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on European Economics |
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Issue of 2008‒06‒27
twenty-one papers chosen by Giuseppe Marotta University of Modena and Reggio Emilia |
| By: | Alessandro Calza |
| Abstract: | This paper tests whether the proposition that globalisation has led to greater sensitivity of domestic inflation to the global output gap (the "global output gap hypothesis") holds for the euro area. The empirical analysis uses quarterly data over the period 1979-2003. Measures of the global output gap using two different weighting schemes (based on PPPs and trade data) are considered. We find little evidence that global capacity constraints have either explanatory or predictive power for domestic consumer price inflation in the euro area. Based on these findings, the prescription that central banks should specifically react to developments in global output gaps does not seem to be justified for the euro area. |
| Keywords: | Globalization ; Inflation (Finance) ; Monetary policy - Europe ; International trade - Europe |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddgw:13&r=eec |
| By: | Francesco Lissoni; Patrick Llerena; Maureen McKelvey; Bulat Sanditov |
| Abstract: | The paper provides summary statistics from the KEINS database on academic patenting in France, Italy, and Sweden. It shows that academic scientists in those countries have signed many more patents than previously estimated. This re‐evaluation of academic patenting comes by considering all patents signed by academic scientists active in 2004, both those assigned to universities and the many more held by business companies, governmental organizations, and public laboratories. Specific institutional features of the university and research systems in the three countries contribute to explain these ownership patterns, which are remarkably different from those observed in the US. In the light of these new data, European universities’ contribution to domestic patenting appears not to be much less intense than that of their US counterparts. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2008-16&r=eec |
| By: | Raquel Ortega-Argiles (Joint Research Centre-European Commission, IPTS Seville); Andries Brandsma (Joint Research Centre-European Commission, IPTS Seville) |
| Abstract: | The average firm size of the top R&D investors among US-based companies is smaller than that of the EU-based firms. Does this help to explain why the US has a greater R&D intensity, or is the higher firm size in the EU, just as its lower R&D intensity, determined by the sectors in which the top R&D investors are operating? Using data on the top-R&D investors from the 2006 EU Industrial R&D Investment Scoreboard, the size differential between R&D performers in the EU and US is more closely examined. A first observation is that, despite great differences between sectors, the overall distribution of companies' R&D investments in both economies is remarkably similar, as opposed to the distribution of the R&D/sales ratios of the same two sets of companies. The notion that size plays a role, independent of the sectoral composition of R&D, is then confirmed by regression analysis. In the US as well as in the EU, smaller sized Scoreboard companies tend to spend a larger proportion of their income from sales on R&D. |
| Keywords: | R&D intensity, firm size, panel data |
| JEL: | L11 |
| Date: | 2008–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2008-049&r=eec |
| By: | Jens Arnold; Giuseppe Nicoletti; Stefano Scarpetta |
| Abstract: | This paper relates diverging productivity performances across OECD countries over the past fifteen years to differences in the stringency of regulations in the product market. We first summarize industry-level evidence linking these diverging patterns to delays in service markets reforms in the wake of the ICT shock. The evidence we survey suggests that, especially in continental EU countries, tight regulation of services has slowed down growth in ICT-using sectors, which use intermediate service inputs intensively. Based on harmonised cross-country firm-level data, we then provide new evidence that one of the key channels through which inappropriate service regulations affect productivity growth is by hindering the allocation of resources towards the most dynamic and efficient firms. At the industry level, resources were allocated less efficiently across firms in countries where service regulations are less market-friendly. Firmlevel econometric estimates confirm that anti-competitive service regulations hamper productivity growth in ICT-using sectors, with a particularly pronounced effect on firms that are catching up to the technology frontier and that are close to international best practice. In other words, regulations hurt in particular those firms that have the potential to excel in domestic and international markets. <P>Réglementation, allocation des ressources et productivité dans les pays de l’OCDE : évidence empirique au niveau des secteurs et des entreprises <BR>Cette étude établi un rapport entre trajectoires divergentes de productivité dans les pays OCDE pendant les dernières 15 années, et différences dans la rigidité de la réglementation sur les marchés des biens. La