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on European Economics |
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Issue of 2009‒05‒09
thirteen papers chosen by Giuseppe Marotta University of Modena and Reggio Emilia |
| By: | Pedersen, Peder J. (Department of Economics); Pytlikowa, Mariola (Department of Economics, Aarhus School of Business) |
| Abstract: | In this paper we look at migration flows from 10 Central and Eastern European Countries (CEEC) to 5 Nordic countries over the years 1985 – 2007. We exploit a natural experiment that arose from the fact that while Sweden opened its labour market from the day one of the 2004 EU enlargement, and Finland and Iceland from year 2006, the other Nordic countries chose a transition period in relation to the “new” EU members. The results based on a differences-in-differences estimator show that the estimated effect of the opening of the Swedish, Finnish and Icelandic labour markets on migration from the CEECs that entered the EU in 2004 is not significantly different from zero. However, the effect of the opening of the Swedish and Finnish labour markets in 2007 on migration from the 2007 EU entrants, Bulgaria and Romania, is significantly positive. Further, we are interested in the overall effect of the “EU entry” on migration. Therefore we look at migration flows from CEECs during the first round of EU enlargement towards the East in 2004 and compare them with migration flows from Bulgaria and Romania. The estimated effect from our D-in-D analyses is positive and significant in all model specifications. |
| Keywords: | International migration; EU enlargement |
| JEL: | F22 J61 O15 |
| Date: | 2008–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:aareco:2008_029&r=eec |
| By: | Tyrowicz, Joanna |
| Abstract: | This paper reviews the literature on the labour market institutions in European Union Member States in the context of monetary integration. Traditionally, labour markets are a key concept in the optimal currency area theory, playing the role of the only accommodation mechanism of asymmetric shocks after the monetary unification. There are several theoretical frameworks linking the institutional design of the labour market to the potential effectiveness of monetary policy in the context of currency areas. Many empirical studies addressed these issues too, yielding important policy implications for labour market reforms in the process of monetary unification. However, there seem to be "white spots" in this patchwork, which may actually be particularly useful from the perspective of CEECs upon the accession to the euro zone. We suggest these research directions encompassing labour supply and theoretical frameworks of labour market flexibility benchmarking in the context of monetary integration. |
| Keywords: | labour market institutions; monetary integration; labour market reform; CEECs; EMU |
| JEL: | F16 F15 D02 J21 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:15045&r=eec |
| By: | Zsolt Darvas |
| Abstract: | This paper studies the transmission of monetary policy to macroeconomic variables in three new EU Member States in comparison with that in the euro area with structural time-varying coefficient vector autoregressions. In line with the Lucas Critique reduced-form models like standard VARs are not invariant to changes in policy regimes. The countries we study have experienced changes in monetary policy regimes and went through substantial structural changes, which call for the use of a time-varying parameter analysis. Our results indicate that in the euro area the impact on output of a monetary shock have decreased in time while in the new member states of the EU both decreases and increases can be observed. At the last observation of our sample, the second quarter of 2008, monetary policy was the most powerful in Poland and comparable in strength to that in the euro area, the least powerful responses were observed in Hungary while the Czech Republic lied in between. We explain these results by the credibility of monetary policy, openness and the share of foreign currency loans. |
| Keywords: | monetary transmission; time-varying coefficient vector autoregressions; Kalmanfilter |
| JEL: | C32 E50 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:208&r=eec |
| By: | Djamel Kirat (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Ibrahim Ahamada (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | In order to comply with their commitments under the Kyoto Protocol, France and Germany participate to the European Union Emission Trading Scheme (EU ETS) which concerns predominantly electricity generation sectors. In this paper we seek to know if the EU ETS gives appropriate economic incentives for an e¢ cient and strong system in line with Kyoto commitments. Because if so electricity producers in these countries should include the price of carbon in their costs functions. After identifying the di¤erent sub periods of the EU ETS during its pilot phase (2005-2007), we model the prices of various electricity contracts and look at their volatilities around their fundamentals while evaluating the correlation between the electricity prices in the two countries. We finnd that electricity producers in both countries were constrained to include the carbon price in their cost functions during the rst two years of operation of the EU ETS. During this period, German electricity producers were more constrained than their French counterparts and the inclusion of the carbon price in the cost function of electricity generation has been so much more stable in Germany than in France. Furthermore, the European market for emission allowances has increased the market power of the historical French electricity producer and has greatly contributed to the partial alignment of the wholesale price of electricity in France with those of Germany. . |
