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on Microeconomic European Issues |
| By: | Koen Decancq; Tim Goedemé; Karel Van den Bosch; Josefine Vanhille |
| Abstract: | This paper considers the measurement of poverty in the European Union (EU). Starting from a definition of poverty that is suitable for the European context, a flexible measurement framework is proposed based on the Foster-Greer-Thorbecke class of poverty measures. Three key issues need to be addressed in the measurement of poverty. First, one has to determine the appropriate metric of individual well-being. Second, a cut-off value or threshold needs to be established under which persons are considered to be poor. Third, it is necessary to outline an aggregation procedure to attain a poverty figure for society as a whole. In what follows, we discuss the different answers that are implicit in the poverty measures applied in this book* and the EU’s social strategy. The EU Statistics on Income and Living Conditions (EU-SILC) are introduced as the main data source for poverty analysis in the EU. Finally, an illustration is provided of how the different conceptual choices in the measurement of poverty affect the empirical findings regarding the evolution of poverty between 2005 and 2009. It turns out that the selection of individual well-being metric and the choice between a county-specific and a pan-European poverty line strongly affect observed patterns of poverty in the EU. * Cantillon, B. and Vandenbroucke, F. (eds.), For Better For Worse, For Richer For Poorer. Labour market participation, social redistribution and income poverty in the EU. Oxford: Oxford University Press (forthcoming). |
| Keywords: | Europe, Poverty, FGT, EU-wide poverty, Concept, measurement, EU-SILC, top-bottom coding |
| JEL: | D31 D63 O52 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:hdl:improv:1301&r=eur |
| By: | Nadine Behncke |
| Abstract: | The present paper contributes to the existing literature analyzing the relationship between intra EU trade in services and European Integration by taking into consideration a potential endogeneity bias of the EU dummy and a correct specification of multilateral resistance terms in a panel data set covering the years 2000-2010. Our results offer evidence for a high positive impact of European integration on aggregate services trade between member states while we find a negative effect of monetary integration. However, there exist notable differences at the sector level. According to our results, European integration has positive effects especially for business services, travel and EDV services. Analyzing the evolvement of the sectoral EU-effects over time shows that exports of EDV and OBS have steadily increased due to European integration. |
| Keywords: | Trade in Service, European integration, gravity equation |
| JEL: | F13 F15 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:wsr:wpaper:y:2013:i:109&r=eur |
| By: | Elena Bárcena-Martín (Dpto. Estadística y Econometría, University of Málaga.); Ana I. Moro Egido (Department of Economic Theory and Economic History, University of Granada.) |
| Abstract: | This paper evaluates to what extent differences in population and structural characteristics between countries can explain country differences with respect to the gender effect on poverty. Our study aims to advance research on the structural dimension in the predominantly individually-oriented study field of poverty. To facilitate an approach that integrates individual and structural context dimensions we take advantage of multilevel techniques to test differences among a large number of countries regarding the effect of the gender gap on the risk of being poor, entering into poverty, and exiting from poverty. We use the European Union Survey on Income and Living Conditions for the years 2007-2008. From our analyses, we conclude that structural effects seem to be more relevant than individual effects in explaining country differences with regard to the gender poverty gap. |
| Keywords: | Student Satisfaction, College Graduates, Higher Education, Part-time Student, Employment Status |
| JEL: | E62 H26 |
| Date: | 2013–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:13/02&r=eur |
| By: | Eve Caroli (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole normale supérieure de Paris - ENS Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, LEDa - Laboratoire d'Economie de Dauphine - Université Paris IX - Paris Dauphine, Legos - Laboratoire d'Economie et de Gestion des Organisations de Santé - Université Paris IX - Paris Dauphine); Mathilde Godard (Legos - Laboratoire d'Economie et de Gestion des Organisations de Santé - Université Paris IX - Paris Dauphine, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, LEDa - DIAL - Laboratoire d'Economie de Dauphine - Economie de la mondialisation et du développement - Université Paris IX - Paris Dauphine : EA4404) |
| Abstract: | This paper estimates the causal effect of job insecurity on health in a sample of 22 European countries. We rely on an original instrumental variable approach based on evidence that workers feel more insecure with respect to their job if employed in sectors with a high natural rate of layoff, but relatively less so if they live in a country where employment is strongly protected by the law. Using cross-country data from the 2010 European Working Conditions Survey, we show that when the potential endogeneity of job insecurity is not accounted for, the latter appears to deteriorate almost all health outcomes. When tackling the endogeneity issue, the health-damaging effect of job insecurity is confirmed for a subgroup of health outcomes, namely self-rated health, being sick in the past 12 month, suffering from headaches or eyestrain and depression or anxiety. Job insecurity also appears to deteriorate individual well-being. As for other health variables, the impact of job insecurity appears to be insignificant at conventional levels |
