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on Microeconomic European Issues |
| By: | Latruffe, Laure; Bravo-Ureta, Boris E.; Moreira, Victor H.; Desjeux, Yann; Dupraz, Pierre |
| Abstract: | This paper examines the association between agricultural subsidies and farm efficiency using data from the European Farm Accountancy Data Network (FADN) for operations specializing on dairy. The analysis covers the 18 year period going from 1990 to 2007 and includes eleven countries: Belgium, Denmark, France, Germany, Ireland, Italy, Luxemburg, the Netherlands, Portugal, Spain, and the United Kingdom. Separate translog stochastic input distance frontiers are estimated for each country. Results show high technical efficiency averages and positive average rates of technological change. In addition, higher subsidy dependence and larger size are significantly associated with lower technical efficiency across all eleven countries. |
| Keywords: | Subsidies, CAP, technical efficiency, technological progress, Europe, dairy production, input distance frontiers, Agricultural and Food Policy, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae12:126846&r=eur |
| By: | Ibrahim Ahamada (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Djamel Kirat (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | This article considers the evidence for threshold effects in the relationship between electricity and emission permit prices in France and Germany during the second phase of the EU ETS. Specifically, we compare linear and nonlinear threshold models of electricity prices using Hansen's (2000) approach of sample splitting and threshold estimation. We find evidence of nonlinear threshold effects in both countries. The estimated carbon price thresholds are 14.94 € and 12.57 € in France and Germany, respectively. In Germany, the carbon price does not affect the electricity price below this threshold. In France, the price of emission allowances affects the cost of electricity generation only below the carbon-price threshold, thus revealing speculative behavior by French electricity producers on the carbon-allowance market. This is not the case for German electricity producers. |
| Keywords: | Carbon emission trading, energy prices, nonlinear threshold model. |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00717629&r=eur |
| By: | Consmuller, Nicola; Beckmann, Volker; Petrick, Martin |
| Abstract: | Since the end of the quasi-moratorium on genetically modified organisms (GMO) in the European Union in 2004, the establishment of GMO-free zones has become an EU wide phenomenon. In contrast to other European countries, Germany follows the concept of cooperative GMO-free zones where neighbouring farmers contractually refrain from GMO cultivation. In this article, we address the question which underlying factors could account for the establishment of cooperative GMO-free zones in Germany. Drawing on the existing literature on spatial agglomeration of different farming systems and the establishment of GMO-free zones, we provide the first systematic study on driving factors for the regional formation of GMO-free zones in Germany. The empirical analysis is based on a unique data set at the federal states level for the years 2004 to 2007. We show that infestation rates with the European Corn Borer, imminent Bt maize cultivation in the near vicinity and the number of arriving tourists mainly account for the establishment of cooperative GMO-free zones. This finding is consistent with the view that it is more the overall rejection of agro-biotechnology by broad strata of the population, including stakeholders in tourism and environmental protection, than economic benefits at the farm level which make German regions establish GMO-free zones. |
| Keywords: | Genetically modified organisms (GMO), GMO-free zone, econometric analysis, Germany., Research and Development/Tech Change/Emerging Technologies, O33, Q15, Q16, R52, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae12:126531&r=eur |
| By: | Frank Vandenbroucke; Bea Cantillon; Natascha Van Mechelen; Tim Goedemé; Anne Van Lancker |
| Abstract: | Should the EU be involved in the governance of minimum income protection, and if it should, in which role precisely? This question raises a complex policy conundrum. We focus on a proposal by the European Anti-Poverty Network (EAPN) for an EU Framework Directive on Minimum Income Protection, in order to examine three aspects of that policy conundrum: (1) the instrumental relevance of minimum income protection; (2) the unequal burden of the redistributive effort that would be required across the EU if the Union were to impose hic et nunc a minimum income guarantee of 60% or 40% of the median national income in all Member States; and (3) the impact on dependency traps, under the same hypothesis. We illustrate each of these observations empirically, using cross-nationally comparable data on income and living conditions (EU-SILC) and minimum income protection levels (CSB-MIPI). Since a harmonised minimum income scheme requires a significantly greater budgetary effort on behalf of some of the poorer Member States in Eastern and Southern Europe, it raises a complex question about the meaning of solidarity within the EU. Enhanced solidarity within Member States cannot be decoupled from enhanced solidarity among Member States – and vice versa. Simultaneously, the EU should put positive pressure on poorer and richer Member States to gradually improve the overall quality and efficiency of their welfare regimes. In this context, the prospect of gradually and flexibly introducing a more binding EU framework on minimum income protection may become realistic. |
