nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2014‒09‒05
seventeen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Impact of research tax credit on R&D and innovation: evidence from the 2008 French reform By Loriane Py; Antoine Bozio; Delphine Irac
  2. A vision of the European energy future? The impact of the German response to the Fukushima earthquake By Grossi, Luigi; Heim, Sven; Waterson, Michael
  3. Involuntary non-standard employment: evidence from Italian regions By De Vita, Glauco; Livanos, Ilias; Salotti, Simone
  4. Effects of demographic changes on hospital workforce in European countries By Marek Radvansky
  5. Export-led growth in Europe: Where and what to export? By Ana Paula Ribeiro; Paula Gracinda Teixeira Santos; Vitor Carvalho
  6. Measuring Fuel Poverty in France: Which Households Are the Most Vulnerable? By Olivia Ricci; Legendre Bérangère
  7. Taxi Regulation in Ireland: Will it be Different this Time? By Gorecki, Paul
  8. Technical Greenhouse-Gas Mitigation Potentials of Biochar Soil Incorporation in Germany By Isabel Teichmann
  9. Taxation and Labor Supply of Married Women across Countries: A Macroeconomic Analysis By Nicola Fuchs-Schündeln; Alexander Bick
  10. Analysing the Interactions of Energy and climate policies in a broad Policy ‘optimality’ framework. The Italian case study By Davide Antonioli; Simone Borghesi; Alessio D'Amato; Marianna Gilli; Massimiliano Mazzanti; Francesco Nicolli
  11. CSR related management practices and Firm Performance: An Empirical Analysis of the Quantity-Quality Trade-off on French Data By Patricia Crifo; Marc-Arthur Diaye; Sanja Pekovic
  12. Biofuels, technological change and uncertainty: Evidence from France By Virginie Doumax-Tagliavini; Cristina Sarasa, University of Zaragoza
  13. Innovation, exports and technical efficiency in Spain By Rosario Sanchez; Angeles Díaz
  14. Taxing home ownership: distributional effects of including net imputed rent in taxable income By Panos Tsakloglou; Francesco Figari; Alari Paulus; Holly Sutherland; Gerlinde Verbist; Francesca Zantomio
  15. Gaming in the Irish Single Electricity Market and Potential Effects on Wholesale Prices By Walsh, Darragh; Malaguzzi Valeri, Laura
  16. Gender and occupational wage gaps in Romania: from planned equality to market inequality? By Daniela Andrén; Thomas Andrén
  17. Maturity Transformation and Interest Rate Risk in Large European Bank Loan Portfolios By Galen Sher; Giuseppe Loiacono

  1. By: Loriane Py; Antoine Bozio; Delphine Irac
    Abstract: R&D and innovation are seen as key determinants of productivity and competitiveness and it has been recognized that the low growth performances of EU countries of the last decades can largely be attributable to their poor research performance, as compared to the US. As a consequence, most EU countries, in particular since the adoption of the Lisbon strategy, have provided tax incentives to increase business R&D, which still remains below the targeted level of 2% of GDP. In the actual context of large public deficit and given the amount of public spending involved, it is crucial to evaluate the impact and effectiveness of these policies. The aim of this paper is to contribute to this literature by evaluating the impact of the research tax credit system on both R&D investments and innovation. In our empirical analysis, we focus on the 2008 French reform, which was marked by the adoption of a pure volume-based scheme.Our empirical analysis relies on an ex post econometric evaluation of the 2008 reform. It is based on the combination of four datasets over the period 2004-2010: i) the yearly survey on R&D investments conducted by the French Ministry of Research which contains detailed information on firms' R&D, ii) the PATSTAT dataset of the European Patent Office which enables us to measure innovation at the firm-level (as measured by a count of the number of patents) iii) the tax files which enables us to identify all the firms in France which benefit from the research tax credit as well as it amount, and iv) the FIBEN dataset of the Banque de France which is used to control for firms' economic and financial characteristics. Our final sample includes 48,111 firms, from which 51.3% have taken advantage of the research tax credit. Our econometric strategy relies on the implementation of a difference in difference which amounts to comparing R&D and innovation outcome for firms which benefit from the research tax credit and for those which do not, before and after the implementation of the reform. The fact that each year in France, nearly 49% of firms which are registered in the R&D survey and which have positive R&D expenditures do not ask for the research tax credit can have several explanations: firms might not be aware of the policy, their R&D activities might not be eligible to the tax credit, asking for the research tax credit might be too complex and costly or firms might want to avoid a tax audit. Nevertheless, as we cannot exclude the possibility of a selection bias in the sample of treated and