Working Papers 2015

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.


1102. Entry Regulations, Welfare and Determinants of Market Structure

Florin Maican and Matilda Orth

We use a dynamic oligopoly model of entry and exit with store-type differentiation to evaluate how entry regulations affect profitability, market structure and welfare. Based on unique data for all retail food stores in Sweden, we estimate…


1101. What Aspects of Society Affect the Quality of Life of a Minority? Global Evidence from the New Gay Happiness Index

Niclas Berggren, Christian Bjørnskov and Therese Nilsson

There is great variation in views on and treatment of minorities such as gay men across the world. We are the first to pinpoint what features of societies that are beneficial to gay men’s quality of life by making use of a unique new cross-country…


1100. Pay Schemes, Bargaining, and Competition for Talent

Assar Lindbeck and Jörgen Weibull

The paper provides a framework for analysis of remuneration to agents whose task is to make well-informed decisions on behalf of a principal, with managers in large corporations as the most prominent example. The principal and agent initially bargain…


1099. Electricity Markets: Designing Auctions Where Suppliers Have Uncertain Costs

Pär Holmberg and Frank A. Wolak

We analyze how market design in.uences the bidding behavior in multi-unit procurement auctions where suppliers have uncertain costs and are uncertain about the availability of production units, as in wholesale electricity markets. We .nd that the…


1098. Auction Performance on Wholesale Electricity Markets in the Presence of Transmission Constraints and Transmission Costs

Mario Blázquez de Paz

Electricity markets are becoming more integrated around the world. However, the knowledge of the effects of different auction formats on suppliers’ strategies in the presence of transmission constraints and transmission costs is still very limited.…


1097. An Extended N-player Network Game and Simulation of Four Investment Strategies on a Complex Innovation Network

Wen Zhou, Nikita Koptyug, Shutao Ye, Yifan Jia and Xiaolong Lu

As computer science and complex network theory develop, non-cooperative games and their formation and application on complex networks have been important research topics. In the inter-firm innovation network, it is a typical game behavior for firms to…


1096. The Impact of Board Internationalization on Earnings Management

Reggy Hooghiemstra, Niels Hermes, Lars Oxelheim and Trond Randøy

Prior literature shows that choices regarding board composition are associated with earnings management. We add to this literature by examining the effects of the presence of a foreign board member on earnings management. Using a sample of 3,249…


1095. Price Instability in Multi-Unit Auctions

Edward Anderson and Pär Holmberg

We consider a procurement auction, where each supplier has private costs and submits a stepped supply function. We solve for a Bayesian Nash equilibrium and show that the equilibrium has a price instability in the sense that a minor change in a supplier.s…


1094. The Effect of Wealth on Individual and Household Labor Supply: Evidence from Swedish Lotteries

David Cesarini, Erik Lindqvist, Matthew J. Notowidigdo and Robert Östling

Online Appendix We study the effect of wealth on labor supply using the randomized assignment of monetary prizes in a large sample of Swedish lottery players. We find winning a lottery prize modestly reduces labor earnings, with the reduction being…


1093. Bailing on the Car that Wasn't Bailed out: Bounding Consumer Reactions to Financial Distress

Cristian Huse and Nikita Koptyug

This paper examines how consumers react to the financial distress of durable goods manufacturers by looking at the Swedish new car market. We employ a difference-in-differences matching methodology whereby we compare sales of carmaker Saab with those of a…


1092. Windfall Gains and Stock Market Participation

Joseph Briggs, David Cesarini, Erik Lindqvist and Robert Östling

We estimate the causal effect of wealth on stock market participation using administrative data on Swedish lottery players. A $150,000 windfall gain increases stock ownership probability among pre-lottery non-participants by 12 percentage points, while…


1091. Does Gender Diversity Promote Non-Conformity?

Makan Amini, Mathias Ekström, Tore Ellingsen, Magnus Johannesson and Fredrik Strömsten

Failure to express minority views may distort the behavior of company boards, committees, juries, and other decision-making bodies. Devising a new experimental procedure to measure such conformity in a judgment task, we compare the degree of conformity in…


