nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2015‒10‒04
twenty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  2. Can Fixed-Term Contracts Put Low Skilled Youth on a Better Career path? Evidence from Spain By José Ignacio García Pérez; Ioana Marinescu; Judit Vall Castello
  3. “Certificate Oversupply in the European Union Emission Trading System and its Impact on Technological Change” By Germà Bel; Stephan Joseph
  4. R&D networks and regional knowledge production in Europe. Evidence from a space-time model By Iris Wanzenböck; Philipp Piribauer
  5. Labour Courts delays and the composition of employment: Is labour encouraged or endangered by institutions? By Giuseppina Gianfreda; Giovanna Vallanti
  6. Does on-the-job informal learning in OECD countries differ by contract duration? By Ferreira Sequeda M.T.; Grip A. de; Velden R.K.W. van der
  7. Where does the surplus go? Disentangling the capital-labor distributive conflict By Francesco Bogliacino; Dario Guarascio; Valeria Cirillo
  8. Market based instruments to reduce air emissions from household heating appliances. Analysis of scrappage policy scenarios By Iñaki Arto; Kurt Kratena; Antonio F. Amores; Umed Temurshoev; Gerhard Streicher
  9. Political Incentives and State Subsidy Allocation: Evidence from Hungarian Municipalities By Balázs Murakozy; Almos Telegdy
  10. International R&D spillovers in Central and Eastern Europe. The role of capital imports and local conditions By Maite Alguacil; Andrea Éltetó; Valeriano Martínez–San Román
  11. International trade and the occupational mix in manufacturing: Evidence from german micro data By Boddin, Dominik; Henze, Philipp
  12. Poverty in adulthood: personal and context factors. Evidence from some European countries By Marisa Hidalgo
  13. Intra-household Commuting Choices and Local Labour Markets By Jennifer Roberts; Karl Taylor
  14. The impact of ageing on income inequality technological change By Dr. Thomas Drosdowski; Britta Stöver; Dr. Marc Ingo Wolter
  15. A structural analysis of labour supply and involuntary unemployment in the Netherlands By Henk-Wim de Boer
  16. Legal and illegal cartels in the European cement industry By Fink, Nikolaus; Frübing, Stefan
  17. Car Ownership and Residential Parking Subsidies: Evidence from Amsterdam By Jesper de Groote; Jos van Ommeren; Hans R.A. Koster
  18. The effectiveness of insider trading regulations: The case of the Italian tender offers By Riccardo Ferretti; Pierpaolo Pattitoni; Anna Salinas
  19. Birth Order and Health of Newborns: What Can We Learn from Danish Registry Data? By Anne Ardila Brenøe; Ramona Molitor
  20. Earnings responses to discontinuities in social security contributions: Evidence from Dutch administrative data By Nicole Bosch; Maja Micevska Scharf

  1. By: Daniela Di Cagno (Università LUISS "Guido Carli"); Andrea Fabrizi (Ministero dello Sviluppo Economico); Velentina Meliciani (Università di Teramo); Iris Wanzenböck (Austrian Institute of Technology)
    Abstract: This paper investigates the impact of “relational” spillovers arising from participation in European research networks on knowledge creation across European regions. We use links in EU Framework Programmes (from the Fourth to the Seventh) to weight foreign R&D in order to construct a relational distance matrix across 257 European regions over the period 1995-2010. We, then, assess the impact of relational spillovers on regional patent applications controlling also for local spatial spillovers. We find that relational spillovers matter for knowledge creation although spatial contiguity remains a crucial factor. We also find that spillovers are higher when regions with different levels of R&D participate in European networks. .
    Keywords: Relational spillovers, R&D collaboration, knowledge, EU Framework Programmes, spatial correlation, patents.
