nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2016‒05‒14
24 papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. EU Structural Funds and Regional Income Convergence - A Sobering Experience By Breidenbach, Philipp; Mitze, Timo; Schmidt, Christoph M
  2. Modelling and Forecasting Mortgage Delinquency and Foreclosure in the UK By Aron, Janine; Muellbauer, John
  3. Securing women's employment: a fertility booster in European countries? By Angela Greulich; Olivier Thévenon; Mathilde Guergoat-Larivière
  4. Do tax incentives for research increase firm innovation? An RD Design for R&D By Elias Einiö; Dechezleprêtre; - Martin Antoine; - Nguyen Ralf; - Van Reenen Kieu-Trang; John
  5. Graduate returns, degree class Premia and higher education expansion in the UK By Robin Naylor; Jeremy Smith; Shqiponja Telhaj
  6. Voters' Information, Corruption, and the Efficiency of Local Public Services By Graziano Abrate; Federico Boffa; Fabrizio Erbetta; Davide Vannoni
  7. Are the Central East European Countries Pollution Havens? By Martina Vidovic
  8. The (displacement) effects of spatially targeted enterprise initiatives: evidence from UK LEGI By Elias Einiö; Henry G. Overman
  9. Financial leverage and export quality: evidence from France By Flora Bellone; Michel Bernini; Sarah Guillou
  10. Coordination of Renewable Energy Remuneration Schemes through Information Exchange By Thilo Grau; Karsten Neuhoff
  11. Entrepreneurs and Freelancers: Are They Time and Income Multidimensional Poor? The German Case By Merz, Joachim; Rathjen, Tim
  13. Economic Implications of EU Mitigation Policies: Domestic and International Effects By Bosello, Francesco; Davide, Marinella; Alloisio, Isabella
  14. Poverty and Children’s Cognitive Trajectories: Evidence from the United Kingdom Millennium Cohort Study By Yekaterina Chzhen; Zlata Bruckauf; UNICEF Innocenti Research Centre
  15. Labour turnover, employment density and employer provided training: Evidence from Vienna By Francisca Bremberger; Rudolf Hochholzer; Petr Huber
  16. Quality of government and social capital as drivers of regional diversification in Europe By Nicola Cortinovis; Jing Xiao; Ron Boschma; Frank van Oort
  17. Education Curriculum and Student Achievement: Theory and Evidence By Andrietti, Vincenzo; Su, Xejuan
  18. The Taxing Deed of Globalization By Egger, Peter; Nigai, Sergey; Strecker, Nora
  19. Partial tax harmonization through infrastructure coordination By Sanz Córdoba, Patrícia; Theilen, Bernd, 1965-
  20. Concentration on the few? R&D and innovation in German firms between 2001 and 2013 By Rammer, Christian; Schubert, Torben
  21. Temporary Agency Work and the Great Recession By Daniel Baumgarten; Michael Kvasnica
  22. Policy of energy poverty alleviation and quality of life in Poland By Michal Litwinski
  23. Minimum Wages and Firm Value By Bell, Brian; Machin, Stephen
  24. Demand Response in Germany: Technical Potential, Benefits and Regulatory Challenges By Jan Stede

  1. By: Breidenbach, Philipp; Mitze, Timo; Schmidt, Christoph M
    Abstract: The European Structural and Investment Funds (ESIF) are the prime instrument of EU regional policy. European policy makers place considerable hope into their growth stimulating funding measures to overcome current economic stagnation. Consequently, there is a strong need for credible evidence regarding the programs' effectiveness. Based on an empirical identification strategy linked to modern growth theory, we find that the disbursement of EU structural funds is negatively correlated with regional growth. Incorporating spatial dynamics and decomposing this correlation into a direct and a spatially-indirect component, it is particularly the latter which determines this "sobering" finding. Regarding the economics behind these results, the obtained negative spatial effect may reflect the role played by policy-induced spatial competition among neighboring regions. It could also highlight the backwardness in technological endowment and economic structures of highly funded regions. In any case, EU structural funding does not seem to contribute effectively to foster income convergence across regions.
