nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2015‒05‒16
twenty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. The Importance of Mittelstand Firms for Regional Apprenticeship Activity - Lessons for Policy - By Jahn, Vera
  2. How Health Plan Enrollees Value Prices Relative to Supplemental Benefits and Service Quality By Bunnings, C,;; Schmitz, H,;; Tauchmann, H,;; Ziebarth, N.R,;
  3. Does Education Raise Productivity and Wages Equally ?The Moderating Roles of Age, Gender and Industry By François Rycx; Yves Saks; Ilan Tojerow
  4. The use (and misuse) of PISA in guiding policy reform: the case of Spain? By Ãlvaro Choi; John Jerrim
  5. Economic Uncertainty, Parental Selection and Children’s Educational Outcomes By Arnaud Chevalier; Olivier Marie
  6. Productivity and employment dynamics: new evidence from Italian regions By B. Biagi; MG. Ladu
  7. A Study on R&D Tax Incentives - Final report By The Consortium consisting of CPB, CAPP, CASE, CEPII, ETLA, IFO, IFS, IHS
  8. Energy poverty in the UK: Is there a difference between rural and urban areas? By Roberts, Deborah; Vera-Toscano, Esperanza; Phimister, Euan
  9. Fiscal investment climate and the cost of capital in Germany and the EU By Evers, Lisa; Spengel, Christoph; Braun, Julia
  10. Weight Discrimination in the German Labor Market By Marina-Selini Katsaiti; Mrittika Shamsuddin; Philip Shaw
  12. Which Employers Regard the Threat of Dismissal as a Suitable Incentive to Motivate Workers? By Uwe Jirjahn
  13. Peak Car for urban Swedish men? By Bastian, Anne; Börjesson, Maria
  14. Assessing European competitiveness : The new CompNet micro-based database By Lopez-Garcia, P. ; di Mauro, F. ; the CompNet Task Force
  15. Work Capacity and Longer Working Lives in Belgium By Jousten, Alain; Lefèbvre, Mathieu
  17. Employment effects of foreign direct investment. New Evidence from Central and Eastern European Countries. By C. Jude; M. I. Pop Solaghi
  18. Conspicuous work : peer working time, labour supply, and happiness for male workers By Collewet M.M.F.; Grip A. de; Koning J. de
  19. Quality and Export Performance Evidence from Cheese Industry By Duvaleix-Tréguer, Sabine; Emlinger, Charlotte; Gaigné, Carl; Latouche, Karine
  20. Does Extending Unemployment Benefits Improve Job Quality? By Nekoei, Arash; Weber, Andrea

  1. By: Jahn, Vera (Helmut Schmidt University, Hamburg)
    Abstract: Politicians frequently emphasize the importance of Mittelstand firms for the economy, thereby parti- cularly referring to their enormous engagement in training apprentices. However, there is yet almost no empirical evidence on the question whether Mittelstand firms are in fact excessively active in trai- ning apprentices. This paper contributes to the literature by studying whether the relative importance of owner-managed SMEs has an effect on firms’ apprenticeship activity. Using a cross section of West German NUTS-3-regions, we find a significantly positive relation between the relative importance of Mittelstand firms and apprenticeship activity on the regional level. However, on the national level an increase in the share of Mittelstand firms turns out to be without effect on apprenticeship activity.
    Keywords: apprenticeship; Mittelstand firms; owner-management; SMEs; Germany; regional spillovers
    JEL: C21 D23 I21
    Date: 2015–05–05
  2. By: Bunnings, C,;; Schmitz, H,;; Tauchmann, H,;; Ziebarth, N.R,;
    Abstract: This paper empirically assesses the relative role of health plan prices, service quality and optional benefits in the decision to choose a health plan. We link representative German SOEP panel data from 2007 to 2010 to (i) health plan service quality indicators, (ii) measures of voluntary benefit provision on top of federally mandated benefits, and (iii) health plan prices for almost all German health plans. Mixed logit models incorporatea total of 1,700 health plan choices with more than 50 choice sets for each individual. The findings suggest that, compared to prices, health plan service quality and supplemental benefits play a minor role in making a health plan choice.
