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on Microeconomic European Issues |
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Issue of 2010‒07‒24
eighteen papers chosen by Giuseppe Marotta University of Modena and Reggio Emilia |
| By: | Dalia Marin |
| Abstract: | Many people in the European Union fear that eastern enlargement has led to major job losses in 'old' member states, particularly in Austria and Germany, as the two most important neighbours of the countries that joined the EU in 2004 and 2007. Are these fears justified'To address these questions, this paper makes use of new survey data of 660 German and Austrian firms with 2,200 investment projects in eastern Europe during the period 1990-2001. The new survey data represent 100 percent of Austrian and 80 percent of German direct investment in eastern Europe. |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:bre:wpaper:439&r=eur |
| 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. |
| Keywords: | SECURITY OF SUPPLY ; NATURAL GAS SUPPLY ; EUROPE ; RUSSIA ; CAUCASUS |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00459202_v2&r=eur |
| By: | MEYER CHRISTENSEN Anna; PAVLOPOULOS Dimitris |
| Abstract: | This paper investigates the effect of institutions on the unemployment gap between immigrants and natives in 11 EU-countries. We study whether benefits provide disincentive effects as the job-search theory suggests or rather efficiency gains as alternative theories propose. Further than the existing literature, we study unemployment duration instead of unemployment incidence, we distinguish between exits to inactivity, primary and secondary employment and we use individual-level measures for unemployment benefits. We apply a competing-risk event-history model using the ECHP. Our results favour the efficiency-gains argument for granting immigrants benefits as we find that benefits reduce unemployment duration and prevent transitions into inactivity. Employment perspectives of immigrants are better when demand for low-skilled labour is high, employment protection is low and immigration policy is labour-market oriented. |
| Keywords: | Benefits; Employment protection; Event-history model; Immigrants; Low-skilled labour; Unemployment duration |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2010-04&r=eur |
| By: | Alexander Vasa |
| Abstract: | The EU Emissions Trading Scheme (EU ETS) is the main instrument to reduce greenhouse gas emissions in Europe. Subject to a country specific limit, installations in the EU ETS can use EU allowances (EUA) and certified emissions reductions (CERs) generated through the Clean Development Mechanism (CDM) to fulfil their emission reduction target. The CDM encourages and finances emission reduction projects in developing countries. The basis for the implementation of a CDM usage limit is the supplementarity criteria, which was established to ensure that developed countries only cover part of their compliance obligations with emissions reductions abroad. The CDM limits are differentiated between EU member states to cater to the different levels of emission reduction ambitions, the progress made when the limits were established and the ability of the Member State to reduce emissions. The binding limits created substantial arbitrage rents, due to the CER-EUA spread in the range of 200 million Euro for the year 2008. This paper discusses different options for the allocation of this rent. The paper finds that making the right to use CERs tradable or the regulator precommitting to buying CERs at the level of the limit reduces the inefficiencies connected to the current regulation. Auctioning these CER usage rights furthermore shifts the rents created through the CER-EUA spread to the state. Both the EU ETS and the CDM are scrutinised by academics, industry and non-governmental institutions according to their efficiency and environmental effectiveness. The debate about wind-fall profits has shown that climate policies need to be designed carefully. In light of improving the EU ETS, the use of CDM and in light of upcoming regional emissions trading schemes in other developed economies, this paper shows how CDM limits can be designed more efficiently. |
| Keywords: | Clean Development Mechanism, Emissions Trading, Climate Policy, Efficiency |
| JEL: | K23 K32 Q48 Q54 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1032&r=eur |
| By: | Christofides, Louis N. (University of Cyprus); Polycarpou, Alexandros (University of Cyprus); Vrachimis, Konstantinos (University of Cyprus) |
| Abstract: | We consider and attempt to understand the gender wage gap across 24 EU member states, all of which share the objective of gender equality, using 2007 data from the European Union Statistics on Income and Living Conditions. The size of the gender wage gap varies considerably across countries and selection corrections affect the offered gap, sometimes substantially. Most of the gap cannot be explained by the characteristics available in this data set. Quantile regressions show that, in most countries, the wage gap is wider at the top of the wage distribution ('glass ceilings') and, in fewer countries, it is wider at the bottom of the wage distribution ('sticky floors'). These features are related to country-specific characteristics that cannot be evaluated at the member state level. We use the cross-country variation in this large sample of member states to explore the influence of (i) policies concerned with reconciling work and family life and (ii) wage-setting institutions. We find that policies and institutions are systematically related to unexplained gender wage gaps. |