première partie du papier résume les résultats empiriques existants au niveau des industries sur le rapport entre productivité et réglementation dans les secteurs de services, ainsi que son rapport avec le choc technologique dans les technologies de l'information et de la communication (TIC). L’évidence empirique que nous examinons suggère qu’en particulier dans les pays d’Europe continentale la réglementation rigide a ralenti la croissance dans les secteurs «utilisateur des TIC», qui utilisent de manière intensive les services réglementés. Sur la base de données harmonisées au niveau des entreprises, ce papier présente ensuite des résultats nouveaux qui montrent que l’effet de la réglementation sur la croissance de la productivité se transmet principalement à travers des obstacles à l’allocation des ressources vers les entreprises les plus dynamiques et efficientes. L’allocation des ressources au sein de chaque industrie est moins efficiente dans les pays ayant une réglementation plus rigide dans les secteurs des services. Nos estimations économétriques au niveau des entreprises montrent ensuite que la réglementation des services réduit la croissance de la productivité dans les secteurs « utilisateur des TIC », avec un effet particulièrement prononcé sur les entreprises qui sont proches de la frontière technologique et y convergent rapidement. Autrement dit, la réglementation nuit surtout aux entreprises qui ont le plus haut potentiel de succès dans les marchés nationaux et internationaux. |
| Keywords: | product market regulation, productivity, productivité, allocative efficiency, firm-level data, réglementation dans les marchés des biens, efficience dans l’allocation de ressources, données individuelles d’entreprise |
| JEL: | D24 E23 K23 L11 L51 |
| Date: | 2008–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:616-en&r=eec |
| By: | Gambardella, Alfonso; Harhoff, Dietmar; Verspagen, Bart |
| Abstract: | This paper employs data from an extensive European survey to produce one of the first systematic assessments of the private economic value of patents. The estimated mean of our patent value distribution is higher than 3 million Euros, the median is about one-tenth, and the mode is around a few thousand Euros. This is in line with previous findings about the skewed distribution of patent values. Our measure is significantly correlated with the number of patent citations, references, claims, and countries in which the patent is applied. Citations explain value as much as the other three indicators combined, and the right tail of citations is correlated with the right tail of our value measure. Yet, the four indicators only explain 2.7% of the variance of patent value. Thus, while the use of these indicators as proxies for value, particularly citations, may be justified, predictions based on these indicators carry significant noise. After using country, technology, and patent class fixed effects, we only explain 11.3% of the variation in patent value. The "measure of our ignorance" about patent value is still sizable, which calls for additional research to fill the gap. |
| Keywords: | intellectual property rights; patent citations; patent claims; patent references; patent value; patent value indicators; patents |
| JEL: | L20 O31 O32 O34 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6848&r=eec |
| By: | Crafts, Nicholas; Toniolo, Gianni |
| Abstract: | This paper surveys the extensive literature on European economic growth since 1950. It presents an overview of comparative growth performance together with benchmarked growth accounting estimates. The growth experience is considered in terms of three periods, the Golden Age of 1950-73, the Growth Slowdown of 1973-1995, and the New Economy period since the mid-1990s, both across countries and across regions. The key conclusion is that study of the historical record underlines the importance of incentive structures for growth outcomes while sustaining growth performance over the long run requires the (often difficult) adaptation of institutions and policies as catch up becomes more complete and new technological epochs arrive. |
| Keywords: | catch-up growth; Golden Age; ICT; slowdown; total factor productivity |
| JEL: | N14 O47 O52 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6863&r=eec |
| By: | Charlotte Christiansen; Angelo Ranaldo (School of Economics and Management, University of Aarhus, Denmark) |
| Abstract: | We analyze the financial integration of the new EU member states’ stock markets using the coexceedance variable that counts the number of large negative returns on a given day across the countries. We use a multinomial logit model to investigate which factors influence the coexceedance variable, separately for geographical effects, asset class effects, volatility effects, and persistence effects. The effects differ for negative (large negative returns) and positive (large positive returns) coexceedance variables. The coexceedance variables for the old and the new EU countries are influenced differently. The effects on the new EU coexceedance variables change after the EU enlargement in 2004. |
| Keywords: | Emerging markets, EU enlargement, EU Member States, Extreme returns, Financial integration, New EU Member States, Stock Markets |
