nep-eec New Economics Papers
on European Economics
Issue of 2008‒05‒17
eighteen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. The private and fiscal returns to schooling and the effect of public policies on private incentives to invest in education: a general framework and some results for the EU By Angel de la Fuente; Juan Francisco Jimeno
  2. Performance of European Airports: Regulation, Ownership and Managerial Efficiency By Carlos Pestana Barros; Rui Cunha Marques
  3. The EU Emissions Trading Scheme : Disentangling the Effects of Industrial Production and CO2 Emissions on Carbon Prices By Emilie Alberola; Benoît Chèze; Julien Chevallier
  4. Addressing the net balances problem as a prerequisite for EU budget reform: A proposal By Angel de la Fuente; Rafael Doménech; Vasja Rant
  5. The Effect of Immigration along the Distribution of Wages By Christian Dustmann; Tommaso Frattini; Ian Preston
  6. Does Immigration Raise Natives’ Income? National and Regional Evidence from Spain By Catalina Amuedo-Dorantes; Sara de la Rica
  7. Perspectives of Workers with Low Qualifications in Germany under the Pressures of Globalization and Technical Progress By Harald Hagemann; Ralf Rukwid
  8. A non-parametric method to nowcast the Euro Area IPI. By Laurent Ferrara; Thomas Raffinot
  9. Wage, Price and Unemployment Dynamics in the Spanish Transition to EMU Membership By Jusélius, Katarina; Ordóñez, Javier
  10. Business surveys modelling with Seasonal-Cyclical Long Memory models By Laurent Ferrara; Dominique Guegan
  11. Do Austrian Men and Women Become more Equal? At Least in Terms of Labor Supply! By Georg Wernhart; Rudolf Winter-Ebmer
  12. Assessing the Argument for Specialized Courts: Evidence from Family Courts in Spain By Nuno Garoupa; Natalia Jorgensen; Pablo Vázquez
  13. Success in the University Admission Process in Germany : Regional Provenance Matters By Sebastian Braun; Nadja Dwenger
  14. How Resilient is the German Banking System to Macroeconomic Shocks? By Jonas Dovern; Carsten-Patrick Meier; Johannes Vilsmeier
  15. On the Social Deficit of the European Integration Project and its Perpetuation through the ECJ-Judgements in Viking and Laval By Christian Joerges; Florian Rödl
  16. Gender and European Integration By Birgit Locher; Elisabeth Prügl
  17. The Spanish Survey of Household Finances (EFF): description and methods of the 2005 wave By Olympia Bover
  18. Structural heterogeneity or asymmetric shocks? Poland and the euro area through the lens of a two-country DSGE model By Kolasa, Marcin

  1. By: Angel de la Fuente; Juan Francisco Jimeno
    Abstract: This paper develops a comprehensive framework for the quantitative analysis of the private and fiscal returns to schooling and of the effect of public policies on private incentives to invest in education. This framework is applied to 14 member states of the European Union. For each of these countries, we construct estimates of the private return to an additional year of schooling for an individual of average attainment, taking into account the effects of education on wages and employment probabilities after allowing for academic failure rates, the direct and opportunity costs of schooling, and the impact of personal taxes, social security contributions and unemployment and pension benefits on net incomes. We also construct a set of effective tax and subsidy rates that measure the effects of different public policies on the private returns to education, and measures of the fiscal returns to schooling that capture the long-term effects of a marginal increase in attainment on public finances under conditions that approximate general equilibrium.
    Keywords: returns to schooling
    JEL: I20 J31 H60
    Date: 2008–03–15
  2. By: Carlos Pestana Barros; Rui Cunha Marques
    Abstract: This paper analyzes regulation, ownership and unobserved managerial ability as factors affecting the performance of a representative sample of European airports by means of frontier models. The Alvarez, Arias and Greene (2004) frontier model is used. These airports are ranked according to their technical efficiency during the period 2001-2004 and homogenous and heterogeneous variables are disentangled in the cost function, which leads us to advise the implementation of common policies as well as policies by segments. Economic implications arising from the study are also considered.
    Keywords: Europe; airports; stochastic frontier models; regulation, ownership and unobserved managerial ability.
    Date: 2008–04
  3. By: Emilie Alberola; Benoît Chèze; Julien Chevallier
    Abstract: This article critically examines the impact of industrial production for sectors covered by the EU Emissions Trading Scheme (EU ETS) on emissions allowance spot prices during Phase I (2005-2007). Using sector production indices and CO2 emissions compliance positions dened by a ratio of allowance allocation relative to baseline emissions, we show that the effect of industrial activity on EU carbon price changes shall be analysed in conjunction with production peaks and compliance net short/long positions at the sector level. The results extend previous literature by showing that carbon price changes react not only to energy prices forecast errors and extreme temperatures events, but also to industrial production in three sectors covered by the EU ETS: combustion, paper and iron.
