This study investigates the impact of public investment in infrastructure into private capital formation and economic growth in Tanzania using time series data over thirty years’ period (1990-2020) and applying vector autoregressive (VAR) model. The findings show that increasing public investment in infrastructure negatively affects private capital formation in the short run due to the dominance of the crowding-out effect. However, the effect turns positive and significant in the medium term due to the dominance of crowding-in effect; but are short-lived as they die in the long term. The impact of increased public capital stock in infrastructure on private capital stock is positive, implying both private capital formation and private capital stock positively affect real GDP growth, implying crowding-in effects of public capital stock in infrastructure, and the complementarity effect between the two. The low magnitude and short-lived effects are reflective of the unfavorable environment for private investment in Tanzania.

In India, there is significant divergence in industrial performance across states, especially after the economic reforms. In this context, this study analyses manufacturing performance at the sub-national level and the role of the state therein. The changing role of the state is particularly important considering the policy shift towards a market-led economy. This study focuses on the role of public infrastructure in explaining the divergence in manufacturing performance.

Public infrastructure is a multidimensional concept, and we constructed three sub-indices physical, social, and financial infrastructure to measure its impact on manufacturing performance. The study considers only the registered manufacturing sector and 16 major states in India due to their significant contribution to manufacturing value added. Panel regression techniques were used for the econometric analysis, highlighting significant disparities in both physical and social infrastructure across states. The study found that regional disparities in infrastructure availability are a major determinant of manufacturing disparity across Indian states.

We develop a novel quantitative spatial equilibrium model that endogenizes the government’s decision to invest in transport and electricity networks. Electricity quality influences local sectoral productivities, while road quality affects trade costs. We show that network complementarities in general equilibrium are primarily shaped by trade routes and the elasticity of substitution between consumption products. Our calibrated model for the Brazilian economy indicates significant welfare gains from reallocating infrastructure investment, with spatial complementarities in heterogeneous infrastructure provision accounting for a substantial portion of these gains. Our results demonstrate that lack of coordination and budget sharing between different line ministries are important sources of misallocation.

This paper examines the long-term effects of inheritance rules on economic development and intergenerational mobility. We exploit a historical natural experiment in pre-revolutionary France, where inheritance customs varied sharply: some regions mandated equal division among heirs, whereas others allowed inheritance favoritism. Using a spatial regression discontinuity design and a rich dataset spanning up to 600 years, we estimate the causal effect of inheritance regimes on long-run economic outcomes. Our analysis relies on detailed genealogical records of over six million individuals born between 1400 and 1900 near the inheritance border. We find that historically egalitarian areas exhibit higher income, lower poverty, and reduced inequality today, even more than two centuries after these rules were abolished. Additionally, we show that the positive effects of equal inheritance on life expectancy already emerged for generations born before the French Revolution.

We provide new evidence on the impact of inheritance receipt in early adulthood on a range of economic outcomes. We use rich administrative data from the Netherlands and an empirical strategy that exploits randomness in the timing of parental and grandparental death. We show that a euro of inheritance leads to an initial increase in wealth of 40¢, which shrinks by half over the following seven years. Half of this initial increase comes from a rise in property assets, which is much more persistent than the increase in other assets. Each euro inherited also leads to a 2¢ fall in annual labour income, with larger falls for younger individuals. There is a small positive effect on business income for recipients with low wealth before inheritance receipt, suggesting that inheritances alleviate credit constraints for some. Our results have important implications for the design of policies such as inheritance and gift taxation.

In this work, I find significant exposure effects of childhood neighborhoods on intergenerational income mobility and on the probability of matriculating from high school. However, these effects disappear when controlling for family fixed effects, suggesting differential selection of families on age at move of the child.

I conclude that the differences between regions are likely to stem from sorting rather than from causal effects of neighborhoods. My results demonstrate that the studies conducted in the United States are not necessarily generalizable to the contexts of different societies such as the Nordic welfare state.

This paper examines the real effects of employment protection measures on firm performance by leveraging a unique feature of German inheritance and gift tax law. Specifically, we exploit the preferential tax treatment granted to gratuitous business transfers, which is contingent on meeting minimum holding periods and payroll sum requirements. To study these effects, we identify firm ownership changes triggered by the death of the owner, utilizing Orbis ownership data and publicly available death records. We merge this data with administrative employment data and employ a stacked difference-in-differences design, exploiting a size-dependent applicability threshold. By comparing firms subject to payroll-sum requirements to those exempted, we isolate the causal impact of these provisions, as both treatment and control group undergo an exogenous succession event. Our preliminary findings indicate that the minimum-employment requirements significantly reduce employment growth, with affected firms experiencing up to 20\% slower growth relative to the control group.

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

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

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

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

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

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

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

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.

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.