nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2011‒01‒30
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. The job creation effect of R&D expenditures By Francesco Bogliacino; Marco Vivarelli
  2. Training Policy for Youth Unemployed in a Sample of European Countries By CAROLEO, Floro Ernesto; PASTORE, Francesco
  3. High-Skilled Immigration Policy in Europe By Kahanec, Martin; Zimmermann, Klaus F.
  4. Regional Disparities in Europe By AMENDOLA, Adalgiso; CAROLEO, Floro Ermesto; COPPOLA, Gianluigi
  5. Determinants of job satisfaction across the EU-15: A comparison of self-employed and paid employees By Roy Thurik; Jolanda Hessels; José Maria Millan; Rafael Aguado
  6. Simulating security of supply effects of the Nabucco and South Stream projects for the European natural gas market By Dieckhoener, Caroline
  7. The Impact of International Trade on Labour Markets. The Case of Outward Processing Traffic between the European Union and Central Eastern European Countries By CELI, Giuseppe
  8. Tax Competition in an Expanding European Union By Ronald B. Davies; Johannes Voget
  9. Use of Time and Value of Unpaid Family Care Work: a Comparison between Italy and Poland By Francesca Francavilla,; Gianna Claudia Giannelli; Gabriela Grotkowska; Mieczyslaw W. Socha
  10. Tax-Benefit Systems in Europe and the US: Between Equity and Efficiency By Bargain, Olivier; Dolls, Mathias; Neumann, Dirk; Peichl, Andreas; Siegloch, Sebastian
  11. Ethnic Identity and Labor-Market Outcomes of Immigrants in Europe By Bisin, Alberto; Patacchini, Eleonora Patacchini; Verdier, Thierry Verdier; Zenou, Yves Zenou5
  12. Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity By Nicholas Bloom; Mirko Draca; John Van Reenen
  13. Job Search Requirements for Older Unemployed: Transitions to Employment, Early Retirement and Disability Benefits By Bloemen, Hans; Hochguertel, Stefan; Lammers, Marloes
  14. Assessing the Effectiveness of Health Care Cost Containment Measures By Nicolas R. Ziebarth
  15. Low-wage jobs: a means for employment integration of the unemployed? : evidence from administrative data in Germany and Austria By Grün, Carola; Mahringer, Helmut; Rhein, Thomas
  16. Immigrants, schooling and background. Cross-country evidence from PISA 2006 By Marina Murat; Davide Ferrari; Patrizio Frederic; Giulia Pirani
  17. Disability and social security reforms: The French case By Luc Behaghel; Didier Blanchet; Thierry Debrand; Muriel Roger
  18. Household Portfolio Choices, Health status and Health Care Systems A Cross-Country Analysis Based on SHARE By Vincenzo Atella; Marianna Brunetti; Nicole Maestas
  19. A multi-scalar analysis of European cities By Enrico Giovannetti; Francesco Pagliacci
  20. Efficient and Inefficient Welfare States By Algan, Yann; Cahuc, Pierre; Sangnier, Marc

  1. By: Francesco Bogliacino (European Commission, JRC-IPTS); Marco Vivarelli (Università Cattolica)
    Abstract: In this study we use a unique database covering 25 manufacturing and service sectors for 16 European countries over the period 1996-2005, for a total of 2,295 observations, and apply GMM-SYS panel estimations of a demand-for-labour equation augmented with technology. We find that R&D expenditures have a job-creating effect, in accordance with the previous theoretical and empirical literature discussed in the paper. Interestingly enough, the labour-friendly nature of R&D emerges in both the flow and the stock specifications. These findings provide further justification for the European Lisbon-Barcelona targets.
