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on Microeconomic European Issues |
| By: | Ronald Bachmann; Peggy Bechara; Sandra Schaffner |
| Abstract: | Using data from the European Union Statistics on Income and Living Conditions (EU-SILC), this paper investigates wage inequality and wage mobility in Europe. Decomposing inequality into within and between group inequality, we analyse to what extent wage inequality and mobility can be explained by observable characteristics. Furthermore, we investigate which individual and household characteristics determine transitions within the wage distribution. Finally, we examine the importance of institutions for wage inequality, wage mobility, and wage transitions. We find that overall, mobility reduces wage inequality. While a large part of wage inequality is due to unobservable characteristics, the equalizing effect of mobility mainly occurs within groups. Furthermore, both personal and household characteristics play an important role for wage transitions. Finally, our findings reveal large cross-country differences across Europe, which are partly linked to the institutional set-up of the national labour markets. |
| Keywords: | Wage inequality; wage mobility; wage transitions; cross-country analysis |
| JEL: | J6 J31 P52 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0386&r=eur |
| By: | Christopher Whelan (Newman Building, School of Sociology); Bertrand Maitre (The Economic and Social Research Institute) |
| Abstract: | In this paper we take advantage of the recent availability of data from the special module on material deprivation in the 2009 European Union Statistics on Income and Living Conditions (EU-SILC) to develop a more comprehensive understanding of the relationship between material deprivation and economic stress. In particular, we focus on the moderating role played by cross-national differences in levels of income and income inequality such that the consequences of material deprivation for subjective economic stress are conditional on the value of macro-economic attributes. In an analysis focused on households clustered within countries, these questions can be most appropriately addressed by a multilevel analysis that allows us to explore the manner in which material deprivation measured at the household level interacts with national attributes in infl uencing household levels of economic stress. Evidence for such moderation is provided by a signifi cant statistical interaction between deprivation and country attributes. In this paper we undertake such an analysis and consider the implications of our findings for competing perspectives on the nature of reference groups in Europe. |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:aia:ginidp:36&r=eur |
| By: | Melissa Engel; Sandra Schaffner |
| Abstract: | The European Union Statistics on Income and Living Conditions (EU-SILC) is a rotational panel provided by Eurostat that covers important variables over all EU Member States. Unfortunately, Eurostat provides separate data sets which do not cover all waves. Furthermore, information on monthly income and hourly wages are missing. In this paper, we make two contributions: first, we develop a method for combining the different waves in order to increase the number of observations; second, we derive monthly and hourly pay. |
| Keywords: | EU-SILC; sampling weights; income; Europe; data quality; panel data |
| JEL: | C81 C83 D31 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0390&r=eur |
| By: | Goedemé, T. |
| Abstract: | In Europe, the elderly stand out for their heavy reliance on welfare state arrangements for securing their living standard. In spite of relatively high elderly at-risk-of-poverty rates in many EU member states, the past two decades have witnessed a tendency to re-strengthen the link between past contributions and pension benefi ts, and to rely more strongly on private pensions. At the same time, public pension replacement rates are projected to decrease in a large number of European countries. In this context, minimum income protection for Europe’s elderly is likely to become even more important for alleviating elderly poverty than is the case today. Yet, minimum income protection schemes targeted at the elderly have remained largely undocumented in the international literature. Therefore, this chapter reviews existing minimum income policies for the elderly in Europe and develops a typology based on entitlement and eligibility criteria. Building on data from a project involving national experts from 25 EU member states, it is shown that in the 2000s welfare erosion of elderly persons’ non-contributory minimum income guarantees has been limited. Moreover, a substantial number of countries has pursued a deliberate policy of increases in minimum income benefi ts for the elderly. Nonetheless, only in a few countries benefi ts are adequate for lifting elderly persons above the poverty line. At the same time, differences between EU member states in terms of mode of access and benefi t levels remain large. |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:aia:ginidp:27&r=eur |
| By: | Marii Paskov (Amsterdam Institute of Social Science Research (AISSR), University of Amsterdam (UvA)); Caroline Dewilde (Department of Sociology and Anthropology , Universiteit van Amsterdam) |
