Working Papers 2017

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.


1193. Market Power and Forward Prices

Keith Ruddell, Tony Downward and Andy Philpott

We construct a model of strategic behavior in sequential markets which exhibits a persistent forward price premium. On the spot market, producers wield market power while purchasers are price takers. Producers with forward commitments have less…


1192. Urban Interactions

Jung Sung Kim, Eleonora Patacchini, Pierre M. Picard and Yves Zenou

This paper studies social-tie formation when individuals care about the geographical location of other individuals. In our model, the intensity of social interactions can be chosen at the same time as friends. We characterize the equilibrium in terms of…


1191. Cournot Competition in Wholesale Electricity Markets: The Nordic Power Exchange, Nord Pool

Erik Lundin and Thomas Tangerås

Horizontal shifts in bid curves observed in wholesale electricity markets are consistent with Cournot competition. Quantity competition reduces the informational requirements associated with evaluating market performance because the markups of all…


1190. The Influence of Institutionally Embedded Ownership on Anglo-American Corporate Governance Migration into Emerging Economy IPO Firms

Bruce Hearn, Lars Oxelheim and Trond Randøy

We argue that the corporate governance of emerging economy IPO firms is influenced by firm-specific institutionally embedded block ownership groups. Applying an extended institutional logic perspective and using a mixed-effects ordered probit model, our…


1189. Who Creates Jobs and Who Creates Productivity? Small versus Large versus Young versus Old

Fredrik Heyman, Pehr-Johan Norbäck and Lars Persson

This paper examines employment and productivity dynamics in the Swedish business sector during the period 1996–2013. In order to analyze employment and productivity in a consistent way we apply a novel implementation of a method, which previously…


1188. The Short- and Long-term Effects of Student Absence: Evidence from Sweden

Sarah Cattan, Daniel A. Kamhofer, Martin Karlsson and Therese Nilsson

Instructional time is seen as an important determinant of school performance, but little is known about the effects of student absence. Combining historical records and administrative data for Swedish individuals born in the 1930s, we examine the impacts…


1187. Homothetic Preferences Revealed

Jan Heufer and Per Hjertstrand

We propose a method to recover homothetic preferences from choice data with minor optimization or measurement errors. Our method allows for a more detailed graphical analysis to reveal subjects' preferences and to choose appropriate functional forms…


1186. Verifying High Quality: Entry for Sale

Pehr-Johan Norbäck, Lars Persson and Roger Svensson

When and how do entrepreneurs sell their inventions? To address this issue, we develop an endogenous entry-sale asymmetric information oligopoly model. We show that lowquality inventions are sold directly or used for own entry. Inventors who sell…


1185. Deregulation and Regional Specialization: Evidence from Canadian Agriculture

Colin A. Carter and Shon Ferguson

For about seventy years, the Canadian Wheat Board (CWB) was one of the world’s largest export “single desk” state traders in agriculture, until it was deregulated in 2012 and stripped of its marketing powers. One of the main crops…


1184. The Competitive Effects of Linking Electricity Markets Across Space and Time

Thomas Tangerås and Frank A. Wolak

We show that a common regulatory mandate in electricity markets that use location-based pricing that requires all customers to purchase their wholesale electricity at the same quantity-weighted average of the locational prices can increase the performance…


1183. The ‘Healthy Worker Effect’: Do Healthy People Climb the Occupational Ladder?

Joan Costa Font and Martin Ljunge

The association between occupational status and health has been taken to reveal the presence of health inequalities shaped by occupational status. However, that interpretation assumes no influence of health status in explaining occupational…


1182. Public Finance and Right-Wing Populism

Linuz Aggeborn and Lovisa Persson

We build a public finance model that explains why voters vote for right-wing populists, and also under which conditions established politicians will adopt a right-wing populist policy platform. Voters with lower private income have a stronger demand for…


1181. Agricultural Trade Reform, Reallocation and Technical Change: Evidence from the Canadian Prairies

Mark Brown, Shon Ferguson and Crina Viju

We decompose the impact of trade reform on technology adoption and land use to study how aggregate changes were driven by reallocation versus within-farm adaptation. Using detailed census data covering over 30,000 farms in Alberta, Saskatchewan and…


1180. Exercise Improves Academic Performance

Alexander W. Cappelen, Gary Charness, Mathias Ekström, Uri Gneezy and Bertil Tungodden

We report the results of a randomized controlled trial testing whether incentivizing physical exercise improves the academic performance of college students. As expected, the intervention increases physical activity. The main result is that it…


1179. Disease and Fertility: Evidence from the 1918 Influenza Pandemic in Sweden

Nina Boberg-Fazlić, Maryna Ivets, Martin Karlsson and Therese Nilsson

This paper studies the effect of the 1918–19 influenza pandemic on fertility using a historical dataset from Sweden. Our results suggest an immediate reduction in fertility driven by morbidity, and additional behavioral effects driven by…