    Keywords: EU Regional Policy; Spatial Spillovers; Panel Data
    JEL: C21 R12 R58
    Date: 2016–04
  2. By: Aron, Janine; Muellbauer, John
    Abstract: In the absence of micro-data in the public domain, new aggregate models for the UK's mortgage repossessions and arrears are estimated using quarterly data over 1983-2014, motivated by a conceptual double trigger frame framework for foreclosures and payment delinquencies. An innovation to improve on the flawed but widespread use of loan-to-value measures, is to estimate difficult-to-observe variations in loan quality and access to refinancing, and shifts in lenders' forbearance policy, by common latent variables in a system of equations for arrears and repossessions. We introduce, for the first time in the literature, a theory-justified estimate of the proportion of mortgages in negative equity as a key driver of aggregate repossessions and arrears. This is based on an average debt-equity ratio, corrected for regional deviations, and uses a functional form for the distribution of the debt-equity ratio checked on Irish micro-data from the Bank of Ireland, and Bank of England snapshots of negative equity. We systematically address serious measurement bias in the 'months-in-arrears' measures, neglected in previous UK studies. Highly significant effects on aggregate rates of repossessions and arrears are found for the aggregate debt-service ratio, the proportion of mortgages in negative equity and the unemployment rate. Economic forecast scenarios to 2020 highlight risks faced by the UK and its mortgage lenders, illustrating the usefulness of the approach for bank stress-testing. For macroeconomics, our model traces an important part of the financial accelerator: the feedback from the housing market to bad loans and hence banks' ability to extend credit.
    Keywords: credit risk stress testing; foreclosures; latent variables model; mortgage arrears; mortgage payment delinquencies; mortgage repossessions
    JEL: C51 C53 E27 G17 G21 G28 R21 R28
    Date: 2016–04
  3. By: Angela Greulich (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Olivier Thévenon (INED - Institut national d'études démographiques, Social Policy Division - OCDE); Mathilde Guergoat-Larivière (LIRSA CNAM - LIRSA - Laboratoire Interdisciplinaire de Recherche en Sciences de l'Action - Conservatoire National des Arts et Métiers [CNAM], CEE - Centre d'études de l'emploi - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé)
    Abstract: This article gives evidence that differences in completed fertility among European countries emerge mainly as a result of fewer women having a second child in low fertility countries and analyses the impact of women's employment on the probability of second child birth. With longitudinal data from the European Survey of Income and Living conditions (EU-SILC) and aggregated data from the OECD Family Database, we find that, on average within European countries, women in stable employment have a significantly higher probability of second childbirth than inactive or unemployed women. However, while female employment generally favours a transition to second childbirth in high-fertility countries, the impact is heterogenous in low-fertility countries. This points to a work-life balance conflict that is stronger in low-fertility countries. To address this issue, multilevel models are run to compare the role of various policies: not surprisingly, they show that childcare policies – which are the most effective policies to secure women's employment – are the most likely to encourage couples to enlarge their families and that the positive effect of stable employment on fertility is reinforced by this policy.
    Keywords: low fertility,female employment,work-life balance,Europe,family enlargement
    Date: 2016–03
  4. By: Elias Einiö; Dechezleprêtre; - Martin Antoine; - Nguyen Ralf; - Van Reenen Kieu-Trang; John
    Abstract: We present the first evidence showing causal impact of research and development (R&D) tax incentives on innovation outcomes. We exploit a change in the asset-based size thresholds for eligibility for R&D tax subsidies and implement a Regression Discontinuity Design using administrative tax data on the population of UK firms. There are statistically and economically significant effects of the tax change on both R&D and patenting, with no evidence of a decline in the quality of innovation. R&D tax price elasticities are large at about 2.6, probably because the treated group is from a sub-population subject to financial constraints. There does not appear to be pre-policy manipulation of assets around the thresholds that could undermine our design, but firms do adjust assets to take advantage of the subsidy post-policy. We estimate that over 2006-11 business R&D would be around 10% lower in the absence of the tax relief scheme.
