Working Papers 2016

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.


1147. Large Scope Business Sector Reforms: Has the Swedish Business Sector Become More Entrepreneurial than the U.S. Business Sector?

Fredrik Andersson, Fredrik Heyman, Pehr-Johan Norbäck and Lars Persson

Recent studies document a 30-year decline in various measures of entrepreneurship in the United States. In contrast, using detailed Swedish employer-employee data over the period 1990–2013, we find no decline in Swedish entrepreneurial activity.…


1146. All the Single Ladies: Job Promotions and the Durability of Marriage

Olle Folke and Johanna Rickne

This paper addresses women's under-representation in top jobs in organizational hierarchies. We show that promotions to top jobs dramatically increase women's probability of divorce, but do not affect men's marriages. This effect is causally…


1145. Differences Attract: An Experimental Study of Focusing in Economic Choice

Ola Andersson, Jim Ingebretsen Carlson and Erik Wengström

Several recent behavioral models of choice build on the idea that decision makers put more weight on attributes in which the available options differ more. We test this assumption in a controlled experiment where such biases will generate choice…


1144. Status Quo Institutions and the Benefits of Institutional Deviations

Niklas Elert and Magnus Henrekson

We nuance the widely held view that well-functioning institutions are the ultimate prerequisite for innovation and entrepreneurship. This is done by putting the spotlight on the role that formal and informal institutions have in serving the economic…


1143. Marketized Education: How Regulatory Failure Undermined the Swedish School System

Johan Wennström

In a radical school choice reform in 1992, Sweden’s education system was opened to private competition from independent for-profit and non-profit schools funded by vouchers. Competition was expected to produce higher-quality education at lower cost,…


1142. Firm Size Distribution and Employment Fluctuations: Theory and Evidence

Holger Görg, Philipp Henze, Viroj Jienwatcharamongkhol, Daniel Kopasker, Hassan Molana, Catia Montagna and Fredrik Sjöholm

This paper studies the effect of the firm-size distribution on the relationship between employment and output. We construct a theoretical model, which predicts that changes in demand for industry output have larger effects on employment in industries…


1141. Foreign Direct Investment and Value Added in Indonesia

Fredrik Sjöholm

Foreign Direct Investment (FDI) has increased in importance over the last decades, globally as well as in Indonesia. We examine how such inflows of FDI affects value added in Indonesia. The effect is positive: foreign firms generate relatively high levels…


1140. Economics and Politics of International Investment Agreements

Henrik Horn and Thomas Tangerås

Close to 2 700 state-to-state investment agreements (IIAs) worldwide protect foreign direct investment (FDI) against host country policies. We analyze the design and implications of protection against regulatory expropriations in IIAs, emphasizing the…


1139. Effects of Privatization on Price and Labor Efficiency: The Swedish Electricity Distribution Sector

Erik Lundin

I examine the effects of privatization, in the form of acquisitions, in the Swedish electricity distribution sector. As the majority of the distribution networks remained publicly owned, I use a synthetic control method to identify the effects on price…


1138. The Social Background of Elite Executives: The Swedish Case

Magnus Henrekson and Odd Lyssarides

Sweden is often described as a country where intergenerational social mobility is high, but research also shows that social mobility decreases the closer one gets to the extreme top of the income distribution. We study the occupational mobility for an…


1137. Cultural Determinants of Gender Roles: Pragmatism Is an Important Factor behind Gender Equality Attitudes among Children of Immigrants

Martin Ljunge

This paper presents evidence of how attitudes toward gender roles in the home and market are shaped by Hofstede’s six cultural dimensions. Children of immigrants in a broad set of European countries with ancestry from across the world are studied.…


1136. A Theory of Delegated Contracting

Wolfgang Gick

Delegated contracting describes a widely observable agency mode where a top principal, who has no direct access to a productive downstream agent, hires an intermediary to forward a sub-contract with specified output targets and payments. The principal…


1135. And Yet It Grows: Crisis, Ideology, and Interventionist Policy Ratchets

Christian Bjørnskov and Martin Rode

Previous studies of policy responses to economic crises argue that crises may lead to more interventionist policy but also cause deregulation. The empirical evidence in previous studies is equally mixed. The present paper argues that whether or not…


1134. Wealth-Income Ratios in a Small, Developing Economy: Sweden, 1810–2014

Daniel Waldenström

This study uses new data on Swedish national wealth over the last two hundred years to examine whether the patterns in wealth-income ratios found by Piketty and Zucman (2014) extend to small and less developed economies. The findings reveal both…


1133. Who Becomes a Politican?

Ernesto Dal Bó, Frederico Finan, Olle Folke, Torsten Persson and Johanna Rickne

Can a democracy attract competent leaders, while attaining broad representation? Economic models suggest that free-riding incentives and lower opportunity costs give the less competent a comparative advantage at entering political life. Also, if elites…