| JEL: | C25 F36 G15 |
| Date: | 2007–11–07 |
| URL: | http://d.repec.org/n?u=RePEc:aah:create:2007-34&r=eec |
| By: | Nicole Walter; Runli Xie |
| Abstract: | Empirical observations show that education helps to protect against labor market risks. This is twofold: The higher educated face a higher expected wage income and a lower probability of being unemployed. Although this relationship has been analyzed in the literature broadly, several questions remain to be tackled. This paper contributes to the existing literature by looking at the above mentioned phenomena from a purely theoretic perspective and in a European context. We set up a model with search-and-matching frictions, collective bargaining and monopolistic competition in the product market. Workers are heterogeneous in their human capital level. It is shown that higher human capital increases the wage rate and reduces unemployment risks, which is consistent with empirical observations for European countries. |
| Keywords: | human capital, search frictions, collective bargaining, monopolistic competition |
| JEL: | E24 J24 J52 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2008-039&r=eec |
| By: | Kristian Bolin; Anna Lindgren; Bjorn Lindgren; Petter Lundborg |
| Abstract: | We analysed the relative importance of individual versus institutional factors in explaining variations in the utilisation of physician services among the 50+ in ten European countries. The importance of the latter was investigated, distinguishing between organisational (explicit) and cultural (implicit) institutional factors, by analysing the influence of supply side factors, such as physician density and physician reimbursement, and demand side factors, such as co-payment and gate-keeping, while controlling for a number of individual characteristics, using cross-national individual-level data from SHARE. Individual differences in health status accounted for about 50 percent of the between-country variation in physician visits, while the organisational and cultural factors considered each account for about 15 percent of the variation. The organisational variables showed the expected signs, with higher physician density being associated with more visits and higher co-payment, gate-keeping, and salary reimbursement being associated with less visits. When analysing specialist visits separately, however, organisational and cultural factors played a greater role, each accounting for about 30 percent of the between-country variation, whereas individual health differences only accounted for 1 percent of the variation. |
| JEL: | I11 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14096&r=eec |
| By: | Colantone, I.; Coucke, K.; Sleuwaegen, L. (Vlerick Leuven Gent Management School) |
| Abstract: | The effects of increasing import competition on output displacement and exit of heterogeneousdomestic firms are investigated within the context of an oligopolistic rivalry model.The displacement effect is found to be stronger for large "output flexible" firms, while small"cost flexible" ones are less affected by increasing import pressure. Extending the model to allow for product heterogeneity between domestic and foreign firms, we also find that product differentiation lowers the displacement effect. The theoretical findings are supported at the empirical level by the analysis of firm exit dynamics for 12 manufacturing sectors in 8 European countries, from 1997 to 2003. In particular, we find that the exit of large firms is sensitive to the shock of increasing import penetration from low-wage countries. Small firms in the same industries are instead only affected by marginal trade integration with respect to neighbouring EU countries and other relatively wealthy trading partners. Hence this paper shows, for the first time, that firms of different size might be affected differently by diverse sources of import competition. Implications on firms’ strategic planning and public policy are discussed. |
| Keywords: | oligopolistic competition, low-wage country import competition, firm exit |
| JEL: | F12 F14 L11 L25 L60 |
| Date: | 2008–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:vlg:vlgwps:2008-06&r=eec |
| By: | Raquel Ortega-Argilés (Joint Research Centre-European Commission, IPTS Seville); Lesley Potters (Joint Research Centre-European Commission and Utrecht School of Economics); Marco Vivarelli (Joint Research Centre-European Commission, Catholic University, Milan and Max Planck Institute of Economics, Jena) |
| Abstract: | The aim of this study is to investigate the relationship between a firm's R&D activities and its productivity using a unique micro data panel dataset and looking at sectoral peculiarities which may emerge; more specifically, we used an unbalanced longitudinal database consisting of 532 top European R&D investors over the six-year period 2000-2005. Our main findings can be summarised along the following lines: knowledge stock has a significant positive impact on a firm's productivity, with an overall elasticity of about 0.125; this general result is largely consistent with previous literature in terms of the sign, the significance and the estimated magnitude of the relevant coefficient. More interestingly, the coefficient increases monotonically when we move from the low-tech to the medium-high and high-tech sectors, ranging from a minimum of 0.05/0.07 to a maximum of 0.16/0.18. This outcome, in contrast with recently-renewed acceptance of low-tech sectors as a preferred target of R&D investment, suggests that firms in high-tech sectors are still far ahead in terms of the impact on productivity of their R&D investments, at least as regards top European R&D investors. |
