Wiley (Books and Journals)
- The Scandinavian Journal of Economics From No. 99-1, March 1997 to No. 122-4, October 2020 Wiley, 2021
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A Common Base Answer to the Question “Which Country Is Most Redistributive?”*
We believe that what most authors have in mind when referring to the “most redistributive country” is a tax and transfer schedule that is most redistributive across all pre‐tax and transfer income distributions. In order to measure each country's tax and transfer redistribution according to the same baseline, we suggest using the transplant‐and‐compare method of Dardanoni and Lambert (2002,...
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Worker–Plant Matching and Ownership Change*
Is a change in ownership an opportunity for the new owners to make systematic changes to the workforce of the acquired plant? Using matched employer–employee data, we document changes to the workforce along observable and unobservable dimensions of worker quality around the time of ownership change. We observe above‐average separations of workers around domestic acquisitions. This is associated...
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The Impact of the London Bombings on the Well‐Being of Adolescent Muslims*
We exploit the timing of the London bombings of July 2005, coinciding with a large‐scale national survey of adolescents, to identify the impact of extremist Islamic terror attacks on the well‐being of adolescent Muslims. Our analysis reveals interesting gender differences. We find evidence of a decline in the happiness of Muslim teenage girls after the bombings, which is also accompanied by a...
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Demographic Transition and Fertility Rebound in Economic Development*
Recent evidence on the “fertility rebound” offers credence to the idea that, from the onset of early industrialization to the present day, the dynamics of fertility can be represented by an N‐shaped curve. An overlapping generations model with parental investment in human capital can account for these observed movements in fertility rates during the different stages of demographic change. A...
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Monetary Policy, Financial Frictions, and Heterogeneous R&D Firms in an Endogenous Growth Model*
Motivated by empirical facts, I construct an endogenous growth model in which heterogeneous research and development (R&D) firms are financially constrained and use cash to finance R&D investments. I also examine the optimal monetary policy. The effects of financial constraint crucially depend on whether R&D firms are homogeneous or heterogeneous regarding R&D productivity. If R&D firms are...
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Entrepreneurial Skills, Technological Progress, and Firm Growth*
Using cross‐country establishment‐level data, I show that employment profiles over a firm's life cycle are flatter in fast‐growing economies than in slow‐growing economies. The difference in average employment over the firm's life cycle increases with plant age. I propose a frictionless overlapping‐generations model with exogenous technological progress. Firm productivity also depends on...
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A Simple Model of Corporate Bailouts in a Globalized Economy*
In this paper, we explore how globalization influences the decision of governments to rescue inefficient domestic firms when bailouts affect firms’ markup. We develop a model of international trade in which immobile domestic‐owned enterprises (DOEs) compete with foreign‐owned enterprises (FOEs) in an oligopolistic market. The decision to bail out DOEs leads to lower corporate tax revenues if FOEs
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Making Partner*
Associates need reputation and financial resources to make partner at law firms, consultancies, and venture capital organizations. We provide a theory for how this prospect influences the business risk strategy they pursue and their execution effort. In our model, business risk affects how reputation evolves and the benchmark reputation for making partner through the impact of execution effort on
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Offshoring Brains? Evidence on the Complementarity between Manufacturing and R&D in Danish Firms*
By employing a firm‐level linked employer–employee dataset for Danish manufacturing firms, this paper investigates whether offshoring is complementary to, or a substitute for, research and development (R&D) activities. Offshoring is instrumented with world export supply to circumvent the inherent endogenous nature of the firm's decision to offshore. Results suggest that firms with increased...
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Distorted Input Ratios in Vertical Relationships*
A project leader sources an input from a supporter and combines it with an input produced in‐house. The leader has private information about the project's cost environment. We show that if the leader can commit to the in‐house input level, the input ratio is distorted upward when the in‐house input is not too costly – the in‐house input is produced in excess and thus partly wasted. By contrast,...
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Prospect Theory, Fairness, and the Escalation of Conflict at a Negotiation Impasse*
We study a bilateral negotiation set‐up where, at a bargaining impasse, the disadvantaged party chooses whether to escalate the conflict or not. Escalation is costly for both parties, and it results in a random draw of the winner of the escalated conflict. We derive the behavioral predictions of a simple social utility function, which is convex in disadvantageous inequality, thus connecting the...
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Wage Cyclicality and Composition Bias in the Norwegian Economy*
Using employer–employee register data, I estimate the real wage semi‐elasticity of aggregate unemployment for the years 1997–2014 in the Norwegian private sector. An increase of 1 percentage point in aggregate unemployment is associated with an average decrease of 2 percent in (total) daily wages. Although Norway has influential labor market institutions, wages in the Norwegian private sector are
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Inertia Risk: Improving Economic Models of Catastrophes*
We model endogenous catastrophic risk in a new way. We call it “inertia risk”, which accounts for delays between physical variables and the hazard rate – a characteristic often observed in reality. The added realism significantly affects optimal policies relative to the standard model of catastrophic risk. The probability of a catastrophe occurring at some point in time can span the entire...
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Recessions and Potential Output: Disentangling Measurement Errors, Supply Shocks, and Hysteresis Effects*
This paper investigates expert revisions of potential output (PO) estimates following recessions. Using data from the Organisation for Economic Co‐operation and Development (OECD), we show that downward revisions are substantial, permanent, and mostly driven by supply shocks. In contrast, PO estimates do not significantly react to demand shocks. Revisions are also partly caused by mismeasurement...
