Rising Earnings Inequality in Sweden: The Role of Composition and Prices

This paper decomposes the rise in cross-sectional earnings inequality in Sweden between 1990 and 2002 into changes in market prices of observable characteristics, changes in the composition of the labor force across demographic groups and industries, and changes in unobservables, and compares the Swedish experience with that in the U.S. The rise in earnings inequality is in both countries a consequence of rising upper tail dispersion. Contrary to the U.S. experience, where the rise is largely driven by changing market prices of observables and increased residual dispersion, shifts in the Swedish labor force composition have contributed positively to the rise in the P90-P50 gap. The rise in the Swedish P99-P90 gap is however entirely accounted for by changes in prices and residual dispersion.Earnings; inequality; Sweden; United States

Population Aging and International Capital Flows

We use the neoclassical growth framework to model international capital flows in an economy with exogenous demographic change. We compare model implications and actual current account data and find that the model explains a small but significant fraction of capital flows between OECD countries, in particular after 1985.current account; international capital mobility; demographics; Feldstein-Horioka puzzle

The labor-supply elasticity and borrowing constraints: Why estimates are biased

The labor-supply elasticity is a central element in many macroeconomic models. We argue that assumptions underlying previous econometric estimates of the intertemporal labor supply elasticity are inconsistent with incomplete markets economies. In particular, if the econometrician ignores borrowing constraints, the elasticity will be biased downwards. Within our model, the bias may be up to 50 percent. We find a similar bias in PSID data.labor supply elasticity; intertemporal substitution; liquidity constraints

Wage Structure and Public Sector Employment: Sweden versus the United States 1970-2002

Swedish census data and tax records reveal an astonishing wage compression; the Swedish skill premium fell by more than 30 percent between 1970 and 1990 while the U.S. skill premium, after an initial decline in the 1970s, rose by 8--10 percent. Since then both skill premia have increased by around 10 percentage points in 2002. Theories that equalize wages with marginal products can rationalize these disparate outcomes when we replace commonly used measures of total labor supplies by private sector employment. Our analysis suggests that the dramatic decline of the skill premium in Sweden is the result of an expanding public sector that today comprises roughly one third of the labor force, and that expansion has largely taken the form of drawing low-skilled workers into local government jobs that service the welfare state.Skill premium; employment; private sector; public sector; Sweden; United States.

Capital Versus Labor Taxation with Heterogeneous Agents

We investigate the welfare implications of eliminating a proportional capital income tax for a model economy in which heterogeneous households face labor income risk and trade only one asset. Labor taxes rises at the time of the reform to maintain long run budget balance. Our stochastic process for labor earnings is consistent with empirical estimates of earnings risk, and also implies a distribution of asset holdings across households closely resembling that in the United States. We find that a vast majority of households prefers the status quo to the tax reform. This finding is interesting in light of the fact that our reform would be optimal if we abstracted from heterogeneity and assumed a representative agent. Initial household productivity and initial household wealth are independently important in determining a particular household's expected gain or loss, in contrast to a complete markets economy in which only the ratio of asset to labor income matters.

Should day care be subsidized?

In an economy with distortionary taxes on labor, can subsidies on day care, financed by an increase in taxes, raise welfare by encouraging women with small children to work? We show, within a heterogeneous-agent life-cycle framework, that the Ramsey optimal policy consists in equalizing consumption/leisure wedges over the life cycle and across agents. A simple way to implement this is to make day care expenses tax deductible. Calibrating our model to Germany, we find that tax deductibility for day care expenses leads to an approximate doubling of labor supply for both married and single mothers with small children. The overall welfare gain from optimal reform corresponds to a 1.0 percent increase in consumption.Female labor force participation; Germany; day care subsidies

Inequality Trends in Sweden 1978-2004

We document a clear increase in Swedish earnings inequality in the early 1990s. Inequality in disposable income and earnings net of taxes and transfers also increased, but much less than the increased inequality in pre-government earnings. These different developments are most likely explained by the generous Swedish welfare system. Consistent with these observations, we see no clear trend in consumption inequality. We also estimate stochastic processes for household earnings. A simple random-walk process captures much of the life-cycle dynamics. But we find clear evidence that the true earnings process is not a random walk. We demonstrate that some estimation methods result in severe upward bias in the estimated volatility of permanent shocks if serial correlation in temporary shocks is ignored. Our estimation results show that the increase in earnings inequality is almost entirely driven by an increase in residual earnings inequality. Moreover, this increase was mostly generated by an increased volatility of persistent shocks.income inequality; consumption inequality; stochastic earnings process

