We study post-Apartheid inequality dynamics in South Africa using a new microdatabase that combines survey, tax, national accounts, and budget data from 1993 to 2019. Until 2005, pretax inequality rose, racial disparities widened, and redistribution stagnated. Thereafter, pretax inequality fell back toward its 1993 level, while major expansions in tax-and-transfer progressivity sharply reduced posttax inequality. Rapid growth of top Black incomes contributed to halving the White-to-Black pretax income ratio and shifted 20% of taxes from Whites to top Black earners. Despite reaching its lowest point in history in 2019, the racial gap remains extreme by international standards, even after redistribution.

We analyze the composition and distribution of national income, private wealth, and the extent of redistribution in Switzerland, combining micro tax, survey, and national accounts data, covering 2003–2022. Constructing Distributional National Accounts (DINA) requires addressing two features of the Swiss setting. Switzerland is a tax haven, so we correct for cross-border profit shifting by multinationals. It is also fiscally decentralized: no nationally representative tax micro-data exist; we reweight cantonal tax records to match national distributions. We find that pre-tax income inequality is substantially higher than tax statistics suggest, with the top 1% income share 50% larger once retained earnings and privileged dividends are included. Wealth inequality is intermediate relative to existing estimates and, unlike those estimates, shows no pronounced upward trend. The overall Swiss tax-and-transfer system is close to flat across most of the distribution, at around 45% of pre-tax income, declining to below 30% for the top 0.01%.

We use population-wide administrative micro-data to provide new estimates of income inequality and effective tax rates by income groups in Brazil. Our data allow us to link businesses to their owners and thus to allocate business income and associated taxes to the corresponding individual firm owners. We provide sharp upward revisions to official inequality estimates: the top 1% earns 27.4% of total income in 2019, one of the highest level recorded in the world. The tax system, which relies heavily on consumption taxes, is regressive: while the average tax rate in the economy is 42.5%, this rate falls to 20.6% for million-dollar earners (roughly the top 0.01%), due to the non-taxation of dividends and provisions that reduce corporate tax liabilities. We provide evidence suggesting that inequality in developing countries may be systematically underestimated, as even in Brazil - where dividends are untaxed - attributing profits to business owners substantially raises income inequality.

In this paper, we investigate the economic divide between East and West German residents along the regional income and wealth distributions employing the Distributional National Accounts method, which aligns microdata with national accounts. We find that East German residents still earn and own a fraction of their West German counterparts. The gap widens towards the top of the distribution due to East Germans’ lower business income and wealth.

Investigating the causes, we find that reunification boosted West German top incomes. We link this to the privatization process of the 1990s in which pre-dominantly top West German investors acquired formerly state-owned East German capital and received higher returns on their investment. Persistent characteristics of businesses owned by either East or West Germans, such as the number of employees, firm structure and legal form, explain a rising share of the persistent productivity gap.

We study how tax authority can manipulate the elasticity of taxable income (ETI) through tax monitoring. We build on a model of a trade-off between consumption and earned income subject to a kinked tax schedule, in which tax administration scales down the ETI through stricter tax enforcement. Using tax-return data on Czech self-employed individuals, we show that the ETI falls 30% in business sectors subject to real-time monitoring of business-to-customer sales via electronic sales registers. A down-scaled ETI permits increasing the revenue-maximizing top tax rate. The results support the optimal tax literature in which the ETI depends on tax environment.

This paper revisits the elasticity of taxable income (ETI) framework in the presence of income volatility. First, I document significant year-to-year income volatility at the top of the income distribution: both upwards and downwards relative income shocks increase in magnitude when moving up the income distribution. I show that this volatility threatens identification and the interpretability of existing ETI estimates due to (i) the sensitivity of logarithms to changes in higher order moments (Jensen bias) and (ii) SUTVA violation when behavioural adjustments cannot be considered as marginal. I propose alternative estimators to recover the parameter of interest.

Taxpayers can reduce their tax liability by itemizing deductions and claiming more than the standard deduction they are automatically entitled to. I show that taxpayers also itemize when costs exceed benefits, a behavior that is strictly dominated by not itemizing. Using German administrative income tax data, I document that 57 percent of tax filers make this mistake at least once. They itemize even when the sum does not exceed the standard deduction, or when they already face a zero tax liability before itemizing, or both. The observed itemizing behavior is consistent with a model with optimization frictions in which some taxpayers always itemize regardless of the costs and benefits.

This paper studies whether tax–transfer systems are inefficient in the sense that they allow for self-financing tax cuts. In the first part, we combine household microdata with tax–transfer calculators for 33 countries around the world. We show that, under standard labor supply elasticities, self-financing tax cuts exist in all 29 countries in which effective marginal tax rates (EMTRs) exhibit sudden drops. In the second part, we show analytically that sudden drops in EMTRs give rise to inefficiencies whenever (a) taxpayers are rational with additively separable preferences, or (b) taxpayers use an ironing heuristic and EMTRs exceed a certain threshold. In the third part, we characterize discrete reforms that move tax–transfer systems to the Pareto frontier for both rational and non-rational taxpayers. Focusing on a model with isoelastic, quasi-linear preferences, we provide an empirically applicable recipe for designing tax reforms that raise revenue without making any individual in society worse off.

Targeting the problem of 'homeless profits' that digital firms earn in countries without a physical presence, OECD Pillar One aims to reallocate taxing rights to market countries based on the sales revenues of in-scope firms. This study theoretically investigates the implications of Pillar One by considering a global firm that conducts all its real activities in a tax haven and competes via prices in e-commerce with local firms in market countries. Our model identifies two core effects. First, all in-scope firms manipulate their routine profit threshold by increasing their total turnover. This reduces the reallocated tax base and crowds out the taxable profits of the local competitors. Second, for tax rate differentials, sales shifting emerges: the global firm increases prices in the high-tax country and books larger sales (and profits) in the low-tax country. Thus, the high-tax country suffers from lower tax revenue and greater market inefficiency, all else equal.

Despite the growing relevance of direct platform taxation, little is known about its economic effects. This paper uses domain-level web traffic data to study how the French DST affected internet usage patterns. I find that traffic to websites owned by the 23 companies likely subject to DST liabilities remained stable after tax implementation, while traffic to non-liable websites declined by approximately 3\% relative to other countries. This differential effect is consistent with DSTs operating through through the advertising market: higher advertising costs reduce the returns to quality investments for non-liable websites that depend on DST-liable platforms for traffic acquisition, while platform quality, net of advertising, remains largely unaffected by jurisdiction-specific taxes.

Profits are often created from activities across multiple jurisdictions. What is the optimal division of tax revenues across these jurisdictions? This paper addresses this question theoretically and empirically. First, we propose a new welfare function for fair division of profit tax revenues across jurisdictions, where jurisdictions' claims to revenue depend on how much of multinational corporations' capital, labour and sales are located within the jurisdiction. Second, we show how this theory can be applied to the optimal division of revenues when taxation distorts location decisions of corporate activities. Third, to speak to the extent of location responses, we exploit data on multinational corporations in the EU to estimate the current distribution of activities and the responsiveness of each activity to tax rate differentials. Fourth, using these results, we simulate optimal divisions of revenues for the EU under formula apportionment.

This paper extends the sufficient statistics approach to study international tax policy. International policy differs from domestic policies because i) from the perspective of domestic policy makers the welfare weight assigned to foreign agents is lower than that of domestic agents, and ii) behavioral changes by foreign agents have spillover effects on the domestic economy that are welfare relevant. I develop a tax and tax administration model that incorporates these features. I ask which elasticities are required to estimate the welfare effects of an international (tax) policy reform, considering variation in both the tax rate and tax administration. The sufficient statistics needed for welfare analysis are the elasticity of taxable income, the elasticity of factor prices, and the elasticity of the foreign input with respect to the policy variable of interest. I apply the approach to calculate the welfare effects of the US corporate tax and U.S. tariffs on imports.

This paper estimates the effects of accumulated bachelor-level student debt on post-graduation labour-market outcomes under Australia’s universal income-contingent loan system. Although income-contingent repayment provides insurance against low earnings, outstanding debt effectively operates as an additional marginal tax on income until fully repaid, potentially influencing labour-market behaviour. Using rich administrative data and exogenous variation in tuition fees generated by federal reforms and field-specific fee schedules, we examine impacts over the early and mid-career. Higher accumulated debt reduces earnings, slows income growth, and worsens job-quality outcomes, with effects strongest early in the career and fading as debt is repaid. Impacts vary by gender, repayment status, and field of study, indicating that student debt can exacerbate existing labour-market inequalities even within an income-contingent framework. Mechanism analysis shows that effects operate primarily through earnings capacity and job quality rather than employment participation. These findings inform the efficiency and equity evaluation of higher-education finance policy.

Austria combines exceptionally low educational mobility with remarkably high income mobility\,--\,a striking ``mobility paradox.'' Using population-wide administrative data, we document this paradox and show that it arises from the structure of Austria’s vocational and tertiary education system. Large within-track heterogeneity in both vocational (VET) and tertiary returns leads to substantial overlap in their lifetime earnings distributions. The widespread and accessible VET pathway provides clear routes into stable, well-paid occupations, enabling high income mobility even for children from less-educated households. The results imply that the link between education and income mobility is not mechanical, and that expanding tertiary enrollment alone may do little to enhance economic opportunity.

We estimate the causal effect of school entry age on outcomes across three time horizons. We find that entry age raises grade 4 test scores by 0.029 standard deviations per month, which attenuates to 21 per cent of its initial magnitude by grade 12. While older entrants score higher through grade~12, they are slightly less likely to ever graduate from high school, consistent with earlier dropout eligibility. Postsecondary outcomes show routing toward university and away from college. The earnings premium is small and positive at age 25, but shrinks and becomes statistically insignificant at 30. Employment insurance receipt, social-assistance receipt, and family low-income effects are small and insignificant. Older entrants are more likely to be married by age 30. Overall, we find an additional month of school-entry age is unlikely to generate meaningful adult economic gains.

This paper provides an evaluation of Oma Linja, a school intervention that supported students in the final year of compulsory education in making the educational choice that is most suitable for them. About 10,000 9th-grade students in Finland participated in a randomized controlled trial. The treatment included a training in group counseling techniques to school educators, and motivational workshops for students. Our primary results indicate that, for the average student, Oma Linja did not significantly change the likelihood of graduating from upper secondary education or enrolling in tertiary education. However, it increased graduation from the vocational track by 2 p.p., with a symmetrical decrease in the academic track. These effects were concentrated in students with GPA below 8.5. Additionally, students with an immigrant background were 4.1 percentage points (7%) more likely to graduate from upper secondary school, closing the graduation gap by 25%.

