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on Microeconomic European Issues |
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Issue of 2014‒07‒21
sixteen papers chosen by Giuseppe Marotta Università degli Studi di Modena e Reggio Emilia |
| By: | Alfonso R. Sánchez; J. Ignacio García-Pérez; Sergi Jiménez |
| Abstract: | In this paper, we explore the links between pension reform, early retirement, and the use of unemployment as an alternative pathway to retirement. We use a dynamic rational expectations model to analyze the search and retirement behaviour of employed and unemployed workers aged 50 or over. The model is calibrated to reproduce the main reemployment and retirement patterns observed between 2002 and 2008 in Spain. It is subsequently used to analyze the effects of the 2011 pension reform in Spain, characterized by two-year delays in both the early and the normal retirement ages. We find that this reform generates large increases in labour supply and sizable cuts in pension costs, but these are achieved at the expense of very large welfare losses, especially among unemployed workers. As an alternative, we propose leaving the early retirement age unchanged, but penalizing the minimum pension (reducing its generosity in parallel to the cuts imposed on individual pension benefits, and making it more actuarially fair with age). This alternative reform strikes a better balance between individual welfare and labour supply stimulus. |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:761&r=eur |
| By: | Caroli, Eve; Godard, Mathilde |
| Abstract: | This paper estimates the causal effect of perceived job insecurity – i.e. the fear of involuntary job loss – on health in a sample of men from 22 European countries. We rely on an original instrumental variable approach based on the idea that workers perceive greater job security in countries where employment is strongly protected by the law, and relatively more so if employed in industries where employment protection legislation is more binding, i.e. in industries with a higher natural rate of dismissals. Using cross-country data from the 2010 European Working Conditions Survey, we show that when the potential endogeneity of job insecurity is not accounted for, the latter appears to deteriorate almost all health outcomes. When tackling the endogeneity issue by estimating an IV model and dealing with potential weak-instrument issues, the health-damaging effect of job insecurity is confirmed for a limited subgroup of health outcomes, namely suffering from headaches or eyestrain and skin problems. As for other health variables, the impact of job insecurity appears to be insignificant at conventional levels. |
| Keywords: | Job insecurity; Health; Instrumental Variables; |
| JEL: | J63 I19 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:dau:papers:123456789/13646&r=eur |
| By: | Patrícia Pereira da Silva (Faculty of Economics, University of Coimbra and INESC Coimbra, Portugal); Pedro Cerqueira (Faculty of Economics, University of Coimbra and GEMF, Portugal) |
| Abstract: | Electricity as well as gas or refined petroleum products exemplify a significant part of the consumer basket of European households and companies. As energy products are important inputs of nearly all final goods and services, any change of energy prices has a direct impact of the general price level. In this context, the main purpose of this study is to assess the main drivers of household electricity prices in the European Union (EU), throughout a period of deep sector transformation. Relying on Eurostat up to date data, not only we analyze the long-term evolution of household electricity prices across the EU, but also we provide the latest empirical evidence on their determinants while confronting the results with the EU energy policy path. For this purpose a new approach is herein developed based on a dynamic model with panel data through GMM proposal method by Blundell and Bond (1998) with the Windermeijer correction (2005). The data analysis provides grounds for a relation between the variable of household electricity prices with variables related to sector liberalization, renewable energy sources which support the EU policy to boost liberalization. This study offers evidence that the sector liberalization, herein assumed via the market share of the largest electricity producer, is accompanied by a decreasing trend in prices, which is consistent with the European Commission’s objectives to liberalize. |
| Keywords: | household electricity prices, market reform, system-GMM panel data model. |
| JEL: | Q28 Q48 C33 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:wpaper:2014-13.&r=eur |
| By: | Christos Genakos; Tommaso Valletti |
| Abstract: | We re-consider the impact that regulation of call termination on mobile phones has had on mobile customers' bills. Using a large panel covering 27 countries, we find that the "waterbed" phenomenon, initially observed until early 2006, becomes insignificant on average over the 10-year period, 2002-2011. We argue that this is related to the changing nature of the industry, whereby mobile-to-mobile traffic now plays a much bigger role compared to fixed-to-mobile calls in earlier periods. Over the same decade, we find no evidence that regulation caused a reduction in mobile operators' profits and investments. |
| Keywords: | Mobile telephony, termination rates, waterbed effect |
| JEL: | D12 D43 L5 L96 L98 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1282&r=eur |
| By: | Kai-Uwe Müller; Katharina Wrohlich |
