nep-eec New Economics Papers
on European Economics
Issue of 2008‒08‒21
fourteen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Regulatory Competition in Europe after Laval By Simon Deakin
  2. Optimal Taxation, Social Contract and the Four Worlds of Welfare Capitalism By Olivier Bargain; Amedeo Spadaro
  3. Monetary Policy by Committee:Consensus, Chairman Dominance or Simple Majority? By RIBONI, Alessandro; RUGE-MURCIA, Francisco J.
  4. Preferences for redistribution: a European comparative analysis By Elvire Guillaud
  6. Does Innovation Stimulate Employment? A Firm-Level Analysis Using Comparable Micro-Data from Four European Countries By Rupert Harrison; Jordi Jaumandreu; Jacques Mairesse; Bettina Peters
  7. The interdependencies between food and biofuel production in European agriculture - an application of EUFASOM By P. Michael Link; C. Ivie Ramos; Uwe A. Schneider; Erwin Schmid; J. Balkovic; R. Skalsky
  9. Labour Market Integration and the Transition to Parenthood : A Comparison of Germany and the UK By Christian Schmitt
  10. The Influence of Stock Market Listing on Human Resource Managment: Evidence for France and Britain By Neil Conway; Simon Deakin; Suzzanne J. Konzelmann; Héloïse Petit; Antoine Rebérioux; Frank Wilkinson
  11. The Gender Wage Gap as a Function of Educational Degree Choices in Greece By Pouliakas, Konstantinos; Livanos, Ilias
  12. How Does Shared Capitalism Affect Economic Performance in the UK? By Alex Bryson; Richard Freeman
  13. Health and Income Poverty in Ireland, 2003-2006 By David Madden
  14. How Tight are Safety-Nets in Nordic Countries? Evidence from Finnish Register Data By Olivier Bargain; Herwig Immervoll; Heikki Viitamäki

  1. By: Simon Deakin
    Abstract: This paper considers the implications for regulatory competition of the recent judgment of the European Court of Justice in Laval. This case is potentially the most important decision on European labour law for a generation. The Court has greatly extended the scope for judicial review of state-level labour laws on the grounds that they restrict freedom of movement from one member state to another. It has also undermined the principle of the territorial effect of labour legislation and has given a strictly pre-emptive interpretation to social policy directives. The Laval judgment is, however, open to attack on a number of grounds. It fails to mount a coherent economic case for judicial intervention on the scale envisaged, and is, more generally, incompatible with the recent experimentalist or reflexive turn in European governance represented by the open method of coordination.
    Keywords: regulatory competition, experimentalism, labour law, free movement of workers, Laval case
    JEL: J83 K31
    Date: 2008–06
  2. By: Olivier Bargain (University College of Dublin); Amedeo Spadaro (Paris School of Economics)
    Abstract: Drawing from the formal setting of the optimal tax theory (Mirrlees 1971), the paper identifies the level of Rawlsianism of some European social planner starting from the observation of the real data and redistribution systems and uses it to build a metric that allows measuring the degree of (dis)similarity of the redistribution systems analyzed. It must be considered as a contribution to the comparative research on the structure and typology of the Welfare State (Esping-Andersen, 1990). In particular we consider the optimal taxation model that combines both intensive (Mirrlees) and extensive (Diamond) margins of labor supply, as suggested by Saez (2002) in order to assess the degree of decommodification of seven European welfare systems. We recover the shape of the social welfare function implicit in taxbenefit systems by inverting the model on actual effective tax rates, as if existing systems were optimal according to some Mirrleesian social planner. Actual distributions of incomes before and after redistribution are obtained using a pan-European tax-benefit microsimulation model. Results are discussed in the light of standard classifications of welfare regimes in Europe. There appears to be a clear coincidence of high decommodification and high Rawlsianism in the Scandinavian, social-democratically influenced welfare states (Denmark). There is an equally clear coincidence of low decommodification and utilitarianism in the Anglo–Saxon liberal model (UK) and in the Southern European welfare states (Italy and Spain). Finally, the Continental European countries (Finland, Germany and France) group closely together in the middle of the scale, as corporatist and etatist.
