The Dynamics of Child Poverty in Sweden

The purpose of this paper is to study (empirically) the dynamics of child poverty in Sweden, the quintessential welfare state. We find that 1 out of every 5 children is disposable income poor at least once during his or her childhood, while only 2 percent of all children are chronically poor. We also document a strong life-cycle profile for child poverty. Just over 20 percent of all children are born into poverty. The average poverty rate then drops dramatically to about 7.5 percent among 1-year old children. After which, it declines (monotonically) to about 3.9 percent among 17-year olds. Children in Sweden are largely protected (economically) from a number of quite serious events, such as parental unemployment, sickness and death. Family dissolution and longterm unemployment, however, do push children into poverty. But for most of these children, poverty is only temporary. Single mothers, for example, are overrepresented among the poor, but not among the chronically poor. Children with immigrant parents are strongly overrepresented among the chronically poor; as are children whose parents have unusually low educations. We argue that information about the dynamics of child poverty may help policy makers to construct more salient policies for fighting child poverty.child poverty; chronic poverty; poverty dynamics

Capital-Skill Complementarity and Inequality in Sweden

Income inequality increased in Sweden during the 1980’s and 90’s as did the returns to higher education. The main conclusion of this study is that increased income inequality between high and low skilled workers is demand driven and is due to the presence of capital-skill complementarity in production. Increased investments in new, more efficient capital equipment, together with a slowdown in the growth rate of skilled labor, have raised the ratio of effective capital inputs per skilled worker, which, in turn, has increased the relative demand (and market return) for skilled labor through the capital-skill complementarity mechanism.capital-skill complementarity; inequality; relative wages; skill premium; university wage premium

Driving Under the Influence of Our Fathers

This paper studies intergenerational correlations in drunk driving between fathers and their children using the Stockholm Birth Cohort. We find strong evidence of an intergenerational drunk driving relationship. Cohort members who have fathers with a drunk driving record have 2.59 times higher odds of having a drunk driving conviction themselves than cohort members with non-drunk driving fathers. We then go on to investigate the underlying mechanisms that give rise to these correlations. The results provide compelling evidence that at least some of this relationship represents a behavior-specific transference from fathers to their children. Specifically, much of the raw father-child drunk driving relationship persists over and above controls for a number of potential explanations, including that the relationship is: (i) a by-product of parental alcoholism, (ii) symptomatic of a general pattern of non-law abiding behavior, (iii) attributable to inherited ability and physical characteristics, and (iv) accounted for by common background variables or social factors. We then go on to show how this mechanism may change over time. As cohort members age into adulthood, the father-child drunk driving relationship appears to be driven by a more general behavioral transference mechanism and can be accounted for by parental alcoholism and non-law abiding behavior.alcohol; crime; drunk driving; illegal behavior; intergenerational crime; intergenerational mobility; risky behavior

Like Godfather, Like Son: Explaining the Intergenerational Nature of Crime

This paper studies intergenerational correlations in crime between fathers and their children and the underlying mechanisms that give rise to these correlations. Using data from the Stockholm Birth Cohort, we find strong evidence of an intergenerational criminal relationship. Sons whose fathers have at least one sentence have 2.06 times higher odds of having a criminal conviction than sons whose fathers do not have any sentence. At the intensive margin, one additional sentence of the father increases the expected number of sons’ convictions by 32 percent. Fatherdaughter relationships are generally not significantly different than fathers-son relationships. Traditional regression techniques indicate that socioeconomic status accounts for roughly one-third of the extensive margin father-son relationship and somewhat less, particularly at the intensive margin, for daughters. Over and above this, for both sons and daughters, our ability proxies account for an additional 20 percent. Finally, household heterogeneity, the most important component of which is household instability, accounts for almost one-third of the intergenerational relationships. More direct evidence regarding whether the intergenerational correlations arise through either an inherited traits mechanism or a father as role model mechanism is provided in four alternative experiments. These experiments focus on: (i) a sample of twins, (ii) an adoptee sample, (iii) the timing of the father’s crime, and (iv) the quality of the father – child relationship. We find evidence that both direct channels play a role in the reproduction of crime from one generation to the next. Finally, we find that paternal incarceration may actually lower the number of crimes committed by some children, providing additional evidence of the importance of a behavioral transference mechanism.crime; illegal behavior; intergenerational crime; intergenerational mobility; risky behavior

Life-Cycle Variations in the Association between Current and Lifetime Income: Country, Cohort and Gender Comparisons

