nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2014‒11‒12
twenty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Still different after all these years. Extensive and intensive margins of exports in East and West German manufacturing enterprises By Joachim Wagner
  2. Incentive Compensation and Incentive Regulation: Empirical Evidence By Carlo Cambini; Sara De Masi; Laura Rondi
  3. Sweden’s School Choice Reform and Equality of Opportunity By Edmark, Karin; Frölich, Markus; Wondratschek, Verena
  4. A note on the granular nature of imports in German manufacturing industries By Wagner, Joachim
  5. Labour market effects of job displacement for prime-age and older workers By Anja Deelen; Marloes de Graaf-Zijl; Wiljan van den Berge
  6. Does early child care help or hurt childrens's development? By Felfe, Christina; Lalive, Rafael
  7. Are Fertility Responses to Local Unemployment Shocks Homogenous Across Social Strata? Evidence from England, 1994 to 2010 By Aksoy, Cevat Giray
  8. Health Effects of Containing Moral Hazard: Evidence from Disability Insurance Reform By Pilar Garcia-Gomez; Anne C. Gielen
  9. Income receipt and mortality - evidence from Swedish public sector employees By Andersson, Elvira; Lundborg, Petter; Vikström, Johan
  10. The Spanish survey of household finances (EFF): description and methods of the 2011 wave By Olympia Bover; Enrique Coronado; Pilar Velilla
  11. Fuel poverty and the energy benefits system: The Italian case By Raffaele Miniaci; Carlo Scarpa; Paola Valbonesi
  12. The case of Oresund (Denmark-Sweden) – Regions and Innovation: Collaborating Across Borders By Claire Nauwelaers; Karen Maguire; Giulia Ajmone Marsan
  13. “Job loss among immigrant and native workers: evidence from Spain’s economic downturn” By Elisabet Motellón; Enrique López-Bazo
  14. Offshoring, Occupations and Job Tasks: Evidence from Swedish Manufacturing By Warda, Peter
  15. Persistence of cooperation on innovation: Econometric evidence from panel micro data By Srholec , Martin
  16. The Stature of the Self-employed and its Premium By Cornelius A. Rietveld; Jolanda Hessels; Peter van der Zwan
  17. The economic consequences of accidents at work By Gabriele Mazzolini
  18. Financial Distress and Happiness of Employees in Times of Economic Crisis By Efstratia Arampatzi; Martijn J. Burger; Ruut Veenhoven
  19. Optimizing the position of bike sharing stations. The Milan case By Edoardo Croci; Davide Rossi
  20. International knowledge diffusion and its impact on the cost-effective clean-up of the Baltic Sea By Elofsson, Katarina

  1. By: Joachim Wagner (Leuphana University Lueneburg, Germany)
    Abstract: This paper uses a new tailor-made data set to investigate the differences in extensive and intensive margins of exports in manufacturing firms from East Germany and West Germany. It documents that these margins do still differ in 2010, 20 years after the re-unification of Germany. West German firms outperform East German firms at all four margins of exports – they have a larger propensity to export, export a larger share of total sales, export more goods and export to a larger number of countries. All these differences are large from an economic point of view. A decomposition analysis shows that in 2010 between 59 percent and 78 percent of the difference in margins can be explained by differences in firm characteristics. Most important here is the higher human capital intensity and (to a much lesser extent) the larger share of old firms in West Germany compared to East Germany.
    Keywords: Export margins, East Germany, West Germany, decomposition analysis
    JEL: F14
    Date: 2014–10
  2. By: Carlo Cambini; Sara De Masi; Laura Rondi
    Abstract: This paper examines the relationship between CEO pay and firm performance within a sample of European publicly listed energy utilities from 2000 to 2010, focusing on the differential responses that arise from being subject to different regulatory regimes. In particular, we investigate the difference in pay-performance sensitivity across regulated and unregulated firms as well as the impact of different regulatory schemes – incentive vs. cost-based regulation - on CEO monetary incentives. Using various measures of performance, we find that European energy utilities link CEO compensation to firm performance, but CEO pay-performance is higher for unregulated companies. When we focus on the effect of alternative regulatory schemes, our results show that payperformance sensitivity is significantly higher for firms under incentive regulation than within firms under cost-based regulation. This result holds after controlling for firm - private vs. state - ownership and for varying degrees of market liberalization across countries.
