nep-eec New Economics Papers
on European Economics
Issue of 2008‒10‒28
23 papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. The corporate income tax rate-revenue paradox: Evidence in the EU By Joanna Piotrowska; Werner Vanborren
  2. Urban Growth Drivers and Spatial Inequalities: Europe - a case with geographically sticky people By Paul Cheshire; Stefano Magrini
  3. Are Small countries leaders of the European tax competition ? By Nicolas Chatelais; Mathilde Peyrat
  4. The Impact of Disaggregated ICT Capital on Electricity Intensity of Production: Econometric Analysis of Major European Industries By Bernstein, Ronald; Madlener, Reinhard
  5. Study on reduced VAT applied to goods and services in the Member States of the European Union By Copenhagen Economics
  6. Impact of ICT and Human Skills on the European Financial Intermediation Sector By Erber, Georg; Madlener, Reinhard
  7. Macroeconomic Effects of EU Transfers in New Member States By Céline Allard; Nada Choueiri; Susan Schadler; Rachel van Elkan
  8. Wage-Price Setting in New EU Member States By Manuela Goretti
  9. Exchange rate pass-through in new Member States and candidate countries of the EU By Ramón María-Dolores
  10. Are Weak Banks Leading Credit Booms? Evidence from Emerging Europe By Deniz Igan; Natalia T. Tamirisa
  11. New Labour? The Impact of Migration from Central and Eastern European Countries on the UK Labour Market By Lemos, Sara; Portes, Jonathan
  12. The single monetary policy and domestic macro-fundamentals: Evidence from Spain By Arghyrou, Michael G; Gadea, Maria Dolores
  13. International Competitiveness of the Mediterranean Quartet:A Heterogeneous-Product Approach By Herman Z. Bennett; Ziga Zarnic
  14. International Benchmarking in Electricity Distribution : A Comparison of French and German Utilities By Astrid Cullmann; Hélène Crespo; Marie-Anne Plagnet
  15. Is Poland at Risk of a Boom-and-Bust Cycle in the Run-Up to Euro Adoption? By Barry Eichengreen; Katharina Steiner
  16. The Bitter Taste of Strawberry Jam: Distortions on Romanian Labour Market beyond 2007 By Silasi, Grigore; Simina, Ovidiu Laurian
  17. Migration from Turkey and the Uncertainty of the Accession of Turkey to the EU By Demet Beton; Glenn Jenkins
  18. Tax Reforms and Labour-market Performance: An Evaluation for Spain using REMS By Jose Emilio Boscá; Rafael Domenech; Javier Ferri
  19. Private Retirement Savings in Germany : The Structure of Tax Incentives and Annuitization By Hans Fehr; Christian Habermann
  20. Preferences for redistribution in the Netherlands By Jan Kakes; Jasper de Winter
  21. The Economic Impact of Immigration in Greece: Taking Stock of the Existing Evidence By Cholezas, Ioannis; Tsakloglou, Panos
  22. Does Money Matter for Schools? By Holmlund, Helena; McNally, Sandra; Viarengo, Martina
  23. Attitudes of Higher Education students to new venture creation: a preliminary approach to the Portuguese case By Aurora A.C. Teixeira; Todd Davey

  1. By: Joanna Piotrowska (Ministry of Finance, Poland); Werner Vanborren (European Commission)
    Abstract: In Europe, the decline in the corporate tax rates has not been reflected in the tax-to-GDP ratios. This paper explores to what extent the observed trend can be explained by changes in the effective tax burden on corporate income, in the share of total income accruing to the corporate sector and in total business income relative to GDP. We present an overview of the findings from previous literature, apply the methodology developed by S?rensen to decompose the most complete data available on the European level and make use of information collected from parallel studies on the effective tax burden and corporatization. The results suggest that corporatization is the driving factor for the trend observed in corporate tax revenues.
    Keywords: corporate taxation, tax revenues, incorporation, corporatization
    JEL: H25
    Date: 2008–10
  2. By: Paul Cheshire (London School of Economics); Stefano Magrini (Department of Economics, University Of Venice Cà Foscari)
    Abstract: We try to combine theory with empirical analysis to investigate the drivers of spatial growth processes, welfare and disparities in a context in which people are markedly immobile. Drawing on two of our recent papers (Cheshire and Magrini, 2006 and 2008), we review the evidence on the drivers of differential urban growth in the EU both in terms of population and output growth. The main conclusion from our findings is that one cannot reasonably maintain the assumption of full spatial equilibrium in a European context. This has a number of wider implications. It suggests that i. differences in real incomes in Europe - and more generally where populations are relatively immobile - are likely to persist and indicate real differences in welfare; ii. there is no evidence of a unified European urban system but rather of a set of national systems; iii. there are significant but theoretically consistent, differences in the drivers of population compared to economic growth.
