nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2015‒03‒05
28 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. The use (and misuse) of Pisa in guiding policy reform: the case of Spain By Álvaro Choi; John Jerrim
  2. Great expectations. The unintended consequences of educational choices By FERRANTE, FRANCESCO
  3. Education in transition and job mismatch: Evidence from the skills survey in non-EU transition economies By Olga Kupets
  4. Producing salience or keeping silence? An exploration of topics and non-topics of Special Eurobarometers By Markus Haverland; Minou de Ruiter; Steven Van de Walle
  5. Does Early Educational Tracking Increase Migrant-Native Achievement Gaps? Differences-In-Differences Evidence Across Countries By Jens Ruhose; Guido Schwerdt
  6. Heterogeneous Responses to Effective Tax Enforcement: Evidence from Spanish Firms By Miguel Almunia; David Lopez-Rodriguez
  7. Old and Young Politicians By Alberto F. Alesina; Ugo Troiano; Traviss Cassidy
  8. Urban house prices: A tale of 48 cities By Kholodilin, Konstantin A.; Ulbricht, Dirk
  9. Cast a Ballot or Protest in the Street - Did our Grandfathers Do More of Both?: An Age-Period-Cohort Analysis in Political Participation By Romina Boarini; Marcos Díaz
  10. Does quality disclosure improve quality? Responses to the introduction of nursing home report cards in Germany By Herr, Annika; Nguyen, Thu-Van; Schmitz, Hendrik
  11. Credit crunched: Single parents, universal credit and the struggle to make work pay By Brewer, Mike; De Agostini, Paola
  12. Does Retirement Make you Happy? A Simultaneous Equations Approach By Raquel Fonseca Benito; Arie Kapteyn; Jinkook Lee; Gema Zamarro
  13. How Job Changes Affect People's Lives - Evidence from Subjective Well-being Data By Adrian Chadi; Clemens Hetschko
  14. The end of decent social protection for the poor? The dynamics of low wages, minimum income packages and median household incomes By Bea Cantillon; Diego Collado; Natascha Van Mechelen
  15. The impact of child care costs and availability on mothers’ labor supply By Daniela Del Boca
  16. The scarring effect of early non-employment By CORINNA.GHIRELLI
  17. Smart specialisation: Sources for new path development in a peripheral manufacturing region By Asheim , Bjørn; Grillitsch , Markus
  18. The Central European Manufacturin Core: What is Driving Regional Production Sharing? By Rober Stehrer; Roman Stöllinger
  19. The Institutional and Economic Limits to Bargaining Decentralization in Italy By D'Amuri, Francesco; Giorgiantonio, Cristina
  20. Litigation in Spain 2001-2010: Exploring the market for legar services By Juan S. Mora-Sanguinetti; Nuno Garoupa
  21. Blueprint for reform of VAT rates in Europe By Rita de la Feria
  22. On the emissions-inequality trade-off in energy taxation: Evidence on the German car fuel tax By Nikodinoska, Dragana; Schröder, Carsten
  23. The impact of immigration on the local labor market outcomes of blue collar workers: panel data evidence By Javier Ortega; Gregory Verdugo
  24. The role of immigration policies for immigrants’ selection and economic success By Irena Kogan
  25. Immigration and the UK Labour Market By Jonathan Wadsworth
  26. Multinational Networks, Domestic,and Foreign Firms in Europe By Bruno Merlevede; Matthijs De Zwaan; Karolien Lenaerts; Victoria Purice
  27. The effect of electricity taxation on the German manufacturing sector: A regression discontinuity approach By Flues, Florens; Lutz, Benjamin Johannes
  28. Peeling the onion: Analyzing aggregate, national and sectoral energy intensity in the European Union By Löschel, Andreas; Pothen, Frank; Schymura, Michael

  1. By: Álvaro Choi (Universidad de Barcelona & IEB); John Jerrim (University Colleage of London)
    Abstract: In 2013 Spain introduced a series of educational reforms explicitly inspired by the Programme for International Student Assessment (PISA) 2012 results. These reforms were mainly implemented in secondary education – based upon the assumption that this is where Spain’s educational problems lie. This paper questions this assumption by attempting to identify the point where Spanish children fall behind young people in other developed counties in terms of their reading skills. Specifically, by drawing data from multiple international assessments, we are able to explore how cross-national differences in reading skills change as children age. Consideration is given to both the average level of achievement and the evolution of educational inequalities. Our conclusion is that policymakers have focused their efforts on the wrong part of the education system; educational achievement is low in Spain (and educational inequalities large) long before children enter secondary school. This study therefore serves as a note of caution against simplistic interpretation of the PISA rankings; policymakers must take a more nuanced approach when enacting important educational reforms.
