We study a highly aggregated fossil-based world economy with two competing stochastic thresholds or tipping points. Current production generates emissions that add to a stock of GHGs that affect the probability distribution of hitting a climate threshold with severe consequences (the “ugly” scenario). The fossil-intensive output is used either for current consumption or as R&D-investment in knowledge production, with the stock of knowledge affecting the probability distribution for hitting a “good” threshold or having a technological breakthrough (the “good” scenario) providing a clean emission-free substitute to fossil energy. We characterize an optimal strategy for allocating resources over time, given that no threshold has been hit, with the strategy or decision rules being continuously revised due to the induced changes in the derived probability distribution. To avoid the ugly scenario, while pushing for the good one, we find that the conditional expected marginal benefit or willingness-to-pay for knowledge will be increasing over time, with a non-decreasing rate of R&D investment and a non-increasing rate of consumption. Implementation of this strategy requires a global organization with coercive power, equipped with instruments so as to tax the negative stock externality and to subsidize the provision of the public good or stock of knowledge. An important task for the global planner is continuously to update the hazard rates for hitting the two thresholds. JEL Classification C02, H23, H41, Q54, Q55

In this paper, we discuss aggregate measures of marginal costs of public funds (MCF) in populations that are heterogeneous with respect to observed as well as unobserved characteristics. We first discuss how to compute MCF in selected examples of traditional (textbook) labour supply models. Next, we review two types of discrete labour supply models proposed in the literature. Subsequently, we discuss how to calculate aggregate measures of MCF for discrete labour supply models. Finally, we apply an estimated two-sector discrete labour supply model to compute MCF based on Norwegian data.

This paper develops analytic results for marginal compensated effects in discrete labor supply models, including a Slutsky equation. The Slutsky equation is aggregate in the sense that it establishes the relationship between the marginal compensated effects of the probability of working and the mean hours of work in terms of the corresponding marginal uncompensated effects. The Slutsky equation differs somewhat from the Slutsky equation in the standard continuous labor supply models. Specifically, the marginal compensated effect of an increase in the wage rate differs from the corresponding effect of a decrease in the wage rate. To illustrate some qualitative properties of the compensated marginal effects we have used an empirical labor supply model to compute numerical compensated (Hicksian) and uncompensated marginal (Marshallian) effects resulting from wage rate changes.

Our objective is to study the competition effect of biosimilar entry in centralized tenders for an expensive category or drugs - TNF-inhibitors. We use monthly observations of prices and volumes for all brands and biosimilars in this drug category in Norway, covering the period from Jan. 2006 to Dec. 2016. Descriptive statistics and regression models are used to investigate the impact of biosimilars on the drug price and the effect of the number of brands on the intensity of competition. Both the entry of biosimilars and new branded drugs have increased competition and reduced prices. According to our estimates, an increase in the market share of biosimilars from 10 % to 60 %, will be accompanied with a 50 % reduction in the expected price. Only two years after entry, the first biosimilars in this drug category had gained a market share of 40 % in Norwegian hospitals. Although entry barriers for biosimilars are higher than for generics of chemical substances, significant cost savings are expected from patent expirations of expensive biologics as well. The centralized design of the tenders is an important institutional factor behind the strong competition effect. Published: Online January 2020

(Article begins on next page) Anyone can freely access the full text of works made available as "Open Access". Works made available under a Creative Commons license can be used according to the terms and conditions of said license. Use of all other works requires consent of the right holder (author or publisher) if not exempted from copyright protection by the applicable law. Availability: This is the author's manuscript

We investigate the impact on pension take-up and labour supply of a broad Norwegian pension reform. Focussing on the long term impact, we use a structural discrete choice model estimated on data for first groups to become eligible for the new pension, accounting for the opportunity cost of retiring early. A majority of the individuals combine take-up of pension with working. This is particular the case for individuals with lower education. The estimated model explains observed behaviour rather precisely, in particular for those who retire entirely and for all choices made by individuals with higher education. The estimated model is applied in an out of sample prediction for the cohort born in 1950. Again, the model predicts rather accurately the fraction that retires entirely and the choices made by the higher educated. Two policy simulations, an increase in longevity and tax on pension income equal to tax on labour income, implies lower take up of pensions and more people working. The response to the longevity adjustment compensates less than half of the reduction of the annual pension level in the adjustment, which is designed to mimic the increase in the longevity over the next 20 years.

