nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2014‒06‒02
twenty papers chosen by
Giuseppe Marotta
University of Modena and Reggio Emilia

  1. Extensive Margins of Imports and Profitability: First Evidence for Manufacturing Enterprises in Germany By Joachim Wagner
  2. After-school care and parents’ labor supply By Felfe, Christina; Lechner, Michael; Thiemann, Petra
  3. Do Firms Benefit from Active Labour Market Policies? By Lechner, Michael; Scioch, Patrycja; Wunsch, Conny
  4. Heterogeneous sports participation and labour market outcomes in England By Downward, Paul; Lechner, Michael
  5. A vision of the European energy future? The impact of the German response to the Fukushima earthquake By Grossi, Luigi; Heim, Sven; Waterson, Michael
  6. The Quiet Revolution and the Family: Gender Composition of Tertiary Education and Early Fertility Patterns By Bicakova, Alena; Jurajda, Stepan
  7. Keep Your Clunker in the Suburb: Low Emission Zones and Adoption of Green Vehicles By Wolff, Hendrik
  8. Offshore grids for renewables: do we need a particular regulatory framework? By Leonardo Meeus
  9. Trends in occupational segregation: What happened with women and foreigners in Germany? By Humpert, Stephan
  10. Youth living in a couple. How women's labour supply adapts to the crisis. The case of Spain. By Tindara Addabbo; Paula Rodr íguez-Modroño; Lina Gálvez-Muñoz
  11. First-Come First-Served: Identifying the Demand Effect of Immigration Inflows on House Prices By Rosa Sanchis-Guarner
  12. Immigrant Selection over the Business Cycle: The Spanish Boom and the Great Recession By Jesús Fernández-Huertas Moraga
  13. When Does Education Matter? The Protective Effect of Education for Cohorts Graduating in Bad Times By David Cutler; Wei Huang; Adriana Lleras-Muney
  14. The Ups and Downs in Women's Employment: Shifting Composition or Behavior from 1970 to 2010? By Giovanni Mastrobuoni; Paolo Pinotti
  15. Do Foreign Owners Favor Short-Term Profit? Evidence from Germany By Dill, Verena; Jirjahn, Uwe; Smith, Stephen C.
  16. Roadblocks on the Road to Grandma's House: Fertility Consequences of Delayed Retirement By Battistin, Erich; De Nadai, Michele; Padula, Mario
  17. The Impact of Solar Penetration on Solar and Gas Market Value: an application to the Italian Power Market By Stefano Cló; Gaetano D’Adamo
  18. Job tasks, computer use, and the decreasing part-time pay penalty for women in the UK By Elsayed A.E.A.; Fouarge D.; Grip A. de
  19. European High-End Products in International Competition By Lionel Fontagné; Sophie Hatte
  20. Privatization and Quality: Evidence from Elderly Care in Sweden By Bergman, Mats; Johansson, Per; Lundberg, Sofia; Spagnolo, Giancarlo

  1. By: Joachim Wagner (Leuphana University Lueneburg, Germany)
    Abstract: This paper uses a tailor-made newly available data set for enterprises from manufacturing industries in Germany to investigate for the first time the links between the extensive margins of imports (the number of imported goods and the number of countries imported from) and firm profitability. While both extensive margins are highly positively linked with firm productivity, profits are not higher in firms that import more goods and from more countries. This demonstrates that productivity advantages of importers are eaten up by extra costs related to buying more goods in more countries.
    Keywords: Imports, intensive margins, profitability, Germany
    JEL: F14
    Date: 2014–05
  2. By: Felfe, Christina; Lechner, Michael; Thiemann, Petra
    Abstract: Does after-school care provision promote mothers’ employment and balance the allocation of paid work among parents of schoolchildren? We address this question by exploiting variation in cantonal (state) regulations of after-school care provision in Switzerland. To establish exogeneity of cantonal regulations with respect to employment opportunities and preferences of the population, we restrict our analysis to confined regions along cantonal borders. Using semi-parametric instrumental variable methods, we find a positive impact of after-school care provision on mothers’ full-time employment, but a negative impact on fathers’ full-time employment. Thus, the supply of after-school care fosters a convergence of parental working hours.
