In the existing literature on welfare state typologies, the concept of the universal welfare state is not defined precisely enough to allow for comparisons of universality over time and between countries. In this paper, I discuss some problems with the way the term ‘the universal welfare state’ has been used and I suggest possible solutions. Among other things, I propose that the term ‘universality’ be used to describe the provision of a specific welfare benefit independently of individual income and/or other individual characteristics. It should also be used to describe the coverage of welfare benefits rather than their size. Based on the theoretical discussion, a number of possible indicators of universality are applied to the case of Sweden in the 1990s. The conclusion is that, despite its economic crisis, universality in Sweden did not decrease.

http://journals.sagepub.com/doi/pdf/10.1111/j.1467-9248.2004.00506.x

The Universal Welfare State: Theory and the Case of Sweden:

Despite challenges and doomsday predictions, the Nordic welfare states with high taxes and public expenditure are still with us. This paper describes strategic choices for policy makers of the welfare state and uses the case of Sweden to argue that the high tax welfare state has survived several challenges through a process of incremental change, where the welfare state is modified in order to maintain political support from voters who would otherwise favor cutbacks. This gradual adaptation leads to heterogeneous universality characterized by flexibility, freedom of choice, and financial solutions that involve both public and private funding. While such policies may increase inequality, they play a crucial role in maintaining political support for high taxes and expenditures. Compared to likely counterfactual scenarios, this gradual adaptation may be the political strategy that minimizes inequality in the long run.

/pdf/explaining-the-survival-of-the-swedish-welfare-state-2n0se6r0zn.pdf

Explaining the Survival of the Swedish Welfare State: Maintaining Political Support Through Incremental Change

This thesis deals with the organization of R&D from a micro perspective in order to get a better idea of how to generate economic growth in the long run. What kind of R&D policies should be promoted? This thesis contributes to the existing literature by investigating other data sets than before, by using more modern econometric techniques and by extending the investigated variables.

Chapter 2 examines the role of foreign sales in stimulating R&D as compared to a domestic sales effect, and finds, in line with the literature, that R&D rises proportionally to sales in cross-sections from 1991 to 2001. Among manufacturing firms, foreign sales are distinctly more associated with an increase in R&D than domestic sales. For service firms, domestic sales are as important as foreign. The results are consistent with the hypotheses that manufacturing firms more easily separate production from R&D, economize on transport costs and are subject to learning-by-exporting effects. In general, the results highlight the dependence on openness in stimulating R&D in a small economy, especially among manufacturing firms.

Chapter 3 uses a panel of Swedish manufacturing firms to examine the effects of internal and external R&D on total factor productivity over the period 1991-2004. The findings give some support to the notion of complementarity between internal and external R&D, especially in industries with high R&D intensities, and suggest that the employees’ level of education is important for the firm’s capabilities to absorb external R&D. However, external R&D is generally found to have a negative effect on productivity and internal R&D is only significant when not including interaction terms between internal R&D and external R&D or human capital.

Chapter 4 examines the productivity effects of privately and publicly funded R&D, both performed in the private sector. In doing so, it ascertains whether there are differences in the direct effects on an industry’s total factor productivity growth, and whether the spillover effects of R&D performed in other industries within a country differ in terms of the two sources of funding. Using a panel of industries from 13 OECD countries, it is found that privately funded R&D has a positive productivity effect, but with diminishing returns. Publicly funded R&D shows signs of increasing returns to scale, but the total effect is negative for most industries in the sample. The results concerning spillover effects are less robust, but there is some evidence of positive spillover effects from privately funded R&D, whereas spillovers from publicly funded R&D have an insignificant or a negative effect on an industry’s productivity growth.

/pdf/the-organization-of-r-d-sourcing-strategy-financing-and-49iitxa7gj.pdf

The Organization of R&D - Sourcing Strategy, Financing and Relation to Trade

The causes and variations of social and material welfare form a widespread theme. Classical sociology attended primarily to social class, whereas modern sociology looks at variables such as gender, ethnicity, sexuality and physical and mental ability. Generation or age is proposed as an additional variable to social and material inequalities. Statistical offices have divided income by age brackets and accounted for ‘age-related’ public spending for decades, but it is only relatively recently that generational variations have been theorized. Structure-oriented scholars within social studies of childhood have suggested comparing and confronting the condition of children vis-a-vis the condition of adults and the elderly.

