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on Public Economics |
| By: | Oliver Hümbelin; Rudolf Farys |
| Abstract: | This empirical analysis of administrative tax data from the Swiss Canton of Aargau (2001 to 2011), shows the potential that this type of data has to grant us a more complete picture of the redistributive effects of visible (tax rates) and hidden (tax deductions) instruments of the welfare state. In terms of methodology, Gini-based redistributive effects are decomposed into effects of mean tax rate, progression and reranking effects. The study's findings show a declined impact of direct taxes, which is attributable to reduced taxation on the community and cantonal but not the state level. At the same time, tax deductions drastically hamper the redistributive effect of taxes, primarily through deductions of wealth expenses, interest and extra-mandatory payments to the pension scheme, each of which leads to a substantial tax relief for high income earners. |
| Keywords: | redistribution effects, direct taxes, tax deductions, tax competition, Switzerland |
| JEL: | D31 D6 H23 H24 |
| Date: | 2017–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:bss:wpaper:26&r=pbe |
| By: | Kohl, Miriam |
| Abstract: | This paper investigates the effects of international trade in a general equilibrium model with heterogeneous firms where a welfare state redistributes income. We look at a very stylised progressive non-distortionary redistribution scheme. We show that for a given tax rate international trade increases income per capita, but also leads to higher income inequality. Two aspects of income inequality are examined. First, inter-group inequality between managers and workers is considered. Second, intra-group inequality within the group of managers is investigated. For a given tax rate the size of the welfare state and therefore the transfer per capita increases when going from autarky to trade. This second-round effect counteracts the primary increase in inequality, yet cannot outweigh it. Since the redistribution scheme is non-distortionary, it is possible to decrease trade-induced inequality by increasing the tax rate without jeopardising the gains from trade. |
| Keywords: | International trade,Income inequality,Redistribution,Heterogeneous firms |
| JEL: | D31 F12 F16 H24 H25 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tudcep:0117&r=pbe |
| By: | Mendonça, Diogo de Prince; Marçal, Emerson Fernandes; Holland, Marcio |
| Abstract: | The main goal of this paper is to determine the effectiveness of fiscal policy in Brazil. With a sample from 1997 to 2014, we are not able to obtain the relevant impact of fiscal stimuli on output, even when altering both the methodology and the model specifications. Our more robust estimate of the government spending fiscal multiplier is approximately 0.5. Higher multipliers are reported using TVAR and other approaches and specifications, although they are biased for outliers and lack of robustness. We were not able to find any statistically significant response of the output to tax changes, but changes in output appear to generate tax revenue. Finally, we discuss plausible explanations for such ineffectiveness of fiscal policy. Among several factors highlighted by the economic literature, we suggest that the level of the government spending undermines the importance of fiscal shocks. That would explain the type of fiscal conundrum manifested in Brazil. |
| Date: | 2016–11–22 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:eesptd:433&r=pbe |
| By: | Guner, Nezih; Kaygusuz, Remzi; Ventura, Gustavo |
| Abstract: | What are the macroeconomic and welfare effects of expanding transfers to households with children in the United States? How do childcare subsidies compare to alternative policies? We answer these questions in a life-cycle equilibrium model with household labor-supply decisions, skill losses of females associated to non participation, and heterogeneity in terms of fertility, childcare expenditures and access to informal care. We consider the expansion of transfers that are contingent on market work -- childcare subsidies and Child and Dependent Care Tax Credits (CDCTC) -- versus those that are not -- Child Tax Credits (CTC). We find that expansions of transfers of the first group have substantial positive effects on female labor supply, that are largest at the bottom of the skill distribution. Universal childcare subsidies at a 75% rate lead to long-run increases in the participation of married females of 8.8%, while an equivalent expansion of the CTC program leads to the opposite -- a reduction of about 2.4%.We find that welfare gains of newborn households are substantial and up to 2.3% under the CDCTC expansion. The expansion of none of the existing programs, however, receives majority support at the time of its implementation. Our findings show substantial heterogeneity in welfare effects, with a small fraction of households —young and poorer households with children — who gain significantly while many others lose. |
