nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2013‒11‒02
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. The make-up of a regression coefficient: gender gaps in the European labor market By M. Grazia Pittau; Shlomo Yitzhaki; Roberto Zelli
  2. “A gravity model of migration between ENC and EU” By Raul Ramos; Jordi Suriñach
  3. Who Cares for You at Home? Personal and Household Services in Europe By Angermann, Annette; Eichhorst, Werner
  4. Costs and Benefits of Labor Mobility between the EU and the Eastern Partnership Countries: The Case of Poland By Duszczyk, Maciej; Góra, Marek; Kaczmarczyk, Pawel
  5. Laterborns Don't Give Up: The Effects of Birth Order on Earnings in Europe By Bertoni, Marco; Brunello, Giorgio
  6. Persistence or Convergence? The East-West Tax Morale Gap in Germany By Möhlmann, Axel
  7. Missing Trader Fraud in European VAT By Sebastian Pfeiffer; Pavel Semerad
  8. The Optimal Energy Mix in Power Generation and the Contribution from Natural Gas in Reducing Carbon Emissions to 2030 and Beyond By Carlo Carraro; Massimo Tavoni; Thomas Longden; Giacomo Marangoni
  9. Assessing the Socio-Economic Consequences of the Rise of Organic Farming in the European Union By Charalampos Konstantinidis
  10. Heterogeneous Sports Participation and Labour Market Outcomes in England By Lechner, Michael; Downward, Paul
  11. Green Investment Strategies and Export Performance: A Firm-level Investigation By Roberto Antonietti; Alberto Marzucchi
  12. New Firms and New Forms of Work By Andreas Koch; Daniel Pastuh; Jochen Späth
  13. Local government allocation of cultural services By Lars Håkonsen; Knut Løyland
  14. Ethnicity and Gender in the Labour Market in Central and South East Europe By O'Higgins, Niall
  15. Succeeding in Innovation: Key Insights on the Role of R&D and Technological Acquisition Drawn from Company Data By Conte, Andrea; Vivarelli, Marco
  16. Housing Choices and Labor Income Risk By Jansson, Thomas
  17. Do Study Abroad Programs Enhance the Employability of Graduates? By Di Pietro, Giorgio
  18. Women’s job search propensity and selection effect in European labour markets By Castellano, Rosalia; Punzo, Gennaro; Rocca, Antonella
  19. UK house prices: convergence clubs and spillovers By Alberto Montagnoli; Jun Nagayasu
  20. Childhood Sporting Activities and Adult Labour-Market Outcomes By Charlotte Cabane; Andrew E. Clark

  1. By: M. Grazia Pittau (Sapienza Universita' di Roma); Shlomo Yitzhaki (The Hebrew University of Jerusalem and Central Bureau of Statistics); Roberto Zelli (Sapienza Universita' di Roma)
    Abstract: We provide a comprehensive picture of the relationship between labor market outcomes and age by gender in all the 28 European countries covered by the European Statistics on Income and Living Conditions (EU-SILC). The analysis is based on a somewhat unconventional approach that refers to concentration curves in the context of Gini regression framework. It allows to identify ranges in the explanatory variables where local slopes change sign and/or size, i.e. the components that \make up" a regression coecient. The European countries are clustered into five groups according to their employment, hours of work and earnings age-profiles by gender, as identified by the concentration curves. The most relevant differences in age proles concern working-hours-patterns: some countries are characterized by an almost specular behavior in men and women; other countries instead show similar patterns. Generally, earnings increase with age for both men and women. However, local regression coefficients are not monotonic over the entire age range and can even be locally negative in some countries.
    Keywords: Gini, OLS, Concentration curves, Regression decomposition, European labor market.
    JEL: C30 J16 J21
    Date: 2013–10
  2. By: Raul Ramos (Faculty of Economics, University of Barcelona); Jordi Suriñach (Faculty of Economics, University of Barcelona)
    Abstract: Due to ageing population and low birth rates, the European Union (EU) will need to import foreign labour in the next decades. In this context, the EU neighbouring countries (ENC) are the main countries of origin and transit of legal and illegal migration towards Europe. Their economic, cultural and historical links also make them an important potential source of labour force. The objective of this paper is to analyse past and future trends in ENC-EU bilateral migration relationships. With this aim, two different empirical analyses are carried out. First, we specify and estimate a gravity model for nearly 200 countries between 1960 and 2010; and, second, we focus on within EU-27 migration flows before and after the enlargement of the EU. Our results show a clear increase in migratory pressures from ENC to the EU in the near future, but South-South migration will also become more relevant.
