nep-eec New Economics Papers
on European Economics
Issue of 2008‒11‒04
27 papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. A non-parametric method to nowcast the Euro Area IPI By Laurent Ferrara; Thomas Raffinot
  2. Short-term forecasts of euro area GDP growth. By Elena Angelini; Gonzalo Camba-Méndez; Domenico Giannone; Gerhard Rünstler; Lucrezia Reichlin
  3. Macroeconomic adjustment to monetary union. By Gabriel Fagan; Vitor Gaspar
  4. The new area-wide model of the euro area - a micro-founded open-economy model for forecasting and policy analysis. By Kai Christoffel; Günter Coenen; Anders Warne
  5. Estimating and forecasting the euro area monthly national accounts from a dynamic factor model. By Elena Angelini; Marta Bańbura; Gerhard Rünstler
  6. The Third sector in Europe; Does it exhibit a coverging movement? By Edith Archambault
  7. Voluntary Private Health Care Insurance Among the Over Fifties in Europe: A Comparative Analysis of SHARE Data By Omar Paccagnella; Vincenzo Rebba; Guglielmo Weber
  8. Returns to Education in Europe – Detailed Results from a Harmonized Survey By Torge Middendorf
  9. An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries By Immervoll H; Kleven H J; Kreiner C T; Verdelin N
  10. The Sustainability of European Health Care Systems: Beyond Income and Ageing By Fabio Pammolli; Massimo Riccaboni; Laura Magazzini
  11. Income and Body Mass Index in Europe By Jaume Garcia; Climent Quintana
  12. Regional Measures of Human Capital in the European Union By Christian Dreger; Georg Erber; Daniela Glocker
  13. The London Agreement and the Cost of Patenting in Europe By Malwina Mejer; Bruno van Pottelsberghe de la Potterie
  14. Prices and output co-movements : an empirical investigation for the CEECs By Iuliana Matei
  15. High suburban fertility: evidence from four Northern European countries By Hill Kulu; Paul J. Boyle; Gunnar Andersson
  16. Cohort fertility patterns in the Nordic Countries By Gunnar Andersson; Marit Rønsen; Lisbeth B. Knudsen; Trude Lappegård; Gerda R. Neyer; Kari Skrede; Kathrin Teschner; Andres Vikat
  17. Wie progressiv ist Deutschland? Das Steuer- und Transfersystem im europäischen Vergleich (How progressive is Germany? Comparing the redistributive effects of tax benefit systems in Europe) By Peichl A; Schaefer T
  18. No take-off toward the Second Demographic Transition in Italian union formation By Giuseppe Gabrielli; Jan M. Hoem
  19. Alternative Tax-Benefit Strategies to Support Children in Poland By Levy H; Morawski L; Myck M
  20. Sweden: A Minimum Wage Model in Need of Modification? By Skedinger, Per
  21. Does Work Pay in France ? Monetary Incentives, Hours Constraints and the Guaranteed Minimum Income By Marc Gurgand; David Margolis
  22. Wage and price dynamics in Portugal. By Carlos Robalo Marques
  23. The Impact of International Outsourcing on Labour Market Dynamics in Germany By Ronald Bachmann; Sebastian Braun
  24. Family Background or the Characteristics of Children : What Determines High School Success in Germany? By Benjamin Balsmeier; Heiko Peters
  25. Exports and Profitability - First Evidence for German Manufacturing Firms By Helmut Fryges and Joachim Wagner
  26. Measuring business dynamics among incumbent firms in The Netherlands By André van Stel; Mickey Folkeringa; Kashifa Suddle; Sita Tan
  27. CAPP_DYN: A Dynamic Microsimulation Model for the Italian Social Security System By Carlo Mazzaferro; Marcello Morciano

  1. By: Laurent Ferrara (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, DGEI-DAMEP - Banque de France); Thomas Raffinot (CPR-Asset Management - CPR Asset Management)
    Abstract: Non-parametric methods have been empirically proved to be of great interest in the statistical literature in order to forecast stationary time series, but very few applications have been proposed in the econometrics literature. In this paper, our aim is to test whether non-parametric statistical procedures based on a Kernel method can improve classical linear models in order to nowcast the Euro area manufacturing industrial production index (IPI) by using business surveys released by the European Commission. Moreover, we consider the methodology based on bootstrap replications to estimate the confidence interval of the nowcasts.
