nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2014‒08‒20
thirteen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Delaying the normal and early retirement ages in Spain: behavioural and welfare consequences for employed and unemployed workers By Alfonso R. Sánchez; J. Ignacio García Pérez; Sergi Jiménez-Martín
  2. Governance, Firm Size and Innovative Capacity: Regional Empirical Evidence for Germany By Berlemann, Michael; Jahn, Vera
  3. Energy prices, technological knowledge and green energy innovation: A dynamic panel analysis of patent counts By Kruse, Juergen; Wetzel, Heike
  4. Carbon Dioxide reducing Environmental innovations, sector upstream/downstream integration and policy. Evidence from the EU. By Massimiliano Mazzanti; Giovanni Marin; Susanna Mancinelli; Francesco Nicolli
  5. A Cross-Country Comparison of the Impact of Labor Income Tax on Female Labor Supply By Marina Mendes
  6. Democratic representation and religion. Differences and convergences between the European Parliament and the US House of Representatives By François Foret
  7. Pappa Ante Portas: The Retired Husband Syndrome in Japan By Bertoni, Marco; Brunello, Giorgio
  8. A note on the inefficiency of technology- and region-specific renewable energy support - The German case By Jägemann, Cosima
  9. Knowledge Complementarity of a Firm’s Internal and External R&D Capabilities By Koski, Heli; Svento, Rauli
  10. Supply Chains and the Internalization of SMEs: Evidence from Italy By Giorgia Giovannetti; Enrico Marvasi; Marco Sanfilippo
  11. International Migration of Couples By Junge, Martin; Munk, Martin D.; Poutvaara, Panu
  12. Tax Competition and Tax Coordination in the European Union: A Survey By Keuschnigg, Christian; Loretz, Simon; Winner, Hannes
  13. Women’s employment makes unions more stable, if the male partners contribute to the unpaid household work By Letizia Mencarini; Daniele Vignoli

  1. By: Alfonso R. Sánchez; J. Ignacio García Pérez; Sergi Jiménez-Martín
    Abstract: In this paper, we explore the links between pension reform, early retirement, and the use of unemployment as an alternative pathway to retirement. We use a dynamic rational expectations model to analyze the search and retirement behaviour of employed and unemployed workers aged 50 or over. The model is calibrated to reproduce the main reemployment and retirement patterns observed between 2002 and 2008 in Spain. It is subsequently used to analyze the effects of the 2011 pension reform in Spain, characterized by two-year delays in both the early and the normal retirement ages. We find that this reform generates large increases in labour supply and sizable cuts in pension costs, but these are achieved at the expense of very large welfare losses, especially among unemployed workers. As an alternative, we propose leaving the early retirement age unchanged, but penalizing the minimum pension (reducing its generosity in parallel to the cuts imposed on individual pension benefits, and making it more actuarially fair with age). This alternative reform strikes a better balance between individual welfare and labour supply stimulus.
    Date: 2014–06
  2. By: Berlemann, Michael (Helmut Schmidt University, Hamburg); Jahn, Vera (Helmut Schmidt University, Hamburg)
    Abstract: Successful innovation is a precondition for economic prosperity. While various potential determinants of innovative activity have been considered, little empirical evidence is yet available for the influence of firm governance issues. This paper aims at filling this gap in the literature by studying whether the relative importance of owner-managed small and medium sized enterprises has an effect on regional innovative capacity. We therefore combine patent data with data from the firm database of Creditreform, containing information on the governance structure of regional operating enterprises. Using a cross section of German NUTS-3-regions, we identify a significantly positive relation between the relative importance of owner-managed SMEs and innovative capacity. This finding is highly robust when controlling for spatial correlations.