    Keywords: Technological change, corporate R&D, employment, product innovation, GMMSYS
    JEL: O33
    Date: 2010
  2. By: CAROLEO, Floro Ernesto (Dipartimento di Studi Economici - Università degli Studi di Napoli Parthenope); PASTORE, Francesco (Dipartimento di Discipline Giuridiche ed Economiche Italiane Europee e Comparate - Seconda Università degli studi di Napoli)
    Abstract: The aim of this paper is evaluating the impact of training on the employability of young long-term unemployed (18-24) within the EU. The analysis focuses on three countries representing different educational and training systems: Spain and Sweden are examples of a rigid and of a flexible sequential system, respectively; Germany is the best example of a dual educational and training system. Following a new wave in the literature on evaluation of employment policy, the paper attempts a target-oriented approach, as opposed to a programme-oriented approach. The effect of training on the labour market participation of young people is estimated by a multinomial LOGIT model relative to five labour market statuses: unemployment, employment, training, education and inactivity. The impact of the policy is analysed controlling for other important individual determinants, such as human and social capital endowment, the reservation wage and unemployment duration. The estimates provide little evidence in favour of a positive impact of ALMP in Spain and Germany. Only in Sweden the probability to be employed is significantly dependent on participation on training programmes. This result could be also due to the poor targeting of the policy to the weakest groups, especially in Southern European countries. It raises the issue of whether ALMP is a good instrument to fight youth unemployment and suggests a reform of the general education system could be more “effective”.
    Keywords: european employment strategy; youth unemployment; active labour market policy; europe; regional unemployment differentials
    JEL: H24 J24
    Date: 2011–01–18
  3. By: Kahanec, Martin (Central European University and IZA); Zimmermann, Klaus F. (IZA, DIW Berlin and Bonn University)
    Abstract: Whether Europe will be able to stand up to its internal and external challenges crucially depends on its ability to manage its internal mobility and inflows of international migrants. Using a unique expert opinion survey, we document that Europe needs skilled migrants, and skill mismatch is to be expected. A review of current immigration policies shows that despite a number of positive recent developments Europe lacks a consistent strategy to address this challenge effectively, paralyzed by the notion of "fortress" Europe, which we argue should be abandoned. Since significant political tensions can be expected between native actors that favor and disfavor further immigration, improving European immigration policies and procedures is a formidable challenge. This task involves the need to improve Europe's image among potential migrants, especially the high-skilled ones.
    Keywords: European Union, Europe, mobility, high-skilled migration, immigration policy
    JEL: F22 J61
    Date: 2010–12
  4. By: AMENDOLA, Adalgiso (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy); CAROLEO, Floro Ermesto (Dipartimento di Studi economici - Università degli Studi di Napoli Parthenope); COPPOLA, Gianluigi (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy)
    Abstract: In the last decades, and particularly in the Nineties, The European Economy has been widely characterised by regional disparities. This paper aims to evaluate if different regional economic structures, such as productive mix and labour market composition, contribute to this disparities and to what extent they prevent the convergence and/or favour divergent clusters of regions. To this purpose we shall apply a multivariate analysis method, named STATIS, to a set of regional characteristic indicators that will allow us to estimate some latent factors which are able to measure the regional differences and their dynamic.
    Keywords: european regional differences; multivariate analysis; STATIS
    JEL: J60 R11 R58
    Date: 2011–01–18
  5. By: Roy Thurik; Jolanda Hessels; José Maria Millan; Rafael Aguado
    Abstract: Job satisfaction of self-employed and paid-employed workers is analyzed using the European Community Household Panel for the EU-15 covering the years 1994-2001. We distinguish between two types of job satisfaction, i.e. job satisfaction in terms of type of work and job satisfaction in terms of job security. Findings from our generalized ordered logit regressions indicate that self-employed individuals as compared to paid employees are more likely to be satisfied with their present jobs in terms of type of work and less likely to be satisfied in terms of job security. The findings also provide many insights into the determinants of the two types of job satisfaction for both the self-employed and paid employees.
