nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2013‒08‒10
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Investment behaviour of EU arable crop farms in selected EU countries and the impact of policy reforms By Guastella,Giovanni; Moro, Daniele; Sckokai, Paolo; Veneziani, Mario
  2. Networks of innovators within and across borders. Evidence from patent data By Andrea Morescalchi; Fabio Pammolli; Orion Penner; Petersen Alexander M.
  3. What do wages add to the health-employment nexus? Evidence from older European workers By Manuel Flores; Adriaan Kalwij
  4. Job Satisfaction of Older Workers as a Factor of Promoting Labour Market Participation in the EU: The Case of Slovenia By Aristovnik, Aleksander; Jaklič, Ksenja
  5. Baseline results from the EU27 EUROMOD By Jara Tamayo, Holguer Xavier; Sutherland, Holly
  6. Chinese Export Competition, Declining Exports and Adjustments at the Industry and Regional Level in Europe By Flückiger, Matthias; Ludwig, Markus
  7. Is money all? Financing versus knowledge and demand constraints to innovation By Gabriele Pellegrino; Mark J. Maria Savona
  8. Has the level of achieved education affected the income of Czech households By Birčiaková, Naďa; Antošová, Veronika; Stávková, Jana
  9. The Effect of Firms' Partial Retirement Policies on the Labour Market Outcomes of Their Employees By Huber, Martin; Lechner, Michael; Wunsch, Conny
  10. Causal Effects of Educational Mismatch in the Labor Market By Jan Kleibrink
  11. R&D drivers and obstacles to innovation in the energy industry By Maria Teresa Costa-Campi; Néstor Duch-Brown; José García-Quevedo
  12. The production function of top R&D investors: Accounting for size and sector heterogeneity with quantile estimations By Antonio Vezzani; Sandro Montresor
  13. Partial Disability System and Labor Market Adjustment: The Case of Spain By Jose I. Silva; Judit Vall-Castello
  14. Empirical Evaluation of the Effectiveness of Competition Policy By Koski, Heli; Pajarinen, Mika
  15. Report No. 54: Social Protection Rights of Economically Dependent Self-employed Workers By Eichhorst, Werner; Kahanec, Martin; Kendzia, Michael J.; Wehner, Caroline; al., et
  16. The Impact of Energy Prices on Green Innovation By Marius Ley; Tobias Stucki; Martin Wörter
  17. Learning More About the Causes and Consequences of Migration through the Experiences of Ireland's Older People By Barrett, Alan; Mosca, Irene
  18. Public-private sector wage differentials in Spain. An updated picture in the midst of the Great Recession. By Antón, José-Ignacio; Muñoz de Bustillo, Rafael
  19. Environmental performance and quality of governance: A non-parametric analysis of the NUTS 1-regions in France, Germany and the UK By Halkos, George; Sundström, Aksel; Tzeremes, Nickolaos
  20. Time-Varying Interdependencies of Tourism and Economic Growth: Evidence from European Countries By Mina Dragouni; George Filis; Nikolaos Antonakakis

  1. By: Guastella,Giovanni; Moro, Daniele; Sckokai, Paolo; Veneziani, Mario
    Abstract: This working paper provides a comparative analysis, among selected EU member states, of the investment demand of a sample of specialised field crop farms for farm buildings, machinery and equipment as determined by different types and levels of Common Agricultural Policy support. It allows for the existence of uncertainty in the price of output farmers receive and for both long- and short-run determinants of investment levels, as well as for the presence of irregularities in the cost adjustment function due to the existence of threshold-type behaviours. The empirical estimation reveals that three investment regimes are consistently identified in Germany and Hungary, across asset and support types, and in France for machinery and equipment. More traditional disinvestment-investment type behaviours characterise investment in farm building in France and the UK, across support types, and Italy for both asset classes under coupled payments. The long-run dynamic adjustment of capital stocks is consistently and significantly estimated to be towards a – mostly non-stationary – lower level of capitalisation of the farm analysed. By contrast, the expected largely positive short-run effects of an increase in output prices are often not significant. The effect of CAP support on both types of investment is positive, although seldom significant, while the proxy for uncertainty employed fails to be significant yet, in most cases, has the expected effect of reducing the investment levels.
