nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2014‒10‒13
seventeen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. A note on firm age and the margins of imports: First evidence from Germany By Joachim Wagner
  2. Unbundling the incumbent: Evidence from UK broadband By Mattia Nardotto; Tommaso Valletti; Frank Verboven
  3. A New Look at Intergenerational Mobility in Germany Compared to the US By Daniel D. Schnitzlein
  4. Monitoring and Assessment Framework for the European Innovation Partnership on Active and Healthy Ageing (MAFEIP) First report on outcome indicators By Fabienne Abadie; Christian Boehler; Maria Lluch; Ramon Sabes-Figuera
  5. Are EU trade preferences really effective? A Generalized Propensity Score evaluation of the Southern Mediterranean countires's case in agriculture and fishery. FOODSECURE working paper no. 23 By Emiliano Magrini; Pierluigi Montalbano; Silvia Nenci
  6. The Causal Effect of Scholarships Targeted at Low Income Students on Performance: Evidence from Italy By V. Rattini
  7. On the employment effects of outward FDI: The case of Spain, 1995-2011 By Oscar Bajo-Rubio; Carmen Díaz-Mora
  9. The economics of research, consulting, and teaching quality: theory and evidence from a technical university By Stefano Bianchini; Francesco Lissoni; Michele Pezzoni; Lorenzo Zirulia
  10. Knowledge-capital formation and valorisation of French SMEs By Zeting LIU; Blandine LAPERCHE
  11. Owner-management, firm age and productivity in Italian family firms By Marco Cucculelli; Lidia Mannarino; Valeria Pupo; Fernanda Ricotta
  12. How Nuclear Power Plants in Spain are reacting to the Massive Introduction of Renewable Energy By Margaret Armstrong; Asana Sasaki; Frederic Novel-Cattin; Alain Galli
  13. Household Finances and Well-Being: An Empirical Analysis of Comparison Effects By Sarah Brown; Daniel Gray
  14. Italian trade and direct investment in North Africa By Riccardo Settimo
  15. The lifecycle deficit in France, 1979-2005 By Hippolyte D'Albis; Carole Bonnet; Julien Navaux; Jacques Pelletan; Hector Toubon; François-Charles Wolff
  16. What drives heterogeneity of procyclicality of loan loss provisions in the EU? By Malgorzata Olszak; Mateusz Pipien; Iwona Kowalska; Sylwia Roszkowska
  17. One currency, one price? Euro Changeover related inflation in Estonia By Jaanika Meriküll; Tairi Rõõm

  1. By: Joachim Wagner (Leuphana University Lueneburg, Germany)
    Abstract: This note uses a new tailor-made data set to investigate the link between firm age and the extensive margins of imports empirically for the first time for Germany. Results turn out to be fully in line with the theoretical considerations. Older firms are more often importers, import more different goods, and import from more different countries of origin.
    Keywords: Imports, firm age, import margins, Germany
    JEL: F14
    Date: 2014–08
  2. By: Mattia Nardotto (University of Cologne); Tommaso Valletti (Imperial College London, University of Rome “Tor Vergata” & CEPR); Frank Verboven (KU Leuven, Telecom ParisTech and CEPR)
    Abstract: We consider the impact of a regulatory process forcing an incumbent telecom operator to make its local broadband network available to other companies (local loop unbundling, or LLU). Entrants are then able to upgrade their individual lines and offer Internet services directly to customers. Employing a very detailed dataset covering the whole of the UK, we find that, over the course of time, many entrants have begun to take advantage of unbundling. LLU entry only had a positive effect on broadband penetration in the early years, and no longer in the recent years as the market reached maturity. In contrast, LLU entry continues to have a positive impact on the quality of the service provided, as entrants differentiate their products upwards compared to the incumbent. We also assess the impact of competition from an alternative form of technology (cable) which is not subject to regulation, and what we discover is that inter-platform competition has a positive impact on both penetration and quality.
    Keywords: regulation, competition, entry, telecommunications, broadband, local loop unbundling
    JEL: D22 K23 L43 L51 L96
    Date: 2014–10–03
  3. By: Daniel D. Schnitzlein
    Abstract: Motivated by contradictory evidence on intergenerational mobility in Germany, I present a cross-country comparison of Germany and the US, reassessing the question of whether intergenerational mobility is higher in Germany than the US. I can reproduce the standard result from the literature, which states that the German intergenerational elasticity estimates are lower than those for the US. However, based on highly comparable data, even a reasonable degree of variation in the sampling rules leads to similar estimates in both countries. I find no evidence for nonlinearities along the fathers' earnings distribution. In contrast, the analysis shows that mobility is higher for the sons at the lowest quartile of the sons' earnings distribution in both countries. In Germany this result is mainly driven by a high downward mobility of sons with fathers in the upper middle part of the earnings distribution. The corresponding pattern is clearly less pronounced in the US.