    Keywords: Non-parametric, Kernel, nowcasting, bootstrap, Euro area IPI.
    Date: 2008–04
  2. By: Elena Angelini (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Gonzalo Camba-Méndez (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Domenico Giannone (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Gerhard Rünstler (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Lucrezia Reichlin (London Business School, Regent’s Park, London NW1 4SA, United Kingdom.)
    Abstract: This paper evaluates models that exploit timely monthly releases to compute early estimates of current quarter GDP (now-casting) in the euro area. We compare traditional methods used at institutions with a new method proposed by Giannone, Reichlin, and Small (2005). The method consists in bridging quarterly GDP with monthly data via a regression on factors extracted from a large panel of monthly series with different publication lags. We show that bridging via factors produces more accurate estimates than traditional bridge equations. We also show that survey data and other ‘soft’ information are valuable for now-casting. JEL Classification: E52, C33, C53.
    Keywords: Forecasting, Monetary Policy, Factor Model, Real Time Data, Large datasets, News.
    Date: 2008–10
  3. By: Gabriel Fagan (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Vitor Gaspar (Bureau of European Policy Advisers, European Commission, Rue de la Loi 100, B-1049 Brussels, Belgium.)
    Abstract: The move to monetary union in Europe led to convergence of interest rates among the participating countries. This was associated with notable cross-country differences in the behaviour of key macroeconomic aggregates. Compared to the low interest rate countries, former high interest rate countries experienced a boom in domestic demand, a deterioration of the current account and appreciation of the real exchange rate. This paper documents the key stylised facts of this experience and provides a compact two-country model, based on the Blanchard-Yaari setup, to analyze this phenomenon. This model, though simple, is able to broadly capture the main qualitative features of the adjustment. Using this model, we show that the creation of the monetary union leads to an increase in welfare for all generations in both country groups. JEL Classification: F36, E21, F32.
    Keywords: euro area, interest rate convergence, overlapping generations model.
    Date: 2008–10
  4. By: Kai Christoffel (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Günter Coenen (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Anders Warne (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.)
    Abstract: In this paper, we outline a version of the New Area-Wide Model (NAWM) of the euro area designed for use in the (Broad) Macroeconomic Projection Exercises regularly undertaken by ECB/Eurosystem staff. We present estimation results for the NAWM that are obtained by employing Bayesian inference methods and document the properties of the estimated model by reporting its impulse-response functions and forecast-error-variance decompositions, by inspecting the model-based sample moments, and by examining the model’s forecasting performance relative to a number of benchmarks, including a Bayesian VAR. We finally consider several applications to illustrate the potential contributions the NAWM can make to forecasting and policy analysis. JEL Classification: C11, C32, E32, E37.
    Keywords: DSGE modelling, open-economy macroeconomics, Bayesian inference, forecasting, policy analysis, euro area.
    Date: 2008–09
  5. By: Elena Angelini (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Marta Bańbura (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Gerhard Rünstler (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.)
    Abstract: We estimate and forecast growth in euro area monthly GDP and its components from a dynamic factor model due to Doz et al. (2005), which handles unbalanced data sets in an efficient way. We extend the model to integrate interpolation and forecasting together with cross-equation accounting identities. A pseudo real-time forecasting exercise indicates that the model outperforms various benchmarks, such as quarterly time series models and bridge equations in forecasting growth in quarterly GDP and its components. JEL Classification: E37, C53.
    Keywords: Dynamic factor models, interpolation, nowcasting.