1090. Did Africa’s First Choices Matter? Growth Legacies of Leaders at Independence

Christina Mangaard Jørgensen and Christian Bjørnskov

We explore the potential effects of the first leaders of Sub-Saharan Africa. We first outline a set of theoretical reasons for why leaders may matter particularly at the critical juncture of African independence and why this influence may be persistent.…


1089. Global Engagement, Complex Tasks, and the Distribution of Occupational Employment

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

Building on a framework introduced by Chaney and Ossa (2013), we construct a task-based model of the firm’s choice of occupational inputs to examine how that choice varies with greater global engagement. We depart from Chaney and Ossa by assuming…


1088. The National Wealth of Sweden, 1810–2014

Daniel Waldenström

This study presents a new database, the Swedish National Wealth Database (SNWD), which contains annual data on private, public and national wealth and sectoral saving rates in Sweden over the past two centuries. The paper reviews previous investigations…


1087. A Left/Right Convergence on the New Public Management? The Unintended Power of Diverse Ideas

Johan Wennström

While it might appear self-evident that the trend toward the New Public Management (NPM) in the public administration systems of many Western countries is an outgrowth of neoliberalism, the case of Swedish education suggests that policies can have widely…


1086. Owner-Level Taxes and Business Activity

Magnus Henrekson and Tino Sanandaji

In some classes of models, taxes at the owner level are “neutral” and have no effect on firm activity. However, this tax neutrality is sensitive to assumptions and no longer holds in more complex models. We review recent research that…


1085. Decomposing the Afternoon Effect: An Empirical Investigation of Sequential Train Ticket Auctions

Ola Andersson and Tommy Andersson

The afternoon effect, i.e., that prices in a sequence of auctions with identical items are decreasing with the order in which the auctions are terminated, is a frequently observed phenomenon in empirical auction studies. Using an unsurpassed amount of…


1084. Subliminal Influence on Generosity

Ola Andersson, Topi Miettinen, Kaisa Hytönen, Magnus Johannesson and Ute Stephan

We experimentally prime subjects subliminally prior to charity donation decisions by showing words that have connotations to prosocial values for a very short duration of time (17ms). Our main finding is that, compared to a baseline condition, the…


1083. Renovatio Monetae: Gesell Taxes in Practice

Roger Svensson and Andreas Westermark

Gesell taxes on money holdings have received attention in recent decades as a way of alleviating the zero lower bound on interest rates. Less known is that such a tax was the predominant method used to generate seigniorage in large parts of medieval…


1082. The Institutional Determinants of Private Equity Involvement in Business Groups: The Case of Africa

Bruce Hearn, Lars Oxelheim and Trond Randøy

This study examines the governance attributes of post-IPO (initial public offering) retained ownership of private equity in business group constituent firms in contrast to their unaffiliated counterparts, in 202 newly listed firms in 22 emerging African…


1081. Taxation of Dividend Income and Economic Growth: The Case of Europe

Margareta Dackehag and Åsa Hansson

More recently researchers have turned to analyze how the tax structure, rather than the overall tax level, affects economic performance. For instance, several papers have investigated how taxation on corporate and individual (labor) income influences…


1080. Tolerance in the United States: Does Economic Freedom Transform Racial, Religious, Political and Sexual Attitudes?

Niclas Berggren and Therese Nilsson

Tolerance is a distinguishing feature of Western culture: There is a widespread attitude that people should be allowed to say what they want even if one dislikes the message. Still, the degree of tolerance varies between and within countries, as well as…


1079. The Turnaround of Swedish Industry: Reforms, Firm Diversity and Job and Productivity Dynamics

Fredrik Heyman, Pehr-Johan Norbäck and Lars Persson

This paper examines the Swedish industrial reorganization process that took place from 1990-2009. We argue that the early adoption of information and communication technology (ICT) in Swedish industry was a crucial element in the success of the industrial…


1078. Why FX Risk Management Is Broken – And What Boards Need to Know to Fix It

Håkan Jankensgård, Alf Alviniussen and Lars Oxelheim

In this paper we challenge the role of Foreign Exchange Risk Management (FXRM) in corporate management. We believe it is fair to characterize FXRM, on the whole, as a legacy activity rather than something that reflects a realistic cost-benefit analysis at…


