nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2016‒04‒23
twenty papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Female labour supply, human capital and welfare reform By Richard Blundell; Monica Costa Dias; Costas Meghir; Jonathan Shaw
  2. Your Retirement and My Health Behaviour: Evidence on Retirement Externalities from a Fuzzy Regression Discontinuity Design By Müller, Tobias; Shaikh, Mujaheed
  3. Labor Market Reforms in Europe: Towards More Flexicure Labor Markets? By Eichhorst, Werner; Marx, Paul; Wehner, Caroline
  4. A cross-country comparison of gender differences in job-related training: The role of working hours and the household context By Boll, Christina; Bublitz, Elisabeth
  5. Rent sharing to control non-cartel supply in the German cement market By Harrington, Joseph E.; Hüschelrath, Kai; Laitenberger, Ulrich
  6. The Effect of Local Taxes on Firm Performance: Evidence from Geo-referenced Data By Federico Belotti; Edoardo Di Porto; Gianluca Santoni
  7. Trade in parts and components across Europe By Richard Frenscha; Jan Hanousekb; Evzen Kocenda
  8. The design of in-work benefits: how to boost employment and combat poverty in Belgium By Dieter Vandelannoote; Gerlinde Verbist
  9. Employment effects of the new German minimum wage : evidence from establishment-level micro data By Bossler, Mario; Gerner, Hans-Dieter
  10. Product Standards and Margins of Trade: Firm-Level Evidence Product Standards and Margins of Trade: Firm-Level Evidence By Lionel Fontagné; Gianluca Orefice; Roberta Piermartini; Nadia Rocha
  11. Great Recession and Disability in Spain By Sergi Jiménez-Martín; Arnau Juanmarti Mestres; Judit Vall-Castello
  12. Does Postponing Minimum Retirement Age Improve Healthy Behaviours Before Retirement? Evidence from Middle-Aged Italian Workers By Bertoni, Marco; Brunello, Giorgio; Mazzarella, Gianluca
  13. The Impact of the National Minimum Wage on Industry-Level Wage Bargaining in France. By E. Gautier; D. Fougère; S. Roux
  14. Regional Human Capital and University Orientation: A case study on Spain By Sánchez-Barrioluengo, Mabel; Consoli, Davide
  15. The Impact of Television Programmes on Teenage Career Aspirations: The 'MasterChef Effect' By Di Pietro, Giorgio
  16. Higher Price, Lower Costs? Minimum Prices in the EU Emissions Trading Scheme By Jan Abrell; Sebastian Rausch; Hidemichi Yonezawa
  17. Public Support to Innovation Strategies By Laura Barbieri; Daniela Bragoli; Flavia Cortelezzi; Giovanni Marseguerra
  18. On the Significance of Labor Reallocation for European Unemployment: Evidence from a Panel of 15 Countries By Dimitrios Bakas; Theodore Panagiotidis; Gianluigi Pelloni
  19. At the Origins of Learning: Absorbing Knowledge Flows from Within or Outside the Team? By Charles Ayoubi; Michele Pezzoni; Fabiana Visentin
  20. Wealth distribution and taxation in EU Members By Anna Iara

  1. By: Richard Blundell (Institute for Fiscal Studies and IFS and UCL); Monica Costa Dias (Institute for Fiscal Studies and Institute for Fiscal Studies); Costas Meghir (Institute for Fiscal Studies and Yale University); Jonathan Shaw (Institute for Fiscal Studies and Institute for Fiscal Studies)
    Abstract: We estimate a dynamic model of employment, human capital accumulation - including education, and savings for women in the UK, exploiting tax and benefit reforms, and use it to analyze the effects of welfare policy. We find substantial elasticities for labor supply and particularly for lone mothers. Returns to experience, which are important in determining the longer-term effects of policy, increase with education, but experience mainly accumulates when in full-time employment. Tax credits are welfare improving in the UK and increase lone-mother labor supply, but the employment effects do not extend beyond the period of eligibility. Marginal increases in tax credits improve welfare more than equally costly increases in income support or tax cuts.
    Date: 2016–02
  2. By: Müller, Tobias; Shaikh, Mujaheed
    Abstract: This paper presents evidence on intra-household retirement externalities by assessing the causal effect of partner's retirement on own health behaviour in Europe. We identify partner's retirement effects by applying a fuzzy regression discontinuity (RD) framework using retirement eligibility as an exogenous instrument for partner's retirement status. Using data from the Survey of Health, Ageing and Retirement in Europe (SHARE) we find that while partner's retirement increases own physical activity, it also increases smoking by up to 7 cigarettes a day and increases alcohol intake by 1-2 drinks per day. Furthermore, we find that physical activity increases only for individuals that are themselves retired pointing toward compensated effects that arise due to husband's and wife's retirement being complements. Similarly, an increase in alcohol intake is observed only if the individuals are themselves retired and an increase in smoking is only observed if the partner is a smoker suggesting mutual positive externalities and leisure complementarities.
