nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2010‒07‒31
twelve papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. World Market Impacts of High Biofuel Use in the European Union By Miguel Carriquiry; Fengxia Dong; Xiaodong Du; Amani Elobeid; Jacinto F. Fabiosa; Ed Chavez; Suwen Pan
  2. European Export Performance By Angela Cheptea; Lionel Fontagne; Soledad Zignago
  3. The importance of Intermediaries organizations in international R&D cooperation: an empirical multivariate study across Europe By Aurora A.C. Teixeira; Margarida Catarino
  4. Understanding Rising Income Inequality in Germany By Biewen, Martin; Juhasz, Andos
  5. Wages, labor or prices : How do firms react to shocks ? By Emmanuel Dhyne; Martine Druant
  6. The Effect of Part-Time Work on Post-Secondary Educational Attainment: New Evidence from French Data By Beffy, Magali; Fougère, Denis; Maurel, Arnaud
  7. The Impact of Regulation on Pricing Behavior in the Spanish Electricity Market. By Aitor Ciarreta; Maria Paz Espinosa
  8. Explaining the fall of the skill wage premium in Spain By Florentino Felgueroso; Manuel Hidalgo; SergiJiménez Martín
  10. Maßnahmesequenzen im SGB II : eine deskriptive Analyse By Dengler, Katharina; Hohmeyer, Katrin
  11. Price and wage formation in Portugal By Carlos Robalo Marques; Fernando Martins; Pedro Portugal
  12. Measuring Regional Inequality by Internet Car Price Advertisements: Evidence for Germany By Konstantin A. Kholodilin; Boriss Siliverstovs

  1. By: Miguel Carriquiry (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Fengxia Dong (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Xiaodong Du (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Amani Elobeid (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Jacinto F. Fabiosa (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Ed Chavez; Suwen Pan
    Abstract: This study examines the world market impact of an expansion in the biofuel sector in the European Union with particular focus on indirect land-use impacts. In the first scenario, an increase of 1 million tonnes oil equivalent (Mtoe) of wheat ethanol use in the European Union expands world land area used in agricultural commodity production by 366,000 hectares, representing an increase of 0.039% in total area. In the second scenario, an increase of 1 Mtoe of rapeseed oil biodiesel use in the European Union expands world land area by 352,000 hectares, representing an increase of 0.038% in total area. With additional land use somewhat close between the two scenarios, the main difference is the spatial distribution of the sources of additional supply. Because the wheat sector, especially in the European Union, is large (26.4 million hectares), when wheat use for ethanol production expands, most of the adjustment is met within the European Union, with only a 9% reduction in net exports required. In contrast, since the rapeseed sector is smaller (only 7.8 mha in the EU), 57% of additional rapeseed oil used for expanded biodiesel production is supplied from higher imports, allowing substantial adjustment by countries outside of the European Union.
    Keywords: biofuels, land use, partial equilibrium model, rapeseed oil biodiesel scenario, wheat ethanol scenario.
    Date: 2010–07
  2. By: Angela Cheptea; Lionel Fontagne; Soledad Zignago
    Abstract: Countries no longer specialise in products or sectors, but in varieties of the same product (sold at different prices). To study the way in which the European Union copes with the emergence of new big world exporters in this context, we analyse the redistribution of world market shares at the level of product variety. We distinguish for each product three price ranges. We decompose the growth of exports into structural effects (geographic and sectoral) and into a pure performance effect. From 1994 to 2007 the EU25 withstood the competition of emerging countries better than the U.S. and Japan. European market share losses arise during the 1994-2000 period, and are mainly explained by poor export performance of old member states. More precisely, the EU gains market shares in the upper segment of the market, by cumulating good performance and favourable structure effects, contrary to the U.S. and Japan which withdraw extensively from this segment of the market. Finally, all developed countries lose market shares in high-technology products to developing countries, with the EU losing less than other countries.
    Keywords: International trade; export performance; market shares; shift-share; European Union
    JEL: F12 F15
    Date: 2010–07
  3. By: Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto; OBEGEF); Margarida Catarino (IAPMEI; Faculdade de Economia, Universidade do Porto)
    Abstract: Despite the large number of publications related to business cooperation in R&D and the wide perception of the importance of intermediary institutions in the R&D cooperation process, empirical studies on its role are scarce, scattered and fragmented. Moreover, the academic work developed in this area is basically of a theoretical nature, whereas the international perspective of R&D cooperation is seldom approached. Departing from a unique database that includes 473 R&D cooperation projects developed within the 6th Framework Programme, involving firms and intermediaries from all European Union countries, this paper gauges the determinants of the importance attached to Intermediaries, through a direct survey to the organizations involved. Based on an estimation of the multivariate model, this study demonstrates that the importance given to Intermediaries depends more on project features than on the characteristics of the participating organizations. In particular, the nationality of participating organizations and the promoter emerged with a strong explanatory power: ceteris paribus, projects with at least one participant from the United Kingdom tend to assign greater importance to intermediaries in international R&D cooperation. Unambiguously, results evidence that the innovating capacity of an organization emerges (both positively and significantly) associated with a greater importance attached to Intermediaries.
