nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2013‒05‒22
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Are firms willing to employ a greying and feminizing workforce?. By Vandenberghe, Vincent
  2. The internationalisation of R&D: sectoral and geographic patterns of cross-border investments By Castelli , Cristina; Castellani, Davide
  3. Economic stress or random variation? Revisiting german reunification as a natural experiment to investigate the effect of economic contraction on sex ratios at birth By Sebastian Schnettler; Sebastian Klüsener
  4. The impact of MENA-to-EU migration in the context of demographic change. By Docquier, Frédéric
  5. Government Popularity and the Economy First Evidence from German Micro Data By Soeren Enkelmann
  6. Costs and fairness of forest carbon sequestration in EU climate policy By Munnich Vass, Miriam; Elofsson, Katarina; Gren, Ing-Marie
  7. Labor Market Laws and Intra-European Migration: The Role of the State in Shaping Destination Choices By John Palmer; Mariola Pytlikova
  8. The effects of unemployment benefits on migration in lagging regions By Jordi Jofre-Monseny (Universitat de Barcelona & Institut dEconomia de Barcelona (IEB))
  9. Concentration Versus Re-Matching? Evidence About the Locational Effects of Commuting Costs By Michael J. Boehm
  10. Analyzing Regional Variation in Health Care Utilization Using (Rich) Household Microdata By Peter Eibich; Nicolas R. Ziebarth
  11. Defining European ICT Poles of Excellence: A Literature Review By Giuditta De Prato; Daniel Nepelski
  12. Does debt affect profitability? An empirical study of French trade sector By Kebewar, Mazen
  13. Plant breeding for an EU bio-based economy: The potential of public sector and public/private partnerships By Aad van Elsen; Alicia Ayerdi Gotor; Carmen di Vicente; Daniel Traon; Jacques Gennatas; Laurence Amat; Valeria Negri; Véronique Chable
  14. Non-financial determinants of retirement By Frank van Erp; Niels Vermeer; Daniel van Vuuren
  15. Measuring spatial effects in presence of institutional constraints: the case of Italian Local Health Authority expenditure By Vincenzo Atella; Federico Belotti; Domenico Depalo; Andrea Piano Mortari
  16. Modelling Migration and Regional Labour Markets: An Application of the New Economic Geography Model RHOMOLO By Andries Brandsma; d’Artis Kancs; Damiaan Persyn
  17. Renewal of mature industry in an old industrial region: regional innovation policy and the co-evolution of institutions and technology By Coenen , Lars; Moodysson , Jerker; Martin , Hanna
  18. Gender Differences in Life Satisfaction and Social Participation By Stephan Humpert
  19. Nonprofits are not alike: The Role of Catholic and Protestant Affiliation By Lapo Filistrucchi; Jens Prüfer
  20. The Process of Wage Adjustment: An Analysis Using Establishment- Level Data By Alberto Bayo-Moriones; Jose Enrique Galdon-Sanchez; Sara Martinez-de-Morentin

  1. By: Vandenberghe, Vincent
    Abstract: Are employers willing to employ more older individuals, in particular older women? Higher employment among the older segments of the population will only materialize if firms are willing to employ them. Although several economists have started considering the demand side of the labour market for older individuals, few have considered its gender dimension properly; despite evidence that lifting the overall senior employment rate in the EU requires significantly raising that of women older than 50. In this paper, we posit that labour demand and employability depend to a large extent on how the age/gender composition of the workforce affects firm's profits. Using unique firm-level panel data we produce robust evidence on the causal effect of age/gender on productivity (value added per worker), total labour costs and gross profits. We take advantage of the panel structure of data and resort to first differences to deal with a potential time-invariant heterogeneity bias. Moreover, inspired by recent developments in the production function estimation literature, we also address the risk of simultaneity bias (endogeneity of firm's age-gender mix choices in the short run) by combining first differences with i) the structural approach suggested by Ackerberg, Caves and Frazer (2006), ii) alongside more traditional IV-GMM methods (Blundell and Bond, 1998) where lagged values of labour inputs are used as instruments. Results suggest no negative impact of rising shares of older men on firm's gross profits, but a large negative effect of larger shares of older women. Another interesting result is that the vast and highly feminized services industry does not seem to offer working conditions that mitigate older women's productivity and employability disadvantage, on the contrary. This is not good news for older women's employability and calls for policy interventions in the Belgian private economy aimed at combating women's decline of productivity with age and/or better adapting labour costs to age-gender productivity profiles.
