nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2013‒11‒29
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. The Impact of Institutional and Socio-Ecological Drivers on Activity at Older Ages By Maciej Lis; Agnieszka Kamińska; Aart-Jan Riekhoff; Izabela Styczynska
  2. Changes in Income Distributions and the Role of Tax-Benefit Policy During the Great Recession: An International Perspective By Bargain, Olivier; Callan, Tim; Doorley, Karina; Keane, Claire
  3. Measuring performance: does the assessment depend on the poverty proxy? By Notten, Geranda
  4. Age and productivity. Human Capital Accumulation and Depreciation By Anna Ruzik-Sierdzinska; Claudia Villosio; Michele Belloni; Maciej Lis; Monika Potoczna
  5. Is money all? Financing versus knowledge and demand constraints to innovation By Pellegrino, Gabriele; Savona, Maria
  6. The impact of migration on children left behind in Moldova By Gassmann, Franziska; Siegel, Melissa; Vanore, Michaella; Waidler, Jennifer
  7. Doubling Up: A Gift or a Shame? Multigenerational Households and Parental Depression of Older Europeans By Luis Aranda
  8. Within and Between-Country Value Diversity in Europe: Latent Class Analysis By Vladimir Magun; Maksim Rudnev; Peter Schmidt
  9. The Side Effect of Pension Reforms on Training: Evidence from Italy By Brunello, Giorgio; Comi, Simona
  10. Dynamic models of R&D, innovation and productivity: Panel data evidence for Dutch and French manufacturing By Raymond, Wladimir; Mairesse, Jacques; Mohnen, Pierre; Palm, Franz
  11. Do High-Income or Low-Income Immigrants Leave Faster? By Bijwaard, Govert; Wahba, Jackline
  12. Factors affecting welfare attitudes in different types of welfare states: personal interests and values By Olga Gryaznova
  13. Migration Plans and Strategies of Recent Polish Migrants to England and Wales: Do They Have Any and How Do They Change? By Stephen Drinkwater; Michał Garapich
  14. The Impact of Cooperation on R&D, Innovation andProductivity: an Analysis of Spanish Manufacturing and Services Firms By Verónica Fernández Gual; Agustí Segarra Blasco
  15. The impact of low-skilled immigration on female labour supply By Forlani, Emanuele; Lodigiani, Elisabetta; Mendolicchio, Concetta
  16. Understanding the diversity of cooperation on innovation across countries: Multilevel evidence from Europe By Srholec , Martin
  17. Smart Cities and a Stochastic Frontier Analysis: A Comparison among European Cities By Mundula, Luigi; Auci, Sabrina
  18. The effect of tax enforcement on tax morale By Antonio Filippin; Carlo V. Fiorio; Eliana Viviano
  19. To Own or Not to Own? Household Portfolios, Demographics and Institutions in a Cross-National Perspective By Sierminska, Eva; Doorley, Karina
  20. Variations in Responses to Anti-Discrimination Legislation among Trade Unions and Employers in EU Countries By John Wrench

  1. By: Maciej Lis; Agnieszka Kamińska; Aart-Jan Riekhoff; Izabela Styczynska
    Abstract: We present an insight of the socio-economic drivers of economic and noneconomic activity of persons 50+ as well their ability to adopt to SET. Not only the labour market participation, but also social engagement, beliefs, education, religious activities and housework are studied. With the use of European Social Survey data we investigate the general level of the activity among people aged 50+ in Europe as well as the relation between various aspects of activity and general labour market performance. We obtain mixed results on the concomitance of non-market and labour-market activities. We also check the role of personal traits as well as pull and push factors on prematurely leaving labour market in European countries. The differences among countries in terms of the results are confronted with the institutional characteristics of the countries. Finally, selected case studies of successful activation policies are presented.
