The aim of this paper is to analyse the distributional effects of fuel subsidy reforms in four countries of the Andean region: Bolivia, Colombia, Ecuador and Peru. The analysis combines tax-benefit microsimulation techniques with input-output analysis to estimate the direct and indirect distributional effects of fuel subsidy reforms, and the role played by enhanced social assistance in protecting vulnerable households. Our results shows that the removal of fuel subsidies has a negative impact on household income, particularly for those at the bottom of the distribution which increases poverty. Recycling the revenue saved from the removal of subsidies to enhance the generosity of existing social protection programs mitigates the increase in poverty but to different extents across countries. The latter reflects differences in targeting of current social protection programmes in the countries under study.

The increased frequency of natural disasters has spawned the creation of sovereign parametric insurance contracts that provide governments with budgetary support for the social protection payments that accumulate in the wake of hurricanes and droughts. However, there is a paucity of economic analysis concerning when it makes public finance sense to purchase sovereign index insurance coverage. We address this question with a model of the decision to purchase insurance to cover stochastic social protection payments. Assuming that the government has a fixed budget and that it maximizes the expected well-being of the poor population, we show that optimal insurance coverage is highly sensitive to both the predictive accuracy of the parametric disaster index and the pricing of the insurance Using realistic parameters drawn from a scheme designed to insured Kenya’s social protection program for its drought-prone regions, we show that while positive, the optimal amount of insurance is modest.

The UK’s Climate Change Act mandates an 80% cut in CO2 emissions by 2050 relative to 1990. Although emissions have already fallen by about 45%, further structural changes are essential for decarbonising the UK economy. This study examines the impact of this transformation on labour productivity, firm demographics and energy consumption. We assess the implications of the transition so far, as well as of the transformation ahead of us. Our investigation employs both empirical and structural approaches. The empirical strategy involves analysing aggregate data, progressing to the division level, and concluding with an examination of individual firm behaviour.

Results indicate that two sectors drove the decarbonisation so far, electricity production and manufacturing. Shifting from coal to gas and renewables reduced emissions in electricity production, while the shrinking of the manufacturing sector reduced emissions in the latter. Reductions in energy intensity and increases in energy efficiency broadly balanced each other out.

This paper argues that adaptation to climate change should be part of a holistic development strategy involving both private and public sector responses. Governments can prioritize public investment in adaptation programs with positive externalities, address market imperfections and policies that make private adaptation inefficient, and mobilize revenues for, and distribute the benefits of, adaptation. Although the choice of what should be done and at what cost ultimately depends on each society’s preferences, economic theory provides a useful framework to maximize the impact of public spending. Cost-benefit analysis, complemented by the analysis of distributional effects, can be used to prioritize adaptation programs as well as all other development programs to promote an efficient and just transition to a changed climate. While compensations may be needed to offset damages that are either impossible or too expensive to abate, subsidies for adaptation require careful calibration to prevent excessive risk taking.

We analyze tax-motivated cross-border income shifting for Austrian multinational entities by merging corporate tax return data with financial statement data. We estimate a semi-elasticity of taxable income of -0.9. This elasticity increases to -2.2 for entities incentivized to shift income out of Austria, while it is close to zero for those with incentives to shift income into Austria. We find little evidence of income shifting when using financial statement profits. However, adjusting these profits for tax-exempt foreign dividends effectively re-aligns estimates with our main findings. These results underscore that using financial statement data to approximate true taxable income can substantially affect income-shifting estimates.

This paper analyzes the fiscal impact of corporate profit shifting to local business tax havens in Germany. Similar to international tax havens, municipalities in Germany have an incentive to reduce their local business tax (LBT) rate to attract corporate profits. I define local tax havens as low-tax municipalities close to large agglomeration areas. I use synthetic difference-in-differences methods together with administrative data sources to estimate the amount of profit shifting to local tax havens. Between 2013 and 2019, around 74 billion Euros were shifted to local tax havens. The results are driven by a small number of large firms that offer business and financial services. The fiscal cost to non-tax haven municipalities amounts to roughly 11 billion Euros.

Can a country reduce its exposure to tax havens, and what are the consequences? We analyze the effects of Ecuador’s corporate tax surcharge for firms with owners in tax havens. The reform was made possible by the prior establishment of an ownership registry. Comparing the behavior of firms with tax-haven owners at baseline (exposed firms), versus other foreign-owned firms, we find that the reform induced 12 percent of exposed firms to reduce tax haven ownership to zero. Exposed firms report owners in non-haven countries that tend to be individuals rather than firms, thus raising beneficial ownership transparency. Exposed firms also increase tax payments by 15%, without reducing employment and investment in Ecuador. Yet, transactions between exposed firms and tax haven parties did not fall. Overall, the policy which combined a “flashlight” (the ownership registry) and a “stick” (the tax surcharge) seemed effective at raising transparency and mitigating tax erosion.

It is well-known that some multinationals shift profits to tax havens. By manipulating the cost of intra-firm transactions, these firms artificially lower their tax base and the reduce the effectiveness of the tax authority. While this can be countered by monitoring and audits, such efforts are costly. Here, we present a data-driven approach to identifying potential profit shifters to better target limited audit resources. By comparing actual data from individual firms' tax returns in Ugandan administrative to broader industry trends, the method identifies when a given firm's behaviour seems unlikely in the absence of profit shifting. The method indicates that fewer of 3% of multinationals in Uganda exhibit such behaviour with four firms making up over 90% of potentially lost tax revenues. Thus, our methodology is a feasible and low cost method of targeting audits.

The Condorcet paradox has been a significant focus of investigation since Kenneth Arrow rediscovered its importance for economic theory. Recent research on this phenomenon has oscillated between simulation studies, probability calculations based on hypothetical voter preferences, and empirical analyses often limited by unsatisfactory data. This paper presents the first comprehensive evaluation of 253 electoral polls conducted across 59 countries. Our findings demonstrate that the Condorcet paradox has virtually no empirical relevance: with only one exception, we find no evidence of cyclical majorities in any of the 253 elections. This result remains robust after statistical inference testing. Furthermore, this study provides insights into which parties are particularly likely to emerge as Condorcet winners and explores how these Condorcet winners assert themselves after elections.

How important are search frictions in the market for charitable donations? I study a dynamic search and matching model to produce new insights for our understanding of the charitable sector. First, the model highlights the role that charity characteristics play in equilibrium donations. Second, charity competition takes the form of a congestion externality. This externality can be influenced by policy instruments like the tax treatment of donations. Finally, empirical support for the model in a form of a charitable giving Beveridge curve is presented.

Utilizing instrumental variable (IV) Probit model on a dataset recovered from field survey on 2nd-5th, August, 2024 in Nairobi City, and employing MLE technique, we establish a 'no-profitability' threshold for low-income gamers. We establish that for football betting budget shares above 0.483%, the financial gain motive waxes off for individuals who strongly disagree that tax increment reduces the frequency of betting on competitive football. Most important, we justify the 'no profitability' hypothesis while concluding that the smoking habits of parents affect negatively, though not significantly, the gambling status of offspring. We, therefore, recommend a regressive and punitive tax on bet stakes in order to cushion low-income gamers against 'self-control'-induced

bankruptcy arising from unprofitable betting.

