We study the impact of the 2022-2023 energy crisis in Germany. We collect 3 waves of panel data to measure how political attitudes change with increasing energy prices for households. Our difference-in-differences estimation exploits unique features of the German energy sector, which allows for a quasi-experimental design. We show that increases in electricity payments lead to a decline in support for democratic institutions, with effects intensifying over time. The study focuses on how economic shocks affect political attitudes. It has implications that range from climate policy to the rise of populism.

We study the relative merit of regulation by “prices vs. quantities” by assessing the instrument choice between carbon taxes and emissions trading systems from the perspective of public perceptions. In a stated-choice experiment across 15,000 respondents from seven European countries, we elicit how citizens perceive the (non-)economic properties of carbon taxation and emissions trading, and study how they are linked to public support. Our analysis is guided by value-based, reason-based and motivated reasoning approaches to public choice. While there is considerable cross-country variation in the appraisal of both instruments, treatments effects of instrument framing are sizeable: carbon taxes are consistently more often perceived as increasing the state budget, harming the economy, and increasing costs of living and production, and emissions trading is more often perceived as easy to evade. Our results suggests that public opinion on carbon pricing is primarily driven by perceptions around taxes being a 'tougher' measure.

We study the optimal taxation of carbon in a fiscal climate-economy model with incomplete markets. Our objective is twofold. First, we want to understand how the presence of inequality and uninsurable idiosyncratic income risk affects the optimal trajectory of climate policy, i.e. both its level and timing. Second, we want to understand how climate policy in turn affects the economy, i.e. the level of aggregate variables, redistribution, insurance provision, and welfare. To investigate these issues, we consider a Ramsey problem where the planner maximizes welfare by choosing the path of proportional taxes on capital and labor, transfers, and debt, as well as taxes on carbon emissions and energy production. We quantitatively study this Ramsey problem under various constraints over the choice of instruments, and highlight the trade-offs faced by a government seeking to jointly address inequality, imperfect insurance, and climate change.

Effective climate change mitigation requires green innovation, but not all projects have equal social value. We examine the role of innovation heterogeneity in a model where the policy maker cannot observe innovation quality and directly subsidize the socially most valuable green innovations. We find that carbon pricing works as an innovation screening device; this creates a premium on the optimal carbon price, raising it above the Pigouvian level. We identify conditions for perfect screening and generalize results to screening policies under alternative intellectual property regimes and complementary policies. A calibration reveals that screening can justify a carbon price that is up to three times the Pigouvian price.

Many developing countries have expanded their pension systems in the last two decades. However, the low coverage of informal workers remains a serious issue. I analyze the impact of a Mongolian large-scale policy that redeemed missing contributions, leading to a relaxation of the contribution requirements. I estimate the price elasticity of public pension demand with respect to money's worth by a regression kink design approach with administrative data. I find small benefits for young individuals effectively promote participation, and large benefits crowd out additional contributions for certain existing participants. I also find gender-heterogeneous impacts possibly driven by different retirement ages.

We evaluate the impact of a policy reform in Sweden in 2020 that raised the early pension claiming age from 61 to 62. Employing administrative data from Sweden and a difference-indifferences approach, we analyze public pension claiming and labor market outcomes among age groups differentially impacted by the reform. We find that the reform led to an extension of working life until age 62, short-term reductions in disposable income for low-income earners, and slight increases in the uptake of sickness and unemployment benefits.

Brazil expanded its rural old-age pension to cover millions of previously uncovered women, conditional on work requirements, through a 1991 reform. We use an extended difference-in-differences approach to show that this expansion increased women’s employment by nine percentage points, or 26 percent. This increase in labor force participation occurred among women who were immediately age-eligible, and among younger cohorts that would be eligible in the future. These results illuminate the capacity of workers to respond to financial incentives for labor participation in old age, and the extent to which younger workers might be forward-looking as they respond to retirement incentives.

We study the influence of family members, neighbors and coworkers on individual retirement decisions. To estimate causal retirement spillovers between individuals, we exploit a pension reform in the Netherlands that creates exogenous variation in peers' retirement behavior, and we use administrative data on the full Dutch population. We begin by documenting large retirement spillovers between spouses, primarily due to women reacting to their husband's retirement choices. Consistent with homophily in social interactions, we find a modest influence of the average sibling, neighbor and coworker, but there are substantial spillover effects between similar individuals in these groups. Additional evidence suggests that retirement spillovers are driven both by leisure complementarities and social norms. Our findings imply that pension reforms can have a large social multiplier, amplifying their overall impact on retirement behavior.

