nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2017‒06‒18
twenty-six papers chosen by
Giuseppe Marotta
Università degli Studi di Modena e Reggio Emilia

  1. Health and inequality in health in the Nordic countries By Christiansen, Terkel; Lauridsen, Jørgen; Lyttkens, Carl Hampus; Ólafsdóttir, Thorhildur; Valtonen, Hannu
  2. The effects of financialisation and financial development on investment: evidence from firm-level data in Europe By Daniele Tori; Özlem Onaran
  3. Does Inter-municipal Cooperation promote efficiency gains? Evidence from Italian Municipal By Massimiliano Ferraresi; Giuseppe Migali; Leonzio Rizzo
  4. The Role of Works Councils for Severance Payments By Christian Grund; Johannes Martin
  5. Introducing Risk Adjustment and Free Health Plan Choice in Employer-Based Health Insurance: Evidence from Germany By Adam Pilny; Ansgar Wübker; Nicolas R. Ziebarth
  6. Austerity, health care provision, and health outcomes in Spain By Borra, Cristina; Pons-Pons, Jeronia; Vilar-Rodriguez, Margarita
  7. Where did all the unemployed go? : non-standard work in Germany after the Hartz reforms By Rothe, Thomas; Wälde, Klaus
  8. New evidence on interregional mobility of students in tertiary education: the case of Italy By Ilaria De Angelis; Vincenzo Mariani; Roberto Torrini
  9. Public Opinion on Immigration in Europe: Preference versus Salience By Hatton, Timothy J.
  10. The impact of participation in job Creation schemes in turbulent times By Bergemann, Annette; Pohlan, Laura; Uhlendorff, Arne
  11. Household spending out of a tax rebate: Italian “€80 tax bonus” By Andrea Neri; Concetta Rondinelli; Filippo Scoccianti
  12. "Countercyclical Labor Productivity: The Spanish Anomaly" By Borja Jalón; Simón Sosvilla-Rivero; José A. Herce
  13. Trading firms and trading costs in services: The case of Sweden By Lodefalk, Magnus; Kyvik Nordås, Hildegunn
  14. Total Factor Productivity Convergence in German States since Reunification: Evidence and Explanations By Burda, Michael C; Severgnini, Battista
  15. The Private Production of Safe Assets By Kacperczyk, Marcin; Perignon, Christophe; Vuillemey, Guillaume
  16. Renewable Energy Sources and Investment in European Power Transmission Networks By Kaloud Tobias
  17. Offshoring, industry heterogeneity and employment By Bramucci, Alessandro; Cirillo, Valeria; Evangelista, Rinaldo; Guarascio, Dario
  18. No free lunch, Buddy: past housing transfers and informal care later in life By Emanuele Ciani; Claudio Deiana
  19. Lobbying in Europe: new firm-level evidence By Dellis, Konstantinos; Sondermann, David
  20. Polls, the Press, and Political Participation: The Effects of Anticipated Election Closeness on Voter Turnout By Leonardo Bursztyn; Davide Cantoni; Patricia Funk; Noam Yuchtman
  21. UK Infrastructure Investment and Finance from a European and Global Perspective By Inderst, Georg
  22. Decomposing Service Exports Adjustments along the Intensive and Extensive Margin at the Firm-Level By Elisabeth Christen; Michael Pfaffermayr; Yvonne Wolfmayr
  23. Capital Taxation and Investment: Matching 100 Years of Wealth Inequality Dynamics By Boehl, Gregor; Fischer, Thomas
  24. The exchange rate susceptibility of European core industries, 1995-2010 By Leuwer, David; Süßmuth, Bernd
  25. The interbank network across the global financial crisis: evidence from Italy By Massimiliano Affinito; Alberto Franco Pozzolo
  26. Who do you know or what do you know? Informal recruitment channels, family background and university enrolments By Emanuela Ghignoni

  1. By: Christiansen, Terkel (Department of Business and Economics, and COHERE); Lauridsen, Jørgen (Department of Business and Economics, and COHERE); Lyttkens, Carl Hampus (Department of Economics); Ólafsdóttir, Thorhildur (Faculty of Business Administration); Valtonen, Hannu (Institute of Public Health and Clinical Nutrition)
