nep-eec New Economics Papers
on European Economics
Issue of 2008‒05‒24
thirteen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Household Membership Decisions of Adult Children: Does Gender and Institutions Matter? By Maria Concetta Chiuri; Daniela Del Boca
  2. Have Some European Countries Been More Successful at Employing Disabled People Than Others? By Morten Blekesaune
  3. Effects of Flat Tax Reforms in Western Europe on Equity and Efficiency By Alari Paulus; Andreas Peichl
  4. Inequalities Within Couples: Market Incomes and the Role of Taxes and Benefits in Europe By Francesco Figari; Herwig Immervoll; Horacio Levy; Holly Sutherland
  5. Return to Work after Childbirth: does Parental Leave Matter in Europe? By Chiara Pronzato
  6. Mums and their sons; Dads and their daughters: Panel Data Evidence of Parental Altruism across 14 EU Countries By Jose Alberto Molina; Maria Navarro; Ian Walker
  7. Institutional Change and Academic Patenting: French Universities and the Innovation Act of the 1999. By Antonio Della Malva; Francesco Lissoni; Patrick Llerena
  8. Poverty Permanence Among European Youth By Arnestein Aassve; A Busetta; D Mendola
  9. Leaving Home and the Chances of Being Poor: the Case of Young People in Southern European Countries By Lavinia Parisi
  10. Would a Legal Minimum Wage Reduce Poverty? : A Microsimulation Study for Germany By Kai-Uwe Müller; Viktor Steiner
  11. Are Lone Mothers Responsive to Policy Changes? The Effects of a Norwegian Workfare Reform on Earnings, Education and Poverty By Magne Mogstad; Chiara Pronzato
  12. Do subsidized work contracts enhance capabilities of the long-term unemployed ? Evidence based on French Data By Tristan Klein; Christine le Clainche
  13. Credit constraints and the cyclicality of R&D investment: Evidence from France By Philippe Aghion; Philippe Askenazy; Nicolas Berman; Gilbert Cette; Laurent Eymard

  1. By: Maria Concetta Chiuri; Daniela Del Boca
    Abstract: While several social, economic and financial indicators point to a growing convergence among European countries, striking differences still emerge in the timing of leaving home for adult children. In Southern countries (as Spain, Italy or Portugal) in 2001 more than 70 percent of young adults between 18 and 34 years of age live with their parents, whereas the corresponding number for Northern countries (like Denmark or the UK) is well below 40 percent. Existing literature highlights several factors explaining the different patterns in Europe: preferences and culture, labor market conditions, housing market as well as differences across the welfare states. In our work, we consider living arrangements of people 18-34 years old from 14 European countries (ECHP). We augment the informational content with indicators of labor, housing and marriage markets characteristics as well as proxy for the welfare states and culture. We investigate how they are intertwined with gender differences
    Keywords: coups, Living arrangements,duration analysis, government expenditures.
    JEL: J13 C41 H53
    Date: 2008
  2. By: Morten Blekesaune (Norwegian Social Research)
    Abstract: Have some European countries been more successful at employing disabled people than others? Answering this question requires data about disability that are comparable across countries. This paper investigates three possible sources of survey data. Altogether, the European Social Survey (ESS) appears to be the most suitable data source for comparing disabled people between European countries. Employment rates among disabled people vary a lot between these countries. This variation is investigated in relation to several country-level characteristics: the number of people reporting disability, employment rates among non-disabled people, general unemployment rates, some characteristics of disability policies as well as some general employment policies. It is difficult to explain why particular countries are more or less successful at employing disabled people.
    Date: 2007–10
  3. By: Alari Paulus (Institute for Social and Economic Research); Andreas Peichl (University of Cologne)
    Abstract: The flat income tax has become increasingly popular recently, yet its implementation is limited to Eastern Europe. We analyse the distributional and efficiency effects of flat tax scenarios for Western European countries. Our simulations show that flat tax rates required to attain revenue neutrality with existing basic allowances improve labour supply incentives. However, they result in higher inequality and polarisation. Flat rates necessary to keep the inequality levels unchanged allow for some scope for flat taxes to increase both equity and efficiency. Our analysis suggests that Mediterranean countries are more likely to benefit from flat taxes.
