nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2014‒10‒03
twenty-one papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. The structure and dynamics of R and D collaborations in Europe and the USA (A longitudinal and comparative perspective) By Sidonia von Proff; Rafael Lata; Thomas Brenner
  2. Integrating VAT into EUROMOD. Documentation and results for Belgium By Decoster, André; Ochmann, Richard; Spiritus, Kevin
  3. Migration in Italy is Backing the Old Age Welfare By Daniela del Boca; Alessandra Venturini
  4. The distributional effects of personal income tax expenditure By Avram, Silvia
  5. Does homeownership partly explain low participation in supplementary pension schemes? By Marco Santantonio; Costanza Torricelli; Maria Cesira Urzì Brancati
  6. The Contribution of Academic Knowledge to the Value of Industry Inventions: Micro level evidence from patent inventors. By Fassio, Claudio; Geuna, Aldo; Rossi, Federica
  7. Two Steps Forward - One Step Back?: Evaluating Contradicting Child Care Policies in Germany By Kai-Uwe Müller; Katharina Wrohlich
  8. Fertility and Modernity By Enrico Spolaore; Romain Wacziarg
  9. Labour Market Dynamics and Worker Heterogeneity During the Great Recession – Evidence from Europe By Ronald Bachmann; Peggy Bechara; Anica Kramer; Sylvi Rzepka
  10. The taxation of farm income in Italy. Evidences from the EU-SILC database By Severini, Simone; Tantari, Antonella; Rocchi, Benedetto
  11. Survey design and the determinants of subjective wellbeing: an experimental analysis By Holford, Angus; Pudney, Stephen
  12. Partner ethnicity and ethnic minority socio- economic occupation: evidence from the UK By Morando, Greta
  13. Tax Competition and Tax Coordination in the European Union: A Survey By Keuschnigg, Christian; Loretz, Simon; Winner, Hannes
  14. Is theatre efficiency affected by the legal form type? A case study of German public theatres By Marta Zieba
  15. Children’s time use and family structure in Italy By Letizia Mencarini; Silvia Pasqua; Agnese Romiti
  16. Occupation, Prestige, and Voluntary Work in Retirement: Empirical Evidence from Germany By Holger Lengfeld; Jessica Ordemann
  17. The Multidimensional Nature of Social Capital: An Empirical Investigation for Older People in Europe By Brenda Gannon; Jennifer Roberts
  18. Where they go, what they do and why it matters: The importance of geographic accessibility and social class for decisions relating to higher education institution type, degree level and field of study By Darragh Flannery; John Cullinan
  19. The Effect of Non-Work Related Health Events on Career Outcomes: An Evaluation in the French Labor Market By Emmanuel Duguet; Christine Le Clainche
  20. Evaluating agri-environmental schemes. The case of Tuscany By Campus, Daniela
  21. Emerging Structural Pressures in European Labour Markets By G.A. Meagher; R.A.Wilson; E.Yerushalmi

  1. By: Sidonia von Proff (Economic Geography and Location Research, Philipps-University, Marburg); Rafael Lata (Foresight and Policy Development Department, Austrian Institute of Technology (AIT), Vienna); Thomas Brenner (Economic Geography and Location Research, Philipps-University, Marburg)
    Abstract: Today it is generally accepted that innovation, knowledge creation, and the diffusion of new knowledge are crucial factors for economic growth at the regional, national, as well as supra-national level, and that successful innovation is increasingly based on interactions and collaborative research activities between research actors. This study focuses on diverse dimensions of distance shaping R and D collaborations in Europe and the US during the time period 1999 to 2009. We take a comparative perspective by analyzing two different R and D collaboration networks (patents and publications) and two different economic areas, namely Europe and the US, in order to examine differences in collaboration activities. In particular, we investigate how the collaboration intensity between regions has been influenced by spatial, technological, and cultural distance and whether these distances have lost importance over time in the distinct networks. The study adopts a panel spatial interaction modeling perspective. In doing so, we explicitly take account of spatial autocorrelation issues of flows by means of Eigenvector spatial filtering techniques. European coverage is achieved by using 1260 NUTS-3 regions of the 25 pre-2007 EU member-states, as well as Norway and Switzerland. The US coverage is attained by using 955 core based statistical areas (CBSAs). The results reveal how collaborative knowledge creation and the spatial range of knowledge diffusion differs between Europe and the US, and provide direct evidence on the differences in cooperation patterns between different types of collaborative R and D from a longitudinal and comparative perspective
    Keywords: R and D Networks, Patents, Publications, Spatial Interaction Modeling, Eigenvector Spatial Filtering, distance
    JEL: C23 O38 L14 R15
    Date: 2014–09–14
  2. By: Decoster, André; Ochmann, Richard; Spiritus, Kevin
    Abstract: This paper documents the integration of microsimulation tools for direct taxation, indirect taxation, and social benefits in the context of the European tax and benefit simulator, EUROMOD. Integration has been developed in parallel for two countries: Belgium and Germany. The paper at hand documents the process and presents simulation results for the case of Belgium. An integrated database underlying EUROMOD that contains householdlevel information on income and consumption is generated. Consumption micro data from the 2009 cross section of the household budget survey for Belgium is used to impute information on spending for durable and non-durable commodities into EU-SILC data, applying regression-based imputation techniques. Engel curves are estimated at the household level for total non-durable spending, expenditures on durable goods, as well as non-durable expenditure share equations. The imputed household spending is then used to simulate the baseline VAT system in EUROMOD, for which we report an incidence analysis. Finally, several arbitrary policy reforms implementing VAT rate uniformity are analyzed with respect to their distributional impact.
