nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2011‒10‒09
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Immigration and Occupations in Europe By Francesco D'Amuri; Giovanni Peri
  2. Does institutional diversity account for pay rules in Germany and Belgium? By Stephan K. S. Kampelmann; François Rycx
  3. Households’ WTP for the Reliability of Gas Supply By Wan-Jung Chou; Andrea Bigano; Alistair Hunt; Stephane La Branche; Anil Markandya; Roberta Pierfederici
  4. Carbon Taxation in the EU: Expanding EU Carbon Price By David A. Weisbach
  5. Who gets a mammogram amongst European women aged 50-69 years and why are there such large differences across European countries? By Wübker, Ansgar
  6. Regional Unemployment in the EU before and after the Global Crisis By Enrico Marelli; Roberto Patuelli; Marcello Signorelli
  7. Modern Day Slavery: What Drives Human Trafficking in Europe? By Diego Hernandez; Alexandra Rudolph
  8. The end of the "European paradox" By Neus Herranz; Javier Ruiz-Castillo
  9. Ethnic Identity and Labor-Market Outcomes of Immigrants in Europe By Alberto Bisin; Eleonora Patacchini; Thierry Verdier; Yves Zenou
  10. The impact of turning a tax reduction into a tax credit to subsidize in-home services: an evaluation of the 2007 reform in France By C. MARBOT; D. ROY
  11. Skill mismatches and wages among European university graduates By Bárcena-Martín, Elena; Budría, Santiago; Moro-Egido, Ana I.
  12. Educational Achievement of Second Generation Immigrants: An International Comparison By Christian Dustmann; Tommaso Frattini; Gianandrea Lanzara
  13. Learning processes and economic returns in European Cohesion policy By Andrés Rodríguez-Pose; Katja Novak
  14. Openness to Trade, Migration and Foreign Direct Investments of the EU By Stanislav Cernosa
  15. Sexual orientation and wage discrimination in France: the hidden side of the rainbow By LAURENT, THIERRY; MIHOUBI, FERHAT
  16. Closer to an internal market? The economic effects of EU tax jurisprudence By Clemens Fuest; Rita de la Feria
  17. (Bad) Luck or (Lack of) Effort?: Comparing Social Sharing Norms between US and Europe. By Pedro Rey-Biel; Roman M. Sheremeta; Neslihan Uler
  18. One Dummy Won't Get it: The Impact of Training Programme Type and Duration on the Employment Chances of the Unemployed in Ireland By McGuinness, Seamus; O'Connell, Philip J.; Kelly, Elish
  19. The make-up of a regression coefficient: An application to gender By M. Grazia Pittau; Shlomo Yitzhaki; Roberto Zelli
  20. Gender Differences in the Intergenerational Earnings Mobility of Second-Generation Migrants By Regina Flake

  1. By: Francesco D'Amuri (Bank of Italy and ISER, University of Essex); Giovanni Peri (University of California, Davis and NBER)
    Abstract: In this paper we analyze the effect of immigrants on natives' job specialization in Western Europe. We test whether the inflow of immigrants changes employment rates or the chosen occupation of natives with similar education and age. We find no evidence of the first and strong evidence of the second: immigrants take more manual-routine type of occupations and push natives towards more abstract-complex jobs, for a given set of observable skills. We also find some evidence that this occupation reallocation is larger in countries with more flexible labor laws. As abstract-complex tasks pay a premium over manual-routine ones, we can evaluate the positive effect of such reallocation on the wages of native workers. Accounting for the total change in Complex/Non Complex task supply from natives and immigrants we find that immigration does not change much the relative compensation of the two types of tasks but it promotes the specialization of natives into the first type.
