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on Public Finance |
| By: | Marko Köthenbürger (CES, University of Munich and CESifo); Panu Poutvaara (University of Helsinki, CEBR, CESifo, HECER and IZA Bonn); Paola Profeta (Bocconi University) |
| Abstract: | We suggest a political economy explanation for the stylized fact that intragenerationally more redistributive social security systems are smaller. We relate the stylized fact to an "efficiencyredistribution" trade-off to be resolved by political process. The inefficiency of social security financing is due to endogenous labor supply. Using data on eight European countries, we find that the stylized fact and a considerable degree of cross-country variation in contribution rates can be explained by the median voter model. |
| Keywords: | earnings-related and flat-rate benefits, applied political economy, public pensions, labor supply |
| JEL: | H55 D72 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1831&r=pub |
| By: | Wojciech Kopczuk; Cristian Pop-Eleches |
| Abstract: | In 2002 more than 18 million low-income individual taxpayers received the Earned Income Tax Credit (EITC). Despite its size, non-participation in this program is a concern and substantial effort is devoted by the IRS, local governments and many non-profits to address it. Most of the tax returns for EITC recipients are filed electronically by paid tax preparers who often charge significant fees for their services. Using variation across states in the introduction of state electronic filing programs, we show that the introduction of electronic filing had a significant effect on participation in the EITC. Our results are robust to accounting for other welfare, EITC and IRS reforms introduced during the same period. We suggest that this effect is due to the impact that electronic filing opportunities had on the tax preparation industry, therefore providing an example of how a market-based approach can be effective in addressing the problem of program non-participation. |
| JEL: | H24 I38 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11768&r=pub |
| By: | Agar Brugiavini (University of Venice - Department of Economics); Franco Peracchi (University of Rome II - Centre for International Studies on Economic Growth (CEIS)) |
| Abstract: | A "good" pension reform should address a number of issues. One important aspect is the financial soundness of the system, particularly in the light of the legacy that we leave to future generations. Policy makers should also address economic efficiency at two levels: no waste of resources for a given contribution rate (or for a given benefit level), and no distortions of individual choices (or at least minimize distortions). The main distortions associated with a pension system or with its reform have to do with saving and labor supply behavior. Italy has seen a flurry of reforms during the 1990s, and economists and policy makers are still struggling to assess the results and the long-term effects of these reforms. Many analysts argue that the overall design of the recent Italian reforms is probably a good one, and yet more steps need to be taken to speed up the reform process and reap the benefits which, due the adverse demographic trends, could easily evaporate. In this paper, we contribute to the current debate on the Italian pension system by analyzing the impact of social security reforms, in terms of both budgetary implications and distributional effects. This is done by simulating the effects of three hypothetical reforms, plus the effects of the 1995-reform of the Italian pension system (the so-called Dini reform). Our approach relies on the use of a semi-structural econometric model to predict retirement probabilities under different policy scenarios, so as to properly take into account the behavioral effects of the reforms. On the basis of the estimated retirement model, we develop a complete accounting exercise which includes not only changes in gross future benefits due to policy changes, but also changes in social security contributions, income taxes and value added taxes. Thus, our results provide not only estimates of the workers' gains or losses, but also an exhaustive evaluation of the gains and losses for the government budget. We find that the reforms, particularly the Dini reform (once fully phased in), have a substantial impact on individuals' retirement decisions and their net social security wealth, as well as substantial gains for the government finances. |
| Date: | 2005–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:67&r=pub |
| By: | Werner Güth (Max Planck Institute for Research into Economic Systems); Vittoria Levati (Max Planck Institute for Research into Economic Systems); Rupert Saugruber (University of Innsbruck) |
| Abstract: | We consider an economy composed of two regions. Each of them provides a public good whose benefits reach beyond local boundaries. In case of decentralization, taxes collected by members of a region are spent only on that region's public good. In case of centralization, tax receipts from the two regions are pooled and used to finance both public goods according to the population size of each region. The experiment shows that centralization induces lower tax morale and less efficient outcomes. The reasons are that centralization gives rise to an interregional incentive problem and creates inequalities in income between regions. |
| Keywords: | Tax morale; Fiscal federalism; Public goods experiments |
| JEL: | C91 H26 H41 H70 |
| Date: | 2005–11–17 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwppe:0511014&r=pub |