Children and distributive justice between generations

This thesis consists of three chapters devoted to both empirical and theoretical aspects of option pricing.

The first chapter investigates the market for European options on the Swedish OMX index using daily data for the period 1993-2000. The assumption of constant volatility of the returns underlying the Black and Scholes option pricing formula is assessed by extracting the volatilities implied by the observed call prices and put prices. These are then related to moneyness and time to expiration. It is found that for both calls and puts the implied volatility is decreasing in time to expiration., while the largest implied volatilities were exhibited for contracts with extreme values of moneyness. The arbitrage relation Put-Call Parity is tested.

The second chapter presents the theory of how Bayesian learning affects asset pricing. The model is due to Timmerman and Guidolin (2003) and is an equilibrium, representative agent model in the vein of Lucas (1978). Their results on asset prices are derived envoking the urn model due to Polya, and it is shown that Bayesian learning implies a recombining tree. Using the moments of the Polya distribution, a closed form approximation is derived for the stock and call price with Bayesian learning. Moreover, the relationship between the Lucas model without learning and the (discrete time) Black and scholes is described explicitly.

The third chapter applies the closed form approximation of the call price with Bayesian learning, as well as alternative models, to data on the Swedish OMX index. Bayesian learning is found to produce superior in-sample fit. Out-of-sample predictions are performed both one-day ahead and one week ahead. The model with Bayesian learning outperforms the other models in terms of the percentage of dates it gives the lowest out-of-sample error, for both prediction lengths. It also gives the lowest average out-of-sample error for the one-day ahead predictions.

https://lup.lub.lu.se/search/ws/files/5800960/27040.pdf

Option Pricing and Bayesian Learning

This thesis is an attempt to generate knowledge about the justification, measurement and consequences of public redistribution.

The first paper poses the following question: How much redistribution from working to non-working can be justified by arguing that external resources are owned jointly by all, or that ownership should ideally be divided equally? This question is analyzed using bargaining theory in a setting with two types who differ in production skill and consumption-leisure preferences. The bargaining concerns the proportional tax rate in a constitution where all resources are allocated to the high-productivity type and taxation redistributes to the type who does not work. It is shown that the tax constitution Pareto dominates the initial distribution only if preferences of the two types are sufficiently similar. Using the Nash bargaining solution and the Kalai-Smorodinsky solution, it is shown that under joint ownership, the justified tax rate is independent of the productivity difference between types, but under divided ownership, the tax rate is decreasing in the productivity difference.

In the second paper, it is examined how inter and intra-individual redistributions depend on characteristics of the welfare state such as the degree of tax progressivity, the choice between flat rate and income-related benefits and the proportion of the lifecycle spent working. A model of a welfare state is used to calculate the difference between gross income inequality and net income inequality among workers as well as inequality of lifetime income. A simulation based on the Swedish system indicates that the redistributive effect of the Swedish system is higher in terms of lifetime incomes than in terms of disposable incomes among workers. The share of inter-individual redistribution in Sweden is approximated to 30 percent of total redistribution. When individuals are allowed to choose labor supply freely, the redistributive effect of the welfare state can not be correctly described by comparing inequality of gross and net income.

The third paper deals with welfare state typologies, i.e. the categorization of different types of welfare states. Literature using the term universal welfare state is analyzed and it is shown that the term is ambiguous. Different ways to alleviate the problem are discussed, including the distinction between group universality and income universality. This paper also contains an empirical application illustrating how universality can be studied over time using the case of Sweden during the 1990s. Following a number of indicators during the 1990s reveals that universality was roughly constant for the Swedish welfare state during this period.

The final paper studies social insurance against short-term income losses, in a setting where low-income earners are more likely to suffer from income loss. With a standard adverse selection model, non-universal social insurance is likely to be better for low income earners. If private insurance firms can observe risks using a costly technology, non-universal social insurance is likely to be better for high income earners. The paper also demonstrates that under this alternative insurance technology, risk aversion does not unambiguously increase the political sustainability of social insurance.

Andreas Bergh

Papers

Distributive justice and the welfare state