nep-pbe New Economics Papers
on Public Economics
Issue of 2012‒07‒23
24 papers chosen by
Keunjae Lee
Pusan National University

  1. From Regressive Pollution Taxes to Progressive Environmental Tax Reforms. By Mireille Chiroleu-Assouline; Mouez Fodha
  2. Heterogeneity of taxation in EA Member countries and some implications for EA fiscal governance By Bernardi, L.
  3. An Experimental Study of Taxpayer Compliance Behavior Under Alternative Reporting Regimes By Bombyk, Matthew
  4. Business Taxation and Wages – Evidence from Individual Panel Data By Thomas K. Bauer; Tanja Kasten; Lars-H.R. Siemers
  5. Tax Contracts and Elections By Gersbach, Hans; Schneider, Maik
  6. Taxing Hotel Room Sales by Online Travel Companies: What Should Be the Appropriate Tax Base? By James Mak
  7. With which countries do tax havens share information? By Katarzyna Bilicka and Clemens Fuest
  8. Empirical Analysis of Corporate Tax and Foreign Direct Investment By Tomonori Sato
  9. Redistributive Taxation in the Roy Model By Casey Rothschild; Florian Scheuer
  10. The Role of Infrastructure Capital in China’s Regional Economic Growth By Shi, Yingying
  11. Local taxes in Buenos Aires City: A CGE approach By Chisari, Omar Osvaldo; Mastronardi, Leonardo Javier; Romero, Carlos Adrián
  12. Private Provision of Public Goods: Neutrality and Wealth-Dependent Preferences By Oskar Nupia
  13. Trust as a Proxy for the Ability to Produce Local Public Goods: Testing Different Measures By Omar Sene
  14. The Politics of Federalism in Argentina: Implications for Governance and Accountability By Martin Ardanaz; Marcelo Leiras; Mariano Tommasi
  15. Fiscal Consolidation Strategy By Cogan, John F.; Taylor, John B.; Wieland, Volker; Wolters, Maik H
  17. The impact of government expenditure on the environment: An empirical investigation By Halkos, George
  18. Rule-of-Thumb Consumers and Labor Tax Cut Policy in the Zero Lower Bound By Kaszab, Lorant
  19. The effects of different types of taxes on soft-drink consumption By Abdulfatah Sheikhbihi Adam; Sinne Smed
  20. Geography and economic growth in Vietnam By Ngo, Thu Hien Laura; Santos, Paulo
  21. Do Income Taxes Affect the Progressivity of Social Security? By Norma B. Coe; Zhenya Karamcheva; Richard Kopcke; Alicia H. Munnell
  22. Language, Mixed Communes and Infrastructure: Sources of Inequality and Ethnic Minorities in Vietnam By Hoa Thi Minh Nguyen; Tom Kompas; Trevor Breusch; Michael B. Ward
  23. Public Finance and its Legal Framework: Toward a Legal Framework to Ensure Fiscal Consolidation and Fiscal Policy Management By Kazuyuki Sugimoto
  24. Spatial Knowledge Spillovers in Europe: A Meta-Analysis By Karlsson, Charlie; Warda, Peter; Gråsjö, Urban

  1. By: Mireille Chiroleu-Assouline (Centre d'Economie de la Sorbonne - Paris School of Economics); Mouez Fodha (LEO - Université d'Orléans)
    Abstract: European countries have increased their use of environmental tax instruments by designing new tax bases. But, many countries have to face the opposition of the public opinion, for fear of the distributive consequences of these environmental tax reforms. This paper sheds light on the distributive consequences of environmental tax policies when households are heterogeneous. The objective is to assess whether an environmental tax reform could be Pareto improving, when the revenue of the pollution tax is recycled by a change in the labor tax properties. We show that, whatever the degree of regressivity of the environmental tax alone, it is possible to design a recycling mechanism that renders the tax reform Pareto improving, by simultaneously decreasing the average rate of the wage tax annd increasing its progressivity.
    Keywords: Environmental tax reform, heterogeneity, welfare analysis, tax progressivity.
