nep-eur New Economics Papers
on Microeconomic European Issues
Issue of 2025–04–21
twelve papers chosen by
Hafiz Imtiaz Ahmad, Higher Colleges of Technology


  1. The Impact of Green Policies on Local Economic Performance: Evidence from the EU ETS Abstract: Environmental policies such as the European Union Emissions Trading System (EU ETS) raise concerns about their impact on local employment and competitiveness. Yet, existing EU ETS studies focus on firm-level outcomes during the initial phases of the program. We construct a panel dataset of about 900 European provinces across 2008 to 2020 to assess the effects of a significant policy change in Phase 3 of the EU ETS. Specifically, we investigate how the changes in the allocation of free allowances affected local economies in terms of employment, gross value added (GVA) and productivity. By assembling a novel dataset and measuring the net change of paid emissions from Phase 2 to Phase 3 we construct a measure of exposure to the policy change at the NUTS-3 level. Using synthetic difference-in-differences, we find that being more exposed to the EU ETS is associated with a statistically significant contraction of employment and GVA in the more carbon-intensive industries. Our results are complemented with evidence on a sizeable reduction in carbon emissions and mild impact in terms of regional disparities in the European Union. By Ireri Hernandez Carballo; Gian Maria Mallarino; Marco Percoco
  2. Social Life and Subjective Well-being in Spain By Fernandez-Urbano, Roger
  3. Flood and Residential Mobility in France By C. LE THI; K. MILLOCK; J. SIXOU
  4. The Role of Proximity in Social Income Dynamic Comparisons and Well-Being By Raquel Fonseca; Ana I. Moro-Egido
  5. Governing sustainable school to work transitions: Can Germany learn from Denmark? By Schmid, Günther; Leschke, Janine
  6. Heat pumps are gaining ground in Europe – electricity prices matter By Letz, Carolin; Rode, Johannes; Römer, Daniel
  7. The Causal Effect of Crop Diversification Obligations on Crop Diversity: An EU-level Analysis By Brutti, Zelda; Freo, Marzia; Serlenga, Laura
  8. Sectorally Concentrated? The Irish Economy in European Context By Eoin T. Flaherty; Sean O'Boyle; Giselle Myles
  9. Firm-level responses to a canceled dividend tax increase By Holmberg, Johan; Selin, Håkan
  10. Bridging Climate and Social Equity: Progressive Carbon Tax Simulations for Belgium By Bursens Floore; De Poli Silvia; Maier Sofia; Verbist Gerlinde
  11. Firm-Level Climate Change Adaptation : Micro Evidence from 134 Nations By Claudia N. Berg; Bettarelli, Luca; Furceri, Davide; Ganslmeier, Michael; Arti Grover; Megan Elizabeth Lang; Marc Tobias Schiffbauer
  12. Improving employability for the least qualified unemployed. Lessons from a new French training program By Héloïse Burlat; Fabrice Gilles; Yannick L'Horty

  1. By: Ireri Hernandez Carballo; Gian Maria Mallarino; Marco Percoco
    Keywords: EU ETS, Carbon policies, CO2 Emissions, Regional Economics, Economic Geography
    Date: 2025
    URL: https://d.repec.org/n?u=RePEc:bcu:greewp:greenwp27
  2. By: Fernandez-Urbano, Roger
    Abstract: This chapter examines the relationship between satisfaction with social life and overall subjective well-being in Spain. Despite increasing recognition of social life as a key determinant of well-being, direct empirical research on its influence remains scarce, particularly in Southern Europe, where much of the existing evidence is anecdotal. Unlike concepts such as social capital, social support, and relational support, satisfaction with social life captures the intrinsic value of social interactions rather than their instrumental utility. It reflects an individual's subjective appraisal of their overall social relationships, encompassing not only close ties but also broader interactions with acquaintances, neighbours, and peripheral contacts. Drawing on data from the first wave of the Global Flourishing Study (2020–2022), this chapter investigates how social life satisfaction contributes to both cognitive and affective well-being. Spanish findings are contextualized within a comparative framework, including high-income, upper-middle-income, and lower-middle-income countries. The results highlight that subjective evaluations of social life play a crucial role in shaping overall well-being, surpassing the influence of individual characteristics. Furthermore, the significance of social life satisfaction for both cognitive and affective well-being increases with socioeconomic development, positioning Spain alongside upper-middle-income countries with collectivistic and Latin cultural orientations. An analysis of heterogeneity within Spain reveals no substantial variations across gender, social background, or regions. However, significant age-related differences emerge, with the importance of social life satisfaction on overall well-being—particularly affective well-being—increasing with age. The chapter concludes by discussing theoretical and practical implications and outlining directions for future research, including methodological considerations.
