nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2013‒07‒15
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Nowcasting Indicators of Poverty Risk in the European Union: A Microsimulation Approach By Navicke, Jekaterina; Rastrigina, Olga; Sutherland, Holly
  2. Youth Unemployment in Europe: What to Do about It? By Eichhorst, Werner; Hinte, Holger; Rinne, Ulf
  3. Low Occupational Prestige and Internal Migration in Germany By Nina Neubecker
  4. Reallocation of Resources Across Age in a Comparative European Setting By Bernhard Hammer; Alexia Prskawetz; Inga Freund
  5. Short-term allocation of gas networks in the EU and gas-electricity input foreclosure By Miguel Vazquez; Michelle Hallack
  6. Testing the Tunnel Effect: Comparison, Age and Happiness in UK and German Panels By Felix FitzRoy; Michael Nolan; Max Steinhardt; David Ulph
  7. Financing investment in the European electricity transmission network: Consequences on long-term sustainability of the TSOs financial structure By Arthur Henriot
  9. Maintaining One's Living Standard at Old Age - What Does That Mean?: Evidence Using Panel Data from Germany By Christian Dudel; Notburga Ott; Martin Werding
  10. Maternal employment: the impact of triple rationing in childcare in Flanders By Dieter VANDELANNOOTE; Pieter VANLEENHOVE; André DECOSTER; Joris GHYSELS; Gerlinde VERBIST
  11. The impact of an increase in the legal retirement age on the effective retirement age By Noelia BERNAL; Frederic VERMEULEN
  12. Overview and analysis of 1:1 learning initiatives in Europe By Anja Balanskat; Diana Bannister; Benjamin Hertz; Ester Sigilló; Riina Vuorikari
  13. People or places? Factors associated with the presence of domestic energy efficiency measures in England. By Andrew Leicester; George Stoye
  14. Ex-post merger evaluation in the UK retail market for books By Aguzzoni, Luca; Argentesi, Elena; Ciari, Lorenzo; Duso, Tomaso; Tognoni, Massimo
  15. Adoption of Waste-Reducing Technology in Manufacturing: Regional Factors and Policy Issues By Giulio Cainelli; Massimiliano Mazzanti; Alessio D'Amato
  16. Proximity strategies in outsourcing relations: the role of geographical, cultural and relational proximity in the European automotive industry By Alexander SCHMITT; Johannes VAN BIESEBROECK
  17. Causal Effects of Educational Mismatch in the Labor Market By Jan Kleibrink
  18. Time to BRIC It? – Internationalization of European Family Firms in Europe, North America and the BRIC Countries By Vivien Procher; Diemo Urbig; Christine Volkmann
  19. Productivity, market selection and corporate growth: comparative evidence across US and Europe By Giovanni Dosi; Daniele Moschella; Emanuele Pugliese; Federico Tamagni
  20. The Vindication of Don Quijote: The impact of noise and visual pollution from wind turbines on local residents in Denmark By Cathrine Ulla Jensen; Toke Emil Panduro; Thomas Hedemark Lundhede

  1. By: Navicke, Jekaterina; Rastrigina, Olga; Sutherland, Holly
    Abstract: The at-risk-of-poverty rate is one of the three indicators used for monitoring progress towards the Europe 2020 poverty and social exclusion reduction target. Timeliness of this indicator is critical for monitoring the effectiveness of policies. However, due to complicated nature of the European Union Statistics on Income and Living Conditions (EU-SILC) poverty risk estimates are published with a 2 to 3 year delay. This paper presents a method that can be used to estimate (nowcast) the current at-risk-of-poverty rate for the European Union (EU) countries based on EU-SILC microdata from a previous period. The EU tax-benefit microsimulation model EUROMOD is used for this purpose in combination with up to date macro-level statistics. We validate the method by using EU-SILC data for 2007 incomes to estimate at-risk-of-poverty rates for 2008-2012, and where possible compare our predictions with actual EU-SILC and other external statistics. The method is tested on eight EU countries which are among those experiencing the most volatile economic conditions within the period: Estonia, Greece, Spain, Italy, Latvia, Lithuania, Portugal and Romania.
    Date: 2013–07–03
  2. By: Eichhorst, Werner (IZA); Hinte, Holger (IZA); Rinne, Ulf (IZA)
    Abstract: Youth unemployment has become a severe economic and societal problem in many European countries. This paper gives an overview of the current situation and assesses different policy options. It emphasizes the role of stronger intra-EU mobility of young workers, policies to make vocational training systems more effective and to adjust employment protection as well as activating labor market policies. However, short-term remedies are not available, despite the fact that the EU has announced massive European initiatives. Rather, European countries should take the opportunity of the crisis to implement forward-looking structural reforms.