| Keywords: | convergence, CSB-MIPI, EU-SILC, European Union governance, harmonisatio,n Minimum income protection, Social Europe |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:hdl:wpaper:1205&r=eur |
| By: | Wim Van Lancker; Joris Ghysels; Bea Cantillon |
| Abstract: | Single mothers are vulnerable to living in poverty in contemporary European societies, which translates into economic dependency and threatens women’s capacity to form autonomous households. Given their difficulties to engage in paid employment in a context of increasing dual earnership, the question how to safeguard the economic status of single mothers is a crucial one. In this article we address this issue by focusing on child benefits and exploring their impact on the poverty risk of single mothers in 15 European countries. In doing so, we combine two methodological traditions and devote specific attention to the design of child benefit systems in Europe which adds to the universality versus targeting-debate. We find that child benefits play a major role in complementing the household income of single mothers but that the poverty-reducing impact differs greatly between countries, depending on the generosity and the design of the benefit system. We also find that designing a single mother-friendly child benefit system does not necessarily come at a great cost. Our results demonstrate that a well-designed child benefit system has the potential to play a crucial role in strengthening women’s autonomy. |
| Keywords: | autonomy, child benefits, comparative, poverty, single mothers, universalism |
| JEL: | J16 J18 I3 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:hdl:wpaper:1203&r=eur |
| By: | Brücker, Herbert (Institute for Employment Research (IAB), Nuremberg); Jahn, Elke J. (Institute for Employment Research (IAB), Nuremberg); Upward, Richard (University of Nottingham) |
| Abstract: | We investigate the labor market effects of immigration in Denmark, Germany and the UK, three countries which are characterized by considerable differences in labor market institutions and welfare states. Institutions such as collective bargaining, minimum wages, employment protection and unemployment benefits affect the way in which wages respond to labor supply shocks, and, hence, the labor market effects of immigration. We employ a wage-setting approach which assumes that wages decline with the unemployment rate, albeit imperfectly. We find that wage flexibility is substantially higher in the UK compared to Germany and, in particular, Denmark. As a consequence, immigration has a much larger effect on the unemployment rate in Germany and Denmark, while the wage effects are larger in the UK. Moreover, the elasticity of substitution between natives and foreign workers is high in the UK and particularly low in Germany. Thus, the preexisting foreign labor force suffers more from further immigration in Germany than in the UK. |
| Keywords: | immigration, unemployment, wages, labor markets, panel data, comparative studies |
| JEL: | F22 J31 J61 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6713&r=eur |
| By: | Friedrichsen, Jana; Zahn, Philipp |
| Abstract: | During the Great Recession mass demonstrations indicated weakened political support in Europe. We show that growing dissatisfaction reflects poor economic conditions; unemployment is particularly important. Using individual level data for 16 Western European countries for 1976-2010, we find that national economic performance even matters beyond personal economic outcomes. Finally, while effects of growth and unemployment rates are the same across demographic subsets, the effect of inflation is heterogeneous. Younger, well-educated, or working individuals put relatively higher weight on price stability than the elderly, less skilled or not working. Our findings reinforce the political importance of employment and growth policies. |
| Keywords: | Political support , satisfaction with democracy , growth , unemployment , collectivism |
| JEL: | H11 O43 P16 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:mnh:wpaper:32076&r=eur |
| By: | Emauela Ghignoni; Alina Veashchagina |