    Keywords: Growth, urban system, spatial equilibrium
    JEL: O18 R11 R13
    Date: 2008
  3. By: Nicolas Chatelais (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, Institut CDC pour la recherche - Institut CDC pour la recherche); Mathilde Peyrat (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, ESSEC Business School - Ecole Supérieure des Sciences Economiques et Commerciales)
    Abstract: The aim of this paper is to develop a better understanding of the literature dealing with strategic fiscal behaviours of small EU countries using estimations of tax reaction functions of competing national governments. Deriving a simple model of tax competition in a Nash and Stackelberg game, we use panel data and tools from spatial econometrics to examine the role of small countries in tax competition within the enlarged European Union. We find that interactions are stronger among smaller EU countries than between larges ones and rates set in small countries influence those in big countries. Finally, small countries located in the centre of the EU have more influence on tax policies choices of big countries than small countries located in the periphery of EU.
    Keywords: Strategic interactions, tax behaviours, spatial econometrics, European Union, tax competition, small countries.
    Date: 2008–10
  4. By: Bernstein, Ronald (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: In this paper we empirically analyse the impact of disaggregated ICT capital on the electricity intensity in five major European industries (chemical, food, metal, pulp & paper and textile). The analysis of each industrial sector is based on an unbalanced panel including data for eight EU member countries (Denmark, Finland, Germany, Italy, Portugal, Slovenia, Sweden and the UK) for the period 1991-2005. The panel-econometric approach, in which we account for country-specific fixed effects, is based on a factor demand model that is similar to the one derived in Collard et al. (2005) [Energy Economics 27 (2): 541-550] for the French services sector. On the one hand, the analysis provides evidence for an electricity-saving effect on production induced by communication technologies in all of the sectors considered. On the other hand, the effect of computers and software on the electricity intensity of industrial production is not that clear-cut, but rather seems to be strongly dependent on the sector-specific production processes involved. Overall, the net effect of ICT diffusion on electricity intensity of production appears to be in favour of an enhancement of electricity efficiency in production.
    Keywords: Information and telecommunication technology; ICT; Electricity intensity; Panel data
    JEL: Q41 Q43
    Date: 2008–09
  5. By: Copenhagen Economics (Copenhagen Economics)
    Abstract: Value Added Tax (VAT) in Europe is regularly subject to intensive debate. It is often argued that the current VAT system should be made more uniform to enhance economic efficiency and to protect the functioning of the internal market. But it is also regularly argued that extending reduced VAT to this or that particular product would create economic benefits such as more employment and less inequality. The study concludes that there seems to be a strong argument for making the current VAT structure more simple and uniform, but also an argument for selective cuts in VAT rates primarily in locally supplied services and parts of the hospitality sector. The authors stress the need to consider each case on its own merits and to appraise whether alternative non-VAT instruments may be preferable to reduced VAT rates.
    Keywords: European Union, VAT, taxation
    JEL: H24
    Date: 2008–10
  6. By: Erber, Georg (Department of Information Society and Competition, DIW Berlin â German Institute for Economic Research); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: This paper investigates the impact of ICT- and non-ICT capital, and of labour at different skill levels, on productivity and employment in the financial intermediation sector of twelve EU member countries plus the US and Japan. A stochastic possibility frontiers (SPF) approach is applied to assess the relation between the production inputs and to compute both time-varying and average inefficiencies. For the empirical analysis, annual data from 1995 to 2005 are employed that were obtained from recently released data contained in the EU KLEMS database. The results obtained shed some light on the relative impact of ICT- and non-ICT capital and labour inputs, and provide new insights about the structural dynamics between these factor inputs. We find that the financial sectors in the twelve EU member states studied are quite similar in terms of efficiency, and that efficiency and productivity depends much more on human capital than on physical capital. We conclude that learning-by-doing and learning-by-using are more decisive elements in shaping the productivity growth path than ICT investment alone, which can leave managers and employees overwhelmed by the complexity and needs of structural adjustments in the companiesâ organisation.
