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  • Social security pension and the effect on household saving

    In this paper, we examine the substitution between pension wealth and household saving. To identify the effect of reductions in social security pension wealth on household saving, we utilize variations in changes in social security pension wealth induced by Norway's 2011 reform across different cohorts, time periods, and sectors. Our study focuses on the saving behaviors of individuals between the ages of 57 and 61, and we find that the annual saving rate increased by around 1.4 percentage points after the reform. When considering the overall life‐cycle changes in household saving, this corresponds to a crowd‐out effect of about 50 percent of the total loss in pension wealth.

  • Nationalistic bias in collusion prosecution: the case for international antitrust agreements

    We study the incentives of competition authorities to prosecute collusive practices of domestic and foreign firms in a multimarket contact model between two firms operating in two countries. In equilibrium, the country of origin of the firms might prefer to delay prosecution to protect profits in foreign markets. This strategic delay is valuable because prosecution in the country of origin of the firms activates an information spillover that triggers prosecution in the foreign country. Prosecution delays, however, are suboptimal under global welfare. With multiple industries, both countries can be better off under integration or signing an international antitrust agreement.

  • Coping with job loss: evidence from military base closures

    We examine how workers adjust in response to an unexpected job loss. Using the closure of military bases in Sweden, we find that displaced workers experience permanent income losses and immediately adjust along two main channels: regional and sector mobility. Displaced military workers are more likely to move to another municipality, start commuting, and change sectors. We also find that workers with mobility restrictions are less likely to change regions and they exhibit lower earnings in the longer run, a result that might help to explain some of the permanent income losses found in the literature.

  • The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 2023
  • Network effect and international currency

    The network effect is an important factor for the inertia and path dependence in the international monetary system. In this paper, we explore its influence, both theoretically and empirically: (a) by extending the standard monetary search model to a three‐country three‐currency model with multiple transitions to clarify the network effect on currency choices; (b) by showing empirically that the network effect is positive, statistically significant, and quantitatively comparable with other factors, such as trade share. The empirical results hold both for major international currencies and emerging currencies, such as RMB, and for various estimation specifications and subsamples.

  • How the other half works: Claudia Goldin's contributions to our understanding of women's labour market outcomes

    The Royal Swedish Academy of Sciences awarded the 2023 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Claudia Goldin “for having advanced our understanding of women's labour market outcomes”. This paper surveys Goldin's contributions, analysing women's labour force participation from the late 1700s through to the present. To document women's participation in the workforce, Goldin uncovered rich data from varied sources, from government reports and city directories to health surveys and university registration cards. She combined these data with economic theory to identify the factors affecting women's employment and to explore how we might achieve gender equity today. Her work has had an immense influence on how we understand the labour market, household decision‐making, and gender inequality.

  • Earnings, labor market dynamics, and inequality in Sweden

    In this paper, we develop a comprehensive model of earnings and labor market dynamics, where employment and job change are endogenous. The model is estimated by applying the method of indirect inference on Swedish register data, and then used to carry out some policy experiments. There are three key conclusions from these experiments. First, employment shocks early in life can, to a larger extent, be mitigated before retirement compared with employment shocks occurring later. Second, we find that idiosyncratic productivity shocks, unobserved heterogeneity, and education contribute substantially to life‐cycle earnings inequality. Finally, we find that transitory shocks to employment risk have negative effects on earnings and employment in the short run but may increase labor market fluidity in the medium run.

  • Will the centralization of carbon pricing revenue in the European Union lead to laxer climate policy?

    We analyze the economic impact of using carbon pricing revenue to fund the European Union (EU) budget. Such a reform would redistribute from countries with above‐average carbon‐intensive production to less‐carbon‐intensive countries. Once the reform is implemented, the low‐carbon countries will prefer a lower carbon price (i.e., laxer climate policy at the EU level) than before the reform, and vice versa. As a result, EU climate policy becomes less ambitious and less disputed, where quantitative impacts presumably remain small. Weaker incentives for national governments to enforce emission taxes after revenue centralization might also contribute to higher emissions.

  • Inequality in Russia over time and over the life cycle

    Using Russian longitudinal data for 1994–2018, we document a secular decline in consumption and income inequality. Although within‐cohort inequality is also declining, the life‐cycle inequality profiles of income and consumption are surprisingly flat. A calibrated life‐cycle model with incomplete markets, high initial variance of the persistent income component, and moderately persistent income shocks is consistent with nearly flat life‐cycle inequality profiles and the puzzlingly large insurance role of assets found in the Russian data. This is in contrast to the standard calibrations that fail to match the life‐cycle inequality profiles and the panel‐data evidence on consumption insurance.

  • Individual credit market experience and beliefs about bank lending policy: evidence from a firm survey

    Using the Austrian Business Survey between 2011 and 2016, we study how firms' individual credit market experiences influence their beliefs about the bank lending policy. Firms that have recently experienced a loan rejection are more likely to believe that the lending policy is restrictive. We see similar effects for firms that were granted loans, but with conditions worse than anticipated. Exploiting the panel structure shows that firms without recent credit market experience are less likely to change their beliefs, which converge towards the middle category. Our findings are in line with theories of rational inattention and with asymmetric experience effects.

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