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.

Environmental change and human history in the Jabal Harun area, Jordan

The research is related to the Finnish Jabal Harun Project (FJHP), which is part of the research unit directed by Professor Jaakko Frösén. The project consists of two interrelated parts: the excavation of a Byzantine monastery/pilgrimage centre on Jabal Harun, and a multiperiod archaeological survey of the surrounding landscape. It is generally held that the Near Eastern landscape has been modified by millennia of human habitation and activity. Past climatic changes and human activities could be expected to have significantly changed also the landscape of the Jabal Harun area. Therefore it was considered that a study of erosion in the Jabal Harun area could shed light on the environmental and human history of the area. It was hoped that it would be possible to connect the results of the sedimentological studies either to wider climatic changes in the Near East, or to archaeologically observable periods of human activity and land use. As evidence of some archaeological periods is completely missing from the Jabal Harun area, it was also of interest whether catastrophic erosion or unfavourable environmental change, caused either by natural forces or by human agency, could explain the gaps in the archaeological record. Changes in climate and/or land-use were expected to be reflected in the sedimentary record. The field research, carried out as part of the FJHP survey fieldwork, included the mapping of wadi terraces and cleaning of sediment profiles which were recorded and sampled for laboratory analyses of facies and lithology. To obtain a chronology for the sedimentation and erosion phases also OSL (optically stimulated luminescence) dating samples were collected. The results were compared to the record of the Near Eastern palaeoclimate, and to data from geoarchaeological studies in central and southern Jordan. The picture of the environmental development was then compared to the human history in the area, based on archaeological evidence from the FJHP survey and the published archaeological research in the Petra region, and the question of the relationship between human activity and environmental change was critically discussed. Using the palaeoclimatic data and the results from geoarchaeological studies it was possible to outline the environmental development in the Jabal Harun area from the Pleistocene to the present.It is appears that there was a phase of accumulation of sediment before the Middle Palaeolithic period, possibly related to tectonic movement. This phase was later followed by erosion, tentatively suggested to have taken place during the Upper Palaeolithic. A period of wadi aggradation probably occurred during the Late Glacial and continued until the end of the Pleistocene, followed by significant channel degradation, attributed to increased rainfall during the Early Holocene. It seems that during the later Holocene channel incision has been dominant in the Jabal Harûn area although there have been also small-scale channel aggradation phases, two of which were OSL-dated to around 4000-3000 BP and 2400-2000 BP. As there is no evidence of tectonic movements in the Jabal Harun area after the early Pleistocene, it is suggested that climate change and human activity have been the major causes of environmental change in the area. At a brief glance it seems that many of the changes in the settlement and land use in the Jabal Harun area can be explained by climatic and environmental conditions. However, the responses of human societies to environmental change are dependent on many factors. Therefore an evaluation of the significance of environmental, cultural, socio-economic and political factors is needed to decide whether certain phenomena are environmentally induced. Comparison with the wider Petra region is also needed to judge whether the phenomena are characteristic of the Jabal Harun area only, or can they be connected to social, political and economic development over a wider area.

Climate change and agriculture: theory and application of mitigation policies

Agriculture’s contribution to climate change is controversial as it is a significant source of greenhouse gases but also a sink of carbon. Hence its economic and technological potential to mitigate climate change have been argued to be noteworthy. However, social profitability of emission mitigation is a result from factors among emission reductions such as surface water quality impact or profit from production. Consequently, to value comprehensive results of agricultural climate emission mitigation practices, these co-effects to environment and economics should be taken into account. The objective of this thesis was to develop an integrated economic and ecological model to analyse the social welfare of crop cultivation in Finland on distinctive cultivation technologies, conventional tillage and conservation tillage (no-till). Further, we ask whether it would be privately or socially profitable to allocate some of barley cultivation for alternative land use, such as green set-aside or afforestation, when production costs, GHG’s and water quality impacts are taken into account. In the theoretical framework we depict the optimal input use and land allocation choices in terms of environmental impacts and profit from production and derive the optimal tax and payment policies for climate and water quality friendly land allocation. The empirical application of the model uses Finnish data about production cost and profit structure and environmental impacts. According to our results, given emission mitigation practices are not self-evidently beneficial for farmers or society. On the contrary, in some cases alternative land allocation could even reduce social welfare, profiting conventional crop cultivation. This is the case regarding mineral soils such as clay and silt soils. On organic agricultural soils, climate mitigation practices, in this case afforestation and green fallow give more promising results, decreasing climate emissions and nutrient runoff to water systems. No-till technology does not seem to profit climate mitigation although it does decrease other environmental impacts. Nevertheless, the data behind climate emission mitigation practices impact to production and climate is limited and partly contradictory. More specific experiment studies on interaction of emission mitigation practices and environment would be needed. Further study would be important. Particularly area specific production and environmental factors and also food security and safety and socio-economic impacts should be taken into account.

