nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2010‒09‒25
fourteen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. The effects of national discretions on banks By Isabel Argimón; Jenifer Ruiz
  2. Quality of Education and Equality of Opportunity in Spain: Lesson from Pisa By Calo-Blanco Aitor; Villar Notario Antonio
  3. The R&D activity of multinational enterprises in peripheral economies: evidence from the EU new member states By Narula, Rajneesh; Guimon, Jose
  4. Evaluation of European electric vehicle support schemes By Kley, Fabian; Wietschel, Martin; Dallinger, David
  5. The Intra-household Division of Labor – An Empirical Analysis of Spousal Influences on Individual Time Allocation By Julia Bredtmann
  6. Aid Allocation through Various Official and Private Channels: Need, Merit and Self-Interest as Motives of German Donors By Nunnenkamp, Peter; Öhler, Hannes
  7. The Canola Oil Industry and EU Trade Integration: A Gravity Model Approach By Röttgers, Dirk; Faße, Anja; Grote, Ulrike
  8. Spatial Competition and Cooperation Effects on European Airports' Efficiency By Pavlyuk, Dmitry
  9. Electricity and telecoms reforms in the EU: Insights from the economics of federalism By Trillas, Francesc
  10. The Ins and Outs of UK Unemployment By Smith, Jennifer
  12. Measuring Intangible Capital Investment: an Application to the "French Data" By Vincent Delbecque; Laurence Nayman
  13. Analysis of Electricity Industry Liberalization in Great Britain: How Did the Bidding Behavior of Electricity Producers Change? By Sherzod N. Tashpulatov
  14. E-governmental services in the Baltic Sea Region By Lille, Maria; Prause, Gunnar

  1. By: Isabel Argimón (Banco de España); Jenifer Ruiz (European University Institute, Florence)
    Abstract: The EU's transposition of Basel II into European law has been done through the Capital Requirements Directive (CRD). Although the Directive establishes, in general, uniform rules to set capital requirements across European countries, there are some areas where the Directive allows some heterogeneity. In particular, countries are asked to choose among different possibilities when transposing the Directive, which are called national discretions (ND). The main objective of our research is to use such observed heterogeneity to gather empirical evidence on the effects on European banks of more or less stringency and more or less risk sensitivity in capital requirements. Following the approach in Barth et al. (2004, 2006, 2008) we build index numbers for groups of national discretions and applying Altunbas et al. (2007) approach, we provide evidence on their effect on banks' risk, capital, efficiency and cost. We show that more stringency and more risk sensitivity in regulation not always result in a trade off between efficiency and solvency: the impact depends on the area of national discretion on which such characteristics apply.
    Keywords: Prudential regulation, capital requirements, bank capital, risk, efficiency
    JEL: E61 G21 G28
    Date: 2010–09
  2. By: Calo-Blanco Aitor (Pablo de Olavide University; Ivie); Villar Notario Antonio (Pablo de Olavide University; Ivie)
    Abstract: This working paper analyzes the performance of the Spanish educational system according to the 2006 PISA report, focussing on the equality of opportunity. The basic idea is that a good educational system should produce outcomes that depend basically on the students effort and not on the students external circumstances (parental background here). We present a simple formula to estimate the inequality of opportunity and analyze empirically the behaviour of Spain and its constituent regions, both with respect to quality (mean scores) and with respect to the inequality of opportunity. We find that Spain performs better than the European average in terms of equality of opportunity and worse in terms of quality. We also find large and systematic differences between the Spanish regions
    Keywords: Quality of education, equality of opportunity, PISA report, regional disparities
    Date: 2010–07–01
  3. By: Narula, Rajneesh (John H. Dunning Centre for International Business, Henley Business School, University of Reading); Guimon, Jose (Department of Economic Structure and Development Economics, Faculty of Economics, Universidad Autónoma de Madrid)
    Abstract: This paper explores the impact of MNEs on innovation systems and the policy options available for peripheral economies to attract and embed the R&D activities of MNEs. After developing the conceptual and policy framework, we discuss the case of the new member states from Central and Eastern Europe that joined the EU between 2004 and 2007. We analyse the evolution of the R&D activity of MNE subsidiaries since the 1980s, contrasting the new member states with the core and Mediterranean countries of the EU. This analysis is useful to illustrate some common challenges for peripheral economies, including the difficulty of building linkages with MNEs in high value adding activities; the risk of crowding-out of domestic R&D following cross-border acquisitions; the risk of external dependency; and the limitations of protectionist policies. We recommend that governments of peripheral economies focus their efforts on fostering a demand-oriented upgrading of technological capabilities and on stimulating domestic linkages and clusters around MNEs, rather than seeking to attract supply-driven R&D.