| Keywords: | Carbon Emission Trading, Multivariate GARCH models, Structural break, Non Parametric Approach, Energy prices. |
| Date: | 2009–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-00378317_v1&r=eec |
| By: | Zagaglia, Paolo (Dept. of Economics, Stockholm University) |
| Abstract: | I study how the pattern of segmentation in the Euro area money market has been affected by the recent turmoil in financial markets. I use nonparametric estimates of realized volatility to test for volatility spillovers between rates at different maturities. For the pre-turmoil period, exogeneity tests from VAR models suggest the presence of a transmission channel from longer maturities to the overnight. This disappears in the subsample starting in August 9 2007. Quantile measures of comovements in volatility report evidence of an increase in contagion within the longer end of the money market curve. |
| Keywords: | Money market; high-frequency data; time-series methods |
| JEL: | C22 E58 |
| Date: | 2009–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sunrpe:2009_0011&r=eec |
| By: | Bazyl, Monika |
| Abstract: | Homeownership rates are very different across European countries. They range from below 50% in Germany to over 80% in Greece, Spain or Ireland. However the differences lie not only in the overall homeownership rates but also in its structure, and this is the focus of this paper. Its aim is to study the impact of microeconomic factors on household’s tenure choice, using a cross-country comparative approach. Logit models are constructed for each country using data for year 2000 from the Consortium of Household Panels for European Socio-Economic Research micro-database. The models show that marriage is a significant determinant of the decision to move to homeownership in all analysed countries, while co- habitating households are more likely to rent, except for Denmark. Nationality, income and age proved to be significant explanatory variables in several countries, while staying insignificant in others. |
| Keywords: | tenure choice; homeownership ; housing |
| JEL: | D10 R20 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:irs:iriswp:2009-04&r=eec |
| By: | Pozzoli, Dario (Department of Economics, Aarhus School of Business); Ranzani, Marco (Universita' Cattolica) |
| Abstract: | This study investigates old European couples' retirement choices in order to bridge the gap between the European and the American literature. The typical European family approaching retirement is a dual-earner family: the dataset used in this paper reveals that 78 percent of working males is married, and amongst these 24 percent has a working wife. This results from dramatic changes in the labor force behaviour of both older men and older women after World War II. These trends signal a need of investigating retirement choices at a household level. Using an absolutely new international micro data (SHARE, Survey of Health, Ageing and Retirement in Europe - Release 2), we adopt a duration analysis approach and estimate both single and competing risks models by allowing for a exible speci cation with and without unobserved heterogeneity. Our ndings show that joint retirement is signi cantly correlated with education, age, and health status, together with partner's employment status, partner's education and partner's health status. We also perform a sensitivity analysis in order to check whether the results on the correlation of health status are robust to two alternative measures of health which possibly correct for subjectivity and cross-country incomparability of self-reported health. We nd that allowing for dierent exit routes and taking into account partner's characteristics is critical to fully understand joint retirement. |
| Keywords: | Joint retirement; Grouped duration data; Europe |
| JEL: | C41 J26 O52 |
| Date: | 2009–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:aareco:2009_002&r=eec |
| By: | Gorecki, Paul (ESRI); Lyons, Sean (ESRI); Tol, Richard S. J. (ESRI) |
| Abstract: | Under 2013 to 2020 European Union proposals for CO2 emission reduction, a Member State can transfer to another Member State ?part? of their allowed emission allocation in the non-Emission Trading Sector (?ETS?). The paper addresses three questions in relation to these Transfer Emission Units or TEUs. First, what mechanism should be used to facilitate the exchange of TEUs? The preferred mechanism is a uniform price auction, preferably EU-wide. Second, what ?part? of the non-ETS emission limit of a Member State should be classed as TEUs ? 10%, 20% or no limit? The proportion of the non-ETS emission limit that should be traded should be maximised. Third, who should realise the value of TEUs ? the State, existing polluters? The value of TEUs should accrue to the State. |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp292&r=eec |
| By: | Tol, Richard S. J. (ESRI) |
