nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2013‒05‒24
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. On the Size and Determinants of Inter-regional Redistribution in European Countries over the Period 1995-2009 By Santiago Lago-Peñas; Albino Prada; Alberto Vaquero
  2. Socio-economic exclusion as a hindrance of economic development. A comparative study for European countries. By Ewa Lechman
  3. Open borders, transport links and local labor markets By Åslund, Olof; Engdahl, Mattias
  4. Drivers to firm innovation and their effects on performance: An international comparison By Fernandes, Cristina; Ferreira, João; Raposo, Mario
  5. Income-Related Inequity in the Use of GP Services: A Comparison of Ireland and Scotland By Layte, Richard; Nolan, Anne
  6. Dropout Trends and Educational Reforms: The Role of the LOGSE in Spain By Florentino Felgueroso; María Gutiérrez-Domènech; Sergi Jiménez-Martín
  7. The Benefit of Coordinating Congestion Management in Germany By Friedrich Kunz; Alexander Zerrahn
  8. Mothers and Daughters: Heterogeneity of German Direct Investments in the Czech Republic By Daniel Munich; Martin Srholec; Michael Moritz; Johannes Schaffler
  9. The determinants of recidivism among ex-prisoners: a survival analysis on French data By Benjamin Monnery
  10. Subsidies for substitutes? : new evidence on deadweight loss and substitution effects of a wage subsidy for hard-to-place job-seekers By Moczall, Andreas
  11. The evolution and sustainability of seasonal migration from Poland to Germany: From the dusk of the 19th century to the dawn of the 21st century By Kepinska, Ewa; Stark, Oded
  12. Dynamic Models of R&D, Innovation and Productivity: Panel Data Evidence for Dutch and French Manufacturing By Wladimir Raymond; Jacques Mairesse; Pierre Mohnen; Franz Palm
  13. Seek and Ye shall Find: How Search Requirements Affect Job Finding Rates of Older Workers By Hullegie, P.G.J.; Ours, J.C. van
  14. Social costs of POS payments in the Netherlands 2002–2012: Efficiency gains from increased debit card usage By Nicole Jonker
  15. Product and labor market imperfections and scale economies: Micro-evidence on France, Japan and the Netherlands By Sabien Dobbelaere; Kozo Kiyota; Jacques Mairesse
  16. Do household surveys give a coherent view of disability benefit targeting? A multi-survey latent variable analysis for the older population in Great Britain By Hancock, Ruth; Morciano, Marcello; Pudney, Stephen; Zantomio, Francesca
  17. Growing up in a blended family or a stepfamily: What is the impact on education? By Sundström, Marianne
  18. Identifying social determinants of urban low carbon transitions: the case of energy transition in Bilbao, Basque Country By Marta Olazabal; Unai Pascual
  19. Does it matter where you work? : employer characteristics and the wage growth of low-wage workers and higher-wage workers By Stephani, Jens
  20. The Effect of Unemployment, Arrears and Negative Equity on Consumption: Ireland in 2009/10 By Gerlach, Petra

  1. By: Santiago Lago-Peñas (REDE, IEB and University of Vigo); Albino Prada (ERENEA and University of Vigo); Alberto Vaquero (REDE and University of Vigo)
    Abstract: The aim of this paper is to analyse cross-country differences in the degree of inter-regional redistribution achieved by means of taxes and expenditures in 21 European countries over the period 1995-2009. We rely on a standard approach based on the observation and comparison of both primary and disposable household income at regional scale. Once the redistributive effect in each country is quantified, we try to explain the drivers of cross-country time-series differences. According to our estimates, cross-national standard deviation is significant and much higher than time variation. Secondly, inter-regional redistribution is strongly and positively related to personal redistribution by means of taxes and social benefits in cash; and is negatively related to both the extent of regional disparities in primary income and to the degree of political and fiscal decentralization.
