nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2013‒03‒02
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Life Satisfaction and Air Quality in Europe By Akay, Alpaslan; Brereton, Finbarr; Cunado, Juncal; Ferreira, Susana; Martinsson, Peter; Moro, Mirko; Ningal, Tine F
  2. Employment Duration and Shifts into Retirement in the EU By Ted Aranki; Corrado Macchiarelli
  3. Labour market uncertainties for the young workforce in France and Germany : Implications for family formation and fertility By Marie-Thérèse Letablier; Anne Salles
  4. Occupational Regulation in the European Legal Market By Mario Pagliero; Edward Timmons
  5. Policies to build research infrastructures in Europe: Following traditions or building new momentum? By Stahlecker, Thomas; Kroll, Henning
  6. A public choice view on the climate and energy policy mix in the EU: How do the emissions trading scheme and support for renewable energies interact? By Gawel, Erik; Strunz, Sebastian; Lehmann, Paul
  7. Subjective Well-Being and Air Quality in Germany By Maike Schmitt
  8. Early Child Care and Child Development: For Whom It Works and Why By Christina Felfe; Rafael Lalive
  9. Properties of knowledge base and firm survival: Evidence from a sample of French manufacturing firms By Alessandra Colombelli; Jackie Krafft; Francesco Quatraro
  10. Impact of energy policy instruments on the estimated level of underlying energy efficiency in the EU residential sector By Massimo Filippini; Lester C Hunt; Jelena Zoric
  11. Market Driven Power Plant Investment Perspectives in Europe: Climate Policy and Technology Scenarios until 2050 in the Model EMELIE-ESY By Andreas Schröder; Thure Traber; Claudia Kemfert
  12. Regional autonomy with regard to innovation policy: A differentiated illustration of the European status quo By Baier, Elisabeth; Kroll, Henning; Zenker, Andrea
  13. The Causal Effect of Deficiency at English on Female Immigrants’ Labour Market Outcomes in the UK By Alfonso Miranda; Yu Zhu
  14. Wealth Distribution within Couples and Financial Decision Making By Markus M. Grabka; Jan Marcus; Eva Sierminska
  15. The Impact on Earnings when Entering Self-Employment: Evidence for Germany By Johannes Martin
  16. The rich, the clean, and the kind - a comprehensive wealth index for cities applied to the case of Germany By Dovern Jonas; Quaas Martin; Wilfried Rickels
  17. Do parents drink their children's welfare? A joint analysis of intra-household allocation of time. By Gianna Claudia Giannelli; Lucia Mangiavacchi; Luca Piccoli
  18. Workplace Heterogeneity and the Rise of West German Wage Inequality By Card, David; Heining, Jörg; Kline, Patrick
  19. The long-run history of income inequality in Denmark: Top incomes from 1870 to 2010 By A. B. Atkinson; J. E. Søgaard
  20. When the Cat is Near, the Mice Won't Play: The Effect of External Examiners in Italian Schools By Marco Bertoni; Giorgio Brunello; Lorenzo Rocco

  1. By: Akay, Alpaslan; Brereton, Finbarr; Cunado, Juncal; Ferreira, Susana; Martinsson, Peter; Moro, Mirko; Ningal, Tine F
    Abstract: Concerns for environmental quality and its impact on people's welfare are fundamental arguments for the adoption of environmental legislation in most countries. In this paper, we analyse the relationship between air quality and subjective well-being in Europe. We use a unique dataset that merges three waves of the European Social Survey with a new dataset on environmental quality including SO2 concentrations and climate in Europe at the regional level. We find a robust negative impact of SO2 concentrations on self-reported life satisfaction.
