nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2013‒08‒05
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Technology Platforms in Europe: an empirical investigation By Lisa De Propris; Carlo Corradini
  2. Nonlinear behaviour of EMBI index:the case of eastern European countries. By Christian Espinosa; Juan Gorigoitía; Carlos Maquieira
  3. Greasing the Wheels of Rural Transformation? Margarine and the Competition for the British Butter Market By Markus Lampe; Paul Sharp
  4. Distant Event, Local Effects? Fukushima and the German Housing Market By Thomas K. Bauer; Sebastian Braun; Michael Kvasnicka
  5. Youth Unemployment in Belgium: Diagnosis and Key Remedies By Cockx, Bart
  6. FGT Poverty Measures and the Mortality Paradox: Theory and Evidence By Mathieu Lefebvre; Pierre Pestieau; Grégory Ponthière
  7. Are German Tourists Environmental Chameleons? A Micro-econometric Analysis of Adaptation to Climate Change By Claudia Schwirplies; Andreas Ziegler
  8. Can Parents' Right to Work Part-Time Hurt Childbearing-Aged Women? A Natural Experiment with Administrative Data By Fernández-Kranz, Daniel; Rodríguez-Planas, Núria
  9. Green investment strategies and export performance: A firm-level investigation By Antonietti,Roberto; Marzucchi,Alberto
  10. Labour’s Record on Cash Transfers, Poverty, Inequality and the Lifecycle 1997 - 2010 By John Hills
  11. International Migration of Couples By Martin Junge; Martin D. Munk; Panu Poutvaara
  12. Intra-Family Migration Decisions and Elderly Left Behind By Tobias Stoehr
  13. Life satisfaction of immigrants: does cultural assimilation matter? By Viola Angelini; Laura Casi; Luca Corazzini
  14. Mind the gap! The relative wages of immigrants in the Portuguese labour market By Sónia Cabral; Cláudia Duarte
  15. Trust and reciprocity among Mediterranean countries By Nikolaos Georgantzis; Juan A. Lacomba; Francisco Lagos; Juliette Milgram
  16. Unemployment and Domestic Violence: Theory and Evidence By Dan Anderberg; Helmut Rainer; Jonathan Wadsworth; Tanya Wilson
  17. Foreign direct investment and institutional reform: evidence and an application to Portugal By Paulo Júlio; Ricardo Pinheiro-Alves; José Tavares
  18. Corruption, Accountability and Efficiency. An Application to Municipal Solid Waste Services By Graziano Abrate; Federico Boffa; Fabrizio Erbetta; Davide Vannoni
  19. The text for legality under EU competition rules: What guidance do the commission's guidelines provide? By Behrens, Peter
  20. The Effects of Private Equity on Targets: Majority versus Minority Investments By Erich Battistin; Paolo Bortoluzzi; Fabio Buttignon; Martina Serafini; Marco Vedovato

  1. By: Lisa De Propris; Carlo Corradini
    Abstract: In the last decades, innovation activity has been defined by an increasing complexity and a faster pace of the underlying technological change. Accordingly, several studies have shown that competitive systems of innovation benefit from being able to build upon a wide but integrated spectrum of technological capabilities characterised by a sustained dynamism in the level of inter-sectoral technology flows. In this context, technological platforms – defined as knowledge and scientific launching pads that spin out of key enabling technologies - may create the opportunity for technological externalities to take place across a set of related sectors through a swarm of increasingly applied and incremental innovations. In this report, we look at the presence and determinants of these technological platforms across EU Countries and explore the mechanisms through which these influence inter sectoral technology spillovers, thus fostering technological shifts and technological synthesis within the broader economy. Using data on patents and patent citations obtained from the PATSTAT-CRIOS database, covering all patent applications made to the European Patent Office (EPO), we try to model the systemic nature of technology platforms. In particular, our aim is to provide empirical evidence that the presence of key enabling technologies at the base of the platform may lead to a more sustained interaction across second tier innovations characterised by a “distant” knowledge base. Then, we endeavour to investigate the relationship that may take place between this process and the role played by the national dimension.
