nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2015‒10‒17
seventeen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Road freight transport policies and their impact: a comparative study of Germany and Sweden By Vierth , Inge; Schleussner , Heike; Mandell , Svante
  2. Social interactions in inappropriate behavior for childbirth services: theory and evidence from the Italian hospital sector By Guccio, C.;; Lisi, D.;
  3. Impact of welfare sanctions on employment entry and exit from labor force: Evidence from German survey data By Hillmann, Katja; Hohenleitner, Ingrid
  4. SIMTASK: A Microsimulation of the Slovak Tax-Benefit System By Zuzana Siebertová; Norbert Švarda; Jana Valachyová
  5. FIntertemporal pro-poorness By Florent Bresson; Jean-Yves Duclos; Flaviana Palmisano
  6. Economic Institutions and the Location Strategies of European Multinationals in their Geographical Neighbourhood By Andrea Ascani; Riccardo Crescenzi; Simona Iammarino
  8. The causal effects of increased learning intensity on student achievement: Evidence from a natural experiment By Andrietti, Vincenzo
  9. The Effectiveness of Fiscal Stimuli for Working Parents By Henk-Wim de Boer; Egbert L.W. Jongen; Jan Kabatek
  10. Estimating the Impact of House Prices on Household Labour Supply in the UK By Zhechun He
  11. Why do empirical tests tend to accept the NEG? An alternative approach to the 'wage equation' in European regions By Fernando Bruna
  12. Under the Radar: The Effects of Monitoring Firms on Tax Compliance By Almunia, Miguel; Lopez-Rodriguez, David
  13. Bilingual Schooling and Earnings: Evidence from a Language-in-Education Reform By Lorenzo Cappellari; Antonio Di Paolo
  14. The changing distribution of individual incomes in the UK before and after the recession By Eleni Karagiannaki; Lucinda Platt
  15. Okun's law and youth unemployment in Germany and Poland By Dunsch, Sophie
  16. How does fiscal decentralization affect within-regional disparities in well-being? Evidence from health inequalities in Italy By Di Novi, C.;; Piacenza, M.;; Robone, S.;; Turati, G.;
  17. A Hedonic Approach Towards Explaining Market Shares of Organic Food - Evidence from Swiss Household Data By Götze, Franziska; Mann, Stefan; Ferjani, Ali; Kohler, Andreas; Heckelei, Thomas

  1. By: Vierth , Inge (VTI); Schleussner , Heike (VTI); Mandell , Svante (KTH/VTI)
    Abstract: We compare policy implications from time-based charges on road freight transports, represented by the case of Sweden, to those from distance-based charges, represented by the case of Germany. The analyses based on official statistics from 2005-2014 indicate that the German road freight policy has resulted in substantially larger revenues and a cleaner truck fleet and mileage. Some support is found for that the German policy causes spill-overs to the neighbouring countries. It can be shown that the Swedish hauliers use cleaner trucks for international than for national transports. In general, the firms have incentives to use the cleanest trucks in the countries that have introduced distance-based tolls. As an estimate of the consequences of this in Sweden, the difference in environmental impact is estimated between the case with the actual composition of trucks using the Swedish network and the hypothetical case where the composition is the same as on the German toll roads. The socio-economic costs are estimated to be around € 16 million per year. This puts pressure on countries as Sweden to implement stronger policies to counter the spill-over effect. The time based charges, e.g., the Eurovignette, seem to be outdated.