This paper examines the effect of asylum seeker intake on the number of new businesses being registered. We combine two datasets: exclusive data on new district-level business registrations and data on asylum seeker intake in about 400 German districts (Kreise) between 2007 and 2021. To address endogeneity in asylum seeker allocation, we use official within-state allocation quotas as an instrument. A one SD higher intake of asylum seekers (≈ 10 asylum seekers) per 1,000 inhabitants leads to 0.7 new businesses per 1,000 inhabitants being registered (≈ 8.8% increase). These new businesses, mainly registered by Germans (not asylum seekers themselves), directly create 2.6 new full-time jobs per 1,000 inhabitants as well as about 8 new full-time jobs per 1,000 inhabitants in the district outside the new businesses. On mechanisms, we also find that the new business registrations are both supply- (new workforce) and demand-driven (new demand patterns).

We present a new methodological approach to measure the redistributive preferences of political parties based on their election proposals. This approach builds on the marginal value of public funds (MVPF) framework. We recover the welfare weight associated with a small reform as the inverse of its MVPF. The aggregated welfare weights of multiple small reform proposals for each party and election year provide measures of the parties’ redistributive preferences along the income distribution. Leveraging this approach, we use a rich structural microsimulation model to estimate the MVPFs and their associated welfare weights for more than 300 proposed reforms of the tax-transfer system by Germany’s five largest parties from 1990 until 2021. Our results allow to study the differences in the redistributive preferences between German parties

and over time.

Does the sudden arrival of a new wave of immigrants distort the electoral performance of local council candidates with an immigrant background? We combine hand-collected candidate-level data on council elections (2001-2021) with detailed administrative data on asylum seekers across Hessian municipalities. We infer candidates’ immigrant background from their names via existing machine learning classification tools. Using a difference-indifferences strategy with a continuous treatment (change in the share of asylum seekers per municipality), we find that candidates with an immigrant background benefit from the arrival of relatively large numbers of asylum seekers such as in late 2015. Further results show that this effect exists exclusively for candidates with a Southern or Eastern European background which are culturally and ethnically relatively similar to native Germans.

What is the causal effect of conflict on refugees’ return and integration? To answer this question, we launched a panel survey of Ukrainian refugees across Europe in June 2022 and combined it with geocoded conflict data. Most refugees plan to return, and initial return intentions strongly predict actual return. Those who initially plan to settle outside Ukraine integrate faster. Increased conflict intensity in the home municipality discourages return there, but not to Ukraine as a whole. It also has no effect on the likelihood of working. Liberation of the home district increases return, while increased pessimism about the outcome of the war reduces return intentions.

In this paper, we consider the income distribution of Japanese high-income earners using micro tax data provided by National Tax Agency for the first time in Japan.

While wage income is the most important income for most of high-income earners, stock capital gains are the most important income for the very top high-income earners. Pareto coefficient of total income in Japan is about 1.45 in 2020. This is much lower than the previous estimates of Pareto coefficients 2.1 in 2003. Different from the existing studies based on data without capital gains, our lower Pareto coefficient estimate shows income concentration toward the super-rich in Japan. The tax burden rate increases with income until about 100 million Japanese yen but decreases beyond it. This regressivity occurs since Japanese income tax system imposes lower tax on capital income. To restore income redistribution function, capital income tax rate should be raised in Japan.

This paper examines income inequality and dynamics in France, using exhaustive administrative panel data. We find that the market income distribution is highly unequal, with the top 1% receiving around 6% of the income. Income mobility is characterized by strong persistence at all income levels and for all age groups. Using a non-parametric framework that accounts for differences in income risk along the market income distribution, we reveal significant differences in income growth moments. Our findings indicate that the distribution of growth rates has high variance, excess skewness, and fat tails. We also investigate the role of redistribution as an insurance tool against income risk and find that transfers are particularly pivotal in reducing income risk for the lower part of the income distribution. We show substantial heterogeneity in income risk across locations, education and occupation groups, and the share of capital in total income.

In recent years, the use of both individual tax data and national accounts data to study United States income inequality has been controversial, and one important piece of this controversy is the role of corporate income and the corporate sector. We provide a framework for thinking about the historical and conceptual relationship between income, inequality, and the corporate sector. We make several contributions. First, we assemble a variety of previously unused data to study the corporate sector in the long run. Second, we survey important long-run sectoral and legal changes to the allocation of income between the individual and corporate sector and the study of inequality. Third, we show that inequality measures are sensitive to how corporate income is imputed to individuals, and that the primary methods used in existing literature may understate top income shares before 1986.