    Keywords: Childcare; parents' labor supply; semi-parametric estimation methods
    JEL: C14 J13 J22
    Date: 2013–11
  3. By: Lechner, Michael; Scioch, Patrycja; Wunsch, Conny
    Abstract: This paper investigates the link between variation in the supply of workers who participate in specific types of active labour market policies (ALMPs) and firm performance using a new exceptionally informative German employer-employee data base. For identification we exploit that German local employment agencies (LEAs) have a high degree of autonomy in determining their own mix of ALMPs and that firms' hiring regions overlap only imperfectly with the areas of responsibility of the LEAs. Our results indicate that in general firms do not benefit from ALMPs and in some cases may even be harmed by certain programs, in particular by subsidized employment and longer training programs. These findings complement the negative assessment of the cost-effectiveness of ALMPs from the empirical literature on the effects for participants.
    Keywords: program evaluation; regional variation; Subsidized employment programs; training programs
    JEL: J68
    Date: 2013–09
  4. By: Downward, Paul; Lechner, Michael
    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 in-comes.
    Keywords: Human Capital; Labour Market; Matching Estimation; Sports Participation
    JEL: C21 I12 I18 J24 L83
    Date: 2013–10
  5. By: Grossi, Luigi (University of Verona); Heim, Sven (ZEW Centre for European Economic Research Mannheim and University of Giessen); Waterson, Michael (Department of Economics, University of Warwick)
    Abstract: The German response to the Fukushima nuclear power plant incident was possibly the most significant change of policy towards nuclear power outside Japan, leading to a sudden and very significant shift in the underlying power generation structure in Germany. This provides a very useful natural experiment on the impact of increasing proportions of renewable compared to conventional fuel inputs into power production, helping us to see how changed proportions in future as a result of policy moves in favour of renewables are likely to impact. We find through quasi-experimental exploration of a modified demand-supply framework that despite the swift, unpredicted change, the main impact was a significant increase in prices, partly caused by more frequent situations with unilateral market power. The price impact was also most significant in off-peak hours leading to changed investment incentives. There were no appreciable quantity effects on the market, such as power outages, contrary to some views that the impacts would be significant. Furthermore, we find the sudden and unilateral phase-out decision by the German government has significantly affected electricity prices and thus competitiveness in neighbouring countries. Key words: Electricity markets ; Atomausstieg ; German power market ; nuclear outages ; renewables. JEL classification: L51 ; L94 ; Q41 ; Q48 ; Q54
    Date: 2014
  6. By: Bicakova, Alena; Jurajda, Stepan
    Abstract: It is well known that highly `female' fields of study in tertiary education are characterized by higher fertility. However, existing work does not disentangle the selection-causality nexus. We use variation in gender composition of fields of study implied by the recent expansion of tertiary education in 19 European countries and a difference-in-differences research design, to show that the share of women on study peer groups affects early fertility levels only little. Early fertility by endogamous couples, i.e., by tertiary graduates from the same field of study, declines for women and increases for men with the share of women in the group, but non-endogamous fertility almost fully compensates for these effects, consistent with higher early fertility in highly `female' fields of study being driven by selection of family-oriented students into these fields. We also show that the EU-wide level of gender segregation across fields of study has not changed since 2000.
    Keywords: Fertility; Field-of-Study Gender Segregation; Tertiary Graduates
    JEL: I23 J13 J16
    Date: 2014–03
  7. By: Wolff, Hendrik (University of Washington)
    Abstract: Spatial distribution and leakage effects are of great policy concern and increasingly discussed in the economics literature. Here we study Europe's most aggressive recent air pollution regulation: Low Emission Zones are areas in which vehicular access is allowed only to vehicles that emit low levels of air pollutants. Using new administrative datasets from Germany, we assess the distribution of air pollution and the spatial substitution effects in green versus dirty vehicles. We find that LEZs decrease air pollution by around nine percent in urban traffic centers while pollution is unchanged in non-traffic areas. These results are driven by our finding that vehicle owners have an incentive to adopt cleaner technologies the closer they live to an LEZ. We reject the widespread concern that dirty vehicles contribute to higher pollution levels by increasingly driving longer routes outside of the LEZ. Back of the envelope calculations suggest that the health benefits of roughly two billion dollars have come at a cost of just over 1 billion dollars for upgrading the fleet of vehicles. Moreover, we find that non-attainment cities that decided not to include an LEZ but engaged in other methods (building ring roads, enhancing public transportation), experience no decrease in pollution.