1178. Cross-border Exchange and Sharing of Generation Reserve Capacity

Fridrik M. Baldursson, Ewa Lazarczyk, Marten Ovaere and Stef Proost

This paper develops a stylized model of cross-border balancing. We distinguish three degrees of cooperation: autarky, reserves exchange and reserves sharing. The model shows that TSO cooperation reduces costs. The gains of cooperation increase with cost…


1177. Infant Health, Cognitive Performance and Earnings: Evidence from Inception of the Welfare State in Sweden

Sonia Bhalotra, Martin Karlsson, Therese Nilsson and Nina Schwarz

We estimate impacts of exposure to an infant health intervention trialled in Sweden in the early 1930s using purposively digitised birth registers linked to school catalogues, census fies and tax records to generate longitudinal microdata that track…


1176. The Educated Underdog Becomes the Ultimate Superstar

Per Hjertstrand, Pehr-Johan Norbäck and Lars Persson

We fi…nd an inverted relation between a player'’s birthday and the likelihood of receiving the Ballon d'’Or (awarded to the best football player in the world). We develop a multi-period skill formation model with selection into elite…


1175. Payroll Taxes and Firm Performance

Johan Egebark and Niklas Kaunitz

The Swedish employer paid payroll tax was reduced substantially for young workers in 2007, causing firms’ average social fees to depend on the age structure of their employees. Using pre-reform conditions to define treated and control firms, we show…


1174. Management Practices and the Quality of Primary Care

Jannis Angelis, Anna Häger Glenngård and Henrik Jordahl

Using the World Management Survey method, we map and analyse management quality in Swedish primary care centres. On average, private providers have higher management quality than public ones. We also find that centres with a high overall social…


1173. Does Religion Make You Sick? Evidence of a Negative Relationship between Religious Background and Health

Niclas Berggren and Martin Ljunge

Religious beliefs and practices influence individual lives and societies in many ways. We study how religion affects self-assessed health, which in turn is important for both individual well-being and productivity. A religious background predicts worse…


1172. Political Power, Resistance to Technological Change and Economic Development: Evidence from the 19th century Sweden

Björn Tyrefors Hinnerich, Erik Lindgren and Per Pettersson-Lidbom

This paper empirically tests the hypothesis that landed elites may block technological change and economic development if they fear that they will lose future political power (Acemoglu and Robinson (2002, 2006, and 2012). It exploits a plausible…


1171. Delegation to a Rationally Inattentive Agent

Assar Lindbeck and Jörgen Weibull

In the political debate, lavish bonus schemes to managers in large corporations are often questioned on moral grounds as well as in terms of economic efficiency. Can high bonuses, sometimes even after ex post unprofitable decisions, be motivated from…


1170. Schumpeterian Entrepreneurship in Europe Compared to Other Industrialized Regions

Magnus Henrekson and Tino Sanandaji

We examine whether Europe has an “entrepreneurship deficit” compared to other industrialized regions. Cross-country comparisons are difficult due to the lack of standard empirical definitions of entrepreneurship. Measures focusing on small…


1169. Gender Discrimination at the Top and Product Market Competition

Fredrik Heyman, Pehr-Johan Norbäck and Lars Persson

We show that increasing the intensity of product market competition can reduce discrimination against female managers, even in an environment in which all employers have a preference for discrimination. The reason is that due to the glass ceiling effect,…


1168. Stock Option Taxation: A Missing Piece in European Innovation Policy?

Magnus Henrekson and Tino Sanandaji

Venture capital has become a dominant form of innovation finance, used by many high-tech startups. Europe lags the U.S. in both VC activity and the creation of successful startups, and has recently been surpassed by China. Few European countries have…


1167. The Economic Microgeography of Diversity and Specialization

Martin Andersson, Johan P Larsson and Joakim Wernberg

As cities increasingly become centers of economic growth and innovation, there is a need to understand their inner workings and organization in greater detail. We use ge-coded firm-level panel data at the sub-city level to assess the long-standing…


1166. Global Earnings Inequality, 1970–2015

Olle Hammar and Daniel Waldenström

We estimate trends in global earnings dispersion across occupational groups using a new database covering 66 developed and developing countries between 1970 and 2015. Our main finding is that global earnings inequality has declined, primarily during the…


1165. Gender Quotas in the Board Room and Firm Performance: Evidence from a Credible Threat in Sweden

Björn Tyrefors Hinnerich and Joakim Jansson

Board room quotas have recently received an increasing amount of attention. This paper provides novel evidence on firm performance from an exogenous change in female board participation in Sweden. We use the credible threat, aimed at listed firms, of a…


1164. Taxation of Swedish Firm Owners: The Great Reversal from the 1970s to the 2010s

Magnus Henrekson

By the late 1960s, real effective taxation of income from individual firm owner­ship in Sweden approached 100 percent. A series of tax reforms initiated in the late 1970s reversed this situation. This paper has a threefold purpose: (1) to…


1163. Age-Dependent Court Sentences and Crime Bunching: Empirical Evidence from Swedish Administrative Data

Björn Tyrefors Hinnerich, Mårten Palme and Mikael Priks

According to Swedish penal code, there is a “rebate” on all prison sentences before the 21st birthday. We exploit this age discontinuity to investigate how individuals respond to harsher punishments. We use a large Swedish dataset, including…


