nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2013‒04‒06
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Environmental policy and directed technological change: evidence from the European carbon maket By Rafael Calel; Antoine Dechezleprêtre
  2. Migration Strategies of the Crisis-Stricken Youth in an Enlarged European Union By Kahanec, Martin; Fabo, Brian
  3. Assessing the effectiveness of the EU Emissions Trading System By Tim Laing; Misato Sato; Michael Grubb; Claudia Comberti
  4. The Effect of Migration and Spatial Connectivity on Regional Skill Endowments across Europe: 1988-2010 By Tani, Massimiliano; Manuguerra, Maurizio
  5. Immigration and Labor Productivity: New Empirical Evidence for Spain By Nicodemo, Catia
  6. Returning Home at Times of Trouble? Return Migration of EU Enlargement Migrants during the Crisis By Anzelika Zaiceva; Klaus F. Zimmermann
  7. Factor Components of Inequality: A Cross-Country Study By Cecilia García-Peñalosa; Elsa Orgiazzi
  8. Best Available Techniques (BAT) Reference Document for Iron and Steel Production: Industrial Emissions Directive 2010/75/EU: Integrated Pollution Prevention and Control By Serge Roudier; Luis Delgado Sancho; Rainer Remus; Miguel Aguado-Monsonet
  9. What Happens to the Careers of European Workers When Immigrants "Take Their Jobs"? By Cattaneo, Cristina; Fiorio, Carlo V.; Peri, Giovanni
  10. Steady-State Labor Supply Elasticities: An International Comparison By Olivier Bargain; Andreas Peichl
  11. Global Supply Chains at Work in Central and Eastern European Countries:Impact of FDI on export restructuring and productivity growth By Jože Damijan; Črt Kostevc; Matija Rojec
  12. The Impact of Energy Performance on Single-Family Home Sales Prices in Sweden By Högberg, Lovisa
  13. The Role of extensive margins of exports in The Great Export Recovery in Germany, 2009/2010 By Joachim Wagner
  14. Who will win the green race? In search of environmental competitiveness and innovation By Sam Fankhauser; Alex Bowen; Raphael Calel; Antoine Dechezleprêtre; David Grover; James Rydge; Misato Sato
  15. Looking for Free-riding: Energy Efficiency Incentives and Italian Homeowners By Anna Alberini; Andrea Bigano; Marco Boeri
  16. Career progression, economic downturns and skills By Jerome Adda; Christian Dustmann; Costas Meghir; Jean-Marc Robin
  17. Factors behind international relocation and changes in production geography in the European automobile components industry By Lampón, Jesús F.; Lago-Peñas, Santiago
  18. Adoption of energy-efficiency measures in SMEs - An empirical analysis based on energy audit data By Tobias Fleitera; Joachim Schleich; Ployplearn Ravivanpong
  19. Life-cycle effects of age at school start By Fredriksson, Peter; Öckert, Björn
  20. The Role of Short-Time Work Schemes during the Global Financial Crisis and Early Recovery: A Cross-Country Analysis By Hijzen, Alexander; Martin, Sébastien

  1. By: Rafael Calel; Antoine Dechezleprêtre
    Abstract: This paper investigates the impact of the EU Emissions Trading Scheme (EU ETS) on technological change. We exploit installations-level inclusion criteria to estimate the impact of the EU ETS on firms patenting. We ?nd that the EU ETS has increased low-carbon innovation among regulated firms by as much as 10%, while not crowding out patenting for other technologies. We also ?nd evidence that the EU ETS has not impacted patenting beyond the set of regulated companies. These results imply that the EU ETS accounts for nearly a 1% increase in European lowcarbon patenting compared to a counterfactual scenario.
