nep-pub New Economics Papers
on Public Finance
Issue of 2023‒08‒28
five papers chosen by
Kwang Soo Cheong, Johns Hopkins University

  1. Public Policy: A science and/or a Field? By Rouhani, Omid
  2. Taxing the Gender Gap: Labor Market Effects of A Payroll Tax Cut for Women in Italy By Enrico Rubolino
  3. Taxes and Gender Equality: The Incidence of the ‘Tampon Tax’ By Thiess Büttner; Frank Hechtner; Boryana Madzharova
  4. A Non-Parametric Estimation of Productivity with Idiosyncratic and Aggregate Shocks: The Role of Research and Development (R&D) and Corporate Tax By Bournakis, Ioannis; Tsionas, Mike G.
  5. Minimum Tax Rates and Tax Competition: Evidence from Property Tax Limits in Finland By Teemu Lyytikäinen

  1. By: Rouhani, Omid
    Abstract: “The Public Policy Theory Primer” book, by Ken Smith and Chris Larimer, investigates public policy theories and examines a key question: Does this scientific field really exists? The book's answer is yes, but in a plural format. The book’s conclusion is that public policy is more art/craft rather than science, at least not yet. Overall, the book is informative, especially for a person with limited knowledge regarding fundamental public policy theories.
    Keywords: Public Policy; Political Science; Policy Analysis; Policy Process
    JEL: H0 H1 H3 H30 H75
    Date: 2023–07–27
  2. By: Enrico Rubolino (University of Lausanne, Department of Business and Economics)
    Abstract: This paper studies the labor market effects of a large payroll tax cut for female hires in Italy. Starting in January 2013, the payroll tax rate paid by the employer for female hires was reduced by 50 percent for a period of 12 months for temporary jobs and 18 months for permanent jobs. Eligibility for the tax cut depends on the time elapsed in nonemployment status and varies discontinuously by the worker’s municipality of residence, age, and occupation. Combining social security data on the universe of Italian private-sector workers with several empirical approaches, I find that the tax cut increases female employment and spurs business performance, especially where gender biases are more severe. By contrast, the tax cut does not raise workers’ net wages. A cost-benefit analysis implies that the net cost of the policy is around one-fourth of the budgetary cost. These findings provide the first empirical evidence that differentiating payroll taxes by gender helps to reduce the gender employment gap, but not the gender pay gap.
    Keywords: Local gender gaps; female employment; payroll tax; tax incidence
    JEL: H22 J21 J31
    Date: 2023–07
  3. By: Thiess Büttner; Frank Hechtner; Boryana Madzharova
    Abstract: Many countries are currently debating whether to reduce or eliminate taxes on feminine hygiene products as a measure to address “period poverty” and promote gender equality. Legislators often reject proposals involving reforms of “tampon taxes” as the pass-through of sales taxes into consumer prices cannot be guaranteed. This paper uses a permanent reduction of the tax on tampons & pads in Germany in 2020 as a natural experiment to study the price and unit-sales effects of the tax. Exploiting an extensive data set on the unit sales and scanner prices of feminine hygiene products in Germany and Italy, our results indicate that the incidence of tampon taxes is fully on consumers, while demand for these products is price-inelastic. We do not find cross-price effects for a closely related product group, which remained taxed at the standard tax rate. Both the pass-through and demand effects are found to be homogenous along the pre-reform market-share and price distributions.
    Keywords: tax incidence, pass-through, gender equality, feminine hygiene products, period poverty
    JEL: H22 H23 I38 J16
    Date: 2023
  4. By: Bournakis, Ioannis; Tsionas, Mike G.
    Abstract: We developed a non-parametric technique to measure Total Factor Productivity (TFP). Our paper has two major novelties in estimating the production function. First, we propose a productivity modelling with both idiosyncratic firm factors and aggregate shocks within the same framework. Second, we apply Bayesian Markov Chain Monte Carlo (MCMC) estimation techniques to overcome restrictions associated with monotonicity between productivity and variable inputs and moment conditions in identifying input parameters. We implemented our methodology in a group of 4286 manufacturing firms from France, Germany, Italy, and the United Kingdom (2001-2014). The results show that: (i) aggregate shocks matter for firm TFP evolution. The global financial crisis of 2008 caused severe adverse effects on TFP albeit short in duration; (ii) there is substantial heterogeneity across countries in the way firms react to changes in R&D and taxation. German and U.K. firms are more sensitive to fiscal changes than R\&D, while Italian firms are the opposite. R\&D and taxation effects are symmetrical for French firms; (iii) the U.K. productivity handicap continued for years after the financial crisis; (iv) industrial clusters promote knowledge diffusion among German and Italian firms.
    Keywords: Total Factor Productivity (TFP), Control Function, Non-parametric Bayesian Estimation, Markov Chain Monte Carlo(MCMC), Research and Development (R\&D), Taxation, European firms
    JEL: C11 D24 H21 H25 Q55
    Date: 2023–07–21
  5. By: Teemu Lyytikäinen
    Abstract: This paper analyzes how minimum local property tax rates affect local tax policy choice. In Finland, central government has raised the limits on property tax rates several times in the past 30 years. I construct a measure of forced tax rate increases caused by these reforms and examine how municipalities respond to forced increases in nearby municipalities. Results for the property tax on business properties indicate that neighbors' forced tax rate increases lead to higher tax rates, after a reform of the tax base equalization system which increased incentives to compete for the tax base. Before the equalization reform, the tax rates on business properties were unaffected by neighbors' forced tax rate increases. I find some indications that forced increases in the residential property tax rate lead to lower tax rates in neighboring municipalities four years later. Analysis of government bills shows that the introduction of minimum tax rates was partly motivated by concerns regarding horizontal and vertical tax competition. Forced property tax rate increases have a clear and lasting effect on tax revenue in affected municipalities, implying that the tax capacity of central government as regards other tax bases likely increased.
    JEL: H70 H71 H77
    Date: 2023–07

This nep-pub issue is ©2023 by Kwang Soo Cheong. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.