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Dynamic Tax Evasion with Habit Formation in Consumption*
We model the optimal intertemporal decision of an agent who chooses tax evasion and consumption, over an infinite lifetime horizon, where consumption is driven by habits. We find the following: (i) tax evaders reduce consumption in the early stages of habit accumulation and increase it over time; (ii) habit formation has a dampening effect on tax evasion; (iii) neglecting tax evasion can lead to...
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A Head‐to‐Head Comparison of Augmented Wealth in Germany and the United States*
We examine the composition of augmented household wealth (i.e., the sum of net worth and pension wealth) in the United States and Germany. Pension wealth makes up a considerable portion of household wealth, of about 48 percent in the United States and 61 percent in Germany. When pension wealth is included in household wealth, the Gini coefficient falls from 0.889 to 0.700 in the United States,...
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International Trade and Income Inequality*
We propose a simple theory that shows a mechanism through which international trade entails wage and job polarization. We consider two countries in which individuals with different abilities work either as knowledge workers, who develop differentiated products, or as production workers, who engage in production. In equilibrium, ex ante symmetric firms attract knowledge workers with different...
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Scheduled to Gain: Short‐ and Longer‐Run Educational Effects of Examination Scheduling*
In this paper, I present findings concerning the effect of examination scheduling on high‐stakes exam scores and longer‐run outcomes. I show that random variations in examination schedules, which increase the time students have to prepare, have positive effects on exam scores. The effect is highly concave, and stronger for females and in quantitative subjects. I trace the effects of preparation...
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Price Dispersion and the Role of Stores*
In this paper, we study price dispersion in the Norwegian retail market for 766 products across 4,297 stores over 60 months. Price dispersion for homogeneous products is significant and persistent, with a coefficient of variation of 37 percent for the median product. Price dispersion differs between product categories and over time. Store heterogeneity accounts for 30 percent of the observed...
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Innovation, R&D Spillovers, and the Variety and Concentration of the Local Industry Structure*
This paper presents a Cournot oligopoly model with R&D spillovers both within and across industries. The aim is to provide a theoretical foundation for the main hypotheses regarding the effect of the local industry structure on innovation and output. Depending on the spillover rates and the degree of product differentiation between the industries, the firms respond differently to changes in...
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Banerjee, Duflo, Kremer, and the Rise of Modern Development Economics*
In 2019, Abhijit Banerjee, Esther Duflo, and Michael Kremer received the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. These three scholars were recognized “for their experimental approach to alleviating global poverty”. This paper reviews the contributions of these three scholars in the field of development economics, to put this contribution in perspective. I highlight
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Conscription and the Returns to Education: Evidence from a Regression Discontinuity*
In 1997, the French government put into effect a law that permanently exempted young French men born after 1 January 1979 from mandatory military service. This paper uses a regression discontinuity design to identify the effect of peacetime conscription policies on education and labor market outcomes. Results indicate that conscription eligibility induces a significant increase in years of...
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Optimal Incentives on Multiple Prosocial Activities when Reputation Matters*
In this paper, we present a signaling model in which individuals engage in socially beneficial but costly activities in order to convey information about their willingness to cooperate with other agents. When several activities are available, the inclusion of monetary compensations in any one of them affects the relative costs of undertaking each activity and, therefore, their informative value...
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Why Unions Reduce Wage Inequality: A Theory of Domino Effects*
Numerous empirical studies show that unions reduce wage differences. I demonstrate that their motive might be a mix of fairness and strategy, maximizing the use of union bargaining power in the presence of efficiency wages. Unions can push primarily for raising the lowest wages, and still not sacrifice higher wages much, if the employers themselves increase higher wages to protect efficiency‐enhan
- The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 2019
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Police‐Monitored Cameras and Crime*
We study the effects of police monitoring on crime. We exploit detailed information on the location and date of installation of police‐monitored surveillance cameras, coupled with data at the street‐segment level on all reported crimes in the city of Montevideo, Uruguay. We find that the introduction of police‐monitored surveillance cameras reduces crime by about 20 percent in monitored areas...
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An Empirical Assessment of the Swedish Bullionist Controversy*
In the 18th century, a fierce political debate broke out in Sweden about the causes of an extraordinary depreciation of the currency. More specifically, the deteriorating value of the Swedish currency was blamed arbitrarily on monetary causes (e.g., the overissuing of banknotes) and on non‐monetary causes (such as balance‐of‐payments deficits). This paper provides a comprehensive empirical...
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Understanding the Determination of Severance Pay: Mandates, Bargaining, and Unions*
A substantial share of severance payments derives from private contracts or collective agreements. In this paper, we study the determination of these payments. We analyze joint bargaining over wages and severance payments in a search‐and‐matching model with risk‐averse workers. Individual bargaining results in levels of severance pay that provide full insurance, but also depend on unemployment...
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Assigning Refugees to Landlords in Sweden: Efficient, Stable, and Maximum Matchings*
In this paper, we investigate the problem of finding housing for refugees once they have been granted asylum. In particular, we demonstrate that market design can play an important role in a partial solution to the problem. More specifically, we investigate a specific matching system, and we propose an easy‐to‐implement mechanism that finds an efficient, stable, and maximum matching. Such a...