    Keywords: R&D, patents, tax, innovation, Regression Discontinuity design
    JEL: H32 O31 H23 O32 H25
    Date: 2016–04–13
  5. By: Robin Naylor; Jeremy Smith; Shqiponja Telhaj
    Abstract: We investigate the extent to which graduate returns vary according to the class of degree achieved by UK university students and examine changes over time in estimated degree class premia. Using a variety of complementary datasets for individuals born in Britain around 1970 and aged between 30 and 40, we estimate an hourly wage premium for a ‘good’ (relative to a ‘lower’) class of degree of 7% to 9%, implying a wide spread around the average graduate premium. We also estimate the premium for a good relative to a lower degree for different cohorts (those born between the mid-1960s and early-1980s) and find evidence that the premium for a good degree has risen over time as the proportions of cohorts participating in higher education have increased.
    Keywords: Graduate returns; higher education participation; ability composition
    JEL: J1
    Date: 2015–11
  6. By: Graziano Abrate; Federico Boffa; Fabrizio Erbetta; Davide Vannoni
    Abstract: This paper explores the link between voters information, corruption and efficiency in the context of a career concern model where politically connected local monopolies are in charge of the provision of a local public service. We find that both a corrupt environment and a low level of voters? information on managerial actions induce managers to reduce effort levels, thereby contributing to drive down efficiency. We test our predictions using data on solid waste management services provided by a large sample of Italian municipalities. We estimate a stochastic cost frontier model that provides robust evidence that services provided in more corrupt regions and in regions with low voters? information are substantially less cost efficient. We show that the negative impact of a corrupt environment is weaker for municipalities ruled by left-wing parties, while the positive impact of voters? information is larger if the waste collection service is managed by limited liability companies. We finally quantify potential cost savings associated to operating in a less corrupt environment and in one in which voters are more informed through a simulation on six major Italian cities. The magnitude of the figures suggests that effective anti-corruption measures, and/or carefully designed incentives for citizens to acquire information, can generate sig- nificant economic benefits.
    Keywords: corruption, voters' information, efficiency, solid waste
    JEL: D24 D72 D73 L25 Q53
    Date: 2016
  7. By: Martina Vidovic (Rollins College)
    Abstract: The aim of the paper is to investigate the relationship between environmental stringency and export flows in EU countries and to determine whether the recent accessions of the CEECs into the EU and the subsequent changes in the regulatory framework of new members have affected intra-EU trade flows. Two main hypotheses are tested. First, we test whether the stringency of a country’s environmental regulations results in pollution havens or, on the contrary it results in better export performance. Second, we test whether the results differ by industry (dirty versus clean) and by EU membership tenure (old versus new EU member countries).An augmented gravity model is estimated using panel data for 21 European countries during the period 1999-2008 for the full sample and also separately for the CEECS and the old EU members. We find that while exporters’ environmental tax expenditure differences are positively correlated with bilateral net exports of clean industries, the effect of environmental stringency differences on net exports of dirty industries is not significant when all the industries are treated as a homogeneous group. However, when heterogeneity across specific industries and between two groups of countries is considered, the results differ. We find that while for old-EU countries higher differences in environmental revenues between partner countries are associated with lower net exports of dirty goods for four major-polluter industries, namely for iron and steel, non-ferrous metals, metal manufactures, metal manufactures and petroleum products, this happens only for two industries when CEEs are considered as exporters (petroleum products and fertilizers). Thus our results show weak support for the pollution haven hypothesis for some dirty industries, mainly for net exports from Western EU countries to the rest. Instead, we find support for the “Porter hypothesis†for trade in clean goods.
    Keywords: Pollution Haven Hypothesis, Porter hypothesis, European Union, Trade Flows
    JEL: F14
  8. By: Elias Einiö; Henry G. Overman
    Abstract: We investigate the impacts of a significant area-based intervention (LEGI) that aimed to increase employment and entrepreneurial activity in 30 disadvantaged areas across England. We examine the spatial pattern of effects at a fine spatial scale using panel data for small geographic units and a regression discontinuity design that exploits the programme eligibility rule. The results indicate considerable local displacement effects. Employment increases in treated areas close to the treatment area boundary at the cost of significant employment losses in untreated localities just across the boundary. These differences vanish quickly when moving away from the boundary and do not persist after the programme is abolished. These findings support the view that area-based interventions may have considerable negative displacement effects on untreated parts of the economy. This displacement can substantially reduce (or in this case eliminate) any net benefits.