    Keywords: youth unemployment, vocational training, Europe, fixed-term contracts
    JEL: J24 J64 J13
    Date: 2013–07
  3. By: Nina Neubecker
    Abstract: This paper assesses a recent prediction of the theoretical migration literature, according to which migration may be driven by a desire to avoid social humiliation rising from occupational stigma. To this end, we study the residential mobility of workers in occupations with relatively low prestige using data from the German Socio-Economic Panel (SOEP). In order to capture low occupational prestige, we relate the prestige of a worker's current occupation to the average prestige of the occupations associated with the worker's vocational training. Our estimation results suggest a negative relationship between the incidence of low occupational prestige and the probability of internal migration in Germany and thus reject our working hypothesis. We discuss the role of specific migration costs and occupational cultures as possible explanations of this result. The absolute prestige level of a worker's occupation does not turn out to be a significant predictor of his propensity to migrate, whereas his absolute income level - but not his relative income level - is significantly positively related to this propensity.
    Keywords: Internal migration, Germany, occupational status, occupational prestige, income, vocational training
    JEL: J61 R23 Z13
    Date: 2013
  4. By: Bernhard Hammer; Alexia Prskawetz; Inga Freund
    Abstract: We investigate the reallocation of resources across age and gender in a comparative European setting. Our analysis is based on concepts and data from the National Transfer Accounts (NTA) project, as well as on data from income and time use surveys. We introduce the aggregate NTA life cycle deficit as a concept of an economic dependency ratio. This dependency measure allows for flexible age limits and age-specific levels of economic dependency. We then move beyond the current NTA methodology and study gender differences in the generation of income and extend our analysis by unpaid household work. We find large cross-country differences in the age- and gender-specific levels and type of production activities and consequently in the organisation of the resource reallocation across age. Our results clearly indicate that a reform of the welfare system needs to take into account not only public transfers but also private transfers, in particular the services produced within the households for own consumption (e.g. childcare, cooking, cleaning...).
    Keywords: Ageing, challenges for welfare system, demographic change, welfare state
    JEL: I38 J10
    Date: 2013–07
  5. By: Miguel Vazquez; Michelle Hallack
    Abstract: Strategic interaction between gas and electricity sectors is a major issue in the implementation of competitive energy markets. One relevant aspect of the problem is the potential for input foreclosure between gas and power industries. In this paper, we are concerned with situations where input foreclosure opportunities are associated with the choice of market design. In particular, we study input foreclosure in the case that the short-term capacity allocation mechanism of gas networks raises barriers to cross-border trade. In that situation, one may find gas markets that are isolated only in the short term. We explain players' ability to influence the electricity price using their gas decisions in those isolated markets. We also show that this should be a concern of EU capacity allocation mechanisms, which provide spatial flexibility in the short term to promote liquidity, at the cost of creating barriers to cross-border trade. Therefore, input foreclosure opportunities are additional costs to be taken into account when weighing benefits and drawbacks of European gas market designs.
    Keywords: Market design, Input foreclosure, Gas-power interaction, Network economics
    Date: 2013–06
  6. By: Felix FitzRoy (University of St. Andrews); Michael Nolan (University of Hull); Max Steinhardt; David Ulph (University of St. Andrews)
    Abstract: In contrast to previous results combining all ages we find positive effects of comparison income on happiness for the under 45s, and negative effects for those over 45. In the BHPS these coefficients are several times the magnitude of own income effects. In GSOEP they cancel to give no effect of effect of comparison income on life satisfaction in the whole sample, when controlling for fixed effects, and time-in-panel, and with flexible, age-group dummies. The residual age-happiness relationship is hump-shaped in all three countries. Results are consistent with a simple life cycle model of relative income under uncertainty.
    Keywords: subjective life-satisfaction, comparison income, reference groups, age, welfare
    JEL: D10 I31 J10
    Date: 2013–07–09
  7. By: Arthur Henriot
    Abstract: This article focuses on the ability of European TSOs to meet the demand for substantial investments in the electricity transmission grid over the next two decades. We employ quantitative analysis to assess the impact of the required capital expenditures under a set of alternative financing strategies. We consider a best-case scenario of full cooperation between the European TSOs. It appears that under current trends in the evolution of transmission tariffs, only half the volumes of investment currently planned could be funded. A highly significant increase in transmission tariffs will be required to ensure the whole-scale investments can be delivered. Finally, alternative strategies can dampen the impact on tariffs but they can only partially substitute for this increase in charges paid by network users.
