Ratio Working Paper No. 200. Economic Freedom and Institutional Convergence
Elert, N. & Halvarsson, D. (2012). Economic Freedom and Institutional Convergence. Ratio Working Paper No. 200.
Elert, N. & Halvarsson, D. (2012). Economic Freedom and Institutional Convergence. Ratio Working Paper No. 200.
Francis Fukuyama argues that liberal democracy is the final form of human government and will become more and more prevalent in the long term. If this prediction is true, countries should converge in their political and economic systems toward liberal democracy, a form of institutional convergence. In this paper, we examine whether there is convergence in economic institutions, drawing on the literatures of economic convergence and of industrial organization. We use the Economic Freedom of the World-index over the period 1970-2009 to proxy for economic institutions. Our results indicate that countries with lower institutional quality experience faster institutional change than countries with higher quality, i.e., we observe institutional convergence. But countries with lower institutional quality have higher variability of institutional change. Using distributional analysis, we examine institutional transition probabilities, and find that the probability of a country ending up with high-quality institutions is high in the long-run. These findings support Fukuyama’s prediction.
Elert, N. & Halvarsson, D.
2012
Ratio Working Paper
2023
Applied Economics Letters, 1-5.
In this note we study how the share of workers in a corporation located in a high gender wage gap country impacts the wage gap in their home country operations. Our findings support the hypothesis that firms with strong intra-firm linkages to a high gender wage gap country also display a relatively large gender wage gap at home.
2023
Rati Working Paper Series.
In this paper, we build upon a monopsony framework, suggested by Card et. al. 2016, which links firm level productivity and rent-sharing to wage inequality. Specifically, our research questions address i) to which extent labor market concentration across firms (within different types of locally situated industries) affects variation in wages among workers within these firms and industries, and ii) how this variation in turn spills over into economy-wide inequality (measured at the level of local labor markets). Using linked employer-employee full population data for Sweden, and an AKM modelling framework to separate between worker- and firm-level heterogeneity, our results suggest that higher firm-level fixed effects (a measure of rent-sharing) is associated with lower labor market employer concentration, something which affects average wage income among firms accordingly. Addressing wage income inequality by applying our model to different segments of the local labor market income distribution, we find that reduced average employer concentration in larger cities accounts for almost all variation in the (positive) link between city size-and wage inequality, except for the largest metropolises where it captures around 30-50 percent of variation depending on the income segment that we focus on.
2022
Small Business Economics 59, 593–610 (2022).
In the race to the South Pole, Roald Amundsen’s expedition covered an equal distance each day, irrespective of weather conditions, while Scott’s pace was erratic. Amundsen won the race and returned without loss of life, while Scott and his men died. In the context of firm growth, the Amundsen hypothesis suggests that smoother growth paths are associated with better performance in subsequent periods. We develop a new method to investigate how firms’ sales growth deviates from their long-run average growth path. Our baseline results suggest that growth path volatility is associated with higher growth of sales and profits, but also with higher exit rates. However, this result is driven by firms with negative growth rates. For positive-growth firms, volatility is negatively associated with both sales growth and survival, providing nuanced support for the Amundsen hypothesis.
The article can be accessed here.