| Keywords: | Child-Related Transfers; childcare; Household Labor Supply |
| JEL: | E62 H24 H31 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11779&r=pbe |
| By: | Nezih Guner (Universitat Autònoma de Barcelona); Remzi Kaygusuz; Gustavo Ventura (Arizona State University) |
| Abstract: | What are the macroeconomic and welfare effects of expanding transfers to households with children in the United States? How do childcare subsidies compare to alternative policies? We answer these questions in a life-cycle equilibrium model with household labor-supply decisions, skill losses of females associated to non participation, and heterogeneity in terms of fertility, childcare expenditures and access to informal care. We consider the expansion of transfers that are contingent on market work - childcare subsidies and Child and Dependent Care Tax Credits (CDCTC) - versus those that are not - Child Tax Credits (CTC). We find that expansions of transfers of the first group have substantial positive effects on female labor supply, that are largest at the bottom of the skill distribution. Universal childcare subsidies at a 75% rate lead to long-run increases in the participation of married females of 8.8%, while an equivalent expansion of the CTC program leads to the opposite - a reduction of about 2.4%. We find that welfare gains of newborn households are substantial and up to 2.3% under the CDCTC expansion. The expansion of none of the existing programs, however, receives majority support at the time of its implementation. Our findings show substantial heterogeneity in welfare effects, with a small fraction of households - young and poorer households with children - who gain significantly while many others lose. |
| Keywords: | household labor supply, child-related transfers, childcare |
| JEL: | E62 H24 H31 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2017-001&r=pbe |
| By: | Gary Clyde Hufbauer (Peterson Institute for International Economics); Zhiyao (Lucy) Lu (Peterson Institute for International Economics) |
| Abstract: | With the election of Donald Trump and a Republican Congress, business tax reform seems a likely bet for 2017. International tax rate comparisons using a new dataset from Thomson Reuters highlight the unfavorable disparity between US corporate tax rates and practices in other advanced economies: The US actual average tax rate, calculated from the dataset at 31.1 percent—even after taking various credits, deductions, and “loopholes” into consideration—is higher than the simple average of foreign groups at 28.1 percent. Comprehensive corporate tax reform, headlined by a cut in the corporate tax rate, should be a priority for the incoming administration and Congress to spur investment and make the United States a more attractive location both for domestic and foreign investment. However, fiscal deficits associated with business tax reform, together with the stimulus to investment, will likely drive up the dollar exchange rate and increase the US trade deficit unless strong offsetting measures are part of the reform package. |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb17-2&r=pbe |
| By: | Mare, Mauro; Motroni, Antonello; Porcelli, Francesco |
| Abstract: | This paper reports empirical evidence supporting the hypothesis that family ties should be listed among the causes of tax evasion. In societies where the power of the family is very high, the quality of public institutions tends to be low. This connection shapes the behavior of taxpayers and generates underground economy. The econometric analysis is based on linear panel data models, and a new dataset that combines data on personal values, social capital, and tax morale, in combination with an index of the shadow economy. The final results show that countries where family ties are stronger also exhibit higher underground economy. |
| Keywords: | family ties, tax evasion, corruption, panel dat |
| JEL: | C23 H26 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:76059&r=pbe |
| By: | António Afonso; João Tovar Jalles |
| Abstract: | We compute time-varying responses of the sovereign debt ratio to primary budget balances for 13 advanced economies between 1980 and 2012, and assess how fiscal sustainability reacts to different characteristics of government debt. We find that the fiscal sustainability time-varying coefficient increases the higher the share of public debt denominated in foreign currency. Moreover, the countries become more sustainable if they contract a higher share of long-term public debt, if it is held by the central bank or if it is easily marketable. Key Words : sovereign debt, fiscal sustainability, time-varying coefficients, debt composition |