    Keywords: low emission zones, air pollution, PM10
    JEL: Q58 R48
    Date: 2014–05
  8. By: Leonardo Meeus
    Abstract: Onshore, generators are connected to the transmission grid by TSOs. This regulatory model could simply be extended to offshore (i.e. Germany), but the connection of offshore wind farms to shore is also an opportunity to test alternatives, i.e. the third party model (i.e. the UK) or the generator model (i.e. Sweden). In this paper, we argue that the third party and generator models are indeed better suited to support the evolution towards larger scale offshore wind farms that are increasingly developed farther out to sea, while the TSO model is better suited to support the evolution towards cross-border offshore grid projects. In other words, an important trade-off needs to be made because none of the existing regulatory models can fulfill all the expectations in the current context in Europe. And, the trade-off has to be made at the regional or EU level because the different national regulatory frameworks are incompatible when applied to a cross-border offshore grid project.
    Keywords: Renewable energy, offshore wind, grid connection, transmission, regulation
    Date: 2014–02
  9. By: Humpert, Stephan
    Abstract: We use recent German survey data for over three decades to analyze long-run trends in occupational segregation. Segregation declines for both women and foreigners in Germany. However, using different ISCO classifications in given years, segregation tends to be a rather stable phenomenon.
    Keywords: Occupational Segregation; Gender; Immigration; Dissimilarity Index; Karmel-MacLachlan Index;
    JEL: J15 J16 J24
    Date: 2014–05–28
  10. By: Tindara Addabbo; Paula Rodr íguez-Modroño; Lina Gálvez-Muñoz
    Abstract: The focus of this paper is on the effects of the Great Recession on young women's labour supply decision. Given the deep effect of the Great Recession on the Spanish labour market and in particular on youth labour supply, in the empirical part of this paper we focus on the Spanish labour market and estimate women's labour supply models by age groups, with a special focus on those aged 20 to 29 and 30 to 39 to detect how young women living in couples show different labour supply probabilities according to their partner's labour market status by using EU-SILC 2007 and 2012 micro data for Spain. We correct also for the non random selection of women living in couple in the younger age groups. This first step of analysis allows us to detect a negative effect, on the likelihood of forming a new household, of precarious employment conditions. The results of our analysis on women's labour supply by age group confirm the discouragement effect of young children for the youngest mothers' labour supply and also a positive effect of being an owner of a house with a mortgage. The literature shows that different effects can be at work with the crisis: the added-worker effect (AWE), showing a countercyclical behaviour of labour supply that implies an increase in individual labour supply in response to transitory shocks in his/her partner’s earnings, and the procyclical discouraged-worker effect.The results of our estimation support the existence of AWE in 2012 for young women living in couples. If in 2012 the discouragement effect dominates only for women older than 40, in 2007 it dominates also amongst younger women. Women's higher propensity to enter the labour market when their partner becomes unemployed or is persistently unemployed coupled with their likelihood to be inactive in the presence of young children would call for labour market policies targeted towards young women who are also more likely to withdraw from the labour market in presence of children. Childcare facilities could mitigate the latter effect and produce a more continuous workprofile thus avoiding the negative effect of work experience interruptions on labour supply over women's life cycle.
    Keywords: Labor supply, Great Recession, Gender, added-worker effect, discouragedworker effect, youth labor supply
    JEL: J22 J21 J16 J64
    Date: 2014–03
  11. By: Rosa Sanchis-Guarner
    Abstract: An inflow of immigrants into a region affects house prices in three ways. In the short run, housing demand increases due to the increase in foreign-born population. In the long run, immigrants affect native location decisions and housing supply conditions. Previous research on the effect of immigration on local house prices has argued that the impact of immigrant demand cannot be separated from the demand changes due to native relocation or that the impact of immigrants on native mobility has no consequences on the estimates. In this paper I propose a methodology to pin down the immigrant demand effect. I apply it to Spanish data during the period 2002-2010 and I show that overlooking the impact of immigration on native mobility induces a sizeable bias in the short-run estimates. My results are robust to controlling for changes in housing supply.
