nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2011‒11‒07
seventeen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Italian consumers’ willingness to pay for renewable energy sources By Bigerna, Simona; Polinori, Paolo
  2. Management of Cluster Policies: Case Studies of Japanese, German, and French Bio-clusters By Okamuro, Hiroyuki; Nishimura, Junichi
  3. Patent fees for a sustainable EU patent system By Jérôme Danguy; Bruno Van Pottelsberghe
  4. Renewable Electric Energy Integration: Quantifying the Value of Design of Markets for International Transmission Capacity By Karsten Neuhoff; Rodney Boyd; Thilo Grau; Julian Barquin; Francisco Echavarren; Janusz Bialek; Chris Dent; Christian von Hirschhausen; Benjamin Hobbs; Friedrich Kunz; Hannes Weigt; Christian Nabe; Georgios Papaefthymiou; Christoph Weber
  5. Extensive and Intensive Margins of Labour Supply: Working Hours in the US, UK and France By Blundell, Richard W; Bozio, Antoine; Laroque, Guy
  6. Trade in quality and income distribution: an analysis of the enlarged EU market. By Hélène Latzer; Florian Mayneris
  7. Addressing leakage in the EU ETS : Border adjustment or output-based allocation ?. By Monjon, Stéphanie; Quirion, Philippe
  8. Labor Supply and Child Care Choices in a Rationed Child Care Market By Katharina Wrohlich
  9. Cost-Benefit Analysis of the Community Patent By Jérôme Danguy; Bruno Van Pottelsberghe
  10. Service deregulation, competition and the performance of French and Italian firms By Daveri, F.; Lecat, R.; Parisi , M L.
  11. Is National Citizenship Withering Away? : Social Affiliations and Labor Market Integration of Turkish Origin Immigrants in Germany and France By Aysegul KAYAOGLU; Ayhan KAYA
  12. Cost overruns in Swedish transport projects By Lundberg, Mattias; Jenpanitsub, Anchalee
  13. Effective taxation of top incomes in Germany By Bach, Stefan; Corneo, Giacomo; Steiner, Viktor
  14. Taxation and Labor Force Participation: The Case of Italy By Fabrizio Colonna; Stefania Marcassa
  15. Regional Growth and Convergence: The Role of Human Capital in the Portuguese Regions By Catarina Cardoso; Eric J. Pentecost
  16. Firm Growth and the Spatial Impact of Geolocated External Factors – Empirical Evidence for German Manufacturing Firms By Matthias Duschl; Antje Schimke; Thomas Brenner; Dennis Luxen
  17. Marriage Dot EU: The Effect of Internet Usage on Marriage Hazard By Mario Vozar

  1. By: Bigerna, Simona; Polinori, Paolo
    Abstract: EU Directive 2009/72/CE imposes to the European Countries environmental and energy targets. The Italian goal is to attain a 17% share in electricity production from renewable energy sources (RES) by 2020. To make investment in renewables attractive, market prices must be profitable and the gap between the private and social costs of renewables must be filled using “persuasive” tools. The acceptance of such a burden may be controversial because it results in an increase in prices. It is interesting to estimate the consumer’s willingness to pay (WTP) for green electricity. We based our research on a national survey conducted in November 2007 in Italy. We used a stochastic payment card (SPC) including a “certainty correction” and proposing five degrees of acceptance. An empirical analysis shows that there is a substantial willingness among Italian consumers to partially cover the cost of achieving the RES goal.
    Keywords: contingent valuation; interval data; stochastic payment card; renewable energy sources
    JEL: Q41 Q26 C24
    Date: 2011–10–30
  2. By: Okamuro, Hiroyuki; Nishimura, Junichi
    Abstract: This paper provides a detailed comparison of the following five cases of Japanese and European clusters in biotechnology: (1) Kobe Biomedical Innovation Cluster (KBIC) in Kobe (Japan), (2) Fuji Pharma Valley Cluster in Shizuoka Prefecture (Japan), (3) BioM Biotech Cluster in Munich (Germany), (4) BioRegion Rhine-Neckar in Heidelberg (Germany), and (5) Alsace BioValley Cluster in Strasbourg (France). We pay special attention to the cluster policy and its management by each region's core cluster management organization. Information on the focal clusters and the management of cluster policies has been obtained through interviews with the cluster directors and core staff in 2010 and 2011. We find several similarities and differences among the five cases of Japanese and European clusters. We also discuss how the management of cluster policies by the core management organizations may be related with the performance of regional clusters.