K-12 Cybersecurity Program Evaluation and Its Application

As the use of the Internet and computers continues to increase, so does the prevalence of cybercrime. However, there is currently no global standard education curriculum guideline in place to prevent cybercrime or cybercrime victimization. The purpose of this study is to examine programs designed for students in grades K-12 that have already been implemented in communities across the country in order to determine the amount of information taught and to identify a global standard preventative program for all educational institutions. This project will be an exploratory study in which existing K-12 curriculum programs are reviewed qualitatively using a content analysis method based upon the theoretical framework of Choi’s Cyber-Routine Activities Theory (Cyber RAT) (Choi, 2008). The expected outcome of this research is to identify and create standards for an ideal cybersecurity educational program for students in grades K-12. This research is timely and imperative in the field of criminal justice because crimes are becoming increasingly prevalent in the cyber-world with very limited means available to control or prevent them. Findings in this study suggest that most programs teach students a sufficient amount of topics relating to computer hygiene, computer ethics, and technological skills. However, further research must be conducted to determine the quality of these programs in adequately informing students about topics involving cybersecurity and cybercrime

Acute achilles tendon rupture : predictors and intervention to promote outcome

Background: Orthopaedic trauma and surgery is still associated with major complications related to immobilization, which results in reduced circulation, thromboembolic events, impaired healing and functional deficits. An acute Achilles tendon rupture (ATR) is associated with a high risk of deep venous thrombosis (DVT) and varied extent of impaired physical ability. The knowledge of underlying factors leading to hampered functional outcome one year after surgery of ATR is still limited. Since pharmacological DVTprophylaxis has low or no effect during lower leg immobilization it is speculated whether adjuvant mechanical treatment with intermittent pneumatic compression (IPC) applied during lower limb immobilization can reduce the incidence of DVT. Aims: The purpose of this thesis was to assess predictors of outcome after acute ATR and to investigate if an intervention using IPC could reduce the risk of immobilization-induced complications, i.e. to reduce DVT-incidence and to enhance the healing response. Results and Discussion: In a prospective cohort of ATR patients using combined patient reported- and functional outcome measures predictors of outcome were investigated. This thesis established that three independent factors predict patient outcome at one year postoperatively. Thus, it was demonstrated that postoperative DVT during leg immobilization, aging and male gender are independent predictive factors of patient outcome. Moreover, more than half of the patients exhibited significant functional deficits at one year postoperatively. These results imply that specific interventions are warranted to prevent DVT. In a prospective randomized study, intervention with IPC under plaster cast was compared to treatment-as-usual with plaster cast only. DVT incidence was assessed using compression duplex ultrasound (CDU), by two ultrasonographers blinded to the treatment. The study ended prematurely since an interim analysis demonstrated a high, non-significant incidence of DVT in both groups, IPC (75%) and controls (50%), and a malfunctioning of the IPC device under plaster cast. These findings suggest that other means of applying IPC during immobilization should be evaluated. The above conclusions resulted in a prospective randomized trial comparing adjuvant IPC applied under an orthosis versus plaster cast only. CDU analysis demonstrated significantly reduced incidence of DVT at 2 weeks post-operatively, 21% in the IPC-group compared to 37% in the control group. Patients aged ≥ 40 years exhibited an almost fivefold increased odds of DVT. Moreover, patients that received no IPC treatment exhibited an almost threefold increased odds for DVT, independently of age. Furthermore, using microdialysis technique, adjuvant IPC treatment was shown to increase the metabolic activity at 2 weeks post-operative ATR. The demonstration that adjuvant IPC effectively reduced DVT incidence, and also is capable of enhancing the metabolic response suggests that IPC treatment may not only be a viable means of prophylaxis against DVT in an outpatient setting, but possibly also a method of promoting healing. Conclusions: This thesis established that poor outcome is common after ATR and that three specific, independent risk factors can predict a negative outcome after ATR. One of these risk factors, i.e. DVT, can be prevented by IPC used under an orthosis during lower limb immobilization. The results suggest that all patients with lower leg immobilization should be screened for risk factors of DVT and that IPC may be an effective, non-pharmacological outpatient approach to reduce the risk of DVT, maybe also for enhancement of healing

Pre-announced optimal tax reform

Optimal tax policies in dynamic models have unappealing features. In particular, optimal tax reform typically involves a large initial accumulation of government assets which is responsible for a large part of the welfare gains from optimal tax reform. In this paper, we investigate the robustness of these findings by studying optimal tax policy in a standard growth model when a reform has to be announced in advance of its implementation. We find that this requirement leads to an optimal solution which is considerably more reasonable than optimal tax reforms studied previously. Using numerical calculations, we find that the optimal pre-announced tax reform involves only a small initial accumulation of government assets. We also find that the welfare gains from optimal tax reform are reduced by no more than a third when the government is required to pre-announce reform about 14 years in advance, and that this reduction is mainly due to the delay itself rather than the effect of pre-announcement on the character of the optimal tax reform. This leaves us with a welfare gain corresponding to an increase in consumption of about 1 percent from a tax reform with reasonable properties.optimal taxation, growth model, implementation lags