Browsing by study line "General track"

As of the 1980s, global poverty has witnessed a serious reduction. In numerous occasions, the reduction in poverty has been connected to an agrarian reform. A land reform is a type of agrarian reform which involves redistribution of land or changes in the legal framework for land administration. A large body of empirical studies have found that land reforms have proven to be a prominent tool in alleviating poverty. In this thesis, I examine the economic outcomes of the Finnish land reform of 1918. The reform enabled tenant farmers, which covered around half of the rural population, to buy their farms with a fraction of the market price. As my identification strategy, I use instrumental variables analysis, exploiting arguably exogenous variation in the regional distribution of tenants. I employ municipal level data from decennial agricultural censuses from 1910 to 1941. I find that the land reform increased capital intensity by around 23% in the two subsequent decades, which correspond to over third of the overall increase. Using a plain stochastic output model, I evaluate that this would signify a 14% increase in output at the farm level. Furthermore, I compute that the reform accelerated the structural transformation of agriculture toward dairy farming by 10 years. These effects are robust to controlling various municipal characteristics, such as natural conditions, population density and wealth. To confirm that the analysis does not simply capture dissimilarities in pre-reform development, I report baseline differences in municipal characteristics by regressing outcomes on the proportion of tenants with a cross-section for 1910. These findings question the traditional view that the Finnish land reform regressed progress in agriculture. They are in line with the evidence on economic benefits of land reforms. As a novel contribution, this thesis is able to show that the effects are persistent. The exact mechanism driving the results could not be distinguished. I suspect, that the causal channel operated either through the farmers' improved incentives or an access to collateralizable assets, both dependent on property rights.

Early literature focused solely on risk’s role in asset pricing. Involving liquidity helps explain unexplained observations from the market, such as, cross-section of assets with different liquidity, and relax some strong assumptions of standard general equilibrium asset pricing models, such as, frictionless markets, no arbitrage, agent optimality and equilibrium. Contrary to empirical evidence, implications of these assumptions would predict that securities with identical cash flows be priced equal. The simplest definition for liquidity is the ease of trading a security, though, in the LAPM and Kiyotaki—Moore-model, liquidity is defined the aggregate value of the ability to transfer wealth across time. Illiquidity stems from exogenous transaction costs, demand pressure, inventory risk, private information and search frictions. Illiquid assets are harder to sell and require a discount, which translates into higher interest compared to a more liquid asset or a higher price commanded by the more liquid asset ceteris paribus; this is the liquidity premium. The intertemporal CAPM predicts that an asset’s price is the expectation of the product of the asset’s payoff and consumer’s intertemporal marginal rate of substitution. The LAPM presents an alternative approach based on corporations’ desire to store liquidity in order to fulfill their future payments. Unlike most real business cycle models, which feature a borrowing constraint, the Kiyotaki—Moore-model features a resalability constraint that allows the model to price the level of liquidity and liquidity risk. The main difference between the models is the LAPM full state contingency, which is why there is no need for money to circulate.

This thesis focuses on rational bubbles. Such bubbles belong to the indeterminacy school of economics, as they deviate economic models from equilibria determined by real economic factors. This topic is studied with an extensive literature review on theoretical and empirical research. Additionally, independent contributions provide new evidence and elaborate the topic further. The theoretical literature review begins afar to elaborate the classic Samuelson–Diamond–Tirolé model. However, this classical model is deterministic, dynamically inefficient and contractionary. Review of literature focus on models that overcome these three weaknesses. Particularly models with financial frictions are given much emphasis. Rational bubbles are explored better in the framework of a Martin–Ventura model. The Martin–Ventura model is similar to the classic model, but it overcomes classical weaknesses with stochasticity and financial frictions. This model is examined in close detail and simulated to show how rational bubbles can have both expansionary and contractionary effects in the Martin-Ventura model. Bubble detection is an inseparable part of bubble theory, and empirical literature review introduces different testing strategies. For example, variance bound, unit root, cointegration, instrument variable and switching-regime tests are discussed. However, many tests require data on many variables that are hard to observe, and nevertheless, the results are often ambiguous. The independent empirical work uses aggregate data of GDP, capital stock, consumption and wealth in the USA and Japan. The aggregate wealth is univariately tested for bubbles with the PSY test and autoregressive change in persistence tests. The multivariate real effects of prospective wealth bubbles are studied with vector autoregression. Similar univariate and multivariate approaches have been applied in other empirical studies, but in more specific setups. The literature review shows that rational bubbles are a diverse concept that is extendable to many models. Furthermore, such indeterminacies often improve the performance and plausibility of conventional (deterministic) models. The theoretical and empirical contributions are aligned and provide tentative bubble-supporting evidence in both countries. In light of the results, both economies, the USA and Japan, have accommodated economic bubbles during the last five decades.

