nep-pbe New Economics Papers
on Public Economics
Issue of 2016‒03‒17
24 papers chosen by
Thomas Andrén

  1. International Tax Evasion, State Purchases of Confidential Bank Data and Voluntary Disclosures By Dirk Bethmann; Michael Kvasnicka
  2. Tackling Spillovers by Taxing Corporate Income in the European Union at Source By Sijbren Cnossen
  3. Social long-term care insurance with two-sided altruism By CREMER, B.; PESTIEAU, P.; ROEDER, K.
  4. Ukraine: Technical Assistance Report-Reducing Social Security Contributions and Improving the Corporate and Small Business Tax System By International Monetary Fund
  5. Accounting for business income in measuring top income shares. Integrated accrual approach using individual and firm data from Norway By Annette Alstadsæter; Martin Jacob; Wojciech Kopczuk; Kjetil Telle
  6. Yardstick Competition and Tax Competition -Intergovernmental Relations and Efficiency of Public Goods- By Yasuyuki Nishigaki; Hideya Kato
  7. Estimating participation responses using transfer program reform By Bastani, Spencer; Moberg, Ylva; Selin, Håkan
  8. Will a Universal Health Coverage Policy be fiscally sustainable for India? New evidence and implications By Muttur Ranganathan, Narayana
  9. Human Capital, Public Debt, and Economic Growth: A Political Economy Analysis By Tetsuo Ono; Yuki Uchida
  10. Fiscal Consolidation During Times of High Unemployment; The Role of Productivity Gains and Wage Restraint By Ruy Lama; Juan Pablo Medina Guzman
  11. The Fiscal Consequences of Shrinking Populations By Benedict J. Clements; Kamil Dybczak; Vitor Gaspar; Sanjeev Gupta; Mauricio Soto
  12. Efficient taxation with differential risks of dependence and mortality By Nishimura, Y.; Pestieau, P.
  13. A comparison of nominal and indexed debt under fiscal constraints By Beetsma, Roel; Westerhout, Ed
  14. Fiscal Policy, Sectoral Allocation, and the Skill Premium: Explaining the Decline in Latin America’s Income Inequality By Juan Guerra-Salas
  15. The Impact of Stagnating Casino Revenues on State and Local Tax Receipts By Srinivasan, Arun; Lambert, Thomas
  16. Measuring the benefit from reducing income inequality in terms of GDP By Simon Voigts; ; ;
  17. Size dependent tax incentives, threshold effects and horizontal subcontracting in Indian manufacturing: Evidence from factory and firm-level panel data sets By K.V. Ramaswamy
  18. Educational poverty as a welfare loss: Low performance in the OECD according to PISA 2012 By Antonio Villar
  19. Catalyst for Change; Empowering Women and Tackling Income Inequality By Christian Gonzales; Sonali Jain-Chandra; Kalpana Kochhar; Monique Newiak; Tlek Zeinullayev
  20. Optimal Income Taxation for the Alleviation of Working-Poverty When Domestic Work is Rewarded By Xi CHEN; Ioana SALAGEAN; Benteng ZOU
  21. Family, Community and Long-Term Earnings Inequality By Paul Bingley; Lorenzo Cappellari; Konstantinos Tatsiramos
  22. Is Taxing Waste a Waste of Time? Evidence From a Supreme Court Decision By Stefano Carattini; Andrea Baranzini; Rafael Lalive
