nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2010‒06‒26
fourteen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Economic downturn and stress testing European welfare systems By Figari F; Salvatori A; Sutherland H
  2. Asymmetric Competition in the Setting of Diesel Excise Taxes in EU Countries By Laszlo Paizs
  3. Knowledge diffusion and innovation policies within the European regions: Challenges based on recent empirical evidence By Corinne Autant-Bernard; Nadine Massard; Muriel Fadairo
  4. EUAs and CERs : moving in lockstep ?. By Hervé-Mignucci, Morgan; Chevallier, Julien; Alberola, Emilie; Mansanet-Bataller, Maria
  5. Human Development in Europe By Kitty Stewart
  6. Crime and Immigration: Evidence from Large Immigrant Waves By Bell, Brian; Machin, Stephen; Fasani, Francesco
  7. Female Labour Supply and Divorce: New Evidence from Ireland By Bargain, Olivier; González, Libertad; Keane, Claire; Özcan, Berkay
  8. Ethnic parity in labour market outcomes for benefit claimants in Great Britain By Claire Crawford; Lorraine Dearden; Alice Mesnard; Barbara Sianesi; Jonathan Shaw
  9. Short-run Projections of Patterns of Job Contraction in the EU By Robert Stehrer; Terry Ward
  10. Tradable Green Certificates as a Policy Instrument? A Discussion on the Case of Poland By Christoph Heinzel; Thomas Winkler
  11. Wage-setting Behavior in France: Additional Evidence from an Ad-hoc Survey By Montornès, J. Author-Name: Sauner-Leroy, J-B.
  12. The Dutch Energy Markets in 2009: Target Scenario – Obstacles – Measures By Vermeulen, Marcel; Bremer, Simon; Barfi Masihi, Vera
  13. Ranking the Schools: How Quality Information Affects School Choice in the Netherlands By Koning, Pierre; van der Wiel, Karen
  14. An analysis of the Graduate Labour Market in Finland: the impact of Spatial Agglomeration and Skill-Job Mismatches By Consoli, Davide; Vona, Francesco; Saarivirta, Toni

  1. By: Figari F (Institute for Social and Economic Research); Salvatori A (Institute for Social and Economic Research); Sutherland H (Institute for Social and Economic Research)
    Abstract: As unemployment rises across the European Union (EU) it is important to understand the extent to which the incomes of the new unemployed are protected by tax-benefit systems and to assess the cost pressures on the governments. This paper uses the EU tax-benefit model EUROMOD to explore these issues, comparing effects in five countries. It provides evidence on the differing degrees of resilience of the household incomes of the newly unemployed due to the variations in the protection offered by the tax-benefit systems, according to whether unemployment benefit is payable, the household situation of the unemployed person, and across countries.
    Date: 2010–06–17
  2. By: Laszlo Paizs (Institute of Economics - Hungarian Academy of Sciences)
    Abstract: This paper tests new implications of the asymmetric tax competition model on diesel excise taxes in the European Union (EU). I extend the standard tax competition model by replacing the unit demand assumption with iso-elastic demand. As a result, not only the level of the equilibrium tax but also the slope of the tax reaction function depends positively on the size of the country. The new implication is testable on panel data in first differences, and it is tested on a panel of 16 European countries. The results provide strong evidence for strategic interaction in the setting of diesel excises and confirm the effect of country size on the response to tax changes in neighboring countries. Strategic interaction between EU countries intensified in the mid 1990s and drove small European countries to set lower diesel tax rates. These results explain why the EU's minimum tax policy has failed to harmonize diesel tax rates across member states.