    JEL: D60 D62 E62 H23
    Date: 2012–07
  2. By: Bernardi, L.
    Abstract: Notwithstanding the repeated efforts of the European Authorities to harmonize and coordinate countries’ taxation, and in spite of the effects of international tax competition, in 2009 EA taxation was still far from being homogeneous among Member Countries. Given this situation, the purpose of the paper is threefold. First of all, it is designed to provide a detailed overview of the existing differences, in terms of taxation, among EA Members. Secondly, it aims at examining whether these disparities could interfere with EA fiscal governance, the rules of which largely consist in single figures applicable to all the concerned countries. Finally, the analysis wants to ascertain whether the present EU Commission’s suggestions for fiscal consolidation and for tax reforms may differently affect specific countries, given the aforementioned differences in their tax systems. The conclusions include the traditional belief that greater harmonization and coordination of Europe’s tax systems could well improve fiscal governance within the EA.
    Keywords: Taxation; Fiscal rules; Fiscal consolidation; Budget balance; EA countries
    JEL: H20 H30 H80
    Date: 2012–07–12
  3. By: Bombyk, Matthew
    Abstract: Underreporting of income is a costly problem for the government and for those people who do pay their taxes, due to the necessity of higher tax burdens to sustain a given amount of revenue. An extensive research report published by the IRS this year estimates that in the United States in 2006 the “tax gap” between paid taxes and legally owed taxes was $450 billion, which means 16.9 percent of total tax liabilities were evaded that year (Black et al., 2012). The IRS recovered $65 billion from late payments and audits, but that still left 14.5 percent noncompliance. Breaking the tax gap down into finer categories, the IRS finds that the vast majority (84 percent) comes from underreporting of income, most of that (62.5 percent) comes from individual income taxes, and most of that (52 percent) is small business proprietor’s income. This totals to 27 percent of noncompliance due to underreporting of individual proprietor income. It is estimated that 57 percent of business income is not reported (Black et al., 2012). Wages make up a small fraction of underreporting, mostly due to the fact that firms must report employee income directly to the IRS, and withholding is common, so a relatively disinterested third party makes the decision of how much income is reported (Slemrod, 2008). Slemrod emphasizes the importance of enforcement in compliance behavior, citing the fact that income subject to withholding and substantial information reporting (wages) has a 1 percent noncompliance rate, compared to 56 percent noncompliance for income with little or no information reporting requirements. Given the difficulty of identifying cheaters and the cost of increasing the rate of auditing, a better understanding of the determinants of noncompliance is needed 1 to reduce the magnitude of tax cheating. To address a part of the tax evasion quandary, Kalambokidis et al. (2012) conducted a laboratory experiment1 which was designed to examine the feasibility of using the choice between a high-burden,2 low-transparency and a low-burden, high-transparency tax regime, as a mechanism to separate out those who have higher and lower propensities to cheat when reporting their income. The results are the subject of this paper.
    Keywords: Financial Economics, Institutional and Behavioral Economics, Public Economics,
    Date: 2012–07
  4. By: Thomas K. Bauer; Tanja Kasten; Lars-H.R. Siemers
    Abstract: Empirical evidence on the degree of business-tax shifting to employees via the wage level is highly controversial and rare. It remains open to which extent the tax burden is shifted, whether there are differences for tax increases and decreases, or whether there exists some treatment heterogeneity, that drive the respective results. Using a large administrative panel data set, we exploit the regional variation of the German business income taxation to address these issues. Our results suggest an elasticity of wages with respect to business taxes that ranges between –0.28 to –0.46, once we control for invariant unobserved regional and individual characteristics. Workers with low bargaining power, e.g., low-skilled, are affected most from business tax shifting, indicating that business-tax incidence involves distributional effects. Finally, we find evidence for an asymmetric tax incidence.
