nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2013‒10‒05
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Inequality-adjusted gender wage differentials in Germany By SELEZNEVA Ekaterina; VAN KERM Philippe
  2. The Structure of the Permanent Job Wage Premium: Evidence from Europe By Kahn, Lawrence M.
  3. Wealth Distribution within Couples By Grabka, Markus M.; Marcus, Jan; Sierminska, Eva
  4. Between the Sword and the Wall: Spain's Limited Options for Catalan Se cessionism By Griffiths, Ryan D.; Guillen, Pablo; Martinez i Coma, Ferran
  5. Substitution and Complementarity between Fixed-line and Mobile Access By Lukasz Grzybowski; Frank Verboven
  6. Costs and Benefits of Labour Mobility between the EU and the Eastern Partnership Countries Country Study: Italy By Marchetti, Sabrina; Piazzalunga, Daniela; Venturini, Alessandra
  7. Sanctions for Young Welfare Recipients By van den Berg, Gerard J.; Uhlendorff, Arne; Wolff, Joachim
  8. A Web Survey Analysis of the Subjective Well-being of Spanish Workers By Guzi, Martin; de Pedraza, Pablo
  9. A non parametric analysis of the relative performance and efficiency patterns of service industries in the advanced countries By Andrés Maroto-Sánchez
  10. ICT to support the Everyday Life Integration of Immigrants in the European Union: An Online Survey of Connected Migrants - First Methodological Report By Gabriel Rissola
  11. Feasibility Study on the Valuation of Public Goods and Externalities in EU Agriculture By Livia Madureira; Jose Lima Santos; Ana Ferreira; Helena Guimarães
  12. A Level Playing Field – An Optimal Weighting Scheme of Dismissal Protection Characteristics By Michael Kind
  13. Country Differences in Ultimatum Wage Bargaining with a Real Task: Evidence from Greece, Spain and the UK By Aurora García-Gallego; Nikolaos Georgantzís; Ainhoa Jaramillo-Gutiérrez
  14. Effects of Compulsory Schooling on Mortality – Evidence from Sweden By Martin Fischer; Martin Karlsson; Therese Nilsson
  15. Consumption-Savings Decisions under Upward Looking Comparisons: Evidence from Germany, 2002-2011 By Moritz Drechsel-Grau; Kai Daniel Schmid
  16. Winners and Losers on the Roller-Coaster: Ireland, 2003-2011 By David Madden
  17. Patterns of Integration: Low Educated People and their Jobs in Norway, Italy and Hungary By Kollo, Janos
  18. Too Old to Work, Too Young to Retire? By Andrea Ichino; Guido Schwerdt; Rudolf Winter-Ebmer; Andrea Ichino
  19. Literature Review on Employability, Inclusion and ICT, Part 1: The Concept of employability, with a specific focus on Young people, older workers and migrants By Anne Green; Maria de Hoyos; Sally-Anne Barnes; David Owen; Beate Baldauf; Heike Behle
  20. Regional integration of stock markets in Southeast Europe By Khaled Guesmi; Duc Khuong Nguyen

  1. By: SELEZNEVA Ekaterina; VAN KERM Philippe
    Abstract: This paper exploits data from the German Socio-Economic Panel (SOEP) to re-examine the gender wage gap in Germany on the basis of inequality-adjusted measures of wage differentials which fully account for gender differences in pay distributions. The inequality-adjusted gender pay gap measures are significantly larger than suggested by standard indicators, especially in East Germany. Women appear penalized twice, with both lower mean wages and greater wage inequality. A hypothetical risky investment question collected in 2004 in the SOEP is used to estimate individual risk aversion parameters and benchmark the ranges of inequality-adjusted wage differentials measures.