    Keywords: absorptive capacity, inventor mobility, spatial networks, patents, regional innovation. JEL classification: J11, J15, J61, C23, C53
    Date: 2013–10
  3. By: Angermann, Annette (affiliation not available); Eichhorst, Werner (IZA)
    Abstract: Personal and household services have grown in importance as a potential area of employment creation. By formalizing personal and household services, not only can service jobs be created with providers, but also private households can be relieved from informal work in order that women in particular can participate more strongly in the labor market. This paper reviews the findings from national experiences with strategies to develop formal personal and household services in European countries, addressing issues such as the definition of these services, quality and professionalization, organizational infrastructure, public support schemes and working conditions. We argue that, under certain institutional conditions, personal and household services can represent an important area of regular employment and increase the reconciliation of work and family life.
    Keywords: personal and household services, Europe, voucher systems, care
    JEL: J14 J38 J45
    Date: 2013–10
  4. By: Duszczyk, Maciej (Warsaw University); Góra, Marek (Warsaw School of Economics); Kaczmarczyk, Pawel (Warsaw University)
    Abstract: Poland is a country being exposed to emigration and immigration flows relatively recently. That, among others, results in not fully developed yet institutional infrastructure for managing especially the immigrants flow. In this paper we structure all existing data and other pieces of information on immigrants coming to Poland from the EU Eastern Partnership Countries (EAPs). The vast majority of all types of immigrants from these countries actually originate in Ukraine. On the other hand also a vast majority of them come to Mazowieckie (Warsaw) Voivodeship. The study also confirms Poland is often not a destination country for immigrants. Many of them flow further to the old member states due to the same driver, namely income disparities existing both between EAPs and Poland as well as between Poland and the EU old member states. Nevertheless, the study shows moderate positive impact of immigration fitting demand mostly in agriculture, construction and household services. We analyse an impact of immigration on the domestic labour market in Poland. The immigrants fill gaps existing due to relatively strong and sustained growth contributing to Poland's welfare growth and also due to large scale emigration from Poland to EU old member states. Regulations applying to the immigrants coming to Poland adopted in 2007-2008 are still in force today. They create institutional infrastructure contributing to increasing scale of employment immigration to Poland. There is no sign the regulations will be substantially changed in the future. We rather expect a step by step development of the currently applied immigration policy.
    Keywords: immigration, impacts of immigration, Eastern Partnership Countries, institutions
    JEL: F22 J15 J61 J63
    Date: 2013–10
  5. By: Bertoni, Marco (University of Padova); Brunello, Giorgio (University of Padova)
    Abstract: While it is well known that birth order affects educational attainment, less is known about its effects on earnings. Using data from eleven European countries for males born between 1935 and 1956, we show that firstborns enjoy on average a 13.7 percent premium over laterborns in their wage at labour market entry. However, this advantage is short lived, and disappears by age 30, between 10 and 15 years after labour market entry. While firstborns start with a better match, partly because of their higher education, laterborns quickly catch up by switching earlier and more frequently to better paying jobs. We argue that a key factor driving our findings is that laterborns are more likely to engage in risky behaviours.
    Keywords: birth order, earnings, risk aversion, Europe
    JEL: D13 J12 J24
    Date: 2013–10
  6. By: Möhlmann, Axel
    Abstract: This paper studies differences in tax morale attitudes between East and West Germany using multiple recent data sets. Contrary to previous 1990s evidence, but in line with recent studies on an east-west mentality gap, we find a persistent higher tax morale in East Germany and no indication of convergence over time. Distinguishing between region of living and birth and periods of within-country migration reveals that the East Germans who stayed determine the results and that migration vanishes differences. Regional economic heterogeneity of tax revenue transfers cannot explain the results. We find a framing effect on the tax morale gap with questions phrasing tax paying as the duty of a good citizen. This result suggests no gap of tax morale with moral reasoning related to the social order and citizenry.