    Keywords: intergenerational mobility, SOEP, CNEF, Germany, US
    JEL: J62
    Date: 2014
  4. By: Fabienne Abadie (European Commission – JRC - IPTS); Christian Boehler (European Commission – JRC - IPTS); Maria Lluch; Ramon Sabes-Figuera (European Commission – JRC - IPTS)
    Abstract: As the initial Monitoring Framework may not be fully relevant for the overarching objective of the EIP on AHA and the Triple Win, either because the Action Groups commitments cannot use specific indicators or because some of the indicators initially thought of may not be best suited for measuring the impacts on the EIP on AHA higher objectives, the aim of this report is to suggest a smaller set of key indicators which may allow efficient monitoring of the impact of the EIP on AHA on the Triple Win and the overarching objective, based on the combined analysis of the above exercises. Such a set of indicators ought to be general enough to be widely applicable to commitments within each Action Group of the EIP, but also specific enough to be able to capture the impact of interventions delivered within each of these Action Groups. Finally, the set of indicators chosen should support modelling the link between EIP on AHA outcomes and the Triple Win and the headline target of two additional healthy life years to the average healthy life span of European citizens. This report therefore presents the results of the analysis of the above mentioned evidence whose objective was to assess the likelihood for each outcome indicator identified to be widely applicable across Action Groups and its fitness for the purpose of measuring the overall EIP on AHA impact. The picture obtained from the data collected from the field (i.e. Reference Sites and Action Groups' good practices) has been further refined by using results from the above mentioned scientific literature review.
    Keywords: EIP, Active and Healthy Ageing, EIP on AHA, indicators, monitoring, framework
    JEL: I11 I18 O33 O38
    Date: 2014–08
  5. By: Emiliano Magrini; Pierluigi Montalbano; Silvia Nenci
    Abstract: This study aims to assess the trade impact of preferential schemes. It focuses on the controversial case of the trade preferences in agriculture and fishery granted by the EU to the Southern Mediterranean Countries over the period 2004-2009. The analysis presents several methodological improvements on previous works. These findings raise important issues for policy-making by mitigating the claimed efficiency of the EU trade policy in the Meditterean area.
    JEL: F1 F4
  6. By: V. Rattini
    Abstract: This paper exploits discontinuities in the assigment of scholarships targeted at low income students in an Italian University in order to evaluate the effects of monetary incentives on students' academic achievement. Results reveal positive and sizeable causal effects both in terms of credits and grades. Gender differentials also emerge: male students drive the results on credits outcome while females students drive the effect on grades. These results suggest that the scholarship design contributes to reducing the probability of delayed graduation ("Fuori Corso" problem).
    JEL: H5 I21 I28
    Date: 2014–10
  7. By: Oscar Bajo-Rubio (Universidad de Castilla-La Mancha); Carmen Díaz-Mora (University of Castilla-La Mancha)
    Abstract: In this paper, we analyse the impact on domestic employment resulting from outward FDI performed by Spanish firms, using industry data for the period 1995‐2011. Together with the effects on total employment, we differentiate the effects according to the particular groups of countries and activities to which those FDI outflows are addressed. In addition, the impact of outward FDI on the demand for labour is also analysed separately for high and low skill levels of the labour force.
    Keywords: Foreign direct investment, Employment, Spanish economy
    JEL: F21 F23 J40
    Date: 2014–09
  8. By: Vincenzo Scoppa; Manuela Stranges (Dipartimento di Economia, Statistica e Finanza, Università della Calabria)
    Abstract: We investigate the role of culture in explaining economic outcomes at individual level analyzing how cultural values from the home country affect the decision to work of immigrants in Italy, using the National Survey of Households with Immigrants. Following the “epidemiological approach”, we relate the probability of being employed in Italy for immigrant women with the female labor force participation (LFP) in their country of origin, taken as a proxy of cultural heritage and gender role model. Controlling for a number of individual and household characteristics, we show that participation in the labor market is affected both by the culture of females’ and by their husband’s origin countries. We also show that the relationship between own decisions in the host country and home country LFP cannot be attributed to human capital quality or discrimination and it turns out to be stronger for immigrants that maintained more intense ties with their origin countries. Finally, we investigate to what extent cultural influence is driven by religious beliefs: we find that religion is a key determinant of differences in female labor decisions, but, besides religion, other cultural values exert additional influence..
