Jakob Molinder, Kerstin Enflo, Tobias Karlsson, 20 September 2018

Conflicts in the labour market are detrimental to economic growth and welfare. Sweden was among the countries with the highest incidents of industrial disputes in the 1920s, but experienced declining levels from the 1930s onward. Using Swedish data from 1919 to 1938, this column shows that towns with both powerful unions and strong Social Democratic presence experienced labour market peace. The results point toward the importance of labour market peace for strategic political reasons, rather than to politicians offering tangible concessions via municipal governmental power.

Martin Nybom, Kelly Vosters,

In 2014, Gregory Clark proposed a ‘simple law of mobility’ suggesting that intergenerational mobility is much lower than previously believed, and relatively uniform across countries. This column tests this law using US and Swedish data. The results show, in contrast to the simple law of mobility, no evidence of a rise in intergenerational persistence and no evidence of uniformity across countries.

Emilia Simeonova, Janet Currie, J Peter Nilsson, Reed Walker, 08 July 2018

Traffic congestion is a major problem for urban centres. Among various negative externalities, traffic creates substantial pollution which can impact the health of residents. This column explores how the implementation of a congestion pricing zone affected the health of children in Stockholm. The programme saw short-term reductions in common traffic pollutants and an accompanying decrease in children’s hospital visits for acute asthma. This decrease grew larger the longer the tax was in place. 

Nikolaus Wolf, 11 June 2018

Camille Landais, Arash Nekoei, J Peter Nilsson, David Seim, Johannes Spinnewijn, 03 February 2018

Unemployment insurance is compulsory in almost all countries, with no choice for workers over the level of coverage. But why restrict choice if it can improve the targeting of individuals who value the insurance the most? This column uses evidence from Sweden to examine whether the issue of adverse selection justifies a universal mandate for unemployment insurance. Workers who purchased more generous unemployment insurance were more than twice as likely to be unemployed in the following year. A universal mandate combats such adverse selection, but forces workers to buy insurance even when insurance costs are higher than the value they assign to it.

Emmanuel Saez, Benjamin Schoefer, David Seim, 22 November 2017

Cuts to the employer portion of payroll taxes are often discussed as a policy lever to reduce labour costs for firms. This column examines the effects of a Swedish experiment which dramatically cut employer payroll taxes for young workers between 2007 and 2015. The tax cut reduced youth unemployment by 2-3 percentage points, without any differential increase in wages of young workers. Firms used the tax windfall to expand employment and business activity, and firms with larger tax windfalls raised wages for workers – both young and old – collectively.

Markus Ibert, Ron Kaniel, Stijn Van Nieuwerburgh, Roine Vestman, 08 September 2017

Empirical analysis of mutual funds has focused on the relationship between funds and fund investors, and little is known about the nature of compensation contracts between firms and managers. This column uses Swedish data to provide novel insights on the relationship between mutual fund firms and manager compensation. In contrast to how investors compensate the fund company, a concave relationship is observed between pay and revenue. The sensitivity of pay to performance is surprisingly weak, with firm-level characteristics playing an important role in dynamic compensation.

Rikard Eriksson, Andrés Rodríguez-Pose, 08 August 2017

While job-related mobility is key to knowledge sharing, it may also undermine on-the-job training through labour poaching, and assessing its overall impact on productivity and growth is not straightforward. This column uses data on nearly 2.7 million new hires in Sweden to analyse the impact of labour mobility on plant performance. The greatest positive impact is seen in the country’s three largest cities, while firms in other large urban and university regions emerge as the biggest losers from job mobility.

Laurent Bach, Laurent Calvet, Paolo Sodini, 07 July 2017

A growing literature conjectures that wealthy households earn higher average returns, which can further exacerbate wealth inequality. Using Swedish administrative data, this column shows that the wealthy indeed earn higher returns on their asset portfolios. These high returns are primarily due to high levels of compensated risk. Households at the top of the wealth distribution further exhibit highly heterogeneous investment performance due to high levels of idiosyncratic risk.

Ernesto Dal Bó, Frederico Finan, Olle Folke, Torsten Persson, Johanna Rickne, 26 April 2017

Ancient Athenians drew lots to determine who served in public office, but oligarchs at that time (and ever since) have argued that there is a trade-off between competence and fair representation. This column uses Swedish population data on cognitive and leadership ability to argue that democracy in Sweden has created government by competent people who are representative of all walks of life. Sweden’s inclusive meritocracy suggests that electoral democracy can help us avoid the tension between representation and competence.

