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on European Economics |
| By: | Isabel Grilo and; Jesus Maria Irigoyen |
| Abstract: | It is now widely acknowledged that the entrepreneurial capacity in an economy is a key determinant of economic growth and productivity improvements. This paper uses survey data from the 15 EU Member States and the US to establish the effect of demographic and other variables on latent and actual entrepreneurship. Latent entrepreneurship is measured by the probability of a declared preference for self-employment over employment. Other than demographic variables such as gender, age and education level, the set of explanatory variables used includes country specific effects, the perception by respondents of administrative complexities and of availability of financial support and a rough measure of risk tolerance. The most striking result is the lack of explanatory power of the perception of lack of available financial support in the latent entrepreneurship equation. |
| Keywords: | Entrepreneurship, self-employment, administrative complexities, access to finance, risk attitudes, probit regression |
| JEL: | M13 J23 R12 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:esi:egpdis:2005-01&r=eec |
| By: | Axel Börsch-Supan (Mannheim Research Institute for the Economics of Aging (MEA)) |
| Abstract: | Pension reforms all across Europe have a common theme: to reduce the generosity of the pay-as-yougo public pension pillar threatened by population aging, and to build up new pillars by private saving through occupational and individual pension plans. The extent of such retirement saving varies a great deal across Europe. This variation reflects, among other factors, the differences in public pension systems, taxation and capital market regulations. The first part of this paper looks at this variation in an attempt to learn about the effectiveness of the various incentives to boost retirement saving. While we find a strong correlation between the generosity of pay-as-you-go pensions and retirement saving, there is no straight correlation between the volume of retirement saving and the extent to which it is tax-favored. The second part of the paper uses the recent reforms in Germany as "experiments" that may shed light on which incentives might work and which might fail. We describe the introduction of the tax-favored "Riester pension plans" in 2001 and the 2004 tax reform, which changes the tax treatment of retirement savings in Germany from a conventional to a deferred taxation scheme. In spite of a deep subsidy and a generous tax treatment, "Riester pensions" have not found much attraction, while the originally heavily tax-favored whole life insurance is still wide spread. We conclude that boosting retirement saving requires more than simply tax relief. |
| Date: | 2004–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:xrs:meawpa:0452&r=eec |
| By: | Axel H. Börsch-Supan, F. Jens Köke and Joachim K. Winter (Mannheim Research Institute for the Economics of Aging (MEA)) |
| Abstract: | This paper shows that the capital market effects of population aging and pension reform are particularly strong in continental European economies such as France, Germany, and Italy. Reasons are threefold: these countries have large and ailing pay-as-you-go public pension systems, relatively thin capital markets and less than benchmark capital performance. The aging process will force the younger generations in these countries to provide more retirement income through own private saving. Capital markets will therefore grow in size and active institutional investors will become more important as intermediaries. Aim of this paper is to show that these changes are likely to generate beneficial side effects in terms of improved productivity and aggregate growth. |
| Date: | 2004–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:xrs:meawpa:0453&r=eec |
| By: | Matteo Governatori; Sylvester Eijffinger |
| Abstract: | The paper builds a simplified model describing the economy of a currency union with decentralised national fiscal policy, where the main features characterising the policy-making are similar to those in EMU. National governments choose the size of deficit taking into account the two main rules of the Stability and Growth Pact on public finance. Unlike previous literature the asymmetric working of those rules is explicitly modelled in order to identify its impact on the Nash equilibrium of deficits arising from a game of strategic interaction between fiscal authorities in the union. |
| Keywords: | Stability and Growth Pact, EMU, asymmetric fiscal rules, decentralised fiscal policy |
| JEL: | E61 H30 H60 H70 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1354&r=eec |
| By: | Jeremy Grant; Thomas Kirchmaier |
