This paper studies the evolution of wage inequality in Germany between 1985 and 2020 using matched employer-employee data. We analyze wage dynamics across 272 industries and four task-based occupational groups, constructing 993 industry–occupation cells consistently observed over 35 years. Total wage variance rose by 9 log points, with about two-thirds of the increase driven by widening differences between 22 cells. These mainly comprise non-routine abstract occupations in high-paying industries and non-routine manual occupations in low-paying sectors. The disproportionate contribution of these 22 cells reflects their employment concentration, growing polarization in relative wages, and stronger assortative matching between workers and firms. Overall, our findings show that rising wage inequality cannot be explained by firms or industries alone. Instead, it is the interaction between industrial structure and occupational tasks that plays a central role in shaping the growth of wage dispersion.

We use the first wave of the COVID-19 pandemic as a natural experiment to identify the scale and mechanisms of inheritance tax planning in the United Kingdom. The pandemic created an exogenous mortality shock that abruptly reduced time for anticipatory planning. Linking administrative inheritance tax returns to high-frequency mortality data, we compare estates of individuals who died unexpectedly during the pandemic with observationally similar decedents from pre-pandemic years. Unexpected deaths are associated with significantly larger reported estate, raising average estate values by about £350,000, and a 5 percentage point increase in effective tax rates. We estimate that inheritance tax planning reduces effective liabilities by at least 55 percent, implying annual revenue losses of £3-4.5 billion. Inter-vivos transfers, rather than within-estate portfolio restructuring, are the primary planning margin. These findings highlight the central role of the seven-year gift rule and suggest that revenue-raising reforms should focus on lifetime transfers.

If differences in market labor earnings between members of a population were to be distributed identically to the observed differences between same-sex siblings, how much inequality would remain? Consistent with Rawls' principle of fair equality of opportunity, we provide an answer to this question, the “fair Gini coefficient," which we estimate for 16 medium- and high-income countries, using consistently defined administrative data. And we show that it is a lower bound for the level of inequality produced by an income-generating process in the hypothetical absence of gender and parental advantage. We find that countries with lower market earnings inequality are not distinctively fair; the fair Gini coefficient relative to total inequality differs little across countries, from Sweden to Brazil. We characterize the formal properties of our statistic and six other measures of gender and parental advantage, and provide estimates from our data set.

This paper introduces a new harmonized global database on estate, inheritance, and gift(EIG) taxation, covering more than 170 countries, and all U.S. states from 2006. We document a declining trend in the adoption and progres-sivity of EIG taxes since the 1980s. Using a two-way fixed effects (TWFE) framework complemented with an event-study approach, we find that a one percentage point in-crease in the top rate is associated with approximately 8% higher revenues between 1965 and 2022. An event-study analysis of 54 significant tax policy reforms reveals that revenues decline by roughly 50% within four years following a cut of at least 10% in top rates, with symmetric effects for rate increases of similar proportion. Finally, a one percentage point increase in the top marginal tax rate is associated with a 0.11-point decline in the Gini coefficient after 10 years, with consisten teffects across top and bottom wealth shares.

This paper examines Social Security contribution dynamics in Portugal during 2019–2024 using granular administrative records. It assesses contributors, earnings, and effective rates to disentangle drivers of revenue across demographic groups and sectors, emphasizing fiscal implications. The main finding is that revenue growth was propelled chiefly by rising earnings, with additional support from higher employment, lifting the contribution‑to‑GDP ratio. Ageing continues to dampen medium‑term prospects, but recent immigration temporarily offsets this by expanding contributors in prime ages; however, lower average earnings among foreign workers limit near‑term fiscal payoffs despite their stronger attachment to the general regime. Gender gaps are modest overall yet fiscally relevant: faster female earnings growth boosts revenue and indicates potential medium‑term gains from continued convergence. Sectorally, contributions are increasingly concentrated in services, particularly high‑skill activities, while compositional shifts within industry reduce average yields. Overall, administrative contribution data are crucial for gauging revenue sustainability and guiding public finance policy.

I study a Danish reform that links social security eligibility to life expectancy and postpones eligibility for some cohorts. Exact birth-date cutoffs create discontinuities that identify causal effects. Using administrative records linked to a survey on retirement expectations, I estimate that a six-month delay raises labor force participation by about 20 percentage points three months after the cutoff, with much larger effects among individuals with low occupational pension wealth. I measure treatment intensity by computing average social security payments during the six-month ineligibility window. These payments fall only modestly across the pension-wealth distribution, so differential incidence explains only part of the gradient. Scaling reduced-form effects by group-specific social security wealth, I find that low-wealth individuals remain more responsive per euro of foregone benefits. Delaying eligibility by half a year yields a net fiscal gain of about EUR 8.4k per affected individual, concentrated among low-wealth groups.

This paper investigates the effects of the public pension earnings test on the labor supply of the elderly in South Korea. Exploiting the unique feature of the 2015 National Pension reform, which significantly relaxed the earnings test for those pensioners who were born on and after July 29, 1954, we estimate the causal effects of the earnings test on elderly labor supply using a regression discontinuity design based on administrative and survey data. Our findings from administrative data indicate that the reform of the earnings test did not affect the employment. However, the findings from the survey data indicate that the reform increased the average weekly working hours by approximately 3 hours. These responses along intensive margin were greater for those with higher pension benefits and those with college or higher education.

This paper investigates the trade-off between insurance and incentives in pension benefit design by comparing the distributional and distortionary impacts of means- and earnings-tested pension benefits before and after retirement. I use reform-induced variation in retirement options and saving possibilities to document the distributional effects of means- and earnings-testing and estimate the behavioral effects on individuals' labor supply and saving decisions of the resulting high effective marginal tax rates.

This study examines geographic preferences in voting and the spatial inequalities in representation in municipal elections in Finland, focusing on the role of homeowners. We show that the homeownership rate in a polling district is associated with higher turnout, more votes given to local candidates, and better representation. For candidates we find a vote distance-gradient (more votes from close to home) that is steeper for homeowner candidates. Finally, our difference-in-difference results suggest that when an individual moves to a new district inside the same municipality, it negatively impacts the share of their own votes that come from their old home district. This effect is also more pronounced when individuals move away from districts with a high homeownership rate compared to those moving from areas with low homeowner share, also consistent with homeowners favoring candidates who live in the same area.

Proportional electoral systems—often lauded for their inclusivity—do not automatically translate into higher women’s representation. Exploiting population-based thresholds that exogenously change district magnitude in Brazil and Finland, we use regression discontinuity designs to show that increasing “seat inclusivity” does not yield statistically significant gains for female candidates. As larger district magnitude may relax how constrained parties are in responding to voters’ demand, our zero results are consistent with candidate supply—rooted in party gatekeeping or self-selection into candidacy—being the critical bottleneck for female representation, rather than voter bias. Our findings challenge the assumption that electoral system reform alone can close gender gaps in politics and underscore the need for complementary measures targeting party nomination strategies and broader social barriers.

We use the introduction of a school-level accountability system in Brazil to estimate the effects of public information on school quality. Reports revealing that schools are high in the test score distribution increase the incumbent mayor's vote share by about 2 percentage points. The revelation of low scores reduces incumbent mayor vote share by roughly the same margin, but also causes decreased class sizes and pupil-teacher ratios in subsequent years. These effects are larger in places with more educated voters.

Municipal bankruptcy is a highly visible and politically consequential fiscal event. This paper examines whether such bankruptcies generate fiscal spillovers to nearby governments. Using Italian municipalities from 2000 to 2015, I combine a border-based exposure design with staggered difference-in-differences and event-study methods to compare municipalities bordering a bankrupt neighbor to those farther away. Exposure induces significant fiscal tightening: direct neighbors increase debt repayment by about 20–25 percent relative to pre-exposure levels and improve net fiscal surplus within one to two years. Effects decline sharply with distance and are not accompanied by higher off-balance-sheet liabilities. Adjustment occurs through expenditure restraint and stronger own-source revenues. Spillovers are stronger among municipalities with higher pre-existing debt and interest burdens, consistent with a disciplinary signal mechanism in which nearby bankruptcy raises perceived enforcement risk and prompts precautionary consolidation.

Do national fiscal rules affect lower-tier governments that are not formally bound by them? I study Germany's debt brake, which constrained the federation and, prospectively, the states but not municipalities. Using a regression kink design exploiting a major German state’s municipal equalization formula, I test whether the reform changed how municipalities adjust expenditure, borrowing, repayment, and tax rates when unconditional grants increase at the margin. I find no robust evidence that municipalities changed their marginal budget response to grants. Additional grants do not become more strongly associated with fiscal consolidation, while shifts toward current goods and services and away from investment fail criteria based on timing, persistence, mechanism, and debt heterogeneity. These patterns align more closely with the financial crisis and the transition to accrual accounting than with debt-brake-induced vertical transmission through the municipal grant margin. Complementary synthetic-control evidence on debt and transfer dependence is consistent with this interpretation.

Spillovers across regions provide strong incentives to coordinate policy or even to centralize it in a federation. I study the feasibility of federalization of policy when the decision of regions over the introduction of a federal standard is endogenized and the choice of the specific standard is separated in time from the decision over having a federal standard. The latter severely limits policy coordination. Moreover, I consider the case in which at a cost a region may choose to not comply with the federal standard (weak enforcement). While weak enforcement may hamper policy coordination in some situations, it may also enable it when rules cannot be fully enforced. I then interpret the introduction, the various reforms and the massive violations of the EU's Stability and Growth Pact (SGP) in light of the theory.

In the context of the financing difficulties of municipalities, this presentation analyses how federal states organise fiscal equalisation mechanisms aimed at supporting municipalities with lower fiscal capacity or higher expenditure needs. It adopts a comparative perspective, examining the Belgian, German, and Australian models of municipal equalisation. While all three systems grant autonomy to federated entities in redistributing resources among municipalities, they differ markedly in the way equalisation is financed at the federal level. In Belgium, a federal grant to the regions is allocated based on their contribution to personal income tax, an indicator at odds with redistribution. Germany relies on a Länder equalisation scheme that partially incorporates municipal fiscal capacity, whereas Australia operates a specific federal grant allocated according to detailed criteria reflecting fiscal capacity and needs. This comparison raises the broader question of how responsibility for municipal equalisation should be allocated across levels of government in federal systems.

This paper empirically analyzes budget deviations in German municipalities, focusing

on ordinary revenues and expenditures, the largest components of total budgets. Using

data from the state of North Rhine-Westphalia for the period between 2019 and

2022, with particular emphasis on the 2020 mayoral elections, I examine the determinants

of deviations between planned and realized budget figures. The results indicate

that municipalities re-electing a mayor from the same party tend to plan revenues

more conservatively in the pre-election year. A detailed breakdown reveals substantial

heterogeneity across the disaggregated revenue and expenditure categories, highlighting

the importance of a granular, category-level view for understanding the drivers of

budget deviations.

This study investigates how institutional features of South Korea’s education finance system influence the allocation of discretionary resources. Despite a shrinking school-age population, statutory indexing to national tax revenues has created a fiscal "windfall" in local education grants. Using a panel fixed-effects framework and a granular dataset of school-level expenditures and municipality election results, I analyze the distribution of Targeted Project Grants by elected provincial superintendents. The results reveal significant political distortions: a 1 percentage point increase in an incumbent’s prior vote share correlates with a 2.3% increase in per capita targeted funding. This "reward-based" allocation is more prevalent among progressive superintendents and typically occurs during the first half of the electoral term. These findings suggest that when fiscal constraints are relaxed, discretionary grants become primary instruments for political signaling and reciprocity rather than purely educational needs.

Regional favoritism by politicians can affect fiscal conditions of subnational governments. I empirically examine potential biases in municipal fiscal oversight between municipalities familiar to the supervisor and those newly incorporated under the supervisor’s jurisdiction and the implications for fiscal indicators. A reform in the German state of Mecklenburg-Vorpommern reduced the number of counties within the federal state. As a result, some municipalities were assigned to a new fiscal supervisor. The findings indicate that municipalities unfamiliar to the supervisor increase their tax multipliers and reduce their levels of debt relative to familiar municipalities. Since these effects are absent for highly indebted municipalities, greater discretion associated with lower levels of municipal debt appears to allow the supervisor to treat municipalities differently based on familiarity. Overall, the results suggest that the supervisor may show favoritism toward familiar municipalities while imposing intensified consolidation pressure on unfamiliar municipalities.