    Abstract: All five Nordic countries emphasise equal and easy access to healthcare. It is the purpose to explore to which extent the populations of these countries have reached good health and high degree of socio-economic equality of health. Each of the five countries has established extensive public health programmes, although with somewhat different emphasis on the causes of ill-health, such as individual behaviour or social circumstances. Attitudes have changed over time, though. We compare these countries to the UK and Germany by using data from the European Social Survey 2002 and 2012 in addition to OECD Statistics from the same years. Health is measured by self-assessed health in five categories, transformed to a cardinal scale using Swedish time trade-off weights. As socio-economic variable we use household income or length of education. Mean health, based on Swedish TTO weights applied to all countries, is above 0.93 in all the Nordic countries and the UK in 2012, while lower in Germany. Rates in good or very good health in the lower income half of the samples are above 0.6 in most countries and even higher in Iceland and Sweden, but below 0.5 in Germany. However, when displayed in a graph the concentration curves nearly follow the diagonal implying almost no income- or education related inequality in self-assessed health weighted by TTO based preferences. The difference is a natural consequence of using different methods. We compared four key life-style related determinants of ill health and found that while there were differences in relative levels between the countries, Germany had a relatively high level of three of these, followed by the UK. We found no association between level of resources used and health status. In general, the Nordic countries have accomplished good health for their populations and high degree of socioeconomic equality in health. Improvements in life-style related determinants of health would be possible, though.
    Keywords: International comparison of health systems; health status; health equity
    JEL: I11 I14 I19
    Date: 2017–06–06
  2. By: Daniele Tori (Open University); Özlem Onaran
    Abstract: In this paper we estimate the effects of financialization on physical investment in selected western European countries using panel data based on the balance-sheets of publicly listed non-financial companies (NFCs) supplied by Worldscope for the period 1995-2015. We find robust evidence of an adverse effect of both financial payments (interests and dividends) and financial incomes on investment in fixed assets by the NFCs. This finding is robust for both the pool of all Western European firms and single country estimations. The negative impacts of financial incomes are non-linear with respect to the companies' size: financial incomes crowd-out investment in large companies, and have a positive effect on the investment of only small, relatively more credit-constrained companies. Furthermore, we find that a higher degree of financial development is associated with a stronger negative effect of financial incomes on companies' investment. This finding challenges the common wisdom on 'finance-growth nexus'. Our findings support the 'financialization thesis' that the increasing orientation of the non-financial sector towards financial activities is ultimately leading to lower physical investment, hence to stagnant or fragile growth, as well as long term stagnation in productivity.
    Keywords: financialization, financial development, firm-level data, Europe
    JEL: C23 D22 G31
    Date: 2017–06
  3. By: Massimiliano Ferraresi (European Commission - DG JRC Directorate I Competences - Modelling, Indicators and Impact Evaluation Unit); Giuseppe Migali (Lancaster University Management School); Leonzio Rizzo (Università di Ferrara)
    Abstract: Inter-municipal cooperation is a widespread phenomenon among municipalities as a way to provide local public services, exploit economies of scale and internalise externalities. While the determinants driving the decision to cooperate have been deeply analyzed in the literature, little is known about possible efficiency gains. We test their existence in terms of local public expenditures reductions by investigating the Italian experience of Municipal Unions. We exploit unique administrative data on 335 municipalities located in the Emilia Romagna region, for the period 2001-2011. Using a difference-in-differences approach combined with matching models, we find that being in a Municipal Union reduces the total per capita current expenditures by around 5%. The effect is robust, persistent and increasing up to nine years after entrance. Furthermore, joining a Municipal Union does not reduce the level of local public services. Hence, the Municipal Union is an effective tool that allows municipalities to gain efficiency.
