nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2011‒12‒19
nineteen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. The Intensive and Extensive Margin of European Labour Supply By Hanna Kröger; Sandra Schaffner
  2. Options introduction and volatility in the EU ETS By Julien Chevallier; Yannick Le Pen; Benoît Sévi
  3. An overview of CO2 cost pass-through to electricity prices in Europe By Boris Solier; Pierre-André Jouvet
  4. Carbon Price Drivers: Phase I versus Phase II Equilibrium? By Anna Creti; Pierre-André Jouvet; Valérie Mignon
  5. Working in family firms: less paid but more secure? Evidence from French matched employer-employee data By Andrea Bassanini; Eve Caroli; Antoine Rebérioux; Thomas Breda
  6. Homeownership and job-match quality in France By Carole Brunet; Nathalie Havet
  7. Work Values in Western and Eastern Europe By Benno Torgler
  8. Assessing the Strength and Effectiveness of Renewable Electricity Feed-in Tariffs in European Union Countries By Felix Groba; Joe Indvik; Steffen Jenner
  9. Performance-related Funding of Universities – Does more Competition Lead to Grade Inflation? By Thomas K. Bauer; Barbara S. Grave
  10. The protection of industrial inventions: analysis of the regulation and policy evaluation. By Daniele Sabbatini
  11. Is public procurement going green? experiences and open issues By Appolloni, Andrea; D'Amato, Alessio; Wenjuan, Cheng
  12. A Switch from Joint to Individual Taxation is Welfare Improving By André Decoster; Peter Haan
  13. Combining cap-and-trade with offsets: Lessons from CER use in the EU ETS in 2008 and 2009 By Raphael Trotignon
  14. GINI DP 12: Factor Components of Inequality. A Cross-Country Study By Cecilia Garcia Peñalosa; Orgiazzi, E.
  15. Wage-Tenure Profiles and Mobility By Anja Deelen
  16. European SMEs, external relationships and innovation: some empirical evidence By A. Lasagni
  17. Estimating Verdoorn law for Italian firms and regions By Fazio, Giorgio; Maltese, Enza; Piacentino, Davide
  18. Gender Regimes and Welfare States in France: A historical perspective By Ai-Thu Dang; Jean-Marie Monnier
  19. The Causal Effect of Education on Health: What is the Role of Health Behaviors? By Brunello, Giorgio; Fort, Margherita; Schneeweis, Nicole; Winter-Ebmer, Rudolf

  1. By: Hanna Kröger; Sandra Schaffner
    Abstract: Labour supply is determined by two factors: the participation of workers in the labour market (extensive margin), and the number of hours supplied by those working (intensive margin). Based on the European Union Labour Force Survey (EU-LFS), we analyse which margin is more decisive in determining overall labour supply in 24 Member States. The results reveal large diff erences between countries, even after controlling for composition effects in terms of socio-demographic and household characteristics. In addition to individual labour supply, our focus is on differences between EU Member States concerning household labour supply. Joint determination of the number of hours worked between spouses can be observed for dual-income couples in Austria, the Netherlands and Spain.
    Keywords: Female labour supply; household labour supply; European Union; EU-LFS
    JEL: J22 J21 J16
    Date: 2011–11
  2. By: Julien Chevallier (Université Paris Dauphine); Yannick Le Pen (Université Paris Dauphine); Benoît Sévi (Université de la Méditerranée Aix-Marseille II)
    Abstract: To improve risk management in the European Union Emissions Trading Scheme (EU ETS), the European Climate Exchange (ECX) has introduced option instruments in October 2006. The central question we address is: can we identify a potential destabilizing effect of the introduction of options on the underlying market (EUA futures)? Indeed, the literature on commodities futures suggest that the introduction of derivatives may either decrease (due to more market depth) or increase (due to more speculation) volatility. As the identification of these effects ultimately remains an empirical question, we use daily data from April 2005 to April 2008 to document volatility behavior in the EU ETS. By instrumenting various GARCH models, endogenous break tests, and rolling window estimations, our results overall suggest that the introduction of the option market had the effect of decreasing the level of volatility in the EU ETS while impacting its dynamics. These findings are fairly robust to other likely influences linked to energy and commodity markets.
    Keywords: EU ETS, option prices, volatility, GARCH, rolling estimation, endogenous structural break detection
    JEL: G13 G18 Q57 Q58
    Date: 2011–06
  3. By: Boris Solier (Paris-Dauphine University (LEDa-CGEMP), Climate Economics Chair and ADEME.); Pierre-André Jouvet (EconomiX-CNRS, University of Paris Ouest, and Climate Economics Chair)
    Abstract: This article investigates the link between wholesale electricity prices in Europe and the CO2 cost, i.e. the price of the European Union Allowances (EUA), over the two first phases of the EU ETS. We set up a theoretical and an empirical model to estimate to what extent daily fluctuations of CO2 costs may have impacted electricity prices. Regarding estimation results for the first phase of the EU ETS, about 42% of estimated pass-through rates appear to be statistically significant, while only one third of them are statistically different from zero in the second phase. We try to improve those results by proposing alternatives estimates based on the compliance periods of the EU ETS.