Democratic participation and trust in public institutions have declined across many advanced democracies, prompting governments to experiment with institutional innovations that foster citizen engagement. Participatory budgeting, which enables citizens to propose, deliberate on, and vote over public spending projects, is one such reform. This paper studies whether participatory budgeting influences democratic engagement and fiscal behavior in advanced democracies. We examine its impact on social capital, trust in institutions, political participation, and local political competition, as well as on tax compliance. Conceptually, participatory budgeting may increase civic engagement and voluntary tax compliance by strengthening transparency, perceived reciprocity, and citizens’ voice in fiscal decision-making. By jointly analyzing political and fiscal outcomes, the paper contributes to understanding whether participatory institutions can reinforce democratic legitimacy and the functioning of the fiscal state.

This paper examines the incidence of a substantial and temporary corporate tax increase in France, targeting large firms with turnover above €250 million between 2011 and 2016. Using a difference-in-differences framework and administrative data, we analyze the effects of this tax hike on prices, wages, employment and investment. We find evidence of significant pass-through to output prices, reductions in the total wage bill driven by a decline in employment and a contraction of sales and investment. We also observe increases in turnover and employment of non-treated firms operating in the sectors the most exposed to the temporary tax. These findings highlight the heterogeneous effects of corporate taxes, emphasizing their impact not only on shareholders but also on workers and consumers. We then combine our estimates with a theoretical model to assess the incidence of the corporate income tax in general equilibrium.

Abundant research shows that higher family income improves children’s short- and long-run outcomes, but evidence from some transfer-based income experiments raises questions about whether these gains arise from earnings or transfer income. This paper revisits that question using the Earned Income Tax Credit (EITC)—a large transfer that raises after-tax income for millions of low-income families—and more than 30 years of linked administrative data covering over 15 million individuals. Higher childhood EITC exposure improves adult outcomes: exposed children have higher earnings and employment, lower poverty, better neighborhood quality, and reduced mortality. Decomposing these long-run effects shows an important pathway operates through improved neighborhood quality, as the EITC increases moves to higher-opportunity Census tracts. Effects are largest for children of unmarried and younger parents but remain substantial for children of always-married parents, demonstrating that transfer income itself—beyond parental employment—plays a powerful causal role in shaping long-run well-being.

This article investigates whether capital or labor income drives overall relative income mobility. To this aim, we use Norwegian income registers covering 300,000 individuals over 26 years. A new framework decomposes total income mobility into capital and labor components across the life cycle. Results show: (1) capital and labor mobility measures yield no clear factor ordering; (2) upward mobility is driven by labor income and joint upward movements; and (3) downward mobility is driven by capital income and joint declines. Findings are robust to large jumps and relate to theories of compositional inequality and homoploutia in capital–labor dynamics.

This paper examines the dynamic effects of natural disasters on income inequality across Japanese municipalities. Using a municipality-level panel from 1999 to 2022, we employ a staggered difference-in-differences framework. We trace changes in the Gini coefficient, P90/P10 ratio, and Theil index following each municipality’s first recorded disaster in our dataset. The estimates reveal a non-monotonic distributional pattern. Two years after the first disaster, all three inequality measures decline significantly, indicating temporary compression. Then there is a rebound in year four and year five. Type-specific estimates suggest different paths across earthquakes, typhoons, and heavy rain or snow. Disaster recovery expenditure rises sharply after disaster exposure and peaks around the second post-disaster year. Nevertheless, regression incorporating recovery expenditure yield inequality estimates that are nearly identical to the baseline results. Overall, disasters generate time-varying distributional adjustments and measured municipal recovery spending does not account for the estimated inequality paths.

This paper examines whether changes in price-labeling regulations affect the economic incidence of value-added taxes (VAT) even when statutory tax rates remain unchanged. Unlike previous studies that rely on VAT rate changes, I exploit Japan's 2021 mandatory tax-inclusive labeling reform, which changed price-display rules while leaving VAT rates unchanged, thereby isolating the salience channel of VAT incidence. Using daily point-of-sale (POS) data covering 639 supermarket products, I document anticipatory pricing in the form of a temporary decline in tax-exclusive prices before the reform. The adjustment is concentrated in minimum (promotional) prices, while maximum (regular) prices remain largely unchanged. A within-product difference-in-differences specification and an independent shelf-price dataset support the identification strategy. Additional evidence shows that products with stronger focal-pricing tendencies exhibited smaller pre-reform price reductions, suggesting that behavioral pricing constrained firms' responses. These findings demonstrate that changes in price-labeling regulations can temporarily alter effective VAT incidence even without statutory tax changes.

We examine the conditions under which changes in value-added taxes lead to price adjustments in products not directly affected by the tax change. We exploit a large and exogenous VAT cut on menstrual products in Germany in 2020 and estimate the pass-through to prices and pricing spillovers on complementary products for which the VAT rate remained unchanged. We use a unique data set of daily prices of 5,000 hygiene products from the online shop of a large German supermarket chain. We document bundling effects as producers of menstrual products fully passed on the VAT cut to prices but significantly increased prices of unaffected complementary feminine hygiene products by 5 to 10 percentage points with no sign of phasing out after more than one year. Producers of panty liners that do not offer products affected by the VAT cut did not adjust prices.

We study how VAT cuts propagate through production networks. Using a large reform in Brazil and transaction-level administrative tax data, we trace effects on prices and quantities along the supply chain. Difference-indifferences estimates reveal overshifting in distributor prices, indicating that upstream firms absorb part of the tax cut. We interpret these findings through a model of imperfect competition in a vertically linked network. Structural estimates show that the tax cut compresses upstream markups, amplifying pass-through to consumers. Our results challenge the classical VAT neutrality benchmark and the view that incidence can be summarized by consumer market elasticities alone.

Despite widespread evidence of consumer inattention and salience effects on prices and consumer demand, little is known about the degree to which “drip” pricing contributes to firm profitability. In this paper, we study investor reactions to several regulatory, legislative, and litigation events intended to limit drip pricing in order to quantify “inattention rents.” Inattention rents differ from ordinary economic rents in that they may even arise in perfectly competitive markets where consumers suffer from inattention. Mitigating inattention (e.g., by requiring advertised prices to be tax and fee inclusive) results in a transfer of surplus from producers to consumers while curbing overconsumption. The announcement of final rules requiring airlines to advertise tax-inclusive prices in the U.S. imply 3-day cumulative abnormal returns of -4% among domestic U.S. carriers, whereas foreign carriers were minimally affected. Proposed legislation related to other forms of drip pricing and targeted litigation have more muted effects.

Under the current corporate taxation system, the corporate tax payment is zero if the taxable income is equal to or less than zero. This may induce a firm to reduce its taxable income to equal to or less than zero. Considering the tax loss carry-forward deduction, the marginal tax rate increases discontinuously when the taxable income is greater than the tax loss carried forward from the previous year. This paper estimates the elasticity of corporate taxable income and examines the tax avoidance behavior of small and medium-sized enterprises (SMEs) in Japan using a bunching estimation approach. We find clear bunching at the threshold where the marginal tax rate jumps from zero. Such bunching is not observed at the next threshold of the marginal tax rate. This finding is consistent with the hypothesis that managers regard tax payments as a loss and engage in loss-aversion behavior.

Do firms respond similarly to corporate tax incentives across countries? We provide globally comparable estimates of the corporate elasticity of taxable income using administrative tax return data from sixteen countries and a unified empirical framework.

Exploiting bunching at a common kink, zero taxable income, we estimate elasticities ranging from 0.08 to 1.9, with an average of 0.92. To explain this heterogeneity, we link elasticities to tax policy, firm characteristics, and country fundamentals. These differences imply that identical corporate tax reforms can generate sharply different revenue effects across countries, leading to substantial heterogeneity in the efficiency costs of corporate taxation.

We examine whether realized income shifting and foreign tax incentives have distinct implications for domestic real activity. Using Austrian tax returns and administrative ownership data, we construct an entity-level measure of shifting intensity and exploit foreign corporate tax-rate changes within MNE groups. Greater shifting intensity is associated with higher domestic capital investment but lower productivity. Foreign tax-rate reductions, in contrast, reduce domestic investment, employment, and productivity, consistent with activity moving toward lower-tax jurisdictions. These findings suggest that income-shifting behavior and changes in international tax incentives affect domestic investment through distinct channels, underlining the importance of distinguishing the two mechanisms when evaluating the real effects of corporate taxation.

We estimate heterogeneous responses to top-bracket tax reforms using a triple-difference design that exploits variation in tax rate changes and the thresholds at which they apply. This strategy identifies behavioral responses even in the presence of unobservable shocks to the income distri-bution. Higher-income taxpayers respond more to top-rate changes, but our results indicate that this reflects the salience of the reforms—the larger mechanical change in average tax rates at higher incomes—rather than heterogeneity in substitution elasticities. We discuss implications for the revenue and distributional effects of top-bracket tax reforms.

In this paper, I study the effects of sickness benefit generosity on the number of benefit recipients and the duration of sick leaves in Finland. I exploit policy reforms that introduced variation over time in the generosity of the statutory sickness allowance, as well as collective bargaining agreements (CBAs) that create differences in top-up sick pay across industries, occupations, and employees with varying levels of seniority and experience. I present novel, self-collected data containing agreement-level information on sick pay terms from CBAs and link these data to individual-level administrative registers covering nearly the entire Finnish population. To estimate the elasticities, I apply difference-in-differences, regression kink design, and bunching methods. Preliminary results suggest that the extensive and intensive margin elasticities -capturing the effects of the replacement rate on sick leave incidence and duration- are approximately 0.6 and 0.2, respectively.

We study how exposure to severe illness affects prosocial behavior using Swedish administrative data linking cancer diagnoses and deaths to charitable donations and family networks. Exploiting variation in timing, we estimate causal effects on giving. A cancer diagnosis leads to a persistent increase in donations concentrated in cancer-related causes, driven primarily by entry into giving and, to a lesser extent, increased persistence. Effects extend to family members and decline with kinship distance. In contrast, cancer-related deaths generate larger but transitory responses. Heterogeneity by severity and patient age suggests that responses scale with emotional intensity and personal relevance.

We examine the impacts of alcohol sales restrictions and taxation on alcohol consumption, focusing on government monopolies in Finland and Sweden where limited private sales are permitted. Leveraging two reforms that relaxed sales restrictions alongside changes in tax rates, we use product- and store-level monthly sales data from state monopolies and private grocery chains spanning a decade. We find that sales of newly permitted grocery store products rose to roughly 500% of their prior monopoly levels. However, large substitution effects between product categories and between monopoly and grocery stores render the net effect of the 2018 reform on total consumption negligible. We also document spillover effects to more distant product categories. Preliminary results from the 2024 reform align with these findings. Overall, our results suggest alcohol sales restrictions generate welfare losses with very limited gains in reducing consumption. We discuss potential mechanisms using theory and survey evidence.

This paper explores how individuals optimally contribute to Flexible Spending Accounts (FSAs). The use-it-or-lose-it provision associated with these accounts introduces risk for users when deciding their contribution amounts. Since users forfeit unused funds, but also reduce their tax liability by contributing, it is unclear whether FSA holders will experience a net gain or net loss from utilizing these accounts. I model this decision-making process to understand the constraints faced by users. I use the Medical Expenditure Panel Survey and find descriptive evidence that (i) FSA users change their contribution behavior over time, (ii) some perceived mistakes in FSA contributions may be due to inexperience, and (iii) forfeitures may happen due to unexpected decreases in medical expenses. I am currently working on updating this empirical work to understand how FSA-users learn from experience with these accounts, using 9 years of employee-level FSA-use data from a large public employer.

