nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2013‒06‒09
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Tourism demand, climatic conditions and transport costs: an integrated analysis for EU regions. By Salvador Barrios; Juan Nicolas Ibañez Rivas
  2. Embeddedness of regions in European knowledge networks. A comparative analysis of inter-regional R and D collaborations, co-patents and co-publications By Iris Wanzenböck; Thomas Scherngell; Thomas Brenner
  3. Open borders, transport links and local labor markets By Åslund, Olof; Engdahl, Mattias
  4. “When supply travels far beyond demand: Institutional and regulatory causes of oversupply in Spain’s transport infrastructure” By Daniel Albalate; Germà Bel; Xavier Fageda
  5. Labor Market Laws and Intra-European Migration: The Role of the State in Shaping Destination Choices By John Palmer; Mariola Pytlikova
  6. The Role of Intra-Industry Trade in the Industrial Upgrading of the 10 CEECs New Members of the European Union By Károly Attila SOÓS
  7. Impact of Italian smoking ban on business activity of restaurants, cafès and bars By Luca, Pieroni; Pierluigi, Daddi; Luca, Salmasi
  8. Productivity and Deregulation in European Railways By Cantos Sánchez Pedro; Serrano Martínez Lorenzo; Pastor Monsálvez José Manuel
  9. Ensuring social inclusion in changing labour and capital markets By A B Atkinson
  10. Technological Diversification and Innovation Performance By Thomas Bolli; Martin Wörter
  11. What does economic research tell us about cross-border e-commerce in the EU Digital Single Market? By Bertin Martens
  12. “Broadband prices in the European Union: competition and commercial strategies” By Joan Calzada; Fernando Martínez
  13. Testing for discrimination against lesbians of different marital status: A field experiment By Doris Weichselbaumer
  14. Money or kindergarten? Distributive effects of cash versus in-kind family transfers for young children By Michael Förster; Gerlinde Verbist
  15. Digital music consumption on the internet By Luis Aguiar; Bertin Martens
  16. Strategic Intelligence Monitor on Personal Health Systems, Phase 2 - Citizens and ICT for Health in 14 European Countries: Results from an Online Panel By Francisco Lupianez-Villanueva; Ioannis Maghiros; Fabienne Abadie
  17. Earned income tax credits, unemployment benefits and wages: empirical evidence from Sweden By Bennmarker, Helge; Calmfors, Lars; Larsson Seim, Anna
  18. Working Paper 05-13 - Does Offshoring Contribute to Reducing Air Emissions? Evidence from Belgian Manufacturing By Bernhard Klaus Michel
  19. Cui Bono, Benefit Corporation? An Experiment Inspired by Social Enterprise Legislation in Germany and the US By Sven Fischer; Sebastian Goerg; Hanjo Hamann
  20. Comparing Public and Private Sector Pay in Ireland: Size Matters By Kelly, Elish; McGuinness, Seamus; O'Connell, Philip J.

  1. By: Salvador Barrios (European Commission – JRC - IPTS); Juan Nicolas Ibañez Rivas (Technical University of Denmark, Department of Transport)
    Abstract: The objective of this study is to analyse the potential impact of climate change on EU tourism demand and to provide long-term (2100) scenarios to be used in the general equilibrium GEM-E3 to allow for potential interactions with the rest of the economy. The analysis is based on a bottom-up approach to derive country-wide figures making use of detailed regional data. Our study brings three novel aspects to the existing literature on recreational demand and climate. First, we derive region-specific estimates of the impact of climate change based on tourists flows between European regions taking into account regions' specific characteristics regarding the nature of (and degree of specialisation in) tourism activities and related vulnerability to potential climate change scenarios. Second, our long-term projections for tourism demand are based on hedonic valuation of climatic conditions combining hotel price information and travel cost estimations. Such an approach allows us to consider together the climatic aspect of recreational demand and its travel cost dimension. In doing so we are able to estimate differentiated valuations of climate amenities depending on the distance travelled by tourists by region of origin and destination. This in turn allows us to further differentiate the valuation of climatic conditions depending on the time duration of holidays. Third, based on this travel-cost/holiday duration approach we can derive alternative scenarios for adaptation of holiday demand to potential climate change scenarios combining two dimensions related to adaptation: an institutional dimension, by considering alternative hypotheses regarding the monthly distribution of total tourism demand, and a time dimension by considering alternative scenarios regarding holiday duration. Our main results show that the climate dimension play a significant (economically and statistically) role in explaining hedonic valuations of tourism services and, as a consequence, its variation in the long-term are likely to affect the relative attractiveness of EU regions for recreational demand. In certain cases, most notably the Southern EU Mediterranean countries climate condition in 2100 could under current economic conditions, lower tourism revenues for up to -0.45% of GDP. On the contrary, other areas of the EU, most notably Northern European countries would gain from altered climate conditions, although these gains would be relatively more modest, reaching up to 0.32% of GDP. We also find that adaptation in the duration of holiday rather than on the monthly pattern of holiday could potentially mitigate these losses.
