nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2015‒11‒07
eighteen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Econometric analysis of the wealth gap between East and West Germany By Becker, Gideon
  2. An analysis of wage differentials between full-and part-time workers in Spain By Raúl Ramos; Esteban Sanromá; Hipólito Simón
  3. EU biofuel policies: income effects and lobbying decisions in the German agricultural sector By Deppermann, Andre; Offermann, Frank; Puttkammer, Judith; Grethe, Harald
  4. Electricity market integration and the impact of unilateral policy reforms By Grossi, Luigi; Heim, Sven; Hüschelrath, Kai; Waterson, Michael
  5. Labour Mobility of Migrants and Natives in the European Union: An Empirical Test of the 'Greasing of the Wheels’ Effect of Migrants By Michael Landesmann; Sandra M. Leitner
  6. Early Maternal Employment and Non-cognitive Outcomes in Early Childhood and Adolescence: Evidence from British Birth Cohort Data By Andrew E. Clark; Warn N. Lekfuangfu; Nattavudh Powdthavee; George Ward
  7. Should everybody be in services? The effect of servitization on manufacturing firm performance By Matthieu Crozet; Emmanuel Milet
  8. Demanding Occupations and the Retirement Age By Vermeer, Niels; Mastrogiacomo, Mauro; van Soest, Arthur
  9. Entrepreneurship Competence: An Overview of Existing Concepts, Policies and Initiatives – In-depth case studies report By Ivana Komarkova; Johannes Conrads; Antonio Collado
  10. Do Employer Pension Contributions Reflect Employee Preferences? Evidence from a Retirement Savings Reform in Denmark By Itzik Fadlon; Jessica A. Laird; Torben Heien Nielsen
  11. Does price volatility matter? An assessment along EU food chains By Assefa, Tsion; Lansink, Alfons G.J.M.; Meuwissen, Miranda
  12. Welfare State Regimes and Social Determinants of Health in Europe By Johannes Pöschl; Katarina Valkova
  13. An empirical analysis of hunting lease pricing and value of game in Sweden By Mensah, Justice; Elofsson, Katarina
  14. Photovoltaic self-consumption regulation in Spain: profitability analysis and alternative regulation schemes. By Javier Lopez Prol,; Karl W. Steininger
  15. Determinants of doctorate holders’ job satisfaction. An analysis by employment sector and type of satisfaction in Spain By J. Oriol Escardíbul; Sergio Afcha
  16. Evaluating the efficiency of Italian public universities (2008-2011) in presence of (unobserved) heterogeneity By Tommaso Agasisti; Cristian Barra; Roberto Zotti
  17. Estimating the effect of teenage motherhood on earnings in the long-term:Evidence from a cohort study By Sandy Tubeuf; Rosalind Bell-Aldeghi
  18. Assessing the Value of Quality in the Italian Wine Market By Cacchiarelli, Luca; Carbone, Anna; Esti, Marco; Laureti, Tiziana; Sorrentino, Alessandro

  1. By: Becker, Gideon
    Abstract: Nearly 25 years after the German reunification, vastly different living conditions between East and West Germany still remain. This is particularly true for the distribution of net wealth which is of special importance for the well-being of individuals. Wealth provides utility in a number of ways, for instance, by acting as a buffer against negative income shocks. Using the wealth component of the German Socio-Economic Panel (GSOEP), we find that, on average, members of western households exhibit a net worth more than twice as high as their eastern counterparts. This wealth gap remains roughly stable over time and is much more pronounced for upper parts of the distributions. In this paper, we analyze how much of this gap in per capita net wealth at different parts of the distribution can be attributed to observable factors such as permanent income or sociodemographic characteristics. We carry out our decomposition analysis via a reweighting approach. We find that for the lower part of the distribution, most of the gap can be attributed to the wealth determinants, while this share is much lower at the upper part. The most important contributing factors in this regard are the lower levels of income still prevailing in East Germany as well as differentials in labor market outcomes. Moreover, Germans in younger cohorts feature more similar levels of wealth and are more similar than the older generation. For them the success on the labor market is by far the most important factor. We also find that home ownership rates differ markedly between the two regions and play an important role for the wealth gap even though differences in housing prices also seem matter.