  23. Seniority wages and the role of firms in retirement By Frimmel W.; Horvath T.; Schnalzenberger M.; Winter-Ebmer R.
  24. Does housing wealth contribute to wealth inequality? A tale of two New Yorks By Guillaume Allegre; Xavier Timbeau

  1. By: Dirk Bethmann (Department of Economics, Korea University, Seoul, Republic of Korea); Michael Kvasnicka (Otto von Guericke University Magdeburg, Universitatsplatz 2, 39016 Magdeburg, Germany)
    Abstract: International tax evasion is a major source of discontent for tax authorities. State purchases of bank data on suspected tax evaders from international tax havens constitute one tool to combat such tax evasion. Increasing the risks of detection, such purchases may spur voluntary disclosures for fear of facing charges for tax fraud. Tax authorities in Germany have made repeated use of this tool in recent years, above all in North-Rhine Westphalia, Germany's most populous federal state. Using self-compiled data for North-Rhine Westphalia on the timing and content of data acquisitions and on monthly voluntary disclosures of international tax evasion involving Swiss banks, we study the e ects that such acquisitions had on the evolution of voluntary disclosures over time. Our results show that purchases of data on potential tax evaders had a positive and sizeable e ect on voluntary disclosures. Various robustness checks and additional explorations corroborate this conclusion.
    Keywords: Tax Evasion, Tax Havens, Whistle-blowers, Tax Data, Voluntary Disclosures
    JEL: H2 H3 H26
    Date: 2016
  2. By: Sijbren Cnossen
    Abstract: This paper surveys and evaluates the corporation tax (CT) systems of the Member States of the European Union on the basis of a comprehensive taxonomy of actual and potential regimes, which have as their base either profits, profits and interest, or economic rents. The current regimes give rise to various instate and interstate spillovers, which violate the basic tenets – neutrality and subsidiarity – of the single market. The trade-offs between the implications of these tenets – harmonization and diversity, respectively – can be reconciled by a bottom-up, reversible strategy of strengthening source-based taxation and approximating tax rates. The strategy starts with dual income taxation, proceeds with final source withholding taxes and rate approximation, and is made complete by comprehensive business income taxation. Common base taxation, if desired, should probably be left to the Member States themselves.
    JEL: F23 H25 H26 H87
    Date: 2016–02
  3. By: CREMER, B. (Toulouse School of Ecoomics); PESTIEAU, P. (3CREPP, Université de Liège; CORE, Université catholique de Louvain, and Toulouse School of Ecoomics); ROEDER, K. (University of Augsburg)
    Abstract: This paper studies the design of a social long-term care (LTC) insurance when altruism is two-sided. The laissez-faire solution is not efficient, unless there is perfect altruism. Under full information, the first-best can be decentralized by a linear subsidy on informal aid, a linear tax on bequests when the parent is dependent and state specific lump-sum transfers which provide insurance. We also study a second-best scheme comprising a LTC benefit, a payroll tax on children’s earnings and an inheritance tax. This scheme redistributes resources across individuals and between the states of nature and the tax on children’s labor enhances informal care to compensate for the children’s possible less than full altruism.
    Keywords: long-term care, social insurance, two-sided altruism
    JEL: H2 H5
    Date: 2015–10–21
  4. By: International Monetary Fund
    Abstract: Social Security Contributions (SSC) in Ukraine need urgent attention. If nothing is done, the budget is poised to lose 4.5 percent of GDP in revenues in 2016 due to a legally mandated SSC rate reduction adopted in March 2015. The Ministry of Finance (MoF) is studying a number of options to find a responsible, revenue neutral, approach to lowering SSC rates, which at 40 percent of payroll are above all countries in the OECD. At the same time, Ukraine hosts a very large informal sector which stands as a difficult obstacle to developing its social and economic potential. However, there is no fiscal space to forgo tax revenues. The shift of the tax burden away from labor (as recommended by previous FAD missions) cannot jeopardize the integrity of public finances; it needs compensation from reliable sources of tax revenues. A closely connected issue is the Single Tax System (STS) originally designed for small entrepreneurs, but which has become very porous to others. The regime allows qualifying taxpayers to pay a very low tax on income and a symbolic SSC fee, and offers ample opportunities for avoidance by employers who contract their workers as independent entrepreneurs. To restore horizontal equity with regular employees, the STS requires fundamental reform, addressing: a (turnover) cap for the STS that is too high, a system that effectively overrides the VAT threshold, unnecessarily admits legal persons and offers important tax and SSC incentives for employees to reclassify as independent entrepreneurs – a practice that is currently very difficult to combat due to poor rules and enforcement practices. However, the revenue potential here should not be exaggerated given the difficulty in taxing this segment of the population.