control firms, we also implemented propensity score matching analysis and are currently trying to refine our empirical strategy by using the suppression of the research tax credit ceiling. Our preliminary results suggest that firms which did benefit from the R&D tax credit relative to those that did not ask for it have significantly increased their R&D expenditures after the 2008 reform. Our results also show that the estimated elasticity differs when we focus on the intensive margin (i.e. when the sample is limited to firms which already ask for the research tax credit before the reform) as the reform led to a large number of firm entry in the tax credit scheme which are relatively smaller in terms of R&D investments. More importantly, we do not find evidence of a significant impact on innovation as measured by the number of patents at the firm level, up to 2 years after the implementation of the reform. Though the time span of analysis is short and that patenting can take more years, these preliminary results suggest that the effects of research tax credit on innovation might be more limited than expected. Finally, our results enable us to shed light on the relative effectiveness of the volume scheme as compared to the incremental one.
    Keywords: France, Tax policy, Impact and scenario analysis
    Date: 2014–07–03
  2. By: Grossi, Luigi; Heim, Sven; Waterson, Michael
    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. --
    Keywords: electricity markets,Atomausstieg,German power market,nuclear outages,renewables
    JEL: L51 L94 Q41 Q48 Q54
    Date: 2014
  3. By: De Vita, Glauco; Livanos, Ilias; Salotti, Simone
    Abstract: Using European Union Labour Force Survey data on over 2.5 million workers in Italian regions for the period 1999-2010, we investigate the determinants of involuntary non-standard (temporary and part-time) employment (INE). We find that regional differences significantly affect the probability of workers being involuntarily employed in non-standard jobs, with higher probabilities for workers in the southern and insular regions than in the rest of the country. Women, young individuals, and low-skilled workers are particularly at risk of INE. The same holds for graduates, whose chances of finding satisfactory full-time permanent jobs are lower than those of individuals with diplomas. Finally, we find that INE follows a counter-cyclical behaviour, with it more likely to be higher when GDP growth is low and unemployment high.
    Keywords: Involuntary employment, regions, part-time employment, temporary employment, non-standard employment
    JEL: J21 R12 R23
    Date: 2014–04
  4. By: Marek Radvansky
    Abstract: Demographic trends and ageing are one of the main factors influencing future trends in the socio-economic development of all European countries included in significant changes in labour market structure. This paper analyse the influence of demographic changes on health care demand based on utilization method and its direct influence on increasing demand for health workforce. The used methodology is based on previous work (Schultz, 2012) and (Schultz et al., 2013) and is based on different utilization in relation to age group. Main driver of expected changes in demand and utilization is represented by demographic scenario projections (Europop). Presented cross-country comparison shows, that despite the similar demographic trends in all European countries, the situation in health care demand, especially length of stay and number of discharges (incl. trends) is significantly different, but generally leads to increase of expected labour force at healthcare sector. Cluster analysis shows four/five different groups of countries in relation to statust and current development of hospital demand. Further development of expected hospital utilization is based on rather simple time series analysis. On the other side, the main purpose of this paper is present the broader overview of possible labour force shortages in specific sector of employment. Indirectly, via relation of workforce to expenditures, we are able to roughly estimate also effect on real healthcare expenditures. We were unable to incorporate all EU countries in this study due to incomplete data sources. Results of this study are relevant to policy and education planning. See above. Paper presents brief analysis of expected employment in hospital sector in 2025. We will provide estimation of four scenarios, two of them will be related to population forecast and rest of them to change of utilization patterns in hospital care services. Initial analysis shows, that uncertainty about future demand for health care is pretty high and can be affected by many different factors. Current decreasing trends in average length of stay couldn’t be kept in long term, thus some constraints have been adopted. Countries overview has two main conclusions. Firstly, the utilization trends across countries are different and cluster analysis provide information, that we can find 5 groups, which best fits similar