nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2011‒08‒22
seventeen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Low-Wage Import Competition, Inflationary Pressure,and Industry Dynamics in Europe By Raphael Anton Auer; Kathrin Degen; Andreas M. Fischer
  2. R&D and Employment: Some Evidence from European Microdata By Bogliacino, Francesco; Piva, Mariacristina; Vivarelli, Marco
  3. Innovation subsidies: Does the funding source matter for innovation intensity and performance? Empirical evidence from Germany By CZARNITZKI Dirk; LOPES BENTO Cindy
  4. What happens to the husband’s retirement decision when the wife’s retirement incentives change? By Selin, Håkan
  5. Disentangling income inequality and the redistributive effect of social transfers and taxes in 36 LIS countries By Wang, Chen; Caminada, Koen
  6. FINANCING EU STUDENT MOBILITY: A Proposed Credit Union Scheme for Europe By Cécile Hoareau
  7. Gasoline price asymmetries in the Euro Zone By Polemis, Michail; Fotis , Panagiotis
  8. Health and Economic Development: Evidence from the Introduction of Public Health By Strittmatter, Anthony; Sunde, Uwe
  9. Continuous Training, Job Satisfaction and Gender: An Empirical Analysis Using German Panel Data By Claudia Burgard; Katja Görlitz
  11. AFTER BROWNE: The New Competitive Regime for English Higher Education By Roger Brown
  12. Labor Markets and Labor Market Institutions in Transition Economies By Lehmann, Hartmut; Muravyev, Alexander
  13. Do supermarkets reduce the number of traditional bookshops? An empirical application to the textbook market in Spain By Aday Hernandez; Juan Luis Jimenez
  14. Conceptualizing Energy Security By Winzer, C.
  15. EXCELLENCE AND DIVERSITY: The Emergence of Selective Admission Policies in Dutch Higher Education - A Case Study on Amsterdam University College By Christoffel Reumer and Marijk van der Wende
  16. What said the new economic geography about Portugal? An alternative approach By Martinho, Vítor João Pereira Domingues
  17. The effect of the supplementary grant on parental contribution in the Netherlands By Roel van Elk

  1. By: Raphael Anton Auer; Kathrin Degen; Andreas M. Fischer
    Abstract: What is the impact of import competition from low-wage countries (LWCs) on inflationary pressure in Europe? This paper examines whether labor-intensive exports from emerging Europe, Asia, and other global regions have a uniform impact on producer prices in Germany, France, Italy, Sweden, and the United Kingdom. In a panel covering 110 (4-digit) NACE industries from 1995 to 2008, instrumental variable estimations predict that LWC import competition is associated with strong price effects. More specifically, when LWC exporters capture 1% of European market share, producer prices decrease by about 3%. In contrast, no effect is present for import competition from low-wage countries in Central and Eastern Europe. Next, decomposing the mechanisms that underlie the LWC price effect on European industry, we show that import competition has a pronounced effect on average productivity and only a muted effect on wages. Owing to the exit of firms and the increase in productivity, LWC import competition is shown to have substantially reduced employment in the European manufacturing sector.
    Keywords: intra-industry trade, comparative advantage, globalization
    JEL: F11 F12 F14 F16 F40
    Date: 2011
  2. By: Bogliacino, Francesco (Universidad EAFIT); Piva, Mariacristina (Università Cattolica del Sacro Cuore); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: After discussing theory regarding the consequences of technological change on employment and surveying previous microeconometric literature, our aim with this paper is to test the possible job creation effect of business R&D expenditures, using a unique longitudinal database covering 677 European manufacturing and service firms over the period 1990-2008. The main outcome from the whole sample dynamic LSDVC (Least Squared Dummy Variable Corrected) estimate is the labour-friendly nature of companies’ R&D, the coefficient of which turns out to be statistically significant, although not very large in magnitude. However, the positive and significant impact of R&D expenditures on employment is detectable in services and high-tech manufacturing but absent in the more traditional manufacturing sectors. This means that we should not expect positive employment effects from increasing R&D in the majority of industrial sectors. This is something that should be borne in mind by European innovation policy makers having employment as one of their specific aims.
