Price-cost Margin and Bargaining Power in the European Union
Ana Cristina Soares
IWH-CompNet Discussion Papers,
No. 4,
2019
Abstract
Using firm-level data between 2004 and 2012 for eleven countries of the European Union (EU), we document the size of product and labour market imperfections within narrowly defined sectors including services which are virtually undocumented. Our findings suggest that perfect competition in both product and labour markets is widely rejected. Levels of the price-cost margin and union bargaining power tend to be higher in some service sectors depicting however substantial heterogeneity. Dispersion within sector and across countries tends to be higher in some services sectors assuming a less tradable nature which suggests that the Single Market integration is partial particularly relaxing the assumption of perfect competition in the labour market. We report also figures for the aggregate economy and show that Eastern countries tend to depict lower product and labour market imperfections compared to other countries in the EU. Also, we provide evidence in favour of a very limited adjustment of both product and labour market imperfections following the international and financial crisis.
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Interactions Between Regulatory and Corporate Taxes: How Is Bank Leverage Affected?
Franziska Bremus, Kirsten Schmidt, Lena Tonzer
Abstract
Regulatory bank levies set incentives for banks to reduce leverage. At the same time, corporate income taxation makes funding through debt more attractive. In this paper, we explore how regulatory levies affect bank capital structure, depending on corporate income taxation. Based on bank balance sheet data from 2006 to 2014 for a panel of EU-banks, our analysis yields three main results: The introduction of bank levies leads to lower leverage as liabilities become more expensive. This effect is weaker the more elevated corporate income taxes are. In countries charging very high corporate income taxes, the incentives of bank levies to reduce leverage turn ineffective. Thus, bank levies can counteract the debt bias of taxation only partially.
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21.03.2018 • 5/2018
What is holding back the banking union?
The European Commission wants to better regulate and monitor the European banking sector. In many EU Member States, however, the necessary directives are being implemented extremely slowly. Surprisingly, the reasons for this do not lie in politics and banking structures, but in the institutional framework conditions and existing regulations in the Member States, as argued by Michael Koetter, Thomas Krause and Lena Tonzer from the Halle Institute for Economic Research (IWH).
Michael Koetter
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The European Refugee Crisis and the Natural Rate of Output
Katja Heinisch, Klaus Wohlrabe
Applied Economics Letters,
No. 16,
2017
Abstract
The European Commission follows a harmonized approach for calculating structural (potential) output for EU member states that takes into account labour as an important ingredient. This article shows how the recent huge migrants’ inflow to Europe affects trend output. Due to the fact that the immigrants immediately increase the working population but effectively do not enter the labour market, we illustrate that the potential output is potentially upward biased without any corrections. Taking Germany as an example, we find that the average medium-term potential growth rate is lower if the migration flow is modelled adequately compared to results based on the unadjusted European Commission procedure.
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Delay Determinants of European Banking Union Implementation
Michael Koetter, Thomas Krause, Lena Tonzer
Abstract
To safeguard financial stability and harmonise regulation, the European Commission substantially reformed banking supervision, resolution, and deposit insurance via EU directives. But most countries delay the transposition of these directives. We ask if transposition delays result from strategic considerations of governments conditional on the state of their financial, regulatory, and political systems? Supervisors might try to protect national banking systems and local politicians maybe reluctant to surrender national sovereignty to deal with failed banks. Alternatively, intricate financial regulation might require more implementation time in large and complex financial and political systems. We therefore collect data on the transposition delays of the three Banking Union directives and investigate observed delay variation across member states. Our correlation analyses suggest that existing regulatory and institutional frameworks, rather than banking market structure or political factors, matter for transposition delays.