    Keywords: Retirement Externalities, Health Behaviour, Fuzzy Regression Discontinuity Design
    JEL: C26 I12 J26
    Date: 2016
  3. By: Eichhorst, Werner (IZA); Marx, Paul (University of Southern Denmark); Wehner, Caroline (IZA and Maastricht University)
    Abstract: Labor market segmentation refers to a salient divide between secure and insecure jobs and is related to problems in important areas, including macro‐economic efficiency, workers' wellbeing and repercussions for social cohesion. European countries have started a new wave of labor market reforms in the aftermath of the 2008/09 crisis to tackle a number of issues, including labor market segmentation. This particularly concerns reforms in: (1) employment protection, i.e. dismissal protection and restrictions on fixed‐term contracts; (2) unemployment benefit generosity and coverage; and (3) the intensity of active labor market policies. The paper provides an overview of reform patterns and tries to assess whether and to what extent these reforms have led to more or less dualized labor markets in terms of dismissal protection, the provision of unemployment benefits and access to ALMPs. In particular, we will provide some evidence on potential changes in hirings on temporary contracts.
    Keywords: employment protection, labor market reforms, unemployment insurance, flexicurity
    JEL: J42 J48 J68
    Date: 2016–04
  4. By: Boll, Christina; Bublitz, Elisabeth
    Abstract: Regarding gender differences, theory suggests that in a partnership the individual with the lower working hours and earnings position should exhibit lower training participation rates. Since women are more likely to match this description, we investigate whether systematic group differences explain gender variation. Across all countries, male workers are not affected by their earnings position. For female workers in Germany, but not Italy or the Netherlands, working part-time instead of full-time corresponds with a decrease in course length by 5.5 hours. Also, regarding German parttime employed women, single earners train 5.6 hours more than secondary earners. The findings of our study hold at the extensive and the intensive margin, suggesting that Germany faces particular household-related obstacles regarding gender differences in job-related training.
    Keywords: further education and training,gender differences,country comparisons
    JEL: J16 J24 M53
    Date: 2016
  5. By: Harrington, Joseph E.; Hüschelrath, Kai; Laitenberger, Ulrich
    Abstract: A challenge for many cartels is avoiding a destabilizing increase in non-cartel supply in response to having raised price. In the case of the German cement cartel that operated over 1991-2002, the primary source of non-cartel supply was imports from Eastern European cement manufacturers. Industry sources have claimed that the cartel sought to control imports by sharing rents with intermediaries in order to discourage them from sourcing foreign supply. Specifically, cartel members would allow an intermediary to issue the invoice for a transaction and charge a fee even though the output went directly from the cartel member's plant to the customer. We investigate this claim by first developing a theory of collusive pricing that takes account of the option of bribing intermediaries. The theory predicts that the cement cartel members are more likely to share rents with an intermediary when the nearest Eastern European plant is closer and there is more Eastern European capacity outside of the control of the cartel. Estimating a logit model that predicts when a cartel member sells through an intermediary, the empirical analysis supports both predictions.
    Keywords: collusion,cartel,non-cartel supply,cement,distribution channels,intermediary
    JEL: L41 K21
    Date: 2016
  6. By: Federico Belotti (CEIS,University of Rome "Tor Vergata"); Edoardo Di Porto (University of Naples Federico II, CSEF and UCFS Uppsala University); Gianluca Santoni (CEPII)
    Abstract: This paper investigates the impact of business property taxation on firms' performance using a panel of italian manufacturing firms. To account for endogeneity in local taxation, we exploit a pairwise spatial differenced generalized method of moments estimator. As well as providing robust inference, we also improve on existing work by exploiting the exogenous variation in local taxes generated by the political alignment of each local government with the central one. We find that property taxation exerts a negative impact on firms' employment, capital and sales to such an extent as to significantly affect total factor productivity.
    Keywords: Local taxation, endogeneity, spatial differencing, two-way clustering.
