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on Public Economics |
| By: | Marina Agranov; Thomas R. Palfrey |
| Abstract: | We explore the effect of income mobility and the persistence of redistributive tax policy on the level of redistribution in democratic societies. An infinite-horizon theoretical model is developed, and the properties of the equilibrium tax rate and the degree of after-tax inequality are characterized. Mobility and stickiness of tax policy are both negatively related to the equilibrium tax rate. However, neither is sufficient by itself. Social mobility has no effect on equilibrium taxes if tax policy is voted on in every period, and tax persistence has no effect in the absence of social mobility. The two forces are complementary. Tax persistence leads to higher levels of post-tax inequality, for any amount of mobility. The effect of mobility on inequality is less clear-cut and depends on the degree of tax persistence. A laboratory experiment is conducted to test the main comparative static predictions of the theory, and the results are generally supportive. |
| JEL: | C92 D3 H2 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22759&r=pbe |
| By: | Kaushal Kishore (Department of Economics, University of Pretoria, Pretoria) |
| Abstract: | In a dynamic two-period model of tax competition, where an investor has home bias for the country where he/she invests in the initial period, we show that tax revenue under a non-preferential taxation scheme is strictly higher compared to a preferential taxation scheme. A non-preferential taxation scheme not only increases tax revenue in the later period, it also reduces competition in the initial period. The gain from having a non-preferential regime is strictly increasing in home bias as long as home bias is not large enough. When home bias is above a critical level, the gain from having a non-preferential agreement is independent of home bias. While the literature on tax competition has identified that ``home bias" can make non-preferential taxation preferable to a preferential regime when investors are small with heterogeneous home bias, we show that even when investors are large with a discrete home bias, a non-preferential regime generates higher tax revenue compared to a preferential regime. We show that even when only one of the capital bases has home bias, a non-preferential regime generates higher tax revenue compared to a preferential regime. This paper also quantify the gain from a non-preferential regime with a parameter which captures home bias and provide clear comparative statics. Moreover, we also show that a country has an incentive to unilaterally commit to a non-preferential agreement. |
| Keywords: | Dynamic Tax Competition; Non-preferential regime; Preferential regime; Home Bias |
| JEL: | F21 H21 H25 H87 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201676&r=pbe |
| By: | Ali Enami (Department of Economics, Tulane University.; Department of Economics, Tulane University and Commitment to Equity Institute; University of Akron, OH, USA) |
| Abstract: | Using the Iranian Household Expenditure and Income Survey (HEIS) for 2011/12, we apply the marginal contribution approach to determine the impact and effectiveness of each fiscal intervention, and the fiscal system as a whole, on inequality and poverty. Net direct and indirect taxes combined reduce the Gini coefficient by 0.0644 points and the headcount ratio by 61 percent. When the monetized value of in-kind benefits in education and health are included, the reduction in inequality is 0.0919 Gini points. Based on the magnitudes of the marginal contributions, we find that the main driver of these reductions is the Targeted Subsidy Program, a universal cash transfer program implemented in 2010 to compensate individuals for the elimination of energy subsidies. The main reduction in poverty occurs in rural areas, where the headcount ratio declines from 44 to 23 percent. In urban areas, fiscally-induced poverty reduction is more modest: the headcount ratio declines from 13 to 5 percent. Taxes and transfers are similar in their effectiveness in achieving their inequality-reducing potential. By achieving 40 percent of its inequality-reducing potential, the income tax is the most effective intervention on the revenue side. On the spending side, Social Assistance transfers are the most effective and they achieve 45 percent of their potential. Taxes are especially effective in raising revenue without causing poverty to rise, indicating that the poor are largely spared from being taxed. In contrast, since the bulk of transfers are not targeted to the poor, they are not very effective: the most effective ones achieve 20 percent of their poverty reduction potential. The effectiveness of the Targeted Subsidy Program could be improved by eliminating the transfer to top deciles and re-allocating the freed funds to the poor. |
