nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2010‒12‒18
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Labor Institutions and their Impact on Shadow Economies in Europe By Kamila Fialová
  2. Knowledge Production in European Union: Evidence from a National Level Panel Data By Pinto, Hugo
  3. What drives retirement income worries in Europe? A multilevel analysis. By Hershey, D.A.; Henkens, C.J.I.M.; Dalen, H.P. van
  4. Social Enterprise in Europe: Governance Models. An analysis of governance models in social enterprises through a comparative study of the legislation of eleven countries By Travaglini, Claudio; Bandini, Federica; Mancione, Kristian
  5. Earnings dynamics and inequality in the EU, 1994-2001 By SOLOGON Denisa; O’DONOGHUE Cathal
  6. Productivity growth and catch up in Europe: A new perspective on total factor productivity differences By Filippetti, Andrea; Payrache, Antonio
  7. Changes to university IPR regulations in Europe and the impact on academic patenting By Geuna Aldo; Rossi Federica
  8. Job Instability and Family Planning: Insights from the Italian Puzzle By Sabatini, Fabio
  9. Satisfaction with job and income among older individuals across European countries By Bonsang Eric; Soest Arthur van
  10. Body weight and socio-economic determinants: quantile estimations from the British Household Panel Survey By Pieroni L; Salmasi L
  12. Do cooperative R&D subsidies stimulate regional innovation efficiency? Evidence from Germany By Tom Broekel
  13. Why Higher Price Sensitivity of Consumers May Increase Average Prices: An Analysis of the European Electricity Market By Paulun, Tobias; Feess, Eberhard; Madlener, Reinhard
  14. Does importing more inputs raise exports? Firm level evidence from France By Bas, Maria; Strauss-Kahn, Vanessa
  15. Public private partnership - a way of overcoming the budget process investment restrictions in european transport infrastructure By Cernaianu, Nicolae; Achim, Marian Lucian
  16. Redistribution, work incentives and thirty years of UK tax and benefit reform By Stuart Adam; James Browne
  17. Backward linkages and the export;performance of business services.;Evidence from a sample of Italian firms By Giuliano CONTI; Alessia LO TURCO; Daniela MAGGIONI
  18. Entrepreneurship education in Italian universities: trend, situation and opportunities By Donato Iacobucci; Alessandra Micozzi
  19. Wage formation and gender wage gaps: The changing role of human capital in the Finnish technology industry By Rita Asplund; Reija Lilja
  20. Environmentally Extended Input–Output Analysis of the UK Economy: Key Sector Analysis By Shmelev, Stanislav Edward

  1. By: Kamila Fialová (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: This paper analyzes the role of labor market institutions in explaining developments of shadow economies in European countries. We use several alternative measures of the shadow sector, and we examine effects of labor institutions on shadow sector in two specific regions: new and old European Union member countries, as their respective shadow sectors exhibited a different development in the last decade. While the share of shadow economy in GDP averaged 27.7% in the new member countries in 1999-2007, the respective share in the old member states stood at 18.0% only. In our paper, we estimate effects of labor market institutions on two sets of shadow economy indicators―shadow production and shadow employment. Comparing alternative measures of the shadow sector allows more granulated analysis of the labor market institutions effects. Our results indicate that the one institution that unambiguously increases shadow economy production and employment is the strictness of employment protection legislation. Other labor market institutions―active and passive labor market policies, labor taxation, trade union density and the minimum wage setting―have less straightforward and statistically robust effects and their impact often diverge in new and old EU member countries. The differences are not robust enough, however, to allow us to reject the hypothesis of similar effect of labor market institutions in new and old EU member states.
    Keywords: labor market institutions, shadow economy, shadow employment, European Union
    JEL: J08 O17 O52
    Date: 2010–12
  2. By: Pinto, Hugo
    Abstract: The knowledge production function framework is used to understand how territories transform specific inputs into knowledge outputs. This article focuses knowledge production function estimation at European Union with twenty five member-states using a data panel analysis between 1999 and 2003. The importance of different variables in knowledge production is tested. The econometric results give relevant insights for EU decision-makers and the creation of a more integrated European Research Area and innovation cooperation within Europe.