    Keywords: Investment, Electricity transmission grid, Transmission System Operator
    Date: 2013–04
  8. By: Laura Crespo (CEMFI, Centro de Estudios Monetarios y Financieros); Borja López-Nodal (Universidad de Cantabria); Pedro Mira (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: In this paper we provide new evidence on the causal effect of education on adult depression and cognition. Using SHARE data, we use schooling reforms in several European countries as instruments for educational attainment. We find that an extra year of education has a large and significant protective effect on mental health: the probability of suffering depression decreases by 6.5 percent. We find a large and significant protective effect on cognition as measured by word recall. We also explore whether heterogeneity and selection play a part in the large discrepancy between OLS and IV (LATE) estimates of the effect of education on depression and cognition. Using the data available in SHARELIFE on early life conditions of the respondents such as the individuals’ socioeconomic status, health, and performance at school, we identify subgroups particularly affected by the reforms and with high marginal health returns to education.
    Keywords: Health-SES gradient, education reforms, instrumental variables treatment effects, SHARELIFE.
    JEL: I1 I2 C3
    Date: 2013–04
  9. By: Christian Dudel; Notburga Ott; Martin Werding
    Abstract: How much retirement income is needed in order to maintain one's living standard at old age? As it is difficult to find a firm basis for an empirical treatment of this question, we employ a novel approach to assessing an adequate replacement rate vis- a-vis income in the pre-retirement period. We subject indications regarding satisfaction with current income as collected in the German Socio-Economic Panel (SOEP) to longitudinal analyses, using linear fixed-effects models and fixed-effects ordered logit models as our main analytical tools. We obtain a required net replacement rate of about 87% for the year of entry into retirement as a rather robust result, while replacement rates keeping the living standard unchanged may slightly decline over the retirement period.
    Keywords: Retirement, living standard, replacement rate, pensions, saving, satisfaction
    JEL: D1 D91 H55 J32
    Date: 2013
    Abstract: This paper analyses how maternal labor supply responds to the price and availability of childcare services. It focuses in particular on the childcare market of Flanders, which is characterised by above average childcare use, a wide variety of price schemes and suppliers, and strong government supervision regarding quality. Variation in prices and the degree of rationing of three types of childcare services at the municipal level are used to identify mothers’ labor supply responses. A discrete labor supply model of the Van Soest (1995) type is elaborated to allow for heterogeneity in prices and to distinguish between rationed and non-rationed households. These extensions rest on rationing probabilities that are estimated separately for informal childcare, formal subsidised childcare and formal non-subsidised childcare using partial observability models (Poirier, 1980). The estimates confirm earlier findings for Germany and Italy, indicating only small price effects and relatively large supply effects. This shows that labor supply incentives of expansion of childcare services are also present in a country which has surpassed the EU target of childcare slots for 33% of children below the age of 3 (Belgium, in contrast with Germany and Italy). Moreover, budgetary simulations suggest the expansion to be beneficial to the exchequer. Rising tax and social security benefits following the increase in labor supply largely exceed the costs of expansion.
    Date: 2013–04
  11. By: Noelia BERNAL; Frederic VERMEULEN
    Abstract: We analyze the impact of an increase in the legal retirement age on the effective retirement age in the Netherlands. We do this by means of a dynamic programming model for the retirement behavior of singles. The model is applied to new administrative data that contain very accurate and detailed information on individual incomes and occupational pension entitlements. Our model is able to capture the main patterns observed in the data. We observe that as individuals get older their labor supply declines considerably and this varies by health status. We simulate a soon to be implemented pension reform which aims at gradually increasing the legal retirement age from 65 to 67. The simulation results show a rather small impact on the effective retirement age. Individuals postpone their retirement by only 3 months on average, while differences across individuals mainly depend on their health status.