1132. The Moldable Young: How Institutions Impact Social Trust

Andreas Bergh and Richard Öhrvall

Social trust is linked to many desirable economic and social outcomes, but the causality between trust and institutions is debated. Using new data from a representative sample of 2,668 Swedish expatriates (surveyed in the SOM Institute’s Swedish…


1131. Wealth Inequality in Sweden: What Can We Learn from Capitalized Income Tax Data?

Jacob Lundberg and Daniel Waldenström

This paper presents new estimates of wealth inequality in Sweden during 2000–2012, linking wealth register data up to 2007 and individually capitalized wealth based on income and property tax registers for the period thereafter when a repeal of the…


1130. Does Country Level Social Trust Predict the Size of the Sharing Economy?

Andreas Bergh and Alexander Funcke

The sharing economy (peer-to-peer based sharing or renting activities coordinated through community-based online services) is typically assumed to be closely related to social trust. The two sharing economy companies Airbnb and Flipkey exist in over 100…


1129. The Local Impacts of Agricultural Subsidies: Evidence from the Canadian Prairies

Ray Bollman and Shon Ferguson

We estimate the impact of the removal of a railway transportation subsidy on the local economies of Alberta, Saskatchewan and Manitoba, exploiting the large regional variation in these one-time freight rate increases. We find that higher freight rates…


1128. The Entrepreneurial Rent: The Value of and Compensation for Entrepreneurship

Magnus Henrekson and Mikael Stenkula

The surplus that is created in a successful entrepreneurial venture is much higher than the profit corresponding to the risk-adjusted market rate of return. The part of the surplus that exceeds this level may be denoted “entrepreneurial rent.”…


1127. The Impact of Upper-Secondary Voucher School Attendance on Student Achievement: Swedish Evidence using External and Internal Evaluations

Björn Tyrefors Hinnerich and Jonas Vlachos

Sweden has a school voucher system with universal coverage and full acceptance of corporate providers. Using a value added approach, we find that students at upper-secondary voucher schools on average score 0.06 standard deviations lower on externally…


1126. The Emergence of a Market for Football Stars: Talent Development and Competitive Balance in European Football

Pehr-Johan Norbäck, Martin Olsson and Lars Persson

We analyze how the Bosman ruling affected the market for star players and talent development in the European football market. We develop a model with sports competition and endogenous ownership of star players in which we show how the stiffer bidding…


1125. The Long Shadows of Past Insults: Intergenerational Transmission of Health over 130 Years

Claudia Andreella, Martin Karlsson, Therese Nilsson and Matthias Westphal

This paper investigates the intergenerational transmission of health in the very long run. Using a unique purpose-built administrative dataset on individuals born in Sweden between 1930–34 and their parents, we study the intergenerational…


1124. Life Expectancy and Mother-Baby Interventions: Evidence from a Historical Trial

Sonia Bhalotra, Martin Karlsson and Therese Nilsson

This paper investigates the potential of an infant intervention to improve life expectancy, contributing to emerging interest in the early life origins of chronic disease. We analyse a pioneering program trialled in Sweden in the 1930s, which provided…


1123. Job Polarization, Job Tasks and the Role of Firms

Fredrik Heyman

A large and growing empirical literature has presented evidence of job polarization, i.e. the simultaneous growth of high-wage jobs and low-wage jobs at the expense of middle-wage jobs. Thus far, the focus has been on employment in different occupations,…


1122. The Role of Institutions in the Migration of Corporate Governance Practice into Emerging Economies – The Case of Africa

Bruce Hearn, Lars Oxelheim and Trond Randøy

This study examines the role of institutional environment in influencing the migration of corporate governance best practice into 22 emerging African economies.  Using a unique and comprehensive sample hand-collected sample of 202 IPO firms from…


1121. Inheritance and Wealth Inequality: Evidence from Population Registers

Mikael Elinder, Oscar Erixson and Daniel Waldenström

We use new population-wide register data on inheritances and wealth in Sweden to estimate the causal impact of inheritances on wealth inequality. We find that inheritances reduce relative wealth inequality (e.g., the Gini coefficient falls by 5–10…


1120. Supporting Developing Countries in WTO Dispute Settlement

Louise Johannesson

Even though the World Trade Organization (WTO) ensures equal access to the dispute settlement system, the legal process is still highly costly, an aspect that primarily affects poorer developing countries. It is feared that this imbalance discourages…


1119. Burying the Bumblebee Once and for All: Does Big Government Hurt Growth Less in High-Trust Countries?

Andreas Bergh and Christian Bjørnskov

High levels of social trust has been linked to both public sector size and long term economic growth, thereby helping to explain how some countries are able to combine high taxes and relatively high levels of economic growth. This paper examines if social…


1118. The Diversity of Entrepreneurial Regimes in Europe

Selin Dilli and Niklas Elert

Although institutional reforms are necessary to increase rates of entrepreneurship in European countries, we argue that one-size-fits-all reform strategies are unlikely to be successful. Reform strategies must be informed by a better knowledge of the…