This paper examines how land taxation affects urban sprawl and suburban development using nationwide data from Japan. We exploit the 1994 property tax reform, which standardized the assessed-to-market value ratio for land across municipalities, generating heterogeneous land tax increases without changes in building taxation or local public expenditures. We find that a 1 percent increase in land tax burden reduced business land development by about 0.4 percent, driven by a reallocation of development from high-tax to low-tax areas rather than an overall decline. Development in low-tax areas occurred through land-use conversion and expansion into low-density areas, contributing to urban sprawl. Land markets adjusted differently by use: residential land responded through prices, while business land adjusted primarily through quantities. These results highlight an avoidance mechanism through which land taxation may unintentionally exacerbate urban sprawl.

In 2024, Finland split the general municipal property tax into land and building components, creating a de facto land value tax (LVT). We study the adoption and early consequences of this reform for municipal public finance. We document how municipalities set LVT rates and whether they offset land taxation by lowering other tax rates, or by adjusting spending, investment, and borrowing. For identification, we exploit quasi-experimental variation induced by statutory minimum rates that bound local LVT choices. The project delivers the first comprehensive evidence on the implementation margins of an LVT in a contemporary setting, informing the design of property taxation and the fiscal instruments available to local governments.

Local governments may use tax-setting discretion strategically when politicians perceive tax burdens to fall differently across voter groups. We study this mechanism in the context of Germany’s property tax reform, which created exogenous variation in expected tax burdens across municipalities and voter groups through different state-level valuation models. In some states, standardized valuations implied a higher tax base for rental properties than for comparable owner-occupied units. We examine whether property tax multipliers increased more after reform details were announced when municipalities were governed by homeowner-friendly parties and located in states where tenants would face higher tax bases. Using a triple difference-in-differences design and panel data from 3,769 West German municipalities between 2017 and 2024, we find evidence consistent with strategic tax adjustments. Our results provide causal evidence on the political determinants of recent increases in German property tax multipliers.

This paper studies the capitalization of property taxes into housing prices using a large-scale natural experiment in the Czech Republic. We exploit a 2024 reform that sharply increased statutory tax rates for municipalities above specific population thresholds and apply regression discontinuity and difference-in-discontinuities designs to isolate exogenous variation in tax liabilities. We find strong evidence of capitalization: an 80% statutory rate increase reduced property prices by 12.6% to 17.5% in non-touristic municipalities. The effects are heterogeneous, with significantly weaker responses in touristic areas and in municipalities with high pre-existing tax burdens. Despite the sizable fiscal shock, we detect little evidence of strategic tax interaction across local governments, suggesting that institutional constraints limit competitive tax-setting. Overall, the results provide robust support for the capitalization hypothesis and highlight the role of market segmentation and local amenities in shaping tax incidence.

Female labor supply has increased substantially over the past century. Consequently, more women and men have observed their mother employed which may affect their own labor supply. In this paper, I exploit a tax reform which stimulated labor supply among women with low labor force attachment. Mothers directly affected by the reform increased their labor supply. However, daughters of these women reduce their labor supply and are more likely to have kids and be married. I do not find any effects on the labor supply or fertility of sons. Hence, my results show that a reform which stimulated maternal labor supply can have unintended negative effects on the labor supply of their daughters.

Can “soft law” disclosure policies reduce gender wage inequality? This paper examines Japan’s 2022 pay transparency mandate, which requires firms with 301 or more employees to publicly disclose gender wage gaps under a soft-law regime without monetary penalties. Although the policy applies nationwide, compliance varied across prefectures due to differences in administrative guidance, generating subnational variation in disclosure intensity. Exploiting this variation as plausibly exogenous, I estimate the effects of disclosure using prefecture-by-industry-by-age aggregate data from the Basic Survey on Wage Structure within a fixed-effects framework. Higher disclosure rates reduced the gender wage gap in base pay by 0.046 log points, equivalent to 17.9 percent of the pre-policy gap. The gap narrowed through faster wage growth for women rather than male wage suppression, with effects concentrated in non-manufacturing industries. Overall, the results highlight the distributional effectiveness of information-based regulation operating through reputational incentives.

In gender-equal countries, the gender wage gap is largely driven by earnings losses following childbirth. We study the role of firm wage premiums in shaping these child penalties using Norwegian linked employer–employee data. Applying an AKM framework and event-study design, we show that mothers experience a persistent decline in firm wage premiums after childbirth. This decline reflects reduced job mobility and lower returns to job changes rather than sorting into family-friendly firms. Our findings highlight employer heterogeneity as an important channel through which childbirth affects women’s earnings trajectories.

We study how policy incentives affect women’s labor supply before childbirth, a relevant period for gender gaps in employment and earnings. We exploit a major German parental benefit reform in 2007 that replaced a flat transfer with an earnings-related benefit, strengthening incentives to earn income prior to birth. Using administrative data on the universe of first-time mothers and a difference-in-income-trends design, we find three main results. Women on average reduce labor supply in the year before childbirth. The reform causally increased pre-birth labor supply: earnings rose by up to 50 percent and labor market exit declined by about 5 percentage points, with stronger effects for low-income and married women. We provide suggestive evidence that increased pre-birth labor supply is associated with higher post-birth earnings and employment. Our findings show that earnings-related benefits can induce sizable anticipatory labor supply responses, providing broader implications for the design of wage-replacement policies.

Value-added tax (VAT) registration thresholds are among the most common size-based

regulations worldwide, yet existing evidence has focused mainly on firms’ avoidance behavior below these thresholds. This paper studies what happens when small firms enter the VAT regime. We use newly available German administrative tax data covering the near-universeof firms and exploit the €17,500 VAT registration threshold. To comapre crossing and noncrossing firms we combine a dynamic difference-in-discontinuities design with a donut RD approach.

Due to data protection reasons we cannot disclose the full paper publicly.

Many countries use a reverse charge mechanism (RC) in the value added tax (VAT) system to combat tax evasion in specific high-risk sectors. The RC shifts the liability to remit VAT from the seller to the buyer. We study the adoption of RC in the construction sector in Finland in 2011 using tax return data on the universe of Finnish firms. Using a difference-in-differences design, we find that reported net VAT liabilities in the construction sector increased by 5%.

According to our results, changing the remittance policy decreased VAT evasion by small subcontractors that provide services for large firms. Using a theoretical model, we show that reverse charge increases tax revenue relative to conventional VAT unless downstream firms increase tax evasion beyond the level previously undertaken by upstream firms, a response that requires a high degree of non-compliance.

We examine the economic consequences of delayed Value Added Tax (VAT) refunds in developing countries, using a novel administrative dataset covering the universe of VAT refund claims in Zambia. We document severe delays in refund processing, with firms waiting, on average, nearly 700 days for reimbursement—over 20 times the statutory processing period. Merging refund records with the universe of firms' VAT and Corporate Income Tax (CIT) filings, we show that prolonged refund delays have substantial adverse effects on firm performance, reducing sales, taxable purchases, profits, investment, and employment. To address the endogeneity of refund delays, we exploit plausibly exogenous variation in administrative congestion using a leave-one-out measure of the average delay experienced by other firms entering the refund system at the same time. The instrumental-variable estimates indicate that the economic costs of refund delays are large and persistent, consistent with firms facing binding working-capital constraints while awaiting reimbursement.

Institutional change tends to arise from "reform journeys", where incremental changes—rather than one-off events—lead to long-run progress. This paper studies the evolution of VAT misreporting in Kenya during a period of sustained administrative reform using firm-to-firm transaction data from 2016 to 2023. We document widespread underreporting of VAT liabilities, especially on the extensive margin, and a sharp decline in this behaviour over time. Using a fixed-effects regression model that allocates reporting discrepancies to buyers or sellers, we show how systematic misreporting varies across firm size, sectors, and tax offices. Eliminating firms’ misreporting would have increased KRA's tax revenue by KSH 597 billion (40% of VAT payable). The negative revenue impact has decreased significantly over time, highlighting improvements in KRA's tax capacity during a sustained reform period.

What leads self-employed entrepreneurs to incorporate? I examine how tax incentives interact with the cost of incorporation to answer this question. I exploit the abolition of minimum capital requirements to start a limited liability company in the Netherlands and compare entrepreneurs that differ in their incentive to incorporate but are otherwise comparable. After the reform, entrepreneurs whose pre-reform taxable income was closest to a kink where marginal personal income tax rates increase steeply are more likely start a corporation. Total tax paid by these entrepreneurs significantly decreases, suggesting they reap the tax benefits of operating as a corporation. However, there is no evidence of changes to overall business activity, measured in terms of total assets and the probability of having employees. Finally, there are no significant differences in the probability that entrepreneurs own an unincorporated business, which suggests that many entrepreneurs operate a corporation alongside an unincorporated firm.

Empirical evidence suggests that bunching at tax kinks primarily occurs among taxpayers who self-report their incomes. I generalize the standard taxable income model and allow for bunching at an additional intuitive margin. Taxpayers who pay a fixed cost may minimize taxes by reporting taxable income at the kink. I study an economy with subgroup-specific joint distributions of earnings abilities and shifting costs. Although everyone faces the same tax system, the kink is to be found at different parts of the subgroup-specific income distributions. The bunching response generally depends not only on elasticities and shifting costs but also on the global properties of the income distribution to the right of the kink. A key insight is that a higher excess mass does not necessarily imply greater responsiveness to taxation. Finally, I examine heterogeneity in bunching at a large and salient kink point in Sweden through the lens of the model.

We study the links between labor and capital taxation in the context of two simultaneous tax reforms in France in 2018: a reduction in the corporate income tax rate and the introduction of a 30% flat tax on dividends. Using new microdata on business ownership, we link corporate tax returns to the personal tax returns of their shareholders. This allows us to examine how the differential of tax liabilities between tax bases affects business entry and income shifting among self-employed workers. Our findings support significant income shifting behavior, particularly among top earners who benefit the most from such tax avoidance practices.

Several countries use preferential tax schemes to attract high-skilled workers from abroad. While these schemes are motivated by the positive spillover effects of tax- induced immigration on receiving countries, there is limited empirical evidence documenting these human capital externalities in the context of tax-induced immigration. In this project, we investigate the firm-level effects of tax-induced immigration in Italy, which offer preferential tax schemes for high-skilled immigrants and returnees since 2010. Using social security data and leveraging pre-existing variation in firms’ exposure to the policy, we estimate the effects of tax-induced immigration on productivity, wages, employment and other outcomes of firms and co-workers.

