When studying the welfare effects of pay-as-you-go social security systems, efficiency gains due to risk-sharing are contrasted to welfare losses due to distortions. In related literature distorted saving decisions leading to crowding out of capital are identified as a major source for welfare losses. Many studies find that the costs of introducing social security outweigh the benefits.

But to my knowledge the literature so far disregards positive welfare effects of social security due to shifts in the asset portfolio of households. I study an overlapping generations model featuring idiosyncratic asset return risk and portfolio choice and find that social security benefits stipulate households to shift their savings to riskier assets with higher returns. Whether we encounter crowding in or out depends on the level of the risk-free rate and its elasticity with respect to changes in the quantity of the safe asset.

We investigate the influence of different levels of profit tax uncertainty of firms on their investment plans in Germany. To isolate this effect, we conduct a surveybased randomized control trial with tax uncertainty treatments. First, profit tax forecasts by scientific tax experts are used to fix the first moment of future profit tax uncertainty across all treatment arms. Firms are then randomly assigned to receive one of two tailored information treatments that vary in the level of uncertainty about the first moment. Our empirical analysis reveals that increased perceived tax uncertainty leads to reductions in planned investments in both capital expenditures and intangible assets over the subsequent periods.

The study integrates two distinct datasets concerning the Indian economy: effective tax rates sourced from the union receipt budget and gross value added from national account statistics. Employing panel regression with Driscoll-Kraay standard errors on the merged data spanning from 2011-12 to 2020-21, the research examines the determinants of effective tax rates within segregated manufacturing industries. Notably, the study underscores that existing regulations or tax structures may impede effective tax rates for Indian manufacturing industries. Additionally, it reveals a non-linear inverted U-shaped relationship between industry size and effective tax rates, suggesting that industry expansion beyond a certain threshold leads to a decrease in effective tax rates. Furthermore, the study posits that an effective and corruption-free government can enhance effective tax rates for Indian manufacturing industries at segregated levels. It also highlights how the availability of optional lower tax rates serves as an incentive for these industries to opt for this tax-saving opportunity.

Financial resilience in old age is a major challenge in rapidly aging societies. In this paper, we study the role that subjective life expectancy plays in the decision to save and participate to the financial market among the elderly and how it interacts with financial literacy. We empirically show that the discrepancy between subjective survival beliefs and objective survival rates affects the decision to save and participate in the stock market and we document that this discrepancy is correlated with financial literacy. We then set up a quantitative life-cycle model to simulate alternative policy interventions. We find that survival literacy interventions informing individuals about their objective survival chances attenuate the longevity risk by encouraging wealth accumulation. Financial literacy policies lowering the costs of participating to the stock market incentivize investment in risky assets, but they benefit wealthy households more.

In the US and UK in particular, new retirees make complex decumulation decisions regarding defined contribution pension wealth. We use detailed data on wealth portfolios of people aged 50-64 in the UK to understand how people access DC pensions. Accessing pensions by making (taxable) lump-sum withdrawal is most common, and is associated with impatience but not with financial literacy. Some individuals use liquidity of DC wealth to pay off formal loans. Finally, many seem unprepared for their decumulation decisions: over 40% of 50-64 year olds do not know how they plan to access their DC wealth, particularly women and those with lower levels of wealth.

This paper examines the welfare effects of pension reforms that increase financial incentives to delay claiming. We leverage the 2015 Brazilian pension reform, which allowed workers past an individual-specific threshold to claim early retirement benefits with full replacement rate - a 30% increase at the discontinuity. Using novel administrative records on early retirement claims and labor market data, we estimate the substitution elasticity of pension claiming and the income elasticity of retirement. We extend the model by Kolsrud et al. (2024) to show that these elasticities, along with the income elasticity of claiming, are sufficient statistics for welfare analyses whenever claiming and labor market exit are separate decisions. Lastly, we evaluate whether informational channels are behind the lack of responsiveness to incentives. We show that easier access to social security offices does not have a significant impact, but that local knowledge of social security rules can affect responsiveness to financial incentives.

I provide a comprehensive analysis of the impact of a pure change in pension wealth on retirement behavior. I exploit a 2010 Norwegian policy reform that retroactively extended childcare-related pension credits to mothers of children born between 1967 and 1991. I quantify the resulting increase in pension benefits and assess the policy's potential to narrow the gender pension gap, along with any distortionary effects on labor supply and pension claiming. Using population-wide administrative data from Norway, I estimate pension benefits for all beneficiaries had the policy not been adopted and implement a difference-in-differences design, leveraging the variation in the credits' impact on final pension benefits. My findings show that the policy increased pension benefits by an average of 2.5%, contributing to a 1.5pp reduction of the gender gap in lifetime pension benefits. I find small, negative effects on employment, earnings, and take-up of other benefits with spillovers to the partners.

The share of retirees and the size of benefits paid are critical to determine an economy's aggregate pension spending. Increasing the statutory retirement age is a popular policy proposal to decrease the burden of aging populations on pension systems by decreasing the share of households eligible for pension benefits. However, in a system in which pension benefits are a function of lifetime earnings, changes in both the extensive and intensive margins of labor supply in response to a reform impact pension costs. Using a heterogeneous-agent OLG model with endogenous retirement choice and pension benefits, I study a 2019 Brazilian pension reform which increased the retirement age. I find that while the reform decreases aggregate pension costs, it leads to welfare losses for high-income households. Moreover, I find that a policy limiting the link between intensive margin labor supply and benefits leads to higher aggregate pension costs than the 2019 reform.

