| 1. |
- Aronsson, Thomas, 1963-, et al.
(author)
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A maximum likelihood bunching estimator of the elasticity of taxable income
- 2024
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In: Journal of applied econometrics (Chichester, England). - : John Wiley & Sons. - 0883-7252 .- 1099-1255. ; 39:1, s. 200-216
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Journal article (peer-reviewed)abstract
- This paper develops a maximum likelihood (ML) bunching estimator of the elasticity of taxable income (ETI). Our structural approach provides a natural framework to simultaneously account for unobserved preference heterogeneity and optimization errors and for measuring their relative importance. We characterize the conditions under which the parameters of the model are identified and show that the ML estimator performs well in terms of bias and precision. The paper also contains an empirical application using Swedish data, showing that both the ETI and the standard deviation of the optimization friction are precisely estimated, albeit relatively small.
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| 2. |
- Aronsson, Thomas, 1963-, et al.
(author)
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Maximum Likelihood Bunching Estimators of the ETI
- 2021
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Reports (other academic/artistic)abstract
- We propose a maximum likelihood method to improve the bunching approach of estimating the elasticity of taxable income (ETI), and derive estimators for several model settings such as bunching with optimization frictions, notches, and heterogeneity in the ETI. Modelling optimization frictions explicitly, our estimators fit the data of several published studies very well. In the presence of a notch, the results can differ substantially from those obtained using the polynomial approach. If there is heterogeneity in the ETI, the elasticity among those who bunch exceeds the average elasticity in the population.
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| 3. |
- Aronsson, Thomas, 1963-, et al.
(author)
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The quality of the estimators of the ETI
- 2022
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In: Journal of Public Economics. - : Elsevier. - 0047-2727 .- 1879-2316. ; 212
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Journal article (peer-reviewed)abstract
- The elasticity of taxable income (ETI) is a central statistic for tax policy design. One purpose of the present paper is to use Monte Carlo simulation techniques to assess the bias and precision of the prevalent estimators in the literature, the IV-regression estimator and the bunching estimator. Thereby, we aim to provide arguments in favor of, or against, using these methods. Another is to suggest indirect inference estimation to improve the quality of the measurement of the ETI. While IV-regression estimators perform well in terms of bias under certain conditions, they are more variable than bunching estimators. We also find that bunching estimators can be biased downward. The estimators based on indirect inference principles are practically unbiased and more precise than the other estimators.
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| 4. |
- Bäckström, Peter, 1985-
(author)
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Empirical essays on military service and the labour market
- 2023
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Doctoral thesis (other academic/artistic)abstract
- This thesis consists of an introductory part and four self-contained papers that study empirical questions related to military service and the labour market.Paper [I] studies the relationship between civilian labour market conditions and the number of people who volunteer for military service in Sweden. I use panel data on Swedish counties for the years 2011 through 2015 and study the effect of civilian unemployment on the rate of applications from individuals aged 18 to 25 to initiate basic military training. The results indicate a positive and statistically significant relationship between the unemployment rate and the application rate, and suggest that the civilian labour market environment can give rise to non-trivial fluctuations in the supply of volunteers to the Swedish military.Paper [II] studies how local labour market conditions influence the quality composition of those who volunteer for military service in Sweden. I estimate a fixed-effects regression model on a panel data set containing cognitive ability test scores for those who applied for military basic training across Swedish municipalities during the period 2010 to 2016. The main finding is that if civilian employment rates at the local level go up, the average test score of those who volunteer for military service goes down. The results suggest that, due to the way in which different types of individuals select themselves into the military, the negative impact of a strong civilian economy on recruitment volumes is reinforced by a deterioration in recruit quality.Paper [III] studies the effect of peacekeeping on post-deployment earnings for military veterans. Using Swedish administrative data, we follow a sample of more than 11,000 veterans who were deployed for the first time during the period 1993-2010 for up to nine years after returning home. To deal with selection bias, we use difference-in-differences propensity score matching based on a rich set of covariates, including measures of individual ability, health and pre-deployment labour market attachment. We find that, overall, veterans’ post-deployment earnings are largely unaffected by their service. Even though Swedish veterans in the studied period tend to outperform their birth-cohort peers who did not serve, we show that this advantage in earnings disappears once we adjust for non-random selection into service. Paper [IV] studies the relationship between military deployment to Bosnia in the 1990s and adverse outcomes on the labour market. The analysis is based on longitudinal administrative data for a sample of 2275 young Swedish veterans who served as peacekeepers in Bosnia at some point during the years 1993–1999. I follow these veterans for up to 20 years after deployment. Using propensity score matching based on a rich set of covariates, I estimate the effects of deployment on three broad measures of labour market marginalisation: long-term unemployment, work disability, and social-welfare assistance. I find no indication of long-term labour market marginalisation of the veterans. Even though the veterans experienced an increase in the risk of unemployment in the years immediately following return from service, in the long run their attachment to the labour market is not affected negatively by their service.
