Essays on Economic Integration and Labour Demand

This dissertation consists of an introductory section and three essays investigating the effects of economic integration on labour demand by using theoretical models and by empirical analysis. The essays adopt an intra-industry trade approach to specify a theoretical framework of estimation for determining the effects of economic integration on employment. In all the essays the empirical aim is to explore the labour demand consequences of European integration. The first essay analyzes how labour-demand elasticities with own price have changed during the process of economic integration. As a theoretical result, intensified trade competition increases labour-demand elasticity, whereas better advantage of economies of scale decreases labour-demand elasticity by decreasing the elasticity of substitution between differentiated products. Furthermore, if integration gives rise to an increase in input-substitutability and/or outsourcing activities, labour demand will become more elastic. Using data from the manufacturing sector from 1975 to 2002, the empirical results provide support for the hypothesis that European integration has contributed to increased elasticities of total labour demand in Finland. The second essay analyzes how economic integration affects the impact of welfare poli-cies on employment. The essay considers the viability of financing the public sector, i.e. public consumption and social security expenses, by general labour taxation in an economy which has become more integrated into international product markets. The theoretical results of the second essay indicate that, as increased trade competition crowds out better economies of scale, it becomes more costly to maintain welfare systems financed by labour taxation. Using data from European countries for the years 1975 to 2004, the empirical results provide inconsistent evidence for the hypothesis that economic integration has contributed to the distortion effects of welfare policies on employment. The third essay analyzes the impact of profit sharing on employment as a way to introduce wage flexibility into the process of economic integration. The results of the essay suggest that, in theory, the effects of economic integration on the impact of profit sharing on employment clearly depend on a trade-off between intensified competition and better advantage of economies of scale. If product market competition increases, the ability of profit sharing to improve employment through economic integration increases with moderated wages. While, the economic integration associating with market power in turn decrease the possibilities of profit sharing with higher wages to improve employment. Using data from the manufacturing sector for the years 1996 to 2004, the empirical results show that profit-sharing has a positive impact on employment during the process of European integration, but can have ambiguous effects on the stability of employment in Finland.

Mathematical Aspects of Financial Markets with Frictions

Frictions are factors that hinder trading of securities in financial markets. Typical frictions include limited market depth, transaction costs, lack of infinite divisibility of securities, and taxes. Conventional models used in mathematical finance often gloss over these issues, which affect almost all financial markets, by arguing that the impact of frictions is negligible and, consequently, the frictionless models are valid approximations. This dissertation consists of three research papers, which are related to the study of the validity of such approximations in two distinct modeling problems. Models of price dynamics that are based on diffusion processes, i.e., continuous strong Markov processes, are widely used in the frictionless scenario. The first paper establishes that diffusion models can indeed be understood as approximations of price dynamics in markets with frictions. This is achieved by introducing an agent-based model of a financial market where finitely many agents trade a financial security, the price of which evolves according to price impacts generated by trades. It is shown that, if the number of agents is large, then under certain assumptions the price process of security, which is a pure-jump process, can be approximated by a one-dimensional diffusion process. In a slightly extended model, in which agents may exhibit herd behavior, the approximating diffusion model turns out to be a stochastic volatility model. Finally, it is shown that when agents' tendency to herd is strong, logarithmic returns in the approximating stochastic volatility model are heavy-tailed. The remaining papers are related to no-arbitrage criteria and superhedging in continuous-time option pricing models under small-transaction-cost asymptotics. Guasoni, Rásonyi, and Schachermayer have recently shown that, in such a setting, any financial security admits no arbitrage opportunities and there exist no feasible superhedging strategies for European call and put options written on it, as long as its price process is continuous and has the so-called conditional full support (CFS) property. Motivated by this result, CFS is established for certain stochastic integrals and a subclass of Brownian semistationary processes in the two papers. As a consequence, a wide range of possibly non-Markovian local and stochastic volatility models have the CFS property.

Stock Option Compensation in Finland: An Analysis of Economic Determinants, Contracting Frequency, and Design

This paper addresses several questions in the compensation literature by examining stock option compensation practices of Finnish firms. First, the results indicate that principal-agent theory succeeds quite well in predicting the use of stock options. Proxies for monitoring costs, growth opportunities, ownership structure, and risk are found to determine the use of incentives consistent with theory. Furthermore, the paper examines whether determinants of stock options targeted to top management differ from determinants of broad-based stock option plans. Some evidence is found that factors driving these two types of incentives differ. Second, the results reveal that systematic risk significantly increases the likelihood that firms adopt stock option plans, whereas total firm risk and unsystematic risk do not seem to affect this decision. Third, the results show that growth opportunities are related to time-dimensional contracting frequency, consistent with the argument that incentive levels deviate more rapidly from optimum in firms with high growth opportunities. Finally, the results suggest that vesting schedules are decreasing in financial leverage, and that contract maturity is decreasing in firm focus. In addition, both vesting schedules and contract maturity tend to be longer in firms involving state ownership.