We conduct a randomized experiment comparing individual- and team-based performance pay among credit officers at a microfinance institution in Uganda. We find that tying rewards to individual or team performance has no significant effect on job performance (loan outcomes). However, turnover is substantially higher under individual incentives, with twice as many employees leaving compared to the team-based scheme. Survey data also reveals lower job and workplace satisfaction under individual incentives. Importantly, when individual incentives are combined with a portfolio rotation policy — which more equitably distributes opportunities for bonuses — the negative effect on turnover is mitigated. These results highlight the risks of individual incentive pay, which can reduce satisfaction and increase turnover. Introducing complementary policies like portfolio rotation can help address these unintended consequences and support better retention under individual-based incentive systems.

Redistributive policies are crucial in tax design but often overlooked when examining optimal tax administrative policies to fight tax evasion. This paper extends the Keen and Slemrod (2017) framework to analyze how redistributive concerns and inequality aversion affect tax administration. The rule for the optimal redistributive tax has the same structure as in a model without tax evasion, but the efficiency concerns depend on the elasticity of reported incomes, not solely on the elasticity of labour supply. Optimal tax enforcement strategies depend on the connection between private compliance costs and inequality aversion. With social marginal welfare weights falling in income, society chooses less strict enforcement and larger implied optimal tax gap if compliance costs are relatively high among low-income individuals. The results highlight an efficiency-equity trade-off in optimal tax administration policies.

I develop a model of optimal income taxation that incorporates a hybrid employment structure, where formally employed workers receive both recorded wages and payments under the table (PUT). When firms’ choices are not considered, the optimal tax rate depends on two sufficient statistics—the PUT elasticity and the ratio of PUT to reported wages. Higher absolute values of the PUT elasticity and the ratio of PUT to reported wages lower the optimal tax rate. When firms are introduced, the corporate tax creates an additional distortion because PUT wages cannot be deducted from taxable income. As higher PUT wages reduce income tax revenue, they simultaneously increase corporate tax payments, partially offsetting the revenue loss and affecting redistribution. I apply this model to the Peruvian context. To estimate PUT, I perform optimal transport matching between two datasets that most governments already collect—payroll administrative records and household survey data.

Abstract This paper revisits classic results in optimal income taxation by incorporating non-filers, whose undermining the efficacy of income tax-based redistribution. Under Atkinson-Stiglitz preference assumption, the addition of non-filers rationalizes commodity subsidies as an alternative approach to achieving redistribution. The imperfection of this approach may also rationalize differential commodity taxation/subsidization. Moreover, when filing is an endogenous choice—affected by demogrant incentives—the optimal income tax follows a modified ABC rule, with social marginal utility adjusted to reflect imperfect takeup. These findings reveal that accounting for non-filers can increase or decrease optimal redistribution.

We integrate tax enforcement into the Mirrlesian optimal income tax framework, derive sufficient statistics formulas for the jointly optimal tax and enforcement schemes, and establish the following properties: (i) Taxation and enforcement are complementary. (ii) Tax exemptions can be optimal under variable enforcement. (iii) Cost-benefit enforcement is optimal if the marginal social value on consumption of evaders is zero. We calibrate the model using US audit data and find that even a conservative re-alignment of audit intensity at high incomes could lead to a significant increase in optimal top tax rates.

The positive correlation of tax to GDP and GDP per capita at the global level suggests that developing country growth reduces aid dependence by mobilizing domestic revenues (DRM) to finance public expenditure. Income status upgrades by the World Bank represent milestones in this transition and may anticipate a decline in aid precipitating an increase in tax collection to complement the shortfall in government revenue. Applying the synthetic control method (SCM) and synthetic difference-in-differences (SDID) to countries with sufficient data in the UNU-WIDER GRD tax database and the WDI, I investigate whether the income status upgrades raise tax and other government revenue in sub-Saharan Africa (SSA). With few exceptions, results show that upgrades induce a rise in government/ tax revenue in per capita terms relative to countries within the same income group, but not relative to GDP. Extensive robustness checks confirm that per capita growth does raise the share of tax revenue in GDP.

This study aims to shed light on the cyclicality of tax policy. The result shows that tax policy in Korea is a-cyclical. One notable feature is a strong relationship between house prices and tax policy. The empirical results show a positive relationship between housing prices and tax rate reduction bills and a negative relationship with tax rate increase bills. This result implies that tax rate reduction is strengthened when the housing market is strong, and conversely, tax rate increase is strengthened when the housing market is weak. Based on this result, this paper argues that asset market imperfections lead to procyclical tax policies. Since the 2000s, real asset markets have had a greater impact on tax revenue fluctuations, and unexpectedly high tax revenues during the real estate boom have led to tax rate reductions.

Since 1991, India’s central government has actively pursued disinvestment of Public Sector Enterprises (PSEs). However, the strategic sale of well-performing PSEs like Life Insurance Corporation of India Ltd. and Air India has drawn criticism, raising concerns about undervaluation and deviation from stated policy objectives. This paper examines the rationale, debates, and fiscal implications of disinvestment in India. Empirically, it analyzes disinvestment proceeds post-1991, particularly after the Fiscal Responsibility and Budget Management (FRBM) Act of 2003, to assess their role in managing fiscal deficits. The findings indicate that disinvestment revenues, both current and lagged, have been used as a fiscal tool, questioning whether the policy aligns with long-term economic efficiency or serves as a short-term revenue strategy. The study contributes to the discourse on whether disinvestment enhances economic sustainability or merely addresses fiscal constraints without structural reforms.

I attempt to reconcile two vast strands of literature that essentially estimate the same empirical relationship. Tax effort studies aim to benchmark a country’s tax-to-GDP ratio to tax outcomes observed in other countries under comparable conditions, in particular under similar levels of economic development, proxied with the real GDP per capita. A completely separate strand of literature deals with estimating tax buoyancy, which is measured as the percentage change in tax revenue associated with a one per cent change in GDP. While dealing with some of the same data as in the tax effort studies, the tax buoyancy literature has developed more robust econometric methods. In this paper, I show that an estimate of long-run buoyancy can be translated into the magnitude of the impact of economic development on the tax-to-GDP ratio by making adjustments for how the population size and real exchange rate interact with economic growth.

The literature has not explored the interaction of economies of scope and economies of scale for public services provided by general-purpose local governments in detail. This study attempts to estimate the interactive effects on expenditures of the designation as a specially authorized city and merger, i.e. the interaction of economies of scope and scale. The findings of this research are summarized as follows. First, in the provision of public services by general local governments, the interaction of economies of scope and economies of scale is observed especially in the long term. The designation as a core city increases per capita expenditures for non-merged cities in the long term, but decreases for merged ones. Second, the contrasts of the long-term effects of designation as a specially authorized city between merged and non-merged cities hold for fiscal items such as ordinary expenses and conditional and unconditional grants.