1162. Equilibrium Supply Security in a Multinational Electricity Market with Renewable Production

Thomas Tangerås

An increasing reliance on solar and wind power has raised concern about system ability to consistently satisfy electricity demand. This paper examines countries’ unilateral incentives to achieve supply security through capacity reserves and market…


1161. Tax Progressivity and Top Incomes: Evidence from Tax Reforms

Enrico Rubolino and Daniel Waldenström

We study the link between tax progressivity and top income shares. Using variation from large-scale Western tax reforms in the 1980s and 1990s and the novel synthetic control method, we find large and lasting boosting impacts on top income shares from the…


1160. Trends and Gradients in Top Tax Elasticities: Cross-country Evidence, 1900–2014

Enrico Rubolino and Daniel Waldenström

We compile data spanning the period 1900–2014 and up to 30 countries to study long-run patterns in the tax elasticity of top incomes. Our results show that top tax elasticities vary tremendously over time; they were medium-to-low before 1950,…


1159. Seasonal Social Preferences

Mathias Ekström

Christmas is when people are expected to act selflessly for the well-being of others, but are people actually more altruistic at this time of the year? Responding to this question poses a challenge because of the confounding factors of charitable tax…


1158. Production or Transmission Investments? A Comparative Analysis

Mario Blázquez de Paz

A successful transformation to a carbon neutral energy system requires the correct investments in transmission and production capacity. In a zonal pricing electricity market, the one proposed by the European Commission to integrate the European…


1157. Misvaluation and Financial Constraints: Method of Payment and Buyer Identity in Mergers & Acquisitions

Aron Berg

The paper studies how stock price misvaluation and financial frictions affect whether an acquisition occurs between or within industries and whether the acquirer pays in cash or stocks. I set up a model where stock market misvaluation correlates within…


1156. Do Equal Rights for a Minority Affect General Life Satisfaction?

Niclas Berggren, Christian Bjørnskov and Therese Nilsson

While previous research examines how institutions matter for general life satisfaction and how specific institutions embodying equal rights for gay people matter for the life satisfaction of gays, we combine these two issues to analyze how the latter type…


1155. Human Capital Sorting: The ‘When’ and ‘Who’ of Sorting of Talents to Urban Regions

Lina Ahlin, Martin Andersson and Per Thulin

Sorting of high-ability workers is a main source of urban-rural disparities in economic outcomes. Less is known about when such human capital sorting occurs and who it involves. Using data on 15 cohorts of university graduates in Sweden, we demonstrate…


1154. Entrepreneurial Experimentation: A Key Function in Entrepreneurial Systems of Innovation

Åsa Lindholm-Dahlstrand, Martin Andersson and Bo Carlsson

There is a need for a conceptual approach that, with reference to explicit micro-level mechanisms and processes of industrial dynamics, articulates the role and function of entrepreneurial experimentation in innovation systems. This paper develops the…


1153. Entrepreneurship and Institutions: A Bidirectional Relationship

Niklas Elert and Magnus Henrekson

The interplay between entrepreneurship and institutions is crucial for economic development; however, the view that institutions determine the extent to which entrepreneurial activity is productive is only part of the story. We argue that causality is…


1152. The Market-Promoting and Market-Preserving Role of Social Trust in Reforms of Policies and Institutions

Niclas Berggren and Christian Bjørnskov

Social trust has been identified as a catalyst for reforms. We take the literature further in two ways. First, we make a fine-grained analysis of mechanisms through which social trust enables liberalizing reforms – by strengthening the ability to…


1151. Anarchy, State, and Utopia: Timothy Snyder’s Interpretive Framework for the Holocaust Applied to Norway under the Nazi Occupation, 1940–45

Johan Wennström

Timothy Snyder has suggested an interpretive framework of the Holocaust that runs counter to previous scholarly literature as well as to popular perception. Snyder’s central thesis is that the mass murder of Europe’s Jewish population should…


1150. Institutional Reform for Innovation and Entrepreneurship: An Agenda for Europe

Niklas Elert, Magnus Henrekson and Mikael Stenkula

It is imperative that the economies of the European Union become more entrepreneurial to promote innovation and economic growth. To achieve these goals, we propose a reform strategy with respect to (i) the rule of law and the protection of property…


1149. Grind or Gamble? An Experimental Analysis of Effort and Spread Seeking in Contests

Ola Andersson, Håkan J. Holm and Erik Wengström

We conduct a contest experiment where participants can invest in increasing both the mean and the spread of an uncertain performance variable. Subjects are treated with different prize schemes and in accordance with theory we observe substantial…


1148. The WTO Dispute Settlement System 1995-2015: A Data Set and its Descriptive Statistics

Louise Johannesson and Petros C. Mavroidis

In this paper, we provide some descriptive statistics of the first twenty years of the WTO (World Trade Organization) dispute settlement. The database used in this paper was assembled by the authors and has been publicly available…

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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