nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2011‒03‒12
seventeen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Allocation of Time within Italian Couples: Exploring the Role of Institutional Factors and their Effects on Household's Wellbeing By Tindara Addabbo; Antonella Caiumi; Anna Maccagnan
  2. Shaping persistent earnings inequality: labour market policy and institutional factors By SOLOGON Denisa; O’DONOGHUE Cathal
  3. Market Integration and Technological Leadership in Europe. By Belderbos, Rene; Sleuwaegen, Leo; Veugelers, Reinhilde; Boiardi, Priscilla; Leten, Bart; Stroobants, Jesse
  4. The Margins of Labour Cost Adjustment: Survey Evidence from European Firms By Jan Babecky; Philip Du Caju; Theodora Kosma; Martina Lawless; Julian Messina; Tairi Room
  5. Economic Crises and the Elderly By Uschi Backes-Gellner; Martin R. Schneider
  6. Free vs. Restricted Immigration: Bilateral Country Study By Razin, Assaf; Wahba, Jackline
  7. Age Biased Technical and Organisational Change, Training and Employment Prospects of Older Workers By Behaghel, Luc; Caroli, Eve; Roger, Muriel
  8. Labor Taxation and FDI decisions in the European Union By Hansson, Åsa; Olofsdotter, Karin
  9. The immigrant/native wealth gap in Germany, Italy and Luxembourg By Thomas Y. Mathä; Alessandro Porpiglia; Eva Sierminska
  10. The response of labour taxation to changes in government debt By Fédéric Holm-Hadulla; Nadine Leiner-Killinger; Michal Slavík
  11. The Poor Health Status of the Hungarians; Comparative Macro-Analysis of the Likely Explanatory Factors onHungarian and Austrian Data, 1960-2004 By M ria Lack¢
  12. Fragile Families in the US and UK By Kathleen Kiernan; Sara McLanahan; John Holmes; Melanie Wright
  13. Choosing between foreign investment and subcontracting: Strategies of Italian firms in Romania By Tattara, Giuseppe
  14. Horizontal price transmission of the Finnish meat sector with major EU players By Liu, Xing
  15. Comparaison internationale des inégalités sociales de santé en Europe : Cas du Luxembourg avec 23 autres pays By TCHICAYA Anastase; DEMAREST Stefaan; LORENTZ Nathalie
  16. Social Capital and Health of Older Europeans By Nicolas Sirven; Thierry Debrand
  17. How efficient is the Italian hospitality sector? A window DEA and truncated-Tobit analysis By JG. Brida; Claudio Detotto; Manuela Pulina

  1. By: Tindara Addabbo; Antonella Caiumi; Anna Maccagnan
    Abstract: Italy is characterized by a very uneven distribution of paid and unpaid work in gender terms. Italy has the lowest female employment rate apart from Malta in the European region, with a tangibly wide gender gap in employment and participation rates to the disadvantage of women. Furthermore, the female labour supply is very unevenly distributed across the Italian regions, and both institutional and labour market factors may be considered as lying at the basis of the high regional heterogeneity. This paper aims at understanding more in depth the uneven allocation of time by gender in Italian households. For this purpose we propose a model on the partners' allocation of time, that takes into account the simultaneity of partners' allocation of time decisions, as well as the issue of censored observations in some partenrs' uses of time. In order to estimate this model, we use IT SILC 2007 data that provides us with information on income and hours of work as well as on other relevant sociodemographic variables, maintaining the significance at regional level. This also allows us to analyze the contribution of institutional factors (like the heterogeneous distribution of childcare services in Italy and labour market differences) and interaction with various dimensions of wellbeing. Our findings suggest that an increase in women's wages affects women's working time, both by directly increasing womens paid hours of work, and decreasing the time devoted to household activities and indirectly via a more equal distribution of unpaid work within the couple. The presence of children in the household tends to reduce women's paid work, while having a positive effect on the time spent by the husband in paid work and on both partners supply of unpaid work. We also note that the availability of childcare services represents the most relevant factor affecting women's participatory decisions as well as their hours of paid work.