    Keywords: Culture, Immigration, Labor Force Participation, Epidemiological Approach, Gender, Italy
    JEL: Z10 Z13 J10 J15 J16 J20
    Date: 2014–10
  9. By: Stefano Bianchini; Francesco Lissoni; Michele Pezzoni; Lorenzo Zirulia
    Abstract: We investigate the effect of both research and consulting on higher education teaching quality at the individual level. We propose a theoretical model in which academics allocate limited time between three activities, over a two period horizon, under the assumption of positive spillovers from research to both consulting opportunities and teaching, and of life cycle effects on incentives. Propositions from the model are tested against teaching evaluation data from a mid-sized Italian engineering faculty. We find that research experience improves teaching quality, but only if it does not translate into large consulting opportunities. In that case, research experience provides too strong a disincentive to invest time in teaching, and quality deteriorates.
    Keywords: higher education; teaching; academic consulting; research; economics of science
    Date: 2014–09–22
  10. By: Zeting LIU (Lab.RII, ULCO/Clersé-UMR8019, Université Lille Nord de France, RRI); Blandine LAPERCHE (Lab.RII, ULCO/Clersé-UMR8019, Université Lille Nord de France, RRI)
    Abstract: This paper focuses on French SMEs and studies their main characteristics regarding knowledge-capital formation and valorisation. We put forward what we may call a “French Paradox”, expressed by a quite important effort in terms of R&D investments and poor results in terms of innovation as measured by traditional indicators (patents). How can we explain this paradox? To answer this question, we study their strategy of knowledge-capital building (through absorptive capacity and open innovation) and valorisation (the way they transform their accumulated knowledge into innovations). We show that apart from the structural characteristics of SMEs (forms of innovation, use of IPRs, etc.), one important reason to their weak performances in terms of innovation lies in their integration within innovation networks dominated by large companies. The valorisation of SMEs’ knowledge capital (through patents and the diffusion of innovations) is thus not always achieved by the SMEs themselves but by the larger company, enriched by the specific knowledge of these SMEs.
    Keywords: Knowledge-capital, absorptive capacity, open innovation, SMEs, France
    JEL: O31 O34 L11
    Date: 2014
  11. By: Marco Cucculelli (Universit… Politecnica delle Marche, Dipartimento di Scienze economiche e sociali); Lidia Mannarino (University of Calabria, Department of Economics and Statistics); Valeria Pupo (University of Calabria, Department of Economics and Statistics); Fernanda Ricotta (University of Calabria, Department of Economics and Statistics)
    Abstract: Using Total Factor Productivity (TFP) as a measure of corporate performance, we find that Italian family-run firms are less productive than firms run by outside managers and the result is robust to potential endogeneity of management regime. This difference tends to vanish when the age of the firms is taken into account.
    Keywords: Family firms, Management, TFP
    JEL: D24 G34
    Date: 2014–09
  12. By: Margaret Armstrong (CERNA - Centre d'économie industrielle - MINES ParisTech - École nationale supérieure des mines de Paris); Asana Sasaki (ENPC - Ecole des Ponts ParisTech - École des Ponts ParisTech (ENPC)); Frederic Novel-Cattin (RENAULT SAS - RENAULT); Alain Galli (CERNA - Centre d'économie industrielle - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: This paper analyses the evolution of the bidding strategies of nuclear power plants on the Spanish day-ahead auction market, over the 11-year period from 2002 until December 2012. During that time the proportion of renewable energy especially wind and solar power increased dramatically. At the outset the nuclear plants offered almost all their production at zero cost; by the end, several were offering about 5% of their production at about 91 euro per MWh compared to the market ceiling price of 180.3 euro per MWh. This change in bidding strategy effectively increased the average wholesale price of electricity, leading to an overall increase in the revenues to power sellers of about $200 million euros per year in 2010 -2012, compared to what it would have been had they offered all their production at zero -cost. These results have important policy implications for regulatory authorities.
    Keywords: Strategic bidding ; Market power ; Day-ahead market ; Wholesale electricity market
    Date: 2014–09–23
  13. By: Sarah Brown (Department of Economics, University of Sheffield); Daniel Gray (Department of Economics, University of Sheffield)
    Abstract: This paper explores the importance of the household's financial position for an individual's level of well-being. Initially, the empirical analysis, based on a large nationally representative panel survey, aims to ascertain the impact of the household's monetary financial position on overall life satisfaction and financial well-being, with the latter being measured by financial satisfaction and subjective prosperity. Taking into account monetary factors in addition to income, the results indicate that the household's level of net wealth, assets and debt are important determinants of overall life satisfaction and financial well-being. The paper also explores whether the financial situation of households in a comparison group influences an individual's overall life satisfaction and financial well-being. The results suggest that the financial position of households in the comparison group is an important determinant of an individual's level of overall life satisfaction and financial well-being, with information effects generally dominating comparison effects. In addition, the effects of the comparison group are asymmetric depending on whether a household's financial position is above or below the average of the reference group and vary over the life-cycle.