Theory suggests that return plans shape migrants’ integration efforts and outcomes, but identifying this effect is challenging. After the Russian invasion in February 2022, more than 5 million Ukrainian refugees fled to other European countries. Initially, Ukrainian refugees expected a short war and Ukrainian victory. Expectations became more pessimistic as the war dragged on. As Ukraine banned men aged 18-60 from leaving Ukraine, this increased the incentives of households with teenage boys to be outside Ukraine before their sons turn 18. Early-leaving households did not anticipate this, enabling us to study the causal effect of gradually worsening return prospects by comparing observationally similar households with and without teenage boys. Using a 10-wave panel survey, we establish that parents with boys are more likely to work, work more hours, but do not engage in more host-country language learning. Parents also report lower return intentions among their teenage sons than daughters.

Immigrants from non-EU countries face considerable barriers in the German labor market. This paper develops a wage posting model to illustrate the underlying mechanisms and provides reduced-form evidence of the causal effects of EU citizenship on labor market outcomes. I exploit the 2004 enlargement of the European Union, which granted EU status to immigrants from ten Eastern European countries residing in Germany. Using a difference-in-differences framework as well as an event-study and rich administrative data from the Sample of Integrated Labour Market Biographies (SIAB), I compare the labor market trajectories of this group before and after enlargement with those of non-EU immigrants who did not benefit from such a change in legal status. The results show that EU citizenship increases wages by 3.6 percent. Unemployment rates increase by 0.7 percentage points. The effects are persistent over time.

We examine the impact of procuring services under a contract where a randomized research design serves as an incentive device. Immigrant job seekers were randomly assigned to either a private fund or public employment services, with the Private provider’s compensation tied to differences in average unemployment benefits and taxes between the two groups. We find that the private fund outperforms the public alternative, increasing earnings by 15%, improving job quality, and reducing the net burden on public finances by 12% over the three-year contract period. These positive effects extend to non-contracted outcomes and persist beyond the period during which the private provider’s incentives were in place. The effects are particularly pronounced for high-skilled participants. Our findings suggest that procurement contracts that credibly align the incentives of providers with public sector goals can significantly improve service quality.

The shift to remote work, with roots predating Covid-19, marks a major transformation of labor markets. This paper investigates its medium-run impact on workers’ labor market outcomes, exploiting plant-level variation in remote work agreements implemented between 2014 and 2017 in France. Using an event study design and rich administrative data, we find that access to remote work yields moderate wage increases and facilitates both occupational and geographical mobility. The associated rise in commuting distances suggests that remote work options alleviate job search constraints, allowing workers to seek higher-paying jobs. Our analysis further reveals that plant-level remote work agreements raise firm productivity, benefiting both incumbent and newly hired workers. Overall, our results underscore how remote work reshapes labor market trajectories through its effects on mobility, job search, and productivity.

Highly educated individuals live longer, on average. Using an overlapping-generations model calibrated for Austria, I investigate the influence of skill-dependent mortality on public pension designs with an aging population. I focus on pension reforms which seek financial balance and avoid redistribution, such as notional defined contribution systems. Simulations show that ignoring the skill-dependence in mortality in standard notional defined contribution systems, where pension benefits adjust automatically, has negligible macroeconomic and welfare impacts. However, ignoring skill-dependence in mortality in the design of skill-dependent retirement age reforms leads to pro-skill biases. In realistic cases, high-skilled households could gain the equivalent of 9.5% of lifetime consumption and other households lose 4.0% of lifetime consumption. Reforms of special pension regimes or policy actions aiming at reducing early retirement, which implicitly depend on skill, should thus be designed with skill-dependent mortality in mind.

This paper studies the efficiency cost of pay-as-you-go pension systems. The return on contributions in such a system is typically average income growth rather than the market return on capital. Because the gap between these returns compounds over the life cycle,

early-career contributions have a higher implicit tax rate. I develop a sufficient-statistics

framework in which the deadweight loss depends on the age profile of implicit tax rates.

Deadweight loss is minimized when the implicit tax rate is constant, mirroring the logic of tax smoothing. I propose an implementation within a notional defined contribution design: contributions are valorized at a higher, market-based rate of return, while only a fraction of contributions is credited to notional accounts and the remainder treated as a pure tax. Finally, I compare pension systems in terms of deadweight loss. The results show real but small gains from pension reform.

In defined-benefit pension systems such as U.S. Social Security, retirement benefits depend on a history-dependent transformation of past earnings: lifetime earnings are condensed into Average Indexed Monthly Earnings (AIME), typically averaging the top 35 years. This rule embeds redistribution and work incentives, yet its effects are hard to quantify because AIME is a nonlinear, non-smooth function of earnings histories. I develop a structural life-cycle model of labor supply, retirement, and earnings risk, solved with a novel deep neural network that learns the mapping from full earnings histories to benefits. Evaluating alternative rules—top 20, top 5, and lifetime averaging—I find that counting fewer years modestly raises consumption and redistributes toward workers with volatile earnings, while lifetime averaging increases labor supply and retirement ages and amplifies inequality. The earnings-summarization formula is central to redistribution, insurance, and incentives.

This paper uses a stylized overlapping-generations model to examine the effect of borrowing constraints on the economic implications of Social Security. In this framework, Social Security provides partial insurance against income risk that is uninsured due to incomplete markets. I find that when borrowing consistent with life cycle behavior is allowed in this framework, the micro- and macroeconomic effects of a downsizing in Social Security are considerably smaller than when borrowing is prohibited. I also find that the key mechanism behind this result is labor supply: with endogenous borrowing, households are able to exploit increasing labor productivity in early life to better self-insure against income risk.

This paper presents descriptive evidence on economic activity reported under DAC7, the European Union’s newly introduced third-party reporting regime for online marketplaces. Using novel administrative data from Germany, we study platform-mediated sales between businesses and consumers as well as among peers. We document the scale, composition, and distribution of online marketplace participation and revenue volume across platforms and transaction types. The analysis provides a comprehensive empirical characterization of activity reported under DAC7 and establishes a baseline for future research and policy evaluation.

This paper develops empirically implementable algorithms for optimal audit targeting with machine learning. We derive a sufficient statistic-based targeting algorithm that depends on three individualized causal effects: the immediate revenue recovered from an audit, the causal effect of an audit on long-run tax revenue, and the marginal administrative cost of an audit. We show that these effects can be estimated with a variety of machine learners including causal forests, LASSO, gradient boosted trees, and neural networks using the universe of Pakistani income tax returns, exploiting years in which audits were assigned completely at random. We implement our targeting algorithms in out-of-bag years, comparing them to the real-world policy when audits were targeted. We show that the real-world audit program in Pakistan lost almost 173,000 Rs ($1, 700) in net revenue per-audit, while our optimal policy generates 285,000 Rs ($2, 800) in expected net revenue per-audit.

Tax withholding in pay-as-you-earn (PAYE) systems is common across developing

countries and considered essential for the effective enforcement of personal income

taxation. To limit administrative burdens, PAYE is often coupled with generous tax

non-filing options. Drawing on rich tax administrative data for South Africa, we

show that such PAYE systems are associated with sizable and non-refunded over-

withholding of taxes, raising taxpayers’ effective tax rates above legally applicable

rates. Vulnerable taxpayer groups – low-income workers, young taxpayers and indi-

viduals who recently entered the formal labor market – are disproportionally affected.

PAYE over-withholding can deter formal labor supply and impair the progressivity

of the personal income tax schedule.

This paper studies whether the timing of income taxation affects welfare when earnings fluctuate within the year. Standard tax systems assess liabilities annually, implicitly treating taxpayers with the same yearly income as equivalent, even if one earns smoothly while another faces sharp monthly swings. We develop a theoretical framework showing that, under a convex tax schedule, shifting from annual to monthly tax adjustment, holding total yearly tax constant, is improving when income is nondecreasing and reduces liquidity risk.

We compare two within-year regimes: Vickrey’s cumulative averaging rule and a new Monthly Compensated (MC) mechanism based on uniform rescaling of monthly tax liabilities. Using monthly data from the U.S. Survey of Income and Program Participation (SIPP), we simulate welfare effects. Income volatility is concentrated at the bottom and linked to employment transitions. The MC system yields substantial gains for low-income, high-volatility individuals across states, while Vickrey delivers smaller but positive gains.

This paper investigates whether there is evidence of ex-ante moral hazard in health insurance—i.e., whether lower out-of-pocket costs lead to risky health behaviors. Understanding the role of ex-ante moral hazard is crucial, given that it can contribute to preventable health issues. I leverage the staggered rollout of U.S. state policies lowering insulin out-of-pocket costs and focus on privately insured households with diabetes. Using household-level grocery purchase data, I find that reduced insulin out-of-pocket costs result in increased purchases of sugar, a nutrient closely tied to insulin needs and linked to long-term health risks. Sales of diabetes supplies also rise, highlighting a shift from lifestyle management to treatment.

How should limited resources for health care be prioritized? Health economic evaluation can inform decision makers if new medical treatments are good value for money. The standard cost-effectiveness framework maximizes QALY gains without considering the distribution of these gains across individuals or groups. However, the way health is produced matters for most people. With general preferences for equity in society, also disease severity would matter for welfare when prioritizing. With public preferences over both disease severity and cost-effectiveness, and policymakers need to balance equity with efficiency. We provide evidence for how the public trades disease severity for cost-effectiveness from a novel striped-down discrete choice experiment, and we also provide a method for adjusting the ICER threshold to account for disease severity.

Population ageing places mounting pressure on public long-term care (LTC) finances, yet little is known about how behavioral bias shapes residential choices that affect fiscal sustainability. This paper examines how cost structure influences housing-with-care decisions and their implications for public LTC systems. Using a randomized survey experiment with 1,032 Japanese adults aged 50+, we vary the trade-off between upfront lump-sum payments and recurring monthly fees while holding service quality constant. Individuals with stronger present bias disproportionately select low-upfront options despite higher lifetime costs. Conversely, greater awareness of future care risk increases demand for higher initial payments that reduce long-term fiscal exposure. Making cumulative costs salient significantly shifts choices toward fiscally sustainable plans. These findings demonstrate that behavioral frictions—not only income constraints—distort intertemporal housing decisions in ageing societies, suggesting that improved cost transparency can align private incentives with public budget sustainability.

Intensifying climate change makes protection against natural disaster risk—through ex ante insurance or ex post aid—a central public policy issue. U.S. flood risk protection has relied on FEMA disaster aid and subsidized insurance through the National Flood Insurance Program (NFIP). To correct subsidy-induced overbuilding and under-mitigation in flood-prone areas, the NFIP recently moved to actuarially fair premiums. This reform has two unintended consequences: fiscal spillovers onto FEMA disaster aid as insurance coverage declines in flood-prone areas, and greater household exposure to uninsurable reclassification risk from uncertain climate projections. We develop a dynamic model of optimal flood insurance and estimate the five key parameters needed to implement it. We find that spillover and reclassification-insurance benefits outweigh moral hazard costs at low subsidy levels, implying an optimal subsidy of 46%, comparable to pre-reform subsidization.

This paper studies how fixed costs of profit shifting shape international tax competition. We set up a formal model with two asymmetric countries: a non-haven country where a representative firm conducts its economic activity and a tax haven. The firm can allocate its profits to the tax haven, which incurs both fixed and variable costs. The presence of fixed costs creates an additional incentive for the non-haven country to reduce its tax rate in order to prevent profit shifting. We show that this can intensify tax competition and ultimately harm both countries, while being beneficial for the firm. Our results suggest that taking fixed costs into account significantly alters the nature of tax competition. This has implications for international measures to curb profit shifting activities, revealing potential adverse effects.

Anti–profit-shifting policies act on distinct firm margins, yet are often evaluated as a single category. I develop a continuous-time heterogeneous-firm model that separates three policy levers: the organizational cost of haven adoption (extensive margin), the marginal cost of shifting (intensive margin), and the statutory tax differential. A sunk adoption cost generates a band of inaction, while a convex shifting cost yields a closed-form shifting schedule increasing in firm size. Calibrated to 2019 U.S. data, the model shows that raising the adoption barrier leaves aggregate shifted profits nearly unchanged through an offsetting composition effect, whereas raising the marginal shifting cost or compressing the tax differential erodes or protects the tax base directly. In a Stackelberg tax-competition game, uncoordinated rate setting yields a welfare loss of about 7%, whereas a stylized Pillar Two floor at 21% eliminates strategic undercutting and raises welfare by about 10% relative to the calibrated baseline.