    Keywords: GIS; European Social Survey; Europe; Life Satisfaction; Subjective Well-Being; SO2 Concentrations; Air Quality
    Date: 2013–02
  2. By: Ted Aranki; Corrado Macchiarelli
    Abstract: The decision to cease working is traditionally influenced by a wide set of socio-economic and environmental variables. In this paper, we study transitions out of work for 26 EU countries over the period 2004-2009 in order to investigate the determinants of retirement based on the Eurostat Survey on Income and Living Conditions (EU-SILC). Applying standard survivor analysis tools to describe exits into retirement, we do not find any significant differences in the patterns into retirement between the average euro area and EU non-euro area countries. Moreover, we find that shifts into retirement have increased during the onset of the 2009 economic and financial crisis. Income, together with flexible working arrangements, is found to be important as regards early retirement decisions, compared to retiring beyond the legal retirement age. Finally, we show that institutional measures (such as, state/health benefits, minimum retirement age) could not be sufficient alone if individuals withdraw earlier from the labour market due to a weakening of their health. Especially, these latter results are of importance for structural and macroeconomic policy, for instance, in increasing the employment of both people and hours worked against the background of population ageing.
    Keywords: Retirement, ageing population, hazard model, duration analysis, EU countries
    JEL: J14 J26 C41
    Date: 2013–02
  3. By: Marie-Thérèse Letablier (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, INED - Institut National d'Etudes Demographiques); Anne Salles (INED - Institut National d'Etudes Demographiques, Université Paris-Sorbonne - UFR Langues Etrangères Appliquées - LEA)
    Abstract: This contribution to the Gusto research project for the European 7th framework programme (Work Package 3 : individual pathways to Flexibility and Sustainability) examines how employment uncertainty during the transition into the labour force differently impacts family formation in Germany and France. Based on a qualitative survey with young men and women in age of being parents, the paper explores how the individuals manage with uncertainty and economic insecurity to finalize their reproduction projects. The paper therefore contributes to an understanding of the contrasted fertility patterns in the two countries. It highlights variations in the perception of insecurity related in particular to differences in gender conventions and their related incidence on family patterns in the two countries. The paper also highlights the contrasted impact of trust in family policies, especially in their ability to secure individuals transitions.
    Keywords: Family formation; fertility decisions; economic insecurity; labour market uncertainty; precariousness
    Date: 2013–01
  4. By: Mario Pagliero (Department of Economics and Public Finance "G. Prato", University of Torino); Edward Timmons (School of Business, Saint Francis University)
    Abstract: In this paper we provide a cross-country comparison of occupational regulation in the European legal market. Although EU growth and assimilation has resulted in some degree of unity in regulation, significant differences remain in licensing restrictions and in the characteristics of the labor force in the legal market of each country. We discuss the potential policy implications of these differences.
    Keywords: occupational licensing, minimum standards, entry regulation, legal market
    JEL: L4 L5 J44 K2
    Date: 2013–02
  5. By: Stahlecker, Thomas; Kroll, Henning
    Abstract: As next to all aspects of research are becoming internationalised at a more and more rapid pace the need for the creation of transnational research infrastructures can no longer be seen as limited to certain fields of natural sciences. Against the background, new policies have been launched with the stated ambition of developing world-class research infrastructures through the creation of critical mass for scientific undertakings across the continent. Thus they seek to contribute to the establishment of a European Research Area in which the fragmentation of scientific resources can be minimised. Against this background, it was the aim of this paper to analyse whether selected policies with the aim to build capacity in this field are likely to contribute to their objective to help foster the emerging European Research Area. Based on a recent representative survey of 598 European research organisations and available data for the 6th and 7th Framework Programmes for Research, evidence was collected to address two main research questions. Firstly, we found that the four largest EU countries (Germany, France, Italy, UK) still dominate both lines of actions aimed at building or extending research infrastructures in Europe (I3 actions and design actions) with a view to budget, project co-ordination and, to a lesser degree, participation. Nonetheless, their dominance seems to subside gradually. In different