    Keywords: service quality; non-essential benefits; prices; health plan switching; German sickness funds; SOEP
    JEL: D12 H51 I11 I13 I18
    Date: 2015–02
  3. By: François Rycx; Yves Saks; Ilan Tojerow
    Abstract: The labour market situation of low-educated people is particularly critical in most advanced economies, especially among youngsters and women. Policies aiming to increase their employability either try to foster their productivity and/or to decrease their wage cost. Yet, the evidence on the misalignment between education-induced productivity gains and corresponding wage cost differentials is surprisingly thin, inconclusive and subject to various econometric biases. We estimate the impact of education on productivity, wage costs and productivity-wage gaps (i.e. profits) using rich Belgian linked employer-employee panel data. Findings, based on the generalised method of moments (GMM) and Levinsohn and Petrin (2003) estimators, show a significant upward-sloping profile between education and wage costs, on the one hand, and education and productivity, on the other. They also systematically highlight that educational credentials have a stronger impact on productivity than on wage costs. This ‘wage compression effect’, robust across industries, is found to disappear among older cohorts of workers and to be more pronounced among women than men. Overall, findings suggest that particular attention should be devoted to the productivity to wage cost ratio of low-educated workers, especially when they are young and female, but also to policies favouring gender equality in terms of remuneration and career advancement.
    Keywords: Education; labour costs; productivity; linked panel data
    JEL: C33 I21 J24 J31
    Date: 2015–05–05
  4. By: Ãlvaro Choi (Department of Public Economics, Political Economy and Spanish Economy, Faculty of Economics and Business, University of Barcelona); John Jerrim (Department of Quantitative Social Science, Institute of Education, University College 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: I2
    Date: 2015–05–05
  5. By: Arnaud Chevalier (IZA; Royal Holloway, University of London; UCD Geary Institute for Public Policy, University College Dublin; ROA, Maastricht University; SFI, Copenhagen); Olivier Marie (ROA, Maastricht University; CEP, London School of Economics, IZA; CESIfo, Munich)
    Abstract: After the fall of the Berlin Wall, East Germany experienced an unprecedented temporary drop in fertility driven by economic uncertainty. Using various educational measures, we show that the children born during this nativity slump perform worse from an early age onwards. Consistent with negative selection, mothers who gave birth in that period had worse observed personal characteristics. These children are also less likely to have grown up within stable family environment. Investigating underlying mechanisms reveals that parental educational input and emotional attachment were also lower for these children. Finally, sibling analysis enable us to reject time of birth effects.
    Keywords: Parental selection; fertility; economic uncertainty; education
    Date: 2015–04–24
  6. By: B. Biagi; MG. Ladu
    Abstract: When productivity growth accelerates job destruction and job creation occurs simultaneously. However the results for the whole economy depend on which effect eventually dominates. We investigate what occurs in Italy during the time span 1977-2003, when some waves of labor market reforms have been introduced towards more flexibility. We also investigate if there are any systematic regional differences in the employment/productivity dynamics and whether these dynamics experience any sort of spatial externalities. Findings suggest that overall in Italy job destruction effect prevails and that the labor market reforms have a negative impact on employment.
    JEL: J01 J20 O30 R11 R23
    Date: 2015
  7. By: The Consortium consisting of CPB, CAPP, CASE, CEPII, ETLA, IFO, IFS, IHS
    Abstract: Investment in research and innovation plays a critical role in kick-starting smart growth and upgrading the competitiveness of European companies. In the post-crisis world, Europe needs innovation more than ever before to keep up with the rapid technology advances and growing global competition. R&D tax incentives are an important innovation policy tool widely used in Europe. In some countries, during the crisis, tax instruments have become increasingly important for stimulating private R&D than direct funding. The recent study conducted jointly by DG TAXUD and DG GROW finds fiscal incentives for R&D expenses to be effective in stimulating investment in R&D. The size of the effect varies across countries which can be linked to country specific features, but, crucially, also to differences in the design and organisational practices of the fiscal schemes. The study identifies what are good designs for R&D tax incentives and which features are to be avoided. To answer this question, the study benchmarks the 80 existing R&D tax incentives in 33 countries (including all EU Member States) based on a number of identified good practices in design and administration.