1117. Effects of Taxes on Youth Self-Employment and Income

Johan Egebark

I study the link between taxes and youth self-employment. I make use of a Swedish reform, implemented in 2007–09, which suddenly made the payroll tax and the self-employment tax vary by age. The results suggest that youth self-employment is…


1116. The Economic Consequences of Social Network Structure

Matthew O. Jackson, Brian Rogers and Yves Zenou

We survey the literature on the economic consequences of the structure of social networks. We develop a taxonomy of `macro' and `micro' characteristics of social interaction networks and discuss both the theoretical and empirical findings…


1115. Private Equity’s Unintended Dark Side: On the Economic Consequences of Excessive Delistings

Alexander Ljungqvist, Lars Persson and Joacim Tåg

Over the past two decades, the U.S. stock market has been shrinking as the public firm model has begun to fall out of favor. We develop a political economy model of delistings to study the wider economic consequences of this trend. We show that the…


1114. Retirement Blues

Gabriel Heller Sahlgren

This paper analyses the short- and longer-term effects of retirement on mental health in ten European countries. It exploits thresholds created by state pension ages in an individual-fixed effects instrumental-variable set-up, borrowing intuitions from…


1113. Market Power and Joint Ownership: Evidence from Nuclear Plants in Sweden

Erik Lundin

This paper presents an empirical test of the anticompetitive effects of joint ownership, by examining the operation of three nuclear plants in Sweden. Since maintenance is the main conduit explaining the variation in output, I formulate a model of…


1112. Migrants, Health, and Happiness: Evidence that Health Assessments Travel with Migrants and Predict Well-Being

Martin Ljunge

Health assessments correlate with health outcomes and subjective well-being. Immigrants offer an opportunity to study persistent social influences on health where the social conditions are not endogenous to individual outcomes. This approach provides a…


1111. What Prevents Female Executives from Reaching the Top?

Matti Keloharju, Samuli Knüpfer and Joacim Tåg

Exceptionally rich data from Sweden makes it possible to study the gender gap in executives’ career progression and to investigate its causes. In their forties, female executives are about one-half as likely to be large-company CEOs and about…


1110. Asymmetric Information in Auctions: Are Resellers Better Appraisers?

Nikita Koptyug

This paper shows that in online car auctions, resellers are better at appraising the value of the cars they are bidding on than are consumers. Using a unique data set of online car auctions, I show that differences in bidding behavior between resellers…


1109. The Future of Welfare Services: How Worried Should We Be about Wagner, Baumol and Ageing?

Andreas Bergh

Welfare services are an important part of the Nordic welfare states both financially and for welfare state redistribution. Baumol’s cost disease, Wagner’s law, and population ageing are often said to bring challenges for the future provision…


1108. Do R&D and ICT Affect Total Factor Productivity Growth Differently?

Harald Edquist and Magnus Henrekson

We analyze the effect of ICT and R&D on total factor productivity (TFP) growth across different industries in Sweden. R&D alone is significantly associated with contemporaneous TFP growth, thus exhibiting indirect effects. Although there is no…


1107. Productivity Shocks, International Trade and Import Prices: Evidence from Agriculture

Shon Ferguson and Johan Gars

The purpose of this study is to measure the sensitivity of trade volumes and unit values to agricultural productivity shocks at home and abroad. We find that the unit values of trade flows vary systematically with production shocks using both aggregate data…


1106. Does Financial Deregulation Boost Top Incomes? Evidence from the Big Bang

Julia Tanndal and Daniel Waldenström

This study estimates the impact of financial deregulation on top income shares. Using the novel econometric method of constructing synthetic control groups, we show that the "Big Bang"-deregulations in the United Kingdom in 1986 and Japan…


1105. Seniority Rules, Worker Mobility and Wages: Evidence from Multi-Country Linked Employer-Employee Data

Petri Böckerman, Per Skedinger and Roope Uusitalo

We construct a multi-country employer-employee data to examine the consequences of employment protection. We identify the effects by comparing worker exit rates between units of the same firm that operate in two countries that have different seniority…


1104. Stock Option Taxation and Venture Capital Activity: A Cross-Country Study

Magnus Henrekson and Tino Sanandaji

One response to uncertainty and transactions costs in VC-finance is to compensate founders (and other key personnel) with stock options under complex contracts. Entrepreneurs are granted stock options contingent on firm performance, vesting and other…


1103. Two Sides to the Evasion: The Pirate Bay and the Interdependencies of Evasive Entrepreneurship

Niklas Elert, Magnus Henrekson and Joakim Wernberg

Evasive entrepreneurs innovate by circumventing or disrupting existing formal institutional frameworks. These evasions rarely go unnoticed and usually lead to responses from lawmakers and regulators. We introduce a conceptual model to illustrate the…

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.

Academically oriented seminars are most of the time held on Wednesdays at 10 am. At these events researchers from IFN and other institutions present their research.

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

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