nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2010‒03‒13
twelve papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Aiding car producers in the EU: money in search of a strategy By Marcella Nicolini; Carlo Scarpa; Paola Valbonesi
  2. Does Private Equity change the performance of a European firm in which it invests? By Oleg Badunenko; Christopher F. Baum; Dorothea Schäfer
  3. The relative importance of shocks in a cohort's early and later life conditions on age-specific mortality By Mikko Myrskylä
  4. The nexus between science and industry: Evidence from faculty inventions. By Czarnitzki, Dirk; Hussinger, Katrin; Schneider, Cédric
  5. Does university quality drive international student flows?. By Van Bouwel, Linda; Veugelers, Reinhilde
  6. Does Excellence in Academic Research Attract Foreign R&D?. By Belderbos, Rene; Leten, Bart; Suzuki, Shinya
  7. Preferences for Health Insurance in Germany and the Netherlands – A Tale of Two Countries By Peter Zweifel; Karolin Leukert; Stephanie Berner
  8. Macedonia’s Accession to the EU and the Labor Market: What Can Be Learned from the New Member States? By Lehmann, Hartmut
  9. What's the Difference?! Gender, Personality, and the Propensity to Start a Business By Furdas, Marina; Kohn, Karsten
  10. A Micro Data Analisys Of Italy’s Brain Drain By Monteleone, Simona; Torrisi, Benedetto
  11. Fiscal decentralization and intergovernmental grants: the European regional policy and Spanish autonomous regions By Juan González Alegre
  12. Workforce reduction and firm performance: Evidence from French firm data By Bénédicte Reynaud

  1. By: Marcella Nicolini (FEEM (Fondazione Eni Enrico Mattei – Milano)); Carlo Scarpa (University of Brescia and FEEM (Fondazione Eni Enrico Mattei – Milano)); Paola Valbonesi (University of Padova)
    Abstract: We focus on state aid to the car sector in the EU. Stemming from the general normative principles on state aid (i.e., art. 107 of the Treaty), we investigate how these have been applied, given the specific soft law provisions which are typical of the sector. A detailed quantitative analysis from 1990 to 2008 is carried out, highlighting a reduction of aids over time. A shift to “regional development” motives in granting aid to the sector is observed in the last ten years. Overall, a lack of coordination in national policies documented by large differences in expenditure across countries in the past, and possible future subsidy races, call for a more focussed European policy for aids to this industry.
    Keywords: State aid to business; Automobile Sector, European Union and industrial policy
    JEL: L40 L62 L52
    Date: 2010–02
  2. By: Oleg Badunenko (DIW Berlin); Christopher F. Baum (Boston College; DIW Berlin); Dorothea Schäfer (DIW Berlin)
    Abstract: The paper investigates whether or not the presence of Private Equity (PE) investors in European companies influences their performance. Previous studies documented unambiguous merit of a buyout during 1980s and 1990s in US and UK markets for listed firms. This study analyzes such influence in both listed and unlisted European firms during 2002-2007. Our major finding is that the return on assets does not meaningfully differ between firms with and without PE backing. We also show that the duration of PE investment does not have a significant effect on firm's performance.
    Keywords: Private equity financing, corporate finance
    JEL: M14 G24 G34
    Date: 2010–03–01
  3. By: Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: The relative importance of a cohort’s early life conditions, compared to later period conditions, on adult- and old-age mortality is not known. This paper studies how cohort-level mortality depends on shocks in the cohort’s early and later life (period) conditions. I use cohort’s own mortality as a proxy for the early life conditions, and define shocks as deviations from trend. Using historical data for five European countries I find that shocks in early life conditions are only weakly associated with cohort’s later mortality. This may be because individual-level health is robust to early life conditions, or because at the cohort-level scarring, selection and immunity cancel each other. Shocks in period conditions, measured as deviations from trend in period child mortality, are strongly and positively correlated with mortality at all older ages. The results suggest that at the cohort-level period conditions drive mortality change.