    Keywords: innovation; owner-managed firms; SMEs; Germany
    JEL: C21 D23 O31
    Date: 2014–07–28
  3. By: Kruse, Juergen (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Wetzel, Heike (Energiewirtschaftliches Institut an der Universitaet zu Koeln)
    Abstract: We examine the effect of energy prices and technological knowledge on innovation in green energy technologies. In doing so, we consider both demand-pull effects, which induce innovative activity by increasing the expected value of innovations, and technology-push effects, which drive innovative activity by extending the technological capability of an economy. Our analysis is conducted using patent data from the European Patent Office on a panel of 26 OECD countries over the period 1978-2009. Utilizing a dynamic count data model for panel data, we analyze 11 distinct green energy technologies. Our results indicate that the existing knowledge stock is a significant driver of green energy innovation for all technologies. Furthermore, the results suggest that energy prices have a positive impact on innovation for some but not all technologies and that the effect of energy prices and technological knowledge on green energy innovation becomes more pronounced after the Kyoto protocol agreement in 1997.
    Keywords: Green energy technologies; innovation; patents; demand-pull; technology-push; dynamic count data model
    JEL: C33 O31 Q40 Q42 Q55
    Date: 2014–07–31
  4. By: Massimiliano Mazzanti (Department of Economics and Management, University of Ferrara, Ferrara (Italy) and SEEDS, Ferrara (Italy).); Giovanni Marin (CERIS-CNR, Milano (Italy).); Susanna Mancinelli (Department of Economics and Management, University of Ferrara, Ferrara (Italy) and SEEDS, Ferrara (Italy)); Francesco Nicolli (CERIS-CNR, Milano (Italy).)
    Abstract: Eco innovations in the climate change realm require pressures and knowledge from outside the firm's and sector's boundaries. The role of policies is well known, as a tool that potentially tackles two externalities: innovation and environmental market failures. Sector integration is also increasingly relevant for understanding the economic, environmental and innovation performances of countries. We integrate these two perspectives to provide evidence on the policy effects behind the adoption of eco innovations in EU sectors. We take a sector perspective by exploiting EU CIS data over 2006-2008. By using past CO2 emission intensity (CO2 on value added) as a proxy of policy stringency, we find that emission intensive sectors are more likely to adopt CO2-related eco-innovations. The aforementioned results are valid for both the economy as a whole and for industrial sectors specifically. We additionally show that not only environmental policies are important to sustain EI adoptions. Other 'external' drivers play a role. Looking at the role of inter sector integration and knowledge sources, we observe that sectors with more emission intensive upstream 'partners' eco-innovate more to reduce their CO2 footprints. The positive and significant effect of upstream emission intensity (supplier's emission intensity) is actually stronger than the effect of 'direct' CO2 emission intensity (policy effect).
    Keywords: environmental innovations, sector integration, induced effects, innovation adoption, NAMEA, Input output, EU, carbon abatement.
    JEL: O13 Q55
    Date: 2014–08
  5. By: Marina Mendes (Centro de Investigación Económica (CIE), Instituto Tecnológico Autónomo de México (ITAM))
    Abstract: Macroeconomists have long been interested in understanding differences in hours worked across countries. Prescott (2004) shows that differences in labor income tax explain the majority of the difference in hours worked between the United States and European countries. In this paper we go one step further in quantifying the impact of labor income tax on differences in hours worked between the United States and European countries. First, we decompose hours worked by gender and marital status, and we find that females are responsible for more than half of the difference in hours worked. Within females, we find that married females are responsible for more than half of the difference in hours worked. Second, given these findings, we quantify the impact of differences in labor income tax in explaining differences in aggregate hours worked. The main contribution of this paper is that we do not restrict the analysis of differences in labor income tax to differences in the progressivity of the tax schedule but we also incorporate differences in the treatment of secondary earners across countries. As a result, we find that differences in labor income tax explain two thirds of the difference in aggregate hours worked across countries, and we also find that differences in the treatment of secondary earner explain two thirds of the difference in hours worked between married and single females.
    JEL: E60 H20 J22
    Date: 2013
  6. By: François Foret
    Abstract: It is common to oppose a secular Europe to a religious America. As representatives of cultural diversity and popular sovereignty, Parliaments are the best illustrations of mutual arrangements between politics and religion. Little data is available on religion at the EP, in contrast to the rich scholarship on the Congress. Relying on the first survey of its kind on members of the European Parliament (MEPs), the article analyses what they believe and what they do with these beliefs. The purpose is to understand how religion interacts with representation and political socialization of MEPs within and outside the assembly. The American House of Representatives is used as a reference case study. Overall, there are significant differences between European and American legislators, mainly due to their distinct social, cultural, political and institutional environments. However, several common logics may also be seen at work, suggesting that the EU is not as exceptional as is often thought.