This study applies Haider and Solon’s (2005) generalized errors-in-variables model to Swedish income tax data in order to produce estimates of the association between current and lifetime income. Our estimates of this association demonstrate strong life-cycle patterns. This implies that the widespread use of current income as a proxy for lifetime income (following the standard errors-in-variables model) leads to inconsistent parameter estimates (a.k.a. life-cycle bias). Estimates for comparable cohorts of Swedish and American men demonstrate surprising similarities. There are, however, significant gender and cohort differences in this association which, in turn, lead to statistically significant and quantitatively meaningful differences in life-cycle biases. The results from this study can aid the applied researcher in analyzing and correcting for life-cycle bias.errors-in-variables model; life-cycle bias; lifetime income

Is the Swedish Central Government a Wage Leader?

Is the Swedish central government a wage leader? This question is studied empirically in a vector error-correction model using a unique, high quality data set. Private sector salaries are found to be weakly exogenous to the system of equations. This means that the private sector is the wage leader in the long-run model. We also find that salaries in these two sectors do not converge to a common salary in the long-run and that changes in central government salaries do not Granger cause changes in private sector salaries. Together, these findings clearly demonstrate that the central government is not placing undue pressure on salaries in the private sector. The central government is not acting as a wage leader.public sector wages; Sweden; vector error-correction model; wage leadership.

Capital-Skill Complementarity and Inequality in Swedish Industry

Income inequality has been increasing in Sweden for more than two decades. Since 1981, the skill premium has risen by 20 percent for the economy as a whole and by as much as 30 percent for men working in the private sector. At the same time, the supply of skilled workers has grown by 20 percent. Given this increase in the supply of skilled labor, why has Sweden experienced such a prolonged increase in income inequality between skilled and unskilled workers? This question is examined here in a neoclassical growth framework using data from Swedish industry. The main finding of this study is that the rise in income inequality in Swedish industry is being driven by capital-skill complementarity. Increased investments in new capital equipment, together with a higher rate of capital utilization and a slowdown in the growth rate of skilled labor, have raised the ratio of effective capital inputs per skilled worker, which, in turn, has increased the relative demand for skilled labor through the capital-skill complementarity mechanism.capital-skill complementarity; skill premium; wage inequality

What More Than Parental Income? An Exploration of What Swedish Siblings Get from Their Parents

Sibling correlations are used as overall measures of the impact of family background and community influences on individual outcomes. While most correlation studies show that siblings are quite similar in terms of future achievement, we lack specific knowledge of what it is about family background that really matters. Studies on intergenerational income mobility show that parental income matters to some extent, but they also show that more than half of the family background and community influences that siblings share are not even correlated with parental income. In this paper, we employ a data set that contains rich information about families in order to explore what factors in addition to parental income can explain why siblings tend to have such similar outcomes. Our results show that measures of family structure and social problems account for very little of sibling similarities in adult income above and beyond that already accounted for by parental income. However, when we add a set of indicators for parental involvement and attitudes, the explanatory power of all our variables increased from about a third (using only traditional indicators of socio-economic status) to just over half. Interestingly, indicators of parents' patience, i.e., propensity to plan ahead and willingness to postpone benefits to the future, are particularly important.family background, intergenerational mobility, parents, siblings, long-run income

Distribution and Relative Abundance of Butterflyfishes and Angelfishes Across a Lagoon and Barrier Reef, Andros Island, Bahamas

Juveniles of Chaetodon capistratus, C. striatus, C. ocellatus, C. sedentarius, Pomacanthus arcuatus, P. paru, Holacanthus ciliaris, and H. tricolor occurred in the shallow lagoon habitats. Adults and subadults of these species were associated with the deeper barrier reef and seaward platform habitats. C. aculeatus occurred only on the outer seaward platform. In strip transects at a seaward platform site, C. capistratus and H. tricolor were found with significantly greater abundance than P. paru and C. striatus

The Incentives of Future Economists - Striking a Balance between Tools and Relevance

As a contribution to the recent debate about graduate education in Economics, we have surveyed all students enrolled in the Stockholm Doctoral Program in Economics. We believe that this is a good representative of a strong European graduate program which in the early 1990's adopted a US-style structure. Our results show that students enter with a relatively broad academic background and an interest in social science and real world problems, but find that incentives within the program do not encourage participation in the policy debate. To the extent that graduate school is educating idiots savants it is not because students enter with no interest. Our results are remarkably similar to those found by Colander and Klamer (1987) in their survey of American graduate students in the late 1980's.Economics education; graduate education