Essays on Public, Political and Labor Economics

Abstract: This thesis contains four essays.The first paper, "Real or Evasion Responses to the Wealth Tax? Theory and Evidence from Sweden", addresses the behavioral effects of an annual wealth tax. I use Swedish tax records over the period 1999-2006 and two sources of variation in the tax rate to estimate the elasticity of taxable net wealth at about 0.3. I decompose the effects into reporting and savings responses and find that an increase in the tax is likely to stimulate evasion. Using military enlistment records on cognitive ability, I find that high-skilled individuals respond more to the tax.The second paper, "Job Displacement and Labor Market Outcomes by Skill Level", uses previously unexplored administrative data on all displaced workers in Sweden 2002-2004 to estimate how the incidence and effects of job loss depend on cognitive and noncognitive skills. I find that workers with low ability are significantly more likely to be displaced but the recovery rates upon job loss show no significant differences across skill groups.The third paper, "Complementary Roles of Connections and Performance in Political Selection in China", analyzes who becomes a top politician in China. It focuses on the promotions of provincial leaders and estimates how performance - measured by provincial economic growth – and connections with top politicians – measured by having worked together in the past – influence promotions. Using data for the period 1993-2009, we find a positive correlation between promotion and growth that is stronger for connected leaders.The fourth paper, "Does the Demand for Redistribution Rise or Fall with Cognitive Ability?", uses data from enlistment and a tailor-made survey that elicits redistributional preferences. On a scale of 0 to 100 percent redistribution, a one standard deviation increase in cognitive ability lowers demand by 6 percentage points, also when controlling for past, current and future expected income.