1077. Pushed by Poverty or by Institutions? Determinants of Global Migration Flows

Andreas Bergh, Irina Mirkina and Therese Nilsson

The existing literature on determinants of migration flows typically claims that income differences across countries should be a pushing factor for people's movement. We suggest that institutional quality is a better proxy for the factors that trigger…


1076. The Roles of Fiscal Rules, Fiscal Councils and Fiscal Union in EU Integration

Lars Calmfors

EU-level fiscal rules have not been able to prevent the large-scale accumulation of government debt in many eurozone countries. One explanation was major flaws in the rules. Some of these flaws have now been corrected. But the failure of the rules…


1075. The Swedish Macroeconomic Policy Framework

Lars Calmfors

The paper describes the monetary and fiscal policy frameworks in Sweden and analyses how they were established as well as current challenges. Sweden provides a good example of how deep economic crisis, in interaction with independent thinking by academics…


1074. Offshoring, Total Factor Productivity and Skill-Biased Technological Change

Zhanar Akhmetova and Shon Ferguson

The paper answers two questions simultaneously. What is the effect of offshoring on firms' total factor productivity? What is the effect of offshoring on skill-biased technological change? We estimate a model of firm production that allows for the…


1073. Swedish Lessons: How Important are ICT and R&D to Economic Growth?

Harald Edquist and Magnus Henrekson

We investigate to what extent ICT and R&D capital is associated with value added growth in the Swedish business sector. By estimating output elasticities based on data for 47 different industries for the period 1993–2012 we show that ICT and…


1072. Firms and Skills: The Evolution of Worker Sorting

Christina Håkanson, Erik Lindqvist and Jonas Vlachos

We document a significant increase in the sorting of workers by cognitive and non-cognitive skills across Swedish firms between 1986 and 2008. The weight of the evidence suggests that the increase in sorting is due to stronger complementarities between…


1071. Stress Reactions Cannot Explain the Gender Gap in Willingness to Compete

Thomas Buser, Anna Dreber and Johanna Möllerström

Women are often less willing than men to compete, even in tasks where there is no gender gap in performance. Also, many people experience competitive contexts as stressful and previous research has documented that men and women sometimes react differently…


1070. Transmission Costs, Transmission Capacities and their Influence on Market Power in Wholesale Electricity Markets

Mario Blázquez de Paz

The integration of electricity markets around the world has increased the importance of congestion between countries/states and has initiated a discussion of how to harmonize network tariffs. This paper analyzes how the transmission capacity and the…


1069. The Making of a Manager: Evidence from Military Officer Training

Erik Grönqvist and Erik Lindqvist

We show that officer training during the Swedish military service has a strong positive effect on the probability to attain a managerial position later in life. The most intense type of officer training increases the probability of becoming a civilian…


1068. Private Equity, Layoffs, and Job Polarization

Martin Olsson and Joacim Tåg

Although private equity firms are often criticized for layoffs, little evidence exists regarding which employees lose their jobs and why. We argue that explanations for the job polarization process can also explain layoffs after buyouts. Buyouts reduce…


1067. Measuring Innovation Using Patent Data

Roger Svensson

Firms and governments spend billions of dollars on R&D every year. To increase social welfare, the results of R&D must be commercialized so that consumers can benefit from improved products and lower prices. One measure of R&D output is…


1066. Black Cat, White Cat: The Identity of the WTO Judges

Louise Johannesson and Petros C. Mavroidis

WTO judges are proposed by the WTO Secretariat and elected to act as ‘judges’ if either approved by the parties to a dispute, or by the WTO Director-General in case no agreement between the parties has been possible. They are typically…


1065. Wind Power Volatility and the Impact on Failure Rates in the Nordic Electricity Market

Sara Fogelberg and Ewa Lazarczyk

Wind power generation of electricity has gained popular support because of its low environmental impact and because of its low costs relative to other renewable energy sources. However, concerns have been raised in the power sector that wind power…


1064. Private and Public Information on the Nordic Intra-Day Electricity Market

Ewa Lazarczyk

This paper is an empirical investigation of how traders react to public news in a market where there are lots of non-scheduled announcements, often arriving simultaneously. Using detailed trade information from the Nordic intra-day electricity market and…


