nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2016‒06‒14
eighteen papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. The Economic Impact of EU Guarantees on Credit to SMEs Evidence from CESEE Countries By Pierfederico Asdrubali; Simone Signore
  2. Do municipal mergers reduce costs? Evidence from a German federal state By Blesse, Sebastian; Baskaran, Thushyanthan
  3. Baseline results from the EU28 EUROMOD (2011-2015) By Leventi, Chrysa; Vujackov, Sanja
  4. Information, Financial Aid and Training Participation: Evidence from a Randomized Field Experiment By Görlitz, Katja; Tamm, Marcus
  5. Promotion of Renewable Energy in the EU By Daniel Rais
  6. Geo-blocking in Cross-border e-Commerce in the EU Digital Single Market By Melisande Cardona
  7. Who Wins? Evaluating the Impact of UK Public Sector Pension Scheme Reforms By Danzer, Alexander M.; Dolton, Peter; Rosazza Bondibene, Chiara
  8. Mapping and Analysis of ICT-enabled Social Innovation initiatives promoting social investment in integrated approaches to the provision of social services: IESI Knowledge Map 2015 By Gianluca Misuraca; Csaba Kucsera; Fiorenza Lipparini; Christian Voigt; Raluca Radescu
  9. Housing Market Response to 2012 Northern Italy Earthquake: The role of house quality and changing risk perception By Marco Modica; Roberto Zoboli; Fabrizio Meroni; Vera Pessina; Thea Squarcina; Mario Locati
  10. Inequalities in Adolescent Health and Life Satisfaction: Evidence from the Health Behaviour in School-aged Children study By Yekaterina Chzhen; Zlata Bruckauf; Kwok Ng; Daria Pavlova; Torbjorn Torsheim; Margarida Gaspar de Matos; UNICEF Innocenti Research Centre
  11. EU corporate tax vs Stacked taxation By Florence LACHET-TOUYA
  12. Demand for offsetting and insetting in the EU Emissions Trading System By Misato Sato; Marta Ciszawska; Timothy Laing
  13. Identifying the Effects of Place-based Policies – Causal Evidence from Germany By Eva Dettmann; Matthias Brachert; Mirko Titze
  14. The variation of export prices across and within firms By Juan de Lucio; Raúl Mínguez; Asier Minondo; Francisco Requena
  15. Interaction of biofuel, food security, indirect land use change and greenhouse mitigation policies in the European Union By Pena-Levano, Luis M; Rasetti, Michele; Melo, Grace
  16. Does self regulation work? The case of television food advertisement to children in Germany By Landwehr, Stefanie C.; Hartmann, Monika
  17. Eco-innovation, sustainable supply chains and environmental performance in European industries By Valeria Costantini; Francesco Crespi; Giovanni Marin; Elena Paglialunga
  18. Minimum wage and employment: Escaping the parametric straitjacket By Cabras, Stefano; Fidrmuc, Jan; de Dios Tena Horrillo, Juan

  1. By: Pierfederico Asdrubali; Simone Signore
    Abstract: This paper estimates the economic impact at final beneficiary level of the Multi-Annual Programme for enterprises and entrepreneurship EU SME Guarantee Facility in Central, Eastern and South-Eastern European (CESEE) Countries in the period 2005-2012. Data on SME beneficiaries has been collected from administrative records and enriched with information on firms’ financial accounts taken from the Orbis database. The paper combines propensity scores and difference-in-differences estimation in order to evaluate the effect of having received a MAP-guaranteed SME loan on firm performance (employment, production, profitability and factor productivity) against a control group of comparable firms. Our results offer several insights. We find that the EU SME Guarantee Facility in the CESEE region had, on average, a significant positive effect on firms’ employment: beneficiary firms were able to increase their workforce by 17.3%, compared to the control groups, within the first 5 years following the issuance of the guaranteed loan. Moreover, by the fifth year after the signature date, the turnover of MAP beneficiaries had increased by 19.6%, compared to non-beneficiary companies. However, MAP beneficiaries faced a temporary setback in productivity, with respect to their peers, an effect that could be due to allocative inefficiencies following the MAP-induced increase in their production factors. Such gap was, however, partially absorbed over the medium run. By breaking down our sample by country, signature year, size and age classes, we observe that micro and young SMEs have benefited the most from MAP-guaranteed loans in terms of economic additionality. Overall, our findings suggest that the EU SME Guarantee Facility has been successful in bringing significant positive effects on beneficiary firms in CESEE Countries.