    Keywords: innovation, employment, manufacturing, services, LSDVC
    JEL: O33
    Date: 2011–08
    Abstract: Applying a variant of a non-parametric matching estimator, we consider European funding and national funding as heterogeneous treatments, distinguishing and simultaneously analyzing the effect these treatments have on innovation input and performance. In terms of input, getting funding from both sources yields the highest impact. If funding from only one source is received, EU grants have higher effects. In terms of output, holding innovation expenditures constant, funding from both sources display higher sales of market novelties and future patent applications at the firm level. If only one grant is obtained, we find superiority for national funding.
    Keywords: Subsidies; Innovation; Policy Evaluation; Treatment effects; Nonparametric matching estimation
    JEL: C14 H50 O38
    Date: 2011–08
  4. By: Selin, Håkan (Uppsala Center for Fiscal Studies)
    Abstract: Several studies have documented a strong correlation in the timing of spouses’ retirement decisions. However, considerably less is known about the causal impact of one spouse’s retirement incentives on the retirement decision of the other spouse. Before, but not after, 2001 broad categories of Swedish local government workers in female dominated occupations were entitled to retire with full pension benefits already at the age of 63. In this paper, we utilize this reform – together with a micro data set covering the total Swedish population – to estimate the effect of a change in the wife’s incentive on the husband’s retirement behavior. We document a sharp decrease in pension benefit withdrawals among 63 year old wives in the local government sector in the years following the reform. However, we do not find any evidence of a response among husbands. This finding is at odds with some earlier results in the literature.
    Keywords: Joint retirement; retirement age; occupational pensions
    JEL: H55 J13 J21
    Date: 2011–07–11
  5. By: Wang, Chen; Caminada, Koen
    Abstract: The aim of this paper is to offer detailed information of fiscal redistribution in 36 countries, employing data that have been computed from the Luxembourg Income Study’s micro-level database. LIS data are detailed enough to allow us to measure both overall redistribution, and the partial effects of redistribution by several taxes or transfers. We elaborate on the work of Jesuit and Mahler (2004) and Mahler and Jesuit (2006), and we refine, update and extent their Fiscal Redistribution approach. LIS data allow us to decompose the trajectory of the Gini coefficient from primary to disposable income inequality in several parts: we will distinguish 11 different benefits and several income taxes and social contributions in our empirical investigation across countries. First, we use LIS data to analyze income inequality and the redistributive effect of social transfers across countries in a descriptive way. Then we proceed with a simulation approach for 36 countries for which we decompose income inequality through several taxes and transfers. We analyze the redistributive effect of several social programs, like unemployment benefits or pensions and income taxes. We develop a budget incidence simulation model to investigate to what extent several social transfers contribute to the overall redistribution in modern welfare states under a strong assumption that the absence of social transfers and taxes would not change individual behavior and labor supply. Among all countries listed in this paper, Denmark and Sweden have the smallest income disparity, while Peru and Colombia have the largest. Nordic countries show the most equally distributed disposable incomes and primary incomes, comparing to the countries in other types of welfare states. On average, large primary income disparity exists in Anglo-Saxon countries. Generally speaking, European countries achieve lower levels of income inequality than other countries. With respect to the redistributive effect, our budget incidence analysis indicates that the pattern is diverse across countries. The largest redistribution is found for Belgium, while Colombia and Peru show rather limited overall redistributive effects. On average, transfers reduce income inequality by over 85 percent, while taxes account for only 15 percent of total redistribution. Among all welfare states, Continental European countries (Belgium, France, Germany, and Luxembourg) achieve the highest level of the reduction of initial income inequality. As far as social programs is concerned, in most countries two dominant income components account for above 50 percent of total reduction in income inequality: the public old age pensions and the survivors scheme, and the income taxes. For example, in Southern European Countries the public old age benefits account for over 80 percent of total redistribution, while these figures are much lower for Anglo-Saxon Countries (20-34%), for Nordic Countries (31-48%), for Continental European Countries (47-57%), and for Central Eastern European Countries (54-70%). In Anglo-Saxon Countries income taxes play a major role (above 30%) compare to other countries (with the exception the United kingdom). Also the redistributive effect of social assistance and child and family benefits in the Anglo-Saxon Countries are relatively high in a comparative setting (9-28%). In Nordic Countries also a variety of other social programs contribute to the reduction of inequality, especially the disability scheme (9-15%). Remarkably, across countries all other social benefit programs seem to have rather limited redistributive effects, although the unemployment compensation benefits do have some effect too.
