nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2012‒11‒17
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. The Drivers of Income Mobility in Europe By David Aristei; Cristiano Perugini
  2. Does Schooling Improve Cognitive Functioning at Older Ages? By Schneeweis, Nicole; Skirbekk, Vegard; Winter-Ebmer, Rudolf
  3. Measuring employment deprivation among households in the EU By Carlos Gradin; Olga Canto; Coral del Rio
  4. Do non-stop flights boost exports? By Marco Alderighi; Alberto Gaggero
  5. Convergence without hard criteria: Does EU soft law affect domestic unemployment protection schemes? By Paetzold, Jörg; van Vliet, Olaf
  6. The rise of the East and the Far East : German labor markets and trade integration By Dauth, Wolfgang; Findeisen, Sebastian; Suedekum, Jens
  7. The Great Export Recovery in German Manufacturing Industries, 2009/2010 By Joachim Wagner
  8. Corporative cartels and challenges to European labour market models By Karlson, Nils; Lindberg, Henrik
  9. International Migration as Occupational Mobility By Dean R. Lillard; Anna Manzoni
  10. Selection and Real wage cyclicality: Germany Case By Kang, Lili; Peng, Fei
  11. Environmental policies, product market regulation and innovation in renewable energy By Lionel Nesta; Francesco Vona; Francesco Nicolli
  12. Labour supply effects of early retirement provision By Ola Lotherington Vestad
  13. Gender Gaps in Spain: Family Issues and the Career Development of College Educated Men and Women By González de San Román, Ainara; de la Rica, Sara
  14. Do literacy and numeracy pay off? On the relationship between basic skills and earnings By Antoni, Manfred; Heineck, Guido
  15. International trade, technical change and wage inequality in the U.K. economy By Engelmann, Sabine
  16. Childhood Health and the Business Cycle: Evidence from Western Europe By Angelini, V.;; Mierau, J.O.;
  17. Impacts of an Ageing Society on Macroeconomics and Income Inequality – The Case of Germany since the 1980s By Jürgen Faik
  18. The Impact of the German Child Benefit on Child Well-Being By Raschke, Christian
  19. Are dangerous jobs paid better? European evidence By Nikolaos Georgantzis; Efi Vasileiou
  20. The role of anti-smoking legislation on cigarette and alcohol consumption habits in Italy By Pieroni, Luca; Chiavarini, Manuela; Minelli, Liliana; Salmasi, Luca

  1. By: David Aristei (University of Perugia); Cristiano Perugini (University of Perugia)
    Abstract: In this paper we study intra-generational income mobility in European countries over the years shortly preceding the outburst of the global crisis. Income mobility plays a crucial role in shaping distributive patterns and is closely related to the capacity of a socio-economic system to provide equality of opportunities and the removal of social impediments. In this study we exploit the longitudinal structure of the EU-Silc database to provide a comprehensive overview of income mobility across 25 European countries, classified into six capitalistic models. After having descriptively analysed heterogeneity in income dynamics by means of alternative mobility measures, we identify the microeconomic drivers of household income mobility, focusing on the role of household and household head demographic, economic and job characteristics. Outcomes reveal that the levels and determinants of mobility differ remarkably in the various institutional models across Europe, particularly regarding demographic attributes, education and temporary/permanent/self-employment positions.
    Keywords: income mobility, household structure, institutional settings, EU-Silc data.
    JEL: D31 J10 O15
    Date: 2012–09
  2. By: Schneeweis, Nicole (Department of Economics, Johannes Kepler University Linz); Skirbekk, Vegard (IIASA, Laxenburg); Winter-Ebmer, Rudolf (Department of Economics, Johannes Kepler University Linz, affiliated with IHS, IZA, and CEPR)
    Abstract: We study the relationship between education and cognitive functioning at older ages by exploiting compulsory schooling reforms, implemented in six European countries during the 1950s and 1960s. Using data of individuals aged 50+ from the Survey of Health, Aging and Retirement in Europe (SHARE), we assess the causal effect of education on old-age memory, fluency, numeracy, orientation and dementia. We find a positive impact of schooling on memory. One year of education increases the delayed memory score by about 0.3, which amounts to 16% of the standard deviation. Furthermore, for women, we find that more education reduces the risk of dementia.
