nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2016‒06‒04
twenty-one papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Overeducation - new evidence for 25 European countries By Boll, Christina; Leppin, Julian Sebstian; Rossen, Anja; Wolf, André
  2. The economic impact of removing geo-blocking restrictions in the EU Digital Single Market By Nestor Duch-Brown; Bertin Martens
  3. The Productivity Impact of R&D Investment: A Comparison between the EU and the US By Castellani, Davide; Piva, Mariacristina; Schubert, Torben; Vivarelli, Marco
  4. Explaining the Male Native-Immigrant Employment Gap in Sweden: The Role of Human Capital and Migrant Categories By Bevelander, Pieter; Luik, Marc-André; Emilsson, Henrik
  5. Modelling and Forecasting Mortgage Delinquency and Foreclosure in the UK. By Janine Aron; John Muellbauer
  6. Mapping public support for further European unification: a multilevel analysis By Kristel Jacquier
  7. The Increase of the Gender Wage Gap in Italy during the 2008-2012 Economic Crisis By Piazzalunga, Daniela; Tommaso, Maria Laura di
  8. Food insecurity among older Europeans: Evidence from the Survey of Health, Ageing, and Retirement in Europe By Nie, Peng; Sousa-Poza, Alfonso
  9. Online Job Search and Migration Intentions Across EU Member States By Tara Sinclair; Mariano Mamertino
  10. The distribution of income over-life: Are we building a new glass ceiling? By Marta Pascual Sáez; Noelia González-Prieto; David Cantarero-Prieto
  11. Delivery Costs and Cross-border e-Commerce in the EU Digital Single Market By Melisande Cardona; Nestor Duch-Brown
  12. How Does Parental Divorce Affect Children's Long-term Outcomes? By Frimmel, Wolfgang; Halla, Martin; Winter-Ebmer, Rudolf
  13. Distributional and Welfare Impacts of Renewable Subsidies in Italy By Distante, Roberta; Verdolini, Elena; Tavoni, Massimo
  14. Entrepreneurial activity in the OECD: Pooled and cross-country evidence By Molina, Jose Alberto; Velilla, Jorge; Ortega, Raquel
  15. Voters' preferences and electoral systems: The EuroVotePlus experiment in Italy By Luca, Bettarelli; Giovanna, Iannantuoni; Elena, Manzoni; Francesca, Rossi
  16. Fiscal burden differentiation between European Union countries as a source of opportunism, moral hazard and unproductive entrepreneurship By Andrzej Pestkowski
  17. Does the type of debt matter? Stock market perception in Europe By Fungáčová, Zuzana; Godlewski, Christophe J.; Weill, Laurent
  18. Financial Trouble Across Generations: Evidence from The Universe of Personal Loans in Denmark By Kreiner, Claus T.; Leth-Petersen, Søren; Willerslev-Olsen, Louise
  19. Understanding the Role of the Public Employment Agency By Christian Holzner; Makoto Watanabe
  20. Case Studies on Open Innovation in ICT By Alberto Di Minin; Chiara Eleonora De Marco; Cristina Marullo; Andrea Piccaluga; Elena Casprini; Maral Mahdad; Andrea Paraboschi
  21. More Union for the EU’s IPO Market By Lannoo, Karel

  1. By: Boll, Christina; Leppin, Julian Sebstian; Rossen, Anja; Wolf, André
    Abstract: This study investigates the incidence of overeducation among workers in the EU and its underlying factors based on the most recent wave of the European Labor Force Survey (EU-LFS 2013). Its main purpose is to shed light on the interplay of so far neglected explanatory factors such as household characteristics and field of study as well as to reveal country differences in the impact of these factors on vertical mismatch. Therefore, our innovative features are the large number of determinants as well as the considerable amount of European countries simultaneously analyzed. Moreover, we differentiate in our analysis between high- and medium-skilled workers. Our findings point to a considerable variation in the potential determinants of overeducation across countries as well as across skill levels. This variation is not restricted to job-related characteristics, but interestingly also concerns household variables. Among those determinants showing a largely uniform influence are nationality, job tenure, temporary employment and presence of unemployed household members.
    Keywords: Overeducation,Realized Matches,European Labour Force,Economics of the Household
    JEL: J24 J21 J22
    Date: 2016
  2. By: Nestor Duch-Brown (European Commission - JRC - IPTS); Bertin Martens (European Commission – JRC - IPTS)
    Abstract: This study investigates the welfare impact of lifting geo-blocking restrictions to cross-border e-commerce in the EU, using a dataset for consumer electronics products in ten European countries for the period 2012-2105. We simulated two counterfactual scenarios where geo-blocking is either fully or only indirectly removed. This would allow consumers to arbitrage, taking advantage of price differences, and to expand product variety through imports. We computed the welfare effects, as changes in both consumer and producer surpluses. Finally, we extrapolated these partial results to all online sales in the EU28. The results indicate that both consumers and producers would gain from removing geo-blocking restrictions. Smaller countries would benefit comparatively more than larger countries.