    Keywords: European Union, FDI, investment, innovation systems, innovation policies, linkages, MNE, multinational enterprises, new member states, peripheral economies, R&D
    JEL: O32 F23 P33
    Date: 2010
  4. By: Kley, Fabian; Wietschel, Martin; Dallinger, David
    Abstract: Electric vehicles can reduce carbon dioxide emissions, increase energy efficiency, and help to reduce the dependency on oil imports. However, today's technical and economic challenges are preventing mass-market adoption. In order to create an early market and support economies of scale in production, some European countries have already established support schemes. This research study aims to provide an overview of the existing support schemes in Europe and to assess them using four criteria: effectiveness, efficiency, practicability, and political acceptance. The study concludes with an impact analysis of today's economic support schemes which considers the total costs of ownership. While one-time support schemes help to reduce the large initial investments for EVs, recurring instruments are often more effective and efficient but also smaller in volume. The comparison of the different regional incentive schemes reveals that EVs today are only economically attractive in Denmark and Norway, but at relatively high prices. Thus, regulators need to increase the volume and efficiency of the support schemes, establish high scoring instruments, and align these on a European scale. In addition, non-monetary support, e.g. free-parking, can help to overcome technical or smaller economic hurdles. --
    Date: 2010
  5. By: Julia Bredtmann
    Abstract: Regarding total working hours, including both paid and unpaid labor, hardly any diff erences between German men and women exist. However, whereas men allocate most of their time to market work, women still do most of the non-market work. Using the German Time Use Surveys 1991/92 and 2001/02, this paper aims to analyze the interactions between the time use decisions of partners within one household. Thereby, an interdependent model of the partners’ times allocated to paid and unpaid work that allows for simultaneity and endogeneity of the time allocation decisions of the spouses is applied. The results suggest that male time in market and non-market work is unaff ected by their wife’s time use, while women adjust their time allocation to the time schedule of their partner. These fi ndings might partly explain why in Germany – and other European countries as well – gender diff erences in employment and wages still persist.
