Kannustaminen ja moraali : Kannustamisen idea suomalaisessa yhteiskuntapolitiikassa 1990-luvulta alkaen

Even though the concept of incentive has become very popular in Finnish welfare politics since the economic crisis of the 1990s, the content of this concept is not clear. Fundamentally, it is a matter of controlling the behaviour of individuals to accord with the authorities' objectives and interests in gaining cooperative benefits. As early as in Plato's Republic, citizens were encouraged to use their abilities and skills in a way most beneficial to the society. Similarly, in today's welfare society citizens are urged to produce common goods and distribute welfare to enable a better life for all through cooperation. The fundamental question is to what extent society can shape individuals' preferences with incentives, and encourage them without external coercion to choose actions beneficial for both the society and the individuals themselves. The objective of the incentive institution is to gain cooperative benefits, but there are different views on how it should be implemented. For example, the incentive system in the Finnish welfare society includes several economic and social conceptions which adjust the distribution of welfare. From an economic perspective, the objective of the incentive system is economic efficiency, while from a social perspective it is the securing of social rights and citizens' equality. The market mechanism, for example, can at best lead to economically efficient activity, but it might sacrifice fairness and equality. In this research, the idea of activation policy expands to cover normative and social incentives, in addition to the economic factors affecting human choice and social actions. Desirable co-living and meaningful cooperation have some prerequisites. We need the expanded idea of activation to study them, and to maintain them in society. The themes discussed in all the ten chapters aim at evaluating the preconditions of a just society. This study provides tools to examine the changes in the welfare state, also from the viewpoint of normative ethics. This offers a morally and conceptually wider perspective than a normative viewpoint of economics alone. In terms of the values of our welfare society, it makes a difference how the relationship between the legalities of economics and citizens' well-being is understood. The research asks whether economic benefits to the society should be allowed to supersede the principles of human dignity Key words:incentives, activation policy, morality, social philosophy, social justice, policy paradigm

Studies on Wage Differentials and Labour Market Transitions

This thesis consists of four studies. The first study examines wage differentials between women and men in the Finnish manufacturing sector. A matched employer-employee data set is used to decompose the overall gender wage gap into the contributions of sex differences in human capital, labour market segregation, and residual within-job wage differentials. The topic of the second study is the relationship between the extended unemployment benefits and labour market transitions of older workers. The analysis exploits a quasi-experimental setting caused by a change in the law that raised the eligibility age of workers benefiting from extended benefits. Roughly half of the unemployed workers with extended benefits are estimated to be effectively withdrawn from labour market search. The risk of unemployment declined and the re-employment probability increased among the age groups directly affected by the reform. The third study provides an empirical analysis of a structural equilibrium search model. Estimation results from various model specifications are compared and discussed. The last study is a methodological study where the difficulties of interpreting the results of competing risks hazard models are discussed and a solution for a particular class of models is proposed. It is argued that a common practice of reporting the results of qualitative response models in terms of marginal effects is also useful in the context of competing risks duration models.

Empirical Analysis of Competition in Procurement Auctions

A vast amount of public services and goods are contracted through procurement auctions. Therefore it is very important to design these auctions in an optimal way. Typically, we are interested in two different objectives. The first objective is efficiency. Efficiency means that the contract is awarded to the bidder that values it the most, which in the procurement setting means the bidder that has the lowest cost of providing a service with a given quality. The second objective is to maximize public revenue. Maximizing public revenue means minimizing the costs of procurement. Both of these goals are important from the welfare point of view. In this thesis, I analyze field data from procurement auctions and show how empirical analysis can be used to help design the auctions to maximize public revenue. In particular, I concentrate on how competition, which means the number of bidders, should be taken into account in the design of auctions. In the first chapter, the main policy question is whether the auctioneer should spend resources to induce more competition. The information paradigm is essential in analyzing the effects of competition. We talk of a private values information paradigm when the bidders know their valuations exactly. In a common value information paradigm, the information about the value of the object is dispersed among the bidders. With private values more competition always increases the public revenue but with common values the effect of competition is uncertain. I study the effects of competition in the City of Helsinki bus transit market by conducting tests for common values. I also extend an existing test by allowing bidder asymmetry. The information paradigm seems to be that of common values. The bus companies that have garages close to the contracted routes are influenced more by the common value elements than those whose garages are further away. Therefore, attracting more bidders does not necessarily lower procurement costs, and thus the City should not implement costly policies to induce more competition. In the second chapter, I ask how the auctioneer can increase its revenue by changing contract characteristics like contract sizes and durations. I find that the City of Helsinki should shorten the contract duration in the bus transit auctions because that would decrease the importance of common value components and cheaply increase entry which now would have a more beneficial impact on the public revenue. Typically, cartels decrease the public revenue in a significant way. In the third chapter, I propose a new statistical method for detecting collusion and compare it with an existing test. I argue that my test is robust to unobserved heterogeneity unlike the existing test. I apply both methods to procurement auctions that contract snow removal in schools of Helsinki. According to these tests, the bidding behavior of two of the bidders seems consistent with a contract allocation scheme.