International bank transfers are the lifeblood of the global economy, funding trade and investment, but they can also conceal profit shifting and illicit activity. Multilateral efforts to grey-list worrisome countries aim to curb such flows, yet evidence of their effectiveness remains limited—perhaps because it relies on aggregate data dominated by unaffected, legal transactions. Using unique granular data from Norway (2012–2021), we likewise find no significant relationship for the average grey-listing effect. Even in the aggregate, however, inbound transfers from listed tax havens are markedly lower, and decomposing by purpose reveals that import payments, interest, and dividends—especially to tax havens—are roughly two-thirds lower when a haven is listed, a pattern driven largely by multinationals. This suggests listing may reduce profit shifting as well as illicit flows. The pattern is more pronounced after Norway aligned its anti-money laundering rules with EU mandates, pointing to the value of combining unilateral and multilateral approaches.

When a country like the United States taxes its citizens on worldwide income, it is well-understood that the creditability of foreign taxes affects the taxpayer’s overall tax burden. This paper shows that foreign tax creditability interacts with the standard irrelevance of statutory incidence results. When tax creditability depends on statutory form—as it does under IRS rules—shifting statutory incidence between equivalent tax bases can affect real wages, labour supply, tax revenue, and firm profits.

Sub-Saharan African (SSA) countries face limited capacity to enforce tax payments combined with various obstacles that reduce tax compliance. Domestic revenues need to be mobilized to finance growing needs demanded by population growth, rising debt levels and declining development aid, often amidst widespread tax evasion, corruption and weak institutions. This paper examines the scope of fairly inexpensive text message “nudges” to improve voluntary compliance and raise tax revenue in a large and diverse East African economy, Tanzania. Six different behavioural messages were sent monthly to a randomized sample of income taxpayers in December 2023 – June 2024. Results confirmed by extensive robustness checks show little if any effect on taxpayer activity or taxes paid. In the absence of other changes, simple behavioral nudges in the form of text messages appear to have no impact on tax compliance.

We study how marginal effective tax rates of means-tested social welfare programs affect labor supply in the formal and informal sector. In a conjoint experiment, German welfare recipients report which jobs they might accept under different policy scenarios, varied in a between-subjects treatment design. We find that in addition to their negative effect on labor supply in the formal sector, higher transfer withdrawal rates increase the probability that job offers in the informal sector are accepted. These results provide novel evidence on the adverse implications of high transfer withdrawal rates and highlight the need for reform initiatives aiming at stronger labor supply incentives.

We study how newspaper narratives shape public beliefs and policy preferences during a period of high inflation in Germany. We conducted an online survey experiment with a broadly representative sample of 4,150 respondents, half of them randomly assigned to one of three inflation narrative treatments: 1) pent-up demand, 2) the energy-price crisis, or 3) corporate price gouging. We find strong baseline political polarization in support for inflation-mitigating policies, while respondents broadly agree on the distributional consequences of inflation. Pre-existing individual causal attributions about inflation correlate with inflation inequality beliefs and policy preferences but prove largely resistant to experimental updating. Among right-leaning respondents, however, exposure to inflation narratives substantially increase policy support, reducing the baseline partisan gap by up to 80%. This effect is concentrated among moderate-right, AfD-leaning respondents, suggesting that, when confronted with inflation as an economic problem, government skepticism is channeled into demand for stronger state protection.

In several cases secessionism goes together with violence. This paper uses a dynamic model to discuss the incentives of moderates and extremists, both agitating for independence. The extremists are willing to conduct terror and I argue that there are two types of extremists, those who are willing to compromise, and those who are not. In the equilibrium of the model, the moderates have a larger incentive to suppress terror and the extremists who are willing to compromise have smaller incentives to conduct terror when the probability of reaching an agreement is higher. The extremists who are not willing to compromise, however, have larger incentives to conduct terror when the probability of reaching an agreement is high.

We study underreporting of business income in Denmark using transaction-level data from a mobile money transfer app. In cross-sectional analysis as well as in event-studies, we find that business owners receive significantly more mobile transfers on their personal accounts than employees. We argue that these excess transfers are likely to reflect customer payments, which are subject to little monitoring by the tax authorities and are unlikely to be reported as income. We show that mobile transfers are particularly prevalent among business owners at the bottom of the income distribution and discuss the implications for the measurement of inequality.

Governments in low-income countries have progressively introduced electronic tax filing and payment systems in the hope of reducing enforcement costs for tax administrations, compliance costs for taxpayers, and the risk of collusive in-person interactions between the two. Combining high-frequency administrative data with a dynamic difference-in-differences approach, we investigate the causal impact of a reform that made the use of these technologies mandatory for large taxpayers in Senegal. Our findings indicate no—or only limited—effects on key measures of tax compliance, such as the probability of declaring, the probability of paying, or tax payments. However, e-filing reduces the prevalence of missing values by more than 90 per cent, with notable measurement implications. In particular, we show that aggregate formal employment is at least 20 per cent greater than suggested by digitised paper-based records.

Taxes on digital financial services are rising across Africa. Ghana introduced its electronic levy (e-Levy) in May 2022 to raise revenue for national development and help formalize the economy, but the policy generated widespread public dissatisfaction. Using data from the Ghana Chamber of Telecommunications on mobile money transactions (sending, receiving, payments, withdrawals), disaggregated by region, and nationally representative survey data from the International Centre for Tax and Development covering individuals and businesses, this paper assesses the e-Levy’s effects on usage and public perceptions. Results show an initial decline in mobile money activity, followed by longer-term positive effects, particularly in payments to formal merchants. Survey findings reveal limited public understanding of the levy’s design across all regions, highlighting the need for greater awareness. Analysis of Ghana Revenue Authority data further shows revenues have fallen well below projections, raising doubts about the levy’s effectiveness in generating substantial public funds.

Governments in lower-income countries face mounting fiscal pressure amid rising debt, declining aid, and intensifying public contestation. New taxes are often unavoidable but politically risky in these times of fiscal crisis with mobile money taxes have proven especially contentious across Africa. This study centres citizen knowledge in understanding perceptions and grievances s of Ghana’s electronic transfer levy (e-levy), introduced in 2022 during a debt crisis and later repealed. Drawing on a nationally representative survey of 1,500 households and focus group discussions, we investigate what citizens know about the tax, how knowledge shapes support or opposition, and whether it moderates partisan effects. We find that while awareness of the e-levy was widespread, detailed knowledge of its design was limited. Greater knowledge modestly increased support, but political affiliation remained a strong predictor of attitudes.

Many countries have special tax regimes for small businesses or specific economic sectors. The goal is usually to reduce compliance costs, but also to reduce inequality since it is assumed that owners of small businesses are generally low-income taxpayers. However, they also create opportunities to hide income and avoid taxes.

To study the magnitude of tax avoidance of special tax regimes in Chile and their effects on horizontal equity, I use administrative data from the Chilean IRS to simulate a tax reform that replaces them with a cash flow tax for small firms.

The results show that a reform of this type would have positive effects, especially in terms of horizontal tax equity as 85.6% of the profits from firms under presumptive taxes and 77.6% of the profits from the small firms under special tax regimes, belong to taxpayers in the top income decile.

Simplified tax regimes exist in almost every country and most often rely on revenue taxation, which lowers the registration cost but distorts input demand, such as labor. We exploit a policy introduced in 2018 called "Factor R" that created a massive tax notch based on the payroll-to-revenue ratio. If a firm has a payroll-to-revenue ratio above 28%, the revenue tax rate drops from 16% to 6%, shifting the whole Factor R distribution. Moreover, this policy created two clean quasi-experiments. Firm owners below 28% pre-policy have strong incentives to increase their Factor R, which they do entirely by shifting dividends to wages rather than increasing employment. Firm owners above 28% pre-policy become automatically eligible for the tax cut, show no increase in employment, but a large revenue elasticity, which is most likely explained by a reduction in underreporting.

A large informal sector creates hard-to-tax firms. However, such firms due to their imports are observed by the tax authority. Using an institutionalised policy which seeks to regularize non-compliant and inconsistent filing firms through a bespoke border tax in Zambia, we examine the effects of this Advance Income Tax (AIT) on firm registration and tax compliance. Our identification strategy relies on difference-in-differences designs to causally estimate these effects across the rate hike, discontinuation and reinstatement phases of the AIT policy. Results show limited effects on formalization but significant effects on consistent filers after paying AIT. With a focus on small scale enterprises, we conclude that such reforms are likely to improve firm registration and compliance if ex-ante evasion is large.

Most entrepreneurs operate without employees. Hiring may be unprofitable for them, but they may also be reluctant to pay the one-time costs of becoming an employer due to attentional costs, risk aversion, or credit constraints. We examine the extent to which a temporary subsidy to hire first employees induces entrepreneurs to become employers in a large-scale randomized experiment. The experiment offered to 34,500 randomly selected non-employer entrepreneurs e10,000 to cover 50% of the wage costs of first employees. We find a 20% increase in the fraction of firms that hire workers, with effects of similar magnitude on wage costs and number of employees. The effects stay positive at 7% after the subsidy period, indicating that the temporary subsidy created new permanent employers. Our results suggest that frictions in hiring first employees can be an important barrier for employer entry and firm growth.

This paper studies the effects of tax incentives on firms’ choices between different types of innovation. We explore how the introduction of front-end (e.g., R&D tax credits) and back-end (e.g., patent boxes) tax incentives alter a firm’s optimal choice across product, process, or mixed innovation using a simple theoretical framework.

We then provide empirical evidence on the heterogeneous effects of these tax instruments across innovation types using European Patent Office (EPO) data. Our empirical results suggest that the introduction of patent box regimes can lead to an increase in mixed patents applications at the expense of product patents. These findings help explain the growing prevalence of mixed patents observed over time and highlight that fiscal incentives can unintentionally distort firms’ innovation portfolios – encouraging certain innovation types while may induce underinvestment in others.

Tax incentives are recognized as essential for promoting innovation and maintaining economic growth. Yet the literature and policy debates have focused on the generosity of tax benefits, neglecting other policy dimensions. This paper studies whether tax-benefit timing affects innovation efficiency. By exploiting a quasi-experimental design based on China’s reform allowing firms to claim the R&D expenditure for additional deduction in advance during corporate income tax prepayment, we find that moving tax incentives around six months ahead significantly raises firms’ innovation efficiency. Mechanism analyses show that the reform improves firms’ liquidity, increases R&D intensity, and strengthens compensation incentives and resource support for R&D personnel, highlighting stronger incentives for the research workforce. The effect is stronger among financially constrained firms, firms less likely to manipulate R&D expenditure, and firms in more competitive markets. These findings suggest that, apart from generosity, the timeliness of tax benefits also matters for incentivizing substantive innovation.

Open innovation—where firms leverage external knowledge and collaborative partnerships to achieve technological breakthroughs—has become critical amid rising market uncertainty. The VAT refund policy achieves tax neutrality by alleviating improper tax encroachment on corporate cash flow, creating a neutral institutional environment for collaborative innovation in new energy enterprises. Utilizing the 2018 VAT refund policy reform as a quasi-natural experiment, we select A-share listed companies in China's new energy sector. Employing difference-in-differences methodology, we examine how tax neutrality impacts open innovation through supply chain transmission (SCT) mechanisms. Results show the policy significantly enhances open innovation by improving cash flow, promoting information sharing, and optimizing risk-sharing mechanisms. Policy effectiveness is moderated by supply chain context: digitization and bargaining power amplify positive effects, while supply chain risks and excessive financialization dampen impacts. This research enriches the literature on tax neutrality and SCT mechanisms, informing innovation policy optimization.

