nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2014‒01‒10
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. CFC legislation, passive assets and the impact of the ECJ’s Cadbury-Schweppes decision By Martin Ruf; Alfons J. Weichenrieder
  2. Broadband access in the EU: An assessment of future economic benefits By Gruber, H.; Hätönen, J.; Koutroumpis, P.
  3. European Hospital Survey: Benchmarking deployment of e-Health services (2012–2013) – Synthesis of outcomes By Ramon Sabes-Figuera; Ioannis Maghiros
  4. The impact of regulation and competition on the adoption of fibre-based broadband services: Recent evidence from the European Union member states By Briglauer, Wolfgang
  5. Does one more or one less mobile opertor affect prices? A comprehensive ex-post evaluation of entries and mergers in European mobile telecommunication markets By Csorba, Gergely; Pápai, Zoltán
  6. Cash Management and Payment Choices: A Simulation Model with International Comparisons By Carlos Arango; Yassine Bouhdaoui; David Bounie; Martina Eschelbach; Lola Hernández
  7. Residential mobile phone users complaints' in Spain By Pérez-Amaral, Teodosio; Gijón, Covadonga; Garín-Muñoz, Teresa; López, Rafael
  8. Investment in broadband infrastructure under local deregulation: Evidence from the UK broadband market By Fabritz, Nadine; Falck, Oliver
  9. Interacting Product and Labor Market Regulation and the Impact of Immigration on Native Wages By Susanne Prantl; Alexandra Spitz-Oener
  10. Regulation, investment and efficiency in the transition to next generation networks: Evidence from the European Union By Rajabiun, Reza; Middleton, Catherine
  11. The Slump and Immigration Policy in Europe By Timothy J. Hatton
  12. Data Envelopment Analysis for Measuring of Economic Growth in Terms of Welfare Beyond GDP By Martin Lábaj; Mikuláš Luptáèik; Eduard Nežinský
  13. Contribution to the economic impact assessment of policy options to regulate animal cloning for food production with an economic simulation model By Koen Dillen; Emanuele Ferrari; Pascal Tillie; George Philippidis; Sophie Helaine
  14. Skill premia and intergenerational education mobility: The French case By B. Ben-Halima; Nathalie Chusseau; Joel Hellier
  15. Great expectations, but how to achieve them? Explaining patterns of inequality in childcare use across 31 developed countries By Wim Van Lancker; Joris Ghysels
  16. Socioeconomic Differentials in Male Mortality in Ireland: 1984-2008 By Layte, Richard; Nolan, Anne
  17. The effect of awareness and incentives on tax evasion By Annette Alstadsæter; Martin Jacob
  18. Does Bank Market Power Affect SME Financing Constraints? By Ryan, Robert M.; O'Toole, Conor; McCann, Fergal
  19. On the weal and woe of internet traffic management in Europe: A critical appraisal from a network economic perspective By Stocker, Volker
  20. Monitoring and Assessment Framework for the European Innovation Partnership on Active and Healthy Ageing (MAFEIP) – Interim Report on the defined process indicators By Fabienne Abadie; Maria Lluch; Ramon Sabes-Figuera; Bernarda Zamora

  1. By: Martin Ruf (Eberhard Karls Universität Tübingen); Alfons J. Weichenrieder (Goethe Universität Frankfurt)
    Abstract: In its Cadbury-Schweppes decision of 12 September 2006 (C-196/04), the ECJ decided that the UK CFC rules, which were implemented to subject low taxed passive income of foreign affiliates to UK corporate tax, implied an infringement of the freedom of establishment. Consequently, many EU countries including Germany changed their legislation. The paper discusses to which extent the ECJ ruling has impacted on the allocation of passive assets in German multinationals. Using firm level data we find evidence for an increased preference for low-tax European countries compared to non-European countries.