    Keywords: gender gap; wage differentials; wage inequality; expected utility; risk aversion; East and West Germany; SOEP; Singh-Maddala distribution; copula-based selection model
    JEL: D63 J31 J70
    Date: 2013–09
  2. By: Kahn, Lawrence M. (Cornell University)
    Abstract: Using longitudinal data on individuals from the European Community Household Panel (ECHP) for thirteen countries during 1995-2001, I investigate the wage premium for permanent jobs relative to temporary jobs. The countries are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Spain, and the United Kingdom. I find that among men the wage premium for a permanent vs. temporary job is lower for older workers and native born workers; for women, the permanent job wage premium is lower for older workers and those with longer job tenure. Moreover, there is some evidence that among immigrant men, the permanent job premium is especially high for those who migrated from outside the European Union. These findings all suggest that the gain to promotion into permanent jobs is indeed higher for those with less experience in the domestic labor market. In contrast to the effects for the young and immigrants, the permanent job pay premium is slightly smaller on average for women than for men, even though on average women have less experience in the labor market than men do. It is possible that women even in permanent jobs are in segregated labor markets. But as noted, among women, the permanent job wage premium is higher for the young and those with less current tenure, suggesting that even in the female labor market, employers pay attention to experience differences.
    Keywords: wage structure, segmented labor markets, temporary jobs
    JEL: J31 J42
    Date: 2013–09
  3. By: Grabka, Markus M. (DIW Berlin); Marcus, Jan (DIW Berlin); Sierminska, Eva (CEPS/INSTEAD)
    Abstract: While most studies on wealth inequality focus on the inequality between households, this paper examines the distribution of wealth within couples. For this purpose, we make use of unique individual level micro data from the German Socio-Economic Panel Study (SOEP). In married and cohabiting couples men's net worth, on average, is 33,000 euros higher than women's. We look at five different sets of factors (demographics, income, labor market, inheritances, financial decision-making in the partnership) that might explain this wealth gap. We find that all factors contribute to the explanation of the wealth gap within partnerships, with inheritances and income being particularly relevant. Furthermore, we find that specific characteristics (e.g., self-employment, no migration background, inheritances, high income) that decrease the wealth gap for women increase it for men. For men the respective coefficients are even stronger in absolute terms. When examining intra-partnership financial decision-making, we find the gap to be significantly smaller when the female partner manages the money and larger if the male partner has the last word in financial decisions.
    Keywords: wealth gap, wealth inequality, intra-household allocation, gender, financial decision-making, SOEP
    JEL: J2 D13 D31 D69 I31
    Date: 2013–09
  4. By: Griffiths, Ryan D.; Guillen, Pablo; Martinez i Coma, Ferran
    Abstract: We propose a game theoretical model to assess the capacity of Catalonia to become a recognized, independent country with at least a de facto European Union (EU) membership. Support for Catalan independence is increasing for reasons pertaining to identity and economics. Spain can avoid a vote for independence by effectively ‘buying-out' a proportion of the Catalan electorate with a funding agreement favorable to Catalonia. If, given the current economic circumstances, the buying-out strategy is too expensive, a proindependence vote is likely to pass. Our model predicts an agreement in which Spain and the European Union accommodate Catalan independence in exchange for Catalonia taking a share of the Spanish debt. If Spain and the EU do not accommodate, Spain becomes insolvent, which in turn destabilizes the EU. The current economic woes of Spain and the EU both contribute to the desire for Catalan independence and make it possibl e.
    Date: 2013–09
  5. By: Lukasz Grzybowski (Telecom ParisTech, Department of Economics and Social Sciences, 46 rue Barrault, 75013 Paris, France); Frank Verboven (University of Leuven and CEPR (London), Naamsestraat 69, 3000 Leuven, Belgium)
    Abstract: We use rich survey data on 133,825 households from 27 EU countries during 2005-2011 to analyze substitution between fixed-line and mobile telecommunications services. We estimate a discrete choice model where households may choose between having mobile or fixed-line voice access only, or using both technologies at the same time. We obtain the following main findings. First, fixed-line and mobile connections are on average perceived as substitutes. But there is substantial heterogeneity across households and EU regions, with stronger substitution in Central and Eastern European countries. Second, there is strong complementarity between fixed-line and mobile connections that are offered by the fixed-line incumbent operator. This gives the incumbent a possibility to leverage its position in the fixed-line market into the mobile market. Third, fixed broadband technologies such as DSL and cable generate strong complementarities between fixed and mobile access, while mobile broadband strengthens substitution (at a smaller scale). The emergence of fixed broadband has thus been an important additional source through which incumbents leverage their strong position in the fixed-line network.