    Keywords: Knowledge Production Function; Panel Data; European Union
    JEL: C3 O3
    Date: 2010–12–07
  3. By: Hershey, D.A.; Henkens, C.J.I.M. (Tilburg University); Dalen, H.P. van (Tilburg University)
    Date: 2010
  4. By: Travaglini, Claudio (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Bandini, Federica (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Mancione, Kristian (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)
    Abstract: One of the aspects least focused upon in studies of Social Enterprises is governance, which is crucial when defining a type of governing system that could improve its efficiency and efficacy. The need to consider both social and economic aims in the decision-making process furthermore emphasizes the importance of: stakeholder participation, accountability, and transparency. This paper explores governance through an in-depth analysis and comparison of the legislation of eleven European countries on social enterprises or social cooperatives. The countries included are: Belgium, Finland, France, Greece, Italy, Latvia, Lithuania, Poland, Portugal, Spain, Latvia and the United Kingdom.
    Keywords: Social Enterprise; Europe; Governance Models
    Date: 2010–05–19
  5. By: SOLOGON Denisa; O’DONOGHUE Cathal
    Abstract: Relying on a consistent cross-national comparative data set – ECHP, we explore the extent to which changes in cross-sectional earnings inequality in 14 EU countries over the period 1994 and 2001 reflect an increase in lifetime earnings inequality or in earnings instability. Equally weighted minimum distance methods are used to estimate the covariance structure of earnings and decompose earnings inequality into its permanent and transitory components. The increase in inequality reflects an increase in lifetime earnings inequality in four countries, and in earnings instability in two countries. Decreases in inequality reflect decreases in earnings instability in four countries, in lifetime inequality in two, and in both in rest.
    Keywords: earnings; inequality earnings dynamics; permanent inequality; transitory inequality; minimum distance estimation
    JEL: C23 D31 J31
    Date: 2010–11
  6. By: Filippetti, Andrea; Payrache, Antonio
    Abstract: This paper investigates the relative contribution of capital deepening and total factor productivity (TFP) as drivers of labour productivity growth and catch up in Europe. Proxies for technological capabilities (technology gap) are introduced which allow to explain differences in TFP. Using a conditional Malmquist nonparametric approach, we find that capital deepening and TFP respectively account for around 53% and 47% of labour productivity growth respectively. Further, change in technological capabilities explains 71% of change in TFP, making a substantial contribution to catch up. Different patterns arise between industrialized and catching-up countries. Our results support the scope for innovation policy, technology diffusion and education policy to explain growth and convergence in labour productivity across Europe.
    Keywords: labour productivity growth; technological capabilities; EU policies; Malmquist TFP
    JEL: O47 E23 O33
    Date: 2010–12–07
  7. By: Geuna Aldo; Rossi Federica (University of Turin)
    Abstract: Most European countries since the end of the 1990s have been moving away from inventor ownership of patent rights towards different systems of institutional ownership. This shift is based on the objectives of policymakers to make conditions similar to those in the US, where the 1980 Bayh–Dole Act allows universities to retain intellectual property rights (IPR) over inventions that come out of federally funded research. This article challenges the view that direct comparisons with US experience will enable us to predict the effects of the implementation of institutional IPR ownership systems in Europe. We provide an overview of the current state of regulation on academic patent ownership in selected European countries which shows that, despite the changes to institutional ownership that have been implemented, there is wide diversity in national systems and several important differences with the US framework. Our analysis of patterns of ownership of academic patents shows that there has not been a general increase in university patenting since 1990, and seeming increases may be due to more complex dynamics in academic patenting and academic patents ownership. The paper concludes with a discussion of how changes in IPR regulations and management of technology transfer by universities, and public policies supporting technology transfer are affecting academic patenting and research activities in universities
    Date: 2010–11
  8. By: Sabatini, Fabio (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)
    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 precariousnes; social capital; Italy
    JEL: C25 J13
    Date: 2010–03–03
  9. By: Bonsang Eric; Soest Arthur van (METEOR)
    Abstract: Using data on individuals of age 50 and older from 11 European countries, we analyze two economic aspects of subjective well-being of older Europeans: satisfaction with household income, and job satisfaction. Both have been shown to contribute substantially to overall well-being (satisfaction with life or happiness). We use anchoring vignettes to correct for potential differences in response scales across countries. The results highlight a large variation in self-reported income satisfaction, which is partly explained by differences in response scales. When differences in response scales are eliminated, the cross country differences are quite well in line with differences in an objective measure of purchasing power of household income. There are common features in the response scale differences in job satisfaction and income satisfaction. French respondents tend to be critical in both assessments, while Danish and Dutch respondents are always on the optimistic end of the spectrum. Moreover, correcting for response scale differences decreases the cross-country association between satisfaction with income and job satisfaction among workers.
