nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2013‒01‒12
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Measuring Vulnerability to Poverty Using Long-Term Panel Data By Landau, Katja; Klasen, Stephan; Zucchini, Walter
  2. What is the impact of educational systems on social mobility across Europe? A comparative approach By Pedro Abrantes; Manuel Abrantes
  3. The geography of European low-cost airline networks: A contemporary analysis By Frédéric Dobruszkes
  4. Life (Dis)satisfaction and the Decision to Migrate: Evidence from Central and Eastern Europe By Vladimir Otrachshenko; Olga Popova
  5. Fiscal Union in Europe? Efficiency, Equity and Stabilizing Effects of an EU-Wide Income Tax By Neumann, Dirk; Bargain, Olivier; Dolls, Mathias; Fuest, Clemens; Peichl, Andreas
  6. The aims of lifelong learning: Age-related effects of training on wages and job security By Lang, Julia
  7. Welfare Analysis of Regulating Mobile Termination Rates in the UK with an Application to the Orange/T-Mobile Merger By David Harbord; Steffen Hoernig
  8. Economic and spatial modelling for estimating supply of perennial crops’ biomass in Poland By P. Mathiou; Stelios Rozakis; Rafal Pudelko; A. Faber
  9. Give them a break! Did activation of young welfare recipients overshoot in Germany? (A regression discontinuity analysis) By Wolff, Joachim; Nivorozhkin, Anton
  10. Corporate Taxation and Productivity Catch-Up: Evidence from 11 European Countries By Norman Gemmell; Richard Kneller; Danny McGowan; Ismael Sanz
  11. Evaluating greening farm policies: A structural model for assessing agri-environmental subsidies By Marita Laukkanen; Céline Nauges
  12. The Effect of Education on Fertility: Evidence from a Compulsory Schooling Reform By Cygan-Rehm, Kamila; Mäder, Miriam
  13. Estimating Heterogeneous Returns to Education in Germany via Conditional Second Moments By Saniter, Nils
  14. Mainstreaming Innovation in Europe. Findings on Employee Innovation and Workplace Learning from Belgium By De Spiegelaere, Stan; Van Gyes , Guy; Van Hootegem, Geert
  15. The Determinants of Outward Processing: Evidence from Offshoring Intermediates by the European Union By Dimitra Petropoulou; Xavier Cirera; Dirk Willenbockel
  16. Identifying the determinants of downward wage rigidity: some methodological considerations and new empirical evidence By Daniel Dias; Carlos Robalo Marques; Fernando Martins
  17. Firm productivity and institutional quality. Evidence from Italian industry By A. Lasagni; A. Nifo; G. Vecchione
  18. Migration and unemployment duration in OECD countries: A dynamic panel analysis By Vincent Fromentin
  19. (Endogenous) occupational choices and job satisfaction among recent PhD recipients: evidence from Catalonia By Antonio Di Paolo
  20. Cash-on-Hand and the Duration of Job Search: Quasi-Experimental Evidence from Norway. By Basten, Christoph; Fagereng, Andreas; Telle, Kjetil

  1. By: Landau, Katja; Klasen, Stephan; Zucchini, Walter
    Abstract: We investigate the accuracy of ex ante assessments of vulnerability to poverty using cross-sectional data and panel data. We use long-term panel data from Germany and apply different 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. --
    JEL: C23 C52 I32
    Date: 2012
  2. By: Pedro Abrantes; Manuel Abrantes
    Abstract: Education is reasonably expected to enhance intergenerational social mobility. However, the extent to which educational systems foster or otherwise constrain social mobility remains controversial. In this paper, data from the European Social Survey covering 22 countries is analysed in order to assess social mobility in the second half of the 20th Century. Variation across five cohesive regional clusters is examined in detail. Results confirm increasing rates of social mobility in Europe and their close relation to massive structural shifts. The erosion of the education-occupation linkage presents a current threat to this trend. Considering formal credentials only, the most equalitarian educational systems are to be found in the United Kingdom and Ireland, but their ability to allocate individuals in the occupational structure is lower than in the other regions. Scandinavian systems show higher chances of social mobility through education, while Mediterranean systems present lower fluidity rates in both the background-education link (like Eastern European countries) and the education-occupation link (like the UK & Ireland). Gender and migration are identified as key factors to explain these differences.
