nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2012‒01‒03
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. GINI DP 15: Can higher employment levels bring down poverty in the EU? By Ive Marx; Pieter Vandenbroucke; Verbist, G. (Gerlinde)
  2. Health Effects of Temporary Jobs in Europe By Christoph Ehlert; Sandra Schaffner
  3. Do EU structural funds promote regional employment? Evidence from dynamic panel data models By Philipp Mohl; Tobias Hagen
  4. More Schooling, More Children By Fort, Margherita; Schneeweis, Nicole; Winter-Ebmer, Rudolf
  5. What explains prevalence of informal employment in European countries : the role of labor institutions, governance, immigrants, and growth By Hazans, Mihails
  6. The “China effect” on EU Exports to OECD markets – A focus on Italy By Giorgia Giovannetti; Marco Sanfilippo; Margherita Velucchi
  7. Assessing the impact of antibiotic policies in Europe By Massimo Filippini; Laura G. González Ortiz; Giuliano Masiero
  8. Fuel Prices and New Vehicle Fuel Economy in Europe By Klier, Thomas; Linn, Joshua
  9. Labor institutions and their impact on shadow economies in Europe By Fialova, Kamila; Schneider, Ondrej
  10. CO2 Prices and Portfolio Management during Phase II of the EU ETS By Maria Mansanet-Bataller
  11. Comparative analysis of delivery of primary eye care in three European countries By Thomas, Dominik; Weegen, Lennart; Walendzik, Anke; Wasem, Jürgen; Jahn, Rebecca
  12. Educational Achievement of Second Generation Immigrants: An International Comparison By Christian Dustmann; Tommaso Frattini; Gianandrea Lanzara
  13. Ethnic Networks and the Location Choice of Migrants in Europe By Klaus Nowotny; Dieter Pennerstorfer
  14. Informal workers across Europe : evidence from 30 European countries By Hazans, Mihails
  15. Tax morale, eastern Europe and European enlargement By Torgler, Benno
  16. Competing in the Higher Education Market: Empirical Evidence for Economies of Scale and Scope in German Higher Education Institutions By Maria Olivares; Heike Wetzel
  17. Contextualizing immigrant inter-wave dynamics and the consequences for migration processes By Agnieszka Kubal; Rianne Dekker
  18. Self-Employment and Geographical Mobility in Germany By Darja Reuschke
  19. Working hours in dual-earner couples: Does one partner work less when the other works more? By Ragni Hege Kitterød, Marit Rønsen and Ane Seierstad
  20. What factors influence the uptake of GPP (Green Public Procurement) practices? New evidence from an Italian survey By Francesco Testa; Fabio Iraldo; Marco Frey; Tiberio Daddi

  1. By: Ive Marx (Centre for Social Policy, University of Antwerp); Pieter Vandenbroucke (Centrum voor Sociaal Beleid, Herman Deleeck, Universiteit Antwerpen); Verbist, G. (Gerlinde)
    Abstract: At the European level and in most EU member states, higher employment levels are seen as key to better poverty outcomes. But what can we expect the actual impact to be? Up until now shift-share analysis has been used to estimate the impact of rising employment on relative income poverty. This method has serious limitations. We propose a more sophisticated simulation model that builds on regression based estimates of employment probabilities and wages. We use this model to estimate the impact on relative income poverty of moving towards the Europe 2020 target of 75 percent of the working aged population in work. Two sensitivity checks are included: giving priority in job allocation to jobless households and imputing low instead of estimated wages. This article shows that employment growth does not necessarily result in lower relative poverty shares, a result that is largely consistent with observed outcomes over the past decade.
    Date: 2011–10
  2. By: Christoph Ehlert; Sandra Schaffner
    Abstract: Over the last two decades, temporary employment has gained importance in the European Union. The implications of this development for the health of the workforce are not yet established. Using a unique individual-level data set for 27 European countries, this paper evaluates whether temporary employment is interrelated with self-assessed health. We find pronounced differences in self-assessed health by employment status across European countries. Furthermore, in the EU full-time permanent employed workers report the best health, followed by temporary and part-time employed workers. These differences largely vanish, when taking into account the potential endogeneity between employment status and self-assessed health. However, repeated temporary contracts have a significant negative impact on health.
    Keywords: Temporary employment; fixed-term contracts; self-assessed health
    JEL: J62
    Date: 2011–12
  3. By: Philipp Mohl (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Tobias Hagen (Frankfurt University of Applied Sciences, Nibelungenplatz 1, D-60318 Frankfurt am Main, Germany.)
