As populations age, the demand for housing is changing. In urban areas with a relatively fixed housing supply, older households "aging in place" can exacerbate housing shortages for younger families. This paper examines the impact of an aging population on the distribution of housing in Stockholm’s housing market. Using Swedish administrative data, I am developing an equilibrium model of the housing market where households exhibit heterogeneous preferences for housing characteristics and face mobility frictions. I will recover households’ willingness to pay for different characteristics and simulate counterfactual scenarios to quantify how an aging population affects the housing market. I will also assess whether elderly households remain in their homes due to their costs of leaving outweighing their costs of staying or a lack of suitable alternatives. Finally, I will evaluate policy interventions to improve the match between family and house size.

This paper analyzes how structural factors in Korean society influence birth rates using local government data. High private education and housing costs negatively impact birth rates, while rising public property values suggest income polarization affects childbirth. Over the past 20 years, efforts to boost household income—mainly through maternal employment—have also lowered birth rates, indicating a lack of synergy between work and family life.

To address this, the paper proposes a dual policy approach: The central government should focus on structural reforms, such as reducing income inequality and restructuring the labor market, to improve socio-economic conditions. Meanwhile, local governments should implement autonomous fertility support policies to attract residents and invest in employment and education infrastructure to curb population decline. This combined strategy aims to tackle both short-term and long-term challenges in South Korea’s fertility decline.

This study examines the intricate relationship between population aging and public expenditure, focusing on Indian states. The findings confirm that as elderly population expands, the demand for healthcare services, pensions, and welfare programs intensifies, placing a growing fiscal burden on state governments. However, the fiscal impact of aging is not uniform across states; it is most pronounced in demographically advanced regions experiencing accelerated aging transitions. These states face the dual challenge of rising expenditure obligations alongside constrained revenue-generation capacities, exacerbating fiscal imbalances within India's federal structure. The study highlights the urgent need for targeted fiscal policies and institutional reforms to address these challenges. Key strategies include revisiting intergovernmental fiscal transfer mechanisms to account for demographic disparities, enhancing the efficiency of public health and social security systems, and fostering economic growth to counteract the effects of a shrinking workforce.

We consider two types of family model, rather than a representative agent setting, in the semi-endogenous growth model of Jones (2022). The paper provides an economic explanation for why birthrates are declining. We show that in an economy consisting of non-cooperative families, the partners have a free-riding incentive when considering the supply of child-rearing effort and thus the growth rate of the population is smaller than that in an economy consisting of cooperative families. This makes family size smaller and reduces the growth rate of the economy. We find that the competitive equilibria of either type of economy cannot internalize the population externalities on technological progress. The socially-efficient solution internalizes population externalities, enhancing technological progress, but labor effort for child-rearing is greater than the competitive equilibrium solutions. Hence, child-rearing should be subsidized to realize the first-best population growth rate which internalizes externalities arising from technological progress.

Over the past two decades, governments have introduced measures to curb multinational tax avoidance, yet evidence from low- and middle-income countries remains scarce. This paper presents new findings from South Africa, linking administrative trade and corporate tax data to assess the effects of key anti-avoidance reforms. We examine two OECD BEPS initiatives, Country-by-Country Reporting and enhanced transfer pricing documentation, alongside the domestic implementation of an earnings-stripping rule that restricts interest deductibility.Using difference-in-differences estimators, we find that BEPS reforms significantly reduced transfer mispricing, lowering intra-firm prices and traded quantities with tax havens. Similarly, the debt-related reform resulted in a measurable reduction in the use of debt financing, while we do not observe any negative real effects for treated firms. Our findings offer novel evidence on the effectiveness of international tax reforms in reducing profit shifting in a developing country context.

Using a newly available exhaustive and granular dataset on the worldwide activity of multinational firms matched with oil, gas & mining production data at the country and firm level, we find evidence that windfall profits of multinational firms are excessively booked in low-tax countries. To identify the effect of price shocks on worldwide profit allocation, we exploit the heterogeneity in commodity price changes across mining and oil & gas products and use the fact that extractive firms specialize in different commodities. We find that a one percent increase in commodity prices leads to a 0.7pp excess increase in profits of subsidiaries located in tax havens.

How can tax authorities in low-income countries identify multinational enterprises (MNEs) engaged in profit shifting? In this project, we introduce a low-cost, data-driven methodology to identify profit-shifting MNEs using administrative data readily available to tax authorities in South Africa. By applying panel regression analysis and probabilistic detection methods, the method generates a variety of "red flags" for firms involved in suspicious activities, enabling tax authorities to prioritize high-risk cases for further auditing within their existing resource constraints. This approach empowers resource-limited tax authorities to target high-risk profit-shifting cases, supporting South Africa's broader revenue mobilization and fiscal sustainability goals. We contribute to the literature on profit shifting by presenting a novel method for identifying profit-shifting behaviours, which can be adapted by other low-income countries facing similar challenges.

Aggressive profit shifting by MNEs is a growing concern for domestic resource mobilization in developing economies. This paper evaluates the revenue and welfare consequences of a flagship anti-avoidance rule that has been implemented in morethan45countries to prevent profit shifting by MNEs through the debt channel. Our focus is Uganda, a representative developing country which implemented the rule in 2018. Exploiting admin data comprising the universe of corporate tax returns, we find that the rule does not significantly increase profits reported by MNEs in Uganda or tax remitted by them in Uganda. As an unintended consequence, however, the implementation of the rule leads to a contraction in real economic activity, reducing the turnover, employment, and trade of treated MNEs. We highlight the limited targeting efficiency of the rule, questioning its overall effects on welfare.

This paper provides evidence that asset testing of social transfers substantially depresses the liquid wealth of the poor. Using administrative data on income and wealth for the full population, we estimate the effects of the asset test for an old-age support program in Denmark. We document that the density distribution of liquid wealth exhibits large but diffuse excess mass below the threshold for the low-income elderly relative to control groups of comparable but ineligible individuals. Analyzing high-frequency bank data on assets, spending and cash withdrawals shows that the excess mass largely reflects permanently lower liquid wealth rather than temporary responses.