    Date: 2008–10
  6. By: Edith Archambault (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, MATISSE - Modélisation Appliquée, Trajectoires Institutionnelles et Stratégies Socio-Économiques - CNRS : UMR8595 - Université Panthéon-Sorbonne - Paris I)
    Abstract: The European Union in its widening movement shows five clusters of Third sector organisations with complex bonds and ties with the surrounding societies and national identities In introduction, we compare briefly the Europe’s Third sector features to North America’s ones (Historical and ideological roots, relationship with central and local governments, sources of income and composition of the Third sector…) In a first part, the European Third sector is broken up into five clusters (Esping-Andersen, Salamon and Anheier) : Continental, Anglo-saxon, Nordic, Mediterranean and Oriental according to :• The relationship to the government (central/local, high/low level of taxation) • The ratio of social protection to GDP, the share of public social expenditure and the dominant type of social security regime• The main religions and their links with parts of the Third sector• The labour market situation (unemployment, flexibility, security) with a special attention devoted to female work (employment rate; full time or part time) in relation with volunteering.Then we give data issued from the Comparative Nonprofit Sector Project (CNP2, Salamon et alii, 2004) on paid employment and volunteering, level and orientation of the partnership with the government, sources of income in every cluster.The second part is devoted to the question of a likely converging evolution of these clusters :• A faster growth rate in new member states makes them catch up gradually the other ones and choose “best practices” regarding social policies and social security regimes• The trend to decentralisation in larger member states combined with the retrenchment of central government is in favour of local solutions to local issues and of public-private partnerships especially with nonprofit organisations.• Despite the ambiguities of its policy towards civil society organizations, European authorities expect them filling the gap of democracy and fighting European bureaucracies.
    Keywords: European and American Third sectors; public-private partnership; Continental cluster; Anglo-Saxon cluster; Nordic cluster; Mediterranean cluster; Oriental cluster; Convergence;
    Date: 2008
  7. By: Omar Paccagnella (University of Padua); Vincenzo Rebba (University of Padua); Guglielmo Weber (University of Padua)
    Abstract: Using data from SHARE (Survey of Health, Ageing and Retirement in Europe), we analyze the effect of having a voluntary health insurance policy (VPHI) on out-of-pocket (OOP) health spending for individuals aged 50 or more in a host of European countries. We control for self selection into VPHI policy holding, and find that VPHI policy holders do not have lower OOP's than the rest of the population. In Southern European countries and Austria they even spend more. We also find that the main determinants of VPHI are different in each country and this reflects the differences in the underlying health care systems.
    Date: 2008–10
  8. By: Torge Middendorf
    Abstract: We use the European Community Household Panel, a harmonized data set covering the countries of the European Union, to provide detailed estimates of the returns to education. Our results can be summarized as follows. Firstly, average returns to education have been mostly stable during the second half of the 1990s and are highest in Portugal and Ireland and lowest in the UK and Italy. Secondly, returns to schooling are significantly negatively related to the educational attainment of the population. Thirdly, for most countries we find significant cohort effects and these are in general uniform across countries implying lower returns to education for younger cohorts. Fourthly, in most countries schooling exerts a significantly stronger impact on wages at the top of the wage distribution, aggravating within-group inequality. Finally, we provide evidence that the more pronounced the difference in returns to education along the wage distribution, the higher the average return to education.
    Keywords: Returns to schooling, cohort effects, quantile regression
    JEL: I21 J24 J31
    Date: 2008–08
  9. By: Immervoll H; Kleven H J; Kreiner C T; Verdelin N
    Abstract: This paper presents an evaluation of the tax-transfer treatment of married couples in 15 EU countries using the EUROMOD microsimulation model. First, we show that many tax-transfer schemes in Europe feature negative jointness defined as a situation where the tax rate on one person depends negatively on the earnings of the spouse. This stands in contrast to the previous literature on this question, which has focused on a specific form of positive jointness. The presence of negative jointness is driven by family-based and means-tested transfer programs combined with tax systems that usually feature very little jointness. Second, we consider the labor supply distortion on secondary earners relative to primary earners implied by the current tax-transfer systems, and study the welfare effects of small reforms that change the relative taxation of spouses. By adopting a small-reform methodology, it is possible to set out a simple analysis based on more realistic labor supply models than those considered in the existing literature. We present microsimulations showing that simple revenue-neutral reforms that lower the tax burden on secondary earners are associated with substantial welfare gains in most countries. Finally, we consider the tax-transfer implications of marriage and estimate the so-called marriage penalty. For most countries, we find large marriage penalties at the bottom of the distribution driven primarily by features of the transfer system.
