nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2012‒05‒15
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Innovation and employment: Some evidence from European sectors By Francesco Bogliacino; Marco Vivarelli
  3. Tobit regression to estimate impact of EU market intervention in dairy sector By Wocken, Meike; Kneib, Thomas
  4. Occupational Sex Segregation and Management-Level Wages in Germany: What Role Does Firm Size Play? By Anne Busch; Elke Holst
  5. The increasing service intensity of European manufacturing By Falk, Martin; Peng, Fei
  6. Accounting for Big City Growth in Low Paid Occupations: Immigration and/or Service Class Consumption By Ian Gordon; Ioannis Kaplanis
  7. Direct payments, crop insurance and the volatility of farm income. Some evidence in France and in Italy By Enjolras, Geoffroy; Capitanio, Fabian; Aubert, Magali; Adinolfi, Felice
  8. Volatile world market prices for dairy products - how do they affect domestic price formation: The German cheese market By Weber, Sascha A.; Salamon, Petra; Hansen, Heiko
  9. Actuarial evaluation of the EU proposed farm income stabilisation tool By Pigeon, Mathieu; Frahan, Bruno Henry de; Denuit, Michel
  10. The costs of electricity interruptions in Spain. Are we sending the right signals? By Pedro Linares; Luis Rey
  11. Life (Dis)satisfaction and the Decision to Migrate: Evidence from Central and Eastern Europe By Vladimir Otrachshenko; Olga Popova
  12. Increasing volatility of input costs in the EU agriculture By Himics, Mihaly; Van Doorslaer, Benjamin; Ciaian, Pavel; Shrestha, Shailesh
  13. The Gender Wage Gap by Education in Italy By Chiara MUSSIDA; Matteo PICCHIO
  14. Vulnerability to Poverty in Italy By Nicola Amendola; Mariacristina Rossi; Giovanni Vecchi
  15. EU wide regional impacts of climate change By Shrestha, Shailesh; Himics, Mihaly; van Doorslaer, Benjamin; Ciaian, Pavel
  16. Comparing the treatment provided by migrant and nonmigrant health professionals: dentists in Scotland By Chalkley, Martin; Wang, Shaolin; Tilley, Colin
  17. The Potential for Segmentation of the Retail Market for Electricity in Ireland By Hyland, Marie; Leahy, Eimear; Tol, Richard S. J.
  18. The evolution of land values in Italy. Does the influence of agricultural prices really matter? By Mela, Giulio; Longhitano, Davide; Povellato, Andrea
  19. Economic and environmental effects of an EU flat rate for the Dutch agricultural sector By Helming, John F.M.; Peerlings, Jack H.M.
  20. Mapping local productivity advantages in Italy: industrial districts, cities or both? By Valter Di Giacinto; Matteo Gomellini; Giacinto Micucci; Marcello Pagnini

  1. By: Francesco Bogliacino (Universidad EAFIT and RISE Group, Medellin); Marco Vivarelli (DISCE, Università Cattolica)
    Abstract: In this study we use a unique database covering 25 manufacturing and service sectors for 16 European countries over the period 1996-2005, for a total of 2,295 observations, and apply GMM-SYS panel estimations of a demand-for-labour equation augmented with technology. We find that R&D expenditures have a job-creating effect, in accordance with the previoustheoretical and empirical literature discussed in the paper. Interestingly enough, the labourfriendly nature of R&D emerges in both the flow and the stock specifications. These findings provide further justification for the European Lisbon-Barcelona targets.
    Keywords: Technological change, corporate R&D, employment, product innovation, GMMSYS.