    Keywords: management, cluster policy, regional cluster, R&D, biotechnology, international comparison
    JEL: O32 O38 R58
    Date: 2011–10
  3. By: Jérôme Danguy; Bruno Van Pottelsberghe
    Abstract: This paper puts forward a sustainable fee structure for the EU Patent (COMPAT). The proposal includes pre-grant and post-grant fees and illustrates the differences between Euro-direct applications and PCT applications. The break-even analysis shows that the COMPAT would make the European patent system more attractive with significantly lower relative costs. At the same time, the new schedule provides a financially sustainable model for the system by preserving relatively high absolute fees and allowing for a fee reduction for small innovative firms and public research organizations.
    Keywords: European patent system; Fees; EU patent
    JEL: O34 P14 K41
    Date: 2011–09
  4. By: Karsten Neuhoff; Rodney Boyd; Thilo Grau; Julian Barquin; Francisco Echavarren; Janusz Bialek; Chris Dent; Christian von Hirschhausen; Benjamin Hobbs; Friedrich Kunz; Hannes Weigt; Christian Nabe; Georgios Papaefthymiou; Christoph Weber
    Abstract: Integrating large quantities of supply-driven renewable electricity generation remains a political and operational challenge. One of the main obstacles in Europe to installing at least 200 GWs of power from variable renewable sources is how to deal with the insufficient network capacity and the congestion that will result from new flow patterns. We model the current methodology for controlling congestion at international borders and compare its results, under varying penetrations of wind power, with a model that simulates an integrated European network that utilises nodal/localised marginal pricing. The nodal pricing simulations illustrate that congestion - and price - patterns vary considerably between wind scenarios and within countries, and that a nodal price regime could make fuller use of existing EU network capacity, introducing substantial operational cost savings and reducing marginal power prices in the majority of European countries.
    Keywords: Power market design, renewable power integration, congestion management, transmission economics
    Date: 2011
  5. By: Blundell, Richard W (University College London); Bozio, Antoine (Institute for Fiscal Studies, London); Laroque, Guy (CREST-INSEE)
    Abstract: This paper documents the key stylised facts underlying the evolution of labour supply at the extensive and intensive margins in the last forty years in three countries: United-States, United-Kingdom and France. We develop a statistical decomposition that provides bounds on changes at the extensive and intensive margins. This decomposition is also shown to be coherent with the analysis of labour supply elasticities at these margins. We use detailed representative micro-datasets to examine the relative importance of the extensive and intensive margins in explaining the overall changes in total hours worked.
    Keywords: labor supply, employment, hours of work
    JEL: J21 J22
    Date: 2011–10
  6. By: Hélène Latzer; Florian Mayneris
    Abstract: This paper contributes to the understanding of the determinants of country-level comparative advantages in terms of quality. More precisely, while the literature has mainly focused so far on supply-side determinants of such comparative advantages, we investigate both theoretically and empirically the role played by income distribution (average income and level of inequalities) of a country on the quality of its exports. Doing so, we provide new insights on the existence of demand-based determinants of the quality content of a country’s exports, in line with the Linder (1961) hypothesis, claiming that firms produce and export goods suited to the specific tastes of their local consumers. We build a model with economies of scale where non-homothetic preferences and within-country income differences determine the quality composition of production and exports. Having neutralized any supply-side comparative advantage, we show that richer countries produce and export higher quality goods, while the level of inequalities has an heterogenous impact, positively affecting the quality content of exports for rich enough countries only. We then corroborate our theoretical predictions on bilateral trade data for the enlarged European Union (EU), an integrated market displaying significant heterogeneity in terms of both average income and within-country inequalities of its members. Furthermore, we are able to show that in terms of magnitude of the effects, inequalities are a second-order demand-based determinant of the quality of exports as compared to average income.
    Keywords: Product quality, Income distribution, Trade, Economies of scale, European Union.
    JEL: F12 L15 O15
    Date: 2011
  7. By: Monjon, Stéphanie; Quirion, Philippe
    Abstract: The EU ETS has been criticised for threatening the competitiveness of European industry and generating carbon leakage, i.e., increasing foreign greenhouse gas emissions. Two main options have been put forward to tackle these concerns : border adjustments and output-based allocation, i.e., allocation of free allowances in proportion to current production. We compare various configurations of these two options, as well as a scenario with full auctioning and no border adjustment. Against this background, we develop a model of the main sectors covered by the EU ETS: electricity, steel, cement, and aluminium. We conclude that the most efficient way to tackle leakage is auctioning with border adjustment, which generally induces a negative leakage (a spillover). This holds even if the border adjustment does not include indirect emissions, if it is based on EU (rather than foreign) specific emissions, or (for some values of the parameters) if it covers only imports. Another relatively efficient policy is to combine auctioning in the electricity sector and output-based allocation in exposed industries, especially if free allowances are given both for direct and indirect emissions, i.e., those generated by the generation of the electricity consumed. Although output-based allocation is generally less effective than border adjustment to tackle leakage, it is more effective to mitigate production losses in the sectors affected by the ETS, which may ease climate policy adoption.