    Date: 2013–05
  2. By: Andrea Morescalchi (IMT Lucca Institute for Advanced Studies); Fabio Pammolli (IMT Lucca Institute for Advanced Studies); Orion Penner (IMT Lucca Institute for Advanced Studies); Petersen Alexander M. (IMT Lucca Institute for Advanced Studies; IMT Lucca Institute for Advanced Studies and Department of Managerial Economics, Strategy and Innovation, K.U. Leuven)
    Abstract: Recent studies on the geography of knowledge networks have documented a negative impact of physical distance and institutional borders upon research and development (R&D) collaborations. Though it is widely recognized that geographic constraints hamper the diffusion of knowledge, less attention has been devoted to the temporal evolution of these constraints. In this study we use data on patents filed with the European Patent Office (EPO) for 50 countries to analyze the impact of physical distance and country borders on inter-regional links in four different networks over the period 1988-2009: (1) co-inventorship, (2) patent citations, (3) inventor mobility and (4) the location of R&D laboratories. We find the constraint imposed by country borders and distance decreased until mid-1990s then started to grow, particularly for distance. The intensity of European cross-country inventor collaborations increased at a higher pace than their non-European counterparts until 2004, with no significant relative progress afterwards. Moreover, when analyzing networks of geographical mobility, multinational R&D activities and patent citations we do not depict any substantial progress in European research integration aside from the influence of common global trends.
    Keywords: Geography of knowledge; Networks of Innovators; European integration; Spatial proximity; Crossborder collaboration; Gravity model
    JEL: O30 R10 R23
    Date: 2013–08
  3. By: Manuel Flores (University of Santiago de Compostela, IDEGA); Adriaan Kalwij (Utrech University School of Economics)
    Abstract: This paper adds to the empirical literature on health as an important determinant of employment at older ages by exploring the role in the health-employment nexus of the wage rates of 50 to 64-year-old workers. To do so, we use individual-level panel data from the Survey of Health, Ageing and Retirement in Europe to estimate a system of equations for health, wages and employment. Our model also takes into account both the potential for measurement error in the health variable and selectivity issues related to the wage equation. We find that for men (women) a one-unit (one standard deviation) increase in health yields, on average, a 7 (8) percentage higher hourly wage rate, resulting in a 2 (4) percentage point higher employment probability. We also show a direct impact of health on employment: a similar increase in health raises the employment probability of men (women) by 16 (13) percentage points. As regards differences between European countries, our findings suggest that for all country groups, the mediating role of wages in the health-employment nexus is relatively small while the direct impact of health on employment is relatively large and rather similar. Overall, our findings indicate only a minor role for disability income policies likes wage subsidies to encourage the employment of (older) workers with health limitations, but an instrumental role for policy aimed at helping employers accommodate these workers on the job and keep them employed at older ages.
    Keywords: Health, wages, employment
    JEL: D00 I10 J14 J20 J30
    Date: 2013–07
  4. By: Aristovnik, Aleksander; Jaklič, Ksenja
    Abstract: This paper deals with the study of older workers’ job satisfaction as a factor that, combined with other personal and job-related factors, can significantly influence the decision to postpone retirement when this decision is in the hands of an individual. Starting from the fact that the employment rate of older workers in Slovenia in 2011 was the lowest in the EU, the article aims to establish the level of older workers’ job satisfaction in Slovenia compared to the EU, analyse its dimensions, its specifics related to age, gender, sector of economic activities and type of profession, as well as ascertain what determines it the most. A statistical analysis of the results of the Fifth European Working Conditions Survey of 2010 reveals that Slovenia ranks 15th among the EU member states in terms of older workers’ job satisfaction, thus lagging behind the EU average. While Slovenian older workers, the same as their European counterparts, are most satisfied with doing useful work and the least with their prospects for career advancement, a comparison with other EU member states shows that they are relatively dissatisfied with working conditions, salary and adequacy of the motivation to give one’s best performance, and relatively satisfied with doing useful work and with their colleagues. The analysis also shows that the level of older workers’ job satisfaction in Slovenia is determined most by their satisfaction with the adequacy of the motivation to give one’s best performance.