    JEL: O33
    Date: 2011–12
  2. By: Zuzana Brixiova; Balazs Egert
    Abstract: The unemployment rate in Estonia rose sharply in 2010 to one of the highest levels in the EU, after the country entered a severe recession in 2008. While the rate declined relatively rapidly in 2011, it remained high especially for the less educated. In 2009, the Employment Contract Law relaxed employment protection legislation and sought to raise income protection of the unemployed to facilitate transition from less to more productive jobs while mitigating social costs. Utilizing a search model, this paper shows that increasing further labour market flexibility through reducing the tax wedge on labour would facilitate the structural transformation and reduce the long-term unemployment rate. Linking increases in unemployment benefits to participation in job search or training programmes would improve the unemployed workers’ incentives to search for jobs or retrain and the medium term labour market outcomes. Social protection schemes for the unemployed should be also strengthened as initially intended to give the unemployed sufficient time to search for adequate jobs or retrain for new opportunities.
    Keywords: Labour market reforms, search model, Estonia, OECD countries
    JEL: J08 J64 E24
    Date: 2012–02–01
  3. By: Wocken, Meike; Kneib, Thomas
    Abstract: This study examines the effect of European intervention politics in the European butter market in the context of market liberalization using the example of Germany. A heteroscedastic Tobit model is estimated using German butter market data from 1973-2010. There is evidence that price support has reduced price instability in the butter market. Simulation indicates that enhancing intervention price causes an increase in the expected butter price in the long-run, even though if market price is higher than intervention level. We find changing effects of stockpiling. If difference between market and intervention price is small and stock quantity is high, it significantly contributes to reducing price volatility. On the contrary if price difference is large and stock quantity low, the effect of reducing price volatility decreases.
    Keywords: Censored regression, market liberalization, butter market, Agricultural and Food Policy, Risk and Uncertainty, C5, D4, Q11.,
    Date: 2012–02–23
  4. By: Anne Busch; Elke Holst
    Abstract: The paper analyzes the gender pay gap in private-sector management positions based on German panel data and using fixed-effects models. It deals with the effect of occupational sex segregation on wages, and the extent to which wage penalties for managers in predominantly female occupations are moderated by firm size. Drawing on economic and organizational approaches and the devaluation of women's work, we find wage penalties for female occupations in management only in large firms. This indicates a pronounced devaluation of female occupations, which might be due to the longer existence, stronger formalization, or more established "old-boy networks" of large firms.
    Keywords: Gender pay gap, managerial positions, occupational sex segregation, gendered organization, firm size
    JEL: B54 J16 J24 J31 J71 L2 M51
    Date: 2012
  5. By: Falk, Martin; Peng, Fei
    Abstract: This paper investigates the impact of the increase in service output on the demand for different categories of service occupations in the EU manufacturing sector. Furthermore, we investigate the impact of the global sourcing of producer services on the demand for different service occupations. Using fixed-effects models based on the manufacturing sector for 18 EU countries for the period 1995-2008, we find that the employment share of service occupations is significantly and positively related to the output share of producer services in manufacturing. In particular, the increase in the output share of services accounts for an average of 13 percent of the increase in the share of service occupations. When service occupations are disaggregated by different categories, we find that the output share of services is significantly and positively related to the share of managers, professionals, and technicians. In contrast, service occupations involving clerks, administrative support, and other office-related personnel do not benefit from increasing service revenues. Finally, professionals and technicians are complementary to intermediate producer services (either from domestic or foreign suppliers), while clerks do not benefit from the rise in intermediate service inputs in manufacturing.
    Keywords: service occupations; servitization; intermediate service inputs; global sourcing; manufacturing sector
    JEL: O11 L8 F14
    Date: 2011–07
  6. By: Ian Gordon; Ioannis Kaplanis
    Abstract: Growth of 'global cities' in the 1980s was supposed to have involved an occupational polarisation, including growth of low paid service jobs. Though held to be untrue for European cities, at the time, some such growth did emerge in London a decade later than first reported for New York. The question is whether there was simply a delay before London conformed to the global city model, or whether another distinct cause was at work in both cases. This paper proposes that the critical factor in both cases was actually an upsurge of immigration from poor countries providing an elastic supply of cheap labour. This hypothesis and its counterpart based on growth in elite jobs are tested econometrically for the British case with regional data spanning 1975-2008, finding some support for both effects, but with immigration from poor countries as the crucial influence in late 1990s London.