| Keywords: | R&D, productivity, knowledge stock, panel data, perpetual inventory method |
| JEL: | O33 |
| Date: | 2008–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2008-050&r=eec |
| By: | Fung, K.C. (BOFIT); Korhonen, Iikka (BOFIT); Li, Ke (BOFIT); Ng, Francis (BOFIT) |
| Abstract: | China has emerged as one of the world's leading recipients of foreign direct investment (FDI). Meanwhile, the successful transition experience of many Central and Eastern European countries (CEECs) also enables them to attract an increasing share of global foreign investment, particularly from the European Union (EU). What is the relationship between inward FDI of China and the CEECs? We conceptualize the relationship according to three alternative paradigms: 1) China and the CEECs each exist in its own regional production network, with no linkage between FDI flows into China and into CEECs; 2) China and the CEECs together comprise a global production network, so that FDI into China is positively related to FDI into CEECs; and 3)FDI into China is a substitute for FDI into the CEECs, so that the correlation between them is negative. In this paper, we employ panel data to study this issue in detail. Specifically, we compare empirical estimates for 15 CEECs over the 15-year period 1990-2004 using four different econometric approaches: FGLS with Random effects, FGLS with fixed effects, EC2SLS and GMM. The result supports the conclusion that China's inward FDI does not crowd out CEECs' inward FDI. In fact, it shows that in some circumstances FDI flows in these two regions are moderately complementary. In addition, our analysis confirms the importance for FDI flows of recipient-country characteristics such as market size, degree of trade liberalization and labor quality, as well as a healthy global capital market. |
| Keywords: | foreign direct investment (FDI); regional networks; global supply chain; China’s FDI; Central and Eastern European Countries’ FDI |
| JEL: | F20 F21 F43 |
| Date: | 2008–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2008_009&r=eec |
| By: | Rafael Domenech (University of Valencia); Ángel Melguizo (BBVA Research Department) |
| Abstract: | In this paper we suggest a set of indicators about the future performance of the Spanish public pension system and a suitable method of representing their uncertainty, in order to improve the communication to the public opinion about its main future challenges. Spain seems a particularly interesting case in Europe to illustrate our proposals, since the social security system has been in surplus for nine consecutive years, in sharp contrast to the projections made just a decade ago, but, at the same time, most projections foresee for Spain one of the highest increases in public expenditure among EU countries due to ageing. We argue that simple, transparent, credible, public and periodic indicators, which take explicitly into account the uncertainty about future demographic, economic and institutional developments, may contribute to improve the debate on the policies needed to strengthen the pension system. |
| Keywords: | pensions, projections, communication, uncertainty |
| JEL: | E17 H55 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iei:wpaper:0803&r=eec |
| By: | Lars P. Feld; Benno Torgler; Bin Ding |
| Abstract: | The paper explores whether a social learning model helps explain the observed conformity and compliance with social norms after the unification of Germany. We compare tax morale, (the willingness to pay taxes), between inhabitants of East and West Germany during the post-unification period, using three World Values Survey/European Values Survey waves between 1990 and 1999. German unification is of particular interest in analysing tax morale since it is close to a quasi-natural experiment. Factors such as a common language, similar education systems and a shared cultural and political history prior to the separation after the Second World War can be controlled because they are similar. Our findings indicate that the social learning model employed in this study helps to predict the development of tax morale over time. It is clear that tax morale values converged within a mere nine years after unification, due largely to a strong change in the level of tax morale in the East. Thus, the paper contributes to the literature that attempts to explain how norms arise, how they are maintained and how they are changed. |
| Keywords: | Tax Morale, Social Learning, Conformity, Convergence Process, Deterrence, Quasi-Natural Experiment |
| JEL: | H26 H73 D78 C93 |
| Date: | 2008–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:qut:dpaper:232&r=eec |
| By: | Ekkehard Ernst; Timo Teuber |