| Abstract: | In this paper, we show that ownership structures vary considerably across Europe, and that the dominant form ofownership is not necessarily the most efficient one. These findings are in contradiction to similar research basedon US samples. The results also demonstrate that firms without a dominant shareholder tend to outperform theircountry peer groups. We base our analysis on a new and unique dataset of uniform ownership data of the largest100 firms in the five major European economies. We quantify the differences in ownership by comparing threedistinct ownership structures of firms and relating them to performance. For the first time we employ aHodrick-Prescott Filter, a methodology widely used in macroeconomics to isolate the trend growth componentsfrom cyclical fluctuations, to estimate the share price trend of each firm. We take this trend as a good indirectindicator of the quality of governance. |
| Keywords: | Corporate governance, ownership structures, performance, Europe |
| JEL: | G32 G34 G38 |
| Date: | 2004–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0631&r=eec |
| By: | Richard Freeman |
| Abstract: | "The standard explanation of why advanced Europe has generated less work per adult thanthe US is that something is seriously amiss with EU labor markets. The theme of this piece issimple. Compared to an ideal competitive market, EU labor markets fall seriously short, butcompared to labor markets in the US and to other markets in advanced capitalist countries,EU labor markets do not live up to their awful press. The variety of labor market institutionsamong EU countries, moreover, reveals a much richer picture of performance and diversitythan the blanket condemnation of inflexibility suggests. I make my case in four propositions,with supporting evidence. My comparisons are with the actual labor market in the US andwith other real world markets, not with the economists' dream ideal competitive markets. Ireview briefly the evidence that labor markets in the EU have performed worse on thequantity side of the market but better on the price or wage side of the market than the USlabor market, then consider the extent to which differences in outcomes are attributable todifferences in the performance of labor markets." |
| Keywords: | labour markets, US, EU, labour market institutions |
| JEL: | J0 |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0644&r=eec |
| By: | Howard Gospel; P Willman |
| Abstract: | Information provision is an important part of all mechanisms which give employees voice atwork. This paper considers the law on information disclosure for joint consultation andcollective bargaining in three countries, Germany, France, and the UK, chosen for theirdistinctive legal and institutional arrangements, within a common European Union context. Itis argued that there is coherence between the law and institutions in Germany; in France,despite extensive legal support for information provision, the law and institutions complementone another less; in the UK, there are contradictory approaches and new dilemmasconfronting the traditional system. Although European Directives harmonise statutoryminima, there are few signs of common disclosure practice emerging across the threecountries. |
| Keywords: | Collective bargaining, information disclosure, unions, Germany, France, UK |
| JEL: | J5 J50 J51 |
| Date: | 2004–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0615&r=eec |
| By: | B Petrongolo |
| Abstract: | This paper presents evidence on gender segregation in employment contracts in 15 EUcountries, using micro data from the ECHPS. Women are over-represented in part-time jobsin all countries considered, but while in northern Europe such allocation roughly reflectswomen¿s preferences and their need to combine work with child care, in southern Europepart-time jobs are often involuntary and provide significantly lower job satisfaction than fulltimeones. Women are also over-represented in fixed-term contracts in southern Europe, andagain this job allocation cannot be explained by preferences or productivity differentialsbetween the two genders. There is thus a largely unexplained residual in the gender joballocation, which may be consistent with some degree of discrimination in a few of the labourmarkets considered, especially in southern Europe. |
| Keywords: | Gender gap, employment, taxation, public policy |
| JEL: | J22 J28 J71 |
| Date: | 2004–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0637&r=eec |
| By: | Goergen,M.; Renneboog,L.D.R.; Khurshed,A. (Tilburg University, Center for Economic Research) |
| Abstract: | We analyse the characteristics of lockup agreements of IPOs on the Neuer Markt and the Nouveau Marche from 1996 to 2000. Even though both markets were part of the same EuroNM network, the characteristics of their lockup agreements are substantially different. Firm characteristics have a major influence on lockup contracts. In addition, shareholder characteristics explain the diversity of contracts within the same firm. Although the French regulator offers two types of minimum lockup contracts, the market perceives a difference between the two contracts as the choice is influenced by the type of the firm and the type of shareholders. |
| JEL: | G24 G34 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2004121&r=eec |
| By: | Germán Calfat; Renato Galvão Flôres Junior (EPGE/FGV) |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:epgewp:575&r=eec |
| By: | Christian Schultz (Institute of Economics, University of Copenhagen) |