This paper presents distributional national accounts for Honduras over 2003- 2019, using survey microdata, administrative tax records, and national account aggregates. It assembles comprehensive data on formal income for high-income individuals, including information on corporate shareholders, which allows cor- porate profits to be assigned to their owners. The estimates suggest a high and persistent inequality in the country: the top 1 percent highest earners received approximately 30 percent of the total income over the period, placing Honduras among the most unequal countries in the world. Undistributed corporate profits are the overwhelming income source at the very top of the distribution, highlight- ing its importance in the measurement of income inequality. Finally, using a panel of tax records, the paper also documents that not only is inequality persistent, but the same individuals are often observed at the top, suggesting that the observed inequality has deep roots.

This paper questions how individuals and couples should be taxed when women face wage discrimination in the labor market.

When women anticipate being discriminated against in the labor market, it affects their decision to invest in education. Consequently, women, thinking that their return on education will be lower, choose to be less qualified on average. This confirms employers' bias regarding the qualifications of women. I find that when women face wage discrimination, they have more incentive to work on household production compared to their husbands and less in the labor market. I show that the optimal income tax rate depends on a pigouvian term that decreases the marginal tax rate of the discriminated group. This paper aims to provide guidance for tax reform when gender inequalities in home production and the labor market interact.

We document trends in inequality in earnings and disposable household income for men and women in Germany from 2001 to 2019. We find that males at the lower half of the earnings distribution have lower earnings in 2019 than in 2001. In contrast, female earnings have increased throughout the distribution. Households and the welfare state has cushioned much—but not all—of the income drop at the bottom of the distribution. A reweighting analysis reveals that changes in working hours as well as in the composition of nationalities explain a substantial part of the drop in the 10th earnings and net income percentile for men. Moreover, changes in household structure have led to an increase in disposable incomes throughout the distribution.

Unequal consumption sharing within households is well-documented. However, there is limited evidence on the stability of within-household inequality over time. Moreover, the responsiveness of within-household inequality to the evolution of social norms and public policy remains an open question to a significant extent. We combine a collective household model with consumption survey data spanning 23 years to study the evolution of within-household consumption inequality. Our findings reveal gender inequality within households. We also observe a slight decrease in women's relative resource shares over the considered time period.

We study the interaction of climate policies and investments into black and green energy generation capacity if policies are set by elected governments and can lead to stranded assets. Within an overlapping generations model, elections determine carbon taxation and green investment subsidies, and individuals make investments into energy capacity given an uncertain election outcome. Some black investments become stranded assets, if the party offering the higher carbon tax is unexpectedly elected. If the party representing the young generation is in power, it can use a high subsidy to reduce or even avoid potentially stranded assets in the next period. With endogenous reelection probability, we show that this party can also use investment subsidies strategically to influence the elections. The party that represents the old generation abstains from both types of climate policies to avoid a redistribution of income towards the young generation.

This paper investigates the role that domestic elections play for IEAs and to what extent they might be an explanatory factor for the modest success of international cooperation on climate change mitigation. Agents involved in international negotiations are often subject to domestic electoral concerns and therefore, policy decisions might affect their chances of reelection in upcoming elections. Also, international treaties usually last beyond a governments’ incumbency, which implies that the negotiation and ratification decision might be made by two different entities. I formulate a 4-stage game in order to analyse the arising strategic incentives depending on the level of political polarisation. I find that incumbent governments mostly choose suboptimal treaties compared to if there was no election in order to boost their chances of reelection. Additionally, I find that increased political polarisation generally leads to more distorted treaties and worse outcomes from the perspective of the median voter.

We study the formation of international climate coalitions. Countries are farsighted and rationally predict the consequences of their membership decisions in climate negotiations. We offer an approach to characterise the equilibrium number of coalitions and their number of signatories independent of their heterogeneity, and we suggest a tractable algorithm to fully characterise the equilibrium. In a dynamic game analysis of an integrated assessment model of the economy and the temperature dynamics, if the policymakers are patient enough and the number of countries is not too large, the number of signatories in all climate treaties is a Tribonacci number. In general, we investigate possible coalition structure outcomes for a calibrated model. In contrast to earlier approach based on internal and external stability, much larger coalitions can be sustained in equilibrium and coalitions of different sizes can co-exist alongside each other.

This paper analyses the effects of altruism on the formation of climate coalitions in the standard two-stage game of self-enforcing international environmental agreements with identical countries. Altruism implies that each country values, to some extent, every other country's welfare when deciding on its coalition membership and emissions policy. In the Nash [Stackelberg] game, altruism decreases [increases] the coalition size. In any case, global emissions and global welfare are close to the non-cooperative values. However, altruism narrows the gap between the individually optimal emissions and the socially optimal emissions, so altruism increases global welfare.

The effects of altruism on the formation of climate coalitions crucially depends on its modelling: If altruism affects the membership decision but not the policy decision, or if each coalition country is more altruistic toward other coalition countries than toward fringe countries, altruism can stabilise large coalitions up to the grand coalition...