nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2010‒10‒09
fifteen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Measures of poverty and inequality in the countries and regions of EU By Nicholas T. Longford; Maria Grazia Pittau; Roberto Zelli; Riccardo Massari
  2. Do employers support later retirement? A view from European employers. By Dalen, H.P. van; Henkens, K.
  3. Small firms captive in a box like lobsters; Causes of poor productivity performance in European business services By Henk Kox; George van Leeuwen; Henry van der Wiel
  4. Public-Private Partnerships in Europe - Before and During the Recent Financial Crisis By Kappeler, Andreas; Nemoz, Mathieu
  5. Pan-European Management of Electricity Portfolios: Risks and Opportunities of Contract Bundling By Gampert, Markus; Madlener, Reinhard
  6. Macroeconometric Evaluation of Active Labour Market Policies in Austria By Dauth, Wolfgang; Hujer, Reinhard; Wolf, Katja
  7. The Impact of Health Changes on Labor Supply: Evidence from Merged Data on Individual Objective Medical Diagnosis Codes and Early Retirement Behavior By Bent Jesper Christensen; Malene Kallestrup Lamb
  8. Satisfaction with Life in Europe By Watson, Dorothy
  9. Assimilation and Integration of Immigrants in Europe By Aleksynska, Mariya; Algan, Yann
  10. On the failure of European planning for less developed regions. The case of Calabria By Forte, Francesco; Magazzino, Cosimo; Mantovani, Michela
  11. Health, disability and pathways into retirement in Spain By Pilar García Gómez; Sergi Jiménez Martín; Judit Vall Castello
  12. Living arrangements of second generation immigrants in Spain: A cross-classified multilevel analysis By Agnese Vitali; Bruno Arpino
  13. Comparing Price Levels of Hospital Services Across Countries: Results of Pilot Study By Francette Koechlin; Luca Lorenzoni; Paul Schreyer
  14. Evidence of Class-size Effects on Bullying in Swedish Schools By Persson, Mattias; Svensson, Mikael
  15. Age norms on leaving home: Multilevel evidence from the European Social Survey By Arnstein Aassve; Bruno Arpino; Francesco C. Billari

  1. By: Nicholas T. Longford (SNTL and UPF, Barcelona, Spain); Maria Grazia Pittau (Department of Statistics, Sapienza University of Rome); Roberto Zelli (Department of Statistics, Sapienza University of Rome); Riccardo Massari (Sapienza University of Rome)
    Abstract: The European Union Survey on Income and Living Conditions (EU-SILC) is the main source of information about living standards and poverty in the member states of the European Union. It provides reliable statistics at national level but sample sizes do not allow reliable estimates at sub-national level, despite a rising demand from policy makers and local authorities. We provide a comprehensive map of median income, inequality (Gini coefficient and Lorenz curve) and poverty (poverty rates), at country and regional levels, based on the equivalized household income in all the countries in which EU-SILC is conducted. We focus on personal income distribution within regions as opposed to per capita income distribution across regions to give a deeper insight into regional disparities. Small-area estimation is applied to improve estimates in regions with small sample size. Uncertainty of such complex non-linear statistics is assessed by bootstrap methods. Household-level sampling weights are taken into account in both the estimates and their relative bootstrapped standard errors.
    Keywords: European regional economics measurement; EU-SILC; Gini coefficient; Poverty rates; Small-area estimation.
    JEL: D31 I32 R10 C13
    Date: 2010
  2. By: Dalen, H.P. van (Tilburg University); Henkens, K. (Tilburg University)
    Date: 2010
  3. By: Henk Kox; George van Leeuwen; Henry van der Wiel
    Abstract: The paper empirically investigates whether a lack of competition determines the poor productivity performance of the European business services. It uses detailed panel data for 13 EU countries over the period 2000-2005. We apply parametric and nonparametric methods to estimate the productivity frontier and subsequently explain the distance to the productivity frontier by market characteristics, entry- and exit dynamics and national regulation. We find that the most efficient scale in business services is close to 20 employees. Scale inefficiencies show a hump-shape pattern with strong potential scale economies for the smallest firms. Nonetheless, some 95% of the firms operate at a scale below the minimal optimal scale. While they are competitive in the sense that their productivities are very similar, they have strong scale diseconomies compared to the larger firms. Their scale inefficiency is persistent over time, which points to growth obstacles that hamper the achievement of scale economies. Regulation characteristics explain this inefficiency, particularly regulation-caused exit and labour reallocation costs are found to have a large negative impact on productivity performance.