    Date: 2012–03
  2. By: Kahanec, Martin (Central European University); Fabo, Brian (Central European Labour Studies Institute)
    Abstract: This paper studies the migration response of the youth from new EU member states to disparate conditions in an enlarged European Union at the onset of the Great Recession. We use the Eurobarometer data and probabilistic econometric models to identify the key drivers of the intention to work in another member state of European Economic Area (EEA) and their expected duration. We find that migration intentions are high among those not married and among males with children, but both categories are also overrepresented among people with only temporary as opposed to long-term or permanent migration plans. Whereas age affects migration intentions negatively, education has no effect on whether working abroad is envisaged. However, conditional on envisaging to work abroad, completion of education (if after 16th birthday) is associated with long-term (at least five years), but not permanent, migration plans. Finally, we find that socio-demographic variables explain about as much variation of migration intentions as self-reported push and pull factors and migration constraints.
    Keywords: migration, EU labor markets, youth, EU enlargement, labor mobility, free movement of workers, transitional arrangements, new member states, European Union
    JEL: F22 J61
    Date: 2013–03
  3. By: Tim Laing; Misato Sato; Michael Grubb; Claudia Comberti
    Abstract: As an increasing number of countries, regions, cities and states implement emission trading policies to limit cap CO2 emission, many turn to the experience of the European Union’s Emissions Trading System, as the largest greenhouse gas emissions trading system currently operating. The aim of this paper is to survey the literature conducted over the past eight years of the scheme’s existence, particularly those focusing on three key challenging areas of evaluation: emissions impacts in relation to the balance with economic objectives; investment and innovation impacts; and finally profits and price impacts. Among the key conclusions is that the lack of flexibility in the structure of the EU ETS cap, and its inability to adjust to radically shifted wider economic conditions, in the shape of the financial crisis, threatens to undermine its efficacy in providing incentives for abatement.
    Date: 2013–01
  4. By: Tani, Massimiliano (Macquarie University, Sydney); Manuguerra, Maurizio (Macquarie University, Sydney)
    Abstract: This paper investigates the effects of labour migration and openness to trade on regional skill endowments across the European Union at a time of increased economic integration. Using regional data from Eurostat's Regio database and the open web source Openflight for the period 1998-2010 we test whether the spatial concentration of skills has increased or decreased over time. We account for neighboring effects associated with both geographic proximity and links through civilian flights using a random spatial effect model. We find that migration contributes to convergence in regional skill endowments across member states, particularly at the Southern and Eastern periphery of the European Union. We also find that inter-regional connectivity through civilian flights has much stronger effects on the evolution of a region's skill endowment than geographic contiguity.
    Keywords: European Union, migration, skill endowments, convergence, spatial connectivity
    JEL: F20 J61
    Date: 2013–03
  5. By: Nicodemo, Catia (University of Oxford)
    Abstract: The purpose of this paper of this paper is to explore the immigration and productivity in Spain. We estimate the effect of immigration on labor productivity from 2004 until 2008 for Spain. Using firms (SABI) and individuals data (Social Security Records) we calculate the effect by sector and municipality for the two big Spanish provinces that have received most immigrants in the last decade: Barcelona and Madrid. After controlling for endogeneity of immigration, the results demonstrate that immigration have a negative effect on productivity. Education and occupation are both variables with a positive effect on productivity, while permanent, public or full time contracts do not have any effect. Type of immigration, Europeans 15 (more skill) versus no European, is not relevant in explain the negative productivity. This fact is due that firms are very heterogenous across them and use their employees under their real production potential.