    Abstract: Despite its rather broad goal of promoting “economic, social and territorial cohesion”, the existing literature has mainly focused on investigating the Cohesion Policy’s growth effects. This ignores the fact that part of the EU expenditures is directly aimed at reducing disparities in the employment sector. Against this background, the paper analyses the impact of EU structural funds on employment drawing on a panel dataset of 130 European NUTS regions over the time period 1999-2007. Compared to previous studies we (i) explicitly take into account the unambiguous theoretical propositions by testing the conditional impact of structural funds on the educational attainment of the regional labour supply, (ii) use more precise measures of structural funds for an extended time horizon and (iii) examine the robustness of our results by comparing different dynamic panel econometric approaches to control for heteroscedasticity, serial and spatial correlation as well as for endogeneity. Our results indicate that high-skilled population in particular benefits from EU structural funds. JEL Classification: R11, R12, C23, J20.
    Keywords: EU structural funds, dynamic panel models, spatial panel econometrics, regional employment effects.
    Date: 2011–12
  4. By: Fort, Margherita (Department of Economics, University of Bologna, Bologna, Italy); Schneeweis, Nicole (Department of Economics, Johannes Kepler University, Linz, Austria); Winter-Ebmer, Rudolf (Department of Economics, Johannes Kepler University, Linz, and Institute for Advanced Studies, Vienna, Austria)
    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.
    Keywords: Instrumental variables, education, fertility
    JEL: I2 J13
    Date: 2011–12
  5. By: Hazans, Mihails
    Abstract: This paper looks into institutional and other macro determinants of prevalence of informal dependent employment, as well as informal self-employment, in European countries, using European Social Survey data on work without legal contract in on 30 countries, covering years 2004-2009. Consistently with theoretical predictions, quality of business environment has a significant negative impact on prevalence of both types of informal employment. The share of non-contracted employees is negatively affected by perceived quality of public services and positively related to economic growth. Informal self-employment is positively related to growth in Europe at large, as well as in Eastern and Southern Europe. The level of GDP per capita also has a positive impact on the prevalence of informal employment in Europe at large and within Eastern and Southern Europe, whilst an opposite effect is found in Western and Northern Europe. Other things equal, the share of non-contracted employees in the labor force across European countries increases with the minimum-to-average wage ratio, with union density, with the share of first and second generation immigrants, and with income inequality, but falls with stricter employment protection legislation (EPL) and higher tax wedge on labor. Thus it appears that in Europe at large, labor cost effects of EPL and taxes are weaker than their impact via perceptions of job security and law enforcement, along with tax morale and the income effect. Yet the EPL effect on informality is positive (i.e., cost-related) when either Eastern and Southern Europe or Western and Northern Europe are considered separately. Furthermore, within Western and Northern Europe, the minimum wage effect is negative, whilst within Eastern and Southern Europe, the union effect is negative; in both cases, we offer a supply side explanation.
    Keywords: Labor Markets,Labor Policies,Debt Markets,Economic Theory&Research,Markets and Market Access
    Date: 2011–12–01
  6. By: Giorgia Giovannetti (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Marco Sanfilippo; Margherita Velucchi
    Abstract: This paper analyzes the indirect impact of China on the export performance of major European countries (Italy, France, Germany and Spain) in their main destination markets (OECD countries). Given a strong specialization in manufacturing sector, these EU countries are likely to be at risk from China’s competition, especially in consumer goods. The heterogeneity in the production (and export) structures of EU countries makes Italy, whose productive structure is based on so-called “traditional” sectors, most vulnerable to China’s competitive pressure. Using data for the period 1995-2009, this paper estimates the possible displacement effect at sector level. Results show that there is a considerable variation in different EU countries’ exposure to China’s competition and that, in some sectors the Chinese exports effect is, indeed, strong. This is particularly true for the more recent period, after China has entered WTO and for Italy, both in traditional and more capital intensive sectors.