In this paper, we introduce novel estimates of wealth inequality, integrating the standard household wealth concept with newly assessed individual human capital. Using microdata and national accounts from numerous countries since 1979, we explore the distribution across age, gender, education, and occupation. Our analysis reveals two key findings: human capital is more evenly distributed than financial capital, and total wealth, the sum of human and financial capital, is significantly more equal than financial wealth alone. This study offers a groundbreaking perspective on global wealth dynamics, emphasizing the critical, yet often overlooked, role of human capital in wealth distribution.

The concentration of wealth among the ultra-rich has renewed debates over using wealth taxes to reduce inequality and finance public investments. Traditional measures based on tax records and surveys understate top wealth due to offshore assets, complex holdings, and underreporting. We address this by combining extrapolations from the Wealth Inequality Database (WID) with real-time Forbes billionaire rankings, thereby recalibrating estimates to better capture ultra-wealth. Using Spain’s progressive wealth tax framework as an empirical benchmark, our analysis indicates that a 1.7–3.5% tax on net wealth above the top 0.5% threshold could generate approximately $2.3 trillion annually—roughly 8% of global central government revenues. We also address concerns about behavioral responses; even under scenarios such as billionaire migration, estimated revenues remain robust at $2.2 trillion (7.7% of revenues). Our findings suggest that wealth taxes offer a promising tool to mitigate inequality and fund critical public priorities.

We conduct a comprehensive empirical investigation of the link between inequality and financial openness. We document that the relationship varies considerably not only over time, but also across the main components of total external liabilities, which have been largely overlooked by the existing literature. In emerging market economies (EMEs), an increase in a country’s external liabilities is associated with an initial rise and a subsequent fall in inequality. This appears to be driven by the fact that the channels through which financial openness increases inequality tend to be active immediately, while the inequality-decreasing channels tend to operate with a lag. The link between financial openness and inequality tends to be substantially weaker in advanced economies than in EMEs.

We present new evidence showing that fiscal austerity strengthens support for redistribution, especially for the relatively well-off. Our theoretical model proposes two mechanisms to explain this heterogeneity in support for redistribution: ‘altruism’ and ‘appreciation’. We test our theoretical model’s predictions by matching attitudes reported in the British Social Attitudes Survey with local area-level spending cuts in England over the period 2010 to 2015. We exploit the spatial and temporal variation in spending cuts at the Local Authority level to compute a plausibly exogenous measure of the austerity shock. We find evidence for these two channels.

Public debt sustainability has garnered importance in the macroeconomic policy making of India, especially since the 1980s. This paper discusses the effectiveness of macroeconomic policies, viz. fiscal policy and monetary policy, to tackle the issue of debt sustainability considering the inter-dependencies between various macroeconomic indicators under the four sectors of the economy. To this end, we estimate a structural equation model with 14 equations which is further incorporated into the debt sustainability analysis using an indicator-based approach. The structural equations are estimated using the Generalised Method of Moments and the data covers annual samples for central government finances from 1981-82 through 2019-20. The simulation exercises reveal that fiscal policy is more effective than monetary policy in improving the debt sustainability indicators of India. Further, fiscal policy through changes in capital expenditure is found to outperform policy action through changes in revenue expenditure.

Tax compliance is vital for public revenue, especially in developing countries under IMF austerity programs. This study investigates how these programs influence voluntary tax compliance, analyzing data from the World Values Survey and IMF Monitoring of Fund Arrangements from 1980 to 2020. Using treatment effects and a difference-in-differences strategy, we find that IMF interventions negatively affect tax morale when cultural and trust factors are included. These programs may erode public trust and perceptions of fairness, reducing intrinsic motivations for compliance. The study emphasizes the need for IMF policies that consider socio-psychological elements and adapt to specific cultural contexts to improve tax compliance. Recommendations include tailoring IMF measures to enhance social development alongside economic stability, thus fostering sustainable growth. This approach could mitigate the negative impacts on tax morale and strengthen fiscal sustainability in developing nations.

This paper investigates the macroeconomic implications of a proposed tax reform that shifts the burden from labor income to capital income taxation within developed economies. As social insurance systems face sustainability challenges, this reform aims to broaden the tax base while enhancing economic efficiency and international competitiveness. Utilizing a two-region general-equilibrium model with overlapping generations, we analyze both short-term and long-term effects of this tax shift. Our findings indicate that reducing labor taxes can stimulate employment and increase net wage income, while simultaneously altering household savings behavior and capital accumulation dynamics. The model reveals a significant increase in domestic savings and a notable rise in net foreign assets, leading to a decrease in global interest rates. However, the transition may adversely affect retirees reliant on savings income, highlighting critical distributional consequences. Overall, the study underscores the complex interplay between tax policy, labor market dynamics, and household welfare.

This study investigates the impact of the nexus requirement on entities’ location decisions for intellectual property and investments. The nexus requirement links the preferential IP Box taxation to domestic research activity, aiming to reduce cross-border patent shifting. Using a stacked difference-in-differences design on a sample of European entities, I analyze whether entities alter their location decisions for investments and intellectual property after the nexus requirement applies. Analyses reveal that the nexus requirement is effective in reducing entities’ patent shifting to IP Box entities. Additional results suggest that multinational entities reallocate capital and labor investment from non-IP Box entities toward IP Box entities to meet the nexus requirement and retain the IP Box tax benefit. While substance requirements were intended to prevent IP and profit outflows from high-tax countries without IP Boxes, they have instead led entities to reallocate investments and innovative activity from these countries to countries offering IP Boxes.

This study estimates compliance costs of applying for corporate R&D tax credits. Using representative firm-level data on R&D expenditure and applications for R&D tax credits from Germany, we estimate compliance costs as foregone tax benefits. For this purpose, we compute potential benefits from applying for the German R&D tax credit and then examine whether or not firms applied for this incentive. Compliance costs are signficiant and constitute on average 10% of expected benefits per firm. The costs are larger for firms of micro and small size and smaller in the chemical and pharmaceutical sector.

Our study assesses the impact of state tax policies on entrepreneurship in Poland, focusing on innovative industries. We analyze the creation and closure of self-employed enterprises from 2016 to 2022 across approximately 2,400 municipalities. Our findings reveal a positive spatial autocorrelation in the density of self-employed enterprises utilizing innovation-related tax relief, particularly in and near large cities. However, many small firms did not take advantage of these reliefs. Notably, municipalities with self-employed enterprises benefiting from R&D tax breaks experienced fewer closures. In contrast, the presence of IP Box users was linked to fewer new establishments, especially in manufacturing. Both types of relief positively influenced innovative sectors like Information and Communication, and Professional, Scientific, and Technical activities.

