high likelihood that sons of the poorest fathers will remain in the lowest earnings quintile. This is a challenge to the popular notion of ’American exceptionalism’. The U.S. also differs from the Nordic countries in its very low likelihood that sons of the highest earners will show downward ’long-distance’ mobility into the lowest earnings quintile. In this, the U.K. is more similar to the U.S..
    Keywords: Intergenerational mobility; earnings inequality; long-run earnings
    JEL: C23 J62
    Date: 2005–12–25
  21. By: Júlia Lendvai (University of Namur, Economics Department.)
    Abstract: This paper estimates traditional and New Phillips curves for Hungary over the sample period 1995Q1 to 2004Q1. It presents the first structural Phillips curve estimations for a New EU Member State economy. We find that Hungarian inflation dynamics can be reasonably well described by a standard New Hybrid Phillips curve and by its open economy extension specifying imported goods as intermediate production goods. Our estimation results indicate that Hungarian inflation is significantly more inertial than Euro area inflation. Hungarian inflation inertia appears to be the result of pervasive backward looking price setting behaviour, while prices seem to be reset more frequently than in the Euro area. At the same time, Hungarian inflation dynamics is comparable to that of countries characterized by a relatively high average inflation rate.
    Keywords: New Keynesian Phillips curve, Inflation dynamics, Open economy.
    JEL: E31 E32
    Date: 2005
  22. By: Jan M. Hoem (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: By current European standards, Sweden has had a relatively high fertility in recent decades. During the 1980s and 1990s, the annual Total Fertility Rate (TFR) for Sweden undulated considerably around a level just under 1.8, which is a bit lower than the corresponding level in France and well above the level in West Germany. (In 2004 the Swedish TFR reached 1.76 on an upward trend.) The Swedish completed Cohort Fertility Rate (CFR) was rather constant at 2 for the cohorts that produced children in the same period; for France it stayed around 2.1 while the West-German CFR was lower and declined regularly to around 1.6. In this presentation, I describe the background for these developments and explain the unique Swedish undulations. Part of the explanation of the trend and level in Swedish fertility is the extensive battery of public family policies in the country. They reflect the great generosity, high flexibility, and universalistic approach of the whole system, where family policies are coordinated with educational policies and labor-market policies in an effort to promote the status of women and achieve equity for all residents. The state has been engaged in the development of high-quality all-day childcare arrangements available to all children, and has conducted campaigns to influence public attitudes toward a woman-friendly political culture. Reforms have been motivated by gender-equality considerations and by a drive to induce women to participate in the labor force and to induce men into parenting and childrearing. Legal rules are individualistic, as highlighted by the abolishment of the public widow’s pension and by a tax system where income tax is levied from the individual and not from the married couple or the household, as in Germany. Welfare-state benefits are directed similarly to the individual, not to the family. Policies can be said to focus on the equal right of working women to have children rather than of the right of mothers to have a job. There is no inclination in the Swedish system to encourage a mother to stay home and take care of her children; if anything there has been a move toward securing both-parent participation in childrearing.
    Keywords: Sweden, fertility
    JEL: J1 Z0
    Date: 2005–04
  23. By: Gunnar Andersson (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Swedish family policies are not directly aimed at encouraging childbirth. Their main goal has rather been to support women’s labour-force participation and to promote gender equality. The focus is to strengthen individuals so that they are able to pursue their family and occupational tracks without being too strongly dependent on other individuals. The reconciliation of family and working life of women has been facilitated by (i) individual taxation, which makes it less attractive for couples to pursue gendered segregation of work and care, (ii) an income-replacement based parental-leave system, which gives women incentives to establish themselves in the labour market before considering childbirth, and (iii) subsidized child-care, which allows women to return to work after parental leave. Fertility has fluctuated during recent decades but, as in the other Nordic countries with a similar welfare-state setup, it has stayed well above the European average. The Swedish context clearly is conducive to such “highest-low” fertility. In this study, I show that institutional factors seem to be far more decisive than cultural ones in shaping childbearing behaviour, and demonstrate some specific impacts of family policies on childbearing dynamics.
    Keywords: Sweden, fertility
    JEL: J1 Z0
    Date: 2005–03
  24. By: David Alich (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: The aim of this paper is to provide insights into third-birth dynamics in West Germany and Norway. Since third-birth the propensity between both countries differs remarkably, we seek to address the following questions in this paper: What are the characteristics of mothers with two and three children? What are the differences in third-birth dynamics between Norway and West Germany, and how can they be explained? Which factors have a similar influence on Norwegian and West German two-child mothers and their further fertility? We believe that a comparison of third-birth behavior between Norway and West Germany is of interest since the two nations are examples of two different European welfare state regimes. Therefore, they can serve as an example to point out the effects of socio-economic characteristics under different societal settings.
    Keywords: Germany, Germany/FRG, Norway, Scandinavia, education, fertility, large family, welfare states
    JEL: J1 Z0
    Date: 2006–02
  25. By: Stephen P. Jenkins (Institute for Social and Economic Research, University of Essex, and DIW Berlin); John Micklewright (Southampton Statistical Sciences Research Institute (S3RI) and School of Social Sciences, University of Southampton); Sylke V. Schnepf (S3RI, University of Southampton)
    Abstract: We provide new evidence about the degree of social segregation in England’s secondary schools, employing a cross-national perspective. Analysis is based on data for 27 rich industrialised countries from the 2000 and 2003 rounds of the Programme of International Student Assessment (PISA), using a number of different measures of social background and of segregation, and allowing for sampling variation in the estimates. England is shown to be a middle-ranking country, as is the USA. High segregation countries include Austria, Belgium, Germany and Hungary. Low segregation countries include the four Nordic countries and Scotland. In explaining England’s position, we argue that its segregation is mostly accounted for by unevenness in social background in the state school sector. Focusing on this sector, we show that cross-country differences in segregation are associated with the prevalence of selective choice of pupils by schools. Low-segregation countries such as those in the Nordic area and Scotland have negligible selection in schools. High segregation countries like Austria, Germany and Hungary have separate school tracks for academic and vocational schooling and, in each case, over half of this is accounted for by unevenness in social background between the different tracks rather than by differences within each track.