    Keywords: Municipal Union cooperation, public expenditure, difference-in-differences, matching
    JEL: H71 H72 C23
  4. By: Christian Grund; Johannes Martin
    Abstract: Using representative German employee data, we analyse the role of works councils for the incidence of severance payments subsequent to dismissals. While there is a positive relation with severance payments after those dismissals which stem from plant closings, the incidence of a works council is negatively associated with severance pay subsequent to individual layoffs. In both cases, we find a negative moderating effect of individuals’ higher re-employment chances. We also explore gender differences and differences between the types of previously held jobs.
    Keywords: Dismissals, Layoffs, Plant closings, Severance pay, Works councils
    JEL: J53 J63 J65
    Date: 2017
  5. By: Adam Pilny; Ansgar Wübker; Nicolas R. Ziebarth
    Abstract: To equalize differences in health plan premiums due to differences in risk pools, the German legislature introduced a simple Risk Adjustment Scheme (RAS) based on age, gender and disability status in 1994. In addition, effective 1996, consumers gained the freedom to choose among hundreds of existing health plans, across employers and state-borders. This paper (a) estimates RAS pass-through rates on premiums, financial reserves, and expenditures and assesses the overall RAS impact on market price dispersion. Moreover, it (b) characterizes health plan switchers and investigates their annual and cumulative switching rates over time. Our main findings are based on representative enrollee panel data linked to administrative RAS and health plan data. We show that sickness funds with bad risk pools and high pre-RAS premiums lowered their total premiums by 42 cents per additional euro allocated by the RAS. Consequently, post-RAS, health plan prices converged but not fully. Because switchers are more likely to be white collar, young and healthy, the new consumer choice resulted in more risk segregation and the amount of money redistributed by the RAS increased over time.
    Keywords: employer-based health insurance, free health plan choice, risk adjustment, health plan switching, adverse selection, German sickness funds, SOEP
    JEL: D12 H51 I11 I13 I18
    Date: 2017
  6. By: Borra, Cristina; Pons-Pons, Jeronia; Vilar-Rodriguez, Margarita
    Abstract: The recession that started in the United States in December 2007 has had a significant impact on the Spanish economy through a large increase in the unemployment rate and a long recession which led to tough austerity measures imposed on public finances. Taking advantage of this quasi-natural experiment, we use data from the Spanish Ministry of Health from 1997 to 2014 to provide novel causal evidence on the short-term impact of health care provision on health outcomes. The fact that regional governments have discretionary powers in deciding health care budgets and that austerity measures have not been implemented uniformly across Spain helps isolate the impact of these policy changes on health indicators of the Spanish population. Using Ruhm’s (2000) fixed effects model, we find that staff or hospital bed reductions account for a significant increase in mortality rates from cardiovascular disease and external causes, for 25-34 and 65-74 year-old groups, and in the late foetal mortality rate. Mortality rates, however, do not seem to be robustly affected by the 2012 changes in retirees’ pharmaceutical co-payments. Contrary to expectations, we find some evidence of reduced mortality rates for cancer and female cancer as a result of the 2012 changes in migrants’ access restrictions to the Spanish NHS. Overall, our analyses suggest that short-term impacts of decreases in health care provision on mortality are significant but small. However, impacts prove to be economically and quantitatively significant in the case of fatalities due to external causes, especially accidental deaths.