    Keywords: fixed-to-mobile substitution; incumbency advantage; broadband access
    JEL: L13 L43 L96
    Date: 2013–09
  6. By: Marchetti, Sabrina (European University Institute); Piazzalunga, Daniela (University of Turin); Venturini, Alessandra (University of Turin)
    Abstract: Migrants from the Eastern Partnership Countries: Moldova, Ukraine, Belarus, Georgia, Armenia, Azerbaijan has increased in the last ten years. Two different patterns are detected among the most important groups: Ukrainian and Moldovan. The first is mainly composed by women with a temporary migration plan while the second was initially composed by women but rapidly the family reunification was obtained and the migration plan became more permanent. By using the Italian Labour Force survey we analyse the employment situation, the over education of the migrants and their assimilation.
    Keywords: migration, labour market
    JEL: J15 J26 J61 J62
    Date: 2013–09
  7. By: van den Berg, Gerard J. (University of Mannheim); Uhlendorff, Arne (University of Mannheim); Wolff, Joachim (Institute for Employment Research (IAB), Nuremberg)
    Abstract: Social welfare systems usually imply specific obligations for benefit recipients. If a recipient does not comply with these obligations, a sanction involving a punitive benefits reduction may be imposed. In this paper we give an overview of the literature on the effects of sanctions in social welfare systems and we present first results on the effects of sanctions for young unemployed welfare recipients based on German administrative data. The German welfare system is particularly strict for young individuals. We distinguish between mild and strong sanctions and we focus on the impact of these sanctions on job finding probabilities. Our results suggest that each type of sanction leads to an increased transition rate to work, and that this effect is higher for strong sanctions. However, strong sanctions for young welfare recipients involve a complete withdrawal of the basic cash transfer payments, and there exists evidence that these severe sanctions might go along with additional, negative effects for sanctioned individuals.
    Keywords: monitoring, welfare, youth unemployment, duration models, unemployment benefits, social assistance
    JEL: J64 J65 I38 C41
    Date: 2013–09
  8. By: Guzi, Martin (Masaryk University); de Pedraza, Pablo (Universidad de Salamanca)
    Abstract: This paper makes use of a large sample of individual data obtained from web surveys in the WageIndicator project. Data includes extensive information on the quality of working conditions together with different well-being indicators. The paper emphasizes the role of work-related characteristics as a specific and very important aspect of life. In our analysis, we demonstrate the role of working conditions in the following three domains: overall life-satisfaction; satisfaction with one’s job; and satisfaction with the combination of family and work. The paper also contributes to the ongoing debate on web survey data quality, reliability, and validity for scientific use. It demonstrates how social sciences can benefit from the use of web survey data in order to overcome the limits of traditional information sources.
    Keywords: subjective well-being, web-surveys, working conditions
    JEL: J28 J81
    Date: 2013–09
  9. By: Andrés Maroto-Sánchez
    Abstract: The service sector plays a key role determining long-term productivity growth rates and living standards due to the increasing share of services both in production and employment within developed economies. Secondly, it can impact the whole economy through its capacity to affect a country’s efficiency and technological frontier. Linking these two ideas, the aim of this paper is twofold. On one side, to analyse the behaviour of productivity in the service sector, both in aggregate and disaggregate terms, and also to explore some explaining factors related to its efficiency in shaping this sector. In doing so, we apply non-parametric approaches – concretely, Malmquist indices and frontier DEA techniques – for macroeconomic data provided by the EU KLEMS database for a set of OECD countries. The main results of the paper seem to outline a partial refutation of the traditional hypothesis of low productivity. There is a huge heterogeneity and dualism within the tertiary sector in the advanced economies. Finally, the results based on non-parametric approaches might complement those obtained by using traditional parametric estimations, widening the future options to measure and analyse the productivity and efficiency patterns in service industries.