    Keywords: tax morale, German reunification, east-west differences, convergence, moral reasoning
    JEL: H26 H73
    Date: 2013–03–15
  7. By: Sebastian Pfeiffer (Institute for Austrian and International Tax Law, Vienna University of Economics and Business); Pavel Semerad (Department of Accounting and Taxes, Faculty of Business and Economics, Mendel university in Brno)
    Abstract: This article deals with various aspects of carousel frauds in which missing traders play a crucial role during intra-union transactions. The most important question is how to stop this kind of crime, which causes a huge tax gap in collecting value added tax. In this paper a detailed analysis of fraud patterns including model calculations was carried out. Very important for tax administration in the European Union are judgments of the European Court of Justice dealing with questions concerning the controversial parts and interpretations of the law in Member States and the Directive. Several judgments from Austria, the Czech Republic and Germany aimed at fraud in value added tax were used. Special emphasis is devoted to the solution to tackle VAT and carousel frauds. The opinions of the authors and the European Union are discussed and new planned solutions to fraud are examined as well. Although QRM allows Member States to apply for an exemption to introduce reverse charge mechanism, the Czech Republic is used as a model example to show legal solutions after earlier unsuccessful application for reverse charge mechanism on fuel sale.
    Keywords: Carusel fraud, missing trader, value added tax, tax evasion
    JEL: H20 H26
    Date: 2013–10
  8. By: Carlo Carraro (University of Venice, FEEM and CMCC, Italy); Massimo Tavoni (FEEM and CMCC, Italy); Thomas Longden (FEEM and CMCC, Italy); Giacomo Marangoni (FEEM and CMCC, Italy)
    Abstract: This paper analyses a set of new scenarios for energy markets in Europe to evaluate the consistency of economic incentives and climate objectives. It focuses in particular on the role of natural gas across a range of climate policy scenarios (including the Copenhagen Pledges and the EU Roadmap) to identify whether current trends and policies are leading to an economically efficient and, at the same time, climate friendly, energy mix. Economic costs and environmental objectives are balanced to identify the welfare-maximising development path, the related investment strategies in the energy sector, and the resulting optimal energy mix. Policy measures to support this balanced economic development are identified. A specific sensitivity analysis upon the role of the 2020 renewable targets and increased energy efficiency improvements is also carried out. We conclude that a suitable and sustained carbon price needs to be implemented to move energy markets in Europe closer to the optimal energy mix. We also highlight that an appropriate carbon pricing is sufficient to achieve both the emission target and the renewable target, without incurring in high economic costs if climate policy is not too ambitious and/or it is internationally coordinated. Finally, our results show that natural gas is the key transitional fuel within the cost-effective achievement of a range of climate policy targets.
    Keywords: : EU Climate Policy, Energy Markets, Gas Share, Carbon Pricing, Renewables Target
    JEL: O33 O41 Q43 Q48 Q54
    Date: 2013–10
  9. By: Charalampos Konstantinidis
    Abstract: Although organic farming is considered the poster child of rural development in Europe, there is little empirical evidence assessing its success in achieving the ambitious socio-economic objectives of support for small farms and employment generation that it is purported to assist. I present empirical evidence from the growth of organic farming in Europe over the past two decades that questions the highly optimistic claims of policy makers. I show that the rise in a region's share of agricultural land farmed under organic methods is associated with higher average farm size. Additionally organic farms in Europe display larger average sizes and lower rates of labor intensity than their conventional counterparts. Since the agricultural labor intensity in a region (the labor application per hectare) is not positively related with the share of organic area, the efficacy of organic farms to generate employment is set in doubt. I assert that this these developments point to the "conventionalization" of organic farming and present a serious challenge to European policy-making. Finally I suggest that the success of organic farming should be evaluated by the numbers of organic farmers, rather than by area covered, as has been the predominant approach so far.
    Keywords: organic farming, agricultural policy, European Union
    JEL: O13 Q18 R11
    Date: 2013–10
  10. By: Lechner, Michael (University of St. Gallen); Downward, Paul (Loughborough University)
    Abstract: Based on a unique composite dataset measuring heterogeneous sports participation, labour market outcomes and local facilities provision, this paper examines for the first time the association between different types of sports participation on employment and earnings in England. Clear associations between labour market outcomes and sports participation are established through matching estimation whilst controlling for some important confounding factors. The results suggest a link between different types of sports participation to initial access to employment and then higher income opportunities with ageing. However, these vary between the genders and across sports. Specifically, the results suggest that team sports contribute most to employability, but that this varies by age across genders and that outdoor activities contribute most towards higher incomes.