    Keywords: Educational policy, academic performance, PISA, PIRLS
    JEL: I21 I24 I28
    Date: 2015
    Abstract: Human capital is invariably found to be an important explanatory variable of various proxies of well being (WB), i.e. income, happiness, job and life satisfaction, health status. Nevertheless, to date few systematic efforts have been made to explain its various and interconnected functions. The U-shaped age-SWB relation found in many empirical studies suggest that investigating the pattern of different measures of WB over people’s life cycle may reveal important information and provide useful insights about the main mechanisms connecting human capital and WB. In this paper I contend that there are four of such links. First, human capital improves the skills in decision making in different life domains. Second, it improves the skills and knowledge in doing things and enjoying life. Third, human capital shapes our identity/personality traits and, fourth, by doing so, it fuels our aspirations in different life domains. The first two effects can be expected to improve people’s performance and subjective well being. Building on Ferrante (2009), more ambiguous is the impact of human capital through the joint action of people’s identity and aspirations. In this paper, I explore data drawn from the Survey on Household Income and Wealth (SHIW) conducted by the Bank of Italy (2008), containing rich information on people’s socioeconomic and educational background, educational and skill mismatch in the workplace and various measures of WB such as income, happiness, job satisfaction and health status. The tentative explanations of my empirical findings are: (a) people experience large mismatches in aspirations/expectations early in adult life; (d) the latter mismatches depend on education and are largely confined to the labour market; (c) the curvature of the U-shaped age-happiness relationship depends on the level of education. The suggested interpretation of these results is that education affects both people’s expectations and the way they react to unfulfilled aspirations.
    Keywords: Education, human capital, aspirations, mismatch, satisfaction, well being
    JEL: I21 I31 J24
    Date: 2014
  3. By: Olga Kupets (Associate Professor, Department of Economics, National University of “Kyiv-Mohyla Academy”)
    Abstract: This paper explores the incidence and determinants of education‐job vertical mismatch in four non-EU transition economies, namely Armenia, Georgia, Macedonia and Ukraine. It uses cross‐section data from the recent World Bank’s Skills toward Employment and Productivity (STEP) surveys of working-age urban population and applies several methods of measuring the incidence of education‐job mismatch. The particular interest is to examine whether the young generation that acquired education in modern economic environment is different from the older generation that studied before or shortly after the onset of transition, and whether overeducated and undereducated workers are different from those who are well-matched in terms of cognitive and non-cognitive skills. Our study shows that although workers from the older pre-transition cohort have relatively higher incidence of overeducation in Georgia and Armenia and lower incidence of overeducation in Ukraine and Macedonia as compared to younger workers from the transition cohort, the effect of cohort and age is rarely significant when other important characteristics are taken into account. Overeducated individuals seem to possess a relatively worse bundle of skills than workers who are adequately matched to their jobs in terms of formal education, undereducated individuals often perform better than well-matched workers, but the differences are not always significant.