    Keywords: Optimal income taxation, tax-benefit policy, microsimulation, comparative social policy analysis, welfare state models
    JEL: H11 H21 D63 C63
    Date: 2008–07–30
  3. By: RIBONI, Alessandro; RUGE-MURCIA, Francisco J.
    Abstract: This paper studies the theoretical and empirical implications of monetary policy making by committee under three different voting protocols. The protocols are a consensus model, where super-majority is required for a policy change; an agenda-setting model, where the chairman controls the agenda; and a simple majority model, where policy is determined by the median member. These protocols give preeminence to different aspects of the actual decision making process and capture the observed heterogeneity in formal procedures across central banks. The models are estimated by Maximum Likehood using interest rate decisions by the committees of five central banks, namely the Bank of Canada, the Bank of England, the European Central Bank, the Swedish Riksbank, and the U.S. Federal Reserve. For all central banks, results indicate that the consensus model is statically superior to the alternative models. This suggests that despite institutionnal differences, committees share unwritten rules and informal procedures that deliver observationally equivalent policy decisions.
    Keywords: Committees, voting models, status-quo bias, median voter
    JEL: D7 E5
    Date: 2008
  4. By: Elvire Guillaud
    Abstract: What explains people's preferences for state intervention in social policies? Conducting a cross-section analysis on individual-level survey data, we highlight the link between the economic position of agents and their specific demand toward redistribution. Controlling for a number of factors usually found to impact individual preferences in the literature, we take the egoistic motives for redistribution seriously and focus on the role played by the occupational status of individuals in shaping their preferences. Thus, (i) we estimate the relative importance of economic factors in terms of current and expected gain, allowing for social mobility experience and risk aversion. Further, (ii) we try to identify which socio-political groups could be formed on the basis of their preferences for redistribution. Finally, (iii) we highlight differences between European countries as it comes to the grouping of agents.
    Date: 2008
  5. By: Laura Crespo (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: In this paper we estimate the causal effect of providing “intensive” informal care to elderly parents on labour market participation decisions for European women who are themselves approaching retirement. In particular, we consider the frequency or intensity of this help and we focus on informal care provided in a daily or weekly basis. We use two different but comparable samples drawn from the Survey of Health, Ageing and Retirement in Europe (SHARE) that provide complementary detailed information about daughters and parents. We obtain evidence about this question for two groups of European countries that strongly differ in terms of informal caregiving intensity within the immediate family and the use of formal care: the northern countries (Sweden, Denmark and The Netherlands), and the southern countries (Spain, Italy and Greece). The results show that the estimated effect of providing “intensive” informal care to elderly parents on the probability of labour participation is negative and large for both groups of countries. Furthermore, a substantially stronger effect is found when the “intensive” caregiving variable is treated as endogenous in the labour participation equation. This shows that the potential opportunity costs in terms of (reduced) employment associated with the provision of informal care by women are seriously underestimated under the exogeneity assumption of the caregiving regressor.
    Keywords: Binary choice, labour force participation decisions, parental informal caregiving, endogenous variables, simultaneous estimation.
    JEL: J2 C3 D1
    Date: 2006–12
  6. By: Rupert Harrison; Jordi Jaumandreu; Jacques Mairesse; Bettina Peters
    Abstract: This paper studies the impact of process and product innovations introduced by firms on employment growth in these firms. A simple model that relates employment growth to process innovations and to the growth of sales separately due to innovative and unchanged products is developed and estimated using comparable firm-level data from France, Germany, Spain and the UK. Results show that displacement effects induced by productivity growth in the production of old products are large, while those associated with process innovations, which are likely to be compensated by price decreases, appear to be small. The effects related to product innovations are, however, strong enough to overcompensate these displacement effects.