    JEL: O31 R12 C23
    Date: 2015
  2. By: José Ignacio García Pérez (U. Pablo de Olavide & FEDEA); Ioana Marinescu (U. of Chicago & NBER); Judit Vall Castello (U. Pompeu Fabra)
    Abstract: By reducing the commitment made by employers, fixed-term contracts can help low-skilled youth find a first job. However, the long-term impact of fixed-term contracts on these workers’ careers may be negative. Using Spanish social security data, we analyze the impact of a large liberalization in the regulation of fixed-term contracts in 1984. Using a cohort regression discontinuity design, we find that the reform raised the likelihood of male high-school dropouts working before age 19 by 9%. However, in the longer run, the reform reduced number of days worked (by 4.5%) and earnings (by 9%).
    Keywords: Temporary Contracts, Long-term impact, Policy evaluation, Young workers, Discontinuity design, Spain.
    JEL: J23 J31 J42 H43 D04
    Date: 2015–09
  3. By: Germà Bel (Faculty of Economics, University of Barcelona); Stephan Joseph (Faculty of Economics, University of Barcelona)
    Abstract: We examine the number of patent applications for climate change mitigation technologies (CCMT) filed at the European Patent Office and seek to relate it to the oversupply of emission allowances under the European Union Emission Trading System (EU ETS). We use a panel count data approach to show that firms covered by the policy take the oversupply into account when determining their level of innovative activity. We also indirectly demonstrate that the “weak” version of the Porter hypothesis holds for the EU ETS, given the sizable oversupply of allowances in the market. Our results suggest that in order to set the European economy firmly on the low-carbon technology pathway, and to ensure that the ambitious EU climate targets are met, serious policy changes must be undertaken.
    Keywords: Environmental Policy; Emission Trading System; Certificate Oversupply; Technological Change; Patent Count Data JEL classification: Q55; Q58; O33; O38
    Date: 2015–09
  4. By: Iris Wanzenböck (Innovation Systems Department, Austrian Institute of Technology); Philipp Piribauer (Department of Economics, Vienna University of Economics and Business)
    Abstract: In this paper we estimate space-time impacts of the embeddedness in R&D networks on regional knowledge production by means of a dynamic spatial panel data model with non-linear effects for a set of 229 European NUTS-2 regions in the period 1999-2009. Embeddedness refers to the positioning in networks where nodes represent regions that are linked by joint R&D endeavours in European Framework Programmes. We observe positive immediate impacts on regional knowledge production arising from increased embeddedness in EU funded R&D networks, in particular for regions with lower own knowledge endowments. However, long-term impacts of R&D network embeddedness are comparatively small.
    Keywords: R&D networks, European Framework Programme, regional knowledge production, dynamic spatial panel data model, space-time impacts
    JEL: C33 O31 R12
    Date: 2015–09
  5. By: Giuseppina Gianfreda (Università della Tuscia); Giovanna Vallanti (LUISS "Guido Carli")
    Abstract: Employment protection is the results of labour laws and of institutional factors which are not encompassed in official legislation. Courts? delay is settling labour disputes are among those factors. Using individual data on the Italian workforce for the period 2007-2010 and exploiting the territorial heterogeneity in the duration of labour suits among Italian regions we investigate the effect of labour trial delays on the composition of employment. We fi?nd that Labour Courts'delays hinder the occupation rate for specific categories of workers, i.e. women, young and low skilled people, while increasing the inactivity rate of the same groups; furthermore, long duration of trials reduces the likelyhood of accessing a permanent occupation for the same groups. Finally, it induces a shift from short term to long term unemployment.
    Keywords: EPL, courts, occupation rate, inactive workers, temporary jobs.
    JEL: D24 J63 K31 K41
    Date: 2015
  6. By: Ferreira Sequeda M.T.; Grip A. de; Velden R.K.W. van der (ROA)
    Abstract: Several studies have shown that employees with temporary contracts have a lowertraining participation than those who have a contract of indefinite duration. Thereis however no empirical literature on the difference in informal learning on-the-jobbetween permanent and temporary workers. In this paper, we analyse this difference across twenty OECD countries using unique data from the recent PIAAC survey. Using an instrumented control function model with endogenous switching, we find that workers in temporary jobs engage in informal learning more intensively than their counterparts in permanent employment, although the former are, indeed, less likely to participate in formal training activities. In addition, we find evidence for complementarity between training and informal learning for both temporary and permanent employees. Our findings then suggest that temporary employment need not be dead-end jobs. Instead, temporary jobs with high learning content could be a stepping stone towards permanent employment. However, our results also suggest that labour market segmentation in OECD countries actually occurs within temporary employment due to the distinction between jobs with low and high learning opportunities.