    Keywords: household finance,wealth distribution,wealth gap,decomposition methods,counterfactuals,distributional analysis
    JEL: D14 D31 D63 E21
    Date: 2015
  2. By: Raúl Ramos (Universitat de Barcelona); Esteban Sanromá (Universitat de Barcelona & IEB); Hipólito Simón (Universidad de Alicante & IEI & IEB)
    Abstract: This research examines wage differences between part-time and full-time workers using microdata from the Spanish Structure of Earnings Survey. The main contribution of the paper is related to the analysis of differences along the wage distribution using econometric decomposition methods and introducing a regional perspective. The evidence shows that part-time workers in Spain experience a significant wage disadvantage. This disadvantage is worse in the case of female workers and it is not homogenous along the wage distribution, being comparatively more relevant for the most qualified women and becoming positive for the most qualified men. However, the disadvantage is practically explained by the endowments of characteristics, with a leading role of segregation of part-time workers in low-wage firms. From a regional perspective, although in the majority of the regions wage differences tend to be explained by endowments of characteristics, there are several regions where the unexplained part of the differential is significant, particularly in the case of male workers. These regional differences seem to be related to differences in the market power of firms at the regional level.
    Keywords: Part-time work, wage gap, regional differences
    JEL: J31 J22 J41 R23
    Date: 2015
  3. By: Deppermann, Andre; Offermann, Frank; Puttkammer, Judith; Grethe, Harald
    Abstract: European Union (EU) policymakers have persistently supported first-generation biofuels despite the clearly emerging picture of small or even negative ecological benefits. This leads to the conclusion that support is driven by other objectives, for example income effects. Against this background, the main objective of this article is to analyse the income effects of abolishing biofuel policies, as well as to explore the link between these effects and lobbying decisions taken by farmers’ associations representing different groups of German farmers. Income effects are estimated for different farm types and regions, and differences between farm net value added and family farm income are analysed. To understand the link between income effects and lobbying decisions, our quantitative results are compared with the biofuel policy positions of different farmers’ associations. Our results suggest that, in the long run, average income effects are small, especially if the ownership of production factors is accounted for in the income calculation. Many farms show losses, but others even benefit from lower rental costs and experience positive income effects. Farmers’ associations seem to be able to well assess the income effects of EU biofuel policy for different types of farms.
    Keywords: biofuel policy, income effects, equilibrium model, farm group model, political economics, Agribusiness,
    Date: 2015
  4. By: Grossi, Luigi; Heim, Sven; Hüschelrath, Kai; Waterson, Michael
    Abstract: The harmonization and integration of separate national energy markets to an interconnected internal European market is a top priority of the European Commission. However, as energy policy largely remains subject to national sovereignty, a higher degree of integration can cause unilateral national policies to harm interconnected markets. We investigate the impact of two distinct national reforms in Germany - the phase-out of nuclear power plants after the Fukushima incident and the expansion of renewables promoted by fixed feed-in tariffs and unlimited priority feed-in - on neighbouring countries. We find that the phase-out triggered price increases of up to 19 percent in neighbouring countries whilst the renewable energy support schemes caused a price decrease of up to 0.17 percent for each percent of additional generation from German renewables. We also apply a novel approach to estimate the degree of market integration and find large differences between neighbouring countries in a range from 14 percent to 99 percent. Our findings point up the need for increased efforts to harmonize national energy policies, but also the need to consider the impact of unilateral environmental measures on other countries' supplies in the context of a partially integrated and partly unilateral system.