respects, some smaller Member States have become better integrated in funding schemes of the 7th Framework Programme than they were under the 6th Framework Programme. Beneficiaries in that sense include Denmark, Finland, Norway and Greece. On the one hand, our findings thus illustrate that the aim to overcome fragmentation is clearly reflected in structure of the policy programmes while, on the other hand, they illustrate that a challenging task remains ahead. Secondly, we found that the structure of expenditure and participation in the related actions under both the 6th and the 7th Framework Programme does not yet match well with the factual pattern of research infrastructures in Europe. Partially, that is due to the European Framework Programme's traditional focus on (nuclear) physics and astronomy that continues to take the largest share of all related allocations of funding. Additionally, however, there is evidence of conscious priority setting in new fields such as energy research and life sciences. Finally, the structure of allocations and participation under the 7th Framework Programme has come to reflect the factual pattern of research infrastructures in Europe better than was the case under FP 6, not least due to in increased acknowledgement of the role of the social sciences. In conclusion, the European effort to build and strengthen key research infrastructures seems well on track to build new momentum although it is unlikely to overcome the persistent disparities across the continent in the nearer future. --
    Date: 2013
  6. By: Gawel, Erik; Strunz, Sebastian; Lehmann, Paul
    Abstract: In this paper, we analyze the rationale for an energy policy mix when the European Emissions Trading scheme (ETS) is considered from a public choice perspective. That is, we argue that the economic textbook model of the ETS implausibly assumes 1) efficient policy design and 2) climate protection as the single objective of policy intervention. Contrary to these assumptions, we propose that the ETS originates from a political bargaining game within a context of multiple policy objectives. In particular, the emissions cap is negotiated between regulators and emitters with the emitters' abatement costs as crucial bargaining variable. This public choice view yields striking implications for an optimal policy mix comprising RES supporting policies. Whereas the textbook model implies that the ETS alone provides sufficient climate protection, our analysis suggests that support for renewable energies 1) contributes to a more effective ETS-design and 2) may even increase the overall efficiency of climate and energy policy if other externalities and policy objectives besides climate protection are considered. Thus, our analysis also shows that a public choice view not necessarily entails negative evaluations concerning efficiency and effectiveness of a policy mix. --
    JEL: H23 Q42 Q48 Q58
    Date: 2013
  7. By: Maike Schmitt
    Abstract: This paper analyses the relation between air quality and subjective well-being in Germany. Life Satisfaction (LS) data from the German Socio-Economic Panel Study (SOEP) is connected with daily county pollution in terms of carbon monoxide (CO), nitrogen dioxide (NO2) and ozone (O3) from 1998 to 2008. The assumed microeconometric happiness function is estimated considering individual time invariant effects. It is observed that O3 has a significant negative impact on life satisfaction. The estimated influence of current CO as well as NO2 is not significant. Moreover, I found that LS of people with environmental worries is more affected by ozone pollution. This was not the case for people with a bad health status. Using the marginal rate of substitution between income and air pollution, it is calculated that an increase of one µg/m3 in daily average county O3 has to be compensated by an increase of €11.33 in monthly net household income to hold an average individual's LS constant.
    Keywords: Life satisfaction, air pollution, environmental quality
    Date: 2013
  8. By: Christina Felfe; Rafael Lalive
    Abstract: Many countries are currently expanding access to child care for young children. But are all children equally likely to benefit from such expansions? We address this question by adopting a marginal treatment effects framework. We study the West German setting where high quality center-based care is severely rationed and use within state differences in child care supply as exogenous variation in child care attendance. Data from the German Socio-Economic Panel provides comprehensive information on child development measures along with detailed information on child care, mother-child interactions, and maternal labor supply. Results indicate strong differences in the effects of child care with respect to observed characteristics (children’s age, birth weight and socio-economic background), but less so with respect to unobserved determinants of selection into child care. Underlying mechanisms are a substitution of maternal care with center-based care, an increase in average quality of maternal care, and an increase in maternal earnings.