    Keywords: Compulsory schooling, Instrumental variables, Education, Cognitive functioning, Memory, Aging, Dementia
    JEL: I21 J14
    Date: 2012–11
  3. By: Carlos Gradin (Universidade de Vigo); Olga Canto (Instituto de Estudios Fiscales); Coral del Rio (Universidade de Vigo)
    Abstract: In this paper, following the literature on well-being, we propose an aggregate measure of employment deprivation among households that is increasing in the incidence of household unemployment (how many households are touched by the lack of employment of any of its members), its intensity (how far are households on average from being employment non-deprived), and inequality of employment exclusion across households (how concentrated is unemployment in a few of them). Based on this measurement framework, we analyze employment deprivation across the European Union using Labor Force Surveys during the current Great Recession. Our results provide evidence for the relevance of incorporating the household dimension in identifying unemployment profiles with different implications in terms of household well-being and vulnerability.
    Keywords: employment deprivation, unemployment measurement, vulnerability, European Union.
    JEL: D30 D63 I31 J64
    Date: 2012–02
  4. By: Marco Alderighi (University of Valle d'Aosta and Bocconi University); Alberto Gaggero (Department of Economics and Management, University of Pavia)
    Abstract: We study empirically the role of air service in boosting exports. We focus on the link between non-stop flights and outgoing trade of the Italian manufacturing sector in Europe using a panel of 12,000 half- yearly observations ranging from 1998 to 2010. The analysis shows that the supply of non-stop flights provided by Full-Service Carriers (FSCs) has a positive impact on the exports of Italian regions, whilst no significant evidence of this is found for Low-Cost Carriers. After taking the endogeneity of flight frequency into account, the estimates indicate that the elasticity of exports to FSC non-stop flights is about 10 percent.
    Keywords: airlines, export, full-service carriers, low-cost carriers, manufacturing.
    JEL: C23 F10 L20 L60 L93
    Date: 2012–10
  5. By: Paetzold, Jörg (University of Salzburg); van Vliet, Olaf (Department of Economics, Leiden University)
    Abstract: The European Employment Strategy (EES) aims to promote convergence of domestic labour market policies by soft law instruments. Previous studies on the impact of the EES are mainly focused on active labour market policies. The present study aims at explaining cross national variation in national passive labour market policies and unemployment benefit levels. Building on the most recent measures and pooled time series data, the empirical findings reveal the presence of a convergence process among the most advanced economies regarding passive labour market policy efforts, with the EES fostering this trend even further. Furthermore, our findings support the argument that the EES creates pressure on governments to reform domestic labour market policies, but this pressure varies across countries and over time. The results suggest that the recommendations from the European Council have contributed to unemployment benefit reform processes.
    Keywords: Passive labour market policies; convergence; European Employment Strategy; Europeanization; Open Method of Coordination; welfare state
    JEL: H53 J68
    Date: 2012–11–09
  6. By: Dauth, Wolfgang (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Findeisen, Sebastian; Suedekum, Jens
    Abstract: "We analyze the effects of the unprecedented rise in trade between Germany and 'the East' - China and Eastern Europe - in the period 1988-2008 on German local labor markets. Using detailed administrative data, we exploit the cross-regional variation in initial industry structures and use trade flows of other high-income countries as instruments for regional import and export exposure. We find that the rise of 'the East' in the world economy caused substantial job losses in German regions specialized in import-competing industries, both in manufacturing and beyond. Regions specialized in export-oriented industries, however, experienced even stronger employment gains and lower unemployment. In the aggregate, we estimate that this trade integration has caused some 493,000 additional jobs in the economy and contributed to retaining the manufacturing sector in Germany. We also conduct our analysis at the individual worker level, and find that trade had a stabilizing overall effect on employment relationships." (Author's abstract, IAB-Doku) ((en))
    Keywords: Außenhandel, Außenhandelsentwicklung, regionaler Arbeitsmarkt, Außenhandel - Auswirkungen, Beschäftigungseffekte, Industrie, Import, Außenhandelsstruktur, Export, regionale Disparität, produzierendes Gewerbe, Außenhandelsverflechtung, Arbeitsmarktentwicklung, Osteuropa, China, Bundesrepublik Deutschland
    JEL: F16 J31 R11
    Date: 2012–07–09
  7. By: Joachim Wagner (Leuphana University Lueneburg, Germany)
    Abstract: This paper uses comprehensive high-quality panel data from official statistics for exporting enterprises to investigate the micro-structure of the recent export recovery in 2010 in manufacturing industries in Germany after the great recession of 2008/2009. Almost all of the increase in exports was due to positive changes of exports in firms that continue to export (i.e. at the so-called intensive margin) while the increase of exports due to export starters (at the so-called extensive margin) was tiny. It is shown that Idiosyncratic shocks to very large firms played a decisive role in shaping the export recovery. These findings are remarkably symmetric to the results from an analysis of the great export collapse of 2008/09.