    Keywords: Managerial compensation, Incentive contracts, Incentive regulation, Energy utilities
    JEL: G30 J33 L51 M12
    Date: 2013
  3. By: Edmark, Karin (Uppsala Center for Labor Studies); Frölich, Markus (University of Mannheim); Wondratschek, Verena (Centre for European Economic Research)
    Abstract: This study analyses whether the Swedish school choice reform, enacted in 1992, had different effects on students from different socio-economic backgrounds. We use detailed geographical data on students’ and schools’ locations to construct measures of the degree of potential choice. This allows us to study the effects of choice opportunities among public schools, whereas previous studies have focused on newly opened private schools. Our results suggest small positive or no effects of choice opportunities, depending on specification and outcome. We find no strong evidence of differences between subgroups; if anything, effects tend to be slightly more positive for disadvantaged groups, such as students from low-income families. Taken together, the results indicate that students from a socio-economically disadvantaged or immigrant background were not harmed by the reform.
    Keywords: school choice; school competition; treatment evaluation; cognitive and non-cognitive skills
    JEL: C21 I24
    Date: 2014–06–23
  4. By: Wagner, Joachim (Leuphana University Lueneburg, Germany, and CESIS, KTH, Stockholm, Sweden)
    Abstract: This paper uses an approach recently suggested by Gabaix (Eonometrica 2011) to investigate for the first time the role of idiosyncratic shocks to the largest firms in the dynamics of imports by firms from manufacturing industries. For Germany we find evidence that imports are power-law distributed and that the distribution of imports in the industries can be characterised as fat-tailed. Results show that idiosyncratic shocks to very large firms are important for the import dynamics in 2010/2011 but not in 2009/2010.
    Keywords: Imports; power law; granular residual; Germany
    JEL: E32 F14 L60
    Date: 2014–10–14
  5. By: Anja Deelen; Marloes de Graaf-Zijl; Wiljan van den Berge
    Abstract: This paper studies the effect of firm closures for prime-age and older workers. Administrative data on the Dutch labour force are used to follow a sample of Dutch workers who lost their jobs due to firm closures in the period 2000 - 2009. Applying difference-in-difference techniques and using a control group created by exact matching, we find that involuntary job loss has a severe impact on older workers' labour market prospects. Finding a new job is relatively difficult, and wage cuts are more substantial once they find a new job. The differences between prime-age and older workers are partly mediated by tenure and industry effects. Not only do older workers on average have longer job tenures than prime-age workers, older workers with longer job tenures experience more negative effects of displacement as well. For prime-age workers tenure in the job before displacement makes less of a difference for their outcomes after displacement. Likewise, displaced older workers are more sensitive to the situation in the local labour market in the industry from which they are displaced. Moreover, older workers experience stronger negative effects of changing industries after displacement on their post-displacement wages.
    JEL: J14 J63 J65
    Date: 2014–09
  6. By: Felfe, Christina (University of St. Gallen); Lalive, Rafael (University of Lausanne)
    Abstract: More children than ever attend center-based care early in life. We study whether children who attend center-based care before age 3 have better or worse language and motor skills, socio-emotional maturity, and school readiness just before entering primary school. In data covering about 36,000 children in one West German state, we use a marginal treatment effects framework to show how causal effects vary with observed characteristics of children, parents, and care centers and with unobserved preferences for center-based care. Early center-based care benefits children with less educated mothers or foreign parents. Benefits increase when parents have a preference for center-based care. Centers with small playgroups and with experienced, trained, or full-time working staff produce the best effects. A modest expansion of the number of places in early care centers improves children's development, whereas a strong expansion has no significant effects.
    Keywords: Child care; child development; marginal treatment effects
    JEL: I21 I38 J13
    Date: 2014–10–10
  7. By: Aksoy, Cevat Giray
    Abstract: Are fertility responses to local unemployment homogenous across sub-demographic groups? This paper investigates how changes in local unemployment rates affect household fertility decisions in England while taking sub-demographic differences into account. Recognizing that labor market status is a major determinant of child rearing decision, and assuming that children are normal goods, this paper hypothesizes that an increase in male and female unemployment will have different effects on the current period fertility. Using the Labor Force Survey and Birth Statistics data from the Office for National Statistics, this study shows that female unemployment tends to increase births whereas male unemployment has the opposite effect. More importantly, reported results indicate that unemployment and fertility relation exhibits strong age group and educational attainment gradients. In addition, a persistent counter-cyclical fertility pattern has also been documented at the ceremonial county level.