| Keywords: | Inequality, poverty, marginal contribution, CEQ framework, policy simulation |
| JEL: | D31 H22 I38 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:tul:ceqwps:1348&r=pbe |
| By: | Jon Jellema (Commitment to Equity Institute); Nora Lustig (Department of Economics, Tulane University and Commitment to Equity Institute.); Astrid Haas (International Global Centre); Sebastian Wolf (International Global Centre) |
| Abstract: | This paper uses the 2012/13 Uganda National Household Survey to analyze the redistributive effectiveness and impact on poverty and inequality of Uganda’s revenue collection instruments and social spending programs. Fiscal policy – including many of its constituent tax and spending elements – is inequality-reducing in Uganda, but the reduction of inequality due to fiscal policy in Uganda is lower than other countries with similar levels of initial inequality, a result tied to low levels of spending in Uganda generally. The impact of fiscal policy on poverty is negligible, while the combination of very sparse coverage of direct transfer programs and nearly complete coverage of indirect tax instruments means that many poor households are net payers into, rather than net recipients from, the fiscal system. As Uganda looks ahead to increased revenues from taxation and concurrent investments in productive infrastructure, it should take care to protect the poorest households from further impoverishment from the fiscal system. |
| Keywords: | fiscal incidence, poverty, inequality, fiscal policy, Uganda |
| JEL: | D31 D63 H22 H23 I38 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:tul:ceqwps:1353&r=pbe |
| By: | Katherine Cuff (McMaster University); Steeve Mongrain (Simon Fraser University); Joanne Roberts (University of Calgary) |
| Abstract: | Firms are subject to many forms of government regulation and laws. Two major sources of these regulations are corporate tax laws and labour or employment laws. For example, labour codes stipulate that firms must ensure their workplaces meet certain safety and health standards, and pay payroll taxes to cover the provision of government provided benefits to their workers, whereas corporate tax laws require firms to collect sales taxes on goods sold and pay taxes on their income or profits. There are many ways for firms to evade these legal requirements. Much of the literature examining the evasion behaviour of firms assumes that the decision to evade one form of regulation (such as labour regulation) is perfectly linked to the decision to evade another (such as paying business corporate taxes). In this paper, we separate these two evasion decisions and allow firms to decide whether to evade labour market regulations (including the payment of payroll taxes) independently from their decisions to evade corporate taxes. We characterize the firms’ optimal entry and evasion behaviour and derive the government's optimal tax policies. |
| Keywords: | Informal Labour Market; Labour Regulation; Tax Evasion; Payroll taxes; Corporate Income Taxes |
| JEL: | H32 H26 K42 |
| Date: | 2016–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:sfu:sfudps:dp16-12&r=pbe |
| By: | Vasilev, Aleksandar |
| Abstract: | This paper shows a standard RBC model, when augmented with a VAT evasion channel, where evasion depends on the consumption tax rate, can produce a hump-shaped consumption Laffer curve. Furthermore, when the evasion channel is turned off, the hump in the Laffer curve disappears, resulting in a monotone relationship between the VAT rate and both the consumption and total tax revenue. This result comes in stark contrast to Hiragara and Nituhara (2015), who generate a peaking curve for consumption tax revenue in a model with a separable utility in consumption and leisure and no evasion. Their results are contingent on implausible values for elasticity parameters, and in addition predict a revenue-maximizing consumption tax rate which is implausibly high. The paper contributes to the public finance literature by providing evidence for the importance of the evasion mechanism, while at the same time adding to the debate about the existence of a peak tax rate for consumption tax revenue. |
| Keywords: | consumption Laffer curve,VAT evasion,general equilibrium,fiscal policy |
| JEL: | D58 E26 H26 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:147001&r=pbe |
| By: | NAKATA Kazuko |
| Abstract: | In 2004, the Japanese government introduced the dual corporate tax system, which allows prefectural governments to set their own corporate income tax rates. The purpose of this paper is to examine the effects of this tax reform on firms' location decision based on a discrete choice model, which investigates what types of firms relocate their headquarters across prefectures and whether their relocation decision was affected by the tax reform. The analysis indicates that the decision to relocate is negatively associated with firms' age and positively associated with their amount of assets, number of employees, debt-to-assets ratio, real estate rent, and payroll. Moreover, firms with a parent company, a foreign subsidiary, fewer business establishments, less capital stock, and fewer employees at the headquarters are more likely to relocate. After the tax reform, firms tend to avoid relocating to prefectures with a high corporate tax rate. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:16055&r=pbe |