    Date: 2015–02
  4. By: Markus Haverland; Minou de Ruiter; Steven Van de Walle
    Abstract: Public opinion does not fall out of the sky. What passes for public opinion in the European Union is largely the answers of its citizens to questions posed in surveys commissioned and controlled by the European Commission. This paper presents the first systematic mapping of the topics and non-topics of the 400 so-called Special Eurobarometers: reports based on batteries of questions about specific policy issues posed in face-to-face interviews to about 25,000 citizens, constituting nationally representative samples of all member states. This exploration is especially relevant against the background of the increased politicisation of the EU; both given the potential value of public opinion as a “substitute” for a more direct link to the electorate and as a power resource in decision-making. We chart the frequency of Special EBs over time, identify the topics (and non-topics) using the Comparative Agenda Project’s EU codebook, and relate their frequency to the distribution of competencies between the EU and its member states. We also document the variation across DGs in their effort to gauge public opinion. We conclude that the Commission is increasingly seeking public opinion and that it does so in a very broad range of policy areas. We find a curvilinear relationship between the degree of EU competencies and the frequency of Special EBs. Citizen input is less sought in areas where the EU already has far reaching competencies and in areas which are clearly in the national (or even sub-national) domain. The lion’s share of Special EBs is conducted in the realm of shared competencies, with an emphasis on those areas where the EU got involved relatively recently. We also detected only two Special EBs specifically related to the redistribution of resources (e.g., cohesion policy) and none on immigration. We also find a large variation across the DGs on whose behalf Special EBs are conducted. Three DGs are responsible for half of all EBs and nine DGs for less than five percent. These results open up promising avenues for research on the responsiveness of the European Commission and its agenda setting strategies and legitimacy seeking behaviour.
    Keywords: public opinion, European Commission
    Date: 2015–02
  5. By: Jens Ruhose (Ifo Institute and IZA, Munich, Germany); Guido Schwerdt (Department of Economics, University of Konstanz, Germany)
    Abstract: We study whether early tracking of students based on ability increases migrant-native achievement gaps. To eliminate confounding impacts of unobserved country traits, we employ a differences-in-differences strategy that exploits international variation in the age of tracking as well as student achievement before and after potential tracking. Based on pooled data from 12 large-scale international student assessments, we show that cross-sectional estimates are likely to be downward-biased. Our differences-in-differences estimates suggest that early tracking does not significantly affect overall migrant-native achievement gaps, but we find evidence for a detrimental impact for less integrated migrants.
    Keywords: Immigration, educational inequalities, educational tracking, differences-in-differences
    JEL: I21 J15 I28
    Date: 2015–03–01
  6. By: Miguel Almunia (University of Warwick); David Lopez-Rodriguez (Banco de España)
    Abstract: We investigate whether monitoring the information trails generated by firms’ activities improves tax compliance. We exploit quasi-experimental variation generated by a Large Taxpayers’ Unit (LTU) in Spain, which devotes additional resources to verifying the transactions reported by firms with more than €6 million in reported revenue. Firms bunch below this threshold in order to avoid stricter tax enforcement, and this reaction is stronger in sectors where paper trail is easier to monitor. These results suggest that monitoring efforts by the tax authority and the traceability of information reported by firms are complements, and both are necessary for effective tax enforcement.
    Keywords: tax enforcement, firms, bunching, Spain, Large Taxpayers Unit (LTU).
    JEL: H26 H32
    Date: 2014
  7. By: Alberto F. Alesina; Ugo Troiano; Traviss Cassidy
    Abstract: We evaluate the effect of a politician’s age on political governance, reelection rates,and policies using data on Italian local governments. Our results suggest that younger politicians are more likely to behave strategically in response to election incentives: they increase spending and obtain more transfers from higher levels of government in preelection years. We argue that is a sign of stronger career concerns incentives. The results are robust to adopting three different identification strategies: fixed-effects regression, standard regression discontinuity design, and an augmented regression discontinuity design that controls for residual heterogeneity.
    JEL: C21 D78 H72 H77 J18
    Date: 2015–02
  8. By: Kholodilin, Konstantin A.; Ulbricht, Dirk
    Abstract: In this paper, the authors construct a unique data set of Internet offer prices for flats in 48 large European cities from 24 countries. The data are collected between January and May 2012 from 33 websites, where the advertisements of flats for sale are placed. Using the resulting sample of 750,000 announcements the authors compute the average city-specific house prices. Based on this information they investigate the determinants of the apartment prices. Four factors are found to be relevant for the flats' price level: income per capita, population density, unemployment rate, and income inequality. The results are robust both to excluding variables and to applying two alternative estimation techniques: OLS and quantile regression. Based on their estimation results the authors are able to identify the cities, where the prices are overvalued. This is a useful indication of a build-up of house price bubbles.
