nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2012‒04‒17
thirteen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Material Deprivation in Selected EU Countries according to EU SILC Income Statistics By Jana Stavkova; Nada Birciakova; Jana Turcikova
  2. Technological Innovation in New European Union Markets By Ainura Uzagalieva; Evžen Kočenda; Antonio Menezes
  3. Examining the relationship between immigration and unemployment using National Insurance Number registration data By Paolo Lucchino; Chiara Rosazza Bondibene; Jonathan Portes
  4. Well-Being in Germany: GDP and Unemployment Still Matter By Johannes Vatter
  5. State of an innovation system: theoretical and empirical advance towards an innovation efficiency index By Montalvo, Carlos; Moghayer, Saeed
  6. Family dissolution and public policies in Germany: Social provisions and institutional changes since the 1980s By Wörz, Markus
  7. Old-age provisions in Germany: Changes in the retirement system since the 1980s By Wörz, Markus
  8. Do new labour activation policies work? A descriptive analysis of the German Hartz reforms By Alber, Jens; Heisig, Jan Paul
  9. The structure of hiring costs in Germany By Samuel Muehlemann; Harald Pfeifer
  10. Lifetime earnings inequality in Germany By Bönke, Timm; Corneo, Giacomo; Lüthen, Holger
  11. Shifted labor market risks? The changing economic consequences of job loss in the United States and West Germany By Ehlert, Martin
  12. The Costs of Corruption in the Italian Solid Waste Industry By Graziano Abrate; Fabrizio Erbetta; Giovanni Fraquelli; Davide Vannoni
  13. Labour mobility within the EU By Dawn Holland; Tatiana Fic; Pawel Paluchowski; Ana Rincon-Aznar; Lucy Stokes

  1. By: Jana Stavkova (Faculty of Business and Economics, Mendel University in Brno); Nada Birciakova (Faculty of Business and Economics, Mendel University in Brno); Jana Turcikova (Faculty of Business and Economics, Mendel University in Brno)
    Abstract: The article focuses on issues of households at risk of poverty in a relative conception. Income poverty represents a situation when the threshold of 0.6 of median income is not achieved. The analysis of a broader definition of poverty bases on identification and assessment of material deprivation factors, which include: Financial stress, Housing conditions, Availability of consumer durables and Basic needs. Data sources are based EU-SILC dataset. The presented analysis focuses on selected EU countries, namely Czech Republic, Finland, France, Spain and United Kingdom. The result is the identification of problem areas that cause deprivation symptoms.
    Keywords: EU-SILC, income, material deprivation, poverty
    JEL: H31 I31 I32 Z10
    Date: 2012–06
  2. By: Ainura Uzagalieva (Centre of Applied Economics Studies of the Atlantic at the Department of Economics and Management, the University of the Azores, Portugal); Evžen Kočenda; Antonio Menezes
    Abstract: We analyze the role of innovation in the technological development of four new EU members: the Czech Republic, Hungary, Poland and Slovakia. For that purpose, we use a novel approach by modeling the empirical relationship between intra-industrial bilateral trade flows, which proxy the level of technological progress, and innovation expenditures within the context of a gravity model with a set of appropriate instrumental variables to account for the potential endogeneity of innovation to trade. We show that innovation efforts in high-tech industries exhibit a strong effect on the technological progress of the region and they are closely linked to foreign direct investment and multinationals. As foreign-owned subsidiaries become a part of the innovation systems and industrial structure of the host country they promote overall technological growth in the region.
    Keywords: foreign direct investment, innovation, imitation, international trade, European Union
    JEL: C51 F14 F21 O31
    Date: 2012–03
  3. By: Paolo Lucchino; Chiara Rosazza Bondibene; Jonathan Portes
    Abstract: Immigration has been central in recent UK policy debates and has attracted significant concern over its possible adverse effect on labour market outcomes. This paper contributes to the evidence on this issue by presenting initial results on the impact of migration inflows on the claimant count rate using previously unused data on National Insurance Number registrations of foreign nationals. Our results, which appear robust to different specifications, different levels of geographic aggregation, and to a number of tests, seem to confirm the lack of any impact of migration on unemployment in aggregate. We find no association between migrant inflows and claimant unemployment. In addition, we test for whether the impact of migration on claimant unemployment varies according to the state of the economic cycle. We find no evidence of a more adverse during periods of low growth or the recent recession.
