nep-eec New Economics Papers
on European Economics
Issue of 2009‒11‒14
twenty-one papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Nowcasting Euro Area Economic Activity in Real-Time: The Role of Confidence Indicators By Domenico Giannone; Lucrezia Reichlin; Saverio Simonelli
  2. Labor productivity: a comparative analysis of the European Union and United States, for the period 1994-2007 By Rafael Fernández; Enrique Palazuelos
  3. Economic incongruities in the European patent system By Malwina Mejer; Bruno van Pottelsberghe de la Potterie
  4. Unemployment Compensation and High European Unemployment: A Reassessment with New Benefit Indicators By David R. Howell; Miriam Rehm
  5. Returns to migration, education, and externalities in the European Union By Andrés Rodríguez-Pose; Vassilis Tselios
  6. Children of Immigrants in the Labour Markets of EU and OECD Countries: An Overview By Thomas Liebig; Sarah Widmaier
  7. Happiness in Europe: Cross-Country Differences in the Determinants of Subjective Well-Being By Pedersen, Peder J.; Schmidt, Torben Dall
  8. The Redistributive Effects of Tax Benefit Systems in the Enlarged EU By Fuest, Clemens; Niehues, Judith; Peichl, Andreas
  9. Migration and Trade: Theory with an Application to the Eastern-Western European Integration By Peri, Giovanni; Iranzo, Susana
  10. Real Convergence, Capital Flows, and Competitiveness in Central and Eastern Europe By Ansgar Belke; Gunther Schnabl; Holger Zemanek
  11. Fiscal variables and bond spreads – Evidence from Eastern European countries and Turkey. By Christane Nickel; Philipp C. Rother; Jan C. Rülke
  12. The Economic Situation of First- and Second-Generation Immigrants in France, Germany, and the UK By Algan, Yann; Dustmann, Christian; Glitz, Albrecht; Manning, Alan
  13. Rose Effect and the Euro: Is the Magic Gone? By Havranek, Tomas
  14. Testing for Convergence in Stock Markets: A Non-linear Factor Approach By Guglielmo Maria Caporale; Burcu Erdogan; Vladimir Kuzin
  15. Risk Attitudes and Investment Decisions across European Countries: Are Women More Conservative Investors than Men? By Oleg Badunenko; Nataliya Barasinska; Dorothea Schäfer
  16. Investigating the Determinants of Banking Coexceedances in Europe in the Summer of 2008 By Brian Lucey* School of Business and Institute for International Integration Studies,Trinity College Dublin Aleksandar Ševic, School of Business, Trinity College Dublin
  17. News and Correlations of CEEC-3 Financial Markets By David Büttner; Bernd Hayo
  18. Announcement effect and intraday volatility patterns of euro-dollar exchange rate : monetary policy news arrivals and short-run dynamic response. By Mokhtar Darmoul; Mokhtar Kouki
  19. When Does It Hurt?: The Exchange Rate "Pain Threshold" for German Exports By Ansgar Belke; Matthias Göcke; Martin Günther
  20. Financial health, exports, and firm survival: A comparison of British and French firms By Marina-Eliza Spaliara; Holger Görg
  21. Mental Retirement By Susann Rohwedder

  1. By: Domenico Giannone (ECARES, Université Libre de Bruxelles and CEPR); Lucrezia Reichlin (London Business School and CEPR); Saverio Simonelli (Università di Napoli Federico II, EUI and CSEF)
    Abstract: This paper assesses the role of surveys for the early estimates of GDP in the euro area in a model-based automated procedures which exploits the timeliness of their release. The analysis is conducted using both an historical evaluation and a real time case study on the current conjuncture.
