nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2015‒12‒12
eighteen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. The socioeconomic and demographic characteristics of United Kingdom junior doctors in training across specialities By Idaira Rodríguez-Santana; Martin Chalkley
  2. From the Cradle to the Grave: the Effect of Family Background on the Career Path of Italian Men By Michele Raitano; Francesco Vona
  3. An Attempt to Disperse the Italian Interlocking Directorship Network: Analyzing the Effects of the 2011 Reform By Carlo Drago; Roberto Ricciuti; Paolo Santella
  4. The lasting health impact of leaving school in a bad economy: Britons in the 1970s recession By Garrouste, Clémentine; Godard, Mathilde
  5. Towards Cross-country comparable reference budgets in Europe: first results of a concerted effort By Tim Goedemé; Bérénice Storms; Sara Stockman; Tess Penne; Karel Van den Bosch
  6. Self-Reported Health and Gender: the Role of Social Norms By Caroli, Eve; Weber-Baghdiguian, Lexane
  7. Quantifying the Ancillary Benefits of the Representative Concentration Pathways on Air Quality in Europe By Milan Šcasný; Emanuele Massetti; Jan Melichar; Samuel Carrara
  8. Foreign Fighters in Syria and Iraq and the Socio-Economic Environment They Faced at Home: a Comparison of European Countries By Philip Verwimp
  9. How much Electricity do we Consume? A Guide to German and European Electricity Consumption and Generation Data By Maximilian Schumacher; Lion Hirth
  10. From barrier to resource? Modelling the border effects on metropolitan functions in Europe By SOHN Christophe; LICHERON Julien
  11. Government quality and the economic returns of transport infrastructure investment in European regions. By Riccardo Crescenzi; Marco Di Cataldo; Andrés Rodríguez-Pose
  12. The Role of Natural Gas in the EU Decarbonisation Path By Manfred Hafner; Simone Tagliapietra
  13. The social cost of illegal drug consumption in Spain: identifying and quantifying its elements. By Berta Rivera; Bruno Casal; Luis Currais
  14. Reflections on the Current Debate on How to Link Flood Insurance and Disaster Risk Reduction in the European Union By S. Surminski; J.C.J.H. Aerts; W.J.W. Botzen; P. Hudson; J. Mysiak; C. D. Pérez-Blanco
  15. Can EU’s Decarbonisation Agenda Break the State-Company Axis in the Power Sector? By Thomas Sattich; Inga Ydersbond; Daniel Scholten,
  16. Since you’re so rich, you must be really smart”: Talent and the Finance Wage Premium By Böhm, Michael; Metzger, Daniel; Strömberg, Per
  17. Weather and Income: Lessons from the Main European Regions By David García-León
  18. Who do you blame in local finance? An analysis of municipal financing in Italy By Massimo Bordignon; Veronica Grembi; Santino Piazza

  1. By: Idaira Rodríguez-Santana (Centre for Health Economics, University of York, UK.); Martin Chalkley
    Abstract: Objective. To analyse the distribution of socioeconomic and demographic characteristics of medical trainees across different specialties in the UK. Design. Mixed logistic regression analysis of data from the National Training Survey 2013 to quantify evidence of systematic relationships between doctors’ characteristics and the specialty they are training in, controlling for the correlation between these characteristics. Setting. Data from the National Training Survey 2013, carried out by the General Medical Council. Participants. Postgraduate medical trainees. Main outcome measures. Odds ratios (calculated for both all trainees and a subsample of UK educated trainees) relating gender, age, ethnicity, place of studies, socioeconomic background and parental education to a trainee’s specialty. Results. There are systematic and substantial differences between specialties in respect of gender, ethnicity, age and socio-economic background. Being male, white British, from a better-off socioeconomic background, trained in a UK university or having parents who have tertiary education increases the chances of being in surgical specialties relative to general practice. Being male, nonwhite, mature, trained in an overseas university, from a better-off socio-economic background, or having parents who have tertiary education increases the chances of being in psychiatric specialties relative to general practice. Measured relative to general practice the gender gap is largest for surgical specialities, the ethnicity gap is greatest for acute care, emergency medicine and anaesthetics and the age-gap is large and positive for psychiatry and large and negative for acute care, emergency medicine and anaesthetics. Conclusions. Differences in the characteristics of trainees will feed into the composition of the practising profession. The persistent gender gap, the underrepresentation of those coming from the disadvantaged backgrounds and the inequity of educational background in some specialties will condition perceptions of the NHS and the medical profession. Our analysis contributes to a fuller understanding of the nature of these differences, which may be a matter for public concern and policy action. Remedial action if required will necessitate a better understanding of the processes of selection and self-selection into specialties that gives rise to these observed differences
    Date: 2015–12
  2. By: Michele Raitano (Department of Economics and Law, Sapienza University of Rome); Francesco Vona (OFCE SciencesPo and SKEMA Business School)
    Abstract: This paper investigates the influence of parental education on the returns to experience of Italian men using a new longitudinal dataset that contains detailed information on individual working histories. Our favourite panel estimates indicate that an additional year of parental education increases sons' weekly wages by 11.7% after twenty years of experience and that 71% of this effect emerges during the career. We show that this effect holds irrespective of individual abilities, and it appears the result of both a glass ceiling effect, due to the complementarity between parental education and son’s abilities, and a parachute effect, associated with family labour market connections.