This study investigates how diverse parental involvement styles affect academic performance and non-cognitive skills among Japanese ninth-grade students. Using original survey data (N > 5,000) and employing Instrumental Variable and factor decomposition methods, I analyze six dimensions of involvement, including time, support, and expectations. Results show that while current involvement has limited direct effects on test scores, it significantly influences outcomes indirectly by increasing study time and enhancing non-cognitive skills. Notably, maternal monitoring negatively correlates with girls' outcomes, suggesting that excessive intervention undermines autonomy. Conversely, paternal involvement and household rules are critical for boys and disadvantaged children. Factor decomposition reveals that early childhood parenting and educational expectations possess greater explanatory power than current involvement, supporting the "self-productivity" theory. These findings suggest a shift from traditional mother-centric monitoring toward a strategic division of roles—emphasizing maternal emotional support and increased paternal engagement—to optimize adolescent development and reduce educational inequality.

Teachers matter for students, but we know little about what effective teachers do in classrooms. This paper estimates the causal effect of teaching styles on student achievement. To address endogenous sorting, I exploit a unique institutional setting in which teachers are randomly assigned to classrooms. Using rich survey data, I employ factor analysis to construct multidimensional indices of teaching styles from 25 teaching practices questions. I find that a one-standard-deviation increase in a Modern Teaching Style -characterized by a student-centered approach-raises students’ average test scores by 0.045 standard deviations. However, the impact is highly heterogeneous:

while positive on average, the effect is negative for mathematics. Furthermore, the gains are largest for low-ability students, and the effect varies with teachers’ experience and educational background. Analysis of the underlying mechanisms suggests that the positive outcomes are driven by enhanced teacher–student interactions and increased teacher attention to students’ learning conditions.

I explore the origins of the positive association between socio-economic background and entrepreneurship. Using Finnish administrative data, I show that children from the top 1% of the parental income distribution are more than five times as likely to become business owners and almost three times as likely to become "real entrepreneurs" as those from the bottom 50%. Similar patterns appear when using parental wealth instead of income, though the effects are somewhat smaller in magnitude. The strongest channel behind the over-representation of entrepreneurs from high-income families is prior experience of business ownership before founding new firms. I rationalize this finding by developing an "ownership ladder'" model, where entrepreneurship is the second step on the ladder, and parental resources are associated with people stepping onto that ladder early.

Using Finnish registry data on 51,056 graduates followed annually since graduation for up to 25 years, we report three findings. First, higher EA-PGI strongly predicts income growth, but only among higher-educated people. This effect is not mediated by overall health. Second, EA-PGI does not predict income differences at labor market entry or the quality of the first employer, but rather a higher job-to-job mobility toward better-paying firms, which drives the long-run income divergence. Third, controlling for parental EA-PGI in 12,871 parent–offspring trios reduces the discounted lifetime income gap by 71 %, and the effect of paternal (but not maternal) EA-PGI on offspring income exceeds that of the offspring’s own EA-PGI. These findings suggest that genetic factors associated with educational attainment predict income trajectories primarily through faster and more frequent changes to higher-paying employers.

The nonprofit sector employs roughly 10% of the American workforce, many of whom work in the same industries as similar for-profit counterparts. To what extent do firms’ nonprofit tax status affect the pay of their employees? We construct a novel merge between firm tax and earnings records, covering the near-universe of US workers in the nonprofit and for-profit sectors, to unpack the nature of nonprofit pay differences in the labor market. We first find that nonprofit workers typically have lower earnings than their for-profit counterparts. We then estimate an AKM worker-firm job ladder model to show that this “pay penalty” reflects causal differences in firm-level earnings premia, rather than differential selection of workers across sectors. We document rich heterogeneity in earnings premia and worker selection across industries, and show that nonprofit and for-profit earnings have been converging over time.

In December 2017, the government of Türkiye announced a comprehensive ban on the procurement of outsourced services by public institutions and mandated that all workers providing such services be transitioned into permanent public positions within six months. We study the labor-market consequences of this abrupt and large-scale policy change using an administrative, linked employer–employee dataset. We find that workers who transitioned into public employment experienced higher wages and improved job security. At the firm level, private service providers with greater exposure to the reform faced sharp employment contractions, declines in productivity and profitability. In contrast, municipal-owned enterprises that internalized service provision became more productive and profitable. We also document modest positive spillovers in local labor markets, including wage gains and reduced turnover among low-skilled private-sector workers. Overall, our results highlight that the outsourcing ban triggered a reallocation of rents away from private service providers toward workers and public employers.

This paper examines how a major Peruvian labor-market reform reallocates rents among firms, workers, and the state when employers possess wage-setting power and workers can exit into informality. It studies the shift from a preferential agrarian regime with low profit taxes and reduced non-wage labor costs to a more pro-worker package that raised taxes, strengthened benefits and protections, and curtailed outsourcing. First, I estimate difference-in-differences and event-study models using ENAHO and EEA to document changes in wages, employment, and the wage–benefit–amenity bundle, and to track worker reallocation across the special regime, the general formal regime, and informality. Second, I develop and estimate a structural model that combines oligopsonistic wage posting with a regime-level discrete-choice model of heterogeneous workers. The model recovers labor-supply elasticities, markdowns, and preference heterogeneity, then decomposes incidence and welfare effects by worker type and outside options. Counterfactuals compare observed outcomes to competitive wages and quantify revenue changes.

This paper leverages a large minimum wage reform in Uruguay to study the effects of minimum wages on the distribution of firm wage premia. The reform significantly decreased wage inequality, mainly by reducing between-firm inequality. AKM and time-varying AKM analyses reveal a large compression in the distribution of firm fixed effects after the reform, driven by an increase in the fixed effects of low-premium firms. Firm-level and worker-level difference-in-differences analyses document a causal effect of the reform on the compression of firm fixed effects. Results suggest minimum wages can increase the supply of “good jobs” by “making bad jobs better”.

We use population-wide data from Finland to provide evidence on the impact of earnings disregard policies on part-time work during unemployment spells. The share of part-time workers among benefit recipients increased sharply from about 10% to nearly 18% over a few years after the implementation of earnings disregards in unemployment benefits and housing allowances, which allowed individuals to earn up to 300 euros per month without reductions in their benefits. Using variation in the impact of the reforms on incentives between individuals eligible for different types of benefits, we estimate a 19-20% increase in participation in part-time work due to the implementation of earnings disregards. We find no evidence that earnings disregards crowd out full-time employment, but instead find moderate positive longer-run employment effects.

This study measures how mid-career Japanese workers value flexible work (time/location) and discretionary work (autonomy over tasks) and discusses implications for retirement and public pension policy. Using an online stated-preference experiment with full-time male employees aged 35–44 in Japan, respondents repeatedly chose between a standard job and alternative work plans under randomized earnings. Logit-based willingness-to-pay estimates show near-zero value for flexibility, but a strongly negative value for discretion: workers require an earnings premium of about 18–20% to accept discretionary jobs. Higher-income respondents value flexibility somewhat more and demand smaller premiums. Linking these preferences to stated plans, flexible-work preference predicts a slightly later desired retirement age but is unrelated to preferred pension claiming age. The findings suggest that work-style reforms alone may not materially delay pension take-up, so labor and pension policies should be designed jointly to extend contribution careers.

We analyze the causal effects of survivor benefits on women’s labor and capital market decisions. We exploit a cohort-based reform in Sweden in 1990 that sharply reduced survivor benefits. To estimate how women compensate for a loss of public insurance, we apply regression discontinuity and differences-in-differences designs to estimate the reform-effects on labor supply, earnings, and wealth accumulation. We find no evidence of forward-looking labor supply adjustments in anticipation of lower survivor benefits while partners are still alive. However, affected women postpone retirement and accumulate significantly more net wealth. Yet, these adjustments are insufficient to fully offset the benefit loss. After an early and unexpected partner death, women substantially increase employment and earnings, which is consistent with imperfect foresight.

Many countries extend unemployment insurance (UI) entitlements for older workers. While such extensions increase separations and prolong unemployment among eligible individuals, little is known about their effects on coworkers within firms. I study whether extended UI reshapes the allocation of separations across age groups using cohort-based reforms to the Finnish UI extension program. Exploiting reform-induced variation in eligibility across firms with different age structures, I show that a higher share of eligible coworkers reduces layoffs among younger employees, particularly during demand shocks. Quantitatively, the reduction in layoffs among younger workers nearly offsets the increase among eligible older workers. Extended UI also reshapes the allocation of furloughs and job-to-job transitions across age groups within firms. These results highlight the importance of within-firm spillovers for understanding the incidence of social insurance policies.

This paper examines five decades of Earned Income Tax Credit (EITC) expansions to estimate employment elasticities and inform future policy design. I construct a comprehensive accounting of changes in tax credits, public assistance, and the return to work, and synthesize evidence across prior studies using a unified framework. The analysis demonstrates how alternative modeling choices—such as how the return to work is measured or which employment estimates are used—generate substantially different elasticity estimates. I present a distribution of estimates across specifications and assumptions, summarized in a histogram of implied elasticities. While estimates vary widely--even for a given policy change and/or employment response--the central tendency is clear: employment elasticities for unmarried mothers average around 0.3.

Existing estimates of tax elasticities rest on local, between-income contrasts, while the questions asked of them are broad. This paper proposes a source of variation available throughout the map of own and partner income. Because it is within-income—it stems from shifts to the tax liability function which, under family taxation, depend on partner income—own income can be controlled for without absorbing the identifying variation, and comprehensive heterogeneity analyses become feasible. The universe of French tax returns (2003–2023) reveals elasticities that decline with income, and, for women, participation responses concentrated in households with an unequal income split. Answers to normative and positive questions—where to tax income more/less, the e˙ects of reforms to jointness—are sensitive to this heterogeneity.

This paper studies behavioral responses to kinks in effective marginal tax-benefit schedules, focusing on income taxation, social security contributions and benefits, labor-market frictions, and informal compensation. Using matched employer-employee administrative records covering Brazil’s formal workforce from 2010 to 2018, we document sharp bunching at the pension-benefit ceiling but little systematic bunching at other statutory nonlinearities. Bunching rises with age, falls with firm size, and is stronger where informality is more prevalent. We develop an intertemporal model in which workers value future pension accrual, face adjustment frictions, and may receive informal earnings. The pension ceiling generates a convex kink in the effective tax-benefit budget set because marginal pension accrual disappears above it, despite the lower employee contribution rate. Structural estimates imply that the effective marginal tax-benefit rate declines with age and that formal earnings respond weakly to the net-of-EMTBR rate. Firm-size-related adjustment frictions explain the limited bunching observed in large firms.