    Keywords: tax competition, minimum tax, asymmetric regions, diesel excise, European Union
    JEL: H70 H77 H87
    Date: 2010–06
  3. By: Corinne Autant-Bernard (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines); Nadine Massard (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines); Muriel Fadairo (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)
    Abstract: This article builds upon empirical results concerning localised knowledge spillovers to highlight some policy implications within European regions. The analysis emphasises the role of regional innovation policies in supporting the institutions that generate knowledge and learning. However, the variety of regional features presented in the empirical literature suggests that the search for universal policy tools is unrealistic. From this perspective, we argue that original strategies must be generated to cope with the various dilemmas faced by regional innovation policies. Such specific strategies require accurate knowledge of local features. Improving data and indicators to diagnose and monitor regional innovation is therefore presented as a key issue for policy makers
    Keywords: innovation policy ; localised knowledge flows ; European regions ; knowledge-based economy
    Date: 2010
  4. By: Hervé-Mignucci, Morgan; Chevallier, Julien; Alberola, Emilie; Mansanet-Bataller, Maria
    Keywords: European CO2 allowance; Certified Emission Reduction;
    JEL: Q52 Q56
    Date: 2009–10
  5. By: Kitty Stewart (London School of Economics and Political Science)
    Abstract: This paper examines levels and trends in human development in the 27 European Union Member States and four of the EU’s nearest neighbours (Iceland, Switzerland, Norway and Turkey). Its starting point is the UNDP Human Development Index but the paper goes beyond the HDI in three main ways. First, drawing on the Human Poverty Index, it sets countries more exacting standards for the three core elements of human development – income, health and education – by looking at progress for the bottom as well as trends in average national achievement, and by defining that progress in relation to national rather than global standards. Second, the paper provides evidence about disparities in human development on these core measures by population sub-groups (gender, geography, social class, ethnic background and migrant status). Third, the paper brings in wider aspects of human development. The three core elements might be thought of as giving people capabilities, but their ability to convert these capabilities into functionings (to lead happy and fulfilling lives, to exercise autonomy, to be active in social and political affairs) will depend not just on their individual characteristics but on the shape of the societies in which they live. The paper therefore looks at overall income equality, agency and empowerment in politics and in employment, social trust and environmental sustainability.
    Keywords: Human Development, Europe, inequality, agency, empowerment
    JEL: I00 I30 Y80
    Date: 2010–06
  6. By: Bell, Brian (London School of Economics); Machin, Stephen (University College London); Fasani, Francesco (University College London)
    Abstract: This paper examines the relationship between immigration and crime in a setting where large migration flows offer an opportunity to carefully appraise whether the populist view that immigrants cause crime is borne out by rigorous evidence. We consider possible crime effects from two large waves of immigration that recently occurred in the UK. The first of these was the late 1990s/early 2000s wave of asylum seekers, and the second the large inflow of workers from EU accession countries that took place from 2004. A simple economics of crime model, when dovetailed with facts about the relative labour market position of these migrant groups, suggests net returns to criminal activity are likely to be very different for the two waves. In fact, we show that the first wave led to a small rise in property crime, whilst the second wave had no such impact. There was no observable effect on violent crime for either wave. Nor were immigrant arrest rates different to natives. Evidence from victimization data also suggests that the changes in crime rates during the immigrant waves cannot be ascribed to crimes against immigrants. Overall, our findings suggest that focusing on the limited labour market opportunities of asylum seekers could have beneficial effects on crime rates.
    Keywords: crime, immigration
    JEL: F22 K42
    Date: 2010–06
  7. By: Bargain, Olivier; González, Libertad; Keane, Claire; Özcan, Berkay
    Abstract: If participation in the labour market helps to secure women's outside options in the case of divorce/separation, an increase in the perceived risk of marital dissolution may accelerate the increase in female labour supply. This simple prediction has been tested in the literature using time and/or spatial variation in divorce legislation (e.g., across US states), leading to mixed results. In this paper, we suggest testing this hypothesis by exploiting a more radical policy change, i.e., the legalization of divorce. In Ireland, the right to divorce was introduced in 1996, followed by an acceleration of marriage breakdown rates. We use this fundamental change in the Irish society as a natural experiment. We follow a difference-in-difference approach, using families for whom the dissolution risk is small as a control group. Our results suggest that the legalization of divorce contributed to a significant increase in female labour supply, mostly at the extensive margin. Results are not driven by selection and are robust to several specification checks, including the introduction of household fixed effects and an improved match between control and treatment groups using propensity score reweighting.