| Abstract: | In several European merger cases competition authorities have demanded that the merging firm auctions of virtual capacity. The buyer of virtual capacity receives an option on an amount of output at a pre-specified price, typically equal to marginal cost. This output is sold in the market in competition with the merging firm. The paper compares sale of physical and virtual capacity by the merging firm and shows that virtual capacity makes tacit collusion easier. The reason is that the auction price on virtual capacity increases, when the merging firm reduces production in order to increase the output price. This reduces its temptation to deviate. |
| Keywords: | virtual capacity; tacit collusion; anti-trust; mergers; competition policy |
| JEL: | L40 L41 D44 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuieci:2004-03&r=eec |
| By: | Jens Tapking; Jing Yang |
| Abstract: | This paper addresses a very European issue, the consolidation of securities trading and settlement infrastructures. In a two-country model, we analyse welfare implications of different types of consolidation. We find that horizontal integration of settlement systems is better than vertical integration of exchanges and settlement systems, but vertical integration is still better than no consolidation. These findings have clear policy implications with regard to the highly fragmented European securities infrastructure. |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:245&r=eec |
| By: | Maria Luisa Mancusi |
| Abstract: | This paper provides an empirical assessment of the effect of national and international knowledge spillovers on innovation at a finely defined sectoral level for six major industrialised countries over the period 1981-1995. International spillovers are always found to be effective in increasing innovative productivity. The paper then uses self-citations to investigate the role of prior R&D experience in enhancing a country¿s ability to understand and improve upon external knowledge (absorptive capacity). The empirical results show that absorptive capacity increases the elasticity of a country¿s innovation to both national and international spillovers. The larger the gap of a country with the technological leaders, the weaker is this effect, but the larger is the country¿s potential to increase it. |
| Keywords: | R&D spillovers, absorptive capacity and patent citations. |
| Date: | 2004–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:stieip:35&r=eec |
| By: | Bouckaert Jan; Verboven Frank |
| Abstract: | Regulators have recently shown an increased sensitivity to the issue of price squeezes, especially telecom regulators in European countries. This paper analyzes the relevance and the scope of price squeeze tests as proposed by practitioners and economists, taking the existing regulatory environment as fixed. Based on the degree of existing regulation (full, partial or no) we distinguish between three types of price squeezes: regulatory squeezes, predatory squeezes, and squeezes as foreclosure. We argue that the scope of price squeeze tests is limited to predatory price squeeze tests, to be used in combination with other pieces of evidence as collected in standard predation cases. We propose a predatory squeeze test that respects previously made regulatory choices, in contrast with earlier proposed tests by European practitioners and economists. We extend the framework to ask at which aggregation level predatory price squeeze tests ought to be applied, a much-debated issue in telecommunications. |
| Date: | 2003–04 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2003007&r=eec |
| By: | De Borger B.; Proost S.; Van Dender K. |
| Abstract: | The purpose of this paper is to study tax competition on a parallel road network when different governments have tolling authority on different links of the network. Reflecting many current situations in Europe, each link is used by both local and transit traffic, and transit has a choice of route. Each government maximises the surplus of local users plus total tax revenues in controlling local and transit transport. Three types of tolling systems are considered: (i) toll discrimination between local traffic and transit, (ii) uniform tolls on local and transit transport, (iii) local tolls only. The results suggest that the welfare effects of introducing transit tolls are large, but that differentiation of tolls between local and transit transport as compared to uniform tolls does not yield large welfare differences. Moreover, the welfare effects of coordination between countries are relatively small in comparison with the welfare gains of tolling transit. Numerical application of the model further illustrates the effects of different transit shares and explicity considers the role of asymmetries between countries. Higher transit shares strongly raise the Nash equilibrium transit toll and slightly decrease local tolls. With asymmetric demands, the welfare gains of introducing differentiated tolling rise strongly for the country with lower local demand. |
| Date: | 2004–03 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2004003&r=eec |
| By: | Peter Friedrich; Anita Kaltschuetz; Chang Woon Nam |