African governments are increasingly digitalizing their tax systems to enhance revenue collection. This study examines the adoption and impact of electronic tax services on SMEs in Burkina Faso, using survey and administrative tax data. It focuses on three indicators: registration on eSINTAX, e-filing, and digital tax payment. Findings show that eSINTAX adoption is driven by factors such as SARL legal status, electronic billing, and higher tax knowledge. Digital tax payment improves perceptions of transparency and reduces perceived corruption. Registration and e-filing increase declared tax amounts. Digital payment leads to higher actual tax payments. The study recommends: Targeted awareness campaigns and practical training to encourage adoption. Investments in digital infrastructure to boost trust and reliability. Strengthening e-payment security to enhance taxpayer confidence. These measures are essential for the successful digitalization of tax systems across African economies.

To reduce tax evasion, in 2013 and 2014 the Hungarian government introduced mandatory online cash registers (OCR) in some sectors. As a result, almost 200,000 OCRs have been installed by 100,000 enterprises. We assume that OCR installation does not change the company’s operating model, so the increase in reported turnover around the installation date reflects a reduction in tax evasion. In this paper, we use microdata to estimate the effect of OCR introduction on reported turnover and tax liabilities using fixed-effects panel and event study models. We identify strong size-related heterogeneity in the retail and the accommodation and food services sectors: smaller companies increased their reported turnover more than larger ones. Since large companies pay the dominant part of value-added tax, the effects on the payment of this tax were mitigated. We find significant spillover effects to suppliers in both sectors, which are slightly stronger among larger companies.

The digitalisation of tax administration promises improved efficiency and increased tax revenues. In recent years, the real-time information trail of the VAT has been digitalised in many developing countries. We evaluate the impact of introducing an e-invoicing system in Uganda by utilizing administrative tax data. The intervention mandated all VAT-registered taxpayers to issue e-invoices for all sales from January 2021. We show that the intervention has been successful, with over 95 percent of VAT taxpayers registered. The introduction of e-invoicing system has led to a significant increase in the monthly VAT declarations, suggesting improved perceptions of evasion detection. However, only about 60 percent of VAT taxpayers issue invoices regularly. The total sales recorded through e-invoicing system align closely with VAT returns. While total sales haven’t shifted significantly, there has been a reduction in VAT due, likely due to more firms claiming input VAT, resulting in more negative VAT liabilities.

With the rapid progress of information and communication technology, the digitalization of administrative processes by governments has gained much attention.This study investigates its effect on tax compliance costs and tax evasion using a reform that mandates large corporations to adopt electronic filing in Japan. The mandatory electronic filing reduced amendment submissions by one-third, and the effects are larger for corporations that were more likely to file amended returns before and those located in a large city. We detected no effects on tax evasion or tax payments in this country where tax administration and morale are developed.

We study a policy in Iran that grants tax cuts to firms experiencing growth above a specified threshold. Using the universe of Iranian corporate tax returns from 2013 to 2022, we employ the bunching method and find that firms increase their reported taxable income growth by 1.17 percentage points for every 1 percentage point reduction in the corporate tax rate. Additionally, event-study results show that this growth corresponds with a reduction in the share of reported exemptions by firms. Evidence suggests that the increase in reported growth is driven by over-reporting of income and inter-temporal income shifting to maximize tax reductions. We further document evidence of information frictions: firms with ownership links are significantly more likely to coordinate their bunching behavior, suggesting that information about optimal tax responses diffuses through business networks. These patterns point to informational barriers as an important constraint on firm-level optimization in response to tax policy.

The objective of this article is to analyze the impact of government size on the Musgravian performance of Sub-Saharan African countries. The Generalized Moments Method (GMM) in a system is applied to a sample of 40 countries over the period from 2006 to 2021. The results obtained show that the size of government significantly affects public performance in all three dimensions of Musgrave. First, it has a positive effect on government stability. Secondly, it reduces the income allowance and promotes employment. Finally, it reduces the share of the population living below the minimum income. Therefore, rather than increasing the size of government, it is recommended to accelerate the digitalization of public administrations in order to improve the quality of institutions and reduce corruption. As a result of this investigation, we note that the problem of sub-Saharan governments is not the quantity of the rulers, but the quality of their actions.

We investigate the impact of financial intermediation on economic growth in four North African countries (Algeria, Egypt, Morocco, and Tunisia). Based on a Principal Component Analysis to construct an index that measures financial intermediation and using Granger causality tests we analyze whether financial intermediation influences economic growth. Using data from 1990 to 2018, we show that financial intermediation does not Granger cause economic growth in these North African countries. This contrasts with the findings in similar but older studies for the East African Community (EAC) countries. We also show that inflation has a significant short-run impact on growth in the North African countries.

Against the backdrop of the new Monetary Policy Committee (MPC) decisions to maintain the status quo policy rates, we analyse the post-pandemic monetary policy stance in India. Using high-frequency time series data spanning from January 2020 to July 2023, the term structure of interest rate is analyzed by incorporating monetary aggregates, fiscal deficit, inflation expectations, and capital flows, employing the ARDL (Autoregressive Distributed Lag) model. The results revealed that the fiscal deficit does not significantly determine interest rates in India's post-pandemic monetary policy stance. While the long-term interest rates were strongly influenced by the short-term interest rates (reinforcing the operation of term structure in India), capital flows, and inflation expectations, the money supply inversely impacted it. These inferences have policy implications on the fiscal and monetary policy coordination in India, where it is crucial to analyse the efficacy of a high interest rate regime on public debt management.

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.