    Keywords: place-based policy; programme evaluation; displacement; employment; industrial policy
    JEL: H25 J20 O40 R11
    Date: 2016–02
  9. By: Flora Bellone (Groupe de Recherche en Droit, Economie et Gestion); Michel Bernini (School of International Studies); Sarah Guillou (OFCE)
    Abstract: Does corporate financial structure matter for a firm’s ability to compete in international markets through output quality? This study answers this question by using firm-level export and balance sheet data covering a large sample of French manufacturing exporters over the period 1997–2007. The main result is that there is a negative causal relation between a firm’s leverage and export quality, where quality is inferred from the estimation of a discrete choice model of foreign consumers’ demand. This result is robust across different specifications and estimation techniques. In addition, by estimating investment models we find that the negative impact of leverage on quality is consistent with theories predicting that the agency cost of debt determines suboptimal investment.
    Keywords: Capital structure; Investment; Output quality; Exports
    JEL: G11 G32 F14 L11
    Date: 2015–10
  10. By: Thilo Grau; Karsten Neuhoff
    Abstract: The increasing scale and dynamics of the global market for renewable energy technologies has often resulted in unexpected high deployment volumes in EU Member States. These deployment peaks were particularly strong for solar photovoltaic (PV) technologies in countries using feed-in tariff remuneration mechanisms. In this paper, we develop an analytic model to capture the interactions of national remuneration schemes with the global market. The model covers two countries and one global technology market. We calibrate the model for the impact of coordinated tariff adjustments based on the experience with PV in Germany and the UK. We then use the model to measure the impact of different global module supply functions, national installation price reductions, and specific shocks on deployment effectiveness in terms of reaching national or aggregated target corridors for separate and coordinated feed-in tariff adjustment mechanisms. The relevance of the insights for wind energy technologies is evaluated. Based on the results, we discuss the implications for the coordination of remuneration schemes.
    Keywords: Renewable energy, feed-in tariff, coordinated remuneration schemes
    JEL: D78 L94 O3
    Date: 2016
  11. By: Merz, Joachim (Leuphana University Lüneburg); Rathjen, Tim (Leuphana University Lüneburg)
    Abstract: Entrepreneurs and freelancers, the self-employed, commonly are characterized as not only to be relatively rich in income but also as to be rich in time because of their time-sovereignty in principle. Our introducing study scrutinises these results and notions about the well-being situation of self-employed persons not only by asking about traditional single income poverty but also by considering time poverty within the framework of a new interdependent multidimensional (IMD) poverty concept. The German Socio-economic panel with satisfaction data serves as the data base for the population wide evaluation of the substitution/ compensation between genuine, personal leisure time and income. The available detailed Time Use Surveys of 1991/92 and 2001/2 of the Federal Statistics Office provide the data to quantify the multidimensional poverty in all the IMD poverty regimes. Important result: self-employed with regard to single income poverty, single time poverty and interdependent multidimensional time and income poverty in both years are much more affected by time and income poverty than all other active persons defining the working poor. A significant proportion of non-income-poor but time poor of the active population are not able to compensate their time deficit even by an above poverty income. These people are neglected so far within the poverty and well-being discussion, the discussion about the "working poor" and in the discussion about time squeeze and time pressure in general and in particular for the self-employed as entrepreneurs and freelancers.
    Keywords: liberal professions (Freie Berufe), entrepreneurs, self-employed, interdependent multidimensional time and income poverty, time and income substitution, extended economic well-being, satisfaction/happiness, CES welfare function estimation, working poor, German Socio-Economic Panel, German Time Use Surveys 1991/02 and 2001/02
    JEL: D31 D13 J22
    Date: 2016–04
  12. By: Dreyer, Heiko; Fedoseeva, Svetlana; Herrmann, Roland
    Abstract: Gravity and pricing to market (PTM) models have been used to elaborate determinants of bilateral trade and export pricing for different countries and branches. Typically, only one of the two methods was chosen. We show in a stepwise approach that a combination of both methods yields novel results on the determinants of exports and export pricing behaviour. For the case of German beer exports, we show that structural differences exist between markets on which exporters apply either PTM or non-PTM strategies. German beer exporters apply PTM strategies, in particular local-currency stabilization, on those markets where imports are very sensitive to exchange-rate changes. Non-PTM strategies, i.e. full exchange-rate transmission, occur on export markets with insensitive reactions. Apart from PTM strategies, German beer exports are strongly dependent on policy variables such as the introduction of the Euro and the partner country’s membership in the EU.