| Abstract: | The idea of fiscal decentralisation has become increasingly fashionable world-wide. But every country has unique features of the intergovernmental fiscal system. In general municipal expenditures are rapidly growing in European countries. On the other hand local tax increases are not easily enforceable at present, whereas the local fiscal autonomy is unlikely to be guaranteed as long as municipalities are strongly dependent on down-flow grants. In such a fiscal-stress situation an improvement of local fiscal capacity can be achieved from the increase of fees. Four European countries were chosen to survey the recent development of municipal finance: Britain, Germany, Poland and Switzerland. This paper firstly identifies and highlights the similarities and differences in municipal finance in an international context. Secondly it theoretically examines the possibility of enhancing fiscal autonomy of local governments through determining optimal fee level which leads to an increase of revenues from this revenue item. |
| Keywords: | fiscal decentralisation, local expenditures and taxes, fees, shared taxes, intergovernmental transfers, municipal borrowings, Poland, Britain, Switzerland, Germany |
| JEL: | H20 H40 H60 H70 H80 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1357&r=eec |
| By: | Michele Pellizzari |
| Abstract: | Informal contacts are extensively used by both firms and workers to find jobs and fill vacancies. Thecommon wisdom in the economic literature is that jobs created through this channel are of better qualityand pay higher wages than jobs created through formal methods. This paper explores the empiricalevidence for European countries using the European Community Household Panel (ECHP) and discovers alarge cross-country as well as cross-industry variation in the wage differentials between jobs found throughinformal and formal methods. Across countries and industries wage premiums and wage penalties tofinding jobs through personal contacts are equally frequent. This paper argues that such variation can beexplained by looking at firms' recruitment strategies. In labour markets where employers invest largely informal recruitment activities, matches created through this channel are likely to be of average better qualitythan those created through informal networks. A simple theoretical model is used to show that employersinvest more in recruitment for high productivity jobs and for positions that require considerable training.The empirical predictions of the theory are successfully tested using industry-level data on recruitmentcosts. |
| Keywords: | Social Networks, Wage Differentials, Recruitment, Hiring |
| JEL: | J31 J64 M51 |
| Date: | 2004–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0623&r=eec |
| By: | Jörn-Steffen Pischke |
| Abstract: | Labor market institutions, via their effect on the wage structure, affect the investmentdecisions of firms in labor markets with frictions. This observation helps explain rising wageinequality in the US, but a relatively stable wage structure in Europe in the 1980s. Thesedifferent trends are the result of different investment decisions by firms for the jobs typicallyheld by less skilled workers. Firms in Europe have more incentives to invest in less skilledworkers, because minimum wages or union contracts mandate that relatively high wages haveto be paid to these workers. I report some empirical evidence for investments in training andphysical capital across the Atlantic, which is roughly in line with this theoretical reasoning. |
| Keywords: | Frictional labor markets, human capital, changes in wage inequality |
| JEL: | E22 E24 J23 J24 J31 |
| Date: | 2004–09 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0652&r=eec |
| By: | Moerman, G.A.; Mahieu, R.; Koedijk, C.G. (Erasmus Research Institute of Management (ERIM), Erasmus University Rotterdam) |
| Abstract: | European banking regulation has been harmonized to a high degree over the last few decades. Nevertheless, the European banking industry remains fragmented as shown by the relatively high market shares of banks in their home countries. In this paper we concentrate on the integration process of European bank share prices. We develop a parsimonious model that is able to detect different integration (correlation) regimes. The model is applied to a set of 41 European banks that have a continuous share price listing over the period January 1990 ? March 2003. Our main finding is that the correlation between larger banks in Europe has increased substantially over this period, whereas the correlation between smaller banks has become lower. A reason for this result could be that investors perceive that the activities of bigger banks get more integrated. Another reason may be that as a result of institutional and other larger investors turning their investment strategies towards a European sector-based approach, investors are tracking indices of the European banking sector. These indices are typically constructed from the stock prices of the larger banks. This would create an incentive for large banks to become more integrated with other large banks. |
| Keywords: | Bank integration;equity market integration;bank risk;European banks;regime-switching; |
| Date: | 2004–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:30001978&r=eec |