    Keywords: internet ads,flats' prices,large European cities,fundamental prices
    JEL: C21 R31
    Date: 2015
  9. By: Romina Boarini; Marcos Díaz
    Abstract: Recent research suggests that younger generations are less likely to be engaged in formal political participation than older ones. However, there is little evidence on the trends for non-formal participation (e.g. signing petitions, demonstrations, etc.) This paper tries to fill a gap in this field by looking at the evolution of extra-parliamentary participation in politics through various measures of civic and political engagement, based on data from six waves of the European Social Survey. The paper confirms that younger generations in European countries participate less in politics through formal activities. A similar trend is observed for extra-parliamentary participation, although this trend is less clear-cut. The results also show that the financial crisis of 2007-2009 witnessed a halt in the downward trend of period effects in the various forms of political participation, followed by the increase of period effects on both formal and extra-parliamentary political participation in the subsequent years (2011-2012.)
    Date: 2015–02–26
  10. By: Herr, Annika; Nguyen, Thu-Van; Schmitz, Hendrik
    Abstract: Since 2009, German nursing homes have been evaluated regularly with quality report cards published online. We argue that most of the information in the report cards does not reliably measure quality of care, but a subset of seven measures does. Using a sample of more than 3,000 nursing homes with information on two waves, we find a significant improvement in the nursing home quality from the first to the second evaluation. Both indicators comprising either the two outcome quality measures or the seven measures indicating "risk factors" in the report cards improve. This can be interpreted as evidence that quality disclosure positively affects the (reported) quality in nursing homes.
    Keywords: public reporting,quality,long-term care,information
    JEL: L15 I11 I18
    Date: 2015
  11. By: Brewer, Mike; De Agostini, Paola
    Abstract: This paper examines the likely impact of Universal Credit on the incomes and work incentives of single parent families. Using the UK module of EUROMOD (version F6.20), we also simulate how single parents’ household income, and their work incentives, would change following adjustments to the universal credit structure. We examine four main alternative scenarios: 1) reducing the overall universal credit taper rate from 65% to 55%; 2) Increasing the basic (standard) allowances in universal credit for single parents; 3) Increasing the earnings disregard in universal credit for single parents and 4) Increasing the income tax threshold for the basic tax rate. We also examine the impact on single parents of an increase in the minimum wage. Finally, we examine the impact on the Exchequer of a five percentage point increase in the single parent employment rate, in terms of benefits saved and taxes paid.
    Date: 2015–02–24
  12. By: Raquel Fonseca Benito; Arie Kapteyn; Jinkook Lee; Gema Zamarro
    Abstract: Continued improvements in life expectancy and fiscal insolvency of public pensions have led to an increase in pension entitlement ages in several countries, but its consequences for subjective well-being are largely unknown. Financial consequences of retirement complicate the estimation of effects of retirement on subjective well-being as financial circumstances may influence subjective well-being, and therefore, the effects of retirement are likely to be confounded by the change in income. At the same time, unobservable determinants of income are probably related with unobservable determinants of subjective wellbeing, making income possibly endogenous if used as control in subjective wellbeing regressions. To address these issues, we estimate a simultaneous model of retirement, income, and subjective well-being while accounting for time effects and unobserved individual effects. Public pension arrangements (replacement rates, eligibility rules for early and full retirement) serve as instrumental variables. We use data from HRS and SHARE for the period 2004-2010. We find that depressive symptoms are negatively related to retirement while life satisfaction is positively related. Remarkably, income does not seem to have a significant effect on depression or life satisfaction. This is in contrast with the correlations in the raw data that show significant relations between income and depression and life satisfaction. This suggests that accounting for the endogeneity of income in equations explaining depression or life satisfaction is important.
