This paper analyses the distributional effects of fuel subsidy reforms in four countries of the Andean region: Bolivia, Colombia, Ecuador and Peru. We combine tax-benefit microsimulation techniques with input-output analysis to estimate the direct and indirect distributional effects of reducing to the point of fully removing such subsidies, and explore how recycling the proceeds towards greater social protection can alleviate the burdens placed on society. 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 increase in natural disasters has spawned the creation of multilateral risk management facilities that offer sovereign parametric insurance contracts that provide governments with budgetary support for infrastructure replacement and excess social protection payments that accumulate in the wake of hurricanes and droughts. While the argument for pre-arranged financing is compelling, there is a paucity of economic analysis concerning how much coverage a government should optimally purchased taking into account the fact that parametric insurance may over- or under-predict true losses. Using a formal model, we show that optimal insurance coverage is sensitive to the predictive accuracy of the parametric disaster index and the pricing of the insurance relative to its actuarially fair level. Using realistic parameters drawn from a scheme designed to insure Kenya’s social protection program for its drought-prone regions, we further show that while the optimal amount of insurance is positive, it is lower than typically imagined.

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 match corporate tax return data with financial statement data to estimate tax-motivated cross-border income shifting in Austria. Our baseline estimate indicates a tax semi-elasticity of taxable income reported on corporate tax returns of -0.9. In contrast, we find little evidence of income shifting when using financial statement profits to proxy for taxable income -- a common approach in prior research. However, adjusting financial statement profits for tax-exempt dividend income yields estimates consistent with our main findings. Additional tests indicate that failing to account for dividend income can distort inferences about the relevance of specific income-shifting strategies. Our findings highlight that using financial statement data to approximate taxable income can affect the reliability of 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.

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.

This study explored how financial access, tax perceptions, parental behaviors, and gambling activity influenced gambling propensity, intensity, and related financial outcomes, including indebtedness, among low-income individuals in Kenya. Utilizing a cross-sectional Financial Access dataset (2024) by Financial Deepening Sector (FSD), Kenya National Bureau of Statistics, and Central Bank of Kenya, Logistic, Ordered Probit, and Multinomial Logit regressions analyzed these relationships. Findings reveal parental gambling history significantly increased gambling propensity, while mobile money and formal credit access facilitated higher gambling intensity. Crucially, both gambling propensity and intensity significantly heightened "missed," "less," and "late" loan payments, strongly supporting the "no-profitability" hypothesis. Formal credit access emerged as a "double-edged sword," though financial literacy was protective and positive tax perception showed only minor impact. This research contributes granular empirical insights into gambling-to-debt pathways in a low-income Kenyan context. Policy recommendations include progressive gambling taxation and hypothecating revenues for financial literacy and debt counseling programs.

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 should reduce 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). Results confirmed by extensive robustness checks show upgrades to rarely have an impact on tax revenue per GDP. Overall income status upgrades cannot be expected to lead to increased DRM in Sub-Saharan Africa.

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.

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 individuals around this age were less likely to be retired and more likely to be employed due to the reform. Regarding health outcomes, we focus on three outcomes, which may respond to changes in labor market status: antidepressant purchases and hospitalization because of cardiovascular, or musculoskeletal conditions. We observe that health effects remain relatively small and rare, yet the reform may have slightly increased the probability of cardiovascular diseases after retirement.

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.

Tax audits are essential for governments to raise revenue but can create economic distortions. To avoid an audit, firms may remain small, move to the informal sector, or shut down. Leveraging administrative tax data from the Ugandan Revenue Authority (URA), a novel linked survey, and a regression discontinuity design (RDD), we show that audits have a dual negative effect: They reduce the tax revenue collected from audited firms and impose large economic distortions. Audited firms are 11 percentage points likelier to shut down, and those that remain operational reduce their output. Back-of-the-envelope calculations indicate that the overall revenue collected from audited firms declines. The total wage bill loss induced by the audits is equivalent to 0.2-0.6% of the total wage bill of the formal economy at baseline, suggesting that the auditing process potentially imposes a large distortion to the Ugandan economy.

Using RCTs in a natural field experiment, tax debtors received emails from the tax authority regarding tax amnesty. We test the impact of nudging sentences and sequences of nudges. We find all treatments to be effective than no communication. Effect sizes increased with nudge sequencing in subsequent reminders. Effects size on uptake averaged 0.7 percentage points in the first two rounds, increasing to 9.6 percentage points in the third round. Further, information treatment is found to be as effective as nudging, except for the deterrence treatment. On payment outcomes, those who acted in the first or second round paid more on average than those in the third, with average effect sizes of 2.5% and 1.4% compared to the no email group. We contribute to tax compliance literature by focusing on the tax amnesty context, nudge sequencing and, provide empirical insights for designing effective compliance strategies in developing countries.

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 through a survey experiment, providing randomized information on the competitiveness of business tax rates and highway access in their headquarters' municipality. Firms often misperceive local policy competitiveness, especially for tax rates. Investment decisions respond asymmetrically to tax competitiveness. Positive tax rank information reduces investment intentions in neighboring municipalities. Compared to this, negative tax news increases relocation plans. However, most firms receiving bad news plan to continue investing in their headquarters' municipality, indicating home bias. These effects are strongest for mobile firms and corporations. Negative infrastructure news lowers location satisfaction but does not influence investment.