    Keywords: Intergenerational Inequality, Parental Education, Experience-Earnings profiles, Human Capital
    JEL: J62 J24 J31
    Date: 2015–08
  3. By: Carlo Drago (“Niccolò Cusano” University); Roberto Ricciuti (University of Verona and CESifo); Paolo Santella (ESMA)
    Abstract: The purpose of this paper is to analyze the effects on the Italian directorship network of the corporate governance reform that was introduced in Italy in 2011 to prevent interlocking directorships in the financial sector. Interlocking directorships are important communication channels among companies and may have anticompetitive effect. We apply community detection techniques to the analysis of the networks in 2009 and 2012 to ascertain the effect of the reform. We find that, although the number of interlocking directorships decreases in 2012, the reduction takes place mainly at the periphery of the network whereas the network core is stable, allowing the most connected companies to keep their strategic position.
    Keywords: Interlocking Directorships, Corporate Governance, Community Detection, Social Networks
    JEL: C33 G34 G38 L14
    Date: 2015–10
  4. By: Garrouste, Clémentine; Godard, Mathilde
    Abstract: This paper investigates whether leaving school in a bad economy deteriorates health in the long-run. It focuses on individuals in England and Wales who left full-time education in their last year of compulsory schooling immediately after the 1973 oil crisis. Unemployment rates sharply increased in the wake of the 1973 oil crisis, so that between 1974 and 1976, each school cohort faced worse economic conditions at labour-market entry than the previous one. Our identification strategy relies on the comparison of very similar pupils – born the same year and with a similar quantity of education (in months) – whose school-leaving behaviour in different economic conditions was exogeneouly implied by compulsory schooling laws. Unlike school-leavers who did postpone their entry on the labour market during the 1980s and 1990s recessions, we provide evidence that pupils’ decisions to leave school at compulsory age immediately after the 1973 oil crisis were not endogeneous to the contemporaneous economic conditions at labour market entry. We use a repeated cross section of individuals over 1983-2001 from the General Household Survey (GHS) and take a lifecourse perspective, from 7 to 26 years after school-leaving. Our results show that poor economic conditions at labour-market entry are particularly damaging to women’s health. Women who left school in a bad economy are more likely to report poorer health and to consult a general practitioner over the whole period under study (1983-2001). Additional evidence suggests that they are also more likely to suffer from a longstanding illness/disability over the whole period. As for men, the health impact of poor economic conditions at labour-market entry is more mixed, and not robust across all specifications. However, we never find that leaving school in a bad economy is beneficial to their health. Finally, our results show that leaving school in a bad economy does not have a lasting impact on labour-market outcomes from 7 to 26 years after school-leaving, neither for men, nor for women.
    Keywords: health, school-leaving, macroeconomic shocks
    Date: 2015–05
  5. By: Tim Goedemé; Bérénice Storms; Sara Stockman; Tess Penne; Karel Van den Bosch
    Abstract: In Europe, reference budgets are increasingly recognised as a helpful tool for policy making and monitoring. If developed in a cross-country comparable way, reference budgets could in addition prove to be useful for cross-national learning and contextualising the EU social indicators. However, current reference budgets are not comparable across countries. In this paper we report on the first results of a concerted effort to construct comparable reference budgets for adequate social participation in Antwerp, Athens, Barcelona, Budapest, Helsinki and Milan. We start from a single theoretical and methodological framework and track carefully differences in institutional settings, climate, culture, availability and prices of goods and services that justify cross-country variations in contents and levels of reference budgets.Results indicate that adequate social participation requires access to different goods and services in the six cities, but that at the same time the needs to be fulfilled are rather similar, such that the variation in the level of reference budgets is less than what would be expected on the basis of differences in median household incomes. Results also show that constructing comparable reference budgets requires substantial and intensive coordination. We suggest directions in which our approach could be improved.
