nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2011‒03‒26
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Determinants of Job Satisfaction across the EU-15: A Comparison of Self-Employed and Paid Employees By Jose Maria Millan; Jolanda Hessels; Roy Thurik; Rafael Aguado
  2. Gas market developments and their effect on relations between Russia and the EU By Sadek Boussena; Catherine Locatelli
  3. A Survey of the European Security Market By Carlos Martí Sempere
  4. Temporary job protection and productivity growth in EU economies By Damiani, Mirella; Pompei, Fabrizio; Ricci, Andrea
  5. New Aspects of Intra-Industry trade: Evidence from EU-15 countries By Tadashi Ito; Toshihiro Okubo
  6. EU Patent System: to be or not to be? By Ãlvaro Escribano; Marco S. Giarratana
  7. On the welfare state performance in the European Union By Tim Coelli; Mathieu Lefebvre; Sergio Perelman; Pierre Pestieau
  8. Factor Content of Intra-European Trade Flows By Götz Zeddies
  9. Income Inequality, Regional Development and Decentralisation in Western Europe By Andy Pike; Andrés Rodríguez-Pose; John Tomaney; Gianpiero Torrisi; Vassilis Tselios
  10. Can regional transfers buy public support? Evidence from EU structural policy By Osterloh, Steffen
  11. The Long Term Impacts of Migration in British Cities: Diversity, Wages, Employment and Prices By Max Nathan
  12. Regional Wage Differences in the Netherlands: Micro-Evidence on Agglomeration Externalities By Stefan P.T. de Groot; Henri L.F. de Groot; Martijn Smit
  13. Wage Differentials between Native and Immigrant Women in Spain: Accounting for Differences in the Supports By Nicodemo, Catia; Ramos, Raul
  14. Regional Patterns of Intangible Capital, Agglomeration Effects and Localised Spillovers in Germany By Kurt Geppert; Anne Neumann
  15. How Important is the Family?: Evidence from Sibling Correlations in Permanent Earnings in the US, Germany and Denmark By Daniel D. Schnitzlein
  16. Social customs and demographic change: The case of godparenthood in Catholic Europe By Guido Alfani; Vincent Gourdon; Agnese Vitali
  17. Union Threat and Non-Union Employment: A Natural Experiment on the Use of Temporary Employment in British Firms By Salvatori, Andrea
  18. The euro and corporate financing By Bris, Arturo; Koskinen, Yrjö; Nilsson, Mattias
  19. Real Earnings Disparities in Britain By Stephen Gibbons; Henry G. Overman; Guilherme Resende
  20. A Generalized Nash-Cournot Model for the North-Western European Natural Gas Markets with a Fuel SubstitutionDemand Function: The GaMMES Model By Ibrahim Abada; Vincent Briat; Steve A. Gabriel; Olivier Massol

  1. By: Jose Maria Millan (University of Huelva); Jolanda Hessels (Erasmus School of Economics); Roy Thurik (Erasmus School of Economics); Rafael Aguado (University of Huelva)
    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.
    Keywords: entrepreneurship; self-employment; job satisfaction; Europe
    JEL: J24 J28 L26 O52
    Date: 2011–02–22
  2. By: Sadek Boussena (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II); Catherine Locatelli (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II)
    Abstract: The changes on the EU gas market are likely to affect Europe's relations with its natural gas suppliers who are facing increasing competition. Heading this list of producing countries is Russia. Gas relations between Russia and the EU are characterized by strong interdependence. But these relations are currently being hampered by serious lack of understanding, making it difficult for the two parties to reach agreement on a new energy partnership. The aim of this article is to analyse the effects of this new European gas context on Gazprom's strategy and how the issues of energy security and cooperation between Russia and the EU will be affected by this new order.