    Keywords: Productivity, Age-Earning Profiles, Lifelong Learning
    JEL: J24 J31
    Date: 2013–10
  2. By: Bargain, Olivier (University of Aix-Marseille II); Callan, Tim (Economic and Social Research Institute, Dublin); Doorley, Karina (IZA); Keane, Claire (ESRI, Dublin)
    Abstract: This paper examines the impact on inequality and poverty of the economic crisis in four European countries, namely France, Germany, the UK and Ireland, and the contribution of tax and benefit policy changes. The period examined, 2008 to 2010, was one of great economic turmoil, yet it is unclear whether changes in inequality and poverty rates over this time period were mainly driven by changes in market income distributions or by tax-benefit policy reforms. We disentangle these effects by producing counterfactual ("no reform") scenarios using tax-benefit microsimulation and representative household surveys of each country. For the period under study, we find that the policy reaction has contributed to stabilizing or even decreasing inequality and relative poverty in the UK, France and especially in Ireland, a country where rising unemployment would have otherwise increased poverty. Market income inequality has nonetheless pushed up inequality and relative poverty in France. Relative poverty and, notably, child poverty, have increased in Germany due to policy responses combined with the increasing inequality of market income.
    Keywords: tax-benefit policy, inequality, poverty, decomposition, microsimulation, crisis
    JEL: H23 H53 I32
    Date: 2013–11
  3. By: Notten, Geranda (Graduate School of Public and International Affairs, University of Ottawa, and UNU-MERIT / MGSoG)
    Abstract: Poverty indicators often disagree about whether a person is poor or not. Yet, when it comes to assessing whether a programme is successful in reaching the poor the dominant practice is to use an income poverty indicator. This paper investigates whether the choice of welfare indicator influences the pro-poorness assessment of an intervention. Using the official European Union income and material deprivation indicators, this paper compares the outcomes of three performance indicators for three types of income transfers in six European countries. The analysis indicates that income transfers are assessed as far more successful when the information from both indicators is combined.
    Keywords: performance, poverty, income, material deprivation, transfers, European Union, EU-SILC
    JEL: I32 I38
    Date: 2013
  4. By: Anna Ruzik-Sierdzinska; Claudia Villosio; Michele Belloni; Maciej Lis; Monika Potoczna
    Abstract: This NEUJOBS research report focuses on links between age, productivity and lifelong learning. Various data sources (EU-SILC, LFS, Structure of Earnings Survey, SHARE, ELSA, SHARELIFE) and methodological approaches were used in this report. Our analysis identifies clusters of countries with common characteristics of age-earnings profiles (for certain groups of employees) and allows for an explanation of those differences. Some differences can be attributed to the share of sectors, education types, and occupations in country-specific employment. Others are due to labour market institutions and the (dis)incentives to work at older ages provided by social security systems. Additionally, the dynamics of earnings after age 50 differ less between educational and occupational groups than at earlier ages. We show that the dynamics of average wages are strongly influenced by the timing of entering and leaving labour market. An estimation of the impact of LLL on productivity (measured by earnings) at older ages shows that for employees aged 50+, participation in training increases wages in the short-term.
    Keywords: Productivity, Age-Earning Profiles, Lifelong Learning
    JEL: J24 J31
    Date: 2013–10
  5. By: Pellegrino, Gabriele (University of Barcelona, and Università Cattolica del Sacro Cuore, Piacenza and Milano); Savona, Maria (SPRU, 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'. We then analyse the impact of obstacles on the translation of firms' engagement in innovative activities onto actual innovative outputs. Second, we assess what mostly affects firms' rate of failure in this process, whether finance or, rather, knowledge or demand-related constraints. Third, we do so in a panel framework, which allows to account for endogeneity and firms' unobserved heterogeneity through individual effects. 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 and brings back into the picture traditional demand and market structure arguments of why firms fail to innovate. The empirical analysis is based on an unbalanced panel of firm data from four waves of the UK Community Innovation Survey (CIS) between 2002 and 2010 merged with the UK Business Structure Database.