Policymakers globally emphasize sub-national autonomy in environmental policies, but empirical evidence linking sub-national fiscal autonomy to climate risk is limited. This study addresses this gap by examining how AI preparedness and statistical performance mediate the relationship between environmental fiscal decentralization and climate risk, as measured by the IMF's Climate INFORM risk indicator. Using Panel Threshold Regressions with latent group structures (Miao et al., 2020) and quantile techniques on approx two decades of global data, we find that sub-national autonomy in climate finance reduces climate risk only up to a certain threshold. Beyond this point, excessive decentralization increases risk, though higher AI preparedness mitigates this negative effect. The findings suggest that strong statistical infrastructure and digital capabilities can counter protectionist policies in decentralized systems, improving climate change accountability. Additionally, decentralization reduces climate risk more effectively in countries with gender-sensitive policies, indicating that societal equality contributes to more sustainable outcomes.

Property tax collection in Zambia under-performs when compared to a number of African countries, owing in part to the existence of a dual tenure system which hampers local governments’ ability to raise revenue on customary land. Pursuing property taxation on customary land would require improved collaboration and information sharing between local councils and traditional leaderships, but also buy-in from owners living under the authorities of chiefs, who have historically reported low levels of trust in local councils’ ability to provide public services. Using novel data of 2’400 property owners in three councils of Zambia, equally distributed among owners who are property tax compliant and non-compliant, in informal settlements and on customary land, we use conjoint analysis to investigate (1) whether owners express a preference for a collaboration between local and traditional authorities in raising property tax, and (2) what drives owners’ preferences in the design of a property tax policy.

Limited access to credit has been identified as a major constraint to sustainable municipal development, but empirical evidence on the effectiveness of credit operations remains inconclusive. This paper evaluates the impact of federal government guaranteed loans on public expenditures. Using data from Brazilian municipalities and a regression discontinuity design --- that leverages a discontinuity in the eligibility criteria for federal government guarantees --- I show that the loans have a positive impact on the quality of local expenditure and social outcome indicators. This impact is characterized by a significant increase in investment while keeping personnel expenditures stable.

The spatial configuration of domestic supply chains plays a crucial role in the transmission of shocks. This paper investigates the representativeness of formal firm-to-firm trade data in capturing domestic trade patterns in Kenya — a context with a high prevalence of informality. We first document a series of stylized facts to show that formal sector data is not representative of overall economic activity. We then link granular transaction-level data on formal firms with data on informal economic activity to estimate a structural model and predict a revised network that accounts for informal firms. We find that formal sector data overstates the spatial concentration of aggregate trade flows and underaccounts for trade within regions and across regions with stronger social ties. Additionally, the higher the incidence of informality in a sector and region, the more we underestimate its vulnerability to domestic output shocks and overestimate its vulnerability to import shocks.

This paper presents findings from a field experiment assessing the impact of increased tax officer presence on tax compliance and morale among SMEs in Tanzania. The experiment was embedded in a face-to-face survey, where Tanzania Revenue Authority officers accompanied an independent survey firm in randomly selected urban and peri-urban wards. This temporary increase in tax officer visibility aimed to test whether their presence influenced taxpayer behavior. Results indicate no significant overall effect on tax compliance or tax morale, as measured through administrative and survey data. However, a short-term rise in compliance was observed in Tanzania’s largest city, while tax morale showed a sustained increase elsewhere. A follow-up survey suggests that these effects stemmed from heightened perceptions of enforcement credibility rather than improved perceptions of tax facilitation or trust in the tax authority.

This paper provides novel evidence of the trade-offs policy makers face between revenue collection, simplicity, and equity when designing simplified tax regimes for small businesses in low-capacity settings. First, it provides a comprehensive stocktaking of the main features of these regimes across Sub-Saharan Africa. Second, it draws on administrative and survey data from Kenya for a thorough examination of its simplified tax regime. This analysis shows most small businesses lack knowledge about design features, such as the existence of a minimum exemption threshold. Finally, the paper presents the results of an experiment that encourages taxpayers to pay customized fixed amounts - a potential alternative design of a simplified tax regime that aims for a better balance of the trade-offs facing policy makers. The findings show that providing simple guidance about how much small businesses with similar characteristics typically pay in taxes can increase revenue, but at the expense of equity.

This study examines behavioral responses to Rwanda's presumptive tax regime for small businesses, with a focus on gender differences in taxpayer behavior. While simplified tax regimes aim to raise revenue, encourage formalization, and reduce compliance costs, there is limited empirical evidence on their effectiveness. In particular, simplified tax regimes may encourage behavioral responses that run counter to its goals, with taxpayers minimizing tax liabilities by strategically reporting income below tax thresholds. Using administrative tax data from 2012 to 2022, we present three sets of stylized facts to answer the following questions: 1) What are the characteristics of taxpayers in the presumptive tax system? 2) Are there behavioral responses to the presumptive tax system, and if so, are there important gender differences? and 3) What proportion of businesses graduate to the regular tax system and what are their characteristics? Are women-owned businesses less likely to graduate?

This paper leverages the 2005 reform of retirement rules in Finland to analyze its impact on both employment and health outcomes. The reform introduced stricter criteria for early retirement while enhancing flexibility in old-age pension options. Examining cohort variations across the reform period allows us to pinpoint its causal impacts. Regarding labor market participation outcomes, we study the reform's influence on individuals close to the earlier retirement age of 65 years. We find that the labor market participation of individuals between ages 65 and 67 increased due to the reform. Regarding health outcomes, we focus on three outcomes likely to relate to labor market status of an individual, and thus to an increased participation rate following the reform: antidepressant usage, cardiovascular risks, and musculoskeletal conditions.

Sin taxes are increasingly being used to discourage the consumption of goods perceived to harm individuals and society. This paper examines the impact of South Africa's Health Promotion Levy (HPL)—the first sugar tax implemented in Africa-on the consumption of sugar-sweetened beverages (SSBs) in the country. Using comprehensive data from excise returns submitted by manufacturers and importers of SSBs, we find that the HPL was extremely effective in reducing the consumption of sugar through these beverages. Within two years of its introduction, the levy caused a substantial 33 percent reduction in the consumption of sugar through taxable beverages. We also find that the consumption partially shifted to non-taxable beverages, resulting in an increase of 15 percent in the consumption of non-taxable SSBs. These findings suggest that while the HPL is effective in reducing SSBs consumption, policy adjustments, including broader product coverage and targeted use of tax revenues, could enhance its impact.

Previous work using mostly self-reports shows large, positive effects of early-life exposure to Food Stamps on self-sufficiency, health, and well-being-lasting well into adulthood. We combine this same adoption timing with administrative data on earnings, employment, and use of disability benefits. Women born in counties with Food Stamps available in early life had 3 percent higher earnings at age 32. Effects were larger in counties with another in-kind food program in place before Food Stamps. Food Stamps relied on the other program's preexisting administrative eligibility determination. Our results establish links between pre-existing administrative infrastructure and the later-life impacts of Food Stamps.