    Keywords: immigration, task specialization, European labor markets
    JEL: J24 J31 J61
    Date: 2010–10
  2. By: Stephan K. S. Kampelmann; François Rycx
    Abstract: This paper examines the relationship between institutions and the remuneration of different jobs by comparing the German and Belgian labour markets with respect to a typology of institutions (social representations, norms, conventions, legislation, and organisations). The observed institutional differences between the two countries lead to the hypotheses of (I) higher overall pay inequality in Germany; (II) higher pay inequalities between employees and workers in Belgium; and (III) higher (lower) impact of educational credentials (work-post tenure) on earnings in Germany. We provide survey-based empirical evidence supporting hypotheses I and III, but find no evidence for hypothesis II. These results underline the importance of institutional details: although Germany and Belgium belong to the same "variety of capitalism", we provide evidence that small institutional disparities within Continental-European capitalism account for distinct structures of pay.
    Keywords: Labour market institutions; wage inequality; rules; collective bargaining.
    JEL: J31 J51 J52 J53
    Date: 2011–09
  3. By: Wan-Jung Chou (APEC Research Centre for Typhoon and Society); Andrea Bigano (Fondazione Eni Enrico Mattei and Centro Euro-Mediterraneo per i Cambiamenti Climatici); Alistair Hunt (University of Bath); Stephane La Branche (Institute of political studies); Anil Markandya (BC3 Basque Centre for Climate Change, University of Bath); Roberta Pierfederici (Fondazione Eni Enrico Mattei)
    Abstract: The security of natural gas supply is an important issue for all EU countries due to the region’s heavy dependence on imported supply sources and in light of energy demand for gas that is continuously increasing. Discussions have emphasised strategies for securing the supply at the macro level, e.g. diversification in supply sources, increase in storage capacity, etc. By contrast, consumers’ demand for the reliability of gas supply is rarely investigated. Hence this study was conducted to examine the economic implications associated with the security of gas supply directly to domestic consumers. Based on the choice experiment approach, household surveys were conducted in France, Italy and the UK. The results confirmed that the degree of the economic impact of a disruption of gas supply to domestic consumers was a function of the duration of a supply disruption and the season in which a supply cut would take place, as well as other preferences of consumers. The willingness to pay to secure per unit of gas consumption, or alternatively the costs of gas unsupplied, was estimated at between €2.65/cubic metre and €41.48/cubic metre across three different European countries.
    Keywords: Energy Security, Gas Supply, Households, Willingness to Pay, Choice Experiment, EU
    JEL: C35 C93 D12 Q41
    Date: 2011–07
  4. By: David A. Weisbach (University of Chicago)
    Abstract: The current pricing mechanism for carbon in the EU, the EU emissions trading system, only covers 40 percent of emissions. Carbon taxation currently plays no role. The Commission has recently proposed to revise the energy tax system in the EU to include a carbon tax component. This paper evaluates the Commission proposal and considers the possible expansion of the EU carbon pricing base either by expanding emissions trading to cover more sectors or by enacting a carbon tax. It concludes that there are strong arguments for expanding the carbon pricing base, as suggested by the Commission. Nevertheless, expanding the base should done through a unified system, such as expanding the coverage of the emissions trading system or enacting an economywide carbon tax rather than through having side-by-side taxes and trading, as in the Commission proposal.
    Keywords: Carbon Tax
    Date: 2011
  5. By: Wübker, Ansgar
    Abstract: On the basis of the Survey of Health, Ageing, and Retirement (SHARE), we analyse the determinants of who engages in mammography screening focusing on European women aged 50-69 years. A special emphasis is put on the measurement error of subjective life expectancy and on the measurement and impact of physician quality. Our main findings are that physician quality, better education, having a partner, younger age and better health are associated with higher rates of receipt. The impact of subjective life-expectancy on screening decision substantially increases after taking measurement error into account. In light of the enormous differences in mammography screening rates between the European countries that can be detected even if several individual characteristics are taken into account, we explore in a second step the causes of these screening differences using newly available data from the SHARELIFE. The results reveal that in countries with low screening rates (e.g. Denmark, Greece and Poland) many reasons (financial restrictions, time costs, access barriers, lack of information, not usual and low perceived benefits of screening) are significant predictors of not receiving a mammogram. In contrast in countries with high screening rates such as the Netherlands only beliefs regarding the benefits of mammograms (Not considered to be necessary) and the cause Not usual to get this type of care seem to be important screening barriers. --