    Keywords: European Court of Justice, corporation tax, foreign direct investment, CFC regulation, passive investment
    JEL: H25 H73
    Date: 2013
  2. By: Gruber, H.; Hätönen, J.; Koutroumpis, P.
    Abstract: This paper evaluates the net benefits of the implementation of the broadband infrastructure deployment targets by 2020 as entailed by the Digital Agenda for Europe Initiative set forth by the European Commission. We estimate the returns from broadband infrastructure for the period 2005-2011, differentiating the impact of broadband by levels of adoption and speed while accounting for reverse causality and extensive heterogeneity. We find that in the base case scenario the overall benefits outweigh the costs by 32% for the entire European Union. We further extrapolate the returns by country under different scenarios of implementation. In most cases the benefits are substantially well above the costs. The findings lead to policy recommendations related to the role of public support for the generalized build out of broadband infrastructure. --
    Keywords: broadband networks,economic impact,Digital Agenda
    JEL: O33 O38 O52
    Date: 2013
  3. By: Ramon Sabes-Figuera (European Commission – JRC - IPTS); Ioannis Maghiros (European Commission – JRC - IPTS)
    Abstract: A widespread uptake of eHealth technologies is likely to benefit European Healthcare systems both in terms of quality of care and financial sustainability and European society at large. This is why eHealth has been on the European Commission policy agenda for more than a decade. The objectives of the latest eHealth action plan developed in 2012 are in line with those of the Europe 2020 Strategy and the Digital Agenda for Europe. This report, based on the analysis of the data from the "European Hospital Survey: Benchmarking deployment of e-Health services (2012–2013)" project, presents policy relevant results and findings in this field. The results highlighted here are based on the analysis of the survey descriptive results as well as two composite indicators on eHealth deployment and eHealth availability and use that were developed based on the survey's data. Although they are closely interrelated, these results have been grouped in four sections and are presented in detail in this document.
    Keywords: European Hospital Survey, EHS, synthesis, outcomes, eHealth, deployment, availability, use, EHR, information exchange, infrastructure, composite, indicators, policy
    JEL: I11 I18 O33 O38
    Date: 2013–12
  4. By: Briglauer, Wolfgang
    Abstract: Fibre deployment of next-generation high-speed broadband networks is considered to be a decisive development for any information-based society, yet investment activities and especially the adoption of fibre-based broadband services take place only very gradually in most countries. This work employs static and dynamic model specifications and identifies the most important determinants of the adoption of fibre-based broadband services with recent panel data from the European Union member states for the years from 2004 to 2012. The results show that the more effective previous broadband access regulation is, the more negative the impact on adoption, while competitive pressure from mobile networks affects adoption in a non-linear manner. It appears that the approach of strict cost-based access regulation embedded in the EU regulatory framework is at odds with the targets outlined in the European Commission's Digital Agenda. Finally, we also find evidence for substantial network effects underlying the adoption process. --
    Keywords: Next-generation telecommunications networks,regulation,competition,adoption,network effects
    Date: 2013
  5. By: Csorba, Gergely; Pápai, Zoltán
    Abstract: This paper estimates the impact of entries and mergers on the price of mobile voice services in a panel database of 27 European Member States between 2003 and 2010. Our difference-in-differences econometric methodology exploits the variance in different structural changes between countries to separate the respective effects. Our results show that the effect of entry crucially depends on the number of active operators and the type of entrant, and not controlling for these differences might lead to misleading conclusions. We find no robust evidence that entry has a price-decreasing effect on markets with originally 2 operators. However, the entry of a 4th operator does have a price-decreasing effect, but with different dynamics concerning the entrant's type. When we separate entry effects for the subsequent years, we show that the significant price-decreasing effects for local operators entering occur only in the first year after entry, while the price-decreasing effects for multinational entries are significantly larger on the long-run. Last, we find no price-increasing effects of 5-to-4 mergers, but a long run price-increasing effect of a 4-to-3 merger. --
    Keywords: ex-post evaluation,mobile telecommunications,entry,merger,difference-in-differences estimations
    JEL: L11 L49 L59 L96
    Date: 2013
  6. By: Carlos Arango; Yassine Bouhdaoui; David Bounie; Martina Eschelbach; Lola Hernández
    Abstract: Despite various payment innovations, today, cash is still heavily used to pay for low-value purchases. This paper develops a simulation model to test whether standard implications of the theory on cash management and payment choices can explain the use of payment instruments by transaction size. In particular, using diary survey data from Canada, France, Germany and the Netherlands, we test the assumption that cash is still the most efficient payment instrument, and the idea that people hold cash for precautionary reasons when facing uncertainty about their future purchases. The results of the simulations show that these two factors are significant determinants of the high shares of low-value cash payments in Canada, France and Germany. Yet, they are not so crucial in the Netherlands, which exhibits a significant share of low-value card transactions. We discuss how the differences in payment markets across countries may explain the differences in the performance of the model.