    JEL: J16 J22
    Date: 2011–02
  2. By: SOLOGON Denisa; O’DONOGHUE Cathal
    Abstract: This paper explores the role of labour market policy and institutional factors in explaining cross-national differences in persistent earnings inequality in Europe. Using non-linear least squares we reveal a complex framework, where institutions and their systemic interactions play a decisive role in shaping persistent inequality. "Piece-meal" reforms appear more effective in reducing persistent inequality than comprehensive policy packages: a substitution effect in reducing persistent inequality emerges between labour market deregulation, deunionization, the transition from a decentralized to a corporatist economy, increasing tax wedge, product market deregulation, increasing active labour market policies, and decreasing generosity of the unemployment benefit. Under special conditions, however, some complementarity effects do emerge. Moreover, the effect of each reform depends on the institutional mix. High corporatism emerges as the most effective tool in reducing the adverse effects of macroeconomic shocks on persistent inequality.
    Keywords: inequality; permanent earnings inequality; labour market institutions; labour market policies
    JEL: D31 J00 J31 J50 J60
    Date: 2011–02
  3. By: Belderbos, Rene; Sleuwaegen, Leo; Veugelers, Reinhilde; Boiardi, Priscilla; Leten, Bart; Stroobants, Jesse
    Abstract: This study traces and analyses the changes in firm and industry structure due to EU market integration and the integration of the EU in the global economy. It focuses on changes in competitiveness based on innovation and technology development. The study provides information on the production, technology structure and geographical distribution of leading European firms. A database with firm-level data has been established and complemented by estimates of indicators of industry structure, including the diversification and technological advancement of a firm's production, the intra-EU multinationality of firms, as well as the degree of concentration and geographical agglomeration of industries. An in-dept empirical analysis of the relationship between technological leadership and market leadership has been conducted. The results indicate an increasing importance of technology for production leadership. Firms with the strongest market positions combine a broader technology portfolio strategy, while ensuring a deeper technology position in the sector of dominance. Technology leadership has a strong impact on the production share that new entrants can attain. The study confirms a positive link between technology and market leadership growth.
    Date: 2010–02
  4. By: Jan Babecky; Philip Du Caju; Theodora Kosma; Martina Lawless; Julian Messina; Tairi Room
    Abstract: Firms have multiple options at the time of adjusting their wage bills. However, previous literature has mainly focused on base wages. We broaden the analysis beyond downward rigidity in base wages by investigating the use of other margins of labour cost adjustment at the firm level. Using data from a unique survey, we find that European firms make frequent use of other, more flexible, components of compensation to adjust the cost of labour. Changes in bonuses and non-pay benefits are some of the potential margins firms use to reduce costs. We also show how the margins of adjustment chosen are affected by firm and worker characteristics.
    Keywords: European Union, firm survey, labour costs, wage rigidity.
    JEL: J30 C81 P5
    Date: 2010–12
  5. By: Uschi Backes-Gellner (Department of Business Administration, University of Zurich); Martin R. Schneider (Economic Department, University of Paderborn)
    Abstract: Economic crises in the last decades have swept elderly workers more than younger workers out of employment. But now the tide is turning. In affluent societies, elderly workers will have more opportunities of being employed in meaningful and well-paid jobs than ever before. On account of demographic changes, fewer (younger) workers will be around and most of the reasons that in the past have induced employers to lay off older rather than younger workers will disappear. Future employment strategies will have to focus more on an optimal age mix and on benefitting from the full potential of the elderly.
    Keywords: ageing workforce, age productivity profiles, recruiting of elderly, employment of elderly
    JEL: J1 M51 J7
    Date: 2011–03
  6. By: Razin, Assaf (Cornell University); Wahba, Jackline (University of Southampton)
    Abstract: This paper tests the differential effects of the generosity of the welfare state under free migration and under policy-controlled migration, distinguishing between source developing and developed countries. We utilize free-movement within the EU to examine the free migration regime and compare that to immigration into the EU from two other groups, developed and developing source countries, to capture immigration-restricted regimes. We standardize cross-country education quality differences by using the Hanushek-Woessmann (2009) cognitive skills measure. We find strong support for the "magnet hypothesis" under the free-migration regime, and the "fiscal burden hypothesis" under the immigration-restricted regime even after controlling for differences in returns to skills in source and host countries.