| Abstract: | Most papers dealing with individual overeducation risks focus on labour supply characteristics and workers behaviour. On the other hand, only few studies consider labour demand characteristics and technological change. In this paper we analyse the influence of both demand and supply factors on educational mismatch in a set of ten European countries. Our hypothesis, confirmed by results obtained using ordered probit model with sample selection, is that demand factors generally play major role in reducing educational mismatch in technologically more advanced countries, whereas supply factors are more important in countries that are lagging behind in the international division of labour. At the same time, important cross-country and gender differences have been identified in the way the demand/supply factors operate. All this calls for the fine-tuning of policies aimed to tackle the problem of educational mismatch. Apparently, EPL does not appear neither to hinder technological development, nor increase overeducation. |
| Keywords: | Educational mismatch, Overeducation, Undereducation, Demand, Supply, Ordered Probit |
| JEL: | I2 J24 C35 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:sap:wpaper:wp154&r=eur |
| By: | Karlsson, Charlie (Jönköping International Business School); Warda, Peter (Jönköping International Business School); Gråsjö, Urban (University West) |
| Abstract: | In this paper we quantitatively review the empirical literature on spatial knowl¬edge spillovers in Europe by means of meta-analysis to determine the extent to which such spillovers have been empirically documented as well as the spatial reach of these spillovers. In addition, we will apply meta-regression analysis to analyze the determinants of observed heterogeneity across and between publications. To our knowledge this is the first study of its kind. Our results show that if total local R&D expenditure in a European region increases by 1%, then the number of patents in that region, on average, increases by about 0.5%. Spatial knowledge spillovers induce a positive effect on local knowledge production, however, this effect proves to be small around 0.07%. Spatial weighting regime seems to matter. If R&D expenditures in other regions are weighted by distance in kilometers or minutes (instead of a binary contiguity matrix) then the spillover effect on average will be larger. Also, public R&D expenditure is found to have a lower impact on local patent production compared to the private R&D expenditure. |
| Keywords: | Knowledge spillovers; knowledge externalities; meta-analysis; Europe |
| JEL: | O32 O33 R19 |
| Date: | 2012–07–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0280&r=eur |
| By: | Bea Cantillon; Natascha Van Mechelen; Olivier Pintelon; Aaron Van den Heede |
| Abstract: | This working paper explores how the poverty reduction capacity of social security evolved in the ‘booming’ years leading up to the current economic crisis. The question to arise is whether and, if so, why social protection provides an explanation for, on the one hand, disappointing poverty trends in many of the EU15 and, on the other, declining poverty risks in Ireland and most of the new Member States. To what extent are these trends connected with expanding labour markets and evolutions in pre-transfer poverty on the one hand and the volume and efficiency of cash benefits deployed on the other? Relying on ECHP, SILC and SOEP data, the paper presents and discusses empirical indications of shifts in the pro-poorness and in the adequacy of cash benefits and the mechanisms underlying such trends. We find that in the nineties the adequacy of social transfers declined significantly in the traditional strongest welfare states in the Nordic countries. Conversely, the clusters of the Southern States in the nineties and of the new Member States in the 2000s displayed a significant increase of poverty reduction by social transfers. During the first years of the crisis the poverty reducing impact of social transfer systems in Europe seems to have been on the decline in the Nordic Countries, on the Continent as well as in the East. The most important conclusion to be drawn is the striking – and in many countries rising – inadequacy of social protection for individuals living in households with a low work intensity. This points at the tension between the adequacy of income protection and activation lending credence to the notion that policies have sought to raise employment at least partially by reducing reservation wages. |
| Keywords: | at-risk-of-poverty rate, cash benefits, ECHP, EU-SILC, in-work poverty, poverty reduction, SOEP, work poor households |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:hdl:wpaper:1204&r=eur |
| By: | D'Amico, Mario; Coppola, Adele; Chinnici, Gaetano; Di Vita, Giuseppe; Pappalardo, Gioacchino |
