nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2012‒09‒22
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Regional innovation performance in Europe By Marta Foddi; Stefano Usai
  2. The Impact of Social Activities on Cognitive Ageing: Evidence from Eleven European Countries By Dimitrios Christelis; Loreti I. Dobrescu
  3. The impact of low emission zones on PM10 levels in urban areas in Germany By Christiane Malina; Frauke Fischer
  4. An "extended" knowledge production function approach to the genesis of innovation in the European regions By Sylvie Charlot; Riccardo Crescenzi; Antonio Musolesi
  5. Innovation at the Firm Level across Countries with Different Economic and Technological Capacity By Andreas Reinstaller; Fabian Unterlass
  6. Measuring Vulnerability to Poverty Using Long-Term Panel Data By Katja Landau; Stephan Klasen; Walter Zucchini
  7. Effects of taxation on European multi-nationals’ financing and profits By Stefan Lutz
  8. Convergence or Divergence? Immigrant Wage Assimilation Patterns in Germany By Michael Zibrowius
  9. A portrait of trading firms in the services sectors – Comparable evidence from four EU countries By Stefanie A. Haller; Jože Damijan; Ville Kaitila; Črt Kostevc; Mika Maliranta; Emmanuel Milet; Daniel Mirza; Matija Rojec
  10. The Impact of Social Support Networks on Maternal Employment: A Comparison of West German, East German and Migrant Mothers of Pre-School Children By Mareike Wagner
  11. Childcare subsidies and labour supply: evidence from a large Dutch reform By Leon Bettendorf; Egbert Jongen; Paul Muller (University Amsterdam/Tinbergen)
  12. Impact of benefit sanctions on unemployment outflow: Evidence from German survey data By Hillmann, Katja; Hohenleitner, Ingrid
  13. Musn’t Grumble. Immigration, Health and Health Service Use in the UK and Germany By Jonathan Wadsworth
  14. Competitive Effects of Merger Remedies in Europe's High-Tech Industry By Petar Angelov; Stephanie Rosenkranz; Hans Schenk
  15. The Aims of Lifelong Learning: Age-Related Effects of Training on Wages and Job Security By Julia Lang
  16. Higher and Higher? - Performance Pay and Wage Inequality in Germany By Katrin Sommerfeld
  17. The Transferable Scars: A Longitudinal Evidence of Psychological Impact of Past Parental Unemployment on Adolescents in the United Kingdom By Nattavudh Powdthavee; James Vernoit
  18. Long-Term Care and the Housing Market By Bell, David; Rutherford, Alasdair
  19. Stricter employment protection and firms’ incentives to sponsor training: The case of French older workers By Messe, Pierre-Jean; Rouland, Bénédicte
  20. How frequently firms export? Evidence from France By Gábor Békés; Lionel Fontagné; Balázs Muraközy; Vincent Vicard

  1. By: Marta Foddi; Stefano Usai
    Abstract: Europe 2020 strategy and the initiative “Innovation Union” call for a particular attention at the territorial dimension of innovation and knowledge creation. The heterogeneity across regions in their capacity to create knowledge and innovation, but also in their abilities to exploit ideas and technologies available across the European territory, motivates in-depth analyses of the territorial dimension of the knowledge economy. This paper investigates the nature of knowledge production and diffusion among regions in 29 EU countries and tries to assess its effectiveness. The analysis follows a two-step analytical route. Firstly, as a preliminary analysis, we estimate a knowledge production function (Griliches, 1979 and many others) with the usual parametric methods, in order to find out which are the main determinants of knowledge production at the regional level in Europe. Secondly, based on these findings, we apply DEA to assess the degree of efficiency of European regions in their use of internal and external inputs for the production of new knowledge and ideas. This allows to provide a ranking of the innovative performance of EU regions for two points in time, the beginning of the current century and the second part of this decade. Such rankings will be evaluated thanks to the Malmquist productivity index in order to assess the relative importance of its main components. According to the Data Envelopment Analysis, we found further evidence of a dualistic (centre vs periphery) pattern in the regional innovation activities, with the highest efficient territories located in the most central or economically strategic areas of the continent. On the contrary, the application of the Malmquist productivity index shows that productivity dynamics has been extremely differentiated across regions in terms of both magnitude and intrinsic features. We, again, observe important differences between the core and periphery of Europe and most specifically between the countries which are rich and industrialized and form the so called “Old Europe” and those which are relatively poor and have entered the European Union quite recently.