    Keywords: older workers, job satisfaction, employment, labour market participation, EU, Slovenia
    JEL: J14 J20 J26 J28
    Date: 2013–08–02
  5. By: Jara Tamayo, Holguer Xavier; Sutherland, Holly
    Abstract: This paper presents baseline results from the latest version of EUROMOD (version F6.36+), the tax-benefit microsimulation model for the EU. First, we briefly report the process of updating EUROMOD. We then present indicators for income inequality and risk of poverty using EUROMOD and discuss the main reasons for differences between these and EU-SILC based indicators. We further compare EUROMOD indicators across countries and over time between 2009 and 2012. Finally, we provide estimates of marginal effective tax rates (METR) for all 27 EU countries in order to explore the effect of tax and benefit systems on work incentives at the intensive margin. Throughout we highlight both the potential of EUROMOD as a tool for policy analysis and the caveats that should be borne in mind when using it and interpreting results. This paper updates the work reported in EUROMOD Working Paper EM3/2013.
    Date: 2013–08–01
  6. By: Flückiger, Matthias; Ludwig, Markus
    Abstract: We analyze how a set of 22 European countries are affected by increased Chinese export competition between 1995 and 2008. Employing product level data, we document a reduction in the export volume of European countries due to increased Chinese export competition. This alteration in the export sector induces changes within the manufacturing industries, especially a decline in employment. The analysis using more aggregated, regional level data, shows that the industry sector as whole declines resulting, amongst others, in an increased unemployment rate. The importance of Chinese export competition for Europe is attributable to its high export intensity.
    Keywords: China, Export Competition, Industry Labor Decline
    JEL: F14 F16
    Date: 2013–08
  7. By: Gabriele Pellegrino (University of Barcelona & IEB); Mark J. Maria Savona (University of Sussex)
    Abstract: The paper adds to the scattered empirical evidence on the role of obstacles to innovation in a three-fold way. First, we correct for the usual sample selection bias by filtering out firms not interested in innovation from ‘potential innovators’. Second, we assess what mostly affects firms’ propensity to realize innovative outputs. Third, we do so in a panel framework by using an unbalanced panel of UK firm for the period 2002 - 2010. We find that demand- and market-related factors are as important as financing conditions in determining firms’ innovation failures. This evidence puts much of the latest hype on finance in perspective.
    Keywords: Barriers to innovation, innovative firms, potential innovators, failed innovators, panel data
    JEL: C23 O31
    Date: 2013
  8. By: Birčiaková, Naďa; Antošová, Veronika; Stávková, Jana
    Abstract: This paper deals with an analysis of the effects of education on the income of Czech households from 2006-2010. EU-SILC (European Union Statistics on Income and Living Conditions) review results are the main data source. The paper investigates with the living conditions of households and that is mandatory for all states. Based on the unified methodology, that is then possible to make comparison between countries. Households are divided into five categories according to the education attained by the head of the household. It further deals with income differences of individual educational groups expressed by the education coefficient. Households at risk of poverty are also taken into account. Income inequality is measured by way of the Gini coefficient. The analysis uses regression techniques to examine the relation between education and the Gini coefficient, as well as between education and households at risk of poverty. The biggest share is represented by households where the household head has vocational education, followed by households where the household head has secondary education. The regression analyses established strong positive dependence between the education level and Gini coefficient, as well as strong negative dependence between the education level and number of households at risk of poverty. Within analyzed period of five years was observed a negative development in the society in form that there is a bigger possibility of getting into the zone at risk of poverty for households with higher level of education.
    Keywords: education, EU-SILC, income, living conditions, poverty
    JEL: D3 D31 I31 I32
    Date: 2013–06
  9. By: Huber, Martin (University of St. Gallen); Lechner, Michael (University of St. Gallen); Wunsch, Conny (VU University Amsterdam)
    Abstract: In this paper, we assess the impact of firms introducing part-time work schemes for gradual labour market exit of elderly workers on their employees' labour market outcomes. The analysis is based on unique linked employer-employee data that combine high-quality survey and administrative data. Our results suggest that partial or gradual retirement options offered by firms are an important tool to alleviate the negative effects of low labour market attachment of elderly workers in ageing societies. When combined with financial incentives to hire unemployed or young jobseekers as replacement, they seem to be particularly beneficial, especially when labour market conditions are difficult. Under such circumstances, they can even have positive spill-over effects on younger workers. Firms should thus be encouraged to offer such schemes.