    Date: 2011–03
  3. By: Carlos Martí Sempere
    Abstract: This document synthesizes the results of the research made on the European security market. It deals with questions of interest regarding the provision of security goods and services for protecting society from terrorism and organised crime. It explores issues such as market revenues, demand and supply, industrial capabilities, technology, research and development, innovation, business strategies, competition as well as market structure, agents' conduct and economic performance. The research has been based upon desk analysis of open source information related to the security market. Economic theory and critical analysis has been applied to understand the gathered information, derive knowledge, point out key issues and assess trends and drivers that will likely shape the sector's future. The study is the outcome of the working package number 5 included in the research project A new Agenda for European Security Economics (EUSECON). This project with code number 218195 has been financed by the European Commission within the 7th European Research Framework Programme. The task has been performed by the company ISDEFE according to the scope and work plan described in the EUSECON proposal. The author wishes to express his appreciation to all the individuals that have provided input and valuable comments to this study, including anonymous referees. Any flaws or omissions contained in this document are solely the responsibility of the author.
    Date: 2011
  4. By: Damiani, Mirella; Pompei, Fabrizio; Ricci, Andrea
    Abstract: The present study examines cross-national and sectoral differences in Total Factor Productivity (TFP) in fourteen European countries and ten sectors from 1995 to 2007. The main aim is to ascertain the role of employment protection of temporary contracts on TFP by estimating their effects with a “difference-in-difference” approach. Results show that deregulation of temporary contracts negatively influences the growth rates of TFP in European economies and that, within sectoral analysis, the role of this liberalization is greater in industries where firms are more used to opening short-term positions. By contrast, in our observation period, restrictions on regular jobs do not cause significant effects on TFP, whereas limited regulation of product markets and higher R&D expenses positively affect efficiency growth.
    Keywords: productivity; labor regulation
    JEL: O47 O43 J58 O40
    Date: 2011–03–18
  5. By: Tadashi Ito (Okinawa University); Toshihiro Okubo (Research Institute for Economics and Business Administration, Kobe University)
    Abstract: This paper argues about some missing aspects of intra-industry trade (IIT) and proposes some alternative measures to better capture the nature of IIT. We show the over-time evolution of the number of IIT products, and propose an index which captures the share of the number of IIT products over the number of all traded goods. We also show how arbitrary the conventional classification into Horizontal and Vertical IIT indices are, and then propose a new measure using the unit value difference of IIT products. To discuss these issues we use trade data at HS 8 digit product level of EU 15 countries for the period 1988 – 2007, mainly within EU countries as well as with Eastern European countries, and with China as major EU trading partners. Our findings include the Eastern European countries' rise up the quality ladder, and the substantially lower prices of China's exports to EU 15 countries vis-à-vis China's imports from them, whose gap is not narrowing even in very recent years.
    Keywords: Intra-industry trade, Horizontal and Vertical Product Differentiation, Quality, unit price gap
    JEL: H32 P16
    Date: 2011–01
  6. By: Ãlvaro Escribano; Marco S. Giarratana
    Abstract: This paper introduce a list of desirable efficiency properties that any a patent system should have in order to enhance innovation, trade competitiveness, employment mobility and economic growth. We briefly overview the literature on patents and discuss the advantages and disadvantages of the present and recent proposals for the future of the European Union Patents System. In particular, we discuss the costinefficiencies observed in the current design of the EU Patent System based in a double structure layer divided in a central European Patent Office (EPO) and several nationalbased patent offices. This paper analyzes the likely backlashes of creating a third layer for a subâ€sample of EU countries. The paper suggests an alternative more efficient Patent System together with some policy implications.
    Keywords: Innovation, Patents, Knowledge spillovers, Common European patent, Welfare losses, Patents’ languages, Cultural proximity, Competitive trade
    JEL: O31 O34 D02 F15 L24
    Date: 2011–02
  7. By: Tim Coelli; Mathieu Lefebvre; Sergio Perelman; Pierre Pestieau
    Abstract: In this paper we use data on five social inclusion indicators (poverty, inequality, unemployment, education and health) to assess and compare the performance of 27 European welfare states (EU27) in 2008. Aggregate measures of performance are obtained using index number methods similar to those employed in the construction of the widely used Human Development Index (HDI). These are compared with alternative measures derived from data envelopment analysis (DEA) methods. We are particularly interested by the comparison between EU15 and the 12 newcomers (EU12). As it will appear among the newcomers some countries are ranking among the top performers and others are relegated in the bottom of the ranking.