| Keywords: | Job insecurity ; Health ; Instrumental Variables |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:hal-00784777&r=eur |
| By: | Sutherland, Holly; Jara Tamayo, Holguer Xavier |
| Abstract: | This paper provides a description of the latest public release of EUROMOD (version F6.0++), a tax-benefit microsimulation model for the EU. First, we briefly report the process of constructing and updating EUROMOD. We then present indicators for income inequality and risk of poverty using EUROMOD and discuss the main reasons for differences between these and EU-SILC based indicators. We further compare EUROMOD indicators across countries and over time between 2007 and 2010. Finally, we provide estimates of marginal effective tax rates (METR) for all 27 EU countries in order to explore the effect of tax and benefit systems on work incentives at the intensive margin. Throughout we highlight both the potential of EUROMOD as a tool for policy analysis and the caveats that should be borne in mind when using it and interpreting results. |
| Date: | 2013–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:ese:emodwp:em3-13&r=eur |
| By: | Doran, Justin; Jordan, Declan |
| Abstract: | Purpose – The purpose of this paper is to analyse income inequality for a sample of 14 European countries and their composite regions using data from the Cambridge Econometrics regional dataset from 1980 to 2009. The purpose of the paper is to provide insight into the dynamics of regional and national cohesion among the EU-14 countries studied. Design/methodology/approach – Initially, inequality is decomposed using the Theil coefficient into between and within country inequality to assess the extent to which convergence has occurred. To investigate the underlying causes of the changes in inequality, the Theil coefficient is further decomposed to assess the contribution of productivity and employment-population ratio differentials to inequality. Findings – The results indicate that while between-country inequality has declined, within-country inequality has increased by approximately 50 percent. Subsequent decomposition indicates that while productivity levels among regions have converged, the employment-population ratios have diverged substantially driving increasing levels of inequality. This suggests that while EU cohesion policies have reduced productivity inequalities they have had little effect in stimulating convergence of employment-population ratios across regions. Research limitations/implications – The paper argues that national priorities, particularly in the context of the current European economic crisis, are likely to hinder European Union level policies to reduce income inequality at a regional level. This may result in further increases in regional inequality among European regions. Originality/value – This paper's main contribution is to highlight how national convergence can lead to regional divergence being overlooked. The value of the paper is that it provides policy insights, based on empirical evidence, for European cohesion policy. |
| Keywords: | Europe, Convergence, Cohesion Policy |
| JEL: | O1 R10 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:44805&r=eur |
| By: | Louis N. Christofides; Alexandros Polycarpou; Konstantinos Vrachimis |
| Abstract: | We consider and attempt to understand the gender wage gap across 26 European countries, using 2007 data from the European Union Statistics on Income and Living Conditions. The size of the gender wage gap varies considerably across countries, definitions of the gap, and selection-correction mechanisms. Most of the gap cannot be explained by the characteristics available in this data set. Quantile regressions show that, in a number of countries, the wage gap is wider at the top (‘glass ceilings’) and/or at the bottom of the wage distribution (‘sticky floors’). We find larger mean/median gender gaps and more evidence of glass ceilings for full-time full-year employees, suggesting more female disadvantage in ‘better’ jobs. These features may be related to country-specific policies that cannot be evaluated at the individual country level, at a point in time. We use the cross-country variation in the unexplained wage gaps of this larger-than-usual sample of states to explore the influence of (i) country policies that reconcile work and family life and (ii) their wage-setting institutions. We find that country policies and institutions are related to features of their unexplained gender wage gaps in systematic, quantitatively important, ways. |
| Keywords: | Gender wage gap, Selection, Quantiles, Work-family reconciliation, Wage-setting institutions |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ucy:cypeua:02-2013&r=eur |
| By: | Georg Zachmann |
| Abstract: | Being able to transport electricity seamlessly across borders is essential for achieving three major European Union energy policy goals: (1) enabling competition between national energy companies, (2) cost-effective roll-out of renewables,and (3) security of supply. However, neither the market design nor the framework for infrastructure investment proposed by the European Commission is adequate for enabling free flows of electricity within the EU. We propose that first, vertical unbundling needs to be completed. Second, to ensure the reliable operation of the meshed European electricity system a European control centre should be established. Third, a truly European and binding network infrastructure planning process should be established. It should be transparent and open in order to ensure the synchronisation of investment.The outcome should be democratically legitimised. Finally, networks should be joint-funded by all benefiting parties, not just consumers that happen to live in the member state where a particular line is being built. Without a bold step the single energy market project risks falling short in theface of increased penetration of intermittent renewable sources |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:bre:polcon:772&r=eur |
