Working Papers 2014

All new research is first presented in a Working Paper (WP) where the target audience is primarily other researchers. All WP’s from recent years are written in English. Since 2006, a Swedish summary has also been included. A WP usually contains research that has progressed enough to be ready to be submitted to a scientific journal for review and potential publication.


1051. Sickness Absence and Local Benefit Cultures

Assar Lindbeck, Mårten Palme and Mats Persson

In many countries, sickness absence financed by generous insurance benefits is an important concern in the policy debate. There are strong variations in absence behavior among local geographical areas. Such variations are difficult to explain in terms of…


1050. Does College Education Reduce Small Business Failure?

Andrea Asoni and Tino Sanandaji

We estimate the effect of college education on business survival using the NLSY79. The endogeneity of both education and business ownership is accounted for by a competing risks duration model augmented with a college selection equation.…


1049. Superentrepreneurship and Global Imbalances: Closing Europe's Gap to Other Industrialized Regions

Magnus Henrekson and Tino Sanandaji

The overwhelming majority of self-employed individuals are not entrepreneurial in the Schumpeterian sense. To unmistakably identify Schumpeterian entrepreneurs, wefocus on self-made billionaires (in USD) from the Forbes Magazine list who became wealthy by…


1048. The Silver Lining of Price Spikes: How Electricity Price Spikes Can Help Overcome the Energy Efficiency Gap

Johannes Mauritzen

Studies have shown that many consumers and businesses fail to invest in energy efficiency improvements despite seemingly ample financial incentives to do so – the so called energy efficiency gap or paradox. Attempts to explain this gap often focus…


1047. Retail Productivity: Investigating the Influence of Market Size and Regional Hierarchy

Özge Öner

This paper investigates the determinants of the productivity of independent retail stores in Sweden by focusing on the impact of market size and regional hierarchy while controlling for several store and employee characteristics over time. The analysis…


1046. Social Capital and Health: Evidence That Ancestral Trust Promotes Health among Children of Immigrants

Martin Ljunge

This paper presents evidence that generalized trust promotes health. Children of immigrants in a broad set of European countries with ancestry from across the world are studied. Individuals are examined within country of residence using variation in trust…


1045. Legitimacy and the Cost of Government

Niclas Berggren, Christian Bjørnskov and David Lipka

While previous research documents a negative relationship between government size and economic growth, suggesting an economic cost of big government, a given government size generally affects growth differently in different countries. As a possible…


1044. Evasive Entrepreneurship

Niklas Elert and Magnus Henrekson

We argue that evasive entrepreneurship is an important, although underrated, source of innovation, and provide the first systematic discussion of the concept. We define evasive entrepreneurship as profit-driven business activity in the market aimed at…


1043. Gender Quotas and Women’s Political Leadership

Diana Z. O'Brien and Johanna Rickne

Though more than 100 countries have adopted gender quotas, the impacts of these reforms on women’s political leadership remain largely unknown. We exploit a quasi-experiment  – a zipper quota imposed by the Swedish Social Democratic…


1042. Richer (and Holier) Than Thou? The Effect of Relative Income Improvements on Demand for Redistribution

Mounir Karadja, Johanna Möllerström and David Seim

We study the extent to which people are misinformed about their relative position in the income distribution and the effects on preferences for redistribution of correcting faulty beliefs. We implement a tailor-made survey in Sweden and document that a…


1041. Foreign Direct Investment, Source Country Heterogeneity and Management Practices

Fredrik Heyman, Pehr-Johan Norbäck and Rickard Hammarberg

This paper examines whether and, if so, why source country heterogeneity exists in foreign direct investments. Using detailed data on all Swedish firms for the period from 1996 to 2009, we find statistical evidence that affiliate performance differs…


1040. Re-Coinage in Medieval Sweden

Roger Svensson

In medieval Europe, old coins were frequently declared invalid and exchanged for new ones at fixed rates and dates. Here, the question of whether and when such re-coinage was applied in medieval Sweden is analyzed against the historical record. A theory…


1039. Trust Us to Repay: Social Trust, Long-Term Interest Rates and Sovereign Credit Ratings

Andreas Bergh and Christian Bjørnskov

This paper asks whether the sensitivity of market long-term interest rates and credit ratings is associated with cross-country differences in informal institutions, measured by social trust. We note a number of theoretical mechanisms that could imply that…


