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on Microeconomic European Issues |
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Issue of 2014‒12‒03
23 papers chosen by Giuseppe Marotta Università degli Studi di Modena e Reggio Emilia |
| By: | Šaric, Amela; Lange, Mirjam R. J. |
| Abstract: | This paper deals with the relationship between the traditional fixed-line, mobile and Voice over IP telephony in the EU.We estimate the supply and demand for fixed-line telephony using data on 25 EU member states for the 2006:Q2 - 2011:Q4 period. Employing instrumental variable approach, we obtain the following results. First, lower prices of Voice over IP and mobile reduce the demand for fixed-line telephony. This indicates some demand-side substitution. Second, we find no relationship between Voice over IP and fixed-line prices. Third, there is a positive and significant relationship between mobile and fixed-line prices. Estimated own- and cross-price elasticities are in the inelastic range. Hence, calls to deregulate fixed-line telephony may be too premature. |
| Keywords: | Fixed networks,Mobile services,Market definition,Hypothetical monopolist test,(De)regulation |
| JEL: | C23 L43 L51 L96 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse14:101385&r=eur |
| By: | Stefan Borsky; Esther Blanco |
| Abstract: | This article addresses the mediating effect of corruption on the influence of stringency of environmental regulation on firms' voluntary environmental performance. Using panel data from adoption of the EU Eco-Management and Audit Scheme (EMAS) across European Union countries from 1995 to 2011, we unveil a direct and an interacting effect of countries' corruption and regulatory stringency on the rate of adoption. First, stricter environmental regulation reduces the rate of EMAS certificates, thus supporting a crowding-out effect of mandatory regulation on voluntary action. Second, increased corruption reduces the rate of EMAS certificates. Third, the negative effect of stringency of regulation on EMAS certification rates is reinforced by corruption. In sum, these results suggest that previous studies address- ing the implications from stricter regulations on firms' voluntary action that abstract from corruption might underestimate the potential negative effect of stringency of regulation on firms' voluntary action. |
| Keywords: | Voluntary environmental action, environmental taxes, corruption, negative binomial regression |
| JEL: | F53 Q23 Q27 F18 L15 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2014-29&r=eur |
| By: | Naci Mocan; Luiza Pogorelova |
| Abstract: | We exploit information on compulsory schooling reforms in 11 European countries, implemented mostly in the 1960s and 70s, to identify the impact of education on religious adherence and religious practices. Using micro data from the European Social Survey, conducted in various years between 2002 and 2013, we find consistently large negative effects of schooling on self-reported religiosity, social religious acts (attending religious services), as well as solitary religious acts (the frequency of praying). We also use data from European Values Survey to apply the same empirical design to analyze the impact of schooling on superstitious beliefs. We find that more education, due to increased mandatory years of schooling, reduces individuals' propensity to believe in the power of lucky charms and the tendency to take into account horoscopes in daily life. |
| JEL: | I20 I25 K10 Z1 Z12 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20557&r=eur |
| By: | Euwals, Rob (CPB Netherlands Bureau for Economic Policy Analysis); Trevisan, Elisabetta (University of Padua) |
| Abstract: | This paper investigates the impact of financial incentives on early retirement behaviour for high and low wage earners. Using a stylized life-cycle model, we derive hypotheses on the behaviour of the two types. We use administrative data and employ a linear random effects model to test the predictions. We exploit exogenous variation in the replacement rate over birth cohorts of workers who are eligible to a transitional early retirement scheme. The empirical results show that low wage earners are, as predicted by the model, more sensitive to financial incentives. This implies that low wage earners will experience a stronger incentive to continue working in an early retirement scheme with a low implicit tax rate. |
| Keywords: | pensions, early retirement, labour market behaviour |
| JEL: | J16 J22 J61 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8466&r=eur |
| By: | Brunner, Beatrice (Zurich University of Applied Sciences (ZHAW)); Kuhn, Andreas (Swiss Federal Institute for Vocational Education and Training) |
| Abstract: | We combine community-level outcomes of 27 votes about immigration issues in Switzerland with census data to estimate the effect of immigration on natives' attitudes towards immigration. We apply an instrumental variable approach to take potentially endogenous locational choices into account, and we categorize immigrants into two groups according to the cultural values and beliefs of their source country to understand how the cultural distance between natives and immigrants affects this relationship. We find that the share of culturally different immigrants is a significant and sizable determinant of anti-immigration votes, while the presence of culturally similar immigrants does not affect natives' voting behavior at all in most specifications. The cultural distance between immigrant and native residents thus appears crucial in explaining the causal effect of immigration on natives' attitudes towards immigration, and we argue that the differential impact is mainly driven by natives' concerns about compositional amenities. We finally show that the elasticity of the share of right-wing votes in favor of the Swiss People's Party is much more elastic with respect to the share of culturally different immigrants than natives' attitudes themselves, suggesting that the party has disproportionally gained from changes in attitudes caused by immigrant inflows. |