| Abstract: | We apply a structural model of mothers' labor supply and child care choices to evaluate the effects of two childcare reforms in Germany that were introduced simultaneously in August 2013. First, a legal claim to subsidized child care became effective for all children aged one year or older. Second, a new benefit called 'Betreuungsgeld' came into effect that is granted to families who do not use public or publicly subsidized child care. Both reforms target children of the same age group and are unconditional on the parents' income or employment status, yet affect mothers' incentives for labor supply and child care choices in opposite directions. Our model facilitates estimating the joint reform impact as well as disentangling the individual effects of both policies. A comprehensive data set with information on labor supply, the use of and potential access restrictions to various child care arrangements provides the basis for the empirical analysis. We find the overall effect of both reforms to be small but positive as far as mother's labor supply and the use of formal care is concerned. The legal claim's positive impact on mothers' labor supply and the use of formal child care is largely offset by the negative effect on both outcomes resulting from the introduction of the 'Betreuungsgeld'. |
| Keywords: | Family policy, labor supply, child care, policy evaluation, structural model |
| JEL: | J22 J18 H31 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1396&r=eur |
| By: | Xavier Cuadras-Morató; Josep Maria Raya |
| Abstract: | Do political tensions affect economic relations? In particular, does politics significantly affect consumer choices? Firms are often threatened by consumer boycotts that pretend to modify their business strategies and behavior. Sometimes these are caused by general political conflicts. The main objective of the paper is to study the consequences of political conflicts between Spain and Catalonia (a region of Spain) and the subsequent boycott calls on sales of Catalan sparkling wine (cava) in the aggregated Spanish market and also in different regions of the country. We use data from sales of sparkling wine in supermarkets and similar outlets. To determine with precision the boycott period we use data on the number of news about the issue that appeared in the main national Spanish daily newspapers. Although we present some preliminary evidence that the boycott calls affected the market share of Catalan cava in Spain, the results of our main econometric exercise indicate that, once we control for the time trends of the different varieties of sparkling wine, the boycott effects cease to be significant in the aggregate Spanish market. This does not necessarily mean that the boycott calls did not have any significant impact, because we actually find that the effects are very different in each regional market. As a matter of fact, our results indicate that the insignificant impact of the boycott calls at the Spanish aggregate level is a consequence of the combination of a negative impact of the boycott on sales of Catalan cava in some regions and the opposite effect in the Catalan market. |
| Keywords: | consumer boycott, wine sales, political economy |
| JEL: | E40 D74 F14 J64 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:770&r=eur |
| By: | Konstantin A. Kholodilin; Claus Michelsen |
| Abstract: | Concerns about global warming and growing scarcity of fossile fuels require substantial changes in energy consumption patterns and energy systems, as targeted by many countries around the world. One key element to achieve such transformation is to increase energy efficiency of the housing stock. In this context, it is frequently argued that private investments are too low in the light of the potential energy cost savings. However, heterogenous incentives to invest in energy efficiency, particularly for owner-occupants and landlords, may serve as one explanation. This is particularly important for countries with a large rental sector, like Germany. Nevertheless, previous literature largely focuses on the pay offs owner-occupants receive, leaving out the rental market. This paper addresses this gap by comparing the capitalization of energy efficiency in selling prices (rents) for both types of residences. For this purpose data from the Berlin housing market are analyzed in hedonic regressions. The estimations reveal that energy efficiency is well capitalized in apartment prices and rents. The comparison of implicit prices and the net present value of energy cost savings/rents reveals that investors anticipate future energy and house price movements reasonably. However, in the rental segment, the value of future energy cost savings exceeds tenants' implicit willingness to pay by factor 2.98. This can either be interpreted as a result of market power of tenants, uncertainty in the rental relationship, or the "landlord-tenant dilemma." |
| Keywords: | Energy efficiency, house price capitalization, rental/owner-occupied housing, hedonic analysis |
| JEL: | R21 R31 Q40 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1398&r=eur |
| By: | Coudiny, Elise; Plaz, Anne; Samson, Anne-Laure |
| Abstract: | This paper uses a French reform to evaluate the impacts of price regulation on general practitioners (GP) care provision, fees, and income. This reform has restricted, since 1990, the conditions self-employed GPs have to fulfill to be allowed to over-bill. We exploit 2005 and 2008 Public Health insurance administrative data on GPs activity and fees. We use regression discontinuity techniques in a fuzzy design to estimate causal impacts for GPs who set up practice in 1990 and were constrained to charge regulated prices. Our results suggest that GPs react to income effects. Under price regulation, facing prices lower of 42%, GPs provide 50% of more care than if they could overbill. Male GPs react more than female GPs, which leads to opposite effects on their labor income. GPs are more accessible to patients but may also induce demand. They reduce aside salaried activities, use more lump-sum payment schemes, and occupy more often gate-keeper positions. A complementary analysis at dates closer to the reform suggests that these figures may underestimate the short-term effects of price regulation. |
| Keywords: | Extra-billings; fee-for-service; GPs’ activity; causal evaluation; regression discontinuity; |