    Keywords: Road freight transport; Road charges; Policy comparison
    JEL: R40
    Date: 2015–10–08
  2. By: Guccio, C.;; Lisi, D.;
    Abstract: Empirical evidence supports the conjecture that social interactions among agents can produce both positive and negative effects. We build on this literature by exploring the role of social interactions in the hospital sector using the large incidence of cesarean sections, usually considered an inappropriate outcome in the childbirth service. In doing so, we lay out a simple model of hospitals’ behavior where the effect of peers’ behavior emerges simply by sharing the same institutional authority responsible for auditing inappropriate behavior. In this setting, enforcement congestion induces a peer effect among hospitals that could make inappropriate behaviors more likely. Then, using the risk-adjusted cesarean section rate of a large panel of Italian hospitals, we empirically investigate whether the behavior of each hospital is affected by the behavior of hospitals withinthe same region, after controlling for demand, supply, and financial factors. In particular, our empirical test employs both peer effects estimate and the spatial econometric approach, exploiting the panel dimension of our data. Both estimates show a significant and strong presence of peer effects among hospitals. We interpret this evidence as a presence of constraint interactions within the hospital sector, which has important implications for healthcare policies against inappropriateness.
    Keywords: social interactions; peer effects; cesarean section; spatial econometrics;
    JEL: I11 C31
    Date: 2015–09
  3. By: Hillmann, Katja; Hohenleitner, Ingrid
    Abstract: Similar to numerous other European countries, Germany's unemployment policy went through a paradigm shift in 2005, towards activation policy by tightening their monitoring and sanction regime. With our study, we aim to provide causal evidence for whether an intended positive effect of benefit sanctions on employment entry of welfare recipients has been bought at the expense of an unintended enhanced incentive to leave the labor market. Using a mixed proportional hazard model, we draw causal inference of sanction enforcements on unemployment exit hazards. Based on a novel survey sample covering the first three years after the 'Hartz IV' law came into effect, we provide evidence for a positive impact of sanctions on employment as well as on exit from labor force.
    Keywords: unemployment benefit sanctions,unemployed welfare recipients,unemployment duration,transition into employment,transition into non-employment,exit from labor force,mixed proportional hazard estimation
    JEL: J48 J63 J64 J68 I38
    Date: 2015
  4. By: Zuzana Siebertová; Norbert Švarda; Jana Valachyová
    Abstract: In this paper we introduce a microsimulation model of the Slovak tax and transfer system SIMTASK. It presents a complex toolkit for static microsimulations. Compared to earlier version of the CBR microsimulation model, simulated results are closer to reality. This has been achieved by recalibrating sample weights of the input database, where the income distribution has been taken into account directly. The improved fit is documented by validating the tax and transfer aggregates using both the original sample weights and the new ones against external data. Along with some other refinements to the model and external data considerations, the paper concludes that the validity of SIMTASK improved in terms of personal income tax simulations, social security contributions simulations, as well as simulations of family related benefits.
    Keywords: microsimulation, EUROMOD, tax and transfer policy, Slovakia
    JEL: C81 I38 H24
    Date: 2015–10–05
  5. By: Florent Bresson (Universit Ìe d’Auvergne & CNRS); Jean-Yves Duclos (Universitè Laval and FERDI); Flaviana Palmisano (Universit Ìe du Luxembourg)
    Abstract: A long-lasting scientific and policy debate queries the impact of growth on distribution. A specific branch of the micro-oriented literature, known as ‘pro-poor growth’, seeks in particular to understand the impact of growth on poverty. Much of that literature supposes that the distributional im- pact should be measured in an anonymous fashion. The income dynamics and mobility impacts of growth are thus ignored. The paper extends this framework in two important manners. First, the paper uses an ‘intertempo- ral pro-poorness’ formulation that accounts separately for anonymous and mobility growth impacts. Second, the paper’s treatment of mobility encom- passes both the benefit of “mobility as equalizer†and the variability cost of poverty transiency. Several decompositions are proposed to measure the importance of each of these impacts of growth on the pro-poorness of distri- butional changes. The framework is applied to panel data on 23 European countries drawn from the ‘European Union Statistics on Income and Living Conditions’ (EU-SILC) survey.