    Keywords: immigration, labor productivity, Spain, MCVL, SABI
    JEL: F22 J61 R11
    Date: 2013–03
  6. By: Anzelika Zaiceva; Klaus F. Zimmermann
    Abstract: The eastern enlargements of the EU in 2004 and 2007 have stimulated the mobility of workers from the new EU8 and EU2 countries. A significant proportion of these migrants stayed abroad only temporarily, and the Great recession may have triggered return intentions. However, a return may be postponed if the economic situation in a sending region is persistently worse. This paper documents emerging evidence on return migration in post-enlargement Europe combining several data sources to describe the characteristics and selection of the returnees, as well as the determinants of return migration and potential re-migration decisions. The findings suggest that brain circulation rather than brain drain is relevant for several new member states and that returnees are most likely to migrate again. Moreover, the proportion of potential movers is larger in countries most affected by the crisis. Repeat and circular migration is expected to alleviate the potential negative impacts of the crisis, leading to a more efficient allocation of resources within the enlarged EU
    Keywords: return migration, EU Eastern enlargement, economic crisis;
    JEL: F22 J61
    Date: 2013–02
  7. By: Cecilia García-Peñalosa (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM)); Elsa Orgiazzi (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie)
    Abstract: This paper uses data from the Luxembourg Income Study to examine some of the forces that have driven changes in household income inequality over the last three decades of the 20th century. We decompose inequality for 6 countries (Canada, Germany, Norway, Sweden, the UK, and the US) into the three sources of market income (earnings, property income and income from self-employment) and taxes and transfers. Our findings indicate that although changes in the distribution of earnings are an important aspect of recent increases in inequality, they are not the only one. Greater earnings dispersion has in some cases been accompanied by a reduction in the share of earnings that dampened its impact on overall household income inequality. In some countries the contribution of self-employment income to inequality has been on the rise, while in others, increases in inequality in capital income account for a substantial fraction of the observed distributional changes.
    Keywords: income inequality; factor decomposition; decomposition by population subgroups
    Date: 2013–03
  8. By: Serge Roudier (European Commission – JRC - IPTS); Luis Delgado Sancho (European Commission – JRC - IPTS); Rainer Remus (Umweltbundesamt (The German Federal Environment Agency)); Miguel Aguado-Monsonet (European Commission – ENTR – F1)
    Abstract: This BAT reference document for the Iron and Steel Production forms part of a series presenting the results of an exchange of information between EU Member States, the industries concerned, non-governmental organisations promoting environmental protection and the Commission, to draw up, review, and where necessary, update BAT reference documents as required by Article 13(1) of the Directive on industrial emissions (2010/75/EU). This document is published by the European Commission pursuant to Article 13(6) of the Directive.
    Keywords: Best Available Techniques, BAT reference document, Iron and Steel
    JEL: Q52 Q53 Q55
    Date: 2013–03
  9. By: Cattaneo, Cristina (Fondazione Eni Enrico Mattei (FEEM)); Fiorio, Carlo V. (University of Milan); Peri, Giovanni (University of California, Davis)
    Abstract: In this paper we use a dataset that follows a representative sample of native Europeans, resident of 11 countries, over the period 1995-2001, in order to identify the effect of inflows of immigrants on their career, employment, location and wage. We use the 1991 distribution of immigrants by nationality across European labor markets to construct an imputed inflow of the foreign-born population that is exogenous to local demand shocks. We also control for a series of fixed effects that absorb individual, country-year and sector-year effects. We find that native Europeans are more likely to upgrade their occupation to one associated with higher skills and better pay, when a larger number of immigrants enter their labor market. They are also more likely to start a self-employment activity. As a consequence of this upward mobility their income increases or stays the same in response to immigration. We find no evidence of an increased likelihood to leave employment or to leave their region of residence. These effects take place within 2 years and some persist over 4 years. Hence it appears that immigrants push native European workers on a faster career track rather than reducing their employment opportunities.
    Keywords: immigrants, job upgrading, mobility, self-employment, Europe
    JEL: J61 O15
    Date: 2013–03
  10. By: Olivier Bargain (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM), IZA - Institute for the Study of Labor); Andreas Peichl (IZA - Institute for the Study of Labor, University of Cologne - University of Cologne, CESifo - CESifo, ISER - University of Essex)
    Abstract: This note provides an extensive survey of studies estimating steady-state labor supply elasticities for Western Europe and the US. Differences are driven by the heterogeneity in work preferences across countries and by methodological difference across studies (data, selection or model estimation and specification). While the former exists but is shown to be relatively small (Bargain et al., 2013), we focus here on modeling choices: Large elasticities are mainly found in studies estimated in the 1980s and relying on the Hausman approach. More recent estimates based on discrete-choice models with tax-benefit simulations show smaller and more similar estimates across countries. While we confirm that elasticities decline over time in the US, there is some evidence that both time effect and modeling choices affect estimates for Europe.