    Keywords: productivity; frontier models; scale efficiency; market selection; regulation
    JEL: L1 L5 D2 L8
    Date: 2010–09
  4. By: Kappeler, Andreas (European Investment Bank, Economic and Financial Studies); Nemoz, Mathieu (European Investment Bank)
    Abstract: This paper offers an updated description of the macroeconomic and sectoral significance of PPPs in Europe - without assessing PPPs from a normative perspective. Builidng on Blanc-Brude et al. (2007), it looks at the evolution of PPPs in the EU, with a particular focus on the recent financial crisis. In 2009, PPP transactions stood at EUR 15.8 billion; a decrease of almost 50% compared to 2007. The total value of closed deals has declined more than the number of deals. At the same time, the PPP market in Europe continues to diversify across countries and sectors. In 2008, the UK share in the total number of EU-PPPs fell below 50%. In many respects, however, the reduction in the European PPP market observed during the financial crisis can be seen as a reversal of an extraordinary spike in the years preceding the crisis.
    Keywords: Public-Private Partnerships; Europe; PPP
    JEL: H54 L33 R42
    Date: 2010–07–01
  5. By: Gampert, Markus (Institute for Combustion Technology (ITV), RWTH Aachen University); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: Today’s European utilities not only focus on electricity supply, but also offer exchange-traded “structured products” or portfolio management for unbundling financial and physical risk positions. Many utilities are only able to provide these services inside of their home markets, but in the globalized economy, the need for a centrally organized pan-European portfolio management has arisen. In this paper, we analyze the problems to be overcome for establishing a European-wide bundling of electricity contracts. For this purpose, a case study based on the business perspective of RWE Supply & Trading in Central and Eastern Europe is carried out.
    Keywords: Portfolio management; Risk management; Electricity market liberalization
    JEL: L53 L94
    Date: 2010–08
  6. By: Dauth, Wolfgang (IAB, Nürnberg); Hujer, Reinhard (Goethe University Frankfurt); Wolf, Katja (IAB, Nürnberg)
    Abstract: This paper contributes to the literature on macroeconometric evaluation of active labour market policies (ALMP) by considering the regional effects on both the matching process and the job-seeker rate. We use an unique new data set on all Austrian job-seekers between 2001 to 2007 and apply GMM and Quasi-ML estimators to take into account both the simultaneity of ALMP and spatial interrelations between employment office districts. The results indicate that job schemes in the non-profit sector, wage subsidies, and apprenticeships cause particularly favourable effects on the regional matching function and the job-seeker rate.
    Keywords: evaluation, active labour market policy, dynamic panel data model, spatial econometrics
    JEL: C33 H43 J64
    Date: 2010–09
  7. By: Bent Jesper Christensen (School of Economics, Aarhus University and CREATES); Malene Kallestrup Lamb (School of Economics, Aarhus University)
    Abstract: People quit the labor force for many different reasons, voluntarily or not, through various arrangements such as unemployment benefits, disability benefits or specially designed early retirement schemes. This paper complements the existing literature by considering a large, register-based sample including objective medical diagnosis codes. We estimate detailed hazard models of duration until retirement, controlling for unobserved heterogeneity and nonparametric baseline hazards, as well as observed heterogeneity through time-varying explanatory variables. These include diagnosis codes, along with a host of demographic, labor market and financial regressors. The panel structure of the data allows following individuals year by year from the age of 50 and precisely measure changes in objectively measured health and other regressors, as well as labor market status. We consider 12 broad, mutually exclusive and exhaustive categories of health diagnoses defined by aggregation across ICD codes. The use of objective medical diagnosis codes should eliminate the justification bias due to self-reports of health, and the large sample size obtained by using register rather than survey data should mitigate the e¤ect of any remaining mismeasurement of true work incapacity. Together, these improvements should help distinguish empirically important effects of health and economic variables on retirement. We distinguish a number of alternative exit routes, in particular, disability, early retirement, unemployment, and others (including out of the labor force and welfare). We estimate both single risk models, lumping all retirement states, and competing risk specifications, including all separate exit routes. Throughout, females are included in the estimations, and we present separate results by gender. We find sizeable differences in retirement behavior across marital status, gender, labor market attachment, occupation, income, and in particular health. We find that the disability retirement exit route that requires specific medical criteria to be met is different from the early retirement route. The latter shares similarities with private pension schemes in a number of countries, including the U.S., where benefits are tied to previous wages, and employers also contribute to this retirement scheme. These differences are pronounced within labor market attachment, income, and in particular health. Furthermore, unemployment followed by early retirement is different from unemployment followed by other programs regarding marital status, gender, income, and health. These comparisons hinge on the competing risk framework. Finally, even when using objective medical diagnosis measures we still find significant effects from health on retirement. Thus, not all health impact on retirement reported in earlier literature was due to justification bias.