Essays on Labor Market Frictions, Technological Change and Macroeconomic Fluctuations

The dissertation consists of an introductory chapter and three essays that apply search-matching theory to study the interaction of labor market frictions, technological change and macroeconomic fluctuations. The first essay studies the impact of capital-embodied growth on equilibrium unemployment by extending a vintage capital/search model to incorporate vintage human capital. In addition to the capital obsolescence (or creative destruction) effect that tends to raise unemployment, vintage human capital introduces a skill obsolescence effect of faster growth that has the opposite sign. Faster skill obsolescence reduces the value of unemployment, hence wages and leads to more job creation and less job destruction, unambiguously reducing unemployment. The second essay studies the effect of skill biased technological change on skill mismatch and the allocation of workers and firms in the labor market. By allowing workers to invest in education, we extend a matching model with two-sided heterogeneity to incorporate an endogenous distribution of high and low skill workers. We consider various possibilities for the cost of acquiring skills and show that while unemployment increases in most scenarios, the effect on the distribution of vacancy and worker types varies according to the structure of skill costs. When the model is extended to incorporate endogenous labor market participation, we show that the unemployment rate becomes less informative of the state of the labor market as the participation margin absorbs employment effects. The third essay studies the effects of labor taxes on equilibrium labor market outcomes and macroeconomic dynamics in a New Keynesian model with matching frictions. Three policy instruments are considered: a marginal tax and a tax subsidy to produce tax progression schemes, and a replacement ratio to account for variability in outside options. In equilibrium, the marginal tax rate and replacement ratio dampen economic activity whereas tax subsidies boost the economy. The marginal tax rate and replacement ratio amplify shock responses whereas employment subsidies weaken them. The tax instruments affect the degree to which the wage absorbs shocks. We show that increasing tax progression when taxation is initially progressive is harmful for steady state employment and output, and amplifies the sensitivity of macroeconomic variables to shocks. When taxation is initially proportional, increasing progression is beneficial for output and employment and dampens shock responses.

Tibetan Market Participation in China

Since the Chinese government began implementing economic reforms in the late 1970s, China has experienced profound economic change and growth. Like other parts of China, Tibetan areas of China have also experienced wide-ranging economic change with growth even higher than the China-wide average in certain years. Though China s strategic policy of developing the West provided many opportunities for economic and business activities, Tibetans have proven poorly equipped to respond to and take advantage of these opportunities. This study is about people, about market participation and specifically about why Tibetans do not effectively participate in the market in the context of China s economic development process. Many political, social, cultural and environmental factors explain the difficulties met by Tibetan communities. However, this study focuses on three factors: the social and culture context, government policy and education. The Buddhistic nature of Tibetan communities, particularly the political and economic system in traditional Tibetan society, explains this, especially after implementation of new national economic policies. An inclusive economic development policy that promotes local people s participation in the market demands serious consideration of local conditions. Unfortunately, such considerations often ignore local Tibetan realities. The economic development policy in Tibetan areas in China is nearly always an attempt to replicate the inland model and open up markets, even though economic and sociopolitical conditions in Tibet are markedly unlike much of China. A consequence of these policies is increasing numbers of non-Tibetan migrants flowing into Tibetan areas with the ensuing marginalization of Tibetans in the marketplace. Poor quality education is another factor contributing to Tibetan inability to effectively participate in the market. Vocational and business education targeting Tibetans is of very low quality and reflective of government failing to consider local circumstances when implementing education policy. The relatively few Tibetans who do receive education are nearly always unable to compete with non-Tibetan migrants in commercial activity. Encouraging and promoting Tibetan participation in business development and access to quality education are crucial for a sustainable and prosperous society in the long term. Particularly, a localized development policy that considers local environmental conditions and production as well as local culture is crucial. Tibet s economic development should be based on local environmental and production conditions, while utilizing Tibetan culture for the benefit of creating a sustainable economy. Such a localized approach best promotes Tibetan market participation. Keywords: Tibet cultural policy education market participation