    Keywords: Forecasting; factor model; real time data; large data sets; survey
    JEL: E52 C33 C53
    Date: 2009–11–06
  2. By: Rafael Fernández; Enrique Palazuelos
    Abstract: <p> This Working Ppaer confirms that labor productivity in the European economies has continued to slow down in recent years. U.S. productivity growth has been higher than in the EU, but only since 2001. At the same time, both economies have modified previous employment performance: EU employment growth is now higher than in U.S. This article proposes that productivity growth be explained by demand dynamics, and investment in particular, not forgetting the influence of employment, along with other factors such as new technologies. </p>
    Keywords: Labor Productivity; Demand; Employment; Labor Markets; Economic Sectors
    JEL: E20 O43 O51 O52
    Date: 2009
  3. By: Malwina Mejer (Université Libre de Bruxelles); Bruno van Pottelsberghe de la Potterie (Université Libre de Bruxelles)
    Abstract: This article argues that the consequences of the ‘fragmentation’ of the European patent system are more dramatic than the mere prohibitive costs of maintaining a patent in force in many jurisdictions. The prevalence of national jurisdictions, which are highly heterogeneous in their costs and practices, over the validity and enforcement of European patents induces both a high level of uncertainty and an intense managerial complexity which undoubtedly reduces both the effectiveness and the attractiveness of the European patent system in its mission to stimulate innovation.
    Keywords: European patent system, litigation process, enforcement, uncertainty
    JEL: K41 P14 O34
    Date: 2009
  4. By: David R. Howell; Miriam Rehm
    Abstract: Generous unemployment benefits lie at the heart of the conventional explanation for persistent high unemployment. The effects of benefit generosity are more ambiguous in a broader behavioral framework in which workers get substantial disutility from unemployment controlling for income, and know that unemployment has scarring effects in the future. The micro evidence suggests modest effects of changes in generosity, but there are reasons to doubt that the impacts on national unemployment rates are consequential. The strongest evidence for the orthodox prediction comes from cross-country regressions on the OECD’s gross replacement rate (GRR), but we find little support in the pattern of annual changes in the GRR and the unemployment rate for OECD countries over the last three decades. We take advantage of newly released and much improved net replacement rate indicators from the OECD, which show little correlation with either the GRRs or with unemployment and employment rates. The evidence does not offer compelling support for the view that benefit generosity is at the root of high European unemployment.   
    Date: 2009
  5. By: Andrés Rodríguez-Pose (IMDEA Ciencias Sociales); Vassilis Tselios (University of Newcastle upon Tyne)
    Abstract: Relatively little attention has been paid to the role that externalities play in determining the pecuniary returns to migration. This paper addresses this gap, using microeconomic data for more than 100,000 individuals living in the European Union (EU) for the period 1994-2001 in order to analyse whether the individual economic returns to education vary between migrants and non-migrants and whether any observed differences in earnings between migrants and locals are affected by household and/or geographical (regional and interregional) externalities. The results point out that while education is a fundamental determinant of earnings, European labour markets – contrary to expectations – do not discriminate in the returns to education between migrants and non-migrants. The paper also finds that household, regional, and interregional externalities influence the economic returns to education, but that they do so in a similar way for local, intranational, and supra-national migrants. The results are robust to the introduction of a large number of individual, household, and regional controls.