Environmental change and anthropogenic impact on lake sediments during the Holocene in the Finnish - Karelian inland area

This thesis discusses the prehistoric human disturbance during the Holocene by means of case studies using detailed high-resolution pollen analysis from lake sediment. The four lakes studied are situated between 61o 40' and 61o 50' latitudes in the Finnish Karelian inland area and vary between 2.4 and 28.8 ha in size. The existence of Early Metal Age population was one important question. Another study question concerned the development of grazing, and the relationship between slash-and-burn cultivation and permanent field cultivation. The results were presented as pollen percentages and pollen concentrations (grains cm 3). Accumulation values (grains cm 2 yr 1) were calculated for Lake Nautajärvi and Lake Orijärvi sediment, where the sediment accumulation rate was precisely determined. Sediment properties were determined using loss-on-ignition (LOI) and magnetic susceptibility (k). Dating methods used include both conventional and AMS 14C determinations, paleomagnetic dating and varve choronology. The isolation of Lake Kirjavalampi on the northern shore of Lake Ladoga took place ca. 1460 1300 BC. The long sediment cores from Finland, Lake Kirkkolampi and Lake Orijärvi in southeastern Finland and Lake Nautajärvi in south central Finland all extended back to the Early Holocene and were isolated from the Baltic basin ca. 9600 BC, 8600 BC and 7675 BC, respectively. In the long sediment cores, the expansion of Alnus was visible between 7200 - 6840 BC. The spread of Tilia was dated in Lake Kirkkolampi to 6600 BC, in Lake Orijärvi to 5000 BC and at Lake Nautajärvi to 4600 BC. Picea is present locally in Lake Kirkkolampi from 4340 BC, in Lake Orijärvi from 6520 BC and in Lake Nautajärvi from 3500 BC onwards. The first modifications in the pollen data, apparently connected to anthropogenic impacts, were dated to the beginning of the Early Metal Period, 1880 1600 BC. Anthropogenic activity became clear in all the study sites by the end of the Early Metal Period, between 500 BC AD 300. According to Secale pollen, slash-and-burn cultivation was practised around the eastern study lakes from AD 300 600 onwards, and at the study site in central Finland from AD 880 onwards. The overall human impact, however, remained low in the studied sites until the Late Iron Age. Increasing human activity, including an increase in fire frequency was detected from AD 800 900 onwards in the study sites in eastern Finland. In Lake Kirkkolampi, this included cultivation on permanent fields, but in Lake Orijärvi, permanent field cultivation became visible as late as AD 1220, even when the macrofossil data demonstrated the onset of cultivation on permanent fields as early as the 7th century AD. On the northern shore of Lake Ladoga, local activity became visible from ca. AD 1260 onwards and at Lake Nautajärvi, sediment the local occupation was traceable from 1420 AD onwards. The highest values of Secale pollen were recorded both in Lake Orijärvi and Lake Kirjavalampi between ca. AD 1700 1900, and could be associated with the most intensive period of slash-and-burn from AD 1750 to 1850 in eastern Finland.