    Keywords: Europe, mortality
    JEL: J1 Z0
    Date: 2010–02
  4. By: Czarnitzki, Dirk; Hussinger, Katrin; Schneider, Cédric
    Abstract: Against the background of the so-called “European paradox”, i.e. the conjecture that EU countries lack the capability to transfer science into commercial innovations, knowledge transfer from academia to industry has been a central issue in policy debates recently. Based on a sample of German scientists we investigate which academic inventions are patented by a scientific assignee and which are owned by corporate entities. Our findings suggest that faculty patents assigned to corporations exhibit a higher short-term value in terms of forward citations and a higher potential to block property rights of competitors. Faculty patents assigned to academic inventors or to public research institutions, in contrast, are more complex, more basic and have stronger links to science. These results may suggest that European firms lack the absorptive capacity to identify and exploit academic inventions that are further away from market applications.
    Keywords: academic inventors; university-industry technology transfer; intellectual property rights;
    Date: 2009–12
  5. By: Van Bouwel, Linda; Veugelers, Reinhilde
    Abstract: We examine whether the (research) quality of a country’s higher education system drives macro-flows of foreign tertiary students in Europe. We use various measures on the quality of a country’s higher education system in an extended gravity model. We find that quality has a positive and significant effect on the size and direction of flows of students exchanged between 18 European countries.
    Keywords: international student mobility; higher education; university rankings; quality indicators;
    Date: 2009–12
  6. By: Belderbos, Rene; Leten, Bart; Suzuki, Shinya
    Abstract: We examine the role of host countries’ academic research strengths in global R&D location decisions by multinational firms. While we expect that a firm’s propensity to perform R&D in a host country increases with the strength of local academic research, firms are expected to be heterogeneously positioned to benefit from academic research strengths due to differences in the capacity to absorb and utilize scientific knowledge. We find support for these conjectures in an analysis of foreign R&D activities in 40 host countries and 30 technology fields by 176 leading European, US and Japanese firms during the periods 1995-1998 and 1999-2002. Controlling for a wide range of host country factors, the number of relevant ISI publications by scientists based in the host country has a substantial positive impact on the propensity to conduct foreign R&D. The effect of academic research is significantly larger for firms with a stronger science orientation in R&D - as indicated by citations to scientific literature in prior patents. For host countries with a strong relevant science base, this greater responsiveness of science oriented firms more than offsets a generally greater inclination to concentrate R&D at home. The findings appear robust across a variety of specifications.
    Date: 2009–11
  7. By: Peter Zweifel (Socioeconomic Institute, University of Zurich); Karolin Leukert (Polynomics, Olten); Stephanie Berner (Polynomics, Olten)
    Abstract: This contribution contains an international comparison of preferences. Using two Discrete Choice Experiments (DCE), it measures willingness to pay for health insurance attributes in Germany and the Netherlands. Since the Dutch DCE was carried out right after the 2006 health reform, which made citizens explicitly choose a health insurance contract, two research questions naturally arise. First, are the preferences with regard to contract attributes (such as Managed-Care-type restrictions of physician choice) similar between the two countries? Second, was the information campaign launched by the Dutch government in the context of the reform effective in the sense of reducing status quo bias? Based on random-effects Probit estimates, these two questions can be answered as follows. First, while much the same attributes have positive and negative willingness to pay values in the two countries, their magnitudes differ, pointing to differences in preference structure. Second, status quo bias in the Netherlands is one-half of the German value, suggesting that Dutch consumers were indeed made to bear the cost of decision making associated with choice of a health insurance contract.
    Keywords: preference measurement, willingness to pay, health insurance, discrete-choice experiments, health reform, Germany, Netherlands
    JEL: C25 D12 I18
    Date: 2010–02
  8. By: Lehmann, Hartmut (University of Bologna)
    Abstract: The paper was produced as a background paper on labor issues for the UNDP study "Convergence to the European Union: Challenges and Opportunities." It first looks at the issue of how the labor market institutions of an acceding country like Macedonia should be shaped to further the integration of the acceding economy into the European economic space. The successes and the failures of the labor market reform efforts of the new member states are discussed to give some guidance to the discussion. Second, we briefly discuss the assistance programs provided by the European commission to help candidate states in this reform process. Macedonia is the country in Europe with one of the highest unemployment rates and a very large incidence of long-term unemployment. A third area of discussion in the paper is, therefore, the development and implementation of passive and active labor market policies that guarantee an equitable and efficient use of governmental resources given the stylized facts of Macedonian unemployment.