trends. Secondly, the age distribution of hospital care remains more stable over time and we couldn’t find significant crossborder influence. Therefore, the trends are distributed rather proportionally. In average in most of the countries we can expect a moderate growth in demand for hospital workforce. Additionally, we have been able to provide information about pure influence of ageing on labour demand. In that case, the differences in population development play significantly lower role than utilization patterns. Generally we can say, that in relation to static scenario (without significant changes in utilization) substantial growth of labour demand can be expected almost in all countries. In dynamic scenario with typically decreasing trend in needs for hospital care only one third of observed countries shows expected increase of demand for hospital care (incl. Germany). We should keep in mind, that only additional demand is analyzed. (Schultz, 2013(a)) shows, that average age of medical and nursing personell is in average over 50, and we can expect also significant role (in some countries even the most significant) of replacement demand in total demand for health care workforce.
    Keywords: Panel of European countries with sufficient data (around 20) , Labor market issues, Impact and scenario analysis
    Date: 2014–07–03
  5. By: Ana Paula Ribeiro; Paula Gracinda Teixeira Santos; Vitor Carvalho
    Abstract: From the late 70s onwards, the literature has produced numerous studies, mostly for developing countries, relating exports and economic growth. Since several European Union (EU) countries face strong recessions in the sequence of the economic crisis and the related fiscal consolidation measures, exports emerge as a meaningful source of growth for developed countries with rather stagnant domestic markets. In this context, we assess if and how the product and the destination structures of exports shape the growth dynamics for the EU countries. Estimation of fixed effects model using panel data of 23 European Union (EU) members over the period 1995-2010. We find that economic growth is foster through export specialization in high value-added products, such as manufactures and high-technology. Moreover, we find evidence that higher growth is fostered by export diversification across partners while enlarging the portfolio of partners, mainly to less developed and more distant countries, has negative impacts on European growth. Unambiguously, relative concentration of exports should be directed towards higher growth countries.
    Keywords: European Union (EU)., Growth, Macroeconometric modeling
    Date: 2013–06–21
  6. By: Olivia Ricci; Legendre Bérangère
    Abstract: Little empirical research has been undertaken on fuel poverty in France. Fuel poverty can be measured in a number of ways; therefore we analyze the impact of three different measurement approaches on the extent of fuel poverty and the composition of the fuel poor households in France. Then, we study another aspect of fuel poverty that has been covered less frequently in literature. That is, identifying households that are at risk of falling below the poverty line specifically because of high fuel costs. These households can be classified as vulnerable in the sense that they are a priori non-poor before the fuel bills but a marginal increase in energy prices is enough to make them slip below the threshold . Such an approach allows us to identify the impact of high fuel costs on the margins of poverty. We conduct descriptive statistics in order to quantify and identify fuel poor households under the three approaches. Then we estimate a log-log regression model to characterize vulnerable households that are pushed into poverty because of fuel costs. Using a log log model allows us to verify whether the patterns commonly seen across fuel poverty are actually associated with single characteristics or a combination of several characteristics The three measurement approaches selected led to contrasting results in terms of the extent of fuel poverty and the composition of the fuel poor. Moreover, the three approaches identify distinct types of fuel poor households. The econometric study suggests that living alone is associated with a high probability of falling into fuel poverty. Moreover, retired people living alone are significantly exposed to fuel poverty. Being a homeowner and highly educated is associated with lower exposure to fuel poverty. The heating system equipment and the type of energy used for cooking are key elements that influence the probability of falling into fuel poverty. Using an individual boiler and cooking with butane/propane are associated with a high probability of being fuel poor, while collective boilers, district heating systems and cooking with city gas (natural gas) seem to protect against fuel poverty. Moreover, a home’s low energy performance is a significant fuel poverty factor. Only housing built after 1974 (after the first thermal regulation in France) decreases the exposure to fuel poverty.