    Keywords: Ukraine;Europe;tax, security, revenue, revenues, tax system
    Date: 2016–02–08
  5. By: Annette Alstadsæter; Martin Jacob; Wojciech Kopczuk; Kjetil Telle (Statistics Norway)
    Abstract: Business income is important in the upper tail of the personal income distribution, but the extent to which it is captured by measures of personal income varies substantially across tax regimes. Using linked individual and firm data from Norway, we are able to attribute business income to personal owners as it accrues rather than when it is realized. This adjustment leads to an increase in top income shares, and the size of this effect varies dramatically depending on the tax regime in place. After a tax reform in 2005 that created strong incentives to retain earnings in the business, the increase is massive: accounting for earnings retained in the corporate sector leads to more than doubling of the share of income of top 0.1% in some years. As the result, traditional measures of top income shares become misleadingly low (even when accounting for capital gains). We speculate on the implications of our findings for levels and trends in top income shares observed in other countries. In particular, we note that the major tax reforms of the 1980s in the United States correspond to a shift in the direction of business income being passed through to personal owners, and argue that top income shares constructed using income tax statistics before 1987 are likely to be significantly understated relative to those afterwards.
    Keywords: top income share; corporate income; business income; tax; inequality
    JEL: H3 H2 D22 G3 J3
    Date: 2016–02
  6. By: Yasuyuki Nishigaki (Ryukoku University); Hideya Kato (Ryukoku University)
    Abstract: Several branches of the literature focus on the advantages of the provision of public goods by a local government. Tiebout (1956) indicated that “voting with feet†leads to the optimal provision of local public goods if residents can emigrate from one municipality to another to maximize utility. Due to the free mobility of residents, local governments exhibit an inter-related performance in a competitive environment and are disciplined to achieve efficient provision of public goods, although rather unrealistic conditions, including perfect information and “free mobility†of residents, are pre-requested.The theory of local yardstick competition, in the principal–agent setting with asymmetric information, states that the comparison of the public service level and tax rates of a government with that of nearby localities can provide a useful instrument to assess a government’s performance. By comparing the performance of similar jurisdictions, voters can elect good politicians and send non-performers packing. Due to such a yardstick comparison of residents, local governors are disciplined to exert maximum efforts toward supplying public goods (Besley and Case 1996, Besley and Smart 2007), although they fail in the optimal provision of public goods (Nishigaki et al. 2015).Furthermore, a political inter-relation among neighboring jurisdictions causes interdependence in policy decisions and mimicking of policy variables or tax rates in the yardstick competition. This interdependence of policy or tax rates caused by informational externality is frequently used as evidence of yardstick competition in empirical studies (Besley and Case 1996, Revelli 2006, Nishigaki et al. 2014).Tax competition among local governments, on the other hand, addresses interaction due to inter-jurisdictional mobility of the tax base. By using a competitive two-region model, studies have indicated that an unfavorable externality of loss in the tax base causes strategic behavior in tax setting and an undersupply of public goods arises as a result of intergovernmental competition (Wildersin 1988, Brueckner and Saavedra 2001). These studies have also indicated that even competition among benevolent governments with full information leads to unfavorable results.By introducing the production of private and public goods using the inter-regionally mobile factor of capital stock, this paper investigates tax competition in a yardstick competition model. The harmful effects of under-provision of public goods caused by tax competition and political competition are synthesized in the yardstick equilibrium. Furthermore, it is indicated that the externality caused by the loss in capital stock is internalized through the informational externality of the yardstick comparison.
