Is Variation in Hours of Work Driven by Supply or Demand? Evidence from Finnish Manufacturing Industries

This paper uses panel data from 1989 to 1995 on blue-collar workers in Finnish manufacturing industries and their establishments to assess the extent to which hours of work are affected by individual or establishment characteristics - observed as well as unobserved. We argue that recent research on working hours has focused almost exclusively on the supply of labor, but that insights into the extent to which hours variation is driven not by supply but by demand will affect the likelihood that supply-side policies will succeed. Our estimates suggest that both individual and establishment characteristics matter, but that establishment level effects account for the bulk of the variation in hours.labour supply, labour demand, employment

Intergenerational mobility of socio-economic status in comparative perspective

This paper reviews three strands of literature on socio-economic intergenerational mobility. The first is a mostly recent and rapidly growing economics literature that measures mobility in labour earnings and income. This approach is compared with two classical sociological approaches that measure the mobility in class and status. The United States seems to rank quite high in terms of class and status mobility, but low in terms of earnings and income mobility. This seemingly contradictory result can be accounted for by lower earnings mobility within occupations in the United States.

American exceptionalism in a new light: a comparison of intergenerational earnings mobility in the Nordic countries, the United Kingdom and the United States

We develop methods and employ similar sample restrictions to analyse differences in intergenerational earnings mobility across the United States, the United Kingdom, Denmark, Finland, Norway and Sweden. We examine earnings mobility among pairs of fathers and sons as well as fathers and daughters using both mobility matrices and regression and correlation coefficients. Our results suggest that all countries exhibit substantial earnings persistence across generations, but with statistically significant differences across countries. Mobility is lower in the U.S. than in the U.K., where it is lower again compared to the Nordic countries. Persistence is greatest in the tails of the distributions and tends to be particularly high in the upper tails: though in the U.S. this is reversed with a particularly high likelihood that sons of the poorest fathers will remain in the lowest earnings quintile. This is a challenge to the popular notion of 'American exceptionalism'. The U.S. also differs from the Nordic countries in its very low likelihood that sons of the highest earners will show downward 'long-distance' mobility into the lowest earnings quintile. In this, the U.K. is more similar to the U.S.

Alleviating unemployment traps in Finland: Can the efficiency-equity trade-off be avoided?

Using a new comprehensive tax-benefit model, JUTTA, this paper examines how labour supply incentives – both to participate in the labour force (the “extensive” margin) and to supply extra hours of work (the “incentive” margin) – have changed in Finland in 1995-2007. The results reveal that the average participation tax rate has decreased by 10 percentage points to 62 per cent. Despite the significant improvement in incentives, some of the unemployed who have children, especially single parents, are still in an unemployment trap, i.e. the disposable family income does not significantly increase if the person is employed. We therefore present simulations where the social security system is reformed, without reducing minimum benefits, so that the income dependence of some of the benefits is reduced. This reform redistributes income to the poor and, at the same time, improves the incentives to participate in the labour force. We also compare the effects of this policy with those of a set of more traditional type of policies, consisting of across-the-board tax cuts and increases in income support.microsimulation, labour supply, extensive margin, efficiency-equity trade-off

Long-Term Effects of Forced Migration

We study the long-term effects of human displacement using individual-level panel data on forced migrants and comparable non-migrants. After World War II, Finland ceded a tenth of its territory to the Soviet Union and resettled the entire population living in these areas in the remaining parts of the country. We find that displacement increased the long-term income of men, but had no effect on that of women. We attribute a large part of the effect to faster transition from traditional (rural) to modern (urban) occupations among the displaced.regional labor markets, displaced persons, migration

Equality of Opportunity and the Distribution of Long-Run Income in Sweden

Equality of opportunity is an ethical goal with almost universal appeal. The interpretation taken here is that a society has achieved equality of opportunity if it is the case that what individuals accomplish, with respect to some desirable objective, is determined wholly by their choices and personal effort, rather than by circumstances beyond their control. We use data for Swedish men born between 1955 and 1967 for whom we measure the distribution of long-run income, as well as several important background circumstances, such as parental education and income, family structure and own IQ before adulthood. We address the question: in Sweden, given its present constellation of social policies and institutions, to what extent is existing income inequality due to circumstances, as opposed to 'effort'? Our results suggest that several circumstances, importantly both parental income and own IQ, are important for long-run income inequality, but that variations in individual effort account for the most part of that inequality.equality of opportunity, family background, inequality, long-run income

The Finnish developmental state and its growth regime

This paper reviews Finland's growth strategy in the postwar decades. Finland was able to initiate an impressive mobilization of resources during this period, reflected mostly in a high rate of capital accumulation for manufacturing industries. This was achieved by an unorthodox combination of dirigiste means and a basic commitment to upholding the market economy. The state acted as a net saver, and credit was rationed to productive investment outlays. This policy package may have been boosted by the country's precarious international position during the cold war, so that an economic failure would have been very risky indeed. We argue also that incomes policies and welfare reforms were important in sustaining the necessary political compromise that underpinned the Finnish development state

Income Poverty in Advanced Countries

The living standard of the least well-off members of society - industrialized or not - is of public policy and ethical interest. One way to examine differences between societies in this respect is to study the extent and severity of income poverty between countries and over time. While poverty can be thought of in many different ways, examining income poverty has a long tradition. This chapter (Draft of Chapter 10 in Handbook on Income Distribution, edited by A.B. Atkinson and F. Bourguignon. Preprint submitted to Elsevier Preprint 31 December 1998) reviews issues that arise in studying economic poverty in industrialized countries and examines evidence on their ranking according to poverty and its changes over time

Survey estimates of wealth holdings in OECD countries: Evidence on the level and distribution across selected countries

This paper discusses issues that arise in the comparison of estimates of wealth holdings and their distribution in light of data for selected OECD countries. We find large differences in the level of wealth, depending on whether the mean or median levels are compared across countries. Sensitivity of wealth estimates to survey design are evident in that even within countries, these ranking of two different surveys depends on how central tendency is measured. Comparisons of the composition of household wealth based on secondary data, as well as the distribution of net worth, are difficult because comparable data are scarce. The evidence suggests that country ranking by level of net worth inequality is similar to that by income inequality, and that net worth inequality has tended to increase across the countries we examine

IQ and Family Background: Are Associations Strong or Weak?

For the purpose of understanding the underlying mechanisms behind intergenerational associations in income and education, recent studies have explored the intergenerational transmission of abilities. We use a large representative sample of Swedish men to examine both intergenerational and sibling correlations in IQ. Since siblings share both parental factors and neighbourhood influences, the sibling correlation is a broader measure of the importance of family background than the intergenerational correlation. We use IQ data from the Swedish military enlistment tests. The correlation in IQ between fathers (born 1951-1956) and sons (born 1966-1980) is estimated to 0.347. The corresponding estimate for brothers (born 1951-1968) is 0.473, suggesting that family background explains approximately 50% of a person's IQ. Estimating sibling correlations in IQ we thus find that family background has a substantially larger impact on IQ than has been indicated by previous studies examining only intergenerational correlations in IQ.ability, intergenerational mobility, family background