nep-pbe New Economics Papers
on Public Economics
Issue of 2017‒01‒08
24 papers chosen by
Thomas Andrén

  1. Optimal Unemployment Insurance and Redistribution By Robin Boadway; Katherine Cuff
  2. Evaluating options for shifting tax burden to top income earners By Jorge Onrubia; Fidel Picos; María del Carmen Rodado
  3. Distributional National Accounts: Methods and Estimates for the United States By Thomas Piketty; Emmanuel Saez; Gabriel Zucman
  4. Corporate Income Tax Compliance Costs and their Determinants: Evidence from Greece By Stamatopoulos, Ioannis; Hadjidema, Stamatina; Eleftheriou, Konstantinos
  5. Modelling corporate tax reforms in the EU: New simulations with the CORTAX model By à lvarez-Martínez, María Teresa; Barrios, Salvador; d'Andria, Diego; Gesualdo, Maria; Pontikakis, Dimitrios; Pycroft, Jonathan
  6. How much is too much? The fiscal space in emerging market economies By Ganiko, Gustavo; Melgarejo, Karl; Montoro, Carlos
  7. In-depth analysis of tax reforms using the EUROMOD microsimulation model By Fidel Picos; Marie-Luise Schmitz
  8. The Historical Evolution of the Wealth Distribution: A Quantitative-Theoretic Investigation By Joachim Hubmer; Per Krusell; Anthony A. Smith, Jr.
  9. Targeting Policies: Multiple Testing and Distributional Treatment Effects By Steven F. Lehrer; R. Vincent Pohl; Kyungchul Song
  10. Recent Trends in U.S. Top Income Shares in Tax Record Data Using More Comprehensive Measures of Income Including Accrued Capital Gains By Jeff Larrimore; Richard V. Burkhauser; Gerald Auten; Philip Armour
  11. The Optimal Policy Mix to Achieve Public Debt Consolidation By Roberta, Cardani; Lorenzo, Menna; Patrizio, Tirelli;
  12. Fiscal Policy, Inequality and the Poor in the Developing World - Working Paper 441 By Nora Lustig
  13. Lone Parents, Time-Limited In-Work Credits and the Dynamics of Work and Welfare By Brewer, Mike; Cribb, Jonathan
  14. Labor Supply Elasticities: Overcoming Nonclassical Measurement Error Using More Accurate Hours Data By Barrett, Garry F.; Hamermesh, Daniel S.
  15. Retirement Decisions, Eligibility and Financial Literacy By Sara Burrone; Mariacristina Rossi
  16. On Pessimism and Optimism by Forward Looking Agents and the Need for Social Security By Batabyal, Amitrajeet; Nijkamp, Peter
  17. Subsidy Policy and Elderly Labor By Miyake, Yusuke; Yasuoka, Masaya
  18. Dynamic scoring of tax reforms in the European Union By Salvador Barrios; Mathias Dolls; Anamaria Maftei; Andreas Peichl; Sara Riscado; Janos Varga; Christian Wittneben
  19. The Power of Social Pensions By Huang, Wei; Zhang, Chuanchuan
  20. Intergenerational Mobility and Preferences for Redistribution By Alberto Alesina; Stefanie Stantcheva; Edoardo Teso
  21. Are the social security benefits of pensions or child-care policies best financed by a consumption tax? By Jinno, Masatoshi; Yasuoka, Masaya
  22. Free Childcare and Parents' Labour Supply: Is More Better? By Brewer, Mike; Cattan, Sarah; Crawford, Claire; Rabe, Birgitta
  23. Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers - Working Paper 446 By Ali Enami , Nora Lustig and Rodrigo Aranda
  24. Negative correlation between retirement age and contribution length? By Erik Granseth; Wolfgang Keck; Wolfgang Nagl; Melinda Tir; Andras Simonovits

  1. By: Robin Boadway (Queen's University); Katherine Cuff (McMaster University)
    Abstract: We characterize optimal income taxation and unemployment insurance in a search-matching framework where both voluntary and involuntary unemployment are endogenous and Nash bargaining determines wages. Individuals differ in utility when voluntarily unemployed (non-participants in the labour market) and decide whether to participate as a job seeker and if so, how much search effort to exert. Unemployment insurance trades off insurance versus moral hazard due to search. We show that it is optimal to have a positive linear wage tax without any redistributive concerns even if search is efficient so the Hosios condition is satisfied. We also allow for different productivity types so there is a redistributive role for the income tax and show that a proportional wage tax internalizes the macro effects arising from endogenous wages. Lump-sum income taxes and transfers can then redistribute between individuals of differing skills and employment states. Our analysis embeds optimal unemployment insurance into an extensive-margin optimal redistribution framework where transfers to the involuntary and voluntary unemployed can differ, and nests several standard models in the literature.