    Keywords: Climatic change, tourism, hedonic prices, travel cost, Europe
    JEL: Q51 Q54 Q52 R41
    Date: 2013–03
  2. By: Iris Wanzenböck (Austrian Institute of Technology (AIT) Vienna); Thomas Scherngell (Austrian Institute of Technology (AIT) Vienna); Thomas Brenner (Philipps-Universität Marburg)
    Abstract: This paper investigates the embeddedness of European regions in different types of inter-regional knowledge networks, namely project based R and D collaborations within the EU Framework Programmes (FPs), co-patent networks and co-publication networks. Embeddedness refers to the network positioning of regions captured in terms of social network analytic (SNA) centrality measures. The objective is to estimate how region-internal and region-external factors influence network embeddedness in the distinct network types, in order to identify differences in their driving factors at the regional level. In our modelling approach, we apply advanced spatial econometric techniques by means of a mixed effects panel version of the Spatial Durbin Model (SDM), and introduce a set of variables accounting for a capacity-specific, a relational as well as a spatial dimension in regional knowledge production activities. The results reveal conspicuous differences between the knowledge networks. Internal capacity- and technology-related aspects but also spatial spillover impacts from surrounding regions prove to be particularly important for centrality in the co-patent network. We also find significant - region-internal and region-external - impacts of general economic conditions on a region’s centrality in the FP network. However, we cannot observe substantial spill-over effects of region-external factors on centrality in the co-publication network. Thus, the distinctive knowledge creation foci in each network seem to find expression in the network structure as well as its regional determinants.
    Keywords: knowledge networks, network embeddedness, network centrality, regional knowledge production, panel Spatial Durbin model.
    JEL: L14 N74 O33 R15
    Date: 2013–05–29
  3. By: Åslund, Olof (IFAU, Uppsala University, Uppsala Center for Labor Studies); Engdahl, Mattias (Department of Economics)
    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: 2013–04–24
  4. By: Daniel Albalate (Faculty of Economics, University of Barcelona); Germà Bel (Faculty of Economics, University of Barcelona); Xavier Fageda (Faculty of Economics, University of Barcelona)
    Abstract: Spain’s transport infrastructure policy has become a paradigmatic case of oversupply and of mismatch with demand. The massive expansion of the country’s transport infrastructure over the last decade has not been a response to demand bottlenecks or previously identified needs. For this reason, the intensity of use today on all interurban modes of transport in Spain falls well below that of other EU countries. This paper analyzes the institutional and regulatory factors that have permitted this policy, allowing us to draw lessons from the Spanish case that should help other countries avoid the pitfalls and shortcomings of Spanish policy. Based on our analysis, we also discuss policy remedies and suggest reforms in different regulatory areas, which could help improve the performance of Spain’s infrastructure policy.
    Keywords: Infrastructure, Overcapacity, Regulation, Spain. JEL classification: H54; L91; L98; R41; R42; R48
    Date: 2013–06
  5. 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 multidestination world.
    Date: 2013–05
  6. By: Károly Attila SOÓS (senior research fellow, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences, Visiting Professor, Kyoto Institute of Economic Research, Kyoto University(2012.11.26-2013.3.16))
    Abstract: In this paper, we analyse the intra-industry trade (IIT) of the ten Central and Eastern European countries (CEECs), members of the EU partly from 2004, partly from 2007, with the 15 “old” member countries of the EU. We use 10 old EU countries’ analogous trade data and trends as a basis of comparison. Besides the (spectacular) growth of IIT, we also examine the trends of strong and not really favourable sectoral concentration of IIT. At the same time, the beakdown of IIT by price-quality segments (i. e., horizontal, low-quality and high-quality vertical IIT) shows a very positive picture, hinting to a very important technological and quality upgrading in the manufacturing industry of CEECs. However, such a conclusion is open to doubts because IIT does not include only the exchange of otherwise similar products of equal or different quality but also back-and-forth transactions in vertically fragmented production chains in the same commodity category. Thus, revealing the actual nature of the contribution to the production of items exported in the framework of IIT requires further research. The latter extends here to an analysis of relative wage levels of workers in industries participating in intra-industry trade, as well as to the examination of the trade of the products of research-intensive (Schumpeter”) industries.