    Date: 2012
  2. By: Castelli , Cristina (Italian Trade Promotion Agency (ICE), Csil Milano); Castellani, Davide (University of Perugia, Italy; CIRCLE; Sweden; IWH and LdA)
    Abstract: This paper presents the sectoral and geographic distribution of R&D-related activities, in comparison with manufacturing activities, by analysing data (from the fDi Markets database) on the number of cross-border greenfield investment projects. Results show that crossborder R&D investments are concentrated in fewer sectors and countries (of origin and destination) than manufacturing, and they are less sensitive to the obstacles related with the distance between home and host countries. More than the two-thirds of all cross-border investments in R&D-related activities are in ICT/Electronic and Life Sciences/Chemicals sectors, but these sectors differ in their propensity towards R&D and Design, Development and Testing activities. Almost half of the investments is due to multinationals from North America, and over one third from Western Europe, but the two areas show a different sectoral specialization. Considering the areas of destination, Asia is the largest recipient, and specializes in the ICT/Electronics and Industrial Machinery, while Western Europe ranks second and attracts relatively more research investments in Life Sciences/Chemicals, as well as in the Machinery industry
    Keywords: Internazionalization of R&D; Multinational Firms; Europe; North America; Asia
    JEL: F23 L23 O30
    Date: 2013–03–03
  3. By: Sebastian Schnettler (Max Planck Institute for Demographic Research, Rostock, Germany); Sebastian Klüsener (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: The economic stress hypothesis (ESH) suggests that economic decline leads to a decrease in the proportion of males born in a population. A multitude of additional influences on sex ratios that often cannot be accounted for empirically make assessing the validity of the ESH difficult. Thus, as a historical quasi-experiment, German reunification constitutes an interesting test case. The economy in East Germany, but not in West Germany, underwent a rapid decline in 1991. In the same year, the sex ratio decreased in East Germany, but not in West Germany. Catalano (2003) interpreted these developments as evidence in support of the ESH. Using more recent and detailed data, we re-examine this case to test an alternative explanation, the random variation hypothesis (RVH). Using aggregate data on sex ratios between 1946-2010 and individual-level data on over 13 million births from the German Birth Registry between 1991-2009, we find evidence supporting the RVH but not the ESH. First, the sex ratio in East Germany shows stronger deviations from the time trend in several years, and is seemingly unrelated to economic developments. The degree of variation is associated with the smaller and decreasing number of births in East Germany during the fertility decline following reunification. The individual-level analysis confirms that the 1991 decrease in the East German sex ratio could also be the result of random variation. A specificity of the East German transformation is the buffering of the consequences of economic decline through integration into the West German welfare state. Therefore, the ESH may be applicable in other transformation cases.
    Keywords: Germany, Germany (Alte Bundesländer), Germany (Neue Bundesländer), economic recession, sex ratio
    JEL: J1 Z0
    Date: 2013–04
  4. By: Docquier, Frédéric
    Abstract: We analyze the consequences of increasing MENA-to-EU migration on both sending and receiving regions. Using a general equilibrium model, we find that increasing MENA-to-EU migration generates significant changes in EU15 tax rates and income per capita. Compared to a non-selective immigration shock, selecting immigrants leads to a moderate reduction in tax rates, but to a greater impact on income per capita in the EU15. Emigration, especially if high-skilled, has a detrimental impact on MENA tax rates. Finally, the negative effects in MENA are mitigated if the brain drain leads to side-effects or is accompanied by increased education attainment at origin.