    Keywords: optimal income taxation, unemployment insurance
    JEL: H21 H3 J6
    Date: 2016–12
  2. By: Jorge Onrubia (Universidad Complutense de Madrid); Fidel Picos (European Commission - JRC); María del Carmen Rodado (Universidad Rey Juan Carlos)
    Abstract: During the last decade, research on income inequality has paid special attention to top income earners. At the same time, top marginal tax rates on upper income earners have declined sharply in many OECD countries. Discussions are still open on the relationship between the increase of the income share of the richest and to what extent the tax burden should be shifted towards top income earners. In this paper we analyse these questions by building and computing a theoretical framework using the decomposition by income groups proposed by Lambert and Aronson (1993) and Alvaredo (2011). We show that for three types of revenue-neutral reforms based on Pfähler (1984) the redistributive effect is always higher than before the reform. When the size of the rich group is sufficiently small we also find that the best option is allocating tax changes proportionally to net income, and the worst doing it proportionally to tax liabilities.
    Keywords: inequality, personal income tax, redistribution, top incomes
    JEL: D63 H23 H24
    Date: 2016–12
  3. By: Thomas Piketty; Emmanuel Saez; Gabriel Zucman
    Abstract: This paper combines tax, survey, and national accounts data to estimate the distribution of national income in the United States since 1913. Our distributional national accounts capture 100% of national income, allowing us to compute growth rates for each quantile of the income distribution consistent with macroeconomic growth. We estimate the distribution of both pre-tax and post-tax income, making it possible to provide a comprehensive view of how government redistribution affects inequality. Average pre-tax national income per adult has increased 60% since 1980, but we find that it has stagnated for the bottom 50% of the distribution at about $16,000 a year. The pre-tax income of the middle class—adults between the median and the 90th percentile—has grown 40% since 1980, faster than what tax and survey data suggest, due in particular to the rise of tax-exempt fringe benefits. Income has boomed at the top: in 1980, top 1% adults earned on average 27 times more than bottom 50% adults, while they earn 81 times more today. The upsurge of top incomes was first a labor income phenomenon but has mostly been a capital income phenomenon since 2000. The government has offset only a small fraction of the increase in inequality. The reduction of the gender gap in earnings has mitigated the increase in inequality among adults. The share of women, however, falls steeply as one moves up the labor income distribution, and is only 11% in the top 0.1% today.
    JEL: E01 H2 H5 J3
    Date: 2016–12
  4. By: Stamatopoulos, Ioannis; Hadjidema, Stamatina; Eleftheriou, Konstantinos
    Abstract: This paper examines the corporate income tax compliance costs and their determinants by analyzing survey and financial statements data from firms operating in Greece. We find that corporate tax compliance costs are of considerable size and vary with several firm-specific characteristics, including the firm’s size, its age, the sector in which it operates, its location and its legal form. The paper intends to raise awareness regarding the impact of tax compliance costs, especially for countries, such as Greece, that were significantly affected by the economic and financial crisis.