    Date: 2011–01–20
  6. By: Dieckhoener, Caroline (Energiewirtschaftliches Institut an der Universitaet zu Koeln)
    Abstract: Due to the increasing European import dependency, significant additional natural gas volumes will be required. In addition to the Nord Stream pipeline, the Nabucco and South Stream pipeline are projects planned for the next decade to provide further gas supplies to the European market. <p> As one of the European Union’s energy policies’ foci is security of supply, the question can be raised if and how these projects contribute to this objective not only in terms of diversification but also in case of supply disruptions such as occurred in 2009 during the Russia-Ukraine gas crisis. <p> This paper discusses the impact of these two major gas import pipeline projects on the South-Eastern Europe gas supply and analyzes their effects on gas flows and marginal cost prices in general and in case of gas supply disruptions via Ukraine in a model-based analysis with the European natural gas infrastructure and dispatch model TIGER.
    Keywords: Natural gas; security of supply; Nabucco; South Stream; Europe; linear-optimization; transport infrastructure
    JEL: C61 L95 Q34 Q41
    Date: 2010–12–27
  7. By: CELI, Giuseppe (Dipartimento di Scienze Economiche - Università di Bari)
    Abstract: In this paper we are trying to evaluate the differential impact of Outward Processing Traffic (OPT) flows with respect to the final trade flows on the labour markets of EU countries. In particular, two EU countries are investigated, Germany and Italy, because of their relevance on total EU-CEEC OPT flows and because they embody two different models of outsourcing towards CEECs. The factor content of trade (FCT) analysis conducted at both levels of inter-industry trade and intra-industry trade signals a more relevant impact of OPT flows than final flows. In particular, results suggest that the labour market effects of intra-industry trade flows deriving from the vertical disintegration of production add significantly to the estimated factor market impact of trade.
    Keywords: intra-industry trade; EU-CEEC trade; vertical disintegration; quality differentiation; labour market effects of international trade
    JEL: F14 F15
    Date: 2011–01–18
  8. By: Ronald B. Davies (Ronald B. Davies, School of Economics, University College Dublin, Newman Building (G215), Belfield, Dublin 4, Ireland); Johannes Voget (Johannes Voget, Mannheim University, Oxford University Centre for Business Taxation , CentER Tilburg University. L9,7, 68131 Mannheim, Germany)
    Abstract: This paper empirically examines whether expansion of the EU has increased international tax competition. To do so, we use a market potential weighting scheme to estimate the slope of best responses. We find robust evidence for tax competition. In particular, our estimates suggest that EU membership affects responses with EU members responding more to the tax rates of other members. This lends credence to the above noted concerns.
    Keywords: Tax Competition; Foreign Direct Investment; Spatial Econometrics
    JEL: F1 F2 H2 H7
    Date: 2010–12
  9. By: Francesca Francavilla, (Policy Studies Institute at University of Westminster); Gianna Claudia Giannelli (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Gabriela Grotkowska (University of Warsaw); Mieczyslaw W. Socha (University of Warsaw)
    Abstract: The study provides a comparison of the size and value of unpaid family care work in two European member States, Italy and Poland. A micro-data analysis is conducted using the Italian and Polish time use surveys. Both the opportunity cost and the market replacement approaches are employed to measure family care work distinguishing between childcare and care of the elderly. The comparison between the two countries reveals that Italians participate somewhat less than Poles in child care, but substantially more in elderly care, because of demographic factors. However, the main explanation of the difference in the value of unpaid family care work, which is higher in Italy, is to be attributed to the discrepancy in hourly earnings, since average earnings of Poles are about one fifth of those of Italians. The value of unpaid family care work is more comparable when computed as percentage of the national GDP. Depending on the approach, it ranges between 3.7 and 4.4 per cent of the Polish GDP and 4.1 and 5 per cent of the Italian GDP. The national values of these activities are discussed and an interpretation of the country differentials in the family caretaking gender gaps is given in terms of differences in culture, economic development and institutions.