We analyze the relative cost effectiveness of R&D tax credits and IP boxes as instruments for stimulating R&D. We set up a model in which there are three types of market failures, all of which lead to under-investment in R&D in the absence of government intervention. Assuming that the marginal cost of public funds exceeds 1, then in the absence of any unobservable input to R&D firms, we unambiguously find that tax credits are more cost effective than IP boxes in achieving the same impact on the level of R&D. We consider two cases in which there is an unobservable input for the R&D firms: in both cases, the tax credit remains more cost effective.

African governments are increasingly digitalizing their tax systems to enhance revenue collection. This study examines the adoption and impact of electronic tax services on SMEs in Burkina Faso, using survey and administrative tax data. It focuses on three indicators: registration on eSINTAX, e-filing, and digital tax payment. Findings show that eSINTAX adoption is driven by factors such as SARL legal status, electronic billing, and higher tax knowledge. Digital tax payment improves perceptions of transparency and reduces perceived corruption. Registration and e-filing increase declared tax amounts. Digital payment leads to higher actual tax payments. The study recommends: Targeted awareness campaigns and practical training to encourage adoption. Investments in digital infrastructure to boost trust and reliability. Strengthening e-payment security to enhance taxpayer confidence. These measures are essential for the successful digitalization of tax systems across African economies.

To reduce tax evasion, in 2013 and 2014 the Hungarian government introduced mandatory online cash registers (OCR) in some sectors. As a result, almost 200,000 OCRs have been installed by 100,000 enterprises. We assume that OCR installation does not change the company’s operating model, so the increase in reported turnover around the installation date reflects a reduction in tax evasion. In this paper, we use microdata to estimate the effect of OCR introduction on reported turnover and tax liabilities using fixed-effects panel and event study models. We identify strong size-related heterogeneity in the retail and the accommodation and food services sectors: smaller companies increased their reported turnover more than larger ones. Since large companies pay the dominant part of value-added tax, the effects on the payment of this tax were mitigated. We find significant spillover effects to suppliers in both sectors, which are slightly stronger among larger companies.

The digitalisation of tax administration promises improved efficiency and increased tax revenues. In recent years, the real-time information trail of the VAT has been digitalised in many developing countries. We evaluate the impact of introducing an e-invoicing system in Uganda by utilizing administrative tax data. The intervention mandated all VAT-registered taxpayers to issue e-invoices for all sales from January 2021. We show that the intervention has been successful, with over 95 percent of VAT taxpayers registered. The introduction of e-invoicing system has led to a significant increase in the monthly VAT declarations, suggesting improved perceptions of evasion detection. However, only about 60 percent of VAT taxpayers issue invoices regularly. The total sales recorded through e-invoicing system align closely with VAT returns. While total sales haven’t shifted significantly, there has been a reduction in VAT due, likely due to more firms claiming input VAT, resulting in more negative VAT liabilities.

With the rapid progress of information and communication technology, the digitalization of administrative processes by governments has gained much attention.This study investigates its effect on tax compliance costs and tax evasion using a reform that mandates large corporations to adopt electronic filing in Japan. The mandatory electronic filing reduced amendment submissions by one-third, and the effects are larger for corporations that were more likely to file amended returns before and those located in a large city. We detected no effects on tax evasion or tax payments in this country where tax administration and morale are developed.

Despite a well documented signaling and status motive behind higher education, the implications thereof for optimal redistributive taxation remain largely unknown. This paper deals with education policy in a very general continuous type model of optimal redistributive taxation, in which individuals are concerned with their relative standing in both education and consumption. We show how concerns for relative education may reduce the optimal marginal eduction subsidies subsantially, as well as how these marginal subsidies relate to the marginal income tax structure. More specifically, we illustrate when optimal eduction subsidies contribute to decrease versus increase consumption inequality.

We follow high school graduates through college and the labor market to study income segregation and intergenerational mobility across colleges in Brazil, a unique context where admissions are mostly determined by exam scores and public institutions are free and of high quality. We show that public college admissions are income neutral once controlling for grades, but elite public colleges are composed mostly of higher-income students, as they have higher exam scores. Intergenerational mobility rates in elite public colleges are low, but higher than in comparable private institutions. We develop a general framework to evaluate affirmative action in public colleges and subsidized loans for private institutions. Both policies increased the mobility of low-income students, but subsidized loans have a larger effect. While AA increases the representation of disadvantaged students in elite schools and subsidized loans do not, the latter policy reallocates an overall larger number of students to better college tiers.

Educational and labor market outcomes are influenced not only by academic ability but also by a student’s relative rank among peers—a phenomenon known as the “big fish, little pond effect” (BFLPE). Using linked administrative data from British Columbia’s Elementary and Labour Market Longitudinal Panel (ELMLP), we track students from elementary school through adulthood to examine the effects of rank in grade 7 on long-term outcomes. We find that higher math rank significantly increases income relative to the median, with top-ranked students earning up to 5% more and lower-ranked students earning up to 7% less. In contrast, reading rank has no effect on income but influences educational attainment. These findings suggest that rank plays a key role in shaping success. Our results have implications for education policy, highlighting the need for targeted interventions to support lower-ranked students and the importance of fostering quantitative skills for long-term economic benefits.

In this paper, a multilevel analysis is applied to the OECD-PISA 2018 data for Greece with the aim to identify the multiple mechanisms that produce adverse child outcomes, at least as captured by poor school performance. At the student level, gender, immigration status, early-childhood education attendance and the cultural aspects of family socioeconomic status play an important role. At the school level, the private-public divide seems to be the strongest favoring private schools. Its direction is however reversed once school mean family socioeconomic background is taken into account, suggesting that the way students and schools are matched affects how family background effects are reproduced. Educational inequalities are further compounded in upper secondary education where differences in family investment in private education and tutoring are huge among children of unequal economic status. The paper provides important insights for policymakers in order for society to tackle inequalities and properly invest in its human capital potential.