    Keywords: education, educational systems, gender, migration, social mobility
    JEL: I24 J21 J70 Y10 Z13
    Date: 2012–03
  3. By: Frédéric Dobruszkes
    Abstract: Low-cost airlines (LCAs) have become essential actors supplying nationwide and continental air services.This paper focuses on the European case and investigates how the LCA spatial strategy hasevolved since the last available comprehensive analysis in 2004. Using comprehensive data, the analysisis conducted at three levels: global, cities and networks. It shows that LCAs now represent 31% ofintra-European airline seats. Although LCA business has expanded to Central-East Europe, Morocco,and a few remote areas, it remains mainly focused on the intra-Western market. In general, LCAs servelarge cities and tourist destinations. The use of secondary, regional airports is put into perspective. Servicevolatility is low at the city level but significant at the inter-city level. Average distance hasincreased, but most flights are short-haul. LCAs play an important role in launching new routes, thusdiversifying the European airline network, and in increasing frontal competition with traditional airlineson pre-existing routes. The niche markets are common in terms of routes but are rather limitedin terms of seats supplied. Actually, the main specificity of the largest LCAs is the provision of flightsthat do not serve the home country. A typology of networks demonstrates that there is no a singleEuropean low-cost model.
    Keywords: Low-cost airlines; Low-fare airlines; No-frills airlines; Air transport; Airline networks; Europe
    Date: 2013
  4. By: Vladimir Otrachshenko; Olga Popova
    Abstract: This paper provides empirical evidence of the impact of life satisfaction on the individual intention to migrate. The impacts of individual characteristics and of country macroeconomic variables on the intention to migrate are analyzed jointly. Differently from other studies, we allow for life satisfaction to serve as a mediator between macro-economic variables and the intention to migrate. Using the Eurobarometer Survey for 27 Central Eastern European (CEE) and Western European (non-CEE) countries, we find that people have a higher intention to migrate when dissatisfied with life. The socio-economic variables and macroeconomic conditions have an effect on the intention to migrate indirectly through life satisfaction. The impact of life satisfaction on the intention to migrate for middle-aged individuals with past experience of migration, low level of education, and with a low or average income from urban areas is higher in CEE countries than in non-CEE countries. JEL codes: I31, J61
    Keywords: life satisfaction, migration, decision making
    Date: 2012
  5. By: Neumann, Dirk; Bargain, Olivier; Dolls, Mathias; Fuest, Clemens; Peichl, Andreas
    Abstract: One central lesson of the sovereign debt crisis is that the Eurozone (and the EU) needs institutional reform. Many observers argue that the monetary union should be complemented by a fiscal union . In this paper we provide the first quantitative analysis of important economic effects of an EU income tax. Using the European tax-benefit calculator EUROMOD, we simulate detailed individual budget curves in order to estimate an average EU tax system . Three key issues are analyzed: firstly, we assess the direct distributional implications of an EU tax (partly) replacing national tax systems. Applying different voting schemes, we especially investigate whether such a step could find political support in each country and the EU as a whole. Secondly, by using behavioral simulation techniques we analyze the impact of introducing a common tax on economic efficiency and adjust the distributional effects accordingly. Thirdly, we investigate the potential of an EU income tax to act as an automatic fiscal stabilizer in the event of an asymmetric shock. We derive crucial policy implications from our simulation exercise for the reform of the Eurozone and shed some light on a very important set of questions: How would further fiscal integration economically affect different households in the different member states? How would it affect automatic stabilizers in the EU? --
    JEL: H20 H31 J22
    Date: 2012
  6. By: Lang, Julia
    Abstract: This paper reports 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. --
    JEL: J24 J28 J31
    Date: 2012
  7. By: David Harbord; Steffen Hoernig
    Abstract: We present a calibrated model of the UK mobile telephony market with four mobile networks; calls to and from the fixed network; network-based price discrimination; and call externalities. Our results show that reducing mobile termination rates broadly in line with the recent European Commission Recommendation to either "pure long-run incremental cost"; reciprocal termination charges with fixed networks; or "Bill & Keep" (i.e. zero termination rates), increases social welfare, consumer surplus and networks' profits. Depending on the strength of call externalities, social welfare may increase by as much as £ 990 million to £ 4.5 billion per year, with Bill & Keep leading to the highest increase in welfare. We also apply the model to estimate the welfare effects of the 2010 merger between Orange and T-Mobile under different scenarios concerning MTRs, and predict that consumer surplus decreases strongly.