    Keywords: Inter-regional redistribution, regional fiscal imbalance, European Union.
    Date: 2013–03–12
  2. By: Ewa Lechman (Gdansk University of Technology, Gdansk, Poland)
    Abstract: In the paper we run an exhaustive study of the magnitude socio-economic exclusion which affects large parts of societies in European countries. Social and economic exclusion – alternatively called as deprivation – are widely recognized as symptoms of human poverty. This implies obstacles in gaining full and free access to education, professional health care, finance, or i.e. labor market, resulting in substantial lack of skills, capabilities and functionings (see Sen 1986). All these disable effective usage and allocation of resources, which constitutes a significant hindrance for economic development of countries. The aim of the analysis is to identify the magnitude of socio-economic deprivation (human poverty) and confront if with the economic development level (approximated by gross domestic product per capita) and dynamics in European countries. For quantitative assessment of the socio-economic deprivation level we apply a bundle of arbitrary chosen indicator derived from EUROSTAT databases. The sample covers European Union economies – with special focus on Baltic Sea region countries, and the time span for the analysis is 2004-2011.
    Keywords: social exclusion, economic exclusion, deprivation, poverty, economic development
    JEL: O11 I0 I32
    Date: 2013–05
  3. By: Åslund, Olof (IFAU - Institute for Evaluation of Labour Market and Education Policy); Engdahl, Mattias (Department of Economics, Uppsala University)
    Abstract: We study the labor market impact of opening borders to low-wage countries. The analysis exploits time and regional variation provided by the 2004 EU enlargement in combination with transport links to Sweden from the new member states. The results suggest an adverse impact on earnings of present workers in the order of 1 percent in areas close to pre-existing ferry lines. The effects are present in most segments of the labor market but tend to be greater in groups with weaker positions. The impact is also clearer in industries which have received more workers from the new member states, and for which across-the-border work is likely to be more common. There is no robust evidence on an impact on employment or wages. At least part of the effects is likely due to channels other than the ones typically considered in the literature.
    Keywords: Migration policy; immigration; labor market outcomes
    JEL: J16 J31 J61
    Date: 2013–05–03
  4. By: Fernandes, Cristina; Ferreira, João; Raposo, Mario
    Abstract: This research aims to analyse the drivers to company innovation and their effects on the financial performance. This study is based upon a sample of companies, located in two neighbouring countries (Portugal and Spain). Linear regression was the methodology deployed to analyse the importance of innovation types (differences between Portugal and Spain). To analyse the extent to which the innovation capacity variables influence financial performance (turnover), we made recourse to Probit Regression models. Our results show significant differences in terms of both the drivers and inhibitors to innovation in these two countries. The introduction of products into new markets only proved significant at Spanish companies whilst innovations in both products and processes are significant in both sets of Iberian companies.
    Keywords: innovation firm, innovation capacities, financial performance, Iberian countries
    JEL: M1 M10 M21
    Date: 2013–05
  5. By: Layte, Richard; Nolan, Anne
    Abstract: Equity of access to health care is a key component of national and international health policy. The Irish health-care system is unusual in requiring the majority of the population to pay the full cost of GP care at the point of use. In contrast, all Scottish residents are entitled to free GP care at the point of use. Using nationally representative micro-data on Irish and Scottish children, we find that the distribution of GP care in Ireland favours those on lower incomes (i.e., 'pro-poor'), but that there is no significant difference in the distribution of GP care across income groups in Scotland. Focusing just on children who pay for GP care in Ireland, we find some evidence for a significant 'pro-rich' distribution of GP visits.