    Date: 2011
  8. By: Götz Zeddies
    Abstract: In recent decades, the international division of labor expanded rapidly in course of globalization. In this context, highly developed countries specialized on (human) capital intensively manufactured goods and increasingly sourced parts and components from lowwage countries. Since this should be beneficial for the high-skilled and harmful for the lower qualified workforce, especially the opening up of Eastern Europe and the international integration of newly industrializing Asian economies are considered as main reasons for increasing unemployment of the lower qualified in high-wage countries. The present paper addresses this issue for selected Western European countries by analyzing factor content of trade, which allows inferring on factor demand patterns resulting from international trade. This is not only done for countries’ total external trade, but also for bilateral trade flows, using input-output analyses. Thereby, differences in factor inputs and production technologies are considered, allowing for product differentiation. According to the results, factor content of bilateral trade flows between Western European high-wage countries does hardly differ. However, the results are different for East-West trade, since exports from Western to Eastern Europe are distinctly more human capital intensively manufactured than imports of Western European high-wage countries from Eastern Europe.
    Keywords: European integration, international trade, labor markets, input-output analysis
    JEL: C67 F11 F15 F16
    Date: 2011–03
  9. By: Andy Pike; Andrés Rodríguez-Pose; John Tomaney; Gianpiero Torrisi; Vassilis Tselios
    Abstract: This paper deals with the relationship between fiscal and political decentralisation, regional economic development, and income inequality within regions. Using Moderated Multiple Regression analysis applied to more than 100,000 individuals in the European Union (EU), it addresses two main questions. First, whether decentralisation in western Europe has an effect on within regional interpersonal inequality. Second, whether this possible relationship is mediated by the level of economic development of the region. The results of the analysis show that greater fiscal and political decentralisation is associated with lower interpersonal income inequality, but that this relationship is far from linear. As regional income rises, further decentralisation is connected to a lower decrease or even to an increase in inequality. This finding is robust to the measurement and definition of income inequality, as well as to the weighting of the spatial units by their population size.
    Keywords: Income inequality, income per capita, fiscal and political decentralisation,interaction, regions, Europe
    JEL: R51
    Date: 2011–03
  10. By: Osterloh, Steffen
    Abstract: Regional transfers are assumed to have an impact on the public opinion towards the benefactor, but empirical evidence is still scarce. In this paper we test this hypothesis for the structural funds of the European Union (EU) by combining detailed data on regional transfers with public opinion surveys. A positive impact of transfers on public support for the EU can be confirmed. Moreover, we scrutinize the role of awareness of being a recipient of funds in this process. In particular, we find that the impact of the amount of transfers on the individual's awareness is heterogenous and particularly depends on education. Finally, we show that the type of information source which arouses the citizen's awareness of the transfers affects the impact on his opinion. --
    Keywords: Regional policy,vote purchasing,public opinion,European Union
    JEL: D72 F59 H73
    Date: 2011
  11. By: Max Nathan
    Abstract: British cities are becoming more culturally diverse, with migration a main driver. Is this growing diversity good for urban economies? This paper explores, using a new 16-year panel of UK cities. Over time, net migration affects both local labour markets and the wider economy. Average labour market impacts appear neutral. Dynamic effects may be positive on UK-born workers' productivity and wages (via production complementarities for higher skill workers) or negative on employment (if migrants progressively displace lower-skill natives from specific sectors). The results, which survive causality checks, suggest both processes are operating in British cities. Long-term industrial decline and casualisation of entry-level jobs help explain the employment findings.
    Keywords: cities, migration, cultural diversity, labour markets, productivity, urban economics
    JEL: D24 J15 J61 O18 R11 R23
    Date: 2011–02
  12. By: Stefan P.T. de Groot (VU University Amsterdam); Henri L.F. de Groot (VU University Amsterdam); Martijn Smit (VU University Amsterdam)
    Abstract: Based on micro-data on individual workers for the period 2000-2005, we show that wage differentials in the Netherlands are small but present. A large part of these differentials can be attributed to individual characteristics of workers. Remaining effects are partially explained by variations in employment density, with an elasticity of about 3.8 percent and by Marshall-Arrow-Romer externalities, where doubling the share of a (2-digit NACE) industry results in a 2.4 percent higher productivity. We find evidence for a negative effect of competition (associated with Porter externalities) and diversity (associated with Jacobs externalities).