| JEL: | C23 E62 F34 H63 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp252016&r=pbe |
| By: | Vitor Gaspar; Laura Jaramillo; Philippe Wingender |
| Abstract: | Is there a minimum tax to GDP ratio associated with a significant acceleration in the process of growth and development? We give an empirical answer to this question by investigating the existence of a tipping point in tax-to-GDP levels. We use two separate databases: a novel contemporary database covering 139 countries from 1965 to 2011 and a historical database for 30 advanced economies from 1800 to 1980. We find that the answer to the question is yes. Estimated tipping points are similar at about 12¾ percent of GDP. For the contemporary dataset we find that a country just above the threshold will have GDP per capita 7.5 percent larger, after 10 years. The effect is tightly estimated and economically large. |
| Keywords: | Taxation;Development;Tax revenues;Economic growth;Time series;Databases;income per capita, taxation, development, multiple equilibria |
| Date: | 2016–12–02 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/234&r=pbe |
| By: | Francesco Fallucchi (University of East Anglia); R. Andrew Luccasen (Mississippi University for Women); Theodore L. Turocy (University of East Anglia) |
| Abstract: | We re-analyse participant behaviour in standard economics experiments studying voluntary contributions to a public good. Previous approaches were based in part on a priori models of decision-making, such as maximising personal earnings, or reciprocating the behaviour of others. Many participants however do not conform to one of these models exactly, requiring ad hoc adjustments to the theoretical baselines to identify them as belonging to a given behavioural type. We construct a typology of behaviour based on a similarity measure between strategies using hierarchical clustering analysis. We identify four clearly distinct behavioural types which together account for over 90% of participants in six experimental studies. The resulting type classification distinguishes behaviour across groups more consistently than previous approaches. |
| JEL: | C65 C71 H41 |
| Date: | 2017–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:17-01&r=pbe |
| By: | Jochem de Bresser; Raquel Fonseca; Pierre-Carl Michaud |
| Abstract: | We develop a retirement model featuring various labor market exit routes: unemployment, disability, private and public pensions. The model allows for saving and uncertainty along several dimensions, including health and mortality. Individuals’ preferences are estimated on data from the U.S. and Europe using institutional variation across countries. We analyze the roles of preferences and institutions in explaining international heterogeneity in retirement behavior. Preliminary estimates suggest that a single set of preferences for individuals from the U.S., the Netherlands and Spain does not fit the data well. Were Europeans to have the same preferences as Americans, they would save less than they actually do. Furthermore, the Dutch and Spanish would work more hours than is observed in the data. |
| Keywords: | Retirement; saving; institutions; structural estimation |
| JEL: | D91 J14 J26 H31 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:criacr:1609&r=pbe |
| By: | Béatrice Boulu-Reshef (Centre d'Economie de la Sorbonne); Samuel H. Brott (Berkeley Research Group, LLC, Washington); Adam Zylbersztejn (GATE L-SE, Université Lumière Lyon 2) |
| Abstract: | We study a finitely repeated public goods game (based on the voluntary contribution mechanism) played under complete uncertainty about the marginal benefit of the public good relative to the private consumption (commonly known as the marginal per capita return: neither one's marginal per capita return nor other players' marginal per capita returns are known at the time of decision-making. We show that contributions are equivalent when the rate of return is predetermined and when it is uncertain, and display a similar decay over time. Combined with the previous experimental findings, our results suggest that the cooperation in public goods games is sensitive to the source of uncertainty about marginal per capita return |
| Keywords: | Cooperation; uncertainty; voluntary contribution mechanism; public good; expected return |
| JEL: | H41 D81 C91 C92 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:17004&r=pbe |
| By: | Tetsuo Ono (Graduate School of Economics, Osaka University); Yuki Uchida (Graduate School of Economics, Osaka University) |