    Keywords: innovation; human capital; spatial spillovers; European regions; DEA
    JEL: C13 C61 O33 R11
    Date: 2012
  2. By: Dimitrios Christelis (CSEF and CFS); Loreti I. Dobrescu (University of New South Wales)
    Abstract: Using micro data from eleven European countries, we investigate the impact of being socially active on cognition in older age. Cognitive abilities are measured through scores on numeracy, fluency and recall tests. We address the endogeneity of social activities through panel data and instrumental variable methods. We find that social activities have an important positive effect on cognition, with the results varying by gender. Fluency is positively affected only in females, while numeracy only in males. Finally, recall is affected in both sexes. We also show that social activities, through their effect on cognition, influence positively households’ economic welfare.
    Keywords: Social Activities, Ageing, SHARE, Panel Data
    JEL: I10 J14 C23
    Date: 2012–09–05
  3. By: Christiane Malina (Institute of Spatial and Housing Economics, Muenster); Frauke Fischer (Institute of Transport Economics, Muenster)
    Abstract: High levels of particulate matter scaling less than 10 micrometers in diameter (PM10) in many urban areas have led to the introduction of binding PM10 limit values by the European Commission in 2005. Road transport in inner city areas is believed to be one of the main contributors to accumulated PM10 levels and, thus, is the focus of regulation. One of the strongest regulatory mechanisms to meet the new PM10 air quality standard is the introduction of low emission zones (LEZs) in Germany. This policy allows local authorities to define geographical areas in urban agglomerations as LEZs, into which vehicles that do not meet predetermined emission standards are prohibited from entering. This paper evaluates the effectiveness of LEZs on reducing PM10 levels in German cities. We employ a fixed effects panel data model to analyze the effects of LEZs on daily PM10 levels using data from 2000 to 2009. We take into account daily data for meteorological conditions and traffic volume. The results of the analysis reveal that the introduction of LEZs has significantly reduced daily PM10 levels in urban areas. We can also show that PM10 levels are significantly driven down further when LEZ standards in cities become more stringent over time.
    Keywords: Particulate matter, low emission zones, panel data
    JEL: Q58 R49
    Date: 2012–08
  4. By: Sylvie Charlot; Riccardo Crescenzi; Antonio Musolesi
    Abstract: The paper looks at the genesis of innovation in the EU regions in order to shed light on the link between innovative inputs (R&D and Human Capital) and the genesis of economically valuable knowledge. The "traditional" regional Knowledge Production Function (KPF) is innovatively developed in three complementary directions. First, the KPF is "augmented" in order to control for all possible "unobservable" and "immeasurable" time varying factors that influence the genesis of innovation (i.e. localised institutional and relational factors, regional innovation policies). Second, a semi-parametric approach that relaxes any arbitrary assumption on the "shape" of the KPF is adopted. Finally, the assumption of homogeneity in the impact of R&D and Human Capital is relaxed by explicitly accounting for the differences between "core" and "peripheral" regions. The econometric results confirm the importance of accounting for time varying unobserved heterogeneity through the adoption of a "random growth" specification: R&D efforts exert a significant influence on innovation only after controlling for regional specific time varying unobserved factors. In addition the semi-parametric approach uncovers significant threshold effects for both R&D expenditure and Human Capital and highlights a strong complementary between these two factors. However, "core" regions benefit from a persistent advantage in terms of the "productivity" of their innovation inputs. This has important implications for the EU innovation policies at the regional level.