1063. The Impact of Entrepreneurship Education in High School on Long-Term Entrepreneurial Performance

Niklas Elert, Fredrik Andersson and Karl Wennberg

This paper studies the long-term impact of entrepreneurship education and training in high school on entrepreneurial entry, performance, and survival. Using propensity score matching, we compare three Swedish cohorts from Junior Achievement Company…


1062. Are High-Growth Firms Overrepresented in High-Tech Industries?

Sven-Olov Daunfeldt, Niklas Elert and Dan Johansson

It is frequently argued that policymakers should target high-tech firms, i.e., firms with high R&D intensity, because such firms are considered more innovative and therefore potential fast-growers. This argument relies on the assumption that the…


1061. The Effect of Employment Protection on Labor Productivity

Carl Magnus Bjuggren

The theoretical predictions of how employment protection affects firm productivity are ambiguous. In this paper I study the effect of employment protection rules on labor productivity using micro data on Swedish firms. A reform of the employment…


1060. Wealth, Health, and Child Development: Evidence from Administrative Data on Swedish Lottery Players

David Cesarini, Erik Lindqvist, Robert Östling and Björn Wallace

Online Appendix We use administrative data on Swedish lottery players to estimate the causal impact of substantial wealth shocks on players' own health and their children's health and developmental outcomes. Our estimation sample is large,…


1059. Jobs Incorporated: Incorporation Status and Job Creation

Thomas Åstebro and Joacim Tåg

Recent research has shown that entrepreneurs who start incorporated firms are fundamentally different from entrepreneurs who start sole proprietorships. This difference suggests that incorporation status may distinguish the self-employed with no ambition…


1058. Norms, Incentives and Information in Income Insurance

Assar Lindbeck and Mats Persson

In this paper, we ask under what conditions norms can enhance welfare by mitigating moral hazard in income insurance. We point out a particular role of norms, namely to compensate for insurers’ difficulties in monitoring the behavior of insured…


1057. Cross-Border Acquisitions and Restructuring: Multinational Enterprises and Private Equity Firms

Selva Bahar Baziki, Pehr-Johan Norbäck, Lars Persson and Joacim Tåg

An increasingly large share of cross-border acquisitions are undertaken by private equity-firms (PE-firms) and not by traditional multinational enterprises (MNEs). We propose a model of cross-border acquisitions in which MNEs and PE-firms compete over…


1056. Economic Freedom and Economic Crisis

Christian Bjørnskov

In this paper, I explore the politically contested association between the degree of capitalism, captured by measures of economic freedom, and the risk and characteristics of economic crisis. After offering some brief theoretical considerations, I…


1055. Retail City: The Relationship between Place Attractiveness and Accessibility to Shops

Özge Öner

This paper explores the role of retailers as an urban amenity. Using data for Swedish rural and city municipalities for 2002–2008, ‘accessibility to shops’ measures are constructed for the shops in the municipalities and in the hosting…


1054. An Innovation Policy Framework: Bridging the Gap between Industrial Dynamics and Growth

Pontus Braunerhjelm and Magnus Henrekson

This paper examines policy measures that foster the creation of innovations with high inherent potential and that simultaneously provide the right incentives for individuals to create and expand firms that disseminate such innovations in the form of…


1053. Does Social Trust Speed up Reforms? The Case of Central-Bank Independence

Niclas Berggren, Sven-Olov Daunfeldt and Jörgen Hellström

Many countries have undertaken central-bank independence reforms, but the years of implementation differ. What explains such differences in timing? This is of interest more broadly, as it sheds light on factors that matter for the speed at which economic…


1052. Swedish Taxation since 1862: An Overview

Magnus Henrekson and Mikael Stenkula

This paper examines the development of taxation in Sweden from 1862 to 2013. The examination covers six key aspects of the Swedish tax system: the taxation of labor income, capital income, consumption, inheritance and gift, wealth and real estate. The…

Sick of Inequality?

An Introduction to the Relationship between Inequality and Health

Sick of Inequality.jpg

In this book Andreas Bergh, Therese Nilsson, IFN and Lund University, and Daniel Waldenström, IFN and Paris School of Economics, France, review the latest research on the relationship between inequality and health. What does inequality mean for our health? Does increasing income inequality affect outcomes such as obesity, life expectancy and subjective well-being?

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