Essays in Structural and Technological Change

Abstract

In the first essay, I study the intergenerational effects of Finland’s Field Reservation Policy introduced in 1969. In the analysis, I use variations in the eligibility to the policy and regional differences in the attractiveness to it. I find that the policy that incentivized farmers to stop farming did not improve the economic outcomes of the farmers, but it did have a significant impact on their children. They achieved higher levels of education, moved away from working in agriculture into administration and managing positions, and they earned more in adulthood. Surprisingly, the effects are driven by children with lower cognitive ability.

In the second essay, I focus on the political effects of the same reform on the parliamentary elections of 1970. In particular, I study how the take-up of the policy contributed to the win of a populist agrarian Finnish Rural Party. By using exogenous mass above the eligibility threshold as an instrument in IV design, I show that a percentage-point increase in the field reservation share leads to a 1.1 percentage-point increase in the vote share of the populist party. I find both qualitative and quantitative evidence for two separate explanations for the political reaction. Identity-based backlash fueled by offended farmers who wanted to keep on farming, and negative externalities, like losing social communities and polluting fallow fields, arising from field reservation. I also show that while the policy decreased the local overall taxable income, it did not affect income per capita.

The third essay studies the effects of a technology subsidy program on employment and skill demand in Finnish firms 1994–2018. In the main analysis, we compare close winners and losers of the subsidies. We find that while the program induced investments in new technologies like CNC machines and robots, it also increased employment but did not change skill composition. We find evidence that firms used the subsidies mainly to expand their production rather than automate their work. The results are also in line with broader associations between machine investments and skill shares in Finland while IT expenditure is associated with skill upgrading.

Publication Information

Stenhammar, A. (2024), Essays in Structural and Technological Change, Aalto University publication series, DOCTORAL THESES 132/2024.

• ISSN: 1799-4934 (Print), 1799-4942 (Online)
• ISBN: 978-952-64-1893-3 (Print), 978-952-64-1894-0 (Online)
• Press Release in Finnish