    Keywords: Exports, great export recovery, granular economy, Germany
    JEL: F14 E32
    Date: 2012–11
  8. By: Karlson, Nils (The Ratio Institute); Lindberg, Henrik (The Ratio Institute)
    Abstract: Abstract We propose that one of the main causes of shortcomings in European labour markets is the existence of corporative cartels, through which the state has delegated various forms of regulatory power to employers and employees that act as cartels. Analysis indicates that these cartel arrangements are not in the interest of labour because they are hard to combine with the demands of a modern and knowledge-based economy. Hence, a modernization of European labour market models is needed.
    Keywords: labour market models; corporatism; cartels; job creation
    JEL: J08 J21 J30 J51
    Date: 2012–11–12
  9. By: Dean R. Lillard; Anna Manzoni
    Abstract: We investigate whether Germans immigrants to the US work in higher-status occupations than they would have had they remained in Germany. We account for potential bias from selective migration. The probability of migration is identified using life-cycle and cohort variation in economic conditions in the US. We also explore whether occupational choices vary for Germans who migrated as children or as adults. Our results allow us to decompose observed differences in occupational status of migrants and non migrants into the part explained by selection effects and the part that is causal, extending the literature on international migration.
    JEL: J24 J61 J62
    Date: 2012
  10. By: Kang, Lili; Peng, Fei
    Abstract: This paper examines the selection biases in the cyclical behaviour of real wages using the German Socio-Economic Panel Data (GSOEP) for the 1984-2009 period. We find rigid wages of job stayers in Germany.
    Keywords: Selection; Wage cyclicality; Panel data
    JEL: E32 C52 J31 C33
    Date: 2012–10–03
  11. By: Lionel Nesta (Ofce sciences-po); Francesco Vona (Observatoire Francais des Conjonctures Economiques Author-Workplace-Postal :69, quai d'Orsay, Paris 75007, France); Francesco Nicolli (University of Ferrara)
    Abstract: We investigate the effectiveness of policies in favor of innovation in renew- able energy under dierent levels of competition. Using information regarding renewable energy policies, product market regulation and high-quality green patents for OECD countries since the late 1970s, we develop a pre-sample mean count-data econometric specification that also accounts for the endogeneity of policies. We nd that renewable energy policies are significantly more effective in fostering green innovation in countries with deregulated energy markets. We also nd that public support for renewable energy is crucial only in the genera- tion of high-quality green patents, whereas competition enhances the generation of green patents irrespective of their quality.
    Keywords: renwable energy technology, patents,environmental policies, product market regulation,policy complementarity
    JEL: Q55 Q58 Q42 Q48 O34
    Date: 2012–10
  12. By: Ola Lotherington Vestad (Statistics Norway)
    Abstract: The main objective of this paper is to estimate labour supply effects of an early retirement programme in Norway. Detailed administrative data are employed in order to characterize full paths towards retirement and account for substitution from other exit routes, such as unemployment and disability insurance. By exploiting a reduction in the lower age limit for early retirement as a source of exogenous variation in individual eligibility I obtain robust difference-in-differences and triple differences estimates indicating that more than two out of three pensioners would still be working at the age of 63 had the age limit been 64 rather than 62. Hence, although successful in creating a more dignified exit route for early leavers, the programme also generated substantial costs in terms of inducing others to retire earlier.
    Keywords: Induced retirement; Pension reform; Matched employer-employee register data; Difference-in-differences.
