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on European Economics |
| By: | Ulrich Fritsche (Department for Economics and Politics, University of Hamburg, and DIW Berlin); Vladimir Kuzin (Goethe-University Frankfurt, Faculty of Economics and Business Administration) |
| Abstract: | Inflation differentials in the Euro area are mainly due to a sustained divergence of wage developments across the Euro area, and narrower differences in labour productivity growth (Alvarez et al., 2006). We investigate convergence of inflation using unit labour cost (ULC) growth and applying PANIC (Bai and Ng, 2002, 2004) and cluster procedures (Hobijn and Franses, 2000, Busetti et al., 2006) to Euro area countries as well as US States, US Census Regions and German Laender. Euro area differs in that dispersion in general (and its fraction due to idiosyncratic factors in specific) is larger and common factors are much less important in explaining the variance of ULC growth. We report evidence for convergence clusters in all countries. |
| Keywords: | Unit labor costs, inflation, European Monetary Union, Germany, United States of America, convergence, convergence clubs, panel unit root tests, PANIC |
| JEL: | E31 O47 C32 C33 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:hep:macppr:200703&r=eec |
| By: | Sebastian Dullien (Financial Times Deutschland); Ulrich Fritsche (Department for Economics and Politics, University of Hamburg, and DIW Berlin) |
| Abstract: | Using unit labor cost (ULC) data from Euro area countries as well as US States and German Laender we investigate inflation convergence using different approaches, namely panel unit root tests, cointegration tests and error-correction models. All in all we cannot reject convergence of ULC growth in EMU, however, country-specific deviations from the rest of the currency union are more pronounced in Europe and more persistent. This holds before and after the introduction of the common currency. |
| Keywords: | Unit labor costs, inflation, EMU, convergence, panel unit root tests, convergence clubs |
| JEL: | E31 O47 C32 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:hep:macppr:200702&r=eec |
| By: | Ansgar Belke; Thorsten Polleit; Wim Kösters; Martin Leschke |
| JEL: | E31 E58 E51 E52 E37 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:hoh:hohdip:279&r=eec |
| By: | Giorgio Brunello (University of Padua) |
| Abstract: | I use the cross-country and time variation in the demographic structure of 11 European countries to study how changes in cohort size affect real earnings in Europe. This is an important question in the light of widespread population ageing. I find that cohort size has a negative and statistically significant effect on earnings, and that this effect is larger for the older age group - aged between 35 and 54 - than for the younger group - aged 20 to 34. I also find that earnings are more sensible to changes in cohort size in Southern Europe, which points to a lower degree of substitutability between individuals with the same education but different age. I argue that the uncovered lower substitutability in the Olive Belt of Europe is in line with the higher employment protection that its workers enjoy, at least compared to the workers located in Northern Europe. One important policy implication of this study is that the demographic shift away from the young and toward the old, a baby bust after a baby boom, is likely to tilt age - earnings profiles in favor of the young more in Southern than in Northern Europe. |
| Keywords: | Cohort size, wages, Europe |
| JEL: | J11 J31 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0036&r=eec |
| By: | Richard Rogerson |
| Abstract: | This paper examines the evolution of hours worked in France, Germany, Italy and the US from 1956-2003 and assesses the role of taxes and technology to account for the differences. The empirical work establishes three results. First, hours worked in Europe decline by almost 45% compared to the US over this period. This change is almost an order of magnitude larger than the effects associated with the increase in unemployment over this time period. Second, the decline occurs at a steady pace from 1956 until the mid 1990s, in contrast to the fact that the relative increase in unemployment occurs in the mid 1970s. Third, the decline in hours worked in Europe is almost entirely accounted for by the fact that Europe develops a much smaller service sector than the US. I build a simple model of time allocation to understand the evolution of total hours worked and their distribution across sectors, and calibrate it to match the US between 1956 and 2000. I find that relative increases in taxes and technological catch-up can account for most of the differences between the European and American time allocations over this period. |
| JEL: | E2 J2 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12889&r=eec |
| By: | Manos Matsaganis (Athens University of Economics and Business); Maria Flevotomou (Athens University of Economics and Business) |
| Abstract: | Fiscal welfare, i.e. the use of the tax system to achieve social policy goals, is assuming ever greater importance throughout Europe and beyond. In housing, the favourable tax treatment of mortgage interest repayments has often coexisted alongside public programmes of housing benefit or social housing. Although the distributional effects of tax expenditure are known to be regressive, the issue has remained relatively under-researched. The paper uses the European tax-benefit model EUROMOD to quantify the distributional impact of mortgage interest tax relief in five European countries: the Netherlands, Sweden, Finland, Italy and Greece. The analysis reveals that higher-income groups capture a disproportionate share of total expenditure on mortgage interest tax relief in all countries, and that this effect is most regressive in the Netherlands and least regressive in Sweden. The paper concludes with a discussion of results and their policy implications. |