We examine how the fiscal equalization system influence the fiscal reactions of Swiss cantonal governments from 2008 to 2020. Using the common correlated effects mean group estimator, we find that a 1 percentage point increase in the debt-to-GDP ratio in the previous year correlates with a 0.1 to 0.2 percentage point increase in the total primary surplus-to-GDP ratio in the current year. Excluding resource equalization payments from the primary surplus measure weakens the fiscal adjustment by 40 percent, however. A sample split between constant net contributing and recipient cantons shows that the fiscal response of recipient cantons depends on the transfers. Our results indicate that equalization transfers affect cantonal fiscal responsiveness to debt and highlight the importance of designing equalization frameworks that balance equitable distribution with incentives for fiscal prudence at the sub-federal level.

In many organizations, agents operate on a fixed budget and allocate funds across sub-periods of the fiscal year. Commonly, unspent budget must be returned to the principal at year-end to prevent policy drifts. However, this savings constraint may induce inefficient spending patterns, such as expenditure surges before the budget expires. This study characterizes optimal budget rollover policy in a model which captures this trade-off. Applying it to Swiss federal consulting spending, I show that substantial welfare gains are possible by allowing agencies to retain one third of unspent funds. I verify the model's predictions exploiting a staggered reform liberalizing rollover.

In recent decades, the global trend has been moving toward the adoption of accrual accounting in the public sector. However, quantitative analysis regarding its fiscal effects is still in its infancy. Thus, this study examines the impact of accrual accounting on municipally controlled enterprises, with specific focus on the Japanese municipal sewage system. For this purpose, it employs a combination of instrumental variables as well as stochastic frontier analysis to quantitatively determine the fiscal effects from the perspective of cost efficiency. Based on the results, the transition from cash- to accrual-based accounting has led to improvements in overall cost efficiency. These findings also provide new quantitative evidence for future discussions on fiscal discipline, which is a key area in the field of public economics. Moreover, to test the robustness of the results based on the above estimation, we adopt nonparametric fuzzy regression discontinuity design in Appendix.

This paper estimates the intent-to-treat (ITT) effect of Germany’s 2000 introduction of conditional birthright citizenship on juvenile crime in the federal states of Baden-Württemberg and Hesse. We utilize administrative police data on suspects involved in multiple incidents and/or serious offenses and, employing a difference-in-differences approach, find that the policy (i) decreased the number of incidents for suspects born between the first six months after the enactment of the reform by approximately 9%, (ii) led to a larger (-11% vs. -7%) and more significant decrease of incidents in regions with high vs. low treatment intensity, (iii) is associated with a crime decrease for boys (-11%), but with an increase for girls (+9%), and (iv) has reduced the number of incidents (intensive margin) linked to suspects, but not the number of suspects involved in multiple incidents and/or serious offenses (extensive margin).

This paper studies firms violating labor regulations and the impact of enforcement on firms and workers. A model of monopsonistic firms that set both wages and working conditions shows that labor market power can lead to poor working conditions, and enforcement of minimum conditions can raise employment through higher labor supply. We link inspection records to survey and administrative employer-employee data for large Mexican manufacturing firms to test the model predictions. Violating firms invest less in worker training, have lower productivity, employ fewer women, and hold greater labor market share. We show that stratified random inspections tend to increase regulatory compliance and causally estimate these inspections raise total firm employment by 4–7% within one year. Firm wages decrease by less than 2%, driven by compositional changes rather than wage setting. Altogether, enforcing labor regulation compliance among large manufacturing firms can improve working conditions, mitigate labor market power, and increase employment.

We examine the political costs of taxation in early modern France. We focus on efforts to enforce the salt tax, the rate of which varied across regions. Using a spatial difference-in-discontinuities design, we compare municipalities just inside the high-tax region with those just outside, before and after a reform aimed at curbing illicit salt smuggling. We find that tax enforcement led to a twenty-fold increase in conflicts between taxpayers and the state in municipalities in the high-tax region. This effect persists until the French Revolution, supporting the view that enforcing the salt tax incurred significant political costs. Finally, we document that the likelihood of conflict increases with tax differences between neighboring regions, which we use to derive an upper bound on the political costs of increased tax enforcement in this historical period.

Should criminal fines be income-dependent? We explore this question in the context of the Finnish speeding fine system, which exhibits income-dependence. Building on the optimal commodity tax literature, we construct a model of optimal fine determination in which the planner uses fines and income taxes to mitigate speeding externalities and redistribute resources across individuals. At the optimum, fines will be income dependent if either (1) the marginal social cost of speeding is correlated with the income of the offender (the efficiency motive) or (2) preferences for crime are correlated with income (the redistributive motive); fine elasticities govern the relative importance of these two forces. To estimate these forces empirically, we draw on linked income tax returns, accident reports, and crime report data from Finland. However, statutory motivations for income-dependent fines typically cite “equality-before-the-law,” rather than redistributive or efficiency-based rationales; we therefore plan to measure fairness preferences using a survey.

We use variation in marginal tax rates and in tax bracket thresholds at which they apply in order to identify the substitution and income effects of tax reforms. We use a triple-difference estimator that exploits variation from subnational tax reforms, for which behavioral responses to taxes are identified even in the presence of unobservable shocks to the income distribution. While high-income taxpayers respond more to tax changes, our results suggest this reflects much more the income or salience effects of tax reforms, rather than inherent heterogeneity in substitution effects. We discuss the implications for optimal redistributive tax policies.

This paper develops a general framework to construct optimal policy reforms starting from a status quo set of policies. We show that if a policymaker can control how fiscal externalities are spent, then the welfare-weighted marginal value of public funds (WMVPF) is the relevant sufficient statistic for determining optimal policy reforms. If a policymaker cannot control how fiscal externalities are spent, then the welfare-weighted net social benefit (WNSB) is the relevant sufficient statistic. If a policymaker can control how a fraction of fiscal externalities are spent, then the relevant sufficient statistic is an "augmented internal WMVPF" consisting of an "internal WMVPF" plus an "external correction" term. We provide a number of stylized examples to illustrate how and when in practice to use the WMVPF versus the WNSB to determine optimal policy reforms.

This paper evaluates Laffer curves produced by reforms to nonlinear income taxes, focusing on individual taxpayers. A reform puts a taxpayer on the “wrong” side of the Laffer curve if it increases their tax burden while reducing tax payments. There always exist potential reforms with this property – and in particular, tax increases restricted to high-income taxpayers are guaranteed to consign some to the wrong side of the Laffer curve. The original design of the 2024 Australian tax reform would have put 15% of the taxpaying population on the wrong side of the Laffer curve, though subsequent modifications reduced this to 5%. Standard tax progressivity measures that ignore the endogeneity of taxable income generally understate the redistributive impact of progressive tax reforms.