    Keywords: EU ETS, Emissions Trading, Carbon Pricing, CO2 Emissions, Industrial Production
    JEL: L11 L16 Q48 Q54
    Date: 2008
  4. By: Angel de la Fuente; Rafael Doménech; Vasja Rant
    Abstract: Conflict among member states regarding the distribution of net financial burdens has been allowed to contaminate the entire design of the EU budget with very negative consequences in terms of equity, efficiency and transparency. To get around this problem and pave the way for a substantive budget reform, we propose to decouple distributional negotiations from the rest of the budget process by linking member state net balances in a rigid manner to relative prosperity. This would be achieved through the introduction of a system of compensating horizontal transfers that would take to its logical conclusion the Commission's proposal for a generalized compensation mechanism. We discuss the impact of the proposed scheme on member states? incentives and illustrate its financial implications using revenue and expenditure projections for 2013 that are based on the current Financial Perspectives and Own Resources Decision.
    Keywords: EU budget
    JEL: H87
    Date: 2008–02–15
  5. By: Christian Dustmann (Department of Economics and Centre for Research and Analysis of Migration (CReAM), University College London); Tommaso Frattini (Department of Economics and Centre for Research and Analysis of Migration (CReAM), University College London); Ian Preston (Department of Economics and Centre for Research and Analysis of Migration (CReAM), University College London)
    Abstract: This paper analyses the effect immigration has on wages of native workers. Unlike most previous work, we estimate wage effects along the distribution of wages. We derive a flexible empirical strategy that does not rely on pre-allocating immigrants to particular skill groups. In our empirical analysis, we demonstrate that immigrants downgrade considerably upon arrival. As for the effects on native wages, we find that immigration depresses wages below the 20th percentile of the wage distribution, but leads to slight wage increases in the upper part of the wage distribution. The overall wage effect of immigration is slightly positive. The positive wage effects we find are, although modest, too large to be explained by an immigration surplus. We suggest alternative explanations, based on the idea that immigrants are paid less than the value of what they contribute to production, generating therefore a surplus, and we assess the magnitude of these effects.
    Date: 2008–04
  6. By: Catalina Amuedo-Dorantes; Sara de la Rica
    Abstract: How immigration affects the labor market of the host country is a topic of major concern for many immigrant-receiving nations. Spain is no exception following the rapid increase in immigrant flows experienced over the past decade. We assess the impact of immigration on Spanish natives’ income by estimating the net immigration surplus accruing at the national level and at high immigrant-receiving regions while taking into account the imperfect substitutability of immigrant and native labor. Specifically, using information on the occupational densities of immigrants and natives of different skill levels, we develop a mapping of immigrant-to-native self-reported skills that reveals the combination of natives across skills that would be equivalent to an immigrant of a given self-reported skill level, which we use to account for any differences between immigrant self-reported skill levels and their effective skills according to the Spanish labor market. We find that the immigrant surplus amounts to 0.04 percent of GDP at the national level and it is even higher for some of the main immigrant-receiving regions, such as Cataluña, Valencia, Madrid, and Murcia.
    Date: 2008–05
  7. By: Harald Hagemann (Universitaet Hohenheim); Ralf Rukwid (Universitaet Hohenheim)
    Abstract: This paper gives a detailed analysis of the perspectives of workers with low qualifications in Germany under the twofold pressures of globalization and technological change. First, alter-native explanations for the skill-bias in the development of labour demand are discussed, with particular emphasis on the “trade versus technology” debate. The consequences of the demand shift away from low-skilled labour in Germany are examined in a detailed empirical analysis of the development of (un)employment problems differentiated for qualification groups. Compared to other advanced economies, Germany shows a higher unemployment rate among less-qualified workers which is generally associated with a lack of flexibility in the German wage structure. However, an analysis of German, U.S. and British wage data based on the Cross National Equivalent File (CNEF) does not confirm the assumption of a simple mono-causal relationship between wage disparity and the intensity of group-specific unemployment. Finally, some political approaches for an improvement of the job prospects of less-qualified persons in Germany are outlined briefly and evaluated against the background of the empiri-cal results.