    Keywords: Time Use, Unpaid Work, Care-giving, Child care, Elderly care, Poland, Italy
    JEL: E01 E26 J13 J14 J16 J22
    Date: 2011
  10. By: Bargain, Olivier (University College Dublin); Dolls, Mathias (University of Cologne); Neumann, Dirk (University of Cologne); Peichl, Andreas (IZA); Siegloch, Sebastian (IZA)
    Abstract: Whether observed differences in redistributive policies across countries are the result of differences in social preferences or efficiency constraints is an important question that paves the debate about the optimality of welfare regimes. To shed new light on this question, we estimate labor supply elasticities on microdata and adopt an inverted optimal tax approach to characterize the redistributive preferences embodied in the welfare systems of 17 EU countries and the US. Implicit social welfare functions are broadly compatible with the fiction of an optimizing Paretian social planner. Some exceptions due to generous demogrant transfers are consistent with the ignorance of behavioral responses by some European governments and are partly corrected by recent policy developments. Heterogeneity in leisure-consumption preferences somewhat affect the international comparison in degrees of revealed inequality aversion, but differences in social preferences are significant only between broad groups of countries.
    Keywords: social preferences, redistribution, optimal income taxation, labor supply
    JEL: H11 H21 D63 C63
    Date: 2011–01
  11. By: Bisin, Alberto (New York University); Patacchini, Eleonora Patacchini (La Sapienza University of Rome, Einaudi Institute for Economics and Finance (EIEF) and CEPR.); Verdier, Thierry Verdier (Paris School of Economics (PSE) and CEPR); Zenou, Yves Zenou5 (Dept. of Economics, Stockholm University)
    Abstract: We study the relationship between ethnic identity and labor-market outcomes of non-EU immigrants in Europe. Using the European Social Survey, we find that there is a penalty to be paid for immigrants with a strong identity. Being a first generation immigrant leads to a penalty of about 17 percent while second-generation immigrants have a probability of being employed that is not statistically different from that of natives. However, when they have a strong identity, second-generation immigrants have a lower chance of finding a job than natives. Our analysis also reveals that the relationship between ethnic identity and employment prospects may depend on the type of integration and labor-market policies implemented in the country where the immigrant lives. More flexible labor markets help immigrants to access the labor market but do not protect those who have a strong ethnic identity.
    Keywords: First and second-generation immigrants; assimilation; integration policies
    JEL: F22 J15 J61
    Date: 2011–01–18
  12. By: Nicholas Bloom; Mirko Draca; John Van Reenen
    Abstract: We examine the impact of Chinese import competition on patenting, IT, R&D and TFP using a panel of up to half a million firms over 1996-2007 across twelve European countries. We correct for endogeneity using the removal of product-specific quotas following China’s entry into the World Trade Organization. Chinese import competition had two effects: first, it led to increases in R&D, patenting, IT and TFP within firms; and second it reallocated employment between firms towards more innovative and technologically advanced firms. These within and between effects were about equal in magnitude, and appear to account for around 15% of European technology upgrading between 2000-2007. Rising Chinese import competition also led to falls in employment, profits, prices and the skill share. By contrast, import competition from developed countries had no effect on innovation. We develop a simple “trapped factor” model of innovation that is consistent with these empirical findings.
    JEL: F14 L25 L60 O33
    Date: 2011–01
  13. By: Bloemen, Hans (VU University Amsterdam); Hochguertel, Stefan (VU University Amsterdam); Lammers, Marloes (VU University Amsterdam)
    Abstract: In this paper, we use a recent policy change in the Netherlands to study how changes in search requirements for the older unemployed affect their transition rates to employment, early retirement and sickness/disability benefits. The reform, becoming effective on January 1st 2004, required the elderly to formally report their job search efforts to the employment office in order to avoid a (temporary) cut in benefits. Before the new law was passed, unemployed were allowed to stop all search activity at the moment they turned 57.5. Estimating various duration models using difference-in-difference and regression discontinuity approaches, we find that for several groups of individuals that were affected by the policy change, the stricter search requirements did significantly increase their entry rate into employment. However, we also find evidence of a higher outflow to sickness/disability insurance schemes, a presumably unwanted side-effect of the policy change.