    JEL: I11 I18
    Date: 2011
  6. By: Enrico Marelli (Department of Economics, Faculty of Economics, University of Brescia, Italy); Roberto Patuelli (Department of Economics, Faculty of Economics-Rimini, University of Bologna, Italy; The Rimini Centre for Economic Analysis (RCEA), Italy); Marcello Signorelli (Department of Economics, Finance and Statistics, Faculty of Political Sciences, University of Perugia, Italy)
    Abstract: In this paper we empirically assess the evolution for the EU regions of both employment and unemployment before and after the Global Crisis. After a review of the literature on the theories and key determinants of regional unemployment, we shall overview the main findings concerning the labour market impact of the Global Crisis. The empirical analysis will initially be carried out at the national level including all EU countries; subsequently, we shall focus on the EU regions (at the NUTS-2 level), in order to detect possible changes in the dispersion of regional unemployment rates after the crisis. Our econometric investigations aim to assess the effect, on labour market performance, of previous developments in regional labour markets time series, as well as the importance of structural characteristics of the labour markets, in terms of the sectoral specialization of the regional economies. In fact, the local industry mix may have played a crucial role in shaping labour market performance in response to the crisis. In addition, we consider further characteristics of the regional labour markets, by including indicators of the level of precarization of labour and of the share of long-term unemployed, as indicators of the efficiency of the local labour markets. From a methodological viewpoint, we exploit eigenvector decomposition-based spatial filtering techniques, which allow us to greatly reduce unobserved variable bias – a significant problem in cross-sectional models – by including indicators of latent unobserved spatial patterns. Finally, we render a geographical description of the heterogeneity influence of past labour market performance over the crisis period, showing that the past performance has a differentiated impact on recent labour market developments.
    Keywords: crisis, employment, unemployment, European Union, NUTS-2, spatial filtering, sectoral composition, spatially heterogeneous parameters
    JEL: C21 R12
    Date: 2011–09
  7. By: Diego Hernandez (Georg-August-University Göttingen); Alexandra Rudolph (Georg-August-University Göttingen)
    Abstract: At a time of increased attention on the international agenda for human trafficking, this paper examines the determinants of human trafficking inflows to 13 European countries based on official records. By employing a fixed effects zero-inflated, negative binomial gravity-type model, we address data characteristics appropriately. The econometric analysis suggests that human trafficking occurs in well established routes for migrants and refugees. Victims are more likely to be transported to, and exploited in, host countries with suboptimal institutional quality levels. Countries whose nationals do not require a visa for short term visits are especially prone to being potential source countries. Legal status and regulation of commercial sex services does not affect the pattern of trafficking flows.
    Keywords: Human Trafficking; Gravity Model; Illegal Migration; International Organized Crime
    JEL: F22 J61 K14 K42 O17
    Date: 2011–09–30
  8. By: Neus Herranz; Javier Ruiz-Castillo
    Abstract: This paper evaluates the European Paradox according to which Europe plays a leading world role in terms of scientific excellence, measured in terms of the number of publications, but lacks the entrepreneurial capacity of the U.S. to transform this excellent performance into innovation, growth, and jobs. Citation distributions for the U.S., the European Union (EU), and the rest of the world are evaluated using a pair of high- and low-impact indicators, as well as the mean citation rate. The dataset consists of 3.6 million articles published in 1998-2002 with a common five-year citation window. The analysis is carried at a low aggregation level: the 219 sub-fields identified with the Web of Science categories distinguished by Thomson Scientific. The problems posed by international co-authorship and the multiple assignments of articles to sub-fields are solved following a multiplicative strategy. In the first place, we find that, although the EU has more publications than the U.S. in 113 out of 219 sub-fields, the U.S. is ahead of the EU in 189 and 163 sub-fields in terms of the high- and low-impact indicators. In the second place, we verify that using the high-impact indicator the U.S./EU gap is usually greater than when using the mean citation rate.