    Date: 2012–01
  4. By: Johannes Vatter
    Abstract: This paper examines regional differences in subjective well-being (SWB) in Germany. Inferential statistics indicate a diminishing but still significant gap between East and West Germany, but also differing levels of SWB within both parts. The observed regional pattern of life satisfaction reflects macroeconomic fundamentals, where labor market conditions play a dominant role. Differing levels of GDP and economic growth have contributed rather indirectly to regional well-being such that the years since the German reunification can be considered as a period of joyless growth. Approximately half of the "satisfaction gap" between East and West Germany can be attributed to differing macroeconomic conditions. Moreover, we argue that it is advisable for governments to collect more data on aspects that presumably influence the well-being of society. For example, it is highly probable that reliable data on regional income inequality would lead to severalimportant and influential studies. This, in turn, can help to design indicators for those characteristics which are known for affecting SWB. In total, we do not perceive any fundamental caveat for using data on SWB in order to measure welfare directly, at least within culturally and linguistically homogenous regions. To reduce statistical uncertainty, however, it would be helpful to include subjective information of this kind into larger cross-sectional surveys such as common census data.
    Keywords: social welfare, subjective well-being, unemployment, economic growth
    JEL: R10 I31
    Date: 2012
  5. By: Montalvo, Carlos; Moghayer, Saeed
    Abstract: Innovation is currently seen as a cornerstone not only for economic development but also as an intrinsic human activity that could help to face the great challenges of human kind. Given the importance of innovation in the new European 2020 Strategy, measuring progress but also monitoring what drives innovation becomes crucial for policy development. Following upon this strategy the new European flag initiative “Innovation Union” called for a new “single” indicator on innovation. Currently the information infrastructure on innovation in Europe contains a number of indicators. Most of the current indicators at the national or sector levels use a performance theoretical framework based on an efficiency model of inputs and outputs. The last five editions of CIS have been a bastion of innovation policy research during the last decade. Despite this, CIS has been criticised for not having an umbrella framework that unifies its different underpinnings to explain what drives innovation to actual innovation and economic outcomes. In this paper we propose a framework that enables the theoretical and empirical linkages between the drivers of innovation to innovation performance via the integration of core features determining innovative behaviour in to a single composite. This index enables to assess the total propensity of firms to innovate and assess the relative innovation performance at the sector and country level. The approach adopted here to create the index overcomes long standing theoretical and methodological issues related to the reduction of complexity in a meaningful form, scope, aggregation, normalisation and validation of innovation composites. The empirical demonstration of the index was done using CIS4 data and the results validate the theoretical structure and robustness of the proposed model. This enables its replication for innovation policy analysis in different settings. The model underlying the proposed index provides not only a depiction of the efficiency of the innovation system but also a link to economic performance and to the factors that determine relative performance.
    Keywords: Innovation indicators; Innovation performance; innovation efficiency; innovation intensity; theory of planned behaviour; CIS; single indicator; composite indicators; sectoral innovation indicators; behavioral economics; psychological economics;
    JEL: D03 D7 C43 O3
    Date: 2011–10–28
  6. By: Wörz, Markus
    Abstract: Germany has long been faced with low birth rates and a pronounced aging of society. Recently divorces and single parenthood have been on the rise. Family policies and regulations dealing with family break-up are thus confronted with new and greater challenges. After describing important changes in household and family composition in more detail, this paper outlines the regulation of the consequences of family break up in relation to alimony and child support. The main part of the paper focuses on public policies in support of families. Here monetary benefits as well as child care services are considered. Because of the increase of single-parent families a small-subsection specifically looks at special benefits for single parents. The analysis of child care and parental benefits, and their evolution in Germany, reveals considerable increases in benefits since the mid-1980s. The changes in child benefits and parental allowance can be broadly classified into three periods where benefits rise from low to high: 1) until 1985, benefits were very low; 2) in 1986, parental allowance was introduced, so that from 1986 to 1995 the level of benefits was moderate; 3) in 1996, the period of high benefits began and benefits were increased considerably. The 2007 reform of parental allowance led to an implicit indexation in which the benefit is now related to formerly earned income. This reform entailed clear increases for middle and high earners. However, low income earners and recipients of social transfers clearly lost when the benefit duration was reduced. Not only have cash benefits been increased, but child care services have also been extended in the western federal states. In terms of institutional reforms regarding alimony and child support, there has been little change compared to the development of family policy benefits. --
    Date: 2011
  7. By: Wörz, Markus