We investigate one of the most distressing experiences a child can face: the terminal illness and death of a sibling. Despite siblings being the ultimate peers in childhood, sibling illness and death spillovers remain largely unexplored as it is notoriously difficult to capture causal effects due to endogenous factors. To circumvent endogeneity issues, we leverage exogenous variation in childhood cancer incidence and death across families in Sweden to estimate causal effects. We estimate the impact of the shock on the educational performance, health outcomes and early labor market succes of the remaining children.Using parental fertility, marital stability, and labour-market outcomes as potential mediators, we aim to improve the understanding of the estimated effects of sibling spillovers.Sibling spillovers are important in understanding the total effects of childhood policies on children within families. Our findings will speak to the efficacy of these human capital interventions.

Regional economic decline is argued to be a major factor behind the recent rise of far-right support in liberal democracies. We generalize this finding using a unique county-level panel covering the fall (1949-1972) and rise (1972-today) of far-right voting in West Germany. Our results show that regional economic ascent predicts the initial fall of the far-right just as economic decline predicts its rise. We then combine the county-level panel with individual-level survey data to -- for the first time -- test the relative importance of regional (places) and individual (people) economic conditions for far-right support. Local growth and individual income shocks have a differential relation to far-right preferences. While individual income decline relates to stronger far-right party identification, local decline predicts heightened worries about immigration. People, it therefore seems, matter for far-right support more than places.

We investigate the role of state capacity and political violence in favoring regime changes. Specifically, we examine the role of road networks in the spread of Fascist violence in early 1920s Italy. Using novel and comprehensive data on Fascist violence, along with digitized maps of the Italian road network, we investigate the impact of road accessibility on the location and intensity of political violence, addressing endogeneity issues by means of an instrumental variable approach based on the least-cost paths virtual network among major municipalities as an instrument for the actual historical road network. We find that road accessibility played an important role in the spread of early Fascist violence. Our conclusions suggest that incumbents might have a strategic incentive to limit the development of state capacity in order to maintain political power.

This paper analyzes the effect of political instability in African countries on the volatility of commodity prices. A synthetic index is constructed from a set of political instability variables, and four types of commodities are considered: energy, agricultural, mineral, and precious metals. Using data from a sample of 37 countries spanning the period 1984-2016, a panel data model is estimated using the system generalized method of moments. Two main results are obtained: (i) political instability in African countries negatively affects the volatility of commodity prices overall, and (ii) this instability particularly affects energy, mineral, and mining commodities. Strengthening political deficiencies in different African countries experiencing instability is necessary to mitigate the volatility of the various commodity prices on which they depend.

Political agency models predict that electoral concerns induce politicians to put effort into making policies that benefit citizens. We exploit the introduction of mayoral term limits in Portugal to investigate how electoral incentives affect incumbents’ efforts to obtain EU grants. We focus on EU grants because getting them requires effort. Moreover, by obtaining EU grants, mayors can do more for their citizens. We focus on Portugal because it provides a quasi-natural experimental setting to determine the causal effect of electoral incentives on effort. We find that term-limited mayors receive about 30% less EU money than mayors eligible for reelection.

The role of interactions between taxpayers and tax officials in shaping compliance strategies remains unexplored in the literature on tax administration and compliance in developing countries. Nevertheless, practically, taxpayers' experience is shaped by interactions with those who implement tax laws: tax officials. Drawing on a survey of small and medium Rwandan businesses, we provide descriptive and causal evidence into taxpayer experiences and the impact of tax officials’ attitudes and behaviours on taxpayers’ perceptions. A vignette experiment proves that interactions shape compliance attitudes. Facilitation-based interactions improve trust and perceptions of professionalism, while enforcement-focused interactions deteriorate tax morale and respect for the tax administration. Moreover, a population-wide survey of Rwandan tax officials explores how taxpayer characteristics influence officials’ attitudes. A conjoint experiment confirms that tax officials favour more knowledgeable businesses and distrust larger, wealthy taxpayers. The analysis highlights taxpayer knowledge and facilitation efforts as key to improving compliance through healthier taxpayer-administration interactions.

We report the results of a text message campaign to promote tax compliance among landowners in Dar es Salaam, Tanzania. Landowners were randomly assigned to one of four groups designed to test different aspects of tax morale. They received a simple text message reminder to pay their tax (a test of salience), a message highlighting the connection between taxes and public services (reciprocity), a message communicating that people who did not pay were not contributing to local or national development (social pressure), or no message (control).

Recipients of any message were 18 percent more likely to pay any property tax by the end of the study period. Total payment amounts were highest for recipients of reciprocity messages. The average estimated benefit-cost ratio across treatments is 36:1 due to the low cost of the intervention, with higher cost-effectiveness for reciprocity messages. Significant geographic heterogeneity in treatment effect sizes and estimated cost-effectiveness were observed.

The compliance effect of tax agents in low-income countries has received little attention in the literature. This study asses their impact through matching analysis of the universe of CIT and VAT returns submitted in Uganda between 2019 and 2023. Tax agents’ impact, proxied by the presence of audit expenses, is confirmed as broadly positive. CIT returns prepared by agents show no difference in declared liabilities in the aggregate, and higher declared CIT liabilities in the case of small and medium taxpayers. Significant but small increases in total VAT declared are mediated by increases in reported input and output VAT. Taxpayers relying on agents’ services are also less likely to nil-file and more likely to file late, while a higher likelihood of audit selection does not lead to significant differences in audit adjustments. These results are robust to different specifications and an alternative definition of agents’ use based on survey data.

In a natural field experiment with randomised controlled trials, tax debtors received three emails from the Kenya Revenue Authority regarding a tax amnesty. The subjects were randomly assigned to five groups one of which was not contacted. Results show that sequencing nudges in subsequent reminders is effective for tax amnesty uptake. Relative to no email control group, we find average effect size of 9 percentage points on uptake. In addition, sequencing of social norms and deterrence reminders lead to a 2.5 percentage points higher uptake regardless of the treatment order. Deterrence nudges are effective for individuals while payment outcomes are significantly high for early takers. Those who take up the amnesty in the first two rounds pay 30 percent more than late takers. This study extends literature on letter studies by focusing on the context of a tax amnesty and introducing sequenced nudges in subsequent reminders.

We incorporate policy competition into a quantitative spatial model. The interdependence of policymaking among a network of counties is characterized by 3109X3109 endogenous bilateral linkages. These linkages are summarized by ``policy impact'' ---the effect of a jurisdiction’s policy on other jurisdictions. Applying our model to local sales taxes, we find that limits to tax competition increase welfare, albeit heterogeneously, and that ignoring endogenous policies underestimates welfare gains by 6%. Ranking counties by the magnitude of their policy impact, we show that interventions targeting high-policy impact jurisdictions raise welfare by six times more than those targeting low-tax jurisdictions.impact. Then, we show interventions targeting high policy impact jurisdictions raise welfare by 6 times more than targeting low-tax jurisdictions.

