nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2011‒10‒15
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. The impact of R&D on employment in Europe: a firm-level analysis By Francesco Bogliacino; Mariacristina Piva; Marco Vivarelli
  2. Productivity and Subsidies in European Union Countries: An Analysis for Dairy Farms Using Input Distance Frontiers By Latruffe, Laure; Bravo-Ureta, Boris E.; Moreira, Victor H.; Desjeux, Yann; Dupraz, Pierre
  3. The Effect of Emigration on Unemployment: Evidence from the Central and Eastern European EU Member States By Pryymachenko, Yana; Fregert, Klas; Andersson, Fredrik N. G.
  4. Regional patterns in the achievement of the Lisbon Strategy: a comparison between polycentric regions and monocentric ones By Paola Bertolini; Enrico Giovannetti; Francesco Pagliacci
  5. The French Unhappiness Puzzle: the Cultural Dimension of Happiness By Claudia Senik
  6. More Schooling, More Children: Compulsory Schooling Reforms and Fertility in Europe By M. Fort; N. Schneeweis; R. Winter-Ebmer
  7. Profit Persistence in the Food Industry: Evidence from five European Countries By Gschwandtner, Adelina; Hirsch, Stefan
  8. Towards GMO-free landscapes? Identifying driving factors for the establishment of cooperative GMO-free zones in Germany By Consmuller, Nicola; Beckmann, Volker; Petrick, Martin
  9. European versus non-European immigrants on the Swedish labour market during the recession By Ekberg, Jan
  10. Fuel Prices and New Vehicle Fuel Economy in Europe By Thomas Klier; Joshua Linn
  11. Do Highly Educated Women Choose Smaller Families? By Hazan, Moshe; Zoabi, Hosny
  12. The drivers of happiness inequality: Suggestions for promoting social cohesion By Leonardo Becchetti; Riccardo Massari; Paolo Naticchioni
  13. Distributional Effects of CAP Subsidies: Micro Evidence from the EU By Ciaian, Pavel; Kancs, D'Artis; Paloma, Sergio Gomez y
  14. Analysing Intergenerational Influences on Income Poverty and Economic Vulnerability with EU-SILC By Christopher T. Whelan; Bertrand Maitre; Brian Nolan
  15. The Impact of Cultural Diversity on Innovation: Evidence from Dutch Firm-Level Data By Ozgen, Ceren; Nijkamp, Peter; Poot, Jacques
  16. Comparative Analysis of Technical Efficiency in European Agriculture By Bakucs, Lajos Zoltan; Ferto, Imre; Latruffe, Laure; Desjeux, Yann; Soboh, Rafat; Dolman, Mark
  17. Career Interruptions : How Do They Impact Pension Rights ?. By El Mekkaoui de Freitas, Najat; Duc, Cindy; Briard, Karine; Mage-Bertomeu, Sabine; Legendre, Berangère
  18. JOB CREATION AND JOB DESTRUCTION IN THE EU AGRICULTURE By Dries, Liesbeth; Ciaian, Pavel; Kancs, D'Artis
  19. European farming and post-2013 CAP measures. A quantitative impact assessment By Helming, John F.M.; van Meijl, Hans; Woltjer, Geert B.; Jansson, Torbjorn; Nowicki, Peter; Tabeau, Andrzej A.
  20. Crime and Unemployment: Evidence from Europe By Duha T. Altindag

  1. By: Francesco Bogliacino (European Commission, Joint Research Center - Institute for Perspective Technological Studies, Sevilla & Centro de Estudios Para America Latina y el Caribe-Universidad EAFIT, Rise Group); Mariacristina Piva (Università Cattolica, Milano and Piacenza); Marco Vivarelli (Università Cattolica, Milano and Piacenza & SPRU-University of Sussex & IZA, Bonn)
    Abstract: The aim of this paper is to test the employment effect of business R&D expenditures, using a unique longitudinal database covering 677 European manufacturing and service firms over the period 1990-2008. Main result 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 job creation effect of R&D expenditures 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 evidence should be kept 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
  2. By: Latruffe, Laure; Bravo-Ureta, Boris E.; Moreira, Victor H.; Desjeux, Yann; Dupraz, Pierre
    Abstract: The major objective of this paper is to examine the association between agricultural subsidies and farm efficiency using data from the European Farm Accountancy Data Network (FADN) for operations specializing on dairy. The analysis covers the 18 year period going from 1990 to 2007 and includes the following seven countries: Denmark; France; Germany; Ireland; Spain; the Netherlands; and the United Kingdom. Separate translog stochastic input distance frontiers are estimated for each country. The key results show high average technical efficiency (TE) ranging from 91.8% to 94.9%, average rates of technological change going from -0.6% to 1.4%, and increasing returns to scale (1.24 to 1.44) across all seven countries. In addition, higher subsidy and hired labor dependence are found to be significantly associated with higher technical inefficiency across all seven countries. Moreover, the latest Common Agricultural Policy (CAP) regime introducing fully decoupled payments has reduced TE in all countries considered except Denmark.