    Keywords: Local Public Goods; Asymmetric Information; Intergovernmental Externality; Yardstick Competition; Tax Competition
    JEL: D72 H41 H71
  7. By: Bastani, Spencer (Uppsala Center for Labor Studies); Moberg, Ylva (Uppsala Center for Labor Studies); Selin, Håkan (Uppsala Center for Labor Studies)
    Abstract: In this paper we estimate labor force participation responses for married women in Sweden using population-wide register data and detailed information about individuals’ budget sets. For identification we exploit a reform in the system for housing allowances in 1997 which affected participation tax rates for households with/without children differently. Using a simple theoretical framework we provide a structural interpretation of our estimates and highlight how the employment response depends on the employment level. Our central estimate of the participation elasticity is 0.13. When splitting the treated sample into four quartiles based on the wife’s skill level we find that the participation elasticity is more than twice as large for the lowest-skill sample than for the highest-skill sample.
    Keywords: labor supply; social assistance; housing allowance; in-work tax credits; take up of transfer programs
    JEL: H20 J22
    Date: 2016–02–17
  8. By: Muttur Ranganathan, Narayana
    Abstract: This paper analyses the fiscal sustainability of India’s recently proposed Universal Health Coverage Policy (UHCP) over the period 2005-2100. Public expenditure on UHCP is calculated by combining the age profiles of public and private health consumption expenditure in the framework of National Transfer Accounts. Fiscal sustainability of UHCP is determined by using the concept and measure of Generational Imbalance in Generational Accounting. In general, the results show that India’s current fiscal policies are not sustainable in both the Baseline and UHCP expenditure scenarios. However, other things being the same, fiscal sustainability of public expenditure on the UHCP is attainable in both the policy scenarios if the income elasticity of public expenditure on social welfare and health expenditure is less than unity. These new results offer evidence and strengthen the arguments for implementation of proposed UHCP by justifying its fiscal sustainability.
    Keywords: Universal Health Coverage, Public health expenditure, Fiscal sustainability, National Transfer Account, Generational imbalance, Generational Accounting, India
    JEL: H51 I18 J11
    Date: 2016–02–22
  9. By: Tetsuo Ono (Graduate School of Economics, Osaka University); Yuki Uchida (Graduate School of Economics, Osaka University)
    Abstract: This study considers public education policy and its impact on growth and wel- fare across generations. In particular, the study compares two fiscal perspectives| tax finance and debt finance|and shows that in a competitive equilibrium context, the growth and utility in the debt-finance case could be higher than those in the tax-finance case in the long run. However, the result is reversed when the policy is shaped by politics. Voters choose debt finance, despite its worse performance, in each period because a current generation can pass the cost of debt repayment to future generations.
    Keywords: Economic growth, Human capital, Public debt, Political equilib- rium
    JEL: D70 E24 H63
    Date: 2016–01
  10. By: Ruy Lama; Juan Pablo Medina Guzman
    Abstract: This paper studies the Swedish fiscal consolidation episode of the 1990s through the lens of a small open economy model with distortionary taxation and unemployment. We argue that the simultaneous reduction in the fiscal deficit and unemployment rate in this episode stems from two factors: (i) high growth rates of total factor productivity (TFP), experienced after the implementation of structural reforms; and (ii) a sustained wage restraint that occurred during the 1990s. The model simulations show that economic growth, accounted for mostly by TFP gains, improved the fiscal balance by 8 percentage points of GDP through an expansion of the tax base and fiscal revenues. Moreover, the combination of stable wages and higher TFP boosted net exports and led to a reduction in the unemployment rate. A counterfactual simulation assuming stagnant TFP shows that fiscal consolidation measures alone would have generated a double-digit unemployment rate without eliminating the fiscal deficit.
    Keywords: Sweden;Europe;Fiscal Consolidation, Search Models of Unemployment, Small Open Economy, productivity, economy, unemployment, competition, unemployment rate, Unemployment: Models, Duration, Incidence, and Job Search, Incidence,
    Date: 2015–12–10
  11. By: Benedict J. Clements; Kamil Dybczak; Vitor Gaspar; Sanjeev Gupta; Mauricio Soto
    Abstract: This Staff Discussion Note looks at the stark fiscal challenges posed by the decline and aging of populations between now and 2100. It finds that without reforms, pensions and health spending would rise to 25 percent of GDP by end-century in more developed countries (and 16 percent of GDP in less developed countries), with potentially dire fiscal consequences. Given the uncertainty underlying the population projections and associated large fiscal risks, a multi-pronged approach will be required. This could include entitlement reform—starting now but at a gradual pace; policies that affect demographics and labor markets; and better tax systems and more efficient public expenditure.
