nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2015‒06‒20
twenty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Direct and indirect effects of training vouchers for the unemployed By Meurs, Dominique; Puhani, Patrick A.; Von Haaren, Friederike
  2. Number of Siblings and Educational Choices of Immigrant Children: Evidence from First- and Second- Generation Immigrants By Dominique Meurs; Patrick Puhani; Friederiki Von Haaren
  3. Home Sweet Home? Public Financing and Inequalities in the use of Home Care Services in Europe By Vincenzo Carrieri; Cinzia Di Novi; Cristina Orso
  4. The effect on mental health of retiring during the economic crisis By Liudmila Antonova; Michele Belloni; Elena Meschi; Giacomo Pasini
  5. The impact of the regional environment on the knowledge transfer outcomes of public research organisations: preliminary results for Europe By Es-Sadki N.; Arundel A.V.
  6. Formal volunteering and self-perceived health. Causal evidence from the Uk-SILC By Fiorillo, D.;; Nappo, N.;
  7. Earnings Distributions and Dimensions of Inequality By Neil Foster-McGregor; Sebastian Leitner; Sandra M. Leitner; Johannes Pöschl; Robert Stehrer
  8. Impact of electricity prices on foreign direct investment: Evidence from the European Union By Bartekova E.; Ziesemer T.H.W.
  9. Examining the energy-related CO2 emissions using Decomposition Approach in EU-15 before and after the Kyoto Protocol By Victor Moutinho; José Manuel Xavier; Pedro Miguel Silva
  10. Competitiveness Impacts of the German Electricity Tax By Florens Flues; Benjamin Johannes Lutz
  11. The impact of local labour market conditions on school leaving decisions By Tumino, Alberto; Taylor, Mark P.
  12. Characterizing the policy mix and its impact on eco-innovation in energy-efficient technologies. By Valeria Costantini; Francesco Crespi; Alessandro Palma
  13. Women as ‘gold dust’: gender diversity in top boards and the performance of Italian banks By Silvia Del Prete; Maria Lucia Stefani
  14. Is our everyday comfort for sale? Preferences for demand management on the electricity market By Broberg, Thomas; Persson, Lars
  15. Choice of foreign R&D entry mode and impact on firm performance: A firm-level analysis for Switzerland and Austria By Hollenstein, Heinz; Berger, Martin
  16. The Swiss Vocational Education and Training System: What Can Spain Learn from Switzerland? By Maria Esther Egg; Ursula Renold
  17. The impact of lower oil prices on energy expenditure and economic activity By Ivan Faiella; Alessandro Mistretta
  18. Inverted-U relationship between innovation and survival: Evidence from firm-level UK data By Guidi, Francesco; Solomon, Edna; Trushin, Eshref; Ugur, Mehmet
  19. The Great Beauty: Public Subsidies in the Italian Movie Industry By G. Meloni; D. Paolini; M. Pulina
  20. When Income Depends on Performance and Luck: The Effects of Culture and Information on Giving By Pedro Rey-Biel; Roman Sheremeta; Neslihan Uler

  1. By: Meurs, Dominique; Puhani, Patrick A.; Von Haaren, Friederike
    Abstract: We document the educational integration of immigrant children with a focus on the link between family size and educational decisions and distinguishing particularly between firstand second-generation immigrants and between source country groups. First, for immigrant adolescents, we show family-size adjusted convergence to almost native levels of higher education track attendance from the first to the second generation of immigrants. Second, we find that reduced fertility is associated with higher educational outcomes for immigrant children, possibly through a quantity-quality trade-off. Third, we show that between one third and the complete difference in family-size adjusted educational outcomes between immigrants from different source countries or immigrant generations can be explained by parental background. This latter holds true for various immigrant groups in both France and Germany, two major European economies with distinct immigration histories.