    Keywords: individual earnings; migration; educational attainment; externalities; household; regions; Europe
    Date: 2009–11–03
  6. By: Thomas Liebig; Sarah Widmaier
    Abstract: This document provides a first comparative overview of the presence and outcomes of the children of immigrants in the labour markets of OECD countries, based on a collection of data from 16 OECD countries with large immigrant populations. Its key findings are the following: • In about half of all OECD countries, children of immigrants - both native-born offspring of immigrants and foreign-born who immigrated before adulthood with their parents - account for ten or more percent of young adults (aged 20-29) in the labour market. • Most children of immigrants have parents from low- and middle-income countries, and the share with parents from such countries is larger among foreign-born children than among the nativeborn offspring of immigrants. This is a result of the diversification of migration flows over the past 20 years. • Among the native-born children of immigrants in European OECD countries, Turkey is the single most important country of parental origin, followed by Morocco. When comparing the countries of parental origin for the native- and the foreign-born children of immigrants, one observes in the European OECD countries a strong decline in the importance of the origin countries of the post-World War II wave of labour migration, in particular Turkey but also Morocco, Italy, Portugal and Pakistan. • In all countries except Germany and Switzerland, a large majority of the native-born children of immigrants have obtained the nationality of their countries of residence. • The OECD’s Programme for International Student Assessment (PISA) has demonstrated lower assessment results for the children of immigrants in most European OECD countries. There are close links between PISA outcomes and educational attainment levels. In the countries in which children of migrants have large gaps in PISA-scores vis-à-vis children of natives, children of immigrants are also strongly overrepresented among those who are low-educated. • One observes a clear difference between the non-European OECD countries (Australia, Canada, New Zealand and the United States) on the one hand and European OECD countries on the other hand. In the former, the children of migrants have education and labour market outcomes that tend to be at least at par with those of the children of natives. In the European OECD countries (with the exception of Switzerland), both education and labour market outcomes of the children of immigrants tend to be much less favourable. • Part of the differences in labour market outcomes observed in most European OECD countries is due to the fact that the children of immigrants tend to have a lower educational attainment than the children of natives. However, significant gaps remain in many of these countries even after correcting for differences in average educational attainment. • The remaining gaps are particularly large for the offspring of migrants from Turkey and from certain non-OECD countries such as Morocco. In all countries, children with parents from middle-and low-income countries have lower outcomes than children of immigrants from highincome countries. The differences are particularly large for young immigrant women. • On average over the OECD countries for which data are available, the children of immigrants have an unemployment rate that is about 1.6 times higher than that of the children of natives, for both genders. The children of immigrants also have lower employment rates – the gaps compared with the children of natives are about 8 percentage points for men and about 13 percentage points for women. • For women, one observes much better results for the native children of immigrants than for young immigrants, suggesting that having been fully raised and educated in the country of residence brings some additional benefit. However, this is not observed for men, where the native-born children of immigrants do not seem to fare better than the young immigrants, particularly after accounting for the lower educational attainment of the latter group. • The less favourable picture for the female children of migrants compared with their male counterparts is less clear-cut after controlling for socio-demographic characteristics, in particular marital status and number of children. Part of the “double disadvantage” for the female offspring of immigrants seems to be due to the fact that in the age range under consideration (20-29 years), they are overrepresented among those who are (already) married and have children. Indeed, once controlling for this, native-born women who have parents from the Maghreb region or Southern Europe, as well those with Turkish parental origin, tend to have higher employment rates - relative to comparable natives - than their male counterparts. • When in employment, children of immigrants are in occupations similar to those of the children of natives. They are also widely spread throughout the economy, but tend to remain underrepresented in the public sector.