    Keywords: corporate taxes; compliance costs; Greece
    JEL: H25 M21
    Date: 2016–12–21
  5. By: Ã lvarez-Martínez, María Teresa (European Commission - JRC); Barrios, Salvador (European Commission - JRC); d'Andria, Diego (European Commission - JRC); Gesualdo, Maria (European Commission - JRC); Pontikakis, Dimitrios (European Commission - JRC); Pycroft, Jonathan (European Commission - JRC)
    Abstract: This study investigates the economic impact of a recent proposal for a common corporate tax base (CCTB), European Commission (2016a), and a common consolidated corporate tax base with formula apportionment (CCCTB) within the EU, European Commission (2016b). On top of the common base, it considers proposals to reduce the debt bias in corporate taxation. To do so, we employ an applied general equilibrium model (CORTAX) covering all EU Member States, featuring different firm types and modelling many key features of corporate tax regimes, including multinational profit shifting, investment decisions, loss compensation and the debt-equity choice of firms. First, the economic impact of C(C)CTB is assessed, restricting the scope of the reforms to multinationals only. Macroeconomic results show that the common tax base simulations directly affect the cost of capital, which on average falls across the EU, boosting investment, and therefore driving the increase in GDP. Second, C(C)CTB is simulated together with proposals to reduce or eliminate the debt bias in corporate taxation, principally: the comprehensive business income tax (CBIT), the allowance for corporate equity (ACE) and the allowance for corporate capital (ACC). From a financing prospective, all proposals incentivise firms to rely less on debt-financing. From a macroeconomic perspective, the simulations which narrow the tax base by introducing addition deductions, i.e. ACE and ACC, raise GDP, despite the fact that the (ex-ante) CIT revenue is maintained by adjusting the CIT rate. The opposite is the case for the CBIT, which causes a fall in GDP. Third, a group of sensitivity simulations are presented to check for robustness. Among the insights from the sensitivity simulations, one notes that the inclusion of domestic firms in the CCCTB proposal somewhat increases the positive impact on GDP. A broader harmonised tax base results in lower welfare and GDP outcomes than a narrower harmonised tax base, because it more directly impacts the marginal investment decision. Reducing profit shifting slightly lowers investment, though on balance does not negatively impact welfare. The model results are robust to varying the capital-labour substitutability. In summary, the results of this economic modelling evaluation suggest that a fairer and more efficient tax system can be introduced whilst maintaining, and perhaps improving, GDP and welfare in the EU.
    Keywords: Computable General Equilibrium model, CORTAX, CCTB, CCCTB, Profit-shifting
    Date: 2016–12
  6. By: Ganiko, Gustavo (Consejo Fiscal de Perú); Melgarejo, Karl (Consejo Fiscal de Perú); Montoro, Carlos (Consejo Fiscal de Perú; Banco Central de Reserva del Perú)
    Abstract: How much fiscal space do emerging market economies have to maintain expansive fiscal policies? This is a key question given the observed increase in public debt since 2007. To answer this question we estimate a debt limit for emerging market economies, from which the public debt to GDP ratio would have an explosive trajectory, in the spirit of Ghosh, Kim, Mendoza, Ostry and Qureshi (2013). For this, we estimate the determinants of the public debt ratio dynamics, the primary balance and the effective cost of debt, for 26 emerging market economies during the 2000-2015 period. We propose an alternative measure, the stochastic debt limit, which takes into account the uncertainty and sensitivity of the debt limit to macroeconomic and financial conditions. The main results are: i) There is evidence of “fiscal fatigue”, namely the loss of control of the debt growth via fiscal adjustments as the debt ratio increases; ii) the debt ratio is an important determinant of the effective cost of public debt; and iii) the debt limit as traditional measured (deterministic) is between 68-97 percentage points of GDP, and between 5-89 percentage points for the stochastic case, which gives evidence of limited fiscal space for the majority of the economies analyzed.
