nep-eec New Economics Papers
on European Economics
Issue of 2006‒09‒16
seven papers chosen by
Giuseppe Marotta
Universita di Modena e Reggio Emilia

  1. Unemployment Insurance in Europe: Unemployment Duration and Subsequent Employment Stability By Konstantinos Tatsiramos
  2. Expansionary fiscal consolidations in Europe: new evidence By António Afonso
  3. Old Europe’s Social Model – A Reason of Low Growth? The Case of Germany By Horst Siebert
  4. The Distribution of Total Work in the EU and US By Michael C. Burda; Daniel S. Hamermesh; Philippe Weil
  5. Leveraged buyouts in the U.K. and continental Europe : retrospect and prospect By Wright,Mike; Renneboog,Luc; Simons,Tomas; Scholes,Louise
  6. Life Cycle Employment and Fertility Across Institutional Environments By Daniela Del Boca; Robert M. Sauer
  7. Labor Market Institutions: Curse or Blessing? By Carsten Ochsen; Heinz Welsch

  1. By: Konstantinos Tatsiramos (IZA Bonn)
    Abstract: The empirical literature on unemployment insurance has focused on its direct effect on unemployment duration, while the potential indirect effect on employment stability through a more efficient matching process, as the unemployed can search for a longer period, has attracted much less attention. In the European context this is surprising as reform proposals of the unemployment insurance system aiming at reducing high European unemployment rates should consider both effects. This paper provides evidence on the effect of unemployment benefits on unemployment and employment duration in Europe, using individual data from the European Community Household Panel for eight countries. Country specific estimates based on a multivariate discrete proportional hazard model, controlling for observed and unobserved individual heterogeneity, suggest that even if receiving benefits has a direct negative effect increasing the duration of unemployment spells, there is also a positive indirect effect of benefits on subsequent employment duration. This indirect effect is pronounced in countries with relatively generous benefit systems, and for recipients who have remained unemployed for at least six months. In terms of the magnitude of the effect, recipients remain employed on average two to four months longer than non-recipients. This represents a ten to twenty per cent increase relative to the average employment duration, compensating for the additional time spent in unemployment. These findings are in line with theories suggesting a matching effect of unemployment insurance.
    Keywords: unemployment insurance, unemployment duration, employment stability
    JEL: J64 J65 C41
    Date: 2006–08
  2. By: António Afonso
    Abstract: In order to assess the existence of expansionary fiscal consolidations in Europe, panel data models for private consumption are estimated for the EU15 countries, using annual data over the period 1970–2005. Three alternative approaches to determine fiscal episodes are used, and the level of government indebtedness is also taken into account. The results show some evidence in favour of the existence of expansionary fiscal consolidations, for a few budgetary spending items (general government final consumption, social transfers, and taxes), depending on the specification and on the time span used. On the other hand, the possibility of asymmetric effects of fiscal episodes does not seem to be corroborated by the results.
    Keywords: fiscal policy; expansionary fiscal consolidations; non-Keynesian effects; panel data models; European Union.
    JEL: C23 E21 E62
  3. By: Horst Siebert
    Abstract: This paper discusses the goal conflict between social protection and economic growth as well as employment. Taking the German economy as an example for the large continental economies of Old Europe, it analyzes twenty mechanisms that affect the fundamentals of the economy negatively and imply low growth and high unemployment. An empirical index is constructed. In the period 1960-2005, an increase in the social protection index goes together with a decline in the GDP growth rate by 2.6 percentage points.
    Keywords: Social protection, Economic growth, Unemployment, Mechanisms for a poor dynamics, Old Europe, Erosion
    JEL: H J K P
    Date: 2006–09
  4. By: Michael C. Burda (Humboldt University of Berlin, CEPR and IZA Bonn); Daniel S. Hamermesh (University of Texas at Austin, NBER and IZA Bonn); Philippe Weil (Université Libre de Bruxelles (ECARES), Institut d’Études Politiques de Paris, CEPR and NBER)
    Abstract: Using two time-diary data sets each for Germany, Italy the Netherlands and the U.S. from 1985-2003, we demonstrate that Americans work more than Europeans: 1) in the market; 2) in total (market and home production)-- there is no one-for-one tradeoff across countries in total work; 3) at unusual times of the day and on weekends. In addition, gender differences in total work within a given country are significantly smaller than variation across countries and time. We conclude that some of the transatlantic differences could reflect inferior equilibria that are generated by social norms and externalities. While an important outlet for total work, home production by females appears very sensitive to tax rates in the G-7 countries. We adapt the theory of home production to account for fixed costs of market work and adduce evidence that they, in contrast to other relative costs, vary significantly across countries.
    Keywords: time use, gender inequality, household production, hours of work
    JEL: J22 E24 D13
    Date: 2006–08
  5. By: Wright,Mike; Renneboog,Luc; Simons,Tomas; Scholes,Louise (Tilburg University, Center for Economic Research)
    Keywords: Public-to-private;going private;LBO;MBO;IBO;Management buy-ins;Management buyouts;Leveraged buyouts
    JEL: G34 G32
    Date: 2006
  6. By: Daniela Del Boca; Robert M. Sauer
    Abstract: In this paper, we formulate a dynamic utility maximization model of female labor force participation and fertility choices and estimate approximate decision rules using data on married women in Italy, Spain and France. The pattern of estimated state dependence effects across countries is consistent with aggregate patterns in part-time employment and child care availability, suggesting that labor market rigidities and lack of child care options are important sources of state dependence. Simulations of the model reveal that Italian and Spanish women would substantially increase their partic- ipation rates were they to face the French institutional environment.
    Keywords: Female Employment, Fertility, Child Care, Institutions, Decision Rules
    JEL: J2 C3 D1
    Date: 2006
  7. By: Carsten Ochsen (University of Rostock); Heinz Welsch (University of Oldenburg)
    Abstract: Previous literature has identified considerable non-pecuniary costs to macroeconomic fluctuation and uncertainty. The present paper investigates whether and to what extent labor market institutions can mitigate those costs. We study how life satisfaction of European citizens is affected by employment protection and the level and duration of unemployment benefit payments. We differentiate between direct effects (at given macroeconomic conditions) and total effects (including the feedback through the institutions? effect on macroeconomic outcomes). We find that the total effect of employment protection is positive, whereas the total effect of benefit duration is negative. The direct and indirect effects of a higher benefit level nearly neutralize each other.
    Keywords: unemployment benefit; employment protection; macroeconomic uncertainty; cost-benefit analysis; life satisfaction; happiness
    JEL: J30 E24 E60 D71 I31
    Date: 2006

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