    Keywords: digital single market, geo-blocking, economic impact, consumer welfare, cross-border e-commerce, trade restrictions, consumer electronics
    JEL: D12
    Date: 2016–05
  3. By: Castellani, Davide (University of Reading); Piva, Mariacristina (Università Cattolica del Sacro Cuore); Schubert, Torben (Lund University); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: Using data on the US and EU top R&D spenders from 2004 until 2012, this paper investigates the sources of the US/EU productivity gap. We find robust evidence that US firms have a higher capacity to translate R&D into productivity gains (especially in the high-tech industries), and this contributes to explaining the higher productivity of US firms. Conversely, EU firms are more likely to achieve productivity gains through capital-embodied technological change at least in medium and low-tech sectors. Our results also show that the US/EU productivity gap has worsened during the crisis period, as the EU companies have been more affected by the economic crisis in their capacity to translate R&D investments into productivity. Based on these findings, we make a case for a learning-based and selective R&D funding, which – instead of purely aiming at stimulating higher R&D expenditures – works on improving the firms' capabilities to transform R&D into productivity gains.
    Keywords: R&D, productivity, economic crisis, US, EU
    JEL: O33 O51 O52
    Date: 2016–05
  4. By: Bevelander, Pieter (Malmö University); Luik, Marc-André (Helmut Schmidt University, Hamburg); Emilsson, Henrik (Malmö University)
    Abstract: Despite having one of the most celebrated labor market integration policies, the native-immigrant employment gap in Sweden is one of the largest among the OECD countries. In this study, we use unique Swedish register data to try to explain the employment gap between male immigrants and natives. The results show that the traditional human capital theory only explains a small share of the immigrant-native gap. After controlling for human capital, demographic and contextual factors, large unexplained employment gaps still persists between immigrants and natives and between migrant categories. Our analysis indicates that admission category is an important determinant of employment integration, and that humanitarian and family migrants suffer from low transferability of their country specific human capital. The article highlights the need to consider migrant categories in integration research, and take into account international human capital transferability when explaining employment outcomes for immigrants.
    Keywords: labour market integration, Sweden, human capital, migration categories, employment gaps
    JEL: F22 J61 J68
    Date: 2016–05
  5. By: Janine Aron; John Muellbauer
    Abstract: 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: foreclosures, mortgage repossessions, mortgage payment delinquencies, mortgage arrears, credit risk stress testing, latent variables model.
    JEL: G21 G28 G17 R28 R21 C51 C53 E27
    Date: 2016–04–11
  6. By: Kristel Jacquier (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics)
    Abstract: Using individual-level data from the European Social Survey, a multilevel analysis involving 21 countries was conducted to identify contextual preference formation. We show that individual predictors such as education work differently in different institutional contexts. Contrary to previous finding in the literature we find that the higher the percentage of tertiary education, the smaller the education gap in public support for the EU.
    Keywords: multilevel data,survey research,european integration
    Date: 2016–04
  7. By: Piazzalunga, Daniela (University of Turin); Tommaso, Maria Laura di (University of Turin)
    Abstract: The paper examines the gender wage gap in Italy during the 2008-2012 economic crisis, using cross-sectional EU-SILC data. The gender wage gap increased from 4% in 2008 to 8% in 2012, when for most European countries the gap decreased. After 2010 the growth of the Italian gender wage gap (and its unexplained component) was particularly high in the upper part of the wage distribution. In 2010-11 a wage freeze in the public sector was introduced as an austerity measure: the average public sector premium dropped from 15% to 11%. Using counterfactual analyses, we show that the wage freeze has been one of the major causes of the growth of the gap, disproportionately affecting women, who are more likely to be employed in the public sector. This 'policy effect' accounts for more than 100% of the increase between 2009 and 2011, while other changes, if anything, would have reduced the gap.
