The Scandinavian Journal of Economics

Publisher:: Wiley
Publication date:: 2021-02-01

ISBN:: 0347-0520

Issue Number

Latest documents

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, Journal of Public Economics 86, 99–122) to establish a common base. The redistributive effects of countries’ tax and transfer schedules are illustrated by employing microdata on eight countries from the Luxembourg Income Study (LIS). Of these eight countries, Finland is found to be the most redistributive country, according to the common base method.
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 with a decline in unobserved worker quality in the plant. Foreign acquisitions are not associated with above‐average worker turnover; instead, new foreign owners share rents with the high‐skilled workers who are already in the plant before the acquisition.
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 rise in expectations of facing discrimination in the labour market. These findings are robust to several falsification tests. However, we fail to uncover compelling evidence of any impact of the bombings on Muslim teenage boys.
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 demographic transition with declining fertility emerges at the intermediate stage, when parents engage on a child quantity–quality trade‐off. At later stages, however, the process of economic growth generates sufficient resources so that households can rear more children while still providing the desirable amount of education investment per child.
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 homogeneous, then the zero nominal interest rate (i.e., the Friedman rule) is always optimal under severe financial constraint. Heterogeneity in R&D productivity leads to the opposite result. With heterogeneity, severe financial constraint makes the strictly positive nominal interest rate welfare‐improving under a plausible condition.
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 entrepreneurs’ skills. Entrepreneurs can increase their skills over their life cycle, but the growth of the vintage component of younger cohorts’ skills is higher in fast‐growing economies than in slow‐growing economies. This model is able to explain most of the differences observed in the sample between fast‐growing and slow‐growing economies.
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 are immobile, whereas tax revenues might increase if FOEs are mobile. Interestingly, the mobility of FOEs makes governments more prone to rescuing inefficient domestic firms because tax competition reduces the opportunity cost of a bailout policy in terms of public good provision.
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 the financial resources accumulated. We show that when business risk is observable, associates with good reputation take on high business risk, as opposed to low business risk, in order to protect their reputation. We also show that opening partner positions decreases the effort incentives of the associates with the best reputation. Finally, we conjecture that wage dispersion at the associate level should be higher when business risk is unobservable.
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 offshoring do in fact tend to engage in further R&D activities at home. Moreover, they also tend to reallocate R&D resources toward product R&D, possibly at the expense of process R&D.
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, without the leader's commitment to the in‐house input level, the input ratio is distorted downward when the in‐house input is sufficiently costly – the outsourced input is produced in excess and thus partly wasted.