This study examines optimal government redistribution in a Mirrleesian framework, accounting for a negative effect of longer working hours on productivity. A government ignoring this effect perceives labor supply as insufficient and sets lower marginal income taxes to encourage work. In contrast, a government recognizing the endogenous relationship between productivity and labor supply redistributes more. However, the resulting marginal taxes are still lower than those predicted by standard models where productivity is independent of working hours.

We evaluate the welfare effects of the Global Minimum Tax (GMT) on corporate income using a multi-country macroeconomic model. The GMT aims to reduce harmful tax competition and profit shifting. While it can boost welfare by increasing tax revenues, it may also raise firms' capital costs, potentially contracting the economy. Our model, which includes 27 EU Member States, the US, the UK, Japan, and a tax haven, provides a quantitative welfare assessment of a 15 percent GMT implementation. We explore two scenarios: In the first, additional corporate income tax (CIT) revenues are distributed to households, resulting in mixed welfare outcomes across countries and a slightly positive global impact. In the second, revenues are returned to firms through lower CIT rates, enhancing economic activity by reducing capital costs. This scenario generally improves welfare, increasing global welfare. A 16 percent GMT rate is found to maximize global welfare.

This paper explores how the Digital Service Tax (DST) affects a digital platform serving two customer groups linked by a network effect. The platform maximizes after-tax revenues from three sources: retail sales, advertising, and profit shifting. The DST falls on advertising revenue and prompts the platform to focus on the untaxed side of the market (retail) by raising the transfer price on the retail good. This dampens competition in the retail market and raises consumer prices while lowering ad prices. More profits are also shifted in response to the DST. However, we show that if the network externalitiy is sufficiently strong, these results may be reversed.

Analysis of the international network of double tax treaties reveals a large potential for tax avoidance. Developing countries are, on average, not more likely to suffer from tax revenue losses than other countries. Yet, this average masks the fact that several countries, such as Bangladesh, Egypt, Indonesia, Kenya, Uganda and Zambia, are vulnerable to substantial potential losses of withholding tax revenue by treaty shopping. The analysis combines tax parameters of more than a hundred countries with an algorithm from network theory, which simulates the tax minimizing behaviour of multinational enterprises. We introduce the notion of potentially aggressive tax treaties. These are the key treaties in treaty shopping routes, that may lead to substantial tax revenue losses in developing countries. Moreover, the treaty partners are often in a prime position to top-up tax undertaxed profits of developing countries that offer tax incentives to attract investment, thus nullifying the incentive effects.

The paper focuses on the effects that the introduction of the Global Minimum Tax (GMT) has from the perspective of developing countries. We introduce a model with two asymmetric host countries for FDI that compete with each other for the location of multinational firms, and simultaneously fight profit shifting to a tax haven. The low-income country has the weaker enforcement technology to fight profit shifting. It therefore loses more revenue from profit shifting, but also becomes a more attractive location for multinationals. The GMT reduces both profit shifting and the location advantage of the low-income country. If tax competition for real investment is sufficiently severe, the introduction of the GMT reduces tax rates and tax revenues in the low-income country while tax revenues in the high-income country rise. Our results help explaining the reservations that several developing countries hold towards the GMT.

Digital nomad visas (DNVs) offer digital nomads a cost-effective way to strategically choose their tax residence country, in addition to providing other direct tax incentives. This paper examines the effective tax burden of digital nomads under these visas in the EU in a simulation analysis. Our preliminary findings indicate that digital nomads with a taxable nexus in the United States or the United Kingdom can achieve a lower effective personal income tax burden by working from EU countries that offer DNVs. Moreover, we employ travel data of digital nomads to gain insights into their movement patterns and the resulting tax revenue implications. Consistent with the tax advantages associated with these visas, we find that destinations offering DNVs attract digital nomads more frequently than those without such a visa.

This paper investigates whether and why pensioners move across borders in response to tax rate differentials. In 2013, retirees relocating to Portugal became eligible to a full tax exemption of foreign-source pensions. Contrary to the broadly held belief that seniors "age in place", we find substantial international mobility responses to the reform, concentrated among wealthy and educated pensioners in higher-tax origin countries. The implied migration elasticity of the stock of foreign pensioners to the net-of-tax rate is large (between 1.5 and 2) and increases at longer horizons. Tax-induced retirement migration clusters in space, and exhibits peer effects, amplification, and hysteresis patterns consistent with agglomeration through endogenous amenities. We show such forces theoretically and empirically have significant implications for optimal tax rates, and for the limited efficacy of unilateral policy responses to tax competition, like the source-based taxation of pensions.

This paper studies the impact of investor citizenship and residence schemes on local real estate markets. We do so by examining the Spanish golden visa programme that was introduced in 2013 and grants visas and full residence rights to foreign investors who invest at least 500,000 Euro in the Spanish real estate market. First, the number of real estate transactions above the threshold increased by 43% more for non-EU relative to EU and Spanish investors after the introduction of the programme. Second, non-EU investors appear to pay a premium of 11,421 Euro around the threshold relative to EU and Spaniards. Finally, we find that the programme had spillover effects on the real estate market. The average increase in golden visa exposure increases overall real estate transaction prices on average by 0.19% after the introduction of the scheme.

Empirical evidence suggests that social acceptance of redistribution depends on whether income differences result from individual responsibilities or from circumstances. Acceptance is limited when differences stem from preferences, but greater when they result from circumstances. We propose a method based on compensating variation (CV) that accounts for this distinction in order to assess the distributional effects of a tax reform. It relies on estimation of a structural labor supply model which allows us to neutralize preference heterogeneity. We apply our method to evaluate the welfare effects of changes in labor income taxation introduced by the Norwegian tax reform of 2013–2019. We find that the estimated measure of CV when preference heterogeneity is neutralized displays distributional effects that are very similar to those observed with the measure of CV with heterogeneous individual preferences, themselves being very similar to those observed with the well-known CE criterion.

Nordic countries have been exceptional in their ability to combine equality and strong social protection with high taxes and dynamic economies. This paper studies the long-term evolution of Nordic tax-bene t policies and the Nordic model. We include the behavioral employment effects of tax-bene t changes by estimating participation elasticities. There has been a tendency to aim at efficiency over equality in the labor market. The employment effects of lower taxes and benefits do not o -set the increased inequality. The results show weakening social protection in Nordic countries.