    Keywords: fiscal policy, fiscal sustainability, fiscal space
    JEL: E62 H63 H62
    Date: 2016–12
  7. By: Fidel Picos (European Commission - JRC); Marie-Luise Schmitz (European Commission - JRC)
    Abstract: In the aftermath of the financial and sovereign debt crisis, the need for a better understanding of the fiscal and equity implications of national tax policy reforms is greater than ever. National fiscal policies have a significant share in paving the way for economic recovery, fiscal consolidation and reducing looming inequality problems. The present work sets out a consistent framework for the in-depth country analyses of tax reforms using EUROMOD performed by the European Commission services in the context of the European Semester. Three examples of policy analysis are presented with the focus being on the provision of correct inferences alongside the typically analysed estimates and indicators.
    Keywords: Fiscal policy analysis, European Semester, survey data, microsimulation, variance estimation
    JEL: H23 H24 H53 C83
    Date: 2016–12
  8. By: Joachim Hubmer; Per Krusell; Anthony A. Smith, Jr.
    Abstract: This paper employs the benchmark heterogeneous-agent model used in macroeconomics to examine drivers of the rise in wealth inequality in the U.S. over the last thirty years. Several plausible candidates are formulated, calibrated to data, and examined through the lens of the model. There is one main finding: by far the most important driver is the significant drop in tax progressivity that started in the late 1970s, intensified during the Reagan years, and then subsequently flattened out, with only a minor bounce back. The sharp observed increases in earnings inequality, the falling labor share over the recent decades, and potential mechanisms underlying changes in the gap between the interest rate and the growth rate (Piketty's r-g story) all fall far short of accounting for the data.
    JEL: D14 D31 D33 E21 E25 E62 H31
    Date: 2016–12
  9. By: Steven F. Lehrer; R. Vincent Pohl; Kyungchul Song
    Abstract: Economic theory often predicts that treatment responses may depend on individuals’ characteristics and location on the outcome distribution. Policymakers need to account for such treatment effect heterogeneity in order to efficiently allocate resources to subgroups that can successfully be targeted by a policy. However, when interpreting treatment effects across subgroups and the outcome distribution, inference has to be adjusted for multiple hypothesis testing to avoid an overestimation of positive treatment effects. We propose six new tests for treatment effect heterogeneity that make corrections for the family-wise error rate and that identify subgroups and ranges of the outcome distribution exhibiting economically and statistically significant treatment effects. We apply these tests to individual responses to welfare reform and show that welfare recipients benefit from the reform in a smaller range of the earnings distribution than previously estimated. Our results shed new light on effectiveness of welfare reform and demonstrate the importance of correcting for multiple testing.
    JEL: C12 C21 I38 J22
    Date: 2016–12
  10. By: Jeff Larrimore; Richard V. Burkhauser; Gerald Auten; Philip Armour
    Abstract: Access to IRS personal income tax records improves researchers’ ability to track U.S. income and inequality, especially at the very top of the distribution (Piketty and Saez 2003). However, rather than following standard Haig-Simons income definitions, tax form income measures were designed to implement the Internal Revenue Code. Using IRS tax record data since 1989 statistically matched to Survey of Consumer Finances and Census data for income sources not available in tax data, we explore the robustness of levels and trends in inequality using the top income literature’s tax return market income definition (Saez 2016) to more comprehensive income measures. We find that focusing solely on market income misses the important redistributive effects of government taxes and transfers. In addition, we find that the use of taxable realized capital gains changes the level and trend in top incomes relative to an accrued capital gains measure that is more consistent with Haig-Simons income definitions.