    Date: 2012
  5. By: Soeren Enkelmann (Department of Economics, Leuphana University Lueneburg, Germany)
    Abstract: This is one of the first studies to estimate a popularity function at the micro-level. Using German micro-level data (GGSS/ALLBUS) for the years 1991, 1992, 1998, and 2008, we show that a positive assessment of the economy significantly improves government popularity while negative evaluations decrease satisfaction with the government. Voters take the (current and expected) national and personal economic situation into account. We find no evidence for a grievance asymmetry, i.e. voters punish the government for a bad economy but also reward them in good times. Finally, we show that popularity functions are only very crude proxies for vote functions, with the latter being mostly driven by party identification.
    Keywords: vote function, popularity function, micro data, Germany
    JEL: D72 H11
    Date: 2013–05
  6. By: Munnich Vass, Miriam (Department of Economics, Swedish University of Agricultural Sciences); Elofsson, Katarina (Department of Economics, Swedish University of Agricultural Sciences); Gren, Ing-Marie (Department of Economics, Swedish University of Agricultural Sciences)
    Abstract: Large emissions of greenhouse gases are expected to cause major environmental problems in the future. European policy makers have therefore declared that they aim to implement cost-efficient and fair policies to reduce carbon emissions. The purpose of this paper is to assess whether the cost of the EU policies for 2020 can be reduced through the inclusion of carbon sequestration as and abatement option while also equity is improved. The assessment is done by numerical calculations using a chance-constrained partial equilibrium model of the EU Emissions Trading Scheme and national effort-sharing targets, where forest sequestration is introduced as an uncertain abatement option. Fairness is evaluated by calculation of Gini-coefficients for six equity criteria to policy outcomes. The estimated Gini-coefficients range between 0.11 and 0.32 for the current policy, between 0.16 and 0.66 if sequestration is included and treated as certain, and between 0.19 and 0.38 when uncertainty about sequestration is taken into account and policy-makers wish to meet targets with at least 90 percent probability. The results show that fairness is reduced when sequestration is included and that the impact is larger when sequestration is treated as certain.
    Keywords: carbon sequestration; costs; fairness; EU climate policy
    JEL: D63 Q48 Q52 Q58
    Date: 2013–05–03
  7. By: John Palmer (Princeton University); Mariola Pytlikova (Danish Institute of Governmental Research (KORA) and CReAM London)
    Abstract: This article investigates the relationship between migrants' destination choices and the formal labor market access afforded by multiple potential host countries in the context of the EU's eastward enlargement. We use an index of labor market access laws combined with data on migration from new EU member states into the existing states of the EU and EFTA from 2004 through 2010 to test whether (1) migrants are attracted to destinations that give them greater formal labor market access, and (2) migration flows to any given destination are influenced by the labor market policies of competing destinations. Our data support both propositions: Migration between origin/destination pairs was positively associated with the loosening of destination labor market restrictions while negatively associated with the loosening of competing destinations' labor market restrictions. These relationships hold even when economic indicators, social welfare spending, and existing immigrant stocks are modeled. By combining rich EU data with a unique approach to evaluating competing legal regimes, the analysis helps us better understand how law shapes migration in a multi-destination world.
    Date: 2013–05
  8. By: Jordi Jofre-Monseny (Universitat de Barcelona & Institut dEconomia de Barcelona (IEB)) (Universitat de Barcelona)
    Keywords: place-based policy, unemployment protection, migration, lagging regions, mobility
    JEL: J6 R23 H73
    Date: 2013
  9. By: Michael J. Boehm
    Abstract: Using administrative employer-employee data from Germany, I exploit two reductions of tax breaks for commuting in 2003/4 and 2006/7 to estimate commuting costs' effect on the decision to switch job and move house. Standard theory predicts that higher commuting costs should lead to increased concentration in urban centers. However, I find that re-matching of existing jobs and houses to reduce commuting distances is much more prevalent in the data. With these estimates I calculate the effect of a complete abolition of the tax breaks on overall travel distance, fuel usage, greenhouse gas emissions, the tax base, and the de-population of the countryside.