    Keywords: Tax incidence; profit taxation; wages; asymmetric effects
    JEL: H22 H25 J31 J38
    Date: 2012–07
  5. By: Gersbach, Hans; Schneider, Maik
    Abstract: In this paper we examine the impact of tax contracts, a novel instrument, on elections, policies, and welfare. We consider a political game in which three parties compete to form the government and voters may behave strategically. Parties have policy preferences about the level of public-good provision and benefit from perks when in office. A government raises taxes for both purposes. We show that tax contracts yield moderate policies and lead to lower perks by avoiding the formation of grand coalitions in order to win government. Moreover, in polarized societies they unambiguously improve the welfare of the median voter.
    Keywords: elections; government formation; political contracts; tax promise
    JEL: D72 D82 H55
    Date: 2012–07
  6. By: James Mak (UHERO, University of Hawaii at Manoa)
    Abstract: This essay examines the current dispute between state and local governments in the U.S. and online travel companies (OTCs) over the appropriate hotel occupancy tax base for online hotel bookings. It addresses the question of what should be the appropriate tax base in designing hotel occupancy tax statutes. It argues that the appropriate tax base should be the full rental prices of the hotel rooms paid by consumers inclusive of online travel company markups and service fees and not the discounted net rates paid by the OTCs to their hotel suppliers.
    Keywords: Hotel Occupancy Tax, Online Travel Companies, Merchant Model
    JEL: Q20 Q25
    Date: 2012–07
  7. By: Katarzyna Bilicka and Clemens Fuest
    Abstract: In recent years tax havens and offshore financial centres have come under increasing political pressure to cooperate with other countries in matters of taxation and efforts to crowd back tax evasion and avoidance. As a result many tax havens have signed tax information exchange agreements (TIEAs). In order to comply with OECD standards tax havens are obliged to sign at least 12 TIEAs with other countries. This paper investigates how tax havens have chosen their partner countries. We ask whether they have signed TIEAs with countries to which they have strong economic links or whether they have systematically avoided doing this, so that information exchange remains ineffective. We analyse 555 TIEAs signed by tax havens in the years 2008-2011 and find that on average tax havens have signed more TIEAs with countries to which they have stronger economic links. Our analysis thus suggests that tax havens do not systematically undermine tax information exchange by signing TIEAs with irrelevant countries. However, this does not mean that they exchange information with all important partner countries.
    Date: 2012–06–15
  8. By: Tomonori Sato (Former Economist, Policy Research Institute, Ministry of Finance)
    Abstract: This paper provides the insight into the effect of corporate income tax on foreign direct investment. The enhanced liquidity of labor and capital through globalization has accelerated the efficient and global utilization of human resources and capital. Considering this situation, many countries are acutely aware of the importance of attracting foreign direct investment in order to vitalize and promote economic growth. Many countries, therefore, have been providing and developing attractive environments for investments, and have lowered their corporate tax rates one after another. However, there are many elements which affect foreign direct investment and the effect of corporate tax on foreign direct investment is not necessarily apparent. We therefore empirically analyze foreign direct investment based on a panel of bilateral foreign direct investment flows among OECD 30 countries over 1985 – 2007. In this paper, we further address the dynamic panel data analysis (System GMM) through the expansion of the static panel data analysis in the previous research. This is why we recognize that the current scale of foreign direct investment may be influenced by the investment level of the previous year. We confirmed the expected result in the empirical analyses, namely, that the current scale of foreign direct investment is influenced by the investment level of the previous period. These studies also implied that the impact of corporate tax on foreign investment is significantly negative.
    Date: 2012–06
  9. By: Casey Rothschild; Florian Scheuer
    Abstract: We consider optimal redistribution in a model where individuals can self-select into one of several possible sectors based on heterogeneity in a multidimensional skill vector. We first show that when the government does not observe the sectoral choice or underlying skills of its citizens, the constrained Pareto frontier can be implemented with a single non-linear income tax. We then characterize this optimal tax schedule. If sectoral inputs are complements, a many-sector model with self-selection leads to optimal income taxes that are less progressive than the corresponding taxes in a standard single-sector model under natural conditions. However, they are more progressive than in canonical multi-sector economies with discrete types and without occupational choice or overlapping sectoral wage distributions.