    Keywords: Services, Efficiency, Productivity, Malmquist, DEA
    Date: 2013–08
  10. By: Gabriel Rissola (Institute for Prospective Technological Studies, Joint Research Centre, European Commission)
    Abstract: This methodological report documents the development of an online-based methodology for collecting quantitative evidence on the adoption and uses of information and communication technologies (ICT) by third-country nationals in Europe. The evidence produced by using this methodology is expected to allow an examination of the extent to which technology can accelerate or trigger the process of integration of immigrants in their host societies. This report was prepared as a part of the research study "ICT to support the everyday life integration of immigrants or ethnic minority people (IEM)" (ConnectIEM) which was co-funded by JRC-IPTS and DG INFSO, European Commission. The following external research teams collaborated in the study: the Migration and Network Society Programme (MNS) hosted by the Internet Interdisciplinary Institute (IN3) of the Open University of Catalonia (UOC), the Technological and Social Change Group (TASCHA) hosted by the University of Washington, and a network of local researchers based in the target countries.
    Keywords: Digital inclusion, migrants, integration, ICT, survey, methodology
    Date: 2013–02
  11. By: Livia Madureira (University of Tras-os-Montes e Alto Douro, Portugal); Jose Lima Santos (Instituto Superior de Agronomia, Technical University of Lisbon, Portugal); Ana Ferreira (University of Tras-os-Montes e Alto Douro, Portugal); Helena Guimarães (Algarve University, Portugal)
    Abstract: The present report develops and test and up an up-scaled non-market valuation framework to value changes in the provision level of the public goods and externalities (PGaE) of EU agriculture from the demand-side (i.e. using valuation surveys). The selected PGaE included in the study are the following: cultural landscape, farmland biodiversity, water quality and availability, air quality, soil quality, climate stability, resilience to fire and resilience to flooding. The evaluation framework has been based in "macro-regions" which can be defined as "multi-country areas with homogeneous agro-ecological infra-structures across EU". The following achievements have been accomplished along the project development: 1) comprehensive description of the study selected PGaE 2) Description of the selected agricultural PGaE using agri-environmental indicators, 3) contribution to a better and more standardised description of the agri-environmental public goods and externalities build on disentangling of the macro-regional agro-ecological infra-structures from its ecological and cultural services, 4) delimitation of wide areas with homogeneous agro-ecological infra-structures across EU, designated “macro-regions”, 5) delimitation of the macro-regions, independently from their supply of PGaE, disentangling the respective agro-ecological infra-structure from its ecological and cultural services, 6) definition of “Macro-Regional Agri-Environmental Problems” (MRAEP), through the association of the “macro-regions” with the core PGaE supplied by them, delivering non-market demand-side valuation problems relevant to the agricultural and agri-environmental policy decision-makers, 7) design of a Choice Modelling (CM) survey able to gather multi-country value estimates of changes in the provision level of different PGaE supplied by different EU broad regions (the macro-regions), 8) successful testing of the valuation framework through a pilot survey and 9) Delivering of alternative sampling plans for the EU level large-scale survey allowing for different options regarding the number of surveyed countries, the size and composition of respective samples, and the survey administration-mode, balanced with estimates for the corresponding budgetary cost.
    Keywords: Public Goods, Externalities, Agriculture, European Union, Choice Modelling, Evaluation
    Date: 2013–09
  12. By: Michael Kind
    Abstract: In the case of collective redundancies, employers are forced to regard certain characteristics when deciding who is going to be dismissed. This paper develops a procedure to derive an empirical-based weighting scheme between the characteristics relevant for this selection (age, disability, dependencies and tenure). First, panel data from the German Socio-Economic Panel (SOEP) for the years 1991-2010 is used to estimate, conditional on the existence of dismissal protection, the relationships of the four characteristics with respect to reemployment probabilities and the quality of the new job (measured in terms of wage). Second, the individual valuation of the two outcomes is compared applying a life satisfaction analysis. Finally, based on the empirical results a weighting scheme for the characteristics is proposed, which serves as an evidence based guideline for employers, employees and unions in the process of collective redundancies.