    Keywords: Incomplete pass-through, gravity equation, pricing to market, export behaviour, German beer, Demand and Price Analysis, International Relations/Trade,
    Date: 2016–03
  13. By: Bosello, Francesco; Davide, Marinella; Alloisio, Isabella
    Abstract: The EU has a consolidated climate and energy regulation: it played a pioneering role by adopting a wide range of climate change policies and establishing the first regional Emission Trading Scheme (EU ETS). These policies, however, raise several concerns regarding both their environmental effectiveness and their potentially negative effect on the economy, especially in terms of growth and competitiveness. The paper reviews the European experience in order to understand if these concerns are supported by quantitative evidence. It thus focuses on key economic indicators, such as costs, competitiveness and carbon leakage as assessed by quantitative ex-ante and ex-post analyses. A dedicated section, extends the investigation to the potential extra-EU spillover of the EU mitigation policy with a particular attention to developing countries. The objective of the paper is to highlight both the limits and the opportunities of the EU regulatory framework in order to offer policy insights to emerging and developing countries that are on the way to implement climate change measures. Overall, the European experience shows that the worries about the costs and competitiveness losses induced by climate regulation are usually overestimated, especially in the long term. In addition, a tightening climate policy regime in the EU might in fact negatively impact developing countries via deteriorated trade relations. Nonetheless it tends to facilitate a resource relocation that if well governed could be beneficial to those countries where the poor are mainly involved in rural activities.
    Keywords: Climate Change, Climate Policy, Mitigation, Economic Impacts, GDP, Competitiveness, Environmental Economics and Policy, F64, H23, O44, O52, Q54, R11,
    Date: 2016–04–30
  14. By: Yekaterina Chzhen; Zlata Bruckauf; UNICEF Innocenti Research Centre
    Abstract: Existing evidence is inconclusive on whether a socio-economic gradient in children’s cognitive ability widens, narrows or remains stable over time and there is little research on the extent of ‘cognitive mobility’ of children who had a poor start in life compared to their peers. Using data from five sweeps of the United Kingdom (UK) Millennium Cohort Study (MCS) at the ages of 9 months, 3 years, 5 years, 7 years and 11 years, this paper explores the cognitive ability trajectory of children in the bottom decile of the distribution at a given age, and the factors that drive or hinder their progress relative to their peers. The paper analyses children’s risks of moving in and out of the bottom decile of the cognitive ability distribution. The findings indicate a relatively high level of cognitive mobility between ages 3 and 11, especially in the pre-school period (between ages 3 and 5), with children from income-poor households more likely to get ‘trapped’ in the bottom of the age-specific cognitive ability distribution.
    Keywords: cognitive development; household surveys; poverty; social surveys;
    Date: 2016
  15. By: Francisca Bremberger (Vienna University of Economics and Business (WU), Welthandelsplatz 1, 1020 Vienna); Rudolf Hochholzer (Wiener ArbeitnehmerInnen Förderungsfonds, Nordbahnstr. 36, 1020 Wien); Petr Huber (Austrian Institute for Economic Research (WIFO), Arsenal, Objekt 20, 1030 Wien and Faculty of Business and Economics, Mendel University in Brno.)
    Abstract: We analyse the impact of regional and sectoral labour market characteristics as determinants of the supply of employer financed training using a unique data set on employer provided training in Vienna. According to the results labour turnover has a robust negative impact and employment density a slightly less robust but also negative impact on the probability of a firm to provide employer financed training. Policies directed at increasing employer provided training may therefore face substantial challenges in sectors and regions with high labour turnover and employment densities. These challenges are likely to be even larger when it comes to providing employer financed training for less skilled workers.
