Cross-border shopping of alcoholic beverages reduces domestic sales and tax revenue. We estimate the magnitude of Norwegian cross-border shopping of hard liquor and wine and its effects on tax revenue by using the travel restrictions during the COVID-19 pandemic as a natural experiment. The Norwegian alcohol retail market is controlled by a state monopoly (Vinmonopolet), and our data set includes the complete transaction data of Vinmonopolet. The effects are identified by using a difference-in-difference approach comparing changes in sales in stores with different driving time to the nearest foreign alcohol store. We find reduced sales in the stores of Vinmonopolet for driving times up to three hours. The reduced sales are about 9% for wine and 6% for hard liquor corresponding to almost one billion NOK in lost annual tax revenue.

Products with negative externalities are often subject to regulations that limit competition. The single-product case may suggest that it is irrelevant for aggregate welfare whether output is restricted via corrective taxes or limiting competition. However, when products are differentiated curbing consumption through market power is costly if purchase decisions of inframarginal consumers are distorted. We examine a regulation known as post-and-hold (PH) used by a dozen states for the sale of alcoholic beverages. Theoretically, PH eliminates competitive incentives among wholesalers. We assemble unique data on distilled spirits from Connecticut, including matched manufacturer and wholesaler prices, to evaluate the welfare consequences of PH. PH leads to substantially lower consumer welfare compared to excise, sales or Ramsey taxes by distorting consumption choices away from high-quality and towards low-quality brands. Replacing PH with taxes could reduce consumption by over 9% without reducing consumer surplus, and increase tax revenues by over 300%.

This paper studies the repercussions of biased tax enforcement on firms’ export per- formance. Mandated transparency at Customs enhances tax authorities’ capabilities for scrutinizing exporting firms, potentially creating an implicit barrier to global market participation. Leveraging an institutional reform in China that introduced exogenous variations in tax enforcement practices for two sets of comparable firms, I estimate the impact of such information-based tax enforcement for manufacturing firms. I find that this bias leads to underperformance in export market, primarily in the intensive margin. Further investigation suggests that effects come from the product portfolio choices: firms under such bias display a great tendency to be a single-product exporter and have a smaller product scope. Heterogeneous effects underscore the paramount significance of fixed costs regarding exporting.

Taxes and tariffs on imports are a major source of government revenue for many developing countries. This means that tax evasion at the border through understating the amount and value of imports as well as mis-classifying them as lower-taxed goods represents a potentially significant loss to much-needed public funds. In the recent years, many countries implemented non-intrusive fixed cargo scanners at entry points as one way to mitigate such misreporting, providing a quasi-experimental treatment setting. Using transaction-level customs data for Uganda, we estimate the impact of scanners on trade and taxes collected at the border. Our estimates suggest that while these scanners reduced evasion, they also raised trade costs. The net impact of these two effects was to lower tariff revenues at the affected entry points by 0.898 percent and VAT receipts by 0.66 percent. t.

This study argues that portfolio theory can provide a powerful tool to make research funding decisions. The proposed methodology allows for an informed management decision process, also in the presence of project interdependencies and multiple policy objectives. Despite its potential to improve funding decisions, the portfolio model is not widely applied in practice. The most common approach is merit-based funding where the evaluators’ scores of the individual proposals guide funding decisions. A possible explanation is that conventions play a role in the selection process. Survey data show that policy practitioners working in the field of research and innovation policy have a relatively strong preference for the merit-based funding model, suggesting the presence of a “club-effect”.

We investigate the effects of monetary compensation on the duration of voluntary work, on donations, and on market labor income of paid volunteers using data from German income tax returns. In recent decades, volunteering has expanded from completely unpaid work to the possibility of receiving small (tax-free) monetary compensations for the activities performed. However, the effects of monetary incentives in the context of prosocial behavior are likely to differ from effects on paid work in the labor market. Our empirical analysis leverages a German policy change from 2013 that increased the tax-free threshold for volunteer compensations. We combine difference-in-differences and matching strategies with a duration analysis model to investigate the effects of changes in volunteer compensation on volunteers working as instructors or educators. This allows us to identify the dominant mechanism behind paid volunteers’ optimal choices for volunteering, market labor, and donations.