    JEL: J13 J15 J24
    Date: 2015–06
  2. By: Dominique Meurs (EconomiX, Université Paris-Ouest); Patrick Puhani (Leibniz Universität Hannover); Friederiki Von Haaren (Niedersächsisches Institut für Wirtschaftsforschung (NIW))
    Abstract: We document the educational integration of immigrant children with a focus on the link between family size and educational decisions and distinguishing particularly between firstand second-generation immigrants and between source country groups. First, for immigrant adolescents, we show family-size adjusted convergence to almost native levels of higher education track attendance from the first to the second generation of immigrants. Second, we find that reduced fertility is associated with higher educational outcomes for immigrant children, possibly through a quantity-quality trade-off. Third, we show that between one third and the complete difference in family-size adjusted educational outcomes between immigrants from different source countries or immigrant generations can be explained by parental background. This latter holds true for various immigrant groups in both France and Germany, two major European economies with distinct immigration histories.
    Keywords: migration, integration, quantity-quality trade-off, decomposition
    JEL: J13 J15 J24
    Date: 2015–06
  3. By: Vincenzo Carrieri (Department of Economics and Statistics, University of Salerno; Health, Econometrics and Data Group, University of York.); Cinzia Di Novi (Department of Economics, University Of Venice Cà Foscari); Cristina Orso (Department of Economics, University Of Venice Cà Foscari)
    Abstract: Income-related inequalities in health care access have been found in several European countries but little is known about the extent of inequalities in the provision of Long Term Care services (LTC). This paper fills this gap: it addresses equity issues related to the provision of home care services across three macro-areas in Europe which are highly heterogeneous in terms of the degree of public financing of LTC and the strength and the social value of family ties. Using cross-country comparative micro-data from SHARE (Survey of Health, Ageing and Retirement in Europe) survey, we estimate and decompose an Erreygers concentration index of the use of both paid domestic help (“unskilled” care) and personal nursing care (“skilled” care), measuring the contribution of income, needs and non-needs factors to overall inequality. We base the decomposition on a bivariate probit model which takes into account the reciprocal interaction between formal and informal home care use. We find evidence of high horizontal inequity in the use of unskilled home care in areas where public financing of LTC is relatively low (Southern Europe) while moderate inequalities emerges in areas where public-private mix of financing is more balanced (Continental Europe). At the same time, we do not detect inequity in Northern Europe characterized by high public spending on universal services equitable for all, including LTC public coverage. In all areas, informal care has been found to be a substitute for paid unskilled care among the poor and this contributes to further skewing the distribution of the use of formal care services towards the rich.
    Keywords: inequality, long term care, home care, Europe
    JEL: I11 I14
    Date: 2015
  4. By: Liudmila Antonova (Department of Economics, University of Venice Cà Foscari); Michele Belloni (Department of Economics, University of Venice Cà Foscari); Elena Meschi (Department of Economics, University of Venice Cà Foscari); Giacomo Pasini (Department of Economics, University of Venice Cà Foscari)
    Abstract: This paper investigates the causal impact of retirement on late life depression, a growing concern for public health as major depressive disorders are the second leading cause of disability. We shed light on the role of economic conditions in shaping the effect of retirement on mental health by exploiting the time and regional variation in the severity of the economic crisis across ten European countries over the 2004-2013 period. We use data from four waves of the Survey of Health, Ageing and Retirement in Europe (SHARE) and address the potential endogeneity of retirement decision to mental health by applying a fixed-effect instrumental variable approach. Results indicate that retirement improves mental health of men, but not of women. This effect is stronger for those men working in regions that are severely hit by the economic crisis and in blue-collar jobs. These findings may be explained by the worsening of working conditions and the rise in job insecurity stemming from the economic downturn: In these circumstances, the exit from the labor force is perceived as a relief.
    Keywords: depression, stress, retirement, crisis
    JEL: I10 J26 J28
    Date: 2015
  5. By: Es-Sadki N.; Arundel A.V. (UNU-MERIT)
    Abstract: We use survey data for 238 European universities and 24 research institutes to examine the effects of regional factors at the NUTS-1 or NUTS-2 level on three knowledge transfer outcomes of public research organisations the number of licence agreements, start-ups and RD agreements with companies. We find that 1 a larger share of regional employment in high and medium-high technology manufacturing sectors in the same region as the public research organisation has a positive impact on the number of licence agreements. 2 A larger share of employment in knowledge-intensive services has a positive impact on the number of start-ups and research agreements, but a negative impact on licence agreements. 3 Competition as measured by the number of public research organisations in a region has a negative impact on all three outcomes.