    Keywords: telecommunications, regulation, mobile termination rates, network effects, welfare, calibration; telecommunications, regulation, mobile termination rates, network effects, welfare, calibration JEL codes: D43, L13, L51, L96
    Date: 2012
  8. By: P. Mathiou (Department of Agricultural Economics and Development Agricultural University of Athens, Greece "); Stelios Rozakis (Department of Agricultural Economics and Rural Development, Agricultural University of Athens, Iera Odos 75, Athens 11855, Greece); Rafal Pudelko (Department of Agrometeorology and Applied Informatics, Institute of Soil Sciences and Plant Cultivation (IUNG), State Research Institute, Czartoryskich 8, 24-100 Pulawy, Poland); A. Faber (Department of Agrometeorology and Applied Informatics, Institute of Soil Sciences and Plant Cultivation (IUNG), State Research Institute, Czartoryskich 8, 24-100 Pulawy, Poland)
    Abstract: Among measures to promote renewable energy the electricity feed-in tariff scheme is extensively used in many countries to meet the goals set by governments related to energy independence and mitigation of greenhouse effect. In this paper, an agricultural supply spatial model is run to estimate biomass plantations adoption by Polish farmers at the municipal level. Detailed spatial and agronomic information is used limiting potential areas to the less fertile land, focusing on certain land classes where research undertaken by IUNG has provided reliable estimates for willow and miscanthus cultivation needs and production yields. Decisions on multi-year land use for dedicated energy plantations replacing conventional annual crops such as rye and triticale are driven by discounted cash flow analysis. An appropriate mathematical model is built in order to estimate biomass for energy supply for a range of hypothetical prices offered by coal fueled power plants. Parametric optimization results are shown in supply curve form in order to determine efficient price levels. Results are illustrated also in terms of crop acreages as well as spatial distribution at the national level in NUTS5 resolution
    Keywords: Willow, Miscanthus, Cost analysis, Mathematical programming, Biomass Supply, Feed-in tariffs, Spatial analysis
    JEL: Q16 Q41
    Date: 2012
  9. By: Wolff, Joachim; Nivorozhkin, Anton
    Abstract: In Germany, due to special rules 15- to 24-year-old welfare recipients, registered with Public Employment Office, are highly targeted by mandatory activation policies. This paper investigates the effects of the special rules in terms of enhancing the (re-)employment probability, increasing earnings and reducing benefit dependency of targeted people in East and West Germany in the short- and the long-run. Using registry dataset of the inflow into unemployment and welfare over the period October 2005 to January 2006 the paper exploits the age related eligibility rule to identify a suitable counterfactual using a regression discontinuity design. Our estimates imply zero or negative effects of targeting for selected population subgroups. A possible explanation to our finding is that an excessive targeting of young welfare recipients by active labour market programmes may lead to a low quality matches between programmes and participants. --
    JEL: C13 I38 J68
    Date: 2012
  10. By: Norman Gemmell; Richard Kneller; Danny McGowan; Ismael Sanz
    Abstract: Firms that lay far behind the technological frontier have the most to gain from imitating the technology or management practices of others. That some firms converge relatively slowly to the productivity frontier suggests the existence of factors that cause them to under-invest in their productivity. In this paper we explore whether higher rates of corporate taxation affect firm productivity convergence because they reduce the after tax returns to productivity enhancing investments for small firms. Using data for 11 European countries we find evidence for such an effect; productivity growth in small firms is slower the higher are high corporate tax rates. Our results are robust to the use of instrumental variable and panel data techniques with quantitatively similar effects found from a natural experiment following the German tax reforms in 2001.
    Keywords: Productivity, taxation, convergence JEL classification: D24, H25, L11, O31
  11. By: Marita Laukkanen; Céline Nauges
    Abstract: One quarter of the agricultural area in the European Union is registered in agrienvironmental programs. Despite the prevalence of such programs and increasing demands for environmental quality in the European Union, ex-post assessments of program benefits are rare. This study uses a structural econometric model to evaluate the impacts of agri-environmental payments provided through the Finnish Agri-Environmental Program, whose primary goal is to reduce nutrient pollution from agricultural land. Drawing on a representative sample of individual grain farms, the research quantifies the effects of agri-environmental payments on farmers? decisions on the use of agri-chemical inputs and on the allocation of land to grain production and set-aside (fallow) over the period 1996?2005. The effects of program payments are ascertained based on exogenous variation in payment rates across regions and over time. We find that the agri-environmental payments have reduced fertilizer inputs but that this impact has been modest. In terms of land allocation, the impact has been counterproductive in that the payments have slightly increased the grain area and reduced set-aside. To quantify the impact of agri-environmental payments on nutrient loading ? the environmental outcome of interest ? we then combine the predicted land allocation and fertilizer use with environmental production functions. Overall, we estimate that the payments have reduced the damage costs associated with nutrient pollution from grain farming by 11 to 12 percent.