    Keywords: regional labour markets, wages, employment, international migration, consumer demand
    JEL: J21 J23 F22 R12
    Date: 2012–04
  7. By: Enjolras, Geoffroy; Capitanio, Fabian; Aubert, Magali; Adinolfi, Felice
    Abstract: Volatility of farm income represents a major challenge for farm management and the design of public policies. This paper measures the extent to which risk management tools, especially direct payments and crop insurance, can significantly reduce crop income volatility in France and in Italy. We use an original dataset of 9,555 farms for the period 2003-2007 drawn up from the Farm Accountancy Data Network (FADN) and three different econometric models to explain the volatility of crop income. The results are contrasted between the specialization of the farms and the two countries: Italian farms use management tools (CAP payments and crop insurance) so as to improve their income and to reduce its volatility (crop insurance, inputs). French farms use the same instruments to increase their income and therefore its volatility while they tend to substitute CAP payments to production. These results question the efficiency of structural policies aimed at stabilizing the farmers' income.
    Keywords: Volatility, Direct payments, Insurance, France, Italy, FADN, Risk and Uncertainty, G22, Q14, Q18,
    Date: 2012–02–23
  8. By: Weber, Sascha A.; Salamon, Petra; Hansen, Heiko
    Abstract: Since the stepwise reduction of intervention prices combined with watered down conditions and suspended export refunds, respectively, the EU dairy industry faces new challenges regarding wild price fluctuations originally caused in third countries. In the past, the EU domestic market was insulated as far as possible from world markets. However, today global prices could affect prices even at the level of consumers, but more directly at the level milk producers. Volatility noticeable increased with the price peak in 2007, followed by the drop in 2008, and a new price boost in 2010. Additionally, reduced security in marketing of butter and skimmed milk powder led to higher processing share of cheese which is not only exported but also increasingly consumed within the EU. Analyzing time series data of dairy products’ prices illustrates price fluctuations at different levels of the supply chain. Particularly, retail prices are less volatile than milk producer prices. Therefore, it is often assumed that retailers do not completely pass on downward movements of producer prices to consumers or, vice versa, and assumption encouraging debates on market power, margins and price transmission in the supply chain. German retailing is characterized by a high of market concentration and by a predominance of discounters, displaying a leading position in price negotiations with dairies or wholesalers. Thus, it can be argued that retailers adversely affect dairies who, in turn, affect milk producers. From this follows price transmission asymmetries differ across different levels of the supply chain, and volatile world market prices induced may affect the lower part of the supply chain negatively. However, price transmission has been analyzed in various studies before, mostly analyzing price transmissions between retailing and consumer level. Thus, they abstract from effects of intermediate levels (wholesale, world market). Therefore, the objective of this paper is to investigate the transmission of milk prices from the farm to the retail level and to detect possible asymmetries, leading in the case of world market price fluctuations to additional problems in the German supply chain. The focus is on the German cheese market whereby regime specific effects are tested e.g., the reduction of EU market support which has major impacts on price transmission. Additionally, the change in the product mix and the increased export orientation of German dairies also affect price transmission. In the analysis monthly data from January 1990 to October 2011 for producer prices of raw milk, wholesale and consumer prices for cheese as well as prices in international trade with cheese are considered. Institutional prices were generated on a monthly basis, thus, capturing dates of change in intervention prices and of export refunds. Applying a subset of model specifications based on error-correction representation asymmetries are studied, whereby the seasonal pattern of data is filtered out.