Adam Smith considered a tax on income to be an ideal form of raising revenue that was administratively impossible. What changed? I study the intellectual history of the income concept and suggest hypotheses for when and why income became an administratively feasible tax base that was legible to the taxing state. I suggest a role for the rise of new accounting technology and the rise of wage earners---both connected the rise of the firm.

Taxation based on identity has a long, sordid history, and persists to this day, usually in implicit ways. It is a relatively tame cousin of the blatant, violent, and genocidal policies that have targeted people of certain religions, races, and genders for millennia. Tax based on identity is difficult, although not impossible, to justify within standard optimal tax analysis, because in that framework the policy objective is usually framed as being anonymous (impartial) and eschews basing policy on disparate preferences. The most promising justification seems to be if, for example, race is systematically correlated with the failure of income to represent ability to pay. It then acts as a tag that can help achieve the desired allocation of tax burden at minimal efficiency cost. For unjustified identity-based tax policy, analysis can help to spot its existence and quantify its welfare cost.

In this paper, I analyze the effects of government tenure on public investments. Particularly, long term investments incur short-term costs and the benefits will be reaped in the future. Who will politically benefit from these investments is often not clear apriori. When politicians stay longer in office the likliohood is higher that benefits start to pay-off during their term in office. Hence, the tenure length of politicians might affect public investment activities. To test this hypothesis, I examine a reform in the German state of Lower-Saxony where mayors tenure length was reduced from 8 to 5 years. Exploiting exogenous variation generated by asynchronous elections, I apply a Difference-in-Difference approach to compare treated and not yet treated municipalities. I find preliminary evidence that shorter term periods reduce the level of public investments. Reform induced changes in political selection are unlikely to be the driver of the reform.

The COVID-19 pandemic presented governments with unprecedented challenges, requiring decisions that balanced public health measures against substantial social and economic impacts. This study examines the strategic and opportunistic behaviors of regional officials in Germany during the pandemic. Using a comprehensive empirical analysis based on hundreds of statements from state incumbents, we shed light on the dynamics of state level political behavior.

Our findings reveal that German regional leaders emphasized their autonomy when performance metrics were favorable but strategically shifted responsibility when outcomes were less favorable. This behavior underscores the dual potential of federal systems as both laboratories of democracy and breeding grounds for responsibility-avoiding (opportunistic) behavior.

Building durable fiscal capacity requires that the state obtains compliance with its tax demands, a struggle for weak states that lack enforcement capacity. One potential option for governments in weak states is to enhance their legitimacy and thereby foster voluntary compliance. In this study, we report results from a participatory budgeting policy experiment in Sierra Leone that attempted to increase legitimacy and tax compliance by inviting public participation in local policy decision-making. In phone based town halls, participants shared policy preferences with neighbors and local politicians and then voted for local public services that were subsequently implemented. We find that the intervention durably increased participants’ perceptions of government legitimacy. However, against influential models of tax compliance, we find a robust null effect on tax compliance behavior. In exploratory analyses, we document that partisan affiliation strongly conditions the interventions’ effects on tax compliance and attitudes towards paying taxes.

This paper analyses how partisan alignment shapes the allocation of intergovernmental grants. Two-Way Fixed-Effects (TWFE) and Regression Discontinuity (RD) estimations are applied to a sample comprising all 308 Portuguese municipalities from 1998-2022. TWFE results indicate that municipalities led by mayors politically aligned with the national government receive more national non-formula-determined grants, on average, and in local and national election years. Preliminary RD results are consistent with those of TWFE estimations, being also suggestive of partisan effects. Further tests are necessary to more thoroughly check for a causal effect of partisan alignment on the allocation of intergovernmental grants to Portuguese municipalities.

In this paper, we document the role of the trusts in British real estate investment. We analyze the direct and indirect market both for domestic and foreign trusts. Building on detailed property level ownership and price data, we establish international ownership chains using Orbis ownership data to detect structures. We focus on trusts either as the nominal owner of properties or as upstream owners of other nominal owners. The main mode of investment in British real estate is transparent with short ownership chains that links to a natural person. When ownership chains become complicated, however, they become very complicated and more likely to include trusts. We document a high share of indirect investments through foreign trusts in more complicated chains. We provide a number of novel descriptive results on both direct and indirect trust ownership characterizing their investment into very high price properties and a geographic focus on urban agglomerations.

This study examines income distribution among Japanese high-income earners using micro tax data provided by the National Tax Agency, a first for Japan. Our analysis reveals several key findings. While wage income is the primary source of income for most high-income earners, stock capital gains are the dominant source for the top income earners. The Pareto coefficient for total income in Japan is approximately 1.45 for 2020, significantly lower than the previous estimates. Unlike existing studies that exclude capital gains, our lower estimate indicates a greater concentration of income among Japan’s superrich. Additionally, effective average tax rates rise with income up to around 100 million yen, after which they decline. This regressivity is due to the Japanese income tax system, which imposes lower taxes on capital income. Using this result, we also derive the optimal marginal tax rates in Japan and find some support for raising the top marginal tax rates.

Excessive financial secrecy facilitates illicit financial flows, including via anonymous ownership of cross-border financial assets. We study the reaction of such investment to recent increases in financial transparency using a new dataset of financial secrecy for 2011---2019. We find that investors reacted by relocating their assets to jurisdictions that remain, or have recently become, relatively more financially secretive than other countries. These effects are highly non-linear and stronger for assets originating from lower-income countries. Our results suggest that recent advances in information exchange are toothless if not accompanied by improved information collection and full corporate beneficial ownership transparency.

We study a policy in Iran that grants tax cuts to firms experiencing growth above a specified threshold. Using the universe of Iranian corporate tax returns from 2013 to 2022, we employ the bunching method and find that firms increase their reported taxable income growth by 1.17 percentage points for every 1 percentage point reduction in the corporate tax rate. Additionally, event-study results show that this growth corresponds with a reduction in the share of reported exemptions by firms. Evidence suggests that the increase in reported growth is driven by over-reporting of income and inter-temporal income shifting to maximize tax reductions. We further document evidence of information frictions: firms with ownership links are significantly more likely to coordinate their bunching behavior, suggesting that information about optimal tax responses diffuses through business networks. These patterns point to informational barriers as an important constraint on firm-level optimization in response to tax policy.

