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.

Striving for the Impossible : The Hegelian background of Judith Butler

This study analyses the Hegelian roots of the subject-theory and the political theory of Judith Butler. Butler can be seen as the author of "gender performativity". Butler claims that subject's identities are linquistic "terms". Linquistic identities are performative and normative: they produce, according to cultural rules, the identities which they just claim to describe. Butler's theory of the performativity of identities is based on her theory of identities as "ek-static" constructions. This means that there is a relation between the self and the Other in the heart of identities. It is claimed in this study that Butler's theory of the relation between the self and the Other, or, between the subject and the constitutive outside, is based on G.W.F. Hegel's theory of the dialectics of recognition in The Phenomenology of Spirit. Especially the sections dealing with the relation between "Lord" and "Bondsman" set the theoretical base for Butler's theory. Further, it is claimed that Hegel's own solution for the enslaving and instrumentalizing relation between the self and the Other, reciprocal recognition, remains an important alternative to the postmodernist conception supported by political theorists like Butler. Chapter 2, on Hegel, goes through the dialectics of recognition between the self and the Other in The Phenomenology of Spirit up until the ideal of reciprocal recognition and absolute knowledge. Chapter 3 introduces two French interpretations of Hegel, by Alexandre Kojéve and Louis Althusser. Both of these interpretations, especially the Kojevian one, have deeply influenced the contemporary understanding of Hegel as well as the contemporary thought - presented e.g. in the postmodern political thought - on the relations between the self and the Other. The Kojévian Marxist utopia with its notion of "the End of History" as well as the Althusserian theory of the Interpellative formation of subjects have influenced how Hegel's theory of the self and the Other have travelled into Butler's thought. In chapter 5 these influences are analyzed in detail. According to the analysis, Butler, like numerous other poststructuralist theorists, accepts Kojéve's interpretation as basically correct, but rejects his vision of "the End of History" as static and totalitarian. Kojéve's utopian philosophy of history is replaced by the paradoxical idea of an endless striving towards emancipation which, however, could not and should not be reached. In chapter 6 Butler's theory is linked to another postmodern political theory, that of Chantal Mouffe. It is argued that Mouffe's theory is based on a similar view of the relation of the self and the other as Butler's theory. The former, however, deals explicitly with politics. Therefore, it makes the central paradox of striving for the impossible more visible; such a theory is unable to guide political action. Hegel actually anticipated this kind of theorizing in his critique of "Unhappy Consciousness" in the Phenomenology of Spirit. Keywords: Judith Butler, G.W.F. Hegel, Chantal Mouffe, Alexandre Kojéve, Postmodernism, Politics, Identities, Performativity, Self-consciousness, Other