| Keywords: | gender wage gap, selection, quantile effects, work-family reconciliation, wage-setting institutions |
| JEL: | J16 J31 J50 C21 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5044&r=eur |
| By: | HILDEBRAND Vincent; VAN KERM Philippe |
| Abstract: | Evidence of the association between wages and body size –typically measured by the body mass index– appears to be sensitive to estimation methods and samples, and varies across gender and ethnic groups. One factor that may contribute to this sensitivity is the non-linearity of the relationship. This paper analyzes data from the European Community Household Panel survey and uses semi-parametric techniques to avoid functional form assumptions and assess the relevance of standard models. If a linear model for women and a quadratic model for men fit the data relatively well, they are not entirely satisfactory and are statistically rejected in favour of semiparametric models which identify patterns that none of the parametric specifications capture. Furthermore, when we use height and weight in the models directly, rather than equating body size with the body mass index, the semi-parametric models reveal a more complex picture with height having additional effects on wages. We interpret our results as consistent with the existence of a wage premium for physical attractiveness rather than a penalty for unhealthy weight. |
| Keywords: | Body Mass Index; Obesity; Wages; Partial linear models; ECHP |
| JEL: | C14 J31 J71 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2010-09&r=eur |
| By: | Maryla Maliszewska; Elena Jarocinska; Milan Scasny |
| Abstract: | The EU-Russia Partnership and Cooperation Agreement, which entered into force in 1997 foresees the possible establishment of a free trade area (FTA) between the parties. The aim of our study is to evaluate the possible economic, social and environmental impact of such a free trade agreement between the European Union and Russia. The results of the analysis indicate that an EU-Russia FTA will be beneficial to the Russian Federation and the EU27. Some sectors are expected to contract in the medium term, but their importance in total output is small. Over the long run, the majority of sectors in Russia are expected to expand, while only a few sectors in the EU27 are expected to register negligible decreases in output. We estimate that welfare losses from the environmental damages would be very small for Russia (possibly even smaller due to the implementation of greener technologies), and negligible for the EU. Despite some significant negative medium-term social implications in selected sectors in Russia, the overall increase in economic activity and wages, coupled with likely domestic policies aiming at easing the impact of transitional unemployment, are expected to allow for the overall reduction in poverty rates. Overall, the results show that significant welfare gains (2.24% of GDP for Russia) would accrue from the deep FTA scenario involving a significant reduction of NTBs along with additional flanking measures, particularly on competition, IPR protection and corruption, which would help re-branding of Russia as a safe and attractive investment location. Also a number of countries such as Finland, Ireland, Netherlands, Denmark, Estonia, Slovakia, Slovenia and Sweden are expected to see their welfare increase by around 0.5% of GDP. |
| Keywords: | free trade agreement, WTO accession, European Union, Russian Federation, labor market, environment, NTBs, CGE |
| JEL: | F12 F15 F16 F17 F18 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:sec:cnrepo:0093&r=eur |
| By: | Giannelli, Gianna Claudia (University of Florence); Mangiavacchi, Lucia (Universita de les Illes Balears); Piccoli, Luca (Paris School of Economics) |
| Abstract: | This study estimates the size and value of unpaid family caretaking activities at a European level. While at a country level several studies are available, a comprehensive evaluation for Europe as a whole was missing so far, mainly due to data limitations. This paper fills this gap using a method that merges the information of an EU household survey (EU-SILC) with a time use survey (HETUS). Monetary values of unpaid family domestic work and unpaid family childcare work are obtained applying both the opportunity cost and the market replacement approaches. For Europe as a whole, the total value of these activities ranges between 20.1 per cent and 36.8 per cent of the EU GDP, depending on the applied methodology. The national values of these activities are discussed and an interpretation of the country differentials in the family caretaking gender gaps is given in terms of differences in culture, economic development and welfare state. |