    Keywords: Innovation, Regions, Knowledge production function, Europe, Semi-parametric models
    JEL: O32 R11 C14 C23
    Date: 2012–09–06
  5. By: Andreas Reinstaller (WIFO); Fabian Unterlass (WIFO)
    Abstract: This paper presents an analysis of innovation behaviour at the firm level across countries with different levels of technological capabilities and economic development. Using data from the Community Innovation Survey for 20 European countries the paper shows that the impact of total innovation expenditures – including next to R&D also outlays for technology transfer, the market introduction of innovations or new designs – increases monotonically across countries with their level of technological capabilities. R&D investments instead have a significant impact on the generation of innovations only for firms located in countries with higher levels of technological capabilities. Firm specific competencies to suggest or contribute to innovation projects have a more significant effect on the innovation output the higher the level of economic development of the countries in which firms are located. Finally, the paper presents also evidence that R&D does not generally increase the absorptive capabilities of firms.
    Keywords: Innovation decision, Catching up, Technological capabilities, R&D
    Date: 2012–09–14
  6. By: Katja Landau; Stephan Klasen; Walter Zucchini
    Abstract: We investigate the accuracy of ex ante assessments of vulnerability to income poverty using cross-sectional data and panel data. We use long-term panel data from Germany and apply di erent regression models, based on household covariates and previous-year equivalence income, to classify a household as vulnerable or not. Predictive performance is assessed using the Receiver Operating Characteristics (ROC), which takes account of false positive as well as true positive rates. Estimates based on cross-sectional data are much less accurate than those based on panel data, but for Germany, the accuracy of vulnerability predictions is limited even when panel data are used. In part this low accuracy is due to low poverty incidence and high mobility in and out of poverty.
    Keywords: vulnerability, poverty, ROC, German panel data
    JEL: C23 C52 I32 O29
    Date: 2012
  7. By: Stefan Lutz
    Date: 2012
  8. By: Michael Zibrowius
    Abstract: Using a rich panel data set, I estimate wage assimilation patterns for immigrants in Germany as an example of a key European destination country. This study contributes to the literature by performing separate estimations by skill groups. Comparisons with similar natives reveal that immigrants’ experience earnings profiles are flatter on average, although clear differences exist between skill groups. The effect of time spent in the host country is significantly positive and thus partly offsetting the diverging trend in the experience earnings profiles. Still, wage differences between natives and immigrants remain. They are particularly noticeable for highly skilled immigrants, the group needed most in Germany’s skill intensive labor market.
    Keywords: international migration, wage differentials, assimilation, longitudinal data
    JEL: F22 J31 J61
    Date: 2012
  9. By: Stefanie A. Haller; Jože Damijan; Ville Kaitila; Črt Kostevc; Mika Maliranta; Emmanuel Milet; Daniel Mirza; Matija Rojec
    Abstract: We establish a set of stylised facts for trade and trading firms in five market services sectors using comparable firm-level and services data from four EU countries. Our analysis shows that exports account for much lower shares of overall sales in the services sectors than in manufacturing. In line with this there are also fewer firms engaged in trade in the services sectors than in manufacturing; trade intensities, in turn, vary by services sector and country. Trade by services firms is somewhat less dominated by firms that both export and import than trade by manufacturing firms. In terms of value, trade in services is considerably more important than in manufacturing, yet the majority of services firms trade mostly goods. Larger and more productive firms are more likely to be two-way traders and to engage in both goods and services trade. Few firms export many services or to many countries. Those firms that export services to many countries account for a large share of export value; this is not the case for all countries for the firms which export many services.
    Keywords: exports, imports, services, international comparison
    JEL: F14 D22 L80
    Date: 2012–09–06
  10. By: Mareike Wagner
    Abstract: Given shortages in public child care in Germany, this paper asks whether social support with child care and domestic work by spouses, kin and friends can facilitate mothers’ return to full-time or part-time positions within the first six years after birth. Using SOEP data from 1993-2009 and event history analyses for competing risks, the author compares the employment transitions of West German, East German and migrant mothers of pre-school children. The results indicate that West German and migrant mothers return to work sooner if they have access to kin, and that kinship support is particularly important when public child care is unavailable. Furthermore, West German and migrant mothers are more likely to work full-time if their spouses partipate in domestic work. In contrast, social support does not affect employment transitions in East Germany where public child care is more easily accessible and continuous female employment is a prevalent social norm.