    Keywords: Well-being, Retirement, Institutions, Simultaneous Equation Approach,
    JEL: I3 J26
    Date: 2015–02–25
  13. By: Adrian Chadi (Institute for Labour Law and Industrial Relations in the EU, University of Trier); Clemens Hetschko (School of Business and Economics, Freie Universitaet Berlin)
    Abstract: For representative German panel data, we document that voluntary job switching is associated with higher levels of life satisfaction, though only for some time, whereas forced job changes do not affect life satisfaction clearly. Using plant closures as an exogenous trigger of switching to a new employer, we find that job mobility turns out to be harmful for satisfaction with family life. By investigating people’s lives beyond their workplaces, our study complements research on the well-being impact of labour mobility, suggesting some positive welfare effects of flexible labour markets, but also a previously undocumented potential for negative implications.
    Keywords: life satisfaction, satisfaction with family life, job changes, honeymoon-hangover effect, employment protection legislation
    JEL: I31 J28 J61 J63
    Date: 2015–02
  14. By: Bea Cantillon; Diego Collado; Natascha Van Mechelen
    Abstract: Why is it that, in almost three decades and despite growth of income, employment and high levels of social spending, even the most developed welfare states in the world failed to improve minimum income protection for families with children? To what extent the erosion of minimum income protection for the working age population compared to median household incomes has been occasioned by exogenous changes either in median household incomes or in gross low wages? Or, has the erosion been associated with deliberate cutbacks of benefit levels? We focus on a limited set of vulnerable households with children, viz. working-aged couples and single parents who either are jobless or live on one low wage and use survey data (ECHP 1994-2001 and SILC 2005-2008 and 2012) and standard simulations of disposable incomes of typical households in order to address these questions. We find that in all EU’s most developed welfare states minimum income protection for work-poor households with children fall short compared to the poverty threshold (defined as 60% of equivalised median household income). Typically, in the decades before the crisis this shortfall has become increasingly bigger. In most countries with available data this was not associated with deliberate cuts in benefit levels for the poor: in general, net disposable incomes of families on social assistance evolved at a similar pace as the net income packages of corresponding families on low wages. Rather, the erosion of the minimum social floor appears to have been related to sinking gross low wages compared to median household incomes. This points at severe and increasing structural difficulties to reduce poverty.
    Keywords: poverty, low wages, social benefits
    JEL: I38 J32 J38
    Date: 2015–03
  15. By: Daniela Del Boca
    Abstract: In this paper we review recent literature on the link between child care and women’s labor supply. The growing labor market participation of women has raised many concerns since it implies less time spent with the children and greater reliance on external forms of care. Focusing on studies examining the US, Canada and several European countries, we compare and discuss their methodologies and empirical results as well as their implications for child care policies. Most of the results suggest that the impact of child care availability and costs are stronger for mothers' labor supply among more disadvantaged backgrounds. Child care programs aimed at lower income and less educated families have important implications for EU targets on child poverty and mothers’ employment.
    Keywords: child care, household choices, mothers’ labor supply
    JEL: J13 I2
    Date: 2015–03
    Abstract: This paper investigates whether early non-employment has a causal impact on workers' subsequent career. The analysis is based on a sample of low educated youth graduating in Belgium between 1994 and 2002. To correct for selective incidence of non-employment, we instrument early non-employment by the provincial unemployment rate at graduation. Since the instrument is clustered at the province-graduation year level and the number of clusters is small, inference is based on wild bootstrap methods. We _nd that one percentage point increase in the proportion of time spent in non-employment during the _rst two and a half years of the career decreases six years after graduation annual earnings from salaried employment by 10% and annual hours worked by 7%.