| Abstract: | This study presents a two-class, successive generations model with human capi- tal accumulation and the choice to opt out of public education. The model demon- strates the mutual interaction between inequality and education choice and shows that the interaction leads to two locally stable steady-state equilibria. The exis- tence of multiple stable equilibria implies a negative correlation between inequality and enrollment in public education, which is consistent with evidence from OECD countries. This study also presents a welfare analysis using data from OECD coun- tries and shows that introducing a compulsory public education system leaves the rst generation worse off, though improves welfare for future generations of indi- viduals in a lower class. The results also suggest that the two equilibria are not Pareto-ranked. |
| Keywords: | Public education, opting out, inequality |
| JEL: | D70 H52 I24 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1617r&r=pbe |
| By: | Vitor Gaspar; Laura Jaramillo; Philippe Wingender |
| Abstract: | An empirical finding by Gaspar, Jaramillo and Wingender (2016) shows that once countries cross a tax-to-GDP threshold of around 12¾ percent, real GDP per capita increases sharply and in a sustained manner over the following decade. In this paper, we attempt via four case studies—Spain, China, Colombia, and Nigeria—to illustrate that the improvements in tax capacity have been part of a deeper process of state capacity building. We discuss the political conditions that supported tax capacity building, highlighting three important political ingredients: constitutive institutions, inclusive politics and credible leadership. |
| Keywords: | Taxation;Spain;China;Colombia;Nigeria;Income taxes;Tax administration;Political economy;Cross country analysis;income per capita, taxation, development, institutions, political economy |
| Date: | 2016–12–02 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/233&r=pbe |
| By: | Mare, Mauro |
| Abstract: | If there is one subject that has been thoroughly explored for many years it is the EU’s finances. Institutional actors, like the Commission or the European Parliament, or many academic experts have all provided valuable and largely converging “diagnoses” on the “weaknesses” of the EU budget. The analysis of the allocation of functions in a multilevel Europe can fruitfully start from the lesson of the fiscal federalism theory. This theory can give many useful insights to the existing European effort to review the current allocation of functions between the European Union and member states. Although this theory has been developed in quite different contexts from the present European one, it can be helpful in providing guidelines for the future European construction. The conventional wisdom – the conclusion of the traditional fiscal federalism theory – argues that the functions of redistribution and stabilization should be attributed to the central level of government, while the function of allocation, in particular in the case of impure or local public goods19 should be transferred to sub central level, namely national governments. However, this theory has always been referred to federal countries and has been applied in federalist contexts while the current European Union is quite far from this dimension. Moreover, fiscal federalism is per se a static theory that stems from mature federations, while the present-day EU needs a dynamic, flexible approach that may guide the institutional process and the economic building. The design of competence allocation in a well-settled, mature federation, it is quite an easy task, while finding the right mix of competence distribution in an evolving process, from an economic union to a quasi-federal entity, is a different and daunting issue. What the European Union needs is a simple but sound rule which can help in its building process and in revising the distribution of government responsibilities among the central tier and the national ones along the road of European integration. Of course, this does not imply that the path has been definitely charted and that we are bound to move to a federal dimension. Even better, recent institutional developments seems to show that the European Union can even remain a single market or a simple economic union; but a flexible blueprint is needed. In this paper we address major pitfalls of the current Eu budget and we propose some possible reforms in the structure of its financing and current revenue. |
| Keywords: | Eu Budget, Fiscal federalism |
| JEL: | H71 H73 H77 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:76112&r=pbe |
| By: | David Morgan |
