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DEMOS-Demokratisk og effektiv styring, planlegging og forvaltning

Drivers of Regional Growth and Economic Development

Alternative title: Faktorer bak regional vekst og økonomisk utvikling

Awarded: NOK 9.2 mill.

As part of sub-projects 1 and 2, the study of Harald Dale-Olsen (2017), Labour demand and supply changes in Norway following an imposed harmonization of payroll-tax rates analyses the impact of the geographically differentiated payroll-tax in Norway on the labour market. He show sthat payroll tax increases are shifted onto workers? hourly wages thus reducing these. Annual earnings also drop as the payroll tax grows. Neither unemployment nor employment levels are affected in the short-run, but the payroll-tax levels and the number of sick leave days appear positively correlated. In the long-run, entry into retirement and DI rolls increase. Thus, the tax hike induces the withdrawal of workers from the labour force. The study is published in LABOUR, 32, 261 - 291. As part of the sub-project 1 and 2, the two studies of Harald Dale-Olsen analyse whether unions promote creative destruction and the what this means for welfare outcome. In these papers the author applies a shift-share approach and historical unionisation data from 1918 to study the impact of regional unionisation changes in Norway on regional outcomes. In the paper Wages, Creative Destruction, and Union NetWorks focus was on the impact on wage and productivity growth and job-creation and -destruction during the period 2003-2012. As unionisation increases, wages grow. Lay-offs through plant closures and shrinking workplaces increase, but the number of new hires through growth and entry are unaffected. Increased unionisation yields a positive impact on regional productivity, exceeding the wage growth, partly due to the closure of less productive firms, but also enhanced productivity of the survivors and new entrants. In the follow-up paper Creative Destruction, Social Security Uptake, and Union Networks, he studied the impact of regional unionisation changes in Norway on regional social security uptake during the period 2003-2012. As regional unionisation increases, inflows to regional unemployment and disability decrease, but the outflow to retirement increases. These papers are available as IZA DP. No. 11894 and IZA DP. No. 12546. As part of sub-project 3, Harald Dale-Olsen and Pål Schøne in the paper Can establishment of public sector jobs spur private sector employment? studied impact of establishment of governmental sector jobs on private sector employment based on Norwegian population-wide administrative-register data. The results suggest that governmental employment has positive effects on private sector employment in the close proximity of the stimulus area. In the same area, we also observe positive short-term effects on wage growth and on firms? sales. Over time, only employment effects prevail. The study is available as IZA Discussion paper No 14063. As part of sub-project 5 Pål Schøne og Marte Strøm analysed in the paper Regional Oil-shock and Household Adaption, the regional consequences of the oil price shock of 2014 on Norwegian households. As part of sub-project 6 Erling Barth, Henning Finseraas, Anders Kjelsrud, and Karl Ove Moene in the paper Does the Rise of China Lead to the Fall of European Welfare States? analysed how globalisation and trad affects regions and their suppport for the Welfare State. They show that the end result of the rise of Chinas is an increased regional polarisation in support of the Welfare State. As part of sub-project 7, Harald Dale-Olsen and Henning Finseraas in the paper Linguistic diversity and Workplace Productivity studied the importance of linguistic diversity in the workplace for workplace productivity. Higher workforce linguistic diversity decreases productivity. We find a negative effect also when we control for the impact of cultural diversity. The detrimental impact disappears over time as immigrant workers? expected proficiency in Norwegian improves since their time of arrival. The study is published in Labour Economics 64, 101813. As part of sub-project 7 Erling Barth, Alex Bryson and Harald Dale-Olsen in the paper «Hva betyr skatte-fradraget for oppslutningen om fagforeninger?» studied whether the tax deductions in the income tax associated with the union membership fees stimulated union membership uptake varied geographically. They found that the deductions had strongest impact in the most central areas in Norway, but also in the rural country-side area the tax deductions stimulated union membership uptake. The study was published in Søkelys på arbeidslivet, 37, 109 - 123.

Arbeidsgiveravgiften påvirkers bedrifters lokalisering, men arbeidstakerne betaler for økte avgifter i form av lavere lønninger, men tjener lite på redusert arbeidsgiveravgift, og virkemiddelet er vanskelig å tilpasse. Relokalisering og nyetablering av statlige jobber i distriktene har en gunstig men avgrenset sysselsettingseffekt i privat sektor, og positive effekter på lønninger og omsetning er kortsiktig. Siden språklig mangfold reduserer produktiviteten i norske bedrifter, særlig for høyt utdannede, men ettersom norskkunnskapene bedres med botid for utenlandske arbeidere, så forsvinner den negative effekten, så er det viktig å forbedre norskkunnskapene til innvandrere og da også høyt utdannede. Siden skattefradraget for organisering er viktig for oppslutningen om fagforeninger, sterkest i byene og tettbebygde strøk, mindre i mer rurale strøk, men den gir alltid støtte til økt oppslutning, så har det offentlige et virkemiddel som kan støtte opp under det kollektive Norge.

In 2.3.1 we study the importance of regional business costs in Norway and UK for establishment location, growth, layoffs and closures, caused by variations in regional support systems such as the geographically differentiated pay-roll tax system (Norway) and the convergence funding for Cornwall and Island of Scilly(UK). In 2.3.2 we study worker outcomes, with specific analyses of the impact on so-called STEM workers (Scientists, Technology professionals, Engineers, and Mathematicians). In 2.3.3 we analyse the relationship between local expansion of public employment and development in private employment in the same region. These effects are of large policy interest since the direction and size of the effects are debated. In 2.3.4 we use similar data from the U.S. and Norway to identify differences in local multipliers from job growth in education intensive establishments relative to growth in low skill establishments, and in science and engineering intensive establishments relative to other occupations. In 2.3.5 we study how higher demand for local services is created by immigration, thus immigrants can locally create more than one job, which might dampen a potential negative effect of immigration on wages. In 2.3.6 we analyze international/national firms' entry, exit and recruitment decisions sensitivity to local conditions, and the importance of local supply of finance by lenders for location and job creation in UK and Norway. In 2.3.7 we examine the relationship between cultural diversity and productivity and the regional level, improving on the cultural distance augmenting part of Alesina et al's index, using World Values Survey data. We exploit population-wide Norwegian register data comprising the period 1995-2016 for all enterprises, firms, workplaces, workers and jobs, on a wide range of dimensions, and add UK annual micro survey data on business location, job, performance, ownership, and wages, and US linked employer-employee population-wide data

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DEMOS-Demokratisk og effektiv styring, planlegging og forvaltning