    Keywords: Work/residence location choice, commuting costs, environmental effects of tax policy, employer-employee data
    JEL: R00 J61 J68 Q48 Q58
    Date: 2013–05
  10. By: Peter Eibich; Nicolas R. Ziebarth
    Abstract: This paper exploits rich SOEP microdata to analyze state-level variation in health care utilization in Germany. Unlike most studies in the field of the Small Area Variation (SAV) literature, our approach allows us to net out a large array of individual-level and state-level factors that may contribute to the geographic variation in health care utilization. The raw data suggest that state-level hospitalization rates vary from 65 percent to 165 percent of the national mean. Ambulatory doctor visits range from 90 percent to 120 percent of the national mean. Interestingly, in the former GDR states doctor visit rates are significantly below the national mean, while hospitalization rates lie above the national mean. The significant state-level differences vanish once we control for individual-level socio-economic characteristics, the respondents’ health status, their health behavior as well as supply-side state-level factors.
    Keywords: Small area variation, health care utilization, SOEP
    JEL: I12 I14 I18
    Date: 2013
  11. By: Giuditta De Prato (Institute for Prospective Technological Studies, Joint Research Centre, European Commission); Daniel Nepelski (Institute for Prospective Technological Studies, Joint Research Centre, European Commission)
    Abstract: The Commission Communication entitled "A Strategy for ICT R&D and Innovation in Europe: Raising the Game" proposes reinforcing Europe's industrial and technology leadership in ICT. Building on Europe's assets, the Communication anticipates a landscape where, by 2020, "(…) Europe has nurtured an additional five ICT poles of world-class excellence (…)". This study attempts to identify ICT R&D&I-related agglomeration economies in Europe that would meet world-level excellence, and to identify weak signals that would indicate the dynamics of a changing ICT-related economic geography in Europe. Both of those identification processes are based on quantitative data, built on a set of relevant criteria leading to measurable indicators. The study is developed around several tasks, the results of which are presented in a series of IPTS working papers. This first Working Paper synthesises the conclusions of the conceptual and empirical literature review that was carried out both at the beginning of the study. It summarises the most prominent concepts discussed in the relevant literature, the methods that were developed and leads to a definition of the European ICT Poles of Excellence that will guide later work.
    Keywords: ICT, excellence, poles of excellence
    Date: 2013–01
  12. By: Kebewar, Mazen
    Abstract: This article aims to expand existing empirical knowledge on the impact of debt level on profitability of companies. We analyze a sample of an unbalanced panel of 2325 unlisted French companies of trade sector spanning over a period of 1999 to 2006. By using the generalized method of moments (GMM), we show that the debt affects negatively the profitability, not only linearly, but also, in a non-linear (concave) way. However, while analyzing according to different size classes (VSEs, SMEs and LEs); we find that the linear negative effect becomes larger and the non-linear effect is significant only in small and medium-sized enterprises (SME). --
    Keywords: Debt,GMM,Panel data,Profitability
    JEL: C33 G32 L25
    Date: 2013–05–10
  13. By: Aad van Elsen (Consultave – NL); Alicia Ayerdi Gotor (Institut Polytechnique LaSalle Beauvais –FR); Carmen di Vicente (Arcadia International – ES); Daniel Traon (Arcadia International – BE); Jacques Gennatas (Arcadia International – BE); Laurence Amat (Arcadia International – BE); Valeria Negri (UNIPG – IT); Véronique Chable (INRA - FR)
    Abstract: The JRC Scientific Policy Report provides the results of a study on "Plant Breeding for an EU bio-based economy 2020" which was carried out by Arcadia International in 2012. The study is based on a literature search, a workshop, interviews with experts and a survey directed at public breeding institutes. The first part of the study evaluates the breeding needs relevant for the biocenomy strategy 2020 for food, feed, biofuel and biochemical uses and to what extent they are covered by the private breeding sector. The second part of the study investigates the capacity of public breeding institutes to fulfill breeding needs where the private sector is not investing sufficiently. On the basis of the results of the study, the authors conclude that the capacity of public breeding in the EU is low and will not be able to fulfil the needs of the bioeconomy-strategy 2020 which are currently not covered by the private sector. In Member States (e.g. PL or RO) where public breeders are still relevant competitors on the market, institutes mainly focus on agronomic traits only. In the other Member States, institutes concentrate mainly on genomic and pre-breeding activities complementing the activities of the private sector in applied plant breeding.