    Keywords: youth unemployment, scars, instrumental variable, wild bootstrap
    JEL: J31 J64
    Date: 2014–12
  17. By: Asheim , Bjørn (UiS Business School/Centre for Innovation Research, University of Stavanger & CIRCLE, Lund University); Grillitsch , Markus (CIRCLE, Lund University)
    Abstract: Smart specialisation as a strategic approach for an innovation-driven regional development policy is extremely important in the European policy context and a precondition for accessing significant amounts of funding. In this paper, we pursue two aims: First, we clarify what smart specialisation means and introduce theoretical perspectives strengthening this policy approach. We will discuss the role of different modes of innovation and knowledge bases for different types of new path development. Second, we aim at identifying the sources for new path development within the smart specialisation framework for a peripheral manufacturing region. We present the key findings from a case study of Møre and Romsdal, in the western parts of Norway, which has been successful economically despite low scores on the typical innovation indicators. The case study was conducted in autumn 2014 and combines an in-depth analysis of relevant policy documents and 17 semi-structured interviews. Thereby, we illustrate to what extent a smart specialisation policy can add value in Norway. As Norway is not part of the EU, it is not compulsory for Norwegian counties to design smart specialisation strategies.
    Keywords: Smart specialisation; new path development; periphery; innovation; regional development
    JEL: P48 R10 R11 R58
    Date: 2015–02–26
  18. By: Rober Stehrer; Roman Stöllinger
    Abstract: There is evidence that Europe’s manufacturing activity is increasingly concentrated in a Central European (CE) core which the IMF in a recent publication also refers to as the German-Central European supply chain. This CE manufacturing core is dominated by Germany and in addition comprises Austria and the four Visegrád countries (the Czech Republic, Slovakia, Hungary and Poland). The case of Austria is particularly interesting because it is neither the primary technology leader within the country group, nor is it an offshoring destination and therefore takes an intermediate position. This study provides further empirical evidence for the growing concentration of European industrial production in the CE manufacturing core and explores in detail the structure and development of the regional supply chains over the period 1995-2011. This includes an analysis of the impact of international production integration on the value added share of manufacturing in the economy. The econometric results point towards differentiated effects for the members of the CE manufacturing core and the remaining EU Member States. Focusing on value added generated by the manufacturing sector, the industries which build the backbone of this regional manufacturing cluster are identified. Finally, the report investigates which factors are conducive to the intensification of international production sharing. In line with the notion of a production-investment-services nexus, it is found that (inward) FDI in the manufacturing sector is associated with higher degrees of production integration. Again, the econometric evidence suggests that some of the factors explaining international production sharing, such as the level of export sophistication, have differentiated effects for the members of the CE manufacturing core as compared to the other EU countries.
    Keywords: European manufacturing, production integration, global value chains, structural change
    JEL: F14 F15 L16
    Date: 2015–02
  19. By: D'Amuri, Francesco (Bank of Italy); Giorgiantonio, Cristina (Bank of Italy)
    Abstract: Italy is not immune from the long term process towards greater bargaining decentralization under way in Western Europe. The article surveys the main actions, either defined by social partners or by government intervention, which have attempted to encourage this process in recent years, without altering the relative importance of different levels of bargaining. Empirical evidence shows that firm-level bargaining has been associated with innovative managerial practices, but also that a significant share of firms would be willing to sign contracts that would grant higher wages or preserve occupational levels in order to obtain higher flexibility in the use of the workforce. From an institutional standpoint, the main obstacles preventing the adoption of such deals are: i) unresolved issues related to the measurement of trade unions' weight at the national level and to the coexistence of two different workers' representation systems, ii) limits to contract enforcement, iii) limited scope for action of second level bargaining in determining both wages and work organization. The effectiveness of tax breaks encouraging a closer link between wage and productivity at the firm level has been undermined by poor monitoring and frequent changes to the eligibility criteria.
    Keywords: industrial relations, labour law, salary structure
    JEL: J31 J41 J51 J53
    Date: 2015–02
  20. By: Juan S. Mora-Sanguinetti (Banco de España); Nuno Garoupa (University of Illinois)
    Abstract: There is empirical evidence of a cross-country positive association between the number of lawyers per capita and the extent of litigation. For instance, Spain has more litigation and more lawyers per capita than most OECD countries. How should this association be interpreted? In this paper we analyse the variation in both variables across Spanish provinces during the period 2001-2010, by means of an instrumental variable approach, to shed some light on the sources of the statistical association between them. Finally, implications of the results are discussed.