    JEL: D31 H24 J3
    Date: 2016–12
  11. By: Roberta, Cardani; Lorenzo, Menna; Patrizio, Tirelli;
    Abstract: In this paper we adopt a Ramsey-optimal approach to identify the combination of income taxes, public expenditure and inflation designed to achieve a fiscal consolidation. In contrast with empirical contributions that emphasize the benefits of expenditure based consolidations, the optimal policy calls for increases in taxes and inflation. Strong monetary accommodation is quite beneficial relative to a situation where the Central Bank is only concerned with inflation stability and the inflation target is defined as a ceiling, as in the Eurozone.
    Keywords: Fiscal Consolidation, Limited Asset Market Participation, Ramsey Fiscal Policy
    JEL: E32 E62 E63
    Date: 2016–12–31
  12. By: Nora Lustig
    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: D31 H5 H22 I13
    Date: 2016–11
  13. By: Brewer, Mike (ISER, University of Essex); Cribb, Jonathan (Institute for Fiscal Studies, London)
    Abstract: Time-limited in-work credits are cheaper, and more targeted, than conventional in-work credits, but are thought to have small to zero long-term impacts. We study two time-limited in-work credits introduced in the mid-2000s in the UK and find they reduced welfare participation and increased employment. Both policies increased job retention once recipients were in work and boosted employment even after the payments were stopped. Conditioning on hours of work was important. Paying a credit to those working 16+ hours a week only increased part-time work, while conditioning on full-time work reduced part-time work and increased full-time work.
    Keywords: in-work credits, time-limits, duration model, lone parents
    JEL: H21 I38
    Date: 2016–12
  14. By: Barrett, Garry F. (University of Sydney); Hamermesh, Daniel S. (Royal Holloway, University of London)
    Abstract: We measure the impact of measurement error in labor-supply elasticities estimated over recalled usual work hours, as is ubiquitous in the literature. Employing hours of work in diaries collected by the American Time Use Survey, 2003-12, along with the same respondents' recalled usual hours, we show that the latter yield elasticities that are positively biased. We argue that this bias arises from the salience on recalled hours of differences in wage rates.
    Keywords: time use, measurement error, labor supply
    JEL: J22 C21
    Date: 2016–12
  15. By: Sara Burrone (University of Firenze; University of Turin and CeRP-Collegio Carlo Alberto); Mariacristina Rossi (University of Turin and CeRP-Collegio Carlo Alberto)
    Abstract: In this work, we analyze if and to what extent financial literacy has an impact on workers’ retirement decisions. We do so with reference to Italy, a country that has undergone important pension reforms in the last two decades. We use the Survey on Household Income and Wealth (SHIW) in the period 2006 to 2010, for which we have information on financial literacy. Our findings show that financially literate workers are more inclined to postpone retirement when they are (at least partially) enrolled in a DC scheme, Conversely, financial literacy does not seem to affect the retirement plans of workers who are still covered by the more generous DB formula.
    Date: 2016–07
  16. By: Batabyal, Amitrajeet; Nijkamp, Peter
    Abstract: We study whether pessimism and optimism about the future by forward looking agents provides a rationale for social security. We first distinguish between an agent’s true and pessimistic preferences and then analyze whether this agent’s level of saving depends on the pessimism parameter ( π ) and how welfare measured by the agent’s true preferences depends on π . Next, we examine whether it is possible for pessimism to increase the agent’s true utility and then show that this kind of pessimism does not provide a rationale for social security. Moving on to optimism, we study the need for a pay-as-you-go (PAYG) social security system when the agent is optimistic about the generosity of the PAYG system. This optimism is modeled with a parameter ( ω ). In this setting, we first study the impact that an increase in ω has on the agent’s saving and then examine whether this agent’s welfare increases or decreases in ω . Finally, we show that this kind of optimism does not justify the presence of the PAYG social security system.