    Keywords: china, trade, italy, gravity model
    JEL: F10 F14
    Date: 2011
  7. By: Massimo Filippini (Department of Economics, University of Lugano; ETH, Zurich, Switzerland); Laura G. González Ortiz (Department of Economics, University of Lugano, Switzerland); Giuliano Masiero (Department of Economics and Technology Management, University of Bergamo, Italy; Department of Econonomics, University of Lugano, Switzerland)
    Abstract: Because of evidence of causal association between antibiotic use and bacterial resistance, the implementation of national policies has emerged as a interesting tool for controlling and reversing bacterial resistance. The aim of this study is to assess the impact of public policies on antibiotic use in Europe using a differences-in-differences approach. Comparable data on systemic administered antibiotics in 21 European countries are available for a 11-years panel between 1997 and 2007. Data on national campaigns are drawn from the public health literature. We estimate an econometric model of antibiotic consumption with country fixed effects and control for the main socioeconomic and epidemiological factors. Lagged values and the instrumental variables approach are applied to address endogeneity aspects of the prevalence of infections and the adoption of national campaigns. We find evidence that public campaigns significantly reduce the use of antimicrobials in the community by 1.4 to 3.7 defined daily doses per 1000 inhabitants. This roughly represents an impact between 7.2% and 18.5% on the mean level of antibiotic use in Europe between 1997 and 2007. The effect is robust across different measurement methods. Further research is needed to investigate the effectiveness of policy interventions targeting different social groups such as general practitioners or patients.
    Keywords: antibiotic use, public policies, national campaigns, difference-in-difference
    JEL: C21 C54 I18
    Date: 2011–12
  8. By: Klier, Thomas; Linn, Joshua (Resources for the Future)
    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.
    Keywords: fuel prices, fuel economy, new vehicles, Europe
    Date: 2011–09–07
  9. By: Fialova, Kamila; Schneider, Ondrej
    Abstract: This paper analyzes the role of labor market institutions in explaining the development of shadow economies in European countries. The analysis uses several alternative measures of the shadow sector, and examines the effects of labor institutions on the shadow sector in two specific regions: new and old European Union member countries, as their respective shadow sectors exhibited a different development in the past decade. Although the share of the shadow economy in gross domestic product averaged 27.5 percent in the new member countries in 1999-2007, the respective share in the old member states stood at 17.9 percent. The paper estimates the effects of labor market institutions on two sets of shadow economy indicators -- shadow production and shadow employment. Comparing alternative measures of the shadow sector allows a more granulated analysis of labor market institution effects. The results indicate that the one institution that unambiguously increases shadow economy production and employment is the strictness of employment protection legislation. Other labor market institutions -- active and passive labor market policies, labor taxation, trade union density, and the minimum wage setting -- have less straightforward and statistically robust effects and their impacts often diverge in new and old European Union member countries. The differences are not robust enough, however, to allow for rejecting the hypothesis of similar effects of labor market institutions in new and old European Union member states.
    Keywords: Labor Markets,Environmental Economics&Policies,Labor Policies,Economic Theory&Research,Debt Markets
    Date: 2011–12–01
  10. By: Maria Mansanet-Bataller (Department of Financial Economics, Faculty of Economics, University of Valencia)
    Abstract: Since the launch of the European Union Emission Trading Scheme (EU ETS), the interest in the trade of EUAs is constantly increasing among academics and market participants. The objective of this article is twofold: (i) a detailed description of this new market is provided for portfolio managers, and (ii) a comprehensive study of the implications of including Phase II EUAs in diversified portfolios is undertaken using as expected returns both historical and risk-adjusted returns. The results show that the opportunity set do not vary if we consider historical returns and that if we take into account risk-adjusted returns the efficient set only increases if the investor takes a short position in Phase II EUAs.
    Keywords: CO2 Futures, Portfolio Management
    Date: 2011–01
  11. By: Thomas, Dominik; Weegen, Lennart; Walendzik, Anke; Wasem, Jürgen; Jahn, Rebecca
    Abstract: --
    Date: 2011
  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: 2011–12
  13. By: Klaus Nowotny (WIFO); Dieter Pennerstorfer (WIFO)
    Abstract: In this paper we analyse the role of ethnic networks in the location decision of migrants to the EU 15 at the regional level. Using a random parameters logit specification we find a substantially positive effect of ethnic networks on the location decision of migrants. The effect is, however, decreasing in network size. Furthermore, we find evidence of spatial spillovers in the effect of ethnic networks: ethnic networks in neighbouring regions significantly help to explain migrants' choice of target regions. The positive effects of ethnic networks thus also extend beyond regional and national borders. Analysing the trade-off between potential income and network size, we find that migrants would require a sizeable compensation for living in a region with a smaller ethnic network, especially when considering regions where only few previous migrants from the same country of origin are located.