| Keywords: | unpaid domestic work, family care work, gender inequality, opportunity cost, market replacement approach |
| JEL: | D19 J16 R20 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5046&r=eur |
| By: | Eichhorst, Werner (IZA); Marx, Paul (IZA) |
| Abstract: | The paper compares employment structures in five Continental welfare states. These countries feature broad similarities in their reliance on a more dualised model of labour market flexibility, particularly in service occupations with low skill requirements. However, a closer look also reveals considerable differences between national patterns of standard and non-standard work. In Germany (and to a lesser extent Austria), marginal part-time provides a fertile ground for low-paid service jobs, as non-wage labour costs are minimised. In France, fixed-term contracts are a flexible and also cheaper alternative to permanent contracts, especially for younger workers. Dutch service sector employers follow an eclectic approach, as can be seen from high shares of self-employed and part-timers, as well as temporary workers. Finally, Belgium has large proportions of very low-skilled, own-account self-employed and involuntary fixed-term contracts. On the basis of these results, we identify four transformative pathways towards a more inclusive or flexible labour market: growing wage dispersion, defection from both permanent full-time employment as well as from dependent employment, and government-sponsored labour cost reductions. |
| Keywords: | labour market dualisation, Continental Europe, fixed-term contracts, part-time work, wage dispersion |
| JEL: | J38 J41 J21 J58 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5035&r=eur |
| By: | Francesco Bosello (Fondazione Eni Enrico Mattei, University of Milan and Euromediterranean Center for Climate Change (CMCC)); Ramiro Parrado (Fondazione Eni Enrico Mattei and Euromediterranean Center for Climate Change (CMCC)); Renato Rosa (Fondazione Eni Enrico Mattei and Euromediterranean Center for Climate Change (CMCC)) |
| Abstract: | Illegal logging is widely recognized as a major economic problem and one of the causes of environmental degradation. Increasing awareness of its negative effects has fostered a wide range of proposals to combat it by major international conservation groups and political organizations. Following the 2008 US legislation which prohibits the import of illegally harvested wood and wood products, the European Union (EU) is now discussing a legislation proposal which would ban illegal timber from the EU market. In this study we use the ICES computable general equilibrium model to estimate the reallocation of global demand and timber imports following the pending EU legislation. With this exercise our final objective is to assess the economic impacts and measure the potential emission reduction resulting from the introduction of this type of policy. Results show that while the EU ban does not seem particularly effective in reducing illegal logging activities, its main effect will be the removal of illegal logs from the international markets. In addition, the unilateral EU ban on illegal logs increases secondary wood production in illegal logging countries as their exports become relatively more competitive. Through this mechanism, part of the banned, illegal timber will re-enter the international trade flows, but it will be “hidden” as processed wood. This effect is, however, limited. Finally, given the limited effect on overall economic activity, effects on GHG emissions are also limited. Direct carbon emissions from logging activities can decrease from 2.5 to 0.6 million tons per year. |
| Keywords: | Forestry, Illegal Logging, International Trade, Economy and Environment, Computable General Equilibrium Models |
| JEL: | D58 Q23 Q56 R13 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.67&r=eur |
| By: | Carlo Cambini (Politecnico di Torino, IMT Lucca and FEEM); Laura Rondi (Politecnico di Torino and FEEM) |
| Abstract: | This paper examines the investment and financial decisions of a sample of 92 EU regulated utilities, taking into account key institutional features of EU public utilities, such as: a) regulation by agencies with various degrees of independence; b) partial ownership of the state in the regulated firm; and c) the government’s political orientation, which may ultimately influence the regulatory climate to be either more pro-firm or more pro-consumers. Our results show that regulatory independence matters for both investment and financial decisions. Investment increases under an Independent Regulatory Agency (IRA), while ownership has no effect. Leverage also increases when the IRA is in place, especially so if the regulated firm is privately controlled. Finally political orientation does matter, as firm investment increases under more conservative (pro-firm) governments, but this effect appears to revert when the IRA is in place. |
| Keywords: | Regulated Utilities, Investment, Capital Structure, Private and State Ownership, Regulatory Independence, overnment’s Political Orientation |