    Keywords: Religion, European Union, US, parliamentary politics, European Parliament
    Date: 2014–05
  7. By: Bertoni, Marco (University of Padova); Brunello, Giorgio (University of Padova)
    Abstract: The "Retired Husband Syndrome", that affects the mental health of wives of retired men around the world, has been anecdotally documented but never formally investigated. We use Japanese micro data and the exogenous variation generated by the 2006 revision of the Japanese Elderly Employment Stabilization Law, which mandated employers to guarantee continuous employment between mandatory retirement age and full pension eligibility age, to estimate the causal effect of the husband's retirement on the wife's mental health. We find that adding one year to the time spent in retirement by Japanese husbands increases the probability that their wives develop the syndrome by 5.8 to 13.7 percentage points, depending on the empirical specification. We discuss mechanisms at work and argue that – ceteris paribus – increasing female labour force participation might exacerbate rather than attenuate the phenomenon.
    Keywords: retirement, pension reforms, couples, stress, depression, Japan
    JEL: D1 I1 I3 J14 J26
    Date: 2014–07
  8. By: Jägemann, Cosima (Energiewirtschaftliches Institut an der Universitaet zu Koeln)
    Abstract: Renewable energy (RES-E) support schemes have to meet two requirements in order to lead to a costefficient renewable energy mix. First, RES-E support schemes need to expose RES-E producers to the price signal of the wholesale market, which incentivizes investors to account not only for the marginal costs per kWh (MC) but also for the marginal value per kWh (MV el) of renewable energy technologies. Second, RES-E support schemes need to be technology- and region-neutral in their design (rather than technologyand region-specific). That is, the financial support may not be bound to a specific technology or a specific region. In Germany, however, wind and solar power generation is currently incentivized via technology- and region-specific feed-in tariffs (FIT), which are coupled with capacity support limits. As such, the current RES-E support scheme in Germany fails to expose wind and solar power producers to the price signal of the wholesale market. Moreover, it is technology- and region-specific in its design, i.e., the support level for each kWh differs between wind and solar power technologies and the location of their deployment (at least for onshore wind power). As a consequence, excess costs occur which are burdened by society. This paper illustrates the economic consequences associated with Germany's technology- and region-specific renewable energy support by applying a linear electricity system optimization model. Overall, excess costs are found to amount to more than 6.6 Bn e2010. These are driven by comparatively high net marginal costs of offshore wind and solar power in comparison to onshore wind power in Germany up to 2020.
    Keywords: Technology- and region-specific renewable energy support; marginal costs; marginal value
    JEL: C61 Q28 Q42
    Date: 2014–03–30
  9. By: Koski, Heli; Svento, Rauli
    Abstract: We use data from over 1500 Finnish companies for the years 2006-2008 and 2008-2010 to explore complementarity of a firm’s R&D strategy with its external knowledge acquisition and innovation collaboration strategies. We define knowledge complementarity (tacit knowledge complementarity) of R&D capabilities to exist when increase in investments in R&D also increases marginal returns from broader external knowledge search (deeper innovation collaboration with external partners). Our estimation results provide support for knowledge complementarity of external R&D. Instead, our data provide no evidence on tacit knowledge complementary of external R&D generally. However, our empirical results concerning the separate types of external R&D suggest that a firm’s acquisition of new technology (i.e., advanced machinery, equipment or software) for innovation purposes appears to be tacit knowledge complementary.