    Date: 2011–09
  9. By: Alberto Bisin (New York University); Eleonora Patacchini (La Sapienza University of Rome, Einaudi Institute for Economics and Finance (EIEF) and CEPR); Thierry Verdier (Paris School of Economics (PSE) and CEPR); Yves Zenou (Stockholm University, Research Institute of Industrial Economics (IFN), CEPR, IZA and CREAM)
    Abstract: We study the relationship between ethnic identity and labor-market outcomes of non-EU immigrants in Europe. Using the European Social Survey, we find that there is a penalty to be paid for immigrants with a strong identity. Being a first generation immigrant leads to a penalty of about 17 percent while second-generation immigrants have a probability of being employed that is not statistically different from that of natives. However, when they have a strong identity, second-generation immigrants have a lower chance of finding a job than natives. Our analysis also reveals that the relationship between ethnic identity and employment prospects may depend on the type of integration and labor-market policies implemented in the country where the immigrant lives. More flexible labor markets help immigrants to access the labor market but do not protect those who have a strong ethnic identity.
    Date: 2011–01
  10. By: C. MARBOT (Insee); D. ROY (Insee)
    Abstract: Since 1991, French taxpayers who employ someone to work at their home (for care, cleaning, etc.) can deduct 50 % of the employment cost from their income tax. In 2007, the tax reduction was turned into a tax credit, making lower income households eligible. However, this change was limited to economically active home employers, which narrowed the scope of the reform. To measure its impact, we use exhaustive tax data, built into a panel covering the 2006-2008 period. First, we study the changes in the amounts refunded, in the number and in the characteristics of home employers. In 2008, households spent 7.8 billion euros on in-home services. 2.6 billion were refunded to them in tax reduction, only 151 million in actual tax credit. Among home employers that did not benefit from the tax reduction scheme in 2006, only 14% later became recipients of the tax credit. This is because the requirement to be economically active excludes the elderly, who make up most of the less well-off home employers. Next, we try to measure the causal change in the consumption of in-home services attributable to the new tax credit. Depending on the definition of the incentive, between 15 % and 25 % of households are impacted. Combining matching and difference-in-difference estimates, we find a significant increase both in the number of home employers and in their expenditure.
    Keywords: Tax credit, home employers, in-home services, tax incentives, policy evaluation, matching, difference-in-difference estimates
    JEL: D13 H23 H31
    Date: 2011
  11. By: Bárcena-Martín, Elena; Budría, Santiago; Moro-Egido, Ana I.
    Abstract: This paper uses comparable international data to examine the extent and wage effects of skill mismatches among European university graduates. The results show that the mismatched earn on average 11.7% less than their well-matched counterparts. This effect, however, cannot be regarded as constant across the conditional earnings distribution: workers with lower unobserved earnings capacity tend to be exposed to greater wage loses when they end up in mismatched jobs.
    Keywords: skill mismatch; pay-penalty; inequality
    JEL: C29 J31 I21
    Date: 2011–07
  12. By: Christian Dustmann (University College London and CReAM); Tommaso Frattini (Università  degli Studi di Milano, CReAM, IZA and LdA); Gianandrea Lanzara (University College London and CReAM)
    Abstract: This paper investigates the educational achievements of second generation immigrants in several OECD countries in a comparative perspective. We first show that the educational achievement (measured as test scores in PISA achievement tests) of children of immigrants is quite heterogeneous across countries, and strongly related to achievements of the parent generation. The disadvantage considerably reduces, and even disappears for some countries, once we condition on parental background characteristics. Second, we provide novel analysis of cross-country comparisons of test scores of children from the same country of origin, and compare (conditional) achievement scores in home and host countries. The focus is on Turkish immigrants, whom we observe in several destination countries. We investigate both mathematics and reading test scores, and show that the results vary according to the type of skills tested. For mathematics, in most countries and even if the test scores achievement of the children of Turkish immigrants is lower than that of their native peers, it is still higher than that of children of their cohort in the home country - conditional and unconditional on parental background characteristics. The analysis suggests that higher school quality relative to that in the home country is important to explain immigrant children's educational advantage.