    Keywords: breeding, bioeconomy, public breeding sector
    JEL: Q16
    Date: 2013–03
  14. By: Frank van Erp; Niels Vermeer; Daniel van Vuuren
    Abstract: This paper first confronts the observed aggregate retirement pattern in the Netherlands with predictions of traditional economic models of retirement. The retirement peaks observed in the data cannot entirely be reconciled with models putting financial incentives central to individual decision-making. After surveying different explanations from psychology and sociology, the paper concludes that social norms, default options, and reference-dependent utility are likely explanations for the observed individual propensity to retire at standard retirement ages. Most empirical evidence on these factors is, however, not related to the retirement age, so that a great deal of research remains to be done.
    JEL: J26 D01 D03
    Date: 2013–05
  15. By: Vincenzo Atella (University of Rome "Tor Vergata"); Federico Belotti (University of Rome "Tor Vergata"); Domenico Depalo (Bank of Italy); Andrea Piano Mortari (University of Rome "Tor Vergata")
    Abstract: Over the last decades spatial econometrics models have represented a common tool for measuring spillover effects across different geographical entities (counties, provinces, regions or nations). Unfortunately, no one has considered that when these entities share common borders but obey to different institutional settings, ignoring this feature may induce misleading conclusions. In fact, under these circumstances, and if institutions do play a role, we expect to find spatial effects mainly \within" entities belonging to the same institutional setting, while the "between" effect across different institutional settings should be attenuated or totally absent, even if the entities share a common border. In this case, relying only on geographical proximity will then produce biased estimates, due to the composition of two distinct effects. To avoid these problems, we derive a methodology that partitions the standard contiguity matrix into within and between contiguity matrices, allowing to separately estimate these spatial correlation coefficients and to easily test for the existence of institutional constraints. In our empirical analysis we apply this methodology to Italian Local Health Authority expenditures, using spatial panel techniques. Results show a strong and significant spatial coefficient only for the within effect, thus confirming the importance and validity of our approach.
    Keywords: spatial, health expenditures, institutional setting, panel data
    JEL: H72 H51 C31
    Date: 2013–05–08
  16. By: Andries Brandsma (European Commission – JRC - IPTS); d’Artis Kancs (European Commission – JRC - IPTS); Damiaan Persyn (European Commission – JRC - IPTS)
    Abstract: The present paper describes the modelling approach of regional labour markets taken in the newly developed dynamic spatial general equilibrium model RHOMOLO, where the labour market equilibrium is determined by ?rms’ labour demand, a wage-curve with unemployment, and inter-regional labour migration. The RHOMOLO model is parameterised by estimating the key structural parameters econometrically. In order to illustrate the potential of the proposed dynamic spatial general equilibrium approach to inter-regionally integrated labour markets, we carry out simulations showing the e?ects of a reduction in ransportation cost, and assess the impact on regional labour markets. Our results con?rm that wages and unemployment are by far the most important channels of adjustment to macro-economic and policy shocks in the EU. In contrast, labour migration plays a secondary role in labour market adjustments in the EU. Our results also suggest that the relationship between market access, labour demand and labour supply is non-linear and spatially inter-dependent, which underlines the importance of the proposed dynamic spatial general equilibrium approach.