    Keywords: European Union, accession, labor market institutions, labor market reform, labor market policies, high and persistent unemployment, Macedonia
    JEL: J08 J20 J24 J26 J30 J48 P23
    Date: 2010–02
  9. By: Furdas, Marina (University of Freiburg); Kohn, Karsten (KfW Bankengruppe)
    Abstract: Women start fewer businesses than men. The start-up rate among women in Germany falls short of males' start-up rate by one third. We scrutinize this gender gap using individual-level data from the KfW Start-up Monitor, a large-scale population survey on start-up activity in Germany. As a unique feature, the data combine socio-demographic characteristics, entrepreneurship-related attitudes, and general personality traits of both business starters and non-starters. Estimating binary choice models and employing decomposition techniques, we find that gender differences in socio-demographics alone would even be in favor of higher start-up rates among women, while the distribution of personality traits is less favorable for business start-ups among women and explains about one third of the entire gender difference. Most substantially, men opt for a start-up more often even given identical human capital and related endowments. Qualificational policies targeted towards higher educational attainments of potential entrepreneurs do thus not suffice to increase the number of female business starters.
    Keywords: entrepreneurship, gender difference, start-up propensity, decomposition analysis, KfW Start-up Monitor, Germany
    JEL: J16 L26 M13
    Date: 2010–02
  10. By: Monteleone, Simona; Torrisi, Benedetto
    Abstract: Contrary to current thinking which views the European brain drain as a transitory phenomenon, this paper shows, using a micro-data analysis, that, as far as Italy is concerned, such migration is permanent. The present study provides new empirical evidence on the propensity to return. The empirical approach and analytical models used outline the profile of the emigrants, their reasons for flight, the drawing factors and the aspects governing return. Our findings are robust and statistics significant in the results and to the choice of instruments and the empirical model we apply.
    Keywords: Permanent migration; Propensity of return; OLS; GLM.
    JEL: F22 O15 J24
    Date: 2010–01–08
  11. By: Juan González Alegre (Universidad Pablo de Olavide)
    Abstract: Most of the Structural Actions are designed as an incentive to increase public investment in less-developed areas. However, we suspect that the efficiency of the policy is related to the level of fiscal autonomy of the subsidized government. In this paper we construct a paned data model in order to estimate the role of fiscal federalism on the effectiveness of the EU Structural Actions in enhancing public investment. We use data from the seventeen Spanish regions for the period 1993-2007. The estimation is run upon three alternative strategies: firstly we break the sample according to the level of fiscal autonomy of the units; secondly, we insert an interaction term capturing the join effect of both variables, fiscal decentralization and EU Structural Actions; finally, we estimate a simultaneous equation model in which public investment and the EU transfers are decided simultaneously. Results unambiguously support the hypothesis that the effectiveness of the Structural Funds decreases with larger decentralization. Our results suggest also that this could be due to the fact that regions find it more difficult to be eligible for additional EUSF as they gain fiscal autonomy. The general conclusions include the recommendation that the future design of the European Cohesion policy should take into account the heterogeneity of Fiscal Federalism across the Member States in order to the get the most out of it.
    Keywords: fiscal federalism, intergovernmental grants, European Union, regional policy, panel data, simultaneous equations for panels
    JEL: H72 H77 C33 C23
    Date: 2010
  12. By: Bénédicte Reynaud
    Abstract: Using a large annual data base of French firms (1994-2000), this article examines the determinants of a workforce reduction of publicly-listed and non-listed companies and their consequences on firm performance. Firstly, workforce reduction appears to be a defensive response to an adverse economic shock. However, publicly-listed firms anticipate better than the others the decision to cut jobs. Secondly, using a Difference in Differences model, the estimates indicate that there has been a very small but significant improvement in the major performance indicators of the non-listed companies. For listed-companies, the estimates are no significant.
    Date: 2010

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