    Keywords: Barriers to innovation, Innovative firms, Potential Innovators, Failed Innovators, Panel data
    JEL: C23 O31 O32 O33
    Date: 2013
  6. By: Gassmann, Franziska (UNU-MERIT/MGSoG); Siegel, Melissa (UNU-MERIT/MGSoG); Vanore, Michaella (UNU-MERIT/MGSoG); Waidler, Jennifer (UNU-MERIT/MGSoG)
    Abstract: This paper empirically evaluates the well-being of children "left behind" by migrant household members in Moldova. Using data derived from a nationally-representative, large-scale household survey conducted between September 2011 and February 2012 among 3,255 households (1,801 of which contained children aged 0-17) across Moldova, different dimensions of child well-being are empirically evaluated. Well-being of children in Moldova is divided into eight different dimensions, each of which is comprised of several indicators. Each indicator is examined individually and then aggregated into an index. Well-being outcomes are then compared by age group, primary caregiver, migration status of the household (current migrant, return migrant, or no migration experience), and by who has migrated within the household. It was found that migration in and of itself is not associated with negative outcomes on children's well-being in any of the dimensions analysed, nor does it matter who in the household has migrated. Children living in return migrant households, however, attain higher rates of well-being in specific dimensions like emotional health and material well-being. The age of the child and the material living standards experienced by the household are much stronger predictors of well-being than household migration status in a number of different dimensions. The results suggest that migration does not play a significant role in shaping child well-being outcomes, contrary to the scenarios described in much past research. This paper is the first (to the authors' knowledge) to link migration and multidimensional child poverty.
    Keywords: Moldova, migration, poverty, child poverty, multi-dimensional poverty
    JEL: I32 F22 J61 O15
    Date: 2013
  7. By: Luis Aranda (Department of Economics, University Of Venice Cà Foscari)
    Abstract: The Great Recession has brought along a rearrangement of living patterns both in the U.S. and in Europe. This study seeks to identify the consequences of the “doubling up” of two or more generations of adults into the same household. In particular, a difference-in-difference (DID) propensity score matching approach is employed to target the causal effect of a change in geographical closeness of respondents and their children —either moving together (doubling up) or apart (splitting up)— on the well-being of the older generation, proxied by their depression score. We find that, although heterogeneous across European regions, in no case does doubling up pose a negative effect to the quality of life of older Europeans. The opposite is true for central and southern Europe, where a double up seems to be followed by a significant reduction in the depression level of the older generation. Our results highlight that, although a negative connotation has usually been attached to multigenerational living arrangements in the post-WWII era, its benefits are evident and, in a time marked by increasing demographic aging, can lead to significant improvements in the quality of life of older Europeans.
    Keywords: Doubling up; Depression; Aging; Difference-in-differences; Matching estimator
    JEL: J14 I31
    Date: 2013
  8. By: Vladimir Magun (Head of the Unit for Personality Studies at the Institute of Sociology of the Russian Academy of Sciences, Head of the Laboratory for Comparative Studies of Mass Consciousness at the National Research University Higher School of Economics); Maksim Rudnev (Research fellow at the National Research University Higher School of Economics and at the Institute of Sociology of the Russian Academy of Sciences;); Peter Schmidt (National Research University Higher School of Economics (Moscow, Russia). International Laboratory of Socio-Cultural research, The Co-Head; Giessen University, Germany)
    Abstract: In order to combine a study of within-country value diversity and cross-country differences, we applied a person-centered approach. Instead of focusing on the distinct value items, respondents from the 33 European countries were classified on the basis of the whole set of Schwartz value items (Portrait Values Questionnaire) by means of Latent Class Analysis. Six Pan-European value classes were found; they differ both by rank of values and degree of value preferences. Surprisingly, a class with the least pronounced value preferences appeared to be the largest one (38%). In each country all six value classes are represented. Nordic and Western European countries have more uniform distributions of value class shares than Post-Communist and Mediterranean countries; this is suggested to be an implication of societal developmental processes which start from the few people who commit themselves to the values of more advanced countries.
    Keywords: value, preference, heterogeneity, fractionalization, latent class analysis, European Social Survey (ESS), Portrait Values Questionnaire, cross-national comparison
    JEL: Z10
    Date: 2013
  9. By: Brunello, Giorgio (University of Padova); Comi, Simona (University of Milan Bicocca)
    Abstract: Due to pension reforms, minimum retirement age increased substantially in Italy between the second part of the 1990s and the early 2000s. We compare the training participation of pre- and post - reform cohorts of private sector employees and estimate that adding one year to minimum retirement age increases training incidence by 6.9 to 10.7 percent, depending on the empirical specification. We find that policies that increase the residual working horizon are effective in increasing training participation by senior workers, and that traditional training policies that aim at reducing training costs by providing subsidies are ineffective.