    Keywords: migration, welfare state, EU
    JEL: J61 J48
    Date: 2011–03
  7. By: Behaghel, Luc (CREST-INSEE); Caroli, Eve (University Paris Ouest-Nanterre); Roger, Muriel (INRA-CORELA)
    Abstract: We analyse the role of training in mitigating the negative impact of technical and organizational changes on the employment prospects of older workers. Using a panel of French firms in the late 1990s, we first estimate wage bill share equations for different age groups. Consistently with what is found in the literature, we find that adopting new technologies and innovative work practices negatively affects the wage bill share of older workers. In contrast, training older workers more than average increases their share in the wage bill in the next period. So, training contributes to offset the negative impact of ICT and innovative work practices. However, it does not reduce the age bias associated with these innovative devices: the interaction terms between training and ICT/innovative work practices are either insignificant or negative. As a second step, we estimate the impact of ICT, innovative work practices and training on employment flows by age group in the next period. We get similar results to those obtained with wage bill shares. Overall, training appears to have a positive impact on the employability of older workers, but it offers limited prospects to dampen the age bias associated with new technologies and innovative work practices.
    Keywords: technical change, organizational change, training, older workers
    JEL: J14 J24 J26 O30
    Date: 2011–03
  8. By: Hansson, Åsa (Department of Economics, Lund University); Olofsdotter, Karin (Department of Economics, Lund University)
    Abstract: This paper uses panel data on bilateral FDI flows in the European Union to empirically analyze the impact of labor and corporate taxations on FDI decisions. While the effect of corporate taxes on FDI is well documented, the impact of labor taxes on FDI has been neglected. This is surprising since labor taxation may influence FDI as well. The reason for this is that taxation of labor affects the production cost and the ability to attract and retain productive labor and ultimately the investment return. By employing a Heckman two-step estimation model, which controls for possible sample selection bias due to many zero bilateral observations, it is found that labor taxes do influence FDI decisions. The effect is significant both statistically and economically, although the magnitude is smaller than for corporate tax.
    Keywords: labor taxation; foreign direct investment
    JEL: F12 F15 F21 H71 H73
    Date: 2011–03–03
  9. By: Thomas Y. Mathä (Economics and Research Department, Banque centrale du Luxembourg.); Alessandro Porpiglia (Economics and Research Department, Banque centrale du Luxembourg.); Eva Sierminska (CEPS/INSTEAD Research Institute & DIW, Berlin, Germany.)
    Abstract: This paper analyses the existence of an immigrant/native wealth gap by using household survey data for Luxembourg, Germany and Italy. The results show that, in all three countries, a sizeable wealth gap exists between natives and immigrants. Towards the upper tail of the wealth distribution the gap narrows to a small extent. This gap persists even after controlling for demographic characteristics, country of origin, cohort and age at migration although cross-country differences exist in the immigration penalty. JEL Classification: D31, F22.
    Keywords: household, survey data, wealth gap, immigrants, distribution.
    Date: 2011–02
  10. By: Fédéric Holm-Hadulla (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Nadine Leiner-Killinger (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Michal Slavík (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.)
    Abstract: This paper investigates the relationship between government debt and labour taxation for a panel of 18 EU countries over the period 1979-2008. The econometric estimates point to a statistically significant and economically relevant positive response of labour taxation to changes in the general government debt and interest expenditure-to-GDP ratios. The results are robust across a range of econometric specifications and labour tax indicators. JEL Classification: H2, H24, H63, J22.
    Keywords: Debt, labour taxes, fiscal adjustment.
    Date: 2011–03
  11. By: M ria Lack¢ (Institute of Economics Hungarian Academy of Sciences)
    Abstract: In Hungary, the health status of working age men is extremely bad in comparison with both the developed market economies and the neighboring transition countries. The study based on data between 1960 and 2004 investigates the health status of population in Hungary and Austria by health-production functions on macro level and makes comparisons. The rationale for comparison of these very countries is the territorial closeness and the mutual long past. The mortality rate of working age population (15-60 years old) is considered the proxy variable for the health status. According to this indicator the health status in the two countries was at the same level in 1960's, but they started to diverge at the beginning in the 1970's. As explanatory variables for the mortality rate of the working age population the following variables are taken into account: the indicators of the life style (consumption of alcohol, smoking, the extra work in the "second" and "hidden economy"), the long- term economic development (the development of the GDP per capita), health-care resources (the relative share of physicians) and the situation in the labor market (unemployment rate). The estimations of the health production functions turn out approximating well real world developments in both countries.