    JEL: O52 F33 E50 E63
    Date: 2015–07
  2. By: Blesse, Sebastian; Baskaran, Thushyanthan
    Abstract: We study the fiscal consequences of municipal mergers by making use of a largescale merger reform in the German federal state of Brandenburg. This reform, which was implemented from 2001 to 2003, led to a substantial reduction in the number of municipalities. Individual mergers were heterogeneous across a number of dimensions, which allows us to contribute to the literature by exploring the consequences of different types of mergers within the same institutional setting. Focusing in particular on the distinction between compulsory and (semi-) voluntary mergers, we implement a difference-in-difference design with panel data from 1995-2010 at the level of post-merger municipalities. We find significant reductions in (administrative) expenditures after compulsory mergers. Voluntary mergers, on the other hand, have no effect on expenditures. We also show that the effects of voluntary and compulsory mergers vary according to further (secondary) characteristics of a merger.
    Keywords: municipal mergers,economies of scale,voluntary and compulsory mergers
    JEL: H11 H72 H77 R53
    Date: 2016
  3. By: Leventi, Chrysa; Vujackov, Sanja
    Abstract: This paper presents baseline results from the latest version of EUROMOD (version G3.0+), the tax-benefit microsimulation model for the EU-28. First, we briefly report the process of updating EUROMOD. We then present indicators for income inequality and risk of poverty using EUROMOD and discuss the main reasons for differences between these and EU-SILC based indicators. We further compare EUROMOD indicators across countries and over time between 2011 and 2015 (or 2014 in some cases). Finally, we provide estimates of marginal effective tax rates (METR) for all 28 EU countries in order to explore the effect of tax and benefit systems on work incentives at the intensive margin. Throughout we highlight both the potential of EUROMOD as a tool for policy analysis and the caveats that should be borne in mind when using it and interpreting results. This paper updates the work reported in EUROMOD Working Paper EM18/2014.
    Date: 2016–05–18
  4. By: Görlitz, Katja (Free University of Berlin); Tamm, Marcus (RWI)
    Abstract: To increase employee participation in training activities, the German government introduced a large-scale training voucher program in 2008 that reduces training fees by half. Based on a randomized field experiment, this paper analyzes whether providing information about the existence and the conditions of the training voucher had an effect on actual training activities of employees. Because the voucher was newly introduced, only one-fourth of the eligible employees knew the voucher exists at the time of the experiment. The information intervention informed a random sample of eligible employees by telephone about the program details and conditions. The results indicate that the information significantly increased treated individuals' knowledge of the program but had no effect on voucher take-up or participation in training activities. Additional descriptive analyses suggest that the reasons for these zero effects are that the demand for self-financed training is low and that liquidity constraints do not discourage many employees from training participation.
    Keywords: training participation, voucher, financial aid, randomized field experiment, information treatment
    JEL: I22 D83 H52
    Date: 2016–04
  5. By: Daniel Rais
    Abstract: Abstract This paper criticizes measures that allow Member States of the European Union (EU) to provide priority treatment for electricity produced from renewable energy sources (RES) in terms of connection and access to the grid, and dispatch of electricity on the grid. It argues against the priority rules set out in the Renewable Energy Directive of 2009 and comes out in favour of grid operation neutrality. To arrive at this conclusion, this paper provides an overview of the nature of priority rules, reviews the distinct problems related to the application of priority rules, objectives of the implementation of Third Energy Package and available legal remedies for the protection of legitimate interests of electricity generators.