    Keywords: pro-poorness, income mobility, growth, poverty dynamics
    JEL: D63 I32
    Date: 2015–07
  6. By: Andrea Ascani; Riccardo Crescenzi; Simona Iammarino
    Abstract: This paper investigates how the location behaviour of Multinational Enterprises (MNEs) is shaped by the economic institutions of the host countries. The analysis covers a wide set of geographically proximate economies with different degrees of integration with the ‘Old’ 15 European Union (EU) members: New Member States, Accession and Candidate Countries, as well as European Neighbourhood Policy (ENP) countries and the Russian Federation. The paper aims to shed new light on the heterogeneity of MNE preferences for the host countries’ regulatory settings (including labour market and business regulation), legal aspects (i.e. protection of property rights and contract enforcement) and the weight of the government in the economy. By employing data on 6,888 greenfield investment projects, the randomcoefficient Mixed Logit analysis here applied shows that, while the quality of the national institutional framework is generally beneficial for the attraction of foreign investment, MNEs preferences over economic institutions are highly heterogeneous across sectors and business functions.
    Keywords: Multinational Enterprises, Economic Institutions, Location Choice, European Union
    JEL: F23 P33 L20 R30
    Date: 2015–07
  7. By: Tifaoui, Said; Von Cramon-Taubadel, Stephan
    Abstract: We show how the measurement scale affects the results of the vertical price transmission analysis. We aim to answer the following question: how changes in wholesale prices (i.e. changes in the margin) affect the changes in the retail price of butter in Germany? We find that the average margin of the chains which change more frequently their prices is twofold the standard deviation of average margin in the German butter market, whereas, the chains characterized by less frequency in their price changes have an average margin which is a fold the standard deviation below this average margin.
    Keywords: Generalized Linear Mixed models, Vertical Price Transmission, Scanner data, German butter market, Demand and Price Analysis,
    Date: 2015
  8. By: Andrietti, Vincenzo
    Abstract: I exploit a unique educational policy - implemented in most German states between 2001 and 2007 - that reduced high school duration by one year while keeping its curriculum unaltered to investigate how the resulting increase in learning intensity affected student achievement. Using 2000-2009 PISA data and a difference-in-differences approach, I find robust evidence that the reform significantly improved the reading, mathematics, and science literacy skills acquired by academic-track high school students upon treatment. A more direct estimate of the effects of the increased learning intensity - as measured by the cumulative weekly number of instructional hours delivered in high school grades - corroborates the latter finding. Furthermore, there is some evidence that the effects of the reform differ by gender and grade retention. Finally, I find no evidence of a significant average effect of the reform on high school grade retention, although I do find that the latter increased significantly for boys and for students with a migration background.
    Keywords: G8,Learning intensity,Instructional hours,Student achievement,Academic-track high school,Difference-in-Differences
    JEL: I21 I28 D04
    Date: 2015–06–01
  9. By: Henk-Wim de Boer (CPB Netherlands Bureau for Economic Policy Analysis; and Faculty of Economics and Business Administration, VU University Amsterdam); Egbert L.W. Jongen (CPB Netherlands Bureau for Economic Policy Analysis); Jan Kabatek (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; Institute for the Study of Labor (IZA); and Netspar)
    Abstract: To promote the labor participation of parents with young children, governments employ a number of fiscal instruments. Prominent examples are childcare subsidies and in-work benefits. However, which policy works best for employment is largely unknown. We study the effectiveness of different fiscal stimuli in an empirical model of household labor supply and childcare use. We use a large and rich administrative data set for the Netherlands. Largescale reforms in childcare subsidies and in-work benefits in the data period facilitate the identification of the structural parameters. We find that an in-work benefit for secondary earners that increases with income is the most effective way to stimulate total hours worked. Childcare subsidies are less effective, as substitution of other types of care for formal care drives up public expenditures. In-work benefits that target both primary and secondary earners are much less effective, because primary earners are rather unresponsive to financial incentives. Classification-C25, C52, H31, J22
    Keywords: Discrete choice, household labor supply, latent classes, differences-indifferences, work and care policies
    Date: 2015–09
  10. By: Zhechun He
    Abstract: This paper applies the British Household Panel Survey (BHPS) from 1997-2008 and study the impact of local authority district house prices on labour supply of couples via bivariate seemingly unrelated regression (SUR) probit and tobit models after imputing potential wages for both workers and non-workers using the Heckman selectivity approach. The use of local authority district house prices has the virtue of being disaggregate and exogenous to the individual. This avoids the potential simultaneity bias from using self-reported house prices (this and labour supply may both be affected by unobserved individual heterogeneity). We allow for the interdependent nature of the couple's labour supply decisions and enhance efficiency of estimation by exploiting the structure in the error terms of the two-equation system. We find heterogeneous responses of labour supply from different household types to house prices as well as the joint decision making of spouses/partners within a household on labour supply. Gender and age differences are present. Our results give interpretations on the role of the different channels through which this impact is driven, including wealth effects, borrowing constraints, precautionary savings, bequest motives and habit formation.