    Keywords: child care, child development, marginal treatment effects
    JEL: J13 I21 I38
    Date: 2013
  9. By: Alessandra Colombelli (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - Université Nice Sophia Antipolis (UNS) - CNRS : UMR6227); Jackie Krafft (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - Université Nice Sophia Antipolis (UNS) - CNRS : UMR6227); Francesco Quatraro (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - Université Nice Sophia Antipolis (UNS) - CNRS : UMR6227)
    Abstract: The paper analyzes the effects of the properties of firms' knowledge base on the survival likelihood of firms. Drawing upon the analysis of the patterns of co-occurrence of technological classes in patent applications, we derive the coherence, variety and cognitive distance indexes, accounting respectively for technological complementarity, differentiation and (dis)similarity in the firms' patent portfolios. The results of our analysis are in line with the previous literature, showing that innovation enhances the survival likelihood of firms. In addition, we show that the search strategies at work in the development of firms' knowledge base matter in reducing the likelihood of a failure event. Knowledge coherence and variety appear to be positively related to firms' survival, while cognitive distance exerts a negative effect. We conclude that firms able to exploit the accumulated technological competences have more chances to be successful in competing durably in the market arena, and derive some policy implications concerning the role of public intervention in the orientation of search efforts in local contexts.
    Keywords: Knowledge coherence; variety; cognitive distance; firms' survival
    Date: 2013–01–21
  10. By: Massimo Filippini (Centre for Energy Policy and Economics (cepe), ETH Zurich and Department of Economics, University of Lugano, Switzerland.); Lester C Hunt (Surrey Energy Economics Centre (SEEC), University of Surrey, UK.); Jelena Zoric (Centre for Energy Policy and Economics (CEPE), ETH Zurich, Switzerland, and Faculty of Economics, University of Ljubljana, Slovenia.)
    Abstract: The promotion of energy efficiency is seen as one of the top priorities of EU energy policy (EC, 2010). In order to design and implement effective energy policy instruments, it is necessary to have information on energy demand price and income elasticities in addition to sound indicators of energy efficiency. This research combines the approaches taken in energy demand modelling and frontier analysis in order to econometrically estimate the level of energy efficiency for the residential sector in the EU-27 member states for the period 1996 to 2009. The estimates for the energy efficiency confirm that the EU residential sector indeed holds a relatively high potential for energy savings from reduced inefficiency. Therefore, despite the common objective to decrease ‘wasteful’ energy consumption, considerable variation in energy efficiency between the EU member states is established, implying that not all countries have been successful in achieving such energy savings. Furthermore, an attempt is made to evaluate the impact of energy-efficiency measures undertaken in the EU residential sector by introducing an additional set of variables into the model and the results suggest that financial incentives and energy performance standards play an important role in promoting energy efficiency improvements, whereas informative measures do not have a significant impact.
    Keywords: energy efficiency, residential energy demand, stochastic frontier analysis, policy measures.
    JEL: C33 C54 Q41 Q48
    Date: 2013–02
  11. By: Andreas Schröder; Thure Traber; Claudia Kemfert
    Abstract: EMELIE-ESY is a partial equilibrium model with focus on electricity markets. Private investors optimize their generation capacity investment and dispatch over the horizon 2010 to 2050. In the framework of the Energy Modeling Forum 28, we investigate how climate policy regimes affect market developments under different technology availabilities and climate policies on the European power markets. The model projects an only minor increase of power consumption because of higher wholesale prices or energy efficiency current climate policy, and a balanced consumption pathway under ambitious climate policy. These results contrast with findings of POLES and PRIMES models in the reference case that predict unexpected heavy consumption increases by 2050. By contrast, we find no investment into Carbon Capture and Storage (CCS) and a diminishing share of nuclear energy. We find that renewable energy supply extension as projected can sufficiently meet electricity consumption complemented by only few capacity investments in conventional technology.