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| 5. |
- Bäckström, Peter, 1985-
(author)
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Essays on military labour supply in the era of voluntary recruitment
- 2020
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Licentiate thesis (other academic/artistic)abstract
- This thesis consists of an introductory part and two self-contained chapters related to the supply of volunteers to the Swedish Armed Forces.Chapter [I] represents the first effort to explore the relationship between civilian labour market conditions and the supply of labour to the military in the all-volunteer environment that Sweden entered after the abolishment of the peacetime draft in 2010. The effect of civilian unemployment on the rate of applications from individuals aged 18 to 25 to initiate basic military training is investigated using panel data on Swedish counties for the years 2011 through 2015. A linear fixed-effects model is estimated to investigate the relationship, while controlling for a range of socio-demographic covariates and unobserved heterogeneity on the regional level, as well as aggregate trends on the national level. The results indicate a positive and statistically significant relationship between the unemployment rate and the application rate. The results are robust to non-linear form specifications, as well as allowing the civilian unemployment rate to be endogenous. As such, the results suggest that the civilian labour market environment in Sweden can give rise to non-trivial fluctuations in the supply of applications to initiate basic military training within the Swedish Armed Forces.Chapter [II] studies how local labour market conditions influence the quality composition of those who volunteer for military service in Sweden. A fixed-effects regression model is estimated on a panel data set containing IQ scores for those who applied for military basic training across Swedish municipalities during the period 2010 to 2016. The main finding is that low civilian employment rates at the local level tend to increase the mean IQ score of those who volunteer for military service, whereas the opposite is true if employment rates in the civilian labour market move in a more favourable direction. As such, the results suggest that the negative impact of a strong civilian economy on recruitment volumes is reinforced by a deterioration in recruit quality.
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| 6. |
- Gustafsson, Johan, 1993-
(author)
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Essays on labor supply, pension policy, and inequality
- 2021
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Doctoral thesis (other academic/artistic)abstract
- Paper [I] analyzes the dynamic properties of life-cycle earnings in Sweden using microdata. We study the evolution of permanent and transitory earnings inequality over the period 2002--2015. Our data comes from administrative records gathered in the ASTRID database. We find that some features of the data do not match the predictions of the heterogeneous or restricted income profile models commonly applied in the earning dynamics literature. Instead, we estimate an alternative permanent-transitory (PT) error components model. Analyzing the covariance structure of both male and female earnings, controlling for educational background, we find that the upward trend in permanent earnings inequality observed in Sweden during the 1990s does not continue in the 2000s, and the financial crisis of 2008 did not have any major impact on the variability of earnings. We further simulate the accumulation of income pension entitlements and find that variations in pension entitlements are smaller among college-educated workers. Paper [II] studies the life-cycle effects of favorable marginal tax treatment on older workers' optimal life-cycle labor supply, retirement timing, and savings. I develop a structural model in continuous time where the life cycle of a representative agent is divided into three distinct phases: pre-treatment, post-treatment, and retirement. Solutions for consumption and savings, labor supply and leisure, and retirement timing are then obtained by solving the model as a salvage value problem. I then calibrate the model to Swedish earnings data and find that the increased extensive margin labor supply is partially offset by a reduction in hours worked during the pre-treatment period. The total effect, however, is an increase in life-cycle labor supply and consumption. \\Paper [III] studies the implications of the structure of public pension programs for the trade-offs determining economic behavior over the life cycle. The economy is modeled as a continuous-time overlapping generations model with endogenous labor supply, savings, and human capital formation. Individuals differ in ability and are free to choose how much to work at each period in time and when to enter and exit the labor market. Numerical simulations provide qualitative insights that a redistributive pension system introduces opposite effects on the incentives for retirement for high- and low-skilled individuals, which leads to increased earnings inequality. This effect can, in turn, dominate reduced pension inequality such that lifetime and population-wide income inequality increase. Ultimately, the equity–efficiency trade-off is found to be difficult to characterize. \noindent \\Paper [IV] explores the effects of pension illiteracy on aggregate labor supply and the redistributive performance of public pension systems. I consider an OLG model in continuous time populated with individuals who differ in labor productivity and pension literacy. Agents suffering from pension illiteracy fail to fully account for the structure of the pension system when planning their economic behavior over the life cycle. I find that pension illiteracy can negatively impact aggregate labor supply and increase earnings inequality and lifetime income inequality. This suggests that pension illiteracy may limit the efficiency gains of an increased correlation between individual contributions and benefits, making the equity–efficiency trade-off difficult to characterize in the context of pension reforms.