    Keywords: gender wage gap, Great Recession, public sector premium, decomposition, counterfactual analysis
    JEL: J31 J71 J16 J45
    Date: 2016–05
  8. By: Nie, Peng; Sousa-Poza, Alfonso
    Abstract: Using data from the fifth wave of the Survey of Health, Ageing and Retirement in Europe, this study investigates the association between food insecurity (FI) and several demographic, socioeconomic, and health-related characteristics in a sample of European residents aged 50 and over. Our initial analysis reveals that in 2013, the proportions of 50+ individuals reporting an inability to afford meat/fish/poultry or fruit/vegetables more than 3 times per week were 11.1% and 12.6%, respectively. It also indicates that not only income but also functional impairment and chronic disease are significantly associated with an increased probability of food insecurity. In a subsequent nonlinear decompositional analysis of the food unaffordability gap between European countries with high versus low FI prevalence, our rich set of covariates explains 36 - 39% of intercountry differences, with household income, being employed, and having functional impairment and/or chronic disease as the most important contributors.
    Keywords: food unaffordability,decompositional analysis,older Europeans
    JEL: D12 D63 I31
    Date: 2016
  9. By: Tara Sinclair (Department of Economics/Institute for International Economic Policy, George Washington University); Mariano Mamertino (Indeed Hiring Lab)
    Abstract: Most studies of migration focus on realized migration. In this study we instead focus on revealed preference of job seekers actively searching for a job in a country other than their current home. The advance of internet job search allows job seekers to explore employment options across the globe before making a decision to move. We characterize job seeker interest across national borders by looking at job search behavior on a major job search website. We focus on the 15 countries of the EU where job seekers in our sample could use the same medium to search at home or abroad. Some of these job seekers may be currently living abroad and are looking to return home. Many are likely responding to information they have about economic conditions both at home and abroad. We find that a small number of countries attract most of the interest of cross-border EU-15 job seekers: approximately 75% of within EU-15 cross-border traffic is going to the UK, France, Germany, Netherlands and Belgium combined - and another 16% is almost evenly split between Spain, Italy and Ireland. But smaller EU economies actually show the highest concentration of EU15 job search inflows. Overall the UK is the big winner in terms of attracting job seekers from outside its borders: almost 4 out of every 10 job searches of Europeans looking for opportunities outside their home country, but in one of the other EU15 countries, ends up on In addition, we show that the UK also receives significant interest from Commonwealth countries and US. Our results suggest that, while language/cultural affinity together with availability of visas play a role in determining job search behaviors, cross-border job search traffic also mirrors jobseekers’ evaluation of the health of the labor market in the ‘origin’ and ‘destination’ countries . A case study on the impact of a major political event on international job search in Greece provides empirical evidence in support of this argument.
    Keywords: international migration, labor mobility, online labor markets, EU labor markets, natural experiments, Greece, brain drain
    JEL: J6 J4 F22
    Date: 2016–05
  10. By: Marta Pascual Sáez; Noelia González-Prieto; David Cantarero-Prieto
    Abstract: The recent economic crisis has highlighted the long-term value of earnings over life. This paper is focused on the relationship between income and age for the case of Spain. Different econometric models and panel techniques are used to explain income over life. We have considered cohort data for different age groups over the years 2003 to 2010 using the information contained in the European Union Statistics on Income and Living Conditions (EU-SILC). We provide empirical evidence confirming that the variation of earnings with age follows a quadratic function, reaches a maximum at age 48 years old and declines thereafter.
    Keywords: Earnings over life, EUSILC, income inequality, glass ceiling.
    JEL: D31 C23
    Date: 2016–05
  11. By: Melisande Cardona (European Commission - JRC - IPTS); Nestor Duch-Brown (European Commission - JRC - IPTS)
    Abstract: This paper studies the effects of delivery costs on cross-border e-commerce flows in the EU. For this purpose, we use surveys carried out in 2015 on firms and consumers, to analyse the supply and demand side separately. The paper first offers some descriptive statistics on the issues of delivery and e-commerce. In addition, the paper provides some indirect and descriptive evidence about the effects of delivery costs on cross-border e-commerce. Finally, a more robust econometric analysis is carried out to assess the effects of a hypothetical reduction of concerns about delivery cost on cross-border e-commerce in the EU, from the perspective of both consumers and firms. On the consumers' side, the results indicate that concerns about long delivery times reduce expenditure in other countries more strongly if the consumer has had more experience with shopping in non-neighbouring countries. The results on the supply side indicate that removing delivery cost concerns would increase the overall number of firms selling online across the border by 6.2 percentage points. Similarly, an increase of 5 percentage points would be registered in the volume of online trade. Finally, we compute the implied reduction in cross-border trade costs that would result from a hypothetical policy intervention to eliminate these delivery cost concerns. We plug this trade cost estimate into a macro-sector multi-country CGE model. The macro-economic results indicate that, even though the impact on GDP would be tiny, an important effect would come from reduced overall price levels. Consumer prices would be significantly reduced due to a productivity shock in the retail sector.
