nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2014‒08‒28
twenty-one papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. A note on firm age and the margins of exports: First evidence from Germany By Wagner, Joachim
  2. The Effect of Local Crime on Well-Being: Evidence for Germany By Christian Krekel; Marie L. Poprawe
  3. A note on quality of a firm’s exports and distance to destination countries: First evidence from Germany By Wagner, Joachim
  4. How Far Away Is a Single European Labor Market? By Krause, Annabelle; Rinne, Ulf; Zimmermann, Klaus F.
  5. European Farmers intentions to invest in 2014-2020: survey results By Marianne Lefebvre; Kim De Cuyper; Ellen Loix; Davide Viaggi; Sergio Gomez y Paloma
  6. The impact of policy interactions on the recycling of plastic packaging waste in Germany By Gandenberger, Carsten; Orzanna, Robert; Klingenfuß, Sara; Sartorius, Christian
  7. Assimilation of the migrant work ethic By Dawson Chris; Veliziotis Michail; Hopkins Benjamin
  8. Determinants of self-reporting under the European corporate leniency program By Hoang, Cung Truong; Hüschelrath, Kai; Laitenberger, Ulrich; Smuda, Florian
  9. Price Competition in the enlarged EU 27 Export Market and the Role of Foreign Direct Investment By Jens K. Perret
  10. Green Microfinance in Europe By Davide Forcella; Marek Hudon
  11. Disability and life satisfaction in Italy By Tindara Addabbo; Elena Sarti; Dario Sciulli
  12. Do Elderly Choose Nursing Homes by Quality, Price or Location? By Hendrik Schmitz; Magdalena Stroka
  13. The public sector wage premium in Spain: evidence from longitudinal administrative data By Laura Hospido; Enrique Moral-Benito
  14. Do expert reviews really drive demand? Evidence from a German car magazine By Dewenter, Ralf; Heimeshoff, Ulrich
  15. Innovation and Job Creation: A sustainable relation? By Daria Ciriaci; Pietro Moncada-Paternò-Castello; Peter Voigt
  16. Issues and Options in the Economic Regulation of European Network Security By Tooraj Jamasb; Rabindra Nepal
  17. Inequality of Opportunity in Retirement Age – The Role of Physical Job Demands By Matthias Giesecke; Sarah Okoampah
  18. A fast-forward look at tertiary education attainment in Europe 2020 By Dragomirescu-Gaina, Catalin; Elia, Leandro; Weber, Anke
  19. Subjective Impact of the Economic Crisis on Households with Children in 17 European Countries By Yekaterina Chzhen; UNICEF Innocenti Research Centre
  20. Does product familiarity matter for participation? By Fuchs-Schündeln, Nicola; Haliassos, Michael
  21. How do households allocate their assets? Stylized facts from the eurosystem household finance and consumption survey By Arrondel, Luc; Bartiloro, Laura; Fessler, Primin; Lindner, Peter; Mathä, Thomas Y.; Rampazzi, Cristiana; Savignac, Frederique; Schmidt, Tobias; Schürz, Martin; Vermeulen, Philip

  1. By: Wagner, Joachim (Leuphana University Lueneburg, Germany, Royal Institute of Technology (KTH), and Centre of Excellence for Science and Innovation Studies (CESIS), Stockholm, Sweden)
    Abstract: This note uses a new tailor-made data set to investigate the link between firm age and the extensive and intensive margins of exports empirically for the first time for Germany. Results turn out to be fully in line with the theoretical considerations. Older firms are more often exporters, export more and more different goods to more different destination countries, and export to more distant destination markets.
    Keywords: Exports; firm age; export margins; Germany
    JEL: F14
    Date: 2014–07–24
  2. By: Christian Krekel; Marie L. Poprawe
    Abstract: This paper investigates the effect of local crime on well-being in Germany, using data from the German Socio-Economic Panel (SOEP) and a novel data set constructed from official police crime statistics, covering both counties and urban districts for the time period between 1994 and 2012. We find that local area crime has a significantly negative impact on life satisfaction, makes residents worry more frequently, and worry more about crime in Germany. In particular, a 1% increase in the crime frequency ratio results in a 0.043 standard deviation decrease in life satisfaction. This effect is driven almost exclusively by violent crimes, while property crimes and other crimes have no significant impact on well-being.