We examine the problem of voluntary participation in negotiations regarding the provision of public goods. In contrast to earlier studies, in our model, a negotiation is followed by renegotiations. First, players decide whether to participate in a negotiation, and the participants produce a public good. The participants then renegotiate the level of the public good with nonparticipants in the preceding negotiations. We show that with these renegotiation opportunities, many players may participate in providing the public good in the preceding negotiation. In some cases, all players participate in the preceding negotiation and the public good is produced efficiently. Our findings indicate that more players participate in the provision of public goods if they have strong bargaining power in the renegotiations. Hence, this problem may not be as severe as reported by previous studies. Our results may be consistent with the recent developments in voluntary projects for international river management.

This paper examines the historical relationship between teacher shortages, teacher demand, and the business cycle using Norwegian data covering a period of more than 160 years (1861-2023). We find a procyclical pattern in teacher shortages especially for the post-WW2 period. The post-WW2 results imply that doubling the unemployment rate reduces teacher shortage by 0.6-0.8 percentage points. The finding corroborates evidence from other countries that the public sector hires employees with higher skills during recessions than during booms. In addition, teacher demand increases teacher shortages, where the finding is similar in OLS-models, IV-models, and a panel data approach for the pre-WW2 period. The results indicate that a ten percentage points increase in teacher demand significantly raises teacher shortages by about two percentage points in the pre-WW2 period and three percentage points in the post-WW2 period.

This paper evaluates the long-term labour market effects of access to academic upper secondary education by leveraging centrally determined supply changes in Swedish school regions.

Positive impacts on male adult (age 40) wages and earnings were found of increased supply of both Social Science/Humanities (SSH) and Natural Science/Engineering (NNE), but the mechanisms behind the effects differed. Expansion of SSH seems to be partly mediated by opening up access for male students to other programs, as more of the female students got access to SSH. For NNE, the positive impact was found only in cases where the initial supply was highly restricted, meaning that students who were admitted due to expansions were of relatively high academic ability.

Taken together, the findings highlight the multidimensional impact of local educational supply: Expansion of one program affects not only access to that program, but also competition for other programs.

This study finds substantial reductions to criminal activity from the introduction of a

comprehensive high school support program for disadvantaged youth living in the largest public housing project in Toronto. The program, called Pathways to Education, bundles supports such as regular coaching, tutoring, group activities, free public transportation tickets and bursaries for postsecondary education. In this paper, we use a difference-in-differences approach that compares students living in public housing communities where the program was offered to those living in communities where the program was not offered over time. We find that eligibility for Pathways reduces the likelihood of being charged with a crime by 32 percent at its Regent Park location. This effect is driven by a reduction in charges for breaking and entering, theft, mischief, other traffic offenses and Youth Criminal Justice Act offenses.

The difference-in-differences (DID) approach that identifies the capitalization of amenities through changes in housing prices has been widely used in studies of hedonic estimation. Recently, concerns have been raised about how to interpret estimated capitalization effects as changes in welfare (Kuminoff & Pope, 2010, Klaiber & Smith, 2013) We demonstrate two reasons when this divergence between capitalization and welfare changes arises: 1) changes in preferences of the marginal individual, "Tiebout bias" (Goldstein & Paul, 1981, Rubinfield et al. 1987) and 2) when jurisdictions have a large share of the relevant market's population or "market power." (Hoyt (1991), Agrawal et al. (2022). Following Banzhaf (2021), we estimate the capitalization of school redistricting in a DID framework that incorporates general equilibrium effects. When comparing estimates from this DID model to the conventional DID model, we find significant differences in both the estimates of capitalization effects and welfare changes.

I use new survey data from France to explore attitudes towards the inheritance tax and demand for redistribution. Although the inheritance tax is very unpopular, respondents show significant support for redistributive taxation, namely for taxing capital income, and the bequests of parents who have themselves inherited. This suggests that respondents do demand redistribution, but that they do not see the inheritance tax as an effective redistributive tool. I analyze how these preferences shift when exposed to two arguments: one highlighting wealth inequality, the other defending parents' right to bequeath their patiently-earned savings. The inequality argument increases support for the inheritance and capital income taxes. Surprisingly, the second argument also increases support for the capital income tax, and mildly increases support for the inheritance tax. This last finding may be due to backfiring, or to that argument increasing support for taxing "low effort" income and wealth.