| JEL: | G31 G32 L33 L51 L90 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.69&r=eur |
| By: | Valentina Iafolla (University of Ferrara); Massimiliano Mazzanti (University of Ferrara, University of Bologna and the National Research Council CERIS-CNR DSE Milan); Francesco Nicolli (University of Ferrara) |
| Abstract: | We empirically test delinking of waste dynamics with regard to economic growth and the effectiveness of environmental and specific waste-related policies, by exploiting a newly constructed, integrated waste-economic-policy dataset based on official data for the EU15 for 1995-2007. We find that absolute delinking for waste generation is far from being achieved in the EU despite fairly stringent and longstanding policy commitment that goes back to the mid 1990s, but which however is biased towards waste management and waste disposal rather than waste prevention. Policy as well as country structural factors seem to impact instead on landfill diversion. Nevertheless, country heterogeneity matters: SURE based analyses show that EU average figures often hide high variance. Their results provide food for thought for a future most comprehensive EU waste policy strategy, which is now aimed mainly at landfill diversion, within a framework strongly oriented to allowing countries to decide about the implementation of EU directives. |
| Keywords: | Waste Generation, Landfill Diversion, SUR, EU Waste Policy, Environmental Policy, Delinking |
| JEL: | C23 Q38 Q56 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.77&r=eur |
| By: | Viehmann, Johannes (Energiewirtschaftliches Institut an der Universitaet zu Koeln) |
| Abstract: | This paper conducts an empirical analysis of risk premiums in the German day-ahead Electricity Wholesale Market. We compare hourly price data of the European Energy Exchange (EEX) auction and of the continuous over-the-counter (OTC) market taking place prior to EEX. As OTC price data are not publicly available, data provided by the Energy Exchange Austria (EXAA) have been used as a snapshot of the OTC market. It has been found that market participants are willing to pay both, positive and negative premiums for hourly contracts that are significantly different from zero. The largest positive premiums were paid for evening peak hours on weekdays during winter months, the period of time with the highest electricity consumption levels of the year. By contrast, night hours on weekends featuring lowest demand levels display negative premiums. Hence, findings by Longstaff and Wang (2004) can be supported that power traders in liberalised markets behave like riskaverse rational economic agents. |
| Keywords: | Electricity trading; Risk premium; EEX |
| JEL: | L94 N74 Q41 |
| Date: | 2010–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2009_001&r=eur |
| By: | Dolores Añon Higon (ERI-CES); Miguel Manjon Antolin (Universidad Rovira i Virgili); Juan A. Mañez (ERI-CES) |
| Abstract: | In this study we analyze multinationality (domestic-based firms vs. multinationals) and foreignness (foreign vs. domestic firms) effects in the returns of R&D to productivity. We follow a two-step strategy. In the first step, we consistently estimate firm’s productivity by GMM and numerically compute the sample distribution of the R&D returns. In the second step, we use stochastic dominance techniques to make inferences on the multinationality and foreignness effects. Results for a panel of UK manufacturing firms suggest that multinationality and foreignness effects operate in an opposite way: whilst the multinationality effect enhances R&D returns, the foreignness diminishes them. |
| Keywords: | multinationals, foreignness, R&D, productivity |
| JEL: | C14 D24 F23 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:dbe:wpaper:1110&r=eur |
| By: | Anna Alberini (University of Maryland and FEEM); Milan Šcasný, Charles University Prague (Charles University Prague) |
| Abstract: | We report on the results of a survey based on conjoint choice experiments that was specifically designed to investigate the effect of context on the Value of a Statistical Life (VSL), an important input into the calculation of the mortality benefits of environmental policies that reduce premature mortality. We define “context” broadly to include i) the cause of death (respiratory illness, cancer, road traffic accident), ii) the beneficiary of the risk reduction (adult v. child), and iii) the mode of provision of the risk reduction (public program v. private good). The survey was conducted following similar protocols in Italy and the Czech Republic. When do not distinguish for the cause of death, child and adult VSL are not significantly different from one another in Italy, and the difference is weak in the Czech sample. When we distinguish for the cause of death, we find that child and adult VSLs are different at the 1% level for respiratory illnesses and road-traffic accidents, but do not differ for cancer risks. We find evidence of a “cancer premium” and a “public program premium.” In both countries, the marginal utility of income is about 20% lower among wealthier people, which makes the VSL about 20% higher among respondents with incomes above the sample average. The discount rate implicit in people‘s choices is effectively zero. We conclude that there is heterogeneity in the VSL, and that such heterogeneity is primarily driven by risk characteristics and mode of delivery of the risk reduction, rather than by individual characteristics of the respondent (e.g., income and education). For the most part, our results do not disagree with environmental policy analyses that use the same VSL for children and adults, and that apply a cancer premium. |
