CPB Discussion papers 2005

n° 052 - December 2005

In the early 1990s, the Dutch social partners agreed upon transforming the generous and actuarially unfair PAYG early retirement schemes into less generous and actuarially fair capital funded schemes. The starting dates of the transitional arrangements varied by industry sector. In this study, we exploit the variation in starting dates to estimate the causal impact of the policy reform on early retirement behaviour. We use a large administrative dataset, the Dutch Income Panel 1989-2000, to estimate hazard rate models for early retirement. We conclude that the policy reform induced workers to postpone early retirement. Model simulations show that the first phase of the transition has already led to an average retirement postponement by 4 months in the group of elderly workers investigated. It will become about 9 months once the transition is fully completed

(texte intégral du n° 52/2005)

n° 051 - October 2005

This paper performs a meta-analysis of empirical estimates of uncompensated labour supply elasticities. We find that much of the variation in elasticities can be explained by the variation in gender, participation rates, and country fixed effects. Country differences appear to be small though. There is no systematic impact of the model specification or marital status on reported elasticities. The decision to participate is more responsive than is the decision regarding hours worked. Even at the intensive margin, we find that the elasticity for women exceeds that for men. For men and women in the Netherlands, we predict an uncompensated labour supply elasticity of 0.1 (or 0.2 if an alternative specification is preferred) and 0.5, respectively. These values are robust for alternative samples and specifications of the meta regression.

(texte intégral du n° 51/2005)

n° 050 - October 2005 

The Kyoto Protocol binds the level of greenhouse gas emissions in participating countries. It does not, however, dictate how the countries are to achieve this level. The economic costs of reaching emission targets are generally evaluated to be low. For example, evaluations with applied general-equilibrium models estimate the costs to be in the range of 0.2% to 0.5% of GDP, when international trade in emissions rights among governments is allowed for. We argue that important costs are overlooked since governments have an incentive to choose highly distorting tax schemes.
This paper shows that governments generally choose different energy tax rates for households and for internationally operating firms as the result of tax competition or pollution competition: in the first case, governments try to undercut other governments to attract firms to their country, whereas in the second, they try to push dirty industries across the border. In both cases, the incentive for firms and households to use or save energy is different at the margin. Both cases call for coordination of climate change policies that goes beyond a binding ceiling on greenhouse gas emissions and international trade in permit rights among governments alone.

(texte intégral du n° 50/2005)

n° 049 - October 2005 

Regulatory heterogeneity as obstacle for international services trade
H. Kox - A. Lejour

International trade in services is hampered by non-tariff barriers that originate from national regulations. Not only the level of regulation in home or export country matters, but also the inter-country differences in regulation for service markets. Regulatory measures tend to affect fixed costs rather than variable costs. The fact that regulations often differ by market, means that the fixed costs of complying with regulations in an export market are in fact sunk market-entry costs. We prove that policy heterogeneity between countries has a negative impact on bilateral service trade. We develop a new index of bilateral policy heterogeneity, and apply it in a gravity model for explaining service trade among EU countries. The empirical results support our theoretical prediction: the degree of regulatory heterogeneity is inversely related to the level of bilateral service trade. Simulations for the EU show that if countries make more use of mutual recognition, bilateral trade in commercial services among EU countries could increase by 30% to 60%.

(texte intégral du n° 49/2005)

n° 048 - September 2005 

An exploration into competition and efficiency in the Dutch life insurance industry
J.A. Bikker - M. van Leuvensteijn

The lack of available prices in the Dutch life insurance industry makes competition an elusive concept that defies direct observation. Therefore, this paper investigates competition by analysing several factors which may affect the competitive nature of a market and various indirect measurement approaches. After discussing various supply and demand factors which may constitute a so-called tight oligopoly, we establish the existence of scale economies and the importance of cost X-inefficiency, since severe competition would force firms to exploit any available scale economies further and to reduce X-inefficiencies. Both scale economies and X-inefficiencies turn out to be substantial, although more or less comparable to those found for insurers in other countries and to other financial institutions. Profits in the Netherlands appear to be high compared to profits of foreign peers, although this probably more a reflecting of the past than of the present. Further, we apply the Boone indicator, a novel approach to measuring the effects of competition. This indicator points to limited competition in comparison to other sectors in the Netherlands. Further investigations of submarkets should reveal what is behind this seemingly limited competition.