    Keywords: Competing risks, Duration analysis, Grouped data, Justification bias, Objective medical diagnosis codes, Retirement, Unobserved heterogeneity.
    JEL: I18 J26 C41
    Date: 2010–09–01
  8. By: Watson, Dorothy
    Keywords: europe
    Date: 2010–07
  9. By: Aleksynska, Mariya (CEPII, Paris); Algan, Yann (Sciences Po, Paris)
    Abstract: This paper documents assimilation of immigrants in European destinations along cultural, civic, and economic dimensions, distinguishing by immigrants' generation, duration of stay, and origin. Based on the European Social Survey, it suggests that assimilation may have multiple facets, and take place at different speed depending on the outcome in question. While assimilation along some economic and cultural outcomes may be correlated, such correlations are not systematic, and imply that progress on some dimensions may compensate the lack of progress on other dimensions; and also that a big discrepancy in one dimension is not necessarily a handicap, or an impediment, for assimilation on other grounds. Correlation of immigrants' outcomes and specific policies aimed at immigrants' integration are rather disparate, raising further questions regarding both their effectiveness and differentiated effect on various aspects of life.
    Keywords: assimilation, integration, migration policies, Europe
    JEL: J1 F22 Z13
    Date: 2010–09
  10. By: Forte, Francesco; Magazzino, Cosimo; Mantovani, Michela
    Abstract: This study analyzes the negative performance of Calabria’s Regional Program 2000-2006, for the enhancement of cultural goods to attract tourism, as an example of the waste of resources of EU ambitious planning for the economic convergence. The empirical analysis shows that the variables relating to cultural sites, education sites and sites with tourism or tourism potentialities had no significance or even negative influence. The significant variables were the number of non profits present in the municipalities and the criminal hubs. The presence of cultural sites is not statistically significant in the allocation of funds to the criminal hubs, After the program the number of visitors and revenues from museum and archeological sites of Calabria lower than before while on average in Italy has had a great increase. On the other hand tourism in Calabria experienced a differential increase , in spite of the waste of the funds of the European regional policy.
    Keywords: Cultural goods; tourism; public policies; public expenditure; Southern Italy.
    JEL: R10 H41 Z10
    Date: 2010
  11. By: Pilar García Gómez; Sergi Jiménez Martín; Judit Vall Castello
    Abstract: In this paper we analyze the trends in labor force participation and transitions to benefit programs of older workers in relation to health trends as well as recent Social Security reforms. Our preliminary conclusions are pessimistic regarding the effect of health improvements on the labor market attachment of older workers since we show that despite the large improvements in the mortality rates among older individuals in Spain, the employment rates of individuals older than fifty-five remain lower than the ones observed in the late 1970s. Some caution should remain in our conclusions as the evidence on health trends is inconclusive. Regarding the effect of Social Security reforms, we find that both the 1997 and the 2002 reform decreased the stock into old-age benefits at the cost of an increased share of the participation into disability. Finally, we find that there was a significant increase in the outflow from employment into disability after the 2002 reform.
    Date: 2010–09
  12. By: Agnese Vitali; Bruno Arpino
    Abstract: Using a cross-classified multilevel modelling approach, we study the probability of living outside the parental home for second generation immigrants in Spain, a "latest-late" transition to adulthood country. We simultaneously take into account two sources of heterogeneity: the country of origin and the province of residence in Spain. Using micro-census data we are able to consider all main immigrant groups. We find that living arrangements vary extremely according to immigrants’ origin, although a geographical clustering emerges. The cultural heritage, as represented for example by the mean age at marriage in the country of origin, still plays an important role in shaping second generation immigrants’ patterns of co-residence with their parents. Even though the effect of the province of residence is less pronounced, it is not negligible. In particular, the cultural climate of the province, as measured by the proportion of cohabiting couples, is found to be influential for both immigrant and native young adults’ living arrangements.
