nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2010‒03‒06
fourteen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Do Competition and Ownership Matter? Evidence from Local Public Transport in Europe By Marcella Nicolini; Andrea Boitani; Carlo Scarpa
  2. European Forests and Carbon Sequestration Services: An Economic Assessment of Climate Change Impacts By Paulo A.L.D. Nunes; Helen Ding; Sonja Teelucksingh
  3. Europe's gas supplies : diversification with Caspian gas and the “Russian risk” By Catherine Locatelli
  4. Does Retirement Affect Cognitive Functioning? By Bonsang Eric; Adam Stéphane; Perelman Sergio
  5. The Determination of Wages of Newly Hired Employees: Survey Evidence on Internal versus External Factors By Kamil Galuscak; Mary Keeney; Daphne Nicolitsas; Frank Smets; Pawel Strzelecki; Matija Vodopivec
  6. Financial Patenting in Europe By Hall, Bronwyn H.; Thoma, Grid; Torrisi, Salvatore
  7. Price relationships in the EU emissions trading system By Julien Chevallier
  8. The European carbon market (2005-2007): banking, pricing and risk-hedging strategies By Julien Chevallier
  9. Cross-country comparison of the replacement incentives of the EU ETS in 2008-12: the case of the power sector By Rogge, Karoline S.; Linden, Christian
  10. Carbon Prices during the EU ETS Phase II: Dynamics and Volume Analysis By Julien Chevallier
  11. The EUA-sCER Spread: Compliance Strategies and Arbitrage in the European Carbon Market By Maria Mansanet-Bataller; Julien Chevallier; Morgan Hervé-Mignucci; Emilie Alberola
  12. Slip Sliding Away: Further Union Decline in Germany and Britain By Addison, John T.; Bryson, Alex; Teixeira, Paulino; Pahnke, André
  13. Service Offshoring and the Skill Composition of Labor Demand By Rosario Crinò
  14. No Country for Fat Men? Obesity, Earnings, Skills, and Health among 450,000 Swedish Men By Lundborg, Petter; Nystedt, Paul; Rooth, Dan-Olof

  1. By: Marcella Nicolini (Fondazione Eni Enrico Mattei); Andrea Boitani (Catholic University); Carlo Scarpa (University of Brescia and Fondazione Eni Enrico Mattei)
    Abstract: This paper investigates how the ownership and the procedure for the selection of firms operating in the local public transport sector affect their productivity. In order to compare different institutional regimes, we carry out a comparative analysis of 72 companies operating in large European cities. This allows us to consider firms selected either through competitive tendering or negotiated procedures. The analysis of the data on 77 European firms over the period 1997-2006 indicates that firms operate under constant returns to scale. Retrieving the residuals we obtain a measure of total factor productivity, which we regress on firm and city characteristics. We find that when firms are totally or partially in public hands their productivity is lower. Moreover, firms selected through competitive tendering display higher total factor productivity.
    Keywords: Local Public Transport, Public Ownership, Translog Production Function
    JEL: C33 K23 L25 L33 L91
    Date: 2010–01
  2. By: Paulo A.L.D. Nunes (University of Venice); Helen Ding (Ca’ Foscari University of Venice and Fondazione Eni Enrico Mattei); Sonja Teelucksingh (ondazione Eni Enrico Mattei and University of the West Indies)
    Abstract: This paper reports an original economic valuation of the impact of climate change on the provision of forest regulating services in Europe. To the authors’ knowledge the current paper represents the first systematic attempt to estimate human well-being losses with respect to changes in biodiversity and forest regulating services that are directly driven by climate change. First, selected 34 European countries are grouped by their latitude intervals to capture the differentiated regional effects of forests in response to climate change. Moreover, the future trends of forest areas and stocked carbon in 2050 are projected through the construction and simulation of global circulation models such as HADMC3 following four different future developing paths described by the four IPCC scenarios. Finally, the valuation exercise is anchored in an ecosystem service based approach, involving the use of general circulation models and integrated assessment models. Our findings address two dimensions in the evaluation of climate impacts on European forests: Firstly, future projections yield different states of the world depending upon the IPCC scenario adopted. Secondly, spatial issues matter in an assessment of the distributional impacts of climate change, as these impacts are not distributed in a uniform way across the European countries under consideration.