    Keywords: Subsidies, CAP, technical efficiency, technological progress, returns to scale, Europe, dairy production, input distance frontiers, Livestock Production/Industries, Productivity Analysis,
    Date: 2011
  3. By: Pryymachenko, Yana (Department of Economics, Lund University); Fregert, Klas (Department of Economics, Lund University); Andersson, Fredrik N. G. (Department of Economics, Lund University)
    Abstract: This paper contributes to the scant empirical literature on the effects of emigration on source countries’ labour markets. Using a novel dataset by Brücker et al. (2009), we investigate whether emigration from the Central and Eastern European (CEE) members of European Union (EU) during the period 2000 to 2007 has contributed to the decline in unemployment observed in these countries. We find that along with structural changes that occurred in the CEE economies during the last decade, emigration indeed had a strong negative effect on unemployment in these countries. A 10 per cent increase in emigration rate leads to around 5 per cent decrease in unemployment rate. Given the minor effect of immigration on host countries’ unemployment found in the literature (including the studies examining the East-West European migration), this paper’s results indicate that the opening up of labour markets following the enlargement of EU in 2004 mainly has had positive effects.
    Keywords: emigration; unemployment; Central and Eastern Europe
    JEL: J21 J31 J61
    Date: 2011–10–06
  4. By: Paola Bertolini; Enrico Giovannetti; Francesco Pagliacci
    Abstract: Polycentrism is a common feature of European urban systems. Lately, the concept has assumed a more normative relevance and it has been often considered as a pre-requisite for a more sustainable and balanced development across Europe. However, the effects of polycentrism on other main European Strategies (such as the Lisbon Strategy, aimed at increasing European competitiveness and social cohesion) are not so clear. Therefore, the paper tries to highlight the relationships between a regional polycentric development and the achievement of the Lisbon Strategy’s targets. Referring to a sample of 75 regions belonging to France, Germany, Italy and Spain, we have first measured the extent of polycentrism, by estimating through OLS the slope of the rank-size distribution of cities within each region. Then, we have performed a principal component analysis (PCA) in order to highlight the main features characterising the performance of each region according to Lisbon Strategy’s targets. Looking at the correlations between the extent of polycentrism and the achievement of the Lisbon Strategy’s targets, we have found that the former is significantly correlated both with the spread of manufacture and with low investments in human capital and innovation.
    Keywords: the Lisbon Strategy, polycentrism, rank-size distribution, PCA
    JEL: O18 O52 R00 R10
    Date: 2011–09
  5. By: Claudia Senik (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, Université Paris-Sorbonne - Ministère de l'Education nationale, de l'Enseignement supérieur et de la Recherche)
    Abstract: This article sheds light on the important differences in self-declared happiness across countries of equivalent affluence. It hinges on the different happiness statements of natives and immigrants in a set of European countries to disentangle the influence of objective circumstances versus psychological and cultural factors. The latter turns out to be of non-negligible importance in explaining international heterogeneity in happiness. In some countries, such as France, they are mainly responsible for the country's unobserved idiosyncratic level of (un-)happiness.