| JEL: | I11 C21 H51 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:dau:papers:123456789/13648&r=eur |
| By: | Rossella Bardazzi; Filippo Oropallo; Maria Grazia Pazienza |
| Abstract: | The reaction of energy demand to price changes is a key policy issue as it describes the economy's reaction to changes in market conditions or to policy interventions. The issue is even more important for the Italian economy, highly exposed to energy price changes, given its almost complete fossil fuel-related energy dependence, environmental sensitivity and highly fragmented industrial structure. Besides the policy issue, there is also an important methodological debate, concerning the best way to evaluate energy demand elasticities, looking at alternative models, data and elasticity definitions. After a discussion of the main methodological issues, this paper presents an estimation of demand elasticities (by factors and by fuels) for Italian industrial firms, by using a microeconomic panel in a two-stage translog model. By using cross-price and Morishima elasticities, we derive information on the magnitude and asymmetry of firms’ reaction to price changes. Moreover, the use of the micro-dataset enables the highly heterogeneous Italian industrial sector to be considered: results are discussed according to sector and firm dimension. These estimations constitute an important cornerstone of energy demand by Italian industrial firms, given that empirical literature is particularly rare on the Italian case study. |
| Keywords: | Capital-energy substitution, fuel substitution, microdata, panel estimation |
| JEL: | C33 D2 Q4 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2014_08.rdf&r=eur |
| By: | Urban, Kirsten; Hans Grinsted Jensen; Martina Brockmeier |
| Abstract: | The EU Single Farm Payment (SFP) is currently distributed in proportion to primary factor shares in version 8 of the GTAP database. In this paper, we investigate whether this way of modeling the EU SFP makes a difference in analyzing agricultural policy reforms. To do so, we create alternative versions of the GTAP database to compare the effects with the default setting in GTAP. Employing OECD data, along with the GTAP framework, we vary the assumptions about the allocation of the SFP. In the process, we demonstrate how to alter and update the GTAP database to implement domestic support of OECD PSE tables. We provide a detailed overview supplemented with assumptions of payment allocation, shock calculations and in particular, the Altertax procedure to update value flows and price equations extended in the GTAP model. Subsequently, we illustrate the impact of those assumptions by simulating a 100% removal of the SFP using the deviating versions of GTAP database. This sensitivity analysis reveals strong differences in results, but particularly in production responses of food and agricultural sectors that decrease with an increasing degree of decoupling. Furthermore, our analysis shows that the effect on welfare and the trade balance decreases with an increasing degree of decoupling. This experiment shows that the allocation of the SFP can have strong impacts on simulation results. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:gta:techpp:4569&r=eur |
| By: | Brunello, Giorgio; Bassanini, Andrea; Caroli, Eve |
| Abstract: | There is growing evidence that social pressure shapes firms' behavior. Given how sensitive communities are to downsizing, this suggests that firms are likely to be under strong social pressure when considering reducing employment. Using French linked employer-employee data, we show that social pressure induces firms to refrain from dismissing at short distance from their headquarters. More specifically, we find that, within firms, secondary establishments located further away from headquarters have higher dismissal rates than those located closer, taking into account the possible endogeneity of plant location. We also find that the positive effect of distance on dismissals increases with the visibility of the firm in the local community of its headquarters. This effect is also stronger the greater the degree of selfishness of the community in which the headquarters are located. This suggests that local social pressure at headquarters is a key determinant of the positive relationship between distance to headquarters and dismissals. We show that our results cannot be entirely accounted for by alternative explanations of the distance-dismissal relationship that are put forward in the literature. |
| Keywords: | Personnel Management; Labor Demand; employment policies; social pressure; |
| JEL: | M12 M51 J23 J63 R12 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:dau:papers:123456789/13579&r=eur |
| By: | González Chapela, Jorge |
| Abstract: | The split work shift has been argued as one of the reasons behind the different Spanish time schedule, characterized by reduced sleep and a more difficult work-family balance. This paper presents direct evidence on the effect that being on a split shift has on Spanish workers’ wellbeing and time use. The split shift is found associated to more time spent working in the market, sleeping, and eating, and less time spent doing housework, caring for children, and at leisure. An increased feeling of being overwhelmed by tasks and having little time to do them is also found among female split-shifters. |
| Keywords: | work shift; role overload; time use; Spanish Time Use Survey |
| JEL: | I32 J22 |
| Date: | 2014–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57301&r=eur |
| By: | Denis Cormier (ESG UQAM, Montreal, Canada); Samira Demaria (University of Nice Sophia Antipolis, France; GREDEG CNRS) |