    JEL: H22 H71 R38
    Date: 2016–04–13
  7. By: Richard Frenscha (Department of Economics, University of Regensburg); Jan Hanousekb (CERGE-EI, Charles University); Evzen Kocenda (Institute of Economic Studies, Charles University)
    Abstract: Based on the factor-proportion gravity framework we build a model that identifies driving forces for trade in parts and components. We test our model empirically by using a detailed and large European data set. We show that trade in parts and components is driven by relative supply-side country differences, proxied by wages and capital labor ratios. The pattern is compatible with models of incomplete specialization and trade. We take our results as evidence for the existence of international East-West production networks in Europe, driven by trade-offs between wages, capital labor ratios and coordination costs. Our results also reveal that (i) in response to stronger relative wage differences trade in parts and components across Europe is predominantly realized along the extensive margin but (ii) potential to intensify the trade and international production network in new EU members is not exhausted yet.
    Keywords: International trade, production networks, gravity model, panel data, European Union
    JEL: C23 F14 F23
    Date: 2016–04
  8. By: Dieter Vandelannoote; Gerlinde Verbist
    Abstract: In-work benefits have received increased attention over the past decades in OECD countries, as a core part of making-work-pay policies. They have two main objectives: on the one hand, increase employment by creating additional financial rewards for remaining in work or for taking up a low-paid job. On the other hand, reduce poverty by increasing incomes of disadvantaged groups of workers and their families. Both objectives of enhancing employment and reducing poverty have been extensively analysed for several countries. Most papers in this domain have investigated existing in-work benefits (for an overview see e.g. Kenworthy, 2015). We take a different approach as we evaluate the impact of different design components on work incentives and poverty indicators by building step-by-step a stylised working tax credit. By different design components we mean: is the working tax credit individual or household based? What is the impact of using an income threshold? What happens when a tapering-out or a tapering-in is implemented? The main question of this paper is thus whether and how the design of a working tax credit has an impact on work incentives and poverty figures. The focus of our analysis is Belgium, a country with a less dispersed income distribution as e.g. the United Kingdom or the USA (which are the countries who first implemented in-work benefits and for which the bulk of the evaluations have been done). We make use of BE-SILC 2012 data and built a discrete labour supply model to evaluate the impact of the design of an in work-benefit on work incentives. Simulations are done using the microsimulation model EUROMOD.
    Keywords: in-work benefits, microsimulation, EUROMOD, policy design, BE-SILC
    JEL: D03 D13 D30
    Date: 2016–04
  9. By: Bossler, Mario (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Gerner, Hans-Dieter (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "In Germany a new statutory minimum wage of EURO 8.50 per hour of work was introduced on 1 January 2015. We identify employment effects using variation in the establishment-level affectedness. The data allow us to address anticipatory wage adjustments as well as spillover effects within and across workplaces. Difference-indifferences estimation reveals an increase in average wages by 4.8 percent and an employment reduction by about 1.9 percent in affected establishments. These estimates imply an employment elasticity with respect to wages of about -0.3. Looking at the associated labor flows, the employment effect seems mostly driven by a reduction in hires but also by a small increase in separations. Moreover, the employment neutral turnover rate decreases. When analyzing alternative adjustment margins, we observe a reduction in the typical contracted working hours but no effects on freelance employment." (Author's abstract, IAB-Doku) ((en))
    Keywords: Mindestlohn, Beschäftigungseffekte, IAB-Betriebspanel, Beschäftigerverhalten, Lohnhöhe, Beschäftigungsform, Personalanpassung, Arbeitszeit, Selbständige
    JEL: C23 J23 J38
    Date: 2016–03–10
  10. By: Lionel Fontagné (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Gianluca Orefice (Centre d'Etudes Prospectives et d'Informations Internationales); Roberta Piermartini (WTO); Nadia Rocha (WTO)
    Abstract: This paper considers the heterogenous trade effects of restrictive Sanitary and Phyto-Sanitary (SPS) measures on exporters of different sizes, and the channels via which aggregate exports fall: firm participation, export values and pricing strategies. We do so by matching a detailed panel of French firm exports to a new database of SPS regulatory measures that have been raised as of concern in the dedicated committees of the WTO. By using specific trade concerns to capture the restrictiveness of product standards, we focus only on standards that are perceived as trade barriers. We analyze their effects on three trade-related outcomes: (i) the probability to export and to exit the export market (the firm-product extensive margin), (ii) the value exported (the firm-product intensive margin), and (iii) export prices. We find that SPS concerns discourage the presence of exporters in SPS-imposing foreign markets. We also find a negative effect of SPS imposition on the intensive margins of trade. These negative effects SPS are attenuated in larger firms.