    Keywords: France, Energy and environmental policy, Macroeconometric modeling
    Date: 2014–07–03
  7. By: Gorecki, Paul
    Date: 2014–06
  8. By: Isabel Teichmann
    Abstract: Biochar is a carbon-rich solid obtained from the heating of biomass in the (near) absence of oxygen in a process called pyrolysis. Its deployment in soils is increasingly discussed as a promising means to sequester carbon in soils and, thus, to help mitigate climate change. For a wide range of feedstocks and scenarios and against the baseline of conventional feedstock management, we calculate the technical greenhouse-gas mitigation potentials of slow-pyrolysis biochar in 2015, 2030 and 2050 when the biochar is incorporated into agricultural soils in Germany and when the by-products from biochar production - pyrolysis oils and gases - are used as renewable sources of energy. Covering the greenhouse gases carbon dioxide, methane and nitrous oxide, our analysis reveals that biochar allows for an annual technical greenhouse-gas mitigation potential in Germany in the range of 2.8-10.2 million tonnes of carbon-dioxide equivalents by 2030 and 2.9-10.6 million tonnes of carbon-dioxide equivalents by 2050. This corresponds to approximately 0.4-1.5% and 0.3-1.1% of the respective German greenhouse-gas reduction targets in 2030 and 2050.
    Keywords: Biochar, agriculture, Germany, climate change, soil carbon sequestration
    JEL: Q15 Q24 Q54
    Date: 2014
  9. By: Nicola Fuchs-Schündeln (Goethe University Frankfurt /Main); Alexander Bick (Arizona State University)
    Abstract: We document contemporaneous differences in the aggregate labor supply of married couples across 18 OECD countries along the extensive and the intensive margin. We quantify the contribution of international differences in non-linear labor income taxes and consumption taxes, as well as gender wage gaps and educational premia, to the international differences in the data. Our model replicates the comparatively small cross-country differences of married men's hours worked very well. Moreover, taxes and wages account for a large part of the observed large differences in married women's labor supply between the US and Europe. The non-linearity of labor income taxes leads to substantially different effects of taxation on married men and women. We find that going to a system of strictly separate taxation would increase labor supply of married women by more than 100 hours annually in a third of our sample countries.
    Date: 2014
  10. By: Davide Antonioli (University of Ferrara, Italy.); Simone Borghesi (University of Siena, Italy.); Alessio D'Amato (Università di Roma Tor Vergata, Italy.); Marianna Gilli (University of Ferrara, Italy.); Massimiliano Mazzanti (University of Ferrara, Italy.); Francesco Nicolli (CERIS-CNR Milano, Italy.)
    Abstract: The paper investigates the effectiveness and efficiency of energy-environmental policy interactions in Italy, adopting a broad optimality perspective that includes policy feasibility and dynamic efficiency. The analysis highlights that though some complementarity among different policies exists, climate policies have been often undermined by energy and renewables policy. Nevertheless, some complementarities between policy landscapes are found, as in the case of the Kyoto Fund (climate policy) and of the incentives and funding towards thermal energy, both acting as a complementary tool to cover non EU-ETS sectors. Overall, renewables oriented policies bring about efficacy but this often occurs at the expenses of their efficiency, thus generating a trade-off between these two components of optimality. Finally, incentives remuneration of renewables and also Energy efficiency investments give a mixed signal to improve innovation and to stimulate the green sector. In conclusion, notwithstanding efficacy is present in some case, cost effectiveness and efficiency are far from being optimal, and It would be better to provide a clear and durable price signal using carbon taxation tools.