    JEL: D5 D80 E2 E6 H2 J3 J6
    Date: 2012–07
  10. By: Shi, Yingying
    Abstract: This paper investigates the role of infrastructure capital in China’s regional economic development during 1990 to 2009 in a neoclassical economic growth model. Four types of infrastructure capital are discussed; electricity, road, rail, and land-line telephone. The results support a positive role of infrastructure in improving economic wellbeing in China. It shows that infrastructure has contributed to the convergence among China’s provinces. However, declining growth momentum from rapid increase of road infrastructure, in particular for the Western region, suggests that road development in the region has been growing too fast. The results counter the conventional wisdom of “road leads to prosperity” widely accepted among national and local governments in China. Thus, the seemingly productive infrastructure capital, when invested beyond a proper level or speed, will become unproductive. The results resonate with the theoretical literature on the inverse U shaped growth impact of infrastructure capital and the dominant “crowding out” of private capital if there is too much infrastructure. They also address the puzzle in the current literature debates as to the direction and magnitude of the growth impact of infrastructure capital.
    Keywords: infrastructure, economic growth, regional inequality, China, International Development, Production Economics, Public Economics, H54, O18, R11,
    Date: 2012–06–20
  11. By: Chisari, Omar Osvaldo; Mastronardi, Leonardo Javier; Romero, Carlos Adrián
    Abstract: The aim of this paper is to analyze the spillover effects of national and local tax policies using a static bi-regional general equilibrium model for the Buenos Aires City (BAC) and the rest of Argentina. The BAC represents 7% of the population of the country, but 29% of its GDP. We analyze the reciprocal impact of fiscal policies on welfare of private agents and the spillover effects on the performance of the public sector of both regions. As expected, the model shows that national fiscal policies do have relevant effects on the activity level of the city and on the welfare of its inhabitants. However, more unexpectedly, it also shows that fiscal decisions at the level of the city have a significant impact on the rest of the country. The results show that: (i) an increase in BAC local taxes produce a decline in the welfare of households and in the activity levels, in both regions; (ii) an increase in national value added tax decreases the regional GDP in both regions, but in different proportions, and increases the regional unemployment rate. The results differ depending on the type of tax (sales or property). Production elasticities and the rule of indexation of wages are key factors that affect the quantitative and qualitative results.
    Keywords: Fiscal Federalism; Computable general equilibrium; Regional spillover effects
    JEL: H77 C68 D58
    Date: 2012–04–30
  12. By: Oskar Nupia
    Abstract: Several authors have investigated the bounds of the so-called neutrality theorem where public goods are privately provided. Following this line of analysis, I investigate further in this paper the bounds of this result. I concentrate on an unexplored case in the existing literature— namely that where individual preferences for a public good are affected by respective levels of individual wealth. I prove that under such circumstances, the neutrality theorem no longer holds. More appealing, I discuss the conditions under which a redistribution of wealth might improve efficiency in the aggregate provision of public goods. Interestingly, we find that a redistribution of wealth from individuals who have a low valuation for public goods to those who have a high valuation for public goods does not necessarily increase its aggregate provision.
    Date: 2012–07–02
  13. By: Omar Sene (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne)
    Abstract: The ability to produce local public goods and services such as sharing savings, risk, insurance, sanitation and educational services, is a key fator for development. This ability, however, varies greatly across communities (Ostrom 1990 ; Khwaja 2009). Considering that this ability depends critically on members' willingness to act collectively, this paper investigate whether the level of trust among people measured in different ways can predict the amount of public good produced. I find that (i) trust, as measured by survey questions, has poor predictive power, while (ii) the results from our version of Trust Game are much better predictors of local public-good production.
    Keywords: Trust, collective action, provision of local public goods, trust game.