Using comprehensive administrative tax returns data from 2017–2024, this study examines how Kenyan taxpayers respond to personal income tax reforms using a bunching approach around the first tax kink. I estimate excess mass of up to 2.9 and an elasticity of taxable income (ETI) of up to 0.42. Unlike typical patterns in the literature, self-employed taxpayers consistently bunch above rather than below the kink, while wage-employed taxpayers bunch more modestly and sometimes spread on both sides. Behavioural responses intensify following reforms that make the kink more salient, alongside substantial regional heterogeneity. Bunching is not persistent at the individual level, as taxpayers who bunch in one year generally do not remain at the kink in subsequent years.I develop a stylised framework attributing the pattern to perceived audit probabilities, finding that self-employed filers reporting just above the kink face significantly lower realised audit rates, while wage-employed filers show no significant difference.

In this study, we examine the effect of yardstick competition on the level of public good provision under shared accountability, which is the co-financing of public goods by upper and lower governments. It is well known that partial expenditure decentralization, where different levels of government share costs, leads to the under-provision of public goods (Joanis (2014). This occurs because rent-maximizing politicians have a free-riding incentive (vertical political externality) to place the cost burden on the other level of government. We investigate whether the introduction of yardstick competition can mitigate this under-provision. Our analysis yields three key findings. First, yardstick competition alleviates the under-provision of public goods. Second, this positive effect is decreased by the distortion caused by the asymmetric vertical political externality. Third, when asymmetric vertical political externality exists and yardstick competition is sufficiently prevalent, the efficacy of yardstick competition is limited and suppressing vertical political externality is more effective.

Do public goods, not just wages, shape where people emigrate? Using a near-universe registry of 400,117 working-age Italian-born emigrants choosing among 36 destinations (2005–2024), we estimate a destination-choice model with individual-by-destination predicted earnings. Income determines whether Italians emigrate and rules out poor destinations; among rich destinations, the quality of public goods does the fine sorting. Under inference that respects the 36-destination design, emigrants forgo 0.7 to 2.0 percent of income for a one-standard-deviation gain in a quality index of schools, health, safety, environment, and institutions. The model predicts the post-Brexit collapse of UK inflows out of sample.

We study the crowding-in and crowding-out effects of EU Cohesion Policy, one of the largest public investment programs in the world, on investments in EU Member States. Leveraging a threshold that makes the poorer regions eligible for EU funding, we show that Cohesion funds crowd-out public investments. The retrieved fiscal resources are shifted towards current expenditures, rather than to other regions or periods. Although this crowding-out effect is a clear violation of EU’s additionality principle, we show that it is more than outweighed by substantial crowding-in of investments by the private sector. We estimate a multiplier of three euros per invested euro, most of it driven by non-tradable industries like construction. Our complementary difference-in-difference suggests that this effect persist over time. Further ongoing work relying on similar designs estimates GDP and employment multipliers of Cohesion of about one, which works primarily through the crowding-in channel of private investments.

Veteran-owned businesses receive preferential treatment in procurement by the U.S. Department of Veterans Affairs, the largest civilian federal agency by procurement spending. We study a 2016 Supreme Court ruling that expanded the scope of these set-asides and estimate its effects on targeted firms and procurement outcomes. The ruling increased the share of purchase order contracts awarded to service-disabled veteran-owned small businesses. Gains accrued both to incumbent vendors and to first-time VA contractors, including firms that had previously registered but had not won federal awards. The expansion also increased competition for awards, with no evidence of deterioration in contract execution performance. New VA vendors were no more likely to win awards from other federal agencies. The results suggest that, in commercial procurement markets with relatively low barriers to entry, set-asides can expand access for targeted firms without detectable deterioration in government procurement outcomes.

Against the backdrop of increased international mobility of individuals, this paper addresses a central tax challenge in this context: the taxation of capital gains. Because capital gains taxation is generally realization-based, taxpayer mobility prior to realization can erode countries’ taxing rights. In response, both the academic literature and policymakers have considered the use of exit taxes on accrued, unrealized gains. Drawing on economic approaches to formula apportionment and tax averaging, as well as legal concepts from tax and public policy, this paper develops and evaluates a novel framework for capital gains taxation: Cross-Border Capital Gains Taxation (CBCGT). The model harmonizes capital gains taxation through cross-border realization-based averaging and intertemporal apportionment. Thereby it balances competing principles of realization-based taxation and accrual-based allocation. The proposal aims to improve international tax policy, and to this end, the paper conducts a legal analysis of its potential application, using the EU as a case study.

Deployment subsidies for nascent technologies have moved to the forefront of climate action, industrial policy, and geoeconomics. To limit the substantial fiscal costs of such programs, policymakers routinely employ subsidy schedules that are nonlinear in the quantity agents deploy. However, nonlinearities can threaten a program's deployment goals because agents may respond to them at the intensive margin by reducing deployed quantity and at the extensive margin by ceasing participation. This paper characterizes optimal nonlinear subsidy schemes in which a principal trades off the benefits from deployment with its budgetary costs. Theoretically, it shows that nonlinearities are optimal only if adopters' participation responses are heterogeneous along the subsidy schedule. Yet, early-stage technologies typically exhibit limited heterogeneity in this dimension. As a consequence, the optimal subsidy rate is close to constant over a wide range of the schedule. A quantitative analysis of the canonical German rooftop-solar program demonstrates the theoretical findings.

Many resource-rich countries have raised tax rates on mining extraction over the past two decades, amid surging demand for minerals. Using a global firm-level panel of mining exploration and production from 1997 to 2024, combined with a newly compiled dataset of statutory tax rates, I find that higher taxes leave production from existing mines unchanged but sharply reduce exploration: a one-percentage-point increase in sales royalties lowers exploration expenditures by 3 to 4 percent, with no significant effect on short-run output. Event studies around the four largest mining tax reforms of the past two decades - South Africa (2010), Ghana (2012), Mexico (2014), and the DRC (2018) - confirm this result. Affected firms gradually relocate exploration abroad, leaving global exploration unchanged in the long run. These findings document a time-inconsistency problem in resource taxation: governments can capture short-run rents from immobile production but erode their long-run tax base by deterring discovery.

This paper examines the relative compensation of state and local government workers compared to their private sector counterparts in the U.S. Augmenting standard data sources on compensation with information on benefits derived from unpublished Bureau of Labor Statistics data and asset-based methodologies for valuing benefits, we document a significant erosion in the public sector compensation premium. While state and local workers received approximately 10 percent higher total compensation than comparable private sector workers in 2011, this differential had declined to negative 5 percent by 2023. This decline stems from multiple factors: relative public sector wages have fallen steeply, public sector retiree health care benefits have diminished, and the historically greater job stability in government employment has eroded. We also document that cash, as opposed to accrual, accounting for defined benefit pensions significantly skews the trend in relative public sector compensation in the ECI—the principal data on U.S. benefit compensation.

Public pension systems with mandatory coverage often retain a voluntary enrollment margin, yet take-up varies sharply across localities under common statutory rules. Using a panel of 232 Korean municipalities over 2003–2024, we distinguish participation prevalence from the density of settings generating repeated interpersonal contact. Prevalence excludes voluntary enrollees by construction and is instrumented with registered-workplace density. The first stage is modest, and weak-instrument-robust Anderson–Rubin tests fail to reject a zero prevalence effect in every specification (preferred model: p = 0.219; 95 percent set [−0.887, 16.411]). By contrast, private-academy density is positively and precisely associated with voluntary enrollment across fixed-effects and IV specifications and three denominators: a one-standard-deviation increase corresponds to about 405 additional enrollees per million residents, 14 percent of the mean. The association strengthens with the municipal female-to-male ratio and is steeper for female enrollment. Because academy density is not instrumented, these are conditional associations, not causal effects.

This paper explores the potential impacts on European economies transitioning from an ageing society, where longer lives strain public finances, to a longevity society characterised by prolonged productivity. In a heterogeneous-agent overlapping generations model, we show that raising the pension age together with increased labour market participation among older adults yields significant fiscal benefits in Germany, Spain, and Sweden, permitting a reduction in the consumption tax rate of between 3 and 5 percentage points. Our research sheds light on how longevity-focused policies can serve as a guide for fiscal resilience amid demographic transitions.

To curb the rising costs of disability insurance (DI) programs, some countries have implemented partial DI programs, which require recipients to work part time to receive benefits. However, the welfare implications of such programs remain unclear. The analysis in this paper is twofold. First, we introduce a conceptual framework that identifies the central tradeoffs between partial DI programs, full DI programs, and ordinary employment. Second, we study a reform in Denmark that expanded the Danish partial DI program. We find that the reform substantially altered selection into the program by shifting individuals who would otherwise have entered the full DI program into the partial DI program. At the same time, we find no evidence of negative selection from ordinary employment. However, existing partial DI participants work fewer hours when starting new spells, suggesting that imperfect screening entails efficiency costs.

This paper studies value-added tax (VAT) avoidance in private jet ownership by linking administrative aircraft-registry data from 41 European countries to high-frequency ADS-B flight tracking for 1,902 business jets. I document that roughly 35% of European private jets are registered in tax havens, yet these jurisdictions serve almost exclusively as paper registries: only 7 of 664 haven-registered jets are primarily grounded locally. At the aircraft level, a ten-percentage-point increase in the domestic VAT rate raises the probability of haven registration by about nineteen percentage points. The findings provide new evidence on the mobility of high-value assets and highlight structural weaknesses in VAT enforcement for cross-border luxury goods.

While the OECD has advanced multilateral reforms to curb profit shifting, countries simultaneously engage in direct negotiations with multinational enterprises (MNEs) to protect their domestic tax base. Drawing on novel micro-data from the French tax authority, offering visibility into a process that is typically highly opaque, we study these negotiations, formally known as Advance Pricing Agreements (APAs). Leveraging the staggered entry of firms into negotiations between 2002 and 2025, we argue that these negotiations have mutual benefits. On the one hand, engaging in negotiation increases a firm’s domestic corporate tax base by about €15 million per year, roughly 2% of baseline sales, which translates into fiscal revenues for the tax authority. On the other hand, negotiations reduce the likelihood of transfer-pricing corrections by about 15 percentage points, providing greater certainty to firms. We also structurally estimate a Nash bargaining model to quantify each firm’s bargaining power vis-à-vis the tax authority.