    Keywords: Health care provision; Mortality; Health cuts
    JEL: I10 I18
    Date: 2017–06–16
  7. By: Rothe, Thomas (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Wälde, Klaus
    Abstract: "The number of unemployed workers in Germany decreased dramatically from its peak in February 2005 at over 5.2 million to 3.6 million by 2008. At the same time, employment increased by 1.2 million. Most theoretical and empirical analyses of this episode assume that a worker leaving unemployment moves into full employment. We ask where the unemployed actually went. Using and merging two large micro data sets, we account for the decrease of unemployment by computing inflows and outflows between unemployment and 16 other labour market states. Direct flows between unemployment and full employment contributed for only less than 9 percent to the decline in unemployment. By contrast, more than 37 percent of the unemployed workers ended up in non-standard work. About 13 percent participated in labour market policy programmes and 28 percent retired. Following the unemployment cohort of February 2005 over time confirms the order of magnitude of our findings." (Author's abstract, IAB-Doku) ((en))
    Keywords: Arbeitslose, beruflicher Verbleib, atypische Beschäftigung, Abgänger, Beschäftigungsform, berufliche Reintegration, Vollzeitarbeit, arbeitsmarktpolitische Maßnahme, Rente, Integrierte Erwerbsbiografien, Sozioökonomisches Panel
    JEL: J21 J62 J64
    Date: 2017–06–08
  8. By: Ilaria De Angelis (Bank of Italy); Vincenzo Mariani (Bank of Italy); Roberto Torrini (Bank of Italy)
    Abstract: A relatively low geographical mobility of students in the Centre and North of the country and a large incidence of movers from southern regions to universities located in the Centre and North are well-established features of the Italian academic system. Exploiting a novel administrative dataset on academic enrolments, this paper shows that the interregional mobility of Italian students has increased in recent years. We highlight that the increase in mobility, which has occurred in a period of declining entry rates, is not attributable to a change in the composition of the enrolling students. We investigate some of the main drivers of student mobility by relating regional flows to the attractiveness of universities and show that mobility is positively associated with the quality of research and teaching and with the job prospects offered by the hosting university. Student flows are instead negatively correlated with the distance between the university and the region of origin and with drop-out rates. The empirical evidence also suggests that in recent years the distance from the university of destination has become less relevant in explaining mobility, whereas the role played by university quality has increased.
    Keywords: university, student mobility, quality of research, labour market JEL Classification: I20, I23
    Date: 2017–06
  9. By: Hatton, Timothy J.
    Abstract: There is growing interest among economists in public opinion towards immigration, something that is often seen as the foundation for restrictive immigration policies. Existing studies have focused on the responses to survey questions on whether the individual would prefer more or less immigration but not on his or her assessment of its importance as a policy issue. Here I distinguish between preference and salience. Analysis of data from the European Social Survey and Eurobarometer indicates that these are associated with different individual-level characteristics. At the national level these two dimensions of public opinion move differently over time and in response to different macro-level variables. The results suggest that both dimensions need to be taken into account when assessing the overall climate of public opinion towards immigration. Finally, there is some evidence that both preference and salience are important influences on immigration policy.
    Keywords: Attitudes to Immigration; Public Opinion; salience
    JEL: D72 F22 J61
    Date: 2017–06
  10. By: Bergemann, Annette (University of Bristol, IFAU Uppsala Sweden, IZA); Pohlan, Laura (University of Mannheim, ZEW); Uhlendorff, Arne (CREST, CNRS, Université Paris-Saclay, IAB, IZA, DIW)
    Abstract: This paper analyzes the impact of participation in job creation schemes (JCSs) on job search outcomes in the context of the turbulent East German labor market in the aftermath of the German reunification. High job destruction characterized the economic environment. JCSs were heavily used in order to cushion this development. Using data from 1990–1999 and building upon the timing-of-events approach, we estimate multivariate discrete time duration models taking selection based on both observed and unobserved heterogeneity into account. Our results indicate that after initial negative effects during the typical program duration of twelve months, probably driven by reduced job search effort during participation resulting in a rearrangement of the job queue, the impact on the job finding probability becomes insignificantly positive. Additional results, however, suggest that female and highly skilled participants leave unemployment quicker than other groups, which results in highly skilled women benefiting from participation. In general, we find no significant impact on postunemployment employment stability. Our results are robust to allowing for random treatment effects. Also taking into account endogenous participation in training programs, endogenous censoring, or multiple treatment effects do not change the results.
