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.

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.

Sign and share: What influences our participation in online microvolunteering

Microvolunteering is bite-size volunteering with no commitment to repeat and minimum formality, involving short and specific actions. Online microvolunteering occurs through an internet-connected device. University students' online microvolunteering decisions were investigated using an extended theory of planned behavior (TPB) comprising attitudes and normative and control perceptions, with the additional variables of moral norm and group norm. Participants (N = 303) completed the main TPB questionnaire and 1-month follow-up survey (N = 171) assessing engagement in online microvolunteering. Results generally supported standard and additional TPB constructs predicting intention. Intention predicted behavior. The findings suggest an important role for attitudes and moral considerations in understanding what influences this increasingly popular form of online activity.

Pengarna eller livet? : En kvalitativ och longitudinell studie om långtidsarbetslösa unga i ett aktörsperspektiv

Your money or your life? A qualitative follow-up study of the young unemployed from an actor perspective is a qualitative and longitudinal study following 36 unemployed young people in Helsinki over a span of ten years. The purpose of the study is to shed light on how a few young people view employment/unemployment and their lives and future, how they as unemployed perceive their encounters with society, and how society supports them. Four so-called key informants were followed at a finer level of empirical detail. They were chosen for the thematic interviews because of their different personalities, starting points and preferences. Although some differences were expected, what the results show is quite striking. The individual stories raise a number of questions about differences between young people, about society s view of the young unemployed, and about the principles behind the so-called activation policy and how society s support is distributed. The key informants descriptions underline that the group young unemployed does not consist of individuals who are alike but that life is complex, that paid work and unemployment can be perceived very differently, and that background and unofficial support can have consequences for self-perception and for ways of looking at the future, vocational choices, paid work and activation policy. Margaret S. Archer s theory of Morphogenesis and Barbara Cruikshank s theory of constructing democracies compose the study s theoretical framework. The key informants stories give a picture of a formal support system that, even though it puts part of the responsibility for unemployment on the individuals themselves, in the name of fairness and equality, treats them in an impersonal way, not giving their personal situation and wishes much weight. As a consequence, those who share the dominant values of society do well, while others who do not are faced with difficulties. The bigger the gap between society s and the individual s values, the bigger the risk to be met by little understanding and by penalties. And vice versa: Those who initially have the right values and know how to deal with authorities get heard and their opinions get accepted. The informants ask for a more personal encounter, which could improve both the atmosphere and the clients experiences of being heard. Still the risk of having a more individualistic system should be addressed, as a new system might generate new winners, but just as well give new losers. Finally, we have to ask if the so-called activation policy is looking for answers primarily to a macro-level problem on the micro-level. If it does not produce more jobs, its support for the unemployed will be insignificant. It is not enough to think about what to do at the grassroots level to make the system more functional and support job-seeking. If the current rate of unemployment endures, the quality of life of the unemployed should be addressed. A first step could be taken by placing less guilt on the unemployed. Instead of talking about activating the unemployed, discussion should be targeted at removing structural impediments to employment. If we want to have less polarisation between the those with paid work and those without, who often struggle with low incomes, we need to include the macro-level in the discussion. What does high unemployment mean in a work-based society, where the individual s self-perception and important social forms of support are linked to labour income? And what can be done at the macro-level to change this undesirable condition at the micro-level? Keywords: Unemployment, Youth, Public interventions, Activation policy, Individual actors, Qualitative, Longitudinal, Holistic, Helsinki, Finland