    Keywords: divorce law/fixed effects/labour supply/natural experiment/propensity score
    Date: 2010–06
  8. By: Claire Crawford (Institute for Fiscal Studies, 7 Ridgmount Street, London, WC1E 7AE; Institute of Education, University of London, 20 Bedford Way, London WC1H 0AL, UK.); Lorraine Dearden (Institute for Fiscal Studies, 7 Ridgmount Street, London, WC1E 7AE; Institute of Education, University of London, 20 Bedford Way, London WC1H 0AL, UK.); Alice Mesnard (Institute for Fiscal Studies, 7 Ridgmount Street, London, WC1E 7AE); Barbara Sianesi (Institute for Fiscal Studies, 7 Ridgmount Street, London, WC1E 7AE); Jonathan Shaw (Institute for Fiscal Studies, 7 Ridgmount Street, London, WC1E 7AE)
    Abstract: Accurate estimates of the extent of ethnic parity amongst benefit claimants are very important for policymakers who provide interventions for these groups. We use new administrative data on benefit claimants in Great Britain to document differences in labour market outcomes between Ethnic Minority and White claimants, both before and after controlling for rich observable characteristics. We do so using a variety of methods, from OLS to propensity score matching to difference-in-differences. We find that, in many cases, Minorities and Whites are simply too different for satisfactory estimates to be calculated, and that results are sensitive to the methodology used. This calls into question previous results based on simple regression techniques, which may hide the fact that observationally different ethnic groups are being compared by parametric extrapolation. For Income Support and Incapacity Benefit claimants, however, we could calculate satisfactory results. For these groups, large and significant raw penalties almost always disappear once we appropriately control for pre-inflow characteristics.
    Keywords: Non-response, bias, school survey, data linkage, PISA
    JEL: I21
    Date: 2010–06–18
  9. By: Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Terry Ward
    Abstract: As the economic recession in the EU seems to be drawing to a close, there is inevitable interest in what the effects on employment in different sectors of activity and occupations have been, or are still likely to be once all the repercussions have materialized. Indeed, given the lags in both the collection of data and, more importantly, in the effect of a downturn in output on employment, it is likely to be only some time after the recession comes to an end and economic growth gets back close to its trend rate that the consequences for jobs will be apparent in the official statistics. Although any estimates, or predictions, of this kind are fraught with difficulty and highly uncertain, it is instructive to look back at previous episodes of economic downturn to see what can be learned from them, in particular about their differential effect on different parts of the economy and on different groups of worker. This is the concern of the present study. Specifically, the aim is to examine previous downturns in the EU economies and the different consequences they had, first, for sectors of activity because of the varying nature of the goods and services produced and, second, for the different types of job within sectors. The further aim is then to use the results of this examination as the basis for constructing projections of developments in employment over the period 2008-2010 given the present forecast of the overall change in GDP. From this, the subsequent step is to consider the implications for employment in different types of job. As part of this, the concern is also to identify the kinds of job which stand to be most affected by the current downturn and the characteristics of the people at present employed in them in different parts of the EU.
    Keywords: employment projections, crisis effects, employment structures, job quality
    JEL: E17 J23 J24 J29
    Date: 2010–02
  10. By: Christoph Heinzel (Centre for Energy and Environmental Markets (CEEM) School of Economics, Australian School of Business, University of New South Wales, Sydney, Australia); Thomas Winkler (WSB Neue Energien GmbH)
    Abstract: Quota obligation schemes based on tradable green certificates have become a popular policy instrument to expand power generation from renewable energy sources (RES). Their application, however, can neither be justified as a first-best response to a market failure, nor, in a second-best sense, as an instrument mitigating distortionary effects of the emissions externality, if an emissions trading system exists that fully covers the energy industry. We study how ancillary reasons, in form of overcoming various barriers for RES use and establishing beneficial side-effects, such as industry development, energy security, and abatement of pollutants not covered under the ETS, apply to the scheme recently introduced in Poland. While setting substantial expansion incentives, an advantage for local industry or job-market development or energy security can hardly be seen. With rising power prices for end consumers and awareness that the extra rents from the schemes mostly accrue to foreign investors and renewable and polluting generators, we expect a negative impact on social acceptance for RES and RES deployment support policies.