    Keywords: parcel delivery costs, cross-border e-commerce, digital single market
    JEL: D12
    Date: 2016–05
  12. By: Frimmel, Wolfgang (University of Linz); Halla, Martin (University of Innsbruck); Winter-Ebmer, Rudolf (University of Linz)
    Abstract: Numerous papers report a negative association between parental divorce and child outcomes. To provide evidence whether this correlation is driven by a causal effect, we exploit idiosyncratic variation in the extent of sexual integration in fathers' workplaces: Fathers who encounter more women in their relevant age-occupation-group on-the-job are more likely to divorce. This results holds also conditioning on the overall share of female co-workers in a firm. We find that parental divorce has persistent, and mostly negative, effects on children that differ significantly between boys and girls. Treated boys have lower levels of educational attainment, worse labor market outcomes, and are more likely to die early. Treated girls have also lower levels of educational attainment, but they are also more likely to become mother at an early age (especially during teenage years). Treated girls experience almost no negative employment effects. The latter effect could be a direct consequence from the teenage motherhood, which may initiate an early entry to the labor market.
    Keywords: divorce, children, human capital, fertility, sexual integrated workplaces
    JEL: J12 D13 J13 J24
    Date: 2016–05
  13. By: Distante, Roberta; Verdolini, Elena; Tavoni, Massimo
    Abstract: We empirically assess the distributional impacts and welfare effects of policies to incentivize renewable electricity production for the case of Italy. We use data from the Household Budget Survey between 2000 and 2010 to estimate a demand system in which energy goods' shares of expenditure are modelled using different empirical approaches. We show that the general Exact Affine Stone Index (EASI) demand system provides more robust estimates of price elasticities of each composite good than the commonly used Almost Ideal Demand System (AIDS). The estimated coefficients are used to perform a welfare analysis of the Italian renewable electricity production incentive policy. We show that different empirical approaches give rise to significantly different estimates of price elasticities and that methodological choices are the reasons for the very high elasticities of substitutions estimated using similar data by previous contributions. We find no evidence of regressivity of the incidence of the Italian renewable incentive scheme in the period under consideration. The renewable subsidies act as a middle-class tax, with the higher welfare losses experienced by households in the second to fourth quintiles of the expenditure distribution.
    Keywords: Energy Taxes, Consumer Demand System, Welfare Effects, Equity, Resource /Energy Economics and Policy, D12, H22, Q48,
    Date: 2016–05–26
  14. By: Molina, Jose Alberto; Velilla, Jorge; Ortega, Raquel
    Abstract: This paper analyzes the role of innovation, and other socio-demographic variables, in the entrepreneurial activity in the OECD. We use the index from the GEM 2014 Global Individual Level database, which contains international micro-data for individuals. Our pooled and cross-country results show that young male individuals tend to entrepreneur more than their counterparts. Innovation is also positive strongly related to entrepreneurship. Furthermore, making use of unbiased estimates based on relatively novel and underused techniques we give strong robustness to this result. We find that family and well-being variables follow a mixed relationship with entrepreneurship. Skills, transmission by meeting and opportunities also play an important role.
    Keywords: Entrepreneurship, TEA, OECD.
    JEL: C21 L26 O31
    Date: 2016–05–25
  15. By: Luca, Bettarelli; Giovanna, Iannantuoni; Elena, Manzoni; Francesca, Rossi
    Abstract: Motivated by the need of understanding voting behavior under different electoral rules, Laslier et al. (2015) have conducted an online experiment in several European countries during the three weeks before the 2014 elections for the European Parliament, the EuroVotePlus experiment. This paper focuses on the Italian data . We first show that the behavior of Italian respondents is consistent with the empirical findings at the European level. Then, we exploit the change from open list to closed list elections implemented in Italy in 1993 to investigate whether and how preferences over institutions are affected by experience. We find that respondents who voted using the open list system in Italy are more likely to prefer closed list systems, and that the effect is stronger the higher the number of open list elections that the respondents have faced.
    Keywords: European Parliament Election, Open list, Closed list, Voting rules
    JEL: D7 C9
    Date: 2016–05–19
  16. By: Andrzej Pestkowski (Wroclaw University of Economics)
    Abstract: Free movement and freedom of establishment existing within the European Union institutions are the main factors which make European Union open for business activities. However, it should be noted that all EU countries have their own tax systems and fiscal policy. This, in turn, differentiates fiscal burden of government imposed onto its taxpayers in each Member State. These differences frequently distort the conditions of establishment. As every entrepreneur is willing to minimize costs, especially when their source are compulsory taxes, mass tax migration between Member States might be expected. Tax avoidance and tax evasion, being a form of tax migration, imply numerous economic, social and legal problems. The aim of this paper is to identify these problems along with their causes and effects in terms of fiscal burden differentiation between Member States. Descriptive, qualitative and quantitative analyses have been applied in order to explain the abovementioned phenomena. Additionally, the analyses have been accompanied by case studies.