    Keywords: household labor supply; elasticity; taxation; Europe; US
    Date: 2013–03
  11. By: Jože Damijan; Črt Kostevc; Matija Rojec
    Abstract: This paper empirically accounts for the importance of the 'global supply chains' concept for export restructuring and productivity growth in Central and Eastern European Countries (CEECs) in the period 1995-2007. Using industry-level data and accounting for technology intensity, we show that FDI has significantly contributed to export restructuring in the CEECs. The effects of FDI are, however, heterogenous across countries. While more advanced core CEECs succeeded in boosting exports in higher-end technology industries, non-core CEECs stuck with export specialization in lower-end technology industries. This suggests that where FDI flows have been directed is of key importance. Our results show that export restructuring and economic specialization brought about by FDI during the last two decades in the CEECs might matter a lot for their potential for long-run productivity growth. Industries of higher-end technology intensity have experienced substantially higher productivity growth and so have countries more successful in attracting FDI to these industries.
    Date: 2013
  12. By: Högberg, Lovisa (Department of Real Estate and Construction Management, Royal Institute of Technology)
    Abstract: The EU Energy Performance Certificates provide new information and measure energy performance more exactly than many earlier (proxy) variables. This is one of the first studies to test the effect of this information, and the first one using Swedish data. The purpose of the paper is to test whether energy performance affects single-family house sales prices, and whether such impact is heterogeneous over house size, age and distance from city center. The paper also examines whether recommendations for supposedly cost-effective energy efficiency measures, by intervention category (construction, installation or operation/control technical measures), are perceived as untapped potential affecting sales prices. Energy performance measurement and dummy variables for three categories of improvement recommendations were included as explanatory variables in a hedonic regression analysis using transaction data and Energy Performance Certificates data for 1073 observations. The results indicate that better energy performance has a positive impact on sales price. Energy efficiency recommendations seem to have an impact on sales price; home buyers seem to require a larger “discount” for more complex types of measures. The results may imply that energy efficiency in buildings will become more important in the future, which may strengthen house owners’/sellers’ incentives to improve energy efficiency.
    Keywords: Energy efficiency; energy performance; property value; hedonic model; Swedish housing market
    JEL: D80 Q40 R15
    Date: 2013–03–27
  13. By: Joachim Wagner (Leuphana University Lueneburg, Germany)
    Abstract: This paper contributes to the literature by documenting for the first time the contribution of adding (and dropping) goods and destination countries to the sharp increase in exports of goods in the German economy as a whole during the Great Export Recovery in 2009/2010. The empirical investigation finds that firms that exported in both 2009 and 2010 are much more important for the export dynamics than export starters and export stoppers. Firms that increased their exports (and that were the drivers of the export boom) exported on average more goods and to more destination countries in 2009 than firms that decreased their exports, and they increased both extensive margins of exports on average while firms with decreased exports reduced both the number of goods exported and the number of countries exported to. These empirical regularities can be linked to recent theoretical models of multiproduct, multiple-destination exporters that point to a positive link between firm productivity and both extensive margins of exports. Although the data do not allow a direct test of the hypothesis, the evidence at hand justifies that we can argue that the more productive firms with higher and increasing extensive margins of exports are the drivers of The Great Export Recovery of 2009/2010 in Germany.
    Keywords: Extensive margins of exports, The Great Export Recovery, Germany
    JEL: F14
    Date: 2013–03
  14. By: Sam Fankhauser; Alex Bowen; Raphael Calel; Antoine Dechezleprêtre; David Grover; James Rydge; Misato Sato
    Abstract: As the world considers greener forms of economic growth, countries and sectors are beginning to position themselves for the emerging green economy. This paper combines patent data with international trade and output data in order to investigate who the winners of this “green race” might be. The analysis covers 110 manufacturing sectors in eight countries (China, Germany, France, Italy, Japan, South Korea, UK and the US) over 2005-2007. We identify three success factors for green competitiveness at the sector level: the speed at which sectors convert to green products and processes (measured by green innovation), their ability to gain and maintain market share (measured by existing comparative advantages) and a favourable starting point (measured by current output). We find that the green race is likely to alter the present competitiveness landscape. Many incumbent country-sectors with strong comparative advantages today lag behind in terms of green conversion, suggesting that they could lose their competitive edge. Japan, and to a lesser extent Germany, appear best placed to benefit from the green economy, while other European countries (Italy in particular) could fall behind. However, the green economy is much broader than the few flagship sectors on which the debate tends to focus, and each country has its niches of green competitiveness.