    Abstract: Pensions absorb the largest share of the welfare state in financial terms. This is true not only in the aggregate but also for individuals. Financial security in old age is of key importance. The provision of financial security, however, is contingent upon the institutional arrangement of social security systems. This paper describes key features of Statutory Pension Insurance (SPI), the most important provision for financial security in old age from which most senior citizens derive the largest part of their retirement income. It focuses next on core SPI features: How benefits are calculated; important changes since the 1980s; and, how these changes affect average pensions. With various routes into retirement - particularly in Germany - the following chapter then discusses these different paths and how they were reformed over time. Following that, occupational and private pensions are examined as alternative means to oldage financial security other than SPI. Here we do so with empirical data showing the evolution of different, old-age income sources since the 1990s. This institutional description shows that SPI became less generous between 1980 and 2007: First, the pension formula has been modified several times resulting in shrinking benefits. The introduction of actuarial reductions, in 1997, for early enrolment of benefits amplified this, since a considerable number of people retire before the statutory retirement age and, therefore, receive lower pensions. Moreover, in several steps, university education has been completely disregarded in the valuation of pensions. At the same time, credits were given for child-raising and child-care services. Whereas the former is already in force, the latter will only benefit future generations of pensioners. Thus, those most affected by welfare state changes in relation to old-age pensions are pensioners who retire early and have higher education. --
    Date: 2011
  8. By: Alber, Jens; Heisig, Jan Paul
    Abstract: The German Hartz reforms, introduced by the Red-Green coalition government in the years 2003 to 2005, form part of a broader pattern of European activation policies which have become known as new labour policies. The idea of these reforms was to reduce welfare dependency and to boost activity rates by making work pay, and by transforming the welfare state from a passive instrument of social protection to an enabling social investment that fosters universal labour force participation as the ultimate form of social inclusion. The German variety of these policies abolished earnings-related benefits to the long-term unemployed, partly fused the unemployment compensation scheme with the minimum income social assistance scheme and increased activating pressures on ablebodied people at working age by combining new sanctions with an extension of placement services. Based on a description of the relevant institutional changes, we show that means-tested benefits have become the major form of social transfer payments to the unemployed. The reforms also entailed a massive growth in German employment and especially in low-wage employment. As non-standard forms of employment proliferated, growing proportions of economically active people joined the ranks of the working poor by combining earnings from work with means-tested in-work benefits. Based on survey data from the German Socio-Economic Panel (GSOEP), we show that the working poor enjoy higher life satisfaction, social integration and civic engagement than the nonworking poor. However, these individual and social benefits of employment critically depend on pay levels and overall job quality, as our own analyses confirm for the case of men's life satisfaction. The welfare gains achieved by Germany's recent reforms may therefore be smaller than suggested by employment rates alone, because people near the poverty line are now more willing to make concessions and to accept job offers even if the jobs they get are of minor quality. -- Die von der rot-grünen Bundesregierung nach der Jahrtausendwende durchgesetzten Hartz-Reformen sind Teil eines allgemeinen Musters der Aktivierungspolitik, die von mehreren sozialdemokratischen Regierungen Europas unter dem Stichwort new labour betrieben wurde. Das Ziel dieser Reformpolitik war es, die Abhängigkeit von staatlichen Transferzahlungen zu mindern und das Beschäftigungsniveau zu steigern, indem Arbeit im Niedriglohnsektor mit Hilfe von Subventionen attraktiver gemacht und der Sozialstaat von einer reaktiven Instanz des sozialen Schutzes zu einem befähigenden Instrument sozialer Investition umgebaut wurde. Die deutsche Variante dieser Politik schaffte die einkommensbezogenen Leistungen für Langzeitarbeitslose ab, fusionierte die soziale Sicherung der Arbeitslosen teilweise mit der Sozialhilfe und erhöhte den Aktivierungsdruck auf die Leistungsempfänger durch eine Politik des Forderns und Förderns, die neue Sanktionsmöglichkeiten mit verbesserten Bildungs- und Vermittlungsdiensten verband. Auf der Grundlage einer Beschreibung der wichtigsten institutionellen Reformen zeigen wir, dass die an Bedürftigkeitstests gebundene Grundsicherung heute die bei weitem häufigste Transferzahlung für Arbeitslose darstellt. Das Beschäftigungsniveau ist seit den Reformen insbesondere im Niedriglohnsektor beträchtlich gestiegen. Da vor allem diverse Formen atypischer Beschäftigung zugenommen haben, zählt ein wachsender Teil der Erwerbstätigen zur Gruppe der arbeitenden Armen, die ihr Erwerbseinkommen mit Leistungen der Grundsicherung aufstocken. Auf der Basis von SOEP-Daten zeigen wir, dass die arbeitenden Armen nicht nur zufriedener, sondern auch in vielfältiger Weise besser sozial integriert sind als vergleichbare nicht arbeitende Arme. Wie wir am Beispiel der Lebenszufriedenheit von Männern zeigen, hängen die positiven Effekte der Erwerbstätigkeit allerdings entscheidend von der Entlohnung und anderen Aspekten der Arbeitsplatzqualität ab. Die Wohlfahrtsbilanz der Hartz-Reformen könnte deshalb ungünstiger ausfallen, als die Beschäftigungsentwicklung vermuten lässt, da Arbeitsuchende nun eher zu Konzessionen bereit sind und auch schlechtere Stellenangebote akzeptieren.