    Keywords: part-time work, elderly employees, treatment effects, matching
    JEL: J14 J26 C21
    Date: 2013–07
  10. 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 diff erences 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
  11. By: Maria Teresa Costa-Campi (University of Barcelona & IEB); Néstor Duch-Brown (University of Barcelona & IEB); José García-Quevedo (University of Barcelona & IEB)
    Abstract: The energy industry is facing substantial challenges that require innovation to be fostered. Nevertheless, levels of R&D investment and innovation remain quite low in comparison with other sectors. In this paper we analyse the main drivers of R&D investment and obstacles to innovation in the energy industry. We examine, firstly, whether the stated R&D objectives pursued by firms play a role in their R&D effort. Secondly, we analyse the effects of financial, knowledge and market barriers on the innovation outcomes of the firms. We rely on data from the Technological Innovation Panel (PITEC) for Spanish firms for the period 2003-2010. We use a structural model with three equations corresponding to the decision to carry out R&D or not, the R&D effort and the production of innovations. The results of the econometric estimations show, first, that R&D intensity is positively related to process innovation. Second, the main barriers that hamper innovation in the energy industry are related to market factors while financial and knowledge obstacles are not significant.
    Keywords: R&D, innovation, energy, barriers, regulation
    JEL: Q40 O31
    Date: 2013
  12. By: Antonio Vezzani (JRC-IPTS); Sandro Montresor (JRC-IPTS)
    Abstract: The paper investigates how top R&D investors differ in the production impact of their inputs and in their rate of technical change. We use the EU Industrial R&D Investment Scoreboard and perform a quantile estimation of an augmented Cobb-Douglass production function for a panel of more than 1,000 companies, covering the period 2002-2010. The results for the pooled sample are contrasted with those obtained from the estimates for different groups of economic sectors. Returns to scale are bounded by the initial size of the firm, but to an extent that decreases with the technological intensity of the sector. The output return of knowledge capital is the most important, irrespective of firm size, but in high-tech sectors only. Elsewhere, physical capital is the pivotal factor, although with size variations. The investigated firms appear different also in their technical progress: embodied in mid-high and low/mid-low tech sectors, and disembodied in high-tech sectors.
    Keywords: production function, R&D, firm and sector heterogeneity
    JEL: D24 D21 O30
    Date: 2013–07
  13. By: Jose I. Silva (University Of Kent); Judit Vall-Castello (Universitat de Girona)
    Abstract: Although partially disabled individuals in Spain are allowed to combine the receipt of disability benefits with a job, the empirical evidence shows that employment rates for this group of individuals are very low. Therefore, in this paper we construct labor market model with search intensity and matching frictions in order to identify the incentives and disincentives to work provided by the partial disability system in Spain from the point of view of both disabled individuals and employers. According to the model, the high employment rate gap observed between nondisabled and disabled workers can be partially explained by the presence of a lower level of productivity and higher searching costs among disabled individuals that discourage them from looking for jobs. Moreover, the design of the Spanish Disability System also contributes in explaining this gap. We also analyze the role of business cycle conditions in shaping the labor market transitions of disabled individuals.
    Keywords: disability system, job search intensity, flow analysis
    JEL: I18 J64 J68
    Date: 2013–07
  14. By: Koski, Heli; Pajarinen, Mika
    Abstract: This study evaluates the usefulness of different modifications of empirical models estimating the so-called Boone indicator for capturing changes in the intensity of competition. We use as “natural experiments” in this evaluation data from three cartel cases: i) international elevators and escalators cartel in various European countries during the years 1995-2004, ii) Finnish raw wood cartel during the years 1997-2004, and iii) Finnish construction cartel 1994-2002. The findings support our argument that particularly when the primary interest is to evaluate the effectiveness of a certain competition policy action, the empirical model should properly take into account a possible structural break in data due to the policy action. Furthermore, our data hint that the methodological choice of prior empirical studies to use data only from one industry at a time may lead into the false conclusions when the Boone indicator is used for evaluating the effectiveness of sector-specific competition policy actions.
