nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2013‒09‒25
fifteen papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. In-work poverty in times of crisis: do part-timers fare worse? By Jeroen Horemans; Ive Marx
  2. The indicators of intertemporal material deprivation: a proposal and an application to EU countries By Conchita D'Ambrosio
  3. Alternative vs. current measures of material deprivation at EU level: What differences does it make? By Anne-Catherine Guio; Erik Marlier
  4. Impact of Mandatory IFRS Adoption on Conditional Conservatism in Europe By Paul André; Andrei Filip; Luc Paugam
  5. EU Trade Preferences and Export Diversification By Persson, Maria; Wilhelmsson, Fredrik
  6. R&D offshoring and the productivity growth of European regions By Castellani, Davide; Pieri, Fabio
  7. Empirical analysis of moral hazard: a study of a vehicle insurance tax reform By Yarmukhamedov, Sherzod
  8. Towards a European Directive on Damages Actions By Frank Maier-Rigaud
  9. Comparing rail passengers’ travel time use in Great Britain between 2004 and 2010 By Lyons, Glenn; Jain , Juliet; Susilo , Yusak O.; Atkins, Steve
  10. Removing the Trade Size Constraint? Evidence from the Italian Market Design By Arie E. Gozluklu; Pietro Perotti; Barbara Rindi; Roberta Fredella
  11. Do the UK Government’s welfare reforms make work pay By Stuart Adam; James Browne
  12. Rail passengers’ time use and utility assessment: 2010 findings from Great Britain with multivariate analysis By Susilo, Yusak O.; Lyons, Glenn; Jain, Juliet; Atkins, Steve
  13. Services vs. Manufacturing – How Does Foreign and Domestic Sales Impact on their R&D? By Ejermo, Olof; Bergman, Karin
  14. An exploration of shoppers travel mode choice in visiting convenience stores in the United Kingdom By Susilo, Yusak O.; Hanks, Nathan; Ullah, Mahmud
  15. Self-employment and the local business cycle By Svaleryd, Helena

  1. By: Jeroen Horemans; Ive Marx
    Abstract: Part-time work has structurally increased across Europe. The recent crisis period has brought additional increases in many countries, especially in involuntary part-time employment. This paper considers the link between part-time work and poverty, taking a comparative perspective across the EU15. The extent to which part-time work is associated with poverty varies considerably, far more so than for full-time workers. Involuntary part-time work clearly stands out as most problematic although an increased poverty risk is not confined to that segment of part-time work. Part-time work for care reasons also carries a higher poverty risk in some countries. It is most problematic in countries where demand and supply side related factors reinforce each other so as to make part-time work an inferior choice from the perspective of preferred working hours, earnings and employment security. Moreover, part-timers sometimes face a ‘double income penalty’ in that they are more likely to have lower earnings and reduced eligibility for certain social transfers. However, there is again considerable cross-country variation in this respect. In some countries actually the reverse is the case and part-timers are in effect more likely to receive social transfers, while being in employment, improving their post-transfer poverty position in a significant way. Taken together, the paper shows that the regulatory drivers shaping part-time work and the welfare state arrangements supporting, or failing to support part-time work play key roles in accounting for the wide variation in poverty risks associated with part-time work across the EU15.
    Keywords: in-work poverty, part-time work, tax benefit systems, EU15, EU-SILC
    JEL: I32 J21 R28 J68
    Date: 2013–08
  2. By: Conchita D'Ambrosio
    Abstract: This paper analyses the effects of the inclusion of past experiences in measuring current material deprivation. The method followed generalises the recent proposal of Bossert, Chakravarty, Ceriani and D’Ambrosio (2013) by adapting the class of indices on the measurement of poverty over time of Dutta, Roope and Zank (2012). An application to the analysis of material deprivation within EU countries is then provided. Following the path of material deprivation experienced by each individual over time yields a picture which differs from that in the annual results. Since the measurement of material deprivation is used by the EU member states and the European Commission to monitor national and EU progress in the fight against poverty and social exclusion, the results suggest that time cannot be neglected. Countries should not only be compared based on their year-by-year results, but additional information is gained by following individuals over time and producing an aggregate measure once time is taken into account.