    Date: 2014–06–16
  3. By: Daniela del Boca; Alessandra Venturini
    Abstract: Our research analyzes the effect of changes in migration policies and the accession to the European Union of former countries of emigration, considering the crucial role played by migrants in an aging society. We focus on the demand of family-care workers by using the last five years of the Italian Labour Force Survey dataset. Our results show that especially during the last years of recession, foreign labor (mostly female) has become fundamental in the family sector,favoring the participation of Italian skilled women in the labor market.
    Keywords: migration, aging, women's work
    JEL: J6 J15
    Date: 2014–09–05
  4. By: Avram, Silvia
    Abstract: Less visible than benefit expenditure, spending channelled through the tax system via tax concessions and advantages can amount to substantial amounts of foregone revenue. In this paper we use EUROMOD, a tax-benefit micro-simulation model covering all EU member states, to investigate the size and distributional effects of tax allowances and tax credits in 6 European countries. We also investigate in detail which types of policy instruments have the most potential to redistribute towards the bottom and which are likely to be mostly benefitting households at the top of the income distribution. We examine both categorical targeting (i.e. eligibility rules that depend on some individual or household general characteristics) and explicit income targeting .We find that with a few exceptions the impact of tax allowances and tax credits on inequality is small. Tax credits are generally more progressive than tax allowances. However, with the exception of refundable tax credits, the design of the allowances/credits appears to be less important than the characteristics of the population they are targeting and/or other features of the income tax system in determining the redistributive effect. Consequently, tax concessions appear ill-suited to target resources towards households in the bottom part of the income distribution.
    Date: 2014–07–04
  5. By: Marco Santantonio; Costanza Torricelli; Maria Cesira Urzì Brancati
    Abstract: We used nine waves of the Bank of Italy’s Survey on Household income and Wealth (1995-2012) to investigate a possible trade-off between homeownership and individual participation in a supplementary pension scheme. Italy lends itself to this type of investigation because the Italian public pension system has been heavily reformed in the period, providing in principle incentives for participation, and the homeownership rate is very high. The impact of homeownership is captured in two ways: by a dummy for being homeowner and by an index defined as the share of housing wealth over total wealth. Our results show that indeed, after controlling for a vast array of socio-economic characteristics and allowing for unobserved individual heterogeneity, both measures of homeownership are negatively associated with participation in supplementary pension schemes and that such an effect does not disappear even after the 2007 reform.
    Keywords: pension plan participation, retirement planning, housing investment
    JEL: D91 H55
    Date: 2014–09
  6. By: Fassio, Claudio; Geuna, Aldo; Rossi, Federica (University of Turin)
    Abstract: There is little evidence on the specific characteristics of the process of university-industry knowledge transfer leading to the generation of valuable inventions. Using the results of an original survey of industry inventors of European patents, resident in the Italian region of Piedmont, we analyze what determines the value of inventions that have benefited from academic knowledge. We find that inventors with greater cognitive proximity to the university and higher patenting output are more likely to interact with universities and to benefit from u niversity knowledge. After controlling for the characteristics of firms and technologies, we find that it is the transfer of theoretical academic knowledge rather than solutions to more technical and specified problems that leads to more valuable inventions. We found some evidence that knowledge transfer processes involving direct personal collaboration between the company inventor and the university researcher (which are characterized by higher trust as a result of social network embeddedness) are conducive to relatively higher value inventions.