| By: | Nora Lustig (Department of Economics, Tulane University) |
| Abstract: | Using comparable fiscal incidence analysis, this paper examines the impact of fiscal policy on inequality and poverty in twenty-five countries for around 2010. Success in fiscal redistribution is driven primarily by redistributive effort (share of social spending to GDP in each country) and the extent to which transfers/subsidies are targeted to the poor and direct taxes targeted to the rich. While fiscal policy always reduces inequality, this is not the case with poverty. Fiscal policy increases poverty in four countries using US$1.25/day PPP poverty line, in 8 countries using US$2.50/day line, and 15 countries using the US$4/day line (over and above market income poverty). While spending on pre-school and primary school is pro-poor (i.e., the per capita transfer declines with income) in almost all countries, pro-poor secondary school spending is less prevalent, and tertiary education spending tends to be progressive only in relative terms (i.e., equalizing but not pro-poor). Health spending is always equalizing except for Jordan. |
| Keywords: | fiscal incidence, social spending, inequality, poverty, Developing Countries. |
| JEL: | H22 H5 D31 I3 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:tul:ceqwps:1323&r=pbe |
| By: | MORITA Tadashi; SATO Yasuhiro; YAMAMOTO Kazuhiro |
| Abstract: | We examine the possible impacts of demographics on the outcomes of capital tax competition in political economy. For this purpose, we develop an overlapping generations model wherein public good provision financed by capital tax is determined by majority voting. When a population is growing, younger people represent the majority, whereas when a population is decreasing, older people represent the majority. We show that the race to the bottom is likely to emerge in the economy with growing population whereas the race to the top might emerge in the economy with decreasing population. |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:16091&r=pbe |
| By: | Gabrielle Fack; Camille Landais |
| Abstract: | In the “sufficient statistics” approach, the optimal tax rate is usually expressed as a function of tax elasticities that are often endogenous to other policy instruments available to the tax authority, such as the level of information, enforcement, etc. In this paper we provide evidence that both the magnitude and the anatomy of tax elasticities are extremely sensitive to a particular policy instrument: the level of tax enforcement. We exploit a natural experiment that took place in France in 1983, when the tax administration tightened the requirements to claim charitable deductions. The reform led to a substantial drop in the amount of contributions reported to the administration, which can be credibly attributed to overreporting of charitable contributions before the reform, rather than to a real change in giving behaviors. We show that the reform was also associated with a substantial decline in the absolute value of the elasticity of reported contributions. This finding allows us to partially identify the elasticity of overreporting contributions, which is shown to be large and inferior to − 2 in the lax enforcement regime. We further show using bunching of taxpayers at kink-points of the tax schedule that the elasticity of taxable income also experienced a significant decline after the reform. Our results suggest that failure to account for the effect of tax enforcement on both the magnitude and the anatomy of the elasticity of the tax base with respect to the net of tax rate can lead to misleading policy conclusions, both for the global optimal tax rate (when all policy instruments are optimized) and the local optimal tax rate (conditional on all other |
| Keywords: | tax evasion; tax enforcement; charitable giving; taxable income; elasticity |
| JEL: | E6 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:64578&r=pbe |
| By: | Bo Hyun Chang (University of Rochester); Yongsung Chang (University of Rochester, Yonsei University); Sun-Bin Kim (Yonsei University) |
| Abstract: | We develop a quantitative heterogeneous-agents general equilibrium model that reproduces the income inequalities of 32 countries in the Organization for Economic Co-operation and Development. Using this model, we compute the optimal income tax progressivity and redistribution for each country under the equal-weight utili- tarian social welfare function. We simulate the voting outcome for the utilitarian optimal tax reform for each country. Finally, we uncover the Pareto weights in the social welfare functions of each country that justify the current redistribution policy. |