    Keywords: Energy,Electricity,Market Integration,Nuclear Phase-Out,Renewables
    JEL: L51 L94 Q41 Q48 Q54
    Date: 2015
  5. By: Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Abstract In the context of current developments of large refugee movements across Europe, it is important to study the impact of migration flows in the European economy. One aspect of this is the impact on mobility patterns (i.e. in and out of jobs, across sectors, across regions and across types of jobs). This paper presents a comprehensive account of key determinants of labour mobility of both migrant and native workers across the EU economies between 2000 and 2011. The main indicators examined are the gross employment reallocation and net employment creation rates (GERR and NECR, respectively) taken over from Davis and Haltiwanger (1992, 1999). We analyse differences in mobility patterns in the EU‑15 and the NMS as regards age groups, skill groups, gender, length of job tenure, and the impact of labour market institutions. A particular focus of the study is the potential of migrants to ‘grease the wheels’ (Borjas, 2001) of labour markets by either themselves showing higher mobility rates or impacting on the mobility patterns of natives or existing migrants. This impact is analysed in great detail with respect to the differentiated impact of migrants of different skill groups or from different countries of origin on patterns of labour market mobility. Furthermore, apart from overall labour market mobility, we also examine inter-regional and inter-sectoral mobility.
    Keywords: labour mobility, employment reallocation, net employment creation, European Union, international migration, inter-sectoral and regional migration
    JEL: F22 J61 J62 J63 R23
    Date: 2015–08
  6. By: Andrew E. Clark; Warn N. Lekfuangfu; Nattavudh Powdthavee; George Ward
    Abstract: We analyse the relationship between early maternal employment and child emotional and behavioural outcomes in early childhood and adolescence. Using rich data from a cohort of children born in the UK in the early 1990s, we find little evidence of a strong statistical relationship between early maternal employment and any of the emotional outcomes. However, there is some evidence that children whose mother is in full-time employment at the 18th month have worse behavioural outcomes at ages 4, 7, and 12. We suggest that these largely insignificant results may in part be explained by mothers who return to full-time work earlier being able to compensate their children: we highlight the role of fathers' time investment and alternative childcare arrangements in this respect.
    Keywords: Child outcomes, maternal employment, well-being, conduct, ALSPAC
    JEL: D1 I3 J6
    Date: 2015–10
  7. By: Matthieu Crozet; Emmanuel Milet
    Abstract: The servitization of the manufacturing sector refers to the evolution of manufacturers' capabilities to offer services as a complement to or a substitute for the goods that they produce. A vast literature has described these strategies and has shown that this phenomenon is widespread and growing in most developed economies. However, very little systematic evidence of the extent or consequences of servitization based on a comprehensive dataset of firms exists. In this paper, we provide such evidence using exhaustive data for French manufacturing firms between 1997 and 2007. We find that the vast majority of French manufacturers sell services in addition to producing goods. The shift toward services is growing steadily but at a slow pace. We also provide evidence of a causal impact of servitization on firm performance. Controlling for various sources of endogeneity bias, we find that firms that start selling services experience an increase in their profitability between 3.7% and 5.3%, increase their employment by 30%, increase their total sales by 3.7%, and increase their sales of goods by 3.6%. The results hold for most industries, although some heterogeneity exists.
    Keywords: Servitization;Deindustrialisation;Firm performance
    JEL: L23 L25 L6
    Date: 2015–10
  8. By: Vermeer, Niels (Dutch Ministry of Finance); Mastrogiacomo, Mauro (De Nederlandsche Bank); van Soest, Arthur (Tilburg University)
    Abstract: In several countries where pensions are reformed and the retirement age is increased, the issue came up to make an exception for workers with demanding occupations, since health considerations may make it unreasonable to expect them to work longer. We analyze unique Dutch survey data on the public's opinions on what are demanding occupations, on whether it is justified that someone with a demanding occupation can retire earlier, and on the willingness to contribute to an earlier retirement scheme for such occupations through higher taxes. A representative sample of Dutch adults answered several questions about hypothetical persons with five different jobs. We use panel data models, accounting for confounding factors affecting the evaluations of the demanding nature of the jobs as well as their reasonable retirement age or willingness to contribute to an early retirement scheme. We find that the Dutch think that workers in demanding occupations should be able to retire earlier. A one standard deviation increase in the perceived demanding nature of an occupation translates into a twelve months decrease in the reasonable retirement age and a 30 to 40 percentage points increase in the willingness to contribute to an early retirement scheme for that occupation. There is some evidence that respondents whose own job is similar to the occupation they evaluate find this occupation more demanding than other respondents, but respondents are also willing to contribute to early retirement of demanding occupations not similar to their own.