    Keywords: stochastic production possibility frontiers; ICT; structural dynamics
    JEL: C23 C51 D23 E23 O33 O47 O57
    Date: 2008–09
  7. By: Céline Allard; Nada Choueiri; Susan Schadler; Rachel van Elkan
    Abstract: Large inflows from the European Union to the New Member States are likely to significantlyimpact macroeconomic outcomes. In this paper, we use the IMF's Global Integrated Monetaryand Fiscal model (GIMF) to analyze the impact of the transfers and show the conditionsunder which they would help speed up convergence. We find that the EU funds need to bedirected predominantly to investment rather than to income support and that to bestaccompany the EU fund inflows, the policy-mix would need to combine counter-cyclicalpolicy with a strong commitment to the existing monetary regime.
    Keywords: European Economic and Monetary Union , Capital flows , Monetary policy , Investment policy , Capital inflows , Economic integration , Exchange rate regimes , Working Paper ,
    Date: 2008–09–18
  8. By: Manuela Goretti
    Abstract: This paper analyzes wage- and price-setting relations in new EU member countries. Panel estimates indicate a strong and significant relationship between real wages and labor productivity, as well as evidence of wage pass-through to inflation. Terms of trade shocks do not feed through to real wages. Country-specific wage developments, beyond differences in labor productivity growth, are mostly explained by real wage catch-up from different initial levels and different labor market conditions. Qualitative evidence also suggests that public sector wage demonstration effects and institutional factors may play a role in wage determination.
    Keywords: Wage policy , Pricing policy , European Union , Europe , Public sector wages , Labor markets , Labor productivity , External shocks , Inflation ,
    Date: 2008–10–07
  9. By: Ramón María-Dolores (Banco de España)
    Abstract: This paper studies the pass-through of exchange rate changes into the prices of imports that originated inside the euro area made by some New Member States (NMSs) of the European Union and one candidate country (Turkey). I use data on import unit values for nine different product categories and bilateral imports from the euro area for each country and I estimate industry-specific rates of pass-through across and within countries using two different methodological approaches. The first one is based on Campa and González-Mínguez (2006) which estimates the short- and long-run pass through elasticities, where long-run elasticities are defined as the sum of the pass-through coefficients for the contemporaneous exchange rate and its first four lags. The second one is employed by de Bandt, Banerjee and Kozluk (2007) which suggests a long-run Engle and Granger (1987) cointegrating relationship and the possibility of structural breaks to restore the long-run in the estimation. I did not find evidence either in favour of the hypothesis of Local Currency Pricing (zero pass-through) or the hypothesis of Producer Currency Pricing (complete pass-through) for all the countries except Slovenia and Cyprus in the latter. The exchange rate pass-through ranged from 0.090 to 2.916 in the short-run and from 0.102 to 2.242 in the long-run. With reference to the results by industry the lowest values for exchange rate pass-through are in Manufacturing sectors. However, I did observe a exchange rate pass-through decline through the pricing chain and a large dependence of their economies on imported inputs.
    Keywords: exchange rates, pass-through, monetary union, panel cointegration
    JEL: F31 F36 F42 C23
    Date: 2008–10
  10. By: Deniz Igan; Natalia T. Tamirisa
    Abstract: This paper examines the behavior of bank soundness indicators during episodes of brisk loan growth, using bank-level data for central and eastern Europe and controlling for the feedback effect of credit growth on bank soundness. No evidence is found that rapid loan expansion has weakened banks during the last decade, but over time weaker banks seem to have started to expand at least as fast as, and in some markets faster than, stronger banks. These findings suggest that during credit booms supervisors need to carefully monitor the soundness of rapidly expanding banks and stand ready to take action to limit the expansion of weak banks.
    Keywords: Banking sector , Bank soundness , Credit expansion , Europe , Emerging markets , Bank credit , Risk management , Working Paper ,
    Date: 2008–09–15
  11. By: Lemos, Sara (University of Leicester); Portes, Jonathan (Department for Work and Pensions, UK)
    Abstract: The UK was one of only three countries that granted free movement of workers to accession nationals following the enlargement of the European Union in May 2004. The resulting large, rapid and concentrated migration inflow can be seen as a natural experiment that arguably corresponds closely to an exogenous supply shock. We evaluate the impact of this migration inflow – one of the largest in British history – on the UK labour market. We use new monthly micro level data and an empirical approach that ascertains which particular labour markets in the UK – with varying degrees of natives' mobility and migrants' self-selection – may have been affected. Our results suggest modest effects throughout the labour market. Despite anecdotal evidence, we found little hard evidence that the inflow of accession migrants contributed to a fall in wages or a rise in claimant unemployment in the UK between 2004 and 2006.
