nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2011‒02‒19
thirteen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. The Italian Position in the Energy and Climate Change Negotiations By Viviani, Carlo
  2. Grandparenting and childbearing in the extended family By Arnstein Aassve, Elena Meroni, Chiara Pronzato; Elena Meroni; Chiara Pronzato
  3. The agenda set by the EU Commission: the result of balanced or biased aggregation of positions? By Miriam Hartlapp; Julia Metz and Christian Rauh
  4. Educational Attainment and Education-job Mismatch of Cross-border Commuters in the EU By Peter Huber
  5. New Social Risks Affecting Children. A Survey of Risk Determinants and Child Outcomes in the EU By Rainer Eppel; Thomas Leoni
  6. Disability and Social Security Reforms:The French Case By Luc Behaghel; Didier Blanchet; Thierry Debrand; Muriel Roger
  7. Working in family firms: less paid but more secure? Evidence from French matched employer-employee data By Andrea Bassanini; Thomas Breda; Eve Caroli; Antoine Rebérioux
  8. The Role of Additionality in the EU Cohesion Policies: An Example of Firm-Level Investment Support By d'Artis Kancs; Pavel Ciaian
  9. The Economic Crisis as a Trigger of Convergence? Short-time work in Italy, Germany and Austria By Stefano Sacchi; Federico Pancaldi; Claudia Arisi
  10. Compliance with EU Social Policies in Old and New Member States: Different Worlds, Different Remedies By Gerda Falkner
  11. Cross-border resolution of failed banks in the EU: A search for the second-best policies By Zdenek Kudrna
  12. School tracking, social segregation and educational opportunity: evidence from Belgium By J. HINDRIKS; M. VERSCHELDE; G. RAYP; K. SCHOORS
  13. Competition and Trust: Evidence from German Car Manufacturers By Leonardo Felli; Johannes Koenen; Konrad O. Stahl

  1. By: Viviani, Carlo
    Abstract: Climate change, security and cost of energy supplies, and the competitiveness of firms and economies have been focal points of the general political and economic policy debate in recent years. This article examines the choices in this field made at global level with the Kyoto Protocol and in Europe with the more recent “20-20-20” package from the standpoints of the Italian national interests and the negotiating stance adopted by our Government in European and international forums. The European negotiations on renewable energy sources, the reduction of emissions in the sectors with and without emissions trading schemes, automobile emissions, the auctioning of emission rights, and the identification of industries exposed to the risk of delocalization (carbon leakage) are described in detail, including background data not previously available, and the reasons for Italy’s positions set forth. The principle guiding Italian negotiators has been to balance the various policy aims, in an effort to ensure that the necessary action against climate change does not have excessive repercussions on growth and employment. The principle is all the more valid in the global talks on the regime that will succeed the Kyoto Protocol when it expires on 1 January 2013. Without a credible global agreement entailing an equivalent commitment, or sectoral agreements, instruments will be needed to prevent Europe’s climate commitment from producing an unfair competitive disadvantage, with potentially serious social and economic consequences but no appreciable environmental advantage.
    Keywords: Climate Change; Energy; UNFCCC; ETS; Emissions Trading Scheme; Auctioning; European Union; Italy; Carbon Leakage; Carbon pricing
    JEL: H77 D62 F23 D44 H23 L60 F42 K32 F18 F53 F21 D78 O52
    Date: 2010–11
  2. By: Arnstein Aassve, Elena Meroni, Chiara Pronzato; Elena Meroni; Chiara Pronzato
    Abstract: The paper analyses the impact of grandparenting on individuals’ fertility behaviour using longitudinal data from eleven European countries. In particular, we focus on how siblings may share and compete for grandparents’ time in terms of childcare. By considering different family scenarios, we show that availability of grandparenting play an important role in individuals’ decision making for having children. Grandparenting is particularly important in the South of Europe where public childcare is limited and here we see a large impact of grandparenting on fertility.
    Keywords: fertility, grandparents, SHARE, extended family
    Date: 2011–02
  3. By: Miriam Hartlapp; Julia Metz and Christian Rauh
    Abstract: Substantial theoretical and conceptual advances have been made with respect to agenda-setting as a determinant for policy outcomes. An actor-centred perspective on frames and venues is core to this literature, structure as a single standing category has received less attention. In this paper we argue that these results should be combined with bureaucratic politics in the European Commission to further our understanding of agenda setting processes in the European Union. Typically, a legislative proposal of the Commission is produced by a lead department which collaborates with a number of other departments on a partly formalized basis before a joint Commission decision is taken. Different services hold different positions on specific policies. We show that structures and rules governing the process yield the potential for some positions to be systematically more strongly represented in the proposals entering inter-institutional decision-making. We complement our argument by providing evidence of interaction patterns when it comes to internal coordination.