    Keywords: labour supply, house prices
    JEL: J22 D1
    Date: 2015–10
  11. By: Fernando Bruna (University of A Coruña, Economics and Business Department)
    Abstract: This paper posits a new approach to the ‘wage equation’ of the New Economic Geography (NEG) stressing the uncertain interpretation of its empirical results. It emphasizes the generality of the variable to be explained, marginal costs. Then, two artificial (noNEG) tests are proposed in order to identify the statistical features explaining why wagetype equations tend to be accepted in tests for European data. The estimation results are shown to be similar not only when Market Potential is built for variables that do not measure market size but also when the focus of attention changes from global to local spatial patterns
    Keywords: New Economic Geography, wage equation, Market Potential, spillovers, global trend, spatial autocorrelation
    JEL: C21 F12 R12
    Date: 2015–11
  12. By: Almunia, Miguel (Department of Economics and CAGE University of Warwick); Lopez-Rodriguez, David (Banco de España)
    Abstract: This paper analyzes the effects on tax compliance of monitoring the information trails generated by firms’ activities. We exploit quasi-experimental variation generated by a Large Taxpayers Unit (LTU) in Spain, which monitors firms with more than 6 million euros in reported revenue. Firms strategically bunch below this threshold in order to avoid stricter tax enforcement. This response is stronger in sectors where transactions leave more paper trail, implying that monitoring effort and the traceability of information reported by firms are complements. We calculate that there would be substantial welfare gains from extending stricter tax monitoring to smaller businesses.
    Keywords: tax enforcement ; firms ; bunching ; Spain ; Large Taxpayers Unit (LTU)
    JEL: H26 H32
    Date: 2015
  13. By: Lorenzo Cappellari; Antonio Di Paolo
    Abstract: We exploit the 1983 language-in-education reform that introduced Catalan alongside Spanish as medium of instruction in Catalan schools to estimate the labour market value of bilingual education. Identification is achieved in a difference-in-differences framework exploiting variation in exposure to the reform across years of schooling and years of birth. We find positive wage returns to bilingual education and no effects on employment, hours of work or occupation. Results are robust to education-cohort specific trends or selection into schooling and are mainly stemming from exposure at compulsory education. We show that the effect worked through increased Catalan proficiency for Spanish speakers and that there were also positive effects for Catalan speakers from families with low education. These findings are consistent with human capital effects rather than with more efficient job search or reduced discrimination. Exploiting the heterogeneous effects of the reform as an instrument for proficiency we find sizeable earnings effects of skills in Catalan.