    Keywords: Higher Education and Research Institutions; Contracting Out; Joint Ventures; Technology Licensing; New Firms; Startups; Management of Technological Innovation and R&D;
    JEL: I23 O32 M13 L24
    Date: 2015
  6. By: Fiorillo, D.;; Nappo, N.;
    Abstract: The paper assesses the causal relationship between formal volunteering and individual health. The econometric analysis employs data provided by the Income and Living Conditions Survey for the United Kingdom carried out by the European Union’s Statistics (UK-SILC) in 2006. Based on 2SLS, treatment effect and recursive bivariate probit models, and religious participation as instrument variable, and controlling for social and cultural capital, our results show a positive and causal relationship between formal volunteering and self-perceived health.
    Keywords: individual health; formal volunteering; social capital; instrumental variable; treatment effect model; recursive bivariate probit model; UK;
    JEL: C31 C36 D64 I10 I18 Z10
    Date: 2015–06
  7. By: Neil Foster-McGregor (The Vienna Institute for International Economic Studies, wiiw); Sebastian Leitner (The Vienna Institute for International Economic Studies, wiiw); Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw); Johannes Pöschl (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: An Analysis Based on the European Union Structure of Earnings Survey (SES) This study provides an in-depth evaluation of earnings differences within and across countries and their evolution over time using three different waves of the Structure of Earnings Survey (SES) – for 2002, 2006 and 2010. Earnings inequalities for the EU stayed roughly constant at a Gini coefficient around 0.3 with, however, large and persistent differences being observed across countries. The crisis had no significant impact on changes in earnings inequalities of those people remaining employed. The report highlights the impacts of individual, job and firm characteristics on earnings differences applying Mincer regressions and provides information to which extent these determinants contribute to the observed earnings inequalities using a Shapley value decomposition approach Differences in earnings by occupation and education are the two most important determinants of wage inequality contributing with about 25% and 12%, respectively, followed by industry (with about 10%), enterprise size (about 6%), job duration (6%), age (5%) and gender (3.5%).
    Keywords: earnings inequalities, Mincer regressions, Shapley decomposition
    JEL: C69 D31 J31
    Date: 2014–12
  8. By: Bartekova E.; Ziesemer T.H.W. (UNU-MERIT)
    Abstract: In the course of recent years growing concerns over increasing energy prices have emerged in the context of maintaining Europes international competitiveness. In particular, rising electricity price differentials adversely affect firms total production costs and ultimately impact their investment decisions. Nonetheless, electricity prices as locational determinants of foreign direct investment FDI have received little attention in the literature so far. We address this gap by including electricity prices in the traditional framework of FDI analysis and examine the impact of price variation on net FDI inflows in countries of the European Union EU. We use a panel of 27 countries for a period of 2003 - 2013 and system generalised method of moments GMM as method of estimation. The main findings of the paper confirm that besides tax rates, unit labour costs and competitive disadvantage in secondary education, also electricity prices contribute to eroding competitiveness of the countries. Yet, the effect of electricity prices does not seem to be uniform across the EU. In fact, southwestern countries tend to be more adversely affected than north-eastern, both in the short and long run.
