nep-pub New Economics Papers
on Public Finance
Issue of 2012‒10‒27
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities By Stefanie Stantcheva; Emmanuel Saez; Thomas Piketty
  2. Unequal Inequalities: Do Progressive Taxes Reduce Income Inequality? By Duncan, Denvil; Peter, Klara Sabirianova
  3. Non-linear Effects of Taxation on Growth By Nir Jaimovich; Sergio Rebelo
  4. Public-private partnerships versus traditional procurement: Innovation incentives and information gathering By Hoppe, Eva I.; Schmitz, Patrick W.
  5. Public Goods in a Voluntary Federal Union: Implications of a Participation Constraint By Aronsson, Thomas; Micheletto, Luca; Sjögren, Tomas
  6. Public Pension Benefits Claiming Behavior: New Evidence from the Japanese Study on Aging and Retirement By Shimizutani, Satoshi; Oshio, Takashi

  1. By: Stefanie Stantcheva (MIT); Emmanuel Saez (University of California Berkeley); Thomas Piketty (Paris School of Economics)
    Abstract: We then analyze top income and top tax rate data in 18 OECD countries. There is a strong correlation between cuts in top tax rates and increases in top 1% income shares since 1975, implyingthat the overall elasticity is large. But top income share increases have not translated into higher economic growth, consistent with the zero-sum bargaining model. This suggests that the first elasticity is modest in size and that the overall effect comes mostly from the third elasticity. Consequently, socially optimal top tax rates might possibly be much higher than what is commonly assumed.
    Date: 2012
  2. By: Duncan, Denvil (Indiana University); Peter, Klara Sabirianova (University of North Carolina, Chapel Hill)
    Abstract: This paper analyzes the effect of changes in structural progressivity of national income tax systems on observed and actual income inequality. Using several unique measures of progressivity over the 1981-2005 period for a large panel of countries, we find that progressivity reduces inequality in observed income, but has a significantly smaller impact on actual inequality, approximated by consumption-based GINIs. We show empirically that the differential effect on observed vs. actual inequality is much larger in countries with weaker legal institutions. Substantial differences in inequality response to changes in top vs. bottom rates are also uncovered. The paper discusses implications of these results for flat tax policies.
    Keywords: income inequality, Gini, personal income tax, structural progressivity, tax evasion
    JEL: H2 I3 J3 O1 O2
    Date: 2012–10
  3. By: Nir Jaimovich; Sergio Rebelo
    Abstract: We study a model in which the effects of taxation on growth are highly non-linear. Marginal increases in tax rates have a small growth impact when tax rates are low or moderate. When tax rates are high, further tax hikes have a large, negative impact on growth performance. We argue that this non-linearity is consistent with the empirical evidence on the effect of taxation and other disincentives to investment and innovation on economic growth.
    JEL: H2 O4
    Date: 2012–10
  4. By: Hoppe, Eva I.; Schmitz, Patrick W.
    Abstract: A government agency wants a facility to be built and managed to provide a public service. Two different modes of provision are considered. In a public-private partnership, the tasks of building and managing are bundled, whereas under traditional procurement, these tasks are delegated to separate private contractors. The two provision modes differ in their incentives to innovate and to gather private information about future costs to adapt the service provision to changing circumstances. The government agency's preferred mode of provision depends on the information gathering costs, the costs of innovation efforts, and on the degree to which effort is contractible.
    Keywords: Public-private partnerships; Integration versus separation; Information gathering; Incomplete contracts
    JEL: D86 H11 L33
    Date: 2012–10
  5. By: Aronsson, Thomas (Department of Economics, Umeå School of Business and Economics); Micheletto, Luca (Department of Policy Analysis and Public Management); Sjögren, Tomas (Department of Economics, Umeå School of Business and Economics)
    Abstract: This paper re-examines the question of whether federal ex-post redistribution in terms of public funds leads to under-provision of public goods by adding the assumption that the member states are free to leave the economic federation. We show that federal ex-post redistribution no longer necessarily means under-provision of local and federal public goods.
    Keywords: Public goods; fiscal federalism; ex-post redistribution
    JEL: D61 H41 H77
    Date: 2012–10–18
  6. By: Shimizutani, Satoshi; Oshio, Takashi
    Abstract: This paper explores the public pension claiming behavior of the Japanese. First, we perform financial simulations and estimate the expected utility, depicting the typical patterns of pension benefits over a life cycle. We show that the optimal retirement age depends on the beneficiaries’ mortality risk, discount rate, initial wealth, and risk attitude. Second, we use individual-level data from the Japanese Study on Aging and Retirement to examine empirically the determinants of the take-up timing. We find supportive evidence that most of the factors examined in the simulation are indeed significantly associated with early claiming of pension benefits for wage earners.
    Keywords: Claiming behavior, Pension benefit, Survival probability, Risk attitude, Japanese Study on Aging and Retirement
    JEL: H55 J26
    Date: 2012–10

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