Pelon ja toivon välissä : Pätkätyöläisen urakerronta

This study analyzes the forming of the occupational identity of the well-educated fixed-term employees. Fixed-term employment contracts amongst the well-educated labour force are exceptionally common in Finland as compared to other European countries. Two groups of modern fixed-term employees are distinguished. The first comprises well-educated women employed in the public sector whose fixed-term employment often consists of successive periods as temporary substitutes. The other group comprises well-educated, upper white-collar men aged over 40, whose fixed-term employment careers often consist of jobs of project nature or posts that are filled for a fixed period only. Method of the study For the empirical data I interviewed 35 persons (26 women and 9 men) in 33 interviews, one of which was conducted by e-mail and one was a group interview. All the interviews were electronically recorded and coded. All the interviewees have two things in common: fixed-term employment and formal high education. Thirteen (13) of them are researchers, four nurses, four midwives, four journalists, and ten project experts. I used the snowball method to get in touch the interviewees. The first interviewees were those who were recommended by the trade unions and by my personal acquaintances. These interviewees, in turn, recommended other potential interviewees. In addition, announcements on the internet pages of the trade unions were used to reach other interviewees. In analysing process I read the research material several times to find the turning points in the narrative the interviewees told. I also searched for the most meaningful stories told and the meaning the interviewees gave to these stories and to the whole narrative. In addition to that I paid attention to co-production of the narrative with the interviewees and analyzed the narrative as performance to be able to search for the preferred identities the interviewees perform. (Riesman 2001, 698-701). I do not pay much attention to the question of truth of a narrative in the sense of its correspondence with facts; rather I think a working life narrative has two tasks: On the one hand one has to tell the facts and on the other hand, he/she has to describe the meaning of these facts to herself/himself. To emphasize the double nature of the narrative about one’s working life I analyzed the empirical data both by categorizing it according to the cultural models of storytelling (heroic story, comedy, irony and tragedy) and by studying the themes most of the interviewees talked about. Ethics of the study I chose to use narrative within qualitative interviews on the grounds that in my opinion is more ethical and more empowering than the more traditional structured interview methods. During the research process I carefully followed the ethical rules of a qualitative research. The purpose of the interviews and the research was told to the interviewees by giving them a written description of the study. Oral permission to use the interview in this research was obtained from the interviewees. The names and places, which are mentioned in the study, are changed to conceal the actual identity of the interviewees. I shared the analysis with the interviewees by sending each of them the first analysis of their personal interview. This way I asked them to make sure that the identity was hidden well enough and hoped to give interviewees a chance to look at their narratives, to instigate new actions and sustain the present one (Smith 2001, 721). Also I hoped to enjoy a new possibility of joint authorship. Main results As a result of the study I introduce six models of telling a story. The four typical western cultural models that guide the telling are: heroic story, comedy, tragedy and satirical story (Hänninen 1999). In addition to these models I found two ways of telling a career filled with fixed-term employments that differ significantly from traditional career story telling. However, the story models in which the interviewees pour their experience locates the fixed term employers work career in an imagined life trajectory and reveals the meaning they give to it. I analyze the many sided heroic story that Liisa tells as an example of the strength of the fear of failing or losing the job the fixed term employee feels. By this structure it is also possible to show that success is felt to be entirely a matter of chance. Tragedy, the failure in one’s trial to get something, is a model I introduce with the help of Vilppu’s story. This narrative gets its meaning both from the sorrow of the failure in the past and the rise of something new the teller has found. Aino tells her story as a comedy. By introducing her narrative, I suggest that the purpose of the comedy, a stronger social consensus, gets deeper and darker shade by fixed-term employment: one who works as a fixed term employee has to take his/her place in his/her work community by him/herself without the support the community gives to those in permanent position. By studying the satiric model Rauno uses, I argue that using irony both turns the power structures to a carnival and builds free space to the teller of the story and to the listener. Irony also helps in building a consensus, mutual understanding, between the teller and the listener and it shows the distance the teller tells to exist between him and others. Irony, however, demands some kind of success in one’s occupational career but also at least a minor disappointment in the progress of it. Helmi tells her story merely as a detective story. By introducing Helmi’s narrative, I argue that this story model strengthens the trust in fairness of the society the teller and the listener share. The analysis also emphasizes the central position of identity work, which is caused by fixed-term employment. Most of the interviewees talked about getting along in working life. I introduced Sari’s narrative as an example of this. In both of these latter narratives one’s personal character and habits are lifted as permanent parts of the actual professional expertise, which in turn varies according to different situations. By introducing these models, I reveal that the fixed-term employees have different strategies to cope with their job situations and these strategies vary according to their personal motives and situations and the actual purpose of the interview. However, I argue that they feel the space between their hopes and fears narrow and unsecure. In the research report I also introduce pieces of the stories – themes – that the interviewees use to build these survival strategies. They use their personal curriculum vitae or portfolio, their position in work community and their work morals to build their professional identity. Professional identity is flexible and varies in time and place, but even then it offers a tool to fix one’s identity work into something. It offers a viewpoint to society and a tool to measure one’s position in surrounding social nets. As one result of the study I analyze the position the fixed-term employees share on the edge of their job communities. I summarize the hopes and fears the interviewees have concerning employers, trade unions, educational institutions and the whole society. In their opinion, the solidarity between people has been weakened by the short-sighted power of the economy. The impact the fixed-term employment has on one’s professional identity and social capital is a many-sided and versatile process. Fixed-term employment both strengthens and weakens the professional identity, social capital and the building of trust. Fixed-term employment also affects one’s day-to-day life by excluding her/him from the norm and by one’s difficulty in making long-term plans (Jokinen 2005). Regardless of the nature of the job contract, the workers themselves are experts in making the best of their sometimes less than satisfying work life and they also build their professional identity by using creatively their education, work experiences and interpersonal relations. However, a long career of short fixed-term employments may seriously change the perception of employee about his/her role. He/she may start concentrating only in coping in his/her unsatisfactory situation and leaves the active improvement of the lousy working conditions to other people. Keywords: narrative, fixed-tem employment, occupational identity, work, story model, social capital, career  