We study how R&D spillovers propagate through buyer–supplier networks, exploiting a major reform of Japan's R&D tax credit system in 2003. The reform replaced the incremental credit for large firms with a volume-based scheme, reducing the marginal cost of R&D for firms with eligible expenditure below a ceiling but not for those above it or for SMEs. Using difference-in-differences, we find the reform increased R&D expenditure, innovative output and sales of treated firms. We find evidence of positive forward spillovers to downstream firms: the reform raised productivity of firms with a greater share of treated suppliers. Conversely, we find no evidence of backward spillovers to upstream firms. Treated firms also reallocated R&D from overseas affiliates to Japan while expanding affiliate employment, suggesting that headquarters' innovation enabled scaling up of foreign production operations.

This paper analyzes the U.S. corporate income tax deduction for state and local tax payments (C-SALT). In the absence of federal deductibility, state and local taxes distort patterns of business activity, with inefficiently little performed in high-tax locations. Federal deductibility restores efficiency, while also encouraging state and local governments to increase their tax rates. The effect of C-SALT deductibility on state tax rates is so powerful that combined federal and state business tax burdens actually increase, notwithstanding the deduction. Nineteen states reduced their corporate tax rates in the aftermath of the 2017 federal tax cut, a reaction pattern consistent with efficient C-SALT deductibility.

I provide new evidence on the job mobility responses to business taxation across the income distribution by combining state-level policy variation with linked Census Bureau data on the universe of firm-worker pairs in the United States. Using an event-study framework, I directly estimate the job mobility responses between firms in the same labor market that are differentially exposed to changes in the state and federal corporate income tax. Intuitively, a reduction in business tax rates should prompt similar workers to flow from less exposed to more exposed firms and partially equalize wages across sectors. I formalize this intuition with a model that describes job mobility and wage responses of less exposed workers as a function of the labor supply and demand cross elasticities between sectors, and I use this model to relate my results to heterogeneity in worker incidence of business taxation.

Remote work is now important in shaping the location decisions of workers and firms, yet is largely ignored in the conventional wisdom about how the burden of state corporate income taxes (CIT) is distributed across workers, firms, and landowners. I develop a spatial equilibrium model with mobile workers and firms and show that, when remote workers are sufficiently substitutable with onsite workers, remote work amplifies both local labor supply and demand elasticities, which in turn, has important implications on whether workers or firms bear more of the burden of state CIT. I derive the sufficient statistics needed for the empirical estimation of the incidence of state CIT that accounts for remote work. I outline the approach to empirically estimate the incidence, and discuss the challenges in doing so. Future work aims to empirically estimate the incidence.

We investigate the effect of business tax rates on real investment, for which previous studies have produced a range of results from zero to sizable responses. We estimate an event-study model drawing on about 11,000 local business tax (LBT) rate changes in German municipalities from 1995 to 2018 combined with an administrative investment panel of manufacturing establishments. We find no significant investment responses to tax rates, neither at the extensive nor at the intensive margin. The null result holds equally across investment types (equipment, land, buildings etc.) and different firm types (firm size, legal form, productivity, firm structure etc.).

We examine preferences for income and wealth taxation in Germany and how they interact within the tax system. In a large-scale online experiment, 1,691 participants are randomly assigned to state either an unspecified overall tax burden, separate income and wealth tax burdens, an income tax burden only, or a wealth tax burden only. Average (implicit marginal) preferred tax rates are 17.4% (18.9%) for income and 4.1% (2.3%) for wealth. When no explicit wealth tax is available, preferred income tax rates are approximately 30% higher, indicating that respondents associate wealth with an ability-to-pay taxes. When both instruments are available, however, respondents do not treat them as substitutes. Instead, they combine both tax burdens rather additively, yielding a substantially higher overall tax burden. Political and redistributive attitudes explain further heterogeneity. Respondents also appear to exempt low levels of wealth and favor taxing financial assets and real estate other than the primary residence.

Horizontal inequity occurs when employees and self-employed with the same income end up with different effective tax burdens, due to the difficulty of enforcing taxes on self-employed. Based on detailed micro-tax simulations models integrated with household surveys in 25 developing countries, we find that tax systems incur large horizontal inequities in practice and that reforms which improve vertical equity worsen horizontal equity by the same amount. An in-person survey in Pakistan and online surveys across multiple countries reveal widespread concern about horizontal equity. Randomized information treatments heighten the concern but do not shift tax preferences over horizontal versus vertical equity.

Economists design schemes to finance environmental policies based on efficiency, but voters, whose support determines the feasibility of such schemes, hold beliefs about efficiency and fairness that often collide with economic theory. We design a large-scale information experiment to assess a representative population’s beliefs about alternative financing schemes. Informed consumers support a CO2 tax after learning the rich pollute more, but oppose it and do not oppose government deficits when learning older people also pollute more. When learning that certain groups, due to luck, gain from climate change, consumers oppose redistribution from gainers to losers. Everybody despises market solutions such as private insurance. Consumers’ beliefs could lead to inefficient schemes to finance environmental policies but communication can manage consumers’ beliefs about the desirability of alternative schemes.

The Inflation Reduction Act (IRA) is the largest climate policy intervention in modern U.S. history, allocating hundreds of billions of dollars to investment incentives. I examine the causal effects of the IRA on local labor markets exploiting variation in statutory industry-level IRA exposure interacted with pre-existing county industry composition in a difference-in-differences design. A one-standard-deviation increase in county IRA exposure increases employment growth by 0.5% and firm growth by 0.12%, with no effect on wages. Using microdata on federal grant awards, I show that counties receiving larger IRA-related grants experience higher employment and wage growth. I then evaluate place-based targeting through energy-community designation and find no average post-IRA effects on employment or firm growth. However, energy communities receiving more direct grants exhibit modest employment and wage gains. These results inform broader debates about the role of different instruments that the government can use in stimulating local economic activity.

How can the green transition reduce residential energy consumption while addressing equity concerns? This paper examines how energy-related subsidies within Germany’s basic security system affect household energy consumption, expenditures, and services. We develop a theoretical framework to study the incentives of lump-sum transfers and full cost-coverage subsidies, accounting for energy efficiency and prices. We empirically test its implications using data from the German Socio-Economic Panel and the Energy Saving Check. We exploit two transfer reforms and the energy price crisis with (triple) DiD strategies. We find that subsidy recipients exhibit higher energy consumption and expenditures than comparable households, yet do not enjoy better energy services, measured by indicators such as adequate warmth. Mechanism analysis shows that these households face higher electricity prices and lower energy efficiency. These findings suggest that improving energy efficiency is key to achieving climate objectives while alleviating energy poverty through enhanced energy services without raising consumption.

Households investing in solar panels become prosumers. Their tendency to increase electricity consumption after installation is a “rebound effect” but little is known about the drivers of this change. Do solar households buy new power-hungry appliances or do they substitute other energy sources for electricity. We give a preliminary answer by studying the natural gas–electricity substitution. Should the latter case hold true, we should observe a decrease of the natural gas consumption. To test this hypothesis, we employ the consumption data provided by the major distribution system operator for the Liège of Belgium. We select the over 12,000 clients who have installed solar PV and are connected to the natural gas network. We propose different panel data estimation strategies of the solar rebound and we identify a negative impact of being prosumer on the natural gas consumption, which decrease by 3.5% after the installations of the panels.

Aggregate price shocks can lead to significant inequality in losses both across and within income groups, creating a trade-off between supporting households through subsidies versus targeted transfers. This study examines the redistributional consequences and behavioral responses to Sweden’s 2021-2022 electricity crisis, when prices in southern zones reached four times those in northern zones due to the country’s bidding zone system. Using rich administrative microdata covering 2017-2022, I find that: (1) Residential mobility declined in high-price zones, (2) Households reduced energy consumption by 3-22% relative to baseline, with larger reductions in less efficient building stock, (3) Geothermal heat pump installations increased.

We study international spillovers of corporate tax reforms in a fragmented global tax regime. Using firm-level evidence on the 2017 U.S. Tax Cuts and Jobs Act (TCJA) and a quantitative general-equilibrium model, we illustrate how multinational enterprises (MNEs) propagate local policy shocks throughout the global economy. Our framework emphasizes two key intrinsic properties of intangible capital: non-rivalry and mobile ownership. We find the TCJA generated positive outward spillovers: First, it boosted U.S. MNEs’ intangible investment, raising their foreign subsidiaries' output. Second, it increased tangible investment of foreign MNEs' U.S. subsidiaries, incentivizing them to expand intangible investment at home. Conversely, a Global Minimum Tax (GMT) implemented by the rest of the world generates negative inward spillovers for the United States, even if U.S.-parented MNEs are exempt. These findings illustrate that there is no such thing as a purely domestic corporate tax policy.

This paper examines how the 2017 U.S. Tax Cuts and Jobs Act affected the international allocation of patents by U.S. multinationals. Using firm-country-year data from Orbis Intellectual Property, it provides the first systematic firm-level evidence on post-TCJA patent relocation. Cross-border patent offshoring falls by roughly 45 percent, and by about 60 percent for intra-company transfers, the margin at which tax-motivated relocation operates most directly. There is no corresponding increase in acquisitions: net repatriation appears only in a handful of very large restructurings. A within-firm design absorbing all firm-year and destination-year shocks finds no differential response by partner-country tax status, consistent with GILTI's global blending. Two measurement results are of independent interest: Orbis coverage of unconsolidated financials is sharply asymmetric between U.S. and non-U.S. firms, and defining panel dyads on full-sample rather than pre-reform activity generates spurious effects. The reform deterred new offshoring without inducing firms to unwind existing positions.

We investigate the effect of the Global Intangible Low-Tax Income (GILTI) regime on U.S. multinationals’ (MNEs) global investment activity. Enacted as part of the Tax Cuts and Jobs Act (TCJA) of 2017, the GILTI provision levies a tax on U.S. MNEs’ foreign profits in excess of a 10% deemed return on tangible assets (QBAI). Using U.S. tax administrative microdata, we examine whether U.S. MNEs exposed to GILTI alter the amount and proportion of their tangible and intangible assets or the location (domestic vs. foreign, haven vs. non-haven) of their investments. While prior studies on the effect of GILTI on investment use public financial statement data to identify GILTI-treated MNEs, we find that public proxies poorly identify exposure to GILTI as reflected on the tax return. Therefore, we define the treatment group using U.S. MNEs’ actual exposure to GILTI based on the tax return, exploiting the rapid and unanticipated enactment of the TCJA.

As the global financial crisis highlighted, firms' choice between external or internal funds to finance investment has large-scale implications for the wider economy. While tax policy has shaped debt–equity preferences, less attention has been devoted to how it can motivate the use of internal financing. This paper studies the Deduction of Retained and Reinvested Profits (DRRP), a Portuguese tax incentive meant to encourage the self-financing of tangible fixed assets investment. We evaluate DRRP’s impact on firm investment, financing decisions, and workforce composition. Our findings show that, as intended, investment and reserves respond to the take-up of the tax credit. However, debt financing also increases significantly, suggesting that instead of switching between external and internal financing, firms use the newly acquired assets as collateral to secure additional funding. As employment and real wages grow, there is no evidence of skill-biased investments.

This paper revisits the problem of optimal public good (or public bad) provision under optimal non-linear income taxes, where the main methodological novelty is that we allow for heterogeneity in preferences and exposure to the public good, by using a modern interpretation of the perturbation approach. This generalization is shown to have crucial implications for the optimal provision rule, and in particular with respect to distributional concerns. The optimal provision rule is shown to deviate from the Samuelson rule in relation to the differences between cross-section and individual income elasticities of the marginal willingness to pay for the public good. This implies that, contrary to the conventional view, it is often optimal to take distributional concerns into account also in cost-benefit analysis, and thus not to delegate such concerns solely to the tax and transfer system.

Applied welfare analysis relies on willingness-to-pay estimates. When the government provides goods that are non-rival or non-excludable, however, willingness to pay is hard to elicit. We characterize a local direct mechanism that truthfully elicits status-quo marginal willingness to pay under general preferences. Allowing arbitrary welfare weights and policy costs that include fiscal externalities generated by mechanism transfers, we characterize the welfare-maximizing local public-good reform at each report profile. The reform is locally incentive compatible when its implemented weighted marginal value of public funds exceeds the welfare cost of raising a public dollar through the residual financing margin. Otherwise, characterizing the constrained second-best mechanism requires additional analysis.