    Keywords: International Investment; Long-term Capital Movements; Economywide Country Studies: Europe; Energy and the Macroeconomy;
    JEL: F21 O52 Q43
    Date: 2015
  9. By: Victor Moutinho (CEFAGE-UE and Department of Economics, Management and Industrial Engineering, University of Aveiro); José Manuel Xavier (ISCIA); Pedro Miguel Silva (Department of Economics, Management and Industrial Engineering, University of Aveiro)
    Abstract: This study breaks down carbon emissions into six effects within the European group - EU-15 countries – and analyses their evolution before and after the Kyoto Protocol in order to determine which of them has more impact in the intensity of emissions in those countries. The 'complete decomposition' technique was used to examine the CO2 emissions and its components: carbon intensity,(CI effect), the changes in fossil fuels consumption towards total energy consumption,(EM effect), the change in energy intensity effect,(EG effect), the average renewable capacity productivity (GC effect), the change in capacity of renewable energy per capita (CP effect), and the change in population, (P effect). It is shown that in both periods (before and after Kyoto protocol) for Germany, Denmark and Sweden reductions in CO2 emissions; in particular, with higher levels of differentiation in Germany and Sweden, before Kyoto commitment, it was explained by the predominance of negative effects on the negative variations of three effects decomposed. In the post Kyoto period there is even a greater differential in the negative changes in CO2 emissions, which were caused by the negative contribution of the intensity variations of the effects EM, GC, CP and P that exceeded the positive changes occurred in CI and EG effects. It seems also important to stress the fluctuations in CO2 variations before and after Kyoto, turning positive changes to negative changes, especially in France, Italy and Spain.
    Keywords: Decomposition analysis; Emissions intensity; European Countries; Renewables capacity.
    JEL: C29 Q47 Q52 Q57
    Date: 2014
  10. By: Florens Flues; Benjamin Johannes Lutz
    Abstract: Proposals to increase environmentally related taxes are often challenged on competitiveness grounds. The concern is that value creation in certain sectors might decline domestically if a country introduces environmentally related taxes unilaterally. Furthermore, environmental goals might not be reached if pollution shifts abroad. A competing view argues that properly implemented environmentally related taxes foster innovation, thereby boosting productivity and competitiveness. Empirical research is needed to gain insight into the strength of these various effects. This paper provides evidence on the short-term competitiveness impacts of the German electricity tax introduced unilaterally in 1999. Germany’s manufacturing sector uses significant amounts of electricity, and to counteract potential negative effects on competitiveness, relief was provided: firms using more electricity than specified thresholds benefitted from reduced electricity tax rates. The tax reduction amounted up to EUR 14.6 per megawatt hour, about 80% of the full tax rate. When measured as an effective rate on the carbon content in the average unit of electricity, the electricity tax translates into EUR 44.4 per tonne of carbon dioxide, indicating the magnitude of the tax. The econometric analysis – a regression discontinuity design – shows no robust effects in either direction of the reduced electricity tax rates on firms’ competitiveness. Firms subject to the full tax rates, but otherwise similar to firms facing reduced rates, did not perform worse in terms of turnover, exports, value added, investment and employment. The analysis questions the relevance of the tax reduction for competitiveness reasons and suggests that it could be gradually removed. The energy use threshold, above which a reduced tax rate applies, could be raised over time and competitiveness impacts monitored.
    Keywords: tax expenditure, environmental taxation, competitiveness impacts
    JEL: D22 H21 H23 Q41 Q48
    Date: 2015–05–12
  11. By: Tumino, Alberto; Taylor, Mark P.
    Abstract: We use data from the British Household Panel Survey and Labour Force Survey to analyse the relationship between the demand for post compulsory education and prevailing labour market conditions in Britain. We explicitly incorporate the role of family resources by allowing effects to differ between young people whose families are home owners and those whose families are tenants. We find evidence that local labour markets significantly influence school leaving decisions of 16 year olds living in tenant households, specifically in social housing. For these groups, an increase in the local youth unemployment rates positively affects school enrolment – consistent with opportunity cost arguments – while high levels of adult unemployment discourage it. Labour markets do not significantly affect school leaving decisions of students from better off families. Our results suggest that factors associated with the family socio economic status, such us parental tastes for education and social norms, outweigh economic considerations among students from higher socio economic backgrounds, who tend to enrol in higher education irrespectively of labour markets conditions.