    Keywords: Demographic transition;Population growth;Aging;Human fertility;Mortality;Migrations;Labor markets;Health care spending;Public debt;Fiscal sustainability;Demographics, Pension Spending, population, fertility, health care, International Migration, Demographic Trends and Forecasts, General, Forecasts of Budgets, Deficits, and Debt,
    Date: 2015–10–26
  12. By: Nishimura, Y. (Osaka University); Pestieau, P. (Université catholique de Louvain, CORE, Belgium)
    Abstract: The purpose of this note is to analyze the optimal tax and transfer policies that should be conducted in a society where individuals differ according to their productivity and their risk of mortality and dependency. We show that according to the most reasonable estimates of correlation among these three characteristics, an optimal policy should consist of a tax on earning and second period consumption and of a subsidy on long term care spending. The sign of the tax on saving is ambiguous but we can expect a positive tax on saving in reasonable cases.
    Keywords: long term care, mortality risk, efficient taxation
    JEL: H2 H5
    Date: 2015–04–04
  13. By: Beetsma, Roel; Westerhout, Ed
    Abstract: This paper makes a welfare comparison between the issuance of price-indexed and nominal public debt in the presence of fiscal constraints, viz. a debt constraint, a deficit constraint and a combination of both. Distortionary taxes or public consumption are regulated to avoid the violation of the relevant fiscal constraint(s). Under a debt constraint indexed debt is generally preferred, while under a deficit constraint the results are more mixed. Introducing inflation persistence and raising the maturity of the debt tends to increase the magnitude of the welfare differences between the two types of debt. Welfare differences are further affected by the degree to which public consumption and tax revenues are indexed to actual versus structural nominal GDP.
    Keywords: debt maturity.; deficit; fiscal constraints; indexed debt; inflation (persistence); nominal debt; public consumption; tax revenues; wage growth; welfare
    JEL: E62 H62 H63
    Date: 2016–02
  14. By: Juan Guerra-Salas
    Abstract: This paper offers an explanation for the substantial decline in income inequality in Latin America during the 2000s, which is known to have been mainly driven by a decline in the skill premium. The 2000s were characterized by an economic expansion concentrated on low-skill-intensive service sectors. The expansion induced an increase in the demand for low-skilled labor relative to highskilled labor, which compressed the skill premium. Procyclical fiscal policy exacerbated the distributional effects of the boom by contributing to the growth of the service sector. I first document the expansion was concentrated on services while manufacturing lagged behind, and show declining inequality is associated with procyclical fiscal policy. I then rationalize the evidence using a small open economy DSGE model that features a low-skill-intensive nontradable sector relative to the tradable sector, and procyclical government purchases. This framework implies that at least part of the decline in inequality is transitory, a prediction supported by recent data
    Date: 2016–02
  15. By: Srinivasan, Arun; Lambert, Thomas
    Abstract: In the aftermath of the Great Recession of 2007-2009, the popular press has noted a rebound in casino revenues in some states, and some expect casino revenues to grow and increase again along with any economic recovery. However, before the recent recession, there were trends indicating stagnation or a peak of casino revenues in most states, and as the last recession has indicated, casino revenues were not “recession-proof” as most had thought previously. In fact, casino revenues in most states saw big declines. In this paper, we show that the casino revenues have stagnated or declined partially due to a saturation point being reached with regard to casino gaming in many areas of the United States. The growth rate of casino revenues as well as the tax receipts for the state governments from casinos follows an ‘S’ curve which is similar to a product life cycle curve. The introduction of more gambling venues as well as putting in slot machines at race tracks may give a temporary boost to state gambling tax receipts, but longer run trends indicate that the years of casinos showing large gains in revenues may be over unless casino operations continue to re-invent themselves.