    Keywords: labour economics ;
    Date: 2010
  10. By: Pieroni L (Department of Economics Finance and Statistics, University of Perugia); Salmasi L (Department of Economics, University of Verona)
    Abstract: This work examines the socio-economic determinants of body weight in UK by means of two recent waves from the British Household Panel Survey. Our results support some findings in the literature, but also point to new conclusions and show that quantile regression estimates are quite different from OLS ones. Among obese people, our results reveal that they are less so as male that do not spend extra-time at work or female increasing physical activity. Furthermore, smoking cessation may lead to moderate effects on weight increases only for underweight or normal-weight subjects but are not significant for obese ones.
    Date: 2010–12–13
  11. By: Tiiu Paas; Helen Poltimäe
    Abstract: This paper bridges two approaches to assess national innovation performance based on European Innovation Scoreboard (EIS) composite indicators and the analysis of the factors that may be behind these indicators. The main focus of the study is on analysing the innovation performance of the Baltic States – small countries with similar post-socialist path dependence. Our aim is to explore what factors have been most influential in developing the different levels of innovation performance in these countries, and whether these differences are also captured by innovation measurement indicators. Our analysis shows that the inability to sufficiently capture the quality of human capital, the small economy effect (i.e. high dependence on single enterprises in a sector) and data availability issues represent remarkable measurement problems. The measurement results may also be biased as a result of self-reporting indicators. This conclusion was confirmed by comparing the EIS evaluations with the results of our assessment via factor analysis. The results are robust. Estonian innovation performance seems to be ahead of the other two Baltic countries; the main causes have been the successful attraction of foreign investment, favourable tax policy and possible positive spillover effects from the Nordic neighbourhood, particularly Finland and Sweden.
    Keywords: national innovation performance, innovation measurement problems, composite indicators, the Baltic States
    JEL: O3 O1 C8 I2
    Date: 2010
  12. By: Tom Broekel
    Abstract: The paper investigates the impact of R&D subsidies on regional innovation efficiency. Building on a rich panel data set covering 270 German labor market regions and four industries, it is particularly shown that subsidies for R&D cooperation are a suitable policy measure for stimulating the innovation efficiency of regions. The empirical findings moreover suggest that regions with low innovation capacities benefit from subsidized inter-regional cooperation involving partners with diverse industrial and sectoral backgrounds. Establishing inter-regional cooperation that give access to related knowledge and skills is more important for regions with large innovation capacities.
    Keywords: innovation policy, regional innovation efficiency, R&D subsidies, cooperation networks, knowledge networks
    JEL: O18 O38 R58 R12
    Date: 2010–12
  13. By: Paulun, Tobias (Institute of Power Systems and Power Economics, RWTH Aachen University); Feess, Eberhard (Frankfurt School of Finance & Management); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: We develop a model of the European electricity market that allows analyzing the impact of consumers' price sensitivity, defined as the willingness to change energy providers, on equilibrium prices. The model is parameterized with publicly available data on total demand, marginal costs and capacity constraints of power generators. Comparably precise data on the price sensitivity is not available, so that we analyze its impact in a range of simulations. Contrary to apparently straightforward expectations, we find that a higher price sensitivity increases average prices under reasonable assumptions. The reason is that, when price sensitivity is high, the most efficient energy providers can attract sufficiently many consumers for operating at full capacity, even when price differences to their less efficient competitors are small. Hence, incentives to reduce prices are higher when the price sensitivity is low. We conclude that the widespread view that high electricity prices can (partially) be attributed to a low willingness of consumers to change their providers is flawed.