    Keywords: retirement age, public pensions, job characteristics, social preferences
    JEL: J26 J81 H55
    Date: 2015–10
  9. By: Ivana Komarkova (CARSA); Johannes Conrads (CARSA); Antonio Collado (CARSA)
    Abstract: Entrepreneurship is recognized by the European Union as one of the eight key competences for lifelong learning, and thus necessary for all members of a knowledge-based society. It is also regarded as an enabler for economic recovery, growth, job creation, employment, inclusion, poverty reduction, and also innovation and productivity. As such, it has become a policy priority and measures have been taken to incorporate entrepreneurship into different policy fields, including education. Education and training systems across Europe are indeed taking entrepreneurship progressively into account. This report presents 10 case studies, which address how entrepreneurship as a key competence is taught and learnt in real settings across all levels of education (i.e. primary, secondary, tertiary) and learning contexts (i.e. formal, non-formal and informal) in Europe. The in-depth analysis of the 10 cases was carried out through several rounds of desk research, direct enquiries and face-to-face or telephone interviews, and expert consultation. This comparative analysis highlights similarities and differences in the development of entrepreneurship competence in terms of pedagogical approaches, assessment practices, evaluation strategies, impact, factors of transferability and sustainability. This report is an interim output of the JRC-IPTS funded study 'Entrepreneurship Competence: An overview of existing concepts, policies and initiatives (OvEnt)' conducted by CARSA. The OvEnt study is part of the wider research agenda of JRC-IPTS on 'ICT for Learning and Skills' that aims to provide evidence on how skills and key competences that our digital society needs are acquired, certified and recognised.
    Keywords: Entrepreneurship Competence, Sense of initiative and entrepreneurship, Entrepreneurship education, Lifelong learning, key competences, reference framework, literature review, inventory, case studies
    JEL: I20 Z00 J24 J20 J29
    Date: 2015–10
  10. By: Itzik Fadlon; Jessica A. Laird; Torben Heien Nielsen
    Abstract: This paper studies how firms set contributions to employer-provided 401(k)-type pension plans. Using a reform that decreased the subsidy for contributions to capital pension accounts for Danish workers in the top income tax bracket, we provide strong evidence that employers' contributions are based on their employees' savings preferences. We find an immediate decrease in employer contributions to capital accounts, whose magnitude increased in the share of employees directly affected by the reform. This response was large relative to average employee responses within private IRA-type plans and was accompanied by a similar-magnitude shift of employer contributions to annuity accounts.
    JEL: J30 J32 J33
    Date: 2015–10
  11. By: Assefa, Tsion; Lansink, Alfons G.J.M.; Meuwissen, Miranda
    Abstract: Agricultural prices in European food markets have become substantially more volatile over the past decade thereby exposing agribusinesses to risk and uncertainty. How food chain actors perceive and manage the risk from price volatility remained unexplored so far. We interviewed farmers, wholesalers, processors and retailers in six European food supply chains on their price volatility perceptions and management strategies. Contrary to common belief, findings show that price volatility matters not only to farmers but to all food chain actors. Actors perceive a more than 15% deviation of prices from their expected levels as price volatility. We further show that three factors determine whether price volatility is perceived as risky: the persistence, the reason and the direction of price deviations. Price volatility management strategies in EU food chains are very diverse and well beyond futures and forward contracts. The scope for policy interventions is identified based on strategy gaps identified in the chains.
