Entrepreneurship and Liquidity Constraints: Evidence from Sweden

Hurst and Lusardi (2004) use a specification with higher‐order polynomials to estimate the relationship between wealth and entrepreneurship. They find evidence against the existence of extensive liquidity constraints in the United States. In this paper, their approach is replicated on Swedish data. A positive relationship between wealth and entrepreneurship is found, which supports the liquidity constraints hypothesis. Alternative methods for handling the endogeneity problem and distinguishing between absolute decreasing risk aversion and liquidity constraints lend further support to the hypothesis. The analysis suggests that there exist liquidity constraints in Sweden, which are possibly more extensive than in the United States.     

Testing the regulatory threat hypothesis: Evidence from Sweden

This study examines whether threat of stricter regulation influences the pricing behavior of firms. Using data on unregulated Swedish local district heating monopolists, we measure the threat level by the number of customer complaints about prices received by a national board. Exploiting a natural experiment, we find that firms reduce prices when customer complaints increase.     

Willingness to Pay for Car Safety: Evidence from Sweden

This study estimates a marginal willingness to pay (WTP) function for a road-mortality risk reduction. Observed marginal WTP from the Swedish car market is used and found to be positively correlated with the baseline risk of the cars. No statistically significant relationships between examined owner attributes, e.g. wealth and background risk, and marginal WTP are found. When comparing the estimated monetary value of a non-marginal risk reduction derived from the integral of the marginal WTP-function with an estimate based on marginal WTP we find, in line with expectations, that the difference between the estimates is negligible for smaller risk reductions and small, 4–10%, also for relatively large risk reductions.      

Repayment performance in group lending: Evidence from Jordan

Using data from a survey of 160 urban borrowing groups of the Microfund for Women in Jordan, we investigate the effect of screening, peer monitoring, group pressure, and social ties on borrowing groups' repayment behavior as an indirect test of different theoretical models. The dependent variable used captures the intensity of default measured by the total number of days of late repayment after each due date, allowing us to use count data models with cluster standard errors. As theory predicts, our empirical analysis suggests that peer monitoring, group pressure, and social ties reduce delinquency. The paper uncovers interesting evidence about the role of social ties and religion. Most notably, in an area where religion contributes to attitudes and beliefs of individuals, we find that religiosity improves repayment performance.     

Evidence from Mexico on social status and violence against women

This study investigates the impact of relative social status on violence against women in Mexico using state-level panel data. Relatively higher female social status, measured by educational, economic and political standings, is associated with lower homicide rates for women and lower intimate partner violence rates. More importantly, different status variables affect violence against women through different channels, depending on the victim–offender relationship. The results are robust to different specifications and different control variables. This study may provide helpful guidelines to policy-makers attempting to identify more effective means for deterring violence against women.     

On the behavioral impacts of violence: Evidence from incentivized games in Kenya

Political violence is a major impediment to economic development, damaging social, physical and human capital. By contrast, the manner in which violence influences prosocial behaviors is less clear cut, even though these behaviors likely contribute to post-conflict outcomes at individual and aggregate levels. We propose that the standard routes through which the experience of violence is thought to increase prosocial behaviors offer different theoretical explanations under heterogeneous conflict exposure histories and for different behavioral domains. We test these hypotheses using incentivized behavioral experiments, collected in the context of electoral violence in Kenya. While we provide some evidence that exposure to violence increases prosocial behaviors, results display significant heterogeneities relating both to the dimensions of behavior analyzed and whether or not individuals were personally injured.     

The effect of redistribution on migration: Evidence from the Israeli kibbutz

This paper tests a key theoretical prediction of public finance, that local redistribution induces sorting of the population so that less productive individuals are located in communities with more redistribution. Specifically, I use a longitudinal data set to test whether and to what extent the intensive redistribution practiced by Israeli kibbutzim encourages exit of more productive individuals and entry of less productive ones. The findings support the theoretical prediction. Kibbutz-leavers are more skilled than both stayers and other rural migrants and they earn higher wages upon exit than observably similar city natives and other migrants. In contrast, individuals who earn lower wages in the city are more likely to enter a kibbutz, but they are not more likely to move to other rural areas. These findings also support Borjas' hypothesis that migrants' self-selection depends on the difference in returns to skills between the origin and the destination.     

The effect of minimum wage on firm markup: Evidence from China

Our paper examines the impact of minimum wage on firm markup in China. We find that minimum wage generates a positive effect on firm markup. More value-enhancing innovative activities, TFP improvement, and efficient labor resource allocation are the potential channels. Further, the positive influence of minimum wage is more pronounced for privately-owned firms, for firms with higher labor intensity and firms with less financial constraints. Besides, these findings are generally robust to different estimation methods. Our results provide new insights into understanding the channels through which labor regulation may cause the change of markup for the emerging markets countries.     

The effect of risk-taking behavior on profitability: Evidence from futures market

We explore how futures traders make a tradeoff between risk and return by examining their risk-taking in the action. By applying a novel measure to their trade-by-trade transactions to capture their tendency in risk-taking, we find a general tendency to reduce risk-taking by cutting positions when facing losses or gains, and the tendency is stronger in the case of losses. However, great variations exist among traders in the risk-taking tendency and the results for trading are opposite for profitable and unprofitable traders. For the unprofitable, more risk-taking by trading more actively leads to greater losses. This is concrete evidence for the prevailing belief in the literature that trading too much, arguably due to overconfidence, is hazardous to investor's wealth. Contrary to that belief, however, we find fresh evidence that more active trading by the profitable traders leads to greater profits, suggesting their trades are likely based on ability and skills.     