    Keywords: health status, health production function, mortality, Hungary, Austria
    JEL: I12
    Date: 2011–02
  12. By: Kathleen Kiernan (University of York); Sara McLanahan (Princeton University); John Holmes (University of York); Melanie Wright (Princeton University)
    Abstract: Non-marital childbearing has increased dramatically over the past several decades in both the US and the UK. In 2008, 45 percent of British children were born outside of marriage, up from 8 percent in 1971. A similar trend appears in the US, with 41 percent of births in 2008 occurring to unmarried mothers, up from 11 percent in 1971. Whereas a great deal has been written about the causes of these trends, surprisingly little is known about the conditions and experiences of the parents and children in these families. In this paper we compare and contrast families formed by married and unmarried parents during the first five years after child’s birth. An emerging body of research indicates that children’s experiences in infancy and early childhood have lasting consequences for their future health and development (Shonkoff and Phillips 2000); a second literature indicates that parental resources and partnerships play a large role in shaping children’s early experiences (Duncan and Magnuson 2005). Together, these two bodies of research suggest that in order to understand the long-run implications of the increase in non-marital childbearing for parents, children and society, we must understand how the parents and children in these families are doing during the first five years after birth. This paper compares and contrasts families formed by unmarried parents in the UK and the UK by addressing several questions: What is the nature of parental relationships and what are parents’ characteristics and capabilities at the time their child is born? What happens to parental relationships over time? What happens to mothers’ economic and psychological resources; What happens to non-resident fathers’ contributions over time? How do children fare, and how do family structure and stability influence the quality of mothers’ parenting and children’s wellbeing? To answer these questions, we rely on data from two birth cohort studies that follow children from the time they are born to the time they enter kindergarten: the Millennium Cohort Study (MCS), which has been following approximately 18,800 children born in the UK at the turn of the twenty first century, and the Fragile Families Study (FFS), which has being following approximately 5,000 children born in US cities between 1998 and 2000. Both of these studies contain rich information about the quality and stability of parental relationships, and both studies contain extensive information on parental resources parental behavior and children’s wellbeing. Both studies also oversample for disadvantaged families. Given their overlap in questions and measures and their similarity in samples, these two data sets are ideal for comparing families formed by unmarried couples in the two countries. More detailed information about these two studies can be found for the MCS in Hansen et al. (2008) and for the FFS in Reichman et al. (2001).
    Keywords: marriage, unwed mothers, births, Millennium Cohort Study
    JEL: D19 D60 J12 J13 I00
    Date: 2011–02
  13. By: Tattara, Giuseppe
    Abstract: Vertical disintegration in most industries and the globalization of markets has led to significant changes in the pattern of international division of labour among manufacturing firms. At the same time increased competition from low cost producers, exchange rate constraints, the opening up of CEE countries have had huge consequences for the Italian industrial system. This paper deals with the Veneto footwear, furniture and refrigeraion industries and examines the effects of foreign direct investments and subcontracting in Romania. The reorganization of the division of labour, in the most dynamic suppliers induced a change in the “nature of subcontracting”, upgrading along the ladder of the value chain as more and more operations are offshored.
    Keywords: Foreign direct investment; International subcontracting;
    JEL: F32 D82
    Date: 2011
  14. By: Liu, Xing
    Abstract: The integration of the Finnish meat market in the EU has important implications for domestic agricultural policy. Our aim is to estimate the characteristics of the Finnish pork and beef markets in relation to those of Germany and Denmark. Our analysis uses symmetric and asymmetric threshold error correction models. Both pork and beef prices in Finland are found to have slowly cointegrated with German prices, but the cointegration relationship of the two counties is only found to be symmetric for pork prices, while it is asymmetric for beef prices. The producer price for pork in Finland is symmetrically cointegrated with the Danish price, but the Finnish and Danish beef prices show a random walk. This implies that the price transmission to the Finnish pork producer market from the EU market is smoother and more efficient than for the beef market. However, the speed of transmission is still slow compared to that between the Danish and German markets.