    Keywords: welfare states, social income transfers, inequality, Gini coefficient, LIS
    JEL: H55 H53 I32
    Date: 2011–08–04
  6. By: Cécile Hoareau
    Abstract: Governments worldwide face the challenge of financing a growing student population with limited resources, especially in the current context of difficult economic recovery. Student loan schemes, because they appear as cost-efficient and are defendable on the lines of social equity (students invest in their future), are increasingly politically attractive. It was therefore only a matter of time before the European Union considered the feasibility of implementing a similar scheme. Such a lending scheme faces EU-specific limitations. The Union has more limited resources than a fully-grown government. It is also bound by Treaty rules to complementary competencies and has to accommodate various levels of member states’ willingness to integrate further. This paper offers a general discussion on the design of an EU-wide lending scheme for students. It argues in favour of a European Credit Union for Students, an EU-wide agency liaising with the European Investment Bank to raise the necessary funds and subcontracting other institutions for the administration of the loans. This agency would start by financing loans for the relatively narrow pool of mobile students under the Erasmus scheme. Doing so, it would lay down the foundation for a further integration of financing capacities as/if the Union becomes ever closer.
    Keywords: Education
    Date: 2010–11–01
  7. By: Polemis, Michail; Fotis , Panagiotis
    Abstract: This paper uses the generalized method of moments (GMM) estimation to a panel data error correction model (ECM) in order to measure the asymmetries in the transmission of shocks to input prices and exchange rate onto the wholesale and retail gasoline price respectively. For this purpose, we use an updated data set of weekly observations covering the period from January 2000 to February 2011 for eleven euro zone countries (Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal and Spain). The results favor the common perception that retail and wholesale gasoline prices respond asymmetrically to cost increases and decreases.
    Keywords: Generalized method of moments; panel data; asymmetries; euro zone; error correction models
    JEL: C51 L11 C33
    Date: 2011–08–12
  8. By: Strittmatter, Anthony (University of Freiburg); Sunde, Uwe (University of St. Gallen)
    Abstract: This paper investigates the causal effect of changes in health on economic development using a long panel of European countries. Identification is based on the particular timing of the introduction of public health care systems in different countries, which is the random outcome of a political process. We document that the introduction of public health care systems had a significant immediate effect on the dynamics of infant mortality and crude death rates. The findings suggest that a reduction in infant mortality or crude death rates exhibited a positive effect on growth in income per capita and increased population growth.
    Keywords: mortality, economic development, growth, public health care
    JEL: I10 J10 O11 N13
    Date: 2011–08
  9. By: Claudia Burgard; Katja Görlitz
    Abstract: Using data from the German Socio-Economic Panel (SOEP), this paper analyzes the relationship between training and job satisfaction focusing in particular on gender differences. Controlling for a variety of socio-demographic, job and firm characteristics, we find a difference between males and females in the correlation of training with job satisfaction which is positive for males but insignificant for females. This difference becomes even more pronounced when applying individual fixed effects. To gain insights into the reasons for this difference, we further investigate training characteristics by gender. We find that financial support and career-orientation of courses only seems to matter for the job satisfaction of men but not of women.