The effect of precautionary saving on consumption in Sweden

Uncertainty concerning future income lowers consumption. This is often called the precautionary demand for savings. In this paper the existence of precautionary savings. In this paper the existence of precautionary saving is investigated using Swedish data for the years 1973–1992. As there are no variables for consumers' uncertainty a proxy is used. Assuming an underlying distribution of attitudinal data, a variance series is derived. Including the proxy in different specifications of the consumption function, indication of precautionary saving can be found. As a result, no uncertainty would raise consumption by 4.9%.     

The Tax‐smoothing Hypothesis: Evidence from Sweden, 1952–1999

This paper tests Barro's (1979) tax‐smoothing hypothesis using Swedish central government data for the period 1952–1999. According to the tax‐smoothing hypothesis, the government sets the budget surplus equal to expected changes in government expenditure. When expenditure is expected to increase, the government runs a budget surplus, and when expenditure is expected to fall, the government runs a budget deficit. The empirical evidence suggests that the model provides a useful benchmark and that tax‐smoothing behavior can explain about 60 percent of the variability in the Swedish central government budget surplus.     

The effect of foreign aid on income inequality: Evidence from panel cointegration

This paper examines the long-run effect of foreign aid on income inequality for 21 recipient countries using panel cointegration techniques to control for omitted variable and endogeneity bias. We find that aid exerts an inequality increasing effect on income distribution.     

The effects of group composition in a strategic environment: Evidence from a field experiment

Recent theoretical and empirical studies have explored the effect of group membership and identity on individual decision-making. This line of research highlights that economic models focusing on the individual as the sole entity in the decision-making environment potentially miss critical features. This study takes this literature in a new direction by overlaying a field experiment onto a setting where groups have arisen naturally. Our experimental laboratory is large open air markets, where we are able to examine the effects of group membership on seller׳s collusive behavior as measured by prices and surplus allocations. This permits us to explore strategic implications of group composition. Empirical results illustrate the importance of group composition on pricing decisions, and show that deviations from Nash equilibrium are crucially related to group membership.     

Working time, employment, and work sharing: Evidence from Sweden

We study three questions which are important for work sharing to increase employment. First, is there a negative long-run relation between working time and employment? Second, are hours per worker exogenous with respect to wages and employment? Third, can policy makers influence actual hours per worker? We formulate a theoretical model for employment, hours per worker, production, and real wages. A VAR model with cointegrating constraints is estimated by maximum likelihood using Swedish private sector data 1970:1–1990:4. We find (i) no long-run relation between hours per worker and employment, (ii) that hours per worker are endogenous with respect to the estimation of long-run parameters, and (iii) that legislated working time and hours per worker are related to each other in the long run. First version received: September 1997/final version accepted: June 1999     

Macroeconomic volatility and anti-refugee violence in developing countries: Evidence from commodity price shocks

I investigate the effect of macroeconomic (output) volatility on anti-refugee violence in developing countries. Opportunity cost, rapacity, and state capacity theories predict ambiguous effects. For causal inference I leverage output volatility caused by plausibly exogenous commodity price shocks. I find that adverse commodity price shocks increase both violence of natives against refugees and violence between refugees. My results suggest that anti-refugee violence increases during recessions and decreases during economic booms.     

The cohort effect of political change on language speaking: Evidence from Hong Kong

It has been proven that language is a symbol of culture and politics. This study investigates the cohort effect of Hong Kong's handover on the language spoken in adulthood based on the 2006 and 2011 Hong Kong population censuses. We find that Mandarin is more likely to be used by Hong Kong natives who were exposed to the transfer of sovereignty over Hong Kong in 1997 during their school-age years, especially the generation that were exposed during their primary-school years. This cohort insisted on speaking Mandarin, even when the political environment changed from 2006 to 2011. Our evidence reveals that the political change that occurs during one's school-age years has a long-term impact on an individual's behaviour in adulthood. Further discussion indicates that exposure to political change such as regime transfer during school-age years impacts an individual's national identity.     

The effect of Protestantism on education before the industrialization: Evidence from 1816 Prussia

Across Prussian counties and towns, Protestantism led to more schooling already in 1816, before the Industrial Revolution. This supports a human capital theory of Protestant economic history and rules out a Weberian explanation of Protestant education just resulting from industrialization.     

The effect of the Internet on economic growth: Evidence from cross-country panel data

Using cross-country panel data, we found evidence that the Internet plays a positive and significant role in economic growth after investment ratio, government consumption ratio, and inflation were used as control variables in the growth equation.     

The effect of ethnic diversity on the participation in social groups: Evidence from trade unions

This paper advances the hypothesis that individuals in more ethnically fragmented societies, participate less in social groups. More precisely, the empirical analysis places the spotlight on trade unions and investigates whether ethnic diversity affects the decision of workers to participate in them. The analysis takes place along two layers: (a) country-level and (b) individual-level. First, building on a set of innovative instruments derived from the parasite-stress theory of values and sociality, our country-level analysis seeks to exploit exogenous sources of variation in ethnic diversity and establish a convincing causal relationship between ethnic diversity and trade union density across countries. In turn, we employ individual-level data from the European Social Survey (ESS) and investigate whether immigrants who cοme from more ethnically fragmented societies participate less in trade unions in their European countries of residence. Consistent with the prediction of the theory, both layers of the empirical analysis provide robust evidence of a negative, sizeable and highly significant effect of ethnic diversity on the participation in trade unions.