    Keywords: Clusters, ecological innovation, industrial innovation, innovation, innovation policy, new technologies, patents, socio-ecological transition, sustainable growth
    JEL: O3 O31 O32 O33 O38
    Date: 2013–07
  2. By: Christian Espinosa (Facultad de Economía y Empresa, Universidad Diego Portales); Juan Gorigoitía; Carlos Maquieira
    Date: 2012–10
  3. By: Markus Lampe (Universidad Carlos III Madrid); Paul Sharp (University of Southern Denmark)
    Abstract: We consider an example of the impact of a new good on producers of close substitutes: the invention of margarine and its rapid introduction into the British market from the mid-1870s. This presented a challenge to the traditional suppliers of that market, butter producers from different European countries. We argue that the capacity to react quickly to the appearance of this cheap substitute by improving quality and establishing product differentiation was critical for the fortunes of butter producers. We illustrate this by discussing the different reactions to margarine and quality upgrading in Ireland, Denmark and the Netherlands. A statistical analysis using monthly data for Britain from 1881-87 confirms that margarine had a greater impact on the price of poor quality butter than that of high quality butter, presumably because it was a stronger substitute.
    Keywords: Butter, margarine, dairies, new products, quality changes
    JEL: L66 N53 O31
    Date: 2013–07
  4. By: Thomas K. Bauer; Sebastian Braun; Michael Kvasnicka
    Abstract: The Fukushima Daiichi accident in Japan in March 2011 caused a fundamental change in Germany's energy policy which led to the immediate shut down of nearly half of its nuclear power plants. This paper uses data from Germany's largest internet platform for real estate to investigate the effect of Fukushima on the German housing market. Using a difference-in-differences approach, we find that Fukushima reduced house prices near nuclear power plants that were in operation before Fukushima by almost 6%. House prices near sites that were shut down right after the accident even fell by 10.8%. Our results suggest that economic reasons are of prime importance for the observed fall in house prices near nuclear power plants
    Keywords: Fukushima,Nuclear Power Plants,Housing Prices,Germany
    JEL: R31 Q48 Q58
    Date: 2013–07
  5. By: Cockx, Bart (Ghent University)
    Abstract: In Belgium youth unemployment is structurally higher than the European (EU27) average, in particular for the low educated. In this study we set a diagnosis of the main structural factors and advance key remedies. We analyze the system of employment protection, education and passive and active labor market policies. A high minimum wage, a strict separation between school and work, and a vertically segmented schooling system with high retention rates and too early tracking are identified as main causal factors. Strict employment protection legislation is only concern for high-skilled youth. Reducing labor costs at low wages and a fundamental schooling reform that aims at dismantling the strict barrier between school and work are proposed as key remedies. In addition, youth should be entitled as of the start of unemployment to a low benefit based on the principle of “mutual obligation”. Very intensive and durable guidance is to be targeted to the low educated.
    Keywords: youth unemployment, employment protection, education, active and passive labor market policies, Belgium
    JEL: J24 J38 J68
    Date: 2013–07
  6. By: Mathieu Lefebvre (Université de Liège - Université de Liège); Pierre Pestieau (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales [EHESS] - Ecole des Ponts ParisTech - Ecole normale supérieure de Paris - ENS Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CORE - Center of Operation Research and Econometrics [Louvain] - Université Catholique de Louvain (UCL) - Belgique, CEPR - Center for Economic Policy Research - CEPR); Grégory Ponthière (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales [EHESS] - Ecole des Ponts ParisTech - Ecole normale supérieure de Paris - ENS Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: Income-differentiated mortality, by reducing the share of poor persons in the population, leads to what can be called the "Mortality Paradox": the worse the survival conditions of the poor are, the lower the measured poverty is. We show that the extent to which FGT measures (Foster Greer Thorbecke 1984) underestimate old-age poverty under income-differentiated mortality depends on whether the prematurely dead would have, in case of survival, suffered from a more severe poverty than the average surviving population. Taking adjusted FGT measures with extended lifetime income profiles as a benchmark, we identify conditions under which the selection bias induced by income-differentiated mortality is higher for distribution-sensitive measures than for headcount measures. Finally, we show, on the basis of data on poverty in 11 European economies, that the size of the selection bias varies across different subclasses of FGT measures and across countries.
    Keywords: Income-differentiated mortality ; FGT poverty measures
    Date: 2013–07
  7. By: Claudia Schwirplies (University of Kassel); Andreas Ziegler (University of Kassel)
    Abstract: SThis paper empirically analyzes the determinants of individual tourism-related adaptation to climate change, i.e. the stated choice of alternative travel destina-tions due to increasing temperatures in the future. By examining the tourism sector, our study investigates an industry which was not extensively considered in economic analyses of climate change so far in spite of its worldwide huge eco-nomic relevance and strong sensitivity to global warming. Our empirical analysis on the basis of unique representative data from 5370 German tourists first re-veals a non-negligible extent of tourism-related adaptation to climate change in the amount of more than 22% of the respondents. Our micro-econometric analysis with binary probit models implies strong positive effects of a high awareness of climate change effects, increasing age as indicator for vulnerability of climate change, as well as a high adaptive capacity (measured by disposable financial resources) on this type of adaptation. The estimation results suggest no single significant effect of a high educational level or a high level of information on ad-aptation to climate change, but a positive interaction effect (which was, in con-trast to former studies, estimated according to Ai and Norton 2003 and Norton et al. 2004). Our empirical results underline several challenges for the tourism in-dustry and policy makers in order to transform the tourism infrastructure and to diversify holiday offers. They additionally reveal important focus groups of tour-ists such as (the increasing group of) elderly persons who are crucial for the de-velopment of successful future product strategies in the tourism sector.