Modern Societal Impulses and their Nordic Manifestations : On Emancipation and Constraint in Societal Development

The 1980s and the early 1990s have proved to be an important turning point in the history of the Nordic welfare states. After this breaking point, the Nordic social order has been built upon a new foundation. This study shows that the new order is mainly built upon new hierarchies and control mechanisms that have been developed consistently through economic and labour market policy measures. During the post-war period Nordic welfare states to an increasing extent created equality of opportunity and scope for agency among people. Public social services were available for all and the tax-benefit system maintained a level income distribution. During this golden era of Nordic welfare state, the scope for agency was, however, limited by social structures. Public institutions and law tended to categorize people according to their life circumstances ascribing them a predefined role. In the 1980s and 1990s this collectivist social order began to mature and it became subject to political renegotiation. Signs of a new social order in the Nordic countries have included the liberation of the financial markets, the privatizing of public functions and redefining the role of the public sector. It is now possible to reassess the ideological foundations of this new order. As a contrast to widely used political rhetoric, the foundation of the new order has not been the ideas of individual freedom or choice. Instead, the most important aim appears to have been to control and direct people to act in accordance with the rules of the market. The various levels of government and the social security system have been redirected to serve this goal. Instead of being a mechanism for redistributing income, the Nordic social security system has been geared towards creating new hierarchies on the Nordic labour markets. During the past decades, conditions for receiving income support and unemployment benefit have been tightened in all Nordic countries. As a consequence, people have been forced to accept deteriorating terms and conditions on the labour market. Country-specific variations exist, however: in sum Sweden has been most conservative, Denmark most innovative and Finland most radical in reforming labour market policy. The new hierarchies on the labour market have co-incided with slow or non-existent growth of real wages and with a strong growth of the share of capital income. Slow growth of real wages has kept inflation low and thus secured the value of capital. Societal development has thus progressed from equality of opportunity during the age of the welfare states towards a hierarchical social order where the majority of people face increasing constraints and where a fortunate minority enjoys prosperity and security.