    Keywords: tradable green certificates, environmental policy, Poland
    Date: 2010–03
  11. By: Montornès, J. Author-Name: Sauner-Leroy, J-B.
    Abstract: We investigate the wage-setting behavior of French companies using an ad-hoc survey conducted specifically for this study. Our main results are the following. i) Wages are changed infrequently. The mean duration of wage contracts is one year. Wage changes occur at regular intervals during the year and are concentrated in January and July. ii) We find a lower degree of downward real wage rigidity and nominal wage rigidity in France compared to the European average. iii) About one third of companies have an internal policy to grant wage increases according to inflation. iv) When companies are faced with adverse shocks, only a partial response is transmitted into prices. Companies also adopt cost-cutting strategies. The wage of newly hired employees plays an important role in this adjustment.
    Keywords: Wage Rigidity, Wage-setting Behavior, Survey Data.
    JEL: E24 J3
    Date: 2010
  12. By: Vermeulen, Marcel; Bremer, Simon; Barfi Masihi, Vera
    Abstract: Competition on the wholesale gas market is still in its early stages. Measures have already been put in place to eliminate some shortcomings, these are the new market model and the market-based balancing system. Both of these are the result of the Gas Letter from the Minister and the underlying TTF advice from the NMa. These measures facilitate a development towards more competition. But for a better functioning market the commitment of all market participants is required. Gasterra, the exclusive marketer of Groningen gas, has a key responsibility here. Energy suppliers should be able to obtain gas on the TTF in the required periods and quantities. Otherwise the development of the wholesale gas market will just be stalled further.
    Keywords: Monitoring, electricity, gas, competition, infrastructure
    JEL: L1 Q4
    Date: 2009–11–01
  13. By: Koning, Pierre (CPB Netherlands Bureau for Economic Policy Analysis); van der Wiel, Karen (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: This paper analyzes whether information on high school quality published by a national newspaper affects school choice in the Netherlands. For this purpose, we use both school level and individual student level data. First, we study the causal effect of quality scores on the influx of new high school students using a longitudinal school dataset. We find that negative (positive) school quality scores decrease (increase) the number of students choosing a school after the year of publication. The positive effects are particularly large for the academic school track. An academic school track receiving the most positive score sees its inflow of students rise by 15 to 20 students. Second, we study individual school choice behaviour to address the relative importance of the quality scores, as well as potential differences in the quality response between socio-economic groups. Although the probability of attending a school is affected by its quality score, it is mainly driven by the travelling distance. Students are only willing to travel about 200 meters more in order to attend a well-performing rather than an average school. In contrast to equity concerns that are often raised, we cannot find differences in information responses between socio-economic groups.
    Keywords: school quality, school choice, information, media
    JEL: I20 D10 D83
    Date: 2010–06
  14. By: Consoli, Davide; Vona, Francesco; Saarivirta, Toni
    Abstract: The recent history of Finland has been shaped by the rollercoaster of the 1990s when the economy went from deep recession to becoming among the most innovative and competitive within merely a decade. Economic recovery driven by the surge of ICT-related industries with the active support of the higher education system gave way also to growing inequalities among regions, especially within graduate workers. The paper elaborates an empirical analysis of the returns to education of a cohort entering the labour force between 1995 and 2005; our objective is to capture the extent of spatial and occupational determinants on income distribution as Finland slid from its most troubled to most prosperous times.
    JEL: R11 J24 J31
    Date: 2010–03–02

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