This paper quantifies how much people would be willing to pay to remove frictions that prevent them from working their ideal number of hours using two sufficient statistics: (1) the percentage difference between ideal and actual hours and (2) the Hicksian elasticity of ideal hours with respect to the after-tax wage rate. We estimate willingness-to-pay to remove these frictions in the U.S. and Germany. Three core findings emerge: (1) adjustment frictions—including fixed costs, discrete choice sets, and search costs—are costly for any reasonable value of the Hicksian elasticity, even when accounting for endogenous wages, multiple labor supply decisions, and dynamics; (2) the cumulative cost of adjustment frictions and tax misperceptions is even larger, with individuals willing to pay at least 10% of their income on average to remove both; and (3) adjustment frictions are much costlier than tax misperceptions.

We provide experimental evidence on how employers adjust expectations to automation risk in high-skill, white-collar work. Using a randomized information intervention among tax advisors in Germany, we show that firms systematically underestimate automatability. Information provision raises risk perceptions, especially for routine-intensive roles. Yet, it leaves short-run hiring plans unchanged. Instead, updated beliefs increase revenue and profit expectations without wage adjustments, implying limited rent-sharing. Employers also anticipate new tasks in legal tech, compliance, and AI interaction, and report higher training and adoption intentions. Our findings reveal how employer beliefs shape anticipatory responses to technological change.

Cash transfers are the world's most common poverty alleviation policy. While effective at short-term poverty alleviation, the standard economic view is that they reduce incentives to work, and thus increase long-run poverty. I study this trade-off by measuring the effect of an exogenous increase in Brazil's main cash transfer on the labour supply of men and women. I find no effect for men, while women increase their labour supply by 7.4%. This is driven by mothers, for whom the transfer relaxes childcare constraints, enabling them to join the labour force. Leveraging discontinuities on the allocation of education funds to Brazil's 5570 municipalities, I find that the effect is stronger in areas receiving more education funds. Overall, my paper illustrates that there is no trade-off between short-term relief and long-term poverty reduction. Rather, cash transfers encourage women's labour force participation, particularly when complementary public goods, such as educational facilities, are available.

We provide evidence on the impacts of job loss among female factory workers in Ethiopia and on how these impacts can be mitigated. We leverage quasi-experimental variation in job loss, experimental variation in job-loss support payments, and high-frequency data spanning a period of 13 months after displacement. We find that job loss is a persistent shock that reduces employment and consumption spending for longer than one year, and almost doubles the rate of poverty. An additional lump-sum payment encourages early spending and reduces both overall and manufacturing employment. In contrast, providing an equivalent amount in monthly tranches -- a payment modality preferred by a majority of workers -- enables workers to better smooth consumption expenditures without negative employment effects. We show that workers have high willingness to pay for additional job-loss insurance, but also heterogeneous preferences over the payment modality. This generates a key trade-off between workers' private welfare and the government industrialization objectives.

This study estimates non-take-up rates for three German means-tested benefits and examines their determinants. While prior research has largely focused on basic income support, less is known about housing allowance (“Wohngeld”) and supplementary child benefits (“Kinderzuschlag”), despite their rising importance and related nature. Employing a microsimulation model based on official Mikrozensus data that replicates the German tax and benefit system, the analysis reveals higher non-take-up rates for housing allowance and supplementary child benefits compared to basic income support. Moreover, cross-benefit analysis indicates that participation in one scheme may affect engagement in others, while regression results offer novel insights into access barriers.

This paper examines the impact of Japan’s consumption taxes on the income distribution from 1989 to 2014. Using micro-level data from the National Survey of Family Income and Expenditure (NFSIE), we apply statutory tax rates to calculate exact consumption tax burdens for each household and measure its redistributive effect by Reynolds-Smolensky index. The results suggest that consumption taxes in Japan are regressive and thus increasingly offset the redistribution efforts made by income taxes. The fixed income and consumption approach further confirms that changes in household spending and saving patterns have magnified this anti-redistributive effect. The findings underscore the need for targeted policy measures to reduce the burden on low-income groups.

Behavioral microsimulation models can be used to supplement results from non-behavioral tax-benefit models in policy-making. However, the policy analyst may not always have access to a fully developed behavioral simulation model for the policy issue in question. Here we draw attention to an alternative, which implies describing behavioral effects by using response estimates from other studies. We refer to this approach as “using external evidence”. We illustrate how tax revenue and distributional effect estimates can be derived by integrating external tax elasticity estimates into a non-behavioral tax-benefit model. The framework is illustrated using two examples from Norwegian tax policy.

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

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

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

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

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

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

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

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

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.

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.