    Keywords: Dismissal protection; reemployment probability; wage hit
    JEL: J63 J64
    Date: 2013–09
  13. By: Aurora García-Gallego (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Nikolaos Georgantzís (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Ainhoa Jaramillo-Gutiérrez (LEE-Department of Economics, Universitat Jaume I-Castellón, ERICES-University of Valencia, Spain)
    Abstract: We study ultimatum bargaining over the wage that should be paid in order to have a subject perform a given real task. Our results are obtained from experiments run in Greece, Spain and the UK. We find significantly higher wage offers and lower acceptance probabilities in the UK than in the other two countries. Interestingly, the combination of these two effects leads to higher wages in the British pool, without reducing market efficiency as compared to Spain and Greece. Country differences in both employer and employee behavior have a clear gender component.
    Keywords: ultimatum bargaining, real task, country differences
    JEL: C91 D03 J16 J31
    Date: 2013
  14. By: Martin Fischer; Martin Karlsson; Therese Nilsson
    Abstract: Theoretically, there are several reasons to expect education to have a positive effect on health, and empirical research suggests that education can be an important health determinant. However, it has not yet been established whether education and health are indeed causally-related, and the effects found in previous studies may be partially attributable to methodological weaknesses. Moreover, existing evidence on the education-health relationship using information of schooling reforms for identication generally uses information from fairly recent reforms implying that health outcomes are observed only over a limited time period. This paper examines the effect of education on mortality using information on a national roll-out of a reform leading to one extra year of compulsory schooling in Sweden. In 1936, the national government made a seventh school year compulsory; however, the implementation was decided at the school district level, and the reform was implemented over a period of 12 years. Taking advantage of the variation in the timing of the implementation across school districts by using county-level proportions of reformed districts, census data and administrative mortality data, we find that the extra compulsory school year reduced mortality. In fact, the mortality reduction is discernible already before the age of 30 and then grows in magnitude until the age of 55–60.
    Keywords: Returns to schooling; education reform; mortality
    JEL: I12 I14 I18 I21
    Date: 2013–09
  15. By: Moritz Drechsel-Grau; Kai Daniel Schmid
    Abstract: In this paper we demonstrate that interpersonal comparisons do not only influence people's level of utility but also lead to "keeping up with the Joneses"-behavior as reference consumption substantially affects households' consumption-savings decisions. By applying the insights from the literature on self-reported well-being to the analysis households' economic decisions, we estimate the causal effect of changes in reference consumption, defined as the consumption level of all households who are perceived to be richer, on households' savings and consumption. Using annual household data from the German Socio-Economic Panel (SOEP) for the years 2002 through 2011 allows us to control for various sources of unobserved heterogeneity. We find that when controlling for changes in own income, increases in reference consumption lead to lower savings and increased consumption as predicted by the Relative Income Hypothesis. Furthermore, households in the (upper) middle class of the income distribution are most strongly affected. An increase in reference consumption of 100 euros induces an average reduction of household savings of 10 to 25 euros depending on the household's position in the income distribution. The economic implications of such behavior are particularly helpful for understanding the link between changes in income inequality and developments in aggregate household savings and consumption. Our model attributes between 30 and 40 percent of the variation in changes of household savings to inequality changes.
    Keywords: Household Savings, Household Consumption, Interdependent Preferences, Reference Consumption, Relatice Income Hypothesis, Income Inequality
    JEL: D12 D11 E21 C23
    Date: 2013
  16. By: David Madden (University College Dublin)
    Abstract: This paper applies the methodology of Ravallion and Chen in calculating growth incidence curves for Ireland over the 2003-2011 period, using measures of equivalised disposable income from the Survey of Income and Living Conditions (SILC). These curves provide an indication of growth at different percentiles of the distribution and may be used to address the issue of whether growth was pro-poor or not. The analysis suggests that growth was broadly pro-poor over the period as a whole and also over two sub-periods of 2003-2007 and 2008-2011, reflecting periods of boom and recession respectively. However, the results must be qualified by the fact that the income measure may not completely capture living standards as it deals incompletely with housing costs and state provided services.