<BR>Les principales conclusions qui s’en dégagent sont résumées ci-dessous. • Dans la moitié environ de l’ensemble des pays de l’OCDE, les enfants d’immigrés (aussi bien ceux nés dans le pays hôte de parents immigrés que ceux nés à l’étranger et qui ont immigré avec leurs parents avant d’avoir atteint l’âge adulte) représentent au moins dix pour cent des jeunes adultes (jeunes âgés de 20 à 29 ans) présents sur le marché du travail. • Les parents des enfants immigrés sont le plus souvent originaires de pays à revenu faible ou intermédiaire, et la proportion d’enfants dont les parents sont dans ce cas est plus forte parmi ceux qui sont nés à l’étranger que parmi les enfants nés dans le pays hôte. • Parmi les enfants nés dans un pays européen de l’OCDE de parents immigrés, ceux dont les parents sont originaires de Turquie sont les plus nombreux, suivis des enfants d’origine marocaine. Quand on compare les pays d’origine des parents immigrés d’enfants nés dans le pays hôte et d’enfants nés à l’étranger, on observe, dans les pays européens de l’OCDE, un fort recul de l’importance des pays d’origine correspondant à la vague de migration de travail de l’après- Deuxième Guerre mondiale. Cette observation concerne notamment la Turquie, mais aussi le Maroc, l’Italie, le Portugal et le Pakistan. • Dans tous les pays hormis l’Allemagne et la Suisse, une grande majorité des enfants nés sur le territoire de parents immigrés ont obtenu la nationalité de leur pays de résidence. • Le Programme international de l’OCDE pour le suivi des acquis des élèves (PISA) a démontré que, dans la plupart des pays européens de l’Organisation, les enfants d’immigrés obtenaient de piètres résultats lors des évaluations. Il existe un lien étroit entre les acquis scolaires mesurés par PISA et les niveaux d’études atteints. Dans les pays où l’on relève d’importantes disparités entre les enfants d’immigrés et les enfants de parents autochtones du point de vue des notes obtenues lors des tests PISA, les premiers sont aussi fortement surreprésentés parmi les personnes peu instruites. • On relève une nette différence entre les pays non européens de l’OCDE (Australie, Canada, États-Unis et Nouvelle-Zélande), d’une part, et les pays européens de l’Organisation, d’autre part. Dans le premier groupe, les enfants d’immigrés affichent généralement, au regard de l’éducation et de l’emploi, des résultats au moins égaux à ceux des enfants de parents autochtones. Mais dans les pays européens de l’OCDE (à l’exception de la Suisse), les résultats des enfants d’immigrés au regard de l’éducation et de l’emploi sont généralement moins bons.
    JEL: J13 J15 J21 L29
    Date: 2009–10–29
  7. By: Pedersen, Peder J. (University of Aarhus); Schmidt, Torben Dall (University of Southern Denmark)
    Abstract: The purpose in the present paper is to use individual panel data in the European Community Household Panel to analyse the impact on self-reported satisfaction from a number of economic and demographic variables. The paper contributes to the ongoing discussion of the relationship between life satisfaction and income. The panel property of the data makes it possible to study also the impact on satisfaction from income changes as well as the impact from acceleration in income and changes in labour market status on changes in satisfaction. A number of demographic variables and individual attitude indicators are also entered into the analysis of both the level of satisfaction and the change in satisfaction from one wave of the survey to the next. We find a strong impact from the level of income in all countries, an impact from change and acceleration in income for a smaller number of countries, a strong impact from most changes in labour market status and finally important effects from a number of demographic variables.
    Keywords: satisfaction, income, labour market status, health
    JEL: C23 D31 I31 J28
    Date: 2009–10
  8. By: Fuest, Clemens (University of Oxford); Niehues, Judith (University of Cologne); Peichl, Andreas (IZA)
    Abstract: How do different components of the tax and transfer systems affect disposable income inequality? This paper explores the redistributive effects of different tax benefit instruments in the enlarged EU based on two approaches. Inequality analysis based on the standard approach suggests that benefits are the most important factor reducing inequality in the majority of countries. The factor source decomposition approach, however, suggests that benefits play a negligible role and sometimes even contribute slightly positive to inequality. On the contrary, here taxes and social contributions are by far the most important contributors to income inequality reduction. We explain these partly contradictory results with the different normative focus of the two approaches and show that benefits have other aims than redistribution. Finally, our country clustering shows that the Eastern European countries do not form a distinguished group. The Central Eastern European countries group together with the Continental European countries and the Baltic States show similarities with some Southern European countries.