    Date: 2014–07
  7. By: Kai-Uwe Müller; Katharina Wrohlich
    Abstract: We apply a structural model of mothers' labor supply and child care choices to evaluate the effects of two childcare reforms in Germany that were introduced simultaneously in August 2013. First, a legal claim to subsidized child care became effective for all children aged one year or older. Second, a new benefit called 'Betreuungsgeld' came into effect that is granted to families who do not use public or publicly subsidized child care. Both reforms target children of the same age group and are unconditional on the parents' income or employment status, yet affect mothers' incentives for labor supply and child care choices in opposite directions. Our model facilitates estimating the joint reform impact as well as disentangling the individual effects of both policies. A comprehensive data set with information on labor supply, the use of and potential access restrictions to various child care arrangements provides the basis for the empirical analysis. We find the overall effect of both reforms to be small but positive as far as mother's labor supply and the use of formal care is concerned. The legal claim's positive impact on mothers' labor supply and the use of formal child care is largely offset by the negative effect on both outcomes resulting from the introduction of the 'Betreuungsgeld'.
    Keywords: Family policy, labor supply, child care, policy evaluation, structural model
    JEL: J22 J18
    Date: 2014
  8. By: Enrico Spolaore; Romain Wacziarg
    Abstract: We investigate the historical dynamics of the decline in fertility in Europe and its relation to measures of cultural and ancestral distance. We test the hypothesis that the decline of fertility was associated with the diffusion of social and behavioral changes from France, in contrast with the spread of the Industrial Revolution, where England played a leading role. We argue that the diffusion of the fertility decline and the spread of industrialization followed different patterns because societies at different relative distances from the respective innovators (the French and the English) faced different barriers to imitation and adoption, and such barriers were lower for societies that were historically and culturally closer to the innovators. We provide a model of fertility choices in which the transition from higher to lower levels of fertility is the outcome of a process of social innovation and social influence, whereby late adopters observe and learn about the novel behaviors, norms and practices introduced by early adopters at the frontier. In the empirical analysis we study the determinants of marital fertility in a sample of European populations and regions from 1830 t0 1970, and successfully test our theoretical predictions using measures of genetic distance between European populations and a novel data set of ancestral linguistic distances between European regions.
    Date: 2014
  9. By: Ronald Bachmann; Peggy Bechara; Anica Kramer; Sylvi Rzepka
    Abstract: Using harmonized micro data, this paper investigates the effects of the early phase (2008-10) of the recent economic crisis on transitions between labour market states in Europe. Our analysis focuses on individual heterogeneity, on the type of employment contract, and on crosscountry differences. Our analysis shows that specific worker groups, such as men and young persons, were particularly strongly hit by the crisis. Furthermore, more transitions from employment, and especially temporary employment, to unemployment were the main factor behind the rise in unemployment; while reduced unemployment outflows did not contribute substantially to the increase in unemployment during the early phase of the crisis.
    Keywords: Recession; labour market transitions; Markov transition matrices; worker heterogeneity
    JEL: J6 E24
    Date: 2014–08
  10. By: Severini, Simone; Tantari, Antonella; Rocchi, Benedetto
    Abstract: In this paper the level of taxation of Italian farm households is studied by analyzing the data of agricultural households in the Italian EU-SILC database. The proposed approach allows to use the EU- SILC database to fill missing information on FADN database through a methodology of statistical matching. The work provides some indications on the level of tax burden and on some factors affecting it as well as on the degree of progressivity of the taxation of agricultural incomes. The results suggest that the level of tax burden is not very much affected by the amount of income actually produced. Indeed, the taxation of agricultural incomes seems paradoxically to have a regressive effect favouring farm families in which farming accounts for the large part of family income.
    Keywords: income taxation, statistical matching, farm household income, Agribusiness, Consumer/Household Economics, H24, Q12,
    Date: 2014
  11. By: Holford, Angus; Pudney, Stephen
    Abstract: We analyse the results of experiments on questionnaire design and interview mode in the first four waves (2008-11) of the UK Understanding Society Innovation Panel survey. The randomised experiments relate to job, health, income, leisure and overall life-satisfaction questions and vary the labeling of response scales, mode of interviewing, and location of questions within the interview. We find significant evidence of an influence of interview mode and question design on the distribution of reported satisfaction measures, particularly for women. Results from the sort of conditional modeling used to address real research questions appear less vulnerable to design influences.  
    Date: 2014–07–23
  12. By: Morando, Greta
    Abstract: What role does integration play in reducing disparities in the labour market between ethnic minority and white majority populations? We shed light on this question by comparing the socio-economic positions of ethnic minorities in co- and inter-ethnic partnerships. We implement propensity score matching techniques to account for selection bias. We find that ethnic minorities in co- and inter-ethnic unions are rarely comparable and a large part of the labour market differences is explained by their individual socio-demographic characteristics. Finally, having a white majority group partner affects the occupational position and labour market participation of only some groups of women.