In recent decades, macroeconomic developments such as globalization, skill-biased technological change, and automation have increased the wedge in the valuation of different skills in the labor market, with certain skills becoming less valuable while other skills receive even higher rewards. Do people perceive such skill-biased inequalities as fair? We provide causal experimental evidence of people's fairness views when income inequality between workers with different skills is driven by exogenous market forces. Our paper suggests that the conventional dichotomy of effort versus luck falls short of explaining redistributive preferences in contexts where markets generate and perpetuate inequality.

We conduct a large-scale online survey in Germany to study beliefs about wealth inequality and preferences for wealth redistribution. First, we examine participants' knowledge of the German wealth distribution and their position in it. Second, we investigate the impact of an information experiment on redistribution preferences. One group receives information on the wealth distribution's shape, while another learns their position in it. We find no significant average treatment effects in the full sample. However, those overestimating their position reduce their inequality aversion after learning their position, while those underestimating it are more likely to believe anyone can become successful through hard work. We employ a data-driven approach to investigate heterogeneity in treatment effects and present evidence that younger participants decrease their support for redistribution after learning about the shape of the wealth distribution. In contrast, older participants decrease their support after learning their position in the distribution.

Employing data from the 61st and 68th National Sample Survey data rounds, our analysis uncovers socio-economic determinants of the spousal age gap (SAG) in India, demonstrating an "inverted U-shape" pattern. We identify that employment in similar white-collar professions is associated with smaller SAGs. In rural settings, transitional household dynamics contribute to reduced age disparities, underscoring the influence of family structure. Furthermore, the limited availability of white-collar jobs regionally exacerbates SAGs, indicating occupational stigma's impact. The expansion of urban white-collar employment in 2004-05 initially narrowed SAGs, though this effect diminished by 2011-12. Additional factors such as household income and demographic pressures are also significant. Our findings suggest that the abandonment of arranged marriages, combined with socio-economic progress, educational gender equity, partnership economics, and shared normative standards, could serve as catalysts for reducing or inverting SAGs, offering new perspectives on age hypergamy in India.

Understanding behavioral aspects of collective decision-making is an important challenge for economics, and narratives are a crucial group-based mechanism that influences human decision-making. This paper introduces the Character-Role Narrative Framework as a tool to systematically analyze narratives, and applies it to study US climate change policy on Twitter over the 2010-2021 period. We build on the idea of the so-called drama triangle that suggests, within the context of a topic, the essence of a narrative is captured by its characters in one of three essential roles: hero, villain, and victim. We show how this intuitive framework can be easily integrated into an empirical pipeline and scaled up to large text corpora using supervised machine learning. In our application to US climate change policy narratives, we find strong changes in the frequency of simple and complex character-role narratives over time.

Does information influence policy support? We administer a large-scale representative survey with randomised video treatments to test how different policy frames affect citizens’ attitudes towards urban tolls in two large European metropolitan areas without tolls, Berlin-Brandenburg and Paris-Ile de France. Providing information on air pollution increases support by up to 11.4%p, information on climate change and time savings increase support by 7.1 and 6.5 %p, respectively. Treatment effects are stronger in the Paris region, where initial support is lower. We also investigate treatment effect heterogeneity across different socioeconomic characteristics as well as by prior beliefs held about the severity of environmental and traffic problems, and we find weak spillovers of our treatment on the support of other policies. Our findings imply that targeted communication of policy co-benefits can increase policy support across different population groups.

We present a theory linking political and social trust to explain trust erosion in modern societies. Individuals disagree on the seriousness of an externality problem, which leads to diverging policy opinions on how to solve it. As a result, disappointment with the policy rule enacted by the government breeds institutional distrust. Individuals who are more worried blame the government because the rule is too lenient. The less worried blame it because they find the rule too intrusive. Second, this heterogeneity in individuals' concern levels also fuels social distrust. The more individuals are worried, the more they distrust others who are not complying with the rules. Our experimental survey conducted in four European countries shows how these trust dynamics came to the surface during the Covid-19 pandemic. We also find that support for the welfare state erodes alongside sliding trust levels.

Stock market participation among working household heads jumped upwards in the year 2020, in Germany by about 25%. A major cause is the required use of work from home (WfH). We show this by repeating a benchmark study with demanding data requests and adding WfH to the explanatory variables. Moreover, we implement an instrumental variables estimation based on WfH capacity. The transmission channels seem to work via increased available time and time flexibility. Moreover, we show that WfH makes the stock market accessible to a broader population, including lower income groups, which may contribute to lower income inequality.