| Keywords: | instrumental variable, endogenous residential choice, cultural distance, cultural values and beliefs, voting behavior, attitudes towards immigration, immigration, rightwing votes |
| JEL: | D72 F22 J15 J61 R23 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8409&r=eur |
| By: | Timothy De Stefano; Richard Kneller; Jonathan Timmis |
| Abstract: | This paper applies a fuzzy regression discontinuity design to study the effects of ADSL broadband internet on the performance of firms. We exploit a geographical discontinuity in the availability of ADSL broadband, firms located one side of the divide had access to broadband services that those on the other side did not. The discontinuity stems from an historical accident, whereby the telecommunications in one area of the North East of England is delivered by a separate company to the national monopoly provider. We study the discontinuity at the boundary between these two telecommunications providers, which rolled out broadband infrastructure at different times. Our analysis strongly suggests that broadband use has no statistically significant effect on the performance of firms. |
| Keywords: | broadband; firms; fuzzy regression discontinuity JEL Numbers: J23; J24; J31 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:not:notecp:14/06&r=eur |
| By: | Jordi López-Tamayo (Department of Econometrics. University of Barcelona); Raul Ramos (Department of Econometrics. University of Barcelona); Jordi Suriñach i Caralt (Department of Econometrics. University of Barcelona) |
| Abstract: | In this paper we design and build a composite indicator to measure the macroeconomic, social and institutional dimensions of countries (ISEPI). The index allows not only comparing the relative situation of countries, but also its time evolution. In order to illustrate the usefulness of the index, we analyse the effects of the European Neighbourhood Policy in EU-Neighbouring Countries during the last decade. The obtained results show that ENP has had different effects according to the considered dimensions and that the evolution of neighbouring countries is quite heterogeneous taking into account their recent institutional and economic performance. From a policy perspective, these results reinforce the validity of the bilateral action plans that have characterized ENP recognising the different starting point and particular characteristics of each neighbouring country. |
| Keywords: | Social indicators, Economic performance, Institutional quality, European neighbourhood policy. JEL classification: C43, F62, O43 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:aqr:wpaper:201412&r=eur |
| By: | Marie-Estelle Binet (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); François Facchini (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne) |
| Abstract: | This article tackles one central issue in the regional science literature: the persistence of regional disparities in unemployment within national economies. Our approach is original as Okun's coefficients are estimated for each of the 22 administrative French regions over the period 1990-2008, taking into account cross-regional disparities in a panel data specification. Estimates show that the coefficients exhibit regional differences. Indeed, Okun's law is confirmed in fourteen regions, although it does not hold in the other eight regions. Finally, region-specific factors that explain the results that are not significant are identified, and policies to reduce unemployment in French regions are examined. |
| Keywords: | Okun's law, panel data, French regions, spatial heterogeneity |
| Date: | 2013–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00812549&r=eur |
| By: | Lars Kunze; Nicolai Suppa |
| Abstract: | This article examines the impact of unemployment on social participation for Germany using the German Socio-Economic Panel. We find significant negative, robust and, for some activities, lasting effects of unemployment on social participation. Causality is established by focussing on plant closures as exogenous entries into unemployment. Social norms, labor market prospects and the perception of individual failure are shown to be relevant for explaining these findings. Furthermore, our results not only (i) provide novel insights into the determinants of the unemployed's unhappiness but also (ii) highlight an hitherto unexplored channel through which unemployment influences economic outcomes, namely by altering the long-run level of social capital, and (iii) point to an alternative explanation of unemployment hysteresis based on access to information. |
| Keywords: | Unemployment, social participation, plant closure, fixed effects, well-being |
| JEL: | J64 I31 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp703&r=eur |
| By: | Hetschko, Clemens |