    Keywords: R&D Cooperation; Intermediaries; International projects; Europe
    Date: 2010–07
  4. By: Biewen, Martin (University of Tuebingen); Juhasz, Andos (University of Tuebingen)
    Abstract: We examine the causes for rising income inequality in Europe’s most populous economy. From 2000 to 2006, Germany experienced an unprecedented rise in net equivalized income inequality and poverty. At the same time, unemployment rose to record levels and there was evidence for a widening distribution of labour market returns, as well as that of other market incomes. Other factors that possibly contributed to the rise in income inequality were changes in the tax system, changes in the household structure (in particular the rising share of single parent households), and changes in other socio-economic characteristics (e.g. age or education). We address the question of which factors were the main drivers of the observed inequality increase. Our results suggest that most of the increase can be explained by both changes in employment outcomes and in market returns, and, to a similar extent, by changes in the tax system. Changes in household structures and other household characteristics seem to have played a much smaller role. Put into an international perspective, our results suggest that rising income inequality in non-Anglo-Saxon countries is the likely result of both increasing inequality in market returns and increasing inequality in employment outcomes, as well as of idiosyncratic changes such as tax reforms.
    Keywords: unemployment, poverty, income inequality, kernel density estimation
    JEL: D31 C14 I30
    Date: 2010–07
  5. By: Emmanuel Dhyne (National Bank of Belgium, Research Department; Université de Mons); Martine Druant (National Bank of Belgium, Research Department)
    Abstract: Survey results in 15 European countries for almost 15,000 firms reveal that Belgian firms react more than the average European firm to adverse shocks by reducing permanent and temporary employment. On the basis of a firm-level analysis, this paper confirms that the different reaction to shocks is significant and investigates what factors explain this difference. Although the explanatory value of the variables is limited, most of the explanatory power of the model being associated with the dummy variables coding for firm size, sector and country, the variables investigated provide valuable information. The importance of wage bargaining above the firm level, the automatic system of index-linking wages to past inflation, the limited use of flexible pay, the high share of low-skilled blue-collar workers, the labor intensive production process as well as the less stringent legislation with respect to the protection against dismissal are at the basis of the stronger employment reaction of Belgian firms. On the contrary, employment is safeguarded by the presence of many small firms and a wage cushion
    Keywords: survey, wage rigidity, cost-push shocks, demand shock, wage bargaining institutions, indexation
    JEL: D21 E30 J31
    Date: 2010–07
  6. By: Beffy, Magali (CREST-INSEE); Fougère, Denis (CREST-INSEE); Maurel, Arnaud (ENSAE-CREST)
    Abstract: In this paper, we provide new evidence on the effect of part-time work on postsecondary educational attainment. To do so, we use samples extracted from the French Labor Force Surveys conducted over the years 1992-2002. These samples are restricted to students in initial education following university studies and preparing an Associate, a Bachelor or a Master degree. We estimate probit models with two simultaneous equations accounting for part-time working while studying and for success on the final exam, along with the decision to continue the following year in one of the models. We take the working time into account by drawing in one of the models a distinction between jobs in which more or less than 16 hours are worked per week. We use variations across departements in low-skilled youth unemployment rates and in their interactions with the father's socio-economic status in order to identify the effect of part-time work on educational attainment. Our results suggest a statistically significant and very large detrimental effect of holding a regular part-time job on graduation probability. Still, a complementary analysis shows that working while studying does not have any significant effect on the probability of continuing studies.
    Keywords: post-secondary educational attainment, students' labor supply, bivariate Probit models
    JEL: C35 I20 J24
    Date: 2010–07
  7. By: Aitor Ciarreta (Universidad del Pais Vasco); Maria Paz Espinosa (Universidad del Pais Vasco)
    Abstract: In this paper we measure the impact of regulatory measures which affected the Spanish electricity wholesale market in the period 2002-2005. Our approach is based on the fact that regulation changes firms' incentives and therefore their market behavior. In the absence of any regulation firms would choose profit- maximizing prices on their residual demands so that the observed gap between optimal and actual prices provides a measure of the effect of regulation. Our results indicate that regulation has decreased wholesale prices considerably, but became less effective at the end of the sample period which explains the change of regulatory regime introduced in 2006.
    Keywords: Regulation, electricity markets, pricing
    JEL: L11 L13 L51
    Date: 2010–07–21
  8. By: Florentino Felgueroso; Manuel Hidalgo; SergiJiménez Martín
    Abstract: The main purpose of this work is to document the driven forces of the fall in the wage skill premium (WSP) in Spain in the last two decades. We show that the increase of occupational mismatch helps to explain the downward trend in university returns since the mid-80s. In the second part of the 90s and during the last decade, the decrease of labor market experience and firm tenure among well-matched workers, due to the extensive use of temporary contracts, also contributes to explain the fall of the WSP.
