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on Public Economics |
| By: | Rosanne Altshuler; Lysle Boller; Kevin A. Roberts; Juan Carlos Suárez Serrato |
| Abstract: | We use newly linked IRS data to study how US multinationals use tax-planning structures that exploit mismatches between US and foreign tax laws. In 2016, these structures accounted for 36% of foreign profits despite being adopted by only 18% of firms. We develop and estimate a structural model using adoption patterns and changes in foreign effective tax rates, domestic and foreign investment, and global R&D following adoption. The model implies substantial heterogeneity in adoption costs and benefits and shows that restricting tax planning creates tradeoffs between tax revenue and economic activity that are amplified by global R&D linkages. |
| JEL: | D22 H25 H26 H32 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35874 |
| By: | Marius A. K. Ring |
| Abstract: | Whether imposing higher taxes on business owners adversely affects business activity by constraining investment and inducing capitalist flight is a central question in the ongoing debate on how to tax the ultra wealthy. To shed new light, I exploit a series of related Norwegian reforms during 2021–2024 that increased dividend tax rates, removed migration-related capital gains tax loopholes, and nearly doubled the effective marginal tax rate on business wealth. These reforms spurred international debate and, allegedly, an “exodus” of Norwegian billionaires (Financial Times, 2023). While I document clear effects on migration, these responses are concentrated among the top 0.1% of the wealth distribution and mostly confined to 2022 and 2023. My results indicate that at most 100 individuals left due to the reforms. I find no evidence of significant outmigration or reduced inflows of startup founders or inventors. I estimate that absent any outmigration, wealth tax revenues would have increased by 75% from 2021 to 2024. Reform-driven outmigration lowers the revenue gain to 71.5%. My findings further show that outmigrating owners’ firms remain economically active and do not reduce investment. In a broader set of analyses, I examine whether business outcomes are affected, regardless of whether owners outmigrate, since firms may reduce investment both due to liquidity constraints or distortions to owners’ savings decisions. I compare firms owned by Norwegian individuals subject to the wealth tax with firms owned by foreigners and other tax-exempt entities. By merging historical ownership data from Orbis with the Norwegian shareholder register, I perform these analyses on both Norwegian and foreign-domiciled firms. Across settings, I find no evidence that Norwegian-owned firms pay out more dividends or invest less after the reforms, nor is there any evidence that the reform induced more bankruptcies. These findings indicate that the short-run economic costs of wealth taxation, in terms of migration and firm investment, are more limited than the public debate implies. |
| JEL: | H0 H2 H3 H31 H32 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35854 |
| By: | Richard Blundell; Monica Costa-Dias; Graham Mazeine; Costas Meghir; Tom Waters |
| Abstract: | Work experience has been found to be a key determinant of work and wages for educated women, but it seems to play a smaller role for the less educated. For them, welfare, tax credits and family composition matter more, and increasingly so does participation in disability programmes. Here we document how labor supply, wages, health, and disability claims have evolved in the UK over the last three decades, and examine how reforms to tax credits, disability benefits and other welfare programs have changed work incentives over this period. We then introduce these features into an empirical dynamic structural model of life-cycle labor supply, human capital and disability benefit application, in which human capital combines health capital, experience accumulated in work, and education. Estimating the model on a panel of working-age women in the UK, we examine the interactions between experience capital and health capital in driving life-cycle earnings across different education groups. Our results highlight the importance of interactions in the disability benefit, welfare and tax-credit systems for understanding the life cycle pattern of hours, employment, earnings, and disability claims, and for evaluating policy counterfactuals. |
| JEL: | D15 D31 H24 H31 I14 I3 J14 J22 J31 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35861 |
| By: | Andrew C. Barr; Laura Kawano; Bruce Sacerdote; Michael Stevens |
| Abstract: | The COVID-19 pandemic caused a sharp initial rise in unemployment, followed by an unexpectedly tight labor market. Using a panel of tax data containing newly assembled information on worker occupation, we document persistent labor force exit, especially among low-income and low-skill workers. Low-skilled unmarried men are by far the most likely to exit, reinforcing recent concerns regarding the economic and social engagement of this group. Contrary to prevailing theories, we find little evidence that school closures, virus exposure, stimulus payments, or unemployment benefits explain these exits. Nor is the exit explained by additional upgrading of occupations or firm quality. Individuals who leave the labor force do not (on average) make up the missing income; however, self-employment income replaces roughly a quarter of the lost W-2 income. The facts suggest that the willingness to work for low pay decreased and preferences for leisure and job flexibility increased among a large set of workers who have found ways to get by with less income. These results have implications for tax policy, fiscal projections, and labor market dynamics in the post-pandemic economy. |
| JEL: | J01 J2 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35856 |
| By: | Olivier J. Blanchard; Pedro Martínez-Bruera; Gonzalo Huertas |
| Abstract: | We characterize the size of the range of multiple equilibria in sovereign debt markets. We show that the nature of the equilibrium depends crucially on the degree of uncertainty, which we formalize first as uncertainty about primary balances and later as uncertainty about the fiscal feedback rule. For low uncertainty, the range can be large, but it becomes smaller as uncertainty becomes larger. If uncertainty is large enough, the multiplicity disappears: the interest rate is unique and becomes a continuous function of the debt level. The source of these results is that larger uncertainty decreases the effect of the perceived probability of default on the actual probability of default, thus reducing and eventually eliminating the scope for multiplicity. Interpreting the source of an increase in the interest rate in actual situations is difficult, and complicates the use of intervention by central banks. |
| JEL: | H6 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35850 |