The Middle East is often perceived as region with rentier economies and uncompetitive markets. Evidence of market power in the region however is scant. In this paper, we ask the following two questions: Is the Middle East uniquely uncompetitive? Can tax policy be a way to even the playing field? Using comprehensive firm-level data from Compustat between 2004 and 2022 and employing two methods for estimating markups (production function and cost-share approach). We document that market power among listed firms in the Middle East is higher than in the US, but on a downward trend. We find that the value-added tax (VAT) introduced by some Gulf states from 2018 to 2022 resulted in a reduction of market power, an unintended benefit beyond increasing fiscal space. While policymakers should continue to use available antitrust levers to achieve economic efficiency, VAT could be considered as an alternative instrument.

The present study examines the role of the congestion technology in a symmetric tax competition setting with a productive public good and with unemployment. Considering two well-known specifications of congestion, the congestion technology can be shown to be crucial for the analysis of efficiency in both public provision and private utilization of a congestible public input in the decentralized equilibrium: For the specification of decreasing marginal congestion, efficiency in the non-cooperative equilibrium with capital and lump-sum taxation will depend alone on the magnitude of the production and congestion elasticities. In contrast, factor prices and corresponding employment levels are, in addition, important to determine whether both provision and utilization levels of the public input are efficient in case of increasing marginal congestion. Numerical analysis is employed to supplement the results of the theoretical and graphical analysis and to further compare the social optimum to the decentralized equilibria.

We study firm responses to local policies using a firm survey. We provide randomized information on the rank of firms headquarters municipalities regarding business tax rates and highway infrastructure access and elicit investment decisions. Firms often misperceive the competitiveness of policies at their headquarter, especially for tax rates. Receiving bad news about policy competitiveness decreases location satisfaction. Tax competitiveness does not affect local firm investments, creating a home bias. Positive (negative) news, however, deter (attract) investment from other municipalities. Mobile firms drive effects. Bad news about relative infrastructure access decrease location satisfaction but do not affect firm investments.

Appropriate management of water requires greater policy coherence vis-a-vis macro-fiscal planning. This renewed emphasis calls for an improved analytical framing and strengthening of public sector capacities. The paper proposes an analytical framing of water resilience relevant to macro-fiscal planning termed ‘water value chain’ outlining channels through which water resilience affects the macroeconomy and a country’s fiscal position. Focusing on three major policy themes in the water value chain, namely: (i) management of water resources, (ii) ensuring adequate and reliable access, and (iii) enhancing the efficiency of water use, the paper further assesses public sector capacity building needs associated as identified in the IMF’s Climate Policy Diagnostic (CPD) and policy reforms being pursued under the IMF’s Resilience and Sustainability Facility (RSF).

Climate change leads to more severe periods of drought. Especially in drought prone regions as Ethiopia there are economic, environmental and social consequences. In this article we take a welfare economic perspective. There are welfare costs due to its direct cost, welfare costs related to risk aversion, and welfare costs related to the fact that drought might impact intertemporal variability.Then we focus on the equity aspect of drought. Increased drought has an impact on inequality as rich and poor households are impacted differently. We analyse the equity impact using the Atkinson Social Welfare Function and arrive at eight cost components: four efficiency related and four equity related. This information can be used to inform policymakers and to advise them which policy measures to take. It can inform about the welfare impact of different policy measures. We apply the approach to rural households in Eastern Ethiopia facing drought.

Zambia’s reliance on rain-fed agriculture makes its economy and population highly vulnerable to frequent droughts and irregular rainfall. This paper assesses the role of social protection, specifically the Social Cash Transfer (SCT) program, in mitigating drought-induced poverty and consumption declines. Using the MicroZAMOD microsimulation model and district-level rainfall data, we find that rainfall shocks significantly increase poverty and reduce household consumption, disproportionately affecting the poorest households. While the current SCT program provides some relief, reforms to eligibility criteria, particularly removing the household composition requirement, could improve targeting, expand coverage, and strengthen resilience against climate-related economic shocks.

Environmental regulations can reduce economic output when firms struggle to adopt cleaner production methods. We examine how public infrastructure can complement regulations by mitigating their economic costs. Using detailed firm-level data and a staggered difference-in-differences design, we find that sewage treatment plants (STPs) provided by local governments significantly enhance wastewater treatment among polluting firms. This infrastructure provision reduced firms’ production adjustments required for regulatory compliance, attenuating output losses by approximately 30%. To further analyze optimal policy design, we develop an equilibrium model that captures the joint decision-making of governments in providing STPs and firms in managing wastewater discharge. Our model also quantifies the social welfare gains from increased public goods provision, offering insights into effective water environmental governance.

This paper studies whether multinational enterprises (MNEs) respond to international anti-tax

avoidance regulations by increasing local profit shifting activities. Within Germany, local variation of profit tax rates facilitate similar avoidance strategies on a sub-national level through the use of intellectual property or financing structures. We study whether these local schemes serve as complements orsubstitutes for international profit shifting. To explore the use of local profit shifting activities by MNEs, we construct a novel database documenting the network structures of MNEs that link international to sub-national tax havens. We hypothesize that MNEs intensify their domestic tax avoidance practices in response to stricter international regulations. Our findings highlight the adaptive strategies of MNEs in response to evolving international tax policies and underscore the complexity of recent anti-tax avoidance regulations and their consequences at both the international and local level.

We develop a methodology to decompose the tax revenue impact of the global minimum tax introduced in 2024 into several components and quantify its potential impact on profit shifting. We apply it to 34 thousand multinational-country observations from tax returns, financial statements and country-by-country reports of all multinationals active in Slovakia. We find that the global minimum tax has the potential to decrease profit shifting by most multinationals, which are on average likely to pay higher effective tax rates in most countries worldwide post-reform. We find that Slovak corporate tax revenues will increase by 4%, with half of the increase due to its minimum top-up taxes. The other half of the increase is corporate income tax on profits that will no longer be shifted out of the country. We expect the global minimum tax to target 49% of previously shifted profits.

This study examines the potential effects of a global minimum tax (GMT) on European banks' liquidity, capital adequacy ratios, and operational capacity. Utilizing estimates of Basel III ratios under GMT scenarios and stress tests by the European Banking Authority, the research highlights differential impacts on banks, suggesting that while some can bear the additional tax burden, others may face challenges, potentially endangering the banking system. The findings contribute to the discussion on the practicality and consequences of implementing a global minimum tax, emphasizing the role of tax havens in maintaining banking efficiency and raising concerns about increased corporate taxation.

The two-pillar approach focusses on BEPS issues in developing countries to a greater extent than preceding OECD agreements. In particular, the Subject-to-Tax Rule (STTR) is intended to address BEPS risks in low-income countries’ tax treaties. This article analyses the STTR alongside treaties and domestic law to understand the likely impact of the rule in the region. It also considers the diverse domestic policy landscapes to explore whether the STTR is an attractive measure for countries in East Africa. The author believes that implementation of the rule will be complex, challenging already stretched tax administrations. Furthermore, some low-income countries may prefer not to engage with reforms that increase source taxation. The analysis concludes that any hopes that the STTR will mark a major step in addressing BEPS in this part of the world are likely to be disappointed, but it could form part of a portfolio of measures for some countries.