    Date: 2025–03–26
    URL: https://d.repec.org/n?u=RePEc:osf:socarx:tdm4c_v1
  3. By: C. LE THI (INSEE, OECD); K. MILLOCK (PARIS SCHOOL OF ECONOMICS, CNRS); J. SIXOU (INSEE)
    Abstract: The evidence on whether people adapt to climate extreme events by moving out of vulnerable areas is currently mixed. In this article, we analyse residential mobility following floods using comprehensive French data. Our identification strategy consists in comparing individuals living in areas exposed to flood risk which were actually subject to a flood, with individuals also residing in flood risk areas but which were not subject to flood. Our results suggest that residential mobility increases by 1 percentage point in the two years following a flood. Compared to the baseline inter-municipality mobility rate in our sample, it equates to a 30% increase in the probability of moving out of the municipality of residence following a flood. The effects are strongly heterogeneous. Mobility rates following a flood are observed to be lower for the bottom and the top quintiles of equivalised disposable income than for the middle quintiles. The effects are found to be more pronounced for private renters than for home-owners and others. An analysis of aggregate flows at the municipality level reveals no effect of flooding on residential mobility on average, confirming the importance of using granular individual data. However, the data do suggest changes in the composition of population outflows. We observe a lower share of homeowners in the population outflows from municipalities that have flooded.
    Keywords: Climate change, Flood, Mobility, Natural Disasters, Residential location choice
    JEL: Q54 R23
    Date: 2025
    URL: https://d.repec.org/n?u=RePEc:nse:doctra:2025-06
  4. By: Raquel Fonseca; Ana I. Moro-Egido
    Abstract: The present study investigates the role of proximity in shaping social income static and dynamic comparisons and their impact on well-being, measured in terms of self-assessed health. Using the Spanish Survey of Household Finances (2002-2017), the study examines how individuals compare their income trajectories with those of their peers, considering varying degrees of proximity. The findings reveal that well-being is negatively impacted by static comparisons only in the case of a significant income gap with richer individuals. However, when dynamic comparisons are introduced, individuals experience an improvement in their subjective well-being when comparing to individuals who previously earned more but now earn less, as long as they drop at a certain distance. Consequently, no effect is observed when comparing with individuals in closer proximity, and effects emerge when the degree of proximity is low.
    Keywords: static and dynamic relative hypotheses, income, proximity, well-being.
    JEL: C29 D31 I31
    Date: 2025
    URL: https://d.repec.org/n?u=RePEc:rsi:creeic:2502
  5. By: Schmid, Günther; Leschke, Janine
    Abstract: In international comparison, dual systems of vocational education and training are often considered to be more successful than school-based systems for managing sustainable transitions from school to work. This assessment is particularly valid for Switzerland, while the German dual system has increasingly come under criticism since the Covid-19 pandemic, especially with regard to the declining attractiveness of its vocational tracks. The comparative focus is rarely put on Denmark with its promising mix of both principles. A comparison of the two countries therefore seems appealing. The study starts by developing the theoretical framework of transitional labour markets: normatively, it stresses professional sovereignty against labour market fitness, while analytically, it emphasises fair risk and balanced power sharing as principles of good governance. It then considers the actors, regulations, transition paths, current developments and problems of the two countries, enriched with descriptive statistics. Germany can learn from Denmark, especially regarding early career orientation in school, income security that encourages risk-taking during the complex transition process, the continuous updating and modularisation of curricula, and adaptive cooperation between schools, companies, social partners and municipalities. The weaknesses of the Danish system, however, provide also lessons, especially the erosion of the attractiveness of vocational education and training. Reform options for Germany conclude the study.