    Date: 2015–02–16
  6. By: Melisande Cardona (European Commission - JRC - IPTS)
    Abstract: A cross-border e-commerce Mystery Shopping Survey conducted in 2015, finds that the practice of erecting virtual barriers is still common in cross-border e-commerce within the EU, as it was in 2009. Electrical appliances, electronics and computer games are particularly difficult to buy online from another country. Geo-blocking often takes place at the delivery stage of the online purchase process and less often at the access stage. Larger websites can also block access according to a buyer’s IP address. Geo-blocking is less probably between countries sharing a common language while a common border or geographical proximity has no effect. Travel services have a different pattern of geo-blocking from tangible goods, where geo-blocking mainly takes place at the access stage. Price analysis shows that differentiation takes place in all sectors, but is more common in the sectors less affected by geo-blocking.
    Keywords: geo-blocking, mystery shopping, cross-border e-commerce, digital single market
    JEL: D12
    Date: 2016–05
  7. By: Danzer, Alexander M. (Catholic University of Eichstätt-Ingolstadt); Dolton, Peter (University of Sussex); Rosazza Bondibene, Chiara (National Institute of Economic and Social Research (NIESR))
    Abstract: Radical changes have been implemented to pension schemes across the UK public sector from April 2015. This paper simulates how these changes will affect the lifetime pension and how the negotiated pension changes compare across six public sector schemes by level of education. Specifically, we simulate the occupation specific Defined Benefit (DB) pension wealth accumulated for a representative employee over the lifecycle by factoring in the recent changes to pension conditions. We find that less educated workers with low or moderate earnings in the NHS, Local Government and Civil Service schemes are the winners having secured an increase in the value of their pension of between 10-20%. Graduate workers with faster wage growth in the Civil Service, Teachers and Local Government schemes loose between 3% and 5%. This is in sharp contrast with the Police and Fire forces who have lost around 40% irrespective of their education.
    Keywords: pension reforms, public sector, defined benefit
    JEL: J32 H55 J45
    Date: 2016–05
  8. By: Gianluca Misuraca (European Commission - JRC - IPTS); Csaba Kucsera (European Commission – JRC - IPTS); Fiorenza Lipparini (The Young Foundation); Christian Voigt (ZSI - Zentrum für Soziale Innovation); Raluca Radescu
    Abstract: This report presents the analysis of the Mapping 2015 of the project 'ICT-enabled Social Innovation to support the Implementation of the Social Investment Package' (IESI). It provides an enriched picture of the existing knowledge base and evidence of how ICT-enabled social innovation initiatives that promote social investment through integrated approaches to social services delivery can contribute to the policy objectives of the EU Social Investment Package (SIP) to support the achievement of the goals of the EU 2020 strategy in terms of inclusive growth and employment. After having introduced the policy and research background outlining the overall objectives and scope of the IESI research and the aim of the mapping 2015, the report provides an overview of the methodology followed for enriching the IESI inventory of ICT-enabled social innovation initiatives through a structured dynamic database and by conducting the mapping and analysis of a selected sample of 210 initiatives. The report then updates the review of the literature and practice in domains related to the role and impact of ICT-enabled social innovation promoting social investment, with a specific focus on the area of active and healthy ageing and long-term care for older people, particularly the theme: prevention, health promotion and rehabilitation. In reviewing the state of the art the report discusses the degree of deployment of ICT-enabled social innovations that promote social investment through integrated approaches to social services provision in terms of geographical spread and different areas of social services covered, providing insight into the levels and types of deployment achieved. Further, the IESI conceptual framework which underpins the research and which has been used to guide the mapping and analysis of initiatives is discussed, proposing additional dimensions in order to enrich the framework of analysis itself. Evolving theoretical approaches are taken into account, the aim being to better explain the implications ICT-enabled social innovation initiatives have or may have for social policy reforms. This is followed by an overview of the consolidated results of the analysis of the initiatives collected as part of the IESI mapping exercise in 2014 and 2015. The analysis presents the IESI Knowledge Map 2015, which aims to provide a better understanding of the main characteristics and patterns of the initiatives identified, according to the IESI conceptual framework. Reference is also made to the different welfare systems and social services delivery models which characterise various EU countries in order to contextualise the potential role played by ICT-enabled social innovation to promote social investment through integrated approaches to social services delivery. The findings of specific thematic analyses conducted on a set of selected topics: 1) the role of social enterprise-driven ICT-enabled social innovation initiatives in support of social services delivery; and the implications of ICT-enabled social innovation that promote social investment through integrated approaches to social services delivery in support of: 2) active inclusion of young people; and 3) active and healthy ageing and long-term care for older people, particularly as regards prevention, health promotion and rehabilitation are then presented. Finally, the main conclusions deriving from the analysis of the mapping in terms of the contribution made by ICT-enabled social innovation promoting social investment through integrated approaches to social services delivery to the implementation of the SIP are outlined. This is complemented by an analysis of the gaps identified; the limitations of the current mapping exercise and recommendations for future research, as well as implications and possible directions for policy.