    Date: 2012–06
  14. By: Martin Ardanaz; Marcelo Leiras; Mariano Tommasi
    Abstract: This paper contributes to an agenda that views the effects of policies and institutional reforms as dependent on the structure of political incentives for national and subnational political actors. The paper studies political incentive structures at the subnational level and the mechanisms whereby they affect national-level politics and policymaking at the national level in Argentina, a highly decentralized middle-income democracy, Argentina. The Argentine political system makes subnational political power structures very influential in national politics. Moreover, most Argentine provinces are local bastions of power dominated by entrenched elites, characterized by scarce political competition, weak division of powers, and clientelistic political linkages. Political dominance in the provinces and political importance at the national level reinforce each other, dragging the Argentine political and policymaking system towards the practices and features of its most politically backward regions.
    JEL: D72 D73 D78 H11 H70 H77
    Date: 2012–06
  15. By: Cogan, John F.; Taylor, John B.; Wieland, Volker; Wolters, Maik H
    Abstract: In the aftermath of the global financial crisis and great recession, many countries face substantial deficits and growing debts. In the United States, federal government outlays as a ratio to GDP rose substantially from about 19.5 percent before the crisis to over 24 percent after the crisis. In this paper we consider a fiscal consolidation strategy that brings the budget to balance by gradually reducing this spending ratio over time to the level that prevailed prior to the crisis. A crucial issue is the impact of such a consolidation strategy on the economy. We use structural macroeconomic models to estimate this impact. We consider two types of dynamic stochastic general equilibrium models: a neoclassical growth model and more complicated models with price and wage rigidities and adjustment costs. We separate out the impact of reductions in government purchases and transfers, and we allow for a reduction in both distortionary taxes and government debt relative to the baseline of no consolidation. According to the initial model simulations GDP rises in the short run upon announcement and implementation of this fiscal consolidation strategy and remains higher than the baseline in the long run.
    Keywords: budget deficit; fiscal consolidation strategy; fiscal policy; government debt; U.S. budget
    JEL: E27 E62 H30 H63
    Date: 2012–07
  16. By: Quattri, Maria A.; Fosu, Augustin Kwasi
    Abstract: In the wake of the current financial and economic crises, the economies of Sub-Saharan Africa (SSA) find themselves squeezed between likely reductions in Official Development Assistance (ODA) and the pressing challenge to eradicate poverty. Public expenditure allocation to the social sector and to public investment is constrained by the need to pursue fiscal discipline, in order to avert debt distress. Within a framework of public expenditure choice (based on Fosu, 2007, 2008, 2010), the paper investigates the impact of the external debt-servicing constraint and external aid on government expenditure allocation in SSA countries after the launch of the HIPC initiative. Three-year panel over 1995-2009 for 40 low- and low-middle income SSA economies, of which 29 are HIPC, is used for the analysis. The findings suggest that the debt effect, while substantially lower than existing estimates for the pre-HIPC period, remains negative for the social sector, with education expenditure suffering the most from higher actual or predicted constraint-consistent debt servicing. ODA, particularly multilateral aid, has a significant positive effect on public investment. Moreover, recent relatively low levels of debt seem temporary and low-income countries are likely to contract additional debt to fill their funding gaps. This calls for appropriate measures, to be undertaken in order to prevent the deleterious effects of debt, especially on the social sector. The additional finding that government effectiveness favors public investment and spending in the social sector suggests that increased attention on governance is called for.
    Keywords: SSA, HIPC, Public Expenditure Allocation, External Debt and Aid, International Relations/Trade, F34, F35, H51, H52, H54, 055,
    Date: 2012
  17. By: Halkos, George
    Abstract: This paper examines the impact of government spending on the environment using a panel of 77 countries for the time period 1980-2000. We estimate both the direct effect of government spending on pollution and the indirect effect which operates through government spending impact on per capita income and the subsequent effect of income level on pollution. In order to take into account the dynamic nature of the relationships examined, appropriate econometric methods are used. For both sulfur dioxide and carbon dioxide, government spending is estimated to have a negative direct impact on per capita emissions. The indirect effect on sulfur dioxide is found to be negative for low levels of income and then becomes positive as income level increases, while it remains negative for carbon dioxide for the whole income range of the sample. The resultant total effects follow the patterns of the indirect effects, which dominate their respective direct ones for each pollutant. Policy implications, occurring from the paper’s results, range according to the level of income of the considered countries.