| By: | Aleksandra Parteka; (Gdansk university of Technology, Gdansk, Poland); ; |
| Abstract: | The purpose of this paper is to evaluate the role of trade in productivity growth in a sample of 30 sectors in 25 EU countries in the period of rapid East-West integration. Shift-share analysis is used to show that changes in value added per hour worked in these countries appear to be mainly due to positive developments (rising productivity) within single industries and only to a lower extent result from a shift towards higher productivity activities. Trade is found to be an important positive determinant of intra-industry productivity growth in European countries. Exports and imports alike can be associated with efficiency gains, but intermediate good exchange and trade with New Member States exert a particularly strong influence on intra-industry productivity growth in the EU. |
| Keywords: | productivity, trade, shift share analysis, European Union |
| JEL: | F14 F16 O47 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:gdk:wpaper:1&r=eur |
| By: | Hirsch, Boris (University of Erlangen-Nuremberg); Jahn, Elke J. (Institute for Employment Research (IAB), Nuremberg); Toomet, Ott (University of Tartu); Hochfellner, Daniela (Institute for Employment Research (IAB), Nuremberg) |
| Abstract: | This paper analyzes wage assimilation of ethnic German immigrants to Germany. We use unique administrative data that include a standardized measure of immigrants' pre-migration wage based on occupation, industry, tenure, qualification, and the German wage structure. We find that immigrants experience a substantial initial wage disadvantage compared to natives. During their first 15 years in the host country they manage to close a considerable part of this gap, though assimilation is only partial. A 10% higher pre-migration wage translates into a 1.6% higher wage in Germany when also controlling for educational attainment, thus pointing at partial transferability of human capital acquired in the source country to the host country's labor market. We also find that wage assimilation is significantly accelerated for immigrants with a higher pre-migration wage. Our results are in line with strong complementarities between general skills and host country-specific human capital, in particular proficiency in the host country's language. |
| Keywords: | migration, labor market assimilation, ethnic Germans, transferability of human capital |
| JEL: | J61 J31 J24 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7240&r=eur |
| By: | Michael Gebel |
| Abstract: | While many previous studies on temporary work have found disadvantages for temporary workers as compared to workers with a permanent contract, this study compares temporary work to the alternative of unemployment. Specifically, this paper investigates the potential integrative power of taking up a temporary job for unemployed workers as compared to the counterfactual situation of remaining unemployed and searching for another job. Applying a dynamic propensity-score matching approach based on British, (West and East) German, and Swiss panel data during the period of 1991–2009, it is shown that taking up a temporary job increases the employment chances during the subsequent five years in (West and East) Germany and the UK. Moreover, the chances of having a permanent contract remain higher and a persistent wage premium can be found during the subsequent five years of the career. Advantages of taking up a temporary job are slightly stronger in West Germany compared to East Germany, where temporary contracts are often based on public job creation measures with limited integration potential. Neither long-run advantages nor disadvantages of taking up a temporary job can be found in the case of the flexible Swiss labour market. |
| JEL: | C14 C41 J41 J60 J64 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp543&r=eur |
| By: | Oxelheim, Lars (Research Institute of Industrial Economics (IFN)); Randoy, Trond (University of Agder) |
| Abstract: | This study examines globalization of monitoring practices by focusing on how American (U.S.) influences on European firms impact the dismissal risk for these firms' CEOs. Specifically, we argue that the stronger short term orientation of the American corporate governance system increase the dismissal performance sensitivity faced by European CEOs, indirectly and directly. The former materializes via European firms cross-listing on U.S. exchanges, the latter results from European firms hiring U.S. independent board members. Both influences are expected to result in increased dismissal performance sensitivity. Based on data from the 250 largest European publicly traded firms we find a significant increase in the dismissal sensitivity of poorly performing companies with American board members and a support for migration of American executive pay practice. However, no significant increase in dismissal performance sensitivity was identified from U.S. cross-listing. In line with our agency theory based prediction, this indicates an institutional contagion driven by the presence of U.S. board members on European corporate boards. To policy makers the message is that internationalization of boards should not be banned or restricted, since it provides owners with more options to influence the corporate governance of the firm. |