    Keywords: Happiness ; Subjective Well-Being ; International Comparisons ; France ; Immigration ; European Social Survey
    Date: 2011–10
  6. By: M. Fort; N. Schneeweis; R. Winter-Ebmer
    Abstract: We study the relationship between education and fertility, exploiting compulsory schooling reforms in Europe as source of exogenous variation in education. Using data from 8 European countries, we assess the causal effect of education on the number of biological kids and the incidence of childlessness. We find that more education causes a substantial decrease in childlessness and an increase in the average number of children per woman. Our findings are robust to a number of falsification checks and we can provide complementary empirical evidence on the mechanisms leading to these surprising results.
    JEL: I2 J13
    Date: 2011–09
  7. By: Gschwandtner, Adelina; Hirsch, Stefan
    Keywords: Agribusiness,
    Date: 2011
  8. By: Consmuller, Nicola; Beckmann, Volker; Petrick, Martin
    Abstract: Since the end of the quasi-moratorium on genetically modified organisms (GMO) in the European Union in 2004, the establishment of GMO-free zones has become an EU wide phenomenon. In contrast to other European countries, Germany follows the concept of cooperative GMO-free zones where neighbouring farmers contractually refrain from GMO cultivation. In this article, we address the question which underlying factors could account for the establishment of cooperative GMO-free zones in Germany. Drawing on the existing literature on spatial agglomeration of different farming systems and the establishment of GMO-free zones, we provide the first systematic study on driving factors for the regional formation of GMO-free zones in Germany. The empirical analysis is based on a unique data set at the federal states level for the years 2004 to 2007. We show that infestation rates with the European Corn Borer, imminent Bt maize cultivation in the near vicinity and the number of arriving tourists mainly account for the establishment of cooperative GMO-free zones. This finding is consistent with the view that it is more the overall rejection of agro-biotechnology by broad strata of the population, including stakeholders in tourism and environmental protection, than economic benefits at the farm level which make German regions establish GMO-free zones.
    Keywords: Genetically modified organisms (GMO), GMO-free zone, econometric analysis, Germany, Agribusiness,
    Date: 2011
  9. By: Ekberg, Jan (Centre for Labour Market Policy Research (CAFO))
    Abstract: Since the end of 2008 there is an economic recession in the world inducing a contraction in the Swedish economy. The recession has to a great extent been a recession in the manufactory sector. During the same period the number employed in the Swedish manufactory sector decreased by about 14 percent. A recovery started in 2010. The study shows that while immigrants born in Europe have not suffered more than natives since late 2008, immigrants born outside Europe have experienced a sharp deterioration in labour market situation compared to natives. The study presents some explanations. From late 2010 the situation has stabilized. There is also a comparison with the labour market situation for immigrants during the recession in the beginning of 1990s. The employment gap between natives and immigrants born outside Europe has not widened as much in the recession 2008 – 2010 as it did during the early 1990s.
    Keywords: Recession; Immigration
    JEL: J01
    Date: 2011–05–01
  10. By: Thomas Klier; Joshua Linn
    Abstract: This paper evaluates the effect of fuel prices on new vehicle fuel economy in the eight largest European markets. The analysis spans the years 2002–2007 and uses detailed vehicle registration and specification data to control for policies, consumer preferences, and other potentially confounding factors. Fuel prices have a statistically significant effect on new vehicle fuel economy in Europe, but this estimated effect is much smaller than that for the United States. Within Europe, fuel economy responds more in the United Kingdom and France than in the other large markets. Overall, substantial changes in fuel prices would have relatively small effects on the average fuel economy of new vehicles sold in Europe. We find no evidence that diesel fuel prices have a large effect on the market share of diesel vehicles.
    Date: 2011–08
  11. By: Hazan, Moshe; Zoabi, Hosny
    Abstract: Conventional wisdom suggests that in developed countries income and fertility are negatively correlated. We present new evidence that between 2001 and 2009 the cross-sectional relationship between fertility and women's education in the U.S. is U-shaped. At the same time, average hours worked increase monotonically with women's education. This pattern is true for all women and mothers to newborns regardless of marital status. In this paper, we advance the marketization hypothesis for explaining the positive correlation between fertility and female labor supply along the educational gradient. In our model, raising children and home-making require parents' time, which could be substituted by services bought in the market such as baby-sitting and housekeeping. Highly educated women substitute a significant part of their own time for market services to raise children and run their households, which enables them to have more children and work longer hours. Finally, we use our model to shed light on differences between the U.S. and Western Europe in fertility and women's time allocated to labor supply and home production. We argue that higher inequality in the U.S. lowers the cost of baby-sitting and housekeeping services and enables U.S. women to have more children, spend less time on home production and work more than their European counterparts.