    Keywords: Bank notes; Financial services; International topics
    JEL: C61 E41 E47
    Date: 2013
  7. By: Pérez-Amaral, Teodosio; Gijón, Covadonga; Garín-Muñoz, Teresa; López, Rafael
    Abstract: Consumer satisfaction is a key determinant of customer retention, profitability of operators, consumer welfare and a strategic variable for competition and international comparisons. Spain's mobile customer satisfaction is the lowest in the European Union according to recent EU studies (SMREC, 2013). Consumer complaints are numerous according to official statistics. In turn, consumer complaints (and how well they are dealt with) influence customer satisfaction and retention. This paper analyzes the determinants of the different types of complaints filed by residential consumers in Spain using the survey CIS (2009) and the report Ministerio de Industria (2012a). The first survey uses disaggregated information on 4,249 residential consumers while the report summarizes the complaints received by the Ministry of Industry's Telecommunications Customer Service Office. Econometric models are specified and estimated to quantify the effects. The results are used to characterize the profiles of typical complainers as well as the possible existence of a complaints divide due to income, age or education. Finally, policy recommendations are proposed to improve customer satisfaction and diminish the reasons for filing complaints. --
    Keywords: consumer satisfaction,complaints,mobile phones,residential consumers,survey data,econometric models
    JEL: C21 D12 D18 L52 L96
    Date: 2013
  8. By: Fabritz, Nadine; Falck, Oliver
    Abstract: This paper investigates telecommunication operator investment in broadband infrastructure after local deregulation of the wholesale broadband access market. Using a panel dataset covering all 5,598 exchange areas in the United Kingdom, we exploit regional differences in deregulation following a 2008 reform. Controlling for initial conditions, first-difference estimates show that local deregulation increases local investment in infrastructure by both the incumbent and competitors. --
    Keywords: Telecommunication,Regulation,Infrastructure Investment,Wholesale Broadband Access,United Kingdom
    JEL: L50 L96
    Date: 2013
  9. By: Susanne Prantl (University of Cologne, Max Planck Institute for Research on Collective Goods, Bonn, and Institute for Fiscal Studies, London); Alexandra Spitz-Oener (Humboldt-University Berlin, IAB, CASE and IZA)
    Abstract: Does interacting product and labor market regulation alter the impact of immigration on wages of competing native workers? Focusing on the large, sudden and unanticipated wave of migration from East to West Germany after German reunification and allowing for endogenous immigration, we compare native wage reactions across different segments of the West German labor market: one segment without product and labor market regulation, to which standard immigration models best apply, one segment in which product and labor market regulation interact, and one segment covering intermediate groups of workers. We find that the wages of competing native West Germans respond negatively to the large influx of similar East German workers in the segment with almost free firm entry into product markets and weak worker influence on the decision-making of firms. Competing native workers are insulated from such pressure if firm entry regulation interacts with labor market institutions, implying a strong influence of workers on the decision-making of profit-making firms.