    Keywords: duration analysis, policy evaluation, search effort, substitution
    JEL: C31 J26 J64 J68
    Date: 2011–01
  14. By: Nicolas R. Ziebarth
    Abstract: Using SOEP panel data and difference-in-differences methods, this study is the first to empirically evaluate the effectiveness of four different health care cost containment measures within an integrated framework. The four measures investigated were introduced in Germany in 1997 to reduce moral hazard and public health expenditures in the market for convalescent care. Doubling the daily copayments was clearly the most effective cost containment measure, resulting in a reduction in demand of about 20 percent. Indirect measures such as allowing employers to cut statutory sick pay or paid vacation during health spa stays did not significantly reduce demand.
    Keywords: health expenditures, cost containment measures, copayment, convalescent care, SOEP
    JEL: H51 I11 I18 J22
    Date: 2011
  15. By: Grün, Carola; Mahringer, Helmut; Rhein, Thomas (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Does the low wage sector serve as a stepping stone towards integration into better-paid jobs or at least towards integration of jobless people into employment? There is evidence for a 'low-wage trap' and for a high risk of low-wage earners to get unemployed, but this may also be due to sorting effects and not to low-wage work itself. The present paper contributes to this debate analysing employment spells of male low-wage earners who had been unemployed before, with methods of continuous-time event history analysis. The present data have been retrieved from two large administrative micro-data sources: the IAB employment sample (IABS) for Germany, and a combination of social security data from the Austrian Social Insurance Institutions. Two possible exits of low-wage spells are focused on: exits to higher-paid employment (upward mobility vs. persistence), and exits to unemployment ('no pay-low pay cycle'). The results show shorter spell durations in Austria, pointing to a considerably higher fluctuation and labour turnover in the Austrian labour market. The influence of individual and firm-related characteristics and of the individual unemployment history on exit probabilities and the role of duration dependence in both countries is investigated. With regard to upward mobility, no convincing evidence for 'true' duration dependence is found, at least for Germany. As to the risk of falling back into unemployment, the results suggest that even low-wage workers can accumulate job-related human capital favouring employment integration over time." (author's abstract, IAB-Doku) ((en))
    Keywords: Niedriglohngruppe, Niedriglohn, erwerbstätige Männer, arbeitslose Männer, berufliche Integration, Berufsverlauf - internationaler Vergleich, Arbeitslosigkeit, beruflicher Aufstieg, labour turnover, Arbeitslosigkeitsdauer, Beschäftigungsdauer, Österreich, Bundesrepublik Deutschland
    JEL: J64 J63 J31
    Date: 2011–01–20
  16. By: Marina Murat; Davide Ferrari; Patrizio Frederic; Giulia Pirani
    Abstract: Using data from PISA 2006, we examine the performance of immigrant students in different international educational environments. Our results show smaller immigrant gaps – differences in scores with respect to natives - where educational systems are more flexible and students’ mobility between courses and school programs is higher. Unlike previous studies, our analysis reveals no direct relation between these gaps and education models, be they comprehensive or tracking, adopted by countries.