| Keywords: | tax relief, mortgage repayments, inequality, microsimulation |
| JEL: | H23 I38 R21 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:ese:emodwp:em2/07&r=eec |
| By: | Gustavo Crespi (SPRU, University of Sussex and University of Chile); Aldo Geuna (SPRU, University of Sussex); Bart Verspagen (Eindhoven University of Technology and TIK) |
| Keywords: | university patenting, public-private technology transfer, european universities |
| JEL: | O3 I28 |
| Date: | 2007–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:154&r=eec |
| By: | Del Boca Daniela (University of Turin); Pasqua Silvia; Pronzato Chiara |
| Abstract: | In this paper, we aim to explore the impact of social policies and labour market characteristics on the woman’s joint decisions of working and having children, using data from the European Community Household Panel (ECHP). We include in the analysis, beyond personal characteristics, variables related to the childcare system, parental leave arrangements, and labour market flexibility. Results show that a non negligible portion of the differences in participation and fertility rates across women from different European countries can be attributed to the characteristics of these institutions. |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:200608&r=eec |
| By: | Ana Rute Cardoso (IZA Bonn, Universidade do Minho, and CEPR); Miguel Portela (Universidade do Minho - NIPE, Tinbergen Institute and IZA Bonn); Fernando Alexandre (Universidade do Minho - NIPE); Carla Sá (Universidade do Minho - NIPE) |
| Abstract: | The Bologna process aims at creating a European Higher Education Area where intercountry mobility of students and sta?, as well as workers holding a degree, is facilitated. While several aspects of the process deserve wide public support, the reduction of the length of the first cycle of studies to three years, in several continental European countries where it used to last for four or five years, is less consensual. The paper checks the extent of public confidence in the restructuring of higher education currently underway, by looking at its implications on the demand for academic programs. It exploits the fact that some programs have restructured under the Bologna process and others have not, in Portugal. Precise quantification of the demand for each academic program is facilitated by the rules of access to higher education, in a nation-wide competition, where candidates must list up to six preferences of institution and program. We use regression analysis applied to count data, estimating negative binomial models. Results indicate that the programs that restructured to follow the Bologna principles were subject to higher demand than comparable programs that did not restructure, as if Bologna were understood as a quality stamp. This positive impact was reinforced if the institution was a leader, i.e. the single one in the country that restructured the program. Still an additional increase in demand was experienced by large programs that restructured to offer an integrated master degree, thus conforming to Bologna principles while not reducing the program duration. |
| Keywords: | education policy; European Higher Education Area; economic, social and cultural integration; count data. |
| JEL: | I28 I21 F15 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:4/2007&r=eec |
| By: | Juan carlos Morales Piñero (Departament d'Economia de l'Empresa, Universitat Autonoma de Barcelona); Joaquim Vergés Jaime (Departament d'Economia de l'Empresa, Universitat Autonoma de Barcelona) |
| Abstract: | Purpose. This paper focuses on analyzing the effect that public reforms have on the efficiency of state-owned enterprises in regulated environments. Design, methodology, approach. The research is focused in the postal sector where public and private companies must obey a legal framework related to provide a universal service. The analysis is carried out using a panel of 7 European postal operators for the period 1997-2003. The activity analyzed was the letter mail division; we take as key variable the unit cost of a letter and use a translog cost function where as independent variables we include traffic levels, labor cost per employee, quality and availability of the service as well as the type of ownership (public or private). Additionally, in a second stage the geographical differences among countries are considered. Findings. Results indicate that postal operators that experienced organizational changes without being privatized, such as the Spanish and Greek operators, do not have higher unit costs than privatized postal operators like the one of Germany and the Netherlands. Moreover, we find that in all cases the operator of Ireland appear to be the most efficient. In this case restructuring process has been carried out giving an important leadership role to workers. This suggests us that labor culture could be a key variable to study when analyzing reform processes in public enterprises. Originality, value. Our findings show that in a regulated environment like in the postal sector, public and private companies can obtain similar efficiency levels in term of unit costs. |
| Keywords: | efficiency, public enterprise reforms, postal sector |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:bbe:wpaper:200702&r=eec |