    Keywords: Unemployment, Fertility
    JEL: J13 J19 J23
    Date: 2014–06–01
  8. By: Pilar Garcia-Gomez; Anne C. Gielen (Erasmus University Rotterdam, the Netherlands)
    Abstract: We exploit an age discontinuity in a Dutch disability insurance (DI) reform to identify the health impact of stricter eligibility criteria and reduced generosity. Women subject to the more stringent rule experience greater rates of hospitalization and mortality. A €1,000 reduction in annual benefits leads to a rise of 4.2 percentage points in the probability of being hospitalized and a 2.6 percentage point higher probability of death more than 10 years after the reform. There are no effects on the hospitalization of men subject to stricter rules but their mortality rate is reduced by 1.2 percentage points. The negative health effect on females is restricted to women with low pre-disability earnings. We hypothesize that the gender difference in the effect is due to the reform tightening eligibility particularly with respect to mental health conditions, which are more prevalent among female DI claimants. A simple back-of-the-envelope calculation shows that every dollar reduction in DI is almost completely offset by additional health care costs. This implies that policy makers considering a DI reform should carefully balance the welfare gains from reduced moral hazard against losses not only from less coverage of income risks but also from deteriorated health.
    Keywords: disability insurance, moral hazard, health, mortality, regression discontinuity
    JEL: I14 H53 I38
    Date: 2014–08–07
  9. By: Andersson, Elvira (Lund University); Lundborg, Petter (Lund University); Vikström, Johan (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: In this paper, we study the short-run effect of salary receipt on mortality among Swedish public sector employees. By using data on variation in paydays across work-places, we completely control for mortality patterns related to, for example, public holidays and other special days or events coinciding with paydays and for general within-month and within-week mortality patterns. We find a dramatic increase in mortality on the day salaries arrive. The increase is especially pronounced for younger workers and for deaths due to activity-related causes such as heart conditions and strokes. Additionally, the effect is entirely driven by an increase in mortality among low income individuals, who are more likely to experience liquidity constraints. All things considered, our results suggest that an increase in general economic activity on salary receipt is an important cause of the excess mortality.
    Keywords: Income; mortality; health; consumption; liquidity constraints; permanent income hypothesis
    JEL: D91 H31 H55 I10 I12 I38
    Date: 2014–08–31
  10. By: Olympia Bover (Banco de España); Enrique Coronado (Banco de España); Pilar Velilla (Banco de España)
    Abstract: This paper describes the methods of the fourth wave of the Spanish Survey of Household Finances (EFF2011), paying special attention to the innovations relative to the previous waves. The EFF2011 was designed to give continuity to the information on household finances collected through the EFF2002, EFF2005 and EFF2008. A desirable characteristic present in all four waves is the oversampling of wealthy households. This is achieved on the basis of the wealth tax through a blind system of collaboration between the National Statistics Institute and the Tax Office which preserves stringent tax confidentiality. An additional important characteristic of the EFF is that the second, third, and fourth waves have a panel component. Further, a refreshment sample by wealth stratum has been incorporated in those waves to preserve cross-sectional representativity and overall sample size. The EFF is the only statistical source in Spain that allows the linking of incomes, assets, debts, and consumption at the household level. There are now four editions of the EFF, which means that these statistics capture the financial situation of households over a long period, including an expansion and a recession. Moreover, the financial situation of Spanish households can now be compared with that of households in other European countries thanks to the recent availability of similar surveys in the rest of the EU.
    Keywords: wealth survey, oversampling of the rich, panel, refreshment sample, imputation.
    JEL: C81 D31
    Date: 2014–10
  11. By: Raffaele Miniaci; Carlo Scarpa; Paola Valbonesi
    Abstract: In this paper we discuss a number of ways to define and measure the affordability of energy consumption, and we examine the emergence of fuel poverty in Italy in the period from 1998 to 2011. The paper examines the eligibility criteria for claiming the benefits available to support energy consumption for vulnerable families and it identifies the potential beneficiaries. The study assesses the appropriateness of the eligibility criteria by comparing the population targeted by the policy with the population actually living in fuel poverty. A simulation exercise, using the hypothetical scenario most likely to result in energy benefits being made available, shows that, regardless of the affordability index adopted, the provision of state energy benefits has little impact on fuel poverty.