    Keywords: low-skilled labour, unemployment, wage inequality, globalization, skill-biased technological change, CNEF
    JEL: J2 J3 F1
    Date: 2007–10
  8. By: Laurent Ferrara (Banque de France et Centre d'Economie de la Sorbonne); Thomas Raffinot (CPR Asset Management)
    Abstract: Non-parametric methods have been empirically proved to be of great interest in the statistical literature in order to forecast stationary time series, but very few applications have been proposed in the econometrics literature. In this paper, our aim is to test whether non-parametric statistical procedures based on a Kernel method can improve classical linear models in order to nowcast the Euro area manufacturing industrial production index (IPI) by using business surveys released by the European Commission. Moreover, we consider the methodology based on bootstrap replications to estimate the confidence interval of the nowcasts.
    Keywords: Non-parametric, kernel, nowcasting, bootstrap, Euro area IPI.
    JEL: C22 C51 E66
    Date: 2008–04
  9. By: Jusélius, Katarina; Ordóñez, Javier
    Abstract: This paper provides an empirical investigation of the wage, price and unemployment dynamics that have taken place in Spain during the last two decades. The aim of this paper is to shed light on the impact of the European economic integration process on Spanish labour market and the convergence to a European level of prosperity. We find some important lessons to be learnt from the Spanish experience that should be relevant for the new member states. Second, before fixing the real exchange rate it seems crucial that it is on its sustainable (competitive) purchasing power parity level. First, high competitiveness in the tradable sector seems crucial for the real and nominal convergence to be successful. The increase in consumption wages and consumer prices as a result of the Balassa-Samuelson effect should not be allowed to exceed the improvement in productivity. Second, before fixing the real exchange rate it seems crucial that it is on its sustainable (competitive) purchasing power parity level. Third, there does not seem to be a short-cut to a European level of standard of living: the path to sustainable prosperity seems to follow the path of productivity improvement. Forth, excessive real wage increases seem to lead to increasing unemployment, slowdown in productivity growth, higher interest rates, and loss of competitiveness. On the other hand, the access to the European market and the possibility of increased export demand is likely to speed up the convergence process as long as competitiveness is not eroded by excess wage increases.
    Keywords: Balassa-Samuelson effect, nominal and real convergence, unemployment dynamics, purchasing power parity, cointegrated VAR
    JEL: C32 E24
    Date: 2008
  10. By: Laurent Ferrara (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, DGEI-DAMEP - Banque de France); Dominique Guegan (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, Ecole d'économie de Paris - Paris School of Economics - Université Panthéon-Sorbonne - Paris I)
    Abstract: Business surveys are an important element in the analysis of the short-term economic situation because of the timeliness and nature of the information they convey. Especially, surveys are often involved in econometric models in order to provide an early assessment of the current state of the economy, which is of great interest for policy-makers. In this paper, we focus on non-seasonally adjusted business surveys released by the European Commission. We introduce an innovative way for modelling those series taking the persistence of the seasonal roots into account through seasonal-cyclical long memory models. We empirically prove that such models produce more accurate forecasts than classical seasonal linear models.
    Keywords: Euro area, nowcasting, business surveys, seasonal, long memory.
    Date: 2008–05
  11. By: Georg Wernhart (Austrian Institute for Family Studies, University of Vienna); Rudolf Winter-Ebmer (Department of Economics, Johannes Kepler University Linz, Austria)
    Abstract: We study the development of wage elasticity of labor supply for Austrian men and women over time using comparable and representative survey data for the 1980s and 1990s. The elasticity of men is relatively low and constant over time, similar to the behavior of single women. Most remarkable is the almost continuous reduction in the labor supply reactions of married women: while their elasticity was still several times larger at the beginning of the 1980s, they approached rapidly the much less elastic behaviour of men. These developments are important for the analysis of deadweight losses of taxation as well as the effects of tax reforms and wage subsidy programs.
    Keywords: Labor supply, gender, wage elasticity
    JEL: J21 J22
    Date: 2008–04
  12. By: Nuno Garoupa; Natalia Jorgensen; Pablo Vázquez
    Abstract: Specialized courts have become a key component of the legal reform packages implemented in civil law countries, particularly, in the area of family law. One argument for this policy is that they are able to reach a decision faster than the regular courts, which are normally congested. We use data from a survey of Spanish family courts in the region of Madrid to test this claim. After controlling for other relevant variables, the econometric results did not provide strong support for specialized courts.
    Date: 2008–05
  13. By: Sebastian Braun; Nadja Dwenger
    Abstract: School education in Germany is under the responsibility of the federal states and as a consequence average grades differ widely across regions. Since school leavers apply nationwide for admission to university, regional provenance may thus matter a lot for the success probability in the admission process. Using a comprehensive dataset of the German central clearing house for university admissions in 2006/2007, we show that success rates indeed differ dramatically between federal states, provided that grades are not made comparable across state boundaries. Most of the variation in success can be explained by state-level differences in grading. By defining quotas for federal states and restricting competition among applicants to the state-level, the link between state-level grading and success rates in the university admission process can be broken.