    Keywords: Price transmission, Cointegration, Granger-causality, Dairy, Risk and Uncertainty, C1, E3, E6, F3, Q1,
    Date: 2012–02–23
  9. By: Pigeon, Mathieu; Frahan, Bruno Henry de; Denuit, Michel
    Abstract: Recently, the European Commission proposed to introduce several risk management tools in the rural development pillar 2 of the CAP. One of them consists in providing co-financing support to mutual funds compensating farmers who experience a severe drop in their farm income. This paper analyses this new farm income stabilization tool for the Walloon region in Belgium, considering separately three groups of farms (crop, dairy and cattle farms). Relying on FADN data from 1997 to 2007, this analysis focuses on estimating the probability that such regional mutual funds would need to intervene to compensate farm net incomes and, in that case, the expected amount of each farm income compensation and the total expected amount of compensation. The budgetary compensation that would be required if an income insurance scheme was implemented to compensate Walloon farmers for their income losses is evaluated. Particular attention is paid to the cyclical pattern as well as to additional requirements that could be imposed to the EU income stabilisation tool.
    Keywords: agricultural risk management, income stabilisation, Belgium, European Union, Risk and Uncertainty, D81, Q12, Q18.,
    Date: 2012–02–23
  10. By: Pedro Linares (Universidad Ponticia de Comillas, MR-CBG Harvard Kennedy Schooland Economics for Energy); Luis Rey (Economics for Energy)
    Abstract: One of the objectives of energy security is the uninterrupted physical availability of energy. However, there is limited information about how much is the cost of energy supply interruptions. This information is essential to optimize investment and operating decisions to prevent energy shortages. In this paper, we estimate the economic impact of an electricity interruption in diferent sectors and regions of Spain. We find that in 2008 the cost for the Spanish economy of one kWh of electricity not supplied was around e6, which is much higher than the signals sent for the operation of the power system. This would mean that we are underinvesting in short-term energy security.
    Keywords: Energy security, electricity interruptions, value of lost load, Spain
    JEL: Q40 Q41 L94
    Date: 2012–04
  11. By: Vladimir Otrachshenko; Olga Popova
    Abstract: This paper provides the first evidence regarding the impact of life satisfaction on the individual intention to migrate. The impact of individual characteristics and country macroeconomic variables on the decision to migrate is analyzed in one framework.Differently from other studies, we allow for life satisfaction to serve as a mediator between macroeconomic variables and the intention to migrate. Using the Eurobarometer Survey for 27 Central Eastern (CEE) and Western European (non-CEE) countries, we test the predictions of our theoretical model and find that dissatisfied with life, people have a higher intention to migrate. The macroeconomic conditions have an effect on the intention to migrate indirectly through life satisfaction. At all levels of life satisfaction, unemployed, middle-aged individuals with a low or average income from urban areas at all levels of education are found to have higher intentions to migrate from CEE countries than from non-CEE countries.
    Keywords: life satisfaction; migration; decision making;
    JEL: I31 J61
    Date: 2012–04
  12. By: Himics, Mihaly; Van Doorslaer, Benjamin; Ciaian, Pavel; Shrestha, Shailesh
    Abstract: In this paper the impact of possible input cost developments on the EU agriculture is analysed under ceteris paribus conditions. Two scenarios are developed with the partial equilibrium model CAPRI. The scenarios assume symmetric input price changes in positive and negative directions around a projected baseline in year 2020. The magnitude of the input price changes are based on observed volatility. To measure the volatility, the annual time-series of the CoCo database were analysed, which contains input cost estimates for a multitude of agricultural activities and cost categories at the geographical level of the EU countries. Our results suggest that the uncertainty in input cost development has a strong potential to affect commodity market balances and farm incomes. There is an ongoing discussion about possible policy measures to mitigate the negative impacts of price volatility on farm incomes. This study contributes to this discussion by estimating a share of 17 billion euros of EU agricultural income being put on risk every year. The analysis also identifies vulnerable regions and production technologies that are particularly affected by input price instability. It remains for further research to perform a systematic sensitivity analysis in order to explore the impact of input cost volatility fully on the model outcomes.