1038. Initial Offer Precision and M&A Outcomes

Petri Hukkanen and Matti Keloharju

Building on recent research in social psychology, this paper analyzes the link between the precision of initial cash offers and M&A outcomes. About one-half of the offers are made at the precision of one or five dollars per share, and an additional…


1037. Pro-Competitive Rationing in Multi-Unit Auctions

Pär Holmberg

In multi-unit auctions, such as auctions of commodities and securities, and financial exchanges, it is necessary to specify rationing rules to break ties between multiple marginal bids. The standard approach in the literature and in practice is to ration…


1036. Explaining Cross-Country Differences in Labor Market Gaps between Immigrants and Natives in the OECD

Andreas Bergh

In most OECD-countries, immigrants have lower employment and higher unemployment than natives. This paper compares nine potential explanations of these gaps. Results are obtained for 21–28 countries using bivariate correlations, OLS-regressions and…


1035. Firm Productivity and Carbon Leakage: A Study of Swedish Manufacturing Firms

Shon Ferguson and Mark Sanctuary

This paper examines the intensive and extensive margins of carbon leakage. The analysis uses an increase in the Swedish electricity price to identify the impact on imports at the firm and product level. Our model of heterogenous firms predicts that higher…


1034. The Glass Ceiling in Politics: Formalization and Empirical Tests

Olle Folke and Johanna Rickne

There is a scarcity of women and minorities at the apex of political power. This paper formalizes the concept of the glass ceiling for political organizations and builds on previous research to suggest four testable criteria. A glass ceiling exists if…


1033. Inherited Wealth over the Path of Development: Sweden, 1810–2010

Henry Ohlsson, Jesper Roine and Daniel Waldenström

Inherited wealth has attracted much attention recently, much due to the research by Thomas Piketty (Piketty, 2011; 2014). The discussion has mainly revolved around a long-run contrast between Europe and the U.S., even though data on explicit historical…


1032. Inheritance Taxation in Sweden, 1885–2004: The Role of Ideology, Family Firms and Tax Avoidance

Magnus Henrekson and Daniel Waldenström

This paper studies the evolution of Swedish inheritance taxation since the late nineteenth century to its abolition in 2004. Our contribution is twofold. First, we compute the annual effective inheritance tax rates for different sizes of bequests, if…


1031. Effects of Payroll Tax Cuts for Young Workers

Per Skedinger

In response to high and enduring youth unemployment, large payroll tax cuts for young workers were implemented in two Swedish reforms in 2007 and 2009. This paper analyses the effects of the reforms on worker outcomes and firm performance in the retail…


1030. Sweden’s School Choice Reform and Equality of Opportunity

Karin Edmark, Markus Frölich and Verena Wondratschek

This study analyses whether the Swedish school choice reform, enacted in 1992, had different effects on students from different socio-economic backgrounds. We use detailed geographical data on students’ and schools’ locations to construct…


1029. Property Taxation, Bounded Rationality and House Prices

Mikael Elinder and Lovisa Persson

In 2008, the Swedish property tax was reformed and a cap on yearly tax liabilities was introduced. A large fraction of owner occupied houses was subject to a substantial decrease in the tax. When the reform was announced, most analysts projected –…


1028. Sensitivity to Shocks and Implicit Employment Protection in Family Firms

Carl Magnus Bjuggren

In this study I present empirical evidence that employment in family firms is less sensitive to performance and product market fluctuations, both at the industry and at the firm level. This supports the idea that family firms are able to offer their…


1027. Swedish Stock and Bond Returns, 1856–2012

Daniel Waldenström

This chapter presents historical evidence about Swedish stock prices, dividends, and yields on government fixed-interest securities. Monthly returns are presented since 1901 for stocks, since 1874 for government long-term bonds and since 1856 for…


1026. Global Engagement and the Occupational Structure of Firms

Carl Davidson, Fredrik Heyman, Steven Matusz, Fredrik Sjöholm and Susan Chun Zhu

Global engagement can impact firm organization and the occupations a firm needs. We examine the effect of globalization on occupational mix using Swedish data covering all firms and a sample of the labor force for 1997–2005. We find a robust…