    Keywords: lawyers, litigation, civil courts, instrumental variables
    JEL: K41 K42 J44 L84
    Date: 2015–02
  21. By: Rita de la Feria (Durham University)
    Abstract: Within Europe differentiated rates structures date back to the introduction of VAT itself. Evidence as regards the negative consequences of applying multiple rates has been apparent for some decades. In this context, since the late 1980s, there have been several attempts to amend European rates structures under the political guidance of the European Commission. However, the most recent agreed upon amendments to the rates structure have increased the level of differentiation, rather than decreased it, with more goods and services being subject to reduced rates in Europe today than even as recently as ten years ago. This reality seems to be changing in the last few years. Since 2008 a staggering twenty-two of the twenty-eight EU Member State countries have increased their VAT rates, resulting in a broad convergence of VAT standard rates across the EU around the 21% mark. Furthermore, there has also been a decrease in levels of differentiation with a reduction in number of VAT rates applicable in many Member States, as well as various base broadening measures. The latest developments seem to indicate that conditions may be present which allow the reversal of the status quo bias, creating the opportunity for base broadening tax reform. This raises the possibility that European countries might engage in an involuntary process of convergence of VAT bases, fuelled by domestic necessities. A politically achievable blueprint for reform of VAT rate structures in European is presented, which would result in a broader-based, and thus more efficient and neutral, VAT. Moreover, application of this blueprint across EU Member States would have the additional advantage of resulting in further convergence of VAT rate structures in Europe, to replace the long-sought, but so far unattainable, EU harmonisation.
    Date: 2014
  22. By: Nikodinoska, Dragana; Schröder, Carsten
    Abstract: By using estimates from an Almost Ideal Demand System (AIDS), we investigate how the German energy tax on car fuels changes the private households-CO2 emissions, living standards, and post-tax income distribution. Our results show that the tax implies a trade-off between the aim to reduce emissions and vertical equity, which refers to the idea that people with a greater ability to pay taxes should pay more.
    Keywords: energy taxes,environmental taxes,energy demand,emissions,tax incidence,redistribution,inequality
    JEL: C31 D12 D63 H22 H23 I3 K32 Q21
    Date: 2015
  23. By: Javier Ortega; Gregory Verdugo
    Abstract: Using a large administrative French panel data set for 1976-2007, we examine how low- educated immigration affects the wages, employment, occupations and locations of blue-collar native workers. The natives in the sample are initially in occupations heterogeneous in the presence of immigrants, which might reflect a different degree of competition with low-educated immigrants. We first show that larger immigration inflows into locations are accompanied by larger outflows of negatively selected natives from these locations. At the same time, larger immigrant inflows into occupations come with larger outflows of positively selected natives towards occupations with less routine tasks. While we find no negative impact on employment, there is substantial evidence that immigration lowers the median annual wages of natives. The estimated negative effects are also much larger in cross-section than in estimates controlling for composition effect, which is consistent with the idea that endogenous changes in occupation and location attenuate the impact of immigration on natives’ wages. We also find much larger wage decreases for workers initially in non-tradable sectors and more particularly in the construction sector, which are much less likely to upgrade their occupation or change location in response to immigration inflows.
    Keywords: immigration; wages; employment
    JEL: J15 J31
    Date: 2015–02
  24. By: Irena Kogan
    Abstract: This study aims at exploring whether host-country immigration policies related to the selection of immigrants with regard to human capital and other characteristics relevant for the labour market are effective and result in these immigrants’ more favourable economic integration. The focus in on immigration policies in two groups of countries. We compare liberal regimes (Ireland and the UK) which policies aimed at attracting highly-skilled immigrants to meet these countries’ economic needs in highly-skilled jobs with those of Southern European countries (Italy, Spain and Greece), which pursued more lax and unselective policies, trying to attract labour force for low-skilled jobs in their countries’ economies. Economic immigrants are expected to have favourable employment entry chances in each group of countries, not least due to the fact that the supply of immigrants apparently met the labour demand in host countries’ economies. We also expect that more selective policies attracting better-qualified immigrants in Ireland and the UK would lead to these immigrants’ better chances of higher-quality employment.
