Olle Hammar defends his thesis The Mystery of Inequality: Essays on Culture, Development, and Distributions

In his dissertation, Olle studies economic inequality, development, and culture. The thesis analyzes global inequality in labor earnings and wages since the 1970s, the relationship between individualism and preferences for redistribution, the development of the Swedish income distribution since 1968, and the impact of cultural values and beliefs on microfinance performance.

Discussant is Professor Ingvild Almås, Institute for International Economic Studies (IIES), Stockholm University, and Norwegian School of Economics (NHH). The grading committee members are Professor Emeritus Anders Björklund, Swedish Institute for Social Research (SOFI), Stockholm University, Professor Joakim Palme, Department of Government, Uppsala University, and Professor Helena Svaleryd, Department of Economics, Uppsala University.

Advisors are Professor Daniel Waldenström, Research Institute of Industrial Economics (IFN), and Associate Professor Niklas Bengtsson, Department of Economics, Uppsala University.

Abstract 

Essay I (with Daniel Waldenström): We estimate trends in global earnings dispersion across occupational groups by constructing a new database that covers 68 developed and developing countries between 1970 and 2018. Our main finding is that global earnings inequality has fallen, primarily during the 2000s and 2010s, when the global Gini coefficient dropped by 15 points and the earnings share of the world’s poorest half doubled. Decomposition analyses show earnings convergence between countries and within occupations, while within-country earnings inequality has increased. Moreover, the falling global inequality trend was driven mainly by real wage growth, rather than changes in hours worked, taxes or occupational employment.

Essay II: I analyze the relationship between individualism and preferences for redistribution, using variation in immigrants’ countries of origin to capture the impact of cultural values and beliefs on personal attitudes towards income redistribution and equality. Using global individual-level survey data, I find strong support for the hypothesis that more individualistic cultures are associated with lower preferences for redistribution. At the same time, cultural assimilation in this dimension seems to take place relatively fast.

Essay III (with Paula Roth and Daniel Waldenström): We provide new evidence on income inequality levels and trends in Sweden from 1968 to 2016. By combining data from tax and population registers, we construct a new dataset that includes the distribution of pre-tax total and post-tax disposable income for the full Swedish population since 1968. Our results indicate that the 1980s was the decade with the lowest level of overall income inequality in Sweden, while income inequality as measured by top income shares for the very top has increased steadily over the studied period.

Essay IV (with Katarzyna Burzynska): We apply a panel of 331 microfinance institutions from 37 countries to investigate the relationship between social beliefs and microfinance financial performance over the period of 2003–2011. We find that microfinance institutions in countries with higher levels of trust and more collectivist culture have lower operating and default costs and charge lower interest rates. These results provide the first large cross-country evidence that social beliefs are important determinants of microfinance performance.

Download the thesis here.

Read more about Olle on his website.