    Keywords: competition, competition policy, Boone indicator, cartels
    JEL: D43 K21 L4 L41
    Date: 2013–08–01
  15. By: Eichhorst, Werner (IZA); Kahanec, Martin (Central European University); Kendzia, Michael J. (IZA); Wehner, Caroline (IZA); al., et (affiliation not available)
    Abstract: Report based on a study conducted for the European Parliament, Bonn 2013 (128 pages)
    Date: 2013–08–06
  16. By: Marius Ley (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Tobias Stucki (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Wörter (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Based on patent data and industry specific energy prices for 18 OECD countries over 30 years we investigate on an industry level the impact of energy prices on green innovation activities. Our econometric models show that energy prices and green innovation activities are positively related and that energy prices have a significantly positive impact on the share of green innovations in non-green innovations. More concretely, our main model shows that a 10% increase of the average energy prices of the previous five years results in a 2.7% and 4.5% increase of the number of green innovations and the share of green innovations in non-green innovations, respectively. We also find that the impact of energy prices increases with an increasing lag between energy prices and innovation activities. Robustness tests confirm the main results.
    Keywords: Innovation, environment, energy prices
    JEL: O30 O34 Q55
    Date: 2013–08
  17. By: Barrett, Alan; Mosca, Irene
    Keywords: Ireland/migration/older/qec
    Date: 2013–06
  18. By: Antón, José-Ignacio; Muñoz de Bustillo, Rafael
    Abstract: Using the recent Wage Structure Survey 2010, this article examines the public-private sector wage gaps in Spain across the whole earnings distribution and the incidence of the gender gap in both sectors of the economy. Firstly, we find that that there is positive wage premium to public sector employment which is not fully explained by employees’ observable characteristics. Furthermore, this premium concentrates on low-skilled workers, while high-skilled individuals in the public sector suffer a pay penalty. Secondly, the gender gap is substantially larger in the private sector. Lastly, we analyse what happens in some specific activities, Education and Human health and social work, where both public and private sector coexist to a large extent. We discuss several explanations for these findings, coherent with international evidence, and the possible implications of the current process of downsizing of public sector employment associated to austerity measures.
    Keywords: wage gap; public sector; gender gap; quantile regression
    JEL: C21 J16 J31 J45
    Date: 2013–08–06
  19. By: Halkos, George; Sundström, Aksel; Tzeremes, Nickolaos
    Abstract: This paper applies nonparametric estimators to examine the effect of regional quality of government on the environmental performance in the NUTS 1-regions in France, Germany and the UK. The most comprehensive existing regional measure on governance is used, gauging the partiality, corruption and effectiveness of government services in each region. By utilizing regional level measures of three pollutants (CO2, CH4 and N2O) the effect of governance on environmental efficiency is analyzed. The empirical analysis suggests that there is a nonlinear relationship between regions’ governance quality levels and their environmental performance. It appears that the effect of regional quality of governance is positive up to a certain level, then turning slightly negative. This suggests that higher governance quality will not always result in increased environmental efficiency.
    Keywords: Quality of governance; Environmental performance; Regions; Nonparametric analysis.
    JEL: C14 H23 Q50 Q58 R11
    Date: 2013–08–06
  20. By: Mina Dragouni; George Filis; Nikolaos Antonakakis
    Abstract: In this study, we employ the novel measure of a VAR-based spillover index, developed by Diebold and Yilmaz (2012) to investigate the time-varying relationship between tourism and economic growth in selected European countries. Overall, the findings suggest that (i) the tourism-economy relationship is not stable over time in terms of both its magnitude and direction, (ii) the relationship exhibits patterns in its magnitude and/or direction during major economic events, such as the Great Recession of 2007 and the Eurozone debt crisis of 2010, and (iii) the impact of these economic events on the relationship between the tourism sector and the economy is more apparent to Cyprus, Greece, Portugal and Spain, which are the European countries that have experienced the most severe economic downturn since 2009. These results are important to tourism actors and policy makers, suggesting that they should pay particular attention to this time-varying relationship and the factors that influence it when designing their tourism strategies. In addition, the findings of this study carry significant implications for researchers, as they underline a strand of the literature which deserves further attention.
    Keywords: Tourism-Led Economic Growth, Economic-Driven Tourism Growth, Spillovers, Time-Varying Relationship, Variance Decomposition, European Countries
    JEL: C32 F43 L83 O52
    Date: 2013–08

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