    Keywords: immigration policies, immigrants’ selection, immigrants’ human capital, immigrants’ labour market integration, comparative research
    JEL: J14 J24 J61
    Date: 2015–03
  25. By: Jonathan Wadsworth
    Abstract: During periods of strong economic growth, migration is and has always been important for filling gaps in the labour market. Perceptions do not seem to line up with the existing academic evidence. On balance, the evidence for the UK labour market suggests that fears about adverse consequences of rising immigration in general and EU immigration in particular have still not, on average, materialised. It is hard to find evidence of much displacement of UK workers or lower wages, on average. Immigrants, especially in recent years, tend to be younger and better educated than the UK-born and less likely to be unemployed. Future migration trends will, as ever, depend on relative economic performance and opportunity. But we still need to know more about the effects of rising immigration beyond the labour market in such areas as prices, health, crime and welfare.
    Keywords: immigration, European Union, UK, government policy, education, labour market, jobs, wages
    Date: 2015–02
  26. By: Bruno Merlevede; Matthijs De Zwaan; Karolien Lenaerts; Victoria Purice (-)
    Abstract: This paper introduces two datasets, AUGAMA, a panel of European firms for the period 1996-2011, and EUMULNET, a European Multinational Network data set. These datasets are constructed on the basis of the Amadeus database issued by Bureau Van Dijk Electronic Publishing. We document the process of building these data sets from the raw Amadeus data for 26 European countries. We show that the data sets adequately approximate the structure of the European economy across countries, regions, and industries as portrayed by data from Eurostat (Structural Business Statistics) and Cambridge Econometrics. As an illustration of possible application, we use the datasets to test a number of results from the theoretical literature regarding the productivity of multinational firms vis-a-vis domestic firms.
    Keywords: multinationals, firm performance, total factor productivity, firm-level data
    JEL: F23
    Date: 2015–02
  27. By: Flues, Florens; Lutz, Benjamin Johannes
    Abstract: Germany taxes electricity use since 1999. The government granted reduced rates to energy intensive firms in the industrial sector for addressing potentially adverse effects on firms' competitiveness. Firms that use more electricity than certain thresholds established by legislation, pay reduced marginal tax rates. As a consequence, the marginal tax rate is a deterministic and discontinuous function of electricity use. We identify and estimate the causal effects of these reduced marginal tax rates on the economic performance of firms using a regression discontinuity design. Our econometric analysis relies on official micro-data at the plant and firm level collected by the German Federal Statistical Office that cover the whole manufacturing sector. We do not find any systematic, statistically significant effects of the electricity tax on firms' turnover, exports, value added, investment and employment. The results suggest that eliminating the reduced marginal electricity tax rates could increase revenues for the government without adversely affecting firms' economic performance.
    Keywords: Efficiency of Environmental Taxes,Control of Externalities,Regression Discontinuity Design
    JEL: D22 H21 H23 Q41 Q48
    Date: 2015
  28. By: Löschel, Andreas; Pothen, Frank; Schymura, Michael
    Abstract: One of the most promising ways of meeting climate policy targets is improving energy efficiency, i.e. reducing the amount of scarce and polluting resources needed to produce a given quantity of output. This study undertakes an empirical exercise using the World Input-Output Database (WIOD), a harmonized dataset comprising time-series of input-output tables along with environmental satellite accounts and socioeconomic information. The paper consists of two parts. In the first part we begin with an aggregated picture of EU27 energy intensity and its evolution between 1995 and 2009. Then we dig deeper and introduce sectoral detail to identify the economic changes that occurred during the same period. Finally, we disaggregate the EU27 into countries for regional analysis and perform a sectoral disaggregation for a fine-grained picture of energy intensity in Europe. In the second part of the study we take our findings from index decomposition analysis and subject them to panel estimations. The objective is to control for factors that may have shaped the evolution of energy intensity in the European Union. In particular, we investigate the impact of technological change, structural change, trade, environmental regulation and country-specific characteristics.
    Keywords: Environmental and Climate Economics,Energy Intensity,Index Decomposition
    JEL: Q0 Q50
    Date: 2015

This nep-eur issue is ©2015 by Giuseppe Marotta. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.