Optimal risk sharing with translation invariant recursive utility for jump-diffusions

We consider optimal risk sharing where agents have preferences represented by translation invariant recursive utility. The dynamics in continuous time is driven by diffusion processes and a random jump measure. The model has some appealing features compared to the scale invariant version. Economic effects of sudden events, like catastrophes or pandemics, can be interpreted and separated from ordinary shocks to the economy. Unlike the scale invariant version, this model allows for a treatment of heterogeneous preferences, and consequently optimal risk sharing at a general and basic level. A new endogenous variable, a traded security, enters via the preference structure, affecting the key relations between agents. We also implement a stock market in this setting, and derive a consumption based capital asset model. A catastrophe-insurance forward contract is analyzed as an application of our general model, where the jump part is priced and plays the essential role

The Shadow of Uncertainty: Climate Policy and the Value of Petroleum Resources

We study how perceived uncertainty associated with future decarbonization policy affects the valuation and management of oil resources. We develop a novel Climate Policy Uncertainty (CPU) index for Norway and embed it within a structural model of extraction and exploration, estimated using field-level data from the Norwegian Continental Shelf. Our findings indicate that elevated policy risk reduces the shadow prices of both discovered and undiscovered oil reserves, especially in the period following the 2015 Paris Agreement, thereby weakening incentives to extract and explore. This decline corresponds to an implicit average carbon cost of approximately USD 6 per tonne of carbon dioxide, reaching up USD 24 per tonne of carbon dioxide. Unlike a Pigouvian tax, this implicit cost does not scale with emissions intensity or generate fiscal revenue, resulting in a diffuse and economically inefficient reduction in fossil fuel production and emissions and a net welfare loss

Local Charger Availability and Electric Vehicle Adoption: Evidence from Norway

This paper examines the effect of local public charging infrastructure on electric vehicle (EV) adoption using microdata from Norway between 2010 and 2023. We use 1.59 million new car registrations, geocoded to buyers’ residences and matched to nearby charging stations, along with neighbourhood controls and fixed effects, to estimate the causal impact of local charger availability. Our preferred estimates show that adding 100 normal chargers within 5 km of a new car buyers residence increases the probability of EV adoption by 0.6 percentage points, while 100 fast chargers raise it by 3 percentage points

The Fatal Consequences of Brain Drain

This paper examines the welfare consequences of reallocating high-skilled labor across borders. A labor demand shock in Norway—driven by a surge in oil prices—substantially increased physician wages and sharply raised the incentive for Swedish doctors to commute across the border. Leveraging linked administrative data and a dose-response difference-in-differences design, we show that this shift doubled commuting rates and significantly reduced Sweden’s domestic physician supply. The result was a persistent rise in mortality, with no corresponding health gains in Norway. These effects were unevenly distributed, disproportionately harming certain places and populations. The underlying mechanism was a severe strain on Sweden’s healthcare system: shortages of young, high-skilled generalists led to more hospitalizations, premature discharges, higher readmission rates, and delayed care. Mortality effects were larger in low-density physician regions and concentrated in older individuals and acute conditions—circulatory, respiratory, and infectious diseases. Our findings show that even temporary, intensive-margin shifts in skilled labor can generate large and unequal welfare losses when public services are already capacity-constrained

Fair Institutions

The experimental literature on preferences for redistribution has established that individual perceptions of what earning distributions are fair depend greatly on context. In this paper, we study an important and novel dimension of context: whether the choice to redistribute occurs before workers work and accrue earnings, or after. Contrary to the predictions of our theoretical framework, we fi nd no evidence that spectators are less likely to equalize earnings ex ante than to equalize earnings ex post. Interestingly, our study also suggests that, relative to American subjects, Scandinavian subjects are more likely to equalize ex post earnings, but we find no evidence that Scandinavian and American subjects make different choices ex ante. A follow-up analysis suggests that the latter result is largely due to Scandinavian and American subjects having similar preferences over ex ante redistribution when equalizing earnings comes at a cost to efficiency. Overall, our results suggest that context-dependent preferences for redistribution are sensitive to the relative timing of the redistribution choice