Prices of different products are followed by statistical offices in order to produce price indices. The quality of products is constantly changing due to creative destruction. When a product leaves market, its price is computed with a method called imputation. Recent studies in United States and France have found that use of imputation may lead to upward bias in inflation. Since price indices are used as deflators when calculating economic growth, such a bias would mean that some of the growth is missed. The aim of this thesis is to study whether such a bias exists in Finland and how large it is. In addition, the channels of innovation induced growth are studied in order to determine from where the potentially missed growth originates. Creative destruction has been incorporated into economic growth models in the early 1990s. In its centre, are firms at the microlevel that innovate and create new products and improve existing ones. It has been shown that it is a key element when economic growth is concerned. New products and improving quality of old varieties is, however, widely recognised problem for price indices. Sources of bias for price statistics has been studied a lot and the changing quality of products is one of the greatest of them. This thesis contributes to this field by recognising a new possible source of bias and its magnitude in Finnish economy. The model used in this thesis is from 2017 paper by Aghion, Bergeaud, Boppart, Klenow and Li. The model is a new keynesian DSGE model with exogenous innovation and it provides an accounting framework which enables the quantification of missing growth. The missing growth is estimated using a so-called market share approach, where market shares of incumbent and entrant producers are exploited to quantify the share of growth that is missed yearly. Another method, namely indirect inference, relies on simulation of the economic growth model. It infers the arrival rates and step sizes of different types of innovations: incumbent of innovation, creative destruction and new product varieties. The simulation also enables for finding the contributions of those innovation types for the economic growth. The contributions provide information on from which type of innovation the majority of growth comes. Both methods use data provided by Statistics Finland. They use micro level data on private enterprises in Finland during the years 1989 – 2016. The market share approach requires establishment level data and information on the revenue and employment. The indirect inference method uses the same data aggregated on firm level for the years 1993 – 2013. In addition, the simulation requires total factor productivity growth rate for the given years. The results suggest that 0.489 percentage points of growth has been missed yearly in Finland during the years 1989 – 2016 when calculated with revenue data. The missed growth was estimated to be 0.532 percentage points per year with employment data. The results are comparable in magnitude with the results from the United States and France. The magnitude has remained stable over the years. The indirect inference method suggests that most of the growth comes from incumbent own innovation: 59.3% in 1993 – 2003 and 57.8% in 2003 – 2013. The rest is due to creative destruction and new product varieties either by incumbents or entrants. If 0.5 percentage points of growth is missed every year, it would have had significant effects on the economy. For example, many social benefits are tied to price indices and over estimation of them would mean that the benefits have not risen as much as they should have. Given the systematic nature of the bias, the central bank should consider increasing its inflation target. The statistical offices that produce the price statistics may be able to lower the bias if they manage to keep up to date with incumbent own innovations, since the majority of growth is originating from it. Also chain linked index helps lowering the bias by updating the sample and weights on a yearly basis. Additional research is needed in order to find solutions to overcome the bias caused by creative destruction and imputation of missing prices.