    Keywords: migration, employment, wages, Central and Eastern Europe, UK
    JEL: J22
    Date: 2008–10
  12. By: Arghyrou, Michael G (Cardiff Business School); Gadea, Maria Dolores
    Abstract: We model pre-euro Spanish monetary policy and use our findings to assess the compatibility of the interest rates set by the ECB since 1999 with Spanish macrofundamentals. We find that in the 1990s Spain implemented successfully a monetary strategy tailored to its own domestic fundamentals; and by abolishing it to join the euro she has paid a cost in the form of a sub-optimal monetary policy. Spain.s experience suggests a cautious approach with regards to the timing of further EMU enlargement.
    Keywords: Spain; ECB; monetary policy; domestic fundamentals; compatibility
    JEL: C51 C52 E43 E58 F37
    Date: 2008–10
  13. By: Herman Z. Bennett; Ziga Zarnic
    Abstract: The real effective exchange rate (REER) is the most commonly used measure for assessing international competitiveness. We develop a methodology to estimate the REER that incorporates two distinctive elements that are not considered in the current literature and apply it to the Mediterranean Quartet (MQ) of Greece, Italy, Portugal, and Spain, whose common pattern of real appreciation has created concern in policy and academic circles. The two elements that we add to the existing literature are (i) product heterogeneity when identifying each country's international competitors and their weights and (ii) a comprehensive treatment of services exports. Our refined measure suggests a modest reduction in the observed REER gap between the MQ countries and the other euro area countries. In particular, considering product heterogeneity and services exports implies a lower real appreciation from 1998 to 2006 on the order of 2-3 percent for all MQ countries. These are difference-in-difference estimates relative to the results obtained for the rest of the euro area countries using the same methodology.
    Keywords: Competition , Greece , Italy , Portugal , Spain , Real effective exchange rates , Exports , Euro Area , Services sector ,
    Date: 2008–10–07
  14. By: Astrid Cullmann; Hélène Crespo; Marie-Anne Plagnet
    Abstract: In this paper we present an international cross-country benchmarking analysis for utility regulation of France and Germany, the two largest electricity distribution countries in Europe. We examine the relative performance of 99 French and 77 German distribution companies operating within two different market structures. This paper applies several parametric benchmarking approaches to assess the relative technical efficiency of the utilities, such as deterministic Corrected Ordinary Least Squares (COLS) and Stochastic Frontier Analysis (SFA). Our base model uses the number of employees as a proxy for labor and network length as a proxy for capital as inputs. Units sold and the numbers of customers are considered as outputs. Our model variations and extensions analyze the effect of different characteristics of distribution areas (e.g. population density and the choice of investment in underground cable network). We find that utilities operating in urban areas feature higher efficiency scores and that investment in underground cables increase the technical efficiency of the distribution utilities.
    Keywords: International benchmarking, electricity distribution, parametric efficiency analysis
    JEL: L94 L11 C40
    Date: 2008
  15. By: Barry Eichengreen; Katharina Steiner
    Abstract: We ask whether Poland is at risk of the boom-bust problem that has afflicted economies around the time of euro adoption. Our answer, inevitably, is mixed. On the one hand the fact that Poland is an outlier, credit-growth wise, accentuates the danger of a boom if one believes in mean reversion. Our econometrics indicate that the fall in interest rates that will flow from expectations of euro adoption will further feed that boom. On the other hand the fact that interest rates have already converged part way to euro-area levels (and more extensively than in earlier adopters that experienced a sharp fall in rates and a pronounced credit boom), especially in the case of lending to firms, suggests that this shock may be less intense in Poland. And it is certainly conceivable that the same policies and country characteristics (not always visible to the econometrician) that have restrained credit growth in the past may continue to do so in the future. The broader literature also points to two set of factors, the first of which makes the danger of an unsustainable credit boom more immediate, the second of which makes it more remote. In the first category are the continuing limitations of the supervisory framework and the weakness of the finance minister in the budget-making process. In the second are a record of rigorous prudential supervision and the existence of relatively competitive labor markets.