Fredrik Andersson, Lars Jonung, 15 December 2016

A recent Vox eBook examined the potential issues facing various EU members when it comes to negotiating with the UK over Brexit. This column, taken from the ebook, argues that Sweden should work for a happy divorce that lays the foundation for a remarriage, or 'Brentry'. As part of this, the authors advocate a temporary escape clause concerning the free movement of labour, which any member state can invoke when and only when they can prove that EU migration is directly harming a significant part of domestic society. 

Matthew Lindquist, Joeri Sol, Mirjam van Praag, Theodor Vladasel, 02 December 2016

Policies aimed at encouraging entrepreneurship are popular around the world, but a recent literature suggests that entrepreneurship might be more predetermined than previously thought. This column uses sibling correlations to tease apart the importance of genes, family background, and neighbourhood effects for later entrepreneurship. Parental entrepreneurship and genes are the two main drivers of sibling similarities in entrepreneurship. However, children do appear to be able to learn about entrepreneurship through their family and community, so it may be possible to teach relevant skills to young people.

Fredrik Andersson, Lars Jonung, 30 May 2016

The volume of credit to Swedish households has grown twice as fast as incomes since the mid-1990s. This has resulted in both rising house prices and rising household debt. This column argues that these trends expose Sweden to important economic vulnerabilities. Curbing these vulnerabilities will require prompt action by the authorities.

Mikael Elinder, Oscar Erixson, Daniel Waldenström, 20 April 2016

The distributional effect of inherited wealth has been a long-standing question in economics. This column presents new evidence on the issue using population-wide register data from Sweden. The findings show that inheritances decrease wealth inequality but increase the absolute dispersion of wealth. The equalising effect of inheritances is diluted, however, by the fact that less wealthy heirs consume most of their inherited wealth, whereas wealthier heirs tend to save theirs. 

Joakim Ruist, 28 January 2016

The current inflow of refugees into Europe has left policymakers in disagreement over how to react. A major concern is the perceived financial burden that can result from large intakes. This column discusses the fiscal impact of refugees on the Swedish economy. The current net redistribution from the non-refugee population to refugees (excluding arrivals in 2015) is estimated to be 1.35% of GDP. The economic burden of a generous refugee policy is therefore not particularly heavy, especially if the host country incorporates them as quickly as possible into the labour market.

Daniel Waldenström, 20 December 2015

Recent work on the importance of wealth and capital shows that it has fluctuated grossly over time in Europe. This column examines whether this pattern carries over to smaller, late-industrialising countries by looking at new historical evidence from Sweden. After being low in the pre-industrial era, Swedish wealth levels came into line with the rest of Europe in the 20th century. However, government wealth grew much faster and became more important in Sweden, largely due its public pension system. These findings highlight the role of economic and political institutions in the long-run evolution of national wealth.

Emilie Anér, Anna Graneli, Magnus Lodefalk, 14 October 2015

A large body of research has established a positive link between immigrants and bilateral trade. However, the temporary movement of people across borders has received less attention. This column uses Swedish data to analyse the impact of temporary cross-border movement on trade. Recently arrived migrants are found to reduce the negative impact of distance on foreign trade, by assisting firms to overcome informal and informational barriers to trade with their origin country. Facilitating movement of people across borders can be a highly useful tool for engaging in and benefitting from specialised and internationalised production networks.

Niklas Bengtsson, Per Engström, 28 October 2014

Critics of the ‘audit society’ and the so-called ‘new public management’ doctrines have gained momentum in recent years. At the centre of the critique is the so-called motivation crowding-out hypothesis. This column presents evidence from a field experiment involving Swedish non-profits. Far from crowding out intrinsic motivation, the threat of an audit improved all aspects of efficiency.

Karl Walentin, 11 September 2014

Central banks have resorted to various unconventional monetary policy tools since the onset of the Global Crisis. This column focuses on the macroeconomic effects of the Federal Reserve’s large-scale purchases of mortgage-backed securities – in particular, through reducing the ‘mortgage spread’ between interest rates on mortgages and government bonds at a given maturity. Although large-scale asset purchases are found to have substantial macroeconomic effects, they may not necessarily be the best policy tool at the zero lower bound.

Pages

Events

CEPR Policy Research