The idea of lifetime taxation was introduced by Vickrey (1939) because fluctuating

incomes are taxed more than constant flows of income under progressive taxation. In

this paper I put this idea in a Mirrleesian framework of optimal non-linear taxation to

evaluate whether taxation of lifetime income improves social welfare compared to period taxation. Optimal non-linear taxes for period and lifetime taxation are derived using the perturbation approach. A simple two-period model with an exogenous two-dimensional heterogeneity in ability is used to study the equity-efficiency trade-off under lifetime taxation. I find that, for standard social-welfare functions, the idea of Vickrey (1939) no longer holds with optimal non-linear taxes, since marginal taxes tend to be declining in income. The resulting optimal period tax is close to linear in income, which implies equal taxes conditional on lifetime income. This explains why gains of moving to lifetime taxation in the numerical simulation are small.

This paper examines the optimal income tax threshold, a topic that has received limited attention in existing literature. I show that the optimal non-linear tax threshold varies across income levels. Analysis of the social planner’s problem reveals that, as income rises, the optimal threshold is shaped by three forces: (i) a mechanical effect, whereby the threshold should be higher (lower) when a large share of individuals is located above (at) the relevant tax bracket; (ii) weaker income effects on labor supply, which push the threshold upward; and (iii) distributional considerations, which push the optimal threshold downward. Simulations calibrated with empirically plausible parameters indicate that the optimal threshold declines with income and becomes very low for high-income earners. I derive the optimal aggregate threshold implied by government optimization. I find that income tax thresholds in developed countries are higher than optimal for high-income earners and lower than optimal for the population as a whole.

Mobile money and real-time digital payment systems have reshaped financial intermediation and state capacity in emerging economies. This paper studies the fiscal consequences of Banco Central do Brasil’s instant payment platform Pix, launched in 2020 and rapidly adopted nationwide. We construct a novel municipality-year panel combining universe Pix transaction data with municipal finances (FINBRA), individual income tax records (IRPF), geographic characteristics (IBGE), and mobile network coverage. Exploiting cross-municipality variation in pre-existing mobile infrastructure as an instrument for Pix adoption, we estimate two-way fixed effects and complementary event-study and regression discontinuity models. Preliminary evidence indicates a positive relationship between Pix transactions per capita and growth in per capita tax revenues between 2019 and 2021. The findings suggest that low-cost, account-to-account digital payment systems can enhance revenue mobilization by expanding traceable transactions and strengthening fiscal transparency in developing economies.

This paper examines whether expanding high-speed mobile internet can increase tax revenue in developing countries. Using the staggered rollout of 3G and 4G infrastructure across Brazilian municipalities and an event study design, we find that mobile internet expansion leads to a persistent rise in income tax revenue, driven mainly by corporate income taxes. The results suggest that increased economic activity and firm formalization explain this effect. Overall, the findings highlight digital infrastructure investment as a tool to promote growth and strengthen fiscal capacity beyond traditional tax reforms.

We study the impact of Brazil’s introduction of a new legal status -- the Microempreendedor Individual (MEI), which simplifies registration and compliance -- on the creation of dynamic firms. We assemble a matched administrative dataset linking the firm registry (CNPJ) to the universe of formal employment records (RAIS), allowing us to identify founders and track firm outcomes. Leveraging industry-level MEI eligibility in a difference-in-differences design, we estimate causal effects on entry and growth. MEI increases the number of new formal entrepreneurs by 137% but initially reduces limited liability entry, consistent with substitution toward the lower-cost regime. The program also yields a net positive effect on job creation: the number of entrepreneurs who ever become employers rises by 22%, driven by newly created employer MEIs that more than offset fewer employer limited liability entrants. These findings suggest that simplified formalization can broaden the base of dynamic, job-generating firms.

This paper provides new evidence on size-based taxation under low enforcement and pervasive informality, common in developing-country settings. I study Brazil’s introduction of a large-scale regime for micro-businesses below a revenue cutoff that replaced all business taxes with a low, fixed monthly fee, greatly simplifying compliance. Business creation proves highly responsive to tax liabilities: the reform increased the number of formal firms by 43%. This expansion is driven mainly by entrepreneurs moving from the informal sector, not by firms switching from other formal tax systems, implying gains in current tax revenue. The results show that targeted small-business regimes can promote formalization by focusing on firms most likely to remain informal. I also develop and estimate a model that clarifies the welfare trade-offs of fixed-fee taxation and identifies sufficient statistics for policy evaluation. The model indicates the reform raised welfare, mainly because it eliminated compliance costs rather than because it lowered taxes.

While prior research infers private firms’ reporting incentives from observed financial statements and institutional settings, we provide direct experimental evidence from managers on their firms’ earnings management (EM) practice and the motivations associated with it. We conduct a large-scale online survey experiment among German private firms and randomly assign participants to a direct question, an indirect question, or a list experiment designed to protect respondent privacy. On average, 20 percent of respondents report engaging in accrual-based EM, and the prevalence estimates are statistically indistinguishable between direct questioning and the list experiment. However, relative to the list experiment, managers directly asked are less likely to report potentially sensitive motives, such as securing better credit terms or influencing perceptions of business partners. No comparable difference emerges for tax-related motives. These findings suggest that private-firm managers are willing to acknowledge EM but selectively report certain motivations associated with it.

How do corporate tax systems shape firm boundaries? This paper shows that nonlinear corporate income taxation (CIT) can distort firms’ organizational structures by inducing tax‐motivated firm splitting. I use administrative data on corporations and their owners and exploit two reforms that altered the tax benefits and costs of dividing a firm into multiple entities. I find that a temporary increase in the tax advantage of splitting reduces the share of firms filing jointly for CIT purposes. Once the benefit is perceived as permanent and minimum capital requirements for new firms are abolished, the number of firms per entrepreneur rises significantly and persistently. Reorganizations are primarily driven by tax motives, as I find no effect on firms' total assets, employment, or industry diversification. These findings highlight extensive-margin responses of business organization to corporate taxation, with relevant implications for the understanding of firm dynamics and for tax design.

Zombie firms are firms that continue to operate despite prolonged periods of financial distress. When part of a group, such firms may serve as tax planning instruments by facilitating profit shifting or loss offsets. This paper studies the role of zombie firms in group-level tax planning by examining their response to DAC6, an EU directive mandating the disclosure of aggressive tax planning arrangements. Using firm-level data from ORBIS and a differences-in-differences design, I find that following DAC6, group zombie firms in the EU are more likely to exit the market than their non-EU counterparts. Among surviving firms, the probability of remaining a zombie declines for EU group firms. Heterogeneity analyses show that both firm location and group headquarters location shape these responses, highlighting how zombie firms are used within groups for tax planning purposes.

How effective are subnational fiscal policies at creating jobs? While traditional arguments assign the stabilization function to the central government, states are often involved either through funds provided by the central government (grants) or through their use of their own revenue sources. Following a recent macroeconomic literature that has estimated “regional multipliers” (essentially a Keynesian multiplier for subnational regions) this paper follows and expands on this literature by estimating the impact of grants, rainy-day funds, and state deficits on state employment. The results show a significant multiplier for grants and rainy-day funds that varies according to the source of funds and whether the labor market is in a slack or boom situation. Estimates for the grant variable suggest that during high unemployment times additional grants will stimulate employment at a cost of about $55,000 per job.

Border taxes are a workhorse instrument of fiscal and trade policy, but their effectiveness hinges on compliance at the border. We study where responses to border tax rates concentrate across product–partner lanes, highlighting heterogeneity linked to enforcement information and valuation uncertainty. Using Japanese transaction-level customs microdata and mirror trade statistics, we created HS6 product–partner–year panels for 2014–2021. Our estimation results show that the average semi-elasticity of mirror gaps with respect to border tax rates is statistically insignificant. However, heterogeneous estimates are nearly zero where enforcement is supported by a rich information base (many declarants and dense transaction histories), sizable where information is scarce, and stronger where lagged unit-value dispersion is greater. These “where the effect lives” patterns survive conservative diagnostics separating incentive responses from measurement noise. The results suggest that, even in a high-capacity country, responses to border taxes are shaped by lane-level information and valuation uncertainty confronting enforcement.

This paper develops an integrated framework that combines the EUROMOD microsimulation model with macro-economic models from the Tax Foundation to assess the short- and medium-term effects of tax and benefit reforms. We apply this approach to a Polish personal income tax reform proposal that eliminates the top tax bracket and increases the basic allowance. The reform reduces the effective tax burden on labour, leading to a projected increase in labour supply by 1.3% and a medium-run GDP gain of 1.4%. These macro-economic responses are fed back into the microsimulation framework through dynamic scoring, which reduces the estimated government revenue loss from 6.6% (static) to 5.4% of baseline revenues. The results highlight the value of combining micro-level distributional analysis with macro-level behavioural feedbacks to fully capture the fiscal, employment, and inequality implications of comprehensive tax reforms.

Despite these potential gains from social safety net programs, many households fail to claim benefits to which they are entitled. We consider the role of administrative burdens associated with tax filing in the imperfect take-up of refundable tax credits and spillover effects in take-up across programs. We examine Hawai`i's food and excise income tax credit that is available to low-income households that is meant to mitigate some regressivity of its general excise tax, but has a low take-up rate. We exploit policy variation in the cost of non-filing driven by a large expansion to the state earned income tax credit (EITC) that creates sharp and heterogeneous treatment intensity by household types and income levels. We use Hawai'i administrative tax records to compare the income distribution of first-time filers around the expansion to examine how the value of refundable tax credits affects tax filing and credit take-up.

College financial aid in the US creates a large implicit tax on parent income. Like many taxes, it is difficult to learn one’s tax rate. Using federal tax data, we provide the first estimates of the response of parent income to the college aid implicit tax (elasticity = .04). We show how to combine the elasticity with survey data to identify deadweight loss from the tax, given that individuals misperceive their tax rate. Misperception of the college aid implicit tax increases deadweight loss by 127%, driven by substantial heterogeneity in misperception across individuals.

This paper studies the employment effects of income tax credits on hard-to-tax labor-intensive consumer services using administrative data on establishments with employees subject to social security payments. Preliminary difference-in-differences estimation result suggest an increase of employment in services such as gardening work as well as child or elderly care. However, for services of craftsmen where the largest part of the tax expenditures is concentrated we find a decline of employment, in particular for small firms.

Population aging makes elderly health a growing policy concern. Using five waves of China Family Panel Studies data, this paper treats the introduction of China’s special additional deduction for elderly support as a quasi-natural experiment and estimates its impact on elderly health with a DID design. We find that the targeted tax deduction significantly improves both physical and mental well-being. Mechanism evidence suggests the deduction strengthens children’s incentives to support parents: higher disposable income is transferred to the elderly and translated into greater medical spending, more emotional companionship, and increased time devoted to physical exercise. Heterogeneity analyses show stronger benefits for men and for younger seniors. Effects are concentrated among middle-income households above the basic deduction threshold, with little impact on ultra-high-income groups. Finally, we document an unintended consequence: a uniform deduction threshold disproportionately benefits higher-income families, widening health inequality among older adults.

This paper characterizes the optimal degree of jointness in the taxation of married couples. We develop a tax-perturbation framework to analyze reforms that vary the degree of jointness, decomposing their efficiency effects into a tagging gain from conditioning taxes on spousal earnings and a distortion arising because those earnings are endogenous. Our main theoretical result shows that, starting from a separable, revenue-maximizing (Rawlsian) tax schedule, introducing negative jointness—where marginal tax rates decrease with spousal earnings—increases tax revenue under a mild regularity condition satisfied by a broad class of empirically relevant joint income distributions. More generally, positive jointness is optimal only if the planner places sufficiently high welfare weight on rich couples with unequal earnings. Using U.S. data on married couples, we find that the globally optimal tax schedule raises the revenue-maximizing lump-sum transfer by about 3% relative to individual taxation, redirecting redistribution toward the poorest couples.