    Keywords: fuel poverty; affordability; energy benefits; vulnerable consumers
    JEL: D12 I32 I38 Q4
    Date: 2014
  12. By: Claire Nauwelaers; Karen Maguire; Giulia Ajmone Marsan
    Abstract: The Oresund is the most well-known example of European cross-border collaboration, building on the metropolitan area around Copenhagen and, across the sound, southern Sweden with the cities of Malmö, Lund and Helsingborg. Cross-border integration intensified following the opening of a fixed-link bridge/tunnel in 2000. Commuting, student flows and cross-border residency have been on the rise in this knowledge-intensive area. Cross-border cluster efforts have had varying degrees of longevity, with Medicon Valley being the most internationally known brand. After hitting a plateau in terms of integration, the area is seeking renewed inspiration for cross-border efforts. This case study is part of the project Regions and Innovation: Collaborating Across Borders. A summary of this working paper appears in a report of the same name.
    JEL: L52 L53 O14 O18 O38 R11 R58
    Date: 2013–12–11
  13. By: Elisabet Motellón (Faculty of Economics, University of Barcelona); Enrique López-Bazo (Faculty of Economics, University of Barcelona)
    Keywords: Immigration, Job Loss, Crisis, Labour Market Segregation, Spain JEL classification: I24, J24, J61
    Date: 2014–10
  14. By: Warda, Peter (Jönköping International Business School (JIBS), and Centre of Excellence for Science and Innovation Studies (CESIS), Sweden.)
    Abstract: My purpose in this paper is to analyze how offshoring of intermediate goods affects different occupational groups in Swedish manufacturing firms using data for the period 2001-2008. Advances in ICT, along with improved infrastructure and lower cost of transportation have boosted the contracting and networking of firms in the global markets. A hot trend among firms is to scan the global economy for cost advantages in their domestic production of final goods. Such cost advantages can come in the form of offshoring, where imported inputs either substitute or complement specific job tasks in the domestic production. Occupations are distinguished by job tasks as cognitive (knowledge handling), management (information handling), social (service handling), and motoric (goods handling). The empirical results are in line with the stated hypotheses and show that more high-technology offshoring increases the cost share of employees with cognitive occupations. More low-technology offshoring positively influences the cost share of employees with motoric occupations.
    Keywords: Offshoring; occupations; job tasks; Sweden; manufacturing
    JEL: F14 J21 J23
    Date: 2014–09–09
  15. By: Srholec , Martin (CERGE-EI, Prague and CIRCLE, Lund University)
    Abstract: Arrangements to cooperate on innovation facilitate access to external sources of knowledge. Using panel data derived from five waves of Community Innovation Survey in the Czech Republic, we examine whether firms engage in these arrangements persistently or rather revert to other behaviour. Econometric estimates of dynamic random effects and multivariate probit models provide strong support to the thesis of persistence, particularly of linkages with the university sector and suppliers. The results are robust to the initial conditions problem and serial correlation in idiosyncratic errors. Government programs initiating cooperation on innovation therefore have the potential to induce durable changes in the innovative behaviour of firms.
    Keywords: Innovation; cooperation; persistence; panel data; Community Innovation Survey; Czech Republic
    JEL: C23 C25 L20 O31 O32
    Date: 2014–09–28
  16. By: Cornelius A. Rietveld; Jolanda Hessels; Peter van der Zwan (Erasmus University Rotterdam)
    Abstract: Taller individuals typically have occupations with higher social status and higher earnings than shorter individuals. Further, entrepreneurship is associated with high social status in numerous countries; hence, entrepreneurs might be taller than wage workers. Using data from the German Socio-Economic Panel (2002-2010), we find that a 1 cm increase in an individual’s height raises the probability of being self-employed (the most common proxy for entrepreneurship) versus paid employed by 0.16 percentage-points. Within self-employment the probability of being an employer is increased by 0.11 percentage-points as a result of a 1 cm increase in height whereas this increase is 0.05 percentage-points for an own-account worker. Furthermore, we confirm that a height premium in earnings exists for not only paid employees, as indicated by prior studies, but also for self-emp loyed individuals. An additional 1 cm in height is associated with a 0.44% increase in hourly earnings for paid employees, and a 0.87% increase for self-employed individuals. The predicted earnings differences between short and tall individuals are substantial. Short paid employees—first quartile of height—earn 15.5 Euros per hour whereas tall paid employees—third quartile of height—earn 16.5 Euros per hour; in self-employment the earnings are 12.8 and 14.4 Euros per hour, respectively. Another novel finding is that we establish the existence of a height premium for work and life satisfaction, but only for paid employees. Finally, our analysis reveals that 44% of the height premium in earnings is explained by differences in educational attainment whereas the height premium in work and life satisfaction is only marginally explained by education.