    Keywords: Government expenditure; environment; direct and indirect effects
    JEL: Q56 Q53 Q54 E60
    Date: 2012–07
  18. By: Kaszab, Lorant (Cardiff Business School)
    Abstract: This paper finds that labor tax cut can be an effective policy tool to mitigate the negative effects of a shock that made the zero lower bound on the nominal interest rate binding if the economy features rule-of-thumb households (besides Ricardian ones) and nominal rigidities in prices and wages. Our results are meant to contribute to the discussion initiated by Eggertsson (2010a) who found labor tax cut policy destabilising under zero nominal interest rate in a New Keynesian economy consisting only Ricardian consumers.
    Keywords: Fiscal policy; zero lower bound; labor tax cut; New Keynesian
    JEL: E52 E62
    Date: 2012–06
  19. By: Abdulfatah Sheikhbihi Adam (Institute of Food and Resource Economics, University of Copenhagen); Sinne Smed (Institute of Food and Resource Economics, University of Copenhagen)
    Abstract: Monthly data from GfK Consumerscan Scandinavia for the years 2006 – 2009 are used to estimate the effects of different tax scenarios on the consumption of sugar sweetened beverages (SSB’s). Most studies fail to consider demand interrelationships between different types of soft-drinks when the effects of taxation are evaluated. To add to the literature in this aspect we estimated a two-step censored dynamic almost ideal demand system where we include the possibilities that consumers have to substitute between diet and regular soft-drinks, between discount and non-discount (normal) brands as well as between different container sizes. Especially the large sizes and discount brands provide considerable value for money to the consumer. Three different type of taxes is considered; a tax based on the content of added sugar in various SSB’s, a flat tax on soft-drinks alone and a size differentiated tax on soft-drinks that remove the value for money obtained by purchasing large container sizes. The scenarios are scaled equally in terms of obtained public revenue. Largest effect in terms of reduced intake of calories and sugar are obtained by applying the tax on sugar in all beverages, even though detrimental health effects in terms of increased intake of diet soft-drinks has to be considered. A flat tax on soft-drinks decrease the intake of sugar, but leave total calorie intake unaltered due to substitution with other SSB’s. A tax aimed at removing the value added from purchasing large container sizes increase sugar and total calorie intake due to substitution towards discount brands. Hence the results show the importance of considering substitution between different sizes, brands and discount versus normal brands when simulating the effects of soft-drinks taxation and point toward a tax on the sugar content of SSB’s as the most effective in the regulation of obesity.
    Keywords: Soft-drinks consumption, taxation, consumer behaviour, two-step censoring
    Date: 2012–07
  20. By: Ngo, Thu Hien Laura; Santos, Paulo
    Abstract: Using panel data from Vietnam, this paper estimates the determinants of consumption growth for the period 2002-04, using a microgrowth model. While controlling for individual heterogeneity, particular attention is devoted to the question of whether geography, broadly defined to include natural and man-made characteristics at the level of the commune, can be responsible for lower growth rates and, consequently, poverty persistence. We find very limited support for this hypothesis. Neither public nor private investment at commune levels seem to have, per se, a significant effect on growth. However, local poverty rate does have an important, nonlinear, relation with growth rate of consumption at individual level, suggesting the importance of local externalities in this process. The policy implications of this finding are discussed.