    Keywords: labour supply, redistribution, optimal tax, couples, marriage tax, joint taxation
    JEL: H20
    Date: 2008–09
  10. By: Fabio Pammolli (Corresponding author, IMT Lucca Institute for Advanced Studies, Lucca, Italy, and Fondazione CERM, Roma, Italy); Massimo Riccaboni; Laura Magazzini
    Abstract: During the last thirty years health care expenditure (HCE) has been growing much more rapidly than GDP in all OECD countries posing increasing concern on the long-term sustainability of current trends. Against this background, we look at the determinants of HCE in European countries, explicitly taking into account the role of income, the effect of ageing population, life habits, technological progress, as well as institutional and budgetary variables. Our results show that the current trend of increasing HCE is rooted in a set of highly differentiated factors. Ageing population is usually regarded as a key driver of HCE in Europe. However, increased life expectancy and decreased fertility rate only tells part of the story. Increased income levels also lead to higher HCE, and the magnitude of the estimated elasticity poses serious concerns about sustainability of current trends. Besides, our results show the deep influence of technological uptake and diffusion, as well as the institutional framework and budget constraints as important factors in explaining HCE growth dynamics. We further control for health habits of the population by looking at the consumption of sugar and of fruits and vegetables. Our results reinforce the need for a political debate at the European level aimed at assuring long-term sustainability and prosperity. The key challenge for Governments is to design pluralistic systems of health care delivery and financing, where a well-balanced mix of public and private financing would put at work market forces to promote investment and innovation, without imposing unsustainable burdens on public budgets or denying care to the disadvantaged population.
    Keywords: health care expenditure, sustainability, ageing population, income elasticity, welfare
    JEL: H51
    Date: 2008–10
  11. By: Jaume Garcia; Climent Quintana
    Abstract: The problem of obesity is alarming public health authorities around the world. Therefore, it is important to study its determinants. In this paper we explore the empirical relationship between household income and body mass index (BMI) in nine European Union countries. Our findings suggest that the association is negative for women, but we find no statistically significant relationship for men. However, we show that the different relationship for men and women appears to be driven by the negative relationship for women between BMI and individual income from work. We tentatively conclude that the negative relationship between household income and BMI for women may simply be capturing the wage penalty that obese women suffer in the labor market.
    Date: 2008–05
  12. By: Christian Dreger; Georg Erber; Daniela Glocker
    Abstract: The accumulation of the human capital stock plays a key role to explain the macroeconomic performance across regions. However, despite the strong theoretical support for this claim, empirical evidence has been not very convincing, probably because of the low quality of the data. This paper provides a robustness analysis of alternative measures of human capital available at the level of EU NUTS1 and NUTS2 regions. In addition to the univariate measures, composite indicators based on different construction principles are proposed. The analysis shows a significant impact of construction techniques on the quality of indicators. While composite indicators and labour income measures point to the same direction of impact, their correlation is not overwhelmingly high. Moreover, popular indicators should be applied with caution. Although schooling and human resources in science and technology explain some part of the regional human capital stock, they cannot explain the bulk of the experience.
    Keywords: Human capital indicators, SOEP, regional growth
    JEL: I20 O30 O40 O52
    Date: 2008
  13. By: Malwina Mejer; Bruno van Pottelsberghe de la Potterie
    Abstract: This paper analyses the consequences for the European Patent System (EPS) of the recently ratified London Agreement (LA), which aims to reduce the translation requirements for patent validation procedures in 15 out of 34 national patent offices. The simulations suggest that the cost of patenting has been reduced by 20 to 30 percent since the enforcement of the LA. With an average translation cost saving of €3,600 per patent, the total savings for the business sector amount to about €220 millions. The fee elasticity of patents being about -0.4, one may expect an increase in patent filings of eight to 12 percent. Despite the translation cost savings, the relative cost of a European patent validated in six (thirteen) countries is still at least five (seven) times higher than in the United States.
    Keywords: European patent system, London Agreement, patent fees, translation costs, fee elasticity
    JEL: P14 P51 O34
    Date: 2008
  14. By: Iuliana Matei (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: This article studies the features of co-movements of prices and production between six CEECs recently joined the EU and the euro zone. More precisely, based partially on the methodology suggested by Alesina, Barro and Tenreyro [2002], we evaluate the size and the persistence of prices and outputs shocks between each CEECs and euro zone. Results will contribute to the debate around the participation of the new members to the EMU.
    Keywords: European monetary integration, co-movements, AR models, CEECs.