    Keywords: Active labor market policy; job Creation schemes; unemployment duration; employment stability; timing-of-events model; East Germany; transition economy; structural change
    JEL: C41 J64 J68
    Date: 2017–05–23
  11. By: Andrea Neri (Bank of Italy); Concetta Rondinelli (Bank of Italy); Filippo Scoccianti (Bank of Italy)
    Abstract: We estimate the consumption response of Italian households to the “€80 tax bonus” introduced in 2014, using the panel component on the Survey of Household Income and Wealth. We find that households that received the tax rebate increased their monthly consumption of food and means of transportation by about €20 and €30, respectively, about 50-60 per cent of the total bonus. There was a larger increase for households with low liquid wealth or low income. Our estimates are quite robust to different model specifications and are broadly in line with the evidence available from similar tax rebates in other countries but, due to the small sample size, are not always statistically significant. To understand the mechanism behind our results we then simulate an overlapping generations model of household consumption: the marginal propensity to consume generated by the structural model is in line with our empirical estimates.
    Keywords: fiscal stimulus, marginal propensity to consume, consumer behaviour
    JEL: D12 E21
    Date: 2017–06
  12. By: Borja Jalón (University Complutense of Madrid); Simón Sosvilla-Rivero (Complutense Institute for International Studies, Universidad Complutense de Madrid; 28223 Madrid, Spain.); José A. Herce (University Complutense of Madrid and International Financial Analysts (AFI).)
    Abstract: The cyclical pattern of labor productivity has been a subject of discussion in the economic literature for long time with important theoretical implications. Many authors point out the role of labor market institutions as determinants of the cyclical pattern. For these authors, the loss of procyclicality experimented in the United States since the mid-1980s could be explained by decrease of rigidities in labor market. Following the literature, this paper explores the role of labor regulation by analyzing the case of Spain, which has gone in a few years from a strongly procyclical pattern to a counterciclycal one. Our results suggest that the high rigidity in wages and the great flexibility in labor, related to the temporary workers after the 1984 legislative reform, is the main cause of the countercyclical pattern of the Spanish labor productivity. Our findings are in line with previous papers highlighting the crucial influence of labor market institutions over the cyclical pattern.
    Keywords: Business cycle, labor productivity, labor regulation, multifactor productivity. JEL classification:E32, J30, K31, O47.
    Date: 2017–06
  13. By: Lodefalk, Magnus (Örebro University School of Business); Kyvik Nordås, Hildegunn (Örebro University School of Business)
    Abstract: This paper first portraits Swedish services exporters and services MNEs; second it analyses the determinants of services exports and affiliate sales; and third it studies the choice of mode of entering a foreign market. Emanating from a heterogeneous firm internationalization model, the main contribution of the paper is to explore the interaction between firm characteristics and foreign market characteristics, particularly policy-induced services trade barriers, in shaping services trade and investment patterns. Exploiting a large and very detailed firm-level dataset for the 2008-2013 period, the descriptive analysis finds that most exporting firms export one or two products to a few, most often other Nordic countries. Still, firms that export to 25 or more markets account for more than 80% of total export value. Furthermore, firms that export to 20 countries export more than 60% to their main destination country. Similar patterns are found for affiliate sales. Using a gravity approach we then study the determinants of the extensive and intensive margin of exports and affiliate sales in pooled as well as sector level regressions. We find that trade costs, both natural and policy-induced have the largest impact on the extensive margin of trade, suggesting that trade costs facing services exporters are mainly in the form of fixed entry costs. This is further supported by the finding that incumbency is the most important determinant of future exports and affiliate sales, and incumbents tend to be protected and thrive behind trade barriers.