    Keywords: Crime, well-being, Germany
    Date: 2014
  3. By: Wagner, Joachim (Leuphana University Lueneburg, Germany, Royal Institute of Technology (KTH), and Centre of Excellence for Science and Innovation Studies (CESIS), Stockholm, Sweden)
    Abstract: This note uses a tailor-made new data set to investigate for the first time the link between the quality of a firm’s exports and the distance to destination countries for Germany. To anticipate the most important result, it is shown that the quality of exported goods and the distance to destination countries are not statistically positively correlated.
    Keywords: Exports; export quality; distance; Germany
    JEL: F14
    Date: 2014–07–24
  4. By: Krause, Annabelle (IZA); Rinne, Ulf (IZA); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: A Single European Labor Market, particularly involving the free movement of workers within Europe, has been a goal of the European community since the 1950s. Whereas it may entail opportunities and drawbacks alike, the benefits – such as greater economic welfare for most citizens – are supposed to outweigh the losses. However, over fifty years after the aim was first established, a Single European Labor Market has not yet been achieved. This paper gives an overview of current European macroeconomic trends, with a particular focus on the Great Recession, and also explores the drivers of and obstacles to labor mobility. Complementarily, it analyzes the results of a unique opinion survey among labor market experts, as well as formulates policy recommendations to enhance mobility. The development of a Single European Labor Market is also discussed in relation to the German model.
    Keywords: European labor market integration, worker mobility, economic crisis, economic migration, German model
    JEL: J40 J61 J68
    Date: 2014–08
  5. By: Marianne Lefebvre (European Commission – JRC - IPTS); Kim De Cuyper (GfK); Ellen Loix (GfK); Davide Viaggi (Dipartimento di Economia e Ingegneria Agrarie Facoltà di Agraria, Alma Mater Studiorum - Università di Bologna); Sergio Gomez y Paloma (European Commission – JRC - IPTS)
    Abstract: The present study aims to analyse farmers’ intentions to invest in the period 2014-2020. It focused on investments in land, machinery, building, training and quota and production rights. It provides up-to-date information on EU farm investment patterns, which is not otherwise available in traditional agricultural statistics (FADN, Eurostat Farm Structure Survey). Given the limitations of the sample, the data cannot be used to predict farm investment in EU-28 over the period 2014-2020, nor to evaluate to what extent CAP payments stimulate investment in EU farms. Nevertheless it contributes to the understanding of the determinants of investment decisions and farmers’ reaction to the EU Agricultural policy.