| Abstract: | The EU has proposed four flexibility mechanisms for the regulation of greenhouse gas emissions in the period 2013-2020: (1) the Emissions Trade Scheme (ETS), a permit market between selected companies; (2) trade in non-ETS allotments between Member States; (3) the Clean Development Mechanism (CDM) to purchase offsets in developing countries; and (4) trade in CDM warrants between Member States. This paper shows that aggregate abatement costs fall as flexibility increases. However, limited flexibility creates rents so that increasing flexibility raises costs in some Member States. Costs are reduced more by the CDM than by non-ETS trade. The CDM warrants market reduces costs by a small amount only; market power is a real issue. However, the warrants market is obsolete in case there is non-ETS trade. The CDM leads to price convergence between the ETS and non-ETS market. There would be one price for carbon in the European Union if the proposed limits on CDM access are relaxed slightly |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp290&r=eec |
| By: | Esteban Sanromá (Universitat de Barcelona); Raúl Ramos (Universitat de Barcelona); Hipólito Simón (Universitat de Alicante) |
| Abstract: | The aim of this paper is to analyse the role played by the different components of human capital in the wage determination of recent immigrants within the Spanish labour market. Using microdata from the Encuesta Nacional de Inmigrantes 2007, the paper examines returns to human capital of immigrants, distinguishing between human capital accumulated in their home countries and in Spain. It also examines the impact on wages of the legal status. The evidence shows that returns to host country sources of human capital are higher than returns to foreign human capital, reflecting the limited international transferability of the latter. The only exception occurs in the case of immigrants from developed countries and immigrants who have studied in Spain. Whatever their home country, they obtain relatively high wage returns to education, including the part not acquired in the host country. Having legal status in Spain is associated with a substantial wage premium of around 15%. Lastly, the overall evidence confirms the presence of a strong heterogeneity in wage returns to different kinds of human capital and in the wage premium associated to the legal status as a function of the immigrants’ area of origin. |
| Keywords: | Fiscal immigration, wages, human capital. |
| JEL: | J15 J24 J31 J61 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2009/5/doc2009-8&r=eec |
| By: | Gabriel Fagan (Directorate General Research, European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Julián Messina (Universitat de Girona, Plaça Sant Domènec, 3, IT-17071 Girona, Italy; IZA and FEDEA.) |
| Abstract: | This paper examines the impact of downward wage rigidity (nominal and real) on optimal steady-state inflation. For this purpose, we extend the workhorse model of Erceg, Henderson and Levin (2000) by introducing asymmetric menu costs for wage setting. We estimate the key parameters by simulated method of moments, matching key features of the cross-sectional distribution of individual wage changes observed in the data. We look at five countries (the US, Germany, Portugal, Belgium and Finland). The calibrated heterogeneous agent models are then solved for different steady state rates of inflation to derive welfare implications. We find that, across the European countries considered, the optimal steady-state rate of inflation varies between zero and 2%. For the US, the results depend on the dataset used, with estimates of optimal inflation varying between 2% and 5%. JEL Classification: E31, E52, J4. |
| Keywords: | Downward wage rigidity, DSGE models, optimal inflation. |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:200901048&r=eec |
| By: | Beetsma, Roel; Giuliodori, Massimo; Wierts, Peter |
| Abstract: | Using real-time data from Europe's Stability and Convergence Programs, we explore how fiscal plans and their implementation in the EU are determined. We find that (1) implemented budgetary adjustment falls systematically short of planned adjustment and this shortfall increases with the projection horizon, (2) variability in the eventual fiscal outcomes is dominated by the implementation errors, (3) there is a limited role for "traditional" political variables, (4) stock-flow adjustments are more important when plans are more ambitious, and (5), most importantly, both the ambition in fiscal plans and their implementation benefit from stronger national fiscal institutions. We emphasise also the importance of credible plans for the eventual fiscal outcomes. |
| Keywords: | EU; Fiscal policy; fiscal rules; implementation; medium-term budgetary framework; planning; real-time data |
| JEL: | E62 H60 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7285&r=eec |
| By: | Claudia M. Buch; Paola Monti; Farid Toubal |
| Abstract: | Has the labor share declined? And what is the impact of international trade? These questions are not only relevant in an international context they also matter for understanding the regional distribution of incomes in a given country. In this paper, we study two regions with trade exposures that differ from the rest of the country, and which display distinct changes in the labor share. East German and Southern Italian regions have a degree of international openness which is below the countries’ averages. At the same time, there has been a more pronounced decline in the labor share in East Germany than in West Germany. In Southern Italy, the labor share has increased in recent years. We show that increased trade openness is not the main culprit behind changing labor shares. |
| Keywords: | labor share, trade, regions |
| JEL: | E25 F10 R10 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:iaw:iawdip:46&r=eec |