This study examines the shadow economy and illicit financial flows, which pose significant challenges for policymakers, particularly in developing economies with weak institutional capacity. North Cyprus is analysed as a politically isolated micro economy characterised by substantial unreported activities and capital flight yet largely underexplored in the literature.

First, the size of the shadow economy is estimated using a Structural Equation Model within a MIMIC framework. In addition to conventional variables such as taxation, unemployment, and inflation, trade flows are also incorporated. Preliminary results indicate that the shadow economy averaged 31.1% of GDP between 1980 and 2023.

Second, illicit financial flows are measured using balance-of-payments-based methodologies, revealing alternating phases of hidden inflows and capital flight exceeding 10% of GDP.

Finally, the study preliminarily finds evidence of bidirectional causality between the shadow economy and illicit financial flows, with informality, inflation, and macroeconomic instability emerging as key determinants.

This paper studies the distributional effects of corporate tax avoidance. Using linked ownership data on multinational enterprises based in France and matched employer–employee panel data, I exploit the establishment of a first affiliate in tax havens in a staggered difference-in-differences framework. I show that tax-haven entry leads to a decline in operating profits and in the domestic corporate tax base, accompanied by an increase in financial income through tax-advantaged dividend receipts. These changes are consistent with profit shifting and an increase in firms’ after-tax surplus. I then examine how the tax savings are shared within firms. While part of the gains accrues to workers, they disproportionately benefit top earners and occupations central to tax avoidance strategies. These findings suggest that corporate tax avoidance not only erodes the domestic tax base but also amplifies within-firm compensation inequality.

Redistributive politics is often framed as a dispute about fairness: who deserves what, and how much society should care about inequality in itself. I argue that a second, analytically distinct motive is just as central; concerns about inequality as an externality. When the income distribution affects outcomes people value, such as crime, trust, democratic stability, or growth, redistribution is not only about justice, but also about internalizing social costs. I first lay out a preference and welfare framework that separates fairness and externality terms. I then summarize evidence that citizens across the world hold strong beliefs about inequality's consequences, and that shifting these beliefs causally shifts support for redistribution. Finally, I show that countries differ in redistributive rhetoric: some debates rely on fairness language, while others more often invoke externalities. The broader claim is that cross-country differences in redistribution likely reflects different beliefs about both fairness and inequality's societal consequences.

This talk asks whether economic inequality reflects not only differences in skills and constraints, but also systematic heterogeneity in preferences. Drawing on three linked papers, we scale incentivized experiments to population-representative samples and link experimentally elicited time, risk, and social preferences to administrative data.

We show that patience predicts wealth accumulation: more patient individuals save more and accumulate substantially higher wealth, accounting for a meaningful share of wealth inequality. Preferences also shape human capital investments: patient individuals choose longer programs with steeper earnings growth, while risk-averse individuals select fields with lower earnings dispersion, even after controlling for ability and family background. Finally, risk tolerance strongly predicts criminal behavior, particularly property crime.

Taken together, the evidence suggests that preference heterogeneity generates persistent divergence in economic outcomes and may imply heterogeneous—and potentially regressive—effects of incentive-based public policies.

Abstract We study whether policy can shift gendered beliefs, norms, and labor market outcomes by exploiting a major expansion of earmarked paternity leave in Denmark. The reform generated large first-stage effects, substantially reallocating leave from mothers to fathers. Using a regression discontinuity design combined with new survey data linked to administrative records, we show that the reform makes parents more supportive of paternity leave, shifts gender-role beliefs in a progressive direction, and reduces perceived differences in childcare ability. The reform also narrows gender gaps in earnings and hours worked. The earnings gap falls by 33pp in the first year following childbirth (during leave) and by 2.8pp in the second year (after leave). These results demonstrate that policy can meaningfully influence beliefs, norms, and gender inequality. On the other hand, earmarking restricts families’ ability to allocate leave freely and lowers leave satisfaction, highlighting a central trade-off inherent in paternalistic policies.

Socioeconomic inequality in longevity is typically measured using a single socioeconomic indicator such as education or income. We combine multiple indicators - education, income, occupation, wealth, and IQ scores - and apply machine learning to measure inequality in longevity. Using Danish population-wide data spanning 40 years, we track mortality for the 1942–44 birth cohorts from age 40 onwards to estimate life expectancy by socioeconomic status. Individuals at the top of the socioeconomic distribution live nearly 25 years longer than those at the bottom. The socioeconomic gradient in life expectancy becomes 50–150% steeper when using multiple indicators.

How do governments finance military spending? Beyond taxes and deficits, central governments in multi-level fiscal systems can shift the burden to subnational governments by cutting intergovernmental transfers, a channel absent from the war finance literature. We document this novel "hidden financing" mechanism using an international panel of 91 countries from 1972–2024. A structural model of politically-constrained fiscal adjustment predicts that transfer cuts emerge at longer horizons, under fiscal constraints, and in federal systems where blame can be diffused to lower-level governments. The data strongly confirm these predictions: a one percentage point increase in military spending reduces transfers by 0.15 percentage points over five years, concentrated in high-debt and federal countries. Using U.S. state-level data and a shift-share identification strategy, we then document how states absorb transfer cuts through tax increases and spending reductions, and connect this burden shifting to its political consequences.

Introducing carbon pricing increases production costs and reduces output, at least initially. Benefits from reduced emissions damage materialize only later. This affects households' saving behavior and, thereby, the natural interest rate $r^*$. Using a dynamic, three-region environmental life-cycle model, we find that the effects on the natural interest rate and net foreign asset positions crucially depend on how governments recycle carbon revenues. If carbon revenues are paid back to all households in a lump-sum manner, saving declines, the natural rate increases permanently and the net foreign asset position of the carbon pricing increasing country falls. The opposite holds if only the working-age population benefits from carbon revenues. The impact on exchange rates and trade flows depends on which regions introduce carbon pricing (and potential border adjustment mechanisms) as this ultimately drives relative price changes across the regions. The resulting asset and trade flows between regions also affect domestic welfare.

We study a two-region overlapping-generations model with life-cycle saving and open capital markets to assess whether capital income taxation can finance social insurance more efficiently and equitably than labor taxation. Revenue-neutrally, a labor-tax cut is funded by taxing (i) households’ savings income, (ii) capital used in production, or (iii) accidental bequests. The labor-tax cut raises employment in all cases. Savings-tax financing lowers aggregate saving, triggers net capital inflows that fund domestic investment, raises consumption and output, and worsens net foreign assets. A production-capital tax increases the user cost of capital, reduces capital intensity, lowers long-run output, and improves net foreign assets as domestic saving shifts abroad. A bequest tax avoids distorting firms’ investment and delivers stronger short-run activity, but implies pronounced intergenerational redistribution; in the long run, consumption falls slightly as investment relies more on foreign financing and interest payments. Welfare gains mainly accrue to post-reform cohorts under savings taxation.

Are bilateral tax treaties effective for tackling tax avoidance by multinationals? While recently signed treaties aim at restricting profit shifting, their primary goal has been the elimination of the double taxation of foreign-earned income, which may induce multinational to shift profits more. We measure the shifted profits of Japanese multinationals in the last two decades and examine how they are affected by bilateral tax treaties between Japan and host countries. We find that a newly signed treaty reduces the shifted profits of a foreign subsidiary by around 10 to 20$\%$. However, treaties are not as effective especially (i) when a subsidiary belongs to the multinational group having more subsidiaries in tax havens; and (ii) since 2009 in which Japan introduced a foreign dividend exemption system, which attempted to increase the repatriation of foreign subsidiaries' income.

This paper shows that the effects of bilateral tax treaties (BTTs) on international banking in developing countries depend critically on treaty design. Using bilateral banking loan data from the Bank for International Settlements matched with newly assembled information on treaty provisions, we find that BTTs have no average effect on cross-border lending, consistent with existing evidence for foreign direct investment. However, this aggregate null masks strong and economically meaningful heterogeneity. BTTs that include tax sparing provisions significantly increase cross-border loans to both banks and non-bank borrowers, while regular BTTs without tax sparing reduce interbank lending and have little impact on lending to non-banks. These patterns suggest that tax sparing preserves host-country tax incentives and stimulates international credit, whereas information exchange provisions constrain tax-motivated financial activity. Overall, the results demonstrate that treaty design, not treaty existence, shapes cross-border banking between developed and developing economies.

Tax havens are used for tax minimization. Whether tax havens affect corporate control in the form of cross-border mergers and acquisitions (M&A) or are merely used as conduits between host and destination countries of (greenfield) foreign direct investment and portfolio investment is an open question. We provide new stylized facts through the first comprehensive analysis of cross-border, tax-haven mergers and acquisitions (M&A). Using novel tax residence data, we investigate 20,360 such transactions from 1990 to 2023, totaling $8.3 trillion in deal value, or 29.7% of cross-border M&A volume. $4.6 of the $8.3 trillion exceeds our prediction based on a gravity model with economic fundamentals. Small havens such as Bermuda alone make up $2.4 trillion or 8.5% of cross-border M&A volume. For identification, we use a change in US tax law in 2004.

Many countries have introduced special withholding taxes on intra-firm payments to low-tax jurisdictions in order to curb multinational profit shifting. Yet little is known about their effectiveness. Using Norway as a testing ground and linking corporate tax returns to the universe of cross-border bank transfers, we show that the introduction of withholding taxes on haven- bound payments significantly reduced payment outflows to affected low-tax jurisdictions. Treated multinationals did not report higher taxable profits in Norway following the reform, however – but rather substituted to other profit shifting channels: Our evidence suggests that affected firms rerouted payments to low-tax jurisdictions within the European Economic Area, which are exempt from the Norwegian withholding tax.

This study investigates China's recent Value-Added Tax (VAT) immediate refund reform aimed at improving production efficiency. Utilizing detailed firm-level data from 2009 to 2019, we explore how allowing immediate refunds of excess VAT input credit affects firm growth, and how these impacts propagate through supply chains. Our findings show that immediate refunds spur firm growth through two channels: (1) by providing liquidity to firms previously burdened by persistent excess VAT credit, and (2) by reducing the marginal cost of any refund-generating activities such as large investment and input expansions. These direct effects also result in positive growth spillovers to upstream industries leading to a likely net-tax revenue increase. We also show that the benefits of statutory immediate refund mandates can be limited by the local administrative environment.

