This paper utilizes administrative employer–employee data to analyze the effect of job loss on interregional migration, and to study how local childhood connections related to family members and birth region preferences shape these location choices. The results show that job loss due to plant closures increases the probability of interregional migration by nearly 80%. While local family connections and birth region preferences create substantial obstacles to moving, they do not necessarily lead to relocation in response to job loss. Instead, displaced movers tend to migrate to regions where they have no observed family or childhood local contacts, but higher economical gains in these regions may partly offset the loss of utility resulting from these factors.

Keywords: Birth region, Family contacts, Job loss, Migration, Plant closure

R&R requested

The ongoing renewable energy transition is expected to cause major structural changes within the energy sector. Climate policy measures can attract new cleaner producers enter the market while atthe same time forcing polluting firms to exit or switch to another industry. Previous carbon intensity and carbon productivity decompositions that apply structiral decomposition analysis at the macro-level of countries and regions do not capture the micro-level dynamics such as market entry and exit of firms, industry switching, as well as reallocation of emissions between firms. The purpose of this study is to fill this gap by presenting a novel micro-level structural change decomposition of carbon productivity. Using comprehensive firm-level register data on greenhouse gas emissions in the Finnish electricity generation industry  in 2000-2019, we find that more efficient allocation of carbon emissions across firms was the main driver of carbon productivity growth in Finnish electricity generation during the study period. We also find that structural change, especially market entry of new firms, played a significant role in carbon productivity growth of this industry.  (with N. Kuosmanen and T. Kuosmanen)

Keywords: Carbon productivity, decomposition analysis, industry structure, market entry and exit, reallocation of resources

Submitted

We study the cyclicality of carbon productivity for the Finnish manufacturing sector, utilizing unique matched administrative data on greenhouse gas emissions and firm-level characteristics for the period 2000-2019. Our least squares regressions reveal a positive correlation between industrial output growth and carbon productivity. Specifically, a one percentage point increase in industrial output corresponds to a cumulative 4-5% increase in carbon productivity over a two-year period. Our key findings remain robust to using an instrument variable approach, where the output of downstream industries serves as an instrument for the output of upstream industries. Furthermore, the observed carbon productivity growth is presumably attributable to reduction in emissions, and firms investing in greener technology, as measured by a higher proportion of STEM and green (environmentally friendly) workers (with P. Fornaro)

Keywords: Carbon productivity, Cyclicality, Emissions, Firm-level data, Input-output tables, Manufacturing 

Submitted

We utilize administrative data on mental health disorders and sickness absence to examine the association between decentralized wage bargaining and workers’ health in Finland. The findings reveal a positive association between decentralization and mental health for blue-collar workers in firms characterized by a high concentration of white-collar employees. Conversely, this association is reversed in firms where blue-collar workers predominate. No consistent links to sickness absences are observed. Further analyses indicate that higher earnings under local wage agreements may explain the observed positive association in white-collar-dominated firms, while decreased employment could partially explain the decrease in mental health in blue-collar-intensive firms. (JEL: J31, J51, J52) (with A. Kauhanen, M. Haapanen and K. Riukula)

Keywords: Decentralization, collective agreements, mental health disorder, sickness absence, job separation, blue-collar, white-collar

Submitted

This paper analyzes how firms with different financial strength levels respond to demand shocks in their export markets. We utilize unique administrative datasets of Swedish and Finnish firms matched with national customs data from 1999 to 2014, which allows us to analyze the effects of several macroeconomic shocks affecting the export product demand and performance of exporting firms. We find that financially stronger export firms are better positioned during both positive and negative demand shocks—suffering less from the negative shocks, benefiting more from the positive shocks. While our results suggest that Swedish and Finnish firms tend to respond similarly to different export demand shocks, there are some salient differences in their survival strategies. While the financially stronger Swedish firms expanded their product lines and market areas, the Finnish firms did not make such adjustments during the 2007–2014 period of negative export demand shocks. By analyzing the firm-level survival strategies on export markets, we provide new insights into the divergent export growth trends of the two countries. (with K. Nilsson Hakkala and Z. El-Sahli) (JEL: F14, F61, L11, L25, D22 )