| Keywords: | Income Inequality, Optimal Tax, Pareto Weights, Political Economy, Redistribution |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:yon:wpaper:2016rwp-92&r=pbe |
| By: | Nora Lustig (Department of Economics, Tulane University) |
| Abstract: | This paper examines the redistributive impact of fiscal policy for Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa using comparable fiscal incidence analysis with data from around 2010. The largest redistributive effect is in South Africa and the smallest in Indonesia. Success in fiscal redistribution is driven primarily by redistributive effort (share of social spending to GDP in each country) and the extent to which transfers/subsidies are targeted to the poor and direct taxes targeted to the rich. While fiscal policy always reduces inequality, this is not the case with poverty. Fiscal policy increases poverty in Brazil and Colombia (over and above market income poverty) due to high consumption taxes on basic goods. The marginal contribution of direct taxes, direct transfers and in- kind transfers is always equalizing. The marginal effect of net indirect taxes is unequalizing in Brazil, Colombia, Indonesia and South Africa. Total spending on education is pro-poor except for Indonesia, where it is neutral in absolute terms. Health spending is pro-poor in Brazil, Chile, Colombia and South Africa, roughly neutral in absolute terms in Mexico, and not pro-poor in Indonesia and Peru. Length: 34 pages |
| Keywords: | fiscal incidence, social spending, inequality, developing countries |
| JEL: | H22 D31 I3 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:tul:ceqwps:1331&r=pbe |
| By: | Michaillat, Pascal; Saez, Emmanuel |
| Abstract: | This paper explores how government purchases can improve stabilization. When unemployment is inefficiently high, optimal government purchases deviate from the Samuelson level to reduce the unemployment gap. Hence, stimulus spending is desirable in slumps whenever the unemployment multiplier is positive. Then, the optimal level of stimulus spending is increasing in the multiplier for small multipliers, largest for a moderate multiplier, and decreasing beyond that. Furthermore, the optimal level of stimulus spending is increasing in the elasticity of substitution between public and private consumption. In particular, optimal stimulus spending is zero when extra public services are useless, and it completely fills the unemployment gap when extra public services are as valuable as extra private services. The results hold whether taxes are nondistortionary or distortionary. |
| JEL: | E32 E62 H21 H41 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11577&r=pbe |
| By: | Gabriela Inchauste; Nora Lustig; Mashekwa Maboshe; Catriona Purfield; Ingrid Woolard |
| Abstract: | This paper uses the 2010/11 Income and Expenditure Survey for South Africa to analyze the progressivity of the main tax and social spending programs and quantify their impact on poverty and inequality. The paper also assesses the redistributive effectiveness of fiscal interventions given the resources used. Because it applies the Commitment to Equity methodology, the results for South Africa can be compared with other middle-income countries for which the framework has also been applied. The main results are twofold. First, the burden of taxes—namely the personal income tax, the value added tax, excises on alcohol and tobacco, and the fuel levy—falls on the richest in South Africa and social spending results in sizable increases in the incomes of the poor. In other words, for the components examined, the tax and social spending system is overall progressive. Second, for these elements, fiscal policy in South Africa achieves appreciable reductions in income inequality and poverty. Moreover, these reductions are the largest achieved in the emerging market countries that have so far been included in the Commitment to Equity project. Although fiscal policy is equalizing and poverty-reducing, the levels of inequality and poverty that remain still rank among the highest in middle-income countries. Looking ahead, as South Africa grapples with slow economic growth, a high fiscal deficit, and a rising debt burden addressing the twin challenges of high inequality and poverty will require not only much improved quality of public services, but also higher and more inclusive economic growth. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:tul:ceqwps:1329&r=pbe |
| By: | Maciej Jagielski; Kordian Czy\.zewski; Ryszard Kutner; H. Eugene Stanley |