    Keywords: Investment, Common Agricultural Policy, Rural Development, Intentions, Survey
    JEL: Q12 Q18
    Date: 2014–07
  6. By: Gandenberger, Carsten; Orzanna, Robert; Klingenfuß, Sara; Sartorius, Christian
    Abstract: Due to the environmental challenges associated with the strong growth of plastic waste worldwide, the EU Commission recently published a green paper on a European Strategy on Plastic Waste in the Environment (COM (2013), 123 final), which highlights the challenges and opportunities that arise from improving the management of plastic waste in the EU. The European Waste Directive (2008/98/EC) which was transposed into German law through the Kreislaufwirtschaftsgesetz (KrWG) established the so-called 5-step waste hierarchy, which gives a clear preference to recycling over energy recovery and disposal of waste in landfills. Although waste avoidance and recycling are stated objectives of German waste policy, effectiveness and efficiency of the respective regulations seems to be influenced negatively by interactions with other policy instruments. Both, the internal interaction between different waste management policies as well as the external interaction between waste management policy and climate policy, seem to have a negative impact on the recycling of plastic packaging material. In order to gain insights regarding the impacts of different policy instruments on the recycling of plastic packaging waste, we conducted a case study analysis based on data gained from an online survey among German experts in the field of plastic packaging waste management and from the literature on waste management. Apparently, negative policy interactions originate from conflicting interests between the stakeholders of the different waste treatment options, i. e. recycling, thermal recovery and incineration. In the policy design stage, these conflicting interests have resulted in a regulatory flexibility that has made the recycling objective susceptible to the potentially negative effects of policy interactions. Apart from the requirement to achieve the minimum recycling quota for plastic packaging waste of 36 %, the waste management actors are flexible to choose their preferred waste treatment option once this threshold level has been achieved. In particular with regard to the recovery of low and medium grade plastic waste, economic incentives for thermal recovery and incineration seem to be much stronger than for recycling. This situation can partly be explained by the demand of energy intensive industries for plastic waste as a substitute for conventional energy sources. This trend has resulted in a considerable increase of the thermal recovery of plastic packaging waste between 2003 (2.3%) and 2010 (25.6%). With re-gard to waste incineration, the effect of the TA Siedlungsabfall (TaSi) on the build-up of incineration capacity and the economic imperative to utilize these capacities materialized in low costs for waste incineration. The massive build-up of capacities for waste incineration and RDF power plants decreased the costs for thermal recovery and made recycling less competitive. Structural changes of the packaging waste stream have also had a negative influence in recycling because the use of composite materials can render recycling technologically and economically infeasible. --
    Date: 2014
  7. By: Dawson Chris (University of Bath); Veliziotis Michail (University of the West of England, Bristol); Hopkins Benjamin (University of Aberystwyth)
    Abstract: Over the last decade the UK has experienced unprecedented increases in migration associated with the 2004 A8 expansion of the EU. This paper studies the work ethic of these recent migrants by analysing worker absence data from the Labour Force Survey for the period 2005-2012. The results show that when A8 migrant workers first arrive in the UK they have substantially lower absenteeism than native workers, but importantly migrant absence levels assimilate within 4-7 years. If UK employers use this information to make hiring decisions, then unusually productive native workers will suffer, this is however only likely to occur in the short term.
    Keywords: Migration, assimilation, absenteeism
    JEL: J61
    Date: 2014–01–07
  8. By: Hoang, Cung Truong; Hüschelrath, Kai; Laitenberger, Ulrich; Smuda, Florian
    Abstract: We empirically investigate the determinants of self-reporting under the European corporate leniency program. Applying a data set consisting of 442 firm groups that participated in 76 cartels decided by the European Commission between 2000 and 2011, we find that the probability of a firm becoming the chief witness increases with its character as repeat offender, the size of the expected basic fine, the number of countries active in one group as well as the size of the firm's share in the cartelized market. Our results have important implications for an effective prosecution of anti-cartel law infringers. --
    Keywords: Competition policy,cartels,leniency,European Union
    JEL: L41 K21
    Date: 2014
  9. By: Jens K. Perret (European Institute for International Economic Relations at the University of Wuppertal)
    Abstract: From a microeconomic perspective competition between firms has been duely discussed. Extending microeconomic concepts to a macroeconomic level and considering competition between countries becomes more complex. The complexity issues is tackled in this study by extending a methodology developed in Borbely (2006) to account for specialization in specific sectors as well as price groups that under certain assumptions can be seen as a quality indicator. This study observes 27 EU countries - excluding Croatia - and Turkey. This allows for a view on the competition structure in the context of the EU common market. In a second step of the analysis it is analyzed whether FDI inflows impact the price - quality - level of a sector or the probability to switch to a higher or a lower price level in said sector. Where in other publications including \cite{borbely06} for selected EU countries a positive impact of FDI inflows is found, this study finds for the EU as a whole or the EU 15 or EU 10+1 (including Turkey) sub-groups no significant impact of FDI inflows on the price level or the probability to switch to another price level.
