Utilities Deprivation Dynamics and Energy Sector Reforms in Europe

In the late 1990s many European countries started comprehensive restructuring of their energy industries, the typical ingredients of the reforms are full or partial privatization, vertical disintegration, liberalization. In this paper we focus on the way in which energy sector reforms affect social affordability. The aim of this paper is to analyze the effects of energy reforms on the household probability of experiencing utilities deprivation (that is, to be unable to pay scheduled utility bills) in seven European Countries: Denmark, Belgium, France, Ireland, Italy, Netherlands and Spain. The period of analysis is 1994-2001. We also explore the dynamics of utilities deprivations focusing on the causes behind deprivation persistence. We differentiate between household heterogeneity and true state dependence. Then, controlling for observed and unobserved heterogeneity, we use the magnitude of average partial effects to investigate the relevance of any state dependence and the impact of energy sector reforms on the probability of experiencing utilities deprivations and on state dependence. We find evidence that vertical disintegration in the energy sector and privatization increase the household probability of experiencing utilities deprivation. Moreover, vertical disintegration also increases the household persistence in the status of deprivation._x000d_ _x000d_ Keywords: deprivation, utilities, privatization, liberalization, vertical disintegration, true state persistence_x000d_ _x000d_ JEL Classification: L97, I31, C23, C25_x000d_ _x000d_ Acknowledgments: The research has been supported by the EU, 6th Framework Programme, UPP project: ‘Understanding Privatization Policy: Political Economy and Welfare Effects’. We are grateful to Carlo Fiorio for helpful comments on a previous drafts

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