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

Survival in the Rainforest : Change and Resilience among the Punan Vuhang of Eastern Sarawak, Malaysia

This dissertation concerns the Punan Vuhang, former hunter-gatherers who are now part-time farmers living in an area of remote rainforest in the Malaysian state of Sarawak. It covers two themes: first, examining their methods of securing a livelihood in the rainforest, and second looking at their adaptation to a settled life and agriculture, and their response to rapid and large-scale commercial logging. This study engages the long-running debates among anthropologists and ecologists on whether recent hunting-gathering societies were able to survive in the tropical rainforest without dependence on farming societies for food resources. In the search for evidence, the study poses three questions: What food resources were available to rainforest hunter-gatherers? How did they hunt and gather these foods? How did they cope with periodic food shortages? In fashioning a life in the rainforest, the Punan Vuhang survived resource scarcity by developing adaptive strategies through intensive use of their knowledge of the forest and its resources. They also adopted social practices such as sharing and reciprocity, and resource tenure to sustain themselves without recourse to external sources of food. In the 1960s, the Punan Vuhang settled down in response to external influences arising in part from the Indonesian-Malaysian Confrontation. This, in turn, initiated a series of processes with political, economic and religious implications. However, elements of the traditional economy have remained resilient as the people continue to hunt, fish and gather, and are able to farm on an individual basis, unlike neighboring shifting cultivators who need to cooperate with each other. At the beginning of the 21st century, the Punan Vuhang face a new challenge arising from the issue of rights in the context of the state and national law and large-scale commercial logging in their forest habitat. The future seems bleak as they face the social problems of alcoholism, declining leadership, and dependence on cash income and commodities from the market.

Antioxidants, weight change and risk of type 2 diabetes

The incidence of type 2 diabetes has increased rapidly worldwide. Obesity is one of the most important modifiable risk factors of type 2 diabetes: weight gain increases and weight loss decreases the risk. However, the effects of weight fluctuation are unclear. Reactive oxygen species are presumably part of the complicated mechanism for the development of insulin resistance and beta-cell destruction in the pancreas. The association of antioxidants with the risk of incident type 2 diabetes has been studied in longitudinal prospective human studies, but so far there is no clear conclusion about protective effect of dietary or of supplementary antioxidants on diabetes risk. The present study examined 1) weight change and fluctuation as risk factors for incident type 2 diabetes; 2) the association of baseline serum alpha-tocopherol or beta-carotene concentration and dietary intake of antioxidants with the risk of type 2 diabetes; 3) the effect of supplementation with alpha-tocopherol or beta-carotene on the risk of incident type 2 diabetes; and on macrovascular complications and mortality among type 2 diabetics. This investigation was part of the Alpha-Tocopherol, Beta-Carotene Cancer Prevention (ATBC) Study, a randomized, double-blind, placebo-controlled prevention trial, which has undertaken to examine the effect of alpha-tocopherol and beta-carotene supplementation on the development of lung cancer, other cancers, and cardiovascular diseases in male smokers aged 50-69 years at baseline. Participants were assigned to receive either 50 mg alpha-tocopherol, 20mg beta-carotene, both, or placebo daily in a 2 x 2 factorial design experiment during 1985-1993. Cases of incident diabetes were identified through a nationwide register of drug reimbursements of the Social Insurance Institution. At baseline 1700 men had a history of diabetes. Among those (n = 27 379) with no diabetes at baseline 305 new cases of type 2 diabetes were recognized during the intervention period and 705 during the whole follow-up to 12.5 years. Weight gain and weight fluctuation measured over a three year period were independent risk factors for subsequent incident type 2 diabetes. Relative risk (RR) was 1.77 (95% confidence interval [CI] 1.44-2.17) for weight gain of at least 4 kg compared to those with a weight change of less than 4 kg. The RR in the highest weight fluctuation quintile compared to the lowest was 1.64 (95% CI 1.24-2.17). Dietary tocopherols and tocotrienols as well as dietary carotenoids, flavonols, flavones and vitamin C were not associated with the risk of type 2 diabetes. Baseline serum alpha-tocopherol and beta-carotene concentrations were not associated with the risk of incident diabetes. Neither alpha-tocopherol nor beta-carotene supplementation affected the risk of diabetes. The relative risks for participants who received alpha-tocopherol compared with nonrecipients and for participants who received beta-carotene compared with nonrecipients were 0.92 (95% CI 0.79-1.07) and 0.99 (95% CI 0.85-1.15), respectively. Furthermore, alpha-tocopherol or beta-carotene supplementation did not affect the risk of macrovascular complications or mortality of diabetic subjects during the 19 years follow-up time. In conclusion, in this study of older middle-aged male smokers, weight gain and weight fluctuation were independent risk factors for type 2 diabetes. Intake of antioxidants or serum alpha-tocopherol or beta-carotene concentrations were not associated with the risk of type 2 diabetes. Supplementation with of alpha-tocopherol or beta-carotene did not prevent type 2 diabetes. Neither did they prevent macrovascular complications, or mortality among diabetic subjects.