    Keywords: structural change, European Union, price competition, exports, revealed comparative advantages, export unit values
    JEL: F14 F15 L16
    Date: 2014–08
  10. By: Davide Forcella; Marek Hudon
    Abstract: Microfinance institutions (MFIs) are alternative financial providers offering financial services to people typically excluded from the standard banking sector. While most MFIs are active in developing countries, there is also a young and developing microfinance sector in Europe; however, very little literature exists on this MFI segment. In this paper, we analyze the environmental performance of 58 European MFIs. Our results suggest that the size of the MFI, investor concern for environmental performance and, to a lesser extent, donor interest, are closely related to the institution’s environmental performance. Moreover, providing loans larger than microcredits is linked to better environmental performance. This could suggest that the additional revenues generated from these loans, also called cross-subsidies, could help MFIs to strengthen their environmental bottom line. Finally, no evidence suggests that profit status explains environmental performance.
    Keywords: Corporate Social Responsibility; Europe; Environment; Microcredit; Microfinance
    Date: 2014–08–19
  11. By: Tindara Addabbo; Elena Sarti; Dario Sciulli
    Abstract: During the last decades, the socio-economic policy agenda has devoted an increasing attention to the inclusion of disabled people into society. Understanding the drivers of life outcomes and conditions of disabled people is essential to analyze the sources of disadvantaged positions. This paper brings evidence on the predictors of life satisfaction of disabled people in Italy, focusing on four specific dimensions (relations with relatives and friends, economic conditions, and leisure time) and analyzing information on people with functional limitations and health problems, as provided by the 2011 ISTAT survey. Estimation results show that household structure, health and disability status affect life satisfaction more significantly than personal and income variables. Education attainments significantly affect satisfaction with the economic conditions. Finally, we find that older disabled people are, on average, more satisfied than younger disabled people, while gender is relevant when interacted with the household type.
    Keywords: disability, life satisfaction, non-linear response models, average partial effects
    Date: 2014–02
  12. By: Hendrik Schmitz; Magdalena Stroka
    Abstract: Quality report cards addressing information asymmetry in the health care market have become a popular strategy used by policymakers to improve the quality of care for elderly. Using individual level data from the largest German sickness fund merged with institutional level data, we examine the relationship between nursing home quality, as measured by recently introduced report cards, nursing home prices, nursing home’s location and the individual choice of nursing homes. Report cards were stepwise introduced as of 2009 and we use a sample of 2010 that includes both homes that had been evaluated at that time and that had not yet been. Thus, we can distinguish between institutions with good and bad ratings as well as non-rated nursing homes. We find that the probability of choosing a nursing home decreases in distance and price. However, we find no significant effect of reported quality on individuals’ choice of nursing homes.
    Keywords: Nursing home choice; quality report cards; quality information; demand
    JEL: I10
    Date: 2014–07
  13. By: Laura Hospido (Banco de España and IZA); Enrique Moral-Benito (Banco de España)
    Abstract: This paper studies the public sector wage gap in Spain by gender, skill level and type of contract, using recent administrative data from tax records. We estimate wage distributions in the presence of covariates separately for men and women in the public and in the private sectors, and we take advantage of the longitudinal structure of the data to control for selection. We find a positive public wage premium for men and women even after accounting for characteristics and endogenous selection; the observed average gap in hourly wages of 35 log points is reduced to 20 when accounting for observed characteristics, and to 10 once endogenous selection is also taken into consideration. We also find substantial variation in the public premium along the wage distribution once observed characteristics are accounted for. This variation, however, is offset by opposite patterns of selection into the public sector: while we observe positive selection into the public sector at the bottom of the wage distribution, workers at the top of the distribution select negatively into the public sector.