    Keywords: EU ETS, CO2 costs pass-through, Electricity prices, Spot markets
    JEL: C22 C58 G1 L94
    Date: 2011–06
  4. By: Anna Creti (EconomiX-CNRS, University of Paris Ouest, and Ecole Polytechnique,); Pierre-André Jouvet (EconomiX and Climate Economics Chair); Valérie Mignon (EconomiX-CNRS, University of Paris Ouest, and CEPII)
    Abstract: The aim of this paper is to investigate the determinants of the carbon price during the two phases of the European Union Emission Trading Scheme (EU ETS). More specifically, relying on daily EU allowance futures contracts, we test whether the carbon price drivers identified for Phase I still hold for Phase II and evolve toward a long-run relationship. Using cointegration techniques and accounting for the 2006 structural break on the carbon market, we show that while a cointegrating relationship exists for both phases of the EU ETS, the nature of this equilibrium relationship is different across the two subperiods, with an increasing role of fundamentals in Phase II. Deriving equilibrium values, we show that the carbon price tends to be undervalued since the end of 2009.
    Keywords: EU ETS, carbon price, energy prices, cointegration.
    JEL: Q4 C22
    Date: 2011–06
  5. By: Andrea Bassanini; Eve Caroli; Antoine Rebérioux; Thomas Breda
    Abstract: We study compensation packages in family and non-family firms. Using French matched employer-employee data, we first show that family firms pay on average lower wages. We find that part of this wage gap is due to low wage workers sorting into family firms and high wage workers sorting into non-family firms. However, we also find evidence that company wage policies differ according to ownership status, so that the same worker is paid differently under family and non-family firm ownership. We also find evidence that family firms are characterised by lower job insecurity, as measured by dismissal rates and by the subjective risk of dismissal perceived by workers. In addition, family firms appear to rely less on dismissals – and more on hiring reductions – than non-family firms when they downsize. We show that compensating wage differentials account for a substantial part of the inverse relationship between the family/non-family gaps in wages and job security.
    Keywords: family firms, wages, job security, compensating wage differentials, linked employer-employee data
    JEL: G34 J31 J33 J63 L26
    Date: 2011
  6. By: Carole Brunet (LED - Laboratoire d'économie dyonisien - Université Paris VIII - Vincennes Saint-Denis); Nathalie Havet (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure de Lyon)
    Abstract: Our empirical study stems from previous research on the inter-relations between residential status and microeconomic labour market outcomes. It focuses on employees and assesses the a priori ambiguous effect of homeownership on job-match quality. We use the French data set of the 1995-2001 European Community Household Panel to build a subjective measure of job downgrading. We estimate a recursive trivariate probit with partial observability that simultaneously models the residential status choice, its impact on the probability of being downgraded, and the selection into employment. The comparison with simpler models indicates that taking into account the selection into employment and controlling unobservable individual heterogeneity are of prime necessity to obtain robust conclusions.
    Keywords: residential status; job downgrading; overeducation; job matching
    Date: 2011–12–07
  7. By: Benno Torgler
    Abstract: The paper reports on work values in Europe. At the country level we find that job satisfaction is related to lower working hours, higher well-being, and a higher GDP per capita. Moving to the micro level, we turn our attention from job satisfaction to analyse empirically work centrality and work value dimensions (without exploring empirically job satisfaction) related to intrinsic and extrinsic values, power and social elements. The results indicate substantial differences between Eastern and Western Europe. Socio-demographic factors, education, income, religiosity and religious denomination are significant influences. We find additional differences between Eastern and Western Europe regarding work-leisure and work-family centrality that could be driven by institutional conditions. Furthermore, hierarchical cluster analyses report further levels of dissimilarity among European countries.
    Keywords: work values; job satisfaction; work-leisure relationship; work-family centrality; Eastern Europe; Western Europe
    JEL: P20 D10 J28 J17 J22
    Date: 2011–12
  8. By: Felix Groba; Joe Indvik; Steffen Jenner
    Abstract: In the last two decades, feed-in tariffs (FIT) and renewable portfolio standards (RPS) have emerged as two of the most popular policies for supporting renewable electricity (RES-E) generation in the developed world. A few studies have assessed their effectiveness, but most do not account for policy design features and market characteristics that influence policy strength. In this paper, we employ 1992-2008 panel data to conduct the first analysis of the effectiveness of FIT policies in promoting solar photovoltaic (PV) and onshore wind power development in 26 European Union countries. We develop a new indicator for FIT strength that captures variability in tariff size, contract duration, digression rate, electricity price, and electricity generation cost to estimate the resulting return on investment. We then regress this indicator on added RES-E capacity using a fixed effects specification. We find that FIT policies have driven solar PV and onshore wind capacity development in the EU. However, this effect is overstated without controls for country characteristics and may be concealed without accounting for the unique design of each policy. We provide empirical evidence that the interaction of policy design and market dynamics are more important determinants of RES-E development than policy enactment alone.