| Keywords: | Executive pay; CEO dismissal; Performance sensitivity; Foreign board membership |
| JEL: | G15 G18 G32 M14 M16 M52 |
| Date: | 2013–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0958&r=eur |
| By: | Bredtmann, Julia; Otten, Sebastian |
| Abstract: | Using data from the European Social Survey 2002-2011 covering immigrants in 26 European countries, this paper analyzes the impact of source- and host-country characteristics on female immigrant labor supply. We find that immigrant women’s labor supply in their host country is positively associated with the labor force participation rate in their source country, which serves as a proxy for the country’s preferences and beliefs regarding women’s roles. The effect of this cultural proxy on the labor supply of immigrant women is robust to controlling for spousal, parental, and a variety of source-country characteristics. This result suggests that the culture and norms of their source country play an important role for immigrant women’s labor supply. Moreover, we find evidence for a strong positive correlation between the host-country female labor force participation rate and female immigrant labor supply, suggesting that immigrant women assimilate to the work behavior of natives. |
| Keywords: | female labor force participation, immigration, cultural transmission |
| JEL: | J16 J22 J61 |
| Date: | 2013–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:44544&r=eur |
| By: | O'Donoghue, Cathal (Teagasc Rural Economy Research Centre); Loughrey, Jason (Teagasc Rural Economy Research Centre); Morrissey, Karyn (University of Liverpool) |
| Abstract: | In this paper we attempted to chart the impact of the early part of Ireland's economic crisis from 2008-2010 on the distribution of income. In order to decompose the impact of components of income, we utilised a microsimulation methodology the EU-SILC User Database. In order to do this we had to develop a simulation based methodology to disaggregate the main 6 benefit variables in the EU-SILC into 17 used in our tax-benefit model. Validating, our results were positive, giving us confidence in our methodology. We utilised the framework to model changes to the level of income inequality from the period just before the crisis in 2004 to after the crisis in 2010. In terms of the impact of the economic crisis, we found that the income inequality fell in the early part of the crisis, but rose steadily and then rapidly. Much of this change was due to rising inequality of market incomes, (even when discounting unemployment). This was due to the differential effect of the downturn on different sectors where some sectors such as the construction and public sectors were significantly hit, while the international traded sectors have been relatively immune from the downturn and have seen continued growth. The impact of the tax-benefit system has been to mitigate this upward pressure, with a gradual rise in the redistributive effect of the tax-benefit system driven by an increase in demand on the benefits side and increased progressivity on the tax side. |
| Keywords: | inequality, microsimulation, macro-economic change |
| JEL: | I38 C53 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7242&r=eur |
| By: | Laura Bartiloro (Banca d'Italia); Cristiana Rampazzi (Banca d'Italia) |
| Abstract: | This paper investigates trends in Italian households’ saving and wealth in the last twenty years, with a special emphasis on the period immediately following the financial crisis in 2008. The analysis is based on data from the Italian Survey on Household Income and Wealth (1991-2010). The crisis has intensified the trends already under way, as confirmed by the further decline in the saving rate and the deterioration in the financial situation of low-income households, young people and tenants. Overall inequality in wealth distribution has increased. Poverty indicators based on income and wealth summarize these developments: in 2010, nine per cent of Italian households were on a low income and in the event of job loss, had sufficient financial asset to survive at the poverty line for barely six months. This percentage increases to 15 per cent for young people and to 26 per cent for tenants. |
| Keywords: | saving rate, households wealth, poverty, micro-data |
| JEL: | D12 E21 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_148_13&r=eur |
| By: | Nicole Bosch; Bas ter Weel |
| Abstract: | This paper analyses changes in job opportunities of older workers in the Netherlands in the period 1996-2010. The standard human capital model predicts that, as a result of human capital obsolescence, mobility becomes more costly when workers become older. We measure and interpret how changing job opportunities across 96 occupations affect different age and skill groups. Older workers end up in shrinking occupations, in occupations with a lower share of high-skilled workers, in occupations facing a higher threat of offshoring tasks abroad, more focus on routine-intensive tasks and less rewarding job content. This process is not only observed for the oldest group of workers, but for workers aged 40 and above. Observing older workers in declining occupations is to a large extent a market outcome, but declining job opportunities in terms of less satisfying working conditions and job tasks and content could potentially raise incentives to retire early. |
| JEL: | J24 J60 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:234&r=eur |
