The primary objective is to produce high quality research that increases the understanding of how a small open economy adapt and stay competitive, faced with challenges from the financial crises, increased immigration, and offshoring, as well as challenges from a large oil and gas sector.
The proposed project consists of three independent, but closely related sub-projects.
In the first sub-project we study how productivity, wages and profitability are related to innovation and competition, utilizing variation both over time, caused by the financial crisis and the great recession, and induced by globalization.
In the second sub-project we investigate how native workers' employment, occupational specialization and educational investments are affected by higher immigration and more offshoring. How does stronger integration in the international labour market affects employment and the optimal direction of natives’ skill formation; both for the individual and for the society?
In the third sub-project we investigate how increasing international economic integration influences the welfare state. Greater exposure to international competition might imply a higher level of external risk and income volatility for large segments of the labour force. We want to examine to what degree the exposure to external risk leads to a growing demand for publicly provided social insurance, because voters want to insure themselves against potential income losses due to international competition.
One of the main critical R& D challenges in the project is to identify causal relationships. In order to do that, we will exploit state of the art methods.
The findings from the project should be of high relevance, both for the research community and policy makers.