    Keywords: bilingual education, returns to schooling, language-in-education reform, Catalonia
    JEL: J24 J31 I28
    Date: 2015–10
  14. By: Eleni Karagiannaki; Lucinda Platt
    Abstract: While there has been substantial research on the impacts of the Great Recession on household incomes, there has been less attention paid to the effects on individual income. Using pooled data from the Family Resources Survey, we address the question of which groups gained and which lost in terms of their individual income between 2005-8 and 2009-12. We investigate changes in median individual incomes and across the distribution by age, ethnicity, social class and housing tenure. We also explore the role of different income sources in overall income changes. We find that working age men faced lower individual incomes across the distribution after the recession compared to the earlier period. By contrast, pensioners’ incomes were protected. Working age women overall experienced individual income gains that largely came from higher labour income; but the pattern was more varied, with some groups of women losing out. The income gains that women in couples obtained were not sufficient to counterbalance the losses that men experienced.
    Keywords: individual incomes; Great Recession; income distribution; UK; working age; pensioners; gender; ethnicity; housing tenure
    JEL: D31
    Date: 2015–09
  15. By: Dunsch, Sophie
    Abstract: The unemployment rates, especially youth unemployment rates, increased in various countries of Europe over the last years. This paper examines youth unemployment developments in Germany and Poland with Okun's law to test the hypothesis that young employees are more exposed to the business cycle. I estimate age and country specific Okun coefficients for five different age cohorts. The results show that youth in Poland is more sensitive to the business cycle than adults, while in Germany the difference between the age cohorts is not that distinctive. A further examination of the different labor market institutions regarding youth employment results in policy recommendations beyond GDP growth, such as job-search assistance as short-term and structural reforms regarding education as long-term recommendation.
    Keywords: Youth Unemployment,Okun's Law,Poland,Germany
    JEL: E24 J64
    Date: 2015
  16. By: Di Novi, C.;; Piacenza, M.;; Robone, S.;; Turati, G.;
    Abstract: This paper aims at investigating empirically the impact of fiscal decentralization reforms on inequality in well-being. In particular, we look at the effects on health inequalities following the assignment of larger tax power to the Italian Regions for financing their health expenditure, starting from the end of the Nineties. Exploiting large differences in the size of the tax base across Regions, we find that fiscal decentralization processes that attribute a greater tax power to lower government tiers, besides reducing inefficiencies of healthcare policies, seem to be effective in reducing also within-regional disparities in health outcomes. However, thedegree of economic development – on which depends the actual fiscal autonomy from Central government – significantly affects the effectiveness of these reforms and highlights the importance to take properly into account the specific features of the context where the decentralization of power is implemented.
    Keywords: fiscal decentralization; regional governments; healthcare policy; health inequalities;
    JEL: H75 I14 I1 R50
    Date: 2015–09
  17. By: Götze, Franziska; Mann, Stefan; Ferjani, Ali; Kohler, Andreas; Heckelei, Thomas
    Abstract: The market share of organic food in Switzerland is high compared with that in other European countries, and has grown notably in recent years. However, little is known about why the market share of certain organic food products is higher than that of others. Swiss household expenditure data distinguishing between organic and conventional products allow an analysis at the product level. As a result, factors which determine the market share level of different organic food products are identified. Based on the results of the analysis, the driving factors are categorised into three dimensions. First, a low level of processing is positively related to a high organic market share, suggesting that communicating the benefits of organic food is more successful for unprocessed than for processed products. Second, it appears that the organic consumer in Switzerland is rather critical about buying products that are relatively expensive compared to their conventional counterpart. Products with high price premiums as well as products that are of particular importance for the household in terms of its food budget, therefore, have a clear disadvantage on the market, suggesting that consumers of organic food are price-conscious. Third, Swiss consumers seem to have a high preference for domestically produced organic products, since the characteristic of being an imported product is negatively related to the organic market share level. The results give a first understanding of what is important to Swiss consumers when it comes to the consumption of organic food and imply that supporting organic food production in Switzerland is still promising from a policy perspective as long as the price premium for organic quality stays at a reasonable level.
    Keywords: Consumer Behaviour, Hedonic Analysis, Organic Food, Non-Linear Regression Model, Switzerland, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,
    Date: 2015

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