    Keywords: open innovation, external knowledge search, complementarity
    JEL: D83 O3 L2
    Date: 2014–08–06
  10. By: Giorgia Giovannetti; Enrico Marvasi; Marco Sanfilippo
    Abstract: This paper explores the impact of being part of a supply chain on the internationalization of firms. We show that even small and less productive firms, if involved in production chains, can take advantage of reduced costs of entry and economies of scale that enhance their probability to become exporters. The empirical analysis is carried out on an original database, obtained by merging and matching balance sheet data with data from a survey on over 25,000 Italian firms, largely SMEs, which include direct information on the involvement in supply chains. We find a positive and significant impact of being part of a supply chain on the probability to export and on the intensive margin of trade. The number of foreign markets served (the extensive margin), on the other hand, does not seem to be affected. We also investigate whether being in different positions along the chain, i.e. upstream or downstream, matters and we find that downstream producers tend to benefit more. Our results are robust to different specifications, estimation methods, and to the inclusion of the control variables typically used in heterogeneous firm models.
    Keywords: Supply Chains, SMEs, Heterogeneous firms, Internationalization
    JEL: F12 F14 F21
    Date: 2014–05
  11. By: Junge, Martin (DEA (Danish Business Research Academy)); Munk, Martin D. (Aalborg University); Poutvaara, Panu (University of Munich)
    Abstract: We present a theory on migration of dual-earner couples and test it in the context of international migration. Our model predicts that the probability that a couple emigrates increases in the home-country earnings of the primary earner. The effect of the home-country earnings of the secondary earner may go either way. We test our theory using population-wide Danish administrative data from 1982 to 2010. We analyze migration decisions separately for couples in which men earned more and couples in which women earned more. The empirical results for dual-earner couples are in line with the theory. The elasticity of the probability of emigration with respect to the primary earner's income is very large. When analyzing emigration for 5 or more years the elasticity of the probability of emigration varies between 1.6 and 3.6 for groups with female primary earner and between 2.4 and 3.1 for groups with male primary earner. The elasticity with respect to the secondary earner's income varies in sign and is generally small. Primary earners in couples are more strongly self-selected with respect to their income than singles. This is a novel result that runs against the intuition that family ties weaken self-selection. Secondary earners in couples, on the other hand, are more weakly self-selected with respect to their income than singles. College education of either partner makes couples more, and having children makes couples less mobile. Power couples are most likely to emigrate, but also most likely to return.
    Keywords: education, family migration, international migration, gender differences, dual-earner couples
    JEL: F22 J12 J16 J24
    Date: 2014–07
  12. By: Keuschnigg, Christian (Institute for Advanced Studies, Vienna, Austria); Loretz, Simon (Institute for Advanced Studies, Vienna, Austria); Winner, Hannes (University of Salzburg)
    Abstract: This survey summarizes the state and development of European tax policy, in particular discussing the harmonization progress in direct as well as indirect taxes. Based on an over-view over the theoretical and empirical literature on tax competition, we further ask whether increased tax coordination is necessary to prevent a race to the bottom. We show that theoretical predictions on the outcome of tax competition are ambiguous, and the empirical evidence in this regard is inconclusive as well. This, in turn, gives rise to an only limited scope of stronger tax harmonization.
    Keywords: Tax Competition; tax coordination; European economic integration
    JEL: H77 H87
    Date: 2014–08–04
  13. By: Letizia Mencarini (Università di Torino & Collegio Carlo Alberto); Daniele Vignoli (Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti", Università di Firenze)
    Abstract: A new generation of studies has called into question standard microeconomic predictions of a positive association between women’s economic independence and union dissolution, and suggests that it is necessary to include information about both partners’ contributions to paid and unpaid work when conducting empirical tests of the impact of women’s employment on union stability. In this study, we follow this strand of research and use data on couples from the 2003 and 2007 waves of the Italian “Family and Social Subject” survey, with the aim of investigating whether and how the gender division of labor channels the causal impact of women’s employment on union disruption. Utilizing techniques of mediation analysis, we suggest that women’s employment does not have a negative effect per se on union stability, and that women’s paid work becomes detrimental to the stability of the union only if the male partner’s contribution to unpaid work is scarce. We found that the impact of women’s employment on union dissolution is positive only when 70% or more of the housework is performed by women.
    Keywords: Marital dissolution; Women's employment; Men's contribution to unpaid work; Italy; Mediation analysis
    JEL: J00 J12
    Date: 2014–07

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