    Keywords: Electricity markets, investment, climate policy
    Date: 2013
  12. By: Baier, Elisabeth; Kroll, Henning; Zenker, Andrea
    Abstract: The EU wide differences in regional autonomy that we can observe today are based on comparatively recent developments which have occurred in parallel in a number of nations. In general, we found that the conception of a relevant quantitative reference framework for future research is not an easy task. Against this background, the main merit of our analysis may not lie in the overall index as such but in its composite parts. Moreover, our findings have been complemented by an illustration of different national cases to underline that the constitution of regional autonomy is a dynamic process that develops against different backgrounds and in different directions. (...) --
    Date: 2013
  13. By: Alfonso Miranda; Yu Zhu
    Abstract: Using the first wave of the UK Household Longitudinal Survey, we investigate the extent to which deficiency at English as measured by English as Additional Language (EAL), contribute to the immigrant-native wage gap for female employees in the UK, after controlling for age, region of residence, educational attainment and ethnicity. We allow for endogeneity of EAL and correct for bias arising from self-selection into employment using a 3-step estimation procedure. We find very strong evidence of negative selection of EAL into employment. Moreover, we also present evidence of self-selection bias on the wage equation, which if uncorrected, would result in significant underestimation of the causal effect of EAL on the immigrant-native wage gap for women.
    Keywords: English as Additional Language (EAL); immigrant-native wage gap; selectivity bias
    JEL: J15 J31 J61
    Date: 2013–02
  14. By: Markus M. Grabka; Jan Marcus; Eva Sierminska
    Abstract: While most studies on wealth inequality focus on the inequality between households, this paper examines the distribution of wealth within couples. For this purpose, we make use of unique individual level micro data from the German Socio-Economic Panel (SOEP). In married and cohabiting couples, men have, on average, 33,000 Euro more net worth than women. We look at five different sets of factors (demographics, income, labor market, inheritances, financial decision making in the partnership) that might explain this wealth gap. We find that all factors contribute to the explanation of the wealth gap within partnerships, with inheritances and income being particularly relevant. Furthermore, we find that specific characteristics (e.g. self-employment, no migration background, inheritances, high income) that decrease the wealth gap for women increase it for men. For men the respective coefficients are even stronger in absolute terms. When examining intra-partnership financial decision making, we find the gap to be significantly smaller when the female manages the money and larger if the male partner has the last word in financial decisions.
    Keywords: Wealth gap, Wealth inequality, Intra-household allocation, Gender, Financial decision making, SOEP
    JEL: J2 D13 D31 D69 I31
    Date: 2013
  15. By: Johannes Martin
    Abstract: Using data of the German Socio-Economic Panel (GSOEP) earnings differentials between self-employed and wage-employed workers in the German labor market are explored. Previous research based on US data reports lower incomes for entrepreneurs. In contrast to that, the findings of this contribution suggest the opposite for German entrepreneurs. They have considerably higher earnings than wage-employed workers. Furthermore, there is a significant and positive effect on earnings when entering self-employment. This holds true when it is also taken into account that workers usually report a smaller firm size and work longer after beginning an entrepreneurial occupation.
    Keywords: Self-employment, Human Capital, Earnings, GSOEP, Entrepreneurship
    JEL: L26 J31 J32
    Date: 2013
  16. By: Dovern Jonas; Quaas Martin; Wilfried Rickels
    Abstract: We develop a comprehensive wealth index for cities that measures their endowment with environmental, energy, social, human, and economic capital stocks. We apply this index to the 100 largest autonomous cities in Germany. We find that (i) a good economic performance does not need to come at the cost of environmental degradation; (ii) clear regional differences exist between West and East Germany and between North and South Germany; and (iii) social preferences reflected in the comprehensive wealth index account for roughly half of the variation in housing rents, which reflect individual willingness to pay for living in a certain city
    Keywords: comprehensive wealth, city, social preferences
    JEL: Q56 R11
    Date: 2013–02
  17. By: Gianna Claudia Giannelli (Department of Economics-University of Florence and IZA); Lucia Mangiavacchi (Universitat de les Illes Balears); Luca Piccoli (Universitat de les Illes Balears)
    Abstract: The aim of this paper is to investigate whether excessive parental alcohol consumption leads to a reduction of child welfare. To this end, we analyse whether alcohol consumption decreases time spent by parents looking after their children and working. Using the Russia Longitudinal Monitoring Survey, the study focuses on mono-nuclear families with children under fifteen years of age, for whom we estimate a model of intra-household allocation of time. We find that husbands' alcohol consumption has a negative impact on their weekly hours spent doing child care, while no significant effect is observed for mothers' alcohol consumption. We interpret these findings as evidence of a negative impact of fathers' alcohol consumption on child welfare.
