nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2012‒04‒23
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Environmental Policy and Directed Technological Change: Evidence from the European Carbon Market By Raphael Calel; Antoine Dechezleprêtre
  2. Work, family or state ? from wage inequalitie ans in-work poverty in a european cross-country perspective By Guillaume Allègre
  3. Narrowing Vertical Fiscal Imbalances in Four European Countries By Izabela Karpowicz
  4. Baseline results from EUROMOD: 2006-2009 policies By Avram, Silvia; Sutherland, Holly
  5. Does Fiscal Decentralisation Foster Regional Investment in Productive Infrastructure? By Andreas Kappeler; Albert Solé-Ollé; Andreas Stephan; Timo Välilä
  6. Going regional. The effectiveness of different tax-benefit policies in combating child poverty in Spain By Canto, Olga; Adiego, Marta; Ayala, Luis; Levy, Horacio; Paniagua, Milagros
  7. Improving Land-use Modelling within CGE to Assess Forest-based Mitigation Potential and Costs By Melania Michetti; Ramiro Parrado
  8. Unemployment Dynamics in Central Europe: A Labor Flow Approach By Vladislav Flek; Martina Mysíková
  9. Welfare compensation for unemployment in the Great Recession By Fernandez Salgado, Mariña; Figari, Francesco; Sutherland, Holly; Tumino, Alberto
  10. The labour markets in Finland, Germany, Latvia, Norway, and Sweden 2006-2010 : Developments and challenges for the future By Klinger, Sabine; Spitznagel, Eugen; Alatalo, Johanna; Berglind, Karin; Gustavsson, Håkan; Kure, Hans; Nio, Ilkka; Salmins, Janis; Skuja, Vita; Sorbo, Johannes
  11. Immigration, Obesity and Labor Market Outcomes in the UK By Averett, Susan; Argys, Laura; Kohn, Jennifer L.
  12. Evaluation of Non-price Competitiveness of Exports from Central, Eastern and Southeastern European Countries in the EU Market By Konstantins Benkovskis; Julia Woerz
  13. Business change in Italian regions. A spatial shift-share approach to plant-level data By Giuseppe Espa; Danila Filipponi; Diego Giuliani; Davide Piacentino
  14. German car buyers' willingness to pay to reduce CO2 emissions By Achtnicht, Martin
  15. The Intergenerational Persistence of Human Capital: An Empirical Analysis of Four Generations By Lindahl, Mikael; Palme, Mårten; Sandgren Massih, Sofia; Sjögren, Anna
  16. Effectiveness of further vocational training in Germany : Empirical findings for persons receiving means-tested unemployment benefit By Bernhard, Sarah; Kruppe, Thomas
  17. Properties of knowledge base and firm survival: Evidence from a sample of French manufacturing firms By Alessandra Colombelli; Jackie Krafft; Francesco Quatraro
  18. Ownership and Investment Behaviour in Transition Countries: A Case Study of Collective and Corporate Farms in the Czech Republic By Curtiss, Jarmila; Ratinger, Tomáš; Medonos, Tomáš
  19. Calculating the 'greening' effect: A case study approach to predict the gross margin losses in different farm types in Germany due to the reform of the CAP By Heinrich, Barbara
  20. The Dynamics of Gasoline Prices: Evidence from Daily French Micro Data By Gautier, E.; Le Saout, R.

  1. By: Raphael Calel (Grantham Research Institute on Climate Change and the Environment, London School of Economics); Antoine Dechezleprêtre (Centre for Economic Performance, London School of Economics)
    Abstract: The European Union Emissions Trading Scheme (EU ETS) has aimed to encourage the development of low-carbon technologies by putting a price on carbon emissions. Using a newly constructed data set that links 8.5 million European companies with their patenting history and their regulatory status under EU ETS, we investigate the hypothesis that the EU ETS has encouraged development of low-carbon technologies. Exploratory data analysis reveals a rapid increase in low-carbon patenting activities at the EPO since 2005, especially among EU ETS regulated companies during the Scheme's second phase. Naive estimates obtained by comparing EU ETS and non-EU ETS firms suggest that the Scheme may be responsible for up to 30% of the increase in low-carbon patenting of regulated companies. However, more refined estimates that combine matching methods with difference-in-differences provide evidence that the EU ETS has not impacted the direction of technological change. This finding appears to be robust to a number of stability and sensitivity checks. While we cannot completely rule out the possibility that the EU ETS has impacted only large companies for which suitable unregulated comparators cannot be found, our findings suggest that the EU ETS so far has had at best a very limited impact on low-carbon technological change.
