Øivind Anti Nilsen

ZEROS AND LUMPS IN INVESTMENT: EMPIRICAL EVIDENCE ON IRREVERSIBILITIES AND NONCONVEXITIES

The objective of this paper is to investigate if and how capital adjustment departs from the smooth pattern implied by standard model based on convex adjustment costs. Using Norwegian micro data, we start by documenting the intermittent and lumpy nature of investment rates. We then present two pieces of econometric evidence on these issues. First, we estimate a discrete hazard model to determine the probability of having an episode of high investment, conditional on the length of the interval from the last high-investment episode. Second, we estimate a switching regression model that allows for the response of the investment rate to fundamentals to differ across regimes. In both cases we investigate the aggregate implications of our results.

Intergenerational Earnings Mobility in Norway: Levels and Trends

Using longitudinal data for Norwegian children born in 1950, 1955, 1960 and 1965, we find a relatively high degree of earnings mobility. There is no tendency toward decreasing mobility over the cohorts. Conditioning on the position in the earnings distribution, the analysis indicates quite high mobility in the middle of the distribution and somewhat more persistence at the top and bottom. This approach also reveals increased mobility over time for sons, but a less clear picture for daughters.

Work or retirement? Exit routes for Norwegian elderly

This study analyses early retirement pathways for Norwegian male and female workers, applying a multinomial logit model to a data set covering more than 10500 employees, ages 56-61, in 1989. The aim is to analyse the transition to different destinations, i.e. disability pension, unemployment benefits, and out of the labour force, in the period 1989-1995. Both family characteristics, expected income in different end-states, and push factors, such as industry attachment and local unemployment, are important for the early retirement process. Findings also indicate that there are several gender differences. The explanatory variables have different effects on the different exit routes for males as well as for females. The hypothesis that disability and unemployment are exchangeable pathways into early retirement is rejected.

Trends in Intergenerational Mobility across Offspring's Earnings Distribution in Norway

Using register data for Norwegian cohorts born in 1950, 1955, and 1960, we found intergenerational earnings mobility to be high, and lower at the lower end of offsprings earnings distribution than at the upper end. The findings also indicate that mobility has increased over time and that the increase is somewhat higher for lower earnings. The increase in earnings mobility over time is larger for women than for men.

Electricity Prices, River Temperatures, and Cooling Water Scarcity

Thermal-based power stations rely on water for cooling purposes. These water sources may be subject to incidents of scarcity, environmental regulations, and competing economic concerns. This paper analyzes the effect of water scarcity and increased river temperatures on German electricity prices from 2002 to 2009. Having controlled for demand effects, the results indicate that the electricity price is significantly impacted by both a change in river temperatures and the relative abundance of river water. An implication is that future climate change will affect electricity prices not only through changes in demand, but also via increased water temperatures and scarcity. (JEL Q25, Q41)

Scarring Effects of Unemployment

Using Norwegian individual register data of young workers, from the period 1986-2008, we analyse whether there are large and persistent negative relationships between unemployment and the risk of repeated unemployment and being out of labour force. A nearest-neighbour propensity score matching method is applied to make the treatment group (the unemployed) and the control group (the employed) as similar as possible. By tracking workers over a 10-year follow-up period, we find that unemployment has a negative effect on later labour market attachment. This is consistent with existing findings in the literature. The negative effects decrease over time. Using the bounding approach proposed by Rosenbaum (2002) to analyse the importance of unobserved variables, our results indicate that a relatively high level of unobserved selection bias could be present in the data before changing the inference. Thus, unemployment leaves young workers with long-term scars.

Is Recipiency of Disability Pension Hereditary

This paper addresses whether children’s exposure to parents receiving disability benefits induces a higher probability of receiving such benefits themselves. Most OECD countries experience an increasing proportion of the working-age population receiving permanent disability benefits. Using data from Norway, a country where around 10% of the working-age population rely on disability benefits, we find that the amount of time that children are exposed to their fathers receiving disability benefits affects their own likelihood of receiving benefits positively. This finding is robust to a range of different specifications, including family fixed effects.

Intergenerational Earnings Mobility Revisited: Estimates Based on Lifetime Earnings

Using Norwegian intergenerational data, which include a substantial part of the life-cycle earnings for children and almost the entire life-cycle earnings for their fathers, we present new estimates of intergenerational mobility. Extending the length of fathers’ earnings window from 5 to 25 years increases estimated elasticities. Increasing the age at which fathers’ earnings are observed has the opposite effect. Biases in the estimated elasticities are related to both transitory earnings variation and life-cycle measurement error; the former appear to be more important than the latter. Estimation bias stemming from persistence in transitory innovations plays only a minor role. Our findings indicate that intergenerational earnings mobility in Norway might have been strongly overstated in many earlier studies with shorter earnings histories. Some of our new estimates are twice as large as earlier estimates.

Using the Helmert-Transformation to Reduce Dimensionality in a Mixed Model: Application to a Wage Equation with Worker and Firm Heterogeneity

A model for matched data with two types of unobserved heterogeneity is considered – one related to the observation unit, the other to units to which the observation units are matched. One or both of the unobserved components are assumed to be random. This mixed model allows identification of the effect of time-invariant variables on the observation units. Applying the Helmert transformation to reduce dimensionality simplifies the computational problem substantially. The framework has many potential applications; we apply it to wage modeling. Using Norwegian manufacturing data shows that the assumption with respect to the two types of heterogeneity affects the estimate of the return to education considerably.

Upstream Merger in a Successive Oligopoly: Who Pays the Price?

This study applies a successive oligopoly model, with an unobservable non-linear tariff between upstream and downstream firms, to analyze the possible anti-competitive effects of an upstream merger in the Norwegian food sector (specifically, the market for eggs). The theoretical predictions are that an upstream merger may lead to higher average prices paid by downstream firms and at the same time no changes in the prices paid by consumers. Consistent with the theoretical predictions it is found that the merger had no effect on consumer prices, but led to higher average prices paid by the downstream firms to the merged firm.