    Keywords: Admission to university, central clearing house, federalism, federal education system
    JEL: C21 I23 H77
    Date: 2008
  14. By: Jonas Dovern; Carsten-Patrick Meier; Johannes Vilsmeier
    Abstract: Macro-stress testing studies often rely on rather short sample periods due to the limited availability of banking data. They may fail to appropriately account for the cyclicality in the interaction between the banking system and macroeconomic developments. In this paper we use a newly constructed data set on German banks’ income and loss statements over the past 36 years to model the interaction between the banking sector and the macroeconomy. Our identified-VAR analysis indicates that the level of stress in the banking sector is strongly affected by monetary policy shocks. The results rationalize the active behavior of central banks observed during periods of financial market crises
    Keywords: stress testing, banking, VAR
    JEL: C32 E44
    Date: 2008–04
  15. By: Christian Joerges; Florian Rödl
    Abstract: The December judgments of the ECJ in Viking and Laval on the compatibility of national collective labour law with European prerogatives have caused a quite heated critical debate. This paper seeks to put this debate in constitutional perspectives. In its first part it reconstructs in legal categories what Fritz W. Scharpf has characterized as a decoupling of economic integration from the various welfare traditions of the Member States. European constitutionalism, it is submitted, is bound to respond to this problématique. The second develops a perspective, within which such a response can be found. That perspective is a supranational European conflict of laws which seeks to realize what the Draft Constitutional Treaty had called the motto of the union: unitas in pluralitate. Within that framework the third part analyses two seemingly contradictory trends, namely first, albeit very briefly, the turn to soft modes of governance in the realm of social policy and then, in much more detail, the ECJ’s hard interpretations of the supremacy of European freedoms and its strict interpretation of pertinent secondary legislation. The conflict-of-law approach would suggest a greater respect for national autonomy in particular in view of the limited EU competences in the field of labour law.
    Keywords: competences; EU Charter of Fundamental Rights; European social model; industrial relations; legitimacy; posting of workers; social democracy; supremacy; trade unions; welfare state
    Date: 2008–04–15
  16. By: Birgit Locher; Elisabeth Prügl
    Abstract: The paper assesses the contribution of gender approaches to understanding European integration. It offers a conceptualization of such approaches as including a distinct ontology, epistemology and methodology. While feminist literature on the European Union is diverse, all such literature sheds light on the gendered process of European integration. The authors identify two distinct contributions of this literature: (a) it illustrates the relevance of movement actors and other advocates in shaping EU policies; (b) it shows that economic integration entails the creation of new gender regimes. The paper illustrates these contentions presenting case studies of the EU’s response to sex trafficking, the reform of the common agricultural policy, and of enlargement.
    Date: 2008–03–03
  17. By: Olympia Bover (Banco de España)
    Abstract: This paper describes the methods of the second wave of the Spanish Survey of Household Finances (EFF2005), paying special attention to the innovations relative to the first wave. The EFF2005 was designed to give continuity to the information on household finances collected through the EFF2002. The EFF is the only statistical source in Spain that allows the linking of incomes, assets, debts, and consumption at the household level. A desirable characteristic present in both waves is the oversampling of wealthy households. This is achieved on the basis of the wealth tax through a blind system of collaboration between the National Statistics Institute and the Tax Office which preserves stringent tax confidentiality. An additional important characteristic of the EFF is that the second wave has a full panel component. Further, a refreshment sample by wealth stratum has been incorporated to preserve cross-sectional representativity and overall sample size.
    Keywords: wealth survey, oversampling of the rich, panel, refreshment sample, imputation
    JEL: C81 D31
    Date: 2008–05
  18. By: Kolasa, Marcin
    Abstract: This paper presents a two-country model linking Poland and the euro area and applies it for assessment of heterogeneity across these two regions. Overall, our results can be seen as rather inconclusive about the differences in parameters describing agents' decision-making in Poland and in the euro area. On the contrary, we find strong evidence for heterogeneity in terms of volatility and synchronization of shocks hitting both economies. Our results may be viewed as a step towards estimating the costs of Poland's entry to the European Monetary Union, associated with giving up the monetary autonomy and losing benefits from stabilizing movements of the exchange rate.
    JEL: E32 D58 F41 C11
    Date: 2008–05

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