    Date: 2013–02
  12. By: Anja Balanskat (European Schoolnet); Diana Bannister (University of Wolverhampton); Benjamin Hertz (European Schoolnet); Ester Sigilló (European Schoolnet); Riina Vuorikari (European Schoolnet)
    Abstract: This report presents the analysis of 31 recent 1:1 learning initiatives, which equip students of a given school, class or age group with a portable computer device. Overall, the analysed initiatives involve approximately 47,000 schools and 17,480,000 students in primary and secondary education across 19 European countries. Based on desk research (analysis report on 1:1 initiatives and a literature review), in-depth expert interviews and stakeholder consultation in an expert workshop, the implementation strategies, the financing models and the pedagogical frameworks of these initiatives are analysed. Policy options for mainstreaming 1:1 initiatives that focus on the notion of 1:1 learning rather than 1:1 devices and successfully promote technological, pedagogical and organizational innovation are also proposed, contributing to the Europe 2020 strategy to modernize Education and Training across Europe.
    Keywords: 1:1 learning, 1:1 computing, Innovation & Creativity in Education and Training, Europe 2020 Strategy, Digital competency, Learning, ICT-enabled innovation for learning
    JEL: I20 I21 I28 I29
    Date: 2013–05
  13. By: Andrew Leicester (Institute for Fiscal Studies); George Stoye (Institute for Fiscal Studies)
    Abstract: We use English household-level survey data from 1996 to 2010 to explore whether economic market failures play a significant role in explaining the presence of energy efficiency measures (loft insulation, cavity wall insulation and full double glazing) in residential properties. There appears to be a limited role for credit constraints as proxied by income, receipt of means-tested benefits or educational attainment. Private renters are significantly less likely to own efficiency measures suggesting that failures in the landlord-tenant relationship in the private-rented sector are a key barrier to uptake. More broadly, we find that it is the characteristics of the dwelling rather than those of the occupants which are the most significant explanatory factors. Our results suggest that well-targeted policies to encourage take-up of efficiency measures could focus on private landlords, long-term owner occupiers, those in older properties and those using non-metered fuels as their main heating source. However, the key target groups vary across different efficiency measures.
    Keywords: energy, energy efficiency, insulation, market failures, evironmental policy
    JEL: D12 H23 Q48 Q58
    Date: 2013–06
  14. By: Aguzzoni, Luca; Argentesi, Elena; Ciari, Lorenzo; Duso, Tomaso; Tognoni, Massimo
    Abstract: This paper empirically evaluates the price effects of the merger of two major book retail chains in the UK: Waterstone's and Ottakar's. We employ differences-in-differences techniques and use a rich dataset containing monthly scanner data information on a sample of 200 books sold in 60 stores in 50 different local markets for a period of four years around the merger. Since retail mergers may have either local or national effects (or both) according to the level at which retail chains set prices, we undertake an ex-post assessment of the impact of the merger at both levels. At the local level, we compare the changes in the average price charged before and after the merger in the shops located in overlap areas -i.e. areas where both chains were present before the merger- and in non-overlap areas -i.e. areas where only one chain was present before the merger. At the national level, we employ two distinct control groups to evaluate the merger, namely the competitors and the top-selling titles. We find that the merger did not result in an increase in prices either at the local or at the national level. We also perform heterogeneous treatment effects estimations in order to assess whether the effect of the merger differs along various dimensions of heterogeneity that are present in our data. --
    Keywords: Mergers,Ex-post Evaluation,Book market,Retail sector
    JEL: K21 L24 L44 D22 O32
    Date: 2013
  15. By: Giulio Cainelli; Massimiliano Mazzanti; Alessio D'Amato
    Abstract: We present a joint theoretical-empirical investigation to assess the adoption by manufacturing firms of innovations aimed at increasing recycling and, consequently, reducing the use of material and waste in production processes. According to the recent emphasis on the 'external' factors stimulating innovation which often may be more important than the classic drivers, such as R&D, we address the role of local influences, such as policy environments and regional structural features. First, we analyse firms’ innovation adoption choices in a simplified technology adoption model augmented by discussions in the environmental innovation (EI) literature that rationalize the research hypotheses underlying empirical models. We frame our empirical analysis on an original integration of data from a firm survey (EU CIS2008 survey of manufacturing firms) and regional level waste related information obtained from Italian environmental agency waste reports. The EU CIS2008 was the first of these surveys to ask for information on EI adoption in the waste sector. Our econometric analysis shows that firms adopt EI on the basis of some relational factors, while drivers such as R&D have no impact. The evidence of our study supports the role of regional factors related to waste management and policy. For example, firms located in regions with better separated waste collection and waste tariff diffusion systems are more likely to adopt EI. Networking and agglomeration economies do not seem to have any effect.