We analyze optimal wealth management, within a global setting, where accumulation of GHGs caused by extraction of fossil resources affects the probability distribution for hitting a threshold or tipping point, indicating a climate change. We derive an optimal strategy for overall wealth management, within a Ramsey-Hotelling-framework. We have two assets; one being reproducible (reversible capital equipment) and another being non-reproducible (stock of exhaustible natural resources – fossil fuels). Resources, along with capital equipment, are inputs in the production of an aggregate output allocated to consumption and net investment. Resource extraction adds to a stock of GHGs that affects the likelihood for a catastrophic event. If, and when, such an event occurs there is a downscaling of production opportunities. We derive a first-best precautionary global tax on using fossil fuel, which internalizes the present value of (conditional) expected welfare loss of hitting a threshold, as well as a set of risk-modified optimality conditions for overall wealth management, as long as no catastrophe has occurred.

The purpose of this paper is to estimate patients’ and doctors’ responses to prices when making a choice between brand name products and generics. We account for the response of pharmacies to government regulation and to prices set by brand name producers. The data from the Norwegian Prescription Database are unique in the sense that we observe prices set by pharmacies as well as by producers. Our results confirm that estimating only the demand side yields biased estimates of consumers’ price responses. We find much stronger price responses when demand and supply are jointly estimated.

We investigate the prevalence of factors associated with participation in the sex market among men resident in Britain using data from Britain’s National Survey of Sexual Attitudes and Lifestyles (Natsal-2, 199-2001,Natsal-3, 2010-2012). The percentage of men asking for paid sex is about 12 per cent in 2010-2012 and it has increased from 10 per cent in 1999-2001. We estimate both the probability of having had sex with a prostitute and the expected number of times men had been together with prostitutes, conditional on participating in the sex market. We find that sex education in school has a negative and significant role in the demand for paid sex. At the time of availability of our data, sex education was compulsory only in council-run schools, but our result suggests that making sex education compulsory in all primary and/or secondary schools may reduce the inclination to have sex with prostitute later in life.

Investments in oil and gas fields are regressed against variables on panel field-data from the start of oil and gas production on the Norwegian continental shelf in 1968 until 2016. Two alternative models track the observed investments aggregated across fields from 1970 until 2016 relatively accurately, except for the period 2012-2015. These years were marked by an almost world-wide recession in the aftermath of the financial crisis in 2008 and by the increase in production of shale-gas in the US. However when using data until 2010 in the estimation of the model, the fixed effect regression predicts rather accurately the development of aggregated across fields from 2011-2016. By using data only from 1995 until 2016 in the estimation of the fixed effect model the observed development after 2011 is also well tracked. The models imply rather strong and significant effect of the lagged oil price (Brent Blend) on investments. When data for the shorter period 1995-2016 is used, we get significant asymmetric price effects on investments, implying that an increase in the oil price has more positive effects on investments in periods with rising oil prices. In periods with declining prices the price history has a rather strong dampening impact on the effects of prices increases on investment. We also find strong and significant negative effects of lower expected remaining reserves on investments.

This paper investigates the wage assimilation of foreign immigrants and internal migrants in Italy, comparing them with stayers. Control for the selection in out-migration is performed using a new duration version of the Heckman correction and by taking into account both return migration and moves to other destinations. Internal migrants experience only minor wage differences when compared with stayers. By contrast, foreign immigrants earn about 8% less than stayers and internal migrants at the beginning of their careers, and the wage gap increases over time. Both language distance and job segmentation contribute to immigrants' lack of wage assimilation.