    Date: 2014–08
  11. By: Patricia Crifo; Marc-Arthur Diaye; Sanja Pekovic
    Abstract: This paper analyzes how different combinations of Corporate Social Responsibility (CSR) dimensions affect corporate economic performance. We use various dimensions of CSR to examine whether firms rely on different combinations of CSR, in terms of quality versus quantity of CSR practices. Our empirical analysis based on an original database including 10,293 French firms shows that different CSR dimensions in isolation impact positively firms’ profits but their effect in term on intensity varies among CSR dimensions. Moreover, the findings on the qualitative CSR measure, based on interaction between its dimensions, show that the substitutability of these dimensions is highly significant for firm performance. However, in terms of the intensity, those interactions produce differential effects.
    Keywords: corporate social responsibility, firm performance, substitutability, complementarity, trade-off, simultaneous equations models,
    Date: 2014–07–01
  12. By: Virginie Doumax-Tagliavini; Cristina Sarasa, University of Zaragoza
    Abstract: In September 2013, the EU Parliament has called for a 6% limitation of crop-based biofuels (instead of 10% initially) and proposed a 2.5% binding incorporation target for cellulosic biofuels by 2020. In spite of this stated objective, the horizon of a large-scale adoption for advanced biofuels remains largely uncertain. Indeed, biofuels competitiveness is tightly linked to crude oil prices that also follow an uncertain evolution. In this context, including both uncertainties into the same analysis framework could be challenging. Focusing on France, this work proposes to address this issue. The main objective is to assess the economic and environmental impacts of first and second-generation biofuels. We also determine the conditions under which advanced biofuels could become available earlier regarding to the evolution of oil prices and public subsidies. We develop an original approach to incorporate uncertainty within a dynamic computable general equilibrium (CGE) model calibrated on 2009 French data. In line with the existing literature, cellulosic biofuels are modeled as latent technology (Reilly and Paltsev, 2007; Melillo et al., 2009) and biofuels by-products are included into the analysis (Taheripour et al., 2010). Using stochastic programming, we consider different scenarios depending on the oil price volatility and the changes in the fiscal incentives. This methodology allows us to compare the effects of first and second-generation biofuels as regards mainly agricultural land, food production and greenhouse gas (GHG) emissions. Results confirm the larger performance of advanced biofuels in terms of GHG emissions. They also show in which measure the technology improvement may reduce the pressure on food and land resources. Therefore, simulations provide guidelines for public deciders to design alternative fiscal policies to support advanced biofuels hand in hand with economic, social and environmental impacts.
    Keywords: France, General equilibrium modeling, Energy and environmental policy
    Date: 2014–07–03
  13. By: Rosario Sanchez; Angeles Díaz
    Abstract: The main purpose of this work is to analyse the effect of exports intensity and R & D activities in technical efficiency using data of Spanish manufacturing firms during the period 2004-2009. In a previous work, Diaz and Sanchez (2008) found that size was an important determinant of technical efficiency. Also, in Sánchez and Díaz (2013) innovation was an important determinant of efficiency for large firms but not for small and medium sized firms. Perhaps because large firms are more easily able to obtain external financing and thus finance their R & D activities and obtain product and process innovation that allows them to gain competitiveness in foreign markets. Size is also related to the ability of firms to compete in foreign markets. So we will focus on exporting companies to investigate the relationship between exports, and efficiency. As it is well known the exporting firms are more competitive than those that are not focused on foreign markets. To obtain empirical evidence we estimate a value added production function following the methodology of the Stochastic Frontier Approach, first developed by Farrell (1957) and widely used in empirical works. Using this methodology several works have analysed technical inefficiency: Caves and Barton (1990) analyse technical efficiency for manufacturing firms in United States; Green and Mayes (1991) analyse technical inefficiency for United Kingdom; and Patibandla (1998) proves the relevance of capital market imperfections on the structure of an industry; Dilling-Hansen et al. (2003), and Kumbhakar et al., (2011) analyse the effect of R&D investment on relative efficiency; Diaz and Sánchez (2008) analyse the impact of size on efficiency; and Sánchez and Diaz (2013) focus in the effect of product and process innovation over technical efficiency, obtaining that large firms’ innovation are more efficient than the small one. The inefficiency determinants can be due to environmental or firm specific factors. Here we focus on these firms specific factors to provide an explanation to the differences in technical inefficiency across Spanish manufacturing firms. Inefficiency tends to be smaller for firms with a higher ratio of gross investment over capital. Firms that account for this kind of investment become more competitive as a consequence of having a higher efficiency in their production process. Also, we found that exporting firms are closer to the stochastic frontier. They have to be more competitive to sell in international markets. Only the most efficient firms survive in the highly competitive international market. Size is another determinant of technical efficiency. Even though the impact of size in technical efficiency is not clearly determined in empirical and theoretical frameworks, here we obtain a positive and significant effect over efficiency. What it means that large firms are closer to the efficient frontier. In addition, efficiency tends to be smaller for those firms with a higher proportion of external funds over value added.