Molecular and epidemiological aspects of Streptococcus pyogenes disease in Finland: Severe infections and bacterial, non-necrotizing cellulitis

Streptococcus pyogenes (group A streptococcus) is an important human pathogen, causing a wide array of infections ranging in severity. The majority of S. pyogenes infections are mild upper respiratory tract or skin infections. Severe, invasive infections, such as bacteraemia, are relatively rare, but constitute a major global burden with a high mortality. Certain streptococcal types are associated with a more severe disease and higher mortality. Bacterial, non-necrotizing cellulitis and erysipelas are localised infections of the skin, and although they are usually not life-threatening, they have a tendency to recur and therefore cause substantial morbidity. Despite several efforts aimed at developing an effective and safe vaccine against S. pyogenes infections, no vaccine is yet available. In this study, the epidemiology of invasive S. pyogenes infections in Finland was described over a decade of national, population-based surveillance. Recent trends in incidence, outcome and bacterial types were investigated. The beta-haemolytic streptococci causing cellulitis and erysipelas infections in Finland were studied in a case-control study. Bacterial isolates were characterised using both conventional and molecular typing methods, such as the emm typing, which is the most widely used typing method for beta-haemolytic streptococci. The incidence of invasive S. pyogenes disease has had an increasing trend during the past ten years in Finland, especially from 2006 onwards. Age- and sex-specific differences in the incidence rate were identified, with men having a higher incidence than women, especially among persons aged 45-64 years. In contrast, more infections occurred in women aged 25-34 years than men. Seasonal patterns with occasional peaks during the midsummer and midwinter were observed. Differences in the predisposing factors and underlying conditions of patients may contribute to these distinctions. Case fatality associated with invasive S. pyogenes infections peaked in 2005 (12%) but remained at a reasonably low level (8% overall during 2004-2007) compared to that of other developed countries (mostly exceeding 10%). Changes in the prevalent emm types were associated with the observed increases in incidence and case fatality. In the case-control study, acute bacterial non-necrotizing cellulitis was caused predominantly by Streptococcus dysgalactiae subsp. equisimilis, instead of S. pyogenes. The recurrent nature of cellulitis became evident. This study adds to our understanding of S. pyogenes infections in Finland and provides a basis for comparison to other countries and future trends. emm type surveillance and outcome analyses remain important for detecting such changes in type distribution that might lead to increases in incidence and case fatality. Bacterial characterisation serves as a basis for disease pathogenesis studies and vaccine development.