    Keywords: Directed Technological Change, EU Emissions Trading Scheme, Policy Evaluation
    JEL: Q54 Q58
    Date: 2012–04
  2. By: Guillaume Allègre (:Observatoire Francais des Conjonctures Economiques)
    Abstract: Our aim is to explore how wages inequalities translate into standard of living inequalities in different European countries. Wage inequalities are measured at the individual level. They can be increased or reduced by two institutions: the household and the tax-benefit system. Standards of living are therefore defined at the intersection of three institutions: the labour market, the family and the state (through social transfers). We propose a new methodology to distinguish the impact of these three institutions on standard of living inequalities. An empirical application is conducted for the employed population in different European countries with a focus on France, Spain, the United Kingdom, Germany, Sweden and Poland. Results are in line with expectations except for Germany, which does not conform to expectations for a corporatist regime.
    Keywords: Inequality, Poverty, Social transfers, Working poor
    JEL: D31 H23 I32
    Date: 2012–04
  3. By: Izabela Karpowicz
    Abstract: This paper describes the institutional changes that have induced a decline in the vertical fiscal imbalance (VFI) - defined as the share of sub-national own spending not financed through own revenues - in four European countries: Belgium, Italy, Norway, and Spain. The decline in VFI was achieved through progressive devolution of revenues to sub-national governments in Belgium, Italy, and Spain, while re-centralization of health sector expenditures was the cause of the decline in the VFI in Norway.
    Keywords: Cross country analysis , Current account balances , Europe , European Economic and Monetary Union , Fiscal policy , Government expenditures , Intergovernmental fiscal relations ,
    Date: 2012–03–29
  4. By: Avram, Silvia; Sutherland, Holly
    Abstract: The aim of the paper is to provide a description of the latest public release of EUROMOD (version F5.0), a microsimulation model of taxes and benefits in the EU. After giving a brief account of the process of constructing EUROMOD, we present headline indicators for income inequality and risk of poverty using EUROMOD and discuss explanations for differences between these and EU- SILC based indicators. We then compare EUROMOD indicators across countries and as policies evolve across time between 2006 and 2009. Throughout we highlight both the potential of EUROMOD as a tool for policy analysis and the caveats that should be borne in mind when using it and interpreting results.
    Date: 2012–02–01
  5. By: Andreas Kappeler; Albert Solé-Ollé; Andreas Stephan; Timo Välilä
    Abstract: The aim of this paper is to analyze the effect of revenue decentralization on the provision of infrastructure at the sub-national level. We estimate the effects of revenue decentralization and earmarked grant financing on the level of sub-national infrastructure investment in 20 European countries over the period 1990-2009. The results are interpreted in light of the predictions of the theory on fiscal federalism. We find that it is sub-national infrastructure investment that increases after revenue decentralization and not investment in redistribution. However, the effect of revenue decentralization is lower the higher the use of earmarked grants to fund infrastructure investment.