| Abstract: | Norway is one of the top spenders on health care among OECD countries in per capita terms but much closer to the average when seen as a share of GDP. The question is to what extent these two key measures are compatible, and how Norway really measures up to other relevant high-income countries in health spending. In considering the latter, Norway allocates more to long-term care services than any other country. So how comparable are countries in the measurement of sectors such as long-term care and does this play a key role in determining overall spending estimates? Delving further, how does spending on the key sector of somatic specialist health care compared to other countries? If too much is spent, there is a risk that there is an over-emphasis on hospitals compared to primary care. On the other hand if there are too little resources in hospitals, there may be an over-expectation from the sector. However, estimates of spending based on inpatient care still mask a number of organisational and accounting differences, requiring adjustments to be made to the underlying figures. The resulting figures provide a new insight into cross-country comparisons and trends of somatic hospital spending. Finally, to determine what is explaining the different levels of spending, the appropriate use of international spatial deflators is discussed. Recent advances in the methodology to compile comparative price information for the health and hospital sectors are used to reveal to what extent spending across the comparator countries is the result of price or volume effects. La Norvège est l'un des pays qui dépense le plus pour les soins de santé dans les pays de l'OCDE par habitant, mais ce pays est beaucoup plus proche de la moyenne quand on regarde ces dépenses de santé en proportion du PIB. La question est de savoir si ces deux mesures clés sont compatibles et comment la Norvège se compare réellement par rapport aux autres pays à niveaux de dépenses de santé élevés. Si l'on prend en compte ce dernier point, la Norvège alloue davantage aux soins de longue durée que tout autre pays. On peut ainsi se demander si les pays sont comparables quand il s'agit des dépenses en soins de longue durée et dans quelle mesure cette comparabilité joue un rôle dans l'estimation globale des dépenses ? On peut également se demander comment compare-t-on les dépenses clés relatives aux soins somatiques spécialisés par rapport à d'autres pays ? Si l'on dépense trop, il y a un risque d’accorder une place trop importante aux hôpitaux par rapport aux soins primaires. D'autre part, s'il y a trop peu de ressources dans les hôpitaux, il peut y avoir des attentes trop fortes sur le secteur. Toutefois, les estimations des dépenses fondées sur les soins hospitaliers cachent encore un certain nombre de différences organisationnelles et comptables, nécessitant d'apporter des ajustements aux chiffres sous-jacents. Les chiffres qui en résultent fournissent un nouvel aperçu des comparaisons entre pays et des tendances des dépenses somatiques dans les hôpitaux. Enfin, pour déterminer ce qui explique les différents niveaux de dépenses, l'utilisation appropriée des déflateurs spatiaux internationaux est examinée. Les progrès récents des méthodologies permettant de compiler l'information comparative sur les prix pour les secteurs de la santé et des hôpitaux sont utilisés pour révéler dans quelle mesure les dépenses dans les pays comparateurs sont le résultat d’un effet prix ou d’un effet volume. |
| Keywords: | health care, health spending |
| Date: | 2017–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaad:91-en&r=pbe |
| By: | Maurer, Raimond; Mitchell, Olivia S.; Rogalla, Ralph; Schimetschek, Tatjana |
| Abstract: | People who delay claiming Social Security receive higher lifelong benefits upon retirement. We survey individuals on their willingness to delay claiming later, if they could receive a lump sum in lieu of a higher annuity payment. Using a moment-matching approach, we calibrate a lifecycle model tracking observed claiming patterns under current rules and predict optimal claiming outcomes under the lump sum approach. Our model correctly predicts that early claimers under current rules would delay claiming most when offered actuarially fair lump sums, and for lump sums worth 87% as much, claiming ages would still be higher than at present. |
| Keywords: | annuity,delayed retirement,lifetime income,pension,early retirement,social security |
| JEL: | G11 G22 H55 J26 J32 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:164&r=pbe |
| By: | Heinz Welsch; Philipp Biermann |
| Abstract: | Previous research has found that subjective well-being (SWB) is lower for individuals classified as being in poverty. Using panel data for 39,239 individuals living in Germany from 2005-2013, we show that people’s SWB is negatively correlated with the state-level poverty ratio while controlling for individual poverty status and poverty intensity. The negative relationship between aggregate poverty and SWB is more salient in the upper segments of the income distribution and is robust to controlling for the rate of unemployment and per capita GDP. The character of poverty as a public bad suggests that poverty alleviation is a matter not only of equity, but of efficiency. |
| Keywords: | poverty; poverty ratio; subjective well-being; public bad; life satisfaction |
| JEL: | I31 I32 D60 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp885&r=pbe |