    Keywords: Intra-household division of labor; time allocation; structural equation model
    JEL: J16 J22 C34
    Date: 2010–08
  6. By: Nunnenkamp, Peter; Öhler, Hannes
    Abstract: Previous literature largely ignores the heterogeneity of aid channels used by each single donor country. We estimate Tobit models to assess the relative importance of recipient need, recipient merit and self-interest of donors for various channels of official and private German aid across a large sample of recipient countries in 2005-2007. Our findings strongly underscore the need for a disaggregated analysis of aid allocation. Aid channels differ significantly in the extent to which need and merit are taken into account. Yet, the German case does not reveal unambiguously superior aid channels. Better targeted aid through some channels seems to be conditioned on political support by recipient countries in the UN General Assembly. --
    Keywords: aid allocation,aid channels,donor motives,Germany,Tobit models
    JEL: F35
    Date: 2010
  7. By: Röttgers, Dirk; Faße, Anja; Grote, Ulrike
    Abstract: Recently biodiesel has become more prominent in countries of the European Union (EU). The rapidly increasing domestic production and consumption of biodiesel is accompanied by increasing trade flows. It is questionable if these trade flows are caused mainly by EU regulations concerning trade or concerning the bioenergy sector. A sector-specific analysis taking industry patterns into consideration is necessary to evaluate the impact of these two policy areas on trade flows. A common way to analyze trade flows is the so-called gravity model, which is employed here. Because of zero-inflated trade data, the model is expanded using the Heckman approach and augmented by spatial weights and Anderson & Van Wincoop's controls for multilateral resistance. The obtained results suggest that while the mandatory biofuel blending quota has a positive impact, investment subsidies cannot be shown to have any effect and trade integration might even have a trade inhibiting effect among EU members. The surprising latter result can be explained by an exhausted domestic European market for raw and intermediate materials for biodiesel and proves stable even when controlling for sector specific variables. --
    Keywords: canola,biofuel,gravity model,trade integration
    JEL: Q17
    Date: 2010
  8. By: Pavlyuk, Dmitry
    Abstract: This paper is devoted to statistical analysis of spatial competition and cooperation between European airports. We propose a new multi-tier modification of spatial models, which allow estimating of spatial influence varying with the distance. Competition and cooperation effects don't diminish steadily with moving from a given airport, their structure is more complex. The suggested model is based on a set of distance tiers, with different possible effects inside each tier. We apply the proposed modification to the standard spatial stochastic frontier model and use it to estimation of competition and cooperation effects for European airport and airport's efficiency levels. We identify three tiers of spatial influence with different completion-cooperation ratio in each one. In the first, closest to an airport, tier we note significant advantage of cooperation effects over competition ones. In the second, more distant, tier we discover the opposite situation – significant advantage of completion effects. The last tier's airports doesn't influence significantly. In this paper we also consider some other possible applications of the proposed spatial multi-tier model.
    Keywords: spatial stochastic frontier; airport efficiency; competition; cooperation
    JEL: C51 L93 C31
    Date: 2010–08
  9. By: Trillas, Francesc (IESE Business School)
    Abstract: The economics of federalism is a broad discipline with more than five decades of experience. It may shed light on how regulatory jurisdiction is allocated in EU electricity and telecommunications markets. Specifically, this paper assesses the evolution of reform up to and including the third EU packages, which continue the liberalization and integration process in these markets. Liberalization has been accompanied by gradual harmonization of national markets to overcome resistance to competitive forces. Less steps than necessary have been undertaken to promote market integration; yet, positive and normative reasons remain for the participation of national or even regional/local powers. Vertical institutional cooperation will remain a necessary condition for a sound regulatory framework, but cooperation may sometimes be inhibited by distributive considerations.
    Keywords: federalism; regulation; electricity; telecommunications;
    JEL: H77 K23 L50 L94 L96 L97
    Date: 2010–05–07
  10. By: Smith, Jennifer (Department of Economics, University of Warwick)
    Abstract: This paper shows that in the UK, increases in unemployment in a recession are driven by rises in the separation rate. A new decomposition of unemployment dynamics is devised that does not require unemployment to be in steady state at all times. This is important because low UK transition rates – one quarter the size of the US –imply substantial deviation of unemployment from steady state near cyclical turning points. In periods of moderation, the job finding rate is shown to have most influence on UK unemployment dynamics. Evidence comes from the first study of monthly data derived from individuals’ labour market spells recorded in the British Household Panel Survey from 1988 to 2008.
