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.