    Keywords: reference budgets, minimum income, budget standard, social participation, adequacy, comparability
    JEL: D31 D63 I32 I38 O52
    Date: 2015–11
  6. By: Caroli, Eve; Weber-Baghdiguian, Lexane
    Abstract: We investigate the role of social norms in accounting for differences in self-reported health as reported by men and women. Using the European Working Conditions Survey (EWCS, 2010), we first replicate the standard result that women report worse health than men, whatever the health outcome we consider – i.e. general self-assessed health, well-being but also more specific symptoms such as hearing problems, skin problems, backache, muscular pain in upper or lower limbs, headache and eyestrain, stomach ache, respiratory difficulties, depression and anxiety, fatigue and insomnia. We then proxy social norms by the gender structure of the workplace environment and study how the latter affects self-reported health for men and women separately. Our findings indicate that individuals in workplaces where women are a majority tend to report worse health than individuals employed in mixed-gender work environments, be they men or women. The opposite holds for individuals in workplaces where men are a majority: men tend to report fewer health problems than when employed in mixed-gender environments and the same goes for women – although the effects are not significant at conventional levels. These results are robust to controlling for a large array of working condition indicators, which allows us to rule out that the poorer health status reported by individuals working in female-dominated environments could be due to worse job quality. We interpret this evidence as suggesting that social norms associated with specific gender environments play an important role in explaining differences in health-reporting behaviours across sex, at least in the workplace.
    Keywords: health, gender, social norms, job quality
    Date: 2015–09
  7. By: Milan Šcasný (Charles University in Prague, Environment Center); Emanuele Massetti (Georgia Institute of Technology, CESIfo and FEEM); Jan Melichar (Charles University in Prague, Environment Center); Samuel Carrara (Fondazione Eni Enrico Mattei)
    Abstract: This paper presents estimates of the economic benefit of air quality improvements in Europe that occur as a side effect of GHG emission reductions. We consider three climate policy scenarios that reach radiative forcing levels in 2100 of three Representative Concentration Pathways (RCPs). These targets are achieved by introducing a global uniform tax on all GHG emissions in the Integrated Assessment Model WITCH, assuming both full as well as limited technological flexibility. The resulting consumption patterns of fossil fuels are used to estimate the physical impacts and the economic benefits of pollution reductions on human health and on key assets by implementing the most advanced version of the ExternE methodology with its Impact Pathway Analysis. We find that the mitigation scenario compatible with +2°C reduces total pollution costs in Europe by 76%. Discounted ancillary benefits are more than €2.5 trillion between 2015 and 2100. The monetary value of reduced pollution is equal to €22 per abated ton of CO2 in Europe. Less strict climate policy scenarios generate overall smaller, but still considerable, local benefits (14 € or 18 € per abated ton of CO2). Without discounting, the ancillary benefits are in a range of €36 to €50 per ton of CO2 abated. Cumulative ancillary benefits exceed the cumulative additional cost of electricity generation in Europe. Each European country alone would be better off if the mitigation policy was implemented, although the local benefits in absolute terms vary significantly across the countries. We can identify the relative losers and winners of ancillary benefits in Europe. In particular, we find that large European countries contribute to as much as they benefit from ancillary benefits. The scenarios with limited technology flexibility do deliver results that are similar to the full technology flexibility scenario.
    Keywords: Ancillary benefits, External costs, Climate change mitigation, Integrated Assessment Models, ExternE, Impact Pathway Analysis
    JEL: Q47 Q51 Q53 Q54
    Date: 2015–10
  8. By: Philip Verwimp
    Abstract: The contribution looks at the gap in labour market and school outcomes between first and second generation migrants and non-migrants in European countries. It correlates these socio-economic data with the number of foreign fighters per million inhabitants. Far from offering a full, causal and micro-level model to understand the story completely, the contribution finds a clear and robust pattern across Europe.