    Keywords: Casinos, Tax revenue, Life Cycle Theory, Regional Development
    JEL: H2 H27 R1 R11
    Date: 2015
  16. By: Simon Voigts; ; ;
    Abstract: Given that well-being is a concave function of income, inequality is inecient from a utilitarian perspective. This paper proposes a way to express the utilitarian benet from redistributive reforms in terms of out- put, i.e. as a share of GDP. Three applications are presented: First, in nine European countries under study, a mild increase in government redis- tribution allows for gains in well-being equivalent to 8.9%-20.2% of higher GDP, and 55.8% for the US. Second, in the US, redistributing income in excess of the level at the 99th percentile is as benecial as a 39.5% GDP-increment. Third, revoking government redistribution in Germany reduces welfare by the same amount as a 25.4% decline in output.
    Keywords: Income Distribution, Inequality.
    JEL: D31 D63
    Date: 2016–02
  17. By: K.V. Ramaswamy (Indira Gandhi Institute of Development Research; Institute of Economic Growth)
    Abstract: India's industrial protection and promotion policies for small-scale enterprises have figured prominently in the literature on industrialization policies in developing countries. These size dependent tax incentives could encourage fragmentation of production and prevent natural up-scaling of firm sizes. The author presents a new empirical application of the idea of threshold burden of tax incentives in India. The study is based on a large unbalanced panel of manufacturing factories in the formal sector spanning the period 1999-2008 and a panel of manufacturing companies covering the period 1990-2010. Average subcontracting intensity was found to be significantly higher in manufacturing factories and firms with sales turnover below the ceiling level set by the tax rules. Econometric tests based on Fixed Effect models supported the hypothesis that firms take advantage of tax incentives by staying below the threshold sales turnover. This is consistent with the idea of threshold effects of size dependent tax incentives.
    Keywords: Firm Size, Threshold Effects, Regulations, manufacturing and small-scale enterprises
    JEL: O14 O17 L60 H32 H25
    Date: 2016–02
  18. By: Antonio Villar (OECD (Thomas J. Alexander Fellow) and Universidad Pablo de Olavide, Department of Economics.)
    Abstract: This paper analyses the incidence and intensity of low performance between 15- year old students in the OECD countries, according to the last wave of PISA. Taking level 2 of proficiency as the baseline competence, we approach the measurement of low performance by applying a multidimensional poverty measure that permits interpreting educational poverty as a welfare loss. We use a conventional welfare evaluation function to derive an index that combines the incidence, intensity and inequality of educational poverty. The results show that OECD countries differ in educational poverty much more than in PISA average scores and also that they present different mixes of incidence and intensity.
    Keywords: educational poverty, welfare loss, low performance, PISA, OECD.
    JEL: I24 I32
    Date: 2016–03
  19. By: Christian Gonzales; Sonali Jain-Chandra; Kalpana Kochhar; Monique Newiak; Tlek Zeinullayev
    Abstract: This study shows empirically that gender inequality and income inequality are strongly interlinked, even after controlling for standard drivers of income inequality. The study analyzes gender inequality by using and extending the United Nation’s Gender Inequality Index (GII) to cover two decades for almost 140 countries,. The main finding is that an increase in the GII from perfect gender equality to perfect inequality is associated with an almost 10 points higher net Gini coefficient. For advanced countries, with higher gender equity in opportunities, income inequality arises mainly through gender gaps in economic participation. For emerging market and developing countries, inequality of opportunity, in particular in education and health, appear to pose larger obstacles to income equality.
    Keywords: Income inequality;Women;Income distribution;Gender;Labor force participation;female labor force participation, gender equity, inequality, gender inequality, labor force, Economics of Gender, Equity, Justice, and Other Normative Criteria and Measurement, Personal Income and Wealth Distribution,
    Date: 2015–10–22
  20. By: Xi CHEN (STATEC); Ioana SALAGEAN (STATEC); Benteng ZOU (CREA, Université de Luxembourg)
    Abstract: The increase in income needed for working households to escape relative poverty may be achieved either by households supplying more hours of paid work on the labor market, or by policy makers adjusting income taxation, minimum wages and social transfers targeted at working households. While past work has given consid- erable attention to the latter policy instruments, theoretical work on how income taxation could minimize working-poverty is scarce. Our study aims to fill this gap. Unlike the traditional optimal income taxation literature, which considers that households allocate time only between consumption and leisure, we explicitly model households’ decisions as including domestic work, which is a social contri- bution and should be rewarded. This new framework highlights (i) the importance of emphasizing the difference between domestic work and real leisure and, (ii) the policy implications of non-market time allocation.