    Keywords: agri-environmental programs, payments for ecosystem services, farm subsidies, structural models, panel data, policy evaluation, nutrient pollution, cost-benefit analysis
    JEL: Q58 Q28 Q53 Q18 H23
    Date: 2012–11–04
  12. By: Cygan-Rehm, Kamila; Mäder, Miriam
    Abstract: This study analyzes the effect of education on the number of children, childlessness, and the timing of the first birth. We use exogenous variation from a mandatory reform to compulsory schooling in West Germany to deal with the endogeneity of schooling. In contrast to studies for other developed countries, we find a significant negative effect of education on completed fertility. We attribute this finding to the particularly high opportunity costs of child-rearing in Germany. --
    JEL: I21 J13 J24
    Date: 2012
  13. By: Saniter, Nils
    Abstract: In this paper I investigate the causal returns to education for different educational groups in Germany. I circumvent potential drawbacks of IV by employing a new method by Klein and Vella (2010). In this approach identification is not based on instruments but on the presence of heteroskedasticity. Using data from the German Socio-Economic Panel Study (SOEP) I find that the causal return to education is 8.5% for the entire sample, 2% for graduates from the basic school track and 11% for graduates from a higher school track. Across these groups the endogeneity bias in simple OLS regressions varies significantly. This confirms recent evidence in the literature on Germany. Various robustness checks support my findings. --
    JEL: C30 I21 J31
    Date: 2012
  14. By: De Spiegelaere, Stan; Van Gyes , Guy; Van Hootegem, Geert
    Abstract: The EU is striving for an ‘Innovative Union’. Various case studies already hinted that the involvement of various types of employees is crucial for the organisational innovativeness. Using data from a large scale Belgian employee level survey in five industries, this article focuses on the question how ‘mainstream’ innovation is in Belgian firms and how this coincides with forms of workplace learning. Innovation mainstreaming here refers to the inclusion of various occupational groups in the innovation process. Findings suggest that innovation in most sectors, is an ‘elite driven’ process with only a limited involvement of lower level employees. Moreover, genuine employee-driven innovations are a rarity. Nevertheless, the research also finds that workplace learning (job training and in-work learning opportunities) are potentially strong levers for employee innovation for all types of employees. Specifically providing in-work learning opportunities to technical workers could make innovation more mainstream in Europe.
    Keywords: Employee Driven Innovation; Innovation Mainstreaming; Innovative Work Behaviour; Workplace Learning
    JEL: D23 D83 D8 O31
    Date: 2012–12
  15. By: Dimitra Petropoulou (Department of Economics, University of Sussex, Brighton, United Kingdom); Xavier Cirera (Institute of Development Studies, University of Sussex, Brighton, United Kingdom); Dirk Willenbockel (Institute of Development Studies, University of Sussex, Brighton, United Kingdom)
    Abstract: This paper analyses the determinants of outward processing (OP) trade; specifically, imports of intermediates subsequent to processing abroad. A model where firms choose between OP and importing intermediates directly from a third country (generic offshoring, GO) predicts higher tariffs, lower monitoring costs and higher quality make OP more likely, while better institutions and rule of law abroad lower contractual breakdown risk under GO making OP less likely. Analysis of EU trade data from 2002 to 2008 emphasizes proximity, quality differentiation and weaker rule of law as OP determinants. Results suggest relationship-specific investments and monitoring under OP may offset contractual uncertainty.