    Keywords: Social policy, Innovation, ICTs, Welfare, Mapping, EU
    Date: 2016–05
  9. By: Marco Modica (IRCrES-CNR, Milano, Italy.); Roberto Zoboli (IRCrES-CNR, Milano, Italy; Catholic University of Sacred Heart, Milano, Italy.); Fabrizio Meroni (INGV, Milano, Italy); Vera Pessina (INGV, Milano, Italy); Thea Squarcina (INGV, Milano, Italy); Mario Locati (INGV, Milano, Italy)
    Abstract: This paper examines the housing market response to Northern Italy earthquake in May 2012. Available literature provides evidence of a drop in the average price of houses after a disaster mainly due to i) underestimation by households of disaster risk in area where its occurrence is low or ii) overreaction because of a higher risk perception triggered by the unforeseen extreme event. Here, we provide evidence that overreaction can play a significant role. We use the Northern Italy earthquake as an experiment that permits to estimate the response of housing value to the extreme event by means of a diff-in-diff models. Differently from other papers, we directly carry out the assessment of the damage earthquake scenario, by using macroseismic methods to evaluate the physical damage level of the Northern Italy earthquake. In this way we are able to compare different damage scenarios and providing information on subjective perception of risk. Moreover, to our knowledge, this is the first work providing evidence that the quality of the houses in relation to the ‘resistance to the tremor’ might also play a relevant role for subjective risk assessment.
    Keywords: Earthquake risk; Housing market; Risk perception
    JEL: R21 R32 Q52
    Date: 2016–04
  10. By: Yekaterina Chzhen; Zlata Bruckauf; Kwok Ng; Daria Pavlova; Torbjorn Torsheim; Margarida Gaspar de Matos; UNICEF Innocenti Research Centre
    Abstract: International studies of inequalities in adolescent health tend to focus on the socio-economic gradient in average outcomes rather than their dispersion within countries. Although understanding the extent to which differences in health are related to socio-economic disadvantage is important, focusing exclusively on socio-economic status risks neglecting differences in the distribution of health outcomes within and between countries. To fill this research gap, this study analyses variation in the extent of inequality in the lower half of the distribution in five indicators of adolescent health and well-being – health symptoms, physical activity, healthy eating, unhealthy eating, and life satisfaction – across EU and/or OECD countries that took part in the latest cycle of the Health Behaviour in School-aged Children study.
    Keywords: adolescent health; household surveys; inequality; physical development;
    Date: 2016
  11. By: Florence LACHET-TOUYA
    Abstract: When same authorities belonging to a same level of government derive their receipts from a mobile tax base, a competition mechanism takes place among them that triggers externalities. Likewise, when different layers of decision-makers exert their taxing power upon a common base, the choices made by one tier affect the receipts that the other governments can collect. Generally speaking, the decisions made by one government affect the tax revenue that can be collected by the decisionmakers belonging to the same tier of government or by stacked jurisdictions : externalities arise, the existence and the magnitude of which are closely related to the nature of the tax, to the mobility of the base and to the distribution of tax competence among decisionmakers. This paper proposes a model where both horizontal and vertical interactions take place. Uncertainty concerning the base, that is, the amount of capital likely to be invested, is introduced and a generalization of taxation schemes is provided in order to assess the robustness of traditional analyses results in a more general and realistic scheme. The analysis led envisages two possible schemes of European corporate taxation. On the one hand, we consider a setting consisting in having a corporate tax set at the European level only, the receipts of which are distributed among member states. On the other hand, we introduce the addition of a European tax upon national corporate taxes and we simultaneously take into account horizontal and vertical externalities. We distinguish according the nature of the objective function that each kind of government may display. We can show that the fi?rst scheme should be preferred, both from a taxation degree and a public investment point of view.
