CPB Document 2009
n° 197, décembre 2009
AIECE General Report Report submitted at the general meeting of 5-6 November 2009
SUYKER Wim, EBREGT Jos, KINGMA Douwe, VAN WELZENIS Gerard
The worst of the financial crisis is behind us. Nevertheless, the fall in global output in 2009 will be the largest of the post-war period. As a result, unemployment and government deficits are rising steeply this year, while inflation will be very low. Financial market support measures and expansionary macroeconomic policy have brought the steep output drop to an end and are leading to a tentative recovery of world output and world trade from the third quarter onwards. This upswing will continue next year, provided that the gradual return to normalcy now taking place in financial markets holds. The uncertainty that surrounds future international developments remains high.
n° 196, novembre 2009
Beoordeling 16 projecten in het kader van het Budget Nota Ruimte
VERRIPS Annemiek, HAMERS David, STOLWIJK Herman et al.
CPB Netherlands Bureau for Economic Policy Analysis and the Netherlands Environmental Assessment Agency have been requested by the government to assess a number of projects submitted for funding by a budget of 1 mld euros on Physical Planning. This publication presents the assessment of 16 projects on which the government has already made a decision. The central question in the assessment is whether the project is expected to contribute to social welfare. Three projects and one project part have received a (neutral) to positive evaluation, four projects a neutral one, one project has received a slightly negative assessment, five projects and one project part ended up with a negative assessment and two projects could not be evaluated on the basis of the information available. Given the short time span of the project, the analysis has the character of a quick scan.
n° 195, novembre 2009
Development and contribution of the effective marginal tax rate in 2001-2011 (only in Dutch)
GIELEN Miriam, LEVER Marcel, VAN OPSTAL Rocus
This document describes the development of the effective marginal tax rate on labour income in the Netherlands between 2001 and 2011 and analyzes the contribution of the various arrangements. The marginal tax rate describes which percentage of an increase in gross income does not result in a higher disposable income, but in higher taxes and lower allowances. The average marginal tax rate has increased from 45.6% in 2001 to 48.1% in 2007; thereafter it is expected to remain nearly stable and to come out at 47.4% in 2011. The increase of the marginal tax rate is mainly due to the higher tariff in the second bracket of the income tax and the growing importance of income dependent allowances. The distribution of the marginal tax rate is reasonably favourable from the perspective of enhancing labour supply. The effective marginal tax rate for entrants to the labour market and for secondary earners is much lower than for sole wage-earners and primary earners.
n° 194, novembre 2009
The contribution of trade policy to the openness of the Dutch economy
CREUSEN Harold, LEJOUR Arjan
The last four decades, Dutch exports and imports grew annually about 7.5%, while re-exports rocketed in the last two decades. Using a gravity approach this paper finds that the increase in trade is largely caused by income developments. Trade policy, consisting of reductions in import tariffs and other trade barriers and the creation of the EU internal market, also has a significant impact on trade growth, although much smaller. Without any liberalisation of trade policy since 1970 the ratio of trade (excluding re-exports) to GDP would have been about 8%- points lower. By estimating the trade enhancing-effect of trade policy on GDP we conclude that trade policy has contributed 6% to 8% to the growth of national income in Netherlands since the 1970s. Foreign Direct Investments (FDI) experienced a massive but erratic growth, mostly in the last two decades. Income developments could explain half of that growth; deregulations of national capital markets explain only a small part of FDI growth.
n° 193, novembre 2009
Maatschappelijke kosten en baten van verstedelijkingsvarianten en openbaarvervoerprojecten voor Almere
ZWANEVELD Peter, ROMIJN Gerbert, RENES Gusta, GEURS Karst
The cost-benefit analysis (CBA) of plans by the National Government surrounding Amsterdam-Almere-Markermeer (RAAM) evaluates different alternatives for the urban development of the city of Almere combined with investments in rail infrastructure. In a first step, the CBA compares the social returns on welfare of different alternatives for urban development in Almere in order to facilitate the so-called ‘Schaalsprong’ – the expansion of the city by 60 thousand homes. In terms of welfare, the westward-oriented development strategy ‘Waterstad’ scores considerably worse than the eastward-oriented strategy ‘Polderstad’ and the central strategy ‘Stad van Water en Groen’. In addition, it is associated with higher financial and legal risks. All considered public transport projects in the analysis are unprofitable. Positive synergy effects arise between the urbanisation strategies and specific public transport projects, but they are not very large compared to the costs of investments.