The objective of this article is to analyze the impact of government size on the Musgravian performance of Sub-Saharan African countries. The Generalized Moments Method (GMM) in a system is applied to a sample of 40 countries over the period from 2006 to 2021. The results obtained show that the size of government significantly affects public performance in all three dimensions of Musgrave. First, it has a positive effect on government stability. Secondly, it reduces the income allowance and promotes employment. Finally, it reduces the share of the population living below the minimum income. Therefore, rather than increasing the size of government, it is recommended to accelerate the digitalization of public administrations in order to improve the quality of institutions and reduce corruption. As a result of this investigation, we note that the problem of sub-Saharan governments is not the quantity of the rulers, but the quality of their actions.

We investigate the impact of financial intermediation on economic growth in four North African countries (Algeria, Egypt, Morocco, and Tunisia). Based on a Principal Component Analysis to construct an index that measures financial intermediation and using Granger causality tests we analyze whether financial intermediation influences economic growth. Using data from 1990 to 2018, we show that financial intermediation does not Granger cause economic growth in these North African countries. This contrasts with the findings in similar but older studies for the East African Community (EAC) countries. We also show that inflation has a significant short-run impact on growth in the North African countries.

Against the backdrop of the new Monetary Policy Committee (MPC) decisions to maintain the status quo policy rates, we analyse the post-pandemic monetary policy stance in India. Using high-frequency time series data spanning from January 2020 to July 2023, the term structure of interest rate is analyzed by incorporating monetary aggregates, fiscal deficit, inflation expectations, and capital flows, employing the ARDL (Autoregressive Distributed Lag) model. The results revealed that the fiscal deficit does not significantly determine interest rates in India's post-pandemic monetary policy stance. While the long-term interest rates were strongly influenced by the short-term interest rates (reinforcing the operation of term structure in India), capital flows, and inflation expectations, the money supply inversely impacted it. These inferences have policy implications on the fiscal and monetary policy coordination in India, where it is crucial to analyse the efficacy of a high interest rate regime on public debt management.

Size-based regulations and taxation are ubiquitous. In this paper, we examine the impact of size-based taxation on firm growth by exploiting a large and permanent tax reform from Pakistan, where the VAT threshold was raised from PKR 5 million to PKR 10 million. Using a difference-in-differences framework and rich administrative data, we estimate the causal effects of this reform on firms whose growth was previously constrained by the size threshold. Our findings reveal substantial growth effects: treated firms saw their revenue increase by 32 log-points, costs by 19 log-points, and gross profits by 13 log-points. These effects are driven by real economic activity, as third-party reported outcomes, such as wages and imported inputs, also grew by similar margins. Treated firms paid higher taxes across various measures, highlighting their strong willingness to pay to get rid of the size-based taxation.

Value-added tax is commonly the most important source of tax revenue for governments in developing countries but little is currently understood about how firms respond to the tax. Using administrative tax data from West Bengal in India, we study the behavioural response induced by a turnover threshold for compulsory VAT registration. Exploiting variation in the tax discontinuity at the registration threshold across firms and over time, we show that it is tax liabilities rather than compliance costs that explain the bunching of firms below this threshold, and the associated revealed preference for a simplified tax scheme. The limited role for VAT compliance costs in business decisions has important implications for the welfare gains from the tax and for the optimal level of VAT registration thresholds.

This paper examines how small and medium-sized businesses respond to a size-based tax and reporting threshold in the German local business tax. Using novel administrative tax return data covering the vast majority of German businesses, we document significant bunching at the tax allowance threshold while reporting requirements play a minor role. Following a cohort-based difference-in-differences approach we show how businesses manage their profits to stay below the tax allowance threshold. The bunching response is driven by a reduction in reported revenue and an increase in costs with some expenditure items potentially reflecting private consumption channeled through the firm.

How do tax enforcement interventions diffuse through firm-to-firm networks? We explore this question with a randomized trial in Uganda. Using transaction-level VAT data, we map seller-buyer networks and identify discrepancies in the amounts reported by trading partners. Enforcement letters highlighting these discrepancies are sent to either the seller, the buyer, or both. The correction rate in the treatment group is 23.8%, fourteen times higher than in the control group. This response is asymmetric: corrections are primarily made by sellers, even when only buyers receive letters, providing novel evidence that firms can induce changes in their partners’ tax reporting. Spillover effects extend to transactions not listed in the letters, including those involving other trading partners. The intervention also results in sustained improvements in reporting behavior over subsequent months. Our study sheds light on firm-to-firm communication within networks and offers policy-relevant insights for fighting tax evasion.

Education policy in the United States, while primarily the responsibility of the state governments, involves complicated decision making at the local, state, and federal levels. Federal involvement dramatically increased under the No Child Left Behind Act of 2001 (NCLB). But, reflecting resistance to various parts of this law, the involvement of federal policy making was substantially reduced when Congress passed the Every Student Succeeds Act (ESSA) in 2015. This change in policy allows estimation of the impact of altered federalism. By looking at how states reacted to their enhanced decision-making role, we see a retreat from the use of output-based policy toward teachers, and this retreat was associated with significantly lower student achievement growth. The snapshot of federalism impacts here is a lower bound on the effects as more states will very likely react to the flexibility of ESSA and as more school districts change their teacher force.

We evaluate the Education Maintenance Allowance, a large conditional cash transfer that paid teenagers from lower-income families in England to remain in full-time education after age 16. Leveraging variation from the staggered roll-out and using linked administrative data, we find no improvement in labor market outcomes by age 31. If anything, the policy slightly reduced cumulative earnings and increased benefit receipt, driven by delayed labor market entry among higher-attaining students and weaker labor force attachment among lower-attaining students who stayed longer in education without gaining qualifications. However, it did reduce crime among lower-attaining students, suggesting some social benefits, though these were likely outweighed by the program’s considerable costs.

This paper examines whether a nationwide policy mandating chess instruction in Armenian elementary schools since 2011 enhances students’ cognitive skills and academic performance. Using Triple Differences identification strategy and student-level data from the Kangaroo International Math Competition (2009–2019), I compare cohorts exposed to early chess training with those who were not. My findings reveal a meaningful and statistically significant positive effect on math test scores, estimated at 1.4 points (a 4% improvement relative to the median). Students from rural areas benefit twice as much from chess instruction, whereas students from public schools do not significantly benefit relative to private schools. The results align with mixed evidence on the far-transfer benefits of cognitively demanding activities. These findings provide practical insights for policymakers considering the inclusion of chess in school curricula, in terms of its cognitive impact and cost-effectiveness.