    Keywords: cointegration, asymmetric, error correction, thresholds, pork and beef prices, Agribusiness, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, International Relations/Trade,
    Date: 2011–02
  15. By: TCHICAYA Anastase; DEMAREST Stefaan; LORENTZ Nathalie
    Abstract: Ce texte porte sur la mesure et la comparaison des inégalités de santé liées au niveau d’éducation au Luxembourg et dans 23 autres pays européens. Les données proviennent des enquêtes/EU-SILC réalisées sous l’égide d’EUROSTAT en 2007 dans l’Union Européenne, l’Islande et la Norvège. Elles concernent les personnes âgées de 16 ans et plus dans les ménages privés. Les principales procédures mathématiques utilisées sont la modélisation linéaire généralisée et les techniques de standardisation par âge et par sexe afin de faciliter les comparaisons dans le temps et dans l’espace. Les résultats montrent l’existence d’inégalités sociales de santé, tant chez les hommes que chez les femmes dans tous les pays. Le Luxembourg occupe une position intermédiaire par rapport à ses pays voisins, une bonne position par rapport aux pays scandinaves et une moins bonne position par rapport aux pays de l’ancienne Europe de l’Est. Globalement, les inégalités sociales de santé paraissent plus élevées dans des pays où les taux de prévalence d’une moins bonne santé sont parmi les plus faibles.
    Keywords: différence de prévalence; Indice d'Inégalité Relatif; inégalités de santé; Risque Attribuable à la Population; Luxembourg; Union Européenne
    JEL: D63 I12 I18 I31
    Date: 2011–02
  16. By: Nicolas Sirven (IRDES institut for research and information in health economics); Thierry Debrand (IRDES institut for research and information in health economics)
    Abstract: This research uses a time-based approach of the causal relationship (Granger-like)between health and social capital for older people in Europe. We use panel data from waves 1 and 2 of SHARE (the Survey of Health, Ageing, and Retirement in Europe)for the analysis. Additional wave 3 data on retrospective life histories (SHARELIFE)are used to model the initial conditions in the model. For each of the first 2 waves, a dummy variable for involvement in social activities (voluntary associations, church, social clubs, etc.) is used as a proxy for social capital as involvement in Putnamesque associations; and seven health dichotomous variables are retained, covering a wide range of physical and mental health measures. A bivariate recursive Probit model is used to simultaneously investigate (i) the influence of baseline social capital on current health - controlling for baseline health and other current covariates, and (ii)the impact of baseline health on current participation in social activities - controlling for baseline social capital and other current covariates. As expected, we account for a reversed causal effect: individual social capital has a causal beneficial impact on health and vice versa. However, the effect of health on social capital appears to be significantly higher than the social capital effect on health. These results indicate that the sub-population reaching 50 years old in good health has a higher propensity to take part in social activities and to benefit from it (social support, etc.). Conversely, the other part of the population in poor health at 50, may see its health worsening faster because of the missing beneficial effect of social capital. Social capital may therefore be a potential vector of health inequalities.
    Keywords: Healthy Ageing, Social Capital, Health Inequality, Granger Causality, Panel Data.
    JEL: C33 I12 Z13
    Date: 2011–02
  17. By: JG. Brida; Claudio Detotto; Manuela Pulina
    Abstract: This paper analyses the Italian regional efficiency of the hospitality sector using a data envelopment analysis (DEA), for the time span 2000-2004. Via a window DEA, pure technical efficiency is computed. The Lombardy region presents the best relative performance. Overall Italian regions denote important sources of inefficiency mostly related to their inputs. Via a truncated-Tobit analysis, the rate of utilisation and regional intrinsic features positively are found to affect hospitality efficiency. Nevertheless, empirical evidence does not support spill-over effects amongst Italian regions.
    Keywords: Regional hospitality sector; window DEA; double bootstrap; spatial heterogeneity.
    JEL: C14 C24 L83 R11
    Date: 2011

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