Regional growth centres - the most attractive location in Finland?

The present study analyses migration patterns in Finland to test if micro- economic evidence for the Harris-Todaro model is found. The H-T hypothesis states that rural-urban migration is a results of differences in expected earnings and employment prospects. In addition to the basic framework factors such as distance-decay and human capital accumulation are considered. The recent migration trend in Finland show concentration of population in a handful of urban growth centres. Human capital is flowing towards those regions while rural areas are losing theirs. In recent years this tends has become more apparent, though the analysis of long-run trends shows that the urban pattern has been developing over several decades. Both the H-T hypothesis and the distance-decay hypothesis are supported by the data. Human capital (young, educated individuals) shows also greater concentration, as expected.

Regional convergence in Finnish provinces and subregions, 1960-94

This paper analyses regional productivity convergence in Finland using two different data sets. Firstly, absolute and conditional convergence was estimated in the 12 Finnish provinces during 1960-94. Convergence was found to be strong in 1960-80, but after 1980 regional disparities started to grow again. Secondly, similar study was made for the 88 small-scale subregions in 1988-94. In addition, the subregions' relative growth performance and cross-sectional convergence dynamics were evaluated using Markov chain transition matrices. No clear evidence of (beta- or sigma-) convergence was found here, but the dynamic analysis revealed an evolving regional distribution of productivity and noticeable potential for convergence. Thus the regional classification and the method used can markedly affect the results obtained in a convergence study.

Regional Labour Market Adjustment: Are Positive and Negative Shocks Different?

This paper investigates the evolution of regional disparities in Finland between 1988 and 1997. The analysis focuses on per capita GDP and its subcomponents, particularly labour productivity, jobs and population. The results show, first, that the evolution of labour productivity and the number of jobs account for the emerged regional divergence of per capita GDP during 1990-1995. Second, even though inter-regional migration tends to have convergent effects on regional per capita GDP, its effect was not strong enough during 1990-1995: the divergence of productivity and jobs dominated. Third%2C among divergent factors (productivity and jobs), manufacturing contributes the most to the divergence of per capita GDP, whereas private services is the main convergent sector. Finally, the divergence of regional productivity (or jobs) in a sector does not necessarily contribute to regional divergence of overall per capita GDP, since the most productive activity (or most of the jobs) in some sector are not necessarily located in regions where per capita GDP is the highest.

Educational policy and intergenerational income mobility: evidence from the Finnish comprehensive school reform

This paper estimates the effect of a major education reform on the intergenerational income mobility in Finland. The Finnish comprehensive school reform of 1972-1977 replaced the old two-track school system with a uniform nine-year comprehensive school and significantly reduced the degree of heterogeneity in the Finnish primary and secondary education. We estimate the effect of this reform on the intergenerational income elasticity using a representative sample of males born during 1960-1966. The identification strategy relies on a difference-in-differences approach and exploits the fact that the reform was implemented gradually across country during a six-year period. The results indicate that the reform reduced the intergenerational income elasticity by about seven percentage points.Intergenerational mobility; education; comprehensive school reform

Matching in thin labour markets: panel data evidence from Finland, 1991-2002

The matching function that postulates a relationship between the flow of new matches and stock of job seekers and vacancies has attracted considerable attention, both theoretical and empirical during the last decade. In this paper the properties of a matching function are examined by using a large panel data set from Finland. The data has a high frequency and it is highly disaggregated, comprising monthly data on 174 work-to-travel areas from a 12-year period between January 1991 and August 2002. We test for density effects, i.e. the importance of the size of markets on matching efficiency. The robustness and importance of our empirical findings are guaranteed by the quality of data. First the data allows us to model matching functions for two different measures of endogenous variables, namely total matches and total outflow from unemployment. Second, we can measure job seekers by their origin, i.e. whether they are unemployed, employed or outside of the labour force. We can thus construct matching models where the measure of job matches and the pool of job searchers are consistent with each other. Third, the data includes information on the composition of the registered job seekers, including age, sex and the share of short- and long-term unemployment. These controls provide interesting information on possible differences in matching rates by these groups.

Factor Price Equalization in Finland

The Heckscher-Ohlin trade model leads to clear conclusions on the absolute and relative factor prices in a two-commodity specification of the model where both commodities are produced and factors can move freely within the economy. Even though the tests on factor price equalization fail in international comparisons, regional approach offers a prospective way of characterizing how factors of production, e.g. skilled and unskilled labor are utilized in optimally behaving markets and which potential reasons are behind deviating from the ideal situation. Within one economy, Finland, where regions are well integrated nationally by goods trade and factor mobility, we test factor price equality between regions. Robust tests derived from Heckscher-Ohlin trade model developed by Bernard and Schott (2001) and further by Bernard et al. (2002) are used for testing the absolute and relative equalization between factor prices. As a distinction to absolute equalization, the relative equalization allows regional differences in the total factor productivity. The tests are robust to unobserved regional productivity differences, unobserved regional factor quality differences and variations in production technology across industries. Regional relative factor prices can also be used for studying regional industry mix (different cones of diversification) that can vary between regions but are in accordance with the theory. These different industry mixes on the other hand imply different skill-premium to prevail in different regions depending on the availability of endowments. Large supply of skilled labor will result in lower relative wages for skilled labor. Tests are applicable to any pairs of factors and do not necessarily need information e.g. on capital inputs. We compare the results with similar regional studies conducted in the United States and the United Kingdom. Compared to flexible labor markets in the U.S. and small but densely populated United Kingdom, the differences are expected to be even larger in Finland, since the country is a sparsely populated but relatively large country. Markets are well integrated in Finland, though, and common regulations prevail throughout the country. The data used for Finland deviates from the reference studies. We utilize Population Census of employed labor force and concentrate the analysis on the manufacturing sector between 1987 and 1999. We start with one cross-section and then extend the analysis to several years. The data includes 135 000 observations based on employment relations. Education level is used for dividing the labor force into skilled and unskilled labor force. The data is connected with the information on provincial identification as well as the industry coding of the employer. The country is divided to 15 employment regions and the employer coding follows 3-digit SITC classification. Both in the U.S. and the UK the hypothesis on the same relative factor prices are widely rejected in the literature. As an explanation there may be varying industry mixes, region-industry technology differences, agglomeration and increasing returns to scale. For Finland we aim at estimating possible regionally varying effects of joining to European Union and are regions differentially exposed to pressures from increased international trade.

Global talent fosters innovation and collaborative patents

Innovation thrives when a diverse set of ideas come together, and globalisation plays an important role in facilitating this process. This recombination often happens through skilled people moving to top talent clusters or labs. Over 40 per cent of the researchers at America’s top seven cancer research centres are foreign-born, and one researcher described how the interaction of these nationalities and their educational differences helped to foster breakthrough research. A recent book by W. Kerr, The Gift of Global Talent, further connects this global talent to important transformations (many good, some bad) in the businesses and economies of countries like the United States and United Kingdom