    Keywords: European Union, taxation, R&D tax incentives
    JEL: H20 H29
    Date: 2015–01
  8. By: Roberts, Deborah; Vera-Toscano, Esperanza; Phimister, Euan
    Abstract: Energy poverty is a significant policy issue in the UK. An argument often raised is that rural households are more likely to be energy poor due to the nature of rural housing stock and also the more limited choice of energy sources in rural areas. However empirical evidence to support this argument is limited. This paper uses data from the British Household Panel Survey to explore whether the incidence and dynamics of energy poverty varies between rural and urban areas in the UK. In addition to descriptive analysis, discrete hazard models of energy poverty exit and re-entry are estimated and used to explore the impact of an increase in energy price. The results indicate that the influence of certain housing and personal characteristics differs by place of residence. After accounting for differences in the observed characteristics, the experience of energy poverty in urban areas was found to be on average longer with a higher probability of energy poverty persistence. Vulnerability to energy price increases was found to be high with a 20% increase in price leading to a 74% increase in the probability rural residents being trapped in energy poverty for five or more years. It is argued that a combination of household type and spatial targeting of policy support is required.
    Keywords: Environmental Economics and Policy,
    Date: 2015–04
  9. By: Evers, Lisa; Spengel, Christoph; Braun, Julia
    Abstract: Encouraging private investment in the EU is currently a primary goal of the European Commission. However, the effectiveness of public policies to stimulate private investment - such as a European Fund for Strategic Investments, which was recently proposed by the president of the European Commission, Jean-Claude Juncker - may be undermined by poor conditions for private investment in individual member states. In particular, the tax systems may negatively impact private investment. A key metric used to evaluate the impact of taxation on investment is the cost of capital. The cost of capital is defined as the minimum pre-tax real rate of return on an investment, given a posttax real rate of return of an alternative capital market investment. In this policy brief, we address the following questions. First, how does the fiscal investment climate in Germany, in terms of the cost of capital, currently compare to that of other member states of the European Union? Second, how has the cost of capital changed over the past 15 years? And third, what would be the effect of currently debated tax policy measures (e.g. the re-introduction of reduced-balance depreciation) on the cost of capital in Germany?
    Date: 2015
  10. By: Marina-Selini Katsaiti (United Arab Emirates University); Mrittika Shamsuddin (United Arab Emirates University); Philip Shaw (Fordham University)
    Abstract: Several papers have looked into the effect of obesity on wage and employment, mainly using data for the US. However, none has looked into the effect of obesity on upward mobility and unemployment duration. Using biannual data from the German Socio-Economic Panel data (GSOEP), covering 2002-2012, we investigate whether and how obesity might affect i) the likelihood of getting promoted, ii) the duration of unemployment, iii) wage and iv) the likelihood of employment. After addressing the issue of endogeneity, we find a penalty on obese and higher BMI females in terms of lower wages, lower chance of getting employed, lower likelihood of being promoted and higher unemployment duration. After we manage to locate such penalties towards females we try to decompose the effect into what is commonly referred to in the literature as explained and unexplained difference. Statistically significant unexplained differences could be hinting to discrimination (or differences in unobservable characteristics). Although the penalty in wage and unemployment duration can be explained by the productivity differences captured by our control variables, differences in promotion prospects and employment across genders could be attributable to discrimination.
    Keywords: Obesity; Wage discrimination; Labor discrimination; Weight discrimination
    JEL: J01 I19
  11. By: Romão, João (Lusíada University)
    Abstract: Despite the close relationship between tourism and territory, the application of spatial analysis methods in tourism is not abundant in the literature. Nevertheless, the recent developments in the analysis of space-time models, the existence of geo-referenced information and the availability of suitable software tools has created new opportunities for studying the role of space in tourism activities. A space-time panel data model is developed in this work in order to analyse the relations between tourism demand and the existence of infrastructures, cultural assets and natural resources in European regions, including the analysis of spatial effects. The results reveal the positive impacts of the explanatory variables on tourism demand and the clear existence of spatial correlations, suggesting that regional tourism demand benefits from the dynamics registered in neighborhood regions. Policy implications - including the need for a multi-regional approach for planning and promotion of tourism - are discussed.
