Entrepreneurship
Stairway to Heaven? Selection into Entrepreneurship and Income Mobility (with Jarkko Harju and Tuomas Matikka)
Conditionally Accepted, Journal of Labor Economics
Abstract (updated March 2025):
Using full-population data from Finland, we show that individuals at the top of the income distribution are significantly more likely to start new incorporated businesses. High-income earners also establish more successful and productive businesses than others. In contrast, parental income is not linked with selection or firm-level outcomes. We find that income gains from entrepreneurship are similar across individual and parental characteristics, and that entrepreneurship is associated with upward income mobility regardless of initial income levels. Overall, our findings suggest that entrepreneurship serves as an upward economic ladder for individuals from diverse backgrounds.
Head Start for Entrepreneurship: The Role of Socio-Economic Background
Abstract (updated March 2025):
I explore the origins of the positive association between socio-economic background and entrepreneurship. Using Finnish administrative data, I show that children from the top 1% of the parental income distribution are more than five times more likely to become business owners and almost three times more likely to become "real entrepreneurs" than those from the bottom 50%. Such patterns persist when using parental wealth instead of income, though the effects are somewhat smaller in magnitude. Entrepreneurs from prosperous origins are more likely to have existing firm ownership -- particularly in family firms -- just before establishing their first own firm, compared to entrepreneurs from lower socio-economic ranks. Among children from high- but not top-income families, common schooling paths are the most strongly associated with high entrepreneurial incidence. Furthermore, there are distinctive differences in industries of the new firms by entrepreneurs' parental background. The socio-economic background of entrepreneurs appears only weakly related to the initial equity of new firms, suggesting that liquidity constraints are not particularly important.
Anatomy of Startup Teams (with Youssef Zad)
Entrepreneurship and Gender: Selection and Firm Performance (with Jarkko Harju and Tuomas Matikka)
Wages and collective bargaining
Are Firms Willing to Pay Lower Wages? A Quasi-Experiment on Subminimum Wage Policy (with Petri Böckerman, Henri Keränen and Tuomas Kosonen)
Abstract (updated November 2024):
We examine a subminimum wage policy in the Finnish retail trade sector during 1993-1998 that allowed firms to pay subminimum wages to newly hired workers under the age of 25. This quasi-experiment enables us to compare wages for new hires in retail trade with those in similar industries. Despite the ongoing recession, the policy was adopted by firms sparingly, with most eligible workers being hired at the standard minimum wage. We propose that wage norm at the standard minimum wage as a potential mechanism explaining the low take-up of subminimum wage. We provide empirical evidence supporting this mechanism, most notably the excess mass at the standard minimum wage in the wage distribution of eligible workers. Many firms that paid the subminimum wage also reverted back to paying the standard minimum wages for subsequent hires.
Collective Bargaining in European Countries — A Systematic Data-Driven Description (with Tuomas Kosonen, Stefano Lombardi, Antoine Bertheau, Manudeep Bhuller, Petri Böckerman, Ana Rute Cardoso, Bernardo Fanfani, Alice Kügler and Kasperi Kuuskoski)
Inequality
Inequality in Finland: Evidence from Distributional National Accounts (with Ohto Kanninen and Terhi Ravaska)
Older working papers (inequality and economic growth):
When Aiyagari meets Piketty: Growth, Inequality and Capital Shares (with Kari Heimonen, Juha Junttila and Teemu Pekkarinen, February 2021). New version (February 2023)