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on Public Economics |
| By: | Du Rietz, Gunnar (Research Institute of Industrial Economics (IFN)); Johansson, Dan (Örebro University School of Business); Stenkula, Mikael (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This paper presents annual Swedish time series data on the top marginal tax wedge and marginal tax wedges on labor for a low, average and high income earner for the period 1862 to 2010. We identify four distinct periods separated by major tax reforms. The tax system can be depicted as proportional, with low tax wedges until World War II. Next follows a period featuring increasing tax wedges beginning in connection with World War II. During the third period, starting with the 1971 tax reform and continuing throughout the 1980s, the efforts to redistribute income culminated and tax wedges peaked. The high income earner started to pay the top marginal tax wedge which could be 90 percent. The main explanations for this development are temporary crises leading to permanent tax increases, expansion of the public sector and distributional ambitions, bracket-creep and the introduction of social security contributions paid by the employers. The 1990–1991 tax reform represents the beginning of a new and still continuing period with decreasing marginal tax wedges. |
| Keywords: | Labor taxation; Marginal tax rate; Marginal tax wedge; Tax reforms |
| JEL: | H21 H31 N44 |
| Date: | 2013–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0977&r=pbe |
| By: | Lindhe, Tobias (Uppsala center for fiscal studies); Södersten, Jan (Department of Economics) |
| Abstract: | This paper examines how the distortions caused by dividend taxation depend on whether or not shareholders can recover their original equity injections without being subject to the dividend tax. We point out the alternative assumptions in the literature on this, and we compare two different tax regimes, one where it is impossible for the firm to pay cash to its shareholders that is not taxed as dividends, the other where the shareholders are allowed a tax-free return of the original capital contributed through new issues. Our analysis shows that the regimes imply a substantial difference to our perceptions of the distortive effects of dividend taxation. |
| Keywords: | dividend taxation; share repurchases; equity trap; cost of capital; nucleus theory; growth path |
| JEL: | H24 H25 H32 |
| Date: | 2013–09–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2013_016&r=pbe |
| By: | Rodrigo Martins (GEMF/ Faculty of Economics University of Coimbra, Portugal); Francisco José Veiga (NIPE/ University of Minho, Portugal) |
| Abstract: | This paper analyzes the effects of voter turnout on the vote shares received by the incumbent government. A system of simultaneous equations is estimated using a panel dataset of 278 Portuguese municipalities, for the period 1979-2005, covering 10 legislative elections. The results indicate that right-wing governments have lower vote shares when turnout is higher, while left-wing ones seem to be unaffected. There is also evidence of the responsibility hypothesis, that turnout is higher in closer elections, and that regional/local economic variables have non-linear effects on turnout. |
| Keywords: | Vote Shares, Turnout, Legislative Elections, Portugal. |
| JEL: | D72 H7 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:wpaper:2013-20.&r=pbe |
| By: | Yarmukhamedov, Sherzod (VTI) |
| Abstract: | This paper uses discrete choice and count data models to analyze the effects of a tax on vehicle insurance levied in Sweden in 2007. The analysis is based on a large set of micro-level panel data on individual insurance holders at the largest insurance company in Sweden for the period 2006-2010. Two questions are addressed: How did the tax reform influence the choice of insurance coverage, and how did changes in coverage affect the incidence of claims? The results show that, on average, the tax reform increased the odds of choosing lower insurance coverage by 47 percent, and that the tax reform had more impact on older drivers. However, switching to lower coverage due to the tax reform has not resulted in significant changes in claim distributions, though the incidence of claims decreased by 20 percent for switchers aged 35-44 in the pre-reform period, indicating a mitigation of ex ante moral hazard in vehicle insurance. |
| Keywords: | Vehicle insurance; Moral hazard; Traffic safety; Tax reform |
| JEL: | C33 C54 D82 H20 L51 |
| Date: | 2013–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ctswps:2013_014&r=pbe |
| By: | Stuart Adam (Institute for Fiscal Studies); James Browne (Institute for Fiscal Studies) |
| Abstract: | The UK government is in the process of introducing a radical package of welfare reforms that it hopes will encourage more people to work as well as reducing government expenditure. The largest structural change planned is the introduction of universal credit to combine six existing means-tested benefits for those of working age into a single payment, which is intended to reduce administration costs and errors, simplify claims, encourage take-up, and increase the incentive to work for those currently facing the weakest incentives. But the deficit reduction package has also involved tax changes and large benefit cuts that have an impact on financial work incentives. At the same time as these reforms have been introduced, weakness in the economy has meant that earnings have increased less quickly than benefit rates, which tends to make working less attractive. In this paper, we use micro-simulation techniques to investigate whether financial work incentives will indeed be stronger in 2015-16 than they were in 2010-11 and to separate out the impact of changes to taxes, benefit cuts and the introduction of universal credit from the impact of wider economic changes. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:13/26&r=pbe |
| By: | Castellani, Davide (Department of Economics, Finance and Statistics, University of Perugia, Centro Studi Luca d'Agliano, Milan, Italy Halle Institute for Economic Research (IWH), Halle, Germany CIRCLE, Lund University, Sweden); Pieri, Fabio (Depto. de Economia Aplicada II (Estructura Economica), Universitat de Valencia, Spain) |