    Keywords: regional labour markets; wage differentials; agglomeration externalities
    JEL: J24 O12 R11 R23
    Date: 2011–03–07
  13. By: Nicodemo, Catia (Universitat Autònoma de Barcelona); Ramos, Raul (University of Barcelona)
    Abstract: The objective of the study is to quantify the wage gap between native and immigrant women in Spain taking into account differences in their characteristics and the need to control for common support. Using the microdata from the Social Security Records (MCVL) and with a matching procedure of Ñopo (2008) we analysed the decomposition of the wage gap. The advantage of this procedure is that we can simultaneously estimate the common support and the mean counterfactual wage for the women on the common support. In addition, we can describe not only differences at the mean, but along the entire wage distribution. The results obtained indicate that, on average, immigrants women earn less than native in the Spanish labour market. This wage gap is bigger when we analyse the developing countries, but our main finding is that part of this wage gap is related to difference in common supports, i.e. immigrant women have different characteristics than native women that make them less attractive in the labour market. If the need to control for common support is neglected, estimates of the wage gap will be biased.
    Keywords: common support, quantile regression, immigration, counterfactual decomposition
    JEL: J16 J31 C2 C3
    Date: 2011–03
  14. By: Kurt Geppert; Anne Neumann
    Abstract: We use a large micro-dataset to assess the importance of intangible capital - organisation, R&D and ICT capital - for the economic performance of establishments and regions in Germany. In 2003 self-produced intangible capital accounted for more than one fifth of the total capital stock of estab-lishments. More than half of the intangible capital is R&D capital. This high proportion is mainly due to a relatively strong and research-intensive manufacturing sector in Germany. At the regional level, we find descriptive evidence for a positive relationship between intangible capital and the economic performance of regions. This is true both for the level of economic activities and for growth. The results of cross-sectional regressions for the years from 1999 to 2003 indicate that dou-bling the intangible capital intensity of establishments increases the average wage levels by one percent. Regarding the regional economic environment of establishments, we find that the substan-tial net advantages of agglomeration have more to do with broad knowledge and diversity than with regional clustering and specialisation. Separate regressions for the wage levels of non-intangible workers show very similar results. These workers can share the rents of the activities of intangible workers. Thus, intangible capital generates positive externalities not only at the regional level, but also at the level of establishments.
    Keywords: Firm productivity, intangible capital, agglomeration, local spillovers
    JEL: J24 M40 O33 R30
    Date: 2011
  15. By: Daniel D. Schnitzlein
    Abstract: This paper is the first to analyze intergenerational economic mobility based on sibling correlations in permanent earnings in Germany and to provide a cross-country comparison of Germany, Denmark, and the US. The main findings are as follows: the importance of family and community background in Germany is higher than in Denmark and comparable to that in the US. This holds true for brothers and sisters. In Denmark 20 percent of the inequality in permanent earnings can be attributed to family and community factors shared by brothers while the corresponding estimates are 43 percent in Germany and 45 percent in the US. For sisters the estimates are 19 percent for Denmark, 39 percent for Germany and 29 percent for the US. This ranking is shown to be robust against alternative approaches.
    Keywords: Sibling correlations, intergenerational mobility, inequality, REML
    JEL: J62
    Date: 2011
  16. By: Guido Alfani; Vincent Gourdon; Agnese Vitali
    Abstract: This article analyzes social norms regulating selection of godparents in Italy and France and how they will be affected by demographic change. On the grounds of Vatican statistics and of the World Values Survey, it demonstrates that baptisms still occur for the vast majority of children in Catholic Europe and that birth rituals are considered important even by non-believers. Relying on historical data, it shows that the custom of selecting godparents from among kinsmen, currently dominant, is a recent development. A new survey about selection of godparents in Italy and France is used which shows that they are not chosen for religious, but for social-relational reasons. Selection of kinsmen is the norm, with uncles and aunts being the majority choice. For Italy, choice determinants are explored by means of multinomial regressions. The results are contrasted with demographic change to show that in lowest-low fertility countries current godparenthood models are bound to disappear.