New aspects of the diagnosis of Helicobacter pylori infection

Aims: Helicobacter pylori infection, although the prevalence is declining in Western world, is still responsible for several clinically important diseases. None of the diagnostic tests is perfect and in this study, the performance of three stool antigen tests was assessed. In areas of high H. pylori prevalence, the definition of patients with the greatest benefit from eradication therapy may be a problem; the role of duodenal gastric metaplasia in categorizing patients at risk for duodenal ulcer was evaluated in this respect. Whether persistent chronic inflammation and elevated H. pylori antibodies after successful eradication are associated with each other or with atrophic gastritis, a long term sequelae of H. pylori infection, were also studied. Patients and methods: The three stool antigen tests were assessed in pre- and post-eradication settings among 364 subjects in two studies as compared to the rapid urease test (RUT), histology, culture, the 13C-urea breath test (UBT) and enzyme immunoassay (EIA) based H. pylori serology. The association between duodenal gastric metaplasia with duodenal ulcer was evaluated in a retrospective study including 1054 patients gastroscopied due to clinical indications and 154 patients previously operated for duodenal ulcer. The extent of duodenal gastric metaplasia was assessed from histological specimens in different patient groups formed on the basis of gastroscopy findings and H. pylori infection. Chronic gastric inflammation (108 patients) and H. pylori antibodies and serum markers for atrophy (77 patients) were assessed in patients earlier treated for H. pylori. Results: Of the stool antigen tests studied, the monoclonal antibody-based EIA-test showed the highest sensitivity and specificity both in the pre-treatment setting (96.9% and 95.9%) and after therapy (96.9% and 97.8%). The polyclonal stool antigen test and the in-office test had at baseline a sensitivity of 91% and 94%, and a specificity of 96% and 89%, respectively and in a post-treatment setting, a sensitivity of 78% and 91%, and a specificity of 97%, respectively. Duodenal gastric metaplasia was strongly associated with H. pylori positive duodenal ulcer (odds ratio 42). Although common still five years after eradication, persistent chronic gastric inflammation (21%) and elevated H. pylori antibodies (33%) were neither associated with each other nor with atrophic gastritis. Conclusions: Current H. pylori infection can feasibly be diagnosed by a monoclonal antibody-based EIA test with the accuracy comparable to that of reference methods. The performance of the polyclonal test as compared to the monoclonal test was inferior especially in the post-treatment setting. The in-office test had a low specificity for primary diagnosis and hence positive test results should probably be confirmed with another test before eradication therapy is prescribed. The presence of widespread duodenal gastric metaplasia showed promising results in detecting patients who should be treated for H. pylori due to an increased risk of duodenal ulcer. If serology is used later on in patients with earlier successfully treated for H. pylori, it should be taken into account that H. pylori antibodies may persist elevated for years for unknown reason. However, this phenomenon was not found to be associated with persistent chronic inflammation or atrophic changes.

Bioavailability aspects of hydrophobic contaminant degradation in soils

This thesis concentrates on bioavailability of organic soil contaminants in the context of bioremediation of soil contaminated with volatile or non-volatile hydrophobic pollutants. Bioavailability and biodegradation was studied from four viewpoints: (i) Improvement of bioavailability and biodegradation of volatile hydrocarbons in contained bioremediation systems at laboratory - and pilot-scale. (ii) Improvement of bioavailability of non-volatile, hydrophobic compounds in such systems. (iii) Biodegradation of a non-volatile hydrophobic compound in soil organic matter in microcosms. (iiii) Bioavailability of nitrogen in an open, full-scale bioremediation system. It was demonstrated that volatility of organic compounds can be controlled by amending the soil with adsorbents. The sorbed hydrocarbons were shown to be available to soil microbiota. As the result, biodegradation of the volatile hydrocarbons was greatly favored at the expense of volatilization. PAH compounds were shown to be mobilized and their bioavailability improved by a hydrophobic, non-toxic additive, vegetable oil. Bioavailability of the PAHs was recorded as an increased toxicity of the soil. In spite of the increased bioavailability, biodegradation of the PAHs decreased. In microcosms simulating boreal forest organic surface soil, PAH-compound (pyrene) was shown to be removed from soil biologically. Therefore hydrophobicity of the substrate does not necessarily mean low availability and biodegradation in organic soil. Finally, in this thesis it was demonstrated that an unsuitable source of nitrogen or its overdose resulted in wasteful spending of this nutrient and even harmful effects on soil microbes. Such events may inhibit rather than promote the bioremediation process in soil.

Aspects of atomic decompositions and Bergman projections

The concept of an atomic decomposition was introduced by Coifman and Rochberg (1980) for weighted Bergman spaces on the unit disk. By the Riemann mapping theorem, functions in every simply connected domain in the complex plane have an atomic decomposition. However, a decomposition resulting from a conformal mapping of the unit disk tends to be very implicit and often lacks a clear connection to the geometry of the domain that it has been mapped into. The lattice of points, where the atoms of the decomposition are evaluated, usually follows the geometry of the original domain, but after mapping the domain into another this connection is easily lost and the layout of points becomes seemingly random. In the first article we construct an atomic decomposition directly on a weighted Bergman space on a class of regulated, simply connected domains. The construction uses the geometric properties of the regulated domain, but does not explicitly involve any conformal Riemann map from the unit disk. It is known that the Bergman projection is not bounded on the space L-infinity of bounded measurable functions. Taskinen (2004) introduced the locally convex spaces LV-infinity consisting of measurable and HV-infinity of analytic functions on the unit disk with the latter being a closed subspace of the former. They have the property that the Bergman projection is continuous from LV-infinity onto HV-infinity and, in some sense, the space HV-infinity is the smallest possible substitute to the space H-infinity of analytic functions. In the second article we extend the above result to a smoothly bounded strictly pseudoconvex domain. Here the related reproducing kernels are usually not known explicitly, and thus the proof of continuity of the Bergman projection is based on generalised Forelli-Rudin estimates instead of integral representations. The minimality of the space LV-infinity is shown by using peaking functions first constructed by Bell (1981). Taskinen (2003) showed that on the unit disk the space HV-infinity admits an atomic decomposition. This result is generalised in the third article by constructing an atomic decomposition for the space HV-infinity on a smoothly bounded strictly pseudoconvex domain. In this case every function can be presented as a linear combination of atoms such that the coefficient sequence belongs to a suitable Köthe co-echelon space.

