nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2010‒12‒04
nineteen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Rents in the European Power Sector due to Carbon Trading. By Cruciani, Michel; Keppler, Jan Horst
  2. The Economic Impact of Upward and Downward Occupational Mobility: A Comparison of Eight EU Member States By Michele Raitano; Francesco Vona
  3. Tax reform in Europe over the next decades By Dr. Christin Lutz; Dr. Ulrike Lehr
  4. The Impact of the European Union Emissions Trading Scheme on the Finnish Economy By Seiji Ikkatai; Ikuma Kurita; Katsuhiko Hori
  5. I Would if I Could: Precarious Employment and Childbearing Intentions in Italy By Francesca Modena; Fabio Sabatini
  6. Non take up of social benefits in Greece and Spain By Matsaganis M; Levy H; Flevotomou M
  7. Globalization and inflation in Europe By Raphael Auer; Kathrin Degen; Andreas M. Fischer
  8. International outsourcing over the business cycle: some intuition for Germany, the Czech Republic and Slovakia By Sandrine Levasseur; Sandrine Levasseur
  9. The Impact of the Crisis on Employment and the Role of Labour Market Institutions By Eichhorst, Werner; Escudero, Veronica; Marx, Paul; Tobin, Steven
  10. The Spanish technnical change: A regional and a dynamic analysis (1994-2007) By Ana Karina Alfaro; José Javier Núñez Velázquez
  11. Labour market inclusion and labour market exclusion among youth in Sweden: What role does immigrant background play? By Månsson, Jonas; Delander, Lennart
  12. Legitimizing Resistanceto EU Integration: Social Europe as a Europeanized Normative Frame in the Conflictover the Bolkestein Directive By Amandine Crespy
  13. Organizational capital and firm performance. Empirical evidence for European firms By Claudia Tronconi; Giuseppe Vittucci Marzetti
  14. Disability Insurance, Population Health and Employment in Sweden By Jönsson, Lisa; Palme, Mårten; Svensson, Ingemar
  15. East Germany overtakes West Germany: recent trends in order-specific fertility dynamics By Joshua R. Goldstein; Michaela Kreyenfeld
  16. Floating European football clubs in the stock market By Michel Aglietta; Wladimir Andreff; Bastien Drut
  17. Gender equality in the European Union: lessons for democracy? By Sara Clavero; Yvonne Galligan
  18. Economic Factors in the Choice of Profession and School in the Case of Secondary Education in Prague By Vladimír Benáček
  19. Early retirement policy in the presence of competing exit pathways: Evidence from policy reforms in Finland By Tomi Kyyrä

  1. By: Cruciani, Michel; Keppler, Jan Horst
    Abstract: The European Union Emissions Trading Scheme (EU ETS) has imposed a price on the allowances for CO2 emissions of electricity companies. Integrating this allowance price into the price of electricity earns a rent for companies who have received these allowances for free. During Phase I, 2005–2007, rents corresponding to the aggregate value of allocated allowances amounted to roughly € 13 billion per year. However, due to the specific price-setting mechanism in electricity markets true rents were considerably higher. This is due to the fact that companies also that have not received any allowances gain additional infra-marginal rents to the extent that their variable costs are below the new market price after inclusion of the allowance price. Producers with low carbon emissions and low marginal costs thus also benefit substantially from carbon pricing. This paper develops a methodology to determine the specific interaction of the imposition of such a CO2 constraint and the price-setting mechanism in the electricity sector under the assumption of marginal cost pricing in a liberalized European electricity market. The article thus provides an empirical estimate of the true total rents of power producers during Phase I of the EU-ETS (2005–2007). The EU ETS generated in Phase I additional rents in excess of € 19 billion per year for electricity producers. These transfers are distributed very unevenly between different electricity producers. In a second step, the paper assesses the impact of switching from free allocation to an auctioning of allowances in 2013. We show that such a switch to auctioning will continue to create additional infra-marginal rents for certain producers and will leave the electricity sector as a whole better off than before the introduction of the EU ETS.