Missing trader fraud is widely viewed as a major source of VAT revenue loss in the EU, yet existing evidence remains limited and largely based on indirect or aggregate measures. We use administrative audit data covering firm-to-firm cross-border transactions across all EU Member States to study this fraud. We first document new facts on its extent and nature, showing that detected fraud is concentrated across a few borders in Eastern and Southern Europe, in the retail sector, and among small rapidly expanding firms. We then examine the effectiveness of two policy instruments, tax audits and the reverse charge mechanism (RCM) in curbing this fraud. Event-study estimates show that tax audits have substantial effects: following detection, many missing traders exit while surviving firms contract, with similar dynamics observed among exporting trade partners. In contrast, RCM lead to substitution of fraud to neighboring non-treated sub-sectors, limiting overall deterrence effects and reducing its impact.

The indirect tax burdens are generally assumed to be shifted fully or predominantly to buyers. Does the same logic apply to export VAT rebates? This study examines the tax incidence of export VAT rebates both empirically and theoretically. We take advantage of China's 2004 export VAT rebate as a natural experiment, and estimate the pass-through rate by employing the difference-in-differences approach. Combining the comprehensive product-level data from China Customs (2003-2004) and detailed export rebate rate information, we find that exporters bear 100% of the export VAT rebate burden. We further show that this reduction of export VAT rebates significantly lowers export quantities and values. We then develop a theoretical model examining the tax incidence of export rebates from one country. This model rationalizes our empirical finding that the burden cannot be shifted to foreign buyers. Our paper provides an insight into the distributional effects of export tax rebate policies.

Self-employment income goes partly unreported in tax records and surveys. We measure how much, and who under-reports, combining a meta-analysis of 690 Pissarides-Weber expenditure-method estimates from 41 studies with an application to the Household Finance and Consumption Survey. Corrected for publication selection, the under-reported share, measured relative to wage earners, lies between 0.17 and 0.26; the raw literature mean of 0.24 sits near the top of this range. The survey reads 0.14 on total food, the measure the literature mostly uses, and 0.24 on food away from home, inside the range. Within the self-employed, employers under-report 0.27 of true income on total food and own-account workers $0.08$; the gap comes from incorporation, since incorporated own-account workers under-report like incorporated employers. Correcting reported income moves the self-employed from the median to about the 52nd to 54th percentile.

While tagging—the conditioning of taxes on personal characteristics correlated with earning ability—can improve efficiency, it is often assumed to lack political support because it violates horizontal equity, which stipulates treating equals equally. To empirically test this view, we conducted an online vignette experiment with a U.S. general population sample (N = 3,012) and report three results that challenge it. First, support for tagging varies substantially across tags and individuals. Consistent with theoretical prescriptions, it is higher for characteristics with a strong correlation with ability or reflecting needs. However, the immutability of a tag does not predict support, contrary to theory. Second, variation in support reflects both horizontal and vertical equity concerns. Third, other considerations, such as efficiency, also matter but less so. Incorporating fairness can either limit or amplify optimal tagging relative to a canonical utilitarian benchmark.

This study investigates how information about intergenerational and intragenerational inequality shapes fairness views and policy preferences. Using a large-scale randomized survey experiment with 4,900 respondents in Germany, we test how exposure to information on wealth and age disparities affects (i) perceptions of distributive and intergenerational fairness, and (ii) support for redistributive and future-oriented policies. We find that respondents generally underestimate existing inequalities. Moreover, providing accurate information about the extent of age and wealth disparities has little impact on left-leaning and centrist individuals but elicits a backlash among right-leaning respondents: the information increases their perceived fairness of the status quo and lowers their support for redistributive and future-oriented measures. We attribute these counterintuitive responses to skepticism about the credibility and neutrality of the provided information. Overall, the findings highlight the limits of informational interventions and the potential for factual communication to backfire in politically polarized contexts.

Why do individuals support some inequality-reducing policies while opposing others? This paper shows that heterogeneity in beliefs about policies’ distributional and macroeconomic effects is a central determinant of support, above and beyond attitudes and preferences. I develop a framework in which policy support depends on perceived self-interest, perceived effects on others' welfare, and perceived effects on the macroeconomy. I test this framework using a large, nationally representative survey of French citizens covering twelve economic policies. Beliefs alone explain 26% of the variation in policy support, outperforming demographics, political ideology, and standard attitudinal measures. Differences in beliefs account for most of the preference for predistribution over redistribution and explain nearly half of the partisan gap in support for inequality-reducing policies. Providing information on policies’ effects increases support, particularly among right-leaning respondents, leading to depolarisation. These findings identify beliefs rather than attitudes as a key margin shaping demand for economic policies.

This paper examines how voters balance inequality reduction, economic growth, and personal tax costs when evaluating fiscal policy. We implement a conjoint survey experiment with representative samples of about 2,000 respondents in each of Brazil, Spain, and the United States. Participants repeatedly chose between alternative policy packages that varied in income tax progressivity, tax revenue, spending composition, public debt or consumption taxes, and expected growth, allowing us to recover revealed preferences under realistic trade-offs.

We find weak unconditional support for inequality reduction and stronger support for growth, but this pattern is largely explained by aversion to higher taxes. When policies are revenue-neutral, voters in all three countries show substantial support for redistribution. Individual self-interest reduces support when personal tax burdens rise, while acceptance increases when revenues fund valued purposes such as education, transfers, or debt reduction.

This paper analyzes the evolution of Book-Tax Conformity in Germany and its variation by industry, legal form, and firm size. Prior research examines the consequences of Book-Tax Conformity for earnings quality, tax avoidance, and auditing, while legal scholarship traces its historical development, yet no study systematically quantifies Book-Tax Conformity in the German context or separates legislative effects from firm-level economic developments. We address this gap using the European Tax Analyzer, a simulation model, to derive annual measures of Book-Tax Conformity for 2007-2024. By applying each year’s legal framework to an identical set of financial statements, we hold economic transactions constant and isolate the impact of changes in national tax law. We model three firm sizes (small, medium, large), two industries (manufacturing, digital), and two legal forms (corporations, partnerships), producing twelve time series. The study offers the first law-driven, quantitative assessment of Book-Tax Conformity in Germany, combining income- and balance-sheet-based measures.

We introduce DiRECT, a corporate tax microsimulation model for policy analysis that estimates tax bases and corporate tax liabilities for over 4.3 million firms in nine EU countries (2016–2019), helping overcome the limited availability of administrative firm-level tax data. Using financial accounting data, DiRECT implements methodological advances in sample construction and simulates key national tax provisions, including depreciation, interest limitation rules, tax-exempt dividend income, allowances for corporate equity, and intra-group/inter-period loss offsetting. Based on observed and simulated deductions, we derive firm-level effective tax rates (DiRECT ETRs) and book–tax difference (BTD) measures, and document their distributions across countries and firm size classes. This reveals systematic cross-sectional patterns in tax burdens and the use and intensity of tax deductions. We validate the model through detailed benchmarking against firm-level administrative tax data from Poland. DiRECT enables distributional and revenue analysis of corporate tax reforms.

Corporate tax cuts are often defended as pro-competitive, yet they may also encourage profit shifting. This paper quantifies the relative importance of these two forces in international services trade. Using comprehensive German firm-level data that link services imports to multinationals’ foreign affiliates and to detailed service categories, we exploit plausibly exogenous changes in partner-country corporate tax rates between 2009 and 2019. Lower partner country tax rates increase German firms’ services imports, consistent with real economic responses. However, the effect is much stronger for multinationals trading with countries where they hold affiliates and is accompanied by changes in the composition and average value of traded services, consistent with tax-motivated pricing and invoicing. A staggered difference-in-differences design implies that roughly 60% of multinationals’ response reflects tax optimisation.

In recent years, several policies – in particular those introduced in the wake of the OECD’s BEPS project – have made it much more difficult for MNEs to shift profits to low-tax countries. We show that in response, MNEs have restructured their tax strategies and now exploit within-country tax avoidance possibilities more strongly. To do so, we exploit the specific corporate tax structure in Germany, where municipal profit taxes vary between 7 and 20.3 percent. We show that profits become more sensitive to within-country tax differentials over time, consistent with firms shifting more profits within Germany after the BEPS reforms than they did before. By contrast, responsiveness to international tax rate differentials does not increase during the same period. Effects are driven by firms that are part of a multinational entity, but not part of a tax-consolidated group. The increase in local profit shifting is based on non-debt shifting channels.

We analyse thirty years of Italian private sector employment data (1985-2018) to study the dynamics of rising earnings inequality. The total variance surged by 10 log points, with 55% occurring between industries, particularly in a few low-paid service sectors. Workers with low earnings ability showed increased likelihood of working in industries with low average firm premium (sorting) together with other low-earning workers (segregation). Strikingly, parallels with the US emerge. In both, inequality increased predominantly between industries and concentrated within a small number of sectors. Italy’s increase primarily stems from low-paying sectors, diverging from the more balanced growth observed in the US across high-paying and low-paying industries. Our findings suggest that despite institutional differences similar underlying forces are at work

This paper contributes to the academic debate on the optimal design of inheritance taxes. I determine the effects of introducing a small linear inheritance tax in a steady state economy with an optimal nonlinear income tax schedule. I show that these effects fall into four categories. First, the introduction of the inheritance tax has a positive redistributive effect within individuals with the same labor income but different inheritance levels. Second, it has a signaling effect, which is positive if there is a positive correlation between the productivities of different generations. Third, the inheritance tax modifies the distortionary and income effects of the labor income tax. These effects have an ambiguous sign. Fourth, and finally, the inheritance tax creates an additional distortion in the bequest decision. This

last effect is negative and pushes in the direction of subsidizing bequests.

Existing evidence on income and wealth concentration has not directly observed a major source of assets, and associated income, for the wealthy: assets held in trust. Using UK administrative data on the universe of trusts, we first document stylised facts about the trust sector. We find trusts are predominantly used for income and wealth accumulation, with only a small share of trust income distributed to beneficiaries. Second, we estimate total income and wealth held in UK trusts using imputation and income capitalisation methods. Finally, we allocate trust-held income and wealth to individual beneficiaries and assess the implications for measured inequality at the top of the distribution. We find that [results under clearance, and will be available at the time of the conference].