(texte intégral du n° 48/2005)

n° 047 - July 2005 

Estimating police effecteviness with individual victimisation data

Ben Vollaard and Pierre Koning

In this paper, we present evidence on the effect of greater numbers of police personnel on victimisation of crime and experience of nuisance. We make use of individual data from a Dutch victimisation survey unique in its size, duration and scope. By using individual victimisation data we provide evidence on the effects of police on nuisance rather than 'hard crime' only, we circumvent measurement error common to police statistics, and we are able to control for both individual and municipality characteristics. We find significantly negative effects of higher police levels on property crime, violent crime and nuisance. The estimated elasticities are in line with the literature based on police statistics. Urban police forces are more effective than rural police forces for most types of crime and nuisance. Additionally, we find experience of nuisance mostly to be a characteristic of the municipality in which someone lives, with little variation across individuals in a municipality, whereas victimisation of violent crime varies across individuals rather than municipalities. For property crime, individual and municipality characteristics are about equally important. Finally, we provide evidence that greater police protection allows people to move around more freely, which is an additional benefit of higher police levels not reflected in a decline in victimisation rates. 

(texte intégral du n° 47/2005)

n° 046 - June 2005 

DEELEN Anja

In this paper, we analyse the employers' decision to opt out of the public disability insurance (DI) system. For the empirical analysis we use an extensive panel of Dutch employers for the period 2000-2002. We find that cross-subsidies employers pay or receive under the current public insurance system of experience rating contribute to the opting out decision. Since cross-subsidies are risk related, this is an indication for the presence of adverse selection: high risk (cross-subsidised) firms tend to remain publicly insured, while low risk (cross subsidising) firms tend to opt out. This finding is supported by the fact that risk related characteristics such as the sector of industry and the composition of the work force by age and gender contribute to the explanation of the opting-out decision. Adverse selection could be diminished by setting public premiums in such a way that they are more actuarial fair in the long run. As a result, the risk profile of firms opting out will become more similar to that of firms not opting out.

(texte intégral du n° 46/2005)

n° 045 - April 2005 

Financial incentives in disability insurance in the Netherlands
A. van Vuren - D. van Vuuren

In this paper, we assess the impact of financial incentives on the inflow in the public Disability Insurance (DI) scheme in the Netherlands. For this matter, the variation in replacement rates over different sectors is exploited to estimate the probability of DI enrolment over a sample of employees from the Dutch Income Panel (1996-2000). On the basis of these administrative data, we find a point estimate of the elasticity of DI enrolment with respect to the DI wealth rate of 2.5.

(texte intégral du n° 45/2005: http://www.cpb.nl/eng/pub/discussie/45/disc45.pdf)

n° 044 - April 2005 

Non-C02 greenhouse gases; all gases count
W. Kets - G. Verweij

Under the Kyoto Protocol, a group of countries commit themselves to reduce the emissions of greenhouse gases to some 5% below the 1990 level. Countries can decide to spread their reduction commitment over several gases to lower compliance costs. Employing a multi-gas strategy can offer considerable efficiency gains because of the widely diverging marginal abatement cost for the different emission sources. In this Discussion Paper, the analysis of climate policy for the most important greenhouse gas, carbon dioxide, is extended with two other important greenhouse gases, methane and nitrous oxide. The multi-region and multi-sector Applied General Equilibrium model WorldScan has been used as an instrument for addressing this issue. The approach presented is consistent with the bottom-up information on reduction possibilities for those non-CO2 greenhouse gases while it allows for general equilibrium effects and intergas interactions. Including non-CO2 greenhouse gases into the analysis has important sectoral impacts while the regional effects are limited. A considerable part of the burden on gas, coal and oil products will be shifted to the agricultural sectors. Reductions of non-CO2 gases could be especially important for countries like China and India.

(texte intégral du n° 44/2005)

n° 043 - April 2005 

Does public service broadcasting serve the public? The future of television in the changing media landscape
M. van Dijk - R. Nahuis - D. Waagmeester

The media landscape is subject to substantial technological change. In this Discussion Paper, we analyse how technological trends affect the economic rationale for PSB. After identifying the aims and nature of PSB, we derive eight possible market failures from the specific economic characteristics of information. The changing relevance of these market failures is subsequently discussed in the light of the technological changes. Based on this analysis, we argue that public service broadcasting (PSB) for the digital age should be light in the sense that it has a much smaller mandate. The main reason for this conclusion is that, due to technological developments, many market failures in the broadcasting industry are no longer relevant. The broadcasting market thus functions more and more like a normal market. This implies that the allocation tends to the efficient outcome, as long as consumer valuation is properly accounted for. This is not the case when there are externalities and possibly not when it comes to valuing quality. In the presence of these market failures, an efficient allocation is not warranted in the broadcasting industry. It is these remaining market failures that give a future PSB a right to exist.

(texte intégral du n° 43/2005)