Browsing by study line "Tutkimuksen opintosuunta"
Now showing items 1-12 of 12
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(2023)This thesis focuses on the investigation of adverse selection and moral hazard in the Finnish entrepreneurial insurance system. The thesis builds upon previous research on moral hazard and adverse selection in insurance markets, but focuses specifically on the social insurance market for entrepreneurs within sickness and parental allowances. This topic is of interest as mandating social insurance for entrepreneurs is vital, but often lacking due to the flexible nature of entrepreneurial activity. As a result, the social insurance systems may be subject to adverse selection and moral hazard. Rich panel data on insurance contributions of entrepreneurs in Finland allows me to measure the extent of asymmetric information both overall and dynamically. To test the former, I use a positive correlation test. In particular, the test looks at the probability of sickness or having a child in relation to insurance contributions. The results indicate a slight positive correlation between sickness risk and insurance contributions as well as the probability of having a child and insurance contributions. A more significant result is found for the risk of having children in a dynamic sense, showing a strong indication of a rise in insurance contributions around the time of receiving parental allowance. However, the results are more ambiguous in the case of sick pay. These results are robust to several controls as well as two separate identification strategies. Due to the endogeneity of illness or choosing to have children, causal conclusions cannot be drawn from the results.
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(2022)The opportunity costs of defence and the impact of defence spending on economic growth aroused the interest of researchers during the Cold War. The question is topical again, as the war in Ukraine has accelerated international armaments and increased investments in defence. For Finland and Sweden, the issue is also important in terms of future NATO membership, because NATO recommends that its member countries spend at least 2% of GDP on defence. Achieving the limit requires an increase in defence spending from both countries. No case studies on the impact of defence spending on economic growth have been published about Finland and Sweden, but the countries have been discussed as part of broader panel materials. This thesis fills the gap. The thesis applies structural vector autoregressive methods to analyse the period from 1960 to 2021. Granger causality is included in the analysis, because–despite its problematic nature–the concept has a central position in the history of the research topic. Previous literature has considered the identification of a structural model challenging because the determination of bidirectional causality would require a suitable exogenous variable, which is almost impossible to find in this context. The view is challenged by suggesting that a partial identification can be accepted when the interest is focused only on the defence spending shock. The alternative analysis concerning a shorter time period tests the sensitivity of results to a time period. The impulse response analysis suggests that the impact of defence spending on GDP is slightly positive for both countries, but statistically significant only for Sweden. Granger causality is not observed in either direction for either country. Finland's neutral result is in line with expectations and previous literature, but Sweden's positive result is contrary to expectations. The alternative analysis concerning the post-Cold War era confirms that the Finnish result is robust regardless of the time period. The inconsistency with previous literature and the challenges caused by conditional heteroskedasticity raise doubts about the reliability of the Swedish result. The thesis indicates that increases in defence spending will not harm economic growth in Finland and Sweden. The result is surprising, as it has been suggested that previous studies have underestimated the negative impact of defence spending and most of the recent literature supports a negative or neutral impact. Further research is needed, especially on the impact mechanisms and the causes of heterogeneity. Decomposing defence spending could provide answers to unresolved questions.
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(2023)Failures in bargaining, such as strikes or stalled climate change negotiations, are costly for all parties. So why does bargaining fail when mutually beneficial agreements exist? In the thesis, the classical problem of bilateral bargaining is studied by the means of a new laboratory experiment and a literature review of related theoretical and experimental work. The main focus is on the role of commitment tactics as a source of conflict. In the literature, complete information bargaining is often deemed to be efficient whereas incomplete information is considered to be the main driver of delay. However, by simply allowing the negotiators to attempt strategic commitments that are costly to make and uncertain to succeed, unique predictions of inefficient equilibria are obtained even when bargaining under complete information. The main theoretical framework of the thesis is a dynamic bilateral bargaining model of tough negotiations and delayed agreement. In the unique stationary Markov perfect equilibrium of the model, the bargaining takes the form of a war of attrition. Negotiators initially commit themselves to incompatible demands but an agreement is reached once a commitment decays. The rates at which the commitments decay determine the expected duration of the conflict. Moreover, if the negotiators do not differ in patience the one with the stronger commitment receives in expectation a larger share of the contested surplus. The predictions of the model are tested in a new laboratory bargaining experiment. The analysis of the pilot round shows mixed results. We find some conflict and inefficiency in bargaining due to initial incompatible commitments. Furthermore, in line with the theory, more than half of the agreed offers have a different outcome than the prevalent equal sharing of much of the experimental bargaining literature. However, it cannot be concluded that the data would be completely in line with the hypotheses. The different rates at which the commitments decay do not always determine the bargaining outcome and length of the delay. Slight modifications to the experimental design, which may solve the issues detected, are discussed. The different delay patterns observed in various real-life bargaining contexts suggest that there is not a single approach which could explain all the inefficiencies. The approach emphasizing the role of strategic commitments provides an alternative to the incomplete information explanation. However, despite the rich theoretical literature, only a few experimental studies testing the commitment models exist. The pilot round of our experiment is an important contribution to this branch of bargaining literature. Certainly, further empirical research is required in order to better understand the exact role that strategic commitments have in different conflicts.