| Abstract: | In recent years EU agricultural system have been characterized by several development patterns and different policies tools have been adopted by each country as a means to reach economic development in rural regions, above all in advanced countries. The recognition of agricultural and territorial systems is essential to define regional development programs, especially in a period when the new rural development policies are going to be designed and planned. Present research tries to identify and analyse main structural models of “agricultures” within European Union, whose classification could be useful as decision tool to define policies of intervention, in view of new programming period (CAP 2014-2020). The research is focused on the analysis of agricultural features in 247 regional areas (NUTS 2) of all European countries and has been carried out adopting a Principal Components Analysis (PCA) to identify main factors that differentiate agricultural systems in EU countries, taking into account a specific group-set of social and economic indicators. Afterward, by applying cluster analysis on the results of PCA, we classified the different regional areas into homogenous groups. The results allow a general classification of “homogeneous agricultural areas”,, whose categorization may be useful for better understanding characteristics of the European Union countryside and better orientate ongoing planning of new CAP. |
| Keywords: | Rural regions, CAP 2014-2020, agricultural systems, NUTS2, Agricultural and Food Policy, Community/Rural/Urban Development, Q18, R12, R14, |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa126:126116&r=eur |
| By: | Figiel, Szczepan; Kuberska, Dominika; Kufel, Justyna |
| Abstract: | It is quite widely believed that well developed clusters are vehicles for competitiveness and innovation. In the paper we test a hypothesis that occurrence of strong clusters in a country’s agro-food sector is positively related to its international competitiveness. Using the European Cluster Observatory dataset on cluster mapping and WTO data on international trade we have looked for correlation between relative strength of the clusters in the EU countries agro-food sectors and international trade measures of competiveness such as RCA, RMA and RC indices. We found that the EU countries differ in terms of both occurrence and relative strength of the agro-food clusters and levels of comparative advantage in agriculture commodities and food products. However, statistical evidence for relationships between variables under consideration appeared to be weak what leads to some suggestions regarding cluster mapping methodology and further studies in this area which could allow to formulate useful policy recommendations. |
| Keywords: | clusters, competitiveness, agro-food sector, international trade, International Relations/Trade, Q17, |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa126:126118&r=eur |
| By: | Halkos, George; Tzeremes, Nickolaos |
| Abstract: | By using conditional directional distance functions this paper investigates the effect of regional economic growth on regions’ environmental efficiency in greenhouse gas emissions. A sample of ninety eight regions (NUTS 2 level) from Germany, France and the U.K. has been used and regional environmental inefficiencies have been obtained using both the unconditional and conditional output directional distance functions. The results reveal that German regions have the highest environmental efficiency levels. In addition it appears that the effect of regional economic growth on regions’ environmental efficiency levels varies between regions and countries due to different national administrative arrangements on the implementation of environmental policies. |
| Keywords: | Regional environmental efficiency; directional distance function; stochastic kernel; nonparametric regression |
| JEL: | Q50 Q56 R15 R11 C60 |
| Date: | 2012–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:40015&r=eur |
| By: | Bauer, Thomas K. (RWI); Bredtmann, Julia (Ruhr University Bochum); Schmidt, Christoph M. (RWI) |
| Abstract: | Volunteering plays a prominent role in the charitable provision of goods and services, yet we know relatively little about why individuals spend time and money to the charity. Assuming that volunteering is a consumption good, we analyze the determinants of individuals' charitable cash donations and volunteer labor as well as the interdependence between both goods. Using data from the European Social Survey, we find a positive relationship between time and money contributions on the individual as well as on the country level. The hypothesis that time and money donations are gross complements, however, is not supported by our analysis, as we find evidence that individuals substitute time donations by money donations as the price of time raises. Analyzing philanthropic behavior on a disaggregated level reveals large differences in the determinants and the relationship of time and money donations – both across different types of voluntary organizations and across different welfare regimes. |
| Keywords: | private philanthropy, charitable contribution, voluntary organizations |
| JEL: | H41 J22 L31 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6701&r=eur |
| By: | Vincent Corluy; Frank Vandenbroucke |