    Keywords: Climate change, adaptation, tourism, micro-econometric analysis
    JEL: Q54 Q58
    Date: 2013
  8. By: Fernández-Kranz, Daniel (IE Business School, Madrid); Rodríguez-Planas, Núria (IZA and IAE-CSIC)
    Abstract: Using a differences-in-differences approach and controlling for individual unobserved heterogeneity, we evaluate the impact of a 1999 law that granted all workers with children younger than 7 years old protection against a layoff if the worker had previously asked for a work-week reduction due to family responsibilities. As only mothers took advantage of these arrangements, we find that after the law, employers were: (i) more likely to let childbearing-aged working women "go" relative to their male counterparts; (ii) less likely to promote childbearing-aged women into good jobs; and (iii) less likely to hire childbearing-aged women. In addition, employers were able to pass at least part of the cost to childbearing-aged women through lower wages, and the amount passed to workers increased with the precariousness of the job. Heterogeneity analysis reveals that the effect on employment transitions is mainly driven by low-skilled workers and those in blue-collar jobs, while the effect on wages holds across all groups. Evidence that the substitution away from (good) jobs widens over time suggests employer learning. These results are robust to the use of different specifications and placebo tests.
    Keywords: female employment transitions and wages, fixed-term and permanent contract
    JEL: C23 C25 C33 J16 J22 J62
    Date: 2013–07
  9. By: Antonietti,Roberto; Marzucchi,Alberto
    Abstract: In this paper we empirically investigate the relationship between investments in environmentally-oriented equipment and firms’ export performance. Drawing on Porter hypothesis and firm heterogeneity theory, we adopt a structural model where first we estimate the impact of green investment strategies on the level of productive efficiency (TFP), and second we assess whether induced productivity influences the extensive and intensive margin of exports. Relying on a rich firm-level dataset on Italian manufacturing, our results show that firms with higher productivity, induced among other factors by green investment involving environmental protection and reduction in the use of raw materials, have increased commitment to, and profits from, exports, especially towards countries adopting a more stringent environmental regulatory framework. Our evidence provides a ‘green investment-based’ explanation for the link between TFP-heterogeneity and trade.
    Keywords: Exports, Firm Heterogeneity, Green Investment Strategy, Total Factor Productivity
    JEL: Q55 Q56 F14 F18
    Date: 2013–07–31
  10. By: John Hills
    Abstract: Cash transfers (benefits and tax credits) are crucial to the way that inequalities develop over time. This paper looks at how Labour's aims, policies and achievements on poverty and inequality related to its reforms of and spending on cash transfers. - Labour's aims for poverty and inequality were selective. 'Equality of opportunity' was the stated aim, rather than equality of outcome - with a focus on lifting the lowest incomes, not reducing the highest ones. - Labour gave priority to reducing child and pensioner poverty, addressing them through a series of reforms. It increased the share of national income provided through cash transfers to children and pensioners, and increased the value of their cash transfers relative to the poverty line. - By contrast, spending on other transfers to working-age adults fell as a share of national income from the level Labour inherited, while benefits for those without children fell further below the poverty line. - By the end of the period both child poverty and pensioner poverty had fallen considerably, in circumstances where child poverty would have risen without the reforms (and pensioner poverty would have fallen less far). However, poverty for working-age adults without children increased. - The risks of poverty converged between children, their parents, pensioners, and other working age adults. Being a child or a pensioner no longer carried a much greater risk of living in poverty than for other age groups. - Overall income inequality was broadly flat, comparing the start and end of Labour's term in office. But differences in net incomes between age groups were much lower. The smoothing of incomes that occurred across the life cycle could be seen as a striking, if unremarked, achievement.