    Keywords: exclusion; labor markets; PISA test scores; europe; terrorism
    JEL: J70 O50 I20
    Date: 2015–12
  9. By: Maximilian Schumacher (Neon Neue Energieökonomik GmbH (Neon), Germany); Lion Hirth (Neon Neue Energieökonomik GmbH (Neon), Germany, Potsdam Institute for Climate Impact Research (PIK), Germany, Mercator Research Institute on Global Commons and Climate Change (MCC), Germany)
    Abstract: Accurate information about electricity generation and consumption is crucial to power system modelling. Several institutions publish such data: for European countries these include the association of system operators ENTSO-E, the EU body Eurostat, and the International Energy Agency; for Germany they comprise the sector organisation BDEW, the federal statistical office Statistisches Bundesamt, the working group AG Energiebilanzen, and the four transmission system operators. This paper compares the terminology, methodology, and reported data of these sources, finding inconsistencies at all three levels. For example, annual electricity generation from wind and solar power in Germany differs by as much as 10% – 20%, depending on who you ask. ENTSO-E publishes “hourly load”, which is widely used among power system modellers. The data documentation provides a (constant) “representativity factor” that should be used to scale the hourly load values. However, we find that the scaling factor, when derived from ENTSO-E’s own more comprehensive data sources (“monthly consumption”), is neither the one provided, nor is it constant. The deviation is particularly worrying in Germany, where peak electricity demand might be underestimated by up to a quarter, and so we propose a scaling procedure that avoids such bias.
    Keywords: Power system data, Power market modelling
    JEL: L94 C63
    Date: 2015–10
  10. By: SOHN Christophe; LICHERON Julien
    Abstract: This paper examines the effects of state borders on the performance of metropolitan areas in Europe. A multi-dimensional conceptualization of border effects is elaborated and empirically tested with the help of statistical modelling. The results suggest that Swiss cases and metropolitan areas recently integrated into the EU benefit the most from their border setting. When considering specific effects, a recent opening of the border as a new contact factor and significant differentiation factors have positive impacts on metropolitan functions. Alternatively, the spatial proximity of the border and its long-standing opening have negative impacts.
    Keywords: Border effects; metropolitan functions; border metropolitan areas; Europe
    Date: 2015–12
  11. By: Riccardo Crescenzi; Marco Di Cataldo; Andrés Rodríguez-Pose
    Abstract: Transport infrastructure investment is a cornerstone of growth-promoting strategies. However, in the case of Europe the relevant literature is increasingly failing to find a clear link between infrastructure investment and economic performance. This may be a consequence of overlooking the role of government institutions. This paper assesses the connection between regional quality of government and the returns of different types of road infrastructure in EU regions during the period between 1995 and 2009. The results unveil a strong influence of regional quality of government on the economic returns of transport infrastructure. In weak institutional contexts, investments in motorways – the preferred option by local governments – yield significantly lower returns than the more humble but possibly more efficient secondary road. Government institutions also affect the returns of transport maintenance investment.
    Keywords: Transport infrastructure, Public capital investment, Economic growth, Institutions, Government quality, Regions, Europe.
    JEL: O43 R11 R40 R58
    Date: 2015–12
  12. By: Manfred Hafner (Associate Researcher, FEEM); Simone Tagliapietra (Senior Researcher, FEEM)
    Abstract: Over the last decade decarbonisation has become a key priority for the EU. However, on the contrary of renewable energy or energy efficiency, the role of gas in this process has never been clearly defined. This uncertainty opens a wide debate on the future role of gas in the EU energy system, particularly vis-à-vis the progressively stronger role of renewables in the EU energy mix. This paper tackles this issue with the aim to explore what role gas might play in making the EU decarbonisation path more balanced and secure up to 2030 and beyond.
    Keywords: Gas, Decarbonisation, EU Energy Policy
    JEL: Q40 Q42 Q48
    Date: 2015–10
  13. By: Berta Rivera; Bruno Casal; Luis Currais
    Abstract: Social and health problems arise when illegal drugs are used or abused, at great cost to individuals and society as a whole. The main objective of this work is to estimate the economic impact of illegal drug consumption in Spain from a social perspective. We conducted a cost-of-illness methodology for the year 2012. Direct costs are distinguished from indirect and intangible ones. The Human Capital approach is taken to carry out an economic assessment of productivity losses due to morbidity and premature death. The total social cost related to drug consumption was somewhere between 962 and 1,172 million euros. The minimum cost of this consumption represented 0.09% of Spain’s GDP for that year. The minimum value for health care costs related to illegal drugs, accounted for 1.1% of spending in the Spanish National Health System. A great economic burden is placed on society when illegal drugs are consumed. In this way, drug prevention and treatment programs can be assessed and health policies will be better informed.
    Keywords: illegal drugs, cost-of-illness studies, human capital, addiction.