    Date: 2013–06
  7. By: Luca, Pieroni; Pierluigi, Daddi; Luca, Salmasi
    Abstract: In this paper, we estimate the economic impact of the Italian smoking ban of 2005 on some activities of the catering sector. We use the quasi-experimental design induced by the introduction of the smoking ban in Italy to compare sales, profits and employment in cafès and restaurants located in the treatment area relative to a control group in similar economies such as Spain and France, where no ban had yet been imposed. We selected a large sample of firms in these three countries from a unique European panel dataset, which collects comparable financial indicators extracted from balance sheets. Our study indicates that the Italian smoking ban had a slight negative impact on sales in caf´es and restaurants but had no effect on profits, earnings or employment.
    Keywords: Smoking ban, difference-in-differences, cafè and restaurant revenues
    JEL: I10 I18
    Date: 2013–03–19
    Abstract: A vast amount of literature is devoted to analyzing the effects of deregulating and restructuring measures in the European railway sector and the results are not totally unambiguous. The contribution of this paper to the existing literature is twofold. Firstly, we estimate efficiency levels derived from two alternative approaches: a non-parametric DEA analysis and a parametric stochastic frontier production. Using two different approaches allows us to test if the heterogeneous results obtained in the literature are due to the different approaches used to measure efficiency. Secondly, we update the sample introducing a data panel with information on 23 national rail systems, and covering data from 2001 to 2008. It is fundamental to use extended and updated data covering the more recent period and more countries, given that most deregulation measures have been implemented in the last few years.
    Keywords: Efficiency, railways, regulation.
    JEL: D24 L92 L51
    Date: 2012–11
  9. By: A B Atkinson
    Abstract: This paper consists of two parts. Part I (“The economics of achieving social inclusion in changing labour and capital markets”) provides an economic analysis of the challenge of meeting the Europe 2020 objectives with regard to employment and social inclusion. Part II (“Putting people first and macro-economic policy”) is concerned with the objectives of macro-economic policy and their communication to the citizens of the EU.
    JEL: H55 I38 J38
    Date: 2013–04
  10. By: Thomas Bolli (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Wörter (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: This paper analyzes the impact of technological diversity on innovation inputs and success using Swiss firm-level panel data. While we do not find any impact of diversity on R&D intensity, we confirm a positive impact of diversity on patent applications as suggested by the literature. However, since patent applications reflect an intermediate innovation input rather than output, we extend the analysis to the share of sales generated by new products. We find a significant negative effect of diversity on the sales share of new products. Hence, technologically more specialized firms have a lower propensity to patent and greater shares of new products. We find neither a direct nor indirect effect of diversity on the sales share generated by improved products. These results suggest that specialization pays-off through more drastic innovations that yield greater market success through a passing monopoly status.
    Keywords: patent applications, innovative sales share, new products, improved products, technological diversity
    JEL: O3
    Date: 2013–06
  11. By: Bertin Martens (European Commission – JRC - IPTS)
    Abstract: This paper presents a non-technical summary of the latest economic research studies on cross-border e-commerce in the EU and elsewhere, and combines this with findings from older research on this subject. It compares online with offline cross-border trade and investigates the differences in drivers and impediments to both. It also looks into research findings regarding consumer motives to shift from offline to online trade and explores possible sources of consumer welfare increase as a result of this shift. Finally, it flags issues for further research. The main purpose of this note is to bring the findings from recent research together in a coherent framework and make it accessible to stakeholders and decision-makers involved in EU policy-making on the Digital Agenda for Europe and the EU Digital Single Market.
    Keywords: online trade, e-commerce, gravity, barriers to trade, home bias
    JEL: F15 O52
    Date: 2013–02
  12. By: Joan Calzada (Faculty of Economics, University of Barcelona); Fernando Martínez (Competition Commission and Faculty of Economics, University of Barcelona)
    Abstract: This paper analyses the determinants of broadband Internet access prices in a group of 15 EU countries between 2008 and 2011. Using a rich panel dataset of broadband plans, we show the positive effect of downstream speed on prices, and report that cable and fibre-to-the-home technologies are available at lower prices per Mbps than xDSL technology. Operators’ marketing strategies are also analysed as we show how much prices rise when the broadband service is offered in a bundle with voice telephony and/or television, and how much they fall when download volume caps are included. The most insightful results of this study are provided by a group of metrics that represent the situation of competition and entry patterns in the broadband market. We show that consumer segmentation positively affects prices. On the other hand, broadband prices are higher in countries where entrants make greater use of bitstream access and lower when they use more intensively direct access (local loop unbundling). However, we do not find a significant effect of inter-platform competition on prices.