Reinventing Nordic Openness : Transparency and State Information in Finland

The study explores new ideational changes in the information strategy of the Finnish state between 1998 and 2007, after a juncture in Finnish governing in the early 1990s. The study scrutinizes the economic reframing of institutional openness in Finland that comes with significant and often unintended institutional consequences of transparency. Most notably, the constitutional principle of publicity (julkisuusperiaate), a Nordic institutional peculiarity allowing public access to state information, is now becoming an instrument of economic performance and accountability through results. Finland has a long institutional history in the publicity of government information, acknowledged by law since 1951. Nevertheless, access to government information became a policy concern in the mid-1990s, involving a historical narrative of openness as a Nordic tradition of Finnish governing Nordic openness (pohjoismainen avoimuus). International interest in transparency of governance has also marked an opening for institutional re-descriptions in Nordic context. The essential added value, or contradictory term, that transparency has on the Finnish conceptualisation of governing is the innovation that public acts of governing can be economically efficient. This is most apparent in the new attempts at providing standardised information on government and expressing it in numbers. In Finland, the publicity of government information has been a concept of democratic connotations, but new internationally diffusing ideas of performance and national economic competitiveness are discussed under the notion of transparency and its peer concepts openness and public (sector) information, which are also newcomers to Finnish vocabulary of governing. The above concepts often conflict with one another, paving the way to unintended consequences for the reforms conducted in their name. Moreover, the study argues that the policy concerns over openness and public sector information are linked to the new drive for transparency. Drawing on theories of new institutionalism, political economy, and conceptual history, the study argues for a reinvention of Nordic openness in two senses. First, in referring to institutional history, the policy discourse of Nordic openness discovers an administrative tradition in response to new dilemmas of public governance. Moreover, this normatively appealing discourse also legitimizes the new ideational changes. Second, a former mechanism of democratic accountability is being reframed with market and performance ideas, mostly originating from the sphere of transnational governance and governance indices. Mobilizing different research techniques and data (public documents of the Finnish government and international organizations, some 30 interviews of Finnish civil servants, and statistical time series), the study asks how the above ideational changes have been possible, pointing to the importance of nationalistically appealing historical narratives and normative concepts of governing. Concerning institutional developments, the study analyses the ideational changes in central steering mechanisms (political, normative and financial steering) and the introduction of budget transparency and performance management in two cases: census data (Population Register Centre) and foreign political information (Ministry for Foreign Affairs). The new policy domain of governance indices is also explored as a type of transparency. The study further asks what institutional transformations are to be observed in the above cases and in the accountability system. The study concludes that while the information rights of citizens have been reinforced and recalibrated during the period under scrutiny, there has also been a conversion of institutional practices towards economic performance. As the discourse of Nordic openness has been rather unquestioned, the new internationally circulating ideas of transparency and the knowledge economy have entered this discourse without public notice. Since the mid 1990s, state registry data has been perceived as an exploitable economic resource in Finland and in the EU public sector information. This is a parallel development to the new drive for budget transparency in organisations as vital to the state as the Population Register Centre, which has led to marketization of census data in Finland, an international exceptionality. In the Finnish Ministry for Foreign Affairs, the post-Cold War rhetorical shift from secrecy to performance-driven openness marked a conversion in institutional practices that now see information services with high regards. But this has not necessarily led to the increased publicity of foreign political information. In this context, openness is also defined as sharing information with select actors, as a trust based non-public activity, deemed necessary amid the global economic competition. Regarding accountability system, deliberation and performance now overlap, making it increasingly difficult to identify to whom and for what the public administration is accountable. These evolving institutional practices are characterised by unintended consequences and paradoxes. History is a paradoxical component in the above institutional change, as long-term institutional developments now justify short-term reforms.

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.

Elements of Volatility at High Frequency

Volatility is central in options pricing and risk management. It reflects the uncertainty of investors and the inherent instability of the economy. Time series methods are among the most widely applied scientific methods to analyze and predict volatility. Very frequently sampled data contain much valuable information about the different elements of volatility and may ultimately reveal the reasons for time varying volatility. The use of such ultra-high-frequency data is common to all three essays of the dissertation. The dissertation belongs to the field of financial econometrics. The first essay uses wavelet methods to study the time-varying behavior of scaling laws and long-memory in the five-minute volatility series of Nokia on the Helsinki Stock Exchange around the burst of the IT-bubble. The essay is motivated by earlier findings which suggest that different scaling laws may apply to intraday time-scales and to larger time-scales, implying that the so-called annualized volatility depends on the data sampling frequency. The empirical results confirm the appearance of time varying long-memory and different scaling laws that, for a significant part, can be attributed to investor irrationality and to an intraday volatility periodicity called the New York effect. The findings have potentially important consequences for options pricing and risk management that commonly assume constant memory and scaling. The second essay investigates modelling the duration between trades in stock markets. Durations convoy information about investor intentions and provide an alternative view at volatility. Generalizations of standard autoregressive conditional duration (ACD) models are developed to meet needs observed in previous applications of the standard models. According to the empirical results based on data of actively traded stocks on the New York Stock Exchange and the Helsinki Stock Exchange the proposed generalization clearly outperforms the standard models and also performs well in comparison to another recently proposed alternative to the standard models. The distribution used to derive the generalization may also prove valuable in other areas of risk management. The third essay studies empirically the effect of decimalization on volatility and market microstructure noise. Decimalization refers to the change from fractional pricing to decimal pricing and it was carried out on the New York Stock Exchange in January, 2001. The methods used here are more accurate than in the earlier studies and put more weight on market microstructure. The main result is that decimalization decreased observed volatility by reducing noise variance especially for the highly active stocks. The results help risk management and market mechanism designing.