    Keywords: fertility; U.S. - Europe differences; Women's education
    JEL: E24 J13 J22
    Date: 2011–10
  12. By: Leonardo Becchetti (University of Rome Tor Vergata); Riccardo Massari (University of Rome La Sapienza); Paolo Naticchioni (University of Cassino)
    Abstract: The goal of this paper is to identify and quantify the contribution of a set of covariates in affecting levels and over time changes of happiness inequality. We make use of a recent methodology that allows decomposing the overall change in happiness inequality into composition and coefficient effects of each covariate. We focus on the increase in happiness inequality observed in Germany between 1991 and 2007 in the German Socio-Economic Panel (GSOEP) database, deriving the following findings. First, trends in happiness inequality are mainly driven by composition effects, while coefficient effects are negligible. Second, among composition effects, education has an inequality-reducing impact, while changes in labour market conditions and demographic composition contribute to explain the rise in happiness inequality. Third, the increase in income inequality cannot be considered as a driver of the increase in happiness inequality. A clear cut policy implication of our paper is that policies enhancing education and labour market performance are crucial to reduce happiness inequality and the potential social tensions arising from it.
    Keywords: happiness inequality, income inequality, education, decomposition methods
    JEL: I31 I28 J17 J21 J28
    Date: 2011–10–06
  13. By: Ciaian, Pavel; Kancs, D'Artis; Paloma, Sergio Gomez y
    Abstract: In this paper we estimate the income distributional effects of the common agricultural policy (CAP) for farmers and landowners. Using a unique farm level panel data set from the FADN for the period 1995-2007 we employ the fixed effects, the Heckman selection bias and the GMM estimators to estimate income distributional effects of CAP subsidies. The results do not confirm the theoretical hypothesis that landowners benefit a large share of the CAP subsidies. According to our estimates, farmers gain between 60% to 95%, 80% to 178% and 86% to 90% of the total value of coupled crop/animal, coupled RDP and decupled payments, respectively. The CAP subsidies are only marginally capitalised in land rents. Our results suggest that rental rates are more responsive to structural variables and show a strong time dependency, suggesting the presence of rigidities in the EU rental markets, which constraint the adjustment of land rents to market signals and thus reduce landowners' gains from the CAP.
    Keywords: Agricultural and Food Policy,
    Date: 2011
  14. By: Christopher T. Whelan (School of Sociology, Geary Institute, University College Dublin); Bertrand Maitre (Economic and Social Research Institute, Dublin); Brian Nolan (School of Applied Social Science, University College Dublin)
    Abstract: The EU-SILC 2005 wave includes a special module on inter-generational transmission of poverty. In addition to the standard data relating to income and material deprivation, the information relating to parental background and childhood circumstances was collected for all household members or selected respondents aged over 24 and less than 66 at the end of the income reference period. In principle, the module provides an unprecedented opportunity to examine on a comparative European basis the relationship between current poverty and social exclusion outcomes and parental characteristics and childhood economic circumstances. In this paper we seek to exploit such potential. In pursuing this objective, it is necessary to address some of the limitations of the data. We do by restricting our attention to a set of countries where data issues seem less extreme. In addition we employ ‘dominance procedures in relation to parents’ education and social class to reduce the scale of the missing values problem. Finally, we compare findings from one dimensional and multidimensional approaches in order to provide an assessment of the extent to which our analysis provides a coherent account of the intergenerational transmission of disadvantage.