    Keywords: Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Human Capital; Skills; Occupational Choice; Labor Productivity; Labor Contracts;
    JEL: E24 J24 J41
    Date: 2015
  7. By: Francesco Bogliacino; Dario Guarascio; Valeria Cirillo
    Abstract: The evidence on growing inequality in OECD countries has raised an important debate over its main drivers, pointing out an increasing importance of the capital-labour conflict. In this contribution, we aim at disentangling the role of some of the forces shaping this process. Our identification strategy relies on the sequential nature of wage setting and profits realization, in line with theoretical insights from the range theory of wages (postulating rents sharing at the shop floor level) and the principle of effective demand. In particular we focus on the role of technology and offshoring as instruments to create surplus and to shape the bargaining power of the parties involved in wage setting, and on different sources of demand as heterogeneous determinants of profits realization. The empirical analysis is performed on a panel of 38 manufacturing and service sectors over four time periods from 1995 to 2010, covering Germany, France, Italy, Spain, and United Kingdom. The contrasting effects of R&D and offshoring emerge as determinants of wages. Investment and internal demands are key variables in the realization of profits. When we look at the heterogeneity of the effects we see three main stylized facts. First of all, distinguishing for technological domain using Pavitt classes we can see that rents are effectively related with upgraded industries. Secondly, when we distinguish for the degree of openness we can see that, again, rents are mainly shared in open industries. Finally, when we disentangle the effect on wages per skill level, it is possible to confirm the intuition that offshoring hits the medium-low skill categories.
    Keywords: rent; surplus; distribution; inequality; offshoring; R&D
    Date: 2015–09–28
  8. By: Iñaki Arto (European Commission – JRC - IPTS); Kurt Kratena (WIFO); Antonio F. Amores (European Commission – JRC - IPTS); Umed Temurshoev (European Commission – JRC - IPTS); Gerhard Streicher (WIFO)
    Abstract: This document explores the potential for the use of a market-based instrument to contribute to reducing the emissions of particulate matter of less than 10 micrometres from household heating appliances in the framework of the review of the Thematic Strategy on Air Pollution. The study is focused on the assessment of the economic and environmental impacts of possible scrappage policies for promoting the accelerated replacement of existing heating appliances with cleaner ones. Under these policy programmes, households replacing an old appliance with a cleaner one would receive a subsidy from the government. This subsidy would compensate households for the residual value of the scrapped appliance and the opportunity costs of the early investment in a new one. Two different scenarios are analysed: The scrappage and replacement of all the different types of conventional appliances that do not incorporate any emission control technology ('non-controlled'), and the scrappage and replacement of only 'non-controlled' firewood- and hard-coal-fired manual single house boilers. It is assumed that the scrappage programme is in force between 2018 and 2020. For each scenario, the study focuses on the effects of different levels of replacement of the 'non-controlled' appliances and the size of subsidies relative to the investment costs.
    Keywords: Market-based Instruments, Emissions reduction, Particles Emissions, Scrappage, Economic Impact
    JEL: Q52 C54 D58 D62 H23 H41 I18 D1
    Date: 2015–09
  9. By: Balázs Murakozy (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Almos Telegdy (National Bank of Hungary and Central European University)
    Abstract: Using application-level data on successful and rejected applications for the European Union’s Structural and Cohesion Funds between 2004 and 2012 in Hungary, we study which grant types are susceptible to political manipulation and how politicians achieve this goal. Using township fixed-effect estimators to attenuate the simultaneity bias between municipality characteristics and political affiliation, we find that townships with a mayor endorsed by the governing parties obtain 10 percent higher grant value per capita. This effect varies widely by grant attributes: it is of 16-19 percent when the applicant is a public entity or the project’s purpose is construction so it is visible to voters and thus may bring about electoral benefits. For private applications and non-construction grants, where electoral gains are likely to be limited, the estimated effect is zero. Decomposing the township alignment effect into grant application effects (application intensity and the average value of grant) and grant decision effects (grant success rate and proportion of grant value received) reveals that both margins play a role in the political manipulation of grant distribution. When analyzing the effect of grants on votes, we show that voters indeed reward construction and public projects.
