Sick of Taxes? Evidence on the Elasticity of Labor Supply when Workers Are Free to Choose

I estimate a price elasticity of sickness absence. Sick leave is an intensive margin of labor supply where individuals are free to adjust. I exploit variation in tax rates over two decades, which provide thousands of differential incentives across time and space, to estimate the price responsiveness. High taxes provide an incentive to take more sick leave, as less after tax income is lost when taxes are high. The panel data, which is representative of the Swedish population, allow for extensive controls including unobserved individual characteristics. I find a substantial price elasticity of sick leave, -0.7, with respect to the net of tax rate. Though large relative to traditional labor supply elasticities, Swedes are half as price elastic as bike messengers, and just as elastic as stadium vendors on the margin which they can adjust freely.sick leave, adjustable labor supply, work effort, taxes

Do Taxes Produce Better Wine?

Theory predicts that unit taxes increase the quality consumed in a market since unit taxes reduce the relative price of high quality goods. Ad valorem taxes, on the other hand, have no effect on relative prices and should not affect product quality. The hypothesis is tested empirically in the US wine market. I find that the market share of high quality wine is significantly increased by unit taxes and that there is no significant effect of ad valorem taxes, in accordance with the hypothesis and previous empirical studies.Quality Choice; Unit Tax; Tax Distortion

The Spirit of the Welfare State? Adaptation in the Demand for Social Insurance

Young generations demand substantially more social insurance than older generations, although program rules have been constant for decades. I postulate a model where the utility of taking up social insurance benefits depends on the past behavior of older generations. The model is estimated with individual panel data. The intertemporal mechanism estimated can account for half of the younger generations’ higher demand for social insurance benefits. The influence of older generations’ behavior remains when instrumenting using mortality rates, which makes a compelling case for a causal intertemporal influence on individual demand.social insurance; adaptation; role models

Trust Issues: Evidence from Second Generation Immigrants

This paper estimates the intergenerational transmission of trust by studying second generation immigrants in 29 European countries with ancestry in 87 nations. There is significant transmission of trust on the mother’s side. The transmission is stronger in Northern Europe. Ancestry from more developed countries suggests a stronger transmission of trust, but the heterogeneity in ancestry dissipates for individuals who reside in Northern Europe. The results suggest an interaction between cultural background and current institutions, where building trust in Northern Europe is a long process but the adjustment to the trust levels in Southern and Eastern Europe is fast

The ‘healthy worker effect’: do healthy people climb the occupational ladder?

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 standing. This paper documents evidence of non-negligible returns to occupation status on health (which we refer as ‘healthy worker effect’). We use a unique empirical strategy that addressed reverse causality, namely an instrumental variable strategy using the variation in average health in the migrant’s country of origin, a health measure plausibly not determined by the migrant’s occupational status. Our findings suggest that health status exerts significant effects on occupational status in several dimensions; having a supervising role, worker autonomy, and worker influence. The effect size of health is larger than that of an upper secondary education