Does it pay for young adults in the Nordic countries to complete upper secondary schooling between the age of 21 and 28 rather than not completing at all? We find that those who graduate before age 28 have a 12–15 percentage pointlower probability of being NEET (Not in Employment, Education or Training) at 28 years of age. When we controlfor socioeconomic background and especially early school-to-work transition paths between 16 and 20 years, muchof the difference between countries disappears, but still the bulk of the difference between late completers and non-completer remains.
Across the OECD countries, dropouts from upper secondary schooling fare worse in the labor market, with higher NEET rates more spells of unemployment and lower earnings. Among the dropouts, there are however significant shares who complete at a later age. In this paper, we thus ask the question: Does it pay for young adults who do not complete upper secondary schooling by the age of 21, to do so at some point during the subsequent 7 years, that is, before turning 28? In all four Nordic countries under scrutiny, we find that late completion lowers the probability of being outside employment, education or training (NEET) at age 28. Moreover, the exact age of completion does not seem to matter. Our estimates are robust to the inclusion of extensive controls for socioeconomic background and early schooling paths, and similar to the ones produced by event history analysis with individual fixed effects. This indicates that late completion of upper secondary schooling plays an important role for the labor market inclusion of young dropouts.
Sibling correlations are broader measures of the impact of family and community influences on individual outcomes than intergenerational correlations. Estimates of such correlations in income show that more than half of the family and community influences that siblings share are uncorrelated with parental income. We employ a data set with rich family information to explore what factors in addition to traditional measures of parents' socio-economic status can explain sibling similarity in long-run income. Measures of family structure and social problems account for very little of sibling similarities beyond that already accounted for by income, education and occupation. However, when we add indicators of parental involvement in schoolwork, parenting practices and maternal attitudes, the explanatory power of our variables increases from about one-quarter (using only traditional measures of parents' socio-economic status) to nearly two-thirds.
This paper documents the variation in living standards of the poorest fifth of children in rich (and some middle-income) nations, with a focus on the relative importance and interaction of social transfers (net of taxes) and labour market incomes. Overall, the cross-national variation in the disposable income of disadvantaged children is comprised equally of variation in market and transfer income (with the two negatively correlated). The English-speaking countries stand out as all having relatively low market incomes, but substantial variation in transfer income. Their low market incomes reflect low employment hours in Australia and primarily low hours in the UK and Ireland, while in the US and Canada low hours and low pay contribute equally. Comparing incomes prior to and after the 2008 financial crisis, the real disposable incomes of the poorest fifth decreased substantially in Greece, Spain and Ireland, but were relatively stable in other rich nations.
This study investigates the relationship between time preferences and lifetime social and economic outcomes. We use a Swedish longitudinal data set that links information from a large survey on children's time preferences at age 13 to administrative registers spanning over five decades. Our results indicate a substantial adverse relationship between high discount rates and school performance, health, labour supply and lifetime income. Males and high-ability children gain significantly more from being future oriented. These discrepancies are largest regarding outcomes later in life. We also show that the relationship between time preferences and long-run outcomes operates through early human capital investments.
This paper considers the role of gender in generating inequality of opportunity. Using data on long-run income for Swedish men and women, we explore to what extent income inequality is due to circumstances beyond individuals' control, such as gender and parental income, rather than to differences in individuals' choices. The key idea is that a society has achieved equality of opportunity if there is no income inequality that is due to circumstances. Analyzing men and women separately, we find that circumstances account for up to 31% of income inequality among men and up to 25% among women. We conclude that there is greater equality of opportunity among women than among men. When we analyze men and women together, treating gender as a circumstance, at most 38% of income inequality can be attributed to circumstances. Gender accounts for up to 13% of income inequality, making gender the single most important circumstance in accounting for inequality in long-run income in Sweden.
This study explores how life expectancy at age 35 has evolved across the income distribution in Sweden over time. We examine individual income for men 1970–2007 and family income for both men and women 1980–2007. During this period, income inequality increased in most western countries, but especially so in Sweden. Drawing on a large sample of the Swedish population, our results show that the gap in life expectancy between the richest and poorest fifths of the income distribution also increased. This was the case both for individual and family income. The increase was larger for men than for women, but the only group with stagnant life expectancy at age 35 was women in the lowest income quintile group. Between 1986 and 2007, the difference between the lowest and highest family income quintiles increased by about one year for women and by almost two years for men. The causes of death that most significantly contributed to the increased disparities among women were circulatory and respiratory diseases. For men, circulatory disease mortality alone caused most of the increased disparities.
We examine the association of income variability both within and across generations based on a heterogeneous growth model of permanent and transitory income in Sweden. Non-parametric regressions reveal that income variability is strongly associated with long-run levels of income, especially for low- and highincome earners, and that it is also strongly associated across generations.
We examine the association of income variability both within and across generations based on a heterogeneous growth model of permanent and transitory income in Sweden. Non-parametric regressions reveal that income variability is strongly associated with long-run levels of income, especially for low- and high-income earners, and that it is also strongly associated across generations.
This paper compares sibling and neighborhood correlations in school performance, educational attainment and income as a way to learn whether the neighborhood where a child grows up in might explain parts of the sibling similarities found in previous sibling correlation studies. The data are based on a cohort of nearly 13,000 individuals born in 1953 and their siblings, all of whom grew up in the Stockholm area. The results show that neighborhood correlations are in general very small and in particular they are much smaller than the sibling correlations. Living in the same neighborhood does not seem to add much to the sibling similarities.
Previous studies of intergenerational income mobility have not considered potential birth-order or family-size effects in the estimated income elasticity. This article uses a large sample of individuals born between 1962 and 1964; income elasticities with respect to parents’ incomes are estimated for individuals with different birth-order positions and family sizes. Results based on labour income and total income for sons and daughters are reported separately. The elasticity tends to decrease with family size as well as with birth order for a given family size, especially in the labour-income analysis of fathers and sons.
Many countries have had to tackle escalating youth unemployment in the aftermath of the financial crisis of 2008, but compared with other countries in the European Union, youth unemployment has increased particularly sharply in Sweden. Currently, Swedish 20-24 year olds are more than three times as likely to be unemployed than are adult workers, which is the greatest such ratio within the EU-15. The bulk of youth unemployment spells starts directly after upper secondary school ends, which in turn suggests special attention should be directed to the interaction of vocational education and labor markets. This paper discusses in the light of international research findings how to ease the transition from school into the labor market for vocational students. The evidence discussed in the paper centers on which educational structures lead to good labor market outcomes for vocational students and especially what we know about the relative merits of workplace- and school-based education and the role of employer contacts.
One of the most basic predictions of almost any model of crime is that individual time preferences matter. However, empirical evidence on this fundamental property is essentially nonexistent. To our knowledge, this paper provides the first pieces of evidence on the link between time discounting and crime. We use a unique dataset that combines a survey-based measure of time discount rates (at age 13) with detailed longitudinal register data on criminal behavior spanning over 18 y. Our results show that individuals with short time horizons have a significantly higher risk of criminal involvement later in life. The magnitude of the relationship is substantial and corresponds to roughly one-third of the association between intelligence and crime.