    Keywords: Renewable energy, Feed-in tariff, Panel data models
    JEL: C23 H23 Q42 Q48
    Date: 2011
  9. By: Thomas K. Bauer; Barbara S. Grave
    Abstract: German universities are regarded as being under-financed, inefficient, and performing below average if compared to universities in other European countries and the US. Starting in the 1990s, several German federal states implemented reforms to improve this situation. An important part of these reforms has been the introduction of indicator-based funding systems. These financing systems aimed at increasing the competition between universities by making their public funds dependent on their relative performance concerning different output measures, such as the share of students obtaining a degree or the amount of third party funds. This paper evaluates whether the indicator-based funding created unintended incentives, i.e. whether the reform caused a grade inflation. Estimating mean as well as quantile treatment effects, we cannot support the hypothesis that increased competition between universities causes grade inflation.
    Keywords: Grade inflation; higher education funding; university competition
    JEL: H52 I21 I22
    Date: 2011–10
  10. By: Daniele Sabbatini (Banca d'Italia)
    Abstract: The Italian and European regulatory framework for patents would benefit from further improvements in order to foster dynamic competition between Italian firms. At the national level the exclusive allocation of the right to patent inventions to universities, rather than to researchers, would promote better commercial exploitation. At the European level a more integrated system of protection (provision of a single patent that is valid in all Member States, the abolition of translation requirements, a unitary system of fees, and the integration of the litigation system) is essential to lower costs and expand the geographic scope of the protection, thus fostering dynamic competition. Further improvements in the language requirements are needed. The objective of reducing the cost of patenting inventions without raising costs for competitors would be better achieved were English the sole official language of the system (instead of the present choice between English, French and German), to make it easier for competitors to know which is the valid version of the patent.
    Keywords: patents, industrial inventions, judicial trial, European patent
    JEL: K11 K41 L51 O31 O32 O34
    Date: 2011–11
  11. By: Appolloni, Andrea; D'Amato, Alessio; Wenjuan, Cheng
    Abstract: Public purchasing authorities are in a leading position for the introduction, promotion and development of green procurement. Indeed, the public sector can influence green procurement both by designing suitable policies and by driving “green” markets through the significant share of public purchases on GDP. The European Commission (EC) has emphasized the importance of cost-efficient GPP and, in compliance with the EU’s Integrated Product Policy (IPC), Member States have been encouraged to devise national action plans. As a result, many countries have already adopted steps in the direction of greening public purchases. The aim of our paper is twofold: first, we focus on the state of the art in terms of the EU and Italian Legislation; then, we highlight open questions related to crucial issues in GPP implementation, with a particular attention to the design of green tenders and awarding criteria to account for environmental quality in public purchasing procedures.
    Keywords: Green Public Procurement/Purchasing (GPP); Italy; EU; Legislation and Implementation
    JEL: H57 L51 A13 G18 Q01
    Date: 2011–10–15
  12. By: André Decoster; Peter Haan
    Abstract: In this paper we empirically derive the welfare effects of a shift from joint taxation with full income splitting to a revenue neutral system of individual taxation in Germany. For the empirical welfare evaluation we estimate the preference heterogeneity in the population and use normative welfare concepts proposed in Fleurbaey (2006) to solve the difficulties of comparison between, and aggregation of heterogeneous individuals and households. We show that, irrespective of the individual welfare measure we use, individual taxation would on average increase individual welfare. Moreover, as far as the aggregation is concerned, we show that any social planner, ranging from a utilitarian to a Rawlsian one, would come to the same conclusion: a policy change which replaces joint taxation with full splitting by individual taxation, would be welfare improving.
    Keywords: Taxation of couples, welfare measures, labour supply, preference heterogeneity
    JEL: C35 D63 D78 H24 H31 J22
    Date: 2011
  13. By: Raphael Trotignon (PhD Student at Paris-Dauphine University (CGEMP/LEDa) and researcher at the Climate Economics Chair.)
    Abstract: The EU ETS is the first full scale example of a cap and trade system linked to project based mechanisms. While most papers on the subject focus on the policy design point of view, few have analyzed the facts. Offsets have been used by European industrial installations in 2008 and 2009. If the linking with an offset mechanism is successful, one should find evidence that offsets are used on a large scale, i.e. that significant volumes of credits go from a large number of projects to a large number of installations, independently from their sector, size or position, and that the limit of import is fully used at the end of the phase. This paper is an ex-post analysis of offsets used in the EU ETS in terms of intensity, frequency, and efficiency. This allows us to answer partially those questions and to identify possible explaining factors.