This paper develops a general equilibrium model of commodity taxation under monopolistic competition with free entry. Extending the Dixit–Stiglitz framework, we allow the government to use both ad valorem and specific taxes and to rebate tax revenue in a lump-sum manner. We show that ad valorem taxation alone can implement the first-best allocation by correcting both markup and entry distortions, rendering specific taxes redundant. The optimal ad valorem tax schedule reverses the Ramsey rule: industries with higher price elasticities of demand face higher tax rates. This reversal arises because taxation affects firms’ entry incentives in addition to consumption choices. When ad valorem taxes are constrained, specific taxes serve only as second-best instruments and equilibrium entry becomes excessive in every industry. The results highlight that instrument choice is central to optimal taxation in imperfectly competitive economies.

This paper develops a general equilibrium framework to quantify optimal circular-economy policies in the presence of heterogeneous materials. The model tracks material flows from virgin extraction through production, consumption, waste generation, recycling, and landfill disposal. Materials differ in recyclability, extraction costs, and environmental damages, generating material-specific externalities not internalized in market outcomes. We characterize three policy instruments: a consumption tax that internalizes waste externalities, material-specific taxes on virgin extraction reflecting scarcity and environmental damages, and recycling subsidies reflecting heterogeneity in recovery technologies and landfill impacts. The optimal consumption tax takes a deposit-refund form, taxing material-intensive consumption while refunding the productive value of recycled inputs. Calibrated to the United States, the model reveals substantial heterogeneity in optimal policies across materials. The results highlight a disconnect between current policies -uniform sales taxes, limited deposit-refund systems, and weak extraction taxes - and efficiency benchmarks.

This paper studies when are sin taxes effective in affecting consumption. We organize the paper through a theory framework that characterizes how substitution preferences relate to elasticity of consumption: otherwise it is very small, but when two goods are very close substitutes the elasticity explodes to a large level. We also present a theory framework to analyze welfare in the presence of externalities. Empirically we analyze a Finnish sin tax scheme with quasi-experimental variation through multiple reforms. Our register data contains hundreds of millions of observations. We also provide survey evidence on substitution preferences across categories of goods. Our estimated consumption elasticities align very well with the theory framework, such that consumption elasticity is close to unity only for sugary soda for which the closest substitute is sugar-free soda. We also provide a meta-analysis to literature analyzing consumption elasticities and show that the elasticity estimates align with our theory framework.

This paper examines a controversial policy—fines that scale with income—and seeks to rationalize it using both canonical economic motives (externality mitigation and redistribution) and novel fairness considerations ("proportional punishment" and "equal compliance") alluded to in statutory justifications for the policy. We focus on speeding offenses in Finland, where a violation that would cost a low-income driver $250 can cost over $100,000 for the rich. Using linked Finnish administrative data and several research designs, we show that the Finnish system cannot be rationalized by externality- or redistribution-based motives. Using an original survey, we find that Finns' valuations of income-based fine policies are insensitive to both the steepness of the fine schedule and the distribution of behavior induced by fines, evidence that is inconsistent with the two hypothesized fairness rationales. We conclude that income-based fines cannot be justified using leading economic or fairness-based rationales for their existence.

Amid persistent fiscal pressures, rising debt, intergovernmental imbalances, and global economic uncertainty, this paper investigates the flypaper effect in India’s North-Eastern Region, focusing on Manipur, a state structurally dependent on central transfers due to geographic isolation, a narrow tax base, ethnic diversity, and entrenched institutional arrangements. Despite fiscal reforms, heavy reliance on transfers raises concerns about fiscal autonomy and expenditure incentives. Using annual data (1987–2023) from the Reserve Bank of India and Union Budget documents, Augmented Dickey–Fuller and Engle–Granger tests indicate I(1) variables with no cointegration, justifying first-difference log-linear estimation. Results reveal that central grants generate significantly larger expenditure responses than own revenue across expenditure categories. The extended model specification finds no evidence supporting the Hamilton (1986) costly taxation hypothesis. Although grants stimulate short-run expenditure, grant dependence negatively affects expenditure growth, suggesting constrained long-run fiscal flexibility and persistent structural dependence, with implications for sustainability and decentralisation effectiveness in fragile federations.

This paper studies how the financial structure of public–private partnerships (PPPs) shapes incentives and project continuation. We develop a two-stage model of sequential moral hazard in which a private firm finances infrastructure through a mix of equity and bank debt. The firm chooses managerial effort and an endogenous continuation threshold after a liquidity shock, which occurs during the building phase. In equilibrium, memory-based contracts arise despite external financing. High performance in the building phase increases both the probability of continuation and operational effort. The model predicts that the effect of leverage on project survival depends on the net financing spread between the interest rate and the firm’s loss tolerance: when financing costs are moderate, debt reduces the likelihood of termination; when costs are high, this effect weakens. Using global project-level data (2006–2024), we find strong empirical support for these predictions.

This paper examines how international mutual funds transmit external shocks to local-currency (LC) government bond markets of emerging market economies (EMEs). Utilizing weekly data on the universe of transactions in the secondary market for Indonesian LC government bonds, we show that when global risk aversion and/or external interest rates increase, international mutual funds increase their net sales of Indonesian Rupiah (IDR) bonds, and their net sales, in turn, increase yields on IDR bonds. Our interpretation is that such external shocks prompt ultimate investors to request redemptions for their shares from mutual funds, and since mutual funds are typically subject to liquidity mismatch with liquid liabilities, fund managers are often pressured to sell the bonds possibly at fire-sale prices, increasing the bond yields. In contrast, trading of IDR bonds by other types of international investor such as insurance companies and pension funds do not cause such destabilising effects on the market.

We provide novel evidence on bureaucratic fragmentation and weak tax administrations as central enablers of low revenue mobilization in low-income countries. In collaboration with the municipal and national tax authorities in Kampala, Uganda, we cross-link previously siloed tax records for 155,000 firms and conduct a large-scale experiment with 60,000 firms. We document pervasive and selective tax evasion: only 14\% of verifiably active firms comply with both government tiers. Cross-record linkage almost triples detectable non-compliance while offering increased enforcement efficiency. This coordination dividend is left untapped. Firms exploit the resulting loopholes through partial informality, re-registering under new identities, and strategic late payments. In a cross-authority field experiment, deterrence nudges, including messages signaling inter-authority coordination, fail to offer a light-touch alternative to addressing fragmentation directly. Our findings establish bureaucratic fragmentation as a distinct and costly source of passive waste in tax administration that existing approaches to revenue mobilization rarely address.

This paper investigates the causal relationship between high-skilled migration and national innovation performance in Europe. Using a panel dataset covering 22 European countries from 1995 to 2018, we employ a shift-share instrumental variable based on historical settlement patterns to address endogeneity concerns. Our findings provide robust evidence that inflows of high-skilled migrants significantly enhance innovation, as measured by patent applications. The effect is heterogeneous: countries with higher GDP levels exhibit stronger innovation gains. Further heterogeneous analyses across patent categories show that the positive impact is concentrated in knowledge-intensive fields, particularly computer technology. Overall, our results underscore the important role of high-skilled migrants in strengthening Europe’s innovation capacity and suggest that migration policy can serve as an effective tool for improving technological competitiveness.

Innovation and economic growth in advanced economies increasingly depend on intangible assets such as patents and trademarks. This study examines the causal effect of information provision on firms’ propensity to apply for a trademark. We combine a Randomized Controlled Trial (RCT) with Difference-in-Differences (DD) analysis using administrative register data. In the RCT, the Finnish Patent and Registration Office (PRH) sends randomly selected firms letters containing different types and levels of information about trademarks. We evaluate the impact of the campaign by comparing changes in the trademark application rates across groups receiving no information, standard information, or enhanced information. Beyond measuring overall increases in applications, the study identifies which specific messages are most effective and which types of firms are most responsive to the intervention. Our findings confirm a modest positive response. Information about protective properties of trademarks works for the whole sample; sole proprietors respond more heavily to standard information.

This paper investigates the causal effect of parental homeownership on children’s housing outcomes. We employ a quasi-experimental approach utilizing Stockholm’s Right-to-Buy (RTB) policy, which created exogenous variation in homeownership among otherwise similar individuals. Leveraging comprehensive, longitudinal administrative microdata, we match residents of municipal rentals converted into tenant-owner cooperatives with similar residents in nearby non-converted properties. We find that children whose parents transitioned from renting to owning are significantly more likely to own a home themselves in both the short and long run. Furthermore, these young adults were more likely to reside in neighborhoods with higher average income and education levels than their untreated counterparts. Our results provide evidence of a strong intergenerational transmission of housing tenure driven by exogenous shifts in parental ownership.

We document patterns of inequality in housing prices and rents housing since 1930, using Census data. First, housing inequality fell from 1930 to 1970 and rose thereafter, with a sharper fall and gentler rise than income inequality. Second, home-ownership rose considerably when inequality fell, but stayed steady when it grew. Third, the fall in housing inequality was most pronounced at the lower end, as the cheapest units without water or electricity disappeared. Fourth, the post-1970 rise was driven more by owner-occupied than rented units. Fifth, rising inequality is explained more by growing spatial differences across neighborhoods than by changing structural characteristics.

This paper studies the United Kingdom's 2020-21 Stamp Duty Land Tax (SDLT) holiday, which unexpectedly eliminated tax liability for most transactions. Using universe-level administrative data on property transfers and SDLT receipts, combined with local-authority-level measures of exposure based on pre-reform price distributions, we implement a difference-in-differences event-study design. The holiday increased transactions by about 18 percent, with around 37 percent of the tax cut capitalized into higher prices. We estimate a fiscal cost of \pounds1.6 billion (25\% of revenue) during the relief period -- with no persistent effect once the policy expired. Distributional effects were regressive: upper-middle-income households (income deciles 7--9) captured net gains of around 10 percent of annual income, while first-time and lower-income buyers benefited only marginally. Linking transactions to buyer wealth, we show that SDLT operates as a de facto regressive wealth tax that falls disproportionately on younger, middle-wealth cohorts rather than on the wealthiest households.

We examine the effects of a property transaction tax and stamp duty exemption for first-time home-buyers below 35 years old in Portugal. Leveraging administrative records covering the universe of real estate transactions merged with personal income tax records, we exploit discontinuities in the policy design to document the effects on the number of transactions and house prices. Our findings indicate that the tax exemption resulted in substantial compositional shifts in the age distribution of buyers immediately following the policy’s introduction, driven by an increase of 31% in house purchases by eligible buyers. While the prices of properties bought by young eligible buyers remained stable, we find evidence of negative spillover effects for older non-eligible buyers, with an increase of 5% in house prices in the post-reform period. We further analyze the role of income in shaping house-buying decisions and the likelihood of moving as a consequence of the tax exemption.