Compliance with the Value Added Tax (VAT) is a major challenge for tax administrations in many low- and lower-middle income countries (LLMIC). Some richer countries have introduced receipt lotteries to improve compliance. To address the problem that the self-enforcing property of the VAT typically breaks down at the point of sale to the final consumer, these lotteries provide customers with a monetary incentive to obtain formal receipts for purchases. In collaboration with the Tanzania Revenue Authority, we introduce a receipt lottery in Tanzania. Using administrative tax data, we find that the lottery significantly increases the recorded sales and VAT liability of VAT registered firms but does not affect non-VAT registered firms. Customer survey data reveals that the customers are aware of the lottery and respond by asking for receipts more frequently. Businesses often respond by printing fewer receipts when customers do not explicitly request them, partially mitigating the lottery’s effects.

For low-income countries looking to enhance revenue mobilisation without harming firm growth, understanding the full burden of taxation, beyond just tax liabilities, is crucial. This paper documents the substantial and often regressive tax compliance costs faced by small and medium-sized firms in Uganda. Using original survey data from nearly 2,000 firms, matched to administrative tax data, I show that compliance costs are significant, equivalent to 2% of turnover for the median firm. Moreover, total compliance costs often exceed firms' tax liabilities. Breaking down cost components, I find that labour time spent on tax compliance activities is the largest component, with tax compliance consuming a median of 34 hours of labour time per month, and approximately 20% of firm owners' working hours. Using a survey experiment, I test how sensitive compliance costs measures are to the measurement strategy, finding significant divergence between estimates from an itemised module versus more aggregate questions.

Low-income countries face the combined challenges of climate shocks and limited domestic revenue mobilization, yet these issues are rarely studied together. This paper provides new evidence on the impact of climate shocks on firm performance and tax revenue in a low income country context, using firm-level data from Zambia. We find that extreme weather events, such as excessive rainfall and high temperatures, significantly reduce firms’ sales, input purchases, and tax collection, particularly in sectors such as manufacturing, retail, accommodation, and construction. Firms respond by reducing employment and wages, reflecting a decline in productivity.

Value Added Tax (VAT) collection is essential for achieving domestic revenue objectives. Yet, the extent of misreporting, or the VAT gap, is infrequently and unsystematically evaluated in developing countries, where it would be most beneficial. This study utilizes VAT declaration and audit data to estimate VAT misreporting in Rwanda, applying a machine learning approach to predict evasion in unaudited firms and periods. We measure the underreporting component of the compliance gap, quantifying potential revenue losses due to non-compliance. We estimate a 62 per cent VAT gap among all VAT-reporting enterprises in Rwanda. The Manufacturing and Wholesale and retail sectors have the highest VAT gaps.

We develop a stylized model of cash management to analyze the effects of mobile money taxation. The model predicts that such a tax incentivizes users to switch to alternative payment systems, disproportionately affecting individuals with limited banking access. we empirically test these predictions using two different types of data. First, we use cross-country financial access surveys, leveraging the staggered introduction of mobile money taxes in Sub-Saharan Africa. We find that the tax reduces the number of mobile money users and the frequency and value of transactions. Second, we use mobile money transaction-level data from Cameroon and Mali. We find that mobile money usage declines following the mobile money tax along the extensive and intensive margins. More financially included individuals respond more strongly to the introduction of the tax, suggesting that rural and unbanked users pay a higher disproportionate share of the tax.

Cryptocurrencies pose substantial challenges to tax enforcement due to their anonymous and decentralized properties, undermining conventional regulatory practices. We study the impact of an ambitious new enforcement initiative aimed at addressing these challenges: domestic third-party reporting of crypto income. We estimate tax compliance and behavioral responses to this new policy by combining unique Danish microdata from domestic crypto platforms, administrative tax records, and cross-border bank transfers. Despite the introduction of domestic third-party reporting, over 90% of crypto investors do not declare crypto income. Moreover, we identify a significant and persistent evasion response to the policy as investors shift trading activity from domestic platforms, subject to third-party reporting, to foreign platforms outside regulatory reach. Our findings underscore the limits of domestic enforcement strategies in addressing tax evasion for decentralized, borderless assets like cryptocurrencies, highlighting the need for international coordination.

The digitalization of tax payments is a key policy focus in low- and middle-income countries, particularly in Africa. This study examines its impact on compliance, leveraging Eswatini’s 2021 zero-cash-handling mandate. Using administrative tax data, we assess (i) the effects of voluntary digital payment adoption and (ii) the mandate’s impact. A staggered difference-in-differences (DiD) approach shows that voluntary adoption reduces late payments by 19 percentage points (25%) and improves payment accuracy by 5.7 percentage points (22%)—rising to 9 percentage points (30%) for strictly digital methods—while having minimal effect on total tax paid. A treatment-intensity DiD strategy finds that the mandate eliminated cash payments but had modest compliance effects, increasing tax payments by 3.5% for individuals and 1.6% for corporations, with no improvement in accuracy. These findings highlight differences between voluntary and mandated adoption, emphasizing the need for policies that account for taxpayer heterogeneity to enhance compliance.

In sub-Saharan Africa, the adoption of mobile money has increased substantially during the last decade and is an important driver of financial inclusion in the region. At the same time, governments have implemented tax on mobile money transfers that may constrain financial inclusion and provide an incentive for cash transfers. The introduction of the taxes has led to heated public debate and reductions in the mobile money tax rates in several countries, making the tax highly salient to many taxpayers. This paper examines the effect of tax salience on the use of mobile money. Using a lab experiment among market traders in Dar es Salaam, we find that increasing the salience of the tax significantly reduces the use of mobile money.

This paper establishes a connection between labor market reforms and an increase in the reforming country's net foreign asset position through a precautionary savings channel. We use data from the German Socioeconomic Panel to document significant changes in the savings behavior of the most affected groups in response to the reform. We then construct a heterogeneous agent model of a small open economy with labor market frictions to assess the current account effects of the major German unemployment benefit reform (Hartz IV). Our findings show that the reduction in the generosity of the unemployment insurance scheme leads to a significant increase in precautionary savings. As a result, since not all of these additional savings can be absorbed domestically, the net foreign asset position and the current account rise. Furthermore, welfare gains and losses are distributed unequally among agents. Compared to a closed economy, the reform is more detrimental.

In recent years the debate on the state's role has shifted towards the empirical assessments of technical efficiency of public spending. This paper analyses the efficiency of public expenditure across 28 states in India from 2000 to 2019 and similarly for 19 major states, using a composite public sector performance (PSP) index and data envelopment analysis. A single input-oriented variable returns to Scale DEA, a non-parametric analysis is done to analyze the efficiency and total revenue expenditure as a share of GDP is taken as the input and the outputs are various socioeconomic indicators as a proxy for outcome. The DEA analysis suggests that Indian states could reduce their public spending by 64% and 58% for all states and 19 states analysis respectively and still achieve similar output. This study adds to the literature by conducting an inter-temporal analysis of public expenditure efficiency across Indian states by identifying the trends.