    Keywords: Training, job satisfaction, gender differences, fixed effects
    JEL: I29 J24 J28 M53
    Date: 2011
  10. By: Cécile Hoareau
    Abstract: The French Government has had a paradoxical relationship with globalization. Globalization is perceived as both a threat to react against and a cradle for new policy ideas. French policymakers have a love-hate relationship with the European higher education reforms that started in the 1990s, a mixed sentiment that French singer Serge Gainsbourg spoke of in his popular song, ‘Je t’aime moi non plus’. At the outset, most of higher education reforms, such as the Bologna declaration, were framed as a way to build Europe and fight against international competition. Yet, the mode of governance of these reforms mirrored the one recommended by international organizations and led to the precise outcome criticized in globalization, i.e. greater competition. This paper explores the relationship between international, European and domestic discourses and modes of governance. It uses insights from the literature on policy transfer to investigate such relationship and questions the sustainability of such ambivalent discourse. The French government should concentrate on the policy it started developing from 2007 consisting in opening French higher education to globalization. Such global openness requires a change in the academic culture that could be triggered by a reform of academic training.
    Keywords: Education
    Date: 2011–01–01
  11. By: Roger Brown
    Abstract: From 2012 English universities and colleges will be operating in a more demanding market environment. There will be competition on tuition fees for undergraduate (Baccalaureate) programs for the first time. New private, including “for profitâ€, providers will be entering the market. There will be much more information about what institutions will be offering to existing and potential students. The Government believes that this will raise quality as well as providing a sustainable basis for the future. However there is little evidence to support these beliefs and considerable grounds for supposing that these policies will create a more stratified, and potentially more wasteful, system.
    Keywords: Education
    Date: 2011–05–01
  12. By: Lehmann, Hartmut (University of Bologna); Muravyev, Alexander (IZA)
    Abstract: This paper summarizes the evolution of labor markets and labor market institutions and policies in the countries of Central and Eastern Europe as well as of Central Asia over the last two decades. The main focus is on the evolution of labor market institutions, which are among candidate explanations for the very diverse trajectories of labor markets in the region. We consider recent contributions that attempt to assess the effect of labor market institutions on labor market performance of TEs, including the policy-relevant issue of complementarity of institutions.
    Keywords: transition economies, unemployment, labor market institutions, labor markets
    JEL: J21 P20
    Date: 2011–08
  13. By: Aday Hernandez; Juan Luis Jimenez (University of Las Palmas de Gran Canaria. Facultad de Economía, Empresa y Turismo)
    Abstract: Some countries, especially in Europe, regulate the textbook market due to its special characteristics. In 2000, the Spanish Government passed a law that relaxes resale price maintenance and lets retailers give discounts of up to 25% off the gross price. Traditional bookshops do not favour this policy. We construct a database for the Canary Islands (a Spanish Autonomous Community) on schools, bookshops, population and other control factors. Our empirical objectives are twofold: first, we explore whether malls force the exit (or encourage entry) of bookshops; second, we test whether these larger retailers decrease consumer welfare by increasing distance from schools to points of sale. The results show that malls are not as bad as bookshops claim
    Keywords: Textbooks, Competition, Regional economic activity
    JEL: Z11 R11
    Date: 2011–07
  14. By: Winzer, C.
    Abstract: Energy security is one of the main targets of energy policy. However, the term has not been clearly defined, which makes it hard to measure and difficult to balance against other policy objectives. We review the multitude of definitions of energy security. They can be characterized according to the sources of risk, the scope of the impacts, and the severity filters in the form of the speed, size, sustention, spread, singularity and sureness of impacts. Using a stylized case study for three European countries, we illustrate how the selection of conceptual boundaries along these dimensions determines the outcome. This can be avoided by more clearly separating between security of supply and other policy objectives. This leads us to the definition of energy security as the continuity of energy supplies relative to demand. If security is defined from the perspective of private utilities, end consumers or public servants, the concept could further be reduced to the continuity of specific commodity or service supplies, or the impact of supply discontinuities on the continuity of the economy.