| Keywords: | VSL, Conjoint Choice Experiments, Mortality Risk Reductions, Cost-benefit Analysis, Forced Choice Questions |
| JEL: | I18 J17 K32 Q51 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.66&r=eur |
| By: | Tabea Bucher-Koenen (Mannheim Research Institute for the Economics of Aging (MEA)) |
| Abstract: | The German population has good financial knowledge measured on the basis of three financial literacy questions. Around 85 % of the individuals comprehend the functioning of interest and inflation. And 60 % of the individuals understand the relationship of risk and diversification. Overall around 52 % of the individuals give correct answers to all three considered ques-tions of financial literacy. Bi-variate and multivariate analyses of the relation between giving three correct answers and socio-demographic characteristics reveal that higher wealth is asso-ciated with higher levels of financial literacy. Moreover, financial literacy relates to higher levels of income and education. There is a significant difference between men and women to give three correct answers. Individuals in East and West, are equally literate, when controlling for differences in income, wealth and education. A positive correlation of financial literacy and financial decision making is identified: more literate households are more likely to save privately for their old-age and at the same time households saving privately for their old-age acquire financial knowledge to improve their investment decisions. Interestingly, the possession of a state subsidised Riester contract is related to lower levels of financial literacy than the possession of other non-subsidised forms of private old-age provision. This indicates that Riester subsidies to some extent successfully encourage individuals with lower financial knowledge to save for old-age. Nevertheless, individuals in the lowest income quintile still have very low levels of private coverage despite the high subsidies. At the same time they show the lowest levels of financial literacy. |
| JEL: | D91 D12 D14 J26 |
| Date: | 2009–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:mea:meawpa:09192&r=eur |
| By: | Fabio Sabatini (University of Trento, Euricse and University of Siena) |
| Abstract: | This paper carries out an investigation into the socio-economic determinants of couples’ childbearing decisions in Italy. Since having children is in most cases a “couple matter”, the analysis accounts for the characteristics of both the possible parents. Our results do not support established theoretical predictions according to which the increase in the opportunity cost of motherhood connected to higher female labour participation is responsible for the fall in fertility. On the contrary, the instability of the women’s work status (i.e. their being occasional, precarious, and low-paid workers) reveals to be a significant dissuasive deterrent discouraging the decision to have children. Couples with unemployed women are less likely to plan childbearing as well. Other relevant explanatory variables are current family size and the strength of family ties. |
| Keywords: | Fertility, Family Planning, Parenthood, Childbearing, Participation, Job Instability, Labour Precariousness, Social Capital, Italy |
| JEL: | C25 J13 Z1 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.90&r=eur |
| By: | Bastian Felix (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen); Oliver Woll (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen); Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen) |
| Abstract: | Natural gas storages may be valuated by applying real options theory. However it is crucial, not to ignore that most evolving gas spot markets, like the German spot market, lack of liquidity. In this context, considering storage operators as price takers does not account for interdependencies of storage operations and market prices. This paper offers a novel approach to storage valuation taking into account the effect of management decisions on market prices. The within this paper proposed methodology determines the optimal production schedule and value by determining the stochastic differential equation describing the storage value and then applying a finite difference scheme. We find that limited liquidity lowers the storage value and reduces withdrawal and injection amounts. Further, we observe decreasing reservation prices for injection and withdrawing for growing illiquidity resulting in a left shift of injection and withdrawing threshold prices. |
| Keywords: | natural gas valuation, limited liquidity |
| JEL: | D52 Q40 Q41 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:dui:wpaper:0903&r=eur |