1025. Employer Attitudes towards Refugee Immigrants

Per Lundborg and Per Skedinger

We present a large survey with responses from Swedish firms on their attitudes towards refugees, regarding hiring, job performance, wage setting and discrimination. Generally, firms report positive experiences of having refugees as employees, but we also…


1024. Are CEOs Born Leaders? Lessons from Traits of a Million Individuals*

Renée Adams, Matti Keloharju and Samuli Knüpfer

Our study combines a near-exhaustive sample of CEOs of Swedish companies with data on their cognitive and non-cognitive ability and height at age 18. Although CEOs, and large-company CEOs in particular, have better traits than the population on average,…


1023. The Effect of Elections on Economic Growth: Results from a Natural Experiment in Indonesia

Sara Moricz and Fredrik Sjöholm

Does democracy increase economic growth? Previous literature tends to find a positive effect but does also suffer from possible endogeneity problems: democratization is typically not random and might be affected by factors that also have an impact on…


1022. Family Ruptures and Intergenerational Transmission of Stress

Petra Persson and Maya Rossin-Slater

The high and rapidly increasing prevalence of mental illnesses underscores the importance of understanding their causal origins. This paper analyzes one factor at a critical stage of human development: exposure to maternal stress from family ruptures…


1021. Long-Run Trends in the Distribution of Income and Wealth

Jesper Roine and Daniel Waldenström

This paper reviews the long run developments in the distribution of personal income and wealth. It also discusses suggested explanations for the observed patterns. We try to answer questions such as: What do we know, and how do we know, about the…


1020. Local Competitiveness Fostered through Local Institutions for Entrepreneurship

Martin Andersson and Magnus Henrekson

We review and assess the role local institutional framework conditions play in fostering local entrepreneurship. The basic premise is that entrepreneurship is a central driver of economic renewal and change, and that institutions affect both the supply…


1019. An International Cohort Comparison of Size Effects on Job Growth

Michael Anyadike-Danes, Carl Magnus Bjuggren, Sandra Gottschalk, Werner Hölzl, Dan Johansson, Mika Maliranta and Anja Myrann

The contribution of different-sized businesses to job creation continues to attract policymakers’ attention, however, it has recently been recognized that conclusions about size were confounded with the effect of age. We probe the role of size,…


1018. Taxation of Real Estate in Sweden (1862–2013)

Mikael Stenkula

This paper examines the development and role of the real estate taxation in Sweden during the period between 1862 and 2010. Real estate has historically been taxed at both the local and state levels in Sweden. The importance of real estate taxation in…


1017. Minimum Wages and the Integration of Refugee Immigrants

Per Lundborg and Per Skedinger

This paper is the first to estimate the effects of minimum wages on the unemployment of refugee immigrants. The collectively agreed minimum wages raise both the incidence of unemployment and days in unemployment considerably for male refugees in Sweden;…


1016. Globalization and Child Health in Developing Countries: The Role of Democracy

Anna Welander, Carl Hampus Lyttkens and Therese Nilsson

Good health is crucial for human and economic development. In particular poor health in childhood seems to be of utmost concern since it causes irreversible damage and have implications later in life. Recent research suggests globalization is a strong…


1015. Strategic Withholding through Production Failures

Sara Fogelberg and Ewa Lazarczyk

Anecdotal evidence indicates that electricity producers use production failures to disguise strategic reductions of capacity in order to influence prices, but systematic evidence is lacking. We use a quasi-experimental set up and data from the Swedish…


1014. Luck, Choice and Responsibility: An Experimental Study of Fairness Views

Johanna Möllerström, Bjørn-Atle Reme and Erik Ø. Sørensen

We conduct a laboratory experiment where third-party spectators can re­distribute resources between two agents, thereby offsetting the conse­quences of controllable and uncontrollable luck. Some spectators go to the limits and equalize all or no…


1013. The Multi-Faceted Concept of Transparency

Jens Forssbæck and Lars Oxelheim

Transparency has become a catchword and in the economic-political debate it is often seen as a universal remedy for all sorts of problems. In this paper, we analyze and discuss the meaning and use of the concept of transparency in economic research. We…


1012. Sizing Up the Impact of Embassies on Exports

Shon Ferguson and Rikard Forslid

The purpose of this study is to test for the effects of trade promotion via the foreign service. We develop a Melitz-based model where firms are heterogeneous with respect to productivity and must pay a beachhead cost to enter a foreign market, which can…