Keywords: Export competition, Financial strength, Firm-level, Trade flows

Submitted

The paper investigates the impact of involuntary job loss on serious debt problems in Finland, where as much as 50 percent of income can be enforced for 25 years. We use linked employer-employee data combined with unique administrative records on debt enforcements spanning 2007-2018. Our event study analysis reveals that job loss, characterized by plant closures and mass layoffs, has a strong and persistent effect on debt problems. Specifically, displaced workers experience a 5 percent increase in the likelihood of enforced debts in the year of displacement. This effect increases, reaching 16 percent four years post-displacement and being roughly 10 percent nine years after. Effects are particularly large for unpaid taxes and private debts, while job loss demonstrates an insignificant impact on unpaid social or healthcare payments. Moreover, these effects are more profound among males and individuals already burdened with excessive debt, such as mortgages, prior to displacement. (with O. Tahvonen, H. Karhunen and O. Kanninen) (JEL: D14, G51, J64, J65) 

Keywords: Default; Debt enforcement; Involuntary job loss; Employer-employee data   

This study examines the relationship between firm-level productivity and energy efficiency in the Finnish energy-intensive sector. We utilize unique administrative data encompassing energy use, greenhouse gas emissions, and firm-level characteristics from 2000 to 2019. To identify energy efficiency effects, we employ two alternative instrumental variable approaches, using EU ETS prices and utilizing a shift-share instrument for firm-specific energy source prices. Our findings indicate that firms with higher energy efficiency demonstrate stronger productivity. Specifically, a 10% increase in energy efficiency enhances labor productivity by 0.5%. These results remain robust when total-factor productivity is used as the outcome measure. Additionally, we observe a positive correlation between carbon productivity and firm-level performance, further supporting the “strong” version of the Porter Hypothesis. This emphasizes the positive impact of sustainable practices on productivity, while simultaneously maintaining ecological well-being. (with N. Kuosmanen)

Keywords: Carbon productivity, energy efficiency, firm-level data, instrument variable approach, labor productivity, total-factor productivity 

We use employer-employee data matched with production, international trade and customs data to examine the effect of China trade shocks on long term labor market outcomes of manufacturing workers in Finland. As for exogenous trade shocks, we utilize the China WTO membership that differentially impacted Finnish firms depending on their pre-existing import and export patterns. We also build a more general model that includes all trade shocks during the past 2001 period. Our results show that manufacturing workers exposed to China trade experience a significant and persistent decline in wages and employment. Trade also causes increase in worker’s school enrollment particularly among abstract or routine workers. Interestingly, routine cognitive workers adapt more easily from displacement as they can move to high-paying abstract occupations, while routine manual workers are more likely to drop into low-paying non-routine manual jobs. (JEL: F16, F66, J24, J31, J60). With S. Pekkala Kerr

 Keywords: Trade shocks, globalization, earnings trajectories, skill upgrading, occupational mobility, unemployment, productivity, China

Increased availability of pain killers has contributed to a growing non-medical use of opioids in OECD countries, including the US and Finland. Using comprehensive administrative data for Finland, we examine how job displacement affects opioid use, and how the effects are moderated by individual’s labor market status. We find that job displacement increases opioid use by approximately 2% from the mean of ~1.20 defined daily doses. This effect also exists among individuals who did not use opioids previously, but the effect is highest (4-9%) among those who already used opioids before losing their job. The results thus indicate that job loss increases the use of opioids both at the extensive and the intensive margins of adjustment. Transition from work to more permanent inactivity after displacement is associated with even greater increase (9-15%) in the use of opioids especially among routine manual workers. In contrast, re-employment may protect individuals from such risky health behaviors. (JEL: I12, J62, J64). (With M. Haapanen, P. Böckerman and H. Karhunen.)

 Keywords: opioids, displacement, occupational mobility