    Keywords: Space-time Model; Panel Data; Spatial Analysis; Tourism Demand
    JEL: C21
    Date: 2015–05–08
  12. By: Uwe Jirjahn
    Abstract: Using German establishment data, this study finds that the share of blue-collar workers, an outdated production technology and a high-wage policy increase the probability that employers regard the threat of dismissal as a suitable incentive. A participatory HRM policy, the incidence of a works council and difficulties in filling vacancies decrease the probability.
    Keywords: Dismissal threat, efficiency wage, monitoring, cooperation, regulation
    JEL: J30 J50 J60 M50
    Date: 2015
  13. By: Bastian, Anne (KTH); Börjesson, Maria (KTH)
    Abstract: We study long-term trends in regional car travel demand within and across socio-demographic groups in Sweden, using cross-sectional data from National Travel Surveys, spanning the period from 1978 to 2011. We find that the reduction in per-adult driving in Sweden mainly occurs among urban men. Urban men of all income groups reduced their driving for both commuting and non-commuting trips in conjunction with rising gasoline prices, which may have contributed to this development. We find that driving among those socio-demographic groups, who have better opportunities to reduce their driving, and driving for discretionary rather than commute purposes is being reduced over time. Sweden is ranked among the most gender-equal countries in the world; yet we find a substantial remaining gender gap in the share of adults driving a car on an average day, even when controlling for other socio-economic differences.
    Keywords: Travel behavior; Peak car; GDP elasticity; Fuel price elasticity; Car use
    JEL: R40
    Date: 2015–04–30
  14. By: Lopez-Garcia, P. ; di Mauro, F. ; the CompNet Task Force (Research Department, NBB)
    Abstract: Drawing from confidential firm-level balance sheets for 17 European countries (13 Euro-Area), the paper documents the newly expanded database of cross-country comparable competitivenessrelated indicators built by the Competitiveness Research Network (CompNet). The new database provides information on the distribution of labour productivity, TFP, ULC or size of firms in detailed 2-digit industries but also within broad macro-sectors or considering the full economy. Most importantly, the expanded database includes detailed information on critical determinants of competitiveness such as the financial position of the firm, its exporting intensity, employment creation or price-cost margins. Both the distribution of all those variables, within each industry, but also their joint analysis with the productivity of the firm provides critical insights to both policymakers and researchers regarding aggregate trends dynamics. The current database comprises 17 EU countries, with information for 56 industries, including both manufacturing and services, over the period 1995-2012. The paper aims at analysing the structure and characteristics of this novel database, pointing out a number of results that are relevant to study productivity developments and its drivers. For instance, by using covariances between productivity and employment the paper shows that the drop in employment which occurred during the recent crisis appears to have had “cleansing effects” on EU economies, as it seems to have accelerated resource reallocation towards the most productive firms, particularly in economies under stress. Lastly, this paper will be complemented by four forthcoming papers, each providing an in-depth description and methodological overview of each of the main groups of CompNet indicators (financial, trade-related, product and labour market).
    Keywords: cross country analysis, firm-level data, competitiveness, productivity and size distribution, total factor productivity, allocative efficiency.
    JEL: L11 L25 D24 O4 O57
    Date: 2015–04
  15. By: Jousten, Alain (University of Liège); Lefèbvre, Mathieu (Université de Strasbourg)
    Abstract: We explore the link between health indicators and employment rates of the population aged 55 or more. Our focus lies on work capacity as a key determinant of employment. Using cohort mortality information as a proxy for overall health outcomes, we establish a substantial untapped work capacity in the population 55+. Similar results are obtained when relying on individual-level objective and subjective health and socioeconomic parameters as predictors.