    Date: 2010–07
  9. By: Renaud Bourlès (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Gilbert Cette (BDF - banque de france - Banque de France, DEFI - Université de la Méditerranée - Aix-Marseille II); Jimmy Lopez (BDF - banque de france - Banque de France); Jacques Mairesse (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique); Giuseppe Nicoletti (Economics Departement - OECD)
    Abstract: The paper focuses on the influence of upstream competition for productivity outcomes in downstream sectors. This relation is illustrated with a neo-Schumpeterian theoretical model of innovation (Aghion et al., 1997) with market imperfections in the production of intermediate goods. In this context, upstream market imperfections create barriers to competition in downstream markets and upstream producers use their market power to share innovation rents sought by downstream firms. Thus, lack of competition in upstream markets curbs incentives to improve productivity downstream, negatively affecting productivity outcomes. We test this prediction by estimating an error correction model that differentiates the potential downstream effects of lack of upstream competition in situations close and far from the global technological frontier. We measure competition upstream with regulatory burden indicators derived from OECD data on sectoral product market regulation and the industry-level efficiency improvement and the distance to frontier variables by means of a multifactor productivity (MFP) index. Panel regressions are run for 15 OECD countries and 20 sectors over the 1985-2007 period with country, sector and year fixed effects. We find clear evidence that anticompetitive regulations in upstream sectors have curbed MFP growth downstream over the past 15 years. These effects tend to be strongest for observations (i.e. country/sector/period triads) that are close to the global technological frontier. Our results suggest that, measured at the average distance to frontier and average level of anticompetitive regulations, the marginal effect of increasing competition by easing such regulations is to increase MFP growth by between 1 and 1.5 per cent per year in the OECD countries covered by our sample. Our results are robust to changes in the way MFP and the regulatory burden indicators are constructed, as well as to variations in the sample of countries and/or sectors.
    Keywords: Productivity, Growth, Regulations, Competition, Catch-up
    Date: 2010–07–20
  10. By: Dengler, Katharina (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Hohmeyer, Katrin (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Sequential strategies of assigning persons to different subsequent programmes play an important role in the activation of unemployed people through active labour market programmes. Especially for unemployment benefit II recipients it could be necessary to participate in different programmes to achieve integration. Therefore, it is important not only to know the selectivity and effects of single programmes but also of programme sequences. This descriptive study investigates the programme sequences of unemployment benefit II recipients considering different subgroups of them. We use a sample of persons, who were registered unemployed and received unemployment benefit II on 30th September 2006. We analyse for individuals, who received permanently unemployment benefit II until the start of the first programme, in how many and in which programmes they participated and which were the most frequent combinations within nearly two years. Moreover the transition rates into the first and second programme are discussed. Last, but not least sequences of two or three programmes are analysed for different subgroups, who also participated in two or three programmes. The most frequent sequences consist of classroom trainings and One-Euro-Jobs. Results indicate that it is also important to distinguish be-tween different groups of unemployed persons. Sequences consisting of One-Euro-Jobs are often applied to groups with long duration of unemployment benefit II receipt and low education, whereas different active labour market programmes like subsidized employment schemes are provided for the better risks which participated in more than one programme. Our sample is selective: the better risks in our sample leave the unemployment benefit II receipt earlier than our bad risks (sorting effect), which are more likely to participate on two or three sequential programmes or even in longer programmes like One-Euro-Jobs." (author's abstract, IAB-Doku) ((en))
    Date: 2010–07–16
  11. By: Carlos Robalo Marques (Banco de Portugal, Research Department, Portugal.); Fernando Martins (Banco de Portugal, Research Department, Portugal.); Pedro Portugal (Banco de Portugal, Research Department, Portugal.)
    Abstract: This paper brings together empirical research on price and wage dynamics for the Portuguese economy based both on micro and macro data. As regards firms' pricing behaviour the most noticeable finding is that prices in Portugal are somewhat less flexible than in the United States but more flexible than in the Euro Area. Regarding firms' wage setting practices, we uncover evidence favouring the hypothesis of aggregate and disaggregate wage flexibility. Despite the existence of mandatory minimum wages, the presence of binding wage floors and the general use of extension mechanisms, the firms still retain some ability to circumvent collective agreements via the mechanism of the wage cushion. The evidence also suggests that Portuguese wages behave in a fashion consistent with the wage curve literature, but the responsiveness of real wages to unemployment changes may have declined over the last decade. JEL Classification: C42, D40, E31, J30.
    Keywords: Survey data, wage and price rigidities, persistence, wage cushion.
    Date: 2010–07
  12. By: Konstantin A. Kholodilin; Boriss Siliverstovs
    Abstract: We suggest to use Internet car sale price advertisements for measuring economic inequality between and within German regions. Our estimates of regional income levels and Gini indices based on advertisements are highly, positively correlated with the official figures. This implies that the observed car prices can serve as a reasonably good proxy for income levels. In contrast to the traditional measures, our data can be fast and inexpensively retrieved from the web, and more importantly allow to estimate Gini indices at the NUTS2 level-something that never has been done before. Our approach to measuring regional inequality is a useful alternative source of information that could complement officially available measures.
    Keywords: Car price advertisements, economic inequality, German NUTS1 and NUTS regions, Gini index, Internet
    JEL: C21 O47 R11
    Date: 2010

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