    Keywords: sports participation, human capital, labour market, matching estimation
    JEL: I12 I18 J24 L83 C21
    Date: 2013–10
  11. By: Roberto Antonietti (Department of Economics and Management “Marco Fanno”, University of Padova, Italy); Alberto Marzucchi (Department of International Economics, Institutions and Development (DISEIS), Catholic University of Milan, Italy and INGENIO (CSIC-UPV), Spain)
    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: 2013–09
  12. By: Andreas Koch; Daniel Pastuh; Jochen Späth
    Abstract: The present contribution examines whether and how young firms and incumbents differ with regard to selected aspects of work forms and work organization in order to assess their roles for the qualitative changes of work in industrialized countries. Conceptually, we emanate from the approach of negotiated order and we empirically ground our research upon guided interviews conducted with employers and employees in about 50 firms in four distinct industries in Germany. According to our results, new forms of work are particularly widespread in new firms. Most of the young companies in our sample practice autonomous work forms like working on one’s own responsibility and team working more frequently than incumbents, they are more prone to revert to functional flexibility (e.g. changing tasks and duties) and their working time arrangements tend to be more flexible. Altogether, firm age turns out to be an important parameter of new work forms and organization, though it is not the only one. Our results show that also the general and industry-specific framework conditions, a firm’s internal characteristics (e.g. innovation intensity, hierarchies and routines), the relevant actors (management, workforce) and particularly the coaction of these elements are important drivers shaping the overall feature of a firm.
    Keywords: Young firms, Negotiated Order, Quality of Work, Working Time, Autonomy, Work Organization, Germany, Guided Interviews
    JEL: J21 L23 L26
    Date: 2013–10
  13. By: Lars Håkonsen (Telemark Research Institute and Telemark College, Norway); Knut Løyland (Telemark Research Institute, Norway)
    Abstract: In the present paper we analyse the allocation process of cultural services in Norwegian municipalities. The cultural sector on this administrative level is decomposed into the following eight subcategories: children and youth activities, libraries, cinemas, museums, arts dissemination, sports, cultural schools, and other cultural services. By means of budget shares for these eight cultural services and a residual sector consisting of all other municipal services, we estimate a system of demand relations which are interdependently linked to each other by a budget restriction. Our analyses are based on data from 406 out of 429 Norwegian municipalities during the period 2002 to 2010. In the empirical analyses we mainly focus on the effects of income variation for the cultural services. We estimate effects of free income, matching grants to each sector, and user fees and other sector-specific income for each sector. We also estimate crowding-out effects for the cultural sectors of demographic variables indicating higher demand for services like education, child care, and health services. Our results confirm previous results. There are interesting differences within the group of cultural services, and these are partly related to different national standardization and regulation among the cultural services. In the concluding section we discuss some cultural policy implications of the results obtained.
    Keywords: Allocation of cultural services; Local government budget; Demand system
    JEL: Z11 Z18 H72
    Date: 2013–10
  14. By: O'Higgins, Niall (University of Salerno)
    Abstract: The Roma are both the largest 'minority' ethnic group in Central and South Eastern Europe and the one which suffered most from transition to the market. Still today, nearly forty years after the introduction of the EU's 1975 Discrimination Directive and with the end of the 'Roma Decade' (2005-15) in sight, people from the Roma minority have unemployment rates far above – and employment rates and wages far below – those of majority populations. One issue which has received relatively attention concerns the 'double' discrimination facing Roma women. Not only do Roma women face poorer employment and wage outcomes in the labour market than non-Roma women, in most CSEE countries the gender wage gap is significantly larger amongst Roma compared to non-Roma. This paper seeks to analyze and explain differences in the gender gap in the wages amongst Roma. The paper employs a non-parametric matching approach to identify the main factors underlying the gender wage gap. Educational attainment plays a relatively small role, explaining only around one-fifth of the gap. Industrial and occupational segregation appear to be playing a strong role as does the civil status of individuals, household socioeconomic status and whether individuals living in a predominantly Roma community.