| Abstract: | Using the empirical data from the Norwegian tax office, we analyse the wealth and income of the richest individuals in Norway during the period 2010--2013. We find that both annual income and wealth level of the richest individuals are describable using the Pareto law. We find that the robust mean Pareto exponent over the four-year period to be $\approx 2.3$ for income and $\approx 1.5$ for wealth. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1610.08918&r=pbe |
| By: | Samuel G. Hanson; David S. Scharfstein; Adi Sunderam |
| Abstract: | In this paper, we develop a new model for government cost-benefit analysis in the presence of risk. In our model, a benevolent government chooses the scale of a risky project in the presence of two key frictions. First, there are market failures, which cause the government to perceive project payoffs differently than private households do. This gives the government a "social risk management" motive: projects that ameliorate market failures when household marginal utility is high are appealing. The second friction is that government financing is costly because of tax distortions. This creates a "fiscal risk management" motive: incremental spending that occurs when total government spending is already high is particularly unattractive. A first key insight is that the government's need to manage fiscal risk frequently limits its capacity for managing social risk. A second key insight is that fiscal risk and social risk interact in complex ways. When considering many potential projects, government cost-benefit analysis thus acquires the flavor of a portfolio choice problem. We use the model to explore how the relative attractiveness of two technologies for promoting financial stability—bailouts and regulation—varies with the government's fiscal burden and characteristics of the economy. |
| JEL: | E61 G11 G28 H1 H43 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22763&r=pbe |
| By: | Kazuyoshi Ohki; |
| Abstract: | We construct a monopolistic competition model considering different markups across industries and firm-level heterogeneity of productivity. An excess entry occurs in low-markup (competitive) industry, and vice versa in high-markup (non-competitive) industry. To achieve the optimum allocation, a social planner should implement an appropriate mix of policies, whose requirement is tighter than the homogeneous-firm model under some situations. The total amount of optimum subsidy (tax) is dependent on the property of distribution when the elasticity of substitution between industries is above unity. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:0984&r=pbe |
| By: | Gary Clyde Hufbauer (Peterson Institute for International Economics); Zhiyao Lu (Peterson Institute for International Economics) |
| Abstract: | On August 30, 2016, European Competition Commissioner Margrethe Vestager demanded that Ireland reclaim €13 billion ($14.5 billion) from Apple Inc. to redress improper “state aids” conferred on the company through Irish tax rulings in 1991 and 2007. The European Commission’s demands triggered a huge uproar—from Ireland, Apple, other multinational corporations, and the US Treasury Department. According to the Commission, Apple paid an effective corporate tax rate of less than 1 percent between 2003 and 2014, through a sweetheart tax deal with Irish tax authorities. The Commission alleged this to be a breach of EU state aid rules and instructed Ireland to claim unpaid taxes from Apple. Both Apple and Ireland announced they would appeal. Apple denied the extremely low effective tax rate claimed by the Commission and insisted that it had paid all taxes in accordance with existing treaties, laws, regulations, and rulings. Ireland appealed in light of its position as a favored site for multinational corporations doing business in Europe. The US Treasury Department, aligning with Apple and Ireland, criticized the Commission’s new approach as applied in the Apple case, as well as the retroactive component of the decision and its detrimental impact on the ability of member states to honor bilateral tax treaties. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb16-16&r=pbe |
| By: | Corneo, Giacomo (Free University of Berlin) |
| Abstract: | Current trends in the distribution of wealth trigger a social divide and threaten democracy in many advanced economies. I propose to counter this evolution by enhancing the role of public capital as a redistribution and empowerment device. The governance of public capital requires two novel institutions: a socially responsible Sovereign Wealth Fund and a Federal Shareholder. This paper offers an account of their possible design and sources of financing. |
| Keywords: | public ownership, redistribution |
| JEL: | H0 H5 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp115&r=pbe |
| By: | Xie, Zoe; Pei, Yun |