| By: | Justus Haucap; Uwe Pauly; Christian Wey |
| Abstract: | In this paper we apply standard cartel theory to identify the major institutional stabilizers of Germany's area tariff system of collective bargaining between a single industry union and the industry's employers association. Our cartel analysis allows us to demonstrate that recent labor policy reforms that intend to make labor markets more "flexible" further serve to stabilize the labor cartel while other pro-competitive proposals have failed. We argue that the pro-competitive recommendations failed exactly because of their destabilizing effects on insiders' incentives to stay in the labor cartel. We propose regulatory measures for injecting competition into Germany's labor markets that focus on the creation of new options for firms and workers outside the existing area tariff system; in particular, by liberalizing existing barriers for the establishment of a fully tariff-enabled union. Such an endeavor must go hand in hand with the institutionalization of a competition policy framework for labor market disputes as any destabilizing policy inevitably provokes counter measures of the incumbent labor cartel so as to protect their dominance vis-à-vis outsider competition. |
| Keywords: | Union, Collective Bargaining, Cartel Stability, Labor Market Reforms |
| JEL: | J52 K31 L12 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp651&r=eec |
| By: | Richard Rogerson |
| Abstract: | This paper argues that it is essential to explicitly consider how the government spends tax revenues when assessing the effects of tax rates on aggregate hours of market work. Different forms of government spending imply different elasticities of hours of work with regard to tax rates. I illustrate the empirical importance of this point by addressing the issue of hours worked and tax rates in three sets of economies: the US, Continental Europe and Scandinavia. While tax rates are highest in Scandinavia, hours worked in Scandinavia are significantly higher than they are in Continental Europe. I argue that differences in the form of government spending can potentially account for this pattern. |
| JEL: | E2 J2 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12890&r=eec |
| By: | Naticchioni, Paolo; Rustichelli, Emiliano; Scialà, Antonio |
| Abstract: | In this paper we point out that the theoretical predictions concern-ing Employment Protection Legislation (EPL) are not fully confirmed by empirical evidence in Italy, a strict EPL country in the nine-ties, according to OECD indexes. In particular, worker and job flow rates are remarkably high, also in comparison with the other Euro-pean countries. Furthermore, the differences in regional worker flow rates -computed on both the social security database and the LFS- are relevant, no matter which measure of worker flows is considered. While EPL is the same across regions, the highest worker flow rates are observed in the South, an area generally recognised as the least dynamic of the country, followed by the Northeast, the Centre and the Northwest. For possible alternative explanations of regional differences investigation focuses on economic structural composi-tion, the black labour market, non-standard contracts, the public sector and self-employment incidence, labour productivity and firm seniority. Using Logit estimates we find that none of these factors can fully explain these differences. Moreover, the predicted nega-tive relation between worker flows and unemployment duration does not seem to hold in the case of Italy. |
| Keywords: | Worker Turnover and Reallocation; Employment Protection; Regional Economics; Italy. |
| JEL: | J65 J68 R1 J63 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:1690&r=eec |
| By: | Konle-Seidl, Regina (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Eichhorst, Werner (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Grienberger-Zingerle, Maria |
| Abstract: | "This paper provides an overview of the sequential shift towards activating labour market and social policy in Germany. It not only shows the changes in the instruments of active and passives labour market policies but also analyzes the implications of this change for the political economy, the governance and the legal structure of a 'Bismarckian' welfare state. Our study points at the changes in Germany's status- and occupation-oriented unemployment benefit regime that has been relinquished for a larger share of dependent population. Unemployment insurance benefit duration is shorter now and newly created basic income support for needy persons is not earnings-related anymore. Pressure on unemployed to take up jobs has increased considerably while more persons than before have access to employment assistance. The paper also aims at a preliminary assessment of the effects of activating labour market policy on labour market as well as social outcomes and sets out probable paths of future adaptation." (author's abstract, IAB-Doku) ((en)) |
| Keywords: | Arbeitsmarktpolitik, Sozialpolitik, Reformpolitik, Hartz-Reform, aktivierende Arbeitsmarktpolitik, aktivierende Sozialpolitik, Aktivierung, Leitbild, Wohlfahrtsstaat, Arbeitslosenunterstützung, Sozialleistungen, Leistungsanspruch, Leistungsbezug, Anspruchsvoraussetzung, Leistungshöhe, Grundsicherung nach SGB XII, Grundsicherung nach SGB II, Zielgruppe, Arbeitslosengeld II-Empfänger, Erwerbsfähigkeit, Sanktion, Arbeitslose, Existenzminimum, Eigentum, Berufswahlfreiheit, Arbeitsverwaltung, Kompetenzverteilung, organisatorischer Wandel, Job-Center, ARGE, aktivierende Arbeitsmarktpolitik - Erfolgskontrolle, öffentliche Ausgaben, Armut, politischer Wandel, Politikumsetzung |