    Keywords: Electricity Market; Price Sensitivity; Heterogenous Oligopoly; Price Competition; Capacity Constraints
    Date: 2010–11
  14. By: Bas, Maria; Strauss-Kahn, Vanessa
    Abstract: Following Melitz (2003)'s seminal paper, several theoretical and empirical studies have shown that only the subset of most productive firms export. While other studies provide evidence on a positive effect of an increase in imported inputs on firms' productivity, the link between imported intermediate inputs and export scope has not been made. This paper bridges the gap by studying the impact of imported inputs on the margins of exports. We use a unique firms' level database of imports at the product (HS6) level provided by French Customs for the 1995-2005 period. Access to new varieties of inputs may increase productivity, and thereby exports, through better complementarity of inputs, transfer of technology and/or decreased inputs price index. We test for these different mechanisms by distinguishing the origin of imports (developing vs. developed countries) and constructing an exact price index a la Broda and Weinstein (2006). We find a significant impact of higher diversification and increased number of imported inputs varieties on firm's TFP and export scope. Whereas the complementarity and transfer of technology mechanisms are supported by our results, the price effect seems very limited.
    Keywords: Firm heterogeneity; imported inputs; TFP; export scope; varieties; price index; firm-level data
    JEL: F10 F12
    Date: 2010–12
  15. By: Cernaianu, Nicolae; Achim, Marian Lucian
    Abstract: One of the ways to overcome, to some extent, the budgetary restrictions on the state's financial resources for investment in transport infrastructure is a public-private partnership. Thus, we considered it useful to express our own opinions as well as reiterating the presentation of world and European experiences by experts in the field of benefits and risks of public-private partnership, and the study which useful lessons can be drawn. We are not just for copying or taking of these experiences, due to the concrete conditions of each country, but certain aspects can be adapted creatively. Consequences of non-critical acquisition strategies developed by others in other circumstances can sometimes have unforeseen negative impacts. International comparisons are useful when account is taken with caution due to both their parts, namely comparisons over time and space comparisons. Some items may be useful but that some countries have common objectives with other countries, especially those related to European integration, and that certain processes may be concurrent in two different countries.
    Keywords: Public-Private Partnership; Infrastructure Finanterea; Funding Opportunities; Lessons of the World and European experience; Expertise in public infrastructure; Risks arising from public-private partnership; Competitive Management; Quality of transport-size major effort and investment effects; Quality of transport; means of mitigating the risk of investment generated by public-private partnership
    JEL: M1 E2
    Date: 2010
  16. By: Stuart Adam (Institute for Fiscal Studies and IFS); James Browne (Institute for Fiscal Studies)
    Abstract: <p><p>Governments wishing to reduce inequality by redistributing money from the rich to the poor face the dilemma that in doing so (by increasing tax rates and means-tested benefits, for example) they reduce the incentive for individuals to increase their incomes. Policy-makers have tried to balance these objectives in different ways and, partly as a result of this, the tax and benefit system today is very different from the one that existed thirty years ago. In this paper we look at how the tax and benefit system redistributed income and affected incentives to work in 2009-10, and at the effect of tax and benefit reforms between 1978-79 and 2009-10 on the level of inequality and work incentives.</p></p>
    Date: 2010–12
  17. By: Giuliano CONTI (Universita' Politecnica delle Marche, Dipartimento di Economia); Alessia LO TURCO (Universita' Politecnica delle Marche, Dipartimento di Economia); Daniela MAGGIONI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Abstract: We provide evidence on backward linkages between downstream manufacturing sectors and the export performance of Italian business service firms. Combining input-output coefficients from the National Accounts with region-level information on the international involvement and market thickness of downstream manufacturing sectors, we build some measures of local spillovers and we test them as determinants of the business service firms' export status. Our results show that the export activity of downstream manufacturing sectors is positively related to the services firms' probability of exporting to the same foreign market. Also downstream market thickness bears the same positive effect, even if the latter turns to be non-significant for KIBS sectors. Finally, our evidence confirms that the scope of export spillovers is essentially local.