    Keywords: Carbon allowances; Electricity Market; European Union Carbon Trading Scheme;
    JEL: L94 Q48
    Date: 2010
  2. By: Michele Raitano (University of Rome, department of public economics); Francesco Vona (Observatoire Français des Conjonctures Économiques)
    Abstract: Recent literature agrees that the degree of intergenerational mobility substantially differs across European countries, ranked between the "mobile" Nordic countries and the "immobile" Anglo-Saxon and Southern ones. In this paper we will compare the intergenerational transmission of advantages in 8 European countries using EU-SILC dataset. Considering parental occupations as background variable, our main aims are to assess whether residual returns to background on offspring’s labour incomes persist after controlling for intermediated background-related outcomes (education and occupation) and to disentangle the role played by upward and downward occupational mobility on earnings. Our empirical analyses show that cross-country differences occur in the labour markets rather than in the educational stream. Consistently with previous findings, residual background effects on earnings are not significant in Nordic and Continental countries whereas they appear large in Anglo-Saxon and Southern ones. When the impact of backward and upward mobility is assessed, in all countries but Nordic ones penalties for upgrading emerge mostly in top occupations and are higher in less-mobile countries. These patterns are smoothened but preserved in bottom occupations and robust to different labour income measures.
    Keywords: Residual Returns to Background, Earning Impact of Occupational Mobility, International comparison, Intergenerational Inequality.
    JEL: D31 I21 J24 J31 J62
    Date: 2010–11
  3. By: Dr. Christin Lutz (GWS - Institute of Economic Structures Research); Dr. Ulrike Lehr (GWS - Institute of Economic Structures Research)
    Abstract: Study for the European Environmental Agency, Copenhagen “Tax reform in Europe over the next decades: implication for the environment, for eco-innovation and for household distribution” Task A: Eco-innovation Literature review on eco-innovation and ETR Modelling of ETR impacts with GINFORS
    Keywords: Tax, Europe
    JEL: H
    Date: 2010
  4. By: Seiji Ikkatai (Institute of Economic Research, Kyoto University); Ikuma Kurita (Institute of Economic Research, Kyoto University); Katsuhiko Hori (Institute of Economic Research, Kyoto University)
    Date: 2010–11
  5. By: Francesca Modena; Fabio Sabatini
    Abstract: This paper carries out an investigation into the socio-economic determinants of childbearing decisions made by couples in Italy. The analysis accounts for the characteristics of both 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 women’s work status (i.e. having occasional, precarious, and low-paid positions) is revealed as a significant dissuasive factor in the decision to have children. Couples in which there is an unemployed woman are less likely to plan childbearing as well. Other relevant explanatory variables are women’s age, men’s work status and education, women’s citizenship, marital status and perceived economic wellbeing.
    Keywords: Fertility, family planning, parenthood, childbearing, participation, job instability, precarious employment, Italy.
    JEL: C25 J13
    Date: 2010
  6. By: Matsaganis M; Levy H; Flevotomou M
    Abstract: Even though interest in non take up of social benefits is considerable in many European countries, the topic is under-researched in southern Europe. The paper provides preliminary estimates of the extent of non take up of two pairs of means-tested retirement benefits in Greece and Spain. The benefits examined are (i) the minimum pension supplements pensioner social solidarity benefit ΕΚΑΣ and complementos por mínimos, and (ii) the social pensions pension to uninsured elderly and pensión de jubilación no contributiva. The paper finds that non take up of social benefits in the two countries is rather extensive, examines the methodological difficulties inherent in the analysis of non take up, and concludes with a discussion of the results and their implications.
    Date: 2010–11–23
  7. By: Raphael Auer; Kathrin Degen; Andreas M. Fischer
    Abstract: What is the impact of import competition from other low-wage countries (LWCs) on inflationary pressure in Western Europe? This paper seeks to understand whether labor-intensive exports from emerging Europe, Asia, and other global regions have a uniform impact on producer prices in Germany, France, Italy, Sweden, and the United Kingdom. In a panel covering 110 (4-digit) NACE industries from 1995 to 2008, IV estimates predict that LWC import competition is associated with strong price effects. More specifically, when Chinese exporters capture 1 percent of European market share, producer prices decrease about 2 percent. In contrast, no effect is present for import competition from low-wage countries in Central and Eastern Europe.