Numerical approaches to new particle formation and growth in the atmosphere

Aerosols impact the planet and our daily lives through various effects, perhaps most notably those related to their climatic and health-related consequences. While there are several primary particle sources, secondary new particle formation from precursor vapors is also known to be a frequent, global phenomenon. Nevertheless, the formation mechanism of new particles, as well as the vapors participating in the process, remain a mystery. This thesis consists of studies on new particle formation specifically from the point of view of numerical modeling. A dependence of formation rate of 3 nm particles on the sulphuric acid concentration to the power of 1-2 has been observed. This suggests nucleation mechanism to be of first or second order with respect to the sulphuric acid concentration, in other words the mechanisms based on activation or kinetic collision of clusters. However, model studies have had difficulties in replicating the small exponents observed in nature. The work done in this thesis indicates that the exponents may be lowered by the participation of a co-condensing (and potentially nucleating) low-volatility organic vapor, or by increasing the assumed size of the critical clusters. On the other hand, the presented new and more accurate method for determining the exponent indicates high diurnal variability. Additionally, these studies included several semi-empirical nucleation rate parameterizations as well as a detailed investigation of the analysis used to determine the apparent particle formation rate. Due to their high proportion of the earth's surface area, oceans could potentially prove to be climatically significant sources of secondary particles. In the lack of marine observation data, new particle formation events in a coastal region were parameterized and studied. Since the formation mechanism is believed to be similar, the new parameterization was applied in a marine scenario. The work showed that marine CCN production is feasible in the presence of additional vapors contributing to particle growth. Finally, a new method to estimate concentrations of condensing organics was developed. The algorithm utilizes a Markov chain Monte Carlo method to determine the required combination of vapor concentrations by comparing a measured particle size distribution with one from an aerosol dynamics process model. The evaluation indicated excellent agreement against model data, and initial results with field data appear sound as well.

Observations on the first steps of atmospheric particle formation and growth

Atmospheric aerosol particles have a significant impact on air quality, human health and global climate. The climatic effects of secondary aerosol are currently among the largest uncertainties limiting the scientific understanding of future and past climate changes. To better estimate the climatic importance of secondary aerosol particles, detailed information on atmospheric particle formation mechanisms and the vapours forming the aerosol is required. In this thesis we studied these issues by applying novel instrumentation in a boreal forest to obtain direct information on the very first steps of atmospheric nucleation and particle growth. Additionally, we used detailed laboratory experiments and process modelling to determine condensational growth properties, such as saturation vapour pressures, of dicarboxylic acids, which are organic acids often found in atmospheric samples. Based on our studies, we came to four main conclusions: 1) In the boreal forest region, both sulphurous compounds and organics are needed for secondary particle formation, the previous contributing mainly to particle formation and latter to growth; 2) A persistent pool of molecular clusters, both neutral and charged, is present and participates in atmospheric nucleation processes in boreal forests; 3) Neutral particle formation seems to dominate over ion-mediated mechanisms, at least in the boreal forest boundary layer; 4) The subcooled liquid phase saturation vapour pressures of C3-C9 dicarboxylic acids are of the order of 1e-5 1e-3 Pa at atmospheric temperatures, indicating that a mixed pre-existing particulate phase is required for their condensation in atmospheric conditions. The work presented in this thesis gives tools to better quantify the aerosol source provided by secondary aerosol formation. The results are particularly useful when estimating, for instance, anthropogenic versus biogenic influences and the fractions of secondary aerosol formation explained by neutral or ion-mediated nucleation mechanisms, at least in environments where the average particle formation rates are of the order of some tens of particles per cubic centimeter or lower. However, as the factors driving secondary particle formation are likely to vary depending on the environment, measurements on atmospheric nucleation and particle growth are needed from around the world to be able to better describe the secondary particle formation, and assess its climatic effects on a global scale.

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.