    Date: 2014–09–03
  13. By: Keuschnigg, Christian; Loretz, Simon; Winner, Hannes
    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: H87 H77
    Date: 2014–08
  14. By: Marta Zieba (Department of Economics, University of Limerick)
    Abstract: The paper aims at exploring the economic efficiency of the performing arts organisations. A parametric stochastic frontier approach is presented as a way of measuring the performance of cultural institutions. In particular, using German public theatres as a case study and summarising the empirical findings obtained in Zieba and Newman (2013), this paper examines how the efficiency of publicly funded performing arts firms, operating under different organisational structures, is affected by two types of shocks. First, we consider what happens to efficiency when there is a funding shock and second, we consider the effect on efficiency of an increase in competition. The identification of these effects was made possible by the natural experiment of the reunification of East and West Germany in 1990. The results suggest that theatres organised under public law are more efficient than theatres organised under private law. However, when exposed to the exogenous demand shock after reunification, the theatres organised under private law react positively to this competition shock as measured by their efficiency scores confirming that they better react to the changing market conditions than theatres organised as public legal forms.
    Keywords: cultural economics, cultural management, theatre
    Date: 2013–03
  15. By: Letizia Mencarini; Silvia Pasqua; Agnese Romiti
    Abstract: A wide range of sociological and psychological studies have shown that children have different cognitive and behavioural outcomes depending on whether they grow up in intact or non-intact families. These gaps may be attributable to differences in the amounts of time and money parents invest in their children, which can in turn result in differences in the amount of time children invest in educational activities. In this paper, we investigate whether children who live with a single parent devote more or less time to reading and studying at home than children who live with both parents. We use data from the Italian Time Use Survey, which contains a detailed time diary for all of the family members in each surveyed household above the age of three. Focusing on children between five and 18 years old, and controlling for the endogeneity of the family structure, our analysis shows that living in a single-parent household reduces the amount of time children devote to reading and studying. This effect turns out to be driven by single parents—mainly single mothers—who are poor and less educated. In addition, the negative effect of living with a single parent is driven by male children, and is greater for children without siblings.
    Keywords: children investments, children outcomes, time-use, single-parent household
    Date: 2014
  16. By: Holger Lengfeld; Jessica Ordemann
    Abstract: The paper examines the extent to which the prestige value of a retiree's former occupation increases the likelihood that they will make a transition into volunteering after retirement. Following social production function theory, we assume that when a person retires, the prestige value attached to their former occupation fades. The fact that volunteering has the character of a collective good provides the opportunity to gain social prestige to offset the loss of occupational prestige. However, the extent of the incentive to volunteer will be distributed unequally across occupations: the higher the former occupational prestige value, the higher the perceived loss of prestige after retirement. Thus, doing a job with high prestige value increases the incentive to volunteer in retirement. This assumption is tested, using data taken from the German Socio-Economic Panel (SOEP) 1992-2013. The sample contains 1,631 workers and 589 retirees, 278 of whom transitioned into volunteering during the observation window. Based on Kaplan-Meier-Failure-Estimates and complementary log-log hazard models, findings show a positive effect of occupational prestige on the transition into volunteering. Thus, the loss of high occupational prestige can be compensated by the social prestige associated with volunteering. Formal volunteering in retirement follows, albeit to a lesser extent, the logic of the occupational social strata.
    Keywords: Social Production Function Theory, retirement, volunteering, occupations
    Date: 2014
  17. By: Brenda Gannon (Manchester Centre for Health Economics, Institute of Population Health, University of Manchester); Jennifer Roberts (Department of Economics, University of Sheffield)
    Abstract: Social capital is a rapidly expanding research theme within economics and has become a popular concept with policy makers in both developed and developing countries. Despite this growth in popularity, social capital remains a controversial concept among economists. We argue that this is largely due to a fundamental mismatch between the theoretical coverage and the vast majority of empirical work. Utilising data from a large cross-Europe survey of older people we use principal components analysis to demonstrate that social capital has multiple dimensions, and then explore the extent to which these latent dimensions coincide with the theoretical constructs of social capital. We use the association between social capital and a number of measures of health and well-being to demonstrate the importance of taking account of the multiple dimensions of social capital in empirical work. As well as showing that all the underlying constructs of social capital are significantly associated with health and well-being, our results also reveal that while in general this association is positive, close bonding in the form of household ties is inversely related to health and well-being; this contradicts the implicit assumption, often made in the literature that, in relation to social capital, more is always better.