    Keywords: input costs, volatility, CAPRI, farm income, Risk and Uncertainty, Q13,
    Date: 2012–02–23
  13. By: Chiara MUSSIDA (Department of Economics and Social Sciences, Università Cattolica del Sacro Cuore, Piacenza, Italy); Matteo PICCHIO (Research Foundation - Flanders (FWO); Sherppa, Ghent University; Department of Economics, CentER,Tilburg University; IZA, Bonn)
    Abstract: This paper studies the gender wage gap by educational attainment in Italy using the 1994–2001 ECHP data. We estimate wage distributions in the presence of covariates and sample selection separately for highly and low educated men and women. Then, we decompose the gender wage gap across all the wage distribution and isolate the part due to gender differences in the remunerations of the similar characteristics. We find that women are penalized especially if low educated. When we control for sample selection induced by unobservables, the penalties for low educated women become even larger, above all at the bottom of the wage distribution.
    Keywords: gender wage gap, education, counterfactual distributions, decompositions, hazard function
    JEL: C21 C41 J16 J31 J71
    Date: 2012–04–24
  14. By: Nicola Amendola (Department of Economics and Institutions, University of Roma "Tor Vergata", Italy); Mariacristina Rossi (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Giovanni Vecchi (Department of Economics and Institutions, University of Roma "Tor Vergata", Italy)
    Abstract: The article empirically analyses the phenomenon of vulnerability to poverty – meant as an individual’s likelihood of becoming poor in the future. On the basis of studies conducted by the Italian Institute of Statistics on the consumption of Italian households in the years 1985-2001 and whose data have been rearranged in a pseudo-panel form, the article estimates the incidence of vulnerability to poverty at national and regional level. We find that potential poverty concerns an unexpectedly high percentage of the population – even as much as 50% in some years. Regional differences are broad, persistent and on the rise: moving from north to south, the risk of becoming poor in the future triples. Vulnerability analysis turns out to be a useful tool which should complement the traditional analysis of poverty.
    Keywords: poverty, vulnerability, living conditions, wellbeing
    JEL: C21 D12 I3 I32 I38
    Date: 2012–05
  15. By: Shrestha, Shailesh; Himics, Mihaly; van Doorslaer, Benjamin; Ciaian, Pavel
    Abstract: The current paper investigates the medium term impact of climate changes on EU agriculture. We employ CAPRI partial equilibrium modelling framework. The results indicate that within the EU, there will be both winners and losers, with some regions benefitting from climate change, while other regions suffering losses in production and welfare. In general, there are relatively small market effects at the EU aggregate. For example, the value of total agricultural income, land use and welfare change by approximately between -0.3% and 2%. However, there is a stronger impact at regional level with the effects increase by a factor higher than 10 relative to the aggregate EU impacts. The price adjustments reduce the response of agricultural sector to climate change in particular with respect to production and income changes.
    Keywords: climate change, regional impacts, CAPRI, market effects, Risk and Uncertainty, Q54,
    Date: 2012–02–23
  16. By: Chalkley, Martin; Wang, Shaolin; Tilley, Colin
    Abstract: Many OECD countries are increasingly relying on migrants to address shortages of trained health professionals. One key concern is whether migrant health professionals provide equivalent health care. We compare the treatment provided by migrant and non-migrant health professionals using administrative data from the Scottish dental system. A difference-in-differences model is estimated to examine whether migrant dentists respond differently to case mix and individual circumstances as compared with their non-migrant counterparts, and assess the extent to which any differences diminish over time. After controlling for both observed and unobserved differences between individual dentists and the cohort of patients that they treat, we find that migrant dentists have marginally different practice styles, and the variation diminishes over time within two years of practice.