    Keywords: employer financed training, urban labour markets, density
    JEL: R12 J24
    Date: 2016–05
  16. By: Nicola Cortinovis; Jing Xiao; Ron Boschma; Frank van Oort
    Abstract: Industrial diversification is considered crucial for economies to prosper. Recent studies have shown that regional economies tend to diversify into sectors that are related to those already present in the region. However, no study yet has investigated the impact of regional institutions. The objective of the paper is to bring together the literatures on related diversification and institutions by analyzing how formal and informal institutions influence regional diversification. Analyzing 118 European regions in the period 2004 and 2012, we find evidence that institutions matter for regions to diversify into new industries. Bridging social capital is a key driver of regional diversification, in addition to relatedness, in contrast to quality of government in regions. Bonding social capital has a negative impact in regions with a low quality of government. This suggests that regional institutions relevant for structural change in regions are predominantly informal in character rather than formal, and bridging rather than bonding.
    Keywords: regional diversification, social capital, quality of government, institutions
    JEL: R11 O14
    Date: 2016–05
  17. By: Andrietti, Vincenzo; Su, Xejuan
    Abstract: This paper proposes a theory of education curriculum and analyzes its distributional impact on student learning outcomes. Different curricula represent horizontal differentiation in the education technology, thus a curriculum change has distributional effects across students. We test the model using the quasi-natural experiment of the G8 reform in Germany. We find evidence of heterogeneous reform effects consistent with our theory. While the reform improves student test scores on average, such benefits are more pronounced for well-prepared students. In contrast, less-prepared students do not benefit from the reform.
    Keywords: Education curriculum,Horizontal differentiation,Distributional effects,Difference-in-differences,Conditional quantile regression,Unconditional quantile regressionI
    JEL: I21 I28 D04
    Date: 2016–04–01
  18. By: Egger, Peter; Nigai, Sergey; Strecker, Nora
    Abstract: We examine the effects of globalization on the size and composition of tax revenues, worker-specific tax burdens, and effective average labor income tax rates using a unique international database on income tax calculators. We find that due to increasing mobility of firms and high-income workers, globalization led governments in OECD countries to seek tax revenues from alternative sources, specifically from employee-borne taxes paid by relatively less mobile middle-income workers. In 1994-2007, they experienced a globalization-induced rise in their personal income tax rate of around 1.5, whereas the top 1% of workers faced a reduction of approximately 1.5 percentage points.
    Keywords: Globalization; Income taxes; International Trade; migration; Tax progressivity
    JEL: F1 F6 H2 H3
    Date: 2016–05
  19. By: Sanz Córdoba, Patrícia; Theilen, Bernd, 1965-
    Abstract: In this article we analyze the role that infrastructure coordination plays to in achieving partial tax harmonization in a coalition of asymmetric jurisdictions. We find that infrastructure coordination with di¤erent investment levels can facilitate partial tax harmonization between asymmetric jurisdictions when asymmetries are not too large. Furthermore, agreeing on a common investment level can be even more e¤ective in facilitating partial tax harmonization between asymmetric jurisdictions. Our results explain the harmonization of corporate tax rates observed in the EU between 1995 and 2006 where there was simultaneous convergence of public infrastructure investments facilitated via EU structural funds. Keywords: Partial Tax Harmonization; Infrastructure Coordination JEL Classification Numbers: F15, F38, H20, H87
    Keywords: Integració econòmica, Política fiscal, Finances internacionals, Impostos, 336 - Finances. Banca. Moneda. Borsa,
    Date: 2016
  20. By: Rammer, Christian; Schubert, Torben
    Abstract: [Introduction] Innovation expenditures in Germany have increased at an impressive rate in the course of the last two decades. Between 1995 and 2013, businesses in Germany raised their spending for developing and introducing new products and new processes from €60.8bn to €144.6bn resulting in a compound annual growth rate of 4.9% (Rammer et al. 2015). While these numbers suggest that German firms have become ever more focused on innovation, they hide the fact that this rise has mainly been driven by large firms belonging to a few sectors. When we look at the above numbers by firm size we find that firms with fewer than 500 employees experienced only a very modest increase in their innovation expenditures (€25.7bn in 1995 vs. €34.5bn in 2013, i.e. 1.6% per year) whereas large firms with more than 500 employees increased their spending from €35.1bn in 1995 to €110.1bn in 2013 (6.6% per year). In line with these observations we also find a concentration of the activities on fewer firms. In particular, the share of innovators – firms that have introduced at least one product or process innovation during the preceding three years – has similarly declined since the late 1990s. Having reached a peak in 1999 at 55.5%, it dropped to 43.7% in 2007 and further declined to 37.1% in 2013. A look at the sector distribution conveys a similar concentration. In 1995, the R&D intensive manufacturing sectors (pharmaceuticals, chemicals, electronics, machinery & equipment, vehicles) spent €30.9bn on innovation and increased that figure to €92.6bn in 2013 (+6.3% per year). Low-tech manufacturing and service sectors expanded their innovation expenditure by an average annual rate of 3.1%. These developments would not be problematic if they were due to firms from high-tech sectors growing at an above-average rate. While some well-known examples of this phenomenon also exist in Germany, e.g. the software company SAP, the absolute numbers of such cases is very limited. Moreover, the share of value added of highly R&D-intensive sectors has remained fairly stable in Germany. This makes this explanation implausible. [...]