    JEL: H55 I38 J26
    Date: 2012–11
  13. By: González de San Román, Ainara (University of the Basque Country); de la Rica, Sara (University of the Basque Country)
    Abstract: Our goal in this paper is to focus on highly educated men and women and try to explore the trade‐offs between family and working career in Spain, where changes in female behavior with respect to the labor market have been relatively recent but rather important. We compare male and female behavior with respect to labor supply and labor performance along their life cycle for different birth cohorts to explore the connection between family and work over time. Our results indicate that family plays a crucial role as a source of gender differences in the labor market in Spain. By 2008, children are the main determinant of the observed gap in labor supply between college men and women. Furthermore, with respect to hours worked, children are also an important determinant for the decision of college‐educated mothers to choose to work part‐time. However, children do not seem to contribute to explain the observed gender wage gap (5%) between college men and women.
    Keywords: gender gaps, career development, family and work, Spain
    JEL: J12 J2 J3
    Date: 2012–10
  14. By: Antoni, Manfred; Heineck, Guido
    Abstract: Is there a reward for basic skills in the German labor market? To answer this question, we examine the relationship between literacy, numeracy and monthly gross earnings of full-time employed workers. We use data from the ALWA survey, augmented by test scores on basic cognitive skills as well as administrative earnings data. Our results indicate that earnings are positively related to both types of skills. There furthermore is no evidence for non-linearity in this relationship and only little heterogeneity when differentiating by sub-groups. --
    Keywords: literacy,numeracy,earnings,administrative data,Germany,ALWA
    JEL: I21 J31
    Date: 2012
  15. By: Engelmann, Sabine
    Abstract: "This paper examines the joint impact of international trade and technical change on U.K. wages across different skill groups. International trade is measured as changes in product prices and technical change as total factor productivity (TFP) growth. We take account of a multi-sector and multi-factor of production economy and use mandated wage methodology to offer a close theoretical-empirical relationship. We use data of the EU KLEMS database and analyse the impact of both, product price changes and TFP changes of 11 U.K. manufacturing sectors on factor rewards of high-, medium- and low-skilled workers. Results show that real wages of skill groups are driven by the sector bias of price change and TFP growth of selected sectors of production. Furthermore, for each year 1970-2005 we estimate the share of the three different skill groups on added value which indicate structural change in the U.K. economy. Empirical results show a structural change in the U.K. economy by the declined share of low-skilled workers and the increased share of medium-skilled and high-skilled workers over the years." (Author's abstract, IAB-Doku) ((en))
    Keywords: Außenhandel, technischer Wandel, Einkommenseffekte, Lohnunterschied, verarbeitendes Gewerbe, Reallohn, Lohnhöhe, Qualifikationsstruktur, Arbeitskräftenachfrage, Beschäftigungseffekte, berufliche Qualifikation, Qualifikationsniveau, Hochqualifizierte, Niedrigqualifizierte, mittlere Qualifikation, Preisentwicklung, Produktivitätsentwicklung, Großbritannien
    JEL: F11 F16 J31
    Date: 2012–03–20
  16. By: Angelini, V.;; Mierau, J.O.;
    Abstract: We analyze the relationship between the business cycle and childhood health. We use a retrospective survey on self-reported childhood health for 10 Western European countries and combine it with historically and internationally comparable data on the Gross Domestic Product. We validate the self-reported data by comparing them to realized illness spells. We find a positive relationship between being born in and growing up during a recession and childhood health. This relationship is not driven by selection effects due to heightened infant mortality during recessions. As the business cycle is exogenous from the individual perspective, our results can be considered causal.