| Abstract: | This paper studies the relationship between income inequality, a macro-level characteristic, and solidarity of Europeans. To this aim, solidarity is defined as the ‘willingness to contribute to the welfare of other people’. We rely on a theoretical idea according to which feelings of solidarity are derived from both affective and calculating considerations, and we test competing hypotheses relating the extent of income inequality to both motivations for solidarity. Using data from the 1999 European Values Study (EVS), we apply multilevel analysis for 26 European countries. Controlling for household income and for other relevant macro-level characteristics which possibly influence feelings of solidarity of Europeans in different countries, we find evidence that in more unequal countries people are less willing to take action to improve the living conditions of their fellow-countrymen. This is true for respondents living in both low- and high-income households. Following from our expectations derived from the literature, this finding furthermore suggests that, at least when measured in terms of ‘willingness to contribute to the welfare of other people’, feelings of solidarity seem to be influenced more strongly by affective, rather than by calculating considerations. |
| Keywords: | solidarity, income inequality, social distance, human motives, Europe. |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:aia:ginidp:33&r=eur |
| By: | Mechelen, N. (Natascha) van; Bradshaw, J. (Jonathan) |
| Abstract: | In this paper the focus is on the child benefit package for working families and its contribution to tackling in-work child poverty. Tackling child poverty is high on the European Union’s political agenda. It was a priority in the March 2006 European Council, a focus of many of the National Reports on Social Protection and Social Inclusion 2006-2008, and the main work of the EU experts on the National Action Plans in 2007. An influential report by the Social Protection Committee (2008) reflected much of this effort and contained detailed comparative analysis of child poverty using the new European Statistics on Income and Living Conditions (EU-SILC) 2005. The report drew attention to the fact that in the majority of the EU member states, children are at a higher risk of poverty than the population as a whole. More recent analyses of the EU-SILC (Tarki, 2010; Atkinson and Marlier, 2010; Tarki, 2011) confirmed this finding. As a part of its 10-year economic plan, the June 2010 European Council set the target to reduce poverty and social exclusion in the EU by 20 million (European Council, 2010). If this objective is to be achieved, parents and their children will need to be a key focus of anti-poverty policies... |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:aia:ginidp:50&r=eur |
| By: | Christopher Whelan (Newman Building, School of Sociology); Brian Nolan (School of Applied Social Science, University College Dublin); Bertrand Maitre (The Economic and Social Research Institute) |
| Abstract: | As awareness of the limitations of relying solely on income to measure poverty and social exclusion has become more widespread, attention has been increasingly focused on multi-dimensional approaches. To date efforts to measure multidimensional poverty and social exclusion in rich countries have been predominantly ad hoc and have relied on data that are far from ideal. Here we apply the approach recently developed by Alkire and Foster, characterized by a range of desirable axiomatic properties but mostly discussed so far in a development context, to European countries, exploiting the potential of harmonized microdata on deprivation newly available for the European Union. The analysis seeks to overcome the limitations of the union and intersection approaches that have characterized many earlier studies. Multidimensional poverty is characterized and decomposed in terms of the contribution of different deprivation dimensions, and an account of cross-national and socio-economic variation in risk levels is presented that is in line with theoretical expectations. Multilevel analysis of multi-dimensional poverty provides the basis for assessment of the role of macro and micro characteristics and their interaction in relation to levels and patterns of multidimensional poverty and social exclusion. Key words: Poverty Measurement; Multidimensional poverty; Deprivation; Social exclusion; EU poverty target. |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:aia:ginidp:40&r=eur |
| By: | Brian Nolan (School of Applied Social Science, University College Dublin) |
| Abstract: | The EU-SILC 2005 wave includes a special module on inter-generational transmission of poverty. In addition to the standard data relating to income and material deprivation, information relating to parental background and childhood circumstances was collected for all household members aged over 24 and less than 66 at the end of the income reference period. In principle, the module provides an unprecedented opportunity to apply a welfare regime perspective to a comparative European analysis of the relationship between poverty and social exclusion and parental characteristics and childhood economic circumstances. In this paper we seek to exploit such potential. In pursuing this objective, it is necessary to take into account some of the limitations of the data. We do by restricting our attention to a set of countries where data issues seem less extreme. Finally, we compare findings from one dimensional and multidimensional approaches to poverty and social exclusion in order to provide an assessment of the extent to which our analysis of welfare regime variation provides a coherent account of the intergenerational transmission of disadvantage. |
| Keywords: | Poverty, intergenerational transmission, welfare regimes, economic vulnerability. |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:aia:ginidp:46&r=eur |
| By: | Verbist, G. (Gerlinde); Matsaganis, M. (Manos) |