    Keywords: GP Services/Children/Concentration Index/Inequity/Ireland/Scotland
    JEL: C20 D12 I10
    Date: 2013–04
  6. By: Florentino Felgueroso; María Gutiérrez-Domènech; Sergi Jiménez-Martín
    Abstract: Over the last 50 years, some important reforms in European countries were aimed at improving the system of vocational studies. By contrast, the Spanish educational law (LOGSE) from 1990 moved in the opposite direction. While the LOGSE increased the number of compulsory schooling years from 8 to 10, it also eliminated vocational studies of first grade (FP-I, ages 14 to 16), thereby reducing flexibility. Dropout rates in Spain decreased from 70% in 1977 to 30% in 1995, but remained at roughly 30% until recent years, twice the EU27 average. This paper analyses the role of LOGSE, and other factors, in explaining why school dropout stopped its declining trend in the last two decades. Results show that the introduction of the new system was negative for male dropout and the abolishment of FP-I for female dropout. The reform also decreased the track choice opportunities for students and, hence, it reduced the probability of following the vocational track after completion of the compulsory stage. It is quite likely that the lack of FP-I affected more males, which in turn could help explain why we find that the reform was negative for male students while somehow positive for females.
    Date: 2013–05
  7. By: Friedrich Kunz; Alexander Zerrahn
    Abstract: The management of congestion within the German electricity transmission network has become more important during the last years. This emerging relevance is caused by the increase of renewable generation and the partial phaseout of nuclear power plants. Both developments yield a change in the transmission flow pattern and thus the need for congestion management. Currently, four German transmission system operators (TSOs) are in charge of managing congestion using curative methods, particularly re-dispatch of power plants. However, the existence of four TSOs within Germany induces the question whether coordination between them in managing national congestion would be beneficial. To address this issue, we apply a generalized Nash equilibrium model to analyze different degrees of coordination, covering the German electricity market with a detailed representation of the generation and network structure. Our results indicate that the costs of congestion management decrease in a rising degree of coordination as TSOs take into account congestion in other operators' zones. Total costs are highest in case each TSO is solely responsible for its own zone, and lowest if one integrated entity is in charge of mitigating congestion. We conclude that, in a setup with multiple TSOs, inducing coordination, for instance through a common market, has the potential of lowering the overall costs of congestion management.
    Keywords: Congestion Management, Coordination, Electricity Economics, Generalized Nash Equilibrium, Germany
    JEL: C61 L94 Q40
    Date: 2013
  8. By: Daniel Munich; Martin Srholec; Michael Moritz; Johannes Schaffler
    Abstract: Much has been written on the distinction between vertical and horizontal foreign direct investment. However, most of the empirical literature relies on indirect and aggregated measures only. The aim of this paper is to help fill this gap by examining the differences between German affiliates in the Czech Republic and their mother companies in Germany on the basis of direct evidence on factor requirements. Using a cluster analysis on firm-level data from the unique ReLoc survey, we identify four main groups of firms that partition the sample by broad sectoral lines and by technological, educational and skill intensity of their operations within each of them. More detailed analysis of the clustering reveals that the vertical model dominates in manufacturing, while the horizontal model of investment prevails in the service sector.
    Keywords: multinational enterprise; foreign affiliate; vertical investment; cluster analysis; Germany; Czech Republic;
    JEL: D21 L16 F23 O23
    Date: 2012–10
  9. By: Benjamin Monnery (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: This article explores the main determinants of the hazard of recidivism among ex-prisoners. We use a nationally-representative sample of prisoners released in 1996-1997 in France, drawn from a 5-year follow-up survey run by the French correctional administration. We estimate semiparametric duration models which deal with violations of the proportional hazards hypothesis. Our results confirm the importance of gender, age, nationality, access to employment and prior convictions on recidivism within five years after release from prison. We also find significant differences in hazards of recidivism by type of initial offense, penal status at entry, and type of release (early release under parole, etc.), while controlling for prison fixed effects. Finally, our study casts doubt on the influence of certain variables (marital status at entry, education, homelessness) and on the effectiveness of semi-liberté as a way to prevent recidivism.