| Abstract: | The recent increase in R&D offshoring have raised fears that knowledge and competitiveness in advanced countries may be at risk of `hollowing out'. At the same time, economic research has stressed that this process is also likely to allow some reverse technology transfer and foster growth at home. This paper addresses this issue by investigating the extent to which R&D offshoring is associated with productivity dynamics of European regions. We find that offshoring regions have higher productivity growth, but this positive effect fades down with the number of investment projects carried out abroad. A large and positive correlation emerge between the extent of R&D offshoring and the home region productivity growth, supporting the idea that carrying out R&D abroad strengthen European competitiveness. |
| Keywords: | R&D Offshoring; Regional Productivity; Foreign Investments; Europe |
| JEL: | C23 F23 O47 O52 R11 |
| Date: | 2013–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2013_020&r=pbe |
| By: | Manuel Gonzalez-Astudillo |
| Abstract: | In this paper, we formulate and solve a New Keynesian model with monetary and fiscal policy rules whose coefficients are time-varying and interdependent. We implement time variation in the policy rules by specifying coefficients that are logistic functions of correlated latent factors and propose a solution method that allows for these characteristics. The paper uses Bayesian methods to estimate the policy rules with time-varying coefficients, endogeneity, and stochastic volatility in a limited-information framework. Results show that monetary policy switches regime more frequently than fiscal policy, and that there is a non-negligible degree of interdependence between policies. Policy experiments reveal that contractionary monetary policy lowers inflation in the short run and increases it in the long run. Also, lump-sum taxes affect output and inflation, as the literature on the fiscal theory of the price level suggests, but the effects are attenuated with respect to a pure fiscal regime. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-58&r=pbe |
| By: | Oliver de Groot; Fédéric Holm-Hadulla; Nadine Leiner-Killinger |
| Abstract: | Do capital markets impose fiscal discipline on governments? We investigate the responses of fiscal variables to a change in the interest rate paid by governments on their debt in a panel of 14 European countries over four decades. To this end, we estimate a panel vector autoregressive (PVAR) model, using sign restrictions via the penalty function method of Mountford and Uhlig (2009) to identify structural cost of borrowing shocks. Our baseline estimation shows that a 1 percentage point rise in the cost of borrowing leads to a cumulative improvement of the primary balance-to-GDP ratio of approximately 2 percentage points over 10 years, with the fiscal response becoming significantly evident only two years after the shock. We also find that the bulk of fiscal adjustment takes place via a rise in government revenue rather than a cut in primary expenditure. The size of the total fiscal adjustment, however, is insufficient to avoid the gross government debt-to-GDP ratio from rising as a consequence of the shock. Sub-dividing our sample, we also find that for countries participating in Economic and Monetary Union (EMU) the primary balance response to a cost of borrowing shock was stronger in the period after 1992 (the year in which the Maastricht Treaty was signed) than prior to 1992. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-59&r=pbe |
| By: | Nielsen, Ulrik H. (Department of Economics, University of Copenhagen); Tyran, Jean-Robert (Department of Economics, University of Vienna); Wengström, Erik (Department of Economics, Lund University) |
| Abstract: | We use the strategy method to classify subjects into cooperator types in a large-scale online Public Goods Game and find that free riders spend more time on making their decisions than conditional cooperators and other cooperator types. This result is robust to reversing the framing of the game and is not driven by free riders lacking cognitive ability, confusion, or natural swiftness in responding. Our results suggest that conditional cooperation serves as a norm and that free riders need time to resolve a moral dilemma. |
| Keywords: | Response Time; Free Riding; Public Goods; Experiment |
| JEL: | C70 C90 D03 |
| Date: | 2013–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2013_029&r=pbe |
| By: | Vatthanamixay Chansomphou (Graduate School for International Development and Cooperation); Masaru Ichihashi (Graduate School for International Development and Cooperation) |
| Abstract: | In this study, we seek to understand the patterns of structural change, labor productivity growth and convergence in BRIC countries. In the first part, we employ the dataset of labor productivity from de Vries et al. (2012) and the Groningen Growth and Development Center (2013) and utilize the shift and share analysis to investigate the contribution of within shift, static shift and dynamic shift effects on growth of labor productivity. In the second part, we use the convergence tests to check for the cross-country convergence in each economic sector. Our aggregate shift-share decomposition results report that labor productivity growth within sector itself is the main source of aggregate growth, while an effect of labor movement exists (shift effect) but not substantial. Among BRIC, we found that, during 1980-2008, China had the highest rate of labor productivity growth, following by India, Russia, and Brazil, respectively. The results of the convergence analysis show that service sectors in BRICs have faster catching-up rates than industrial sectors, and there is no convergence in agriculture. Among service sectors, financial, insurance, and real estate sector has highest speed of convergence. The BRICs results are then used to compare with the four OECD countriesf results. It is found that in OECD countries, the sectors that converge fastest are mining and finance, insurance, and real estate. Nevertheless, the magnitudes of speed of convergence in OECDs are not comparable to BRICs. This confirms the growth theory in that less developed countries converge faster than developed nations. In sum, our findings imply that service sectors are the driving force of economic growth and economic convergence in BRICs. |
| Keywords: | Structural change, shift-share analysis, sectoral convergence, BRICs |
| JEL: | C80 N10 O10 O11 O41 O47 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:hir:idecdp:3-5&r=pbe |