U12-type Spliceosome: Localization and Effects of Splicing Efficiency on Gene Expression

The removal of non-coding sequences, introns, is an essential part of messenger RNA processing. In most metazoan organisms, the U12-type spliceosome processes a subset of introns containing highly conserved recognition sequences. U12-type introns constitute less than 0,5% of all introns and reside preferentially in genes related to information processing functions, as opposed to genes encoding for metabolic enzymes. It has previously been shown that the excision of U12-type introns is inefficient compared to that of U2-type introns, supporting the model that these introns could provide a rate-limiting control for gene expression. The low efficiency of U12-type splicing is believed to have important consequences to gene expression by limiting the production of mature mRNAs from genes containing U12-type introns. The inefficiency of U12-type splicing has been attributed to the low abundance of the components of the U12-type spliceosome in cells, but this hypothesis has not been proven. The aim of the first part of this work was to study the effect of the abundance of the spliceosomal snRNA components on splicing. Cells with a low abundance of the U12-type spliceosome were found to inefficiently process U12-type introns encoded by a transfected construct, but the expression levels of endogenous genes were not found to be affected by the abundance of the U12-type spliceosome. However, significant levels of endogenous unspliced U12-type intron-containing pre-mRNAs were detected in cells. Together these results support the idea that U12-type splicing may limit gene expression in some situations. The inefficiency of U12-type splicing has also promoted the idea that the U12-type spliceosome may control gene expression, limiting the mRNA levels of some U12-type intron-containing genes. While the identities of the primary target genes that contain U12-type introns are relatively well known, little has previously been known about the downstream genes and pathways potentially affected by the efficiency of U12-type intron processing. Here, the effects of U12-type splicing efficiency on a whole organism were studied in a Drosophila line with a mutation in an essential U12-type spliceosome component. Genes containing U12-type introns showed variable gene-specific responses to the splicing defect, which points to variation in the susceptibility of different genes to changes in splicing efficiency. Surprisingly, microarray screening revealed that metabolic genes were enriched among downstream effects, and that the phenotype could largely be attributed to one U12-type intron-containing mitochondrial gene. Gene expression control by the U12-type spliceosome could thus have widespread effects on metabolic functions in the organism. The subcellular localization of the U12-type spliceosome components was studied as a response to a recent dispute on the localization of the U12-type spliceosome. All components studied were found to be nuclear indicating that the processing of U12-type introns occurs within the nucleus, thus clarifying a question central to the field. The results suggest that the U12-type spliceosome can limit the expression of genes that contain U12-type introns in a gene-specific manner. Through its limiting role in pre-mRNA processing, the U12-type splicing activity can affect specific genetic pathways, which in the case of Drosophila are involved in metabolic functions.

The Finnish Competition State and Entrepreneurial Policies in the Helsinki Region