    Abstract: Duale Systeme der Berufsausbildung werden im internationalen Vergleich oft erfolgreicher eingeschätzt als schulische Systeme, den Übergang von der Schule in den Beruf nachhaltig zu gestalten. Diese Einschätzung gilt insbesondere für die Schweiz, während das deutsche System seit der COVID-19-Pandemie zunehmend kritisiert wird, vor allen die sinkende Attraktivität der beruflichen Bildungsgänge. Selten wird der vergleichende Blick auf Dänemark gerichtet, das auf den ersten Blick eine vielversprechende Mischung beider Prinzipien aufweist. Ein Vergleich der beiden Länder erscheint deshalb reizvoll. Die Studie entwickelt zunächst den theoretischen Bezugsrahmen von Übergangsarbeitsmärkten: normativ stellt er die berufliche Souveränität gegenüber der Arbeitsmarkttauglichkeit in den Vordergrund, analytisch betont er faire Risikoteilung und ausgewogene Machtteilung als Grundsätze guter Regierungsführung. Anschließend werden die jeweiligen Akteure, Regelungen, Übergangspfade, aktuellen Entwicklungen und Probleme der beiden Länder vorgestellt, angereichert mit deskriptiver Statistik. Deutschland kann von Dänemark lernen, insbesondere hinsichtlich der frühen Berufsorientierung in der Schule, der Einkommenssicherheit zur Ermutigung der Risikobereitschaft während des komplexen Übergangsprozesses, der kontinuierlichen Aktualisierung und Modularisierung von Lehrplänen und enge Zusammenarbeit zwischen Schulen, Unternehmen, Sozialpartnern und Kommunen. Doch auch aus den Schwächen des dänischen Systems lassen sich Lehren ziehen, insbesondere bezüglich der schwindenden Attraktivität der Berufsbildung. Optionen für Reformen in Deutschland beschließen die Studie.
    Keywords: vocational education and training, apprenticeship system, transitions, transitional labour markets, comparative analysis, governance, risk sharing, Berufliche Bildung, Lehrlingssystem, Übergänge, Übergangsarbeitsmärkte, vergleichende Analyse, Risikoteilung
    Date: 2025
    URL: https://d.repec.org/n?u=RePEc:zbw:wzbeme:315473
  6. By: Letz, Carolin; Rode, Johannes; Römer, Daniel
    Abstract: Heat pumps are a key technology for decarbonising domestic heat. In the past 10 years, sales of heat pumps have grown considerably in Germany and Europe. There are regional differences and heat pumps already have a very high market share particularly in northern Europe. This study examines the factors in play and analyses the influence of the relative electricity price on the diffusion of heat pumps. The empirical findings suggest that the electricity-to-gas price ratio is a relevant lever for strengthening the diffusion of heat pumps in Germany and Europe. Survey data from the KfW Energy Transition Barometer support this result, as households themselves also mention cost-effectiveness as a major factor for their use. This opens up options – particularly for a country like Germany, which also manufactures heat pumps.
    Date: 2025–02–20
    URL: https://d.repec.org/n?u=RePEc:dar:wpaper:153404
  7. By: Brutti, Zelda (European Commission - JRC); Freo, Marzia (European Commission - JRC); Serlenga, Laura (University of Bari)
    Abstract: The Common Agricultural Policy (CAP) is a cornerstone policy of the European Union, increasingly focused on promoting environmentally sustainable practices. In 2014, the CAP introduced Greening payments and a crop diversification requirement to enhance soil resilience and mitigate ecosystem degradation. Despite its economic significance, the policy's effectiveness across the EU remains largely limited. This study evaluates the impact of the Greening crop diversification requirement on crop diversity itself and on a set of subsequent outcomes, including agricultural land allocation, the economic performance of farms and indirect environmental outcomes. Using farm-level data from the Farm Accountancy Data Network (2012-2017), causal relationships are identified, through a design that combines propensity score matching and difference-in-differences, by comparing farms needing to adapt to the new requirements to those who were already compliant. Additionally, a regression discontinuity design estimates local average treatment effects for 2017, thereby exploiting the diversification requirementâs threshold-based design. Both strategies corroborate the conclusion that Greening measures have significantly increased crop diversity across the EU; moreover, results for the remaining farm-level outcomes are consistent with adaptation responses to the new environmental requirements. Overall, the results highlight the policyâs effectiveness in promoting sustainable agriculture throughout the EU.