    Keywords: Material Deprivation, Intertemporal Social Index Numbers, Persistent Deprivation
    JEL: D63
    Date: 2013–08
  3. By: Anne-Catherine Guio; Erik Marlier
    Abstract: Guio, Gordon and Marlier (2012) have proposed a theory based analytical framework for developing robust (i.e. suitable, reliable, valid and additive) aggregate indicators that could be used for analytical and monitoring purposes at national and EU levels. They have applied this framework to EU-SILC data collected in 2009, and as a result of their systematic item by item analysis carried out at both EU and country levels, they have suggested an alternative material deprivation (MD) indicator which consists of 13 items – six are common to the current 9-item MD indicator and seven are new. This paper discusses the impact of the move from the current EU definition of MD to this alternative 13-item indicator – impact in terms of the size of the population deprived throughout the EU, impact in terms of the composition (socio-demographic characteristics) of this population as well as impact on the Europe 2020 social inclusion target.
    Keywords: Poverty, material deprivation, Europe 2020 social inclusion target, EU-SILC
    JEL: O52 I32
    Date: 2013–08
  4. By: Paul André (Accounting / Management Control Department - ESSEC Business School); Andrei Filip (Accounting / Management Control Department - ESSEC Business School); Luc Paugam (Accounting / Management Control Department - ESSEC Business School, DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris IX - Paris Dauphine)
    Abstract: We study the effect of the mandatory adoption of IFRS in Europe in 2005 on conditional conservatism. To capture conditional conservatism, we use three measures: the Basu (1997) measure, the Khan and Watts (2009) measure, and a measure controlling for potential shifts in unconditional conservatism and cost of capital after the adoption of IFRS. From a sample of 7,251 firm-year observations drawn from 16 European countries, we document an overall decline of the degree of conditional conservatism across our three measures. While there is no change in weak enforcement/governance countries which remain less conditionally conservative than strong enforcement/governance countries, the latter exhibit a significant decrease. Further, we demonstrate that the decline is more significant for firms carrying intangible assets and goodwill in their balance sheets, items for which impairment tests rely on unverifiable fair value estimates. We argue that IFRS are conceptually conditionally conservative but that inappropriate application of conditional conservatism principles may have prevented financial reporting from reaching the level of conservatism targeted by the IASB.
    Keywords: Conditional Conservatism ; IFRS ; Europe ; Enforcement, Governance ; Intangibles ; Impairment
    Date: 2013
  5. By: Persson, Maria (Department of Economics, Lund University); Wilhelmsson, Fredrik (AgriFood Economics Centre, Lund University)
    Abstract: Since at least the 1960s, the European Union (EU) has offered various kinds of non-reciprocal trade preferences for developing countries. Originally, these trade preferences had at least two policy goals: (i) to increase export volumes for developing countries and thereby boost their export earnings, and (ii) to facilitate export diversification. While extensive research has confirmed that the first of these goals is typically met, the second goal seems to have been largely forgotten by researchers as well as in policy circles. The aim of this paper is therefore to analyse the impact of the EU’s non-reciprocal trade preferences for developing countries on export diversification. Our estimation results suggest that some trade preference programs, such as the Generalised Scheme of Preferences (GSP), are associated with increasing ranges of export products. By contrast, preferences offered to Mediterranean countries typically have no significant effects, and African, Caribbean and Pacific (ACP) preferences actually have negative effects toward the end of our time period, suggesting that ACP countries may respond to preferences by specializing into fewer goods.
    Keywords: Export diversification; non-reciprocal trade preferences; GSP; ACP; EU
    JEL: F13 F15 O24
    Date: 2013–09–17
  6. By: Castellani, Davide (Department of Economics, Finance and Statistics, University of Perugia, Centro Studi Luca d'Agliano, Milan, Italy Halle Institute for Economic Research (IWH), Halle, Germany CIRCLE, Lund University, Sweden); Pieri, Fabio (Depto. de Economia Aplicada II (Estructura Economica), Universitat de Valencia, Spain)
    Abstract: The recent increase in R&D offshoring have raised fears that knowledge and competitiveness in advanced countries may be at risk of `hollowing out'. At the same time, economic research has stressed that this process is also likely to allow some reverse technology transfer and foster growth at home. This paper addresses this issue by investigating the extent to which R&D offshoring is associated with productivity dynamics of European regions. We find that offshoring regions have higher productivity growth, but this positive effect fades down with the number of investment projects carried out abroad. A large and positive correlation emerge between the extent of R&D offshoring and the home region productivity growth, supporting the idea that carrying out R&D abroad strengthen European competitiveness.