    Keywords: Redistributive politics; Political alignment; European Structural Funds, Hungary
    JEL: D72 D78 H77
    Date: 2015–06
  10. By: Maite Alguacil (Departament of Economics, Universitat Jaume I, Castellón, Spain); Andrea Éltetó (Institute of World Economics, CERS, Hungarian Academy of Sciences, Budapest, Hungary); Valeriano Martínez–San Román (Department of Economics, University of Cantabria, Spain)
    Abstract: In this paper, we analyze both theoretically and empirically the role of foreign technology (embodied in capital and intermediate goods imports from more advanced countries) as the main driver of technology diffusion and productivity growth in the Central and Eastern European (CEE) member countries, taking into consideration the ability of these economies to adopt new technologies domestically. Productivity spillovers may vary depending on the absorptive capacities, thus conferring some scope for policy makers in their attempt to maximize the potential benefits from foreign transactions. Based on industrial-level data, we use different panel data methodologies to estimate the links between labor productivity, imports of capital goods, and local conditions in the CEE member states for the period 1995-2009. To detect potential different patterns of technology absorption at different stages of development, we split the sample into two different country groups: more and less advanced countries. Our results suggest that capital imports are productivity enhancing in the Central and Eastern European economies, with a greater effect on less advanced countries. Our estimates also confirm the relevance of other local conditions, such as domestic capital, skill endowments, and the technology gap, in productivity gains.
    Keywords: Imports of capital goods; Productivity; CEE countries; Local conditions
    JEL: C33 F14 O4
    Date: 2015
  11. By: Boddin, Dominik; Henze, Philipp
    Abstract: We use the Establishment History Panel from 1975 to 2010 provided by the German Federal Employment Office to examine the impact of international trade on the occupational structure of the German manufacturing sector. To capture trade, we match the Establishment History Panel with UN Comtrade trade data. To do so, we develop a new matching approach that takes the input and output structure of the German manufacturing sector into account. We identify three different trade channels: import intensity, import competition, and export intensity. Using a fixed-effects Poisson regression model, we find diverse occupational effects from trade at the industry-level, while establishment-level estimations show only few significant effects.
    Keywords: International Trade,Occupational Mix,Firm Organization
    JEL: J21 F16 L23
    Date: 2015
  12. By: Marisa Hidalgo (Department of Economics, Universidad Pablo de Olavide)
    Abstract: Living in poverty may have long-run negative effects. Children from poor families are more likely to be poor when adults. The interaction between families and public policies is crucial as it affects a child's opportunities. In this paper we focus on European countries and analyze why individuals from different countries and cohorts differ in the poverty status once we control for personal and family characteristics. We first isolate the impact of country-cohorts from regressions using individual-level data and then explain this residual country-cohort heterogeneity in poverty incidence with aggregate level indicators of social policies. We consider three different measures of social policies: a welfare state generosity index and two childhood-related policy: family allowances and expenditure in primary education. We find that these social policies' measures reduce poverty incidence in adulthood beyond personal and family characteristics. We find that individuals from country-cohorts with more generous welfare states, higher family allowances and expenditure in primary education show lower poverty incidence. In addition we find that they are more effective when initial GDP is low.
    Keywords: poverty rate, welfare state generosity, family allowances, public expenditure in education.