    JEL: I18 I31 H75
    Date: 2015–12
  14. By: S. Surminski (The Grantham Research Institute on Climate Change and the Environment London School of Economics, London, United Kingdom); J.C.J.H. Aerts (Institute for Environmental Studies, VU University Amsterdam, the Netherlands); W.J.W. Botzen (Institute for Environmental Studies, VU University Amsterdam, the Netherlands); P. Hudson (Institute for Environmental Studies, VU University Amsterdam, the Netherlands); J. Mysiak (Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo sui Cambiamenti Climatici); C. D. Pérez-Blanco (Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo sui Cambiamenti Climatici)
    Abstract: Flood insurance differs widely in scope and form across Europe. Against the backdrop of rising flood losses a debate about the role of EU policy in shaping the future of this compensation tool is led by policy makers and industry. In this paper we investigate if and how current EU policies influence flood insurance. While the question of supply and demand is at the core of the debate, we argue that another key dimension is often overlooked: how to use insurance as a lever for risk reduction and prevention efforts. We investigate if and how current EU policies interplay with these two dimensions and then reflect on the national policy level, by illustrating two conflicting cases of flood insurance: the United Kingdom (UK), where flood insurance provision is widely available, but subject to current reform, and the Netherlands, where efforts to introduce flood insurance have only recently failed. In analysing the current positions on the role of the EU in shaping flood insurance we conclude that there is wide agreement that harmonisation of flood insurance offering across the EU is unlikely to be effective. We conclude that there is clear scope for the EU to play a greater role in linking risk transfer and prevention, beyond existing channels, to ensure an integrated approach to flood risk management across the EU.
    Keywords: Flood Insurance, Disaster Risk Reduction, Europe
    JEL: Q54 Q58 G22
    Date: 2015–05
  15. By: Thomas Sattich (Vrije Universiteit Brussel, Belgium); Inga Ydersbond (University of Oslo, Norway); Daniel Scholten,
    Keywords: Decarbonisation, Electricity generation, Energy policy, European Union, Interconnectors, Member States, Political negotiations, Policy making, Power grid, Power transmission system, Power pools, Power system, Regulatory framework, Renewable energy
    JEL: O13 Q4 Q42 Q48
    Date: 2015–06
  16. By: Böhm, Michael (University of Bonn); Metzger, Daniel (Stockholm School of Economics); Strömberg, Per (SIFR)
    Abstract: Relative pay in the financial sector has experienced an extraordinary increase over the last few decades. A proposed explanation for this pattern has been that the demand for skilled workers in finance has risen more than in other sectors. We use Swedish administrative data, which include detailed cognitive and non-cognitive test scores as well as performance in high-school and university, to examine the implications of this hypothesis for talent allocation and relative wages in the financial sector. We find no evidence that the selection of talent into finance increased or improved, neither on average nor at the top of the talent distribution. A changing composition of talent or their returns cannot account for the surge in the finance wage premium. These findings alleviate concerns about a “brain drain” into finance at the expense of other sectors, but they also suggest that rents in finance are high, increasing, and largely unexplained.
    Keywords: Finance wage premium; talent allocation; wage inequality
    JEL: G20 J31 M52
    Date: 2015–11–01
  17. By: David García-León (Universidad de Alicante)
    Abstract: Some recent papers by Dell et al. (2009) and Dell et al. (2012) (DJO) relating weather and economic outcomes, have delivered meaningful messages with clear implications to the effects of a changing climate. In a nutshell, the authors claim that a 1°C increase in global average temperatures would harm both the level and growth capacities of relatively poor countries, leaving rich countries basically unaffected. In this study, we make use of a detailed weather and economic dataset covering the main regions of the five largest economies in the Euro area in an attempt to refute the previous affirmation. In particular, we find in our sample that global warming affects, although in a modest manner, all regions within well-developed countries in the long-term (level effect). As in DJO, the level effect in poor regions is exacerbated. The latter regions also suffer from a slight negative short-term effect (growth effect). We claim also that the larger short-time response of these regions to a climate shock is partially adapted in the long-run.
    Keywords: Economic Growth, Weather, Ricardian Analysis, Developed Economies, Climate Change, Adaptation, NUTS
    JEL: O1 O4 Q51 Q54 Q59 R11
    Date: 2015–05
  18. By: Massimo Bordignon (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Veronica Grembi; Santino Piazza
    Abstract: In a political agency model, we study the effect of introducing a less transparent tax tool for the financing of local governments. We show that lower quality politicians would use more the less transparent tax tool to enhance their probability of re-election. This prediction is tested by studying a reform that in 1999 allowed Italian municipalities to partially substitute a more accountable source of tax revenue (the property tax) with a less transparent one (a surcharge on the personal income tax of residents). Using a Difference in Difference approach, we show that in line with theory, Mayors at their first term in power adopted a higher surcharge on the personal income tax and reduced the property tax rate significantly more than Mayors in their final term..
    Keywords: Fiscal federalism, Tax transparency, Agency Model, Property tax.
    JEL: H71 H77 D78
    Date: 2015–12

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