| Abstract: | German panel data is used to show that the decrease in life satisfaction caused by an increase in the probability of losing work is higher when self-employed than when paid employed. Further estimations reveal that becoming unemployed reduces self-employed workers´ satisfaction considerably more than salaried workers´ satisfaction. These results indicate that losing self-employment is an even more harmful life event than losing dependent employment. Monetary and non-monetary reasons seem to account for the difference between the two types of work. Moreover, it originates from the process of losing self-employment and the consequences of unemployment rather than from advantages of self-employment. |
| Keywords: | life satisfaction,self-employment,probability of losing work,unemployment |
| JEL: | I31 J24 J65 L26 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:201426&r=eur |
| By: | Deelen, Anja (CPB Netherlands Bureau for Economic Policy Analysis); Euwals, Rob (CPB Netherlands Bureau for Economic Policy Analysis) |
| Abstract: | In this study, we investigate the anatomy of older workers' wages. The central question is whether the wage cushion – i.e., the difference between actual wages and collectively agreed-upon (maximum) contractual wages – contributes to the fact that wages continue increasing at older ages. We follow the wages of individual workers in twenty-two sectors of industry in the Netherlands using administrative data for the period 2006–2010. In the public sector, we find no evidence of a wage cushion. Wage scale ceilings set in collective agreements are guiding for older workers' wages, and workers earning a contractual wage equal to a wage scale ceiling are not compensated with higher additional wages. In the private sector, we do find evidence of a wage cushion. Wage scale ceilings are less restrictive and workers earning a contractual wage exceeding the highest wage scale ceiling experience higher contractual wage growth. The private sector wage cushion enhances wage differentiation and allows for wages that continue increasing at older ages. |
| Keywords: | wages, economics of the elderly |
| JEL: | C23 J14 J31 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8467&r=eur |
| By: | Martins, Pedro S. (Queen Mary, University of London) |
| Abstract: | Several countries extend collective bargaining agreements to entire sectors, therefore binding non-subscriber workers and employers. These extensions may address coordination issues but may also distort competition by imposing sector-specific minimum wages and other work conditions that are not appropriate for many firms. In this paper, we analyse the impact of such extensions along several margins drawing on firm-level monthly data for Portugal, a country where extensions have been widespread until recently. We find that both formal employment and wage bills in the relevant sector fall, on average, by 2% – and by 25% more across small firms – over the four months after an extension is issued. These results are driven by both reduced hirings and increased firm closures. On the other hand, informal work, not subject to labour law or extensions, tends to increase. Our findings are robust to several checks, including a falsification exercise based on extensions that were announced but not implemented. |
| Keywords: | collective agreements, worker flows, wage rigidity |
| JEL: | J31 J52 J23 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8540&r=eur |
| By: | Konstantin A. Kholodilin; Claus Michelsen; Dirk Ulbricht |
| Abstract: | The surge in the German house prices starting in 2010 raised fears about the emergence of a speculative bubble. Given a local nature of housing markets, it is not clear to what extent the bubble, if any, is spread across different cities. In this paper, we test for speculative house price bubbles in 127 large German cities over the last 20 years. Along with testing bubbles for each city separately, we apply two new testing approaches: a panel data and principal components version of explosive root tests. We define bubble as an explosive growth of prices that is not supported by the rent increase. Therefore, to check for the existence of bubbles, we examine prices, rents, and price-to-rent ratios. We find evidence for explosive price increases in many cities, especially for the case of newly built housing. However, only in few urban housing markets prices decouple from their fundamental values. On the national level, we do not see evidence for speculative price movements. Overall, we find that the danger of a build-up of a speculative price bubble in the German housing market is rather moderate. |
| Keywords: | Speculative bubble, explosive root, German cities |
| JEL: | C21 C23 C53 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1417&r=eur |
| By: | Arpaia, Alfonso (European Commission); Kiss, Aron (European Commission, Directorate Economic and Financial Affairs); Turrini, Alessandro (European Commission) |
| Abstract: | The paper sheds light on developments in labour market matching in the EU after the crisis. First, it analyses the main features of the Beveridge curve and frictional unemployment in EU countries, with a view to isolate temporary changes in the vacancy-unemployment relationship from structural shifts affecting the efficiency of labour market matching. Second, it explores the main drivers of job matching efficiency, notably with a view to gauge whether mismatches became more serious across skills, economic sectors, or geographical locations and to explore the role of the policy setting. It emerges that labour market matching deteriorated after the crisis, but with a great deal of heterogeneity across EU countries. Divergence across countries increased. Matching deteriorated most in countries most affected by current account reversals and the debt crisis. The lengthening of unemployment spells appears to be a significant driver of matching efficiency especially after the crisis, while skill and sectoral mismatches also played a role. Active labour market policies are associated with a higher matching efficiency and some support is found to the hypothesis that more generous unemployment benefits reduce matching efficiency. |