| By: | Bargain, Olivier (University of Aix-Marseille II); Dolls, Mathias (IZA); Neumann, Dirk (University of Cologne); Peichl, Andreas (IZA); Siegloch, Sebastian (IZA) |
| Abstract: | We analyze to which extent social inequality aversion differs across nations when control- ling for actual country differences in labor supply responses. Towards this aim, we estimate labor supply elasticities at both extensive and intensive margins for 17 EU countries and the US. Using the same data, inequality aversion is measured as the degree of redistribution implicit in current tax-benefit systems, when these systems are deemed optimal. We find relatively small differences in labor supply elasticities across countries. However, this changes the cross-country ranking in inequality aversion compared to scenarios following the standard approach of using uniform elasticities. Differences in redistributive views are significant between three groups of nations. Labor supply responses are systematically larger at the extensive margin and often larger for the lowest earnings groups, exacerbating the implicit Rawlsian views for countries with traditional social assistance programs. Given the possibility that labor supply responsiveness was underestimated at the time these programs were implemented, we show that such wrong perceptions would lead to less pronounced and much more similar levels of inequality aversion. |
| Keywords: | social preferences, redistribution, optimal income taxation, labor supply |
| JEL: | H11 H21 D63 C63 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7215&r=eur |
| By: | Björn Alecke; Claudia Burgard; Timo Mitze |
| Abstract: | This paper investigates the effects of tuition fees on the university enrollment and location decision of high school graduates in Germany. After a Federal Constitutional Court decision in 2005, 7 out of 16 German federal states introduced tuition fees for higher education. In the empirical analysis, we use the variation over time and across regions in this institutional change in order to isolate the causal effect of tuition fees on student enrollment and migration. Controlling for a range of regional- and university-specific effects, our results from Difference-in-Differences estimations show that there is generally no effect of tuition fees on internal enrollment rates. However, we find a redirecting effect on first-year students‘ migratory behavior as indicated by a signicant drop in the gross in-migration rates in fee-charging states. Further, our results point at a stronger migration response of male students, which, however, can mainly be attributed to a “border effect”. That is, interregional migration flows of male students are redirected from fee-charging universities to those universities that are geographically close by while being located in a non-charging neighboring state. Controlling for these border effects, the relocating trend in long-distance migration of university freshmen does not show any particular gender differences. |
| Keywords: | Tuition fees; gender differences; higher education; student migration; policy evaluation; Difference-in-Differences |
| JEL: | D04 I23 J16 R23 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0404&r=eur |
| By: | Davide Fantino (Bank of Italy); Giusy Cannone (Polytechnic University of Turin) |
| Abstract: | This paper provides some empirical evidence of the impact of two policy measures designed to support innovation in small and medium firms in an Italian region, both financed using the European Structural Funds but managed at regional level. The first measure was a concessional loan to promote the introduction of innovative plant, machinery and equipment, while the second was a free grant to stimulate research activity by firms. The programmes were effective in stimulating targeted investments (respectively tangible and intangible), but the benefits were short-lived, although to different degrees. The impact was stronger for the smallest firms and, in the case of the second measure, for firms with a low credit rating. |
| Keywords: | R&D, public policy, evaluation |
| JEL: | O32 O38 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_902_13&r=eur |
| By: | Janueleviciute, Jurgita (Department of Economics, University of Bergen); Askildsen, Jan Erik (UniRokkansenteret); Kaarbøe, Oddvar (Department of Economics, University of Bergen); Siciliani, Luigi (Department of Economics and Related Studies, University of York); Sutton, Matt (Centre for Health Economics, University of Manchester) |
| Abstract: | Many publicly funded health systems use prospective activity-based financing to increase hospital production and efficiency. The aim of this study is to investigate whether price changes for different treatments affect the mix of activity provided by hospitals. We exploit variations in prices created by changes in the national average treatment cost per DRG offered to Norwegian hospitals over a period of five years (2003-2007). We use data from the Norwegian Patient Register, containing individual-level information on age, gender, type of treatment, diagnosis, number of co-morbidities and the national average treatment costs per DRG. To examine the changes in activity within the DRGs over time, fixed-effect models are applied. The results suggest that a ten-percent increase in price leads to a rise of one percent in the number of patients treated. This increase is mainly due to more admission of emergency patients, rather than to increases in elective activity. |
| Keywords: | Hospitals; DRGs; prices; activity |
| JEL: | H42 I11 |
| Date: | 2013–03–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bergec:2012_015&r=eur |