    Keywords: public sector wage gap, quantile regression, wage distribution, panel data
    JEL: C21 C23 J31 J45
    Date: 2014–08
  14. By: Dewenter, Ralf; Heimeshoff, Ulrich
    Abstract: A wide range of media provide information on many products based on reviews or expert opinions. A natural question is, whether these reviews and expert opinions have any effect on sales. A small but growing literature in economics and marketing science deals with this issue, by testing the relevance of such product information for goods such as financial instruments, wine, books and movies. However, most of these products have in common that quality is very difficult to measure. It is always also a matter of taste whether these products can be seen as high or low quality goods. Based on a unique dataset, we test whether test scores published in a major German car magazine have significant impact on registrations of new cars in Germany. We find that test scores for certain cars have statistically significant impact on the number of new cars sold by several leading manufacturers on the German car market. --
    Keywords: Car magazines,Test Scores,Demand
    JEL: L15 L82
    Date: 2014
  15. By: Daria Ciriaci (JRC-IPTS); Pietro Moncada-Paternò-Castello (JRC-IPTS); Peter Voigt (University of Barcelona, IEB)
    Abstract: This study examines growth patterns of innovative and non innovative firms and, in this regard, whether being an innovator determines company trajectories; i.e. whether there are systematic differences in the persistence of the jobs created by innovating vs. non-innovating firms. For this purpose, a semi-parametric quantile regression approach has been adopted examining serial correlation in employment by drawing on a unique longitudinal dataset of 3,300 Spanish firms over the years 2002-2009, obtained by matching different waves of the Spanish Encuesta sobre Innovacion en las Empresas, the Spanish innovation survey, which is administered every year by the Spanish National Statistics Institute (INE). The empirical results of the study indicate that among those firms experiencing high organic employment growth, smaller and younger innovative firms grow more, at average, than larger innovative firms. Moreover, the jobs created by innovative firms, in general, appear to be rather persistent over time whereas those created by non innovative firms do not. Among declining firms, non-innovators tend to deteriorate faster in terms of economic performance. Overall, evidence suggests that being innovative supports and stabilizes a firm's organic employment growth pattern and being smaller and younger seems to be a sufficient condition to experience high employment growth, i.e. – with regard to the latter – it is not necessary to have a comparably high R&D spending / being an R&D intensive company.
    Keywords: Serial correlation; quantile regression; Spanish firms; firm size, firms age; job creation; YICs
    JEL: L11 L25
    Date: 2013–01
  16. By: Tooraj Jamasb; Rabindra Nepal
    Abstract: Incentive regulation needs to adapt to the emerging changes in the operating environment of the electricity networks and take into account the security of these. This paper assesses the current issues and options in economic regulation of network security across the European electricity systems. An output oriented incentive regulatory approach combines the efficiency promoting mechanisms in a revenue cap framework with output based incentives such as better provision of network security. Thus, incentive regulation is destined to move from pursuing the optimal to being more practical. The RIIO regulatory framework in the UK and the service quality regulation in Italy provide good examples of application of output-based regulation. We also propose an output-based approach for regulation of network security, which accounts for the risks from natural, accidental and malicious threats. We conclude that regulation for network security may also involve looking beyond economic network regulation and focus on the wider security policy and regulation interface considering the risks facing the electricity networks.
    Keywords: network security, exceptional events, incentive regulation, output-based
    JEL: L51 L94 L98
    Date: 2014–08–04
  17. By: Matthias Giesecke; Sarah Okoampah
    Abstract: We quantify differences in the retirement age between manual and non-manual workers and evaluate these differences in the context of the literature on equality of opportunity. The focus is on the question how individual background during childhood transmits through physical demands of occupations on retirement ages. Individual retrospective data from the German Socio-Economic Panel are used to analyse labour force dynamics over the years 1984 to 2011. Discrete time duration models suggest that retirement ages differ substantially between manual and non-manual workers. To elaborate how such differences are explained by individual background characteristics on the one hand and eff ort and luck on the other hand, we make use of tests for stochastic dominance and a Blinder-Oaxaca decomposition. The result is that individual background characteristics explain a share of about one third of inequality in retirement ages as transmitted through physical demands of occupations.