    Date: 2011–07
  13. By: Andrés Rodríguez-Pose (IMDEA Social Sciences); Katja Novak (Slovenian Government)
    Abstract: This paper evaluates whether the learning mechanisms of the European Cohesion policy have contributed to improve the economic impact of Structural Fund expenditure over time. It intends to show whether the evolution of the policy in response to greater internal monitoring and consultation and external scrutiny and criticism has resulted in a more efficient and better targeted Cohesion policy. This is tested using an econometric model which evaluates the effect of Structural Fund expenditure on the growth of regional GDP per capita – conditional on factor endowments, institutional quality and initial conditions – during the last programming periods for which full sets of data are available (1994-1999 and 2000-2006). The results of the analysis unveil an increase in the effectiveness of the policy in successive periods. This positive association is robust to controlling for the level of development of the country and the relative economic position of a region within a country. The results also show that, when structural factors are taken into consideration, Structural Fund investment tends to yield higher returns in better-off countries and wealthier regions within countries.
    Keywords: Cohesion; regional development; economic growth, GDP per capita; regions; European Union
    Date: 2011–09–30
  14. By: Stanislav Cernosa
    Abstract: This paper analyses openness to trade, migration and foreign direct investment (FDI) using panel data. The focus is on the relationship between 15 EU countries (EU 15) as destination countries, and 71 trading partner countries which send migrants and receive FDI outflows, where only those predictions are introduced in the extended gravity model which are based on demographic trends of the partner countries and their geographical locations. The results confirm that a unified model successfully explains differences in openness to trade, migration and FDI between the EU 15 and the 12 new EU member countries, candidate countries, and developing countries.
    Keywords: International trade, migration, foreign direct investment, gravity model
    Date: 2011–09–30
    Abstract: This article is the first study to present an econometric evaluation of wage discrimination based on sexual orientation in the French labor market. Having identified same-sex couples using the French Employment Survey, we estimate the wage gap related to sexual orientation in the private and public sectors, in order to analyze whether or not lesbians and gays suffer a wage penalty. The results obtained show the existence of a wage penalty for homosexual male workers, as compared with their heterosexual counterparts, in both the private and public sectors; the magnitude of this discrimination varies from about -6.5% in the private sector, to -5.5% in the public sector. In the private sector, the wage penalty suffered by gay employees is higher for skilled workers than for the unskilled, and – in both sectors – the wage penalty is higher for older workers than for younger ones. Discrimination is also lower in Paris than in the rest of France. As with many other countries, we do not find any evidence of the existence of a wage discrimination against lesbians.
    Keywords: Wage discrimination; Sexual orientation; Gay and Lesbians
    JEL: J7
    Date: 2011–09–01
  16. By: Clemens Fuest (Oxford University Centre for Business Taxation); Rita de la Feria (Oxford University Centre for Business Taxation)
    Abstract: This paper proposes a new framework to assess the impact of Court of Justice of the European Union (CJEU) jurisprudence on Internal Market-related areas, by considering whether the jurisprudence of the Court on corporate taxation fulfils the constitutional mandate, as set-out in the European Treaties, of establishing such a market. It is shown that the Court’s focus upon removing discriminatory obstacles to the fundamental freedoms does not necessarily lead to a more level playing field and increased tax neutrality, an instrumental objective towards attaining a European Internal Market. In order to assess whether the jurisprudence of the Court does indeed attain increased neutrality or level playing field, two rulings are used as case studies. The first ruling in Lankhorst-Hohorst regards the compatibility of thin capitalisation with free movement provisions; the second in Marks & Spencer concerns the compatibility of rules on group consolidation with those same provisions. An economic analysis demonstrates that, depending on the reaction of Member States to the ruling, tax induced differences in capital costs faced by firms operating within the European Internal Market may increase, whilst GDP and welfare may decrease. Consideration of actual legislative amendments introduced to thin capitalisation rules by Member States following Lankhorst-Hohorst, and to group consolidation rules following Marks & Spencer, appear to indicate that it is this negative scenario which has prevailed. Results demonstrate that it is not always or necessarily the case that decisions of the CJEU will led to an increased level playing field and tax neutrality, thus contributing to the establishing of the EU Internal Market. The paper considers the constitutional implications of this conclusion, and the consequent breaking of the constitutional instrumental chain. In particular, it reflects on whether the Court’s actions can be regarded as ultra vires, and whether they may constitute a violation of the rule of law and the principle of separation of powers. It concludes that the Court’s lack of consideration of the constitutional instrumental chain might mean that we are heading in the wrong direction.