    Keywords: R&D Offshoring; Regional Productivity; Foreign Investments; Europe
    JEL: C23 F23 O47 O52 R11
    Date: 2013–05–11
  7. By: Yarmukhamedov, Sherzod (VTI)
    Abstract: This paper uses discrete choice and count data models to analyze the effects of a tax on vehicle insurance levied in Sweden in 2007. The analysis is based on a large set of micro-level panel data on individual insurance holders at the largest insurance company in Sweden for the period 2006-2010. Two questions are addressed: How did the tax reform influence the choice of insurance coverage, and how did changes in coverage affect the incidence of claims? The results show that, on average, the tax reform increased the odds of choosing lower insurance coverage by 47 percent, and that the tax reform had more impact on older drivers. However, switching to lower coverage due to the tax reform has not resulted in significant changes in claim distributions, though the incidence of claims decreased by 20 percent for switchers aged 35-44 in the pre-reform period, indicating a mitigation of ex ante moral hazard in vehicle insurance.
    Keywords: Vehicle insurance; Moral hazard; Traffic safety; Tax reform
    JEL: C33 C54 D82 H20 L51
    Date: 2013–09–19
  8. By: Frank Maier-Rigaud (IESEG School of Management (LEM-CNRS))
    Abstract: This paper critically reviews the European Commission’s proposed Directive on future rules concerning actions for damages for competition law infringements under national law. It is argued that the proposal underestimates the importance of loss of profits induced by increased prices and does little in ensuring that such effects will receive an equal treatment to price effects in damage claims. The paper suggests that the importance of such effects could have been emphasized by introducing a rebuttable presumption on lucrum cessans based on pass-on considerations – paralleling the presumption on overcharge. Furthermore, the decision to leave questions of causality to national tort laws is criticized as a harmonized regulation of claims based on the merits of the evidence presented would have been a superior tool, in line with a more economic approach and better suited for achieving the goal of compensation for any victim due to its intrinsic flexibility. Finally the notion that legally relevant damages only accrue within a vertical value chain is challenged.
    Keywords: quantification of damages, pass-on, passing-on defence, overcharge, unjust enrichment, private enforcement, lucrum cessans, quantity effect, damnum emergens, price effect, burden of proof, standard of proof, tort law, compensation, presumption
    JEL: K21 K40 L40
    Date: 2013–07
  9. By: Lyons, Glenn (University of the West of England); Jain , Juliet (University of the West of England); Susilo , Yusak O. (KTH); Atkins, Steve
    Abstract: This paper provides a unique insight into aspects of stability and change regarding the travel time use of rail passengers in Great Britain between 2004 and 2010. Empirical evidence is presented on how rail passengers spend their time, how worthwhile they consider their time use to be, the extent of advance planning of their time use and how equipped for time use they are in terms of the items they have to hand when they travel. The results reveal a consistent dominance of reading for leisure, window gazing/people watching and working/studying as favoured travel time activities. Over the six year period the availability and use of mobile technologies has increased. Listening to music in particular has doubled in its incidence suggesting an increasing capacity for travellers to personalise the public space of the railway carriage. Most notably the analysis reveals a substantial increase in the proportion of travellers overall making very worthwhile use of their time.
    Keywords: Travel time use; Multitasking; Rail travel; Value of time; Mobile technologies
    JEL: R40 R42
    Date: 2013–09–23
  10. By: Arie E. Gozluklu; Pietro Perotti; Barbara Rindi; Roberta Fredella
    Abstract: Trading venues often impose a minimum trade unit constraint (MTUC) to facilitate order execution. This paper examines the effects of a natural experiment at Borsa Italiana where the exchange reduced the MTUC to one share for all stocks. After the removal of the MTUC, we observe a substantial improvement in liquidity, measured by a decrease in the bid-ask spread and an increase in market depth. The cross-sectional evidence shows that those firms for which the MTUC was more binding benefit the most from the microstructure change. These findings are consistent with a model of asymmetric information in which the MTUC affects traders’ choice of order size. As the model predicts, liquidity improves following the reduction in adverse selection costs. KEYWORDS: minimum trade unit constraint, limit order book, market liquidity, adverse selection costs
    Date: 2013
  11. By: Stuart Adam (Institute for Fiscal Studies); James Browne (Institute for Fiscal Studies)
    Abstract: The UK government is in the process of introducing a radical package of welfare reforms that it hopes will encourage more people to work as well as reducing government expenditure. The largest structural change planned is the introduction of universal credit to combine six existing means-tested benefits for those of working age into a single payment, which is intended to reduce administration costs and errors, simplify claims, encourage take-up, and increase the incentive to work for those currently facing the weakest incentives. But the deficit reduction package has also involved tax changes and large benefit cuts that have an impact on financial work incentives. At the same time as these reforms have been introduced, weakness in the economy has meant that earnings have increased less quickly than benefit rates, which tends to make working less attractive. In this paper, we use micro-simulation techniques to investigate whether financial work incentives will indeed be stronger in 2015-16 than they were in 2010-11 and to separate out the impact of changes to taxes, benefit cuts and the introduction of universal credit from the impact of wider economic changes.