Abstract Faculty: Social Sciences Program: Economics Line of study: General line Author: Juho Ivaska Name of work: Mitigating the Covid-19 shock – A simulation study on the cost compensation schemes of Finland, Norway and the United States Type of work: Master’s thesis Month and year: 11/2021 Number of pages: 43 Keywords: Corporate subsidies, Covid-19, Simulation Storage location: University of Helsinki library Abstract: During the Covid-19 pandemic, many countries implemented sizeable support programs for companies suffering from the pandemic. This thesis compares the effectiveness of the Business Cost Support of Finland, the Norwegian Business Compensation Scheme and the Paycheck Protection Program (PPP) of the USA in terms of mitigating pandemic effects on firm profitability, liquidity and solvency. All three programs are cost support schemes but they differ in what costs are covered and in their eligibility criteria. The comparison is executed by simulating the pandemic-induced turnover shock on Finnish enterprises under each support scheme. Statistics Finland’s detailed Financial statement data from 2019 provides the starting position for the simulation. The turnover shock is one year of length and assigned to firms based on their industry code. Effectiveness of the support schemes is measured by mitigation rate which describes the share of the effects of the pandemic that the scheme can mitigate. Additionally, the costs of the schemes are considered. This thesis finds that the Norwegian scheme was the most effective in decreasing the number of unprofitable firms as well as the number of firms with liquidity troubles. It ranks the highest in all but one measure even when adjusted by its second highest price. The Finnish scheme yielded the highest price-adjusted mitigation rate in average quick ratio but trailed the Norwegian scheme slightly in all other categories. The PPP was the most expensive of the support schemes and thus the least effective in all the profit and liquidity related measures. This thesis concludes that compensating fixed costs and targeting the support carefully were crucial in supporting the worst hit businesses for a reasonable price. The Finnish Business Cost Support fared well compared to its counterparts but allowing for higher and lower single support payments would have most likely increased its effectiveness. If the target of the scheme is maintaining employees on firm payrolls, a pure wage compensation scheme as the PPP yields better results.

The formation and determining factors of commute distance are of prime interest in the fields of urban and labour economics, as the length of the commute is a result of many different personal and economic factors. Knowledge of what factors affect the length of the commute could be of use in public policy as well as future research. Similarly, empirical studies on the effect of income specifically have historically shown mixed results due to bias resulting from reverse causality, and inadequate methods of correcting for it. To date, there has been little research on commuting in Finland, and no studies specifically focused on the effect of income. This study applies a cross-sectional linear regression model, as well as fixed effects model utilizing panel data to both survey the overall effects of a large catalogue of determinants of commute distance and correct for the issue of reverse causality in the income-commute relationship. The study focuses on the year 2020 but utilizes data from 2015 to construct the fixed effects model. The fixed effects model is used to determine the relationship between income and commute distance as it, by definition, corrects for omitted variable bias. In addition, with a data selection of workers who remain with their employer during the observational period, the reverse causality issue is eliminated. The results indicate that the relationship between income and commute distance in Finland is negative in the fixed effects model when reverse causality is eliminated, which contrasts with basic theory and a large majority of previous studies. Sensitivity tests suggest that this result is not merely a superfluous outcome of the data selection process, but a genuine result. Out of the other determinants, it was found that educational effects in Finland, especially for men, are different than what was expected, as higher education was associated with a decrease in commute distance. Being married, male and having a car were found to positively affect commute distances. The number of children in the household was found to be a negative factor, especially for women. The result of this study reinforces the notion that studying the relationship between income and commute distance without correcting for reverse causality will lead to biased estimates. Additionally, compared to the few previous studies that have sufficiently done so, this study suggests a pattern. As a negative relationship between income and commute distance has only currently been established in Denmark and Finland, as compared to the positive results in larger European countries, possible future studies could elaborate on whether this effect is characteristic of the Nordic countries, or smaller countries in general.