    Keywords: pension reforms, training, Italy
    JEL: J24 J26
    Date: 2013–11
  10. By: Raymond, Wladimir (STATEC Luxemburg); Mairesse, Jacques (CREST-INSEE, UNU-MERIT, Maastricht University, and NBER); Mohnen, Pierre (UNU-MERIT / MGSoG, SBE, Maastricht University, and CIRANO); Palm, Franz (SBE, Maastricht University and CESifo)
    Abstract: This paper introduces dynamics in the R&D to innovation and innovation to productivity relationships, which have mostly been estimated on cross-sectional data. It considers four nonlinear dynamic simultaneous equations models that include individual effects and idiosyncratic errors correlated across equations and that differ in the way innovation enters the conditional mean of labour productivity: through an observed binary indicator, an observed intensity variable or through the continuous latent variables that correspond to the observed occurrence or intensity. It estimates these models by full information maximum likelihood using two unbalanced panels of Dutch and French manufacturing firms from three waves of the Community Innovation Survey. The results provide evidence of robust unidirectional causality from innovation to productivity and of stronger persistence in productivity than in innovation.
    Keywords: R&D, innovation, productivity, panel data, dynamics, simultaneous equations
    JEL: C33 C34 C35 L60 O31 O32
    Date: 2013
  11. By: Bijwaard, Govert (NIDI - Netherlands Interdisciplinary Demographic Institute); Wahba, Jackline (University of Southampton)
    Abstract: We estimate the impact of the income earned in the host country on return migration of labor migrants from developing countries. We use a three-state correlated competing risks model to account for the strong dependence of labor market status and the income earned. Our analysis is based on administrative panel data of recent labor immigrants from developing countries to the Netherlands. The empirical results show that intensities of return migration are U-shaped with respect to migrants' income, implying a higher intensity in low- and high- income groups. Indeed, the lowest-income group has the highest probability of return. We also find that ignoring the interdependence of labor market status and the income earned leads to an overestimating the income effect on departure.
    Keywords: migration dynamics, labour market transitions, competing risks, immigrant assimilation
    JEL: F22 J61 C41
    Date: 2013–11
  12. By: Olga Gryaznova (National Research University Higher School of Economics, Laboratory for Comparative Social Research, Senior Research Fellow, Laboratory for Comparative Researches of Mass Consciousness, Research Fellow.)
    Abstract: This study examines the effect of personal interests and basic human values on the degree of support for a welfare state. Data from the European Social Survey, round 4 (2008) for 29 European countries (total n = 56,752) was used for the study. Results show that values such as collectivism and altruism promote demand for state intervention in welfare, while values like individualism and egoism negatively affect it. Income has the strongest negative effect on support for a welfare state among all the factors tested, even more so than gender and employment status in all types of welfare states. Compared to other countries (familialistic, social-democratic, conservative, and liberal), former USSR and ex-communist countries seem to be more influenced by collectivistic and individualistic values, and education. In addition, in ex-communist countries, altruistic and egoistic values have a crucial impact on the demand for a welfare state. In liberal, conservative, and social-democratic countries, values and education do not have much impact.
    Keywords: Welfare state, welfare attitudes, welfare regimes, basic human values, self-interest, cross-cultural comparative researches.
    JEL: Z13
    Date: 2013
  13. By: Stephen Drinkwater (WISERD, CMPR and Department of Economics, Swansea University); Michał Garapich (CRONEM, University of Roehampton)
    Abstract: Debates have persisted about the character of the large East-West population flows that followed the accession of Poland and other Central and Eastern European states to the EU in 2004. Some of the key discussions surround the extent to which the mobility has been temporal and hence how likely these migrants are to settle permanently or to stay for long periods in host countries. This paper further enhances the understanding of such issues mainly through examining survey data on 700 Polish nationals in seven English and Welsh towns and cities, and supplemented by an analysis of qualitative information obtained from the respondents. Three categories of migrants are initially identified on the basis of their intentions of stay in the UK. Multinomial logit models are then estimated to examine the characteristics of individuals in each category to establish the factors that influence migration strategies and changes in plans. The results indicate that although standard socio-economic characteristics tend to be insignificant, migration strategies and changes in intentions are affected by the migrant’s view of whether their job matches their expectations, the time of entry into the UK and remittances. Analysis of the qualitative information provides a complementary perspective and re-inforces some of the key findings in relation to the factors determining changes in the anticipated length of stay.