    JEL: D2 J23 L1 O31 O33
    Date: 2008–08
  7. By: P. Michael Link; C. Ivie Ramos; Uwe A. Schneider; Erwin Schmid; J. Balkovic; R. Skalsky (Research unit Sustainability and Global Change)
    Abstract: In the continuous quest to reduce anthropogenic emissions of carbon dioxide, the production and use of organically grown fuels in Europe has increased in importance in the recent past. However, the production of so-called biofuels is a direct competitor of agricultural food production for land, labor, water resources etc. with both land use options influencing each other depending on the respective boundary conditions defined by political regulations and economic considerations. In this study we will explore the economic and technical potentials of biofuels in Europe as well as the interdependencies between these two land use options for different economic incentives for biofuels using the European Forest and Agriculture Sector Optimization Model (EUFASOM). Key data on biodiesel and ethanol production have been gathered and are used for calibration of the model. The simulations extend until the year 2030, for which results are presented. Results indicate that moderate production targets of biofuels lead to an expansion of mainly the biodiesel production while more ambitious targets call for a focus on bioethanol. This has to do with the different levels of production efficiency depending on the production output. Growth of bioethanol feedstock is spread over entire Europe while the production of biodiesel feedstock occurs mainly in Central Europe.
    Keywords: biodiesel, bioethanol, Europe, EUFASOM, modeling
    JEL: Q18 Q19 Q54
    Date: 2008–07
  8. By: Samuel Bentolila; Juan J. Dolado; Juan F. Jimeno (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: The Phillips curve has flattened in Spain over 1995-2006: unemployment has fallen by 15 percentage points, with roughly constant inflation. This change has been more pronounced than elsewhere. We argue that this stems from the immigration boom in Spain over this period. We show that the New Keynesian Phillips curve is shifted by immigration if natives’ and immigrants’ labor supply or bargaining power differ. Estimation of the curve for Spain indicates that the fall in unemployment since 1995 would have led to an annual increase in inflation of 2.5 percentage points if it had not been largely offset by immigration.
    Keywords: Phillips curve, immigration.
    JEL: E31 J64
    Date: 2007–12
  9. By: Christian Schmitt
    Abstract: The aim of this paper is to investigate the hypothesis that after leaving the educational system, labour market integration has a causal effect on first-birth decisions. The analysis focuses on two major research questions: First, how is the timing of first parenthood associated with previous labour market performance? Second, can differences in first birth-risks be related to labour market performance? In other words, to what extent do the fertility decisions of successfully integrated individuals differ from those who are poorly integrated into the labour force? To account for the impact of cross-national differences in institutional settings, I contrast the continental conservative German welfare state with the liberal market economy of the UK. To account for gender-specific differences in opportunity costs, I distinguish between men and women in this analysis. Using longitudinal micro-data from the SOEP and BHPS, I apply a piecewise constant exponential hazard model. The results show a significantly reduced first-birth risk in the case of German men with weak occupational integration, as well as in the case of British and German women with pronounced labour market attachment. Furthermore, regarding the timing of family formation, a lengthy process of occupational integration tends to delay the transition to parenthood for both men and women, especially in Germany.
    Keywords: Fertilty, first-birth, occupational integration, cross-national comparison
    Date: 2008
  10. By: Neil Conway; Simon Deakin; Suzzanne J. Konzelmann; Héloïse Petit; Antoine Rebérioux; Frank Wilkinson
    Abstract: We use data from REPONSE 2004 and WERS 2004 to analyse whether approaches to HRM differ according to whether an establishment is part of a company with a stock exchange listing. In both countries we find that listing is positively associated with teamworking and performance-related pay, while in France, but not in Britain, it is also linked to worker autonomy and training. Our findings are inconsistent with the claim that shareholder pressure operates as a constraint on the adoption of high-performance workplace practices. The pattern is similar in the two countries, but with a slightly stronger tendency for listing to be associated with high-performance workplace practices in France.