    Keywords: International trade - Econometric models ; Labor market ; Inflation (Finance) - Euro area ; Globalization
    Date: 2010
  8. By: Sandrine Levasseur (OFCE, Research Department); Sandrine Levasseur (Observatoire Français des Conjonctures Économiques)
    Abstract: In this paper, we assess the extent to which multinational firms - in the first instance, the German ones - may adjust their international outsourcing over the business cycle in the Czech Republic and Slovakia. For that purpose, we have used monthly data of production for the manufacturing sector as a whole and some of its sub-sectors, since 2000 onwards. Our econometrical estimates suggest that there would be an asymmetry in the international outsourcing across the states of the economy, meaning that multinationals firms would be engaged differently in outsourcing activities, depending on whether bad or good economic times occur. Yet, such an asymmetry is found increasing over the time for German and French multinationals operating in the transport equipment sector of Slovakia. Another conclusion is that international outsourcing made by multinational firms in Slovakia may account for a portion of its large business cycles volatility.
    Keywords: International outsourcing, foreign direct investment, business cycles, Central and Eastern European countries, European integration.
    JEL: F21 F23 F4 L60
    Date: 2010–11
  9. By: Eichhorst, Werner (IZA); Escudero, Veronica (ILO International Labour Organization); Marx, Paul (IZA); Tobin, Steven (International Institute for Labour Studies (ILO))
    Abstract: The paper takes a comparative perspective on the labour market impact on G20 and EU countries of the financial and economic crisis that began in 2008. It starts from the observation that the decline in employment and rise in unemployment in relation to output or GDP reductions varies significantly across countries. It examines the impacts from an institutional perspective taking into account different channels of external, internal and wage flexibility determined by both the institutional arrangements in place before the crisis and discretionary reforms implemented during the crisis. Emphasis is placed on the role of permanent and temporary jobs, working time adjustment, wage flexibility and active and passive labour market policies. The paper shows that, at least for the time being, unemployment increases have been contained in countries with comparatively strong internal flexibility. At the same time, however, it appears that the crisis has – at least in some cases – contributed to a further dualization of labour markets given that risks are allocated unequally across types of employment.
    Keywords: crisis, employment, EPL, institutions, dual labour markets, flexibility
    JEL: J58 J65 J21
    Date: 2010–11
  10. By: Ana Karina Alfaro (Departamento de Estadística, Estructura y O.E.I. Universidad de Alcalá.); José Javier Núñez Velázquez (Departamento de Estadística, Estructura y O.E.I. Universidad de Alcalá.)
    Abstract: Studying wage dispersion, many researchers have found that the skill premium (the ratio of skilled workers’ wages to unskilled ones) has increased after 1979 in many developed countries, when there was a very sharp increase in the supply of skilled workers. The recent consensus is that technical change favours skilled workers, replacing tasks previously performed by the unskilled and exacerbating inequality. In the Spanish case, Nuñez and Alfaro (2009) have found evidences of a decline in the wage premium during the nineties. So, in this paper, we distinguish between skilled and unskilled workers differentiating the efficiency units of both types of workers. Moreover, we calculate the Spanish technology frontier and the technology differences between the Spanish Regions in 2006 and we analyze the evolution of the Spanish technology frontier over 1994-2007, testing the kind of technical change. In addition, a coherent Spanish wage micro-data base is achieved, using data from Eurostat: ECHP and EU-SILC.