    Keywords: Child care, Time allocation, Alcohol consumption, Labor supply, Russia.
    JEL: D1 I1 J13 J22
    Date: 2013
  18. By: Card, David (University of California, Berkeley); Heining, Jörg (Institute for Employment Research (IAB), Nuremberg); Kline, Patrick (University of California, Berkeley)
    Abstract: We study the role of establishment-specific wage premiums in generating recent increases in West German wage inequality. Models with additive fixed effects for workers and establishments are fit in four sub-intervals spanning the period from 1985 to 2009. We show that these models provide a good approximation to the wage structure and can explain nearly all of the dramatic rise in West German wage inequality. Our estimates suggest that the increasing dispersion of West German wages has arisen from a combination of rising heterogeneity between workers, rising dispersion in the wage premiums at different establishments, and increasing assortativeness in the assignment of workers to plants. In contrast, the idiosyncratic job-match component of wage variation is small and stable over time. Decomposing changes in mean wages between different education groups, occupations, and industries, we find that increasing plant-level heterogeneity and rising assortativeness in the assignment of workers to establishments explain a large share of the rise in inequality along all three dimensions.
    Keywords: wage inequality, assortative matching
    JEL: J00 J31 J40
    Date: 2013–02
  19. By: A. B. Atkinson (Nuffield College, Oxford and Institute for New Economic Thinking at the Oxford Martin School); J. E. Søgaard (University of Copenhagen and the Danish Ministry of Finance)
    Abstract: We use historical publications and – for more recent years – micro-data from the income tax and wealth tax returns to estimate the development in income inequality in Denmark over the last 140 years. The paper breaks new ground in treating the specific features of the Danish Tax system and in analysing the implications of the switch from joint to individual taxation. We show that income inequality have declined substantially over the last century with an income share for the top 1 per cent dropping from 27.6 per cent from its peak in 1917 to 6.4 in 2010. However the decline is not simply a secular downward trend consistent with the downward part of a Kuznets curve. Instead there seems to be several distinct phases, interleaved with periods of stability.
    Keywords: Income inequality, Income distribution, Wealth distribution, Top incomes, Taxation, Denmark
    JEL: D31 H2 J3 N3
    Date: 2013–02
  20. By: Marco Bertoni; Giorgio Brunello; Lorenzo Rocco
    Abstract: We use a natural experiment to show that the presence of an external examiner has both a direct and an indirect negative effect on the performance of monitored classes in standardized educational tests. The direct effect is the difference in the test performance between classes of the same school with and without external examiners. The indirect effect is the difference in performance between un-monitored classes in schools with an external examiner and un-monitored classes in schools without external monitoring. We find that the overall effect of having an external examiner in the class is to reduce the proportion of correct answers by 5.5 to 8.5% - depending on the grade and the test - with respect to classes in schools with no external monitor. The direct and indirect effects range between 4.3 and 6.6% and between 1.2 and 1.9% respectively. Using additional supporting evidence, we argue that the negative impact of the presence of an external examiner on measured test scores is due to reduced cheating (by students and/or teachers) rather than to the negative effects of anxiety or distraction from having a stranger in the class.
    Keywords: Education, testing, external monitoring, indirect treatment effects
    JEL: C31 H52 I2
    Date: 2013–02

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