    Keywords: employment, retirement, work capacity
    JEL: J14 J21 J26
    Date: 2015–04
  16. By: Giuseppe Di Liddo (University of Salento); Cosimo Magazzino (University of Roma Tre); Francesco Porcelli (University of Exeter)
    Abstract: The aim of this study is to empirically assess the existence of the BARS curve (Barro, Armey, Rahn, and Scully), as well as the relationship between public expenditure and decentralization, for Italian regions in the 1997-2009 period. Using panel data methodologies, we inspect the nexus between Regional government size (measured by the share of public expenditure on GDP) and the economic growth rate. The main results are twofold. First, when the degree of decentralization is reasonably low (below the 31% of expenditure decentralization), a BARS curve has been successfully discovered, and the optimal government size remains almost constant, assuming a value close to the 52%. The second one concerns the fact that, even though the optimal government size is almost constant, decentralization has a positive effect on economic activity. Finally, decentralization attenuates the negative impact of sub-optimal expenditure policy on growth process. Therefore, our results suggest that decentralization exerts a positive impact on public sector efficiency, contributing to stimulate the income growth.
    Keywords: BARS curve, decentralization, Italian Regions, public expenditure, economic growth, panel data
    JEL: H11 H50 H77 O43 R10 R50
    Date: 2015
  17. By: C. Jude; M. I. Pop Solaghi
    Abstract: This paper examines the role of foreign direct investment (FDI) as a determinant of employment by using a dynamic labor demand model applied for a panel of 20 Central and Eastern European Countries during the period 1995-2012. Our results indicate that FDI leads to a phenomenon of creative destruction. The introduction of labor saving techniques leads to an initial negative effect on employment, while the progressive vertical integration of foreign affiliates into the local economy eventually converges towards a positive long run effect. However, this phenomenon is only observed in EU countries. Our analysis thus gives partial support to the worries that FDI may displace jobs. Still, the relative importance of FDI as a determinant of employment is modest compared to economic restructuring and output growth. Finally, our results show evidence of a skill bias of production in foreign affiliates, as human capital favors a positive contribution of FDI to employment.
    Keywords: FDI, employment, labor demand, transition countries, dynamic panel.
    JEL: F23 J23
    Date: 2015
  18. By: Collewet M.M.F.; Grip A. de; Koning J. de (GSBE)
    Abstract: This paper uncovers conspicuous work as a new form of status seeking that can explain social interactions in labour supply. We analyse how peer working time relates to both labour supply and happiness for Dutch male workers. Using a unique measure of peer weekly working time, we find that mens working time increases with that of their peers and that peer working time is negatively related to mens happiness. These findings are consistent with a conspicuous work model, in which individuals derive status from working time.
    Keywords: Externalities; General Welfare; Time Allocation and Labor Supply;
    JEL: J22 I31 D62
    Date: 2015
  19. By: Duvaleix-Tréguer, Sabine; Emlinger, Charlotte; Gaigné, Carl; Latouche, Karine
    Abstract: The paper questions the impact of quality label on firm export competitiveness in the cheese and cream industry. We use firm level data from the French custom and an original dataset of firms and products concerned by protected designations of origin (PDO). Our econometric estimations shows that PDO labelling impacts both the extensive margin (the number of destinations) and the intensive margin of trade (the value of trade), and increases the average export unit value. The role of label in export performance varies with the market of destination and is more important when exporting to EU countries.
    Keywords: Quality Label, PDO, Trade Margin, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, International Relations/Trade,
    Date: 2015–04
  20. By: Nekoei, Arash (IIES, Stockholm University); Weber, Andrea (University of Mannheim)
    Abstract: Contrary to standard search model predictions, prior studies failed to estimate a positive effect of unemployment insurance (UI) on reemployment wages. This paper estimates a positive UI wage effect exploiting an age-based regression discontinuity in Austrian administrative data. A search model incorporating duration dependence determines the UI wage effect as the balance between two offsetting forces: UI causes agents to seek higher-wage jobs, but also reduces wages by lengthening unemployment. This implies a negative relationship between the UI unemployment duration and wage effects, which holds empirically both in our sample and across studies, reconciling disparate wage-effect estimates. Empirically, UI raises wages by improving reemployment firms' quality and attenuating wage drops.
    Keywords: unemployment insurance, job-search, wages
    JEL: H5 J3 J6
    Date: 2015–04

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