    Keywords: economics of crime; recidivism; duration models
    Date: 2013–05–15
  10. By: Moczall, Andreas (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This paper estimates substitution effects of the German active labour market programme 'JobPerspektive'', a wage subsidy for hard-to-place welfare recipients. Using a novel panel of the entire population of German establishments with full information on unsubsidized and subsidized employment, counterfactual employment levels of subsidized employers are modelled by way of matching on the propensity score of receiving the subsidy. Using the same method, the substitution of particular groups of workers, including those subsidized by other programme types, is investigated as well. Results provide little evidence for widespread substitution of regular workers due to receiving this particular subsidy; in fact, regular employment is somewhat increased in West Germany as a result of subsidization. Furthermore, JobPerspektive is being used by employers in lieu of wage-paying work opportunities, and receiving JobPerspektive causes establishments to employ more workers with regular hiring subsidies." (Author's abstract, IAB-Doku) ((en))
    Keywords: Langzeitarbeitslose, schwervermittelbare Arbeitslose, arbeitsmarktpolitische Maßnahme, Wirkungsforschung, Lohnkostenzuschuss, Arbeitslosengeld II-Empfänger, berufliche Reintegration, Beschäftigungseffekte, Eingliederungszuschuss, Arbeitsgelegenheit
    JEL: H25 M51 C31
    Date: 2013–05–16
  11. By: Kepinska, Ewa; Stark, Oded
    Abstract: We document and suggest a rationale for the durability of seasonal migration from Poland to Germany, a phenomenon persisting for more than a century. We refer to the role of the tradition of engaging in seasonal migration as a force that helped invigorate the process and contribute to its sustainability even when, to different degrees and at different times, the process was interrupted by a shifting political, regulatory, and legal environment. Evidence in support of the role of tradition is provided, among other things, by the continuation of the seasonal flow of migrants from once border regions - which became internal regions following WWII, despite the fact that since the redrawing of the German-Polish border, proximity is no longer a factor encouraging repeated, short-term seasonal moves. --
    Keywords: Poland-to-Germany seasonal migration,Evolution of seasonal migration,Longterm durability of seasonal migration,Tradition
    JEL: F22 J22 J43 J61 N3 N33 N34 N93 N94
    Date: 2013
  12. By: Wladimir Raymond; Jacques Mairesse; Pierre Mohnen; Franz Palm
    Abstract: This paper introduces dynamics in the R&D to innovation and innovation to productivity relationships, which have mostly been estimated on cross-sectional data. It considers four nonlinear dynamic simultaneous equations models that include individual effects and idiosyncratic errors correlated across equations and that differ in the way innovation enters the conditional mean of labor productivity: through an observed binary indicator, an observed intensity variable or through the continuous latent variables that correspond to the observed occurrence or intensity. It estimates these models by full information maximum likelihood using two unbalanced panels of Dutch and French manufacturing firms from three waves of the Community Innovation Survey. The results provide evidence of robust unidirectional causality from innovation to productivity and of stronger persistence in productivity than in innovation. <P>Dans ce papier, nous introduisons de la dynamique dans le modèle Crépon-Duguet-Mairesse (CDM), à la fois entre la R-D et l’innovation et entre l’innovation et la productivité. Le modèle CDM a généralement été estimé sur des données en coupe transversale. Nous proposons quatre modèles dynamiques à équations simultanées avec des effets individuels et des effets idiosyncratiques corrélés entre équations. Ces modèles diffèrent dans la façon dont l’innovation apparaît dans l’équation de productivité : à travers une variable binaire ou une variable continue, et à travers une mesure observée ou une mesure latente de l’innovation. Les modèles sont estimés par maximum de vraisemblance sur des données panel d’entreprises françaises et néerlandaises provenant de trois vagues des enquêtes communautaires d’innovation. Les résultats sont robustes et montrent que la causalité est unidirectionnelle allant de l’innovation à la productivité, et que la persistance est plus forte dans la productivité que dans l’innovation.