    Keywords: regional investment, fiscal federalism, dynamic panel data
    JEL: H54 H77 H76 C23
    Date: 2012
  6. By: Canto, Olga; Adiego, Marta; Ayala, Luis; Levy, Horacio; Paniagua, Milagros
    Abstract: In recent years, child-related policies in Spain have experienced relevant changes at different government levels. The central government implemented a new universal child benefit at birth and reformed some of the most relevant policies for children living in low income households. Also, many regional governments (Comunidades Autnomas) have implemented their own policies to support families with children with different schemes in terms of design and generosity. All these policies have increased social protection expenditure aimed at families and children in Spain as a whole along the last decade (one of the lowest in the EU). So far, however, little is known about their impact on child poverty in Spain. Making use of the tax-benefit microsimulation model for the European Union EUROMOD this paper simulates the eligibility and receipt of most of the existing monetary child-related policies at all government levels and assesses their real (for central government policies) or potential (for regional policies) effect on the reduction of child poverty in Spain. Our results underline that, even after the introduction of a universal lump-sum benefit for newborns at the central government level in 2007, in aggregate terms, central government tax credits are the main child-related policy in Spain. Results also underline that central government policies have a considerably larger role in reducing poverty risk even if policies in some regions perform best than others. In general, our simulations suggest that regional benefits and tax credits reinforce and complement the focus of central government policies on younger children, who, on the other hand, seem to be less vulnerable to poverty than older children in Spain.
    Date: 2012–03–01
  7. By: Melania Michetti (Centro Euro-mediterraneo per i Cambiamenti Climatici (CMCC), Fondazione Eni Enrico Mattei (FEEM), Università Cattolica del Sacro Cuore di Milano); Ramiro Parrado (Centro Euro-mediterraneo per i Cambiamenti Climatici (CMCC), Fondazione Eni Enrico Mattei (FEEM), Università Ca’ Foscari di Venezia)
    Abstract: We present a computable general equilibrium model properly modified to analyse the potential role of the European forestry sector within climate mitigation. Improvements on database and modelling frameworks allow accounting for land heterogeneity across and within regions and for land transfers between agriculture, grazing, and forestry. The forestry sector has been modified to track carbon mitigation potential from both intensive and extensive forest margins, which have been calibrated according to a forest sectoral model. Two sets of climate policies are simulated. In a first scenario, Europe is assumed to commit unilaterally to reduce CO2 emissions by 20% and 30%, by 2020. In a second scenario, in addition to the emissions quotas, progressively higher forest sequestration subsidies are paid to European firms to foster the implementation of forestry practices. Results show that including forest carbon in the compliance strategy decreases European policy costs and carbon price, while it does not lead to significant reductions in carbon leakage. We conclude that while European forests can reinforce other mitigation measures, their contribution as a stand-alone abatement strategy results insufficient to comply with emissions reduction targets. Additionally, carbon sinks provided by European temperate forests do not offer considerable mitigation potential if compared with other forest biomes around the world. A much higher forest mitigation would require other regions to take part in a climate stabilization agreement, especially those where old-growth forests exist.
    Keywords: Climate Change, Climate Mitigation, General Equilibrium Modelling, Forestry
    JEL: D58 Q23 Q54 Q58
    Date: 2012–03
  8. By: Vladislav Flek (University of Finance and Administration); Martina Mysíková (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: We analyze labor market flows and unemployment in the Czech Republic (CR), Slovakia and Poland over the period 2004–2007. Relative involvement of working-age population in gross labor market flows is approximately five times lower in central Europe than in the U.S. /UK. Yet, compared to neighboring countries, the CR suffers more from unemployment rigidity, as evidenced most convincingly by a relatively weakernet flowof workers from unemployment to employment. This net flow alone would cut the unemployment rate in Poland more than twice as fast as in the CR. The CR lags behind in creating jobs forthe unemployed, particularly for men, individuals with primary education, and for the 55–65 age group.
    Keywords: EU-SILC, labor market flows, longitudinal data, unemployment
    JEL: E24 J60 J63 J64
    Date: 2012–03
  9. By: Fernandez Salgado, Mariña; Figari, Francesco; Sutherland, Holly; Tumino, Alberto
    Abstract: This paper analyses the extent to which tax-benefit systems provide an automatic stabilisation of income for those who became unemployed at the onset of the Great Recession. The focus of the analysis is on the compensation for earnings lost due to unemployment which is channelled through the welfare systems to this group of people who are clearly vulnerable to the recessions adverse effects. In order to assess the impact of unemployment on household income, counterfactual scenarios are simulated by using EUROMOD, the EU-wide microsimulation model, integrated with information from the EU-LFS data. This paper provides evidence on the differing degrees of relative and absolute resilience of the household incomes of the new unemployed. These arise from the variations in the protection offered by the national tax-benefit systems, depending on entitlement or not to Unemployment Benefits, and from the personal and household circumstances of those most recently at risk of unemployment in the countries considered.
