Researcher introduction: Research Professor Teemu Lyytikäinen
This time, we introduce Teemu Lyytikäinen, who was appointed Research Professor at VATT Institute for Economic Research in December 2024. Teemu is involved in several research projects related to municipal finance and housing, among other topics. Read more about Teemu's research activities.
Could you please introduce yourself?
I am Teemu Lyytikäinen, Research Professor at VATT Institute for Economic Research. My research interests include the housing market, housing policy and the impacts of financing systems in local government. I am also VATT's Research Leader in the research theme of local public finance and provision of public services, which includes four highly capable specialist researchers in addition to me.
My research is mostly empirical. I use large statistical data sets on households and housing transactions, for example. I try to find research designs that make it possible to reliably isolate the impact of economic policy measures from other influencing factors. I also perform a lot of research-based expert duties, such as issuing statements on legislative proposals.
How did you end up at VATT?
I have a long history with VATT. I first joined VATT as a trainee. I also wrote my doctoral thesis at VATT. I finished it in 2009. Following my PhD defence, I spent a couple of years working as a researcher at the Spatial Economics Research Centre of the London School of Economics. My time at LSE was rewarding, but I was happy to come back to VATT. I joined VATT because I am interested in social issues. I find motivation in knowing that my research informs the preparation of policy measures and the current debate on economic policy.
What are you researching currently?
I am studying the impacts of the property taxation of power plants on wind power construction in Finnish municipalities and the impacts of wind power plants on housing prices, for example. The results can be used to assess how including property tax on power plants in the municipal tax base equalisation scheme would affect wind power construction, and what is the extent of the negative impacts of wind turbines on local residents. Cristina Bratu, Marita Laukkanen and Sander Ramboer from VATT also participate in this study.
I am also working on another interesting study with Risto Hurmeranta from the University of Helsinki on loss aversion in the housing market. We are looking at how a decrease in the property value of a homeowner's residence below the original purchase price affects moving and the housing transaction volume. We analyse migration within travel-to-work areas and migration between travel-to-work areas separately so that the results will show whether loss aversion reduces the mobility of labour regionally or only affects housing changes within travel-to-work areas.
At the turn of the year, we also published a working paper that was co-authored with Sander Ramboer and Max Toikka from Aalto University, in which we examined the effects of the reform of central government transfers to local governments, implemented in 2015, on municipal economic policy, migration and jobs. The results help to anticipate the effects of the reform of central government transfers to local governments that is currently under way. The study is currently being reviewed by a renowned scientific journal, and we hope that the reviewers will also find it to be of high quality and importance.
What kind of research projects will you be working on in the future?
I will continue to study the effects of housing policy. Based on previous research conducted by me and my colleagues, we already know quite a lot about the effects of housing-related taxes, subsidies and regulatory measures. However, there are still many gaps and details to be clarified. I am also still interested in the finances and financing systems of municipalities and the wellbeing services counties.
What societal question would you like an answer to right now?
One big and challenging question in urban economics concerns the productivity benefits arising from a city's size and density, which are referred to as agglomeration economies. Together with Cristina Bratu, I co-authored a report for the Economic Policy Council which assessed agglomeration economies by examining regional wage disparities among similar private-sector workers.
It is the most reliable analysis on the subject using Finnish data, but it nevertheless has potential sources of error. I would like to find a certain answer to how significantly the size and density of a city affect productivity and economic growth. In order to obtain a reliable answer, Finland should be replicated and various changes need to be introduced to the different versions with regard to the location of the population and jobs. However, for the time being, we need to tolerate uncertainty on this issue.
Teemu Lyytikäinen
Blog
Blogit
Local public finance and provision of public services
housing markets