This paper studies the joint design of nonlinear income taxes and education subsidies when schooling raises productivity, signals ability, and improves employers' information, thereby enhancing worker--task assignment. I develop a model in which these roles operate jointly. Under utilitarian welfare, marginal education subsidies of roughly -60 to -70 percent are optimal across the spending distribution, primarily because of the externality generated by signaling. Signal precision reduces the magnitude of these negative subsidies by about 5 percentage points because better worker-specific information weakens employers' reliance on credentials. With stronger redistributive preferences, the education-subsidy schedule becomes progressive: subsidies remain strongly negative at low spending margins, become less negative at higher margins, and turn positive near the top. Precision-driven ability--wage sorting becomes more socially valuable when income taxation is redistributive because it improves task assignment, raises output, affects tax revenue, and makes income a more informative proxy for latent ability.

When should governments sacrifice production efficiency for redistribution? We generalize the celebrated result of Diamond and Mirrlees (1971a,b) by allowing for imperfect competition, suboptimal and nonlinear taxation. We demonstrate that production efficiency hinges on the flexibility of the tax system in compensating gains and losses from changes in factor prices. This requires the tax system to target each factor’s income. We show how to adjust tax systems or production policies for imperfect targeting and market failures, even when the tax system is not flexible enough. We then obtain new sufficient statistics formulas. Endogenous factor prices do not modify the test to identify Pareto-improving tax reforms.

This study examines how mandatory electronic fiscal devices (EFDs) impact firm behavior in sub-Saharan Africa. Using a harmonized dataset of 12,450 firm-year observations across 10 economies, we analyze the tension between deterministic surveillance and economic growth. Utilizing a triple difference (DDD) strategy and density-discontinuity analysis, we evaluate how digital mandates induce strategic informality and digital dwarfism. We find that while EFDs enhance monitoring, they trigger strategic informality and digital dwarfism, where firms artificially suppress turnover to remain below surveillance thresholds. This structural squeeze results in a -12.4% informality leakage and a 61.2% collapse in SME graduation rates. In low-trust

environments, digital mandates erode the fiscal social contract, leading to a net shrinkage of the formal tax base. We identify a 74.4% drop in firm density immediately above the mandate threshold, signaling a productivity ceiling that traps SMEs in the shadow economy.

Can simply exceeding a critical tax-to-GDP threshold bring about an accelerated trajectory of economic growth and development in a country? We revisit Gaspar, Jaramillo and Wingender’s 2016 “tax tipping point” result. Both with their regression discontinuity approach and a dynamic difference-in-differences estimation, we find that cumulative growth over 10 years increases by 10 percentage points when a country’s tax-to-GDP ratio increases above a 10 percent threshold. Further, crossing the threshold coincides with the beginning of significant improvements in measures of a country’s financial development, government effectiveness, legal framework, and governance. Event studies additionally reveal that only transformational episodes of tax increases above the threshold deliver these gains: episodic crossings that fail to bring tax revenues durably above the threshold yield fleeting gains. Our results suggest that a minimal tax capacity is necessary for growth but emphasize that only a sustained tax increase associated with other developmental progress is sufficient.

There is an ongoing debate on whether the transfer pricing (TP) standards introduced under the OECD/G20 BEPS Project are suitable for lower‑income countries (LICs). Although more than 100 LICs have adopted BEPS‑aligned documentation requirements, the revenue effects remain unclear. This paper uses new country‑level data for 97 LICs from 2011–2020 and exploits the staggered adoption of BEPS Action 13 to estimate its impact on corporate income tax (CIT) revenue. To capture institutional heterogeneity, countries are grouped by the sophistication of their TP frameworks prior to adoption. The results reveal striking differences across groups. Countries with limited TP rules experience significant and sustained increases in CIT revenue—up to 0.86 percentage points of GDP three years after adoption. In contrast, countries with moderate TP sophistication show small or negative effects, while those with comprehensive frameworks exhibit no discernible change. These findings highlight that the effectiveness of BEPS TP documentation critically depends on countries’ institutional starting points.

This paper analyzes Brazil’s 2016 offshore tax amnesty, implemented ahead of the increase in monitoring capacity under the OECD Common Reporting Standard. Using administrative microdata on the universe of reported foreign assets, we find that 21,000 individuals disclosed $59 billion (3.4% of GDP). Participation was strongly correlated with wealth, reaching 21% among the top 0.001%. However, using microdata on foreign exchange, we show that net capital repatriation was limited, averaging only 20% of disclosed assets. Most wealth remained abroad, driven by high foreign returns and diversification benefits. Tracking repatriated capital, we find it flowed mainly into domestic fixed income rather than the real economy. Consequently, firms owned by amnesty participants showed no growth in employment or revenues, although they significantly substituted external debt with proprietary capital. These results suggest that while amnesties effectively uncover hidden wealth, they are insufficient to fundamentally shift capital allocation.

We estimate the effects of monetary policy shocks on the disposable income distribution in the Netherlands. We use administrative register data on income from labor, wealth and transfers, and on hours worked, for the period 2005–2024. We find a U-shaped effect of an expansionary monetary policy shock on disposable incomes, where the largest gains are for the lower end of the income distribution. The main driver of the effects is labor income. The effects on income from wealth and transfers are much smaller, but the effect on wealth income causes an uptick in the overall effect at the top of the income distribution. We find that hours worked are a key driver of the labor income effect. Furthermore, we find that workers that switch firms following a monetary policy shock exhibit much larger income gains and changes in hours worked than workers that stay with the same firm.

In the face of persistently rising income inequality, the capacity to redistribute becomes essential, particularly in the context of human capital formation. Using panel data on public education funding across U.S. school districts between 2005 and 2019, we document a negative response of local funding to higher inequality. This effect is driven by reduced redistribution in poorer districts, while in wealthier districts, it is mitigated by the positive impact of a larger tax base. The results remain robust to an instrumental variable approach that addresses the endogeneity of the local income distribution. Our findings emphasize a new inequality amplification mechanism, in line with recent theoretical work.

Despite broad public support for progressive taxation, the current U.S. tax system is among the most regressive in history. This paper tests whether social and institutional ties between legislators and the ultra-rich help explain this mismatch. We use large language models to classify the progressivity of the full universe of tax-related bills introduced in Congress since 1973. Using publicly available biographies, we then construct a new dataset linking Members of Congress to billionaires through overlap in higher-education institution, program, and graduation cohort. Our preliminary findings suggest that legislators with greater exposure to billionaires during college and university are more likely to sponsor regressive tax proposals and fewer progressive ones. These results support the view that elite networks can transmit political influence through informal social channels. The paper identifies a measurable pathway of elite influence and speaks to debates on transparency, accountability, and unequal political representation in the United States.

Public goods can be funded by private donations or government provision. With multiple public goods and heterogeneous preferences, the choice of funding method gives rise to a potential conflict between income groups. In this paper, we address the interaction between heterogeneous preferences over different public goods and how to fund them. There may be a conflict of interest between donors and governments when there is some public provision of public goods. This conflict can be resolved using differentiated subsidies. To analyse optimal policy we apply an 'agnostic welfare function', which highlights how the welfare treatment of warm glow motivations affects optimal policy. We provide sufficient conditions under which a differentiated subsidy welfare dominates public provision. Finally, we derive the structure of optimal public good funding by combining tax financed provision and differentiated or uniform donation subsidies.

This paper analyses the impact of the 2017–2018 personal income tax (PIT) reforms in Latvia on long-term voluntary saving behaviour in tax-favoured instruments, namely the third pension pillar and life insurance policies with a savings component. Using rich administrative microdata from personal income tax declarations covering the period 2010–2023, we study behavioural responses along both the extensive margin (entry and exit) and the intensive margin (contribution levels and income elasticity). We document that the reforms substantially reduced opportunity-seeking behaviour, particularly among high-income individuals, maximizers of PIT refunds, and those aged 55 and above. Entry responses are considerably stronger than exit responses, highlighting pronounced behavioural inertia. Contribution levels increase with income and participation duration, but income elasticity declined after the 2018 reform. The findings underline the importance of policies that broaden initial participation, as wider coverage is likely to translate into higher aggregate retirement savings over time.

What are the economic and welfare effects of liberalizing access to private retirement wealth in the U.S.? In the empirical section, I document that early withdrawals from individually managed accounts are infrequent due to early-withdrawal penalties, but conditional on withdrawal, amounts are sizeable, whereas withdrawals from employer-sponsored retirement plans are virtually absent due to strict withdrawal rules. Furthermore, the minimum withdrawal rules bind for a substantial fraction of retirees. Guided by these facts, I build a rich lifecycle model that features three frictions in accessing retirement wealth: early-withdrawal penalties, restricted access to employer-sponsored retirement savings, and required minimum withdrawals during retirement. I evaluate a reform that removes these frictions, mimicking recent proposals to make retirement accounts more flexible. The cohorts who are alive at the reform implementation gain on average 0.23% (CEV), while cohorts born after the reform experience welfare losses of 0.15%.

Institutions routinely delegate complex measurement to external experts, creating scope for expert judgment and discretion to shape reported information. This paper studies delegated measurement in state and local public pensions, where actuaries value long-term benefit promises that determine reported funding, required contributions, and fiscal risk. I use novel data linking plan-level financials to actuarial firms and valuation assumptions. Leveraging actuarial firm switches and malpractice litigation, I show that actuaries materially affect reported liabilities and funding status. Small actuarial firms, in particular, are associated with more favorable reporting. When an actuarial firm is sued for malpractice, its other public pension clients subsequently report stronger financials and use more aggressive assumptions, consistent with reputational and market incentives shaping expert discretion. Counterfactual exercises suggest that these forces shift aggregate reported liabilities by tens to hundreds of billions of dollars.

This paper addresses issues in the design of current capital gains tax systems and how to tackle them. Important among such issues is an incentive to delay realisation. We explore alternative policies to mitigate issues in capital gains taxation, such as taxation on accrual, interest rate adjustments on delayed tax payments, indexing of capital gains and a rate of return allowance, and applying tax rules based on accrual and tax payments on realization. Whereas capital gains are measurable on realisation, measuring capital gains before realisation poses a challenge. We address this by exploiting Norwegian tax register data and machine learning methods. From this, we show revenue and incidence effects of the proposed alternatives.

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This paper uses population-wide Norwegian administrative data on property transactions, income, wealth, registered residence, and meter-level electricity consumption to study avoidance of the owner-occupation capital gains exemption. We document a sharp spike in sales exactly at the one-year eligibility threshold, driven entirely by gain realizations and strongest for high-gain transactions. Higher taxable gains significantly increase relocation rates, but electricity data show that most of this response reflects “on paper” moves. These findings imply substantially reduced effective taxation of housing gains and potentially distorted portfolio allocation.

Tax basis is often treated as a simple accounting measure, yet in practice it creates powerful avoidance incentives and meaningful economic distortions. We survey basis-driven behavior from unilateral decisions to complex, multi-party transactions. In single-actor settings—such as cryptocurrencies, step-up in basis, and like-kind exchanges—housing markets bunch at the $500,000 capital gains exemption, implying an elasticity of taxable gains of 0.23. Homeowners also adjust basis through strategic improvements, especially where disclosure is limited. Two-party distortions include conservation easements, avoidance-motivated charitable giving, installment sales, and ETF in-kind contributions, which facilitate deferral and effective basis resetting; these contributions have grown from $5 million to $3 billion in 2025. In multi-party contexts, basis rules affect partnerships, acquisitions, and stock splits. Following a 2008 reform requiring broker basis reporting, annual stock splits fell by roughly 99 percent. Overall, basis complexity generates deadweight loss through misallocation, transaction costs, and rent-seeking.

In this paper we develop a stylized model of international trade and firm mobility to study how a country with cost disadvantages should design its tariff and subsidies policies in an increasingly fragmented world economy. We consider a setting with imperfect competition and strategic interaction between domestic and foreign firms, where there is room for using subsidies as well as tariffs to maximize national welfare. Firms are internationally mobile, but mobility is costly. If the rest of the world increases subsidies or tariffs, the optimal response generally depends on the specifics of the market under consideration, but in many cases it is nationally optimal to respond by reducing, not increasing domestic subsidies and tariffs.