    Keywords: EU ETS, Clean Development Mechanism, Linking
    JEL: Q49 Q50 K32
    Date: 2011–03
  14. By: Cecilia Garcia Peñalosa (Centre de la Vieille Charité, GREQAM); Orgiazzi, E.
    Abstract: This paper uses data from the Luxembourg Income Study to examine some of the forces that have driven changes in household income inequality over the last three decades of the 20th century. We decompose inequality for 6 countries (Canada, Germany, Norway, Sweden, the UK, and the US) into the three sources of market income: earnings, property income and income from self-employment. Our findings indicate that although changes in the distribution of earnings are an important aspect of recent increases in inequality, they are not the only one. In some countries the contribution of self-employment income to inequality has been on the rise. In others, increases in inequality in capital income –probably caused by tax changes- account for a substantial fraction of the observed changes in the distribution of income. JEL classification numbers: D31, D33
    Date: 2011–07
  15. By: Anja Deelen
    Abstract: <p>The Dutch labour market is characterized by low job mobility and high average unemployment duration. This study investigates the role of wage-tenure profiles in explaining patterns of job mobility.</p><p>Based on a large administrative database, the estimates show that wage-tenure profiles in the Netherlands are relatively steep. Furthermore, industries with high returns to tenure appear to have a high share of older workers, as well as high average job tenure. This implies that steep wage-tenure profiles are related to low levels of mobility.</p>
    JEL: J31 J62
    Date: 2011–12
  16. By: A. Lasagni
    Abstract: This paper investigates the role of external relationships as key drivers of small business innovation. An empirical analysis is based on data for approximately 500 small- and medium-sized enterprises (SMEs) in six European countries. The results indicate that innovation performance is higher in SMEs that are proactive in strengthening their relationships with innovative suppliers, users and customers. Furthermore, the findings of this paper support the view that SMEs will have better new product development results if they improve their relationships with laboratories and research institutes.
    Keywords: : SMEs, open innovation, networks, external relationships
    JEL: L60 O31
    Date: 2011
  17. By: Fazio, Giorgio; Maltese, Enza; Piacentino, Davide
    Abstract: In empirical regional economics, returns to scale are typically estimated at the regional level in search for evidence on alternative theories of growth and agglomeration. However, returns to scale may also have a firm-level dimension. In this paper, we exploit micro level data and estimate the dynamic Verdoorn law in a multilevel-setting, where returns to scale are obtained simultaneously for the micro and the regional level. Using Italian firm-level data and the NUTS-3 level of aggregation, we estimate the classic and augmented versions of Verdoorn law for all sectors and separately for manufacturing. Our results show that increasing returns to scale co-exist at both levels, with some degree of regional heterogeneity across the Italian peninsula.
    Keywords: Returns to scale; Verdoorn Law; Multilevel models; Italian firms
    JEL: O47 C31 R12 R11
    Date: 2011–12
  18. By: Ai-Thu Dang; Jean-Marie Monnier
    Abstract: This paper has a twofold aim. First, we will analyze the system of family benefits in relation with the income tax system in France through the adoption of a historical and gender perspective. While typologies of welfare states frequently neglect taxation, in our view, one must take family taxation into account because it provides incentives and disincentives for paid income. Moreover, in the case of France, a close relationship exists between family benefits and taxation on income, one that stems from certain discussions—discussions led to the birth of the French system.Second, we will demonstrate how and to what extent France has moved away from the male-breadwinner model. However, any decline of the malebreadwinner model does not, in turn, indicate a corresponding shift toward a dual caregiver model. Indeed, the current French model has ambiguous effects on gender relations.
    Keywords: gender regimes, gender relations, unpaid work, French policy reform
    JEL: J16 J18 J21
    Date: 2011
  19. By: Brunello, Giorgio; Fort, Margherita; Schneeweis, Nicole; Winter-Ebmer, Rudolf
    Abstract: We study the contribution of health-related behaviors to the health-education gradient by distinguishing between short-run and long-run mediating effects: while in the former only current or lagged behaviors are taken into account, in the latter we consider the entire history of behaviors. We use an empirical approach that addresses the endogeneity of education and behaviors in the health production function. Focusing on self-reported poor health as our health outcome, we find that education has a protective effect for European males and females aged 50+. We also find that the mediating effects of health behaviors--measured by smoking, drinking, exercising and the body mass index--account in the short run for 17% to 31% and in the long run for 23% to 45% of the entire effect of education on health, depending on gender.
    Keywords: education; Europe; health; health behaviours
    JEL: I1 I12 I21
    Date: 2011–12

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