Migrants and Economic Performance in the EU15: their allocations across countries, industries and job types and their (productivity) growth impacts at the sectoral and regional levels

Studies regarding the migrants’ impact upon performance variables and in particular upon productivity growth – which is the focus of this study - are few although there has been an increased interest in this area. This study addresses this issue in a cross-country and regional perspective with a focus on EU-27 countries at the industry level. In the first part of the study the focus is on employment patterns of migrants regarding their shares in employment, the composition in terms of places of origin, and an important aspect of the analysis is the study of their ‘skills’ (measured by educational attainment levels) and the utilisation of these skills relative to those of domestic workers. The second part of the study conducts a wide range of ‘descriptive econometric’ exercises analysing the relationship between migrants employment across industries and regions and output and productivity growth. We do obtain robust results with respect to the positive impact of the presence of high-skilled migrants especially in high-education-intensive industries and also more generally – but less robustly – on the relationship between productivity growth and the shares of migrants and of high-skilled migrants in overall employment. There is also an analysis of the impact of different policy settings with respect to labour market access of migrants and to anti-discrimination measures. The latter have a significant positive impact on migrants’ contribution to productivity growth. In the analysis of impacts of migrants on value added and labour productivity growth at the regional level we add migration variables to robust determinants of growth and find positive and significant relationships between migrants’ shares (and specifically of high-skilled migrants) and regional productivity growth. The limitations of the study with respect to data issues, causality and selection effects are discussed which give scope for further research.migration, productivity, employment structures

Attracting foreign direct investment: the public policy scope for South East European countries

Based on earlier empirical literature for Central and Eastern European Countries this paper attempts to analyze the likely impact of changes in corporate income taxes, in the endowment with production-related material infrastructure and in the institutional environment on Foreign Direct Investment (FDI) – and thus on one channel of regional development in South Eastern European Countries (SEECs). Specifically, we explore the scope for public policy to attract FDI separated by these three policy areas and across the SEECs. Our findings suggest that the potential for SEECs to attract FDI upon changes in these policy areas varies not only substantially between the three policy areas but also within the group of SEECs. Yet, as a general picture, most SEECs have substantial scope to attract FDI by improving their institutional environment as well as their infrastructure endowment. The tax instrument, in contrast, is largely exhausted as a means to attract FDI. Based on these findings some medium- and long-term policy issues are outlined.foreign direct investment, taxes, infrastructure, institutions, South Eastern European countries

Non-Sequential Search, Competition and Price Dispersion in Retail Electricity

We investigate the impact of consumer search and competition on pricing strategies in Germany's electricity retail. We utilize a unique panel dataset on spatially varying search requests at major online price comparison websites to construct a direct measure of search intensity and combine this information with zip code level data on electricity tariffs between 2011 and 2014. The paper stands out by explaining price dispersion by differing pricing strategies of former incumbents and entrant firms, which are distinct in their attributable shares in informed versus uninformed consumers. Our empirical results suggest causal evidence for an inverted U-shape effect of consumer search intensity on price dispersion in a clearinghouse environment as in Stahl (1989). The dispersion is caused by opposite pricing strategies of incumbents and entrants, with incumbents initially increasing and entrants initially decreasing tariffs as a reaction to more consumer search. We also find an inverted U-shape effect of competition on price dispersion, consistent with theoretical findings by Janssen and Moraga-González (2004). Again, the effect can be explained by opposing pricing strategies of incumbents and entrants. (authors' abstract)Series: Department of Economics Working Paper Serie

Effective Climate Policy Doesn't Have to be Expensive

We compare the effectiveness of different climate policies in terms of emissions abatement and costs in the British and German electricity markets. The two countries follow different climate policies, allowing us to compare the effectiveness of a relatively low EU ETS carbon price in Germany with a significantly higher carbon price due to a unilateral top-up tax (the Carbon Price Support) in the UK. We first estimate the emissions offsetting effects of carbon pricing and of subsidized wind and solar feed-in, and then derive the abatement costs of one tonne of CO2 for the different policies. We find that a reasonably high price for emissions is the most cost-effective climate policy, while subsidizing wind is preferable to subsidizing solar power. A carbon price of around EURO 35 is enough in the UK to induce vast short-run fuel switching between coal- and gas-fired power plants, leading to significant emissions abatement at low costs.Series: Department of Economics Working Paper Serie

Vertical disintegration in the European electricity sector: Empirical evidence on lost synergies

The EU has been promoting unbundling of the transmission grid from other stages of the electricity supply chain with the aim of fostering competition in the upstream stage of electricity generation. At present, ownership unbundling is the predominant form of unbundling in Europe. From a policy perspective, a successful unbundling regime would require that the benefits of increased competition in power generation would at least offset the associated efficiency losses from vertical divestiture. Since evidence on this topic is scarce, this study helps fill this void by empirically estimating the magnitude of economies of vertical integration (EVI) between electricity generation and transmission based on a quadratic cost function. For this purpose we employ unique firm-level panel data of European electricity utilities. Our results confirm the presence of substantial EVI of 14% for the median sized integrated utility. Moreover, EVI tend to increase with firm size

Vertical Disintegration in the European Electricity Sector: Empirical Evidence on Lost Synergies

The EU has been promoting unbundling of the transmission grid from other stages of the electricity supply chain with the aim of fostering competition in the upstream stage of electricity generation. At presence, ownership unbundling is the predominant form of unbundling in Europe. However, the benefits of increased competition from ownership unbundling of the transmission grid may come at the cost of lost vertical synergies between the formerly integrated stages of electricity supply. The policy debate generally neglects such potential costs of unbundling, yet concentrates on its benefits. Therefore European crosscountry evidence may shed some light on this issue. This study helps fill this void by empirically estimating the magnitude of economies of vertical integration (EVI) between electricity generation and transmission based on a quadratic cost function. For this purpose we employ novel firm-level panel data of major European electricity utilities. Our results confirm the presence of substantial EVI, which put the policy measure of transmission ownership unbundling into question. (authors' abstract)Series: Working Papers / Research Institute for Regulatory Economic

Unbundling, regulation and pricing : evidence from electricity distribution

Unbundling of vertically integrated utilities has become an integral element in the regulation of network industries and has been implemented in many jurisdictions. The idea of separating the network, as the natural monopoly, from downstream retailing, which may be exposed to competition, is still subject to contentious debate. This is because there is much empirical evidence that unbundling eliminates economies of vertical integration while empirical evidence on price reducing effects is still lacking. In this paper we study the effect of legal unbundling on grid charges in the German electricity distribution industry. Using panel data on German distribution system operators (DSOs) we exploit the variation in the timing of the implementation of legal unbundling and the fact that not all DSOs had to implement unbundling measures. We are also able to identify heterogeneous effects of legal unbundling for different types of price regulation, because we observe a switch in the price regulation regime from rate-of-return regulation to incentive regulation during our observation period. Our findings suggest that legal unbundling of the network stage significantly decreases grid charges in the range of 5% to 9%, depending on the type of price regulation in place

Market liberalization : price dispersion, price discrimination and consumer search in the German electricity markets

We study how consumer search affects pricing in markets with incumbents and entrants using panel data on German electricity retail markets. Consumers observe the baseline price of the incumbent and decide whether or not to search. Incumbent providers can price discriminate between searching and loyal consumers. Empirically we show that local incumbents increase their baseline rate while entrants decrease their tariffs if consumer search increases. Moreover, the incumbent price discriminates more strongly in markets with more consumer search. Using a theoretical model, we show that these pricing patterns are consistent with the strategic interaction of profit-maximizing firms