    Date: 2012–03–03
  10. By: Klinger, Sabine (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Spitznagel, Eugen (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Alatalo, Johanna; Berglind, Karin; Gustavsson, Håkan; Kure, Hans; Nio, Ilkka; Salmins, Janis; Skuja, Vita; Sorbo, Johannes
    Abstract: "Via the International Labour Market Forecasting Network, forecasters of the public employment services or comparable institutes from the Nordic countries as well as Germany and Austria exchange their analyses about the current and future development of the national economies and labour markets. This report documents some of the discussions during the past few years. Finland, Germany, Latvia, Norway, and Sweden exemplify their starting conditions and labour market reactions to the Great recession in 2008 and 2009." (Author's abstract, IAB-Doku) ((en))
    Date: 2012–04–03
  11. By: Averett, Susan (Lafayette College); Argys, Laura (University of Colorado Denver); Kohn, Jennifer L. (Drew University)
    Abstract: We estimate the dual effects of immigration and obesity on labor market outcomes in the UK. There is only one other paper that has estimated these dual effects on a sample of immigrants to the US. We use the British Household Panel Survey, which contains information on height and weight for 2004 and 2006, along with immigration status and labor market outcomes. This was a period of increased immigration to the UK resulting in large part from the accession of new EU member states, though our sample includes both recent arrivals and those who have been in the UK for decades. We first analyze an immigrant-only sample and then expand the sample to compare the experience of these immigrants to natives with similar weight and other observable characteristics. We find support for the "healthy immigrant hypothesis" that suggests that immigrants are less likely to be obese than natives, and also evidence of an assimilation effect in which immigrants' weight increases with their time in the UK. The results indicate a wage premium and higher proportions of white collar work for immigrant men, but a wage penalty and lower proportions of white collar work for overweight and obese immigrant men. We find weaker but still negative associations between weight and labor market outcomes for immigrant women. Data limitations preclude efforts to address endogeneity, so these findings should be viewed as associations that support the need for better data for additional analysis of the dual effects of immigration and obesity on labor market outcomes.
    Keywords: immigrant, obesity, labor market outcomes
    JEL: I10 J15 J31
    Date: 2012–03
  12. By: Konstantins Benkovskis; Julia Woerz
    Abstract: We propose an export price indicator adjusted for non-price factors as a measure of a country's competitiveness. Based on the approach by Broda and Weinstein (2006) who adjust price developments for changes in varieties of imported products, we relax their assumption of unchanged quality over time and apply this index to export prices of the ten CESEE EU Member States which acceded in 2004 and 2007. The index is calculated using data from Comext at the highly disaggregated eight-digit CN product level. Our analysis spans the time period from 1999 to 2010, thus including the recent global recession in 2009. The results show that all CESEE10 countries experienced loss in price competitiveness, although much smaller than is usually suggested by the traditional CPI-based or ULC-based real effective exchange rate measures. Although relative export prices (unit values) increased stronger in CESEE10 countries as compared with their competitors, the average quality of their goods increased even more, thus fully compensating for the rise in prices. These improvements in non-price competitiveness were pronounced in all CESEE10 countries.