    Keywords: services trade; affiliate sales; trade costs; micro data; Sweden
    JEL: D22 F13
    Date: 2017–06–09
  14. By: Burda, Michael C; Severgnini, Battista
    Abstract: A quarter-century after reunification, labor productivity in the states of eastern Germany continues to lag systematically behind the West. Persistent gaps in total factor productivity (TFP) are the proximate cause; conventional and capital-free measurements confirm a sharp slowdown in TFP growth after 1995. Strikingly, eastern capital intensity, especially in industry, exceeds values in the West, casting doubt on the embodied technology hypothesis. TFP growth is negatively associated with rates of investment expenditures. The stubborn East-West TFP gap is best explained by low concentration of managers, low startup intensity and the distribution of firm size in the East rather than R&D activities.
    Keywords: Development accounting; German reunification; productivity; regional convergence
    JEL: D24 E01 E22 O33 O47
    Date: 2017–06
  15. By: Kacperczyk, Marcin; Perignon, Christophe; Vuillemey, Guillaume
    Abstract: Do claims on the private sector serve the role of safe assets? We answer this question using high-frequency panel data on prices and quantities of certificates of deposit (CD) and commercial paper (CP) issued in Europe. We show that only very short-term private securities benefit from a premium for safety. We then use several sources of variation to show that the issuance of short-term CDs strongly responds to measures of safety demand. The private production of safe assets is stronger for issuers with high credit worthiness, and breaks down during episodes of market stress. We conclude that even very short-term private assets are sensitive to changes in the information environment and should not be treated as equally safe at all times.
    Keywords: Collateral; safe assets; Short-term debt; Treasuries
    JEL: E44 G21
    Date: 2017–06
  16. By: Kaloud Tobias (Department of Economics, Vienna University of Economics and Business)
    Abstract: During the past decade, renewable energy sources have become an indispensable pillar in European electricity generation. This paper aims at examining if the increasing importance of renewables stimulates investment in European power transmission networks. The question of interest is addressed by an error correction investment model that builds on Neoclassical theory and is further augmented by recent literary findings. Under the proposed threefold estimation strategy, the share of renewables is not found to significantly influence investment spending when the full set of transmission system operators are considered. However, a slight and justified sample restriction leads to the conclusion that a rising share of renewable energy sources substantially increases investment in power transmission networks.
    Keywords: Renewables, Investment, Transmission Network, Electricity
    JEL: C33 L50 L94 Q42 Q48
    Date: 2017–06
  17. By: Bramucci, Alessandro; Cirillo, Valeria; Evangelista, Rinaldo; Guarascio, Dario
    Abstract: Economies and production systems are subject to incessant processes of structural change fuelled by the dynamics of demand, technology and international competition. The increasing international fragmentation of production, also known as "offshoring", is an important element of such a (global in scale) process of structural change having important implications for employment and on the way employment gains and losses are distributed across firms, industries, national economies and components of the labour force. This paper assesses the employment impact of offshoring, in five European countries (Germany, Spain, France, Italy and the United Kingdom), distinguishing between different types of inputs/tasks offshored, different types of offshoring industries and types of professional groups affected by offshoring. Results provide a rather heterogeneous picture of both offshoring patterns and their effects on labour, and the presence of significant differences across industries. Along with this variety of employment outcomes, the empirical evidence suggests that offshoring activities are mainly driven by a cost reduction (labour saving) rationale. This is particularly the case for the manufacturing industry where offshoring is found to exert a negative impact among the less qualified (manual) or more routinized (clerks) types of jobs, while the main difference between high- and low-technology industries has to do with the type of labour tasks that are offshored and the types of domestic jobs that are affected. In hightech industries the negative effects of offshoring on employment are concentrated among the most qualified professional groups (managers and clerks). A specular pattern is found in the case of the low-tech industries where job losses are associated to the offshoring of the least innovative stages of production and manual workers are those most penalised.