Share Repurchases, Dividends, and Executive Options

This paper reports empirical results on the determinants of the authorization decision for share repurchases and dividends in Finland. We use a data set with precise data on share repurchases as well as characteristics for the option programs. Contrary to the U.S., we use a data set where 41% of the options are dividend protected, which allows us to separate between the "option funding" and "substitution / managerial wealth" hypothesis for the choice of the distribution method. We find that foreign ownership is the main determinant for share repurchases in Finland and attribute this relationship to tax factors. We also find evidence in support of both the signaling and agency cost hypotheses for cash distributions, especially in the case of share repurchases. Finally, we find a significant difference between companies with and without dividend protected options. When options are dividend protected, the relationship between dividend distributions and the scope of the options program turns to a significantly positive one instead of the negative one documented on U.S. data. This gives some support for the substitution / managerial wealth hypothesis as a determinant for the choice of the distribution method.

Evaluating the regional and distributional impacts of forestry cost-share payments.

XVIII IUFRO World Congress, Ljubljana 1986.

Domestic labour relations in India : Vulnerability and gendered life courses in Jaipur

This study explores labour relations between domestic workers and employers in India. It is based on interviews with both employers and workers, and ethnographically oriented field work in Jaipur, carried out in 2004-2007. Combining development studies with gender studies, labour studies, and childhood studies, it asks how labour relations between domestic workers and employers are formed in Jaipur, and how female domestic workers trajectories are created. Focusing on female part-time maids and live-in work arrangements, the study analyses children s work in the context of overall work force, not in isolation from it. Drawing on feminist Marxism, domestic labour relations are seen as an arena of struggle. The study takes an empirical approach, showing class through empiria and shows how paid domestic work is structured and stratified through intersecting hierarchies of class, caste, gender, age, ethnicity and religion. The importance of class in domestic labour relations is reiterated, but that of caste, so often downplayed by employers, is also emphasized. Domestic workers are crucial to the functioning of middle and upper middle class households, but their function is not just utilitarian. Through them working women and housewives are able to maintain purity and reproduce class disctinctions, both between poor and middle classes and lower and upper middle classes. Despite commodification of work relations, traditional elements of service relationships have been retained, particularly through maternalist practices such as gift giving, creating a peculiar blend of traditional and market practices. Whilst employers of part-time workers purchase services in a segmented market from a range of workers for specific, traditional live-in workers are also hired to serve employers round the clock. Employers and workers grudgingly acknowledged their dependence on one another, employers seeking various strategies to manage fear of servant crime, such as the hiring of children or not employing live-in workers in dual-earning households. Paid domestic work carries a heavy stigma and provide no entry to other jobs. It is transmitted from mothers to daughters and working girls were often the main income providers in their families. The diversity of working conditions is analysed through a continuum of vulnerability, generic live-in workers, particularly children and unmarried young women with no close family in Jaipur, being the most vulnerable and experienced part-time workers the least vulnerable. Whilst terms of employment are negotiated informally and individually, some informal standards regarding salary and days off existed for maids. However, employers maintain that workings conditions are a matter of individual, moral choice. Their reluctance to view their role as that of employers and the workers as their employees is one of the main stumbling blocks in the way of improved working conditions. Key words: paid domestic work, India, children s work, class, caste, gender, life course

Essays on labour demand and wage formation

The first essay in this thesis is on gender wage differentials among manufacturing sector white-collar workers. The wage differential is decomposed into firm, job (within-firm) and individ-ual-level components. Job-level gender segregation explains over half of the gap, while firm-level segregation is not important. After controlling for firm, job and individual characteristics, the remaining unexplained wage cap to the advantage of men is six per cent of men s mean wage. In the second essay, I study how the business cycle and gender affect the distribution of the earnings losses of displaced workers. The negative effect of displacement is large, persistent and strongest in the lowest earnings deciles. The effect is larger in a recession than in a recov-ery period, and in all periods women s earnings drop more than men s earnings. The third essay shows that the transition from steady employment to disability pension de-pends on the stringency of medical screening and the degree of experience-rating of pension costs applied to the employer. The fact that firms have to bear part of the cost of employees disability pension costs lowers both the incidence of long sick leave periods and the probabil-ity that sick leave ends in a disability pension. The fourth and fifth essays are studies on the employment, wage and profit effects of a re-gional payroll tax cut experiment conducted in northern and eastern Finland. The results show no statistically significant effect on any of the response variables.