    Keywords: Optimism, Overlapping Generations, Pessimism, Saving, Social Security
    JEL: H55 R28
    Date: 2016–11–17
  17. By: Miyake, Yusuke; Yasuoka, Masaya
    Abstract: In economically developed countries, aging societies with fewer children are progressing. Increased longevity has necessitated postponement of the working retirement age. Our paper presents an examination of how subsidies for an elderly labor supply affect the elderly labor supply. Our paper presents derivation that this subsidy raises the elderly labor supply. Then, the wage rate of younger laborers can be increased because of complementarity between the younger labor supply and older labor supply. This effect is explained as an externality. By virtue of the externality effect, a subsidy to facilitate the elderly labor supply should be provided in support of social welfare.
    Keywords: Aging society, Elderly labor, Subsidy
    JEL: H20 H55 J14 J26
    Date: 2016–12–21
  18. By: Salvador Barrios (European Commission - JRC); Mathias Dolls (ZEW); Anamaria Maftei (European Commission - JRC); Andreas Peichl (ZEW); Sara Riscado (European Commission - JRC); Janos Varga (European Commission – DG ECFIN); Christian Wittneben (ZEW)
    Abstract: In this paper, we present a dynamic scoring analysis of tax reforms for European countries. In this analysis we account for the feedback effects resulting from the adjustment in the labour market and for the economy-wide reaction to tax policy changes. We combine the microsimulation model EUROMOD, extended to incorporate an estimated labour supply model, with the new Keynesian DSGE model QUEST, used by the European Commission for analysing fiscal and structural reform in EU member states. These two models are connected in two ways: by introducing tax policy shocks in QUEST, derived from computing changes in implicit tax rates using EUROMOD; and by calibrating the elasticity of labour supply and the non-participation rates, by skill categories, in QUEST from values calculated using EUROMOD and the estimated labour supply function. Moreover, we discuss aggregation issues and the consistency between the micro and macro modelling of labour supply and interpret the model interaction in terms of tax incidence analysis. We illustrate the methodological approach with the results obtained when scoring specific reforms in three EU Member States, namely, Italy, Belgium and Poland. We compare two different scenarios – one in which the behavioural response to tax changes over the medium term is ignored and another scenario where this behavioural/micro-dimension is embedded into the microsimulation model. In this particular set-up, we do not find evidence of strong second-round effects, and the fiscal and distributional effects of the reforms tend to overlap in both scenarios. We attribute these results to existing rigidities in labour and product markets, which have shrunk further the small tax policy shocks introduced into the macroeconomic model.
    Keywords: Dynamic scoring, tax reforms, first and second round effects, labour market behaviour
    Date: 2016–12
  19. By: Huang, Wei (National Bureau of Economic Research); Zhang, Chuanchuan (Central University of Finance and Economics)
    Abstract: This paper examines the impacts of social pension provision among people of different ages. Utilizing the county-by-county rollout of the New Rural Pension Scheme in rural China, we find that, among the age-eligible people, the scheme provision leads to higher household income (18 percent) and food expenditure (10 percent), lower labor supply (6 percent), and better health (11-14 percent). In addition, among the age-ineligible adults, the pension scheme shifts them from farming to non-farming work, lowers insurance participation rate, but does not change income, expenditure or health significantly. Finally, among the children aged below 15, the pension scheme leads to more pocket money received, more caring from grandparents, improved health, and higher schooling rate.
    Keywords: pension, health, elderly
    JEL: E21 H55 I38 O22
    Date: 2016–12
  20. By: Alberto Alesina (Harvard University); Stefanie Stantcheva (Harvard University); Edoardo Teso (Harvard University)
    Abstract: Using newly collected cross-country survey and experimental data, we investigate how beliefs about intergenerational mobility affect preferences for redistribution in five countries: France, Italy, Sweden, U.K., and U.S. Americans are more optimistic than Europeans about intergenerational mobility, and too optimistic relative to actual mobility. Our randomized treatment that shows respondents pessimistic information about mobility increases support for redistribution, mostly for equality of opportunity policies. A strong political polarization exists: Left-wing respondents are more pessimistic about intergenerational mobility, their preferences for redistribution are correlated with their mobility perceptions, and they respond to pessimistic information by increasing support for redistribution. None of these apply to right-wing respondents, possibly because of their negative views of government.