    Date: 2012–09
  15. By: Anna Alberini (Department of Agricultural and Resource Economics, University of Maryland, USA, Fondazione Eni Enrico Mattei, Italy and faculty affiliate at CEPE, ETH Zurich); Andrea Bigano (Fondazione Eni Enrico Mattei and Euro-Mediterranean Centre for Climate Change, Italy); Marco Boeri (Queen’s University, Northern Ireland)
    Abstract: We examine the effect of energy efficiency incentives on household energy-efficiency home improvements. Starting in February 2007, Italian homeowners have been able to avail themselves of tax credits on the purchase and installation costs of certain types of energy efficiency renovations. We examine two such renovations—door/windows replacements and heating system replacements—using multi-year cross-section data from the Italian Consumer Expenditure Survey and focusing on a narrow period around the introduction of the tax credits. Our regressions control for dwelling and household characteristics and economy-wide factors likely to influence the replacement rates. The effects of the policy are different for the two types of renovations. With window replacements, the policy is generally associated with a 30% or stronger increase in the renovation rates and number of renovations. In the simplest econometric models, the effect is not statistically significant, but the results get stronger when we allow for heterogeneous effects across the country. With heating system replacements, simpler models suggest that the tax credits policy had no effect whatsoever or that free riding was rampant, i.e., people are now accepting subsidies for replacements that they would have done anyway. Further examination suggests a strong degree of heterogeneity in the effects across warmer and colder parts of the country, and effects in the colder areas that are even more pronounced than those for windows replacements. These results should, however, be interpreted with caution due to the low rate of renovations and the imprecisely estimated effects.
    Keywords: Energy Efficiency Policy, Household Behavior, Italy, Energy Consumption Survey
    JEL: Q41 D12 H3
    Date: 2013–03
  16. By: Jerome Adda (Institute for Fiscal Studies and European University Institute); Christian Dustmann (Institute for Fiscal Studies and University College London); Costas Meghir (Institute for Fiscal Studies and Yale University); Jean-Marc Robin (Institute for Fiscal Studies and Sciences Po)
    Abstract: This paper analyses the career progression of skilled and unskilled workers, with a focus on how careers are affected by economic downturns and whether formal skills, acquired early on, can shield workers from the effect of recessions. Using detailed administrative data for Germany for numerous birth cohorts across different regions, we follow workers from labour market entry onwards and estimate a dynamic life-cycle model of vocational training choice, labour supply and wage pogression. Most particularly, our model allows for labour market frictions that vary by skill group and over the business cycle. We find that sources of wage growth differ: learning-by-doing is an important component for unskilled workers early on in their careers, while job mobility is important for workers who acquire skills in an apprenticeship scheme before labour market entry. Likewise, economic downturns affect skill groups through very different channels: unskilled workers lose out from a decline in productivity and human capital, whereas skilled individuals suffer mainly from lack of mobility.
    Keywords: Wage determination, skills, business cycles, apprenticeship training, job mobility
    Date: 2013–03
  17. By: Lampón, Jesús F.; Lago-Peñas, Santiago
    Abstract: This article analyses business strategies in the automobile sector to determine the key factors behind production relocation processes in automobile components suppliers. These factors help explain changes in production geography in the sector not only in terms of location advantages but also from a perspective of corporate strategies and decision-making mechanisms within firms. The results obtained from an empirical study in Spain during the period 2001-2008 show how the components sector has used relocation to meet the requirements for efficiency imposed by automobile manufacturers. The search for lower labour costs, production concentration and specialisation in order to obtain economies of scale and improved productivity are found to be the main factors determining relocation in the sector. These processes are facilitated by the operational flexibility of the multinational firms that dominate the sector which allows them to transfer resources internationally. Lean supply, technological requirements for production processes and the integration of production plants in the institutional environment are the main barriers to such processes of mobility, and may also determine the geographical destination of migrated production.