    Keywords: Maternal employment, child care, social support
    Date: 2012
  11. By: Leon Bettendorf; Egbert Jongen; Paul Muller (University Amsterdam/Tinbergen)
    Abstract: <p>Over the period 2005-2009 the Dutch government increased childcare subsidies substantially, reducing the average effective parental fee by 50%, and extended subsidies to so-called guestparent care. We estimate the labour supply effect of this reform with a difference-in-differences strategy, using parents with older children as a control group.</p><p>We find that the reform had a moderately sized impact on labour supply. Furthermore, the effects are an upper bound since there was also an increase in an earned income tax credit for the same treatment group over the same period. The joint reform increased the maternal employment rate by 2.3%-points (3.0%). Average hours worked by mothers increased by 1.1 hours per week (6.2%). Decomposing the hours effect we find that most of the increase in hours is due to the intensive margin response. A number of robustness checks confirm our results.</p><p> </p>
    JEL: C21 H40 J13 J22
    Date: 2012–09
  12. By: Hillmann, Katja; Hohenleitner, Ingrid
    Abstract: Similar to many other European countries, Germany's unemployment policy made a paradigm shift towards activation policy with a tightened monitoring and sanction regime. In our analysis, we examine the impact of benefit sanctions on the probability of getting employed or leaving the labor force. Using a mixed proportional hazard model, we draw causal inference of sanction enforcement on unemployment exit hazards. Based on a survey sample, covering the first three years after implementation of the Hartz IV law in 2005, we find evidence for a positive impact of sanctions on getting employed, but also on leaving the labor market. --
    Keywords: unemployment benefit sanctions,unemployment duration,employment,nonemployment,mixed proportional hazard estimation
    JEL: J48 J63 J64 J68 I38
    Date: 2012
  13. By: Jonathan Wadsworth (Royal Holloway College, Centre for Economic Performance at the London School of Economics; Centre for Analysis and Research on Migration at UCL and IZA, Bonn)
    Abstract: A rise in population caused by increased immigration, is sometimes accompanied by concerns that the increase in population puts additional or differential pressure on welfare services which might affect the net fiscal contribution of immigrants. The UK and Germany have experienced significant increases in immigration in recent years and this study uses longitudinal data from both countries to examine whether immigrants differ in their use of health services than native born individuals on arrival and over time. While immigrants to Germany, but not the UK, are more likely to self-report poor health than the native-born population, the samples of immigrants use hospital and GP services at broadly the same rate as the native born populations in both countries. Controls for observed and unobserved differences between immigrants and native-born sample populations make little difference to these broad findings.
    Keywords: Immigration, Health, Health Service
    JEL: H00 J00
    Date: 2012–09
  14. By: Petar Angelov; Stephanie Rosenkranz; Hans Schenk
    Abstract: Using an event study methodology, this paper assesses the competitive effects of remedies implemented by the European Commission in 11 horizontal mergers in the ICT industry between 1990 and 2010. The estimates of merger announcement effects for both merging parties and competitors have predominantly insignificant residuals, suggesting that collusion and anti-competitive effects are not implied by the market reactions to merger announcements. Remedies, both behavioural and structural, appear to be largely ineffective in negating the competition concerns of the Commission, even if properly applied to anti-competitive mergers. Moreover, behavioural remedies appear to transfer rents from merging parties to competitors. These findings suggest that static economic models are ineffective in analysing dynamic markets, possibly as a result of inadequate market definitions.
    Keywords: Merger remedies; competition policy; industrial competitiveness; ICT; M&A; event study
    JEL: G34 L41 L43
    Date: 2012–09
  15. By: Julia Lang
    Abstract: This study analyses the effects of training participation on wages and perceived job security for employees of different ages. Based on data from the German Socio-Economic Panel, results indicate that only younger workers benefit from training by an increase in wages, whereas older employees’ worries about losing their job are reduced. This observation can also be explained by the fact that goals of training courses are related to the age of participants. Moreover, I differentiate between workers who permanently and only occasionally participate in training. The results indicate that there seem to be decreasing marginal returns to training with respect to job security.