    Keywords: redistribution, intergenerational mobility, taxation, online experiment, fairness
    JEL: D31 D72 H21 H23 H24 H41
    Date: 2016–12
  21. By: Jinno, Masatoshi; Yasuoka, Masaya
    Abstract: Our paper sets an endogenous fertility model and examines how tax revenues derived from a consumption tax should be used for social security benefits such as pension and child-care policies. An additional pension financed by a consumption tax can achieve Pareto-improving allocations. Child allowances and an education subsidy decrease the older generation's utility because of tax burdens and the lack of additional benefit. Even if child allowances can raise the share of young people in society and some future generation's utility, that future generation's utility decreases because of a decrease in income growth. However, with certain parametric conditions, an education subsidy can raise every generation's utility, except for that of the older generation, because of the increase in income growth.
    Keywords: Endogenous fertility, Human capital, Child allowance, Education subsidy, Pension
    JEL: H20 H55 I20 J13
    Date: 2016–12–21
  22. By: Brewer, Mike (ISER, University of Essex); Cattan, Sarah (Institute for Fiscal Studies, London); Crawford, Claire (University of Warwick); Rabe, Birgitta (ISER, University of Essex)
    Abstract: Despite the introduction of childcare subsidies in many countries, the cost of childcare is still thought to hinder parental employment. Many governments are considering increasing the generosity of their childcare subsidies, but the a priori effect of such a policy is ambiguous and little is known empirically about its likely impact. This paper compares the effects on parents' labour supply of offering free part-time childcare and of expanding this offer to the whole school day in England using an empirical strategy which, unlike previous studies, exploits both date of birth discontinuities and panel data. We find that the provision of free part-time childcare has little, if any, causal impact on the labour market outcomes of mothers or fathers. Increasing the number of hours of free childcare to cover a full school day, however, leads to significant increases in the labour supply of mothers whose youngest child is eligible, with impacts emerging immediately and increasing over the months following entitlement.
    Keywords: labour supply, childcare, school entry, difference-in-difference
    JEL: I21 J22
    Date: 2016–12
  23. By: Ali Enami , Nora Lustig and Rodrigo Aranda
    Abstract: This paper uses contract theory to suggest simple contract designs that could be used by the Global Fund. Using a basic model of procurement, we lay out five alternative options and consider when each is likely to be most appropriate. The rest of the paper then discusses how one can build a realworld contract from these theoretical foundations, and how these contracts should be adapted to different contexts when the basic assumptions do not hold. Finally, we provide a synthesis of these various results with the aim of guiding policy makers as to when and how ‘results-based’ incentive contracts can be used in practice.
    Keywords: Taxes, subsidies, redistribution, fiscal transfers
    Date: 2017–01
  24. By: Erik Granseth (Swedish Pensions Agency); Wolfgang Keck (Wissenschaftzentrum Berlin für Socialforschung); Wolfgang Nagl (Institute for Advanced Studies); Melinda Tir (Databank of the Research Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Andras Simonovits (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and also Mathematical Institute of Budapest University of Technology, Budapest)
    Abstract: Though never stated explicitly, there is a hidden hypothesis that in a normal pension system, the retirement age and the contribution length are strongly and positively correlated. We compare the time paths of male and female correlation coefficients in Austria, Hungary, Germany and Sweden for several years and categories; and obtain a mixed picture. Hungary stands out with its strong negative correlation but the remaining three countries cannot boast with strongly positive correlation, either. Further work is needed to understand the significance of our findings but they signal some problems with these systems: heterogeneously fragmented careers and unfair benefit rules.
    Keywords: public pension system, length of employment, fragmented careers, retirement age
    JEL: H55 J26 J64
    Date: 2016–11

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