    Keywords: Migrant health professionals, Treatment difference, Assimilation, British NHS, Administrative data,
    Date: 2011
  17. By: Hyland, Marie; Leahy, Eimear; Tol, Richard S. J.
    Abstract: We estimate the gross margin that is earned from the supply of electricity to households in Ireland. Using half hourly electricity demand data, the system marginal price (also called the wholesale price) and the retail price of electricity, we analyse how the gross margin varies across customers with different characteristics. The wholesale price varies throughout the day, thus, the time at which electricity is used affects the gross margin. The main factor in determining gross margin, however, is demand. The highest gross margins are earned from supplying customers that have the following characteristics: being aged between 46 and 55, having a household income of at least ?75,000 per annum, being self?employed, having a third level education, having a professional or managerial occupation, living in a household with 7 or more people, living in a detached house, having at least 5 bedrooms or being a mortgage holder. An OLS regression shows that gross margin is partly explained by the energy conservation measures which are present in a household, the number of household members, the number of bedrooms, income, age, occupation and accommodation type.
    Keywords: data/education/electricity/Ireland/regression
    Date: 2012–04
  18. By: Mela, Giulio; Longhitano, Davide; Povellato, Andrea
    Abstract: Interest towards farmland market has been increasing in recent years. In developing countries there is rising concern about land being purchased by foreign investors, while in the developed world the debate is centred on whether agricultural factors are still the main determinants of land values or not. This work assesses the determinants of land values in Italy using panel data techniques during the time span 1992-2010. In Italy farmland values have historically been influenced more by natural characteristics of the land than agricultural prices. However, lately non-agricultural factors have been increasing their importance. We find that agricultural prices only slightly affect average land values in Italy. Main determinants of land prices are the yield from real estate investment, GDP per capita, house prices, and population density. For arable land also environmental regulations for livestock farms positively affects values.
    Keywords: farmland prices, land market, panel data models, farmland values determinants, Risk and Uncertainty, C23, E32, Q24.,
    Date: 2012–02–23
  19. By: Helming, John F.M.; Peerlings, Jack H.M.
    Abstract: The objective of this research is to give insights into the production, income and environmental effects of the introduction of an EU flat rate for Dutch agriculture. For this purpose, a detailed agri-environmental programming model for Dutch agriculture is used. Results of the EU flat rate scenario are compared to a reference scenario that describes agricultural production in the Netherlands in 2020. Results show that total gross margin in Dutch agriculture decreases because of the EU flat rate with 7%. The supply of starch potatoes and cow milk decreases most. Production of seed and consumption potatoes, vegetables and intensive livestock products increases slightly. This is largely due to a shift of farm payments from milk and starch potatoes production to arable crops and vegetable production. It was found that including risk aversion of income volatility amplifies these effects. The flat rate decreases the total emissions of nutrients to the environment from agricultural production.
    Keywords: EU flat rate, mathematical programming, income volatility, Agricultural and Food Policy, Risk and Uncertainty, Q1, D8,
    Date: 2012–02–23
  20. By: Valter Di Giacinto (Bank of Italy); Matteo Gomellini (Bank of Italy); Giacinto Micucci (Bank of Italy); Marcello Pagnini (Bank of Italy)
    Abstract: We compare the magnitude of local productivity advantages associated with two different spatial concentration patterns in Italy – urban areas and industrial districts. The former have high population density and host a wide range of economic activities, while the latter are marked by a high concentration of small firms producing relatively homogenous goods. Using data from a large sample of Italian manufacturing firms observed over the 1995-2006 period, we detect local productivity advantages for both urban areas and industrial districts. However, firms located in urban areas reap a larger productivity premium than those operating within districts. The advantages of industrial districts have declined over time; those of urban areas have remained stable. Differences in the composition of firm employees between white- and blue-collars explain a small fraction of the urban productivity premium. The quantile regressions show how more productive firms gain larger benefits by locating in urban areas. Our analysis raises the question of whether Italian industrial districts are less fit than urban areas to prosper in a world characterized by advancing globalization and the growing use of ICT.
    Keywords: urban areas, industrial districts, agglomeration economies, productivity, white- and blue-collars, Italian economy
    JEL: C52 D24 R12
    Date: 2012–01

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