    Keywords: Working-poverty, time allocation, optimal income taxation, household-public goods.
    JEL: H21 I32 H24
    Date: 2016
  21. By: Paul Bingley; Lorenzo Cappellari; Konstantinos Tatsiramos
    Abstract: Correlations between the earnings of siblings reflect shared family and community background, but evidence is mixed on the relative magnitudes of these influences. Using administrative data on the Danish population we link brothers, schoolmates and teenage neighbors and estimate a model of multiple group earnings dynamics to measure jointly the relative importance of family, neighborhoods and schools for long-term earnings. We find that: (1) family is by far the most relevant factor; (2) the influence of neighborhoods and schools falls rapidly, becoming insignificant by age 30; and (3) community effects are persistent and upward biased by a factor of five if family effects are ignored.
    Keywords: Sibling correlations; Neighbourhoods; Schools; Life-cycle earnings; Inequality
    Date: 2016
  22. By: Stefano Carattini; Andrea Baranzini; Rafael Lalive
    Abstract: Many people are against a garbage tax even though it often works. We study how a Supreme Court decision, mandating Vaud, a region of Switzerland, to implement a tax on garbage, affects garbage production and beliefs about the tax. Our empirical approach exploits that parts of Vaud already implemented a garbage tax before the mandate, allowing us to adopt a difference-in-differences approach. Pricing garbage by the bag (PGB) is highly effective, reducing unsorted garbage by 40% (arc-elasticity of -0.3), increasing recycling of aluminum and organic waste, without negative spill-overs on adjacent regions. We also find that people are very concerned with PGB ex ante, but implementing PGB reduces concerns with effectiveness and fairness substantially. After implementing PGB, people intend to vote for an up to 70% higher garbage tax compared to before PGB. Taxing garbage generates benefits worth 36 % of garbage management costs.
    Date: 2016–02
  23. By: Frimmel W.; Horvath T.; Schnalzenberger M.; Winter-Ebmer R. (GSBE)
    Abstract: In general, retirement is seen as a pure labor supply phenomenon, but firms can have strong incentives to send expensive older workers into retirement. Based on the seniority wage model developed by Lazear 1979, we discuss steep seniority wage proles as incentives for firms to dismiss older workers before retirement. Conditional on individual retirement incentives, e.g., social security wealth or health status, the steepness of the wage profile will have different incentives for workers as compared to firms when it comes to the retirement date. Using an instrumentalvariable approach to account for selection of workers in our firms and for reverse causality, we find that firms with higher labor costs for older workers are associated with lower job exit age.
    Keywords: Social Security and Public Pensions; Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination; Retirement; Retirement Policies; Wage Level and Structure; Wage Differentials;
    JEL: J14 J26 J31 H55
    Date: 2015
  24. By: Guillaume Allegre (OFCE); Xavier Timbeau (OFCE)
    Abstract: In Capital in the 21st century (hereafter Capital), Thomas Piketty points outthe risk of a concentration of wealth in the twenty-first century that would threaten the social justice and meritocratic values of our democratic societies.The main force of divergence is due to the fact that net returns on capital (r) are expected to be greater than the growth of the economy (g), or: “r>g”.According to Piketty, this will lead to two undesirable consequences: firstly,wealth will have a tendency to concentrate in the hands of a few; secondly,constituted wealth will tend to dominate accumulated wealth from labour:“the past devours the future”.
    Keywords: Inequality of income; Housing wealth; Wealth inequality
    Date: 2015–01

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