    Keywords: international migration; educational systems; PISA
    JEL: F22 I21
    Date: 2010–11
  17. By: Luc Behaghel (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Didier Blanchet (INSEE-D3E - Département des études économiques d'ensemble - INSEE); Thierry Debrand (IRDES - Institut de recherche et documentation en économie de la santé - IRDES); Muriel Roger (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, INSEE-D3E - Département des études économiques d'ensemble - INSEE)
    Abstract: The French pattern of early transitions out of employment is basically explained by the low age at “normal” retirement and by the importance of transitions through unemployment insurance and early-retirement schemes before access to normal retirement. These routes have exempted French workers from massively relying on disability motives for early exits, contrarily to the situation that prevails in some other countries where normal ages are high, unemployment benefits low and early-retirement schemes almost non-existent. Yet the role of disability remains interesting to examine in the French case, at least for prospective reasons in a context of decreasing generosity of other programs. The study of the past reforms of the pension system underlines that disability routes have often acted as a substitute to other retirement routes. Changes in the claiming of invalidity benefits seem to match changes in pension schemes or controls more than changes in such health indicators as the mortality rates. However, our results suggest that increases in average health levels over the past two decades have come along with increased disparities. In that context, less generous pensions may induce an increase in the claiming of invalidity benefits partly because of substitution effects, but also because the share of people with poor health increases.
    Keywords: Pensions ; Social Security ; Disability ; Early Retirement ; Unemployment ; Senior
    Date: 2011–01
  18. By: Vincenzo Atella (Faculty of Economics, University of Rome "Tor Vergata"); Marianna Brunetti (Faculty of Economics, University of Rome "Tor Vergata"); Nicole Maestas (RAND)
    Abstract: Health risk is increasingly viewed as an important form of background risk that affects household portfolio decisions. However, its role might be mediated by the presence of a protective full-coverage National Health System that could reduce households’ probability of incurring current and future out-of-pocket medical expenditures. In this paper, we first sketch a theoretical framework in which household portfolio decisions are a function of both individual and systemic characteristics. Then, we test its main implications based on SHARE data, studying the influence of current health status and future health risk on the decision to hold risky assets, across 10 European countries with different health care systems, each offering a different degree of protection against out-of-pocket medical expenditures. We find robust empirical confirmation of our model implications, since perceived health condition matters more than objective health condition and, consistent with the theoretical underpinnings of background risk, health risk affects portfolio choices only in countries with less protective healthcare systems. Furthermore, portfolio decisions consistent with background risk models are observed only with respect to middle-aged and highlyeducated investors.
    Keywords: Household portfolios, health status, national health care systems
    JEL: D8 E2 G1
    Date: 2011–01–21
  19. By: Enrico Giovannetti; Francesco Pagliacci
    Abstract: In this article, we observe existing links between sustainable development and cities’ structural features. First, we identify cluster of cities that are homogenous in structural terms. We then adopt a multiscalar perspective. We compare the results at different territorial scales (LAU-2 and NUTS-3 level). When the sustainable development of the clusters is observed, a clear ‘geography of resource exploitation’ emerges. Then, as a possible response to these problems, we suggest a tool adopted by planners: that is, polycentrism. We look upon it as a possible mode for the governance of networks of medium-sized cities. In particular, we analyse the structural drivers that explain potential for polycentric integration.
    Keywords: Medium-sized cities; polycentrism; sustainable development; cluster analysis
    JEL: Q01 R10 R58
    Date: 2010–12
  20. By: Algan, Yann (Sciences Po, Paris); Cahuc, Pierre (Ecole Polytechnique, Paris); Sangnier, Marc (Paris School of Economics)
    Abstract: This paper shows that cross country differences in the generosity and the quality of the welfare state are associated with differences in the trustworthiness of their citizens. We show that generous, transparent and efficient welfare states in Scandinavian countries are based on the civicness of their citizens. In contrast, the generosity but low transparency of the Continental European welfare states survive thanks to the support of a large share of uncivic individuals who consider that it can be justifiable to misbehave with taxes and social benefits. We also explain why countries with an intermediate degree of trustworthiness of their citizens and of transparency of the government, like Anglo-Saxon countries, have small welfare states. Overall, this paper provides a rationale for the observed persistence of both efficient and inefficient welfare states, as a function of the civicness of the citizens.
    Keywords: welfare state, trust, civism, corruption
    JEL: H1 Z1
    Date: 2011–01

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