    Keywords: Offshoring,Technological change,Employment
    JEL: F16 O33 F11
    Date: 2017
  18. By: Emanuele Ciani (Bank of Italy); Claudio Deiana (European Commission, Joint Research Centre)
    Abstract: Previous empirical literature on the relationship between intergenerational transfers of assets and services has mostly focused on contemporary exchanges. In contrast, we provide novel evidence that parents who helped their adult children in the past are rewarded by a greater likelihood of receiving informal care later in life. To this end we use Italian data to look at retrospective information about how parents help their children to purchase houses when they get married. Our estimates show a positive association with the current provision of informal care, which is robust to controlling for a large set of individual and family characteristics. We provide evidence that this can be explained by various self-interest motives, relating to theories based either on bilateral exchange or on the presence of a third generation of grandchildren, such as those including a demonstration effect or the concept of a family constitution.
    Keywords: informal care, housing, intergenerational transfers, geographical proximity.
    JEL: D10 J13 J14
    Date: 2017–06
  19. By: Dellis, Konstantinos; Sondermann, David
    Abstract: Lobbying can provide policy makers with important sector-specific information and thereby facilitating informed decisions. If going far beyond this, in particular if successfully influencing policy makers to unnecessarily tighten regulation or not opening already excessively regulated markets, it could potentially reduce overall economic welfare. We create a unique firm-level database on EU lobby activity and firm characteristics. We tend to find that firms in more protected sector, e.g. firms from non-tradable or higher regulated sectors tend to spend more for lobby activities. Also such firms tend to have higher profit margins and lower productivity, as often the case in sheltered sectors. JEL Classification: D72, D78, O38
    Keywords: lobbying, political economy, regulation
    Date: 2017–06
  20. By: Leonardo Bursztyn; Davide Cantoni; Patricia Funk; Noam Yuchtman
    Abstract: We exploit naturally occurring variation in the existence, closeness, and dissemination of pre-election polls to identify a causal effect of anticipated election closeness on voter turnout in Swiss referenda. Closer elections are associated with greater turnout only when polls exist. Examining within-election variation in newspaper reporting on polls across cantons, we find that close polls increase turnout significantly more where newspapers report on them most. This holds examining only "incidental" exposure to coverage by periodicals whose largest audience is elsewhere. The introduction of polls had larger effects in politically unrepresentative municipalities, where locally available information differs most from national polls.
    JEL: D72 P16
    Date: 2017–06
  21. By: Inderst, Georg
    Abstract: This study provides an overview of UK infrastructure investment and finance in an international context, yielding interesting facts and insights for both investors and policy makers worldwide. The UK is one of the leading countries in terms of private sector involvement in infrastructure, with several decades’ experience in regulating privatized utilities and in developing public-private partnerships (PPP). It has attracted substantial European and global capital, and London is a major market place for the infrastructure and green business. However, the UK has also seen decades of weak spending by the state (and taxpayers) on infrastructure. The country needs more investment when public budgets are already stretched. The question is whether private capital will be so easily available in future, especially from institutional and foreign investors.
    Keywords: infrastructure investment, infrastructure finance, project finance, public-private partnerships, institutional investors, pension funds, infrastructure policy
    JEL: E22 F21 G15 G18 G22 G23 G28 H54 L9 O16
    Date: 2017–05
  22. By: Elisabeth Christen (WIFO); Michael Pfaffermayr (WIFO); Yvonne Wolfmayr (WIFO)
    Abstract: Using a panel-data set of Austrian service exporting firms this paper examines the determinants of service exports at the firm-destination country level. We implement a random-effects Heckman sample selection firm-level gravity model as well as a fixed effects Poisson model. Expected firm-level service exports are decomposed into the intensive and extensive margins of adjustment as a response to counterfactual changes. We find market demand to be the key determinant. Results also suggest high service export potentials due to regulatory reform in partner countries within the EU. Adjustments at the extensive margin only play a marginal role. Increasing firm size as well as changes in distance related costs are most effective in developing new export relationships in services.