    Keywords: Production relocation, automobile components sector, geography, Spain, Europe
    JEL: F22 L6 L62
    Date: 2013–03–29
  18. By: Tobias Fleitera (ISI - a Fraunhofer Institute for Systems and Innovation Research - a Fraunhofer Institute for Systems and Innovation Research); Joachim Schleich (MTS - Management Technologique et Strategique - Grenoble École de Management (GEM), ISI - Fraunhofer Institute for Systems and Innovation Research - Fraunhofer Institute for Systems and Innovation Research); Ployplearn Ravivanpong (ISI - Fraunhofer Institute for Systems and Innovation Research - Fraunhofer Institute for Systems and Innovation Research)
    Abstract: This paper empirically investigates the factors driving the adoption of energy-efficiency measures by small and medium-sized enterprises (SMEs). Our analyses are based on cross-sectional data from SMEs which participated in a German energy audit program between 2008 and 2010. In general, our findings appear robust to alternative model specifications and are consistent with the theoretical and still scarce empirical literature on barriers to energy efficiency in SMEs. More specifically, high investment costs, which are captured by subjective and objective proxies, appear to impede the adoption of energy-efficient measures, even if these measures are deemed profitable. Similarly, we find that lack of capital slows the adoption of energy-efficient measures, primarily for larger investments. Hence, investment subsidies or soft loans (for larger invest-ments) may help accelerating the diffusion of energy-efficiency measures in SMEs. Other barriers were not found to be statistically significant. Finally, our findings provide evidence that the quality of energy audits affects the adoption of energy-efficiency measures. Hence, effective regulation should involve quality standards for energy au-dits, templates for audit reports or mandatory monitoring of energy audits.
    Keywords: Energy efficiency in SMEs; adoption of energy-efficiency measures; barriers to energy efficiency;
    Date: 2012
  19. By: Fredriksson, Peter (Dept. of Economics, Stockholm University); Öckert, Björn (Institute for Evaluation of Labour Market and Education Policy (IFAU))
    Abstract: In Sweden, children typically start compulsory school the year they turn 7. Individuals born around the new year have about the same date of birth but enter school at different ages. We exploit this source of exogenous variation to identify effects of age at school entry on educational attainment and long-run labor market outcomes. Using data for the entire native population born 1935-55, we find that school entry age raises educational attainment. We show that the comprehensive school reform (which postponed tracking until age 16) reduced the effect of school starting age on educational attainment. We also trace the effects of school starting age on prime-age earnings, employment, and wages. On average, school starting age only affects the allocation of labor supply over the lifecycle; prime-age earnings is unaffected, and there is a negative effect on discounted life-time earnings. But for individuals with low-educated parents, and to some extent women, we find that prime-age earnings increase in response to age at school start.
    Keywords: School starting age; educational attainment; life-time earnings; regression discontinuity
    JEL: C31 I21 I28 J24
    Date: 2013–03–22
  20. By: Hijzen, Alexander (OECD); Martin, Sébastien (OECD)
    Abstract: There has been a strong interest in short-time work (STW) schemes during the global financial crisis. Using data for 23 OECD countries for the period 2004 Q1 to 2010 Q4, this paper analyses the quantitative effects of STW programmes on labour market outcomes. Special attention is given to the dynamic aspects of the relationship between output shocks and labour market outcomes. The results indicate the STW raises hours flexibility by increasing the output elasticity of working time and helps to preserve jobs in the context of a recession by making employment and unemployment less elastic with respect to output. A key finding is that the timing of STW is crucial. While STW helped preserving a significant number of jobs during the crisis, its continued use during the recovery may have slowed the job-content of the recovery. By the end of 2010, the net effect of STW on employment was negligible or may even have become negative. However, the gross impact of STW on the number of jobs saved per quarter remains large and positive in the majority of countries.
    Keywords: global financial crisis, partial unemployment benefits, work sharing
    JEL: J23 J65 J68
    Date: 2013–03

This nep-eur issue is ©2013 by Giuseppe Marotta. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.