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(2022)Conflict-related violence and fragility are among the core development challenges of our time. Over the past decades, most armed conflicts have comprised one or more non-state actors, and conflicts commonly arise among domestic actors. These non-state actors cannot resort to conscript armies and thus need to motivate citizens to join their ranks. Due to this, addressing individual participation motivations is an integral part of the study of conflict. Armed conflict participation is puzzling because it comes with significant risks. In contrast, the possible benefits of conflict outcomes are often public and non-excludable goods, making conflict participation subject to a free rider problem. This thesis provides a narrative literature review of individual participation motivations in the presence of the free rider problem. The focus is on situations where individuals are not conscripts, and the armed groups cannot mobilise an existing reserve of combatants. The existing economic literature has addressed individual-level conflict participation motivations relatively little. This thesis assesses different motivational factors’ ability to solve the free rider problem and seeks to inspire future research. Both theoretical and empirical literature is covered. This thesis addresses three motivational factors: (1) material incentives and the opportunity cost of participation; (2) grievances and socio-emotional incentives; and (3) negative incentives, particularly forced participation and the cost of non-action. This thesis does not seek to determine which motivation provides the best explanation. Instead, the logic behind each motivational factor is illustrated, and their ability to solve the free rider problem is critically evaluated. This thesis concludes that each motivational factor can help solve the free rider problem, but relying on a single motivation is often insufficient. This thesis recommends that economists look beyond material incentives and account for various motivations. Complementing material incentives with socio-emotional and negative incentives, in particular, gives a fuller picture of why individuals are willing to participate and risk their lives in conflict activities. However, further empirical research is needed to identify and test the abovementioned motivations.
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(2023)Kuolevuus on viime vuosikymmeninä alentunut merkittävästi. Eläkejärjestelmän näkökulmasta elinajan piteneminen asettaa maksunnousupaineita, sillä eläkettä maksetaan pidemmäksi ajaksi kuin mihin oli varauduttu. Tästä syystä vuoden 2005 eläkeuudistuksessa otettiin käyttöön uusi sopeutumismekanismi, elinaikakerroin. Sen tarkoitus on sopeuttaa alkavien eläkkeiden määrä elinajanodotteen muutokseen. Lisäksi vuoden 2017 eläkeuudistuksessa on päätetty nostaa alinta eläkeikää asteittain 63 vuodesta 65 vuoteen kolmen kuukauden vuosivauhtia vuoteen 2027 asti. Sen jälkeen alimman eläkeiän nousu sidotaan elinajan odotteeseen. Edellä kuvattu kokonaisuus on edunsaajalle haastava ja elinaikakerrointa on julkisuudessa usein kuvattu ’eläkeleikkurina’. Tässä työssä elinaikakertoimen ja eliniän noston yhteisvaikutukset on kuvattu selkeästi. Muutosten tarpeellisuus on osoitettu skenaariolaskelmilla asteittain niin, että kunkin toimenpiteen vaikutus on eritelty sekä eläkejärjestelmän että vakuutetun näkökulmasta. Toimenpiteiden vaikutusten arviointiin on käytetty kahta kirjallisuudessa vakiintunutta mikrotalouden käsitettä: aktuaarinen reiluus ja aktuaarinen neutraalisuus. Tässä työssä ei arvioida edellä mainittujen käsitteiden arvoja absoluuttisina, vaan pikemminkin tarkastellaan niiden muutoksia eri sopeutusmekanismien tullessa voimaan. Laskelmissa arvioidaan myös vuoden 2005 eläkeuudistuksessa voimaan tulleen lykkäyskertoimen kannustavuutta. Arvio on toteutettu kahdella skenaariolla: ensinnä, kun työskentely jatkuu työeläkeotteella ilmoitettuun tavoite-eläkeikään asti ja toiseksi tilanteessa, jossa työskentely jatkuu yhden vuoden ajan alimman eläkeiän täyttymisen jälkeen. Laskelmista nähdään, että molempien sopeutumismekanismien voimaantulo on ollut välttämätöntä, jotta vakuutusmaksun korotuksen tarve ei olisi noussut kohtuuttomasti. Lisäksi vakuutetun näkökulmasta sekä elinaikakertoimen että alimman eläkeiän nosto kohdistuvat edunsaajille eikä tuleville vakuutetuille, kuten olisi käynyt mikäli vakuutusmaksua olisi nostettu. Kannustavuuden näkökulmasta tulokset ovat mielenkiintoisia. Työskentely tavoite-eläkeikään asti on toimeentulon näkökulmasta kannattavaa. Eläkejärjestelmän näkökulmasta se pidentää työuria ja lyhentää eläkeuria, näin ollen maksutulo kasvaa ja eläkevarallisuudet pienenevät. Vakuutetun näkökulmasta