    Keywords: flat tax, income inequality, microsimulation, tax reform
    Date: 2008–03
  4. By: Francesco Figari (Institute for Social and Economic Research); Herwig Immervoll (Organisation for Economic Co-operation and Development); Horacio Levy (European Centre for Social Welfare Policy and Research); Holly Sutherland (Institute for Social and Economic Research)
    Abstract: In spite of there being few elements of tax or cash benefit systems in developed countries that are any longer explicitly gender-biased in a discriminatory sense, it is well recognised that they have significant gender effects. To the extent that women earn less than men on average under tax-benefit systems that are progressive, there is some redistribution from men to women overall. However, an aggregate perspective is insufficient for understanding how earning opportunities and public policies affect living arrangements at the family level in general and the circumstances of men and women in particular. Arguably, it is within the household that a gendered division of labour is most relevant. It is difficult to observe how income and other resources get allocated within households. We can, however, observe the incomes brought into the household and to what extent taxes and benefits mitigate (or indeed exacerbate) any inequality of income between men and women. We explore the effects of tax and benefit systems on differences in income and in incentives to earn income between men and women within couples in a selection of the member countries of the European Union (EU) using EUROMOD, the EU tax-benefit microsimulation model. This comparative perspective allows us to establish the relative effects of different policy regimes, given the underlying characteristics of each national population, using a consistent approach and set of incidence assumptions across countries.
    Keywords: europe, gender, inequality, taxation
    Date: 2007–11
  5. By: Chiara Pronzato (Institute for Social and Economic Research)
    Abstract: The aim of this paper is to investigate the role of the extended parental leave in the return to work for mothers of newborn children. Parental leaves have been introduced in the last 30 years in all European countries in order to extend the period of job-protection, allowing both parents to care for the child after the maternity leave period has expired. In this paper, I exploit the variability in policies offered by the EU countries, in terms of length of the leave and payments, and I study the influence of statutory leaves on the probability of staying at home with the child during the leave, and on the probability of working in the period of time following the leave. Using data from ECHP, I select women who have a child in the years of the survey, who have worked before, and I follow them over time. After studying the determinants of the return to work in each country separately, I generalize the results, matching women with similar human capital characteristics and fertility history from different countries and, consequently, under different parental leave regulations. Results suggest that the right to long and paid leaves gives mothers the opportunity to remain at home with the child at a lower cost, and that lengthy statutory leaves are associated with being more likely to be at work in the period following the leave.
    Keywords: childcare, europe, women and employment
    Date: 2007–11
  6. By: Jose Alberto Molina (Department of Economic Analysis, University of Zaragoza, Spain); Maria Navarro (Department of Economic Analysis, University of Zaragoza, Spain); Ian Walker (Department of Economics, University of Warwick, UK)
    Abstract: We study how fathers’ and mothers’ income satisfaction correlate with the income satisfaction of their sons and daughters, as well as with other economic and sociodemographic variables. We estimate these correlations using data on parents and children in households surveyed in the eight waves of the European Community Household Panel-ECHP (1994-2001) for 14 EU countries. To assess the robustness of simple correlations to we exploit siblings in the Panel and we investigate the sensitivity of the estimates to the inclusion of other control variables. We also adopt a multi-level random effects ordered probit specification that exploits step-parents in the data to allow us to decompose nature from nurture effects. Our headline results suggest strong altruism effects, but these estimated effects differ across countries, differ between mothers and fathers, and are different between sons and daughters.
    Date: 2007–06–12
  7. By: Antonio Della Malva; Francesco Lissoni; Patrick Llerena
    Abstract: Recent empirical work in the field of university-industry technology transfer has stressed the importance of IPR-related reforms and university patenting has major forces behind the success of US high-tech industry. European policy-makers have been tempted to explain the poorer technological performance of their countries with the lower propensity of their academic institutions to get engaged in patenting and commercializing their research results. As a consequence, a number of measures have been taken to promote academic awareness of IPRs, as part of more comprehensive policies in favour of academic commercialization and entrepreneurship. This paper explores university patenting, and the related policies, in France. We provide evidence that university patenting in that countries has been underestimated by policy-makers’ perceptions: French academic scientists are in fact responsible for no less than 3% of patents by French inventors at the European Patent Office. However, only 10% of academic-invented patents are owned by domestic universities, with the remainder assigned both to firms and to Public Research Organizations (PROs). We then explore the impact of the Innovation Act, passed in France in 1999. We find that the Act has significantly increased the likelihood an academic patent to be assigned to a university rather than to a business company. We also find, that the opening of a technology transfer office in a university appears to have a stronger and more significant impact than the Act on the decision of universities to retain IPRs over their scientists’ discoveries.
    JEL: L31 O31 O34
    Date: 2008
  8. By: Arnestein Aassve (Institute of Quantitative Methods, Bocconi University); A Busetta (Università di Palermo); D Mendola (Università di Palermo)
    Abstract: Previous studies suggest that Scandinavian countries are the ones with the highest rates of youth poverty in Europe. This somewhat unexpected finding prompts the question whether the incidence of poverty is an appropriate measure of youth disadvantage. Instead of considering poverty rates we define here youth disadvantage in terms of the number of periods an individual is recorded to be below the poverty line. Using the European Community Household Panel, individuals are classified into different groups of poverty permanence, each reflecting severity of social disadvantage. Based on these categories we implement a generalized ordinal logit model to assess the various factors associated with social disadvantage among youth. In contrast to previous research, we find little evidence to suggest that young individuals in Scandinavian countries suffer higher levels of social disadvantage. Moreover there is no significant gender difference in Conservative and Social Democratic welfare regimes, but significant difference in Mediterranean and Liberal countries. As previous studies suggests, young individuals’ living arrangements matter.