    Keywords: Immigration, Product Market Regulation, Labor Market Regulation
    JEL: L50 J61 J3
    Date: 2013–12
  10. By: Rajabiun, Reza; Middleton, Catherine
    Abstract: This article explores the impact of public policy, technological change, and the development of Internet connectivity in EU members. The analysis illustrates that the results of previous empirical literature on the interplay between regulation, competition, and investment depend on the construction of indicators employed to evaluate this interaction. Furthermore, the article points out that the traditional policy model and related empirical literature treats fixed capital inputs in networks as a measure of digital infrastructure quality/outcomes. Using broadband speed measurements between 2007 and 2012, the article addresses this gap in the literature and evaluates the determinants of digital infrastructure quality in the EU. The analysis suggests the primary driver of network quality in the medium to long term is the willingness and/or ability of operators to reinvest more of their revenues in network capacity improvements. --
    Keywords: Broadband Networks,European Union,Regulation,Technological Change,Federalism
    Date: 2013
  11. By: Timothy J. Hatton (University of Essex and Australian National University)
    Abstract: Historical experience suggests that when a period of rising immigration is followed by a sudden slump, this can trigger a policy backlash. This has not occurred in the current recession. This paper examines three links in the chain between the slump and immigration policy. First, although immigration flows have responded to the slump, and immigrants have borne more than their share of the burden, this has done little to protect the employment of non-Immigrants. Second, despite the recession for Europe as a whole, attitudes to immigration have not changed very much, and they have been influenced more by fiscal concerns than by rising unemployment. Third, while far right parties have used the recession to renew the political pressure for tougher immigration policies, governments have been constrained by the composition of immigration and by EU regulation.
    Keywords: European immigration, Recession, Immigration policy
    JEL: F22 F52 J15
    Date: 2014–01
  12. By: Martin Lábaj (University of Economics in Bratislava, Faculty of National Economy, Department of Economic Policy); Mikuláš Luptáèik (University of Economics in Bratislava, Faculty of National Economy, Department of Economic Policy); Eduard Nežinský (University of Economics in Bratislava, Faculty of National Economy, Department of Economic Policy)
    Abstract: Recent discussions on the definition of growth in terms of welfare beyond GDP suggest that it is of urgent need to develop new approaches for measuring the economic performance of the firms and national economies. The new concepts should take into account simultaneously economic as well as social and environmental goals. We first discuss several approaches to productivity measures. Then we extend the Data Envelopment Analysis models for environment to measure the so called eco-efficiency and for social indicators to take into account the social performance. For an illustration, we perform the analysis of 30 European countries in the year 2010. In the last section we discuss the possibilities of inter-temporal analysis of proposed models and of their use in ex-ante evaluation of different policy scenarios.
    Keywords: eco-efficiency, data envelopment analysis, beyond GDP
    JEL: C43 C61 O47
    Date: 2013–01–20
  13. By: Koen Dillen (European Commission – JRC - IPTS); Emanuele Ferrari (European Commission – JRC - IPTS); Pascal Tillie (European Commission – JRC - IPTS); George Philippidis (European Commission – JRC - IPTS); Sophie Helaine (European Commission – JRC - IPTS)
    Abstract: The EU is currently evaluating different policy options towards the use of cloning or products derived from cloned animals in the food chain. This study presents a first attempt to quantify the likely effects of different policy scenarios on international trade and EU domestic production. In the context of the Impact Asessment process the JRC was requested to simulate via a modelling study the economic impact of selected policy options. Based on a literature review and the specific constraints for this study, the choice was made to perform the analysis through the use of a computable general equilibrium model and focus on the dairy and beef sector. The different model scenarios are constructed based on combinations of the discussed policy options such as a ban or traceability and labelling requirements with the productivity increase associated with cloning. The results show that only the situation where trade with countries using the technique of cloning is suspended has an effect on competitiveness. This suspension could be due to express prohibitions or a de facto decision by exporters when traceability and labelling costs increase. Under this scenario imports drop significantly which is followed by a slight increase in domestic production and prices, especially for beef and cattle.