    Keywords: International trade,firm heterogeneity,multi-product exporters,non-tariff barriers *
    Date: 2015–09
  11. By: Sergi Jiménez-Martín; Arnau Juanmarti Mestres; Judit Vall-Castello
    Abstract: In this paper we evaluate the impact of the business cycle on participation in the Disability Insurance (DI) program in Spain in the context of the Great Recession, which has been particularly strong in this country. We follow two approaches. First, we use regional administrative data to estimate the effect of the regional unemployment rate on the number of applications, denials and allowances to the DI rolls. Second, we use longitudinal panel data to estimate the effect of the business cycle on transitions from different labor market states to the DI rolls. Our results show a pro-cyclical behavior of participation in DI during the years of the Great Recession. This is in contrast to the countercyclical response documented both for other countries as well as for Spain before 2008. We document some facts that partially explain why DI benefits have become pro instead of countercyclical during the Great Recession in Spain. Our results provide valuable evidence for policy-makers as they highlight that some of the disabled population may be left economically uncovered during the worst of times.
    Keywords: disability, great recession, labour market transitions
    JEL: I13 I38 J14
    Date: 2016–04
  12. By: Bertoni, Marco (University of Padova); Brunello, Giorgio (University of Padova); Mazzarella, Gianluca (University of Padova)
    Abstract: By increasing the residual working horizon of employed individuals, pension reforms that raise minimum retirement age are likely to affect the returns to investments in health-promoting behaviours before retirement, with consequences for individual health. Using the exogenous variation in minimum retirement age induced by a sequence of Italian pension reforms during the 1990s and 2000s, we show that Italian males aged 40 to 49 reacted to the longer time to retirement by raising regular exercise and by reducing smoking and regular alcohol consumption. Dietary habits were also affected, with positive consequences on obesity and self-reported satisfaction with health.
    Keywords: retirement, working horizon, healthy behaviours, pension reforms
    JEL: H55 I12 J26
    Date: 2016–03
  13. By: E. Gautier; D. Fougère; S. Roux
    Abstract: This paper examines empirically how industry-level wage floors are set in French industry-level wage agreements and how the national minimum wage (NMW) interacts with industry-level wage bargaining. For this, we use a unique dataset containing about 48,000 occupation-specific wage floors, in more than 340 French industries over the period 2006-2014. We find that the NMW has a significant impact on the seasonality and on the timing of the wage bargaining process. Inflation, past sectoral wage increases and real NMW increases are the main drivers of wage floor adjustments; elasticities of wage floors with respect to these macro variables are 0.6, 0.3 and 0.25 respectively. Wage floor elasticities to inflation and to the NMW both decrease along the wage floor distribution but are still positive for all levels of wage floors.
    Keywords: minimum wage, collective bargaining, wages.
    JEL: J31 J51 E24
    Date: 2016
  14. By: Sánchez-Barrioluengo, Mabel; Consoli, Davide
    Abstract: This paper explores the relationship between regional human capital (HC) and the processes of knowledge creation and mobilization due to Higher Education Institutions (HEIs). Although the nexus between these dimensions emerges frequently in both the scholarly and policy discourses, no study has so far investigated explicitly how their connection works. Using occupations as a proxy for the skill content of jobs, we analyse individual (gender, schooling and age) and regional (university orientation) factors that influence HC employment structure in Spanish regions over the period 2003-2010. The main finding is that teaching university mission is a robust predictor of high-skill employment, while the impact of engagement (research and knowledge transfer) activities is more sensitive to structural characteristics of the regional socio-economic context.
    Keywords: Human Capital, University Orientation, Skills, Region
    JEL: J24
    Date: 2016–04–11
  15. By: Di Pietro, Giorgio (University of Westminster)
    Abstract: In recent years, in Italy, a larger number of students have chosen to attend vocational hospitality and catering schools. This paper investigates the extent to which this increase may have been triggered by the growing popularity of the cooking reality show MasterChef, in which the chef profession is portrayed as exciting and glamorous. Using panel data methods and controlling for several potential confounding variables, the analysis attempts to separate the effect of MasterChef from that of other determinants of the decision to attend vocational hospitality and catering schools. The results show that an increase of one percentage point in the audience of MasterChef is associated with an increase in the proportion of final year lower secondary school students willing to enrol at vocational hospitality and catering schools of between 0.25 and 0.35 percentage points. This finding suggests that popular television programmes like MasterChef may play an important role in complementing and supplementing government measures aimed at promoting vocational training among youths.