    Keywords: inequality, redistribution, decomposition, tax benefit systems
    JEL: D31 D60 H20
    Date: 2009–10
  9. By: Peri, Giovanni (Universitat Rovira Virgili); Iranzo, Susana (University of California, Davis and CESifo, Munich)
    Abstract: The remarkable increase in trade flows and in migratory flows of highly educated people are two important features of globalization of the last decades. This paper extends a two-country model of inter- and intra-industry trade to a rich environment featuring technological differences, skill differences and the possibility of international labor mobility. The model is used to explain the patterns of trade and migration as countries remove barriers to trade and to labor mobility. We parameterize the model to match the features of the Western and Eastern European members of the EU and analyze first the effects of the trade liberalization which occurred between 1989 and 2004, and then the gains and losses from migration which are expected to occur if legal barriers to labor mobility are substantially reduced. The lower barriers to migration would result in significant migration of skilled workers from Eastern European countries. Interestingly, this would not only benefit the migrants and most Western European workers but, via trade, it would also benefit the workers remaining in Eastern Europe.
    JEL: F12 F22 J61
    Date: 2009–03
  10. By: Ansgar Belke; Gunther Schnabl; Holger Zemanek
    Abstract: The paper scrutinizes the role of wages and capital flows for competitiveness in the new EU member states in the context of real convergence. For this purpose it extends the seminal Balassa-Samuelson model by international capital markets. The augmented Balassa-Samuelson model is linked to the monetary overinvestment theories of Wicksell and Hayek in order to trace cyclical deviations of real exchange rates from the productivity-driven equilibrium path. Panel estimations for the period from 1993 to 2008 reveal mixed evidence for the role of capital markets for both the economic catch-up process and international competitiveness of the Central and Eastern European countries.
    Keywords: Exchange rate regime, wages, Central and Eastern Europe, EMU accession, panel model
    JEL: E24 F16 F31 F32
    Date: 2009
  11. By: Christane Nickel (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Philipp C. Rother (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Jan C. Rülke (WHU – Otto Beisheim School of Management, Burgplatz 2, D-56179 Vallendar, Germany.)
    Abstract: We investigate the impact of fiscal variables on bond yield spreads relative to US Treasury bonds in the Czech Republic, Hungary, Poland, Russia and Turkey from May 1998 to December 2007. To account for the importance of market expectations we use projected values for fiscal and macroeconomic variables generated from Consensus Economics Forecasts. Moreover, we compare results from panel regressions with those from country (seemingly unrelated regression) estimates, and conduct analogous regressions for a control group of Latin American countries. We find that the role of the individual explanatory variables, including the importance of fiscal variables, varies across countries. JEL Classification: C33, E43, E62, H62.
    Keywords: Budget deficits, determination of interest rates, fiscal policy, Eastern European countries.
    Date: 2009–10
  12. By: Algan, Yann (Sciences Po, Paris); Dustmann, Christian (University College London); Glitz, Albrecht (Universitat Pompeu Fabra); Manning, Alan (London School of Economics)
    Abstract: A central concern about immigration is the integration into the labour market, not only of the first generation, but also of subsequent generations. Little comparative work exists for Europe’s largest economies. France, Germany and the UK have all become, perhaps unwittingly, countries with large immigrant populations albeit with very different ethnic compositions. Today, the descendants of these immigrants live and work in their parents’ destination countries. This paper presents and discusses comparative evidence on the performance of first- and second-generation immigrants in these countries in terms of education, earnings, and employment.
    Keywords: immigration, second-generation immigrants, integration
    JEL: J61 F22
    Date: 2009–10
  13. By: Havranek, Tomas
    Abstract: This paper presents an updated meta-analysis of the effect of currency unions on trade, focusing on the Euro area. Using meta-regression methods such as funnel asymmetry test, evidence for strong publication bias is found. The estimated underlying effect for currency unions other than Eurozone reaches more than 60%. However, according to the meta-regression analysis, the Euro's trade promoting effect corrected for publication bias is insignificant. The Rose effect literature shows signs of the economics research cycle: reported t-statistic is a quadratic concave function of publication year. Explanatory meta-regression (robust fixed effects and random effects), that can explain about 70% of the heterogeneity in the literature, suggests that results published by some authors might consistently differ from the mainstream output and that study outcomes are systematically dependent on study design (usage of panel data, short- or long-run nature, number of countries in the dataset).