    Keywords: social segregation, secondary schools, England, cross-national comparison, PISA.
    JEL: D39 I21 I39
  26. By: Philippe Mahler (Socioeconomic Institute, University of Zurich); Rainer Winkelmann (Socioeconomic Institute, University of Zurich)
    Abstract: We examine the effect of single motherhood on children’s secondary school track choice using 12-year-old children drawn from the German Socio-Economic Panel. In line with previous studies for the U.S., the U.K. and Sweden, we find a negative correlation between single motherhood and children’s educational attainment. Looking for alternative explanations for this correlation, we use probit regression models to control for factors related to single motherhood such as higher educational background, lower household income and higher labor supply of the mother. Our evidence suggests that single motherhood reduces school attainment mainly because it is associated with lower resources (household income) available for the child.
    Keywords: school choice, educational attainment, binary response model, German Socio-Economic Panel
    JEL: I21 J12
    Date: 2005–09
  27. By: Nicole Kuijpers; Joëlle Noailly; Ben Vollaard
    Abstract: This study provides an overview of the policy of liberalisation that transformed the Dutch notary profession into one of the least regulated in Europe. We discuss the changes brought with the new Notary Act of 1999, the political debates and lobbying preceding the introduction of the Act, and its impact on the profession. We go into the likely effects on key indicators, including entry, notary fees and the (perceived) quality of service. We place the Dutch experiences in an international context by comparing the Dutch notary profession to the organisation and regulation of the profession in other countries, including the US, Quebec, Germany and Belgium.
    Keywords: notary profession; liberalisation
    JEL: K23
    Date: 2005–09
  28. By: Rob Euwals; Daniël van Vuuren; Ronald Wolthoff
    Abstract: In the early 1990s, the Dutch social partners agreed upon transforming the generous and actuarially unfair PAYG early retirement schemes into less generous and actuarially fair capital funded schemes. The starting dates of the transitional arrangements varied by industry sector. In this study, we exploit the variation in starting dates to estimate the causal impact of the policy reform on early retirement behaviour. We use a large administrative dataset, the Dutch Income Panel 1989-2000, to estimate hazard rate models for early retirement. We conclude that the policy reform induced workers to postpone early retirement. Model simulations show that the first phase of the transition has already led to an average retirement postponement by 4 months in the group of elderly workers investigated. It will become about 9 months once the transition is fully completed.
    Keywords: early retirement; intertemporal choice; duration analysis
    JEL: C41 D91 J26
    Date: 2005–12
  29. By: Jens Suedekum (University of Konstanz and IZA Bonn)
    Abstract: In this paper I analyze the impact of human capital on local employment growth for the case of West Germany (1977-2002). I find robust evidence that skilled cities grow faster than unskilled ones, but this need not indicate localized human capital externalities are at work. A large initial share of high-skilled workers significantly reduces subsequent growth of highskilled jobs. The observed positive impact on total employment growth is, therefore, due to the fact that low-skilled jobs grow faster than high-skilled jobs decline in initially skilled cities. This evidence is in line with complementarities among skill groups as the major causal link between human capital and employment growth. It challenges theories of self-reinforcing spatial concentration of high-skilled workers due to strong localized spillovers.
    Keywords: human capital, local employment growth, externalities
    JEL: R11 O40
    Date: 2006–02
  30. By: Kurt Geppert; Martin Gornig; Axel Werwatz
    Abstract: The vast majority of regions in West Germany, and the EU, have become more similar in terms of per-capita income and productivity between 1980 and 2000. But a number of rich areas - generally large agglomerations - have succeeded in departing from this trend of convergence. They are continuing to rise above the average productivity level. We examine whether this development can also be seen as due to changes in the spatial distribution of economic sectors. Knowledge-intensive services in particular are identified as industries that combine employment growth and further geographical concentration. Logistical and nonparametric regressions confirm a positive relation between the regional weight of sectors that are continuing to concentrate geographically and the probability that this region will develop ahead of the general trend. We find that increasing localisation of fast growing industries is an important factor behind the changes in the spatial pattern of the economy.
    Keywords: regional convergence, knowledge-intensive services, industry-specific local linkages, logistical regressions, non-parametric regressions
    JEL: C14 C16 R12 R30
    Date: 2006–01
  31. By: Patrizio Piraino
    Abstract: This paper examines the degree of intergenerational economic mobility in Italy. It adds to the growing number of international studies of the extent to which economic status is passed on across generations. On the basis of recent econometric innovations used in the literature, I am able to overcome some of the data limitations for Italy. I use the Historical Database of the Bank of Italy households survey, which contains information from 1977 to 2002. Retrospective information in the repeated cross-sections may be exploited by applying a two-sample two stage least squares estimation. I estimate the intergenerational income elasticity for Italy and find that mobility is limited. From an overall comparison, the evidence provided in this paper hints at Italy in the low-mobility group among advanced societies in the range of values characterising the US and the UK. The analysis of the results allows a characterization of interesting descriptive features in the transmission of economic status in Italy.
    Keywords: Intergenerational income mobility; two-sample two-stage least squares; mobility patterns.
    JEL: J62 D31
    Date: 2006–01

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