| Abstract: | In this paper we explore missing links between employment policy success (or failure) and inclusion policy success (or failure), relying on the EU Labour Force Survey (EU LFS) and the EU Survey on Income and Living Conditions (EU SILC). At the inclusion side of the equation, our focus is on the share of individuals at risk of poverty in the 20-to-59 age cohort. The analysis proceeds in two steps. The first step considers the distribution of individual jobs over households, thus establishing a link between individual employment rates and household employment rates. Following the work by Gregg, Scutella and Wadsworth a ‘polarization index’ is defined in terms of the difference between, on the one hand, the hypothetical share of individuals living in jobless households assuming that individual employment is distributed randomly across households, and, on the other, the actual share of individuals living in jobless households. Actual changes in household joblessness are decomposed in (i) changes due to changes in polarization and (ii) changes due to changing individual employment rates and changing household structures. The second step in the analysis decomposes changes in the at-risk-of-poverty rates on the basis of (i) changes in the poverty risks of jobless households, and (ii) changes in the poverty risks of other (non-jobless) households; (iii) changes in household joblessness due to changes in individual employment rates and changing household structures (changes one would expect if no changes in polarization would occur) and (iv) changes in polarization. The proposed technique does yield interesting insights into the trajectories that EU welfare states have followed over the past ten years. |
| Keywords: | at-risk-of-poverty rate, convergence across EU, jobless and work-poor households, polarization of employment |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:hdl:wpaper:1206&r=eur |
| By: | Dormont, Brigitte; Milcent, Carine |
| Abstract: | There is ongoing debate about the effect of ownership on hospital performance as regards efficiency and care quality. This paper proposes an analysis of the differences in productivity and efficiency between French public and private hospitals. In France, public and private hospitals do not only differ in their objectives. They are also subject to different rules as regards investments and human resources management. In addition, they were financed according to different payment schemes until 2004: a global budget system was used for public hospitals, while private hospitals were paid on a fee-for-service basis. Since 2004, a prospective payment system (PPS) with fixed payment per stay in a given DRG is gradually introduced for both private and public hospitals. Payments generally differ for the same DRG, depending on whether the stay occurred in a private or public hospital. A convergence of payments between the nonprofit and for profit sectors was planned by 2018 by the previous government, but this project has been abandoned by the newly elected government. Pursuing such a convergence comes down to suppose that there are differences in efficiency between private and public hospitals, which would be reduced by the introduction of competition between these two sectors. The purpose of this paper is to compare the productivity of public and private hospitals in France. We try to assess the respective impacts, on productivity differences, of differences in efficiency, patient characteristics and production composition. We have chosen to estimate a production function. For that purpose, we have defined a variable measuring the volume of care services provided by each hospital, synthetizing the hospital multiproduct activity into one homogenous output. Our data comes from two administrative sources which record exhaustive information about French hospitals. Matching these two database provides us an original source of information, at the hospital-year level, about both the production composition (number of stays in each DRG), and production factors (number of beds, facilities, number of doctors, nurses, of administrative and support staff, etc.). We observe 1,604 hospitals over the period 1998-2003, of which 642 hospitals are public, 126 are private not-for-profit and 836 are private-for-profit. This database is relative to acute care and covers more than 95 % of French hospitals. We use a stochastic production frontier approach combined with hospitals fixed effects. We find that the lower productivity of public hospitals is not explained by inefficiency (distance to the frontier), but oversized establishments, patient characteristics and production characteristics (small proportion of surgical stays). Once patient and production characteristics are taken into account, large and medium sized public hospitals appear to be more efficient than private hospitals. As a result, payment convergence would provide incentives for public hospitals to change the composition of their supply for care. |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:docweb:1205&r=eur |
| By: | Marco Caliendo; Steffen Künn; Arne Uhlendorff |