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| 7. |
- Holmberg, Johan, 1994-
(author)
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Essays on earnings formation, labor market dynamics, and taxation
- 2021
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Doctoral thesis (other academic/artistic)abstract
- Chapter [I] analyses the dynamic properties of life-cycle earnings of men and women in Sweden by fitting a model to the covariance structure of earnings. We find that the financial crisis of 2008 did not have any major impact on the variability of earnings and that the upward trend in permanent earnings inequality observed in Sweden during the 1990s does not continue in the 2000s. Using the model to simulate the accumulation of income pension entitlements, we find that college-educated workers have smaller variations in pension entitlements than workers with less education.Chapter [II] presents a life-cycle earnings dynamics model that includes endogenous employment and job change. The model is estimated on Swedish register data using indirect inference. By simulating data from this model, we study the macroeconomic consequences of transitory shocks to unemployment risk, how unemployment at different ages affects the accumulation of pension entitlements, and analyze how different factors contribute to earnings inequality. We find that transitory aggregate shocks to unemployment risk have long-lasting negative effects on employment and earnings, that becoming unemployed at age 40 has a large negative effect on pension accumulations, and that unobserved individual heterogeneity contributes substantially to the observed life-cycle earnings inequality for both men and women in Sweden.Chapter [III] presents a model of earnings dynamics that includes transitions in and out of employment and business cycle fluctuations. The model is estimated using indirect inference and a mix of Swedish register, survey and macro data. We find that the transitions from unemployment to employment are more sensitive to business cycle fluctuations than the probability of remaining employed. By simulating data from the model, we find that the business cycle has a relatively small impact on earnings inequality in Sweden and that young workers are more sensitive to business cycle fluctuations than older workers.Chapter [IV] deals with optimal nonlinear taxation of income and profits in a general equilibrium model with frictional unemployment. We find that the government can achieve redistribution of income through taxation without distorting production efficiency. This outcome is possible if the government uses two nonlinear tax instruments, taxing profits and labor income separately. The results also show that including involuntary unemployment creates an incentive to tax entrepreneurial income at lower marginal rates and labor income at higher marginal rates than otherwise.
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| 8. |
- Lanot, Gauthier, et al.
(author)
-
Before political economy: debate over grain markets, dearth and pauperism in England, 1794–96
- 2024
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In: History of European Ideas. - : Routledge. - 0191-6599 .- 1873-541X.
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Journal article (peer-reviewed)abstract
- During the 1790s Britain experienced a series of poor harvests which, given an expanding population and wartime disruption to the European grain trade, caused sudden and rapid increases in the domestic price of wheat. In modern discussion of Corn and Poor Laws the severity of these fluctuations has been obscured by the use of annual average grain prices, despite weekly county prices being available from 1771 as published in the London Gazette. We highlight the uncertainties of grain prices during the period 1794-96, drawing upon contemporary discussion published in the Annals of Agriculture of the problems arising from fluctuations in the price of wheat. Our purpose is to demonstrate that the tropes usually today associated with the Corn and Poor Laws – pauperism, a clash between merchant, manufacturing and landlord interests, population and impoverishment – are absent from discussion during this period. A doctrinaire “political economy” would develop in the early 1800s, but did not yet exist. Policy argument drew upon casuistic reasoning from circumstance and past experience. We also show in conclusion that Edmund Burke’s Thoughts and Details on Scarcity cannot be linked to “political economy”.
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| 9. |
- Lanot, Gauthier, et al.
(author)
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The price elasticity of electricity demand when marginal incentives are very large
- 2020
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Reports (other academic/artistic)abstract
- Using unique data on Swedish households, we measure the price elas- ticity of electricity demand for households facing a mandatory non-linear distribution tariffs where households are charged based on their maximum consumption during a month, and where the marginal incentives are very large. We estimate the price elasticity using both 2SLS and bunching esti- mators, and we find that the price elasticity is smaller than what previous literature on electricity demand have found. Furthermore, we illustrate why charging households based on maxi- mum consumption during a month leads to weak incentives in the end of the month, and discuss alternative tariff designs.
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| 10. |
- Lanot, Gauthier, et al.
(author)
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The price elasticity of electricity demand when marginal incentives are very large
- 2021
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In: Energy Economics. - : Elsevier. - 0140-9883 .- 1873-6181. ; 104
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Journal article (peer-reviewed)abstract
- Using unique data on Swedish households, we measure the price elasticity of electricity demand for households facing a mandatory non-linear distribution tariff, where households are charged based on their maximum consumption during a month, and where the marginal incentives are very large. We estimate the price elasticity using both 2SLS and bunching estimators, and we find that the price elasticity is smaller than what many previous studies on electricity demand have found.We show that the 2SLS estimates are not robust to changes to the set of controls or to the sample definition, while the bunching estimates suggest that the price elasticity of electricity demand is small in response to the large marginal incentives.Furthermore, we illustrate why charging households based on maximum consumption during a month leads to weak incentives in the end of the month, and discuss alternative tariff designs.