    Keywords: Economic Valuation, Forest Ecosystem, Carbon Sequestration, Climate Change Impacts
    JEL: Q23 Q51 Q57
    Date: 2010–01
  3. By: Catherine Locatelli (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II)
    Abstract: The issue of EU gas supply security has become more and more important in the 2000s in the context of the gas market liberalisation and the question of reliability of Russian supplier. One answer to these problems is the EU gas diversification, specifically the opening up of a fourth gas corridor to supply the EU via the “Caucasus” or “southern” route with gas from Central Asia. The feasibility of this strategy might now be called into question. The aim of this article is to examine the new strategies that could emerge in the producing countries as well as those of international oil companies, and then look at what the consequences might be as far as the EU's diversification strategy is concerned. The aim of this article is to identify some of the problems and limits for this corridor.
    Date: 2010–02
  4. By: Bonsang Eric; Adam Stéphane; Perelman Sergio (ROA rm)
    Abstract: This paper analyzes the effect of retirement on cognitive functioning using two large scale surveys. On the one hand the HRS, a longitudinal survey among individuals aged 50+ living in the United States, allows us to control for individual heterogeneity and endogeneity of the retirement decision by using the eligibility age for Social Security as an instrument. On the other hand, a comparable international European survey, SHARE, allows us to identify the causal effect of retirement on cognitive functioning by using the cross-country differences in the age-pattern of retirement. The results highlight in both cases a significant negative, and quantitatively comparable, effect of retirement on cognitive functioning. Our results suggest that promoting labor force participation of older workers is not only desirable to insure the viability of retirement schemes, but it could also delay cognitive decline, and thus the occurrence of associated impairments at older age.
    Keywords: education, training and the labour market;
    Date: 2010
  5. By: Kamil Galuscak; Mary Keeney; Daphne Nicolitsas; Frank Smets; Pawel Strzelecki; Matija Vodopivec
    Abstract: This paper uses information from a rich firm-level survey on wage and price-setting procedures, in around 15,000 firms in 15 European Union countries, to investigate the relative importance of internal versus external factors in the setting of wages of newly hired workers. The evidence suggests that external labour market conditions are less important than internal pay structures in determining hiring pay, with internal pay structures binding even more often when there is labour market slack. When explaining their choice firms allude to fairness considerations and the need to prevent a potential negative impact on effort. Despite the lower importance of external factors in all countries there is significant cross-country variation in this respect. Cross-country differences are found to depend on institutional factors (bargaining structures); countries in which collective agreements are more prevalent and collective agreement coverage is higher report to a greater extent internal pay structures as the main determinant of hiring pay. Within-country differences are found to depend on firm and workforce characteristics; there is a strong association between the use of external factors in hiring pay, on the one hand, and skills (positive) and tenure (negative) on the other.
    Keywords: Wage rigidity, newly hired workers, internal pay structure, employee turnover, business cycle, survey data.
    JEL: J31 J41
    Date: 2009–12
  6. By: Hall, Bronwyn H. (UNU-MERIT, Maastricht University, Institute of Fiscal Studies, University of California-Berkeley, and NBER); Thoma, Grid (CESPRI, Bocconi University, and University of Camerino); Torrisi, Salvatore (Department of Management, University of Bologna, and CESPRI, Bocconi University)
    Abstract: We take a first look at financial patents at the European Patent Office (EPO). As is the case at the US Patent and Trademark Office (USPTO), the number of financial patents in Europe has increased significantly in parallel with significant changes in payment and financial systems. Scholars have argued that financial patents, like other business methods patents, have low value and are owned for strategic reasons rather than for protecting real inventions. We find that established firms in non-financial sectors with diversified patent portfolios own a large share of financial patents at the EPO. However, new specialized technology providers in the financial area also hold a number of such patents. Decisions on the financial patent applications take longer and they are more likely to be refused by the patent office, suggesting greater uncertainty over validity than for other patents. They are also more likely to be opposed, which is consistent with the fact that their other economic value indicators are higher.