| Abstract: | In some countries including Germany unemployed workers can increase their income during job search by taking up "marginal employment" up to a threshold without any deduction from their benefits. Marginal employment can be considered as a wage subsidy as it lowers labour costs for firms owing to reduced social security contributions, and increases work incentives due to higher net earnings. Additional earnings during unemployment might lead to higher reservation wages prolonging the duration of unemployment, yet also giving unemployed individuals more time to search for better and more stable jobs. Furthermore, marginal employment might lower human capital deterioration and raise the job arrival rate due to network effects. To evaluate the impact of marginal employment on unemployment duration and subsequent job quality, we consider a sample of fresh entries into unemployment. Our results suggest that marginal employment leads to more stable post-unemployment jobs, has no impact on wages, and increases the job-finding probability if it is related to previous sectoral experience of the unemployed worker. We find evidence for time-varying treatment effects: whilst there is no significant impact during the first twelve months of unemployment, job finding probabilities increase after one year and the impact on job stability is stronger if the jobs are taken up later within the unemployment spell. |
| Keywords: | marginal employment, unemployment duration, job search, employment stability, timing of events model |
| JEL: | J64 C41 C33 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1222&r=eur |
| By: | Gimenez, Jose Ignacio (University of Zaragoza); Sevilla-Sanz, Almudena (Queen Mary, University of London) |
| Abstract: | Using detailed time-use data for seven industrialized countries from the 1970s until today we document general decreases in men's market work coupled with increases in men's unpaid work and child care, and increases in women's paid work and child care coupled with decreases in unpaid work. We also find almost universal increases in the time devoted to watching television over this period, and uncover a widespread increase in leisure inequality in favor of lower educated adults. Trends in leisure inequality mirror the general increase in income and earnings inequality experienced in most countries over this period, especially after the mid-1980s. All these findings are consistent with previous results for the US. However, in contrast to the increases in leisure found for the US, we fail to find common trends in leisure time across countries over the period analyzed. |
| Keywords: | time use survey, leisure inequality |
| JEL: | D12 D13 J2 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6709&r=eur |
| By: | Blanco, Maria; Van Doorslaer, Benjamin; Britz, Wolfgang |
| Abstract: | Irrigation water use by agriculture has been identified as one of the major sustainable water management issues in the implementation of the Water Framework Directive (WFD). This paper aims at developing a simulation framework to jointly assess agricultural and water issues. While the strong linkages between water, food, and the environment call for an integrated and multidisciplinary modelling approach, a complete and consistent modelling system to evaluate food-water relationships in Europe was missing so far. The spatial economic simulation model for agriculture CAPRI, which comprises a set of environmental indicators to assess food-environment interrelations within European regions, has been extended to account for food-water links. This modelling framework enables simulating the potential impact of climate change and water availability on agricultural production at the EU regional level, as well as looking at the sustainable use of water, the implementation of water policies or the integration of water issues in the Common Agricultural Policy. |
| Keywords: | agricultural policy, agro-economic modelling, food-water linkages, bioeconomy, Agricultural and Food Policy, Environmental Economics and Policy, C60, Q11, Q18, |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa126:126031&r=eur |
| By: | Stephan Brunow (Institute for Employment Research); Peter Nijkamp (VU University) |
| Abstract: | There is evidence from the literature that firms enjoy higher productivity levels when the workforce employed is culturally more diverse. It is an open question whether this gain is utilized to shift the supply curve and set lower prices, in order to achieve a higher demand and possibly higher revenues. This knowledge gap is not addressed in the existing literature, and forms the departure of our research. We introduce a reduced-form model, inspired by the study of Melitz and Ottaviano (2008) on heterogeneous firms, and add labour productivity by using the approach of Ottaviano and Peri (2005) on cultural diversity. In our empirical study, we employ German data, while the field of research is conducted for single plants, and industry-specific effects are taken into account. Our analysis shows significant positive effects of the cultural diversity of the high-skilled workforce on the market size of single establishments. We conclude that emerging productivity gains are not just paid as dividend or factor rewards but are also used to set lower prices in order to achieve higher demand. |
| Keywords: | cultural diversity, firm heterogeneity, market size |
| JEL: | J15 L11 L25 R12 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:nor:wpaper:2012022&r=eur |