    Keywords: R&D, Innovation, Productivity, Panel data, Dynamics, Simultaneous equations, R-D, innovation, productivité, données panel, dynamique, équations simultanées
    Date: 2013–05–01
  13. By: Hullegie, P.G.J.; Ours, J.C. van (Tilburg University, Center for Economic Research)
    Abstract: Abstract Unemployment insurance recipients in the Netherlands were for a long time exempted from the requirement to actively search for a job when they reached the age of 57.5. We study how this exemption affected the job finding rates of the recipients involved. We find evidence that the job finding rate of unemployed workers who were getting close to the age of 57.5 is reduced in anticipation of the removal of the search requirement. In addition we find a large negative effect on job finding rates of the actual removal of the search requirement. Apparently, even for persons with seemingly poor job prospects search requirements have a positive effect on finding rates.
    Keywords: eligibility criteria;unemployment benefits;job finding;older workers
    JEL: C41 H55 J64 J65
    Date: 2013
  14. By: Nicole Jonker
    Abstract: The overall costs of the payment system to society are considerable. These costs depend on the relative usage of the available payment instruments, which differ in the costs that each entails to market participants in the payment chain. In the Netherlands, debit card payments have become less costly than cash payments. In 2012 an average cash payment cost EUR 0.44 whereas an average debit card payment cost EUR 0.30. Between 2002 and 2012, the number of debit card payments more than doubled to 2.5 billion, while cash usage declined to 3.75 billion payments. As a result of the changing payment behaviour of the Dutch, the total costs of cash and debit card payments to society declined by 10% from over EUR 2.6 billion in 2002 to less than EUR 2.4 billion in 2012. Relative to GDP, the social costs dropped from 0.57% to 0.40% of GDP. The costs incurred by banks for cash and debit card payments have been rather stable. Retailers, on the other hand, have achieved major cost reductions. The trend towards more card and less cash usage is expected to continue. From a cost perspective this will be beneficial for society as a whole.
    Keywords: social costs; efficiency; payment instruments
    JEL: D21 D23 D24 E42 G21
    Date: 2013–04
  15. By: Sabien Dobbelaere; Kozo Kiyota; Jacques Mairesse
    Abstract: Allowing for three labor market settings (perfect competition or right-to-manage bargaining, efficient bargaining and monopsony), this paper relies on two extensions of Hall's econometric framework for estimating simultaneously price-cost margins and scale economies. Using an unbalanced panel of 17,653 firms over the period 1986-2001 in France, 8,725 firms over the period 1994-2006 in Japan and 7,828 firms over the period 1993-2008 in the Netherlands, we first apply two procedures to classify 30 comparable manufacturing industries in 6 distinct regimes that differ in terms of the type of competition prevailing in product and labor markets. For each of the three predominant regimes in each country, we then investigate industry differences in the estimated product and labor market imperfections and scale economies. We find important regime differences across the three countries and also observe differences in the levels of product and labor market imperfections and scale economies within regimes.
    JEL: C23 D21 J50 L13
    Date: 2013–05
  16. By: Hancock, Ruth; Morciano, Marcello; Pudney, Stephen; Zantomio, Francesca
    Abstract: We compare three major UK surveys, BHPS, FRS and ELSA, in terms of the picture they give of the relationship between disability and receipt of the Attendance Allowance (AA) benefit. Using the different disability indicators available in each survey, we estimate a model in which probabilities of receiving AA depend on latent disability status. Despite major differences in design, once sample composition is standardised through statistical matching, the surveys deliver similar results for the model of disability incidence and AA receipt. Provided surveys offer a sufficiently wide range of disability indicators, the detail of disability measurement appears relatively unimportant.