| Abstract: | During recessions, the U.S. government substantially increases the duration of unemployment insurance (UI) benefits through multiple extensions. This paper seeks to understand the incentives driving these increases. Because of the trade-off between insurance and job search incentives, the classic time-inconsistency problem arises. This paper endogenizes a time-consistent UI policy in a stochastic equilibrium search model, where a government without commitment to future policies chooses the UI benefit level and expected duration each period. A longer benefit duration increases unemployed workers' consumption but reduces job search, leading to higher future unemployment. Quantitatively, the model rationalizes most of the variations in benefit duration during the Great Recession. We use the framework to evaluate the effects of the 2009-2013 benefit extensions on unemployment and welfare. |
| Keywords: | Time-consistent policy, Unemployment insurance, Labor market, Business cycle |
| JEL: | E61 H21 J64 J65 |
| Date: | 2016–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74698&r=pbe |
| By: | Daniel K. Fetter |
| Abstract: | A key question in the design of public assistance to the needy is how allocation of responsibility for funding and decision-making across different levels of government influences the level and type of assistance provided. The New Deal era was a period in which this allocation changed significantly in the United States, as provision of public assistance shifted from local governments to states and the federal government, accompanied by a large increase in government transfer payments. Focusing on assistance to the elderly and using variation in state laws governing the division of funding between local and state governments for the Old Age Assistance (OAA) Program, this paper investigates the responsiveness of OAA payments and recipiency to local government funding shares. Payments per elderly resident were significantly lower in states with higher local funding shares, driven largely by reductions in recipiency. The baseline results suggest that had local governments needed to fund half of OAA payments in 1939, on the lower end of local funding shares prior to the New Deal, the OAA recipiency rate would have been 5 percent rather than 22 percent, and perhaps even lower. More speculative results suggest that greater local funding led to lower representation of blacks among OAA recipients relative to their share of the population, particularly in the South. |
| JEL: | H75 H77 I38 N32 N42 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22760&r=pbe |
| By: | Pasquale Foresti; Oreste Napolitano |
| Abstract: | In this paper a panel analysis is employed to investigate the effects of governments’ expenditure and taxation on stock market indexes in 11 members of the Eurozone. A significant number of studies have focused on the effects of monetary policy on the Eurozone stock markets, while only a limited number of papers have investigated the effects of fiscal policy on the stock markets. Therefore, we know little, if anything, on the sign and the stability of the stock markets’ reaction to taxation and public expenditure. Our results show that fiscal maneuvers influence stock markets and that, following an increase (decrease) in public deficit, stock markets indexes go down (up). Nevertheless, further analysis shows that the signs of the estimated stock markets’ reactions are not constant over time and that they can change according to the surrounding macroeconomic scenario. |
| Keywords: | Stock Market, Fiscal Policy, Eurozone |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:eiq:eileqs:115&r=pbe |
| By: | Bjerk, David J. (Claremont McKenna College) |
| Abstract: | This paper uses a laboratory experiment to explore individuals' motivations for redistribution. The laboratory results show that as income uncertainty diminishes, participants become more extreme in their preferences for redistribution. The findings suggest that for most people, the motivation for redistribution is financial self-interest – namely as insurance against future bad luck – rather than furthering equity. However, a non-negligible group of participants propose redistribution levels inconsistent with financial self-interest, where this group is primarily made up of those with the least to lose financially from making such a proposal, and the size of this group increases when participants can communicate prior to proposing. Survey data from the National Longitudinal Survey of Youth and General Social Survey show that these experimental findings may help shed light on the way preferences for redistribution evolve with age in the real world. |
| Keywords: | redistribution, laboratory experiment, veil of ignorance, progressive taxation |
| JEL: | H2 D3 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10259&r=pbe |
| By: | Mihalyi, Peter; Vincze, Laszlo |