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Multidimensional Well-being and Regional Disparities in Europe
Jörg Döpke, Andreas Knabe, Cornelia Lang, Philip Maschke
Journal of Common Market Studies,
No. 5,
2017
Abstract
Using data from the OECD Regional Well-Being Index – a set of quality-of-life indicators measured at the sub-national level – we construct a set of composite well-being indices. We analyze the extent to which the choice of five alternative aggregation methods affects the well-being ranking of regions. We find that regional inequality in these composite measures is lower than regional inequality in real GDP per capita. For most aggregation methods, the rank correlation across regions appears to be quite high. It is also shown that using alternative indices instead of GDP per capita would only have a small effect on the set of regions eligible for aid from EU Structural Funds. The exception appears to be an aggregation based on how individual dimensions relate to average life satisfaction across regions, which would substantially change both the ranking of regions and which regions would be eligible for EU funds.
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Structural Reforms in Banking: The Role of Trading
Jan Pieter Krahnen, Felix Noth, Ulrich Schüwer
Journal of Financial Regulation,
No. 1,
2017
Abstract
In the wake of the recent financial crisis, significant regulatory actions have been taken aimed at limiting risks emanating from banks’ trading activities. The goal of this article is to look at the alternative reforms in the US, the UK and the EU, specifically with respect to the role of proprietary trading. Our conclusions can be summarized as follows: First, the focus on a prohibition of proprietary trading, as reflected in the Volcker Rule in the US and in the current proposal of the European Commission (Barnier proposal), is inadequate. It does not necessarily reduce risk-taking and it is likely to crowd out desired trading activities, thereby possibly affecting financial stability negatively. Second, trading separation into legally distinct or ring-fenced entities within the existing banking organizations, as suggested under the Vickers proposal for the UK and the Liikanen proposal for the EU, is a more effective solution. Separation limits cross-subsidies between banking and proprietary trading and diminishes contagion risk, while still allowing for synergies and risk management across banking, non-proprietary trading, and proprietary trading.
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The European Refugee Crisis and the Natural Rate of Output
Katja Heinisch, Klaus Wohlrabe
Abstract
The European Commission follows a harmonized approach for calculating structural (potential) output for EU member states that takes into account labor as an important ingredient. This paper shows how the recent huge migrants inflow to Europe affects trend output. Due to the fact that the immigrants immediately increase the working population but effectively do not enter the labor market, we illustrate that the potential output is potentially upward biased without any corrections. Taking Germany as an example, we find that the average medium-term potential growth rate is lower if the migration flow is modeled adequately compared to results based on the unadjusted European Commission procedure.
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Eine europäische Post-Transformationsregion auf dem Weg zur Integration: Wirtschaftliche Lage und Perspektiven im deutsch-polnisch-tschechischen Dreiländereck
Gerhard Heimpold
I. Roch, J. Banse, H. Leimbrock, J. Mathey (Hrsg.): Transformationsprozesse und Entwicklungsperspektiven im Dreiländereck Deutschland - Polen - Tschechien. IÖR Schriften Band 70, Rhombos-Verlag: Berlin,
2016
Abstract
Der Beitrag untersucht vergleichend die wirtschaftliche Leistungsfähigkeit der Regionen im deutsch-polnisch-tschechischen Dreiländereck, für die sich die nach dem EU-Beitritt Polens und Tschechiens neue Entwicklungschancen ergeben haben. Der Beitrag zeigt Handlungsbedarfe, um noch besser wirtschaftlichen Nutzen von der Grenzöffnung zu ziehen.
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Multidimensional Well-being and Regional Disparities in Europe
Jörg Döpke, A. Knabe, Cornelia Lang, Philip Maschke
Abstract
Using data from the OECD Regional Well-Being Index – a set of quality-of-life indicators measured at the sub-national level, we construct a set of composite well-being indices. We analyse the extent to which the choice of five alternative aggregation methods affects the well-being ranking of regions. We find that regional inequality in these composite measures is lower than regional inequality in gross-domestic product (GDP) per capita. For most aggregation methods, the rank correlation across regions appears to be quite high. It is also shown that using alternative indicators instead of GDP per capita would only have a small effect on the set of regions eligible for aid from EU Structural Funds. The exception appears to be an aggregation based on how individual dimensions of welfare relate to average life satisfaction across regions, which would substantially change both the ranking of regions and which regions would receive EU funds.
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