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Working papers

Taxing top wealth: Migration responses and their aggregate economic implications (2024) (with K. Jakobsen, H. Kleven, C. Landais and M. Muñoz)

Revise and resubmit, American Economic Review

Do wealth taxes lead to a harmful exodus of wealthy taxpayers? Using administrative data on wealth, firm ownership structure, and migration in Sweden and Denmark, we estimate international migration responses to wealth taxation and evaluate the aggregate economic implications of tax-induced migration. Exploiting three large reforms, we find significant migration responses to wealth taxes among the wealthy. We then investigate individual-level, firm-level, and market-level effects of these migration responses. A large fraction of wealthy taxpayers are business owners, and the employment, investments, and value-added of these businesses are negatively affected by owner out-migration. Nevertheless, the aggregate consequences of these effects are modest. We estimate that migration responses to a 1pp increase in the top wealth tax rate decrease the stock of wealthy taxpayers by less than 2% in the long run, and lead to a reduction of 0.05% in aggregate employment, 0.07% in aggregate investment, and 0.13% in aggregate value-added. Hence, our results demonstrate that trickle-down effects of tax-induced migration by the wealthy do exist, but that they are quantitatively small.

Link to paper

The capital advantage: Comparing returns to ability in the labor and capital markets (2024) (with S. Bastani, K. Karlsson and D. Waldenström)

Using Swedish registry data linking military enlistment records with tax information, we find that cognitive ability is more strongly associated with capital income than with labor income. This relationship persists across income types and margins, even after controlling for education, occupation, and parental background. High ability individuals save more, earn higher risk-adjusted investment returns, allocate more to risky assets, and are less likely to engage in hand-to-mouth behavior. The capital market rewards cognitive ability more than non-cognitive skills, potentially affecting intergenerational economic mobility. As technological progress increases the importance of capital income, economic inequality based on cognitive ability may increase. Policies aimed at improving cognitive ability could mitigate capital income inequality, and tax policies should take into account the different contributions of ability to labor and capital income.

Link to paper

Business-cycle effects on precautionary saving estimates: Evidence from Swedish administrative data (2019)

Precautionary saving behavior is a cornerstone of many structural models, yet empirical evidence is inconclusive. Estimates of the size of precautionary wealth range between 0-50% of total wealth while Euler equation regressions have estimated relative risk aversion below conventionally assumed levels. The paper shows theoretically and empirically that (i) saving is non-linear function of income or consumption growth variance, and (ii) that the relationship between saving and income or consumption variance is highly dependent on the business cycle. Accounting for non-linearities and removing business cycle effects show that linear models underestimates precautionary wealth with at least 30% and that the coefficient of relative risk aversion is estimated to 1. The paper uses Swedish registry data on income and wealth and a residual measure of consumption to estimate Euler equations. The results are robust to asset risk, habit persistence and credit constraints. A heterogeneity analysis shows that increased income risk leads to a rebalancing to less risky assets, and that groups who face higher income variance change their net worth less when income risk rises.

Link to paper

Work in progress

Labor shortages, rent sharing and employment dynamics

I combine linked employer-employee data with data from a firm tendency survey in Sweden to gauge the effects of firms' reports of labor shortages on wage formation and employment dynamics. Firms that report labor shortage raise incumbent workers' wages 0.3 to 0.9 percent faster. The effects are concentrated among highly educated workers earning above median wages: Workers in the top wage quartile get up to 2 percent higher wage raises compared the national average. Also, incumbent workers in firms with labor shortage climb quicker up the job ladder. The employment dynamics can be understood as firms with labor shortage being more prone to hire workers from non-employment who take jobs further down the job ladder while incumbent workers move up the rungs. Moves up the job ladder is the chief explanation as to why labor shortages lead to higher wage growth, not rent sharing.

See the NIER's Wage formation report (2022) for a shorter version in Swedish.

Labor market effects of high minimum wages: Evidence from Sweden 

I study the effect of collective agreed minimum wages on employment and wage formation in the retail and hospitality sectors in Sweden. In the sectors, which traditionally employ many workers with a lower degree of labor market attachment, the minimum wage bite rose from 60% in year 2000 to 70% in 2010. This makes it an interesting case study to see how high minimum wages can become before they start having adverse effects on employment. I find that higher minimum wages increase the likelihood of non-employment among incumbent workers; minimum wages raise total wages but that the relationship is inelastic suggesting that workers earning more than the minimum wage are compensated for the minimum wage increments; labor earnings drop since higher wages cannot compensate for reduced employment on both the intensive and extensive margins. I also find that minimum wages affect employment negatively when the minimum wage bite rise but not when it is kept constant, albeit at a relatively high level.

See the NIER's Wage formation report (2021) for a shorter version in Swedish.

Peer-reviewed publications

Retirement consumption and pension design (2024)

(with Camille Landais, Daniel Reck and Johannes Spinnewijn)

American Economic Review, 114(1), 89-133. 

Link to paper

Link to Vox column

The Value of Registry Data for Consumption Analysis: An Application to Health Shocks (2020)

(with Camille Landais and Johannes Spinnewijn)

Journal of Public Economics, 189

Link to paper

Link to Vox column

The Optimal Timing of Unemployment Benefits: Theory and Evidence from Sweden (2018)

American Economic Review, 108(4-5), 985-1033.

(with Camille Landais, Peter Nilsson and Johannes Spinnewijn)

Link to paper

Other publications

Effekter av kortare arbetstid på BNP, sysselsättning, produktivitet och hälsa  (2024)

Konjunkturinstitutet, Specialstudie 

Link to paper 

The value and limits of unemployment insurance (2024)

(with Johannes Spinnewijn)

LSE Public Policy Review, 3(2)

Link to paper 

Link to LSE Business Review blog post

Voluntary unemployment insurance as an option for non-standard work: The case of Sweden (2018)

OECD (2018) (ed.), The Future of Social Protection: What works for non-standard workers?, OECD publishing, Paris.

Link to paper

Yrkesintroduktionsanställningar – Slutrapport om effekter på sysselsättning och lönebildning (2016) 

Konjunkturinstitutet, Specialstudie

Link to paper