| Abstract: | This study focuses on the use of non-GAAP by French companies (CAC 40) and its impact on the stock market controlling for corporate governance. Our main results are as follows. First, we find a complementary effect between residual earnings and non- GAAP for market valuation. Second, in the presence of good governance, the impact of the publication of non-GAAP (number) on the valuation of residual results decreases. This could mean an abundance of non-GAAP reduces its relevance. Corporate governance would substitute to non-GAAP measures (number) for residual earnings valuation. Third governance itself has a positive impact on residual earnings valuation. However, unlike the number of non-GAAP published, the level of detail (number of pages) is not affected by corporate governance in residual earnings valuation. This could be explained by the fact that the AMF advocates for a reconciliation of non-GAAP and IFRS financial data. Fourth, our results suggest that after a certain threshold, non-GAAP (number or pages) create asymmetry in equity markets. |
| Keywords: | Corporate governance, Non-GAAP, Residual earnings, Stock market valuation |
| JEL: | M41 G14 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2014-22&r=eur |
| By: | Nina Boogen (ETH Zurich, Switzerland); Souvik Datta (ETH Zurich, Switzerland); Massimo Filippini (ETH Zurich, Switzerland) |
| Abstract: | In this paper we estimate the long- and short-run price elasticities of residential electricity consumption in Switzerland from a household survey by constructing an index of the stock of household appliances as well as by using energy services. We create the index by aggregating the information on the major household appliances. The index is used to estimate the impact of appliances on residential electricity demand. Furthermore, we also use energy services to estimate the electricity demand. We adopt an instrumental variables approach to obtain consistent estimates of the price elasticity to account for potential endogeneity concerns with the average price as well as the appliance index. Our results suggest that the price elasticity is around -0.6. We conclude that Swiss households are price inelastic in electricity prices. This can be used for policy makers as well as by utility companies to design pricing instruments to modify electricity consumption. We also find that estimates of the electricity demand when we substitute the usual residential characteristics with energy services are quite comparable. |
| Keywords: | Residential electricity; appliance stock index; energy services; instrumental variables |
| JEL: | D D1 Q Q4 Q5 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:14-200&r=eur |
| By: | Geertsema, J. Bieuwe; Allers, Maarten A. (Groningen University) |
| Abstract: | We use difference-in-difference estimation to study how municipal amalgamation affects local government spending and public service levels in the Netherlands. Employing different models, different control groups and a number of robustness tests, we find no significant effect on aggregate spending. We explore whether this finding is a result of amalgamation effects working in opposite directions for different types of municipalities, cancelling each other out. However, the amalgamation effect for small municipalities does not differ significantly from that for large ones, and the effect for municipalities with homogeneous preferences does not differ from that for jurisdictions with heterogeneous preferences. We also investigate whether amalgamation leads to better public services instead of lower spending. As it turns out, amalgamation reduces spending on administration, but there is no corresponding spending increase on public services. Finally, amalgamation does not raise house prices, which we would expect were it to improve public services |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:rugsom:14019-eef&r=eur |
| By: | Ignacio A. INOA; Nathalie PICARD; André de PALMA (Université de Cergy-Pontoise, THEMA; Université de Cergy-Pontoise, THEMA; Ecole Polytechnique, Departement d’Economie) |
| Abstract: | Residential location decision is often a household joint decision involving several decision-makers. These different decision-makers usually have diverging preferences, especially in dual-earner households, when spouses work at different locations. Since about half a century, literature on residential location has studied in great detail the influence of socio-demographic characteristics (and in particular the differences between females and males or between multiple-worker and single-worker households). However, there is no research devoted to the within-family joint decision process leading to residential location decision (and work-place decisions). In the context of Paris Area, we analyze differences between spouses’ values of commuting times and show that spouses’ disparities in commuting decisions is a key element in the intra-household decision process. The single-worker household approach leaves aside by construction important intra-household considerations that influence commuting time and accessibility to jobs. We review different models useful to study intra-household decisions in dual-earner households. To do that, we base our analysis on the framework introduced by Chiappori, de Palma, Picard, and Inoa (2013), which applies the collective approach of household behavior(Chiappori, 1988; Chiappori, 1992) to describe residential location choice of dual-earner households. This collective approach has been used in several economic fields, but not in urban and transport economics so far. Furthermore, we argue that the framework developed by Inoa, Picard, and de Palma (2013), can also be adapted to analyze the joint residential and job location decisions in a two-worker household. The analysis is based on two accessibility variables (one for each spouse) embedded in a three-level nested Logit model which is used to study the interdependence of residential and workplace locations, while accounting for variation of preferences for job types across individuals. |
| Keywords: | intra-household interaction, residential location, Paris region |
| JEL: | R21 R31 C35 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2014-05&r=eur |