1011. Health Responses to a Wealth Shock: Evidence from a Swedish Tax Reform

Oscar Erixson

This essay contributes in two ways to the literature on the effects of economic circumstances on health. First, it deals with reverse causality and omitted variable bias by exploiting exogenous variation in inherited wealth generated by the unexpected…


1010. Person-Organization Fit and Incentives:
A Causal Test

Ola Andersson, Marieke Huysentruyt, Topi Miettinen and Ute Stephan

We investigate the effects of organizational culture and personal value orientations on performance under individual and team contest incentives. We develop a model of regard for others and in-group favoritism predicting interaction effects between…


1009. Real-time versus Day-ahead Market Power in a Hydro-based Electricity Market

Thomas Tangerås and Johannes Mauritzen

We analyse in a theoretical framework the link between real-time and day-ahead market performance in a hydro-based and imperfectly competitive wholesale electricity market. Theoretical predictions of the model are tested on data from the Nordic power…


1008. The Bright but Right View? A New Type of Evidence on Entrepreneurial Optimism

Ola Bengtsson and Daniel Ekeblom

Existing empirical evidence suggests that entrepreneurs are optimists, a finding researchers often interpret as evidence of a behavioral bias in entrepreneurial decision-making. We revisit this claim by analyzing an unusually large survey dataset (180,814…


1007. Globalization and the Transmission of Social Values: The Case of Tolerance

Niclas Berggren and Therese Nilsson

Tolerance – respecting those who are different – is arguably of particular importance in an era of globalization, where a potential for economic, social and personal development is increasingly a function of interaction with others different…


1006. Estate Division: Equal Sharing as Choice, Social Norm, and Legal Requirement

Oscar Erixson and Henry Ohlsson

The objective of this essay is to study to what extent parents divide their estates unequally between their children and the determinants of this decision. We use a new dataset based on the estate reports for almost 70,000 Swedish widows, widowers,…


1005. International Network Competition

Thomas Tangerås and Joacim Tåg

We analyse network competition in a market with international calls. National regulatory agencies (NRAs) have incentives to set regulated termination rates above marginal cost to extract rent from international call termination. International network…


1004. Swedish Capital Income Taxation (1862–2013)

Gunnar Du Rietz, Dan Johansson and Mikael Stenkula

This paper describes the evolution of capital income taxation in Sweden between 1862 and 2013, including the taxation of corporate profits, dividends, capital gains, interest income, and wealth taxation. To illustrate this evolution, we present annual…


1003. Political Selection in China: the Complementary Roles of Connections and Performance

Ruixue Jia, Masayuki Kudamatsu and David Seim

Who becomes a top politician in China? We focus on provincial leaders ‒ a pool of candidates for top political office ‒ and examine how their chances of promotion depend on their performance in office and connections with top politicians. Our empirical…


1002. Preferential Voting, Accountability and Promotions into Political Power: Evidence from Sweden

Olle Folke, Torsten Persson and Johanna Rickne

Preferential voting has been introduced in a number of proportional election systems over the last 20 years, mainly as a means to increase the accountability of individual politicians. But most of these reforms have been criticized as blatant failures. In…


1001. Payroll Taxes and Youth Labor Demand

Johan Egebark and Niklas Kaunitz

In 2007, the Swedish employer-paid payroll tax was reduced substantially for young workers. We estimate the labor market response for different ages, and at different phases of the business cycle. The overall impact on employment and wages is relatively…


1000. Swedish Wealth Taxation (1911–2007)

Gunnar Du Rietz and Magnus Henrekson

We study the evolution of modern Swedish wealth taxation since its introduction in 1911 until it was abolished in 2007. A thorough description of the rules concerning valuation of assets, deductions/exemptions and tax schedules to characterize effective…


999. Entrepreneurship, Innovation and Human Flourishing

Magnus Henrekson

This essay uses Edmund Phelps’ new book Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change (Princeton University Press, 2013) as inspiration to discuss innovation and entrepreneurship. The book is laudable for its…

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

Events

Seminars organized by IFN

 

To present ongoing research informal brown-bag seminars are held on Mondays at 11:30 am. This is an opportunity for IFN researchers to test ideas and results.

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In addition, IFN organizes seminars open to the public. Topics for these are derived from the IFN research.

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