    Keywords: corporate governance, human resource management, employment relations
    JEL: G32 G38 K22 K31 J53 J88
    Date: 2008–06
  11. By: Pouliakas, Konstantinos; Livanos, Ilias
    Abstract: This study investigates the extent to which differences in the subject of degree studied by male and female university graduates contributes to the gender pay gap in Greece. The case of Greece is interesting as it is an EU country with historically large gender discrepancies in earnings and one of the highest levels of occupational gender segregation among OECD economies. Using micro-data from the most recently available waves (2000-2004) of the Greek Labour Force Survey (LFS), the returns to academic disciplines are firstly estimated by gender. It is found that the subjects in which women are relatively over-represented (e.g. Education, Humanities) are also those with the lowest amortization in terms of wage returns. Oaxaca-Ransom decompositions subsequently imply that gender differences in the type of degree studied can explain an additional 22.5% of the male-female pay gap in Greece. Risk-augmented earnings functions also indicate that Greek women seek for less risky educations that consequently command lower wage premiums in the job market. The findings of the paper suggest that the promotion of gender equality in Greece should pay attention to the educational choices of men and women prior to them entering the labour market, via efficient career counselling and educational reforms that heed to the signals of the labour market.
    Keywords: Gender wage gap; subject of degree; returns; risk; Greece
    JEL: J31 J71 J24 J16
    Date: 2008–08–14
  12. By: Alex Bryson; Richard Freeman
    Abstract: This paper uses nationally representative linked workplace-employee data from the British 2004 Workplace Employment Relations Survey to examine the operation of shared capitalist forms of pay--profit-sharing and group pay for performance, employee share ownership, and stock options--and their link to productivity. It shows that shared capitalism has grown in the UK, as it has in the US; that different forms of shared capitalist pay complement each other and other labor practices in the sense that firms use them together more than they would if they chose modes of pay and work practices independently; and that workplaces switch among schemes frequently, which suggests that they have trouble optimizing and the transactions cost of switching are relatively low. Among the single schemes, share ownership has the clearest positive association with productivity, but its impact is largest when firms combine it with other forms of shared capitalist pay and modes of organization.
    JEL: J33 L23 L25
    Date: 2008–08
  13. By: David Madden (University College of Dublin)
    Abstract: Recent advances in the measurement of bi-dimensional poverty are applied to a measure of poverty which incorporates income and health poverty. The correlation between income and poverty is examined using the Receiver Operating Characteristics curve. Following from this unidimensional and bi-dimensional poverty indices are calculated for Ireland for the years 2003-2006. Individual and bi-dimensional indices generally show a decline over the period with the biggest decline between 2003 and 2004. The results are generally not sensitive to the degree of poverty aversion or the substitutability between the different dimensions of poverty.
    Keywords: receiver operating characteristic, multidimensional poverty
    JEL: I12 I31 I32
    Date: 2008–07–20
  14. By: Olivier Bargain (University College of Dublin); Herwig Immervoll (OECD); Heikki Viitamäki (VATT)
    Abstract: The non take-up of social assistance benefits due to claim costs may seriously limit the anti-poverty effect of these programs. Yet, available evidence is fragmented and mostly relies on interview-based data, potentially biased by misreporting and measurement errors on both benefit entitlement and income levels used to assess eligibility. In this paper, we use Finnish administrative data to compare eligibility and actual receipt of social assistance by working-age families during the post-recession period (1996-2003). Possible errors due to time-period issues and discretionary measures by local agencies are carefully investigated. Non take-up is found to be substantial - between 40% and 50% - and increasing during the period. Using repeated cross-section estimations, we identify a set of stable determinants of claiming behavior and suggest that the increasing trend is mainly due to a composition effect, i.e. a decline in the proportion of groups with higher claiming propensity. We finally discuss the targeting efficiency of the social assistance scheme.
    Keywords: take-up, social assistance, poverty, register data
    JEL: D31 H31 H53 I38
    Date: 2007–08–25

This nep-eec issue is ©2008 by Giuseppe Marotta. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.