    Keywords: Dynamic spatial general equilibrium model, labour, migration, unemployment, wage, RHOMOLO, DSGE, new economic geography.
    JEL: C68 D58 F22 J20 J61 J64 O15
    Date: 2013–03
  17. By: Coenen , Lars (Nordic Institute for Studies in Innovation, Research and Education (NIFU), Oslo; CIRCLE, Lund University); Moodysson , Jerker (CIRCLE, Lund University); Martin , Hanna (CIRCLE, Lund University)
    Abstract: The objective of this paper is to further insights on the potentials and barriers for industrial renewal in locked-in regions and industries. To do so, the paper analyzes the Swedish policy program ‘Biorefinery of the Future’ (BioF). This initiative is geared to develop a strong regional innovation environment for forestry-based biorefinery development in the area of Örnköldsvik and Umeå in Northern Sweden. Theoretically, the paper draws on concepts from evolutionary economic geography regarding path-dependence, related variety and lockin, and combines these with institutional approaches found in science and technology studies to explain disruptive shifts or transitions in socio-technical systems.
    Keywords: Regional Innovation Policy; Old Industrial Regions; Evolutionary Economic Geography; Socio-technical Transitions
    JEL: O33 O38
    Date: 2013–05–06
  18. By: Stephan Humpert (Institute of Economics, Leuphana University Lueneburg, Germany)
    Abstract: This paper deals with the effects of social participation activities on life satisfaction. Using the German General Social Survey (ALLBUS) for 2010, I present gender specific differences for several social activities, such as club memberships of political, welfare, health or more leisure time orientated groups. These activities have different impacts on male or female satisfaction. While sports and civic engagements improve only female life satisfaction, men are more affected by charity organizations or leisure time activities, such as hobbies. It is an interesting result that political activities and trade unions have no, or even negative effects on life satisfaction.
    Keywords: Subjective Well-Being, Social Participation, German General Social Survey (ALLBUS)
    JEL: D60 I31 O52 Z13
    Date: 2013–05
  19. By: Lapo Filistrucchi (DISEI, Università degli studi di Firenze); Jens Prüfer
    Abstract: There are no generally accepted results regarding the objectives, decisions, and economic outcomes of nonprofit organizations, as compared to for-profit or public firms. We posit that this inconclusiveness is due to a too broad definition of nonprofits and that different types of nonprofits exist. This conjecture is investigated by constructing a model in which nonprofits differ by religious affiliation and testing the resulting hypotheses on the observed behavior of German nonprofit hospitals. We find that Catholic and Protestant nonprofits adopt significantly different strategies in the market. This confirms our conjecture and the importance of religion for economic outcomes.
    Keywords: Governance; Owner Objectives; Religious Organizations; Catholicism and Protestantism; Hospitals
    JEL: L31 L21 Z12 D64 I11
    Date: 2013
  20. By: Alberto Bayo-Moriones (Departamento de Gestión de Empresas-UPNA); Jose Enrique Galdon-Sanchez (Departamento de Economía-UPNA); Sara Martinez-de-Morentin (Departamento de Economía-UPNA)
    Abstract: In this article, we use data from Spanish manufacturing plants to analyze the determinants of the importance attributed to several criteria when wages are adjusted. More specifically, the criteria we take into account in the study are the cost of living, the wages of the firm in relation to its competitors, the fulfillment of collective agreements at sector level, the need to recruit and retain employees, the performance of the organization, and the industrial relations climate. Our results show that the structural characteristics of the establishment, as well as the wage setting arrangements and trade unions, play a role in explaining the importance of the factors mentioned in shaping wage adjustments. The human resource management policies adopted by the employer seem to be less relevant.
    Keywords: human resource management, structural characteristics, trade unions, wage adjustment, wage setting arrangements
    Date: 2013

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