    JEL: I32 I38 H5
    Date: 2015–09
  13. By: Jennifer Roberts (Department of Economics, University of Sheffield); Karl Taylor (Department of Economics, University of Sheffield)
    Abstract: While the job search literature has increasingly recognised the importance of the spatial distribution of employment opportunities, local labour market conditions have been a notable omission from much of the empirical literature on commuting outcomes. This study of the commute times of dual earner couples in England and Wales finds that local labour market conditions are closely associated with commute times and their effects are not gender neutral. Male commute times are much more sensitive to local unemployment rates than women’s; where women earn less than one–third of household income, their commute times do not seem to be sensitive to local unemployment. In addition, the more conducive the local labour market is to female employment, the less time women spend commuting. On average the ‘female friendliness’ of the local labour market has no effect on male commute times, but in households where women earn the majority of household income, men commute further if the local labour market is female friendly. We also show that it is important to account for the heterogeneity of household types; there are important differences in our results according to female income share, housing tenure, mover status and mode of travel.
    Keywords: local labour market; dual earner households
    JEL: D19 J24 R40
    Date: 2015–09
  14. By: Dr. Thomas Drosdowski (GWS - Institute of Economic Structures Research); Britta Stöver (GWS - Institute of Economic Structures Research); Dr. Marc Ingo Wolter (GWS - Institute of Economic Structures Research)
    Abstract: The question whether ageing leads to more or less inequality is not easily answered. Different, in part opposed, effects can be identified that are sensible to reactions of private households, the implementation of political measures etc. To get a better idea of the effect of demographic change on the distribution of income in Germany we apply a scenario analysis using the macro-econometric input-output model INFORGE and the socio-economic module DEMOS. Different exogenously given population projections are applied to identify the structural and quantity effect of ageing on inequality of disposable incomes between household groups. In summary, the projected demographic change in Germany is likely to increase income inequality. Main driver is the disproportionate increase in wage income due to labour market shortages. While the quantity effect acts slightly equalising on income inequality, the structural effect definitely raises income inequality.
    Keywords: income inequality, ageing, socio-economic modelling
    JEL: D31
    Date: 2015
  15. By: Henk-Wim de Boer
    Abstract: Most structural models for labour supply ignore the possibility of involuntary unemployment which may lead to biased behavioural responses. This may have important policy implications. We estimate a structural model for labour supply without and with involuntary unemployment for the Netherlands, using data for the period 2006-2009. We estimate both models for four groups separately: singles without children, single parents, couples without children and couples with children. We use information on job search behaviour to estimate the determinants of involuntary unemployment. We find that average labour supply elasticities are only slightly lower in the model with involuntary unemployment than in the model without involuntary unemploy- ment. The main reason for this small bias is the relatively small share of individuals who are involuntary unemployed in the period 2006{2009. A simulation of tax-benefit reforms confirms that the upward bias in average labour supply responses is limited in the model without involuntary unemployment. Only for subgroups with a high risk of being involuntary unemployed, such as lower educated individuals and immigrants, we find a relatively large upward bias in labour supply elasticities in the model without involuntary unemployment.
    JEL: C25 C52 H31 J22
    Date: 2015–09
  16. By: Fink, Nikolaus; Frübing, Stefan
    Abstract: Due to being much better documented, legal cartels have recently attracted the interest of many researchers who aim to understand the functioning of illegal cartels in detail. This paper contributes to the question of what we can learn from legal cartels by taking a closer look at the cement industry which has a rich history of both legal and illegal cartels. We undertake a cross-country comparison for Austria, Germany, Poland and Norway, providing narrative evidence for many traits of the cases based on a variety of detailed sources. We identify similarities between legal and illegal cartels in aspects such as monitoring efforts, information exchange, the importance of industry associations and the role of capacities, whereas we also find substantial differences in the allocation of clients, reactions to deviations and pricing schedules.
    Keywords: cartels,collusion,cement
    JEL: L41 L43 L61
    Date: 2015
  17. By: Jesper de Groote (VU University Amsterdam); Jos van Ommeren (VU University Amsterdam); Hans R.A. Koster (VU University Amsterdam)
    Abstract: Many cities around the world have introduced paid parking but implicitly subsidize parking for example by providing residential parking permits for street parking. We study the welfare effects of residential parking subsidies through changes in car ownership for Amsterdam. We employ a boundary-discontinuity design that exploits spatial variation in the length of waiting lists for permits and therefore in the size of the parking subsidy. In the city center, the waiting time for a permit is up to four years. Our results indicate that one additional year of waiting for a parking permit reduces car ownership with 2 percentage points corresponding to a price elasticity of car demand of -0.8. We demonstrate that subsidizing residential parking induces a substantial welfare loss. On average, a parking permit induces an annual deadweight loss of € 270. Furthermore, we show that the provision of parking permits is an income-regressive policy: rich households are five times more likely than poor households to receive these (implicit) parking subsidies.