    Date: 2008–10
  15. By: Hill Kulu (Max Planck Institute for Demographic Research, Rostock, Germany); Paul J. Boyle (Max Planck Institute for Demographic Research, Rostock, Germany); Gunnar Andersson (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: This study examines fertility variation across different residential contexts in four Northern European countries: Denmark, Finland, Norway and Sweden. We move beyond the conventional urban-rural focus of most previous studies of within-nation variations in fertility by distinguishing between urban centres and suburbs of cities and towns. We base our study on aggregate and individual-level register data and our analysis shows that fertility levels are significantly higher in suburbs than in urban centres; this pattern has persisted over the past quarter of a century for all four countries. A parity-specific analysis of Swedish register data reveals that total fertility varies between central cities and suburbs due to the relatively high first- and second-birth propensities in the suburbs. Further analysis shows that fertility variation between the central cities and suburbs persists after controlling for women’s socioeconomic characteristics. We discuss the role of various factors in accounting for high suburban fertility including omitted individual characteristics, contextual factors and selective residential moves of couples planning to have a child.
    Keywords: Europe, fertility, suburban areas
    JEL: J1 Z0
    Date: 2008–09
  16. By: Gunnar Andersson (Max Planck Institute for Demographic Research, Rostock, Germany); Marit Rønsen; Lisbeth B. Knudsen; Trude Lappegård; Gerda R. Neyer (Max Planck Institute for Demographic Research, Rostock, Germany); Kari Skrede; Kathrin Teschner (Max Planck Institute for Demographic Research, Rostock, Germany); Andres Vikat (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Previous analyses of period fertility suggest that the trends of the Nordic countries are sufficiently similar to speak of a common "Nordic fertility regime". We investigate whether this assumption can be corroborated by comparing cohort fertility patterns in the Nordic countries. We study cumulated and completed fertility of Nordic birth cohorts based on the childbearing histories of women born in 1935 and later derived from the population registers of Denmark, Finland, Norway, and Sweden. We further explore childbearing behaviour by women’s educational attainment. The results show remarkable similarities in postponement and recuperation between the countries and very small differences in completed fertility across educational groups. Median childbearing age is about 2−3 years higher in the 1960−64 cohort than in the 1950−54 cohort, but the younger cohort recuperates the fertility level of the older cohort at ages 30 and above. A similar pattern of recuperation can be observed for highly educated women as compared to women with less education. An interesting finding is that of a positive relationship between educational level and the final number of children when women who become mothers at similar ages are compared. Country differences in fertility outcome are generally rather low. Childlessness is highest in Finland and lowest in Norway, and the educational differentials are largest in Norway. Despite such differences, the cohort analyses in many ways support the notion of a common Nordic fertility regime.
    Keywords: Denmark, Finland, Norway, Sweden, cohort fertility
    JEL: J1 Z0
    Date: 2008–02
  17. By: Peichl A; Schaefer T
    Abstract: When comparing tax benefit systems across Europe, Germany is usually regarded as a country with a high level of taxes and contributions which is often seen as a main challenge for the economic performance of the welfare state. In this paper, we analyse the progressivity and redistribution induced by the tax benefit system in the EU-15 countries. We show that the German system as a whole employs only a medium level of redistribution. However, this can be decomposed into a highly progressive income tax system, a highly unequal pre-tax income distribution and regressive social insurance contributions.
    Keywords: Progression, Umverteilung, Steuer- und Transfersystem, europäischer Vergleich
    JEL: D31 H24
    Date: 2008–04
  18. By: Giuseppe Gabrielli (Max Planck Institute for Demographic Research, Rostock, Germany); Jan M. Hoem (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Recent trends in official statistics show strong increases in non-marital cohabitation in younger Italian generations. Moreover, other sources suggest that consensual unions have lasted longer in recent years before they were converted into marriages. In the present paper we consider entry into marriage and entry into cohabitation as competing risks and study whether the (standardized) entry risk for cohabitation has overtaken that for marriage in Italy, much as in countries in Central and Eastern Europe that we have studied in earlier papers. We find that it has not, and conclude that the move toward the Second Demographic Transition has not taken off in Italy. We also find that the rise in the risk of entry into cohabitation is confined to Northern and Central Italy, while the risk of marriage formation has dropped both there and in Southern Italy. Perhaps Italy is a special case in the European context as far as union formation is concerned.