    Keywords: gender, discrimination, Roma, labour market
    JEL: J16 J15
    Date: 2013–10
  15. By: Conte, Andrea (European Commission); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: This paper discusses the relationship between a company's investment in innovation and its success in introducing new product and/or process innovations. In doing so, this analysis departs from the standard approach which puts forward a homogenous R&D-based knowledge production function by introducing different types of innovation investments (R&D and technology acquisition) for different sets of companies. Using the Community Innovation Survey (CIS) dataset comprising more than 3000 Italian manufacturing companies, the econometric analysis adopts a set of techniques which allows to control for the sample selection, endogeneity and simultaneity problems which arise when dealing with CIS data. The main findings are summarised as follows: (1) beyond the acknowledged effect of R&D in increasing the probability of success of product innovation, a larger-than-expected role is played by technology acquisition in the innovation process; (2) the relative importance of R&D and technology acquisition varies significantly across different types of companies where crucial dimensions of analysis are company size and the technological domain of a sector.
    Keywords: R&D, product innovation, process innovation, embodied technical change, sample selection, SUR, community innovation survey
    JEL: O31
    Date: 2013–10
  16. By: Jansson, Thomas (Monetary Policy Department, Central Bank of Sweden)
    Abstract: I show that individuals whose unemployment risk tends to increase more when local home prices fall optimally invest less in owner-occupied housing. Using a unique, Swedish register based database, I find that a one standard deviation increase in the covariance between individually estimated unemployment risks and local home prices implies an average increase in the value of households investments in owner-occupied housing of USD 13,300. Further, I find, in line with the predictions of my theoretical model, that same-industry couples rent more often, but, conditional on ownership, invest USD 9,200 more on average in single-family homes than different-industry couples.
    Keywords: homeownership; housing demand; unemployment; house price risk
    JEL: D12 D14 R21
    Date: 2013–08–01
  17. By: Di Pietro, Giorgio (University of Westminster)
    Abstract: Despite the great popularity of international educational mobility schemes, relatively little research has been conducted to explore their benefits. Using data on a large sample of recent Italian graduates, this paper investigates the extent to which participation in study abroad programs during university studies impacts subsequent employment likelihood. To address the problem of endogeneity related to participation in study abroad programs, we use university-department fixed effects and instrumental variable estimation where the instrumental variable is exposure to international student exchange schemes. Our estimates show that studying abroad has a relatively large and statistically meaningful effect on the probability of being in employment 3 years after graduation. This effect is mainly driven by the impact that study abroad programs have on the employment prospects of graduates from disadvantaged backgrounds.
    Keywords: study abroad programs, graduates, employment, instrumental variable
    JEL: I2 J6
    Date: 2013–10
  18. By: Castellano, Rosalia; Punzo, Gennaro; Rocca, Antonella
    Abstract: The aim of this paper is to explore the main determinants of women’s job search propensity and the mechanism underlying the selection effect into labour markets. The analysis compares the European countries which share the lowest female activity rates with the well-developed economies of North Europe characterized by the highest levels of female labour force participation. The potential selection bias due to the overlap in some unobserved characteristics is addressed via a bivariate probit model. Significant selection effects in women’s job search process of opposite signs are found for the Greek and for the Polish and the Norwegian labour markets.
    Keywords: job search propensity, gender gap, selection effect, bivariate probit model
    JEL: J16
    Date: 2013–10
  19. By: Alberto Montagnoli (Division of Economics, University of Stirling); Jun Nagayasu (Graduate School of Systems and Information Engineering,)
    Abstract: This paper uses the log t test to analyse the convergence of house prices across UK regions and the presence of spillovers effects. We find that UK house prices can be grouped into four clusters. Moreover we document the dynamics of the house price spillovers across regions.
    Keywords: Regional house prices, heterogeneity, convergence, spillovers
    JEL: E31 E52
    Date: 2013–10
  20. By: Charlotte Cabane (University of St. Gallen - University of St. Gallen); Andrew E. Clark (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA))
    Abstract: We here ask whether sports participation at school is positively correlated with adult labour-market outcomes. There are many potential channels for this effect, although, as usual, identifying a causal relationship is difficult. We appeal to two widely-separated waves of Add Health data to map out the correlation between school sports and adult labour-market outcomes. We show that different types of school sports are associated with different types of jobs and labour-market insertion when adult. We take the issue of the endogeneity of sport seriously and use data on siblings in order to obtain estimates that are as close to unbiased as possible. Last, we compare the effect of sporting activities to that of other leisure activities.
    Keywords: Job characteristics ; Education ; Sport ; School
    Date: 2013–10

This nep-eur issue is ©2013 by Giuseppe Marotta. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.