    Date: 2013–05–07
  17. By: Sundström, Marianne (Swedish Institute for Social Research, Stockholm University)
    Abstract: This paper studies the effects of growing up in a blended family or a stepfamily on children’s educational outcomes. I use a random sample of 40,000 Swedish children born in the mid-1960s matched to their full and half-siblings born in 1960-1970, in total 76,000 children. Childhood family and siblings structure is inferred using the censuses combined with the Swedish multigenerational register. The children are followed into adulthood and their education examined. The cross-section results indicate that growing up with half-siblings is negatively correlated with education and living with both biological parents and no half-siblings is associated with more schooling than living with a single parent or a stepparent. To assess causality I estimate sibling-difference models and find that the negative correlations disappear which is consistent with selection explaining the cross-section results. Narrowing the siblings sample to children in stable blended families reveals that joint children obtain significantly more schooling than stepchildren. In stable stepfather blended families the difference is even larger. Possible explanations for these interesting findings are that fathers are more willing and able to support their children with their current spouse and that stepfathers do not share their income equally between their biological children and their stepchildren.
    Keywords: Family structure; stepfamilies; stepfathers; sibling differences; educational attainment
    Date: 2013–05–15
  18. By: Marta Olazabal; Unai Pascual
    Abstract: Cities are widely defined as complex systems formed by coupled social, ecological and economical systems. The complexity of urban dynamics goes far beyond its boundaries due to the strong influence of larger scales and the deep dependence of cities on outside resources. Such crucial cross-scale effects can fuel maladaptive behaviour, conducting cities to rigid and unsustainable traps. Urban energy systems have all the ingredients of complexity, dependence and vulnerability to global environmental change. Presumably, transformability, like adaptability, depends on perceptions, values and culture of each society. Here it is hypothesized that often social behaviours related to the scepticism, close-minded attitudes, traditional economic models, lack of trust in institutions and in self-capacities are those which limit the potential of transformation in cities (favouring lock-in status). The type of energy and the way it is supplied depends largely on utilities, urban planning and design, economic incentives, regulations, investment opportunities etc. These determinants, together with household factors depending on lifestyle, rent, etc. affect the level of consumption and choices. Altogether, these determinants play a decisive role in decision making processes at individual and institutional level and therefore can limit the transformation potential. We use a case study in Bilbao (Basque Country) to illustrate barriers and hidden opportunities of a local energy transition through an analysis of its cognitive dimension. <br /> <br /> This is done by applying a semi-quantitative methodology (Q method) which aids to investigate the stakeholders’ perceived capacity of change. This results in four distinct discourses with direct implications in the potential of transformation of the city of Bilbao.<br />
    Keywords: urban sustainability, transitions, low carbon, Q method, Bilbao
    Date: 2013–05
  19. By: Stephani, Jens (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Using rich German linked employer-employee data and endogenous switching regression models, I show that large firms and firms with a high export share or a low proportion of fixed-term workers provide higher wage growth for low-wage workers. While having many low-paid co-workers dampens the wage growth of both low-wage workers and higher-wage workers, there are also employers who provide higher wage growth only for higher-wage workers. The results indicate a certain degree of labour market segmentation that is a) important for the wage mobility of individual workers and b) relevant in the context of polarisation and rising wage inequality." (Author's abstract, IAB-Doku) ((en))
    JEL: J30 J60
    Date: 2013–05–13
  20. By: Gerlach, Petra
    Abstract: Since the onset of the financial crisis, income and consumption have fallen sharply in Ireland, particularly for young households. This paper shows that young households are more likely than older ones to be exposed to unemployment, arrears and negative equity. These may give rise to credit constraints and buffer-stock savings. Savings may be built up not only to finance future consumption, but also to deleverage, since high indebtedness makes the access to additional credit more difficult. We show that the permanent income hypothesis, which posits that consumption should evolve more smoothly than actual income, apparently fails to hold for households in negative equity, at risk thereof and at risk of unemployment. This may have caused much of the decline in aggregate consumption during the crisis.
    Keywords: Credit constraints,Ireland,Household Budget Survey
    Date: 2013–05

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