Mobile money is a key digital alternative to traditional banking in developing countries, yet several African governments have introduced taxes on its transactions. Using a stylized model, cross-country panel survey data, and transaction-level data, we show that such taxes reduce user numbers, transaction frequency, and transaction value, with high tax elasticity. Evidence from Cameroon and Central Africa Republic indicates a significant drop in usage probability and in transaction volume. Unbanked and rural users respond less, suggesting they bear a disproportionate tax burden.

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.

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 droughts 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.

We study the potential impact of the OECD Global Anti-Base Erosion (GloBE) minimum tax on banks, combining a theoretical model with a new cross-country dataset of bank-level tax haven exposure and profitability. We show that the policy affects banks’ effective tax burden, their internal capital markets, and ultimately their financial stability metrics under Basel III. A dynamic stress-testing simulation and a difference-indifferences analysis reveal that banks with significant tax haven profit shares are more sensitive to post-GloBE regulatory shocks.

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.

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.

This paper examines how the gradual increase in the early retirement age (ERA) for women from 60 to 65 affected working-age disability benefit claims and receipt in England and Wales. This reform allows us to isolate how changes in public pension eligibility directly affect disability insurance claims and receipt, in the absence of any changes to the age of eligibility for disability insurance. We find that increasing the ERA is associated with a large and significant increase in new claims for disability insurance (37% of the baseline level of claims). Smaller increase in disability insurance claims are also found for cohorts of men who, although they face no change in their ERA, see large reductions to the generosity of the means-tested welfare system that occur alongside the increase in the ERA for women. Our findings underscore the interplay between rising ERA and alternative forms of social security.

The link between state history and contemporary economic outcomes, like development and governance, is well established, but the effect of state antiquity on fiscal capacity remains underexplored. This study examines whether longer historical experience with state-level institutions improves tax collection capabilities. Using data from 159 countries, we find that accumulated statehood experience positively impacts fiscal capacity. This relationship is robust across alternative measures of state antiquity and fiscal capacity, controls for standard fiscal capacity determinants, and considerations of heterogeneity. It also holds after addressing endogeneity concerns, including measurement errors and omitted variables. Our analysis reveals two key mechanisms through which state antiquity enhances fiscal capacity: fostering economic development and improving governance quality. Notably, it strengthens corruption control, government efficiency, and the rule of law. These findings highlight the enduring influence of historical statehood on modern fiscal capacity and its transmission through institutional and economic pathways.

We study the transition of sub-national fiscal multipliers’ efficiency in normal times across the structural characteristics’ threshold levels in the Indian states. Using the recently developed Panel Structural Threshold Regression Model, we identify latent groups across the states contingent on their structural characteristics. Our findings suggest that for Indian States capital outlay expenditure multipliers are higher than revenue and aggregate spending multipliers. We identify financial inclusion as one of the important state-level fiscal multiplier determinants. Our results suggest that state public debt has negative implications for all the categories of fiscal multipliers and across all the latent groups. Based on our study, we argue for a sustainable policy-oriented targeting framework, which includes threshold levels for public debt accretion as a sub-target.

Women in East Africa are enormously underrepresented in government with no more than one in every five cabinet positions being occupied by women. Women in cabinet are also less likely to hold high-prestige cabinet positions. This has ramifications on the implementation of policies that raise the living standards among the poorest segment of the population. This paper analyzes the extent to which gender inclusive cabinets foster pro-poor growth. We utilize the Who Governs dataset alongside the Worldwide Governance Indicators, and the World Income Inequality datasets in a regression discontinuity design setup. Results indicate that raising the share of women in cabinet above designated thresholds insignificantly affects the distribution of average pre-tax national incomes among the poorest half relative to the top income decile. These results hint at the low prestige positions held by the underrepresented women in cabinet.

How, and to what extent do tax policymaking processes impact tax revenue performance? This study assesses the effects of political institutions on tax systems in Africa to identify actionable strategies to enhance domestic revenue mobilisation in the region. Using a combination of quantitative and textual data, the main finding is that democratic accountability and practice show surprisingly less marked effects on tax systems in West Africa, particularly after controlling for basic tax handles that may moderate the probable interactions between institutions and tax administration. Also, results show that trade/labour unions have strong potential to influence tax system outcomes in the long run

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.

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.

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 over the last two decades in the U.S. Exploiting both company- and state-level variation in exposure to the expanded federal capital gains tax exclusion on qualified small business stock (QSBS), we find that QSBS-eligible companies’ probability of staying private increased by 3.5 percentage points, and that the average income gap between HNWIs and other income earners increased by 7.2%. 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.

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.

How does simplifying VAT affect firms’ compliance in cross-border trade? We study a major 2021 reform of the EU’s VAT system, which introduced the One Stop Shop (OSS) and the Import One Stop Shop (IOSS) to streamline cross-border VAT reporting for business-to-consumer (B2C) transactions. Using high-frequency, transaction-level administrative data from Germany, we examine whether these measures increased reported sales and VAT revenue. In the intra-EU setting, we find that the OSS significantly increased the number and volume of reported intra-EU B2C transactions, consistent with improved compliance. In the global setting, where simplification coincides with a reporting threshold for imports below EUR 150, we find evidence that firms adjust behavior strategically to exploit the cutoff. Post-reform, B2C imports from non-EU countries cluster just below the threshold, and parcel weights decline suggesting undervaluation or shipment splitting to benefit from simplified procedures and avoid tariffs.

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.