    Keywords: financial satisfaction; fixed effects ordered logit; household finances; overall life satisfaction; subjective prosperity
    JEL: D14 I31 J28
    Date: 2014–10
  14. By: Riccardo Settimo (Banca d'Italia)
    Abstract: More than three years since the events of the Arab Spring, the five North African countries – Algeria, Egypt, Libya, Morocco and Tunisia are still going through a difficult transition. This study provides an overview of Italian trade and direct investment in the region. The main stylized facts are the following: (1) among the countries of the European Union, Italy is the region’s largest trading partner; (2) the region is a crucial source of energy, supplying 31 per cent of the oil and 44 per cent of the natural gas that Italy imports; (3) compared with the EU average, Italian exports are specialized in refined petroleum products and capital goods. The primary objective of Italian firms’ direct investment in North African countries is to enter new markets rather than to secure lower production costs.
    Keywords: international trade, foreign direct investment (FDI), North Africa
    JEL: F10 F21 F50 O55
    Date: 2014–09
  15. By: Hippolyte D'Albis (Paris School of Economics - Université Paris I - Panthéon-Sorbonne); Carole Bonnet (INED - Institut National d'Etudes Démographiques Paris - INED); Julien Navaux (LEDa - Laboratoire d'Economie de Dauphine - Université Paris IX - Paris Dauphine); Jacques Pelletan (UP8 - Université Paris 8, Vincennes-Saint-Denis - Université Paris VIII - Vincennes Saint-Denis); Hector Toubon (LEDa - Laboratoire d'Economie de Dauphine - Université Paris IX - Paris Dauphine); François-Charles Wolff (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272)
    Abstract: We use the National Transfer Accounts methodology to calculate the lifecycle deficit in France for the years 1979-2005. During this period, consumption profiles were roughly constant over age, while labor income profiles shifted to higher ages. The share of the aggregate lifecycle deficit in GDP rose sharply in the 1980s due to an increase in the mean age of the population. In contrast, the per capita shares of the lifecycle deficit attributed to the population under 20 and over 60 varied little during this period, even though the relative weights of these two age-segments has shifted continuously in favor of the latter.
    Keywords: Comptes de Transferts Nationaux; Consommation; Revenus du travail; Déficit de cycle de vie
    Date: 2014–07–28
  16. By: Malgorzata Olszak (University of Warsaw, Faculty of Management); Mateusz Pipien (Cracow University of Economics, Economic Institute, National Bank of Poland); Iwona Kowalska (University of Warsaw, Faculty of Management); Sylwia Roszkowska (Faculty of Economic and Social Sciences, University of £ódŸ, National Bank of Poland)
    Abstract: This paper documents a large cross-bank and cross-country variation in the relationship between loan loss provisions and the business cycle and explores bank management specific, bank-activity specific and country specific (institutional and regulatory) features that explain this diversity in the European Union. Our results indicate that LLP in large, publicly traded and commercial banks, as well as in banks reporting in consolidated statements’ format, are more procyclical. Better investor protection and more restrictive bank regulations reduce the procyclicality of LLP. Additional evidence shows that moral hazard resulting from deposit insurance renders LLP more procyclical. We do not find support for the view that better quality of market monitoring mitigates the risk-taking behavior of banks. Our findings clearly indicate the empirical importance of earnings management for LLP procyclicality. Sensitivity of LLP to the business cycle seems to be limited in the case of banks which engage in more income smoothing and which apply prudent credit risk management.
    Keywords: loan loss provisions, procyclicality, earnings management, investor protection, bank regulation, bank supervision
    JEL: E32 E44 G21
    Date: 2014–05
  17. By: Jaanika Meriküll; Tairi Rõõm
    Abstract: This paper studies euro changeover-related inflation using disaggregated price level data. The difference-in-differences approach is used and the control group for the treatment country, Estonia, is built from 12 euro area countries. The Nielsen Company disaggregated price data are employed at product, brand and shop-type level. The results indicate that while the overall inflationary effect of euro adoption was modest, the effects were significantly different across various market segments. Changeoverrelated inflation was higher for products that were relatively cheaper than the euro area average. Inflationary effects were stronger in smaller shops.
    Keywords: euro, currency changeover, market concentration, consumer behaviour
    JEL: D49 P46 E58
    Date: 2014–10–10

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