    Date: 2013–11
  14. By: Verónica Fernández Gual (CREIP, XREAP, Industry and Territory Research Group, Reus, Spain); Agustí Segarra Blasco (CREIP, XREAP, Industry and Territory Research Group, Reus, Spain)
    Abstract: This paper investigates relationships between cooperation, R&D, innovation and productivity in Spanish firms. It uses a large sample of firm-level micro-data and applies an extended structural model that aims to explain the effects of cooperation on R&D investment, of R&D investment on output innovation, and of innovation on firms’ productivity levels. It also analyses the determinants of R&D cooperation. Firms’ technology level is taken into account in order to analyse the differences between high-tech and low-tech firms, both in the industrial and service sectors. The database used was the Technological Innovation Panel (PITEC) for the period 2004-2010. Empirical results show that firms which cooperate in innovative activities are more likely to invest in R&D in subsequent years. As expected, R&D investment has a positive impact on the probability of generating an innovation, in terms of both product and process, for manufacturing firms. Finally, innovation output has a positive impact on firms’ productivity, being greater in process innovations.
    Keywords: innovation sources; productivity; R&D Cooperation
    Date: 2013–11
  15. By: Forlani, Emanuele; Lodigiani, Elisabetta; Mendolicchio, Concetta (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This paper contributes to the literature on the impact of immigrants on native female labour supply. By segmenting the market by educational levels, we are able to investigate which nativeborn women are more affected by an increase of low-skilled immigrants working in the household service sector. We present a model of individual choice with home production and, using an harmonized dataset (CNEF), we test its main predictions. Our sample includes countries implementing different family policies. Our results suggest that the share of immigrants working in services in a given local labour market is positively associated with the probability of nativeborn women to increase their labour supply at the intensive margin (number of hours worked per week), if skilled, and at the extensive margin (participation decision), if unskilled. Moreover, they show that these effects are larger in countries with less family-supportive policies." (Author's abstract, IAB-Doku) ((en)) Additional Information Auch erschienen als: DEM working papers series 58
    Keywords: Einwanderer, ausländische Arbeitnehmer, Hochqualifizierte, Niedrigqualifizierte, Arbeitskräfteangebot, Frauen, Erwerbsbeteiligung, Familienpolitik, Australien, Bundesrepublik Deutschland, Großbritannien, USA, Schweiz, Bundesrepublik Deutschland
    JEL: J22 J61
    Date: 2013–11–18
  16. By: Srholec , Martin (CIRCLE, Lund University)
    Abstract: Much has been written about innovation cooperation. But little research has been done to explain national differences thereof. Using macro and micro evidence from the fourth Community Innovation Survey, we econometrically investigate the extent to which national framework conditions account for the propensity of firms to cooperate on innovation at home and abroad. The results indicate strong differences across countries in the latter. Firms operating in countries with less developed research infrastructure are shown to be more likely to cooperate with foreign partners, hence supporting the thesis that in this context the foreign linkages tend to be diasporic. Size and openness of the economy matters too. But characteristics of firms that explain cooperation have not been found to differ much by country. In this respect, the results draw attention to limits of the existing micro datasets on innovation cooperation.