| JEL: | J68 |
| Date: | 2007–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:200706&r=eec |
| By: | Cowling, Marc |
| Abstract: | Whilst there is a volume of literature mapping out the evolution, causes and implications of income inequality across countries, there is little in-depth evidence concerning the desire of populations for income equality. This paper tackles this gap by presenting UK evidence from a large-scale adult population survey for 2003. The headline result is that 75% of the UK adult population prefer a fairer income distribution. Our econometric findings suggest that women are more likely to favour income equality than men and that better educated people are more tolerant of income inequality. Only the very rich favour income inequality. Geography is important, with the Welsh, Scots and Northern Irish all more likely to prefer a more equitable income distribution. |
| Keywords: | income inequality; self-interest; voting |
| JEL: | H0 |
| Date: | 2007–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:1615&r=eec |
| By: | Bartzsch, Nikolaus |
| Abstract: | The saving ratio of households in Germany has increased in the past few years when the income trend was weak. This could be due to precautionary saving. In this paper, the importance of precautionary saving against income uncertainty is analyzed empirically using micro data from the German Socio- Economic Panel Study (GSOEP). Wealth in 2002 is regressed on alternative measures of income uncertainty in a cross-section of households. In addition to the usual controls, risk aversion is also taken into account. When using net financial wealth, precautionary saving is statistically significant and economically quite important. The share of precautionary net financial wealth in total aggregate net financial wealth is on average about 20%. Compared with net financial wealth, housing wealth is not used as a bu®er stock against income uncertainty, confirming the hypothesis that this kind of asset is rather illiquid. |
| Keywords: | precautionary saving, precautionary wealth, buffer-stock model |
| JEL: | D91 E21 J24 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:5193&r=eec |
| By: | Ronny Freier; Viktor Steiner |
| Abstract: | We develop a structural multi-factor labour demand model which distinguishes between eight labour categories including non-standard types of employment such as marginal employment. The model is estimated for both the number of workers and total working hours using a new panel data set. For unskilled and skilled workers in full-time employment, we find labour demand elasticities similar to previous estimates for the west German economy. Our new estimates of own-wage elasticities for marginal employment range between -.4 (number of male workers in west Germany) to -1 (working hours for women). We illustrate the implications of these estimates by simulating the likely labour demand effects of the recent increase of employers' social security contributions (SSC) on marginal employment in Germany. |
| Keywords: | Multi-factor labour demand for heterogenous labour, marginal employment |
| JEL: | J21 J23 C51 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp662&r=eec |
| By: | Luigi Guiso; Fabiano Schivardi |
| Abstract: | We contrast two potential explanations of the substantial differences in entrepreneurial activity observed across geographical areas: entry costs and external effects. We extend the Lucas model of entrepreneurship to allow for heterogeneous entry costs and for externalities that shift the distribution of entrepreneurial talents. We show that these assumptions have opposite predictions on the relation between entrepreneurial activity and firm level TFP: with different entry costs, in areas with more entrepreneurs firms’ average productivity should be lower and vice versa. We test these implications on a sample of Italian firms and unambiguously reject the entry costs explanation in favor of the externalities one. We also investigate the sources of external effects, finding robust evidence that learning externalities are an important determinant of cross-sectional differences in entrepreneurial activity |
| Keywords: | Entrepreneurship, clustering, agglomeration economies |
| JEL: | D24 D62 J23 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:200616&r=eec |
| By: | Arnold, Ivo J.M.; Kool, Clemens J.M.; Raabe, Katharina |
| Abstract: | This paper presents evidence on the industry effects of bank lending in Germany and identifies the industry effects of bank lending associated with changes in monetary policy and industryspecific bank credit demand. To this end, we estimate individual bank lending functions for 13 manufacturing and non-manufacturing industries and five banking groups using quarterly bank balance sheet and bank lending data for the period 1992:1-2002:4. The evidence from dynamic panel data models shows that industry-specific bank lending growth predominantly responds to changes in industry-specific bank credit demand rather than to changes in monetary policy. In fact, conclusions regarding the bank lending effects of monetary policy are very sensitive to the choice of industry. The empirical results lend strong support to the existence of industry effects of bank lending. Because industries are a prominent source of variation in the bank lending effects of bank credit demand and monetary policy, the paper concludes that the industry composition of bank credit portfolios is an important determinant of bank lending growth and monetary policy effectiveness. |