Ohjailusta kilpailuun : Suomen hallitusten kasvu- ja rakennepolitiikka vuosina 1962-1999

The study examines the contents, changes and the causes of changes of the growth and structural policy exercised by Finnish governments in 1962-1999. The policy is evaluated e.g. on the basis of government programmes. It is divided in the study into three phases: the phase of guided economy 1962-77, the transition period 1977-91 and the phase of competitive economy 1991-99. The opening of the economy has been the central factor influencing the contents of the growth and structural policy. When dividing the policy into ten sectors, it was found that the sectors losing weight during the study period are agricultural and forest policies and welfare policy and the sectors increasing weight are labour policy and environmental policy. Though impacts of the changes in the general line of the growth and structural policy could be seen in sector policies, the breaks in sector policies did not necessarily coincide with the breaks in the general line of the policy. In the study, in particular, the impacts of the factors affecting growth and structural policy thinking (political changes, foreign influences and changes in economics) are evaluated. The policy was influenced more by the prevailing ideological climate ("the spirit of time") than by political changes. Until the 1970s foreign influences mainly came from those individual Western European countries, where the role of government planning was important and where the economic development was favourable. Some impacts from socialist countries could be seen at the end of the 1960s and at the beginning of the 1970s. Since the 1980s the role of international organisations became emphasised. Also the impacts of the changes in economics could be seen in the changes in the general line of the growth and structural policy.

Political transition and structural politicisation : The long shadow of Taiwan's one-party legacy

Väitöskirjatutkimuksessa tarkastellaan Taiwanin politiikkaa ensimmäisen vaalien kautta tapahtuneen vallanvaihdon jälkeen (2000) yhteiskunnan rakenteellisen politisoitumisen näkökulmasta. Koska Taiwanilla siirryttiin verettömästi autoritaarisesta yksipuoluejärjestelmästä monipuoluejärjestelmään sitä on pidetty poliittisen muodonmuutoksen mallioppilaana. Aiempi optimismi Taiwanin demokratisoitumisen suhteen on sittemmin vaihtunut pessimismiin, pitkälti yhteiskunnan voimakkaasta politisoitumisesta johtuen. Tutkimuksessa haetaan selitystä tälle politisoitumiselle. Yhteiskunnan rakenteellisella politisoitumisella tarkoitetaan tilannetta, jossa ”poliittisen” alue kasvaa varsinaisia poliittisia instituutioita laajemmaksi. Rakenteellinen politisoituminen muuttuu helposti yhteiskunnalliseksi ongelmaksi, koska siitä usein seuraa normaalin poliittisen toiminnan (esim. lainsäädännän) jähmettyminen, yhteiskunnan jyrkkä jakautuminen, alhainen kynnys poliittisille konflikteille ja yleisen yhteiskunnallisen luottamuksen alentuminen. Toisin kuin esimerkiksi Itä-Euroopassa, Taiwanissa entinen valtapuolue ei romahtanut poliittisen avautumisen myötä vaan säilytti vahvan rakenteellisen asemansa. Kun valta vaihtui ensimmäisen kerran vaalien kautta, vanha valtapuolue ei ollut valmis luovuttamaan poliittisen järjestelmän ohjaksia käsistään. Alkoi vuosia kestänyt taistelu järjestelmän hallinnasta vanhan ja uuden valtapuolueen välillä, jossa yhteiskunta politisoitui voimakkaasti. Tutkimuksessa Taiwanin yhteiskunnan politisoituminen selitetään useiden rakenteellisten piirteiden yhteisvaikutuksen tuloksena. Tällaisia politisoitumista edistäviä rakentellisia piirteitä ovat hidas poliittinen muutos, joka säilytti vanhat poliittiset jakolinjat ja niihin liittyvät vahvat edut ja intressit; sopimaton perustuslaki; Taiwanin epäselvä kansainvälinen asema ja jakautunut identiteetti; sekä sosiaalinen rakenne, joka helpottaa ihmisten nopeaa mobilisointia poliittiisiin mielenilmauksiin. Tutkimuksessa kiinnitetään huomiota toistaiseksi vähän tutkittuun poliittiseen ilmiöön, joidenkin demokratisoituvien yhteiskuntien voimakkaaseen rakenteelliseen politisoitumiseen. Tutkimuksen pääasiallinen havainto on, että yksipuoluejärjestelmän demokratisoituminen kantaa sisällään rakenteellisen politisoitumisen siemenen, jos entinen valtapuolue ei romahda demokratisoitumisen myötä.