| Abstract: | An overlapping-generations model with search unemployment is calibrated for the Netherlands to assess the impact of tax-benefit reforms on labour supply. Several reforms are analysed, in particular the introduction of a flat tax and pension reforms. The model demonstrates the potential of these reforms to raise labour supply. In particular, pension reforms, such as lowering replacement rates for pensioners, help to boost participation rates of older workers. On the other hand, a flat tax would promote longer working hours across the board, thereby rising labour supply. However, the introduction of a flat tax is a costly measure and would increase the primary general government deficit by close to 2% of GDP. Simultaneous measures to lower the structural unemployment rate would not only help to avoid adverse effects of such a tax reform on the fiscal balance but would strengthen further the positive effects of a flat tax on working hours. <P>Le système des impôts et des transferts sociaux néerlandais et l’emploi pendant le cycle de vie : Résultats et options de réformes <BR>Un modèle à générations imbriquées avec chômage d’équilibre est calibré pour les Pays-Bas afin d’évaluer l’impact des réformes du système d’imposition et de transferts sociaux sur l’offre du travail. Plusieurs réformes sont analysées, en particulier l’introduction d’un impôt à taux unique et des réformes du système des retraites. Le modèle montre le potentiel de ces réformes pour augmenter l’offre du travail. En particulier, les réformes du système des retraites visant à diminuer le taux de remplacement des retraites permettent d’augmenter l’offre du travail des seniors. De l’autre côté, un impôt à taux unique permettrait d’augmenter le nombre d’heures travaillées par personne, ce qui augmenterait l’offre du travail. Néanmoins, introduire un tel impôt est une mesure couteuse et augmenterait le déficit primaire de près de 2% du PIB. Des mesures simultanées de réduire le taux de chômage structurel permettraient de contrebalancer des effets adverses d’une telle réforme des impôts sur le solde budgétaire et augmenterait en même temps son effet positif sur le nombre d’heures travaillées. |
| Keywords: | tax reform, Netherlands, Pays-Bas, pension reform, réforme du système de retraite, overlapping generation model, modèle à générations imbriquées, dynamic tax-benefit policies, equilibrium unemployment, labour market search frictions, politiques fiscales dynamiques, chômage d’équilibre, frictions d’appariement du marché du travail, réformes du système des impôts |
| JEL: | D91 E24 J26 J64 |
| Date: | 2008–06–19 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:617-en&r=eec |
| By: | Timothy K.M. Beatty and Dag Einar Sommervoll (Statistics Norway) |
| Abstract: | This paper considers statistical discrimination in rental markets, using a rich data set on rental contracts from Norway. We find that tenants born abroad pay a statistically significant and economically important premium for their dwelling units after controlling for a comprehensive set of apartment, individual and contract specific covariates. We also find that the premium is largest for tenants of African origin. Moreover, the children of parents born abroad also face a statistically significant and economically important rental premium. |
| Keywords: | Statistical Discrimination; Rental Markets; Hedonic Regression |
| JEL: | J15 R21 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:547&r=eec |
| By: | Sergi Jiménez-Martín; Cristina Vilaplana Prieto |
| Abstract: | The remarkable growth of older population has moved long term care to the front ranks of the social policy agenda. Understanding the factors that determine the type and amount of formal care is important for predicting use in the future and developing long-term policy. In this context we jointly analyze the choice of care (formal, informal, both together or none) as well as the number of hours of care received. Given that the number of hours of care is not independent of the type of care received, we estimate, for the first time in this area of research, a sample selection model with the particularity that the first step is a multinomial logit model. With regard to the debate about complementarity or substitutability between formal and informal care, our results indicate that formal care acts as a reinforcement of the family care in certain cases: for very old care receivers, in those cases in which the individual has multiple disabilities, when many care hours are provided, and in case of mental illness and/or dementia. There exist substantial differences in long term care addressed to younger and older dependent people and dependent women are in risk of becoming more vulnerable to the shortage of informal caregivers in the future. Finally, we have documented that there are great disparities in the availability of public social care across regions. |
| Keywords: | Formal care, informal care, caregiver, dependent |
| JEL: | I1 J14 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1096&r=eec |
| By: | Boeters, Stefan; Feil, Michael (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]) |