The thesis examines the intensification and characteristics of a policy that emphasises economic competitiveness in Finland during the 1990s and early 2000s. This accentuation of economic objectives is studied at the level of national policy-making as well as at the regional level through the policies and strategies of cities and three universities in the Helsinki region. By combining the analysis of state policies, urban strategies and university activities, the study illustrates the pervasiveness of the objective of economic competitiveness and growth across these levels and sheds light on the features and contradictions of these policies on a broad scale. The thesis is composed of five research articles and a summary article. At the level of national policies, the central focus of the thesis is on the growing role of science and technology policy as a state means to promote structural economic change and its transformation towards a broader, yet ambivalent concept of innovation policy. This shift brings forward a tension between an increasing emphasis on economic aspects – innovations and competitiveness – as well as the expanding scope of issues across a wide range of policy sectors that are being subsumed under this market- and economy oriented framework. Related to science and technology policy, attention is paid to adjustments in university policy in which there has been increasing pressure for efficiency, rationalisation and commercialisation of academic activities. Furthermore, political efforts to build an information society through the application of information and communication technologies are analysed with particular attention to the balance between economic and social objectives. Finally, changes in state regional policy priorities and the tendency towards competitiveness are addressed. At the regional level, the focus of the thesis is on the policies of the cities in Finland’s capital region as well as strategies of three universities operating in the region, namely the University of Helsinki, Helsinki University of technology and Helsinki School of Economics. As regards the urban level, the main focus is on the changes and characteristics of the urban economic development policy of the City of Helsinki. With respect to the universities, the thesis examines their attempts to commercialise research and thus bring academic research closer to economic interests, and pays particular attention to the contradictions of commercialisation. Related to the universities, the activities of three intermediary organisations that the universities have established in order to increase cooperation with industry are analysed. These organisations are the Helsinki Science Park, Otaniemi International Innovation Centre and LTT Research Ltd. The summary article provides a synthesis of the material presented in the five original articles and relates the results of the articles to a broader discussion concerning the emergence of competition states and entrepreneurial cities and regions. The main points of reference are Bob Jessop’s and Neil Brenner’s theses on state and urban-regional restructuring. The empirical results and considerations from Finland and the Helsinki region are used to comment on, specify and criticise specific parts of the two theses.

Residential Differentiation, Housing Policy and Urban Planning in the Transformation from State Socialism to a Market Economy: The Case of Tallinn

The thesis examines urban issues arising from the transformation from state socialism to a market economy. The main topics are residential differentiation, i.e., uneven spatial distribution of social groups across urban residential areas, and the effects of housing policy and town planning on urban development. The case study is development in Tallinn, the capital city of Estonia, in the context of development of Central and Eastern European cities under and after socialism. The main body of the thesis consists of four separately published refereed articles. The research question that brings the articles together is how the residential (socio-spatial) pattern of cities developed during the state socialist period and how and why that pattern has changed since the transformation to a market economy began. The first article reviews the literature on residential differentiation in Budapest, Prague, Tallinn and Warsaw under state socialism from the viewpoint of the role of housing policy in the processes of residential differentiation at various stages of the socialist era. The paper shows how the socialist housing provision system produced socio-occupational residential differentiation directly and indirectly and it describes how the residential patterns of these cities developed. The second article is critical of oversimplified accounts of rapid reorganisation of the overall socio-spatial pattern of post-socialist cities and of claims that residential mobility has had a straightforward role in it. The Tallinn case study, consisting of an analysis of the distribution of socio-economic groups across eight city districts and over four housing types in 1999 as well as examining the role of residential mobility in differentiation during the 1990s, provides contrasting evidence. The third article analyses the role and effects of housing policies in Tallinn s residential differentiation. The focus is on contemporary post-privatisation housing-policy measures and their effects. The article shows that the Estonian housing policies do not even aim to reduce, prevent or slow down the harmful effects of the considerable income disparities that are manifest in housing inequality and residential differentiation. The fourth article examines the development of Tallinn s urban planning system 1991-2004 from the viewpoint of what means it has provided the city with to intervene in urban development and how the city has used these tools. The paper finds that despite some recent progress in planning, its role in guiding where and how the city actually developed has so far been limited. Tallinn s urban development is rather initiated and driven by private agents seeking profit from their investment in land. The thesis includes original empirical research in the three articles that analyse development since socialism. The second article employs quantitative data and methods, primarily index calculation, whereas the third and the fourth ones draw from a survey of policy documents combined with interviews with key informants. Keywords: residential differentiation, housing policy, urban planning, post-socialist transformation, Estonia, Tallinn

