Welcome

I am a lecturer (assistant professor) at the Adam Smith Business School at the University of Glasgow. I work in Labor Economics with a focus on the Economics of Crime.

Contact:
Email: martti.kaila@gmail.com

Research:

How Do People React to Income-Based Fines? Evidence from Speeding Tickets Discontinuities

This paper studies the impact of income-based criminal punishments on crime. In Finland, speeding tickets become income-dependent if the driver’s speed exceeds the speeding limit by more than 20 km/h, leading to a substantial jump in the size of the speeding ticket. Contrary to predictions of a traditional Becker model, individuals do not bunch below the fine hike. Instead, the speeding distributions are smooth at the cutoff. However, I demonstrate that the size of the realized speeding ticket has sizable but short-lived impacts on reoffending ex-post. I use a regression discontinuity design to show that fines that are 200 euros larger decrease reoffending by 20 percent in the following six months. After 12 months, the effect disappears. My empirical results are consistent with an explanation that people operate under information frictions. To illustrate this, I construct a Becker model with misperception and learning that can explain all the empirical findings.

The Impact of an Early Career Shock on Intergenerational Mobility with Emily Nix and Krista Riukula revise and resubmit, Journal of Labor Economics

Children’s incomes are highly correlated with their parents’ incomes. Differences in the first job explain part of this intergenerational persistence in incomes, but little is known about how subsequent labor market shocks might contribute to intergenerational mobility. In this paper, we focus on a consequential early career shock, job loss. We document three results. First, those born to lower-income parents suffer more from job loss. After an exogenous job loss, adult children born to parents in the bottom 20% of the income distribution have double the unemployment compared with those born in the top 20%, with 118% higher earnings losses. Second, this causes the rank-rank correlation, a measure of persistence of incomes, to increase by 34% for those impacted and country-level rank-rank correlations to increase as children age. Third, direct interventions by parents after their child loses a job and earlier life investments both explain our main results.

The Crime Ladder: Estimating the Impact of Different Punishments on Defendant Outcomes with Kristiina Huttunen and Emily Nix

Most criminal justice systems use a “ladder of punishments” that starts with less severe punishments and progress to more severe punishments according to crime severity and criminal history. Using random assignment to judges, we estimate causal impacts of three common punishments on the ladder-fines, probation, and prison-on defendants’ criminal and labor market outcomes. We find that fines increase recidivism. However, this increase is concentrated among those committing less severe crimes. Probation decreases recidivism for those committing less severe crimes and first offenders. Neither fines nor probation affect earnings. Prison has a mixed impact, decreasing future charges but also decreasing earnings.

Financial Crime and Punishment with Kristiina Huttunen, Dave Macdonald and Emily Nix

Financial crimes impose significant costs on society. This paper investigates whether prison sentences reduce financial crimes. Using random assignment of judges to identify causal impacts of prison sentences from 2000 to 2018 in Finland, we show that prison reduces defendant reoffending by 42.9 percentage points in the three years following the crime. We also find that a prison sentence reduces the likelihood that a defendant’s colleagues commit financial crimes in the future, suggesting important spillover effects of harsher punishments for financial misconduct.

Inequality in College Applications: Evidence from Three Continents with Adam Altjmed, Andres Barrios Fernandez, Aspacia Bizopoulou, Rigissa Megalokonomou, José Montalban Castilla, Christopher Neilson, Sebastián Otero, and Xiaoyang Ye

This paper combines rich administrative data on college applications from seven very different countries: Brazil, Chile, China, Croatia, Finland, Greece, and Sweden. In all these countries, an important share of colleges select their students through centralized admission systems that only consider students’ preferences and academic performance. We use these data to study differences in preferences for colleges and majors by gender and socioeconomic status. We find important differences both across the gender and socioeconomic dimensions. In all countries, female students are more likely to apply to health and education majors. Male students, on the other hand, are more likely to apply to STEM majors. These differences persist along the whole distribution of academic ability. Differences in preferences for fields of study are less prominent when comparing individuals from different socioeconomic backgrounds. However, we do find that conditional on academic ability, students from low-SES households apply to less selective programs. These differences could be important to understand some of the inequeality we observe in labor market trajectories. Finally, in none of the countries we study applicants to education programs come from the top of the ability distribution. However, whereas in most of them applicants trend to come from middle- and low-SES backgrounds, in Finland there is an important share of them who come from a high-SES background.