    Keywords: Price volatility perceptions, management strategies, European food supply chains, in-depth interviews., Financial Economics, Food Consumption/Nutrition/Food Safety, Q11,
    Date: 2015
  12. By: Johannes Pöschl (The Vienna Institute for International Economic Studies, wiiw); Katarina Valkova
    Abstract: Abstract The aim of the paper is to identify social determinants of poor health when considering differences across countries and types of welfare states. In order to do so, we first perform a cluster analysis to classify countries into groups of welfare state models. The innovation of the paper is clustering method using the information about the actual redistributional effects and country health care expenditures instead of concentrating on country institutional arrangements. Thereafter, a logistic regression model is used to investigate the social determinants of poor health status in Europe, taking into account demographic and socioeconomic factors, indicators of relative poverty and finally environmental factors. Following the recent literature, we also apply an alternative estimation strategy and employ a multilevel logistic regression of individuals nested within countries with random intercept on the country level. The results show that, apart from age, inequality at the individual level is mostly determined by the education level, income and employment status as well as indicators of relative poverty. Environmental factors as well as other demographic characteristics such as migration or the marital status seem to matter less. Moreover, welfare state models play an important role in determining health inequalities across countries, even after controlling for a large number of socioeconomic characteristics at the individual level.
    Keywords: health, welfare regimes, health care expenditures, poverty, cluster analysis, multilevel analysis
    JEL: H51 I18
    Date: 2015–07
  13. By: Mensah, Justice (Department of Economics, Swedish University of Agricultural Sciences); Elofsson, Katarina (Department of Economics, Swedish University of Agricultural Sciences)
    Abstract: Hunting generates considerable benefits to hunters, while simultaneously causing damages to agriculture and forestry. The aim of this paper is to estimate hunting values for multiple hunted species, by disentangling the role of wildlife harvesting opportunities from other factors which affect hunting lease prices. We examine the determinants of hunting lease prices in Sweden using both spatial and non-spatial econometric techniques. Our analysis confirms considerable hunting values for large ungulates such as moose and fallow deer. Results also suggest that hunters prefer to have a diverse set of ungulate species on their hunting ground. Moreover, the study reveals the presence of spatial spillovers in lease prices, implying that landowners have little scope for exerting monopoly power on the lease market. It also indicate that proximity to urban centers, income, size of the hunting field, and congestion cost are key drivers of hunting lease prices.
    Keywords: Valuation; Wildlife; Hedonic price method
    JEL: O13 Q51
    Date: 2015–10–26
  14. By: Javier Lopez Prol, (University of Graz); Karl W. Steininger (University of Graz)
    Abstract: After three years of discussion, the regulation of photovoltaic self-consumption in Spain has been finally passed on October 9th, 2015. We assess the impact of this regulation on the profitability (reflected by Internal Rate of Return) of potential investors in three different segments: residential and small and medium-size enterprises of the commercial and industrial sectors, paying special attention to the effect of the backup charge and the effect of financing cost. We then analyse three alternative regulation schemes focusing on the price at which the surplus electricity of the PV system is sold to the grid: mere self-consumption, net metering and net billing. For each of the investing segments and regulation schemes, we consider alternative configurations: with and without backup charge, and with own capital versus 80% externally financed capital at market interest rates. The results show that the current regulation will hinder the diffusion of self-consumption PV installations by making them economically infeasible across all segments. We further identify that this regulation creates incentivizes for inefficient behaviour, such as disconnection from the grid. According to our results and to the recommendations of the European Commission, we find that a net billing scheme would be more suitable for promoting PV diffusion at minimum cost for the system.
    Keywords: Net Metering; Net Billing; Internal Rate of Return; Royal Decree 900/2015, PV
    JEL: N74 O13 Q42 Q48
    Date: 2015–10
  15. By: J. Oriol Escardíbul (Universitat de Barcelona & IEB); Sergio Afcha (Pontificia Universidad Católica del Perú)
    Abstract: In this study we analyze the determinants of job satisfaction of doctorate holders in Spain. Specifically, we consider overall job satisfaction as well as basic and motivational satisfaction following Herzberg’s typology (based on Maslow’s hierarchy of needs). Using data from the Spanish Survey on Human Resources in Science and Technology of 2009, representative of the Spanish doctoral graduate population, we develop an analysis by gender and institutional sector (university and non-university) where employees are employed. We propose OLS regression to identify the determinants of basic and motivational satisfaction at job as well as an ordered logit model for overall job satisfaction. Results do not allow us to confirm Herzberg’s differentiation for the Spanish PhD holders, since factors related with basic motivation (such as salary or working conditions referred to ‘safety’) have a bearing on all types of job satisfaction (not only the basic one as expected). Likewise, results do not show significant differences by gender. However, it seems that these ‘basic’ needs are less important for the job satisfaction those PhD holders working at the University. Our results seem reasonable for a Southern European country where monetary conditions in labor relations are worse than in other developed countries.