n° 192, novembre 2009
Special care for children with learning and/or behavioural difficulties
VAN DER WIEL Henry, MINNE Bert, WEBBINK Dinand
The expenditures for primary education in the Netherlands have gone up considerably over the years due to special care of children with learning and behavioural difficulties and children with learning disabilities. The number of these 'disabled' children increased from 80 000 in 1997 to more than 100 000 in 2007. This report analyses the reasons for this increase taking into account the impact of related policies. The increase in expenditures for primary education is closely related to the shift to more expensive forms of special education and the rise in the number of 'disabled' children with a voucher for attending the regular primary school (in Dutch: rugzakleerlingen). This increase is probably due to new policy measures that have attracted new 'disabled' children without binding financial constraints. Finally, information about the effectiveness of policies for 'disabled' children in terms of prospects or net social returns is hardly available.
n° 191, septembre 2009
Economic consequences of sharpening the regulation of easening Sunday shopping
VAN DE Wiel Henri, MINNE Bert
The Dutch government wants to sharpen the regulation of easing Sunday shopping restrictions related to the tourism criterion. This report analyses the consequences of this sharpening for the Dutch economy. For the whole economy, the economic impact of less Sunday opening hours on employment and sales is limited in the long run, but for individual shops it should not be sniffed at. In the short run, there are one-off costs to find new jobs for shop workers loosing their jobs due to less Sunday opening hours. There can also be differences in consequences within the retail trade and between municipalities. Moreover, welfare will diminish for some consumers, whereas it will increase for others.
n° 190, août 2009
Market performance and distributional effects on renewable energy markets
KOUTSTAAL Paul, BIJLSMA Michiel, ZWART Gijsbert, VAN TILBURG Xander, ÖZDEMIR Özge
A renewable obligation combined with tradable renewable energy certificates is a market-based instrument used to promote the production of electricity from renewable energy sources. A renewable obligation is an alternative for subsidies. A renewable obligation will only be an efficient instrument if certificate markets are efficient. This requires that there is no market power and no anti-competitive behaviour on the certificate market. If the current developments in Dutch renewable energy production continue, market power on a future renewable certificate market in the Netherlands will probably not be an issue, even if the RO should only rest on the retail market instead of on the whole electricity market.
A renewable obligation will raise the retail price for consumers, thereby reducing consumer surplus. Simulations show that the retail electricity price increases with € 30 per MWh to a level of € 104 per MWh in case of a 30% renewable target. Consumer surplus is reduced with 19% compared to the baseline scenario. In contrast, a subsidy such as the Dutch SDE which is financed from the state budget has the effect to (slightly) lower the retail electricity price, thereby increasing consumer surplus. It should however be realised that the costs of the subsidy will indirectly affect electricity consumers through their tax payments.
n° 188, août 2009
Beoordeling CPB FES-ronde Selectieve Continuering
VERRIPS Annemiek, OKKER Ruud
Het CPB is door het kabinet gevraagd 14 projecten te toetsen in het kader van de zogenoemde 'selectieve continuering' van projecten. De projecten zijn ingediend in het kader van een door het kabinet vastgesteld budget vanuit het FES (Fonds Economische Structuurversterking) van 500 mln euro. Deze notitie bevat een globale toetsing van de projecten. Uitgangspunt voor een beoordeling vormt de vraag of een project naar verwachting bijdraagt aan de maatschappelijke welvaart (in brede zin). Doel van de beoordeling is om informatie aan te dragen ten behoeve van een afweging door het Kabinet. Twee projecten en één projectonderdeel zijn als gunstig (mits) beoordeeld. Het betreft hier condities die relatief eenvoudig uitvoerbaar lijken. Vijf projecten en één projectonderdeel zijn als gemengd beoordeeld. Vijf projecten en twee projectonderdelen hebben een ongunstig oordeel gekregen. Het beeld in het kennis- en innovatiedeel is iets gunstiger dan in het onderwijsdomein. Gezien de beperkte tijdspanne van het project, heeft de analyse het karakter van een quick scan.