    JEL: F0 F15
    Date: 2008–10
  16. By: Silasi, Grigore; Simina, Ovidiu Laurian
    Abstract: The paper is a contribution at the scientific debate of migration and mobility issues in the context of an enlarged European Union (EU-27). We consider that Romania, a country with a labour market that faces distortions, will benefit from migration on short term, but will need to import labour force in order to maintain the development trend. Remittances, as result of Romanians emigration after 2002, helped the economic development of the country in the last years (remittances’ inflow doubled the FDI). As a response to the media debate regarding Romania’s emigration, we consider that the fear of mass migration from Romania following the year 2007 is not justified. While the European (and mostly British) media cries on the threat of Bulgarians and Romanians’ emigration, as following to the 2007 accession, the scientific reports say that the A8 countries’ migration benefits to economy of the EU15 countries. In the same time, the Romanian media and the Romanian entrepreneurs announce the ‘Chinese invasion’ and the lack of labour in construction, industry and even agriculture. We see labour as goods: the economic theory say that goods are moving with the prices, the highest price attracts (more) goods. Romania is not only a gateway for the East-West international migration (like Portugal, Spain, Italy and Greece for the South-North direction), but a labour market in need of workers. While a big part of the labour force is already migrated, mostly to the SE Europe (some 2.5m workers are cited to be abroad, with both legal and illegal/irregular status), the Romanian companies could not find local workers to use them in order to benefit from the money inflow targeting Romania in the light of its new membership to the European Union (foreign investments and European post accession funds). Instead of increasing the salaries, the local employers rather prefer to ‘import’ workers from poorer countries (Chinese, Moldavians, Ukrainians, who still accept a lower wage as compared to the medium wage in Romania, but bigger enough as compared to those from their country of origin). The paper concludes with the case of the Banat region, considered the ‘Western Europe’ from Romania, as a small scale model for the labour market relations within the whole EU.
    Keywords: labour migration; labour market distortions; South-Eastern Europe Syndrome; network effect; decision making; motivation; need for esteem; Banat region
    JEL: F22 J61 R23
    Date: 2007–10–26
  17. By: Demet Beton (Eastern Mediterranean University); Glenn Jenkins (Queen's University and Eastern Mediterranean University)
    Abstract: There is a fear that, if Turkey were given admission to the EU, massive migration to the other member countries of the EU would result. This paper develops a theoretical framework for the migration decision that takes into consideration the impact on uncertainty of some of the important economic and social variables that are addressed by the EU membership and institutions. It emphasizes future expectations of living conditions and the level of uncertainty associated with them as a key variable in making migration decisions. It suggests that the more prosperous and stable Turkey is expected to be in the future, the less likely a person will now want to migrate. Hence, the greater certainty now that Turkey will gain admission in to EU, the more attractive is it for potential migrants to remain in Turkey. This framework suggests that measures to hinder Turkey's entry into the EU by having national referendums to approve its entry will increase the uncertainty of the future economic and social prospects in Turkey and will encourage migrants to migrate now to the member countries of the EU.
    Keywords: Turkey, Migration, Uncertainty, Accession, European Union
    JEL: F22 J61
    Date: 2008–04
  18. By: Jose Emilio Boscá (University of Valencia); Rafael Domenech (University of Valencia); Javier Ferri (University of Valencia)
    Abstract: This paper uses REMS, a Rational Expectations Model of the Spanish economy designed by Boscá et al (2007), to analyse the effects of lowering the overall tax wedge to the level prevailing in the US. Our results partially confirm previous findings in the literature: a reduction in the overall tax wedge of 19.5 points, in order to reach the US levels, has a positive effect in the long run, increasing total hours by about 7 per cent and GDP by about 8 percentage points. In terms of GDP per adult, these results account for 1/4 of the gap with respect to the US, but imply a reduction of only one percentage point in the labour productivity gap. The rise in total hours per adult is explained by a similar increase in both hours per employee and the employment rate of about 3.5 percentage points, allowing hours per adult to converge to levels only slightly lower than those in the US.
    Keywords: general equilibrium, tax wedge, tax reforms, fiscal policy, labour market
    JEL: E32 E62
    Date: 2008–10
  19. By: Hans Fehr; Christian Habermann
    Abstract: The present paper studies the growth, welfare and efficiency consequences of the recent introduction of tax-favored retirement accounts in Germany in a general equilibrium overlapping generations model with idiosyncratic lifespan and labor income uncertainty. We focus on the implicit differential taxation of specific savings motives, the mandatory annuitization of benefits and the impact of special provisions for low-income households. The simulations indicate that the reform improves overall economic efficiency by about 0.6 percent of aggregate resources, but welfare decreases significantly for future generations. Finally, we show that special provisions could be very effective in raising the participation of low-income households despite their low budgetary cost.