    Keywords: Technological frontiers, technological differences, technical change, skills
    JEL: J24 O14 O33
    Date: 2010
  11. By: Månsson, Jonas (Centre for Labour Market Policy Research (CAFO)); Delander, Lennart (Centre for Labour Market Policy Research (CAFO))
    Abstract: The aim of this article is to analyse the impact of human capital variables on the probability for young people of being included in and excluded from the labour market. Of special interest is to study the causal effects of having immigrant background, controlling for other individual characteristics such as age, sex, education, being breadwinner, parental income, and parental employment. The research questions are investigated by using data from Statistics Sweden on young people’s sources and levels of income. The population consists of 18–24 year olds in the county of Kronoberg in southern Sweden. The period covered by the study is 1997–2007. We estimate the impact of individual characteristics by means of both panel data analysis and cross-section analysis. We find that there is a strong association between not having completed compulsory school and being excluded from the labour market. When control-ling for other human capital variables we can not, however, argue that being immigrant or having immigrant parents considerably increases the probability of labour market exclusion. On the other hand, our results clearly testify that having foreign-born parents reduces the probability of being included in the labour market. It can be assumed that this is a consequence of young people with immigrant parents being disadvantaged compared to native youth as regards access to a social network that can be benefited from in the job search proc-ess. Thus, immigrant background chiefly is an obstacle to being included in the Swedish labour market and of less importance for the risk of labour market exclusion. In the respects mentioned here, the results of the panel data analysis corresponds qualitatively with those of the cross-section analysis.
    Keywords: Human capital; Immigration; Labour market inclusion;
    JEL: E24
    Date: 2010–11–21
  12. By: Amandine Crespy
    Abstract: This paper deals with the conflict over the Bolkestein directive proposal on services liberalization in the European Union. It explains how left-wing political parties, unions and alterglobalist associations succeeded in changing the course of the European decision-making process. The analysis puts forward a comprehensive framework which builds on both public policy and social movement literature, and integrates the study of institutional as well as discursive explanatory factors. The identification of the causal mechanisms at stake demonstrates that two interrelated processes were crucial in legitimizing protest in the eyes of central decision-makers and national public opinions: the Europeanization of mobilization in connection with the framing of the debate as a conflict for the defence of a social Europe.
    Keywords: Europeanization; regulations; provision of services; liberalization; discourse
    Date: 2010–11–03
  13. By: Claudia Tronconi; Giuseppe Vittucci Marzetti
    Abstract: The paper assesses the impact of Organizational Capital (OC) on firm perfor- mance for a sample of European firms. OC is proxied by capitalizing an income statement item (SGA expenses). A rationale for this methodology is provided. Results are robust and show the strong effect of OC on firm performance.
    Keywords: Intangibles, Knowledge-based resources, Organizational capital,R&D capital stock, Translog production function
    JEL: C21 D24 D29 L20
    Date: 2010
  14. By: Jönsson, Lisa (Dept. of Economics, Stockholm University); Palme, Mårten (Dept. of Economics, Stockholm University); Svensson, Ingemar (Swedish Pensions Agency)
    Abstract: This paper describes the development of population health and disability insurance utilization for older workers in Sweden and analyses the relation between the two. We use three different measures of population health: (1) the mortality rate (measured between 1950 and 2009); (2) the prevalence of different types of health deficiencies obtained from Statistics Sweden’s Survey on Living Conditions (ULF, 1975-2005); (3) the utilization of health care from the inpatient register (1968–2008). We also study the development of the relative health between disability insurance recipients and non-recipients. Finally, we study the effect of the introduction of less strict eligibility criteria for older workers in 1970 and 1972 as well as the subsequent abolishment of these rules in 1991 and 1997, respectively.
    Keywords: Disability insurance; Population health
    JEL: H51 H55 I18 J26
    Date: 2010–11–25
  15. By: Joshua R. Goldstein (Max Planck Institute for Demographic Research, Rostock, Germany); Michaela Kreyenfeld (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Some 20 years after unification, the contrast between East and West Germany provides a unique natural experiment for studying the persistence of communist-era family patterns, the effects of economic change, and the complexities of the process of fertility postponement. After unification, fertility rates plummeted in the former East Germany to record low levels. The number of births per year fell 60 percent. The period total fertility rate (TFR) reached a low of 0.8. Since the middle of the 1990s, however, period fertility rates have been rising in East Germany, in contrast to the nearly constant rates seen in the West. By 2008, the TFR of East Germany had overtaken that of the West. In this paper, we explore why fertility in the East is higher than in West Germany, despite the severe economic situation in the East, whether the East German TFR will increase even further in the future, and whether the West German rate will remain at the constantly low level that has prevailed since the 1970s. This article seeks to shed some light on these questions by (a) giving an account of the persisting East-West differences in attitudes towards and constraints on childbearing, (b) conducting an order-specific fertility analysis of recent fertility trends, and (c) projecting completed fertility for the recent East and West German cohorts. In addition to using the Human Fertility Database, we draw upon Perinatal Statistics, which enable us to conduct an order-specific fertility analysis. This new data source allows us to calculate a tempo-corrected TFR for East and West Germany, which has not been available previously.