    Keywords: parking policy; car ownership; household location choice
    JEL: R20 R40 R42
    Date: 2015–09–28
  18. By: Riccardo Ferretti; Pierpaolo Pattitoni; Anna Salinas
    Abstract: This study analyzes the effectiveness of the Market Abuse Directive (MAD) in reducing the possible profits of insider trading during voluntary tender offers with the purpose of delisting initiated by controlling shareholders in Italy. Our results suggest that the introduction of the MAD did not produce appreciable effects on the magnitude of abnormal returns and volumes noted in the period preceding the announcement of a tender offer. However, a regression analysis reveals that the MAD has changed the manner in which certain corporate characteristics influence the capacity of insiders to achieve profits. In particular, in the post-MAD period, the market reaction to tender offer announcements tends to be greater for bigger firms. On the other hand, the effect of ownership concentration has become virtually null. We interpret the results in light of the economic problem of the potential insider who chooses the optimal level of insider trading by considering the marginal costs and benefits of the illegal activity.
    Keywords: Market Abuse Directive, Tender offer, Delisting, Event study
    JEL: G14 G34 K2 K4
    Date: 2015–09
  19. By: Anne Ardila Brenøe (Department of Economics, University of Copenhagen); Ramona Molitor (Department of Business Administration University of Copenhagen and Economics, University of Passau)
    Abstract: Research has shown a strong negative correlation between birth order and cognitive test scores, IQ, and educational outcomes. We ask whether birth order differences in health are present at birth using matched administrative data for more than 1,000,000 children born in Denmark between 1981 and 2010. Using family fixed effects models, we find a positive and robust birth order effect; earlier born children are less healthy at birth. Looking at the potential mechanisms, we find that during earlier pregnancies women have higher labor market attachment, behave more risky in terms of smoking, receive more prenatal care, and are diagnosed with more medical pregnancy complications. Yet, none of these factors explain the birth order differences at birth. Combining our results with findings from the medical literature, we propose that biology is driving the early life advantage (nature). Finally, we show that these birth order differences at birth do not explain the negative birth order effect in educational performace, suggesting that nurture rather than nature is an important player later in life.
    Keywords: Birth order, parity, child health, fetal health, health at birth, education
    JEL: I10 I12 J12 J13
    Date: 2015–09–22
  20. By: Nicole Bosch; Maja Micevska Scharf
    Abstract: We analyse the effects of social security contributions (SSCs) by examining the distribution of earnings close to thresholds in the schedule in the Netherlands. The shape of the earnings distribution provides information on behavioural and incidence effects of SSC. We consider three earnings concepts, four types of contributions and five thresholds at which marginal rates change. The basic idea is that a discontinuity in the marginal SSC rate should cause a discontinuity in the distribution of at least one of three earnings concepts: labour costs, gross earnings and net earnings.  We use a rich administrative dataset containing observed payments on most SSCs for the entire working population for the years 2006-2012. Our finding that the density of gross earnings is smooth is an indication of small behavioural responses and is consistent with the results in recent empirical studies that attribute this to the complexity of the tax system, small changes and non-salience. Smoothness of gross earnings challenges the standard incidence theory prediction of full shifting of SSCs to employees. New and more puzzling is the finding of a smooth distribution of both net earnings and labour costs. The smooth distribution of these earnings concepts renders the results on incidence inconclusive. This lack of ‘deterministic’ discontinuity can mainly be explained by measurement errors resulting from the complexity of the institutional system and the rather small changes in marginal rates. A general finding of this paper is that this kind of cross-sectional analysis requests high quality data on SSCs which are rare.
    JEL: H22 H24 H55
    Date: 2015–09

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