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| 11. |
- Naka, Poontavika, et al.
(author)
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A multiple state model for the working-age disabled population using cross-sectional data
- 2020
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In: Scandinavian Actuarial Journal. - : Taylor & Francis. - 0346-1238 .- 1651-2030. ; 8, s. 700-717
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Journal article (peer-reviewed)abstract
- A multiple state model describes the transitions of the disability risk among the states of active, inactive and dead. Ideally, estimations of transition probabilities and transition intensities rely on longitudinal data; however, most of the national surveys of disability are based on cross-sectional data measuring the disabled status of an individual at one point in time. This paper aims to propose a generic method of the estimation of the expected transition probabilities when the model allows recovery from disability using the UK cross-sectional data. The disability prevalence rates are modelled by taking into consideration the effect of age and time. Under some plausible assumptions concerning the death rates among inactive and active people, the estimated prevalence rates of disability are used to decompose survival probabilities in each state.
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| 12. |
- Sousounis, Panos, et al.
(author)
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Minimum wage effects on reservation wages
- 2022
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In: Journal of Labor Research. - : Springer. - 0195-3613 .- 1936-4768. ; 43, s. 415-439
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Journal article (peer-reviewed)abstract
- Reservation wages are part of the transmission mechanism between minimum wages and unemployment via the labour force participation decision. The limited available empirical evidence on the relationship between reservation wages and legal minimum wages suggest that individuals use minimum wages as benchmarks against which their reservation wages are set. This has a profound behavioural effect that may encourage individuals to either enter the labour force or price themselves out of potential employment. We employ a fuzzy regression discontinuity design to explore the influence of minimum wages on reservation wages. Our findings suggest that the behavioural response is too small to be extracted from the variability of the reservation wage data. For policy makers this finding is important. While minimum wages raise earnings and living standards, they can push some workers out of the labour force by increasing their reservation wage beyond the minimum. We do not find any evidence of such a response of the reservation wage of jobseekers to the minimum wage in the UK.
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| 13. |
- Vega, Alejandro, 1986-
(author)
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Essays on health, labor market behavior, and economic incentives
- 2024
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Doctoral thesis (other academic/artistic)abstract
- Paper [1] analyzes how the labor force participation changes in response to major health shocks, such as new cancer diagnoses, heart attacks, and strokes, in middle-aged to elderly Mexican couples, and how the spouses interact in their responses. The data originates from the Mexican Health and Aging Study and provides information on how couples coordinate their labor market activities in response to major health shocks. The results show that women’s labor force participation is negatively affected by a major health shock to their husbands. In contrast, men’s labor force participation does not change significantly in response to a major health shock to their wives.Paper [2] focuses on the correlation between negative health shocks and the households’ share of wealth held in risky assets. By using U.S. data from the Health and Retirement Study, we try to establish a link between negative health shocks and financial outcomes such as the household’s probability of owning risky assets and the share of risky assets held. We define a recent negative health shock to include cancer or malignant tumour diagnoses, stroke or transient ischemic attack, heart attack, coronary heart disease, angina, congestive heart failure, or other heart problems. We find tha tthe probability of owning risky assets and the share of risky assets are significantly lower among households where the women has experienced a negative health shock. In contrast, neither thep robability of owning risky assets nor the share of risky assets held by the household are significantly associated with a negative health shock to the man.Paper [3] investigates whether job loss can cause symptoms of depression in later life. We focus on couples aged 50 or older. We use data from the Health and Retirement Study, which provides longitudinal information about changes in labor market status and mental health outcomes among respondents and their spouses in the United States. To deal with potential reverse causality problems, we utilize data on job loss resulting from business closures. We find that job loss can lead to depressive symptoms for the affected individual’s partner. The effects are gendered, as women are negatively affected by job losses experienced by their husbands, but we do not observe such harmful effects among men whose wives lose their jobs. We also show how the effects of job loss vary across couples with differing levels of economic resources and health care needs, as well as differential access tohealth care.Paper [4] estimates the labor supply response to an increase in the marginal wage rate among middle-aged to elderly Mexican women. Using data from the National Survey of Occupation and Employment, I find that an increase in the marginal wage rate is associated with an increase in worked hours. The results suggest that the marginal wage rate elasticities are larger for older women than for their younger counterparts.
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