    Keywords: Emission trading; border adjustment; output‐based allocation; competitiveness; carbon leakage;
    JEL: Q38 Q58 Q54 L94 L61 L51
    Date: 2011–09
  8. By: Katharina Wrohlich
    Abstract: This paper presents an empirical framework for the analysis of mothers' labor supply and child care choices, explicitly taking into account access restrictions to subsidized child care. This is particularly important for countries such as Germany, where subsidized child care is rationed and private child care is only available at considerably higher cost. I use a discrete choice panel data model controlling for unobserved heterogeneity to simultaneously estimate labor supply and the demand for child care of German mothers with at least one child under the age of seven years. The model can be used to evaluate different kinds of policy reforms, such as changes in the availability or costs of child care. Results from the illustrating policy simulations show that targeting public expenditures at an extension of child care slots has greater effects on maternal employment than a reduction of parents' fees to existing slots.
    Keywords: Child care, labor supply, discrete choice, panel study, Germany
    JEL: J22 J13 C35
    Date: 2011
  9. By: Jérôme Danguy; Bruno Van Pottelsberghe
    Abstract: For more than 40 years, governments and professional associations have acted, voted or lobbied against the implementation of the Community Patent (COMPAT, officially called the EU Patent). The econometric results and simulations presented in this paper suggest that, thanks to its attractiveness in terms of market size and a sound renewal fee structure, the COMPAT would drastically reduce the relative patenting costs for applicants while generating more income for the European Patent Office and most National Patent Offices. The loss of economic rents (€400 million would be lost by patent attorneys, translators and lawyers) and the drop of controlling power by national patent offices elucidate further the observed resistance to the Community Patent.
    Keywords: patent systems, community patent, patenting cost, renewal fees, m
    Date: 2011–04
  10. By: Daveri, F.; Lecat, R.; Parisi , M L.
    Abstract: We use firm-level data for France and Italy to explore the impact of service regulation reform implemented in the two countries on the mark-up and eventually on the performance of firms between the second half of the 1990s and 2007. In line with some previous studies, we find that the relation between entry barriers and productivity is negative. This relation is intermediated through the firm’s mark up and is stronger in the long than in the short run.
    Keywords: regulation, services, performance, TFP.
    JEL: D24 K20 L51 O40 O57
    Date: 2011
  11. By: Aysegul KAYAOGLU (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Ayhan KAYA (Istanbul Bilgi University)
    Abstract: There are around 3 million Turkish origin migrants in Germany and 400 thousand in France who have already raised their third generations. Nowadays they are even being named with their hyphenated identities, such as German-Turks and French-Turks. In the meantime, they encounter various obstacles in everyday life due to the stigmatization and securitization of migration and Islam. This is why their integration into the receiving societies is of great importance, as better social cohesion helps nurture the economic, political and social contribution of migrants to their countries of settlement. Using the data derived from a recent micro-level survey on Turkish-origin immigrants residing in Germany and France, the determinants of their social affiliations and employment probability as well as the impact of citizenship acquisition on their socio-economic integration will be analyzed in this article.
    Keywords: Turkish migrants, Citizenship, Affiliation, Economic Integration
    JEL: F22 O15 Z13
    Date: 2011–07–31
  12. By: Lundberg, Mattias (CTS); Jenpanitsub, Anchalee (Mass Rapid Transit Authority of Thailand)
    Abstract: Cost overrun of transport projects is one of the most important problems in transport planning. It also makes the result of the cost-benefit analyses uncertain, thus decreasing their usefulness for decision making. In recent years more emphasis has been put on improving cost calculations and reducing cost overruns, in Sweden and internationally. Still cost overruns have not decreased. We find that the average cost overrun in Swedish road projects is similar to other countries, while it is lower than in other countries for rail. Small projects (< 100 million SEK) have much higher cost overruns than large projects and constitute a large share of total overruns. A project type with large overruns, both in absolute and relative terms, is new rail tracks on existing lines. To improve cost estimates in Sweden, the Successive Calculation method has recently been applied. We find that the variance is significantly lower in these than in actual outcomes, and that the difference is surprisingly small between projects in different planning stages. Another method, Reference Class Forecasting, is demonstrated in two case studies. It results in higher required uplifts. An interesting way forward would be to develop risk-based estimating, based on principal component analysis. To do that, a database needs to be collected, which in turn demands better follow-up procedures.
