Essays on Empirical Microeconomics

This thesis consists of four essays on empirical microeconomics. The first three essays focus on the 2008 differentiation of Finnish car tax rates. The focus of the fourth essay (joint work with Christina Gathmann and Kristiina Huttunen) is on the health consequences of job loss. In the first essay, I estimate the distributional and environmental effects of the 2008 CO2 differentiation of Finnish ad valorem car tax rates on the market for new cars. My differentiated-product oligopoly model shows that this environmentally motivated demand-side fiscal policy did not drive the observed decline of new-car CO2 emissions rates, given the concurrent introduction of mandatory EU CO2 emissions standards for manufacturers. However, the preferential tax treatment of cars with low CO2 emissions rates increased local pollution due to higher sales of diesel cars. The tax reform was a regressive policy with substantial tax revenue losses and a disproportional benefit to high-income consumers. Optimal fiscal policy aiming to balance environmental and public finance goals needs to consider both the market structure as well as other concurrent policies on different levels of government. In the second essay, I estimate the effect of the Finnish 2008 car tax reform on CO2 emissions rates of new cars, a key statistic for policymakers. My flexible reduced-form approach uses detailed vehicle registration data, and does not rely on explicit modeling of economic primitives. The results confirm the limited impact of the domestic fiscal policy on CO2 emissions rates of new cars in Finland.The third essay demonstrates the failure of nested logit demand models to generate reasonable economic implications in this market where the product-specific tax rate is an increasing function of a continuous product characteristic. The computational burden of the random-coefficients logit demand model used in the first essay is therefore both justified and required.In the fourth essay, we quantify the effect of job loss on mortality and find evidence of spillover effects inside the family. The empirical analysis compares workers displaced due to plant closure in Finland's great recession between 1991 and 1993 to workers not displaced in a plant closure. We find that the mortality risk of job loss is distributed asymmetrically across genders: if a man loses his job, both spouses suffer a higher risk of dying. If a woman loses her job in contrast, we find no increase in mortality for either spouse.