n° 187, juillet 2009
What is known about the effects of the characteristics of education systems? A literary study (Only in Dutch)
WEBBINK Dinand, DE WOLF Inge, WOESSMANN Ludger, VAN ELK Roel, VAN DER STEEG Marc
This study reviews the empirical evidence on the effects of characteristics of educational systems on public interests, like the quality of education, efficiency and accessibility. First, a selection of relevant characteristics has been made by comparing the Dutch system with several other countries. Next, for each characteristic a review has been made of the available evidence. The review focuses on the results from the most credible studies, especially studies that (quasi-) use experimental designs. In addition, recent cross-country studies that relate characteristics of educational systems with student achievements in international tests are also used. Finally, the main findings have been translated in a research agenda.
n° 186, juin 2009
An analysis of individual accounts for the unemployment risk in the Netherlands
JONGEN Egbert
Individual savings accounts are a recurring reform option for unemployment insurance. Under a system of individual accounts, individuals are forced to save part of their income into an individual account out of which benefits are paid during unemployment. Individuals are allowed to have a negative balance and still have the same access to income during unemployment. When negative balances at the end of the working life are nullified, some risk pooling remains. To study the impact of introducing individual accounts for unemployment, we construct a simulation model, which we calibrate for the Netherlands. The simulations results suggest that an optimal combination of the forced savings rate and the replacement rate can slightly increase welfare, when unemployed are credit constrained. When credit constraints are not that important for unemployment, individual accounts are less interesting for unemployment, but then current UI replacement rates seem rather generous. Empirical studies suggest that credit constraints are not that important for unemployment.
This document is a companion paper to CPB Document 168,(only in Dutch) by Egbert Jongen and Annemiek van Vuren. It gives a detailed analysis of the model, the calibration and the simulation results.
n° 185, mai 2009
Beoordeling projecten ICRE 2007/2008
VAN 'T RIET Maarten, VERRIPS Annemiek, ZWANEVELD Peter
CPB Netherlands Bureau for Economic Policy Analysis has been requested by the government to assess a number of projects submitted for funding by a budget called ‘FES’. This publication presents the assessment of 10 projects. The central question in the assessment is whether the project is expected to contribute to social welfare. The goal of the assessment is to provide information to the Dutch cabinet for its final selection process. Three projects have received a positive evaluation, three a neutral (to positive) one, and five projects a negative assessment (one project was assessed as two different parts). Given the short time span, the analysis has the character of a quick scan.
n° 184, mai 2009
Het zwarte gat: reëel probleem of fata morgana
MELLENS Martin, NOORDMAN Herman
The Dutch balance of payments has shown a surplus for many years now. Theoretically, this should have led to substantial positive net external wealth. Statistics tell a different story though. Dutch savings seem to disappear in what was labelled the ‘black hole’ by Arnold Kusters in the nineties. Large sums of money are involved. The increase in net external wealth between 1990 and 2009 is 200 billion euro lower than you would have expected by looking at accumulated Dutch savings. This document presents the results of recent research, particularly that of Wim Boonstra. The causes and economic consequences of the black hole are discussed. Prices of assets and liabilities are important determinants of ‘the black hole’. They may show large variation over time and their impact on the real economy is hard to quantify. For these reasons, the usefulness of the concept for economic policy analysis seems to be limited so far.
n° 183, avril 2009
Beoordeling projecten innovatie en onderwijs 2008: Analyse ten behoeve van toewijzing FES-gelden
HUIZINGA Free, VERRIPS Annemiek
CPB Netherlands Bureau for Economic Policy Analysis has been requested by the government to assess a number of projects submitted for funding by an innovation budget of 279 mln euros called ‘FES’. This publication presents the assessment of 23 projects in the areas of research, innovation and education. Eight of these projects were assessed by ECORYS under the responsibility of CPB. The central question in the assessment is whether the project is expected to contribute to social welfare. The goal of the assessment is to provide information to the Dutch cabinet for its final selection process. Five projects have received a positive evaluation, seven a neutral (to positive) one, and eleven projects a negative assessment. The projects in the area of ‘Research infrastructure’ score best on average. Only one of these projects is expected to reduce overall welfare. The picture in the area of education (tacking the shortage of teachers) is the most negative. All five projects have received a negative evaluation. Given the short time span of the project, the analysis has the character of a quick scan.