    Keywords: social security, cash transfers, child poverty, pensioner poverty, New Labour, public spending, life cycle
    JEL: I38
    Date: 2013–07
  11. By: Martin Junge (DEA (Danish Business Research Academy)); Martin D. Munk (Aalborg University); Panu Poutvaara (University of Munich, Ifo Institute, CESifo and IZA, CReAM)
    Abstract: We present theory and evidence on international migration of couples. Our main question is how migration decisions depend on partners’ education and earnings, and the number of children. We use register data on full Danish population from 1982 to 2010, focusing on opposite-gender couples in which the female is aged 23 to 37, and the male 25 to 39. We find that power couples in which both are highly educated are most likely to emigrate, but also most likely to return. The probability of emigration is increasing in male earnings, but does not depend much on female earnings.
    Keywords: International migration, Family migration, Education
    JEL: F22 J12 J16 J24
    Date: 2013–07
  12. By: Tobias Stoehr
    Abstract: In many poor countries with high emigration rates elderly people are left behind without care when their children migrate. Without a functioning market in private care migrants face a difficult trade-off between working their way out of poverty and providing informal care once their parents become frail or sick. I develop a non-cooperative model of siblings' interactions that explains how chain migration can lead to a breakdown of traditional caregiving structures while an opposing endogenous effect increases family members' incentives to specialize as caregiver. The model's predictions are tested using novel data from Moldova and found to perform better than predictions of some established migration models. The empirical analysis suggests that migration and staying in order to provide care are strategic complements for children of elderly parents in most families. This is evidence of a promising resilience of families' informal security arrangements to large-scale migration
    Keywords: migration, elderly care, remittances, intra-family allocation,informal security networks
    JEL: F22 J14 I19 D10
    Date: 2013–07
  13. By: Viola Angelini (University of Groeningen); Laura Casi (Bocconi University); Luca Corazzini (University of Padova)
    Abstract: We empirically assess the relationship between cultural assimilation and subjective well-being of immigrants by using the German Socio-Economic Panel, a longitudinal dataset including information on both the economic and non economic conditions of the respondents. We find that the more immigrants identify with the German culture and fluently speak the national language, the more they report to be satisfied with their lives. This result is robust to several potential confounding factors, including a large number of individual variables (demographic, educational, social, economic and health), labour market outcomes and the external social conditions of the immigrant.
    Keywords: assimilation, identity, life-satisfaction, immigration. JEL: J15, I31, Z10, F22.
    Date: 2013–07
  14. By: Sónia Cabral; Cláudia Duarte
    Abstract: Using matched employer-employee data, we examine the wage gaps between immigrant and native workers in the Portuguese labour market in the 2002-2008 period. We use the relation between the Gelbach’s and Oaxaca-Blinder’s decompositions to split the unconditional average wage gap as the sum of a composition effect and a wage structure effect. Most of the wage gap is not due to worst endowments of the immigrants but to differences in the returns to those characteristics and to the immigrant status effect. In particular, education and foreign experience of the average immigrants are significantly less valued in the Portuguese labour market. Overall, the wages of immigrants do not fully converge to those of comparable natives as experience in the Portuguese labour market increases. The assimilation rates tend to be stronger in the first years after migration and for immigrants with higher levels of pre-immigration experience. Total immigrants are a heterogeneous group of different nationalities, with immigrants from the EU15 and China starring as the two extreme cases.
    JEL: F22 J31 J61
    Date: 2013
  15. By: Nikolaos Georgantzis (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Juan A. Lacomba (Department of Economics & GLOBE, University of Granada, Spain); Francisco Lagos (Department of Economics & GLOBE, University of Granada, Spain); Juliette Milgram (Department of Economics & GLOBE, University of Granada, Spain)
    Abstract: This article examines an intra- and international trust game experiment among Moroccan, French and Spanish subjects. Before making each decision, participants were informed on the nationality of their partner. We find that, overall, subjects from Morocco exhibited a higher level of trust. Furthermore, they were found to trust French subjects more than those from Spain. Regarding reciprocal behavior, subjects from Spain were the least trustworthy. Apart from this, we do not observe any discriminatory patterns from or towards any country.
    Keywords: trust, reciprocity, trust game, cross-country, experiment
    JEL: C91
    Date: 2013
  16. By: Dan Anderberg; Helmut Rainer; Jonathan Wadsworth; Tanya Wilson
    Abstract: Is unemployment the overwhelming determinant of domestic violence that many commentators expect it to be? The contribution of this paper is to examine, theoretically and empirically, how changes in unemployment affect the incidence of domestic abuse. The key theoretical prediction is that male and female unemployment have opposite-signed effects on domestic abuse: an increase in male unemployment decreases the incidence of intimate partner violence, while an increase in female unemployment increases domestic abuse. Combining data on intimate partner violence from the British Crime Survey with locally disaggregated labor market data from the UK's Annual Population Survey, we find strong evidence in support of the theoretical prediction.