    Keywords: non-price competitiveness, quality, relative export price
    JEL: C43 F12 F14 L15
    Date: 2012–04–13
  13. By: Giuseppe Espa; Danila Filipponi; Diego Giuliani; Davide Piacentino
    Abstract: In this paper, a shift-share decomposition analysis of business change at plant-level is applied to Italian regions with reference to the period 2004-2009. In particular, a spatial version of shift-share analysis allows to look not only at the national, industrial mix and regional-shift components, as in traditional approaches, but also at the neighbourhood effect. Additionally, we introduce a novel spatial decomposition which is able to conclude more effectively on the neighbourhood influence. Moreover, the micro-level nature of data allows us to analyse the neighbourhood effect at different spatial levels of aggregation (NUTS-2 and NUTS-3 regions). Some results are worth mentioning. First, the spatial level of aggregation affects heavily the results. Second, we find evidence of neighbourhood advantage in the Southern NUTS-3 regions and opposite results for the Central-Northern NUTS-3 regions. Third, we find evidence of positive industrial mix effects only in the Centre-North of Italy. Finally, results obtained over a shorter time span 2004-2007 confirm our conclusions
    Keywords: Business change, Spatial shift-share, Plant-level data, Italian regions
    JEL: C21 L26 R12
    Date: 2012
  14. By: Achtnicht, Martin
    Abstract: Motorized individual transport strongly contributes to global CO2 emissions, due to its intensive usage of fossil fuels. Current political efforts addressing this issue (i.e. emission performance standards in the EU) are directed towards car manufacturers. This paper focuses on the demand side. It examines whether CO2 emissions per kilometer is a relevant attribute in car choices. Based on a choice experiment among potential car buyers from Germany, a mixed logit specification is estimated. In addition, distributions of willingness-to-pay measures for an abatement of CO2 emissions are obtained. The results suggest that the emissions performance of a car matters substantially, but its consideration varies heavily across the sampled population. In particular, some evidence on gender, age and education effects on climate concerns is provided. --
    Keywords: Choice experiment,CO2 emissions,Mixed logit,Passenger cars,Willingness to pay
    JEL: C25 D12 Q51
    Date: 2012
  15. By: Lindahl, Mikael (Uppsala University); Palme, Mårten (Stockholm University); Sandgren Massih, Sofia (Uppsala University); Sjögren, Anna (IFAU)
    Abstract: Most previous studies of intergenerational transmission of human capital are restricted to two generations – parents and their children. In this study we use a Swedish data set which enables us link individual measures of lifetime earnings for three generations and data on educational attainments of four generations. We investigate to what extent estimates based on income data from two generations accurately predicts earnings persistence beyond two generations. We also do a similar analysis for intergenerational persistence in educational attainments. We find two-generation studies to severely under-predict intergenerational persistence in earnings and educational attainment over three generations. Finally, we use our multigenerational data on educational attainment to estimate the structural parameters in the Becker-Tomes model. Our results suggest a small or no causal effect of parental education on children's educational attainment.
    Keywords: multigenerational income mobility, human capital transmission, intergenerational income mobility
    JEL: D31 J62
    Date: 2012–04
  16. By: Bernhard, Sarah (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Kruppe, Thomas (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Further vocational training for the unemployed aims at enhancing their job prospects. This paper analyses the effectiveness of such subsidized training programmes for means-tested unemployment benefit recipients in Germany. The empirical findings are based on rich administrative data of the German Federal Employment Agency using propensity score matching to construct a suitable comparison group. We consider initiation of training in early 2005, just after the reform of the German means-tested benefit system, which aimed at activating hard-to-place jobseekers, and after the introduction of a voucher system as the sole assigning mechanism for vocational training. We estimated the effects of vocational training for several groups differentiated by age, gender, migration background, skills, programme duration, duration since the end of the last job and differences between East and West Germany. As a result we show that vocational training has a considerable beneficial impact on participants: It reduces the share of unemployment benefit II recipients and raises the employment rate in the intermediate term by up to 13 percentage points." (Author's abstract, IAB-Doku) ((en))