    Keywords: Cloning, CGE, European policy, international trade, competitiveness
    JEL: F11 F13 Q16 Q17 Q18
    Date: 2013–12
  14. By: B. Ben-Halima (EQUIPPE, University of Lille 1, France); Nathalie Chusseau (EQUIPPE, University of Lille 1, France); Joel Hellier (EQUIPPE, University of Lille 1 and LEMNA, IEMN-IAE, France)
    Abstract: In the case of France, we analyse the changes in the wage value of each education level and the impact of parents' education and income upon the education attainment of children, sons and daughters. We find a critical decline in the skill premium of the Baccalaureat (`bac') in relation to the lowest educational level, and an increase in the skill premia of higher education degrees in relation to the bac, which is however not large enough to erase the decrease in all the skill premia relative to the lowest education. We also find a significant rise in the impact of family backgrounds upon education from 1993 to 2003, i.e. a decrease in intergenerational education mobility, which primarily derives from higher impact of parental incomes. Finally, the gender wage gap is particularly large for the lowest and the highest education degrees, and ntergenerational persistence is greater for sons than for daughters.
    Keywords: Family backgrounds, intergenerational education mobility, skill premium.
    JEL: I2 J24 J31
    Date: 2013–11
  15. By: Wim Van Lancker; Joris Ghysels
    Abstract: Childcare services are increasingly regarded as a major policy lever to mitigate social inequalities. Such services are believed to be effective in reducing poverty and increasing employment rates by allowing both parents to engage in paid employment, as well as to benefit the cognitive and non-cognitive development of young children. This holds in particular for young children from disadvantaged backgrounds, enhancing their future success in education and in the labour market. However, recent studies have shown that the use of formal childcare services is socially stratified, i.e. higher-income families or families with a high-educated mother use childcare services to a much larger extent than lower-income families or families with a low-skilled mother. Due to this social gap in childcare use, government investment in childcare could fail to live up to its inequality-reducing potential or, worse still, may actually exacerbate rather than mitigate social inequalities. Drawing on the comparative social policy literature, this article explores, for the first time, the determinants of inequalities in childcare coverage for a broad set of countries. Our results contribute to a proper understanding of the mechanisms driving inequality in childcare service use, which is crucial to the future of childcare services as an effective policy instrument to mitigate social inequalities in early life.
    Keywords: childcare, comparative, ECEC, Education, inequality, welfare state
    JEL: I24 I3 H53 J13 J24
    Date: 2013–12
  16. By: Layte, Richard; Nolan, Anne
    Abstract: The presence of pronounced inequalities in mortality and life expectancy across income, education and social groups is now well established. Research across a large number of developed and wealthy countries, including Ireland, has shown that those with fewer resources, less education or a lower occupational class have higher standardised mortality rates (SMRs) than more advantaged individuals. Research for Ireland for the period 1989-1991 indicated that men in the unskilled manual social class had a mortality rate 2.8 times that of men in the higher professional social class. However, serious issues with the occupational coding of mortality data for the years since 1991 have meant that there has been no subsequent analysis of trends in socio-economic inequalities in mortality. The period since then has been characterised by an unprecedented boom and bust in economic activity which may well have influenced mortality differentials between socio-economic groups. The SMR in 2008 was 37% lower than in 1984 and 30% lower than in 1995. Using annual mortality data from the CSO over the period 1984-2008, this paper examines whether the overall downward trend in mortality observed over this period was experienced equally by all socio-economic groups (SEG) whilst adjusting the SMRs to take account of the coding issues effecting data on occupation/SEG. We use three methods to deal with the coding issues in the data across time: direct adjustment; imputation and a fully Bayesian imputation. Using these approaches we find that the differential in SMRs between professional and unskilled men aged 15+ decreased between 1984 and the early 1990s but then increased significantly thereafter as the SMR for professional men continued to decrease whilst that of unskilled men stabilised and then began to increase.
    Date: 2013–11
  17. By: Annette Alstadsæter (University of Oslo); Martin Jacob (WHU – Otto Beisheim School of Management)
    Abstract: We examine the role of tax incentives and tax awareness on tax evasion. We are able to observe tax evasion of business owners in rich Swedish administrative panel data. During the period of 2006-2009, around 5% of tax returns overstate a claimed dividend allowance even after the tax authority has approved the returns. Tax awareness decreases and complexity increases the likelihood of misreporting. Our results indicate that some of the observed misreporting could be accidental while some misreporting is deliberate tax evasion. We identify a positive and significant effect of tax rates on tax evasion by exploiting a large kink in the tax schedule.