| Abstract: | Welfare states provide social benefits in cash and in kind. Cash benefits are income transfers, such as retirement pensions, family and unemployment benefits and social assistance. Benefits in kind are commodities directly transferred to recipients at zero or below-market prices (Barr 2012). In Europe, benefits in kind are usually services, such as health, education, child care and care for the elderly. For example, hospital care in most countries is provided either free of charge or at near-zero prices (at the point of use). User fees are even rarer in the case of primary and secondary education: enrolment is compulsory up to a certain age, while tuition is provided free of charge to all children attending publicly funded schools, irrespective of family income. Moreover, child care is often heavily subsidised; kindergartens are run by the state (most commonly local governments) or government-supervised private organisations, while user fees, where applicable, are usually income-related (in the sense that higher-income families pay higher fees, while lower-income ones pay less or are fully exempted). Elderly care may also be available on similar terms; besides, several countries have developed long-term care insurance schemes, to cater for the future needs of an ageing population. ... |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:aia:ginidp:53&r=eur |
| By: | Ive Marx (Centre for Social Policy, University of Antwerp); Sarah Marchal (CSB , University of Antwerp); Brian Nolan (School of Applied Social Science, University College Dublin) |
| Abstract: | This paper focuses on the role of minimum wages, in conjunction with tax and benefit policies, in protecting workers against financial poverty. It covers 20 European countries with a national minimum wage and three US States (New Jersey, Nebraska and Texas). It is shown that only for single persons and only in certain countries do net income packages at minimum wage level reach or exceed the EU’s at-risk-of poverty threshold, which is set at 60 per cent of median equivalent household income in each country. For lone parents and sole breadwinners with a partner and children to support, net income packages at minimum wage are below this threshold almost everywhere, usually by a wide margin. This remains the case despite shifts over the past decade towards tax relief and additional income support provisions for low-paid workers. We argue that there appear to be limits to what minimum wage policies alone can achieve in the fight against in-work poverty. The route of raising minimum wages to eliminate poverty among workers solely reliant on it seems to be inherently constrained, especially in countries where the distance between minimum and average wage levels is already comparatively small and where relative poverty thresholds are mostly a function of the dual-earner living standards. In order to fight in-work poverty new policy routes need to be explored. The paper offers a brief discussion of possible alternatives and cautions against ‘one size fits all’ policy solutions. |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:aia:ginidp:56&r=eur |
| By: | Virginia Maestri (AIAS, Universiteit van Amsterdam) |
| Abstract: | This paper evaluates the redistributive effect of a comprehensive set of housing-related policies, taking into account the housing advantage of homeowners and social tenants. We use the Euromod microsimulation model to simulate housing policies in Estonia, Italy and the United Kingdom. Disentangling the contribution to inequality and poverty of each housing-related policy, we find that the current design of property taxes is not progressive and that other housing policies have a limited impact on inequality in Estonia and on both inequality and relative poverty in Italy. In all three countries, housing-related policies favor the elderly. |
| Keywords: | Housing policies; Imputed rent; Inequality; Microsimulation JEL: H23; H53; I38 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:aia:ginidp:31&r=eur |
| By: | Michelle Norris (Extension at the Champaign Center, University of Illinois); Nessa Winston |
| Abstract: | This article compares the structural features of home-ownership systems in EU15 countries (home-ownership rates, mortgages and public subsidisation of this tenure) with data on inequalities in outcomes (variations in home-ownership access, risks and standards between income groups). Its purpose is to assess the relevance of the debate on the convergence and divergence of housing systems which has dominated the comparative housing literature. The article concludes that, depending on the level of analysis adopted and the particular variables selected for examination, elements of both convergence and divergence are evident in Western European home-ownership systems. The comparative housing literature has also largely failed to capture the key inter-country cleavages in home-ownership systems that are between the Northern and Southern EU15 countries. These shortcomings are related to methodological and conceptual problems in this literature. |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:aia:ginidp:42&r=eur |
| By: | Francesco Figari (University of Insubria); Paulus, A. (Alari) |
| Abstract: | This paper examines the redistributive impact of imputed rent (private and public) and indirect taxes (value added tax and excises), comparing this with the effects of cash transfers and direct taxes in five EU countries. The extended income concept, taking into account both imputed rent and indirect taxes, provides a more reliable picture of inequality differences across countries. Our results show that indirect taxes have a regressive effect with respect to income in all countries considered but always smaller in magnitude than other tax-benefit instruments. Imputed rent reduces overall inequality in particular where the prevalence of individuals living in own accommodation is high even among the poorest (Greece) and where the contribution of the public imputed rent is large (the UK). |
| Keywords: | Imputed rent, indirect taxes, European Union, household income, microsimulation, EUROMOD. JEL: C81, H23, D63 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:aia:ginidp:28&r=eur |