Regulating Food Consumption : Studies of change and variation in Europe

The role of people as buyers and eaters of food has changed significantly. From being protected by a paternalistic welfare state, people appear to be accorded more freedom and responsibility as individuals, where attention is redirected from the state towards market relations. Many have asserted that these changes are accompanied by fragmentation, individualisation, and privatisation, leading to individual uncertainty and lack of confidence. But empirical observations do not always confirm this, distrust is not necessarily growing and while responsibilities may change, the state still plays an active role. This dissertation explores changing relationships between states and markets, on the one hand, and ordinary people in their capacities as consumers and citizens, on the other. Do we see the emergence of new forms of regulation of food consumption? If so, what is the scope and what are the characteristics? Theories of regulation addressing questions about individualisation and self-governance are combined with a conceptualisation of consumption as processes of institutionalisation, involving daily routines, the division of labour between production and consumption, and the institutional field in which consumption is embedded. The analyses focus on the involvement of the state, food producers and scientific, first of all nutritional, expertise in regulating consumption, and on popular responses. Two periods come out as important, first when the ideas of “designing the good life” emerged, giving the state a very particular role in regulating food consumption, and, second, when this “designing” is replaced by ideas of choice and individual responsibility. One might say that “consumer choice” has become a mode of regulation. I use mainly historical studies from Norway to analyse the shifting role of the state in regulating food consumption, complemented with population surveys from six European countries to study how modernisation processes are associated with trust. The studies find that changing regulation is not only a question of societal or state vs individual responsibilities. Degrees of organisation and formalisation are important as well. While increasing organisation may represent discipline and abuses of power (including exploitation of consumer loyalty), organisation can also, to the consumer, provide higher predictability, systems to deal with malfeasance, and efficiency which may provide conditions for acting. The welfare state and the neo-liberal state have very different types of solutions. The welfare state solution is based on (national) egalitarianism, paternalism and discipline (of the market as well as households). Such solutions are still prominent in Norway. Individualisation and self-regulation may represent a regulatory response not only to a declining legitimacy of this kind of interventionism, but also increasing organisational complexity. This is reflected in large-scale re-regulation of markets as well as in relationships with households and consumers. Individualisation of responsibility is to the consumer not a matter of the number of choices that are presented on the shelves, but how choice as a form of consumer based involvement is institutionalised. It is recognition of people as “end-consumers”, as social actors, with systems of empowerment politically as well as via the provisioning system. ‘Consumer choice’ as a regulatory strategy includes not only communicative efforts to make people into “choosing consumers”, but also the provision of institutions which recognise consumer interests and agency. When this is lacking we find distrust as representing powerlessness. Individual responsibility-taking represents agency and is not always a matter of loyal support to shared goals, but involves protest and creativity. More informal (‘communitarian’) innovations may be an indication of that, where self-realisation is intimately combined with responsibility for social problems. But as solutions to counteract existing imbalances of power in the food market the impacts of such initiatives are probably more as part of consumer mobilisation and politicisation than as alternative provisioning.

Trust and Safe Choices: Coping with health-related risks in food consumption in St. Petersburg

This dissertation considers the problem of trust in the context of food consumption. The research perspectives refer to institutional conditions for consumer trust, personal practices of food consumption, and strategies consumers employ for controlling the safety of their food. The main concern of the study is to investigate consumer trust as an adequate response to food risks, i.e. a strategy helping the consumer to make safe choices in an uncertain food situation. "Risky" perspective serves as a frame of reference for understanding and explaining trust relations. The original aim of the study was to reveal the meanings applied to the concepts of trust, safety and risks in the perspective of market choices, the assessments of food risks and the ways of handling them. Supplementary research tasks presumed descriptions of institutional conditions for consumer trust, including descriptions of the food market, and the presentation of food consumption patterns in St. Petersburg. The main empirical material is based on qualitative interviews with consumers and interviews and group discussions with professional experts (market actors, representatives of inspection bodies and consumer organizations). Secondary material is used for describing institutional conditions for consumer trust and the market situation. The results suggest that the idea of consumer trust is associated with the reputation of suppliers, stable quality and taste of their products, and reliable food information. Being a subjectively constructed state connected to the act of acceptance, consumer trust results in positive buying decisions and stable preferences in the food market. The consumers' strategies that aim at safe food choices refer to repetitive interactions with reliable market actors that free them from constant consideration in the marketplace. Trust in food is highly mediated by trust in institutions involved in the food system. The analysis reveals a clear pattern of disbelief in the efficiency of institutional food control. The study analyses this as a reflection of "total distrust" that appears to be a dominant mood in many contexts of modern Russia. However, the interviewees emphasize the state's decisive role in suppressing risks in the food market. Also, the findings are discussed with reference to the consumers' possibilities of personal control over food risks. Three main responses to a risky food situation are identified: the reflexive approach, the traditional approach, and the fatalistic approach.