This article provides evidence that increased salience of public service provision can strengthen the social contract and increase tax compliance in a low-capacity setting. I conduct a field experiment randomizing information about public service provision across 5,494 property owners and tenants in Freetown, Sierra Leone. Receiving information increases property tax payments by 20% on average. The effect is driven by increases in tax compliance on both the extensive and intensive margin. Residents of low-value properties are 7–16 percentage points more likely to pay taxes when informed about public services that are both geographically accessible and respond to the citizens’ most urgent needs, suggesting a benefit-based approach to taxation. Revenue effects are largely driven by residents of high-value properties, who depend less on the public provision of services, and for whom the treatment seems to act as a more general signal of government performance.

Governments provide many goods and services without charge, making it impossible to use market prices to assess their values or significance. This paper proposes that government size be measured by the opportunity cost of government activity, as reflected in the value of foregone private output. Properly applied, this entails two important changes to the current national income accounting treatment of government product: exclusion of expenditures on intermediate goods and services provided to businesses, and replacement of the government price deflator with an appropriately modified private sector price deflator. The price deflator adjustment alone implies that average annual government output growth is 1.0 percent higher than currently measured, and that average annual GDP growth is 0.13 percent higher.

We examine the impact of Japan's pension reform on divorce. In typical Japanese couples, spouses enjoy marital gains from the division of labor, not only during their younger years but also into old age, with the primary earner generating income through pension benefits and the dependent spouse contributing through household work. The reform allowed dependent spouses to claim half of the primary earner's pension contributions during the marriage upon divorce. Thus, dependent spouses could secure these gains without maintaining marital relationships. Using the reform as a natural experiment, we test the hypothesis that the reduction in marital gains increased the likelihood of divorce. Our analysis reveals that among couples experiencing the largest reduction in these gains, divorce incidents rose by 10 to 20% in a few years after the reform. This finding highlights the importance of marital gains from the division of labor in shaping divorce decisions.

We use a life-cycle labor search model in which firms post contracts specifying job formality and wages calibrated to match key aspects of the Brazilian labor market to study two sets of pension reforms --- reforms which change the share of pension contributions paid by the firm and reforms which change the pension contribution tax base. We find that fixing the total per worker pension contribution rate but increasing the share paid by the firm leads to less vacancy posting, a higher non-employment rate, and a lower labor share. On the other hand, reforms which weaken the linkage between formality and public pension contributions by changing the pension tax base lead to an increase in aggregate vacancies and the formality share. The results highlight the importance of firm responses in policy reforms in developing countries.

Public pension coverage has been expanding worldwide in response to the challenges of an aging society, potentially influencing health-related decisions. Leveraging Mongolia's pension policy, which expanded voluntary participation differently across birth cohorts, this study examines the effects of pension participation on the health-related behaviors of informal workers. Using a difference-in-differences approach with nationally representative survey data, I find causal evidence that pension participation reduces tobacco consumption, indicating a behavioral shift toward healthier living. This study contributes to the literature on the effects of social protection in developing countries, asymmetric information in insurance markets, and tobacco control policies.

Many countries use increases in the Early Retirement Age (ERA) as a tool to limit spending on public pensions. This paper examines how the gradual increase in the ERA for women from 60 to 65 affected working-age disability benefit receipt and claims in England and Wales. Importantly, throughout this period, the maximum age of eligibility for applying for disability benefits (which are neither means-tested nor contingent on non-employment) was 65. As such, this reform allows us to study how changes in public pension eligibility directly affect disability benefit take-up in the absence of any changes to the age of eligibility for those benefits. We find that reaching the ERA is associated with around a 0.5 percentage-point reduction in women’s disability benefit prevalence, equivalent to about 5% of the baseline prevalence. The effect grows over time. Our findings underscore the interplay between rising ERA and alternative forms of social security.

Populism, characterized by a rhetoric of ``the people'' versus ``the elite'', is on the rise in Western democracies. This paper examines how local social mobility environments relate to populist attitudes and voting behavior. Linking novel survey data from the US with electoral outcomes and social mobility measures at the county-level, I find that higher local mobility is associated with lower support for populist attitudes and Trump votes. To explore the role of social mobility beliefs, I collect over 3,450 respondent-generated narratives of upward mobility and classify them as "luck-based" or "effort-based" using a large language model. To identify the causal effect of lucky-ascent beliefs on populism, I conduct a survey experiment in which 2,000 respondents are randomly exposed to luck-based ascent narratives. Exposure raises populist attitudes by decreasing beliefs in the role of merit, particularly among men, individuals without a college degree, and those without upward mobility experience.

We investigate how beliefs about wage inequality impact preferences for redistribution with more than 9,000 respondents in six high-income countries. Using nationally representative, randomized survey experiments and a novel distribution builder tool, we elicit detailed beliefs about wage inequality and examine the impact of accurate information on support for redistribution. We find most respondents underestimate wage inequality and that information treatments have minimal effects, except for respondents on the far-right, who exhibit large increases in support for higher income taxes and social spending. This finding suggests that far-right voters have limited support for redistribution partly because they underestimate wage inequality.

While consumer sentiment is a key macroeconomic indicator tied to employment and inflation, its response to targeted government policies remains less understood. This study addresses that gap by examining the causal link between fiscal interventions and household confidence, using the 2021 Child Tax Credit (CTC) expansion as a natural experiment. The CTC provided monthly payments that lifted incomes—particularly for lower-income families—until it abruptly expired in early 2022. Drawing on microdata from the University of Michigan’s Consumer Sentiment Survey, we show that removing this crucial support triggered a pronounced drop in economic confidence, most severe among lower-income households and those with multiple children. In contrast, higher-income families saw no substantial change in sentiment. Our findings demonstrate that government policies like the CTC can have significant effects on consumer sentiment, underscoring their vital role for vulnerable populations who rely heavily on such financial support to maintain economic stability.

One of the main insights of public economics is that taxes are not necessarily borne by those who pay the taxes. However, public debates about taxation rarely consider tax shifting. Using corporate taxation as an example, we investigate in a survey experiment whether individuals' preferences for taxation change when they are informed about four channels of tax shifting: prices, wages, owner payouts, or investments. We find that the preferred corporate tax rate decreases when the burden falls onto individuals (in terms of prices and wages), and less so when we reveal the effect on payouts or investments. The change is caused by own perceived costs, distributional concerns seem to play only a limited role for the reaction to the information.

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.

Does the source of Research and Development funding, public or private, matter for productivity growth? Using a novel firm-level dataset with patent and balance-sheet information covering 70 years (1950-2020), I estimate the impact of the decline in public R&D in the US on productivity growth. I use two instrumental variable strategies–a historical shift-share IV and a patent examiner leniency instrument–to estimate the impact of the decline in public R&D on the productivity of firms through technology spillovers. I find that a 1% decline in public R&D spillovers causes a 0.03 to 0.08% decline in firm TFP growth. Public R&D spillovers appear to be two to three times as impactful as private R&D spillovers for firm productivity. Using a calibrated model where corporate tax funds public R&D, I find that the decline in public R&D can explain around a third of the decline in TFP growth in the US.