    Keywords: Weiterbildungsförderung - Erfolgskontrolle, Arbeitslosengeld II-Empfänger, Arbeitsmarktchancen, Integrierte Erwerbsbiografien, berufliche Reintegration, arbeitsmarktpolitische Maßnahme, Geschlechterverteilung, Altersstruktur, Nationalität, Qualifikation, Weiterbildung - Dauer, Westdeutschland, Ostdeutschland, Bundesrepublik Deutschland
    JEL: C13 I38 J69
    Date: 2012–04–04
  17. By: Alessandra Colombelli (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia Antipolis (UNS)); Jackie Krafft (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia Antipolis (UNS)); Francesco Quatraro (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia Antipolis (UNS))
    Abstract: The paper analyzes the effects of the properties of firms' knowledge base on the survival likelihood of firms. Drawing upon the analysis of the patterns of co-occurrence of technological classes in patent applications, we derive the coherence, variety and cognitive distance indexes, accounting respectively for technological complementarity, differentiation and (dis)similarity in the firms' patent portfolios. The results of our analysis are in line with the previous literature, showing that innovation enhances the survival likelihood of firms. In addition, we show that the search strategies at work in the development of firms' knowledge base matter in reducing the likelihood of a failure event. Knowledge coherence and variety appear to be positively related to firms' survival, while cognitive distance exerts a negative effect. We conclude that firms able to exploit the accumulated technological competences have more chances to be successful in competing durably in the market arena, and derive some policy implications concerning the role of public intervention in the orientation of search efforts in local contexts.
    Keywords: Knowledge coherence; variety; cognitive distance; firms' survival
    Date: 2012–04–06
  18. By: Curtiss, Jarmila; Ratinger, Tomáš; Medonos, Tomáš
    Abstract: Cooperative and corporate farms have retained an important role for agricultural production in many transition countries of Central and Eastern Europe. Despite this importance, these farms' ownership structure, and particularly the ownership's effect on their investment activity, which is vital for efficient restructuring and the sector's future development, are still not well understood. This paper explores the ownership-investment relationship using data on Czech farms from 1997 to 2008. We allow for ownership-specific variability in farm investment behaviour analyzed by utilizing an errorcorrection accelerator model. Empirical results suggest significant differences in the level of investment activity, responsiveness to market signals, investment lumpiness, as well as investment sensitivity to financial variables among farms with different ownership characteristics. These differences imply that the internal structure of the Czech cooperative and corporate farms will be developing in the direction of a decreasing number of owners and an increasing ownership concentration.
    Date: 2012–02
  19. By: Heinrich, Barbara
    Abstract: Agricultural policy is designed to achieve certain goals. One goal that is of increasing importance in public discussion is 'public money for public goods' i.e. the compensation for the provision of public goods and the internalization of externalities. The European Union's Common Agricultural Policy is currently undergoing a reform process which inter alia aims to achieve a higher environmental standard in agricultural production by binding direct payments to practices beneficial for the climate and the environment (the so-called 'greening'). I simulate how farms would respond to these measures using a case study farm modeling approach and data for different farm types in Germany. I find that the considered and currently envisaged 'greening' measures can be expected to function in general due to the linkage to the direct payments, which provide a strong disincentive to forego participation. The individual economic outcome strongly depends on the current intensity of the farm in question and on the implementation details of the introduced measures. However, farms with very high gross margins per hectare will forego the support scheme. --
    Keywords: greening,Common Agricultural Policy,reform of the CAP,agri-environmental measures,direct payments
    Date: 2012
  20. By: Gautier, E.; Le Saout, R.
    Abstract: Using millions of individual gasoline prices collected at a daily frequency, we examine the speed at which market refined oil prices are transmitted to consumer liquid fuel prices. We find that on average gasoline prices are modified once a week and the distribution of price changes displays a M-shape as predicted by a menu-cost model. Using a reduced form state-dependent pricing model with time-varying random thresholds, we find that the degree of pass through of wholesale prices to retail gasoline prices is on average 0.77 for diesel and 0.67 for petrol. The duration for a shock to be fully transmitted into prices is about 10 days. There is no significant asymmetry in the transmission of wholesale price to retail prices.
    Keywords: price stickiness, menu costs, (S,s) models, gasoline price.
    JEL: E31 D43 L11
    Date: 2012

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