    Keywords: pro-poor growth, poverty efficient growth rate
    JEL: I31 I32 O4
    Date: 2013–09–27
  17. By: Kollo, Janos (Hungarian Academy of Sciences)
    Abstract: The paper looks at how the distribution of jobs by complexity and firms' willingness to hire low educated labor for jobs of different complexity contribute to unskilled employment in Norway, Italy and Hungary. In search of how unqualified workers can attend complex jobs, it compares their involvement in various forms of post-school skills formation. The countries are also compared by the weight of small firms, which are assumed to assist low skilled workers through interpersonal relationships. The data suggest that unskilled employment in Norway benefits from synergies between work in skill-intensive jobs, intense adult training, informal learning and involvement in civil activities. In Italy, workplaces requiring no literacy skills at all have the largest contribution but small businesses tend to employ low educated workers at a large scale even in highly complex jobs. In Hungary, insufficient skills (relative to Norway) and an undersized small-firm sector (relative to Italy) set limits to the inclusion of the low educated. An extreme degree of social isolation is likely to deteriorate their skills and jobs prospects further.
    Keywords: skills, skill requirements, unemployment, firm size
    JEL: J21 J24
    Date: 2013–09
  18. By: Andrea Ichino; Guido Schwerdt; Rudolf Winter-Ebmer; Andrea Ichino
    Abstract: We study whether employment prospects of old and young workers differ after a plant closure. Using Austrian administrative data, we show that old and young workers face similar displacement costs in terms of employment in the long-run, but old workers lose considerably more initially and gain later. We interpret these findings using a search model with retirement as an absorbing state, that we calibrate to match the observed patterns. Our finding is that the dynamics of relative employment losses of old versus young workers after a displacement are mainly explained by different opportunities of transition into retirement. In contrast, differences in layoff rates and job offer arrival rates cannot explain these patterns. Our results support the idea that retirement incentives, more than weak labor demand, are responsible for the low employment rates of older workers.
    Keywords: Aging, Employability, Plant Closures, Matching
    JEL: J14 J65
    Date: 2013–08
  19. By: Anne Green (University of Warwick, Institute for Employment Research); Maria de Hoyos (University of Warwick, Institute for Employment Research); Sally-Anne Barnes (University of Warwick, Institute for Employment Research); David Owen (University of Warwick, Institute for Employment Research); Beate Baldauf (University of Warwick, Institute for Employment Research); Heike Behle (University of Warwick, Institute for Employment Research)
    Abstract: IPTS has launched a research project on how ICT can support employability, in the context of its policy support activities for the implementation of the Europe 2020 strategy, and the Digital Agenda for Europe. As a first step, JRC-IPTS contracted the Institute of Employment Research, University of Warwick, UK to prepare: a) a review of the literature on employability, its dimensions and the factors which affect it in general and for groups at risk of exclusion, namely migrants, youth and older workers; and b) a report on how ICT contribute to employability, support the reduction of barriers and create pathways to employment for all and also for the three specific groups at risk of exclusion. This report presents the findings of the first part of the research.
    Keywords: Employability, inclusion, migrants, youth, older workers
    Date: 2013–03
  20. By: Khaled Guesmi; Duc Khuong Nguyen
    Abstract: This article investigates the dynamics of regional financial integration and its determinants in an international setting. We test a conditional version of the international capital asset pricing model (ICAPM) accounting for the deviations from purchasing power parity (PPP) as well as temporal variations in both regional and local sources of risk. Using data from four major countries of the Southeast Europe (Czech Republic, Greece, Poland, and Romania), our results support the validity of ICAPM and indicate that the risk is internationally priced. Further- more, we show that changes in the degree of regional stock market integration are explained principally by trade openness and the level of stock market development whatever the measure of currency risk. Finally, as expected, the degree of stock market integration varies considerably over time and from one market to another. As intense market integration induces both benefits and risks, our findings should have significant implications for eco- nomic policies and market regulations in emerging, frontier-emerging and transition countries, particularly for countries from the same region.
    Keywords: ICAPM, market integration, exchange rate risk
    JEL: G12 F31 C32
    Date: 2013–09–25

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