    Keywords: Services, back-ward linkages, firms' internationalisation, spillovers
    JEL: F14 L25 L80
    Date: 2010–12
  18. By: Donato Iacobucci (Dipartimento di Ingegneria Informatica, Gestionale e dell’Automazione, Università Politecnica delle Marche); Alessandra Micozzi (Dipartimento di Ingegneria Informatica, Gestionale e dell’Automazione, Università Politecnica delle Marche)
    Abstract: The aim of this paper is to provide an analysis of the present situation and recent evolution in entrepreneurship courses and curricula in Italian universities. The analysis is based on a census of entrepreneurship courses and curricula run by Italian universities in 2004 and 2010. Entrepreneurship education in Italian universities is in its early development. Up to 2004 only a few universities had courses dedicated to entrepreneurship and the majority of them dealt with the development of the business plan. This situation has only slightly improved in the following years. Courses and curricula are mostly within business schools while very few exist in engineering and science schools. This situation contrasts with the need for entrepreneurship education in the Italian economy. Given the importance of traditional sectors in Italian industry we need to stimulate start-up in high-tech sectors: the development of entrepreneurship courses in engineering and in other science curricula could play an important role in this sense. At the same time we need to favor the growth process of small firms; this requires people who are able to play an entrepreneurial role in established firms.
    Keywords: entrepreneurship education, university courses, intrapreneurship, entrepreneurial competences.
    Date: 2010–11
  19. By: Rita Asplund; Reija Lilja
    Abstract: Both academia and policymakers express a strong belief in higher average education levels exerting a narrowing impact on wage inequality in general and gender wage gaps in particular. The present paper scrutinizes whether or not this effect extends to R&D- and export-intensive branches such as the technology industry. The answer seems to be a cautious ‘no’. Indeed, while changes in standard human capital endowments can explain little, if anything, of the growth in real wages or the widening of wage dispersion among the Finnish technology industry’s white-collar workers, a new job task evaluation scheme introduced in 2002 seems to have succeeded, at least in part, to make the wage-setting process more transparent by re-allocating especially the industry’s female white-collar workers in a way that better reflects their skills, efforts and responsibilities. One crucial implication of this finding is that improving the standard human capital of women closer to that of men will not suffice to narrow the gender wage gap in the advanced parts of the economy and, hence, not also the overall gender wage gap. The reason is obvi-ous : concomitant with rising average education levels, other skill aspects have received increasing attention in working life. Consequently, a conscious combination of formal and informal competencies as laid down in well-designed job task evaluation schemes may, in many instances, offer a more powerful path to tackling the gender wage gap.
    Keywords: decomposition, gender wage gap, human capital, job task evaluation, technology industry, wage formation
    JEL: J16 J31
    Date: 2010–12–07
  20. By: Shmelev, Stanislav Edward
    Abstract: The paper assesses the sustainability of investment in various economic sectors, with the aim of minimizing resource use and generation of emissions. The broad development focus of the paper and the potential for the proposed methodology to be applied in many different countries make it a useful methodological contribution to the global sustainability debate. The UK case is taken for illustration purposes, and (given the availability of the necessary data) this methodology could be applied in countries with various economic structures and specialisations. An environmentally extended static 123-sector UK input–output model is used, linking a range of physical flows (domestic extraction, use of water, and emissions of CO2, CH4, NOx) with the economic structure of the UK. A range of environmentally adjusted forward and backward linkage coefficients has been developed, adjusted according to final demand, domestic extraction, publicly supplied and directly abstracted water, amd emissions of CO2 and NOx,. The data on the final demandadjusted and environmentally adjusted forward and backward linkage coefficients were used in a multi-criteria decision-aid assessment, employing a NAIADE method in three different sustainability settings. The assessment was constructed in such a way that each sector of the UK economy was assessed by means of a panel of sustainability criteria, maximizing economic effects and minimizing environmental effects. This type of multi-criteria analysis, applied here for the first time, could prove to be a valuable basis for similar studies, especially in the developing world, where trade-offs between economic development and environmental protection have been the subject of considerable debate.
    Keywords: input–output analysis; environmentally extended; MCDA; key sectors; sustainability; ecological economics; UK
    JEL: Q32 Q53 Q25 C67 B41 Q57
    Date: 2010–11

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