    Keywords: Rose effect; Trade; Currency union; Euro; Meta-analysis; Publication bias
    JEL: F15 C42 F33
    Date: 2009–05–05
  14. By: Guglielmo Maria Caporale; Burcu Erdogan; Vladimir Kuzin
    Abstract: This paper applies the Phillips and Sul (2007) method to test for convergence in stock returns to an extensive dataset including monthly stock price indices for five EU countries (Germany, France, the Netherlands, Ireland and the UK) as well as the US over the period 1973-2008. We carry out the analysis on both sectors and individual industries within sectors. As a first step, we use the Stock and Watson (1998) procedure to filter the data in order to extract the long-run component of the series; then, following Phillips and Sul (2007), we estimate the relative transition parameters. In the case of sectoral indices we find convergence in the middle of the sample period, followed by divergence, and detect four (two large and two small) clusters. The analysis at a disaggregate, industry level again points to convergence in the middle of the sample, and subsequent divergence, but a much larger number of clusters is now found. Splitting the cross-section into two subgroups including Euro area countries, the UK and the US respectively, provides evidence of a global convergence/divergence process not obviously influenced by EU policies.
    Keywords: Stock Market, Financial Integration, European Monetary Union Convergence, Factor Model
    JEL: C32 C33 G11 G15
    Date: 2009
  15. By: Oleg Badunenko; Nataliya Barasinska; Dorothea Schäfer
    Abstract: This study questions the popular stereotype that women are more risk averse than men in their financial investment decisions. The analysis is based on micro-level data from large-scale surveys of private households in five European countries. In our analysis of investment decisions, we directly account for individuals' self-perceived willingness to take financial risks. The empirical evidence we provide only weakly supports the gender differences argument. We find that women are less likely to invest in risky financial assets. However, when the probability of investing is controlled for, males and females are found to allocate equal shares of their wealth to risky assets.
    Keywords: Gender, risk aversion, financial behavior
    JEL: G11 J16
    Date: 2009
  16. By: Brian Lucey* School of Business and Institute for International Integration Studies,Trinity College Dublin Aleksandar Ševic, School of Business, Trinity College Dublin
    Abstract: We examine the nature, extent and possible causes of bank contagion in a high frequency setting. Looking at six major European banks in the summer and autumn of 2008, we model the lower coexceedances of these banks returns. We find that market microstructure, volatility (measured by range based measures) and limited general market conditions are key determinants of these coexceedances. We find some evidence that herding occurred.
    Date: 2009–09–30
  17. By: David Büttner (Faculty of Business Administration and Economics, Philipps Universitaet Marburg); Bernd Hayo (Faculty of Business Administration and Economics, Philipps Universitaet Marburg)
    Abstract: We investigate conditional correlations between six CEEC-3 financial markets estimated by DCC-MGARCH models. In general, the highest correlations exist between Hungary and Poland in foreign exchange and stock markets. Short-term money markets are rather isolated from each other. We find that the associations of CEEC-3 exchange rates versus the euro are weaker than those versus the US dollar. The persistence of the effect of shocks on the timevarying correlations is strongest for foreign exchange and stock markets, indicating a tendency toward contagion. In searching for the origins of financial market volatility in the CEEC-3, we uncover some evidence of Granger-causality on the foreign exchange markets. Finally, using a pool model, we investigate the impact of euro area, US, and CEEC-3 news on the correlations. Apart from ECB monetary policy news, we observe no broad effects of international news on correlations; instead, local news exerts an influence, which suggests adominance of country- or market-specific circumstances.