    Keywords: Services trade, Firm-level evidence, Firm heterogeneity, Gravity model, Sample selection, Intensive and extensive margin of trade
    Date: 2017–06–14
  23. By: Boehl, Gregor (IFMS, Goethe University Frankfurt, Germany.); Fischer, Thomas (Department of Economics, Lund University)
    Abstract: Using a parsimonious, analytically tractable dynamic model, we are able to explain up to 100 years of the available data on the dynamics of top-wealth shares for several countries. We build a micro-founded model of heterogeneous agents in which - in addition to stochastic returns on investment - individuals disagree marginally on their expectations of future returns and thus hold different asset positions. We show that, given a positive tax on capital gains, the distribution converges to a double Pareto distribution for which the degree of wealth inequality decreases with the tax rate. Closed-form solutions confirm that without government intervention there is infinite inequality. Moreover, transition dynamics are shown to increase with the tax rate. We discuss the model's ability to match the measured wealth inequality for the US, the UK, Sweden, and France, both in levels and transitions. The heterogeneous development in the different countries and across time can be traced back to different tax regimes.
    Keywords: Wealth inequality; capital taxation; stochastic simulation; heterogeneity
    JEL: C63 D31 G11 H23
    Date: 2017–06–07
  24. By: Leuwer, David; Süßmuth, Bernd
    Abstract: This study investigates reactions to real exchange rate changes in the German, French and UK automobile and mechanical engineering sectors using monthly data from 1995 to 2010. Our findings indicate that EUR/USD appreciations hamper exports, but do not necessarily imply an aggravated business climate or export order-book assessment. This does not apply to the GBP/USD and corresponding time series for the UK. First and foremost, our fixed coefficient and time varying parameter VAR model estimates confirm the extraordinary role of the German key sectors, while currency union membership seems to play a minor role at best. Overall, the exchange rate susceptibility is less profound than claimed by lobbies and held as popular belief.
    Keywords: exporting sectors,confidence indicators,structural VAR
    JEL: C30 E42 F41
    Date: 2017
  25. By: Massimiliano Affinito (Bank of Italy); Alberto Franco Pozzolo (Università degli Studi del Molise)
    Abstract: This study examines the effects of the global financial crisis (GFC) on interbank market connectivity using network analysis. More specifically, using data on Italian banks’ bilateral interbank positions between 1998 and 2013, we analyze the impact of the following events on each bank’s network centrality: the liquidity crisis in August 2007, the collapse of Lehman Brothers in September 2008, Eurosystem’s long term refinancing operations (LTROs) between 2009 and 2012, the sovereign debt crisis in July 2011, and the announcement of Outright Monetary Transactions (OMT) in 2012. The results show that the 2007 liquidity crisis and especially the collapse of Lehman Brothers are associated with a marked reduction of the relative interconnectedness of the Italian banking sector (i.e., a shift in the distribution of banks’ centrality to the left, away from the most connected bank). In the following years, the system progressively recovered its initial patterns of integration among banks, which coincided wih the main Eurosystem’s monetary policy interventions. However, the average outcome conceals different results across banks, depending on their characteristics and initial positions within the system.
    Keywords: global financial crisis, interbank markets, networks, central bank operations
    JEL: E52 E58 G21
    Date: 2017–06
  26. By: Emanuela Ghignoni
    Abstract: This paper deals with the role that an extensive use of informal networks to match workers to jobs can play in the university enrolments decisions of low socioeconomic status students in Italy. By applying estimation techniques with instrumental variables to ISTAT microdata, I found that upper-secondary students coming from lower social classes are less likely to participate in higher education when they live in provinces where the percentage of newly tertiary graduates who found a job thanks to the help of relatives, family connections or friends is higher. My results are consistent with the hypothesis that the wide diffusion of ‘favouritism’ in local labour markets engenders a sense of ‘economic despair’ among those who are poorly connected, thereby damaging individual human capital accumulation, inequality of access to higher education and local socio-economic development.
    Keywords: informal channels, favouritism, enrolments, tertiary education, local labour markets
    JEL: I24 J24 R10
    Date: 2017–06

This nep-eur issue is ©2017 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.
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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.