The Power to Discriminate

This paper examines the relationship between labor market power and employer discrimination, providing new causal evidence on when and where discriminatory outcomes arise. We leverage job displacements from mass layoffs and firm closures as a source of exogenous job search and combine this with an exact matching approach. We compare native–immigrant worker pairs who held the same job at the same firm, in the same occupation, industry, location, and wage prior to displacement. By tracking post-displacement outcomes across labor markets with differing levels of employer concentration, we identify the causal effect of labor market power on discriminatory behavior. We document four main findings. First, wage and employment discrimination against immigrants is substantial. Second, discrimination is amplified in concentrated labor markets and largely absent in highly competitive ones. Third, product market power has no independent effect, consistent with the idea that wage-setting power is necessary for discriminatory outcomes. Fourth, observed gaps fade with sustained employer–immigrant interactions, consistent with belief-based discrimination and employer learning. Together, these findings show that discrimination is not fixed, but shaped by market structure and firm-level dynamics

Fairness Across the World

This paper provides global evidence on the nature of inequality acceptance, based on a large-scale experimental study with more than 65,000 individuals across 60 countries. We show that, across the world, the source of inequality matters substantially more for inequality acceptance than the cost of redistribution. However, fairness views vary significantly across countries, largely reflecting disagreement over whether inequality caused by luck is fair. The meritocratic fairness view is most prevalent in the Western world, but substantial support for the libertarian and egalitarian fairness views exists in many countries. Focusing on beliefs, we further show that, globally, people believe luck plays a greater role than merit in shaping inequality, while disagreement about the cost of redistribution is more pronounced. Finally, we establish that both fairness views and beliefs about the source of inequality are key to understanding policy attitudes and cross-country variation in government redistribution, whereas efficiency considerations play a less important role

Competition matters: uniform vs. indication-based pricing of pharmaceuticals

Pharmaceutical expenditures are rising rapidly, driven in part by the innovation of highly effective but very expensive drug therapies that treat multiple diseases. While these drugs offer substantial health benefits, payers face a critical trade-off between cost containment and access to new medicines. A key policy question is whether producers should be restricted to uniform pricing or allowed to use indication-based pricing, where prices vary across patient groups. We analyse how this choice affects drug producers' incentives to invest in new indications, their pricing strategies, and the resulting surplus for health plans. In a monopoly setting, indication-based pricing yields higher profits and thus strengthens incentives to invest in new indications, while the payer prefers uniform pricing unless the fixed investment costs cannot be recouped. The novelty of our study lies in showing that monopoly-based insights may not hold under competition. Specifically, we identify a softening-of-competition effect, where a uniform pricing restriction serves as a credible commitment to raise prices in the competitive market. In this case, the health plan generally favours indication-based pricing to reduce costs. However, an exception arises, where both parties prefer uniform pricing, if the uniform price generates significant health gains through demand expansion in the original monopoly market. Our findings suggest that neither pricing scheme is universally optimal, underscoring the need for case-by-case assessments across drug classes

Income Equality in The Nordic Countries: Myths, Facts, and Lessons

Policymakers, public commentators, and researchers often cite the Nordic countries as examples of a social and economic model that successfully combines low income inequality with prosperity and growth. This article aims to critically assess this claim by integrating theoretical perspectives and empirical evidence to illustrate how the Nordic model functions and why these countries experience low inequality. Our analysis suggests that income equality in the Nordics is primarily driven by a significant compression of hourly wages, reducing the returns to labor market skills and education. This appears to be achieved through a wage bargaining system characterized by strong coordination both within and across industries. This finding contrasts with other commonly cited explanations for Nordic income equality, such as redistribution through the taxtransfer system, public spending on goods that complement employment, and public policies aimed at equalizing skills and human capital distribution. We consider the potential lessons for other economies that seek to reduce income equality. We conclude by discussing several underexplored or unresolved questions and issues