Documents IFN 8 results

"I study the link between taxes and youth self-employment. I make use of a Swedish reform, implemented in 2007–09, which suddenly made the payroll tax and the self-employment tax vary by age. The results suggest that youth self-employment is insensitive to tax reductions, both in the short run and in the somewhat longer run. I also study the effect of the tax reductions on income. For those that are defined as self-employed, I find positive effects on income from self-employment, and negative effects on income from wage employment. This finding suggests that the lower taxes caused the self-employed to reallocate time from employment to self-employment."

"In this paper, we argue that fundamental reforms of the Swedish business sector can explain the remarkable productivity and employment growth that followed the deep economic crisis in Sweden in the early 1990s. In the 1970s and 1980s, Sweden had one of the most regulated business sectors in the developed world. In the 1990s, however, Sweden reformed its labour market, product market, and corporate tax system as well as removed barriers to foreign direct investment (FDI). Our main finding from our institutional and theoretical examination is that the removal of barriers to entry and growth for new and productive firms and the increased rewards for investments in human capital and effort in workplaces were crucial to the success of these reforms. We find support for our thesis using detailed matched plant-firm-worker data. In particular, we observe increased allocative efficiency, measured as increased market share for more productive firms. Moreover, we show that foreign firms substantially contributed to productivity and employment growth during this period, which suggests that the liberalization of FDI was an important factor in the success of the reforms. Finally, we discuss how other countries can benefit from the Swedish experience by examining factors that appear to be specific to Sweden and others that can be generalized to other countries."

"The theoretical predictions of how employment protection affects firm productivity are ambiguous. In this paper I study the effect of employment protection rules on labor productivity using micro data on Swedish firms. A reform of the employment protection rules in 2001 made it possible for small firms with less than eleven employees to exempt two workers from the seniority rules. I exploit the reform as a natural experiment. My results indicate that increased labor market flexibility increases labor productivity. The increase appears to be driven mainly by the older and the smallest firms. It is not explained by capital intensity or the educational level of workers."

"An increasingly large share of cross-border acquisitions are undertaken by private equity-firms (PE-firms) and not by traditional multinational enterprises (MNEs). We propose a model of cross-border acquisitions in which MNEs and PE-firms compete over domestic assets. MNEs' advantage lies in firm-specific synergies and retained earnings, whereas PE-firms are good at reorganizing target firms. Prevailing interest rates do not work in favor of PE-firms, but a lower risk premium and a better financial market development does. Stronger firm-specific synergies, however, favors MNEs. Performing a welfare analysis, we show that a policy of restricting PE-firms from buying domestic assets can be counterproductive."

"The world is in the midst of a new wave of privatization, with record dollar amounts raised in both developed and developing countries. Using rich Swedish registry data covering two decades from the mid-1990s, we show that privatizations increased unemployment incidence by almost a fifth, and duration by a quarter, relative to peers who remained employed by a state-owned enterprise. This led to almost one million extra days of unemployment for the workers affected. Wages and labor force participation remain unchanged. Furthermore, we show that privatizations have been costly for workers, and therefore for society, only if they took place during recessions. These results shed new light on the welfare costs of privatization and how they can be mitigated."

"In Sweden, as in many other countries, marginal groups tend to be overrepresented in non-standard employment. A decomposition of the employment rate of full-time workers on permanent contracts reveals that non-standard employment contributes to a substantially weaker labour market attachment for females and the foreign born than suggested by conventional employment figures alone.

Our econometric analysis shows that the negative wage premia associated with fixed-term employment are considerably smaller in Sweden, both for natives and foreign born, than those that have been found for other countries. This may be due to a highly compressed wage structure and extensive coverage of collective bargaining in Sweden. On the whole, the type of fixed-term contract seems not to matter for the estimated wage premia."