    Keywords: Retirement age; inequality of opportunity; physical job demands; blinderoaxaca-decomposition
    JEL: D63 J26 J62 C14
    Date: 2014–06
  18. By: Dragomirescu-Gaina, Catalin; Elia, Leandro; Weber, Anke
    Abstract: This paper provides an answer to the question of whether Europe will be able to reach its tertiary education target by 2020. Insights into the dynamics of future education attainment and areas for effective policy interventions in the long-run are highlighted. We model the dynamics behind education decisions as a balance between investment and consumption motivations. We use a panel approach and a wide range of statistical tests to insure that model specifications are stable and robust. We find that while Europe is likely to achieve its target, there is a growing divide between best performing countries and low performers.
    Keywords: human capital investment; tertiary education; panel data; forecasting; Europe 2020 strategy
    JEL: C23 C52 C53 J24
    Date: 2014–06–01
  19. By: Yekaterina Chzhen; UNICEF Innocenti Research Centre
    Abstract: This paper investigates differences in the perceived impact of the economic crisis between adults in households with and without children in 17 European countries, using data from the Life in Transition Survey 2010. It also explores the channels through which the crisis affected adults in households with children and the ways in which they coped with the decline in income or economic activity. Overall, adults in households with children were more likely to report an impact of the crisis, with larger differences in countries with higher rates of monetary child poverty. There is evidence that adults in households with children prioritised expenditure on basic necessities, while cutting back on luxuries and holidays, but many still reported reduced consumption of staple foods as a result of economic difficulties.
    Keywords: children; economic crisis;
    JEL: I31 I32 J18
    Date: 2014
  20. By: Fuchs-Schündeln, Nicola; Haliassos, Michael
    Abstract: Regulation of investor access to financial products is often based on product familiarity indicated by previous use. The underlying premise that lack of familiarity with a product class causes unwarranted participation is difficult to test. This paper uses household-level data from the 'experiment' of German reunification that (exogenously) offered to East Germans access to capitalist products (exogenously) unfamiliar to them. We compare the evolution of post-unification participation of former East and West Germans in financial products, controlling for relevant household characteristics. We vary familiarity differentials by considering (i) both unfamiliar 'capitalist' products (stocks, bonds, and consumer credit) and ones available in the East (savings accounts and life insurance); and (ii) cohorts with different exposure to capitalism. We find that East Germans participated immediately in unfamiliar risky securities, at rates comparable to West Germans of similar characteristics. They phased out disproportionate participation in previously familiar assets as familiarity with capitalist products grew. They were more likely to use consumer debt, partly to catch up with richer new peers. We find no signs of abrupt participation drops that could suggest mistakes or regret related to lack of familiarity. --
    Keywords: household finance,familiarity,financial literacy,stockholding,household debt,social interactions,consumer credit,counterfactual analysis,German reunification
    JEL: G11 E21
    Date: 2014
  21. By: Arrondel, Luc; Bartiloro, Laura; Fessler, Primin; Lindner, Peter; Mathä, Thomas Y.; Rampazzi, Cristiana; Savignac, Frederique; Schmidt, Tobias; Schürz, Martin; Vermeulen, Philip
    Abstract: Using the Household Finance and Consumption Survey (HFCS), a large micro-level dataset on households' wealth in fifteen euro area countries, this paper explores how households allocate their assets. We derive stylized facts on asset participation as well as levels of asset holdings and investigate the systematic relationships between household characteristics and asset holding patterns. Real assets make up the bulk of total assets. Whereas ownership of the main residence varies strongly between countries, the value of the main residence tends to be the major asset for home-owners and is a significant part of total assets in all countries. While almost all households hold safe financial assets, a low share of households holds risky assets. The ownership rates of all asset categories generally increase with wealth (and income). The significance of inheritances for wealth accumulation is remarkable and underlines its key role in the process of persistent wealth inequality. We tentatively link differences in asset holding patterns across countries to differences in institutions, such as mortgage market institutions and house price-to-rent ratios. --
    Keywords: household financial decisions,individual portfolio choice,real and financial assets,cross-country comparisons
    JEL: D1 D3
    Date: 2014

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