    Keywords: Outward processing, offshoring, European Union
    JEL: F14 D23 L23
    Date: 2013–01
  16. By: Daniel Dias; Carlos Robalo Marques; Fernando Martins
    Abstract: This paper discusses the identification of the determinants of downward wage rigidity and provides new empirical evidence concerning its importance in Europe. It is shown that the models estimated so far in the literature suffer from econometric problems that prevent the contributions of those determinants to be correctly identified or precisely estimated. An empirical exercise, along the lines discussed in this paper, using survey data for 15 European Union countries, shows that the results may significantly differ from the ones previously obtained in the literature. Together, the theoretical considerations and the estimated results suggest that new empirical evidence is required before definite conclusions on the determinants of downward nominal or real wage rigidity can be drawn.
    JEL: C31 J31 J50
    Date: 2012
  17. By: A. Lasagni; A. Nifo; G. Vecchione
    Abstract: This paper aims at contributing to the debate on the determinants of differentials in firms’ productivity. The case of Italy looks particularly interesting, since it is characterized by a substantial and long-lasting productivity gap of industrial firms located in the Southern regions with respect to the rest of the country. We test the hypothesis that the macro factors, particularly the quality of institutions, play a central role in explaining Italian firms’ productivity. Consistent with previous studies, our results show that institutional quality is one of the basic determinants of the observed TFP differentials across firms located in different Italian regions.
    Keywords: productivity, macroeconomic factors, institutional quality, differentials
    JEL: C33 D24 L60 O43 R11
    Date: 2012
  18. By: Vincent Fromentin (CERFIGE, Université de Lorraine and CREA, University of Luxembourg)
    Abstract: This paper examines whether or not immigration has a positive influence on the duration of unemployment, in a macroeconomic perspective. The integration of immigrants into the labor market is a recurrent topic in literature on the economic consequences of immigration, and it is a central concern to policy makers aiming to design policies. However, to our knowledge, few researchers have studied the impact of immigration on the duration of unemployment. By using panel estimations (OLS and GMM), we show that migration seems to influence short– term unemployment positively and long-term unemployment negatively, for 14 OECD destination countries between 1975 and 2008.
    Keywords: International migration, unemployment duration, OECD countries, panel data
    Date: 2012
  19. By: Antonio Di Paolo (AQR – IREA, University of Barcelona, Avda Diagonal, 690, 08034 Barcelona)
    Abstract: Drawing on data from two successive cohorts of PhD graduates, this paper analyses differences in overall job satisfaction and specific job domain satisfaction among PhDs employed in different sectors four years after completing their doctorate degrees. Covariate-adjusted job satisfaction differentials suggest that, compared to faculty members, PhD holders employed outside traditional academic and research jobs are more satisfied with the pecuniary facets of their work (principally, because of higher earnings), but significantly less satisfied with the content of their job and with how well the job matches their skills (and, in the case of public sector workers, with their prospects of promotion). The evidence regarding the overall job satisfaction of the PhD holders indicates that working in the public or private sectors is associated with less work well-being, which cannot be fully compensated by the better pecuniary facets of the job. It also appears that being employed in academia or in research centres provides almost the same perceived degree of satisfaction with the job and with its four specific domains. We also take into account the endogenous sorting of PhD holders into different occupations based on latent personal traits that might be related to job satisfaction. The selectivity-corrected job satisfaction differentials reveal the importance of self-selection based on unobservable traits, and confirm the existence of a certain penalisation for working in occupations other than academia or research, which is especially marked in the case of satisfaction with job content and job-skills match. The paper presents additional interesting evidence about the determinants of occupational choice among PhD holders, highlighting the relevance of certain academic attributes (especially PhD funding and pre-and-post-doc research mobility) in affecting the likelihood of being employed in academia, in a research centre or in other public or private sector job four years after completing their doctorate programme.
    Keywords: Job Satisfaction, Job Domain Satisfaction, Occupational Choices, Self-Selection, PhD Holders, Catalonia
    JEL: J24 J28 J45 C31 C35
    Date: 2012–12
  20. By: Basten, Christoph; Fagereng, Andreas; Telle, Kjetil
    Abstract: We identify the causal effect of lump-sum severance payments on non-employment duration in Norway by exploiting a discontinuity in eligibility at age 50. We find that a severance payment worth 1.2 months' earnings at the median lowers the fraction re-employed after a year by six percentage points. Data on household wealth enable us to verify that the effect is decreasing in prior wealth, which favors an interpretation as liquidity constraints over the alternative of mental accounting. Finding liquidity constraints in Norway, despite its equitable wealth distribution and generous welfare state, means they are likely to exist also in other countries. --
    JEL: C41 E24 J65
    Date: 2012

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