| Abstract: | With the help of five models, this paper analyses pension systems in general and the direct financial effects of the retirement-age-reducing concept mentioned in the title. Th e first part assumes a financially unchanged environment, when earnings are permanent, there is no interest and everyone lives for a predetermined length of time (deterministic models). Taking into consideration actual mortality rates (stochastic model) we give an idealised description of the current pay-as-you-go pension system, which, however, does not significantly diff er from real life. Th e most important consequence of taking mortality into consideration is the life insurance effect. The contribution of individuals who deceased prior to reaching a pensionable age, will increase the sources for the pension of survivors. Every forint the survivors paid themselves is worth 1.5–2 times as much on account of this life-insurance effect. In the second part of the paper incomes are assumed to increase and interest also accounted for. Here we highlight the advantage of funded pension schemes in that for the same amount of pension they require a third to half of the pension insurance contributions of the pay-as-you-go pension system, because half to two-thirds of pension funding comes from the returns on invested payments. Analysis of this reveals the hidden state deficit inherent in the pay-as-you-go pension scheme, and the fact that every active employee pays the interests on it on a monthly basis when paying two to three times more in pension insurance contribution than would be necessary. The third part demonstrates that if both women and men were to retire after 40 years of employment, it would entail pensions cuts of 9–12% for females and males respectively or a general pension cut of 19% for both sexes on average, if the present balance of contributions and pension payments are to be kept in the future. |
| Keywords: | pension system, early retirement at 40, modelling the pay-as-you-go pension system |
| JEL: | C88 G22 H55 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74669&r=pbe |
| By: | Hu, Luojia (Federal Reserve Bank of Chicago); Kaestner, Robert (University of Illinois at Chicago); Mazumder, Bhashkar (Federal Reserve Bank of Chicago); Miller, Sarah (University of Michigan); Wong, Ashley |
| Abstract: | We examine the effect of the Medicaid expansions under the 2010 Patient Protection and Affordable Care Act (ACA) on consumer, financial outcomes using data from a major credit reporting agency for a large, national sample of adults. We employ the synthetic control method to compare individuals living in states that expanded Medicaid to those that did not. We find that the Medicaid expansions significantly reduced the number of unpaid bills and the amount of debt sent to third-party collection agencies among those residing in zip codes with the highest share of low-income, uninsured individuals. Our estimates imply a reduction in collection balances of between $600 to $1,000 among those who gain Medicaid coverage due to the ACA. Our findings suggest that the ACA Medicaid expansions had important financial impacts beyond health care use. |
| Keywords: | Health insurance; consumer finance; low income; Medicaid; public policy; Affordable Care Act (ACA) |
| JEL: | H42 I12 I18 |
| Date: | 2016–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-2016-10&r=pbe |
| By: | Christian Dustman (University College London and CReAM); Kristine Vasiljeva (Kraka); Anna Piil Damm (Aarhus University) |
| Abstract: | To estimate the causal effect of refugee migration on voting outcomes in parliamentary and municipal elections in Denmark, our study is the first that addresses the key problem of immigrant sorting by exploiting a policy that assigned refugee immigrants to municipalities on a quasi-random basis. We find that – in all but the most urban municipalities - allocation of larger refugee shares between electoral cycles leads to an increase in the vote share not only for parties with an anti-immigration agenda but also for centre-right parties, while the vote share for centre-left parties decreases. However, in the largest and most urban municipalities refugee allocation has – if anything – the opposite effect on vote shares for anti-immigration parties. We demonstrate response heterogeneity according to municipal characteristics, with a more pronounced response in less urban municipalities in which the pre-policy shares of both immigrants and the more affluent is high, and in urban municipalities with high unemployment. At the same time, higher pre-policy crime rates are associated with more support for anti-immigration parties in response to refugee allocation in both urban and non-urban municipalities. We also find some evidence that refugee allocation influences voter turnout. Moreover, it has a large impact on the decision of anti-immigration parties’ choice of where to stand for municipal election. |
| Keywords: | immigration, political preferences, re-distribution, welfare, random allocation |
| JEL: | H53 I38 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1619&r=pbe |