    Keywords: Childhood Health, Business Cycle, Western Europe
    JEL: I12 E32 O52
    Date: 2012–10
  17. By: Jürgen Faik (FaMa – Neue Frankfurter Sozialforschung)
    Abstract: This paper is concerned with the interplay between demography and macroeconomics on one hand and macroeconomics and income inequality on the other hand. For this purpose, several estimation equations are derived by econometric methods (on the empirical basis of the 1984-2010 German Socio-Economic Panel (SOEP) waves). In concrete terms, the macroeconomic variables inflation, economic growth, and unemployment are at first connected with the German demographic ageing; afterwards, these connections are used to produce a nexus between German income inequality and the stated macroeconomic variables (additionally to the exogenous effects of ageing). For the empirical periods examined (1983-2009), there have been a) a (slightly) negative influence of demographic ageing on the inflation rate, b) a (weak) positive effect of ageing on the level – not on the increases (reductions) – of economic growth rates, and c) a somewhat stronger positive impact of demographic ageing on unemployment rates. While the measured income inequality is upwards directly (exogenously) driven by demographic ageing, the mechanisms through the different macroeconomic channels are more difficile: inflation is positively and unemployment negatively correlated with income inequality, and regarding economic growth a (slightly) concave effect upon income inequality has been observed. All these findings imply that demographic ageing, ceteris paribus and by tendency, diminishes income inequality via inflation and unemployment rate, which is also valid for economic growth (within the empirically relevant value range for the German demographic ageing). But on balance, there is an overcompensating direct, exogenous impact of demographic ageing on inequality in the model used in this paper, and this causes tendencies towards a remarkable increase of German income inequality until 2060. These tendencies are more pronounced in the forecast variant in which a strongly ageing population is assumed.
    Keywords: Demographic ageing, macroeconomics, personal income distribution, inequality.
    JEL: D30 D31 D60
    Date: 2012–10
  18. By: Raschke, Christian (Louisiana State University)
    Abstract: The German Child Benefit ("Kindergeld") is paid to legal guardians of children as a cash benefit. This study employs exogenous variations in the amount of child benefit received by households to investigate the extent to which these various changes have translated into an improvement in the circumstances of children related to their well-being. I use the German Socio-Economic Panel to estimate the impact of a given change in the child benefit on food expenditures of households, the probability of owning a home, the size of the home, as well as the probability of parents’ smoking, alcohol consumption, and parents’ social activities such as traveling, visiting movie theaters, going to pop concerts, attending classical music concerts or other cultural events. Households primarily increase per capita food expenditures in response to increases in child benefit, and they also improve housing conditions. I do not find a significant effect of child benefit on parents’ smoking or drinking, but parents of older children use the child benefit to pay for their social and personal entertainment activities.
    Keywords: child benefit, fungibility of income, child well-being
    JEL: I38 D12 H31
    Date: 2012–11
  19. By: Nikolaos Georgantzis (GLOBE & Economics Department, University of Granada, Spain; LEE & Economics Department, Universitat Jaume I, Castellón-Spain); Efi Vasileiou (University of Panthéon-Assas (Paris-2), France; LEE, Universitat Jaume I, Castellón-Spain)
    Abstract: This article tests whether workers are indifferent between risky and safe jobs provided that, in labour market equilibrium, wages should serve as a utility equalizing device. Workers’ preferences are elicited through a partial measure of overall job satisfaction: satisfaction with job-related risk. Given that selectivity turns out to be important, we use selectivity corrected models. Results show that wage differentials do not exclusively compensate workers for being in dangerous jobs. However, as job characteristics are substitutable in workers’ utility, they could feel satisfied, even if they were not fully compensated financially for working in dangerous jobs.
    Keywords: Satisfaction with Job Risk; Compensating Wage Differentials; Dangerous Job
    JEL: C23 J31
    Date: 2012
  20. By: Pieroni, Luca; Chiavarini, Manuela; Minelli, Liliana; Salmasi, Luca
    Abstract: The short-term effects of public smoking bans on individual smoking and drinking habits were investigated in this paper. In 2005, a smoking ban was introduced in Italy, and we exploited this exogenous variation to measure the effect on both smoking participation and intensity and the indirect effect on alcohol consumption. Using data from the Everyday Life Aspects survey, for the period 2001-2007, we show that the introduction of smoke-free legislation in Italy significantly affected smoking behavior. We also document significant indirect effects on alcohol consumption for the main alcoholic beverage categories. A robustness analysis is also performed, to test the extent to which unobservable variables may bias our estimated parameters. Our results are then used to perform a cost-effectiveness analysis of the anti-smoking legislation in Italy.
    Keywords: Anti-smoking legislation; regression discontinuity; Difference-in-Differences; cost-effectiveness analysis
    JEL: I12 I18 I10
    Date: 2012–11–06

This nep-eur issue is ©2012 by Giuseppe Marotta. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.