    Keywords: waste and material reduction technology; innovation adoption; firm behaviour; waste policy; regional frameworks; agglomeration economies
    JEL: D22 Q53 Q55
    Date: 2013–06–21
  16. By: Alexander SCHMITT; Johannes VAN BIESEBROECK
    Abstract: Trends towards international fragmentation of production and modular process technologies have increased the importance of proximity in the supply chain of sophisticated manufactured goods. Using a rich and novel data set for the European automotive industry, we simultaneously evaluate the relative importance of geographical, cultural and relational proximity in sourcing strategies. The estimates indicate that each dimension provides an independent benefit and also which measures have the largest relative importance. We also find that the positive effects attributed to some measures reflect past relationships rather than predict new ones. In particular, co-location and a low cultural distance should be interpreted as outcomes of a sourcing strategy, not as predictors for sourcing success. We investigate to what extent firms from different countries follow different strategies and which choices suppliers can make to boost their attractiveness as outsourcing partner.
    Date: 2013–02
  17. By: Jan Kleibrink
    Abstract: This paper analyzes the effect of educational mismatch on wages in Germany, using data from the German Socio-Economic Panel. Educational mismatch has been discussed extensively, mostly by applying OLS wage regressions which are prone to an unobserved heterogeneity bias. This problem is approached by using FE and IV models. As a stability check, the regressions are rerun using data from the International Adult Literacy Survey, allowing for an explicit control of skills as proxy of abilities. Results show that unobserved heterogeneity does not explain the wage differences between actual years of education and years of required education. This rejects the hypothesis that mismatched workers compensate for heterogeneity in innate abilities. The results suggest a structural problem in the German educational system as skill demand and supply are not in long-term equilibrium.
    Keywords: Wages; educational mismatch
    JEL: I14 I21 J31
    Date: 2013–07
  18. By: Vivien Procher; Diemo Urbig; Christine Volkmann
    Abstract: For a sample of 1243 European companies, we analyse the link between firm type and foreign direct investment (FDI) locations. We find substantial empirical evidence that being a family firm does not only affect the overall propensity for FDI but that this effect is also specific to target regions. Overall, family firms invest more than managerial-led firms, particularly in Europe and North America. Furthermore the BRIC countries Brazil, Russia, India and China do not constitute a homogenous attractiveness cluster for FDI.
    Keywords: Foreign direct investment; family firms; BRIC
    JEL: D21 F23 L22
    Date: 2013–05
  19. By: Giovanni Dosi; Daniele Moschella; Emanuele Pugliese; Federico Tamagni
    Abstract: This paper presents a broad set of empirical regularities about selection and market shares reallocation in manufacturing industries of France, Germany, UK and USA. We first disentangle the contribution to industry-level productivity growth of within-firm productivity changes and between-firms reallocation of shares. The evidence corroborates that within-firm learning prevails over competitive selection. Second, we address the strength of reallocation by exploring if and to what extent firm growth rates are shaped by relative productivity levels in deviation from industry average and by the over time variation of productivities themselves. The econometric analysis accounts for both the dynamic dimension of the selection process and idiosyncratic firm-specific factors. We find that changes, rather than relative levels, are the dominant productivity-related determinant of relative growth rates.
    Keywords: firms heterogeneity, sectoral productivity decomposition, corporate growth, productivity, market selection, firm-industry dynamics
    Date: 2013–07–08
  20. By: Cathrine Ulla Jensen; Toke Emil Panduro (Department of Food and Resource Economics, University of Copenhagen); Thomas Hedemark Lundhede (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: In this article we quantify the marginal external effects of nearby land based wind turbines on property prices capitalized through traded residential properties located within 2,500 meters or less. We succeed in separating the effect of noise and visual pollution from wind turbines. This was achieved by using a dataset covering 21 municipalities and consisting of 12,640 traded residential properties sold in the period 2000-2011. We model the hedonic price function in two steps. First we detrend data across municipalities using a pooled cross sectional model which allows for different price trends across municipalities. Second we control for spatial autocorrelation by using explicit spatial models. Properties affected by noise and visual pollution from wind turbines are identified using Geographical Information Systems. Our results show that wind turbines have a significant negative impact on the price schedule of neighboring residential properties. The visual pollution accounts for 3.15% of the residential sales price. The price premium declines with distance by about 0.242% of the sales price for every 100 meters. The effect of noise depends on the noise level emitted and ranges from 3% to 7% of the sale price for residential properties.
    Keywords: Valuation, wind turbines, spatial autocorrelation, hedonic house price modeling
    Date: 2013–07

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