    Keywords: Training, Wages, Job security
    JEL: J24 J28 J31 M53
    Date: 2012
  16. By: Katrin Sommerfeld
    Abstract: Performance pay is of growing importance to the wage structure as it applies to a rising share of employees. At the same time wage dispersion is growing continuously. This leads to the question of how the growing use of performance pay schemes is related to the increase in wage inequality? German SOEP data for the years 1984 to 2009 confirm the large increase in the application of performance pay schemes. This in turn led to an upward shift of the wage distribution by about one log point. However, it did not contribute to the growth in wage inequality. Even though wage inequality grew within the group of employees who receive performance pay, it grew even more so within the group who do not receive it. Still, the wage difference between both wage schemes remained flat over the distribution. The empirical analysis employs sequential decompositions in a quantile regression framework.
    Keywords: Performance pay, wage structure, quantile regression, sequential decomposition
    JEL: J31 J33 C21
    Date: 2012
  17. By: Nattavudh Powdthavee; James Vernoit
    Abstract: Using a longitudinal data of British youths, this paper explores the consequences of past parental unemployment on the current happiness and self-esteem of the children. We find that a past unemployment spell of the father has important consequences for their children and leads to them having both lower subjective well-being and self-confidence. In addition, this paper also presents evidence that both subjective well-being and self-confidence responds differently to maternal unemployment compared to paternal unemployment. In our final table, we show changes in adolescents' well-being and self-esteem predicts educational attainments at 16. Together these findings offer new evidence of unemployment scarring on children's livelihood.
    Keywords: Unemployment, scarring, children, happiness, self-esteem, noncognitive skills
    JEL: D1 I3 J6
    Date: 2012–09
  18. By: Bell, David; Rutherford, Alasdair
    Abstract: This paper examines the combined effects of population ageing and changes in long-term care policy on the housing market. Those needing care prefer to receive it at home rather than in institutional settings. Public authorities prefer to provide care in residential settings which are generally lower cost than institutional care. The trend away from institutional provision towards care at home is endorsed by national governments and by the OECD. Nevertheless, as the number requiring care increases, this policy shift will maintain the level of housing demand above what it would otherwise be. It will also have distributional consequences with individuals less likely to reduce their housing equity to pay for institutional care, which in turn will increase the value of their bequests. Empirical analysis using the UK Family Resources Survey and the British Household Panel Survey shows that household formation effects involving those requiring long-term care are relatively weak and unlikely to significantly offset the effects of this policy shift on the housing market and on the distribution of wealth.
    Keywords: Ageing; Demographic change; Housing market; Long-term care
    Date: 2012–06
  19. By: Messe, Pierre-Jean; Rouland, Bénédicte
    Abstract: From French data, this paper uses a difference-in-differences approach combined with propensity score matching to identify the effect of an exogenous change in employment protection among older workers on firm’s incentives to sponsor training. Laying off workers aged 50 and above, French firms have to pay a tax to the unemployment insurance system, known as the Delalande tax. In 1999, the measure was subjected to a reform that increased due taxes but that did not concern equally all firms. We find that this exogenous shock to employment protection for older workers substantially rises firms’ incentives to train the 45-49 age group of workers. This result confirms predictions of the simple labor market model we develop in a first stage.
    Keywords: older workers; employment protection; firms’ training incentives
    JEL: J14 J24 J26
    Date: 2012–09
  20. By: Gábor Békés; Lionel Fontagné; Balázs Muraközy; Vincent Vicard
    Abstract: This paper proposes studying export frequency as an additional margin of international trade. While extensive margins of products and destination define the scope of firm’s export, export shipment frequency is determined by sale method choice and cost structure of the trade technology. We define export shipment frequency as the per annum number of shipments of a given product, by a firm to a given destination. In order to more deeply understand the trade cost structure and sale methods, we estimate gravity models on export frequency and other margins of trade using monthly firm-product-destination level export data from France. We show that in key predictions of the model are validated. During the recent trade collapse, we also find a great deal of stability in shipment frequency with a modest adjustment to declining GDP.
    Date: 2012–03–01

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