Artificial Intelligence (AI) is transforming business operations and global markets, yet little is known about how AI investments spill over across borders. Using a novel panel dataset, we examine the international propagation of U.S. firms’ AI investments, focusing on their European subsidiaries and broader industry-level effects. We find that AI investment strongly predicts growth in foreign subsidiaries’ assets, employment, and revenues, with significant spillovers to European industries exposed to U.S. AI firms. However, these effects vary with local tax policies: countries with attractive R&D tax incentives experience faster and larger AI-driven growth, while low corporate tax rates further amplify revenue spillovers. Our findings highlight the role of fiscal policy in shaping the diffusion of AI and offer new insights into how digital-era investments influence global economic growth.

The objective of this article is to show that there is a distorting effect of Cameroon's failing institutional environment on the structure of public expenditure. To study the choices made by public authorities, we rely on a Bayesian model over the period 1970-2020 to determine the occurrence of public investment allocation. It emerges that institutional failure marked by corruption, political and social instability, and approximate compliance with established laws, directs public investment towards types of expenditure for which rent seeking is easier and easily concealed, particularly in physical capital to the detriment of education and health expenditure. In this context, the results also reveal that economic growth is negatively associated with the choice of investing in social projects. Economic policy recommendations are in line with budgetary rebalancing through social investments, which are essential for resolving social crises and improving factor productivity.

This paper studies the relationship between the growth in private capital markets and the rise in economic inequalities in the U.S over the last two decades. First, we document that the share of overall financing raised by early-stage private companies from high-net-worth individuals (HNWIs) tripled from 2004 to 2022. Second, exploiting state-level variation in exposure to the expanded federal capital gains tax exemption on qualified small business stock, we find that the growth in HNWIs’ early-stage investments increased the average income gap between HNWIs and other income earners by 6.0%. Third, we show that this rise in income concentration appears to have been driven by HNWIs’ excess returns on their early-stage investments relative to public stock market returns. Finally, we find that HNWIs’ excess returns on these investments accounted for 11% and 5% of the growth in the top 1% share of income and wealth, from 2010 to 2019.

Tax administrations in low-and middle-income countries have been introducing technological innovations to improve tax compliance and boost revenue collection. This study evaluates the impacts of e-filing adoption, first introduced in late 2011, on corporate income tax (CIT) compliance in Ethiopia using tax administrative panel data spanning between 2008 and 20219. Employing a modified difference-in-difference approach by de Chaisemartin and d’Haultfoeuille (2024), which is robust to heterogeneous and dynamic treatment effects, the study documents three findings. First, e-filing adoption reduces the likelihood of being late in CIT filing on average by 7 percentage points. Second, there is no evidence that the e-filing adoption increases the amount of CIT liabilities. Third, the results on gross income and total expenses suggest that taxpayers play smartly to avoid paying higher taxes. Moreover, evidence from focus group discussions compliment the empirical findings that the technology reduces compliance costs for the tax administration and taxpayers.

We study the impact of tax preparers on corporate tax optimization in South Africa. The analysis draws on the population of corporate tax returns linked to data on tax preparer use. Consistent with frictions from tax code complexity, we document that tax preparer take-up is associated with a significant decline in firms’ reported taxable income and tax payments. Additional analyses show that the use of a tax preparer increases the take-up of tax advantages: Eligible firms become more likely to seek access to a regime with special low tax rates; they are more likely to claim employment tax incentives for the young and to run losses. The observed effects imply that the application of tax laws differs across firms with and without tax preparer. The same holds true for the effectiveness of tax incentives: The use of a tax preparer significantly increases the propensity to employ young and eligible workers.

Does simplification increase firms’ compliance with value-added tax (VAT)? We exploit

the 2021 EU VAT e-commerce package to investigate whether simplified registration and reporting in the cross-border e-commerce sector incentivizes firms to change VAT reporting behavior. Using administrative foreign trade statistics, VAT returns, and customs data from Germany in difference-in-differences and bunching designs, we evaluate whether the introduction of the One Stop Shop (OSS) and the Import One Stop Shop (IOSS) increased reported cross-border sales and respective VAT revenue. In addition, we conduct a survey among German firms to gain a deeper understanding of how firms reacted to the reform.

This paper leverages a large tax-benefit policy with administrative data from the state of Sao Paulo in Brazil to document the economic impact on firms' behavioral responses and correspondent tax collection. Our analysis compares treated firms—primarily within the textile and clothing industries—exposed to an increase in the presumptive tax credit against comparable firms, most of which are in the footwear industry, a closely related industrial sector not yet affected during the analyzed period. We employ a dynamic difference-in-differences strategy to document a positive (11%) effect on reported sales and purchases only in the year after its implementation without affecting tax collection and the number of firms in these sectors. Last, we explore a synthetic control strategy at the industry level to find a (positive) negative effect on formal jobs in the (textile) clothing sector without any significant aggregated effect aggregated impact on formal employment and wages.

The integration of domestic firms into the mining global value chain (GVC) can bolster local economies, yet the scale and impact of these linkages remain unclear. This study examines the mining value chain in Kitwe, a key mining hub in Zambia’s Copperbelt. Ten years of VAT data on domestic purchases and imports reveal that mine suppliers adjust both their domestic and international procurement in response to fluctuations in the international copper price. Our cross-sectional firm survey reveals GVC integration is of strong interest among local firms. Ultimately, Zambia faces a double-edged sword: while local firms seek deeper integration into the mining GVC to boost revenue, profits, exports, and employment, the financialization of the global copper trade ties Zambia to the volatility of commodity prices. Thus, the government must ensure optimal backward linkages between local firms and mines to foster resilient, non-resource-dependent growth and maximize VAT, tariff, and income tax revenue.

Disillusionment with income as a measure of well-being has led to alternative measures that are broader and focus on outcomes. Deaton (2008), among others, espouses a measure of well-being called life evaluation/satisfaction that aggregates components of well-being, such as economic status, health, family circumstances and even human and political rights. We have used this measure of life evaluation. As there is no study of the relationship between life evaluation and trust in the present Indian government/National Democratic Alliance (NDA), led by the Bhartiya Janata Party (BJP), our present study aims to fill this gap, based on the Gallup World Poll Survey for India, covering the period 2018-2021. As trust in the NDA is endogenous, 2SLS and Lewbel IV estimators have been used. Our analysis confirms robustly that trust in the NDA determines life evaluation, controlling for other covariates. As trust in the NDA decreased over the period analysed, so did the life evaluation

Based on a new granular and exhaustive dataset on effective payments made by listed extractive (mining, oil & gas) firms to governments worldwide, we find that a 1% increase in commodity prices leads to a 0.3% increase in fiscal windfalls for states. We find that rich source countries benefit from a higher proportional increase of their fiscal windfalls than lower-income countries during commodity price increases. This result indicates that tax systems in lower-income countries favor more stable revenues at the expense of benefiting more from commodity price booms. The revenue implications may be substantial in contexts of commodity price booms.