| Keywords: | cyclical unemployment, structural unemployment, mismatch |
| JEL: | J23 J24 E32 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp91&r=eur |
| By: | Cremers, Katrin; Gaessler, Fabian; Harhoff, Dietmar; Helmers, Christian |
| Abstract: | We analyze the impact of the probabilistic nature of patents on the functioning of Germany's bifurcated patent litigation system where infringement and validity of a patent are decided independently by different courts. We show that bifurcation creates situations in which a patent is held infringed that is subsequently invalidated. Our conservative estimates indicate that 12% of infringement cases in which the patent's validity is challenged produce such 'invalid but infringed' decisions. We also show that having to challenge a patent's validity in separate court proceedings means that more resource-constrained alleged infringers are less likely to do so. We find evidence that 'invalid but infringed' decisions create uncertainty which firms that were found to infringe an invalid patent attempt to reduce by filing more oppositions against newly granted patents immediately afterwards. |
| Keywords: | Litigation,innovation,patents,bifurcation,Germany |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:14072&r=eur |
| By: | Jan Kabatek (Tilburg University [Tilburg] - Netspar); Arthur Van Soest (Tilburg University [Tilburg] - Netspar); Elena Stancanelli (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | Earlier studies suggest that income taxation may affect not only labour supply but also domestic work. Here we investigate the impact of income taxation on partners' labour supply and housework, using data for France that taxes incomes of married couples jointly. We estimate a household utility model in which the marginal utilities of leisure and housework of both partners are modelled as random coefficients, depending on observed and unobserved characteristics. We conclude that both partners' market and housework hours are responsive to changes in the tax system. A policy simulation suggests that replacing joint taxation of married spouses' incomes with separate taxation would increase the husband's housework hours by 1.3% and reduce his labour supply by 0.8%. The wife's market hours would increase by 3.7%, and her housework hours would fall by 2.0%. |
| Keywords: | Time use; Taxation; Discrete choice models |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00966801&r=eur |
| By: | Federico Podestà (FBK-IRVAPP) |
| Abstract: | Since the mid-1980s France and Belgium have modified their family policy system by introducing two long leave schemes and some measures to support childcare at home. Although this change has been presented under the umbrella of the 'free choice' for women rhetoric, several scholars have argued that it would have de facto reinforced the male bread-winner model and, consequently, discouraged female economic activity. In order to test this conjecture, this paper illustrates an impact evaluation of this policy-intervention period. The synthetic control method has allowed to contrast the evolution of French and Belgian female labour force participation rates, observed in consequence of the implementation of the policies under investigation, with the corresponding evolution of the same rates, observable in the absence of such work/family programs. This exercise has induced to think that, if both France and Belgium would have not exposed to this policy-treatment, their female labour market participation rates would be higher than those actually measured. |
| Keywords: | Female labour market participation, Parental leaves, Family allowances, France, Belgium, Policy evaluation, Synthetic control method |
| JEL: | J21 J13 C52 I38 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:fbk:wpaper:2014-06&r=eur |
| By: | O'Leary, Nigel C. (Swansea University); Sloane, Peter J. (Swansea University) |
| Abstract: | There is an apparent inconsistency in the existing literature on graduate employment in the UK. While analyses of rates of return to graduates or graduate mark-ups show high returns, suggesting that demand has kept up with a rapidly rising supply of graduates, the literature on over-education suggests that many graduates are unable to find employment in graduate jobs and the proportion over-educated has risen over time. Using a simple supply and demand model applied to UK data that defines graduate jobs in terms of the proportion of graduates and/or the graduate earnings mark-up within occupations, we find that there has been a shift in the likelihood of young British university graduates being employed in non-graduate jobs in the recent years of our analysis. This finding is in contrast to existing studies. |
| Keywords: | education, wages, graduates, mismatch |
| JEL: | I2 J0 J3 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8413&r=eur |
| By: | Marc Francke; Alex van de Minne; Johan Verbruggen |