    Keywords: Cost overrun; cost estimates; actual costs; successive calculation; reference class forecasting
    JEL: R40 R42
    Date: 2011–11–02
  13. By: Bach, Stefan; Corneo, Giacomo; Steiner, Viktor
    Abstract: We exploit an exhaustive administrative dataset that includes the individual tax returns of all households in the top percentile of the income distribution in Germany to pin down the effective income taxation of households with very high incomes. Taking tax base erosion into account, we find that the top percentile of the income distribution pays an effective average tax rate of 30.5 percent and contributes more than a quarter of total income tax revenue. Within the top percentile, the effective average tax rate is first increasing and then decreasing with income. Since the 1990s, effective average tax rates for the German super rich have fallen by about a third, with major reductions occurring in the wake of the personal income tax reform of 2001-2005. As a result, the concentration of net incomes at the very top of the distribution has strongly increased in Germany. --
    Keywords: personal income tax,taxing the rich,effective progressivity
    JEL: H24 H26 D31
    Date: 2011
  14. By: Fabrizio Colonna (Banca d'Italia); Stefania Marcassa (Paris School of Economics)
    Abstract: Italy has the lowest labor force participation of women among OECD countries. Moreover, the participation rate of married women is positively correlated to their husbands' income. We show that a high tax schedule together with tax credits and transfers raise the burden of two-earner households, generating disincentives to work. We estimate a structural labor supply model for women, and use the estimated parameters to simulate the effects of alternative revenue-neutral tax systems. We find that joint taxation implies a drop in the participation rate. Conversely, working tax credit and gender-based taxation boost it, with the effects of the former concentrated on low educated women.
    Keywords: female labor force participation, Italian tax system, marginal tax rate, joint taxation, gender-based taxation, working tax credit
    Date: 2011–07
  15. By: Catarina Cardoso (School of Business and Economics, Loughborough University, UK); Eric J. Pentecost (School of Business and Economics, Loughborough University, UK)
    Abstract: Potentially one of the most important determinants of regional economic growth and convergence is human capital, although due to a lack of data this factor is frequently omitted from econometric studies. In contrast, this paper constructs three measures of human capital at the NUTS III regional level for Portugal for the period 1991-2008 and then includes these variables in regional growth regressions. The results show that both secondary and higher levels of education have a significant positive effect on regional growth rates which may be regarded as supportive of Portuguese education policy, which over the last three decades has attempted to raise the regional human capital by locating higher education institutions across the country.
    Keywords: Human capital, Regional convergence, GMM
    JEL: C23 I21 O18 R11
    Date: 2011–09
  16. By: Matthias Duschl (Department of Geography, Philipps University Marburg); Antje Schimke (Karlsruhe Institute of Technology (KIT)); Thomas Brenner (Department of Geography, Philipps University Marburg); Dennis Luxen (Karlsruhe Institute of Technology (KIT))
    Abstract: In this paper the relationship between firm growth and external knowledge sources, such as related firms and universities, is studied. The spatial characteristics of these relationships are examined by geolocating firms into a more realistic relational space using travel time distances and using flexible distance decay function specifications. This approach properly accounts for growth relevant knowledge spillovers and allows for estimating their spatial range and functional form. Applying quantile regression techniques on a large sample of German manufacturing firms, we show that the impact of external factors substantially differ along firms’ size, type of knowledge source and growth level.
    Keywords: Firm growth, external factors, universities, agglomeration, space, spatial range, distance decay functions, knowledge spillovers, high growth firms, quantile regression
    JEL: C31 D92 L25 R11
    Date: 2011–10
  17. By: Mario Vozar
    Abstract: The rapid growth of internet usage over the last two decades has been influencing many aspects of our life and most noticeably the ways in which people communicate with each other. Therefore, it is appropriate to ask whether the growth of internet usage influences individuals’ marital decisions in modern society. In my study, I concentrate on the effect of the growing internet usage on the gender and age-specific marriage hazard rate for the first time marriages in Europe. The panel data analysis reveals a negative impact of internet usage on male’s as well as female’s marriage hazard rate for those in their twenties.
    Keywords: marriage market; divorce; internet;
    JEL: J12 L8
    Date: 2011–08

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