taas elinaikakertoimen pienentävä vaikutus eläkemäärässä kumoutuu lykkäyskorotuksen ansiosta täysin, ja lisäksi eläke kasvaa lisävuosien osalta myös tavallisella karttumalla. Mekanismi on siis näiltä osin toimiva. Yhden vuoden lisätyöskentelyn kannustavuus riippuu monista tekijöistä: odotetusta elinajasta, jo karttuneesta eläkkeestä ja jopa lykkäysvuoden eläkeindeksistä. Tämän tarkastelun perusteella on vaikea osoittaa, että mekanismi olisi kaikille ikä- tai tuloluokille täysin toimiva. Laskelmien tulosten perusteella nähdään, että vuoden 2005 ja 2017 eläkeuudistuksissa luoduilla sopeutumis-mekanismeilla on merkittävä rooli maksutason hillitsemisessä elinajan pidentyessä. Lisäksi tuloksista huomataan, että sopeutusmekanismeja on tutkittava eri mittareilla, jotta havaitaan niiden kokonaisuusvaikutukset eri tilanteissa. Aktuaarinen reiluus ja erityisesti aktuaarinen neutraalisuus ovat tämän tutkimuksen perusteella osoittautuneet varteenotettaviksi käsitteiksi tähän tarkoitukseen.
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Heterogeneity in New Keynesian Models : Monetary Policy Implications from HANK and TANK Approaches (2023)This thesis explores the implications of Heterogeneous Agent New Keynesian (HANK) models for monetary policy by analyzing the existing literature and proposing a structural modification to a Two-Agent New Keynesian (TANK) model. The literature review offers an overview of the results of HANK models, starting from early contributions that first combined heterogeneity with nominal rigidities, revealing transmission channels of monetary policy that cannot be assessed with a representative agent framework. Subsequent studies build and use the HANK framework to examine these transmission channels more deeply, identifying the significant role of distributional effects in how monetary policy is transmitted to aggregate macroeconomic variables. The review also discusses the optimal monetary policy in HANK models, which focuses on minimizing idiosyncratic risk at the cost of inflation stability, and the role of HANK models in addressing the forward guidance puzzle. The thesis further examines TANK models as a simpler alternative to HANK models still being sufficient for capturing the effects of heterogeneity in New Keynesian models. By modifying a TANK model, this thesis aims to better align heterogeneity assumptions with empirical evidence on household types, particularly with the so-called wealthy hand-to-mouth households. This modification leads to the identification of a new feedback loop channel where investments in physical capital amplify the responses of aggregate variables. However, a structural dilemma arises where calibrations cannot guarantee the desired non-Ricardian response of consumption with a negative investment response. The thesis contributes to the understanding of the results and implications of different variations of HANK models for monetary policy, complementing existing theoretical discussions, and demonstrates the importance of heterogeneity assumptions in New Keynesian models.
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(2022)The LHC particle accelerator at CERN probes the elementary building blocks of matter by colliding protons at a center-of-mass energy of √s = 13 TeV. Collimated sprays of particles arise when quarks and gluons are produced at high energies, that are reconstructed from measured data and clustered together into jets. Accurate measurements of the energy of jets are paramount for sensitive particle physics analyses at the CMS experiment. Jet energy corrections are for that reason used to map measurements towards Monte Carlo simulated truth values, which are independent of detector response. The aim of this thesis is to improve upon the standard jet energy corrections by utilizing deep learning. Recent advancements on learning from point clouds in the machine learning community have been adopted in particle physics studies to improve jet flavor classification accuracy. This includes representing jet constituents as an unordered set, or a so-called “particle cloud”. Two highly performant models suitable for such data are the set-based Particle Flow Network and the graph-based ParticleNet. A natural next step in the advancement of jet energy corrections is to adopt a similar methodology, only changing the problem statement from classification to regression. The deep learning models developed in this work provide energy corrections that are generically applicable to differently flavored jets. Their performance is presented in the form of jet energy response resolution and reduction in flavor dependence. The models achieve state of the art performance for both metrics, significantly surpassing the standard corrections benchmark.