    Keywords: cross-classified multilevel models, living arrangements, second generation immigrants, Spain, young adults
    Date: 2010–10
  13. By: Francette Koechlin; Luca Lorenzoni; Paul Schreyer
    Abstract: Health services account for a large and increasing share of production and expenditure in OECD countries but there are also noticeable differences between countries in expenditure per capita. Whether such differences are due to more services consumed in some countries than in others or whether they reflect differences in the price of services is a question of significant policy relevance. Yet, cross-country comparisons of the price of health services are rare and fraught with measurement issues. This paper presents a new set of comparative prices for hospital services in a selection of OECD countries. The data is novel in that it reflects quasi-prices (negotiated or administrative prices or tariffs) of the output of hospital services. Traditionally, prices of outputs have been compared by comparing prices of inputs such as wage rates of medical personnel. The new methodology moves away from the input perspective towards an output perspective. This should allow productivity differences between countries to be captured and paves the way for more meaningful comparisons of the volume of health services provided to consumers in the different countries. One of the key findings of the pilot study is that the price level of hospital services in the United States is more than 60 % above that of the average price level of 12 countries included in the study. Price levels turn out to be significantly below average in Korea, Israel and Slovenia.<BR>Les services de santé représentent une part importante et croissante de la production et des dépenses dans les pays de l’OCDE mais avec des différences notables entre pays dans les dépenses par habitant. Savoir si de telles différences sont dues aux quantités de services consommés dans tel ou tel pays ou reflètent des différences dans les prix des services est une question fondamentale pour mener une politique pertinente. Jusqu’à présent, les comparaisons entre pays du prix des services de santé sont rares et rendues difficiles par les problèmes de mesure. Cet article présente un ensemble de prix comparatifs pour les services hospitaliers dans une sélection de pays de l'OCDE. Ces données sont inédites car elles reflètent « les quasi-prix » (prix négociés ou réglementés ou tarifs) de la production de services hospitaliers. Traditionnellement, les prix de ces produits étaient comparés en utilisant les prix des « input » (approche par les coûts) tels que les taux de salaire du personnel médical. La nouvelle méthodologie s’écarte de cette approche pour tendre vers une approche « output ». Cela devrait permettre de saisir les différences de productivité entre les pays et d’ouvrir la voie à des comparaisons plus significatives du volume des services de santé fournis aux consommateurs dans les différents pays. Un des résultats clés de cette étude pilote est que le niveau de prix des services hospitaliers aux États -Unis est de plus de 60% supérieur au niveau de prix moyen des 12 pays inclus dans l’étude. En revanche, les niveaux de prix sont significativement plus bas en Corée, en Israël et en Slovénie.
    JEL: C43 I10 M41
    Date: 2010–07–08
  14. By: Persson, Mattias (Department of Business, Economics, Statistics and Informatics); Svensson, Mikael (Department of Business, Economics, Statistics and Informatics)
    Abstract: In this paper we estimate the effect of class-size on the prevalence of physical and verbal bullying in Swedish schools. We use self-reported individual level data from approx. 3 100 Swedish adolescents in the 9th grade (aged 15-16) regarding their experience of bullying in the school environment. The data covers 40 schools containing 159 classes. We run probit regressions, school fixed-effects probit regressions controlling for between-school endogeneity, as well as using an instrumental variable approach controlling for between- and within-school endogeneity. The results indicate, giving the same conclusion in all specifications, that bullying is not less or more prevalent in smaller classes. However, there are some results indicating that in smaller classes there is a higher probability that an adolescent self-identifies as a bully.
    Keywords: Bullying; Class-size; School; Adolescents; Sweden
    JEL: H75 I12 I21
    Date: 2010–09–08
  15. By: Arnstein Aassve; Bruno Arpino; Francesco C. Billari
    Abstract: Young people leave the parental home at different ages, and differences exist both between and within societies. To explain this heterogeneity, differences in earnings and employment, education and family formation are popular candidates. Comparative research has emphasised the importance of institutional arrangements, in particular the way state welfare systems are able to support young individuals in the transition to adulthood. It has been argued, however, that despite differences in welfare support, differences in social norms also play an important role. In this paper we make an attempt to explain the heterogeneity in individuals’ perceptions of the "age deadline" for leaving home. Using information from the third round of the European Social Survey (ESS) we implement a series of multi-level regression models where we account both for country and regional heterogeneity. The idea is that contextual variables may affect individuals’ perception of the age deadline, which in turn is likely to matter for the actual age of leaving home. Just as in the literature concerned with explaining actual behaviour, we find that strong normative differences between countries persist. We also find significant, though lower, regional variability in the analysis on the pooled set of European countries we have in our data set. Unemployment rate and education are found to have a strong role in explaining heterogeneity of norms at the country level, while religiosity influences age norms mostly at the regional level. This is consistent with the idea that "cultural" factors are important at the regional level while "structural" factors show their influence at the country level.
    Keywords: age norms, European Social Survey, leaving home, multilevel analysis
    Date: 2010–10

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