Both economic and epidemiological literature have shown that perceived high strain at work and lack of social infrastructures are good predictors of sick leave. The latter is particularly relevant in countries where facilities for children and care services are scarce and women are asked to fill the gap. The Italian 2011 pension reform significantly restricted age and seniority requirements for retirement, especially for women in private employment. We investigated whether older Italian employed women reacted to the postponement of retirement by increasing their sick leave. The empirical analysis offers unequivocal evidence that this has indeed been the case, in particular, for low-income grandmothers living in regions with a poor supply of childcare services. Radical reforms risk losing some of their effectiveness if they are not accompanied by parallel measures designed to introduce the welfare provisions previously indirectly and inadequately provided by the pension system, such as care facilities.

We estimate a dynamic discrete choice model of registered nurses' labor supply. A distinguished feature of our model is that the random terms in the utility functions are correlated over time and jobs (habit or job persistence). Past options and not only the past optimal choices matter for the current choices. Given observed incentives and institutional constraints on offered hours, we find that nurses are mobile when they are young (less mobility than among physicians), but there is also a weak tendency of higher mobility again when they are approaching retirement age. Wage increases have a modest impact on labor supply. The overall elasticity for nurses is close to zero. These low elasticities shadow for stronger responses, shifting labor away from part-time jobs in the public and private sector toward full-time jobs in the private sector. A change in taxation away from the progressive tax system toward a flat tax of 28 % gives registered nurses a very modest incentive to shift their job to private hospitals. For physicians, the impact is stronger.

We show how a neoclassical labor supply model with optimal decisions for labor force participation and hours of work, derived from first order conditions, can be taken to data even in the presence of a step-wise linear progressive tax system which may imply non-convex budget sets. The estimated model is used to simulate the optimal behavior when the tax system of 2001 is replaced by the less progressive tax system of 2006. The latter tax system implies a lower labor market participation among married women in Norway, a higher working load, given participation, and a more uneven distribution of household income.

Using an extensive longitudinal dataset extracted from the Norwegian Prescription Database (NorPD), Norwegian title: Reseptregisteret, from the Norwegian Institute of Public Health (NIPH) containing all prescriptions written in the period May 2004 to June 2007, we selected two particular drugs (chemical substances) used against cholesterol. The two brand-name products on the Norwegian markets are Provachol (Anatomic Therapeutic Chemical (ATC) classification code C10AA03) and Zocor (ATC code C10AA01). The generics are Provastatine and Simastatine. We find that prices have a negative impact on transitions in the sense that an increase in the brand price will reduce the transition from generics to brand and likewise an increase in the generic price will reduce the transition from brand to generics. Moreover, we find that the older a male doctor is, the more likely it is that he continues to prescribe the brand-name product.

Both economic and epidemiological literature have shown that perceived high strain at work and lack of social infrastructures are good predictors of sick-leave. The latter is particularly relevant in (Mediterranean) countries where facilities for children and LTC services are relatively scarce and women are frequently asked to fill the gap. The Italian 2011 pension reform, approved under the threat of a financial crisis, significantly restricted age and seniority requirements for retirement, especially for women in private employment, who still enjoyed a much more favorable treatment than men and women in public service. We investigate whether (employed) older Italian women reacted to the postponement of retirement by increasing their recourse to sick-leave. The empirical analysis, based on a noteworthy administrative data set provided by the Italian Social Security Agency, offers unequivocal evidence that this has indeed been the case, in particular for grandmothers.

The often discussed problems of aggregating tangible capital assets across vintages and of decomposing value aggregates into quantity and price aggregates are revisited. For stock values and service flow values, some new results are given, and illustrated by examples, along with reinterpretations of familiar ones. If the definitions and measurement methods for prices and quantities do not ‘match’, a third, ‘quality’, component may be needed. Should this ‘buffer’ component be included in the price or quantity components, or both, or should it be accounted for separately, and in the latter case, how does it depend on the interest rate and the capital’s age? In discussing these issues, five related quantity variables and five related price variables are introduced and discussed. For certain parametric profiles for survival and efficiency loss they are equal. Some variables are observable from market data without large efforts, some are genuinely unobservable, and some can be quantified only if certain (sometimes questionable and often nontestable) assumptions are made. Examples based on three sets of parametric profiles, including exponential decay, are given.