In most countries, retirement wealth is relatively illiquid due to early withdrawal penalties. While policymakers face a trade-off between flexibility and commitment, there is no consensus on the optimal solution to this problem. Exploiting administrative tax data and a natural experiment from Denmark, we document how individuals react to an exogenous reduction in the early withdrawal penalty. Moreover, we show how individuals use early withdrawal from pension accounts to smooth out the financial consequences of negative life events like unemployment. While the empirical results confirm the benefits of flexibility in case of a negative life event, they also suggest that households may be tempted to spend instead of saving for retirement if the penalty is too low. We use a life-cycle model to give a structural interpretation to the data and evaluate alternative policies to optimally balance the trade-off between flexibility and commitment.

Low- or middle-income countries, where participation in pension schemes is rare, are experiencing fast population aging and weakening traditional risk-sharing networks, but little is known about how their citizens prepare financially for old age. Using age-cohort-time decompositions on 18 years of micro-data from Pakistan, we find that the average household accumulates 4.2 years’ worth of consumption between the head’s ages of 25 and 65, mostly in the form of illiquid residential housing. Land is also an important part of rural households’ portfolio but grows little over the life cycle (10 months’ worth). More liquid forms of wealth such as financial wealth also grow with age, but in much more modest amounts. This ability to long-term save could motivate the extension of contributory pension instruments to the informal sector. More recent cohorts accumulate significantly more which is consistent with anticipations of higher longevity and lower family transfers in old age.

Financial literacy research shows that women and older people have significantly lower levels of financial literacy, which affects investment and savings decisions. Confidence can be a driving force in responding to financial literacy questions and in financial decision-making. We conduct a survey experiment to test whether information about group differences in numeracy skills affects confidence, hypothetical investment and savings decisions, and demand for information and education. We find that providing information about group differences has some positive effects on male respondents' confidence, but doesn't affect female respondents. Furthermore, providing information about group differences doesn't affect investment and savings decisions or the demand for political information.

Drawing on administrative tax return and trade data linked with employment records, this paper looks into how multinational enterprises (MNEs) in Norway responded to an increase in transfer pricing (TP) strictness. We analyze the amount of money MNEs spent on tax compliance - both on external consultants and in-house lawyers and accountants - after the reform. Difference-in-differences event study designs show that the regulation significantly impacted tax payments, reported profits, and spending on tax advisors. On average, MNEs spent an extra NOK 4.64 million on tax compliance services in the subsequent year. This includes a 12.5% increase in spending on consultants and a 150% increase in spending on in-house advisors. We also found evidence that stricter TP regulations in countries where affiliates locate raised the demand for tax advisors for firms in Norway.

This paper studies how firms manipulate their transfer prices to shift profit from high tax countries to low tax countries. Using detailed transaction-destination level firm data for years 2013-2019, I find evidence of Finnish multinational enterprises underpricing their exports to low tax destinations. By exploiting variation in corporate income tax rate differences and differences in the ownership of affiliates, I apply a triple difference estimation strategy. I find that a 1 percentage point increase in tax rate difference decreases export unit value by 1.2% among multinational firms exporting to low tax countries. My results suggest firms use transfer pricing as a complement channel, as firms more prone to other profit shifting mechanisms also underprice their exports more. Also, I provide evidence that transfer mispricing is concentrated in exports destined to countries where the multinational’s affiliate has a higher level of economic activity.

The development of digital technologies allows multinational enterprises (MNEs) to operate online platforms and supply network products for their platform. Although improving their platform by investing in online technologies benefits consumers and service providers in platforms, it also helps platform MNEs manipulate transfer prices and save taxes because new technology makes applying the arm’s length principle difficult. This study investigates the effects of tightening transfer pricing regulations in two-sided markets. We show that stricter transfer pricing regulations reduce an MNE’s tax avoidance gain from investing in online technologies and an investment level. Besides that, one of the main findings is that a tighter transfer pricing regulation harms a high-tax country when transfer pricing regulations are loosely enforced, and the marginal impacts of online technology investments on network externality are larger than that on profit shifting. This finding provides an important policy implication for international taxation under the digital economy.