    Keywords: Innovation; cooperation; innovation system; multilevel model; Europe
    JEL: D21 F23 L16 O23
    Date: 2013–11–19
  17. By: Mundula, Luigi; Auci, Sabrina
    Abstract: The level of interest in smart cities is growing, and the recent literature on this topic (Holland, 2008; Caragliu et al., 2009, Nijkamp et al., 2011 and Lombardi et al., 2012) identifies a number of factors that characterise a city as smart, such as economic development, environment, human capital, culture and leisure, and e-governance. Thus, the smartness concept is strictly linked to urban efficiency in a multifaceted way. A seminal research for European policy conducted by Giffinger et al. (2007) defines a smart city on the basis of several intangible indicators, such as a smart economy, smart mobility, smart environment, smart people, smart living, and smart governance. These authors’ methodology results in a ranking of 70 European cities in terms of their smartness. Our aim is to verify the robustness of these smartness indicators in explaining the efficiency of the same sample of European cities. Using the concept of output maximising, we built a stochastic frontier function in terms of urban productivity and/or urban efficiency by assessing the economic distance that separates cities from being smart. Moreover, this approach, which distinguishes between inputs and efficiency, allows us to incorporate the smartness indicators into the systematic component within the error term. As a result, our conclusions identify a different ranking of European cities with respect to Giffinger et al. (2007)’s analysis, thereby highlighting the need for a better and more robust definition of these indicators.
    Keywords: smart cities, stochastic frontier, technical inefficiency
    JEL: D63 Q01 R11
    Date: 2013–11–10
  18. By: Antonio Filippin (University of Milan); Carlo V. Fiorio (University of Milan); Eliana Viviano (Bank of Italy)
    Abstract: In this paper we argue that tax enforcement is an additional contextual factor affecting tax morale, one of the most important determinants of tax compliance. By using a unique dataset that merges a representative sample of Italian households with administrative data on tax enforcement, we find first that tax morale is positively correlated with tax enforcement. Second, to deal with possible endogeneity of tax enforcement, we show that results are confirmed in an IV specification using the change in the tax gap at the provincial level as an instrument for tax enforcement. Finally, we provide evidence that the impact of tax enforcement and social environment is stronger at low quantiles of tax morale. Our results show that apart from lowering the expected value of tax evasion, tax enforcement has an additional and indirect effect on tax compliance through its effect on tax morale.
    Keywords: tax morale, tax enforcement, tax gap.
    JEL: H26 H29 D70
    Date: 2013–10
  19. By: Sierminska, Eva (CEPS/INSTEAD); Doorley, Karina (IZA)
    Abstract: Using harmonized wealth data and a novel decomposition approach, we show that cohort effects exist in the income profiles of asset and debt portfolios for a sample of European countries, the U.S. and Canada. We find that younger households' participation decisions in assets are more responsive to income than older households. Family structure plays a significant role in explaining cross-country differences for both cohorts. Examining institutional differences, we find that in more financially developed and economically open countries, households are less likely to own housing but more likely to be in debt. Typical mortgage characteristics and mathematical literacy are also correlated with debt participation across countries. These findings have important implications for policy setting during times of financial unease for the young, as well as for the future in helping secure adequate income for the elderly. Our results show that there is scope for policies which promote asset participation for young households and debt participation, where there is a need for consumpation smoothing, for older households.
    Keywords: wealth portfolios, decomposition, institutions, demographics
    JEL: G11 G21 J10
    Date: 2013–11
  20. By: John Wrench
    Abstract: This paper looks at European trade unions and employers, their awareness of racial/ethnic discrimination, and their receptiveness to legislation against it, focusing both on differences among EU member states, and on changes that have occurred since the 1990s. It draws specifically on two research projects carried out by two EU agencies: the European Foundation for the Improvement of Living and Working Conditions, and the EU Agency for Fundamental Rights (FRA), published 14 years apart. The comparison indicates that the 'no problem here' stance regarding racial discrimination, common in the early 1990s, is no longer dominant amongst the EU15 unions and employers, but could still be found amongst respondents in some of the 12 member states that had joined the EU in after 2004. In general, trade unionists and employers in these newer member states are significantly less sympathetic to the EU's Racial Equality Directive and its rationale than their counterparts to the west. Drawing on qualitative interviews from the FRA research, the paper contrasts the various arguments in support of and against the legislation.
    Keywords: Trade unions, migrants, ethnic minorities, racial discrimination, Racial Equality Directive, European Union.
    Date: 2013–07

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