    Keywords: Gender, Herzberg, Maslow, job satisfaction, PhD labor market, Spain
    JEL: I23 J24 J31 J32
    Date: 2015
  16. By: Tommaso Agasisti (Politecnico di Milano); Cristian Barra (Università di Salerno); Roberto Zotti (Università di Salerno)
    Abstract: In assessing universities’ performances, the most recent literature underlined that the efficiency scores may suffer from the presence of incidental parameters or time-invariant, often unobservable, effects that lead to biased efficiency estimates. To deal with this problem, we apply a procedure developed by Wang and Ho (2010), for estimating the efficiency in Italian higher education through a multi-output parametric distance function. We show that models which do not consider unobservable heterogeneity tend to estimate higher efficiency scores; we also study the determinants of efficiency. The findings provide a clue towards the expansion of pro-competitive policies in the Italian higher education sector, consistently with the interpretation that when market forces operate, there are benefits for university efficiency. When exploring differences in universities’ performances, by geographical areas, we claim that maintaining State-level policies can be detrimental for overall efficiency, and instead special interventions for universities in the South should be designed.
    Keywords: efficiency, unobserved heterogeneity, higher education
    JEL: I24 I23 C14 C67
    Date: 2015–11
  17. By: Sandy Tubeuf (Academic Unit of Health Economics, Leeds Institute of Health Sciences, University of Leeds); Rosalind Bell-Aldeghi (Centre de Recherche sur les Stratégies Economiques, Université de Franche Comté)
    Abstract: Teenage motherhood is seen as a trigger to lower social and economic achievements. Differences in long-term economic outcomes such as earnings of teenage mothers in comparison with nonteenage mothers has however been seldom studied and the causality link is not straightforward. In particular it is unclear whether teenage mothers would have been able to achieve better socioeconomic outcomes if they had not had a child in their teenage years. In this paper we use data from the 1970 British Cohort Study and we evaluate the effect of teenage motherhood on the hourly earnings at age 30, 34, 38 and 42 using alternative non-experimental estimation methods to control for possible biases including linear regression, matching methods, and Heckman sample selection models. Our findings confirm that teenage motherhood has a significant negative effect on hourly wages. Our preferred estimates show a wage loss between 30% and 12% when comparing teenage mothers with any other women in their generation and between 23% and 9% when comparing with women who delayed childbearing. When comparing to women who have not had any children, the pay penalty ranges between 39% and 29% over the four age points. The use of Heckman selection and matching methods to correct from selection into employment as well as into teenage parenthood allows us to correct estimates of the proportion of wage loss due to teen birth. We conclude that there is evidence of long-term scarring effects of teenage motherhood on earnings of women in the UK.
    Keywords: evaluation; matching; propensity score; selection; socioeconomic outcomes; teen births; earnings
    JEL: J13 J31
    Date: 2015
  18. By: Cacchiarelli, Luca; Carbone, Anna; Esti, Marco; Laureti, Tiziana; Sorrentino, Alessandro
    Abstract: The paper aims at: i) understanding to what extent wine experts’ evaluations are influenced by different quality clues ii) assessing the role and effectiveness of different quality clues in the creation of price. To meet these goals we set two independent equations. The first -estimated via an ordered logit- explaining the score obtained by each wine with a bunch of attributes of the wine and of its production process. The second equation is a hedonic price model –estimated via an interval regression- where price is a function of a large number quality clues. The analysis covers 2,523 wines from three Italian Regions as reviewed by Veronelli guide. Results indicates that: i) few attributes seems to systematically impact experts’ judgments; ii) many quality clues are associated with significant price premiums; iii) in some cases consumers give value to quality clues along with experts while in other cases there is no alignment.
    Keywords: hedonic price, quality clues, experts’ evaluation, interval regression, ordered logit model, Food Consumption/Nutrition/Food Safety, International Development, D400,
    Date: 2015

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