    Keywords: fiscal burden; tax systems; opportunism; moral hazard; unproductive entrepreneurship
    JEL: E26 H26 K34 K42
    Date: 2016–05
  17. By: Fungáčová, Zuzana; Godlewski, Christophe J.; Weill, Laurent
    Abstract: We study the effect of bank loan and bond announcements on borrower’s stock price. We apply an event study methodology on a sample of companies from 17 European countries and find that debt announcement generates a positive stock market reaction. However, our main conclusion is that the issuance of a loan exerts a significantly stronger reaction than does the issuance of a bond. This finding supports the hypothesis that loan issuance has a positive certification effect. The analysis of determinants of abnormal returns following debt announcements shows a positive impact of financial development and a negative effect of the Eurozone crisis.
    Keywords: corporate bonds, syndicated loans, event study, stock returns, Europe
    JEL: G14 G20
    Date: 2015–08–20
  18. By: Kreiner, Claus T.; Leth-Petersen, Søren; Willerslev-Olsen, Louise
    Abstract: Do people end up in financial trouble simply because of adverse shocks to income and wealth, or is financial trouble related to persistent differences in financial attitudes and behavior that may be transmitted from generation to generation? We address this question using a new administrative data set with longitudinal information about defaults for the universe of personal loans in Denmark. We provide non-parametric evidence showing that the default propensity is more than four times higher for individuals with parents who are in default compared to individuals with parents not in default. This intergenerational relationship is apparent soon after children move into adulthood and become legally able to borrow. The intergenerational relationship is remarkably stable across age groups, levels of loan balances, parental income levels, childhood school performance, time periods and different measures of financial trouble. Basic theory points to three possible explanations of the correlation across generations in financial trouble: (i) children and parents face common shocks; (ii) children and parents insure each other against adverse shocks; (iii) financial behavior differs across people and is transmitted across generations. Our evidence indicates that the last explanation is the most important. Finally, we show that the intergenerational correlation in financial trouble is not fully incorporated in interest setting on loans, pointing to adverse selection in the market for personal loans.
    Keywords: default; Household borrowing decisions; intergenerational dependency
    JEL: D12 D91 G20
    Date: 2016–05
  19. By: Christian Holzner (Ludwig Maximilian University of Munich, Germany); Makoto Watanabe (VU University Amsterdam, the Netherlands)
    Abstract: Using a unique vacancy dataset, we fnd that the Public Employment Agency (PEA) distributes workers more evenly across vacancies than the private market. We investigate the implications of having such a market place by using a directed search model, where firms can search via the PEA or the private market. Lower coordination frictions reduce wage competition and enable registered firms to pay lower wages compared to the private market. This advantage has to be traded o against the negative selection of applicants coming through the PEA. We take these theoretical predictions to the data and find strong support for them.
    Keywords: Labor Search; Intermediation; Public Employment Agency
    JEL: J6
    Date: 2016–05–23
  20. By: Alberto Di Minin (Scuola Superiore Sant'Anna); Chiara Eleonora De Marco (Scuola Superiore Sant'Anna); Cristina Marullo (Scuola Superiore Sant'Anna); Andrea Piccaluga (Scuola Superiore Sant'Anna); Elena Casprini (Scuola Superiore Sant'Anna); Maral Mahdad (Scuola Superiore Sant'Anna); Andrea Paraboschi (Scuola Superiore Sant'Anna)
    Abstract: This report synthesizes the results of 13 case studies on innovative ICT and ICT-enabled companies across Europe. It aims to assess the impact of Open Innovation strategies (OISs) on their innovation processes and to highlight the role played by ICT.
    Keywords: Open Innovation, ICT, Innovation Ecosystem, SMEs, LE
    Date: 2016–05
  21. By: Lannoo, Karel
    Abstract: In his assessment of the latest draft prospectus Regulation, published on 30 November 2015, Karel Lannoo argues in this ECMI Commentary that the text goes somewhat further than the European Commission has previously entertained, but it falls short of creating a European market. In his view, the Commission is hostage to its own (or member states’) unwillingness to expand the powers of the European Securities and Markets Authority (ESMA) to become an EU-wide listing authority. In short, the Union that the EU wants to create for capital markets still seems a distant ambition.
    Date: 2016–03

This nep-eur issue is ©2016 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.