    Date: 2013–09
  12. By: Susilo, Yusak O. (KTH); Lyons, Glenn (University of the West of England); Jain, Juliet (University of the West of England); Atkins, Steve (University of the West of England)
    Abstract: Using data from Great Britain’s National Passenger Survey 2010 this paper examines the travel time use of rail passengers and their indicative assessment of its utility. The paper explores the impacts of individuals’ socio demographic characteristics, types of activity undertaken and the perceived difficulties that may be faced by the travellers on their assessment of travel time use utility. The study shows that only 13% of travellers considered their travel time as wasted. However, this varies by journey purpose, travelling class (first/standard class), gender and journey length. The study shows that the positive or negative appreciation by passengers of their journey time is not only a result of various combinations of on-board activity engagements, but also the smoothness of overall journey experience. Being able to work/study on the train most significantly increases individual appreciation of time use. However, a delay on an individual’s train journey also has a major influence in reducing his/her perceived value of travel time spent. ICT devices that enable travellers to watch film/video or play games or check emails are more appreciated than those providing access to music/podcast or access to social networking sites. The paper joins others in questioning assumptions made in economic appraisal that travel time is unproductive. It concludes with a call for more substantive and targeted data collection efforts within travel behaviour research devoted to further unravelling the phenomenon of the positive utility of travel.
    Keywords: Travel time use; Rail passenger; Journey satisfaction; Great Britain
    JEL: R40 R42
    Date: 2013–09–23
  13. By: Ejermo, Olof (CIRCLE, Lund University); Bergman, Karin (AgriFood Economics Centre, Lund Sweden)
    Abstract: While the distinction between manufacturing and services becomes increasingly blurred to some observers, we find, using a panel of Swedish firms, clear evidence that foreign sales (exports) are more important than domestic sales for stimulating R&D. This is particularly clear for manufacturing and this importance of foreign sales has increased over time, simultaneous to an opening up of the Swedish economy. Even though service industries have seen an increase in both R&D and trade over time, it is thus mainly manufacturing that has benefited from increased possibilities for absorptive capacity. This result suggests a clear dichotomy between manufacturing and services in terms of how they react to trade and how they turn towards the foreign market vs. the domestic market to find stimuli for innovation
    Keywords: Research and Development; Foreign and domestic sales; services; manufacturing
    JEL: D22 F14 F43 L60 L80 O14 O31 O33 O52
    Date: 2013–06–15
  14. By: Susilo, Yusak O. (KTH); Hanks, Nathan (Transport Planning Associates (UK)); Ullah, Mahmud (University of the West of England)
    Abstract: Using data from 2,096 convenience store customers within and outside the Greater London Metropolitan Area, this paper explores how individuals access their convenience stores and how significant the influence of their socio-demographics, shopping types and trip chaining is to their mode choice in visiting the stores. Trip chaining is found to be very crucial in influencing customers’ mode choice and their visit frequency to the stores. The models also show that frequent shoppers (people who visit the stores at least a few times a week) are the ones most likely to visit the stores on foot. Interestingly, the estimation results also show that the location’s density, shopping types and the day of the week are not significant in influencing the travel modes. Customers who live at the most deprived areas are less likely to use a private car in visiting the stores.
    Keywords: The use of local stores; Shift in travel mode; Shopping trip pattern; London
    JEL: O18 R41
    Date: 2013–09–23
  15. By: Svaleryd, Helena (Department of Economics)
    Abstract: The business cycle is likely to be of importance for self-employment rates. When the economy is growing, business opportunities open up and encourage the set-up of new firms. In downturns, self-employment may be a way to avoid unemployment. The strength of these pull and push factors may depend on the amount of human capital a person has. The findings in this paper show that although the local business cycle is of minor importance for total self-employment rates in Sweden, there are heterogeneous effects across groups. People with higher human capital endowments are more likely to be pulled into self-employment, while those with lower human capital endowments are to a larger extent pushed into self-employment. This pattern is particularly strong for women.
    Keywords: Self-employment; local business cycle; panel data
    JEL: J21 J24
    Date: 2013–08–28

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