Can Labour Market Institutions Explain Unemployment Rates in New EU Member States?. CEPS ENEPRI Working Papers No. 27, 1 July 2004

This study poses the question about whether labour market institutions can explain unemployment rates in the ten new European Union member states. In five out of the ten new member states, unemployment rates lie above the average in the 15 member states of the European Union (EU-15) that comprised the EU prior to May 2004. The study finds that labour market institutions in the acceding countries are less rigid than in the EU-15. Moreover, labour market institutions explain only a minor part of unemployment in the new EU member states. This does not mean that these countries have no labour market problems. Just as in the EU-15, a great deal of heterogeneity exists among the acceding countries. In some of them, labour market reforms could prove a key issue in improving employment performance. The main worry is the poor labour market performance in Poland and the Slovak Republic, where unemployment has risen to almost 20%. The main reasons for this growth are i) postponed restructuring in combination with tight monetary policy, ii) poor governance, and iii) an increasing labour force

Higher education; time for coordination on a European level?

Education has always been regarded as a national matter. According to the subsidiarity principle power may only be shifted to a higher level of coordination when solid arguments exist that this will improve welfare. This paper aims at answering the question if these arguments exist. We find no support for economies of scale, i.e. larger countries do not necessarily provide higher quality education; nor do larger schools. Empirical evidence for human capital externalities through student mobility is scarce. Concluding, we find little support for European coordination of higher education. However, there is evidence that student mobility is a precursor for labour migration. Uniformizing the structure of higher education in the EU, and making educational programs more transparent, may therefore be defended from this perspective. Quality does matter for students, and student mobility is increasing. This may be beneficial to labour mobility.

Social Europe. ENEPRI Occasional Paper No. 5, November 2003

[From the Introduction and Summary]. Building a Social Europe has received due attention since the founding of the European Community in Rome. The European summit in Lisbon in 2000 was an important milestone in this process. European leaders committed themselves to working together through the 'open coordination' method to develop a policy to combat poverty and social exclusion. The open coordination approach means that countries exchange information and encourage each other to pursue policies geared to their social objectives. The European Union does not itself play an active role in the way in which individual member states set about achieving those objectives. It has however been agreed that member states will draw up a National Action Plan every two years setting out the way in which they plan to realise their objectives

Taxation and Foreign Direct Investment: A Synthesis of Empirical Research

This paper reviews the empirical literature on the impact of company taxes on the allocation of foreign direct investment. We make the outcomes of 25 empirical studies comparable by computing the tax rate elasticity under a uniform definition. The mean value of the tax rate elasticity in the literature is around -3.3, i.e. a 1%-point reduction in the host-country tax rate raises foreign direct investment in that country by 3.3%. There exists substantial variation across studies, however. By performing a meta analysis, the paper aims to explain this variation by the differences in characteristics of the underlying studies. Systematic differences between studies are found with respect to the type of foreign capital data used, and the type of tax rates adopted. We find no systematic differences in the responsiveness of investors from tax credit countries and tax exemption countries.

Assessing subsidiarity

This paper discusses the assessment of subsidiarity in the European Union from a broad fiscal federalism perspective. It incorporates recent insights from political economy analyses of fiscal federalism to arrive at a list of issues that need to be taken into account when considering whether concrete policies should be centralised in the European Union or not. �

What a difference does it make? Understanding the empirical literature on taxation and international capital flows

This study explains the variation in empirical estimates in the literature on the elasticity of foreign direct investment with respect to company tax levels. To that end, the meta analysis of De Mooij and Ederveen (2003) is extended by considering an alternative classification of the literature and by including new studies that have recently become available. Specific attention is paid to two new dimensions: the spatial and the time dimension of the underlying studies.Foreign direct investment, corporate taxation, meta analysis, international capital flows,de Mooij,Ederveen

Corporate Tax Elasticises A Reader's Guide to Empirical Findings

Corporate taxes exert a variety of effects on business behaviour. A wealth of empirical evidence assesses the magnitude of these behavioural margins of taxation. This article offers an up-to-date review and aims to provide common ground by computing for each distortion the semi-elasticity of the corporate tax base. We pay particular attention to international investment where it is not a priory clear whether marginal investment decisions or discrete locations are most important. Using anextension of the meta analysis of De Mooij and Ederveen (2003), we explore the extent to which existing studies reveal differences in effect size between the intensive and extensive margins of international investment

Fertile Soil for Structural Funds?

Structural funds are the most intensively used policy instrument by the EuropeanUnion to promote economic growth in its member states and to speed up the process ofconvergence. This paper empirically explores the effectiveness of European Structural Fundsby means of a panel data analysis for 13 countries in the European Union. We show that onaverage Structural Funds are ineffective. For countries with the right institutions,however, Structural Funds are effective. The latter result is obtained for a wide range ofconditioning variables, such as openness, institutional quality, corruption and indicatorsfor good governance

Fertile soil for structural funds? A panel data analysis of the conditional effectiveness of European cohesion policy

Structural funds are the most intensively used policy instrument by the European Union to promote economic growth in its member states and to speed up the process of convergence. This paper empirically explores the effectiveness of European Structural Funds by means of a panel data analysis for 13 countries in the European Union. We show that - on average - Structural Funds are ineffective. For countries with the ‘right' institutions, however, Structural Funds are effective. The latter result is obtained for a wide range of conditioning variables, such as openness, institutional quality, corruption and indicators for good governance.