    Keywords: Financial markets, Czech Republic, Hungary, Poland, political news, macroeconomic shocks, contagion, DCC-MGARCH
    JEL: G12 G15 F30
    Date: 2009
  18. By: Mokhtar Darmoul (Centre d'Economie de la Sorbonne); Mokhtar Kouki (LEGI-Ecole Polytechnique de Tunis)
    Abstract: In this article, we examine the announcement effect of news relating to the monetary policies of the ECB and the FED and resulting from the official meetings of the Council of the governors and the FOMC on intraday volatility of the foreign exchange rate euro-dollar at five minutes of intervals. The results show that the news of the monetary policy of the ECB relative to its Target interest rates are more significant and more influential on the level of intraday volatility than those of the monetary policy of the FED relative to its federal funds rate. In spite of the reduced number of these news, their effect appears statistically significant during the years of the sample of foreign exchange rate euro-dollar selected. We also introduced a polynomial structure which enables us to take into account the short-run response patterns and to highlight a possible dissymmetry in the effect of each variable of signal on the volatility of foreign exchange rate euro-dollar.
    Keywords: Announcement effect, forex, news, exchange rate.
    JEL: C15 E44 F31 G14
    Date: 2009–08
  19. By: Ansgar Belke; Matthias Göcke; Martin Günther
    Abstract: This paper deals with the impact of the $/€ exchange rate on German exports in the period from 1995Q1 to 2008Q4. Our main aim is to identify "pain thresholds" for German exporters. We rely on a non-linear model according to which suddenly strong spurts of exports occur when changes of the EXR go beyond a kind of "play" area (analogous to a mechanical play). We implement an algorithm describing play-hysteresis into a regression framework. A unique "pain threshold" of the $/€ exchange rate does not exist, since the borders of the play area and, thus, also the "pain threshold" (as the upper border) depend on the historical path of the whole process. We come up with an estimate of a play area width of 24 US dollar cent per euro. At the end of our estimation period, the previous exchange rate movements had shifted the upper bound of the play area to about 1.55 US dollar per euro. In our interpretation, this is the current "pain threshold", where a strong spurt reaction of exports to a further appreciation of the euro is expected to start.
    Keywords: exchange rate movements, play hysteresis, modelling techniques, switching regression, export demand
    JEL: C51 C63 E24 F41
    Date: 2009
  20. By: Marina-Eliza Spaliara (Dept of Economics, Loughborough University); Holger Görg (Kiel Institute for the World Economy, CEPR)
    Abstract: We examine the differential effects of financial status and exporting activity on the likelihood of survival for firms in the UK and France - two countries with different financial systems. We aim to answer two main questions: What is the direct impact of financial characteristics and different facets of exporting activity on the likelihood of survival? Do the sensitivities of survival incidence to financial variables vary with the exporting status of firms? We find strong evidence that continuous exporters face a higher probability of survival compared to starters, continuous non-exporters and firms exiting the exporting market. Further, important sensitivities of survival prospects to financial indicators are observed for the UK firms which might be explained by the ''market based'' economy. Finally, a within and across countries comparison reveals that the survival of exporting groups varies substantially depending on firms' financial status, the financial system and the prolonged participation in the export market.
    Date: 2009–11
  21. By: Susann Rohwedder
    Abstract: Some studies suggest that people can maintain their cognitive abilities through "mental exercise." This has not been unequivocally proven. Retirement is associated with a large change in a person's daily routine and environment. In this paper, the authors propose two mechanisms how retirement may lead to cognitive decline. For many people retirement leads to a less stimulating daily environment. In addition, the prospect of retirement reduces the incentive to engage in mentally stimulating activities on the job. They investigate the effect of retirement on cognition empirically using cross-nationally comparable surveys of older persons in the United States, England, and 11 European countries in 2004. They find that early retirement has a significant negative impact on the cognitive ability of people in their early 60s that is both quantitatively important and causal. Identification is achieved using national pension policies as instruments for endogenous retirement.
    Keywords: cognition, retirement, human capital, international comparison, HRS, SHARE, ELSA
    JEL: I12 J24 J26
    Date: 2009–10

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