    Keywords: Self-employment, Stature, Height premium, Education, Life satisfaction
    JEL: J24 J31
    Date: 2014–08–19
  17. By: Gabriele Mazzolini (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: This paper investigates the economic consequences of workplace accidents in the British labour market. For the empirical analysis, I use data on employment and earnings from the British Household Panel Survey and exploit fixed effects estimators to control for time-invariant unobserved workers’ characteristics. I provide evidence that accidents at work negatively affect both job opportunities and workers’ earnings. First, employment probabilities following a state of injury are significantly lower. This effect persists over time and is stronger in those regions where the macroeconomic conditions are worse. Second, a serious workplace accident also results in significant delayed wage penalties, which increase with the accident’s seriousness. The effect is lower in the public sector and unionized firms, where job and earnings protection is higher and physically demanding working conditions are not widespread, or if the worker moves to a new job which suits his/her post-injury abilities better.
    Keywords: accident at work, employment, earnings losses, BHPS
    JEL: J28 J71 J17
    Date: 2014–06
  18. By: Efstratia Arampatzi (EURAC b.v.); Martijn J. Burger (Erasmus University Rotterdam); Ruut Veenhoven (Erasmus University Rotterdam, the Netherlands)
    Abstract: Using data for 28 European countries for the 2008-2012 period, we examine whether employed individuals are affected by the economic crisis. We provide robust evidence that unfavourable macroeconomic conditions are negatively associated with the life satisfaction of employees. In addition, we find that higher levels of regional unemployment and inflation are predominantly associated with lower levels of life satisfaction for employees who are in a bad financial situation or who expect that their future financial situation will be worse. By contrast, employed people who do well financially and who have good prospects are not affected by the crisis.
    Keywords: life satisfaction, financial distress, economic crisis, Europe
    JEL: I00 D60
    Date: 2014–07–04
  19. By: Edoardo Croci; Davide Rossi
    Abstract: Bike Sharing systems are rapidly spreading around in European cities. Bike sharing is a new type of public transportation based on the use of public bikes to cover relatively short distances in urban areas. It is used both in conjunction with traditional public transport to complete the “last mile”, or in alternative for its flexibility. Usage fees are usually very low, compared to other means of transport, as costs of service are often covered by advertising. In this work we will focus on the case of Milan where the bike sharing system, called "BikeMi", was introduced in 2008 and has already reached over 200 stations and 3.000 bikes with 1.8 million travels in 2013. The aim of the paper is to assess which attractors influence the use of bike sharing stations. The paper also examines the different effect of proximity and visibility of bike sharing stations from attractors. An econometric analysis is performed, based on the data set of use of the system and on GIS information on the position of bike sharing stations and attractors. The main results suggest that the presence of metro and train stations, universities, museums, cinema and restricted traffic areas in correspondence of bike sharing stations significantly increase use. On the other hand the presence of tram and bus stops and theatres does not and has an opposite influence. With respect to visibility, there is a positive effect for tram, bus and metro stops, theatres and cinemas. On the other hand, universities and museums show a negative correlation. The results appear robust to the inclusion of time and other possible confounding variables, such as weather conditions. The analysis supports the relevance of the role of urban planning for the best positioning of bike sharing stations and the need to carefully consider the features of surrounding environment to optimise the distribution of bike sharing stations in a territory.
    Keywords: bike sharing, sustainable mobility, urban mobility
    JEL: D04 Q58 R42
    Date: 2014
  20. By: Elofsson, Katarina (Department of Economics, Swedish University of Agricultural Sciences)
    Abstract: This paper analyzes the implications of international knowledge diffusion for the costs of Baltic-wide policy to reduce nutrient emissions to the Baltic Sea. In particular, the impact on the distribution of abatement and costs over time and space is investigated, and the relative importance of knowledge spillovers between countries and nutrient spillovers between marine basins is examined. Using a spatial and dynamic cost-effectiveness model over the Baltic Sea drainage basin, it is shown that theoretically, the presence of knowledge spillovers could imply that abatement can be cost-effective even if the cost is comparatively high and the impact on water quality is zero. The empirical simulations show that a more likely outcome is that higher knowledge dispersal leads to a further concentration of abatement to countries with large, low-cost abatement opportunities.
    Keywords: Baltic Sea; knowledge spillovers; learning rate; nitrogen.
    JEL: Q52 Q53 Q55
    Date: 2014–09–26

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