    Keywords: Spain, Trade issues, Sectoral issues
    Date: 2014–07–03
  14. By: Panos Tsakloglou; Francesco Figari; Alari Paulus; Holly Sutherland; Gerlinde Verbist; Francesca Zantomio
    Abstract: Imputed rental income of homeowners is tax exempt in most countries, despite the long-standing arguments recommending its inclusion in the tax base, on both equity and efficiency grounds. The current fiscal crisis revived interest towards this form of taxation. The paper investigates the fiscal and distributional consequences of including homeowners’ imputed rent, net of mortgage interest and maintenance costs, in taxable income as any cash income source that extends consumption opportunities. Three scenarios are analysed in six European countries: in the first imputed rent is included in the taxable income of homeowners, while at the same time existing mortgage interest tax relief schemes and taxation of cadastral incomes are abolished. In two further revenue-neutral scenarios, the additional tax revenue raised through the taxation of imputed rent is redistributed to taxpayers, either through a proportional rebate or a lump-sum tax credit. Results show how including net imputed rent in the tax base might affect inequality in each of the countries considered. Housing taxation appears to be a promising avenue for raising additional revenues, or lightening taxation of labour, with no inequality-increasing side-effects. See above See above
    Keywords: See above, Impact and scenario analysis, Microsimulation models
    Date: 2014–07–03
  15. By: Walsh, Darragh; Malaguzzi Valeri, Laura
    Date: 2014–07
  16. By: Daniela Andrén; Thomas Andrén
    Abstract: In Romania, the communist regime promoted an official policy of gender equality for more than 40 years, providing equal access to education and employment, and restricting pay differentiation based on gender. After its fall in December 1989, the promotion of equal opportunities and treatment for women and men did not constitute a priority for any of the governments of the 1990s. This paper analyzes both gender and occupational wage gaps before and during the first years of transition to a market economy, and finds that the communist institutions did succeed in eliminating the gender wage differences in female- and male-dominated occupations, but not in gender-integrated occupations. During both regimes, wage differences were in general much higher among workers of the same gender working in different occupations than between women and men working in the same occupational group, and women experienced a larger variation of occupational wage differentials than men.
    Keywords: Romania, female- and male-dominated occupations, gender wage gap, occupational wage gap.
    JEL: J24 J31 J71 J78 P26 P27
    Date: 2014–08–25
  17. By: Galen Sher; Giuseppe Loiacono
    Abstract: Rationale and objective: The objective of this paper is to define the term "Maturity Transformation" and to measure the amount of interest rate risk arising from maturity transformation to which large European banks are exposed. Modeling approach and methodology: We collect balance sheet asset and liability data by maturity for the largest European banks, in more detail than is available from the major data providers. To these asset and liability exposures, we apply several methods for measuring interest rate repricing risk based on asset pricing models, including the latest Basel Committee guidelines. Preliminary/expected results: We are able to rank the banks in our sample based on measures of the interest rate risk of their loan portfolios using publicly available information. These risk measures are crucial for understanding the overall interest rate risk of banks, and for allowing supervisors, investors and customers to hold these institutions to account.
    Keywords: European Union, Finance, Microsimulation models
    Date: 2013–06–21

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