| Abstract: | It is widely perceived that the supply of mortgages, especially since the extensive liberalization of the mortgage market of the 1980s, has had implications for the housing market in the Netherlands. In this paper we introduce a new method to estimate a credit condition index (CCI). The CCI represents changes in the supply of credit over time, apart from changes in interest rates and income. It has been estimated by an unobserved component in an error-correction model in which the average amount of new provided mortgages per period is explained by the borrowing capacity and additional control variables. The model has been estimated on data representing first time buyers (FTB). For FTB we can assume that the housing and non-housing wealth is essentially zero. The CCI has subsequently been used as an explanatory variable in an error-correction model for house prices representing not only FTB, but all households. The models have been estimated on quarterly data from 1995 to 2012. The estimated CCI has a high correlation with the Bank Lending Survey, a quarterly survey in which banks are asked whether there is a tightening or relaxation of (mortgage) lending standards compared to the preceding period. The CCI has explanatory power in the error-correction model for house prices. In real terms house prices declined about 25% from 2009 to 2012. The estimation results show that nearly half of this decline can be attributed to a decline in the CCI. |
| Keywords: | lending standards; financial liberation; housing prices |
| JEL: | C32 E44 E51 G21 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:447&r=eur |
| By: | Franke, Benedikt; Simons, Dirk; Voeller, Dennis |
| Abstract: | Employment tax credit programs have been repeatedly used during economic crises, although their usefulness is empirically contestable. The objective of this paper is to quantify the tax effects of employment tax credit programs. A recent revision of the German inheritance tax law provides an eminent opportunity to analyze the effects caused by such a preferential treatment. The tax liability depends on a company's future employment expenses. Hence, we use micro-level data of realized business transfers from the German Inheritance Tax Statistic and combine them with a simulation of the future development of employment over the relevant time-horizon. We identify the magnitude of tax reductions granted to business transfers under a preferential treatment. Further, we demonstrate that these reductions are considerably larger in times of economic growth. Our findings also suggest that employment tax credits have pro-cyclical effects and specifically foster transfers between unrelated parties. Finally, the preferential treatment of business transfers does not provide incentives to increase employment. |
| Keywords: | Alternative tax treatments,Employment tax credits,Inheritance tax,Simulation |
| JEL: | C15 H30 K34 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:arqudp:177&r=eur |
| By: | Mäder, Miriam; Müller, Steffen; Riphahn, Regina T.; Schwientek, Caroline |
| Abstract: | This paper studies the association between the unemployment experience of fathers and their sons. Based on German survey data that cover the last decades we find significant positive correlations. Using instrumental variables estimation and the Gottschalk (1996) method we investigate to what extent fathers' unemployment is causal for offsprings' employment outcomes. In agreement with most of the small international literature we do not find a positive causal effect for intergenerational unemployment transmission. This outcome is robust to alternative data structures and to tests at the intensive and extensive margin of unemployment. |
| Keywords: | youth unemployment,non-employment,intergenerational mobility,causal effect,Gottschalk method |
| JEL: | J62 C21 C26 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwqwdp:122014&r=eur |
| By: | Alina Sorgner (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Michael Fritsch (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Alexander Kritikos (DIW, Berlin) |
| Abstract: | Based on representative micro data for Germany, we compare the incomes of self-employed with those of wage workers. Our results show that the median self-employed entrepreneur with employees earns significantly more than the median salaried employee, while the median solo entrepreneur earns less. However, solo entrepreneurship pays for those with a university entrance degree but no further professional qualification as well as for those who were in the upper percentiles of the income distribution in their previous salaried job. Surprisingly, the variation in hourly incomes of solo entrepreneurs is higher than that of entrepreneurs with employees. |
| Keywords: | Income, Entrepreneurship, Self-Employment, Start-ups, Germany |
| JEL: | L26 D22 |
| Date: | 2014–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2014-029&r=eur |
| By: | Cronin, Hugh (Economic and Social Research Institute, Dublin); McGuinness, Seamus (Economic and Social Research Institute, Dublin) |
| Abstract: | This paper uses a linked employer-employee dataset, the National Employment Survey, to examine the determinants of organisational change and employee resistance to change and, specifically, to examine the influence of employee inflexibility on the implementation of firm-level policies aimed at increasing competitiveness and workforce flexibility. Key finding arising from the research is that while workforce resistance to job-related change often forces firms to seek alternative means of achieving labour flexibility, there appears little that firms can do to prevent such resistance occurring. The presence of HRM staff, consultation procedures, wage bargaining mechanisms, bullying and equality polices etc were found to have little impact on the incidence of workforce resistance to changes in job conditions. |
| Keywords: | workforce resistance, organisational change, linked employer-employee data |
| JEL: | J31 J51 J53 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8441&r=eur |