n° 182, mars 2009
The effect of early tracking on participation in higher education
VAN ELK Roel, VAN DER STEEG Marc, WEBBINK Dinand
This paper examines the impact of early tracking on enrollment in and completion of higher education. We compare pupils that are directly tracked in lower general secondary education (‘mavo’) to pupils that postpone their choice of education level by entering secondary education in a combined first-grade class. Potential self-selection problems are addressed in two ways. First of all, using micro data allows us to control for a large set of individual background characteristics including tests of cognitive ability. Second, we exploit differences in regional supply of particular school types. The estimates show that early tracking has a detrimental effect on enrollment in and completion of higher education for pupils who leave primary education with a mavo advice. In addition, we find no evidence that pupils who leave primary education with a higher general secondary education (‘havo’) advice would be negatively affected by being in a comprehensive class together with the mavo advice pupils. Enrollment in and completion of higher education can be increased by stimulating participation in combined first-grade classes that keep pupils with a mavo or havo advice together for an additional one or two years.
n° 181, mars 2009
Competition, innovation and intellectual property rights in software markets
DE BIJL Paul, BIJLSMA Michie, KOCSIS Viktoria
This study analyzes under which circumstances it may be desirable for the government to stimulate open source software as a response to market failures in software markets. To consider whether policy intervention can increase dynamic efficiency, we discuss the differences between proprietary software and open source software with respect to the incentives to innovate and market failures that may occur. The document proposes guidelines to determine which types of policy intervention may be suitable. Our most important finding is that directly stimulating open source software, e.g. by acting as a lead customer, can improve dynamic efficiency if (i) there is a serious customer lock-in problem, while (ii) to develop the software, there is no need to purchase specific, complementary inputs at a substantial cost, and (iii) follow-on innovations are socially valuable but there are impediments to contractual agreements between developers that aim at realizing such innovations.
n° 180, février 2009
Relation entry, exit and productivity. An overview of recent theoretical and empirical literature
KOCSIS Viktoria, LUKACH Ruslan, MINNE Bert, SHESTALOVA Victoria, ZUBANOV Nick, VAN DER WIEL Henry
This document provides a review of recent theoretical and empirical literature on the relationship between entry, exit and productivity. Decomposition methods show that entry and exit considerably contribute to productivity growth, but are unable to shed any light on the ultimate sources of productivity growth. However, the theories discussed do provide options for effective policy instruments. We argue that productivity or welfare should be the aim of policy and not the number of entrants, the intensity of competition or the amount of innovation expenditures. Taking a welfare approach, we address market failures with respect to entry. The most eminent market failure is market power of dominant incumbents. Lowering institutional entry barriers economy-wide is a promising policy option for further consideration. Whether such a policy measure actually improves social welfare depends also on the extent of other failures. Therefore, an ex ante cost-benefit analysis needs to precede intervention.
n° 179, février 2009
Analyzing labour supply of elderly people: A life-cycle approach
VAN ERP Frank, DE HEK Paul
In light of the ageing of the Dutch society, policy measures aim at increasing the participation rate of elderly workers, particularly in the age-group between 55 and 64. This paper develops a stylized numerical simulation model describing consumption, savings and labour supply behaviour over the life cycle to analyze the labour-market implications of such proposals. For example, we simulate a shift in the (normal) retirement age from 65 to 67, the elimination of the Social Security premium exemption after age 65, and a premium on first-tier pension benefits if the commencement date of these benefits is postponed. Each of these reforms affect the economic outcomes via wealth effects, income effects and inter- and intratemporal substitution effects. The stylized model offers a profound theoretical underpinning which helps us to understand these policy effects over the entire life cycle of individuals. However, the numerical outcomes should be taken with some caution as the model ignores insights of behavioural economics (such as ‘framing effects’).
n° 178, février 2009
Accuracy of short-term forecasts 1971-2007 (only in Dutch)
KRANENDONK Henk, DE JONG Jasper, VERBRUGGEN Johan
This report analyses the accuracy of short-term economic forecasts by the CPB. The years 1971-2007 are taken into account. The goals of this study are twofold. First of all, knowledge of the quality of CPB predictions and of sources of prediction errors may help to improve future forecasts. Secondly, we like to illustrate the uncertainties which necessarily surround economic projections. A number of economic variables are being analyzed, but the main focus is on GDP growth. This enables us to compare CPB forecasts to those performed by other institutions, both national and international ones. Since all forecasters make sizeable prediction errors, an important lesson from this study is that making accurate forecasts is a difficult task. Nevertheless, this also indicates that there is room for improvement.
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