    Keywords: teenage career aspirations, vocational hospitality and catering schools, panel data analysis, MasterChef
    JEL: I21 J44 C23
    Date: 2016–03
  16. By: Jan Abrell (ETH Zürich, Switzerland); Sebastian Rausch (ETH Zurich, Switzerland); Hidemichi Yonezawa (ETH Zurich, Switzerland)
    Abstract: This paper examines the efficiency and distributional impacts of introducing a price floor in an emissions trading system (ETS) when environmental regulation is partitioned. We theoretically characterize the conditions under which a price floor enhances welfare. Using a multi-country multi-sector numerical general equilibrium model of the European carbon market, we find that moderate minimum price levels in the EU ETS can reduce the costs of EU climate policy by up to thirty percent and yield outcomes close to uniform carbon pricing. Moreover, most of the EU Member States would gain. Our results are robust with respect to parametric uncertainty in production and consumption technologies.
    Keywords: Emissions Trading, Price Floors, EU ETS, Partitioned Environmental Regulation, General Equilibrium
    JEL: H23 Q52 Q58 C68
    Date: 2016–04
  17. By: Laura Barbieri (Dipartimento di Scienze Economiche e Sociali, Università Cattolica); Daniela Bragoli (Dipartimento di Discipline matematiche, Finanza matematica ed Econometria, Università Cattolica); Flavia Cortelezzi (Dipartimento di Diritto, Economia e Culture, Università degli Studi dell’Insubria); Giovanni Marseguerra (Dipartimento di Discipline matematiche, Finanza matematica ed Econometria, Università Cattolica)
    Abstract: This study investigates whether the receipt of public R&D funding determines firm's R&D strategy election. Using the Community Innovation Survey (CIS) dataset including more than 3000 Italian manufacturing companies, we adopt a multinomial logit model after controlling for sample selection and endogeneity issues which arise when dealing with CIS data. The main finding is that public R&D funding in uences whether firms select the make, the buy or the make&buy strategy and in particular firms, after receiving public support, prefer the composite strategy rather than the single strategies. This result turns out to be good news given that government support, correcting for the market failures which characterize the combined strategy, favors the strategy which seems to enhance a positive synergy between in house R&D and external sourcing.
    Keywords: Public Funding, R&D strategies, CIS Survey
    JEL: G32 O31 D21
    Date: 2015–12
  18. By: Dimitrios Bakas (Nottingham Business School, Nottingham Trent University, UK; The Rimini Centre for Economic Analysis, Italy); Theodore Panagiotidis (Department of Economics, University of Macedonia, Greece; The Rimini Centre for Economic Analysis, Italy); Gianluigi Pelloni (Department of Economics, University of Bologna, Italy; Wilfrid Laurier University, Canada; Johns Hopkins University, SAIS Bologna Center, Italy; The Rimini Centre for Economic Analysis, Italy)
    Abstract: We explore the macroeconomic effects of sectoral shifts for a set of 15 European countries. An extensive panel is constructed that allows us to assess the effect of labor reallocation in the European context. Indexes of labor market turbulence based on alternative sectoral disaggregation are constructed. The effect of labor reallocation on unemployment is found to be positive and significant in all different specifications. This remains robust when we consider measures of volatility in the model.
    Date: 2016–01
  19. By: Charles Ayoubi (Ecole Polytechnique Fédérale de Lausanne); Michele Pezzoni (Université Nice Sophia Antipolis; GREDEG CNRS; Bocconi University, CRIOS); Fabiana Visentin (Ecole Polytechnique Fédérale de Lausanne)
    Abstract: Empirical studies document a positive effect of collaboration on team productivity. The most common explanation to the teamwork productivity gain is that teamwork stimulates knowledge sharing among team members. However, little has been done to assess how knowledge flows among team members. Our study addresses this issue by exploring uniquely rich data on a Swiss funding program promoting team collaboration. We find that team characteristics play a key role in favoring knowledge flows among team members. Specifically, we find a significant effect of the social distance and an inverted U-shape effect of the cognitive distance of the team members on the probability of learning from within the team.
    Keywords: team, learning process, knowledge flows, cognitive distance, social distance, geographical distance
    Date: 2016–04
  20. By: Anna Iara (European Commission)
    Abstract: After a short overview of the distribution of private wealth and asset-based taxation in EU Members, this paper provides a range of economic arguments to make the case for assetbased taxation. Thereafter, aspects of design and implementation of specific asset-based taxes, notably housing, net wealth, and gifts and inheritances, are discussed from a distributional perspective. Finally, the possible role of the EU level of policy making in the adoption of such tax instruments is addressed
    Keywords: wealth distribution, wealth taxation, capital income taxation, household data
    JEL: D31 H23 H24
    Date: 2015–12

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