    Keywords: Individual retirement accounts, annuities, stochastic general equilibrium
    JEL: H55 J26
    Date: 2008
  20. By: Jan Kakes; Jasper de Winter
    Abstract: We investigate the determinants of Dutch households' preferences for income redistribution, using survey data. Our results show that support for redistributive policies is related to self-interest, exposure to misfortune and risk-aversion. In addition, people who believe that prosperity is primarily due to luck rather than hard work tend to favour redistribution, indicating that equal opportunities are considered important. Interestingly, support for redistributive policies is positively related to education, while the impact of age is ambiguous. This is an important outcome, as it implies that globalisation and skill-biased technological progress may put less pressure on the Dutch social security system than previously assumed.
    Keywords: Redistribution; social security.
    JEL: D31 D63 H23 H55 P16
    Date: 2008–09
  21. By: Cholezas, Ioannis (University of Peloponnese); Tsakloglou, Panos (Athens University of Economics and Business)
    Abstract: Greece was traditionally an emigration country. However, since the early 1990s it became an immigrant destination and nowadays up to a tenth of the population are immigrants, mainly from neighbouring Balkan countries and, especially, Albania. This large scale immigration within a short time period had important social, as well as, economic consequences. The paper reviews the existing evidence and concludes that on average the economic effects of immigration were beneficial, although their distributional consequences were adverse. Greek immigration policy was haphazard and more efforts are needed in order to integrate the immigrants in the economic and social fabric of the country.
    Keywords: immigration, Greece
    JEL: F22
    Date: 2008–10
  22. By: Holmlund, Helena (CEP, London School of Economics); McNally, Sandra (London School of Economics); Viarengo, Martina (London School of Economics)
    Abstract: There is considerable disagreement in the academic literature about whether raising school expenditure improves educational outcomes. Yet changing the level of resources is one of the key policy levers open to governments. In the UK, school expenditure has increased by about 40 per cent in real terms since 2000. Thus, providing an answer to the question as to whether such spending has an impact on educational outcomes (and whether it is good use of public money) is of paramount importance. In this paper we address this issue for England using much better data than what has generally been used in such studies. We are also able to test our identification assumption by use of a falsification test. We find that the increase in school expenditure over recent years has had a consistently positive effect on outcomes at the end of primary school. Back-of-envelope calculations suggest that the investment may well be cost-effective. There is also some evidence of heterogeneity in the effect of expenditure, with higher effects for students who come from economically disadvantaged backgrounds.
    Keywords: education, resources
    JEL: I21 H52
    Date: 2008–10
  23. By: Aurora A.C. Teixeira (INESC Porto, CEMPRE, Faculdade de Economia, Universidade do Porto); Todd Davey (Muenster University of Applied Sciences)
    Abstract: Institutions of higher education have an important role in the generation of high tech ‘entrepreneurial capacity’. Being entrepreneurship in Portugal an emergent phenomenon there is an urgent need to better understand and develop this area not only by analysing the ‘supply side’ (i.e., the courses taught in this field) but also the ‘demand side’, that is, the attitudes of students, future potential entrepreneurs, to new venture creation. Based on 4413 responses of students enrolled in Portuguese higher education institutions, gathered in June-July 2008, we found, using a multivariate model, that students who had already created a firm although, on average, possess larger entrepreneurial experience and knowledge, they do not reveal high risk propensity or creativity. Those students that have taken some steps to create new businesses and, to a larger extent, those foreseeing their future career as owning their business have higher risk and creative profiles. Students who live in an environment which ‘breads’ entrepreneurship have stronger desire to become entrepreneurs. This supports the contention that entrepreneurship is a learned process and that school, teachers, and other institutions and individuals may encourage entrepreneurial behaviours. ‘Role models’ seem indeed to constitute a key factor fostering entrepreneurship among Portuguese higher education students – in the Portuguese case, the entrepreneur and entrepreneurial company references are, respectively, Belmiro de Azevedo and Sonae. Although in a descriptive analysis students enrolled in non-university (e.g., polytechnics) and private higher education institutions reveal higher effective and potential entrepreneurial propensities, when we (simultaneously) control for a vast number of factors which are likely to affect entrepreneurship propensity, such differences cease to be statistically relevant. Students’ personality (risk, creativity) and demographic traits (gender and age), competencies and familiarity with entrepreneurship (entrepreneurial experience, knowledge, awareness, interest), and contextual factors (professional experience, role models) are important determinants of entrepreneurial propensity, whereas the type of higher education institutions (public vs private, non-university vs university), and, to some extent, the degree (postgraduate vs undergraduate), and the scientific area, fail to emerge as key determinants.
    Keywords: students; entrepreneurship; attitudes
    Date: 2008–10

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