    Keywords: market valuation, intangible assets, patents, software, Europe
    JEL: G20 L86 O31 O34
    Date: 2010
  7. By: Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre)
    Abstract: The Emissions Trading Scheme (ETS) constrains industrial polluters to buy/sell CO2 allowances depending on a regional depolluting objective of -8% of CO2 emissions by 2012 compared to 1990 levels. Companies may also buy carbon offsets from developing countries, funding emissions cuts there instead, under a Kyoto Protocol Clean Development Mechanism (CDM). This article critically analyzes the price relationships in the EU emissions trading system. The United Nations Framework Convention on Climate Change (UNFCCC) delivers credits that may be used by European companies for their compliance needs. Certified Emissions Reductions (CERs) from CDM projects are credits flowing into the global compliance market generated through emission reductions. EUAs (EU Allowances) are the tradable unit under the EU ETS. Besides, the EU Linking Directive allows the import for compliance into the EU ETS up to 13.4% of CERs on average. This article details the idiosyncratic risks affecting each emissions market, be it in terms of regulatory uncertainty, economic activity, industrial structure, or the impact of other energy markets. Besides, based on a careful analysis of the EUA and CER price paths, we assess common risk factors by focusing more particularly on the role played by the CER import limit within the ETS.
    Keywords: Kyoto Protocol; Clean Development Mechanism; EU Emissions Trading Scheme; Greenhouse Gases Reductions; Emissions Markets; CDM; EU ETS
    Date: 2010–02–22
  8. By: Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre)
    Abstract: At the stage of international post-Kyoto negotiations, the adoption of ambitious public policies raises an increasing interest, as society has a whole is more concerned by the scale of damages and the potential irreversibility linked to climate change. The introduction of a tradable permits market in Europe on January 1, 2005, in order to provide incentives to Member-States to take early abatement measures, may be seen as a decisive first step towards that direction. The creation of the EU ETS has indeed revealed the key role played by the European Union in the preservation of the global public good that constitutes the climate. This article reviews the market rules of the European carbon market during 2005-2007. More particularly, it synthesizes theoretical and empirical analyses of banking and borrowing provisions, price drivers and risk-hedging strategies attached to tradable quotas, which were introduced to cover the CO2 emissions of around 10,600 installations in Europe.
    Keywords: Climate Change Policy; Emissions Trading; EU ETS; European carbon market; Banking Borrowing; Carbon Pricing; Spot Prices; Futures Prices; Option Prices; Risk-Hedging Strategies
    Date: 2010–02–22
  9. By: Rogge, Karoline S.; Linden, Christian
    Abstract: In this paper, we conduct a cross-country quantitative analysis of the replacement incentives generated by the EU ETS for the power sector in 2008-12. In order to do so, the allocation rules of the Member States are applied to concrete reference power plants for three different fuel types (lignite, hard coal and gas). Based on these calculations, we compare installation-specific replacement in-centives across the Member States. Our analysis shows that replacement incentives vary significantly across Member States and typically deviate from the incentives provided in the reference case of full auctioning. Furthermore, the EU ETS allocation rules lead to perverse incentives in approximately 30% of the possible replacement options. Only 5 MS do not provide any perverse incentives. Finally, we explore the link between replacement incentives and allocation types. Based on our findings, we derive policy recommendations for the design of emission trading schemes emerging around the world. --
    Keywords: EU emission trading scheme (EU ETS),replacement,adoption,diffusion,power sector,allocation rules
    Date: 2010
  10. By: Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre)
    Abstract: The European Union Emissions Trading Scheme (EU ETS) is the largest emissions trading scheme to date. This article summarizes the principle elements behind the trading system, and details the carbon price dynamics during Phase II (2008-2012), along with an analysis of traded volumes. The main findings emphasize that the EU ETS is a rapidly growing market, which yields to innovative learning process for all participants involved: policy makers, industrial operators, and financial analysts. Besides, these results shed some light on the usefulness of credit project mechanisms, which may result in the medium-term in integrated ‘world' carbon markets between various regional and/or national ETS.