    Keywords: Immigration, housing markets, instrumental variables
    JEL: J61 R12 R21
    Date: 2014–05
  12. By: Jesús Fernández-Huertas Moraga
    Abstract: Spain received more immigrants than any other European country during its boom between 1997 and 2007 but continued receiving them during the recession that followed. This paper documents the selection of these immigrants in terms of their productive characteristics both before and after the peak of the boom. Pre-crisis immigrants were typically positively selected although selection was less positive for some over-represented national groups. Post-crisis immigration became even more positively selected, as well as older and more feminized.
    Date: 2014–05
  13. By: David Cutler; Wei Huang; Adriana Lleras-Muney
    Abstract: Using Eurobarometer data, we document large variation across European countries in education gradients in income, self-reported health, life satisfaction, obesity, smoking and drinking. While this variation has been documented previously, the reasons why the effect of education on income, health and health behaviors varies is not well understood. We build on previous literature documenting that cohorts graduating in bad times have lower wages and poorer health for many years after graduation, compared to those graduating in good times. We investigate whether more educated individuals suffer smaller income and health losses as a result of poor labor market conditions upon labor market entry. We confirm that a higher unemployment rate at graduation is associated with lower income, lower life satisfaction, greater obesity, more smoking and drinking later in life. Further, education plays a protective role for these outcomes, especially when unemployment rates are high: the losses associated with poor labor market outcomes are substantially lower for more educated individuals. Variation in unemployment rates upon graduation can potentially explain a large fraction of the variance in gradients across different countries.
    JEL: I12 I20 J11
    Date: 2014–05
  14. By: Giovanni Mastrobuoni (University of Essex and Collegio Carlo Alberto); Paolo Pinotti (Universita Bocconi and BAFFI Center)
    Abstract: We exploit exogenous variation in legal status following the January 2007 European Union enlargement to estimate its effect on immigrant crime. We difference out unobserved timevarying factors by 1) comparing recidivism rates of immigrants from the “new” and “candidate” member countries and 2) using arrest data on foreign detainees released upon a mass clemency that occurred in Italy in August 2006. The timing of the two events allows us to set up a difference-in-differences strategy. Legal status leads to a 50 percent reduction in recidivism and explains one-half to two-thirds of the observed differences in crime rates between legal and illegal immigrants.
    Keywords: immigration, crime, legal status
    JEL: F22 K42 C41
    Date: 2014–01
  15. By: Dill, Verena (University of Trier); Jirjahn, Uwe (University of Trier); Smith, Stephen C. (George Washington University)
    Abstract: Comparing domestic- and foreign-owned firms in Germany, this paper finds that foreign-owned firms are more likely to focus on short-term profit. This influence is particularly strong if the local managers of the German subsidiary are not sent from the foreign parent company. Moreover, the physical distance between the foreign parent company and its German subsidiary increases the probability of focusing on short-term profit. These findings conform to the hypothesis that foreign owners facing an information disadvantage concerning the local conditions of their subsidiaries are more likely to favor short-term profit. However, we do not identify differences in "short-termism" between investors from "Anglo-Saxon" and other foreign countries; rather, results point in the direction of more general features of corporate globalization.
    Keywords: foreign ownership, short-termism, asymmetric information, globalization, multinational enterprises, stakeholders
    JEL: F23 G34 M16 P10
    Date: 2014–05
  16. By: Battistin, Erich; De Nadai, Michele; Padula, Mario
    Abstract: We investigate the role of grandparental childcare for fertility decisions of their offspring. Exploiting pension reforms in Italy, we argue that delayed retirement means a negative shock to the supply of informal childcare for the next generation. We show that one additional grandparent available in the early child-bearing years increases by 5% the number of children. Effects are limited to the most familistic close-knits, and are not the mechanical consequence of changes in living arrangements, investment in education or labor supply. Given the Italian lowest low fertility, we conclude that pension reforms may have had unintended inter-generational effects.