    Keywords: network migration, ethnic networks, random parameters
    Date: 2011–12–19
  14. By: Hazans, Mihails
    Abstract: The European Social Survey data are used to analyze informal employment in 30 countries, focusing on employees without contracts and on informal self-employed workers (who are distinguished from formal workers). Overall the size of informal employment decreases from South to West to East to North. However, working without a contract is more prevalent in Eastern Europe than in the West, except for Ireland, the United Kingdom, and Austria. Between 2004 and 2009, no cases were found when unemployment and dependent informality rates in a country went up together, suggesting that working without a contract is pro-cyclical in Europe. The dependent informality rate is inversely related to skills (measured by either schooling or occupation). Both in Southern and in Western Europe, the highest dependent informality rate is found among immigrants from Central and Eastern Europe and the Former Soviet Union, while in Eastern Europe this group is second after minorities without immigrant background. In the Southern and part of Western Europe, immigrants not covered by European Union free mobility provisions are much more likely to work without a contract than otherwise similar natives. The paper provides evidence that exclusion and discrimination plays an important role in pushing employees into informality, while this seems not to be the case for informal self-employed workers. Both on average and after controlling for a rich set of individual characteristics, informal employees in all parts of Europe are having the largest financial difficulties among all categories of the employed population (yet they fare much better than the unemployed and discouraged), while informal self-employed workers are at least as well off as formal employees. Finally, there is a negative and significant effect of individual-level satisfaction with the national government on the propensity to work without a contract in Eastern Europe, as well as in Western Europe.
    Keywords: Labor Markets,Work&Working Conditions,Labor Policies,Labor Management and Relations,Tertiary Education
    Date: 2011–12–01
  15. By: Torgler, Benno
    Abstract: This study tries to remedy the current lack of tax compliance research analyzing tax morale in 10 Eastern European countries that joined the European Union in 2004 or 2007. By exploring tax morale differences between 1999 and 2008, it shows that tax morale has decreased in 7 out of 10 Eastern European countries. This lack of sustainability may support the incentive based conditionality hypothesis that the European Union only has a limited ability to influence tax morale over time. The author observes that events and processes at the country level are crucial to understanding tax morale. Factors such as perceived government quality and trust in the justice system and the government are positively correlated with tax morale in 2008.
    Keywords: Taxation&Subsidies,Debt Markets,Subnational Economic Development,Emerging Markets,National Governance
    Date: 2011–12–01
  16. By: Maria Olivares (University of Zuerich, Department of Business Administration, Switzerland); Heike Wetzel (University of Cologne, Institute of Energy Economics, Germany)
    Abstract: Since the late 1990s, the European higher education system has had to face deep structural changes. With the public authorities seeking to create an environment of quasi-markets in the higher education sector, the increased competition induced by recent reforms has pushed all publicly financed higher education institutions to use their resources more efficiently. Higher education institutions increasingly now aim at differentiating themselves from their competitors in terms of the range of outputs they produce. Assuming that different market positioning strategies will have different effects on the performance of higher education institutions, this paper explores the existence of economies of scale and scope in the German higher education sector. Using an input-oriented distance function approach, we estimate the economies of scale and scope and the technical efficiency for 154 German higher education institutions from 2001 through 2007. Our results suggest that comprehensive universities should indeed orientate their activities to the concept of a full-university that combines teaching and research activities across a broad range of subjects. In contrast, praxis-oriented small and medium-sized universities of applied sciences should specialise in the teaching and research activities they conduct.
    Keywords: Higher Education Production, Economies of Scale and Scope, Technical Efficiency, Stochastic Frontier Analysis, Input Distance Function
    JEL: L25 I23 D24
    Date: 2011–12
  17. By: Agnieszka Kubal (University of Oxford); Rianne Dekker (Erasmus University Rotterdam)
    Abstract: What drives international migration? Theories of migration networks, migration culture, migration systems and cumulative causation suggest that once a critical threshold level of migrants have settled, migration tends to stimulate the creation of social and economic structures that make the process of migration self-perpetuating (cf. Massey et al. 1987; de Haas 2010). One important aspect of the theory is that the more migrants from a particular locality settle in one place, their presence, assistance and established structures in the destination country act as incentives for others to follow in their footsteps, which emphasizes the instrumental role of pioneers’ agency in influencing others to follow suit. A historical perspective on the migration from Ukraine to the United Kingdom and the Netherlands challenges this assumption. While substantial numbers of migrants have settled in those destinations, migration, especially in the last 20 years, has not developed into large, self-sustaining migration systems (in comparison to the dynamic migration linkages between Ukraine and Southern European countries such as Portugal, Italy and Greece). Trying to understand why migration has not taken off, we argue that the role of settled pioneer migrants and their community structures in assisting others to follow in their footsteps should not be taken for granted. We argue that the role of pioneers is much more ambiguous and complex, and the relevant question about ‘bridgeheads’ and ‘gatekeepers’ (cf. Böcker 1994) should not be that of ‘either/or’ but ‘how much’, ‘to what extent’ or ‘under what conditions’.