| By: | Uwe Neumann; Rüdiger Budde; Christoph Ehlert |
| Abstract: | This paper examines what regional characteristics drove urban economic growth in Europe during the past decade. Possible impacts on the new member states in Central Europe due to expansion of the European Union are accounted for by comparison between two periods, before and after 2004. With a focus on cities, a more precise view of Europe-wide regional disparities and their development can be provided than by research based on larger territories, which prevails in the empirical literature on regional convergence. After 2004, economic growth accelerated considerably in the least developed peripheral regions and in the wealthier capital cities of Central European countries. In the medium term, however, no equalisation of disparities within Europe can be exptected. The analysis suggests that economic prosperity in Central Europe and in other parts of Europe depends on the performance of urban “growth poles” favouring regional innovation. This implies that it is a task of regional policy to support provision of a high-quality infrastructure for education and innovation in cities and to encourage utilisation of these facilities within wider regions. |
| Keywords: | Spatial economics; urban economics; EU enlargement |
| JEL: | R11 R12 C21 C23 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0384&r=eur |
| By: | Hoareau, Cécile (Maastricht University); Ritzen, Jo (IZA and Maastricht University); Marconi, Gabriele (Maastricht University) |
| Abstract: | Higher education contributes to economic innovation. This study measures and compares the extent to which national governments’ policies foster this contribution across Europe. The study stresses the relevance of policies which are ‘empowering’ for higher education institutions, or in other words provide them with appropriate resources and regulatory environments. The assessment relies on quantitative scores, based on the contribution of policies regarding funding and autonomy to higher education performance in education, research and economic innovation, using non-arbitrary weights and eighteen policy indicators across 32 European countries. A large number of countries belong to a ‘middle group’ in our overall assessment, indicating a relative cohesion in Europe. Yet, substantial variations exist in terms of higher education policy in Europe, each European country having room for policy improvement. |
| Keywords: | higher education, research, innovation, Europe, public policy, institutions |
| JEL: | I23 I28 J24 L38 O31 O38 O43 O52 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp51&r=eur |
| By: | Davide CASTELLANI; Valentina MELICIANI; Loredana Mirra |
| Abstract: | The paper accounts for the determinants of inward foreign direct investment in business services across the EU-27 regions. Together with the traditional variables considered in the literature (market size, market quality, agglomeration economies, labour cost, technology, human capital), we focus on the role of forward linkages with manufacturing sectors and other service sectors as attractors of business services FDI at the regional level. This hypothesis is based on the evidence that the growth of business services is mostly due to increasing intermediate demand by other services industries and by manufacturing industries and on the importance of geographical proximity for forward linkages in services. To our knowledge, there are no studies investigating the role of forward linkages for the location of FDI. This paper aims therefore to fill this gap and add to the FDI literature by providing a picture of the specificities of the determinants of FDI in business services at the regional level. The empirical analysis draws upon the database fDi Markets, from which we selected projects having as a destination NUTS 2 European regions in the sectors of Business services over the period 2003-2008. Data on FDI have been matched with data drawn from the Eurostat Regio database. Forward linkages have been constructed using the OECD Input/Output database. By estimating a negative binomial model, we find that regions specialised in those (manufacturing) sectors that are high potential users of business services attract more FDI than other regions. This confirms the role of forward linkages for the localisation of business service FDI, particularly in the case of manufacturing. |
| Keywords: | FDI, Business Services, Regional Specialisation, Forward linkages |
| JEL: | R12 L80 F23 |
| Date: | 2012–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:pia:wpaper:104/2012&r=eur |
| By: | Antonio De Socio (Bank of Italy); Valentina Nigro (Bank of Italy) |
| Abstract: | We evaluate the relation between firm leverage and taxation of corporate income using a dataset of mostly unlisted European corporations, highly representative of medium-sized and large firms. We use a correlated random effect approach in order to take into account unobserved heterogeneity and to assess the contribution of cross-sectional variation of the regressors. We also apply quantile regressions to evaluate a possible differential impact of taxation on leverage across firms. Our results suggest that corporate income taxation is positively related to leverage and explains part of the cross-country variability, showing a stronger effect for less levered firms. In accordance with the theory of the debt tax shield, the relation between debt and taxation is stronger for highly profitable firms. These findings are robust to the inclusion of different measures of the financial development and characteristics of the legal system of the country where firms are located. |
| Keywords: | leverage, corporate taxation, financial structure |
| JEL: | G32 H32 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_889_12&r=eur |
| By: | Aretz, Bodo (ZEW Mannheim); Arntz, Melanie (ZEW Mannheim); Gregory , Terry (ZEW Mannheim) |