    Date: 2010–04–01
  4. By: Peter Huber (WIFO)
    Abstract: I describe the extent and structure of cross-border commuting in the EU 27 to show that this is important only in a small number of border regions with strong linguistic, historic or institutional ties. Cross-border commuters are mostly medium skilled, male manufacturing workers, who have higher over- but lower under-education rates than non-commuters, internal commuters and established migrants. These findings can mostly be attributed to cross-border commuters from the 12 new EU member countries. Cross-border commuters from the EU 15 have higher under- and lower over-education rates than non-commuters.
    Keywords: Commuting, Selection, Education-job Mismatch
    Date: 2011–02–08
  5. By: Rainer Eppel (WIFO); Thomas Leoni (WIFO)
    Abstract: Socio-economic transformations associated with the shift to post-industrial societies have not only created new opportunities and prosperity, but have also given rise to the emergence of new social risks occurring at different stages of life. This paper examines the situation of children, who can arguably be considered a particularly vulnerable social group. It provides an overview of the changes generating child-related risk structures and, given this background, compares child well-being outcomes across a number of dimensions in the countries of the EU 15. The analysis reveals considerable heterogeneity both across and within welfare state regimes, suggesting overall a sort of "North-South-divide" with Nordic Europe coming out on top and Southern Europe on the bottom. In Austria, children seem to be better-protected from poverty risk than the average child in the EU 15. However, the level of material well-being is lower compared to the Nordic countries and does not translate into equally good performance in all the selected non-material domains.
    Date: 2011–02–08
  6. By: Luc Behaghel (Paris School of Economics (Inra)); Didier Blanchet (Insee-D3E); Thierry Debrand (IRDES institut for research and information in health economics); Muriel Roger (Paris School of Economics, Inra, Insee-D3E)
    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.
    JEL: H55 J26 J14
    Date: 2011–02
  7. By: Andrea Bassanini (ERMES - Equipe de recherche sur les marches, l'emploi et la simulation - CNRS : UMR7017 - Université Panthéon-Assas - Paris II, IZA - Institute for the Study of Labor - IZA, OECD - OECD); Thomas Breda (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); Eve Caroli (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, EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre); Antoine Rebérioux (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre)
    Abstract: We study the compensation package offered by family firms. Using matched employer-employee data for a sample of French establishments in the 2000s, we first show that family firms pay on average lower wages to their workers. This family/non-family wage gap is robust to controlling for several establishment and individual characteristics and does not appear to be due either to the differential of productivity between family and non-family firms or to unobserved establishment and individual heterogeneity. Moreover, it is relatively homogeneous across workers with different gender, educational attainment and age. By contrast, the family/non-family wage gap is found to be larger for clerks and blue-collar workers than for managers, supervisors and technicians, for whom we find no significant wage gap. As a second step, we investigate why workers stay in family firms while being paid less. We show that these firms offer greater job security. We find evidence that the rate of dismissal is lower in family than in non-family firms. We also show that family firms rely less on dismissals and more on hiring reductions when they downsize. These results are confirmed by subjective data: the perceived risk of dismissal is significantly lower in family firms than in non-family ones. We speculate that our results can be explained either by a compensating wage differential story or by a model in which workers sort in different firms according to their preferences.
    Keywords: family firms ; wages ; job security ; linked employer-employee data
    Date: 2010–11
  8. By: d'Artis Kancs; Pavel Ciaian
    Abstract: Additionality is one of the key principles driving the functioning of the EU Cohesion Policies (ECP). The present paper studies how additionality affects the distributional effects of the ECP. Using the example of the firm-level investment support, we analyse the role of additionality and co-financing rate in differently competitive markets. We find that the investment additionality and the level of competition importantly affect the distributional effects of the ECP. Imposing additionality to the ECP investments in a perfectly competitive environment causes distortions in the capital market and leads to lower welfare levels. In contrast, without the enforcement of additionality, the distortions are zero and the support fully benefits firms. In an imperfectly competitive environment the firm-level investment support may increase capital use and may be welfare increasing with and without the enforcement of the investment additionality.
    Keywords: Additionality, EU Cohesion Policy, investment subsidy, regional development.
    JEL: F1 O1 R3 R4
    Date: 2010–11–26
  9. By: Stefano Sacchi; Federico Pancaldi; Claudia Arisi
    Abstract: In all European countries, emergency policy measures have been introduced in order to counteract the employment consequences of the economic crisis. In the context of variously composed anticrisis packages, many European countries have used Short-Time Work (STW) schemes, that is measures to subsidize a temporary reduction in working time intended to maintain an employment relationship. Countries which already had STW schemes, such as Kurzarbeit in Germany and Austria and the Cassa Integrazione Guadagni (CIG) in Italy, have loosened the eligibility requirements and extended their maximum duration. This paper focuses on the issue whether the economic crisis has spurred any convergence in the use of STW in these three social-insurance countries - Austria, Germany and Italy - or whether policy change has rather occurred in a path-dependent fashion. In order to do so, the paper also adopts a systemic approach, focusing on relationships of complementarity or functional substitution and equivalence among the various schemes comprising income maintenance systems to tackle the risks of partial or total unemployment. In addition to shedding light on a rather under-researched province of contemporary welfare states such as STW, this article also aims to contribute to the debate on the analytical levels in the study of social policy by showing the relevance and potential of adopting an intermediate level of analysis between a regime-centred and a programme-centred approach.