    Keywords: Tax evasion, tax compliance, misreporting, tax awareness, income taxation
    JEL: H26 H24 D14
    Date: 2013
  18. By: Ryan, Robert M.; O'Toole, Conor; McCann, Fergal
    Abstract: This paper examines the extent to which bank market power alleviates or magnifies SME credit constraints using a large panel dataset of more than 118,000 SMEs across 20 European countries over the period 2005-2008. To our knowledge, this is the first study to examine bank market power and SME credit constraints in an international, developed economy setting. Moreover, our study is the first to address a number of econometric considerations simultaneously, in particular by controlling for the availability of profitable investment opportunities using a structural Q model of investment. Our results strongly support the market power hypothesis, namely, that increased market power results in increased financing constraints for SMEs. Additionally, we find that the relationship exhibits heterogeneity across firm size and opacity in a manner that suggests that the true relationship between bank market power and financing constraints might not be fully explained by the existing theory. Finally, we find that the effect of bank market power on financing constraints increases in financial systems that are more bank dependent.
    Date: 2013–11
  19. By: Stocker, Volker
    Abstract: The Body of European Regulators for Electronic Communications (BEREC) has recently proposed a framework to assess the reasonableness of traffic management (TM) practices. This paper discusses BEREC's proposal from a network economic perspective focusing on the underlying concepts of congestion, application-agnosticism and layer separation. It can be shown that within the current European regulatory framework the adverse use of TM by network operators is no cause for concern as long as regulatory objectives are fulfilled and significant market power is adequately disciplined. Furthermore, entrepreneurial search processes for optimal price and quality differentiation may require the implementation of TM practices which deviate from strict application-agnosticism and thus violate BEREC's layer separation principle. They may according to BEREC be labeled unreasonable. Instead of the complex case-by-case assessment inducing regulatory micro-management necessary in BEREC's framework, an alternative from a network economic perspective is proposed. Based on an economic understanding of congestion, a market-driven interpretation of applicationagnosticism and a corresponding layer separation constitute the main pillars of a resilient and dynamic understanding of TM. --
    JEL: L51 L86 L96
    Date: 2013
  20. By: Fabienne Abadie (European Commission – JRC - IPTS); Maria Lluch (European Commission – JRC - IPTS); Ramon Sabes-Figuera (European Commission – JRC - IPTS); Bernarda Zamora (European Commission – JRC - IPTS)
    Abstract: This report aims to provide a list of process indicators that will allow monitoring the EIP on AHA process over the period 2012-2020. It also presents main highlights from the baseline data in graphical format, based on the tables provided in Annex I. The latter show the indicators computed from the baseline, i.e. data from the 234 EIP on AHA commitments submitted to the EC in June 2012 through the First Invitation for Commitment. The analysis of the data collected through the 2013 Monitoring Survey and that submitted by participants through the Second Invitation for Commitment in April 2013 will be presented in the next updates of this report. Adding the respective data sets to the analysis will allow us to take into account the enlargement of the EIP on AHA to new regions/ countries and stakeholders and measure progress in general. Although the data presented in this report only refers to the 2012 baseline dataset, the selection of process indicators presented in section 2 has been based on the analysis of both the 2012 baseline data and the 2013 Monitoring Survey data which is why there are references to both datasets. The rationale behind this is the need for the process indicators to be as inclusive as possible so as to allow monitoring and comparing the evolution of the EIP on AHA not only for the 2012-2020 period but also between the baseline (the First Invitation for Commitment), the Monitoring Survey and the Second Invitation for Commitment. Last but not least this report also identifies first gaps related to the baseline data and issues that had to be resolved or decisions to be taken when processing the data.
    Keywords: EIP, Active and Healthy Ageing, EIP on AHA, indicators, monitoring, framework
    JEL: I11 I18 O33 O38
    Date: 2013–12

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