    Keywords: EU ETS; Carbon Price; Phase II; CER ; Spot Price ; Futures Price ; Options Price
    Date: 2010–02–23
  11. By: Maria Mansanet-Bataller (Mission Climat Caisse des Dépôts - Université Panthéon-Sorbonne - Paris I); Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre); Morgan Hervé-Mignucci (Mission Climat Caisse des Dépôts - Université Panthéon-Sorbonne - Paris I); Emilie Alberola (Mission Climat Caisse des Dépôts - Université Panthéon-Sorbonne - Paris I)
    Abstract: This article studies the price relationships between EU emissions allowances (EUAs) – valid under the EU Emissions Trading Scheme (EU ETS) – and secondary Certified Emissions Reductions (sCERs) – established from primary CERs generated through the Kyoto Protocol's Clean Development Mechanism (CDM). Given the price differences between EUAs and sCERs, financial and industrial operators may benefit from arbitrage strategies by buying sCERs and selling EUAs (i.e. selling the EUA-sCER spread) to cover their compliance position between these two assets, as industrial operators are allowed to use sCERs towards compliance with their emissions cap within the European system up to 13.4%. Our central results show that the spread is mainly driven by EUA prices and market microstructure variables and less importantly, as we would expect, by emissions-related fundamental drivers. This might be justified by the fact that the EU ETS remains the greatest source of CER demand to date.
    Keywords: EUA-sCER Spread; Arbitrage; Emissions Markets
    Date: 2010–01–13
  12. By: Addison, John T. (University of South Carolina); Bryson, Alex (National Institute of Economic and Social Research); Teixeira, Paulino (University of Coimbra); Pahnke, André (IAB, Nürnberg)
    Abstract: This paper presents the first comparative analysis of the decline in collective bargaining in two European countries where that decline has been most pronounced. Using workplace-level data and a common model, we present decompositions of changes in collective bargaining and worker representation in the private sector in Germany and Britain over the period 1998-2004. In both countries within-effects dominate compositional changes as the source of the recent decline in unionism. Overall, the decline in collective bargaining is more pronounced in Britain than in Germany, thus continuing a trend apparent since the 1980s. Although workplace characteristics differ markedly across the two countries, assuming counterfactual values of these characteristics makes little difference to unionization levels. Expressed differently, the German dummy looms large.
    Keywords: behavioral and composition effects, patterns of erosion, worker representation, union coverage, union recognition, shift share analysis
    JEL: J50 J51
    Date: 2010–02
  13. By: Rosario Crinò
    Abstract: This paper studies the effects of service offshoring on the skill composition of labor demand, using novel comparable data for nine Western European countries between 1990 and 2004. The empirical analysis delivers three main results. First, service offshoring is skill-biased, because it increases the demand for high and medium skilled labor and decreases the demand for low skilled labor. Second, the effects of service offshoring are similar to those of material offshoring, both qualitatively and quantitatively. Third, the economic magnitude of these effects is not large.
    Keywords: Offshoring; Labor Demand; Skills
    JEL: F1
    Date: 2010–02–11
  14. By: Lundborg, Petter (Lund University); Nystedt, Paul (Linköping University); Rooth, Dan-Olof (Linneaus University)
    Abstract: The negative association between obesity and labor market outcomes has been widely documented, yet little is known about the mechanisms through which the association arises. Using rich and unique data on 450,000 Swedish men enlisting for the military, we find that the crude obesity penalty in earnings, which amounts to about 18 percent, is linked to supply-side characteristics that are associated with both earnings and obesity. In particular, we show that the penalty reflects negative associations between obesity, on the one hand, and cognitive skills, non-cognitive skills, and physical fitness, on the other. Our results suggest that employers use obesity as a marker for skill limitations in order to statistically discriminate.
    Keywords: obesity, overweight, earnings, cognitive ability, non-cognitive ability, health, physical fitness
    JEL: I10 J10 J70
    Date: 2010–02

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