    Keywords: Italy
    JEL: J1 Z0
    Date: 2008–06
  19. By: Levy H (Institute for Social & Economic Research); Morawski L; Myck M
    Abstract: Eurostat data shows that children and elderly are especially at risk of being in poverty. In 2004 the average rates of poverty risk in the European Union for these groups were about 19%. In Poland, the rate was 29% for children and only 7% for the elderly. We examine the role of the tax-benefit system in explaining this situation and analyse how much child poverty figures could change under several reform scenarios. In 2005, families with children were mainly supported by a means-tested family allowance and some supplements. This was extended in 2007 with the introduction of a non-refundable child tax credit. Making use of the European tax-benefit microsimulation model EUROMOD, this paper assesses the consequences of the recent reform in Poland. We examine the outcome in comparison to child policies in three other European systems and show that poverty reduction would have been more pronounced, if child policies were changed along the lines of the system in France or the United Kingdom. The Austrian system - relying primarily on universal benefits - would bring about a similar reduction in the poverty rate but with much greater reduction in the poverty gap. The paper presents detailed distributional analysis under the different systems assuming the cost of 'importing' each of them to be the same as that of introducing the 2007 reform.
    Keywords: child poverty, tax and benefit reforms, transition
    JEL: D31 I38
    Date: 2008–06
  20. By: Skedinger, Per (Research Institute of Industrial Economics (IFN))
    Abstract: Swedish minimum wages are not regulated by law, but subject to bargaining between employers and trade unions and form part of collective agreements. This paper provides an overview of the Swedish minimum wage system, its characteristics and effects on employment and wages, and also discusses the challenges to the model represented by increasing low-wage competition from new EU member states and the verdict in the Laval case, related to this process and the first of its kind in post-enlargement EU.
    Keywords: Minimum wages; Low-wage competition; Laval case
    JEL: J31 J52 J61 J81
    Date: 2008–10–28
  21. By: Marc Gurgand (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Normale Supérieure de Paris); David Margolis (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: This paper uses a representative sample of individuals on France's main welfare program (the Revenu Minimum d'Insertion, or RMI) to estimate monetary incentives for employment among welfare recipients. Based on the estimated joint distribution of wages and hours potentially offered to each individual, we compute potential gains from working in a very detailedmanner. Relating these gains to observed employment, we then estimate a simple structural labor supply model. We find that potential gains are almost always positive but very small on average, especially for single mothers,because of the high implicit marginal tax rates embedded in the system. Employment rates are sensitive to incentives with extensive margin elasticitiesfor both men and women usually below one. Conditional on these elasticities, simulations indicate that existing policies devoted to reducing marginal tax rates at the bottom of the income distribution, such as the intéressement earnings top-up program, have little impact in this population due to their very limited scope. The recently introduced negative income tax (Prime pour l'emploi), seems to be an exception.
    Keywords: Welfare; labor earnings; transfers, tax-system
    Date: 2008–07
  22. By: Carlos Robalo Marques (Banco de Portugal, Research Department, R. do Ouro, 27, 1100 Lisboa, Portugal.)
    Abstract: This paper investigates the persistence of aggregate wages and prices in Portugal assuming a model of a unionized economy with imperfect competition. An impulse response analysis is conducted where the structural shocks are identified by taking into account the long-run properties of the model, as well as the cointegrating and weak-exogeneity properties of the system. Real wages and wage inflation emerge as especially persistent following an import price shock, while price inflation is more persistent following an unemployment shock. At the business cycle horizon variation in the forecast errors of wages is attributable mainly to unemployment shocks (about 80 percent), whereas variation in the forecast errors of prices is attributable mainly to import price shocks (about 60 percent) and to unemployment shocks (around 20 percent). Productivity shocks explain somewhat less than 10 percent of the variation in forecast errors of wages and prices. JEL Classification: C32, C51, E31, J30.
    Keywords: wages, prices, impulse response function, persistence, structural error-correction model.
    Date: 2008–10
  23. By: Ronald Bachmann; Sebastian Braun
    Abstract: Using an administrative data set containing daily information on individual workers’ employment histories, we investigate how workers’ labour market transitions are affected by international outsourcing. In order to do so,we estimate hazard rate models for match separations, as well as for worker flows from employment to another job, to unemployment, and to nonparticipation. Outsourcing is found to have no significant impact on overall job stability in the manufacturing sector, but it is associated with increased job stability in the service sector. Furthermore, the effect of outsourcing varies strongly across skill levels and age groups.This is especially the case in the manufacturing sector, where the hazard of transiting to nonemployment rises with international outsourcing for medium-skilled and older workers.