    Date: 2015–06–11
  12. By: Valeria Costantini (Department of Economics, Roma Tre University, Rome (Italy)); Francesco Crespi (Department of Economics, Roma Tre University, Rome (Italy)); Alessandro Palma (Department of Economics, Roma Tre University, Rome (Italy))
    Abstract: This paper provides an empirical investigation of the role played by selected characteristics of the policy mix in inducing innovation in energy efficiency technologies. An original dataset covering 23 OECD countries over the period 1990-2010 combines the full set of policies in the energy efficiency domain for the residential sector with data on patents applied over the same period in this specific technological sector. The evidence of a positive policy inducement effect on innovation dynamics is enriched by the following main results: i) policy mix comprehensiveness is influential since countries adopting different instruments show a relatively higher positive inducement effect; ii) inconsistency problems between the different tools forming the policy mix may negatively influence innovation activities when the variety of policy instruments becomes excessive; iii) the different instruments forming the policy mix need to be well balanced in their relative strength in order to reduce potential negative lock-in effects; iv) the greater the external balance of the national policy strategy with the policy setting of other similar countries, the higher the inducement effect on the technological dynamics of the investigated country. Several suggestions for implementing effective policy strategies can be made in this case study that can be potentially extended to other technology domains.
    Keywords: eco-innovation, policy mix, policy spillovers, energy efficiency, residential sector.
    JEL: O31 O38 Q48 Q55 Q58
    Date: 2015–06
  13. By: Silvia Del Prete (Bank of Italy); Maria Lucia Stefani (Bank of Italy)
    Abstract: European comparisons for the 2000s show that Italy was among the EU countries where women were least represented in bank boardrooms. Using a unique dataset on Italian banks over the period 1995-2010, this paper investigates the effects of gender diversity in boards on bank riskiness and economic performance. Taking account of omitted variables and reverse causality problems, as a source of endogeneity, our main econometric findings suggest that gender diversity may have a positive impact on the quality of credit and, to a lesser extent, on profitability. Both results may be driven by women’s higher risk aversion and their attitude to monitoring activities. Our study therefore suggests that women are ‘gold dust’ for Italian banks and that increasing their presence may be beneficial to economic performance.
    Keywords: banking, corporate governance, gender diversity, board of directors
    JEL: G21 G34 J16
    Date: 2015–06
  14. By: Broberg, Thomas (CERE); Persson, Lars (CERE)
    Abstract: In a European perspective, the electricity markets have been experiencing major changes via deregulation, new technologies and changes in the production mix. Together with the daily and seasonal peak hours on the demand side, the changing markets put pressure on increased flexibility to handle and sustain balance in the grid systems. This paper focuses on the demand side and analyzes preferences related to demand management of Swedish households energy use. Preferences are analyzed within the framework of choice experiments and people are faced with hypothetical electricity contracts. The respondents reveal their preferences for attributes related to external control of heating, household electricity and information dissemination (integrity). The results show that people put a substantial value on not being controlled, illustrated by compensations up to thousands of SEK for accepting a contract characterized by external control of energy use in various dimensions. In addition, the results show that household composition, age, gender and income play a role for the perceived discomfort from the external control and information dissemination.
    Keywords: choice experiment; demand side management; electricity market; energy policy; demand flexibility; smart grids
    JEL: Q40 Q41
    Date: 2015–06–08
  15. By: Hollenstein, Heinz; Berger, Martin
    Abstract: The study seeks to identify the determinants of a firm's foreign entry mode choice and the impact of mode selection on firm performance for the specific case of R&D - a topic so far not investigated in entry mode research. Separate estimates of a Heckman selection model for Austria and Switzerland, based on comparable firm-level data and variable specification, show for both countries that the OLI model is well-suited to explain not only the propensity to investing abroad in R&D but also the respective choice between equity-based and non-equity governance modes. Moreover, it turns out, but only for Swiss companies, that foreign R&D raises (domestic) firm performance with a larger impact in case of equity-based governance. The differences between the two countries primarily reflect the much higher degree of R&D internationalisation of Switzerland.
    Keywords: internationalisation of R&D,foreign R&D entry mode choice,international R&D cooperation
    JEL: F23 L24 O32
    Date: 2015
  16. By: Maria Esther Egg (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Ursula Renold (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Switzerland is famous for its vocational education and training (VET) system. This article describes Switzerland’s success in integrating adolescents into the labour market, with emphasis on two aspects. First, dual-track VET, which combines learning at school and in host companies, is an attractive choice for adolescents. It prepares them for the labour market and for progression routes to higher education. Second, the firm’s decision to train could be an example of the prisoner’s dilemma, but Switzerland has managed to sidestep that issue and minimize concerns about poaching. Finally, we discuss what Spain could learn from the Swiss VET system.