U.S. debt has doubled over the last 25 years, implying potential effects for interest rates and both fiscal and monetary policy. Theory predicts that debt crowds out capital and increases rates. However, empirical estimates ignore how the composition and timing influence these effects. Using a life-cycle model, we show that while a 1pp increase in debt raises long-run interest rates by 1.4 bp regardless of the type of fiscal policy, the immediate response varies across policies. Debt-financed transfers are initially saved, dampening the immediate effect on interest rate, while debt-financed government consumption produces a larger immediate response. Simulating policy since the 2000s, we find that only half of the 170 bp eventual increase in interest rates has occurred, indicating that already accumulated debt will provide significant upward pressure on interest rates going forward. Thus, both the composition and timing of debt are important when evaluating the implications on interest rates.

A popular view is that fiscal policies are sustainable if r < g, e.g. if the interest rate on government bonds is lower than the rate of economic growth. This paper challenges this view. One reason is that if the interest rate is below the rate of growth currently, this may well be reversed somewhere in the future. Another reason is that even if r < g holds indefinitely, the level to which the public debt ratio will converge may, due to population ageing, be unsustainably high. Thirdly, accounting for the empirical fact that the interest rate on government bonds is increasing in the public debt ratio further increases the risk of fiscal unsustainability. Numerical simulations for four EU countries indicate that it is very unlikely that public debt ratios will stabilize at sustainable levels if current fiscal policies remain unchanged

Japan had experienced a deflationary economy for the past 20 years, and the lowest birth rate in the OECD. Here, we hypothesize that the reason lies in the modification of Domar’s rule to control debt; Japan conducts the financial policy using Domar’s condition with growth rate > interest rate (ρ > r), modified from Domar’s rule with growth rate > debt increasing rate (ρ > d). In this paper, we empirically analyze how ρ-d and ρ-r affect GDP growth and birth rate. Furthermore, we examine the optimal conditions for maintaining high GDP growth and birth rates.

We evaluate how federal tax policy changes transmit into budget dynamics across different levels of government under fiscal federalism. Our analysis focuses on the responses of federal, state, and municipal expenditures by using a series of exogenous tax shocks resultant from German tax reforms between 1992 and 2022. A proxy SVAR framework allows us to approach causal estimates by exploiting the distinction between exogenous policy shifts and endogenous fiscal responses. Our results show that increases in federal tax revenues lead to a short-run increase and a modest long-run increase in federal expenditures, while state expenditures temporarily decline and municipal responses remain imprecise. Overall, the results suggest that federal revenue shocks do not systematically translate into lasting expenditure adjustments at lower levels of government.

This study investigates how the connection of taxation to public benefits can decrease tax payers' perceived tax burden, affecting their labor-leisure decision. We present a model of tax and benefit (mis)-perception, in which payoff maximizing work effort increases when the perceived tax burden decreases. Increasing the salience of benefits funded by taxation and the probability of receiving them decreases this perceived tax burden. We use two real-effort online experiments to test the suppositions of the model. In a flat tax system, we find that lack of information on the accrual of benefits increases perceived tax burden and decreases labor supply. In a progressive tax system, we find that full benefit salience improves motivation to remain in the unemployment insurance system and that effort increases under benefit salience when the unemployment rate is high. As such, behavioral responses to the salience of benefits also requires the expectation of their need.

Immigrants’ access to welfare benefits and public services is central to immigration policy debates, yet credible evidence on how eligibility affects labor supply remains limited. We study this question using a natural experiment, where Ukrainian refugees unexpectedly became eligible for a broad set of welfare benefits and public services after 12 months of residence in Finland. Using high-frequency administrative data, we compare monthly employment and earnings trajectories of Ukrainian refugees to similar migrants whose welfare eligibility was unaffected. We find substantial but incomplete take-up of benefits but a decline in labor supply after eligibility: employment falls by about 4 percentage points and earnings by 13 percent in the first year. For refugees with children, access to childcare services increases labor supply relative to non-parents. Exploiting regional variation in coverage, we show that early access to immigrant training mitigates employment losses, although part of the short-run decline reflects full-time language-training enrollment.

This paper examines the effectiveness of Minimum Income Schemes (MIS) across EU-27 countries during the high inflation period of 2021-2024. Using microsimulation techniques, we analyse how well MIS parameters kept pace with inflation and assess their capacity to protect vulnerable households from monetary poverty. Our results suggest that countries with automatic indexation mechanisms demonstrate superior poverty outcomes with respect to those lacking formal indexation mechanisms or implementing insufficient adjustments. Moreover, in some countries MIS seem able to mitigate a large part of the increase in poverty rates, while in others they have a limited potential to do so, even with optimal indexation conditions. This work demonstrates that the interaction between indexation mechanisms and underlying design features, such as coverage, generosity and eligibility criteria, fundamentally shapes the schemes’ distributional outcomes.

In many countries, elected politicians are overrepresented on corporate boards. This raises concerns about firms gaining political access and has led several countries to ban board membership for office-holders. We test this troubling access-seeking hypothesis against a benign selection hypothesis. Because only the access-seeking hypothesis implies a causal effect of winning elections on board membership, we employ a close-election regression discontinuity design with data on Swiss federal legislators from 1931–2015. We find a substantial overrepresentation of politicians on boards, but at most a small causal effect. Thus, the overrepresentation mostly reflects positive selection, not firms’ pursuit of political access.

Do electoral turnovers discipline offshore finance by raising (expected) accountability and scrutiny? Using bilateral quarterly BIS data on cross-border offshore bank deposits, we study whether national power transitions triggered by elections, particularly narrowly decided turnovers, affect offshore bank deposits. Electoral turnovers generate theoretically ambiguous effects. Increased enforcement expectations may reduce offshore deposits, while precautionary capital flight or rent extraction may increase them. Using a regression discontinuity design and a difference-in-differences analysis, we show that offshore deposits decline by 10 percent following close electoral turnovers. The effect is consistent with an accountability mechanism, suggesting that new governments raise (expected) enforcement and scrutiny and induce wealthy and politically exposed individuals to reduce offshore deposits. These findings demonstrate that political transitions can reshape private portfolio decisions in opaque jurisdictions, even in the absence of new transparency reforms.

This paper studies whether U.S. defense and security aid is systematically diverted by recipient-country elites into offshore bank accounts. I combine project-level data on U.S. defense and security aid disbursements from 2013-2018 with bilateral crossborder bank deposit data from the Bank for International Settlements. Exploiting within-country variation, I find that deposits held in high-secrecy offshore jurisdictions increase in quarters with U.S. defense and security aid disbursements, while deposits in other international financial centers do not. However, this relationship is not broad-based across recipient countries. Instead, it is driven by a small number of countries receiving exceptionally large aid disbursements and by quarters in which aid exceeds high thresholds relative to GDP. In contrast, U.S. economic and development aid is not associated with comparable offshore deposit dynamics. The findings suggest that while elite capture can occur in high-intensity settings, diversion of U.S. defense and security aid is not a structural phenomenon.

This paper investigates how voters react to persistent inaction of mainstream parties in government. We study the illegal burial, dumping, and burning of toxic industrial waste perpetrated by criminal organizations in Southern Italy since the late 1980s. We combine plausibly exogenous geographical variation in exposure to pollutants stemming from historical wind trajectories with the sudden release of information about the exact geo-location of contaminated sites. Difference-in-differences estimates show that, after the information shock, municipalities exposed to toxic winds experienced a persistent decline in turnout of 5.8 percentage points relative to non-exposed municipalities. Using individual-level survey data, we also find that exposure to pollutants reduce trust in parties and in national parliament. Finally, we show that exposure to toxic winds increases the vote share of the challenger Five Star Movement (FSM) in national elections, who actively contrasted mainstream parties’ inaction on the issue.

Fiscal devaluation has often been the focus of policy discussion within the eurozone as it provides a means by which southern European countries can regain competitiveness. It takes the form of a subsidy on labour, financed by taxing consumption. This paper discusses the effects of fiscal devaluation on the main macroeconomic variables in a two-country model with monopolistic competition, innovation, endogenous entry, and endogenous tradability. I found that trade balance can only be improved in a highly competitive market, but fiscal devaluation also causes utility to decrease in the country that implements it. Fiscal devaluation can be a prosper-thy-neighbor policy, regardless of the market structures and the productivity level of the economies. Comparing fiscal devaluation with more targeted subsidies, I find that only subsidizing labour in the innovation sector can lead to similar outcomes, while only subsidizing producing labour may cause a decrease in consumption and utility.

This paper examines transmission of global financial shocks to domestic interest rates in India using a state-dependent local projection framework. Results show that external shocks exert statistically significant and persistent effects on both policy rates and short-term money market rates, though strength of transmission varies across policy regimes. Foreign exchange intervention (FXI) provides partial insulation by dampening the persistence of shocks over time, particularly under strict intervention regimes. The findings also reveal important differences across instruments: under strict FXI, policy rates remain relatively insulated while money market rates adjust gradually through liquidity conditions; under light FXI, both rates respond more strongly and persistently. Importantly, the joint use of macroprudential policies and FXI can substantially neutralize the transmission of U.S. monetary policy shocks. The paper further finds that stronger fiscal support is associated with greater short-run insulation from external tightening, highlighting the complementary role of fiscal policy in stabilizing domestic financial conditions.

This paper examines urbanization in a multi-sector economy with productivity differences

and trade frictions. Location-specific non-traded goods imply decentralized outcomes are not in general socially optimal, even without typical externalities, like congestion or agglomeration. Optimal urbanization exceeds decentralized levels when productivity differences in non-traded goods are small, a case typical of developed economies, while developing countries tend to be overurbanized. A model calibrated to Brazilian data shows wedges remain quantitatively important in the presence of agglomeration and congestion effects. Urban-biased policies are closer to optimal outcomes when productivity gaps are extreme but may worsen urbanization distortions at intermediate productivity levels.

We evaluate whether India’s 2016 demonetization generated lasting improvements in tax compliance. Using the synthetic control method and cross-country panel data from 2005–2022, we find a statistically significant and persistent increase in sales and production tax revenues, which directly reflect recorded transactions in a cash-intensive economy, following demonetization. To assess whether this increase reflects improved tax compliance, rather than contemporaneous policy changes that altered the structure of indirect taxation, we examine income- and profit-based taxation as a falsification test and find no comparable long-run change. Moreover, cash usage declined and digital payments increased in 2016–2017, but both reverted to pre-demonetization trends thereafter, with no evidence of a decline in the size of the informal economy. Thus, demonetization itself did not generate durable improvements in tax compliance.