    Keywords: Crop diversification, Greening payments, Common Agricultural Policy, FADN
    JEL: Q18 Q51 Q12 Q57 Q58
    Date: 2025–02
    URL: https://d.repec.org/n?u=RePEc:jrs:wpaper:202503
  8. By: Eoin T. Flaherty (Geary Institute for Public Policy, University College Dublin and Department of Finance, Ireland); Sean O'Boyle (National Treasure Management Agency, Ireland); Giselle Myles (Central Statistics Office, Ireland)
    Abstract: This paper adds to our understanding of the sectoral interlinkages in the Irish economy and how it relates to the wider EU economy. While the Irish economy is highly concentrated on a GVA basis, it is much less concentrated on the basis of employment and input-output interdependencies. Except for GVA, this level of concentration has not changed much over time. The MNE and domestic sectors each account for close to half of economic output. Their activity is very different but there is still a sizeable interlinkage between them. We also examine the interlinkages of the EU economy. Increasing European strategic autonomy would require greater manufacturing output. Our model suggest that central and eastern member states would benefit most from doing so, relative to their size. Ireland would benefit seventh least. Splitting the Irish economy in two, we find the MNE sector would benefit more than the EU average while the domestic sector is amongst those to benefit least.
    Keywords: network analysis, IO tables, macroeconomic measurement, multinational firms, macroeconomic aspects of international trade, globalisation
    JEL: C45 E01 D57 E01 F23 F4 F62
    Date: 2025–01–04
    URL: https://d.repec.org/n?u=RePEc:ucd:wpaper:202503
  9. By: Holmberg, Johan (Department of Economics at Umea School of Business, Economics and Statistics, and Uppsala Center for Fiscal Studies (UCFS)); Selin, Håkan (Institute for Evaluation of Labour Market and Education Policy (IFAU) and UCFS)
    Abstract: An increase in the dividend tax on shares of Swedish closely-held corporations, scheduled for January 1, 2018, was canceled at short notice. In a difference-in-difference setting, we examine how firms reacted to the canceled reform. We find that dividends payments increased in 2016 and 2017 and declined sharply in 2018, especially for cash-rich firms. However, cash holdings recovered quickly in 2018 and 2019, and the excessive dividend payouts did not affect investments. Paradoxically, the discontinued reform implied an additional tax burden for those engaged in intertemporal tax arbitrage.
    Keywords: Owner level taxes; tax planning; investments; employment
    JEL: G35 H32
    Date: 2025–04–08
    URL: https://d.repec.org/n?u=RePEc:hhs:ifauwp:2025_003
  10. By: Bursens Floore; De Poli Silvia; Maier Sofia (European Commission - JRC); Verbist Gerlinde
    Abstract: This paper explores the distributive impact of a hypothetical carbon tax on households' transport and energy consumption in Belgium. It focuses on the welfare effects across population groups and along the income distribution, as well as on the expected budgetary and environmental effects, accounting for consumer responses under a partial equilibrium microsimulation framework. Given the well-known regressive features of consumption taxes in general, and of energy- or carbon-related taxes in particular, this study evaluates various methods for making the carbon tax more progressive and assesses how these methods affect the overall distributional outcomes. We assess both the expected results as well as the feasibility of each of the tax design scenarios, considering the effect on household income and its distribution vis-a-vis the expected reduction in greenhouse gas emissions.
    Date: 2025–03
    URL: https://d.repec.org/n?u=RePEc:ipt:taxref:202501
  11. By: Claudia N. Berg; Bettarelli, Luca; Furceri, Davide; Ganslmeier, Michael; Arti Grover; Megan Elizabeth Lang; Marc Tobias Schiffbauer
    Abstract: Are firms adapting to climate change? This paper studies this question by combining geocoded World Bank Enterprise Survey data with spatially granular weather data to estimate temperature response functions for nearly 160, 000 firms in 134 countries over a 15-year period. Our results show that market imperfections in low- and middle-income countries constrain firms’ ability to adapt. Small and medium-size firms in low- and low-middle income countries are most vulnerable, with revenues declining by 12 percent in years with temperatures 0.5◦C above historical averages. The impact is equally strong for manufacturing and services firms and result from declines in labor productivity and wages. Heat-sensitive sectors and less resilient firms are more severely affected, reinforcing the causal interpretation. Unique firm-level information on policy constraints including limited financing, burdensome regulations, and unsafe conditions suggest that such factors raise adaptation costs, undermining economic resilience to climate change.
    Date: 2025–03–10
    URL: https://d.repec.org/n?u=RePEc:wbk:wbrwps:11081
  12. By: Héloïse Burlat; Fabrice Gilles; Yannick L'Horty
    Date: 2025
    URL: https://d.repec.org/n?u=RePEc:tep:teppwp:wp25-04

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