    Date: 2016
  21. By: Daniel Baumgarten (Department of Economics, Ludwig-Maximilian University Munich); Michael Kvasnica (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: We investigate with German data how the use of temporary agency work has helped establishments to manage the economic and financial crisis in 2008/09. We examine the (regular) workforce development, use of short-time work, and business performance of establishments that made differential use of temporary agency work prior to the crisis. Overall, our results suggest that establishments with a greater use of temporary agency work coped better with the sharp decline in demand and made less frequent use of government-sponsored short-time work schemes.
    Keywords: labour demand, employment adjustment, economic crisis, temporary agency work, short-time work, establishment data
    JEL: E32 J23 L23 J68
    Date: 2016–03
  22. By: Michal Litwinski (Poznan University of Economics)
    Abstract: The aim of the article is to verify a hypothesis about positive influence of instrument of energy poverty alleviation policy on quality of life in Poland. In the article literature review is presented. There is also conducted quantitative analysis of data for 2004-2014. Variables regarding energy policy were obtained from OECD database, variables regarding quality of life – from Eurostat. The analysis confirmed that shaping one of the instruments of energy poverty alleviation policy – energy prices can positively affect access to electricity, thereby reducing scope and depth of energy poverty. Limitation of this phenomena could be a reason of quality of life increase.
    Keywords: energy policy; quality of life; energy prices
    JEL: I31 C32 Q48
    Date: 2016–05
  23. By: Bell, Brian (University of Oxford); Machin, Stephen (University College London)
    Abstract: How does the value of a firm change in response to a minimum wage hike? The evidence we have to date is not well-suited to answer this question, principally because events that have been studied are not completely unknown to the stock market or have uncertainty associated with them. This paper exploits the announcement of a sizeable change in the minimum wage in the UK that was both totally unanticipated and free of uncertainty. The stock market response of employers of minimum wage workers is examined in an event study setting, looking at minute-by-minute changes surrounding the announcement and at cumulative abnormal returns on a daily basis before and after the announcement. The analysis uncovers significant falls in the stock market value of low wage firms. The size of the fall in value is compared to the fall in profitability in response to the wage cost shock that will be induced by the announcement and is seen to be of a comparable magnitude.
    Keywords: minimum wages, firm value
    JEL: J23 L25
    Date: 2016–04
  24. By: Jan Stede
    Abstract: An increased flexibility of the electricity demand side through demand response (DR) is an opportunity to support the integration of renewable energies. By optimising the use of the generation, transmission and distribution infrastructure, DR reduces the need for costly investments and contributes to system security. There is a significant technical DR potential for load reduction from industrial production processes in Germany, as well as from cross-cutting technologies in industry and the tertiary sector.The availability of demand response as a system resource depends on the underlying type of demand. Already today energy-intensive industries market significant demand capacity in the German minute reserve. The DR literature reveals that there is a potential of several gigawatts of additional capacity available for at least one hour in Germany. Demand can also cover longer periods, but this often requires investment, for example in storage capacity for intermediate products.To enable the effective use and full remuneration of demand response, further improvements in power market design are discussed: (i) Enabling third parties (referred to as Demand Side Management Companies) to help business customers realise their flexibility potential; (ii) creating robust intraday and balancing prices in auction platforms as reference prices for longer-term contracts to stabilise revenue streams of flexibility providers; (iii) it needs to be further assessed whether additional catalysing instruments are necessary to initiate investment in new business processes or storage capacity.
    Date: 2016

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