    Keywords: Germany, fertility
    JEL: J1 Z0
    Date: 2010–11
  16. By: Michel Aglietta; Wladimir Andreff; Bastien Drut
    Abstract: Since the first initial public offering of a European football (soccer) club in 1983, more than forty other clubs have experienced a venture in the stock market. In this paper, it is investigated how much relevant and successful these experiences of listing and floating football clubs at the stock exchange have been. First, by showing that investing in the Dow Jones StoXX Football index is of little attractiveness in the perspective of an investor's efficient overall asset allocation. Then in examining the determinants of a football club's fair value and the relationship between stock performances and sporting results. Finally, an approach (alternative to the Anglo-American model of capitalism) of corporate governance, based on the concept of a soft budget constraint, is applied to European football clubs taking stake of their lasting financial deficits and debts. This alternative theoretical approach paves the way for an empirical testing of a vicious circle between negotiating higher TV rights revenues and player wage inflation.
    JEL: G12 G30 G34 Z19
    Date: 2010
  17. By: Sara Clavero; Yvonne Galligan
    Abstract: The gendered nature of democratic decision-making in the EU is the focus of this paper. It outlines a theoretical model of democracy that looks at public decision-making processes through a gender lens: gender democracy. It then takes two instances of democratic decision-making in the European Union relevant to gender equality: the Goods and Services Directive and the Recast Equality Directive. Using the concept ‘gender democracy’, the paper illuminates the contingent treatment of gender interests in democratic politics at EU level.
    Keywords: democracy; directives; gender policy
    Date: 2010–11–15
  18. By: Vladimír Benáček (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: n this paper we study three crucial questions of economic decision-making: a) How are the people motivated in the choice of profession (career) and schools? This is also a decision that deals with the criteria for building the human capital of various specialisations. b) Can enterprises rely on the supply of new workers that should be qualified by skills for filling the future specialised demands of enterprises? c) Do the admissions into secondary schools, as intermediaries between the previous two, adjust to labour inputs with specific skills as required by firms? We have found by analysing the data for the agglomeration of Prague that the specialisation structure the supply of new cohort of workers (i.e. the school leavers) was highly consistent with the structure of expected demand of empoyers (i.e. enterprises). Our analysis working with 28 professional types of secondary schools in Prague reveals that the choice of school and profession depends primarily on the industrial structure of both employment opportunities and unemployment threats. As a secondary observation, the structure of new admissions to schools is related to the level of wages, profits, unemployment rates and R&D expenditures in industries. At the same time we could see that the existing official statistics about educational specialisation are insufficiently structured for serving as an efficient instrument for underpinning the labour market-dependent decision making in both families and schools.
    Keywords: education; human capital; supply and demand for working skills; employment in industries
    JEL: I21 G21
    Date: 2010–11
  19. By: Tomi Kyyrä
    Abstract: A majority of older Finns withdraw from employment via early retirement schemes years before the statutory retirement age. Over the past 15 years, a series of policy reforms have been introduced to reduce the widespread use of early exit pathways. By exploiting variation in eligibility rules between different cohorts, this study examines the effects of changes in the eligibility age thresholds for unemployment and part-time pension schemes and the effect of tightening medical criteria for disability pension eligibility. The findings imply that these reforms have jointly raised the average age at which older workers leave employment by 3.9 months. This increase is mainly due to a sharp drop in disability pension enrolment from age 58 upwards and to a lower incidence of unemployment at younger ages. The policy effects are found to be heterogeneous, so that different subgroups were affected by different reforms.
    Keywords: Early retirement, policy reform, disability, unemployment
    JEL: J26 J14
    Date: 2010–11–12

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