    Keywords: anticipations, inference, perfect foresight, rational expectations, financial markets, asymmetric information, arbitrage
    JEL: D72 D82 H23 H30 H32 H71 H77
    Date: 2016–05
  12. By: Misato Sato; Marta Ciszawska; Timothy Laing
    Abstract: International carbon offsetting can help reduce compliance costs in emissions trading schemes and at the same time support carbon mitigation projects in developing countries. A surprising observation from the European Union Emissions Trading System’s experience with offsetting is that companies do not fully utilise offsetting for compliance despite the cost advantage in doing so. However, so far there has been limited research evaluating what factors influence companies’ decisions to utilise offsets. This paper fills this gap by investigating the demand for carbon offsets in tradable permit emissions markets. To do so, we use detailed firm-level data on 279 companies regulated under the EU ETS during 2008-2012. Our findings suggest that there are clear sectoral differences and that, contrary to expectations, transaction costs and over-allocation of free allowances are not the key determining factors. We find some evidence to support the existence of ‘insetting’, that is, companies with subsidiaries in key offset countries are more likely to use a larger share of their offset allowance for compliance. Semi-structured interviews with companies supported these findings.
    Date: 2016–05
  13. By: Eva Dettmann; Matthias Brachert; Mirko Titze
    Abstract: The German government provides discretionary investment grants to structurally weak regions to reduce regional disparities. We use a regression discontinuity design that exploits an exogenous discrete jump in the probability of receiving investment grants to identify the causal effects of the investment grant on regional outcomes. We find positive effects for regional gross value-added and productivity growth, but no effects for employment and gross wage growth.
    Keywords: evaluation, industrial policy, regression discontinuity design
    JEL: A11 D61 H20 Z00
    Date: 2016–05
  14. By: Juan de Lucio (Pontificia University of Comillas-ICADE. Alberto Aguilera 23, 28015 Madrid (Spain)); Raúl Mínguez (Chamber of Commerce of Spain. Ribera del Loira 12, 28042 Madrid (Spain).); Asier Minondo (Corresponding author. Deusto Business School, University of Deusto, Camino de Mundaiz 50, 20012 Donostia - San Sebastian (Spain). Research afiliate of Instituto Complutense de Estudios Internacionales.); Francisco Requena (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    Abstract: This paper uses transaction-level trade data to analyze the differences in export prices across and within Spanish manufacturing rms in the year 2014. The transactionalnature of the database uncovers sizable differences in the price that an exporter charges for the same product and destination. To explain this new margin in the variation of export prices, we extend the Baldwin and Harrigan (2011) model, allowing more productive firms to manufacture a wider quality-range of varieties. For a representative sample of multi-transaction and multi-destination exporting firms, regression analyses con rm that more productive rms set higher average export prices and o er a wider quality-range of varieties within a destination.
    Keywords: export prices, firm-level transaction data, heterogeneous firms, quality
    JEL: F1 F10 F23
    Date: 2016–05
  15. By: Pena-Levano, Luis M; Rasetti, Michele; Melo, Grace
    Abstract: The European Union is putting a lot of effort in mitigating climate change effects and lessen the dependence of fossil fuels. Several policies are being proposed in the Renewable Energy Directives (RED), such as increasing the share of renewable sources in fuel mix, specific increases in fuel production? and anti-dumping strategies. However, these policies raise concerns with respect to competition with food production, and indirect increases GHG emissions caused by land use change. Our study evaluates the RED policies together with additional climate mitigation policies using a computable general equilibrium modeling. Our results suggest that, for the case of the European Union (EU), an increase in biofuel production does not represent a threat in food security. In addition, we found that the land use change in the EU are modest compared to previous studies in developing regions. Our findings illustrate how the imposition of a regime can vary depending on the economic development of a region.