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(2023)To comprehensively study economic inequality and its development, Distributional National Accounts (DINA) base its inequality measures on the national income as a whole. Focusing on the national accounts part of the project, I follow DINA’s recommendations on modifying the concept of national income to cover some of the aspects it currently excludes. The three proposed modifications account for natural resource depletion, income from tax havens, and reinvested earnings on foreign portfolio investment. In this thesis, I apply all three modifications to the Finnish national income 1975–2022. To estimate the first, novel modification on the depreciation of natural capital, I combine a variety of data sources and methodologies on depletion of timber and minerals. The two modifications to foreign income flows have already been estimated by DINA, and my contribution lies in analyzing the results in the Finnish context. Although depletion of natural resources has gained wide attention, my thesis thus provides the first example where depletion of natural resources has been studied aside the two other modifications. I find that the modifications change national income by between 0.8 and - 5.8 % each year, the effect being largest at the beginning of the 21st century. Moreover, the modifications change the rate of growth in national income by approximately two percentage points each year 1998–2003. The results imply that the way natural resources and foreign income flows are recorded can significantly affect the level of national income and that the effect is not unequivocally negative.
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(2024)Value added taxes (VAT) are a central tool for collecting consumption taxes in Finland and worldwide. Still, VAT system has its shortcomings. Dishonest companies can exploit the system to evade taxes or apply for unjust tax deductions. This thesis investigates the effectiveness of an augmented VAT mechanism, reverse charge, on value added tax compliance. Reverse charge mechanism transfers the liability for remitting VAT in business-to-business transactions to the purchaser, instead of the seller. In this thesis, I conduct theoretical and empirical analysis of reverse charge. First, I employ a tax evasion model to predict how firms change their behavior when reverse charge policy is adopted. Then, I examine how VAT reverse charge affects firms' reporting behavior using administrative data on Finnish firms' VAT returns. Reverse charge policy was adopted in the Finnish construction industry in 2011. I compare the outcomes of construction firms to similar companies, with a Differences-in-Differences design, to capture the effect of the policy on VAT compliance. The findings indicate a 3.87% increase in reported tax liabilities by construction firms once the policy is adopted, suggesting enhanced tax compliance. Sensitivity analysis shows that the results hold under moderate violations of the parallel trends assumption. This thesis contributes to the existing economic literature by showing novel evidence on the firm level effects of reverse charge. I also illustrate another market structure where tax revenue can be increased by changing who remits taxes to the government.
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(2023)Milloin julkaista tuoteuutuus? Julkaisun ajoittaminen on erityisen tärkeää kulttuurihyödykkeiden markkinoilla, joilla kysyntä on usein kausittaista ja nopeasti vähenevää. Tällaisilla markkinoilla toimivat yritykset haluaisivat julkaista tuotteensa kysynnän ollessa suurin, mutta myös kilpailijat tavoittelevat kausittaisia kysyntähuippuja, ja lisäksi nykyisten tilaajien kärsivällisyys on rajallinen, joten he saattavat perua tilauksensa mikäli joutuvat odottamaan uusia julkaisuja liian kauan. Yritykset joutuvat siis tasapainottelemaan kilpailullisen paineen ja nykyisten asiakkaiden poistuman välillä tehdessään investointi- ja julkaisupäätöksiään. Tässä tutkielmassa tarkastellaan strategista investointia ja julkaisun ajoittamista tilauspohjaisten palveluiden kontekstissa. Aikaisempi taloustieteen ja markkinoinnin kirjallisuus on tutkinut kulttuurihyödykkeiden investointipäätöksiä ja julkaisun ajoittamista lähinnä elokuvien teatterilevityksen kontekstissa. Suoratoiston nopeasta yleistymisestä huolimatta suoratoistopalveluiden julkaisupäätöksiä tutkivaa teoreettista tai empiiristä kirjallisuutta ei ole. Tämä tutkielma laajentaa tätä kirjallisuutta kehittämällä yksinkertaisen peliteoreettisen mallin, joka formalisoi kulttuurihyödykkeiden markkinoille tyypillisen kausittaisen ja nopeasti vähenevän kysynnän, ja endogenisoi asiakaspoistuman. Mallin tasapainot osoittavat, että ajoituspäätökset riippuvat olennaisesti nykyisten asiakkaiden määrän suhteesta kausittaiseen kysyntään: tämän suhdeluvun ollessa korkea, yritykset asettavat asiakaspoistuman minimoinnin kausittaisesta kysynnästä kilpailemisen edelle ja viivyttävät julkaisuja. Lisäksi investoinnit tuotteiden laatuun ovat matalampia viivästetyssä tasapainossa. Teoreettisesta mallista johdettuja hypoteeseja testataan