    Keywords: migration system, cumulative causation, Ukrainian migration, pioneer migrants, migration waves, United Kingdom, Netherlands
    Date: 2011–12
  18. By: Darja Reuschke
    Abstract: Little is known about the individual location behaviour of self-employed entrepreneurs. This paper investigates the geographical mobility behaviour of self-employed entrepreneurs, as compared to employees, thereby shedding new light onto the place embeddedness of self-employment. It examines whether self-employed entrepreneurs are `rooted¿ in place and also whether those who are more rooted in place are more likely to enter self-employment. The paper draws on large-scale panel data covering the years 1996¿2009 from the German Socio-Economic Panel Study (SOEP). It shows that self-employed entrepreneurs as compared to employees are not more `rooted¿ in their place of residence and that those who are more rooted in their place of residence are not more likely to become self-employed. However, in contrast to expectations drawn from previous literature, flows into self-employment are positively associated with inter-regional moves. It concludes that a longitudinal perspective on individual employment careers provides an important methodological advance. In addition, it emphasises the importance of mobility and immobility and individual and household constraints and preferences for understanding who becomes self-employed.
    Keywords: Self-employment, migration, moves, panel data, SOEP, Germany
    JEL: C23 J21 J61 J62 R23
    Date: 2011
  19. By: Ragni Hege Kitterød, Marit Rønsen and Ane Seierstad (Statistics Norway)
    Abstract: In spite of increased labour market participation in recent decades, women in Norway still have high part-time rates and seldom work more than their partners. Given that an aging population implies a projected large labour demand in many Western countries, it is important to explore potential labour market reserves among women. Utilising the panel in the Norwegian part of the EU-SILC, we ask whether an increase in the mother’s paid hours is associated with an increase or a decrease in the father’s hours, or whether there is no relationship between changes in the partners’ working hours at all. An increase from parttime to normal full time for the mother is not associated with a change in the father’s hours, but an increase from full time to very long hours for the mother corresponds to an increase in the father’s hours. A positive association between the parents’ paid hours applies first and foremost to parents with school-aged children and to couples where both partners have either long or short education. When the mother has long education and the father has short, an increase in her paid hours is associated with a decrease in his.
    Keywords: Dual-earners; gender equality; labour market; working hours
    JEL: J22 J23
    Date: 2011–12
  20. By: Francesco Testa (Istituto di Management - Scuola Superiore Sant’Anna, Pisa); Fabio Iraldo (Istituto di Management - Scuola Superiore Sant’Anna, Pisa); Marco Frey (Istituto di Management - Scuola Superiore Sant’Anna, Pisa); Tiberio Daddi (Istituto di Management - Scuola Superiore Sant’Anna, Pisa)
    Abstract: Green Public Procurement (GPP) is becoming a cornerstone of environmental policies both at European Union and Member State level. Drawing upon a database of public authorities located in three Italian Regions, this paper assesses the determinants and drawbacks of green procurement adoption. In particular, using an econometrical approach we tested the following propositions: i) the existing awareness on GPP practices, tools and regulations does support public authorities to develop GPP strategies; (ii) the support of external experts in purchasing function does support public authorities to develop GPP practices; (iii) the small dimension of public authority is an obstacle to adopting GPP practices; (iv) ISO 14001 certified public authorities are more likely to develop GPP practices. The econometric analysis shows that the dimension of public authorities and the level of awareness of the existing tools for supporting GPP have a positive and significant effect on the probability that they adopt GPP practices.
    Keywords: green public procurement, local authorities, ISO 14001, environment.
    JEL: Q58 M20 K32
    Date: 2011–06–01

This nep-eur issue is ©2012 by Giuseppe Marotta. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.