    Keywords: European biofuel policy, Biodiesel, GTAP-BIO-FCS, Land use change, GHG emissions, Agricultural and Food Policy, Crop Production/Industries, Food Consumption/Nutrition/Food Safety, International Development, Land Economics/Use, Research and Development/Tech Change/Emerging Technologies, Resource /Energy Economics and Policy, D58, Q16, Q58,
    Date: 2016
  16. By: Landwehr, Stefanie C.; Hartmann, Monika
    Abstract: Television advertisement targeting children and promoting food products high in sugar, saturated fat or sodium is considered to enhance the development of childhood overweight and obesity. Thus, reducing children’s exposure to advertisement of energy-dense, nutrient-poor (EDNP) products is considered as one option to improve children’s health. In 2007, globally leading food and beverage companies launched the EU Pledge, a self-regulation initiative in which signatory corporations agreed to restrict television and internet advertising of EDNP products not in line with specific nutritional criteria to media audiences of at least 35 % children under the age of 12 at European level. While initially each participating corporation defined their own nutritional criteria, in 2012 companies agreed on a common nutrient profiling system which has to be adopted by the end of 2014. The overall objective of this study is to examine the effectiveness of the EU Pledge in reducing children’s exposure television advertising of EDNP food and drink products. In October 2011, 2012 and 2014, television program of ten German television networks was recorded each on one weekend day and one week day. In total, 892 hours of television program were taped. Data was analyzed using content analysis. The sample contains 127.6 hours of advertising with a total of 1,069 food commercials addressing children. More than half of all food advertisements designed in a child-appealing way originates from Pledge-signatory companies (57.4 %). The share of products from Pledge-participating companies matching the common criteria of the EU Pledge increased from 37.5 % in 2011 to 75.0 % in 2014. At the same time, the share of non-participating companies declined (2011: 80.0 %; 2014: 25.0 %). However, compared to the criteria of the Ofcom score (compliance Pledge-members 2011: 12.5 %; 2014: 25.0) criteria of the EU Pledge are considerable less strict. The results indicate that despite the adoption of harmonized criteria, the overall nutritional value of food products advertised to children on television has not improved as EDNP products continue dominating food commercials to children.
    Keywords: self-regulation in industry, food marketing to children, television advertising, Agricultural and Food Policy, Health Economics and Policy, Marketing,
    Date: 2016
  17. By: Valeria Costantini; Francesco Crespi; Giovanni Marin; Elena Paglialunga
    Abstract: The introduction and adoption of green technologies are considered the most cost effective way to reduce environmental pressure without compromising economic competitiveness. The scientific literature has emphasized the crucial role played by diffusion pathways of green technologies along the supply value chain, but empirical quantitative findings on the effectiveness of green technologies in improving environmental performance are scarce. The objective of this paper is to highlight the role of inter-sectoral linkages in shaping the influence played by eco-innovations on sectoral environmental performance. Empirical findings show that both the direct and indirect effects of eco-innovations help reduce environmental stress and that the strength of these impacts varies across the value chain depending on the technology adopted and the type of pollutant under scrutiny. The main implications we can deduce are that, first both corporate and policy governance strategies should specifically address the goal of maximizing environmental gains that can be achieved through the development and adoption of clean technologies along the supply chain, and second both strategies should be coordinated in order to minimize the costs for reducing environmental pressures.
    Keywords: eco-innovation, environmental performance, inter-sectoral linkages, international spillovers, value chain, sustainable production, governance systems
    Date: 2016–04–29
  18. By: Cabras, Stefano; Fidrmuc, Jan; de Dios Tena Horrillo, Juan
    Abstract: Parametric regression models are often not flexible enough to capture the true relationships as they tend to rely on arbitrary identification assumptions. Using the UK Labor Force Survey, the authors estimate the causal effect of national minimum wage (NMW) increases on the probability of job entry and job exit by means of a non-parametric Bayesian modelling approach known as Bayesian Additive Regression Trees (BART). The application of this methodology has the important advantage that it does not require ad-hoc assumptions about model fitting, number of covariates and how they interact. They find that the NMW exerts a positive and significant impact on both the probability of job entry and job exit. Although the magnitude of the effect on job entry is higher, the overall effect of NMW is ambiguous as there are many more employed workers. The causal effect of NMW is higher for young workers and in periods of high unemployment and they have a stronger impact on job entry decisions. No significant interactions were found with gender and qualifications.
    Keywords: BART,causal inference,regression approach,matching regression
    JEL: C23 C11 C14 J3 J4
    Date: 2016

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