    Date: 2011
  17. By: Pedro Rey-Biel (Universitat Autònoma de Barcelona, Departmento de Economía e Historia Económica); Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University, USA); Neslihan Uler (Research Center for Group Dynamics, Institute for Social Research, University of Michigan)
    Abstract: We compare the determinants of individual giving between two countries, Spain and the US, which differ in their redistribution policies and their beliefs over the causes of poverty. By varying the information about the determinants of income, we find that, although overall giving is similar in both countries when subjects know the actual role of luck and effort, Spanish subjects give more when they are uninformed compared to American subjects. Using elicited beliefs, we find that this is due to Spanish subjects associating poverty with bad luck and Americans believing that low performers did not work hard enough.
    Keywords: individual giving, cross-cultural, beliefs, laboratory experiment
    JEL: C72 C91 D63 D81 H50
    Date: 2011
  18. By: McGuinness, Seamus; O'Connell, Philip J.; Kelly, Elish
    Abstract: In the extensive literature on the employment impact of public-sponsored training programmes for the unemployed, insufficient attention has been paid to the differential impact of different types of programmes and training duration. This paper uses a unique dataset, which tracks the labour market position of a cohort of unemployment benefit claimants for almost two years, to evaluate the impact of a range of government-sponsored training courses in Ireland. Overall, we found that those who participated in training were less likely to be unemployed at the end of the two-year study period. However, the average effect of training varied by the type and duration of training received. In general, we found strong positive effects for job-search skills training and medium-to high-level skills courses, a more modest positive effect for general vocational skills programmes (which are not strongly linked to demand in the labour market) and less consistent effects with respect to low-level skills training. We also found that training episodes with lower duration had a more positive impact, with the exception of high-level skills training programmes where longer training durations appear more effective. The results suggest that, in the Irish context, there are potentially substantial benefits to re-orientating unemployment training provision away from standard classroom vocational training towards the medium to high-level skill end of the market and demonstrate that, in most cases, training durations can be reduced without lowering the effectiveness of the interventions.
    Keywords: employment/Ireland/labour market/unemployment/skills/vocational training
    Date: 2011–09
  19. By: M. Grazia Pittau (Sapienza Universita' di Roma); Shlomo Yitzhaki (The Hebrew University of Jerusalem and Central Bureau of Statistics); Roberto Zelli (Sapienza Universita' di Roma)
    Abstract: In this paper we illustrate the potential use of an old/new methodology which combines the use of concentration curves in order to investigate the components that make up a regression coefficient. The illustration is based on examining gender differences in the effect of age on labor market participation in Italy. Women participation rate is substantially lower than men, but their age profile is similar. The most striking difference is in terms of hours of work: while Italian men increase their work effort until the age of 35, Italian women reduce it until the age of 39. These results do not differ substantially when we split the working population into employed and self-employed. Earnings increase with age for both men and women, however the local regression coefficient is negative for Italian women in the age of 38–42. This evidence is accentuated when we focus on the employees.
    Keywords: Gini, OLS, Concentration curves, Regression decomposition, Italian labor market.
    JEL: C30 J16 J21
    Date: 2011–09
  20. By: Regina Flake
    Abstract: This study analyzes gender diff erences in the intergenerational earnings mobility of second-generation migrants in Germany. The analysis takes into account potential infl uences like assortative mating in the form of ethnic marriages and the parental integration measured by parents’ years since migration. First, intergenerational earnings elasticities are estimated at the mean and along the earnings distribution. The results do not reveal large diff erences in the intergenerational mobility – neither between natives and migrants nor between men and women. Second, intergenerational changes in the relative earnings position are analyzed. The results show that migrants are less likely than natives to worsen their relative earnings position while they have the same probability as natives to improve their earnings position. In summary, migrants are mostly as (im)mobile as the native population.
    Keywords: International migration; second-generation migrants; intergenerational mobility; marriage
    JEL: F22 J12 J30 J62
    Date: 2011–09

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