    Keywords: Telecommunications, Broadband prices, European Union, Competition, Regulation. JEL classification: L51, L86, L96.
    Date: 2013–05
  13. By: Doris Weichselbaumer
    Abstract: In this paper, a correspondence testing experiment is conducted to examine sexual orientation discrimination against lesbians in Germany. Applications for four fictional female characters are sent out in response to job advertisements: a heterosexual single, a married heterosexual, a single lesbian and a lesbian who is in a ‘same-sex registered partnership’. Different results are obtained for the two cities investigated, Munich and Berlin. While single lesbians and lesbians in a registered partnership are equally discriminated in comparison to the heterosexual women in the city of Munich, no discrimination based on sexual orientation has been found in Berlin. Furthermore, for a subset of our data we can compare the effects of a randomized versus a paired testing approach, which suggests that under certain conditions, due to increased conspicuity, the paired testing approach may lead to biased results.
    JEL: C93 J15 J71
    Date: 2013–05
  14. By: Michael Förster; Gerlinde Verbist
    Abstract: Public support to families with pre-school children can be in the form of cash benefits (e.g. child allowances) or of “in-kind” support (e.g. care services such as kindergartens). The mix of these support measures varies greatly across OECD countries, from a cash / in-kind composition of 10%/90% to 80%/20%. This paper imputes the value of services into an “extended” household income and compares the resulting distributive patterns and the redistributive effect of these two strands of family policies. On average, cash and in-kind transfers each constitute 7 – 8% of the incomes of families with young children. Both instruments are redistributive. Cash transfers reduce child poverty by one third, with the estimated impacts in Austria, Ireland, Sweden, Hungary and Finland performing above average. When services are accounted for, child poverty falls by one quarter and poverty among children enrolled in childcare is more than halved. This reduction is highest in Belgium, France, Hungary, Iceland and Sweden. The paper also presents simulations in which cash transfers are replaced by services, and vice versa, to provide a better understanding of these effects. The results from these simulations do not allow us to draw “generalised” conclusions as to which of the two instruments fares “better”. However, in a majority of countries, if all in-kind spending on childcare were transformed into cash benefits, a lump-sum approach (i.e. a basic income supplement to all children) would be more effective in reducing poverty than an up-rating of present child benefits. The analysis in this paper is exploratory in that it considers only the first-round distributive effects of the policy instruments and does not capture additional indirect and longer-term redistributive effects, in particular possible labour supply effects and their potential impact on household incomes. The hypothetical simulations constitute extreme cases in that the entire volume of early childhood education and care (ECEC) services is replaced by cash transfers, and vice versa. The simulations nevertheless provide useful benchmarks for estimating potential losses or gains in redistribution when key elements of the early childhood policy mix are to be changed.
    Keywords: child poverty, income distribution, cash and in-kind transfers, family policy
    JEL: D31 H40 I38 J13
    Date: 2013–04
  15. By: Luis Aguiar (European Commission – JRC - IPTS); Bertin Martens (European Commission – JRC - IPTS)
    Abstract: The goal of this paper is to analyze the behaviour of digital music consumers on the Internet. Using clickstream data on a panel of more than 16,000 European consumers, we estimate the effects of illegal downloading and legal streaming on the legal purchases of digital music. Our results suggest that Internet users do not view illegal downloading as a substitute to legal digital music. Although positive and significant, our estimated elasticities are essentially zero: a 10% increase in clicks on illegal downloading websites leads to a 0.2% increase in clicks on legal purchases websites. Online music streaming services are found to have a somewhat larger (but still small) effect on the purchases of digital sound recordings, suggesting complementarities between these two modes of music consumption. According to our results, a 10% increase in clicks on legal streaming websites lead to up to a 0.7% increase in clicks on legal digital purchases websites. We find important cross country difference in these effects.