    Keywords: Godparenthood; godparents; spiritual kinship; demographic change; social change; social customs; social norms; baptism; lowest-low fertility
    Date: 2011–02
  17. By: Salvatori, Andrea (ISER, University of Essex)
    Abstract: This paper presents the first empirical evidence on the effect of the threat of unionisation on the use of a predominantly non-union type of employment, i.e. temporary employment. The identification strategy exploits an exogenous variation in union threat induced in the UK by new legislation enabling unions to obtain recognition even against the will of the management. The analysis finds no evidence of an effect on the probability that a firm employs fixed-term workers, and some weak evidence of a negative effect on the probability of using agency workers. Overall, therefore, there is no support for the hypothesis that firms under the threat of unionisation are more likely to use this type of non-union employment.
    Keywords: temporary employment, union threat, difference in difference
    JEL: J51
    Date: 2011–03
  18. By: Bris, Arturo (IMD and ECGI); Koskinen, Yrjö (Boston University and CEPR); Nilsson, Mattias (University of Colorado at Boulder)
    Abstract: In this paper we study how the introduction of the euro has affected corporate financing in Europe. We use firm-level data from eleven euro area countries as well as from a control group of five other European countries spanning the years 1991–2006. We show that firms from euro area countries that previously had weak currencies have increased both their equity and their debt financing compared to the control group. We also show that results are stronger for firms that hail from less financially developed euro area countries, and that large firms from industries that are dependent on external financing have increased their debt financing more. These results support the hypothesis that improved access to capital markets in the euro area has enabled increased external financing, especially debt financing
    Keywords: euro; external financing; supply of capital; financial development; financial dependence; financial integration
    JEL: F33 F36 G32
    Date: 2011–03–15
  19. By: Stephen Gibbons; Henry G. Overman; Guilherme Resende
    Abstract: This report estimates housing-cost-earnings differentials across labour market areas in Britain. We show that quality-adjusted housing costs rise on average, one for one with the skill-adjusted earnings of the average working household. However, the relationship is Ushaped, with relatively high housing costs in places at the bottom and top ends of the wage distribution. This variation in housing costs means nominal wages are uninformative about real income disparities. If we assume spatial equilibrium and treat the cost-earnings differentials as estimates of the value of amenities, we can rank cities in terms of quality of life and estimate the value of different amenities. Our work improves on previous research by using longitudinal data on workers to estimate skill-adjusted labour market earnings differentials (net of taxes), using micro data on housing transactions, and by considering the implications of capital gains for housing user cost calculations.
    Keywords: Britain, spatial equilibrium, labour market, housing market
    JEL: J60 R23
    Date: 2011–01
  20. By: Ibrahim Abada; Vincent Briat; Steve A. Gabriel; Olivier Massol
    Abstract: This article presents a dynamic Generalized Nash-Cournot model to describe the evolution of the natural gas markets. The aim of this work is to provide a theoretical framework that would allow us to analyze future infrastructure and policy developments, while trying to answer some of the main criticisms addressed to Cournot-based models of natural gas markets. The major gas chain players are depicted including: producers, consumers, storage and pipeline operators, as well as intermediate local traders. Our economic structure description takes into account market power and the demand representation tries to capture the possible fuel substitution that can be made between the consumption of oil, coal and natural gas in the overall fossil energy consumption. We also take into account the long-term aspects inherent to some markets, in an endogenous way. This particularity of our description makes the model a Generalized Nash Equilibrium problem that needs to be solved using specialized mathematical techniques. Our model has been applied to represent the European natural gas market and forecast, until 2030, after a calibration process, consumption, prices, production and natural gas dependence. A comparison between our model, a more standard one that does not take into account energy substitution, and the European Commission natural gas forecasts is carried out to analyze our results. Finally, in order to illustrate the possible use of fuel substitution, we studied the evolution of the natural gas price as compared to the coal and oil prices. This paper mostly focuses on the model description.
    Keywords: Energy markets modeling, Game theory, Generalized Nash-Cournot equilibria, Quasi-Variational Inequality
    Date: 2011

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.