    Keywords: social capital; health; older people; principal components analysis
    JEL: Z13 I12 J14
    Date: 2014–09
  18. By: Darragh Flannery (Department of Economics, University of Limerick); John Cullinan (School of Business and Economics, National University of Ireland, Galway)
    Abstract: The factors influencing the decision of school leavers to participate in higher education has been extensively investigated previously. This has mainly focused on the influence of characteristics such as parental education level, social class and spatial factors on the decision to participate in higher education at a broad level. However, given the influence the type of tertiary education pursued may have on future labour market outcomes, an understanding of the factors behind more specific higher education outcomes decisions is important. Within this context, this paper focuses on the influence of geographic accessibility and social class on young people when making decisions relating to higher education institution type, degree level and field of study pursued using a rich Irish dataset. We estimate this relationship using a bivariate probit framework and controlling for a range of other variables we find evidence of significant spatial and socio-economic effects on these higher education outcomes.
    Keywords: higher education institution type, degree level, field of study, geographic accessibility, social class
    Date: 2013–02
  19. By: Emmanuel Duguet; Christine Le Clainche
    Date: 2014
  20. By: Campus, Daniela
    Abstract: The rural development plans in Europe, within the provisions of Axis Two of the Common Agricultural Policy, consider the opportunity to protect and enhance “environmental-friendly” farming systems. The present paper describes the role of organic farming measures in the promotion and safeguard of the High Nature Value in Tuscany. Using National Census of Agriculture data (2010) a Probit model was adopted, in order to estimate the probability of program enrolment. After that, both control and treatment groups were constructed implementing a Propensity Score Approach: selecting 13 explanatory variables which are presupposed to be independent from the outcome variable, the two groups were built on the basis of the propensity scores. The aim should be to have two similar groups, for which the only difference is the treatment itself. In our study the treatment variable is the total area under organic agriculture, while the outcome is the High nature Value. After having controlled and achieved a good balancing between the covariates, the mean effect of the program participation on the treated (ATT) was computed. It is obtained as a difference between the averages of the two groups. The result unexpectedly reveals that AES have not a statistically significant impact on both fauna and flora biodiversity. However, these results must be interpreted with caution because both the type of data (we used cross-sectional data) and the assumptions on which the methodology is based could have a relevant effect on the final outcome.
    Keywords: agri-environmental payments, biodiversity, Tuscany, treatment effect., Agricultural and Food Policy, Community/Rural/Urban Development, Environmental Economics and Policy, Research Methods/ Statistical Methods, C21, Q18, Q56.,
    Date: 2014
  21. By: G.A. Meagher; R.A.Wilson; E.Yerushalmi
    Abstract: In recent years, a series of European labour market forecasts have been produced on behalf of, and have been published by, the European Centre for the Development of Vocational Training (Cedefop). These forecasts were generated using a modular modelling approach containing two major components, a multi-sector macroeconomic model (E3ME) for 29 European countries, and a labour market extension (WLME). The countries are treated as an integrated system in E3ME but the extension is applied to each country separately. Forecasts of employment by industry are determined by E3ME; forecasts of employment by occupation and qualification are determined by the extension. Both components rely mainly on time series econometric techniques to generate their forecasts. Meagher et al.(2014) describe how the WLME can be replaced with an alternative extension (MLME) which uses computable general equilibrium (CGE) modelling techniques. Compared to the WLME, the MLME relies less on time series analysis and more on explicitly modelled economic behaviour, based on theoretical considerations. In this paper, the design of the hybrid E3ME-MLME model is advanced in two ways. Firstly, MLME is configured such that, in the absence of any shocks and assuming that the occupational labour markets clear, it reproduces the forecasts derived using WLME. In that case, the MLME forecasts can be regarded as providing enhanced information about the WLME forecasts. In particular, MLME provides forecasts of changes in relative wage rates which can be used to identify structural pressures in the markets for labour, pressures which remain only implicit in the WLME employment forecasts produced for Cedefop. Secondly, when suitably configured, MLME can be used to determine the deviations to the WLME employment forecasts which would result if some of the conditions (either explicit or implicit) under which they were derived are relaxed. In particular, MLME is used to determine how the forecasts would be different if wage rates are not sufficiently flexible to clear the occupational labour markets. The attendant surpluses and shortages revealed by MLME provide corroborative evidence on the underlying structural pressures in the Cedefop forecasts. Results are reported for the United Kingdom, Greece and the Netherlands.
    Keywords: Forecasting, CGE models, hybrid models, labour markets, structural imbalances
    JEL: C53 C58 D58 E27 J23 O41
    Date: 2014–09

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