    Keywords: Fertility; Informal Child Care; Pension Reforms
    JEL: H42 J08 J13
    Date: 2014–04
  17. By: Stefano Cló (University of Milan (Italy)); Gaetano D’Adamo (University of Valencia (Spain))
    Abstract: We assess the impact of solar penetration in the Italian wholesale electricity market on the market value of solar with respect to gas sources, measured as the ratio between the relative price they respectively earn and the average daily electricity price (value factor). We find that, on average, an increase of solar generation has a negative impact on the price earned by solar producers, thus causing a marginal departure from the grid parity condition. The relation between solar production and its market value is not constant over the years, while it depends on the degree of solar penetration. It is positive for very low levels of solar production while, as production increases, its marginal impact on the solar market value decreases and eventually becomes negative. An opposite relation is found when looking at the Gas market value. As solar displaces gas mainly during the peak-price hours, an initial solar penetration reduces the gas market value. However, as the solar share further increases, gas producers adapt their biding strategies. They switch production from the peak to the off-peak hours, where they exploit their temporary market power to increase the off-peak price. As a result, the relative price earned by gas producers is higher than the average daily price, increasing their market value with respect to renewable sources.
    Keywords: Renewable sources, grid parity, solar, gas, Italian power market, electricity price, value factor
    JEL: C22 D40 Q41 Q42
    Date: 2014–05
  18. By: Elsayed A.E.A.; Fouarge D.; Grip A. de (GSBE)
    Abstract: Using data from the UK Skills Surveys, we show that the part-time pay penalty for female workers within low- and medium-skilled occupations decreased significantly over the period 1997-2006. The convergence in computer use between part-time and full-time workers within these occupations explains a large share of the decrease in the part-time pay penalty. However, the lower part-time pay penalty is also related to lower wage returns to reading and writing which are performed more intensively by full-time workers. Conversely, the increasing returns to influencing has increased the part-time pay penalty despite the convergence in the influencing task input between part-time and full-time workers. The relative changes in the input and prices of computer use and job tasks together explain more than 50 percent of the decrease in the part-time pay penalty.
    Keywords: Human Capital; Skills; Occupational Choice; Labor Productivity; Wage Level and Structure; Wage Differentials;
    JEL: J24 J31
    Date: 2014
  19. By: Lionel Fontagné (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Sophie Hatte (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, Université de Rouen - Université de Rouen)
    Abstract: We study international competition in high-end products for 416 detailed HS6 product categories marketed by leading French luxury brands. We construct a world database of trade flows for these products in the period 1994-2009, computing unit values of related bilateral trade flows and analyzing competition among the main exporters. We use the observed distribution of unit values to define a high-end market segment. In 2009, Europe's market share (EU27 plus Switzerland) despite suffering some erosion since 1994, represented three-quarters of the world market. Exports of high-end products are shown to be less sensitive to distance than other products, and found more sensitive to destination country wealth than other products, but only in relation to countries already producing a large range of luxury brands.
    Keywords: Product differentiation ; Market shares ; Unit values
    Date: 2013–11
  20. By: Bergman, Mats; Johansson, Per; Lundberg, Sofia; Spagnolo, Giancarlo
    Abstract: Non-contractible quality dimensions are at risk of degradation when the provision of public services is privatized. However, privatization may increase quality by fostering performance-improving innovation, particularly if combined with increased competition. We assemble a large data set on elderly care services in Sweden between 1990 and 2009 and estimate how opening to private provision affected mortality rates – an important and not easily contractible quality dimension – using a difference-in-difference-in-difference approach. The results indicate that privatization and the associated increase in competition significantly improved non-contractible quality as measured by mortality rates. It also reduced the cost per resident, although left total cost unaffected.
    Keywords: competition; incomplete contracts; limited enforcement; mortality; nursing homes; outsourcing; performance measurement; privatization; procurement; public services; quality
    JEL: H57 I18 L33
    Date: 2014–04

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