empiirisesti käyttäen aineistoa suoratoistopalveluiden markkinalta Yhdysvalloista. Empiiriset tulokset vahvistavat osan hypoteeseista melko vahvasti: TV-sarjat ovat tärkeä strateginen väline suoratoistopalveluille, ja teoreettisen mallin havainnot asiakaspoistumasta osuvat yhteen havaitun viikoittaisten julkaisujen syklisyyden kanssa. Lisäksi empiiriset tulokset implikoivat sekä kilpailullisen paineen että omien samanaikaisesti julkaistujen ohjelmien olevan yhteydessä julkaisuun lähempänä kysyntäpiikkejä, joskin näiden tulosten osalta näyttö on tilastollisesti heikompaa. Tutkielmassa kehitetty teoreettinen malli vaikuttaa tulosten perusteella antavan hyödyllisiä ennusteita suoratoistopalveluiden investointi- ja julkaisupäätöksistä. Koska malli yleistyy melko suoraan myös muille markkinoille, olisi kiinnostavaa testata sen soveltumista muilla samankaltaisilla markkinoilla.
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(2023)Standard business cycle models rely on contemporaneous shocks to productivity in order to generate business cycles. Therefore a technological regress is necessary for a recession to occur. This is not always a satisfactory explanation, as for example the recession of 2001 is often not considered as created by a negative technological shock. Instead many economists believe it was caused by a revision in expectations. Technological news shocks is a topic that has gained interest in the recent macroeconomic literature and is aimed at tackling the aforementioned issue. A news shock is a shock which on arrival does not affect the variable of interest, instead the value is only expected to change in the future. In standard real business cycle models introduction of news shocks to productivity leads to recessions, as households experience a positive wealth effect while the firms do not yet change their behaviour. Thus a multitude of general equilibrium models designed specifically for news shocks have been proposed. This thesis investigates the role of technological news shocks as drivers of business cycles in Finland. To this end a Bayesian structural vector moving average model is used, which allows for non-invertible data generating processes. Non-invertibility arises when a shock can not be recovered from current and past observables, instead future observables are also needed. The prior of the model is informed with a combination of two DSGE models, one informing the news shock impulse responses, and other informing the rest of the impulse responses. Two out of three estimated specifications of the model do create a positive co-movement of the included macroeconomic aggregates. This is not reflected in a non-informative specification, in which output growth rate increases, but the growth rate of hours worked decreases. The results suggest that news shocks could indeed play a role in the Finnish business cycles, but more research into the topic would be in place.
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(2023)The gender wage gap is still prevalent despite increases in female educational attainment and employment rates in many countries. Recent research has studied how much of the gender wage gap is due to firm pay policies by estimating the difference in firm pay premiums that men and women receive from their employers. This is called the firm effects gap. This gap can be further decomposed into bargaining and sorting effects which measure how much of this gap in pay premiums is due to women receiving lower pay premiums than men working in the same firm (bargaining) and how much is due to women working in low-paying firms (sorting). The first part of this thesis goes over this recent literature, and based on research from different countries, it is evident that firm pay policies have a non-negligible effect on the gender wage gap. The empirical part of this thesis uses Finnish data from organized firms, which are covered by collective agreements, over the period 2012-2021 and estimates the firm effects gap and its components in the overall sample and in various subgroups. Compared to other studies, the effect of firm pay policies on the gender wage gap is moderate in the overall sample: according to highest (lowest) estimate they explain 24.9% (4.9%) of the overall gender wage gap. Gender wage gaps increase over the life cycle, but this cannot be explained by firm pay policies as the firm effects gap and its components stay roughly at the same level across age groups. Firm effects gaps are smaller among people with a higher education degree and in larger firms, but differences are small. While gender wage gaps are larger for high earners, firm effects gaps are smaller in upper wage deciles. Although collective agreements are a prevalent feature of Finnish labor markets, not all firms are covered by them. Also, the sample is restricted to organized firms, which are not the only firms covered by collective agreements due to general applicability, and many small firms are excluded. Therefore, it is unclear whether these results can be generalized to the whole private sector in Finland.
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