Returns to scale in a matching model: evidence from disaggregated panel data

The returns to scale in the matching function play an important role in models with endogenous search effort. Due to positive externalities, increasing returns to scale in matching can support high or low activity equilibrium in the labour market. In this study, we examine this issue using panel data from Finnish employment offices. The study finds that the results from the Cobb–Douglas and translog specification are qualitatively different. The CD specification of the matching function exhibits constant returns to scale. The translog specification, in turn, exhibits increasing returns to scale. The elasticity estimate for returns, using the preferred specification and minimum and maximum sample values for job seekers and vacancies, fall in the range of 1.1 to 1.6.     

Determinants of audit report modifications in Finnish municipalities

Although municipalities are major economic and social actors in most countries, remarkably little is known about their audits, particularly the determinants of their audit report modifications. The existing evidence is ambiguous at best and scarce, which provides opportunities for further accounting studies in this area. Therefore, based on an agency theory framework, we fill this important research gap by exploring three determinants of audit report modifications in municipalities: (1) economic performance, (2) decentralization of decision-making across different decision-making bodies, and (3) political competition between political parties in local councils. These determinants are examined based on a large panel of data on Finnish municipalities for the period from 2009 to 2013, covering virtually all of the country’s municipalities. We find that a striking 33 percent of audit reports had modifications during this period, which raises serious concerns about the state of municipal management, accounting, and auditing in Finland. Regarding the above determinants, the following conclusions can be made based on our analyses. First, we find partial evidence that weak economic performance increases the likelihood of audit report modifications. Second, the lower the competition among political parties in a local council, the lower the likelihood of audit report modifications. Finally, the more decentralized decision making is across the different decision-making bodies under the local council, the higher the probability of audit report modifications. These results are consistent with agency theory’s explanations regarding the value of auditing.     

Inter‐Team Coordination Patterns and Outcomes in Multi‐Team Projects

We examine what kinds of patterns of mechanisms can be applied in the coordination of several inter‐related project teams. We identify three distinct coordination schemes; namely: centralized coordination, decentralized coordination, and balanced coordination. In addition, we compare individuals' perceptions on communication, coordination effectiveness, project efficiency, learning, task analyzability, and task uncertainty between the three identified coordination schemes. The results of our study extend to both theoretical and practical understanding of coordination in multi‐team projects and its relation to communication, coordination effectiveness, project performance, and learning.     

Single‐Party Rule,Public Spending,and Political Rents: Evidence from Finnish Municipalities*

In this paper, I investigate the differences in public spending and extraction of political rents between single‐party and coalition governments. Common pool theories predict that coalitions tend to spend more and extract more rents than single‐party governments. Using data from Finnish municipalities for the years 1997–2012 and a regression discontinuity design approach tailored for proportional elections, I provide causal evidence consistent with the theoretical predictions.     

Integration of planning and execution in service innovation

The purpose of this article is to elaborate two activities included in innovation: planning and execution. We use four dimensions – decision making, organization, process, and external interaction – as the analytical framework. Building on five empirical case studies in the Finnish residential sector, the article identifies various approaches to integrating planning and execution during the development process. Furthermore, the article identifies four integrative mechanisms that relate to each of the four analytical dimensions. The key proposition is that the integration between planning and execution is the driving force for innovation, and that the locus of this integration is the practical engagement of actors with specific aims, problems, and means at hand related to the emerging solution. Finally, the article identifies the availability of, or access to, service-provision resources and the customer interface as a key enabler of this integration.     

Model selection in macroeconomics: DSGE and ad hocness

ABSTRACT

We investigate the applicability of Rodrik’s accounts of model selection and horizontal progress to macroeconomic DSGE modelling in both academic and policy-oriented modelling contexts. We argue that the key step of identifying critical assumptions is complicated by the interconnectedness of the common structural core of DSGE models and by the ad hoc modifications introduced to model various rigidities and other market imperfections. We then outline alternative ways in which macroeconomic modelling could become more horizontally progressive.     

Lessons from the crisis in Finland and Sweden in the 1990s

This paper discusses the lessons of the Nordic financial crisis which hit Sweden and Finland in the beginning of the 1990s. The main causes of this exceptionally deep recession were the deregulation of the financial markets in the 1980s and the subsequent overheating, during which the asset prices and debts doubled. The consequences of the bursting of this financial bouble were currency and banking crises, collapsing asset prices, mass unenployment and large fiscal deficits. There are some lessons which can be learnt by analyzing these events, and they are presented in this paper. Among the lessons are the importance of asset prices and wealth effects to the stability of the whole financial system.     

Displacement Effects of Active Labour Market Policy: The Youth Labour Market in Finland

In 1994 the number of workers participating in active labour market programmes in Finland was 299,000. On average there where 125,000 workers in these programmes at any one time, the average length of participation in a programme being about 5 months. In relation to the 2.5 million-strong Finnish labour force, these figures are proportionally large. In 1994 the total expenditure on unemployment amounted to 6.7 per cent of GNP of which the share spent on active labour market programmes was about 25 per cent. The study investigates the displacement effects of active labour market programmes in the youth labour market in Finland. The two age groups analysed are 15-19-year-olds and 20-24-year-olds. The results, based on a VAR analysis of quarterly data from the period 1981.1-1995.2, suggest that the displacement effects of job-creation programmes may be substantial. The study cannot, however, provide any robust estimates of the likely size of such displacement effects on youth employment in Finland. This revised version was published online in July 2006 with corrections to the Cover Date.