    Keywords: domestic violence, unemployment
    JEL: J12 D19
    Date: 2013–07
  17. By: Paulo Júlio; Ricardo Pinheiro-Alves; José Tavares
    Abstract: We examine the role of geographic, economic, and institutional factors in attracting Foreign Direct Investment (FDI) in Europe, using a cross-section of inward bilateral investments. We estimate and assess the expected benefits, the required reform efforts, and the efficiency of reform options corresponding to a convergence of Portuguese institutions to EU standards. We conclude that improving home institutions is likely to have a quantitatively very significant role in attracting FDI. Geographical and market size factors also play a role. Reforms promoting the independence of financial institutions and a leaner bureaucracy, lowering political risk and corruption, and improving the investment code may significantly affect the amount of bilateral inward FDI that is targeted to Portugal.
    JEL: F30 H00
    Date: 2013
  18. By: Graziano Abrate (Department of Business Management and Environment, University of Eastern Piedmont); Federico Boffa (Department of Law and Economics, University of Macerata); Fabrizio Erbetta (Department of Business Management and Environment, University of Eastern Piedmont); Davide Vannoni (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)
    Abstract: This paper explores the link between accountability, corruption and efficiency in the context of a career concern model where politically connected local monopolies are in charge of the provision of a local public service. We find that both corruption and a low degree of accountability induce managers to reduce effort levels, thereby contributing to drive down efficiency. Our predictions are tested using data on solid waste management services provided by a large sample of Italian municipalities. The results of the estimation of a stochastic cost frontier model provide robust evidence that high corruption levels and low degrees of accountability substantially increase cost inefficiency. Finally, we show that the negative impact of corruption is weaker for municipalities ruled by left-wing parties, while the positive impact of accountability is stronger if the refuse collection service is managed by limited liability companies.
    Keywords: corruption, accountability efficiency, solid waste.
    JEL: D24 D72 D73 L25 Q53
    Date: 2013–07
  19. By: Behrens, Peter
    Abstract: Under the regime of Regulation 1/2003 on the implementation of the rules of competition laid down in Articles 101 and 102 TFEU undertakings are obliged to take care by themselves of their compliance with the competition rules. For practical purposes this is also true when it comes to the rules applicable to the the control of concentrations under Regulation 139/2004. In order to facilitate the task of undertakings, which has become even more difficult according to the more economic approach to competition law, the Commission has published a number of guidelines which are setting out the relevant criteria applied by the Commission itself. A closer look reveals, however, that the criteria defined in the various guidelines are far from reflecting a coherent, precise and consistent approach of the Commission. At least four distinct legal tests may be identified, such as a consumer harm-test, a negative market effects-test, a market power-test and a competitive process-test. This paper analyses the various guidelines in order to demonstrate how these different approaches are embedded in their wording. The unavoidable conclusion is that undertakings get much less guidance from the guidelines than they would be justified to expect. This is all the more deplorable, because the European cours' jurisdprudence continues to follow an approach which is considerably different from the Commission's. --
    Keywords: competition rules,merger control,competition guidelines,effects based approach,consumer harm,market power,market structure,competitive process,competitors' rivalry,consumer choice
    Date: 2013
  20. By: Erich Battistin (University of Padova); Paolo Bortoluzzi (University of Padova); Fabio Buttignon (University of Padova); Martina Serafini (University of Padova); Marco Vedovato (University of Venice)
    Abstract: This paper investigates the differential effects on performance of majority and minority Private Equity (PE) investments. By using a difference in difference approach, we compare a sample of 191 firms in the years following the PE investment with a control group constituted by firms that are the most similar to targets in the years preceding the deal. We find that, in the three years following PE investments, targets achieve higher profitability, higher sales and employ more than their control counterparts, and this is more so for minority deals. We also show that PE targets experience a significantly higher board turnover than controls, and that changes are more pronounced in majority investments where both the CEO and the chairman are replaced. Moving to targets ownership types, we find that PEs are especially effective when they acquire a minority interest in family firms or, to some extent, when they take a majority stake in non-family firms. These results suggest that when dealing with family firms PEs are particularly beneficial when they tend to complement rather than substitute the incumbent human capital, namely the entrepreneurs/owners serving as CEO or chairman before the PE steps in.
    Keywords: Private Equity, Minority Investments, Private Firms, Firm Performance, Corporate Governance. JEL: G32, G34.
    Date: 2013–07

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