    Keywords: Poverty, Intergenerational, EU-SILC
    Date: 2011–10–06
  15. By: Ozgen, Ceren (VU University Amsterdam); Nijkamp, Peter (VU University Amsterdam); Poot, Jacques (University of Waikato)
    Abstract: Due to the growth in international migration in recent decades, the workforce of firms in host countries has become considerably more diverse, both demographically and culturally. It is an important question for firms and for governments to ask whether there are some productivity-enhancing externalities gained from this growing diversity within firms. In recent years migration research has demonstrated positive economic impacts of cultural diversity on productivity and innovation at the regional level. However, there is a dearth of research on the links between innovation and migrant diversity at the firm level. In this paper we construct and analyse a unique linked employer-employee micro-dataset of 4582 firms, based on survey and administrative data obtained from Statistics Netherlands. Excluding firms in the hospitality industry and other industries that employ low-skilled migrants, we use the local number of restaurants with foreign cuisines and the historical presence of migrant communities as valid instruments of endogenous migrant settlement. We find that firms in which foreigners account for a relatively large share of employment are somewhat less innovative. However, there is strong evidence that firms that employ a more diverse foreign workforce are more innovative, particularly in terms of product innovations.
    Keywords: immigration, innovation, cultural diversity, knowledge spillovers, linked employer-employee data, Netherlands
    JEL: F22 O31
    Date: 2011–10
  16. By: Bakucs, Lajos Zoltan; Ferto, Imre; Latruffe, Laure; Desjeux, Yann; Soboh, Rafat; Dolman, Mark
    Abstract: Technical efficiency has long been analysed as a measure of farm performance, however most studies are restricted to a single country case. This paper presents a comparative analysis of field crop and dairy farm performance across eight EU countries, including two New Member States (NMS), focusing on long run stability and mobility patterns. The main research question is how relative performance of farms fluctuates over time, i.e. whether poorly performing farms remain always inefficient whilst some farms are always very efficient. Results show that on average 60% of farms maintain their efficiency ranking in two consecutive years, whilst 20% improve and 20% worsen their positions, for all countries. Due to the unstable economic conditions, farms in NMS are more mobile than those in EU15.
    Keywords: Farm technical efficiency, SFA, FADN, stability analysis, Farm Management, P52, Q12,
    Date: 2011
  17. By: El Mekkaoui de Freitas, Najat; Duc, Cindy; Briard, Karine; Mage-Bertomeu, Sabine; Legendre, Berangère
    Abstract: The aim of this article is to analyse the question of career interruptions and to evaluate their impact on pension retirement for French private sector workers. Using the last French survey on households' wealth (2003-2004), we first study the career set-backs for individuals born between 1937 and 1949. We highlight the new trends in professional paths. The risk of unemployment and job flexibility has sharply risen. As a consequence, some cohorts appear to be more exposed to career interruptions. Second, we determine how pension rights for French employees are affected by different career accidents. We consider unemployment, part-time employment and inactivity periods. Our results show how, by compensating for some career accidents, the French legislation allows individuals to receive, in some cases, the same level of social security pension that they would have received with a smooth professional path.
    Keywords: France; Social Security; Retirement; Pension; Part Time;
    JEL: J32 J22 D14 H55 E24 J26
    Date: 2011–07
  18. By: Dries, Liesbeth; Ciaian, Pavel; Kancs, D'Artis
    Keywords: Labor and Human Capital,
    Date: 2011
  19. By: Helming, John F.M.; van Meijl, Hans; Woltjer, Geert B.; Jansson, Torbjorn; Nowicki, Peter; Tabeau, Andrzej A.
    Abstract: Following the paradigm for reforming the current CAP, the first objective of this study is to give insights into the economic impact of post-2013 CAP measures at different levels of aggregation (e.g. EU, Member State and region). The post-2013 CAP measures included are directed towards income for the farmers, competitiveness, valuable areas and ecosystem services. The second objective is to analyse the impact of a scenario that combines the above mentioned post-2013 CAP measures. This study can be seen as a first attempt to quantify the transition to a CAP with more targeted measures at the European level and reveals considerable methodological and data challenges. A key finding is that the impact of the various measures is very different with regard to various economic indicators.
    Keywords: Agricultural and Food Policy,
    Date: 2011
  20. By: Duha T. Altindag
    Abstract: I investigate the impact of unemployment on crime using a country-level panel data set from Europe that contains consistently-measured crime statistics. Unemployment has a positive influence on property crimes. Using earthquakes, industrial accidents and the exchange rate movements as instruments for the unemployment rate, I find that 2SLS point estimates are larger than OLS estimates.
    Keywords: Crime; Europe; Unemployment; Earthquakes; Industrial accidents; Instrumental variables
    JEL: K42 J00
    Date: 2011–10

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