Normalization and Charter 77 : Violence, Commitment and Resistance in Czechoslovakia

In Czechoslovakia, the occupation of 1968 denoted the beginning of normalization , a political and societal stagnation that lasted two decades. Dissident initiative Charter 77 emerged in 1977, demanding that the leaders of the country respect human rights. The Helsinki process provided a macro-level framework that influenced opposition and dissident activities throughout Eastern Europe. The study contributes a focused empirical analysis of the period of normalization and the dissident movement Charter 77. Dissent in general is seen as an existential attitude; it can be encapsulated as a morally rationalized critical stance as derived from shared experience or interpretation of injustice, which serves as a basis for a shared collective identity comprising oppositional consciousness as one unifying factor. The study suggests that normalization can be understood as a fundamentally violent process and discusses the structural and cultural manifestations of violence with relation to Charter 77. In general, the aim of the system was to passivize the society to such an extent that it would not constitute a potential threat to the hegemonic rule of the regime. Normalization caused societal stagnation and apoliticization, but it also benefited those who accepted the new political reality. The study, however, questions the image of Czechoslovakia s allegedly highly repressive rule by showing that there was also quite considerable tolerance of Charter 77 and consideration before severe repression was brought to bear against dissidents. Furthermore, the study provides understanding of the motives and impetuses behind dissent, the strategic shifts in Charter 77 activities, and the changes in the regime s policies toward Charter 77. The study also adds new perspective on the common image of Charter 77 as a non political initiative and suggests that Charter 77 was, in fact, a political entity, an actively political one in the latter half of the 1980s. Charter 77 was a de facto hybrid of a traditional dissident initiative and an oppositional actor. Charter 77 adopted a two-dimension approach: firstly, it still emphasized its role as a citizens initiative supporting human rights, but, secondly, at the same time, it was a directly political actor supporting and furthering the development of political opposition against the ruling power.

Essays on Russia's Economic Transition

This study comprises an introductory section and three essays analysing Russia's economic transition from the early 1990s up to the present. The papers present a combination of both theoretical and empirical analysis on some of the key issues Russia has faced during its somewhat troublesome transformation from state-controlled command economy to market-based economy. The first essay analyses fiscal competition for mobile capital between identical regions in a transition country. A standard tax competition framework is extended to account for two features of a transition economy: the presence of two sectors, old and new, which differ in productivity; and a non-benevolent regional decision-maker. It is shown that in very early phase of transition, when the old sector clearly dominates, consumers in a transition economy may be better off in a competitive equilibrium. Decision-makers, on the other hand, will prefer to coordinate their fiscal policies. The second essay uses annual data for 1992-2003 to examine income dispersion and convergence across 76 Russian regions. Wide disparities in income levels have indeed emerged during the transition period. Dispersion has increased most among the initially better-off regions, whereas for the initially poorer regions no clear trend of divergence or convergence could be established. Further, some - albeit not highly robust - evidence was found of both unconditional and conditional convergence, especially among the initially richer regions. Finally, it is observed that there is much less evidence of convergence after the economic crisis of 1998. The third essay analyses industrial firms' engagement in provision of infrastructure services, such as heating, electricity and road maintenance. Using a unique dataset of 404 large and medium-sized industrial enterprises in 40 regions of Russia, the essay examines public infrastructure provision by Russian industrial enterprises. It is found that to a large degree engagement in infrastructure provision, as proxied by district heating production, is a Soviet legacy. Secondly, firms providing district heating to users outside their plant area are more likely to have close and multidimensional relations with the local public sector.