    Keywords: short time work; unemployment compensation; social protection; convergence; path dependence
    JEL: I38 J65 J68
    Date: 2011
  10. By: Gerda Falkner
    Abstract: Going beyond the traditional compliance debate that is still ongoing in various journals and geared towards a specialized political science sub-community, this paper focuses on the wider social reform issues arising from the finding that there are serious compliance problems almost everywhere in the EU, particularly when enforcement and application of the standards are considered and not only formal transposition into domestic law. This article presents in brief the findings from two large-scale research projects on (non-)compliance with EU law in two sub-fields of social policy, working time and equal treatment policies. Two teams of co-authors studied the "old" EU15 plus later four countries from Central and Eastern Europe: the Czech Republic, Hungary, Slovakia and Slovenia. Four "worlds of compliance" were discussed on the basis of our findings from the 102 overall qualitative case studies. Searching for ways to improve the state of social affairs, it seems useful to build on these differential procedural modes of implementation and to draw up tailor-made recommendations of potential use for those fighting compliance problems, such as the European Commission.
    Keywords: social policy; implementation; directives; political science; non-discrimination; Czech Republic; Hungary; Slovakia; Slovenia
    Date: 2010–09–15
  11. By: Zdenek Kudrna
    Abstract: This paper analyzes the reasons for the failure of the multilateral resolution of EU cross-border banks such as Fortis. We argue that the pre-crisis regime based on soft law and voluntary coordination was unable to align the incentives of national authorities acting under the time pressure and uncertainty of a banking crisis. We ask whether this experience induced the Commission to propose reforms that would close the regulatory gap between integrated cross-border banks and national resolution regimes. Although, the Commission proposals submitted within a year of the crisis considered the more radical reform options, such as shifting the regime to the EU level or reorganizing cross-border banks so that they could be resolved on the national level, in the end the Commission supported the traditional reform path of deepening soft law and strengthening pre-crisis governance arrangements. At the same time, the new financing mechanisms introduced to stabilize the Eurozone can pave the way for the introduction of an EU-level bank resolution regime, when the next reform opportunity arises.
    Keywords: political science; European Commission
    Date: 2010–11–15
    Abstract: Educational tracking is a very controversial issue in education. The tracking debate is about the virtues of uniformity and vertical dierentiation in the curriculum and teaching. The pro- tracking group claims that curriculum and teaching better aimed at children's varied interest and skills will foster learning efficacy. The anti-tracking group claims that tracking systems are inef- cient and unfair because they hinder learning and distribute learning inequitably. In this paper we provide a detailed within-country analysis of a specific educational system with a long history of early educational tracking between schools, namely the Flemish secondary school system in Belgium. This is interesting place to look because it provides a remarkable mix of excellence and inequality. Indeed the Flemish school system is repeatedly one of the best performer in the international harmonized PISA tests in math, science and reading; whereas it produces some of the most unequal distributions of learning between schools and students. Combining evidence from the PISA 2006 data set at the student and school level with recent statistical methods, we show first the dramatic impact of tracking on social segregation; and then, the impact of social segregation on equality of educational opportunity (adequately measured). It is shown that tracking, via social segregation, has a major effect on inequality of opportunity. Children of dierent economic classes will have different access to knowledge.
    Keywords: tracking, ability grouping, educational performance, social segregation, inequality, PISA
    JEL: I28 H52 D63
    Date: 2010–11
  13. By: Leonardo Felli (London School of Economics, CEPR); Johannes Koenen (University of Bonn); Konrad O. Stahl (University of Mannheim, CEPR)
    Abstract: We explore the determinants and effects of trust relationships between upstream suppliers and downstream producers. Using unique survey data on individual supplier-buyer relationships in the German automotive industry, we show, by means of different measures of supplier-buyertrust, tha thigher levels of trust mitigate relationship-specific underinvestment in a classical hold-up situation. Moreover, contrary to the extant literature, we show that higher levels of supplier’s trust are reflected in the buyer’s choice of a more competitive procurement strategy among potential suppliers.
    Keywords: Trust, Hold-up problem, Competition, Specific investment, Suppliers, Car manufacturers, German automotive industry
    JEL: D86 L22 L62
    Date: 2011–02

This nep-eur issue is ©2011 by Giuseppe Marotta. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.