| Keywords: | Monetary policy transmission, credit channel, industry structure, dynamic panel data |
| JEL: | C23 E52 G21 L16 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:5197&r=eec |
| By: | Emilia Del Bono (Institute for Social and Economic Research); Daniela Vuri (University of Florence) |
| Abstract: | This paper explores a newly available Italian panel dataset obtained from a 1:90 sample of social security administrative records (INPS) to investigate whether observed differences in the characteristics of workers and firms, and observed differences in job mobility are able to explain gender differences in log wage growth. We focus on the wage growth of individuals aged 15-30, a crucial period in the formation of lifetime earnings. We find that there is a significant and growing pay differential between men and women during their early careers, and that between-firm wage growth is substantially higher for men than for women. Controlling for individual observed and unobserved heterogeneity does not reduce, instead exacerbates the effect of a firm change on the gender wage growth gap. On the other hand, when we take into account the type of industry, occupation, and the size of the firm workers move to when changing employer we see a reduction of the unexplained gender differential. We also find that women are not always penalized with respect to men, but this occurs only for positive wage changes, for the highest wage increases, and when women move towards larger firms. These results suggest that job and firm characteristics, rather than across-the-board discrimination, are the most important determinants of the gender wage growth differential in the Italian labour market. |
| Keywords: | gender gap, wages |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2006-59&r=eec |
| By: | Eva Sierminska; Yelena Takhtamanova |
| Abstract: | To explore the link between household consumption and wealth, we use a new source of harmonized microdata (Luxembourg Wealth Study). We investigate whether there are differences in wealth effects from different types of wealth and across age groups. We consider three countries: Canada, Italy and Finland. We find that the overall wealth effect from housing is stronger than the effect from financial wealth for the three countries in the sample. Additionally, in accordance with the life-cycle theory of consumption, we find the housing wealth effect to be significantly lower for younger households. We also find between-country differences in the wealth effect. |
| Keywords: | Consumption (Economics) ; Wealth ; Households - Economic aspects |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2007-01&r=eec |
| By: | Merrouche, Ouarda (Department of Economics) |
| Abstract: | In 1980, seven out of the seventeen Spanish regions were devolved education spending responsibility. Using a difference-in-differences approach, which I show to be particularly credible in this context, I evaluate the long term effect of this reform on human capital. I find no robust evidence to corroborate the theoretically predicted benefits of decentralization. |
| Keywords: | Decentralization; Education; Difference-in-differences estimator |
| JEL: | E61 E65 |
| Date: | 2007–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2007_003&r=eec |
| By: | Cowling, Marc |
| Abstract: | A simple model of the firms’ decision to pay workers performance related pay (PRP) is tested using company level data for 1,001 UK private sector businesses. From the basic sample statistics we observe that, on average, 26.5% of workers are covered by PRP systems. Yet this hides the fact that only 50.5% of businesses have any workers at all covered by PRP. Our empirical analysis offers support for the key hypotheses drawn from Lazear type PRP models, which emphasise the relations between firm size and implementation costs, and ease of measurement, as medium and large firms are more likely to have PRP systems. However, these results are over-turned when we consider the extent of workers covered by firm level PRP systems if they are in place. Here we observe that more workers are covered by PRP in micro and small firms. |
| Keywords: | performance related pay systems; firm size; quality of work |
| JEL: | J31 J33 |
| Date: | 2007–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:1619&r=eec |
| By: | Francesco Figari (Institute for Social & Economic Research); Levy H (Institute for Social & Economic Research); Sutherland H (Institute for Social & Economic Research) |
| Abstract: | We explore the prospects for using the EU-SILC as the underlying micro-database for policy simulation across the EU. In particular we consider the issues to be addressed, and the advantages arising, from building a database from the EUSILC for the EU tax-benefit model, EUROMOD. In order to identify the issues and illustrate their importance a trial database for Spain is constructed. It is used within EUROMOD to calculate some selected social indicators as well as indicators of work incentives and the effects of fiscal drag in Spain between 2003 and 2006. We conclude that, although transforming the EU-SILC into a database for EUROMOD would require a significant amount of effort, this is likely to be worthwhile because of the consequential improvements in comparability across countries, efficiency in developing and maintaining the model for many countries and simplification of access arrangements. We therefore offer some suggestions for how to improve the User Database for this purpose. |
| Keywords: | EU-SILC, European Union; Microsimulation |
| JEL: | C81 C88 I32 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:ese:emodwp:em1/07&r=eec |