    Keywords: International Development,
    Date: 2012
  21. By: Norma B. Coe; Zhenya Karamcheva; Richard Kopcke; Alicia H. Munnell
    Abstract: Policymakers have designed Social Security to be a progressive retirement program that replaces a larger share of monthly earnings for low- and middle-income workers than for high earners. However, previous research has found that, although the Disability Insurance (DI) component of Social Security is very progressive, the Old-Age and Survivors Insurance (OASI) component may be less progressive than intended. One reason is that high earners tend to live longer than low earners. Since Social Security pays an annuity that lasts throughout retirement, it benefits high earners with greater longevity. Social Security’s progressivity may also be affected by federal income taxes paid by workers and retirees, but research to date has largely ignored this effect. This brief uses data on households from the Health and Retirement Study to examine the interaction between income taxes and Social Security contributions and benefits. The discussion proceeds as follows. The first section describes factors that could affect the progressivity of the OASI component of Social Security. The second section introduces three ways in which the income tax system could impact progressivity: the treatment of employer contributions to Social Security; the Earned Income Tax Credit; and the taxation of Social Security benefits. The third section describes the data and methodology used to analyze households in three birth cohorts and presents the before- and after-tax re­sults for the oldest cohort. The fourth section extends the analysis to the two later cohorts to assess whether the role of taxes changes over time. The conclusion is that the net impact of taxes on progressivity is modest, as large effects from the separate tax provi­sions mainly offset one another. Over time, however, the net impact of taxes appears to be growing more progressive as an increasing number of retirees are required to pay income taxes on their benefits under current law.
    Date: 2012–01
  22. By: Hoa Thi Minh Nguyen; Tom Kompas; Trevor Breusch; Michael B. Ward
    Abstract: This paper re-examines the sources of inequality in Vietnam, a transitional economy with large reductions in poverty from recent and dramatic economic growth, but vastly unequal gains across ethnic groups. Using an instrumental variable approach to provide consistent estimators of explanatory variables at household and commune levels for ethnic differences in real household expenditure per person, we draw four key conclusions. First, removing language barriers would signifcantly reduce inequality among ethnic groups, narrowing the ethnic gap, and especially so through enhancing the gains earned by minorities from education. Second, variations in returns to education exist in favour of the majority in mixed communes, suggesting that either the special needs of minority children have not been adequately addressed in the classroom, or preferential treatment and the possibility of some form of discrimination exists in the labour market. Third, in contrast to recent literature, there is little dierence between ethnic groups in terms of the benefits drawn from enhanced infrastructure, such as power and clean water, at the commune level. An exception is the returns to roads, which differentially benefits the minority group. Finally, contrary to established views, we find that as much as 50 to 70 percent of the ethnic gap is attributed to differences in endowments, and not to differences in the returns to endowments.
    Keywords: ethnic inequality, poverty, language, instrumental variables, Vietnam, infrastructure, human capital
    JEL: O10 O12 P20
    Date: 2012–07
  23. By: Kazuyuki Sugimoto (Chairman of Mizuho Research Institute Ltd. Former Professor, Graduate School of Public Policy, University of Tokyo)
    Abstract: Public finance in Japan faces challenges more serious than ever before. One of the most compelling and urgent goals is to ensure public finance discipline. This paper focuses on a framework and measures to ensure public finance discipline.
    Date: 2012–06
  24. By: Karlsson, Charlie (Jönköping International Business School); Warda, Peter (Jönköping International Business School); Gråsjö, Urban (University West)
    Abstract: In this paper we quantitatively review the empirical literature on spatial knowl¬edge spillovers in Europe by means of meta-analysis to determine the extent to which such spillovers have been empirically documented as well as the spatial reach of these spillovers. In addition, we will apply meta-regression analysis to analyze the determinants of observed heterogeneity across and between publications. To our knowledge this is the first study of its kind. Our results show that if total local R&D expenditure in a European region increases by 1%, then the number of patents in that region, on average, increases by about 0.5%. Spatial knowledge spillovers induce a positive effect on local knowledge production, however, this effect proves to be small around 0.07%. Spatial weighting regime seems to matter. If R&D expenditures in other regions are weighted by distance in kilometers or minutes (instead of a binary contiguity matrix) then the spillover effect on average will be larger. Also, public R&D expenditure is found to have a lower impact on local patent production compared to the private R&D expenditure.
    Keywords: Knowledge spillovers; knowledge externalities; meta-analysis; Europe
    JEL: O32 O33 R19
    Date: 2012–07–09

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