This paper considers the role universities play in determining their enrollment when faced with government regulated domestic tuition. Our theoretical framework posits that domestic student enrollment increase and international student enrollment decrease or remain unchanged when domestic tuition increases. Using 30 years of data, we find higher tuition increases domestic enrollment, mediated by an expectation that students may respond negatively to increased tuition. Universities shift enrollment toward higher-revenue fields. The results for international student enrollment is mixed, depending on the research intensity of the university.

Voluntary intermunicipal cooperation can address inefficiencies from local government fragmentation without politically costly mergers, but trust deficits often hinder collaboration. This paper explores whether partisanship can facilitate cooperation by building trust and aligning preferences. We contribute to research on local cooperation and political alignment using data from Spanish municipal associations and a novel administrative dataset covering four decades. We examine (1) whether founding municipalities in associations are more similar in partisanship than later joiners, (2) whether alignment increases the likelihood of joining, and (3) apply a Regression Discontinuity Design to assess causal effects. We find that founding members are more alike in partisanship and other traits; aligned municipalities are 60% more likely to join an association; and our RDD confirms a causal relationship. Our findings highlight how partisan alignment can overcome coordination barriers in fragmented governance in low-trust settings but exacerbate conflict in high polarized ones.

This study explores whether the advantages of larger local governments outweigh the inefficiencies associated with consolidation. Specifically, it examines an Italian policy reform that required small municipalities to engage in inter-municipal cooperation for the provision of shared services. The analysis assesses the impact of this reform on local real estate prices, revealing a significant decline in house prices in the affected municipalities. This decrease suggests a deterioration in the quality of public goods provision. Furthermore, we find no evidence supporting alternative explanations, such as changes in taxation or housing supply, for these price fluctuations. Ultimately, the results indicate that the joint management of municipal functions may be harmful to both local governments and their residents, raising critical questions about the overall effectiveness of consolidation efforts.

The paper estimates public sector borrowing requirement (PSBR) for select Indian states. In doing so it quantifies their off-budget borrowings and examines guarantees given by them as per their fiscal responsibility legislations. To the best of our knowledge this is the first study of its kind for India and covers period from 2015-22. Seven states were selected based on their fiscal performance. It highlights the challenges in deriving estimates of components of PSBR. The study stresses on fiscal transparency which is critical to good governance and policy making and is of the view that instead of focusing on narrow definition of fiscal indicators like debt/ deficit, a broader definition encompassing activities of public sector would make fiscal policy realist and effective. It examines factors that influence PSBR for Indian states and finds it to be positively related to per capita GSDP and fiscal-deficit-to-GSDP ratio and inversely to states’ own-tax-revenue-to-total-expenditure ratio.

The study investigates how the reputation of a treasurer—based on their tenure compared to that of the mayor—affects financial outcomes in Polish local governments. It employs the Inverse Probability Weighted Regression Adjustment (IPWRA) method to analyze two groups of local governments: those where the treasurer was appointed by the incumbent mayor and those where the treasurer has held the position longer than the current mayor. The findings indicate that treasurers with a strong reputation lead to better financial results for local governments. This includes lower expenses, higher tax revenues, and reduced deficits and debt. Conversely, local governments with treasurers who have a weaker reputation tend to have higher current expenditures, lower investment expenditures, and increased debt issuance

We ask how externalities should be taxed when redistribution is costly. In our model, the government raises revenue using distortionary income and commodity taxes. If more or less productive people have identical tastes for an externality-generating activity, the government optimally imposes a Pigouvian tax equal to marginal damage from the externality, regardless of whether the tax is regressive. But if regressivity partly reflects different preferences across incomes, the tax optimally deviates from the Pigouvian benchmark to help redistribute income efficiently. The overall tax may be higher or lower, and may even reverse sign relative to the externality. We derive sufficient statistics for optimal policy and use them to study carbon taxation in the US. Throughout most of the income distribution, our empirical results imply an optimal carbon tax below marginal damage, but this reverses for high earners. Allowing heterogeneity within and across incomes attenuates schedules toward the Pigouvian benchmark.

This study examines the potential impacts of carbon taxation on Belgium’s economy, focusing on emissions reduction and fostering innovation. As a strong EU innovator, Belgium has yet to implement a carbon tax, despite falling short of its climate targets. Using a computable general equilibrium (CGE) model calibrated with a detailed Social Accounting Matrix (SAM) for Belgium, the research explores varying carbon tax levels and revenue recycling strategies, including innovation subsidies and labour tax reductions. The model captures the dynamic interplay between economic activity, sectoral transitions, emissions, and R&D investments. By integrating innovation dynamics into the CGE framework, this study offers a forward-looking analysis of how carbon taxes can support technological progress and economic resilience. The results aim to provide actionable insights for policymakers designing equitable environmental policies that balance decarbonization with economic competitiveness.

Fuel and vehicle taxes are key revenue sources in sub-Saharan Africa (SSA) and play a role in addressing externalities such as congestion, air pollution, and road damage. This paper draws on a new database covering fuel and vehicle taxes in 38 SSA countries, tracking reforms since 2014. The findings show that these taxes are poorly aligned with environmental objectives: most revenue comes from up-front vehicle purchase taxes, which are least effective at targeting externalities from vehicle use. Since 2014, purchase taxes have grown in importance as fuel taxes have lagged behind inflation. While some purchase taxes include environmental elements—such as higher rates for vehicles with larger engines—most countries tax expensive but cleaner vehicles more than cheaper, dirtier ones. Cars face much higher taxes than buses and trucks, creating loopholes for vehicles on the boundary, such as pickup trucks.

Climate change and energy poverty in low- and middle-income countries are global challenges that are sometimes in tension with each other. This paper analyzes a randomized intervention that addresses both: distribution of solar lights to replace kerosene lamps. The solar lights strongly reduce carbon emissions from kerosene by half, while at the same time lowering household expenditures and improving health and subjective wellbeing. Providing lights for free, rather than charging a co-pay, boosts take-up without lowering usage. Access to solar lights can therefore be a highly cost-effective climate intervention, which at the same time increases the welfare of the poor.