    Keywords: Unemployment dynamics ; Job finding rate ; Separation rate JEL Classification: E24 ; E32
    Date: 2010
  11. By: Alfredo Marvão Pereira (Department of Economics, The College of William and Mary); Jorge M. Andraz (Faculdade de Economia, Universidade do Algarve)
    Abstract: The objective of this paper is to identify the effects of railroad infrastructure investments on aggregate and regional economic performance in Portugal. At the aggregate level, we show that railroad investments crowd in private investment and employment and have strong effects on output. At the regional level, we show that railroad investments affect private investment positively in all regions, employment in only Lisbon and North, and output in all regions with the exception of Alentejo. The effects are regionally distributed in a rather uneven manner with Lisbon and North capturing the bulk of the effects. Our results also highlight the relevance of regional spillovers. In terms of the relative effects of comparable railroad investments in the region and elsewhere in the country, we find that North and Center benefit more from investments elsewhere while the remaining regions benefit more from local investments. Finally, from a country-wide perspective, railroad investments located in Lisbon generate the largest marginal benefits, which reflect, mostly, the large effects in the Lisbon region itself. By contrast, railroad investments in the remaining regions have a much lower marginal benefit to the country but these benefits reflect mostly spillovers. This highlights the difficulty in implementing policies that simultaneously maximize aggregate growth and reduce regional disparities.
    Keywords: railroad infrastructure, public investment, regional spillovers
    JEL: C32 H54 R53
    Date: 2010–09–15
  12. By: Vincent Delbecque; Laurence Nayman
    Abstract: Following Corrado, Hulten and Sichel (2005) this paper investigates French spending in intangible capital. In this work, we tackle two issues. First, working on national accounting data we sharply investigate the data sources, using detailed supply & use tables taken from the French national accounts. Second, referring to different fields in the economic literature, we deepen the analysis and the measurement methods that have been used recently in the empirical literature. We are then able to assess more accurately the items of interest. We estimate that French intangible GFCF could be valued for the whole economy between 8% and 9% of GDP in 2004 and between 6% and 7% for the business sector.
    Keywords: Intangible capital investment; national accounts; methodology; productivity; growth
    JEL: E22 B40 C82 O47
    Date: 2010–09
  13. By: Sherzod N. Tashpulatov
    Abstract: Promoting competition among electricity producers is crucial for ensuring allocative efficiency and lower electricity prices. In this paper, I empirically examine the electricity market of England and Wales in order to analyze to what extent the regulatory reforms were successful in promoting competition among electricity producers during 1995-2000. This research provides further evidence of the effects of the reforms undertaken by the regulatory authority during the liberalization process and could be also of interest to countries that created their wholesale electricity markets similar to the original model of the England and Wales wholesale electricity market.
    Keywords: liberalization; electricity markets; uniform price auction; market power
    JEL: D21 D44 L90 L94
    Date: 2010–09
  14. By: Lille, Maria; Prause, Gunnar
    Abstract: This paper will present results of the surveys and new trends which were related to e-governmental issues. A common understanding of e-government is usage of ICT means in the public sector for delivering information and services to its customers and enterprises. The objective is improvement of public services and strengthening democratic processes. E-government is a popular topic in the political agenda throughout the Baltic Sea Region (BSR) with all countries having ICT development strategies, policies or agendas. However, often are missing goals for thematic developments which would take into account the needs of potential users. The structure of the paper is ordered to present firstly, the overall objectives of e-governance and e-services. Secondly, the data about the satisfaction level of enterprises for e-services is given. As there are not many comparable results available about the needs of the enterprises, the paper is based on two main sources. One of the important outcomes of the LogOn Baltic project was to provide empirical data about satisfaction level of enterprises with existing eservices and about the needs for new services. The aim of the INTERREG III B project LogOn Baltic was to present solutions for improving the interplay between Logistics and Information and Communication Technologies (ICT) competence and spatial planning, strengthening the small and medium-sized enterprises' (SMEs) competitiveness in the BSR. The ICT-related results of the LogOn Baltic project provide an overview of the existing ICT structures and services in the BSR, mainly based on a web-based scientific survey with nearly 1,100 responses. A second source is the survey on the satisfaction level with public services among enterprises in Estonia in the City of Tallinn, which shows similar trends with the LogOn Baltic project. The third part of the paper introduces some case studies on innovative e-services in Estonia and Germany together with the European initiative for the BSR to improve e-services for companies. --
    JEL: L86 L96 R58
    Date: 2009

This nep-eur issue is ©2010 by Giuseppe Marotta. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.