    Keywords: Minimum income support,unemployment compensation,labour market reforms,Hartz reform,activation policy,social inclusion,recommodification,working and non-working poor,Mindestsicherung,Arbeitslosenunterstützung,Arbeitsmarktreformen,Hartz-Reform,Aktivierungspolitik,soziale Inklusion und Teilhabe,Rekommodifizierung,arbeitende und nicht arbeitende Arme
    JEL: I38 J68
    Date: 2011
  9. By: Samuel Muehlemann (University of Bern and IZA Bonn); Harald Pfeifer (Federal Institute for Vocational Education and Training (BIBB) Bonn)
    Abstract: In this paper, we analyze the structure of hiring costs of skilled workers in Germany. Using detailed and representative firm-level data on recruitment and adaptation costs of new hires, we find that average hiring costs amount to more than 8 weeks of wage payments (4,700 Euros). The structure of hiring costs is convex, as an increase in the number of hires by 1% increases hiring costs by 1.3%. We find a moderate effects of labor market institutions on the magnitude, but none on the structure hiring costs.
    Keywords: Labor adjustment costs, hiring costs
    JEL: J32 J63
    Date: 2012–04
  10. By: Bönke, Timm; Corneo, Giacomo; Lüthen, Holger
    Abstract: This paper documents the magnitude, pattern, and evolution of lifetime earnings inequality in Germany. Based on a large sample of earnings biographies from social security records, we show that the intra-generational distribution of lifetime earnings of male workers has a Gini coefficient around .2 for cohorts born in the late 1930s and early 1940s; this amounts to about 2/3 of the value of the Gini coefficient of annual earnings. Within cohorts, mobility in the distribution of yearly earnings is substantial at the beginning of the lifecycle, decreases afterwards and virtually vanishes after age forty. Earnings data for thirty-one cohorts reveals striking evidence of a secular rise of intra-generational inequality in lifetime earnings: West-German men born in the early 1960s are likely to experience about 80 % more lifetime inequality than their fathers. In contrast, both short-term and long-term intra-generational mobility have been rather stable. Longer unemployment spells of workers at the bottom of the distribution of younger cohorts contribute to explain 30 to 40 % of the overall increase in lifetime earnings inequality.
    Keywords: Earnings distribution; Lifetime inequality
    JEL: D31 H24
    Date: 2012–04
  11. By: Ehlert, Martin
    Abstract: This article analyzes how institutional changes in the welfare state influence income mobility around job loss in the United States andWest Germany. Drawing both on an analysis of changes in provisions for the unemployed and on panel data from the Panel Study of Income Dynamics (PSID) and the German Socio-Economic panel (GSOEP), I demonstrate that the material well-being of American households hit by job loss has decreased substantially over time because of welfare state retrenchment, while unemployed German households have experienced only little deterioration of their economic well-being despite worsening labor market circumstances and institutional changes. The analysis also reveals that women in the United States are especially disadvantaged by job loss because, in their case, the withdrawal of the state has not been counteracted by an increase in influence on the part of the family. --
    Date: 2011
  12. By: Graziano Abrate (Department of Business Management and Environment, University of Eastern Piedmont); Fabrizio Erbetta (Department of Business Management and Environment, University of Eastern Piedmont); Giovanni Fraquelli (Department of Business Management and Environment, University of Eastern Piedmont); Davide Vannoni (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)
    Abstract: The paper investigates the link between corruption and efficiency by using a rich micro-level dataset concerning solid waste collection activities in 529 Italian municipalities observed over the years 2004-2006. In order to test the impact of corruption on cost efficiency we estimate a stochastic latent class frontier approach, which accounts for technological heterogeneity across units. The results of our estimates show that corruption significantly increases inefficiency, a finding which is robust to the inclusion of alternative local corruption indicators and of other control variables such as geographical, demographic and political factors. Finally, we find that the impact of corruption tends to be greater in the southern regions of the country and for those municipalities which are less involved in recycling activities.
    Keywords: corruption, cost inefficiency, latent class stochastic frontier, solid waste
    JEL: C33 D24 D73 Q53
    Date: 2012–04
  13. By: Dawn Holland; Tatiana Fic; Pawel Paluchowski; Ana Rincon-Aznar; Lucy Stokes
    Date: 2011–04

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