    Keywords: Swiss vocational education and training system, apprenticeship, standard of excellence, youth labour market, prisoner’s dilemma
    JEL: C71 I21
    Date: 2015–06
  17. By: Ivan Faiella (Bank of Italy); Alessandro Mistretta (Bank of Italy)
    Abstract: The recent drop in oil prices will lower Italy’s energy bill. Due to the progressive marginalization of oil, both as an energy source and as a benchmark for energy prices, households and firms will reap the benefits of this reduction largely through the lower cost of petroleum products; for electricity and gas, the effects will be negligible. Using simulation techniques and survey microdata it can be estimated that the effects will differ for households and firms, with the former expected to benefit from liquid fuel savings amounting to €2.1 billion per year (€80 per family), €1.8 billion of which will be used to increase consumer spending. These additional resources will not reach the one third of households that do not purchase gasoline or diesel. Using some recent estimates of manufacturing firms’ energy costs we also estimate that the decline in the prices of oil products will increase turnover by €650 million and investment expenditure by about €27 million.
    Keywords: microsimulation, oil prices, energy costs
    JEL: C15 Q41 Q43
    Date: 2015–06
  18. By: Guidi, Francesco; Solomon, Edna; Trushin, Eshref; Ugur, Mehmet
    Abstract: Theoretical and empirical work on innovation and firm survival has produced varied and often conflicting findings. In this paper, we draw on Schumpeterian models of competition and innovation and stochastic models of firm dynamics to demonstrate that the conflicting findings may be due to linear specifications of the innovation-survival relationship. We demonstrate that a quadratic specification is appropriate theoretically and fits the data well. Our findings from an unbalanced panel of 39,705 UK firms from 1997-2012 indicate that an inverted-U relationship holds for different types of R&D expenditures and sources of funding. We also report that R&D intensity is more likely to increase survival when firms are in more concentrated industries and in Pavitt technology classes consisting of specialized suppliers of technology and scale-intensive industries. Finally, we report that the effects of firm and industry characteristics as well as macroeconomic environment indicators are all consistent with prior findings. The results are robust to step-wise modeling, controlling for left truncation and use of lagged values to address potential simultaneity bias.
    Keywords: innovation,R&D,firm dynamics,survival anaysis
    JEL: C41 D21 D22 L1 O3
    Date: 2015–06–15
  19. By: G. Meloni; D. Paolini; M. Pulina
    Abstract: We examine the impact of public subsidies in the Italian movie industry by considering two dimensions - quantity (box-office revenues) and quality (film festival awards). Public subsidies and movie genres are employed as explanatory variables to investigate how public intervention and genre influence movie industry performance. We find that although public funding shows an overall negative influence on quantity and quality, there are some differences when considering public subsidies by genre. On balance, there is statistical evidence that dramas and thrillers are the genres that should be primarily financed by public agents.
    Keywords: movie industry; public subsidies; awards; box office
    JEL: C23
    Date: 2015
  20. By: Pedro Rey-Biel (Universitat Autònoma de Barcelona and Barcelona GSE); Roman Sheremeta (Weatherhead School of Management at Case Western Reserve University and the Economic Science Institute at Chapman University); Neslihan Uler (Institute for Social Research at the University of Michigan)
    Abstract: We study how giving depends on income and luck, and how culture and information about the determinants of others’ income affect this relationship. Our data come from an experiment conducted in two countries, the US and Spain, which have different beliefs about how income inequality arises. We find no cross-cultural differences in giving when individuals are informed about the determinants of income, but when uninformed, Americans give less than Spanish. Culture and information not only affect individual giving, but also the determinants of giving and the beliefs about how income inequality arises. Beliefs partially moderate cross-cultural differences in giving.
    Keywords: individual giving, information, culture, beliefs, laboratory experiment
    JEL: C91 D64 D83
    Date: 2015

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