Forskningens syfte är att förstå och kvantifiera energifattigdom I Finland inom ramen för statsvetenskap och välfärdspolitik. Energifattigdom är ett fenomen med flera potentiella faktorer som orsakar det. På grund av detta behövs ett brett spektrum av policy och politik för att lindra det. Energifattigdom är ett fenomen som nyligen fått mera fokus inom akademisk forskning i europeisk aspekt. Två metoder användes för att undersöka energifattigdom i Finland. Först genomfördes en kvalitativ sekundär analys for att känna igen och kategorisera resultat för orsaker och korrelationer för energifattigdom inom tidigare forskning. Baserat på tidigare hittade korrelationer gjordes antaganden om vad som orsakar eller riskerar att orsaka energifattigdom. Detta behövdes på grund av att energifattigdom inte mäts i Finland. Efter kvalitativa sekundär analysen gjordes en kvantitativ analys för att undersöka den regionala signifikansen av varje faktor för energifattigdom. Den kvalitativa sekundär analysen av tidigare forskning lyckades och gav korrelationer och orsak till energifattigdom. Den regionala betydelsen av varje faktor kvantifierades framgångsrikt och antaganden kunde göras för fenomenet i Finland. Till slut diskuteras de politiska- och policyansträngningar som direkt eller indirekt redan tagits i Finland för att lindra energifattigdom.

Kansaneläkelaitoksen (Kelan) järjestämän ammatillisen kuntoutuksen tavoitteena on auttaa kuntoutusasiakasta sopivan ammattialan valinnassa, työllistymisessä sekä työelämässä pysymisessä tai sinne palaamisessa. Tässä tutkielmassa pyritään selvittämään ammatillisen kuntoutuksen vaikutusta 16-29-vuotiaan kuntoutusasiakkaan myöhempään elämäntilanteeseen tarkastelemalla työkyvyttömyyteen tai työttömyyteen liittyvien sosiaaliturvaetuuksien saamista kolme vuotta kuntoutuksen hakemisen jälkeen. Ammatilliseen kuntoutukseen päätymistä ei voida pitää satunnaisena, vaan kuntoutuspalveluihin ohjataan tavallisesti yksilöt, jotka ovat terveydellisistä syistä kuntoutuksen tarpeessa, mutta kykeneviä hyötymään tarjotusta kuntoutuspalvelusta. Sekoittavat tekijät vaikuttavat sekä kuntoutukseen pääsemiseen että myöhempään sosiaaliturvan saamiseen, mikä tekee myönteisestä kuntoutuspäätöksestä sosiaaliturvan saamiselle niin sanotun endogeenisen selittäjän. Tutkielman aineistona toimivat Kelan etuusrekistereistä poimitut tiedot 16-29-vuotiaiden henkilöiden vuonna 2016 tekemistä ammatillisen kuntoutuksen hakemuksista, joihin on yhdistetty tiedot henkilöille vuonna 2019 maksetuista Kelan sosiaaliturvaetuuksista. Tutkielman menetelmänä endogeenisen selittäjän luoman estimointiharhan ratkaisemiseksi käytetään instumenttimuuttujaestimointia. Instrumenttina myönteisen kuntoutuspäätöksen saamiselle käytetään tietoa siitä, millä osuudella henkilön kuntoutushakemuksen käsitellyt kuntoutusratkaisija on tehnyt muille käsittelemilleen hakemuksille myönteisiä päätöksiä, eli niin sanottua ratkaisijan ''ankaruutta''. Myönteisen kuntoutuspäätöksen kausaalivaikutusta maksettuihin sosiaaliturvaetuuksiin estimoidaan kaksivaiheisella pienimmän neliösumman (2VPNS) estimoinnilla kuljettaen rinnalla myös perinteistä pienimmän neliösumman estimointia. Tutkielman tulokset käsittelevät ratkaisijan ankaruuden kelpoisuutta myönteisen kuntoutuspäätöksen saamisen instrumentiksi, sekä myönteisen kuntoutuspäätöksen vaikutusta henkilön vuonna 2019 saamaan sosiaaliturvaan. Saatujen tulosten perusteella kuntoutusratkaisijan ankaruus täyttää instrumentin eksogeenisyydelle, relevanssille ja monotonisuudelle asetetut oletukset. 2VPNS-estimoinnin tulokset näyttävät, että myönteisellä kuntoutuspäätöksellä on toimeentuloa turvaavien sosiaaliturvaetuuksien saamista kasvattava vaikutus. Ratkaisijan ankaruutta validina instrumenttina käyttävä 2VPNS-estimointi ilmentää myönteisen kuntoutuspäätöksen kausaalivaikutusta eri sosiaaliturvaetuuksien saamiseen. Saatuja tuloksia tulkittaessa otetaan kuitenkin huomioon estimaattien epätarkkuus ja niiden paikallinen luonne. 2VPNS-estimointi ilmentää myönteisen kuntoutuspäätöksen kausaalivaikutusta rajatapauksilla, joiden kuntoutukseen pääsy on riippunut kuntoutusratkaisijan ankaruudesta.