Aspects of Arminian Soteriology in Methodist-Lutheran Ecumenical Dialogues in 20th and 21st Century

The aim of this thesis is to analyse the key ecumenical dialogues between Methodists and Lutherans from the perspective of Arminian soteriology and Methodist theology in general. The primary research question is defined as: "To what extent do the dialogues under analysis relate to Arminian soteriology?" By seeking an answer to this question, new knowledge is sought on the current soteriological position of the Methodist-Lutheran dialogues, the contemporary Methodist theology and the commonalities between the Lutheran and Arminian understanding of soteriology. This way the soteriological picture of the Methodist-Lutheran discussions is clarified. The dialogues under analysis were selected on the basis of versatility. Firstly, the sole world organisation level dialogue was chosen: The Church – Community of Grace. Additionally, the document World Methodist Council and the Joint Declaration on the Doctrine of Justification is analysed as a supporting document. Secondly, a document concerning the discussions between two main-line churches in the United States of America was selected: Confessing Our Faith Together. Thirdly, two dialogues between non-main-line Methodist churches and main-line Lutheran national churches in Europe were chosen: Fellowship of Grace from Norway and Kristuksesta osalliset from Finland. The theoretical approach to the research conducted in this thesis is systematic analysis. The Remonstrant articles of Arminian soteriology are utilised as an analysis tool to examine the soteriological positions of the dialogues. New knowledge is sought by analysing the stances of the dialogues concerning the doctrines of partial depravity, conditional election, universal atonement, resistible grace and conditional perseverance of saints. This way information is also provided for approaching the Calvinist-Arminian controversy from new perspectives. The results of this thesis show that the current soteriological position of the Methodist-Lutheran dialogues is closer to Arminianism than Calvinism. The dialogues relate to Arminian soteriology especially concerning the doctrines of universal atonement, resistible grace and conditional perseverance of saints. The commonalities between the Lutheran and Arminian understanding of soteriology exist mainly in these three doctrines as they are uniformly favoured in the dialogues. The most discussed area of soteriology is human depravity, in which the largest diversity of stances occurs as well. On the other hand, divine election is the least discussed topic. The overall perspective, which the results of the analysis provide, indicates that the Lutherans could approach the Calvinist churches together with the Methodists with a wider theological perspective and understanding when the soteriological issues are considered as principal. Human depravity is discovered as the area of soteriology which requires most work in future ecumenical dialogues. However, the detected Lutheran hybrid notion on depravity (a Calvinist-Arminian mixture) appears to provide a useful new perspective for Calvinist-Arminian ecumenism and offers potentially fruitful considerations to future ecumenical dialogues.

Living Poetically in the Modern Age : The Situational Aspects of Kierkegaard's Thought

How did Søren Kierkegaard (1813 1855) situate the human subject into historical and social actuality? How did he take into consideration his own situatedness? As key for understanding these questions the research takes the ideal of living poetically that Kierkegaard outlined in his dissertation. In The Concept of Irony (1841) Kierkegaard took up this ideal of the Romantic ironists and made it into an ethical-religious ideal. For him the ideal of living poetically came to mean 1) becoming brought up by God, while 2) assuming ethical-religiously one s role and place in the historical actuality. Through an exegesis of Kierkegaard s texts from 1843 to 1851 it is shown how this ideal governed Kierkegaard s thought and action throughout his work. The analysis of Kierkegaard s ideal of living poetically not only a) shows how the Kierkegaardian subject is situated in its historical context. It also b) sheds light on Kierkegaard s social and political thought, c) helps to understand Kierkegaard s character as a religious thinker, and d) pits his ethical-religious orientation in life against its scientific and commonsense alternatives. The research evaluates the rationality of the way of life championed by Kierkegaard by comparing it with ways of life dominated by reflection and reasoning. It uses Kierkegaard s ideal of living poetically in trying to understand the tensions between religious and unreligious ways of life.