| Abstract: | This paper contributes to the sparse literature on employment spillovers on minimum wages by exploiting the minimum wage introduction and subsequent increases in the German roofing sector that gave rise to an internationally unprecedented hard bite of a minimum wage. We look at the chances of remaining employed in the roofing sector for workers with and without a binding minimum wage and use the plumbing sector that is not subject to a minimum wage as a suitable benchmark sector. By estimating the counterfactual wage that plumbers would receive in the roofing sector given their characteristics, we are able to identify employment effects along the entire wage distribution. The results indicate that the chances for roofers to remain employed in the sector in eastern Germany deteriorated along the entire wage distribution. Such employment spillovers to workers without a binding minimum wage may result from scale effects and/or capital-labour substitution. |
| Keywords: | minimum wage, Germany, capital-labour substitution, labour-labour substitution, scale effect |
| JEL: | J38 J21 J23 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7047&r=eur |
| By: | Martin Borowiecki; Bernhard Dachs; Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Steffen Kinkel; Johannes Pöschl (The Vienna Institute for International Economic Studies, wiiw); Magdolna Sass; Thomas Christian Schmall; Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Andrea Szalavetz |
| Abstract: | (Report based on Background Study for European Competitiveness Report 2012, see http //ec.europa.eu/enterprise/policies/industrial-competitiveness/competitiveness-analysis/european-competitiveness-report/index_en.htm)SummaryThe ongoing internationalization of production has altered the economic landscape. Many products used to be produced locally using inputs drawn largely from the domestic economy, which implied that most of the value chains or production processes used to be located in the country where a firm had its headquarters. Technological development has facilitated the geographical fragmentation of production processes, resulting in the emergence of global value chains. Different parts of a firm’s production processes can now be located in different parts of the world, according to the comparative advantages of the locations. This ‘slicing up of the value chains’, and the dispersal of the various elements to different parts of the world has given rise to increased trade with the use of imported intermediate goods in manufacturing industries having been increased globally, thereby involving more industries and countries in the value chains. Focusing on four important manufacturing industries (chemicals, chemical products and man-made fibres; machinery and equipment; electrical and optical equipment; and transport equipment) the ongoing trends of the internationalization of production is studied. To account for the multi-faceted phenomenon of the internationalization of production processes and its consequences, a comprehensive review of the literature is provided first. This is followed by an overview of the patterns and trends in vertical specialization across countries for the four selected industries. This section is based on the World Input-Output Database (WIOD), which allows the integration of production patterns and processes to be studied at a global level. As this is accompanied by similar trends in trade before and over the crisis the next section focuses on the changes in trade patterns of these industries which is based on detailed Harmonized System (HS) 6-digit trade data allowing for a differentiation between use categories of products trade in parts and components is important for the machinery and equipment, electrical and optical equipment and transport equipment industries, while trade in semi-finished products is important for the chemicals industry. As the offshoring decisions are made at company level it is important to understand the motives leading firms to offshore, the drivers of the decisions with respect to characteristics of the host and the destination country and the characteristics of the offshoring firms. Section 5 therefore focuses on the offshoring decisions at the company level it analyses the motives and determinants of company strategies with respect to the relocation of production. Section 6 provides a summary. |
| Keywords: | vertical integration, trade in intermediates, offshoring |
| JEL: | F1 F15 F19 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:wii:rpaper:rr:383&r=eur |
| By: | Gaynor, Martin; Propper, Carol; Seiler, Stephan |
| Abstract: | The impacts of choice in public services are controversial. We exploit a reform in the English National Health Service to assess the impact of relaxing constraints on patient choice. We estimate a demand model to evaluate whether increased choice increased demand elasticity faced by hospitals with regard to clinical quality and waiting time for an important surgical procedure. We nd substantial impacts of the removal of restrictions. Patients became more responsive to clinical quality. Sicker patients and better informed patients were more aected. We leverage our model to calculate potential benets. We nd increased demand responsiveness led to a signicant reduction in mortality and an increase in patient welfare. The elasticity of demand faced by hospitals increased post-reform, giving hospitals potentially large incentives to improve their quality of care and nd suggestive evidence that hospitals responded strongly to the enhanced incentives due to increased demand elasticity. The results suggests greater choice can enhance quality. |
| Keywords: | Demand Estimation; Health Care Reform; Patient Choice |
| JEL: | D12 I11 I18 L13 L30 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9250&r=eur |