    JEL: N7 O13 Q4
    Date: 2011–08–16
  15. By: Christoffel Reumer and Marijk van der Wende
    Abstract: This paper explores the emergence of selective admission policies in Dutch university education. Such policies are being developed to promote excellence in a higher education system that is generally known to be “egalitarian†and increasingly criticized for a lack of differentiation. The changing policy context of admission in Dutch university education and its driving forces and rationales are discussed in the context of European-wide developments such as the Bologna Process. Especially the emergence of selective liberal arts colleges will be presented as a recent excellence initiative. A review of international trends, methods and criteria in selective admission (notably from systems with extensive experience in this field such as the USA), including historical pitfalls, provides an analytical framework for the discussion of the fostering of excellence in combination with the aim for diversity in the student population. The predictive value of selection methods and criteria used at Amsterdam University College (AUC) are evaluated against the study progress and performance of AUC students. This includes academic criteria such as GPA in secondary school, and AUC’s use of interviews. Examining data from AUC’s first entering class in 2009, the college has achieved enrolling students from different national and socioeconomic backgrounds. It is also achieving excellence in terms of study progress and academic performance, including an attrition rate of only 13 percent. The question is whether interviews generate sufficient added value, in particular with regard to the time and costs of this model and with a view to the risk of subjective interpretations of “soft variables†such as student motivation. The answer seems to be that interviews provide extra guidance to both the student and the institution as to whether the student is choosing the right study programme (and not so much as whether he or she is able to complete it successfully). Consequently, the combined model of selection on the basis of prior academic achievement at secondary school (GPA) and personal interviews will be continued. However, specific attention needs to be paid to the fact that the interviewer’s estimate of academic performance seems to be less accurate to predict study success than the actual secondary school GPA (i.e. based on the former more students could have been wrongly rejected than on the basis of the latter).
    Keywords: Education
    Date: 2010–10–01
  16. By: Martinho, Vítor João Pereira Domingues
    Abstract: With this work we try to analyse the agglomeration process in Portugal, using the New Economic Geography models, in a linear and in a non linear way. In a non linear way, of referring, as summary conclusion, that with this work the existence of increasing returns to scale and low transport cost, in the Portuguese regions, was proven and, because this, the existence of agglomeration in Portugal. We pretend, also, in a linear way to explain the complementarily of clustering models, associated with the New Economic Geography, and polarization associated with the Keynesian tradition. As a summary conclusion, we can say which the agglomeration process shows some signs of concentration in Lisboa e Vale do Tejo and the productivity factor significantly improves the results that explain the regional clustering in Portugal. The aim of this paper is to analyze, yet, the relationship between the regional industry clustering and the demand for labor by companies in Portugal. Again, the results are consistent with the theoretical developments of the New Economic Geography, namely the demand for labor is greater where transport costs are lower and where there is a strong links "backward and forward" and strong economies of agglomeration.
    Keywords: new economic geography; linear and non linear models; Portuguese regions
    JEL: O18 C23 R12 R23
    Date: 2011
  17. By: Roel van Elk
    Abstract: <p>Recently, there has been considerable debate about a reform of the Dutch system of student support, in which grants will be (partly) replaced by loans. </p><p>The discussion focuses on the effects on student enrollment decisions. Surprisingly, no study has yet analysed the effect of receiving a grant on parental contribution. Parents may decrease their contribution when their child receives a grant, in which case subsidies meant for the students unintentionally end up with the parents. Understanding the corresponding parental behaviour will contribute to a more in-depth discussion on the financial aid system.</p><p>This paper focuses on the effect of the supplementary grant on the parental contribution in the Netherlands. The supplementary grant is meant to support students from disadvantaged families. Parents from students with the supplementary grant have less disposable income, which probably implies a lower contribution. Our identification strategy separates this income effect from the effect due to the payments of the supplementary grant. The results suggest substantial substitution. Each additional euro spent on supplementary grant reduces the parental contribution with approximately 20-60 cents. A broad range of sensitivity analyses support our main estimation results. Nevertheless, some caution in interpreting the results is needed because of data limitations.</p>
    Date: 2011–08

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