    Keywords: comparative research, panel data, poverty persistence, youth
    Date: 2008–03
  9. By: Lavinia Parisi (Institute for Social and Economic Research)
    Abstract: This paper analyses, for Southern European countries, the link between the poverty status of young people who leave home and the economic status of their family of origin. First we model the poverty status of those who leave home while also accounting for the fact that youths from better-off households are more likely to leave home (a sample selection model). Second we address the time at risk of leaving home using a competing risks duration model. Estimates from both approaches suggest that young people delay leaving home because it may increase their chances of being poor. Moreover both approaches indicate that young people who have left home are more likely to be poor if their family of origin is poor and that differences across countries are not statistically significant.
    Keywords: poverty persistence, young people, youth poverty
    Date: 2008–03
  10. By: Kai-Uwe Müller; Viktor Steiner
    Abstract: In view of rising wage inequality and increasing poverty, the introduction of a legal minimum wage has recently become an important policy issue in Germany. We analyze the distributional effects of the introduction of a nationwide legal minimum wage of ¿ 7.5 per hour on the basis of a microsimulation model which accounts for the complex interactions between individual wages, the tax-benefit system and net household incomes. Simulation results show that the minimum wage would be rather ineffective in reducing poverty, even if it led to a substantial increase in hourly wages at the bottom of the wage distribution and had no negative employment effects. The ineffectiveness of a minimum wage in Germany is mainly due to the existing system of meanstested income support.
    Keywords: minimum wage, wage distribution, working poor, poverty reduction, microsimulation
    JEL: I32 H31 J32
    Date: 2008
  11. By: Magne Mogstad (Statistics Norway); Chiara Pronzato (Institute for Social and Economic Research)
    Abstract: This study evaluates a Norwegian single parent benefit reform, in which work and educational requirements were introduced, time limits imposed, and the maximum benefit level increased. We propose to identify the impact of the reform by taking the difference between a pre-reform difference-in-difference estimator and a post-reform difference-in-difference estimator of the effects of becoming single mother on earnings, education, and poverty. This estimator will, unlike the commonly applied difference-in-difference estimator, capture the effects of policy changes when the institutional setup involves a phase-in period from the time a reform is introduced to it is fully implemented. The main findings of this study are that the reform had an overall positive effect on earnings as well as on education of single mothers. Furthermore, we find that the reform led to remarkable decrease in poverty, especially for single mothers with young children. This was driven both by increased earnings and higher benefit amounts. Our findings also demonstrate substantial heterogeneity in the responses of single mothers to the reform by age and educational level. Altogether, the results from this paper undermine the argument in favour of generous out-of-work benefits to support individuals prone to poverty, rather than encouraging self-sufficiency by strengthening the incentives to work and undertake education.
    Keywords: labour supply, poverty, single parents
    Date: 2008–04
  12. By: Tristan Klein; Christine le Clainche
    Abstract: In the 1990’s, France introduced different subsidised contracts to create jobs targeted at long-term unemployment. These programs were supposed to help the beneficiaries to enhance their employability. It is then interesting to use the “capabilities” approach to assess their impact. From the panel of the Research and Statistical Department of the French Ministry of labour and social affairs (Dares) concerning employment policy beneficiaries, an initial analysis explored the beneficiaries’ refined functionings and a second how they subjectively perceive their standard of living. Comparing beneficiaries’ perceptions to those of a control group provided the necessary data to evaluate the real impact of these employment schemes on beneficiaries. Globally, subsidised employment contracts provide beneficiaries’ with an increased number of opportunities or choices that can be achieved and thus can be said to improve their quality of life. Furthermore, the private sector employment contract to the long-term unemployed (the so-called “CIE”) is generally viewed more positively than the fixed-term contract in the public sector (the so-called “CES”) although the latter is viewed as more successful in allowing beneficiaries to “feel useful” and “regain self-esteem”.
    Date: 2008–05
  13. By: Philippe Aghion; Philippe Askenazy; Nicolas Berman; Gilbert Cette; Laurent Eymard
    Abstract: We use a French firm-level data set containing 13,000 firms over the period 1993-2004 to analyze the relationship between credit constraints and firms' R&D behavior over the business cycle. Our main results can be summarized as follows: (i) the share of R&D investment over total investment is countercyclical without credit constraints, but it becomes less countercyclical as firms face tighter credit constraints; (ii) this result is magnified for firms in sectors that depend more heavily upon external finance, or that are characterized by a low degree of asset tangibility; (iii) in more credit constrained firms, R&D investment share plummets during recessions but does not increase proportionally during upturns; (iv) average R&D investment and productivity growth are more negatively correlated with sales volatility in more credit constrained firms.
    Date: 2008

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