How can unconditional welfare transfers encourage households to allocate more resources to children? We conducted a nationwide randomized controlled trial in Georgia to test two approaches: providing food vouchers instead of cash and labeling cash transfers to promote child-related spending. Compared to cash alone, we find that labeling transfers significantly increases the share of household expenditure on children. By contrast, infra-marginal food vouchers reduce overall household consumption without altering its composition. This reduction likely stems from the higher shopping costs at voucher-accepting stores. Our findings suggest that subtle

interventions like labeling can avoid the drawbacks of more restrictive, paternalistic policies.

The dependency on imported essential production inputs poses a threat of abrupt price hikes and shortages, potentially triggered by political events. The energy crisis resulting from the Russian war of aggression is an example. This paper investigates whether governments should bolster production via transfers or cost subsidies in the event of a crisis, utilizing a dynamic multi-sector economic model that is calibrated to Germany and incorporates endogenous firm entry and exit. Our findings suggest that subsidizing production costs is more beneficial for economic activity and welfare, provided the energy demand due to the subsidy does not significantly influence the price of the essential production input. If it does, this approach could become exceedingly expensive. In such scenarios, it is economically more efficient to provide lump-sum transfers to firms. The effectiveness of these policies ultimately hinges on their impact on the price of the imported input.

We examine the impact of a 25% quota in Indian private schools for disadvantaged students, one of the world’s largest education equity programs. Lottery-based estimates show that benefiting students attend more preferred and expensive schools, but program benefits are highly regressive: only 7.4% of spending reaches the poorest quintile, while 24.3% goes to the wealthiest. Low application rates among poorer students are not due to preferences or beliefs but stem from information gaps and application barriers. A randomized intervention confirms these frictions, showing that easing a single constraint, like information, does not necessarily reduce regressivity. Our findings highlight how such barriers can undermine redistributive policies, emphasizing the need for comprehensive interventions designed to address the joint incidence of multiple constraints to applying.

We consider the effect of childcare attendance and maternal employment on the health outcomes of young children in a low-income setting. We exploit exogenous variation introduced by a randomized childcare subsidy program in an urban informal settlement in Kenya which provided mothers of 1 to 3 year-olds with vouchers for 12 months of fully subsidized childcare. We find small, weakly significant, effects of increased childcare attendance on reporting symptoms of communicable illness. Findings suggest the income effect from the subsidy offsets this negative effect. We find little effect of maternal employment on child health. The intervention included a quality enhancement arm, where randomly selected childcare centres received early childhood development training, but we find little evidence of any effect on measured outcomes. We conclude that subsidizing childcare remains a viable policy option for encouraging maternal employment, but caution that increased exposure to communicable illness may be a factor.

This paper studies the effect of prohibiting the use of cash for wage disbursements on labor markets in developing countries. We study a reform in Uruguay that mandated wage payments to be disbursed using electronic methods. Using a difference-in-differences approach based on pre-reform sector-level cash intensity, our results indicate that firms in high cash intensity sectors are significantly more likely to discontinue formal activities post-reform. Active firms show a slight reduction in the number of employees and an increase in reported wages. These results are driven by low productivity firms. Complementary results using survey data indicate an increase in informal employment and a decrease in collusive underreporting of earnings partially explain these results. Overall, results suggest that, while eliminating cash for wage payments enhances tax compliance among formal workers, it may also shift some economic activity into full informality, offsetting the revenue gains from improved payroll tax compliance.

This paper examines bunching responses at kink points in the effective marginal tax-benefit schedule, capturing the interaction of income taxation, social security contributions, pension benefits, and informality. Using Brazilian matched employer-employee administrative data, we proceed in three steps. First, we identify workers who bunch at the kink created by the pension-benefit cap, documenting how intensity varies across worker types, sectors, and firm sizes. Second, we assess the impact of payroll tax reductions on bunching, quantifying how lower labor taxes shape worker responsiveness. Third, we investigate whether transitions to the simplified Simples tax regime affect bunching independently of social security incentives, isolating the role of tax simplification. Theoretically, we extend Saez (2010) and Chetty et al. (2011) by incorporating the discounted value of pension benefits into effective marginal tax-benefit rates and showing analytically how access to informal income amplifies bunching at kinks.

We explore the effects of a minimum wage hike in 2018 and an upward revision in the first kink in the progressive income tax schedule in 2017 in Zambia, to compare their impacts on wages in both the formal and informal sectors. We show that the minimum wage effects spill over into the informal sector despite being targeted at the formal sector. We propose and show a new lighthouse effect, where tax kinks are a reference point for wage setting in the uncovered informal sector. Results show that the minimum wage increases informal wages by 0.4%. Additionally, a hike in the first tax kink produces similar distributional effects and reduces real wages just above the revised kink of both formal and informal workers. With the informal sector’s persistence on new bunchers driving our results, we confirm that the new lighthouse effect is relevant in the case of a developing country.

We study the dynamics of formal employment, using matched employer-employee panels from ten countries at different income levels, and from across states in Brazil and Colombia. We show that increases in formality rates with development are driven by the extensive rather than the intensive margin of formal employment. Countries and regions with higher formality exhibit a higher rate of job-to-job switches and higher returns to tenure. As a result, formal workers in these regions experience higher life-cycle wage growth.

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

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

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

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

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

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

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

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.

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.