    Keywords: Digital Music, Copyright, Downloading, Streaming, Piracy on the internet
    JEL: K42 L82 L86 Z1
    Date: 2013–02
  16. By: Francisco Lupianez-Villanueva (Universitat Oberta de Catalunya (UOC)); Ioannis Maghiros (European Commission – JRC - IPTS); Fabienne Abadie (European Commission – JRC - IPTS)
    Abstract: The Citizen Panel Survey carried out in SIMPHS2 to better assess users and patients' needs and expectations with regard to ICT for health, directly supports the objectives of the Digital Agenda in the area of eHealth which are to both cope with societal challenges and create opportunities for innovation and economic growth by reducing health inequalities, promoting active and healthy ageing and increasing empowerment. It also contributes to the goals of the European Innovation Partnership on Active and Healthy Aging which addresses the societal challenge of an ageing population focusing on the main areas of life events (Prevention, Care and cure and Independent living) with the following expected results: - An improvement of the health status and quality of life of Europeans, especially older people; - An improvement of the sustainability and efficiency of health and social care systems; - Boosted EU competitiveness through an improved business environment for innovation. In this policy context the analysis of users' demand undertaken through the SIMPHS2 Citizen panel survey aims to: - develop typologies of digital healthcare users and measure the impact of ICT and the Internet on health status, health care demand and health management. - identify factors that can enhance or inhibit the role and use of Personal Health Systems from a citizen' s perspective with special emphasis on mHealth, RMT, disease management, Telecare, Telemedicine and Wellness. To reach these objectives, we started by defining a theoretical framework for policy-making, which was used to design and gather relevant information. A multivariate statistical analysis was subsequently carried out to identify the underlying conceptual dimensions emerging from the data collected. Key relationships between concepts (underlying dimensions) were identified to understand ICT for Health as a complex ecosystem. We concluded with some lessons learned.
    Keywords: ICT, citizen, panel, survey, health, eHealth, users
    JEL: I11 I18 O33 O38
    Date: 2012–05
  17. By: Bennmarker, Helge (IFAU - Institute for Evaluation of Labour Market and Education Policy); Calmfors, Lars (Institute for International Economics Study, Stockholm University); Larsson Seim, Anna (Department of Economics, Stockholm University)
    Abstract: Although there is a large literature on employment effects of earned income tax credits (EITCs) and unemployment benefits, less is known about wage effects. In our model the impact is via the net (after-tax) replacement rate. Using a panel of individuals from Sweden, we find a positive relationship between the net replacement rate and wages with semi-elasticities in the range 0.2-0.4. This implies that a one percent reduction in the unemployment benefit level or a one percent increase in the net-of-tax rate is associated with a fall in the before-tax wage of 0.1-0.2 per cent. EITCs and unemployment benefit reductions are thus likely to induce wage moderation.
    Keywords: Earned income tax credit; unemployment benefits; wage formation
    JEL: H24 J31 J38
    Date: 2013–05–10
  18. By: Bernhard Klaus Michel
    Abstract: Since the mid-90's, production-related air emissions in Belgian manufacturing have been reduced substantially and it can be shown that the pace of the reduction has been fastest for domestic intermediates. It is widely debated whether offshoring has played a role in this reduction by replacing domestic intermediates by imported intermediates. This paper develops a decomposition analysis to measure the contribution of offshoring – the share of imported intermediates in total intermediates – to the fall in air emission intensities for domestic intermediates. This decomposition analysis reveals that 27% of the fall in the intensity of greenhouse gas emissions, 20% of the fall in the intensity of acidifying emissions and 20% of the fall in the intensity of tropospheric precursor emissions in Belgian manufacturing between 1995 and 2007 can be attributed to offshoring.
    JEL: F18 Q53
    Date: 2013–05–24
  19. By: Sven Fischer (Max Planck Institute for Research on Collective Goods, Bonn); Sebastian Goerg (Max Planck Institute for Research on Collective Goods, Bonn); Hanjo Hamann (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: How do barely incentivized norms impact incentive-rich environments? We take social enterprise legislation as a case in point. It establishes rules on behalf of constituencies that have no institutionalized means of enforcing them. By relying primarily on managers' other-regarding concerns whilst leaving corporate incentive structures unaltered, how effective can such legislation be? This question is vital for the ongoing debate about social enterprise forms, as recently introduced in several US states and in British Columbia, Canada. We ran a laboratory experiment with a framing likened to German corporate law which traditionally includes social standards. Our results show that a stakeholder provision, as found in both Germany and the US, cannot overcome material incentives. However, even absent incentives the stakeholder norm does not foster other regarding behavior but slightly inhibits it instead. Our experiment thus illustrates the paramount importance of taking into account both incentives and framing effects when designing institutions. We tentatively discuss potential policy implications for social enterprise legislation and the stakeholder debate.
    Keywords: experiment, stakeholder value, social enterprise, benefit corporation, corporate law
    JEL: D01 A12 M52 D03 L21 M14
    Date: 2013–02
  20. By: Kelly, Elish; McGuinness, Seamus; O'Connell, Philip J.
    Keywords: Ireland/qec
    Date: 2013–01

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