    Keywords: Job stability, labour market transitions; worker flows, outsourcing,duration analysis
    JEL: F16 J63 J23
    Date: 2008–07
  24. By: Benjamin Balsmeier; Heiko Peters
    Abstract: It is becoming more and more important to be highly skilled in order to integrate successfully into the labor market. Highly skilled workers receive higher wages and face a lower risk of becoming unemployed, compared to poorly qualified workers. We analyze the determinants of successful high school graduation in Germany. As our main database, we use the youth file of GSOEP for the period extending from 2000 to 2007. Because the decision as to which secondary school track to attend - general school (Hauptschule), intermediate school (Realschule) or high school (Gymnasium) - is made after the end of elementary school (Grundschule) at age of ten, parents are responsible for this decision. Therefore, the characteristics of the child as well as those of its parents are the main determinants of educational attainment. We also include the characteristics of grandparents in our regression framework, something which has not been done in any previous study so far. In order to disentangle the determinants of successful graduation at high school, we use the Cox proportional hazard model. We find markedly different determinants of successful graduation for males and females. Furthermore, the results indicate a strong linkage between mothers and daughters, as well as between fathers and sons.
    Keywords: high school graduation, Cox proportional hazard model, Germany
    JEL: A21 C41 I21
    Date: 2008
  25. By: Helmut Fryges and Joachim Wagner (Institute of Economics, University of Lüneburg)
    Abstract: Using unique recently released nationally representative high-quality longitudinal data at the enterprise level for Germany, this paper presents the first comprehensive evidence on the relationship between exports and profitability. It documents that the positive profitability differential of exporters compared to non-exporters is statistically significant, though rather small, when observed firm characteristics and unobserved firm specific effects are controlled for. In contrast to nearly all empirical studies on the relationship between productivity and exports we do not find any evidence for selfselection of more profitable firms into export markets. Due to the sampling frame of the data used we cannot test the hypothesis that firms which start exporting perform better in the years after the start than their counterparts which do not start. Instead, we use a newly developed continuous treatment approach and show that exporting improves the profitability almost over the whole range of the export-sales ratio. Only firms that generate 90 percent and more of their total sales abroad do not benefit from exporting in terms of an increased rate of profit. This means, that the usually observed higher productivity of exporters is not completely absorbed by the extra costs of exporting or by higher wages paid by internationally active firms.
    Keywords: exports, profitability, micro data, Germany
    JEL: F14 D21
    Date: 2008–10
  26. By: André van Stel; Mickey Folkeringa; Kashifa Suddle; Sita Tan
    Abstract: Business dynamics in an industry is generally seen as an important indicator of the industry's level of competitiveness and economic performance. Two types of business dynamics may be distinguished: business dynamics reflecting competition by new-firm entries and business dynamics reflecting competition among incumbent firms. A growing literature pays attention to the important role of the former type of business dynamics (the starting up of new firms) for achieving economic growth. However, the latter type of business dynamics tends to be overlooked in this type of literature. In part this is due to the large requirements, both in terms of data and in terms of methodology, of measuring competition among incumbent firms. A sophisticated indicator for measuring the extent of business dynamics among incumbent firms in an industry is the mobility index. In the current paper we compute mobility indices for 16 industries -covering the whole private sector except for the primary sectors of economy- in the Netherlands over the period 2000-2006, and compare the values of the mobility indices across the sectors.
    Date: 2008–10–27
  27. By: Carlo Mazzaferro; Marcello Morciano
    Abstract: We present the technical structure of CAPP_DYN, a population based dynamic microsimulation model for the analysis of long term redistributive effects of social policies, developed at CAPP (Centro di Analisi delle Politiche Pubbliche) to study the intergenerational and the intragenerational redistributive effects of reforms in the social security system. The model simulates probabilistically the socio-demographic and economic evolution of a representative sample of the Italian population for the period 2005-2050. After a short review of the existing similar models for the Italian economy, a rather detailed analysis and discussion of the functioning of the model as well as a description of estimation procedures employed in each single module of the models is offered.
    Keywords: Dynamic microsimulation; lifetime and intragenerational redistribution; social security systems
    JEL: C51 C52 H55
    Date: 2008–09

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