This thesis regards non-Lambertian surfaces and their challenges, solutions and study in computer vision. The physical theory for understanding the phenomenon is built first, using the Lambertian reflectance model, which defines Lambertian surfaces as ideally diffuse surfaces, whose luminance is isotropic and the luminous intensity obeys Lambert's cosine law. From these two assumptions, non-Lambertian surfaces violate at least the cosine law and are consequently specularly reflecting surfaces, whose perceived brightness is dependent from the viewpoint. Thus non-Lambertian surfaces violate also brightness and colour constancies, which assume that the brightness and colour of same real-world points stays constant across images. These assumptions are used, for example, in tracking and feature matching and thus non-Lambertian surfaces pose complications for object reconstruction and navigation among other tasks in the field of computer vision. After formulating the theoretical foundation of necessary physics and a more general reflectance model called the bi-directional reflectance distribution function, a comprehensive literature review into significant studies regarding non-Lambertian surfaces is conducted. The primary topics of the survey include photometric stereo and navigation systems, while considering other potential fields, such as fusion methods and illumination invariance. The goal of the survey is to formulate a detailed and in-depth answer to what methods can be used to solve the challenges posed by non-Lambertian surfaces, what are these methods' strengths and weaknesses, what are the used datasets and what remains to be answered by further research. After the survey, a dataset is collected and presented, and an outline of another dataset to be published in an upcoming paper is presented. Then a general discussion about the survey and the study is undertaken and conclusions along with proposed future steps are introduced.

The aim of this research is to examine the impact of population aging on income inequality in Finland over the time period from 1991 to 2016. The research question is relevant since population aging is a part of reality around the world because of the declining trend in the rate of birth in addition to greater longevity. These vast demographic and socio-economic changes stress the well-being of nations. This study offers some important insights into the discussion of income inequality in Finland as no similar study has been conducted before. Understanding the link between aging and income inequality will help us to direct our attention to where policy decisions might need to be directed if inequality is seen to grow adversely. This study will be carried out by both a decomposition analysis and a shift-share analysis. These methods are commonly used for examining the contribution to inequality of particular characteristics, as they manage to gauge the relative importance of different determinants in overall inequality. These methods will be applied to the traditional inequality measures belonging to the family of generalized entropy (GE), such as the mean logarithmic deviation, Theil’s index, and the half-squared coefficient of variation. The use of multiple different measures in inequality research is recommendable, for they provide information about the distribution from different perspectives, and clarify where in the distribution the change has taken place. In order to study the impact of population aging on income inequality, the population was partitioned into five different age cohorts; 0-39, 40-60, 61-65, 66-70, and 71+, and one- or two-person households were examined in this research. Data for this study was received from the Luxembourg Income Study Database (LIS). Income inequality was investigated by disposable household income, which was equivalized by the square root scale. The decomposition analysis allows us to answer the question of how much of total inequality is attributable to variability in the first subgroup, in the second, etc., and how much to between subgroups. To complement the results from the decomposition analysis, by the shift-share analysis we are able to simulate such a Finland which would have not aged at all since both 1991 and 2000 while other factors remain unchanged at the 2016 level. The results of the decomposition analysis led us to a clear conclusion that variations within groups are much more significant in the formation of total inequality than the variations between groups. In the light of the shift-share analysis, interestingly, the aged Finland is less unequal than the Finland, which would use the population shares of 1991 and 2000. Hence such a study of aging, which only examines changes in population shares ceteris paribus, shows that aging has slowed down the rise of inequality in Finland. This is because the age structure of the years 1991 and 2000 put the most weight on people in most unequal, or second most unequal age group in proportion to other age groups than the population distribution of the year 2016.