| Abstract: | "Labour market reforms that are designed to stimulate labour supply at the lower end of the wage distribution can never be precisely restricted to affect only the target group. Spillovers to and feedback from other segments of the labour market are unavoidable and may counteract the direct effects of the reform. An adequate representation of heterogeneous labour markets becomes therefore an important issue for the assessment of reforms. We analyse the possible interactions between labour market segments in a combined, consistent microsimulation-AGE model with a flexible representation of substitution possibilities and di¤erent wage-forming regimes. We look at a stylised reform and find labour-demand cross-price elasticities between the low and medium skilled to be the main drivers of the results. Interaction with the high-skilled segment is less pronounced." (author's abstract, IAB-Doku) ((en)) |
| JEL: | D58 J22 J51 |
| Date: | 2008–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:200825&r=eec |
| By: | Barbara Petrongolo |
| Abstract: | This paper investigates long-term returns from unemployment compensation, exploitingvariation from the UK JSA reform of 1996, which implied a major increase in job searchrequirements for eligibility and in the related administrative hurdle. Search theory predictsthat such changes should raise the proportion of non-claimant nonemployed, withconsequences on search effort and labor market attachment, and lower the reservation wageof the unemployed, with negative effects on post-unemployment wages. I test these ideas onlongitudinal data from Social Security records (LLMDB). Using a difference in differencesapproach, I find that individuals who start an unemployment spell soon after JSAintroduction, as opposed to six months earlier, are 2.5-3% more likely to move fromunemployment into Incapacity Benefits spells, and 4% less likely to have positive earnings inthe following year. This latter employment effect only vanishes four years after the initialunemployment shock. At the same time, earnings for the treated individuals seem to be lowerthan for the non treated, but the confidence intervals around these estimated effects are quitelarge to exclude a wider variety of scenarios. These results suggest that while tighter searchrequirements were successful in moving individuals off unemployment benefits, they werenot successful in moving them onto new or better jobs, with fairly long lasting unintendedconsequences on a number of labor market outcomes. |
| Keywords: | unemployment compensation, job search, post-unemployment earnings |
| JEL: | J31 J64 J65 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0841&r=eec |
| By: | Paramio, Juan Luis (Departamento de Educación Física, Deportes y Motricidad Humana. Universidad Autónoma); Zofío, José Luis (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid) |
| Abstract: | We discuss the effects that the emergence of the new post-industrial form of flexible capitalist organization has on the Spanish labor market and, by extension, on the working life of two representative groups of employees characterized by their casual and stable working conditions. This brings a growing duality in the labor market, where individuals who cannot escape casual employment coexist with those enjoying long term contracts. This concern includes how these changes affect the nature and the ways in which these particular groups understand quality of life and standard of living, which in turn serves to call into question the ‘end of work’ and the expected ‘leisure society’. In addition, we highlight several circumstances that illustrate a decay in job quality and working conditions, particularly the increase in working hours. Parallel to this process we identify a work-and-spend behavior, resulting in overspent families that exhibit financial fragility and give up quality of life, associated with more free time, for higher living standards, which demand an increasing job commitment. Free time from work has become a scarce resource in Spain, and for those individuals belonging to what is known as the ‘new leisure class’, it is associated with high spending leisure activities, which has increased the economic importance of leisure industries. |
| Keywords: | Labour market; cycle of work-and-spend; free time; leisure industries; Spain |
| JEL: | J08 J22 J31 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:uam:wpaper:200806&r=eec |
| By: | Biroli, Pietro; Buti, Marco; Turrini, Alessandro Antonio; Van Den Noord, Paul |
| Abstract: | European policy makers, notably in the euro area, seem to take for granted that the electorate will punish them for bold reform in product and labour markets. This may explain why progress in the euro area has been comparatively limited. This paper posits and, using a dataset for 21 OECD countries, shows that this fear of electoral backlashes is unfounded, provided that financial markets work well. The mechanisms involved are relatively straightforward: well functioning financial markets "bring forward" future yields of structural reform to the present, thus permitting to overcome possible short-run costs. As a result, the electorate tend to reward, not punish, reformist governments. This has important implications for the design of structural reform packages, with financial market reforms being an essential ingredient beside product and labour market reforms. |
| Keywords: | Economic and Monetary Union; electoral cycle; financial markets; structural reforms |
| JEL: | E61 H30 H60 H70 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6875&r=eec |