This paper examines whether downstream trade policy generates upstream spillover effects within global value chains, analysing the impact of recent US solar trade measures on Chinese solar wafer exports to ASEAN countries. Following the expiration of the U.S. tariff moratorium in June 2024, tariffs were implemented on solar cells and modules imported from Cambodia, Malaysia, Thailand and Vietnam. This resulted in weaker incentives for firms to assemble Chinese solar products in these countries and export them to the U.S.

Using highly disaggregated quarterly trade data and event-study models with binary, binned and continuous treatment specifications, the analysis revealed a significant decrease in Chinese wafer exports to the affected ASEAN countries. The most significant effects occurred immediately after the tariff moratorium expired and during the preliminary tariff phase. These findings demonstrate that downstream trade policy can generate significant upstream spillover effects through global value chains by reducing demand for intermediate inputs.

This paper studies whether tariffs can affect the equilibrium world real interest rate by redistributing income across regions and cohorts with different propensities to save. We analyze this question in a parsimoniously calibrated three-region Blanchard-Yaari overlapping-generations model with trade in differentiated goods, endogenous net foreign asset positions, and a world real interest rate determined by global asset-market clearing. The long-run response of r* depends critically on how tariff revenue is recycled across domestic cohorts. Recycling tariff revenue more strongly toward retired households lowers aggregate saving and raises r*, whereas recycling it more strongly toward working-age households attenuates this effect and can reverse it.

This study investigates how local governments in China strategically deploy tax incentives to support firms with robust economic performance, fostering a symbiotic government-business relationship to advance local development objectives. Using firm-level data from the National Tax Survey, we find that sub-national governments tend to lower the effective tax rates for prominent local firms that make significant contributions to the local economy. This preferential treatment is more pronounced among local officials who face stronger career incentives or heightened pressure to promote economic growth. To address potential confounding factors such as political favoritism, tax avoidance strategies, or exclusive special deals, we employ quasi-experimental shocks and leadership turnover as identification strategies. Our findings also reveal a dual dynamic: while local business champions benefit from favorable tax policies, they are subjected to increased scrutiny, including a higher likelihood of tax audits and stricter penalties for tax evasion.

This paper revisits the empirical evidence on multinational profit shifting using a unique confidential administrative dataset from the General Financial Directorate of the Czech Republic, which includes firm-level Country-by-Country Reporting from every international enterprise operating in Czechia. The analysis reveals a shift in the selection of profit-shifting destinations in recent years. Between 2016 and 2023, the share of global profits shifted into European profit centres decreased from 78.7% to 40.9%, while Caribbean destinations rose in importance. Additionally, our results affirm the emerging pattern in contemporary literature, in which micro-level datasets systematically yield more conservative estimates of the magnitude of profit shifting than previous macro-level studies. Lastly, the exceptional level of granularity in our data enables us to confirm the extreme nonlinearity of the semielastic relationship between booked corporate profits and effective tax rates, with the cubic specification providing the best fit.

Beneficial ownership (BO) registers make ultimate owners visible and raise the expected detection risk of intra-group payments routed through opaque ownership chains. Using confidential Czech firm-level country-by-country reporting and the staggered adoption of BO registers across jurisdictions, I estimate the effect of ownership transparency on within-multinational profit allocation. Heterogeneity-robust difference-in-differences estimates show that BO adoption modestly narrows downward profit misalignment: reported profits move closer to levels predicted by local employment, assets, and revenue. The effect concentrates among multinational-jurisdiction pairs with lower pre-reform exposure and fades within two years. The public-access split is null, consistent with a mechanism operating through expected authority detection rather than public exposure. Related-party transaction data corroborate a restructuring reading: BO reforms abroad bring extensive-margin entry of new firm-counterparty disclosure relationships, with little change within continuing pairs. The pattern suggests unilateral transparency reallocates rather than eliminates shifted profits, so durable benefits depend on the breadth of adoption.

This paper studies how profit shifting affects real investment by multinational corporations (MNCs). We model three main profit-shifting channels and show that two influence investment through the user cost of capital. For all channels, we identify conditions under which an MNC’s minimum tax rate affects investment in other affiliates. Using detailed micro-level data on foreign affiliates, we test these predictions with instrumental variable regressions and event study analyses. We find that incentives to shift profits to low-tax locations reflect in the user cost of capital in high-tax countries. A one percentage point increase in the local statutory tax rate reduces investment by about 0.55%, while the response to the MNC-specific minimum tax is considerably smaller. Beyond user costs, transfer pricing of intermediate goods also affects investment through the minimum tax rate. Overall, our findings inform evaluations of policies such as the Global Minimum Tax.

This paper studies a reform to Social Security that provides a universal lump-sum transfer early in life in exchange for an actuarially fair reduction in retirement benefits. The policy reshapes saving and consumption profiles, with potentially large effects for credit-constrained households. Using survey data, we document persistent disparities in credit access by income and race. We then evaluate the reform in a quantitative overlapping-generations life-cycle model with incomplete markets and heterogeneity by race and education. A $40,000 transfer at age 25 generates welfare gains for all groups, equivalent to a 1.0–2.6 percent increase in lifetime consumption. Gains arise from improved consumption smoothing and lower borrowing costs and decline when the transfer is delayed. Means-tested programs, differential mortality, and bequest motives affect magnitudes but not the direction of welfare effects. Overall, reallocating Social Security wealth earlier in life improves welfare without raising government spending

A common criticism against redistribution is that it focuses on the inequality of outcomes and that the sources of income differences are neglected. Indeed, income differences may also reflect differences in effort, and theories of Equality of Opportunity postulate that such differences should not be equalized by society. This paper examines how redistribution, via tax-benefit policies, influences equality of opportunity in European countries. The results indicate that redistribution of outcomes also improves opportunities by reducing inequitable income differences. But, from the point of view of equality of opportunity, redistribution may go too far in many European countries. This is corroborated by the finding that the extent of redistribution required to neutralize the effect of circumstances on income is smaller than the actual redistribution in most, but not all, countries.

Inequality in life expectancy shows a strong correlation with income. But does this critical dimension of inequality, extending beyond income and wealth, call for additional fiscal redistribution? In this paper, we explore how systematic differences in life expectancy and health influence optimal fiscal redistribution. We propose a parsimonious modeling framework that allows us to immediately point to the mechanisms that shape the optimal fiscal tax and transfer system when individuals differ in their life expectancy. Theoretically, we demonstrate that heterogeneity in life expectancy alone prompts a utilitarian government to redistribute from individuals with shorter to those with longer life expectancy. However, if we consider that health status may also impact on the ability to enjoy late life consumption, this redistribution can be reversed. We then develop and calibrate a quantitative life-cycle model with heterogeneous agents that differ in income and health to study optimal fiscal redistribution through the pension system.

We combine detailed administrative and survey data with national accounts to construct a time series of distributional national income estimates for Finland. Our approach extends the Distributional National Accounts (DINA) framework by systematically evaluating how alternative methodological choices shape measured inequality. Rather than aiming to identify a single “true” level of inequality, we emphasize transparency and robustness by presenting a range of plausible estimates derived from extensive sensitivity analyses. Most notably, we analyze how the treatment of retained earnings and allocating education and health care spending affects estimates of income inequality using microdata on these factors. On the distribution of income in Finland, the DINA series show higher levels of income inequality and sharper change in inequality than measures based on fiscal income alone.

This paper proposes a model of tax compliance and fiscal capacity grounded in universalization reasoning. Citizens partially internalize the consequences of concealment by imagining a world in which everyone acted similarly, linking their compliance decisions to the perceived effectiveness of public spending. A selfish elite chooses between public goods and private rents, taking compliance as given. In equilibrium, citizens' moral internalization expands the feasible tax base and induces elites to allocate resources toward provision rather than appropriation. When the value of public spending is uncertain, morality enables credible reform: high-value elites can signal their type through provision, prompting citizens to increase compliance and raising fiscal capacity within the same period. The analysis thus identifies a moral channel through which states may escape low-capacity traps even under weak institutions.

In an incentivized survey with experimental elements involving 1,547 respondents across three Italian cities we exploit regional variation in background, language and diet to investigate the relationship between cultural identity, trust and cooperation. Respondents with relatives who originate in the north of Italy, and who share common cultural characteristics, contributed 15% more in a public goods game and displayed greater trust towards others, than respondents whose language and diet had cultural links to the south. However, self-reported identity, a mainstay of the survey literature, had no predictive power. This highlights the importance of identity, but only if measured appropriately.

One of the advantages of multi-level government is that it can bring policies closer to voters, thus improving accountability. In this paper we ask whether such a layered and complex system can also erode transparency, undercutting accountability instead. We conduct a survey experiment with a nationally representative sample of 5,000 Italian citizens to investigate how responsibility for public services as well as their quality is perceived. We find that when respondents are asked which level of government is responsible for certain important services incorrect answers abound. A subset of respondents is then provided with correct information about which level of government is actually responsible. We find that when this feedback shifts perceived responsibility toward a government that is politically aligned with the respondent, service quality assessments become more favorable. These findings highlight the importance of information provision and the politically motivated quality assessment that can be present without it.

Amidst fiscal turmoil, understanding non-material determinants of well-being is critical. This study investigates how economic resources and social intangible assets—social capital and community consciousness—shape multidimensional well-being. Using Korean Happiness Survey data, we analyze four dimensions: happiness, meaning, satisfaction, and perceived autonomy.Findings reveal income is a robust predictor, especially for autonomy, identifying wealth as a primary enabler of individual agency. Crucially, social assets function as utility multipliers. The "happiness return" on income is significantly higher for individuals in robust social scaffolds, suggesting connectivity dictates the conversion efficiency of wealth into well-being.These results provide a structural explanation for the Easterlin Paradox and advocate for Well-being Budgeting. Amidst fiscal strain, public investment should prioritize social infrastructure to maximize the psychological utility of limited resources, fostering a resilient, self-directed society.

Over the past two decades, the likelihood of divorce after age 50 has doubled. Grey divorce therefore increasingly occurs when pension wealth constitutes a large share of household resources and gender gaps are substantial. Cross-country differences in pension division raise the question of how well individuals are insured against its consequences. Using Danish administrative data, we show that divorce is associated with delayed retirement, especially for women. We then develop a structural model of household bargaining, divorce, saving, and retirement to study how divorcees insure consumption and how these margins interact with pension-division policies. We find that compensating pension wealth differences through liquid assets has little effect on divorced women’s retirement because it is used to smooth consumption around divorce. By contrast, in-kind pension division leads divorced women to retire earlier. When public pensions are means tested, it also reduces their reliance on public benefits by raising private pension income.

This paper studies savings behavior and its determinants in old age. A large empirical literature documents low drawdown of wealth late in life. I confirm this result in the context of the Netherlands, where there are extensive public insurance schemes covering both health and care expenditures. To investigate the determinants of this observed behavior, I provide suggestive evidence that bequest motives cannot fully account for this empirical finding. The results have implications for the retirement consumption smoothing benefits of private saving in working life, and is important in considering how to insure retirees against risks such as long-term care late in life.

This paper studies to what extent marital and cohabitation decisions respond to financial incentives in a state pension. As is common in many benefit programs around the world, the Danish state pension pays more to individuals living alone to make up for the higher cost of living for singles. In response, at the age cutoff for eligibility, the likelihood of living alone jumps up by 0.2\% pt. due to both an increase in separation and divorce risk for existing couples and a fall in the likelihood of moving in with a new partner. By focusing on a subsample of individuals and couples already retired, it can be ruled out that this is due to retirement itself, which commonly takes place under an early retirement program which is not means-tested.

This paper provides a non-cooperative model of domestic violence that models the decision to enter a marriage and the decision to abuse one’s partner. The effect of policy interventions on aggregate abuse rates is decomposed into a marriage-rate effect and an abuse-rate effect, which are analysed separately. The model predicts that lower divorce costs increase marriage rates while decreasing abuse rates. Improvements in women’s outside options relative to the surplus from marriage can have ambiguous effects on abuse, with the potential to either reduce or exacerbate it. In contrast, policies that widen the utility gap between single and married men are predicted to lower abuse rates. By explicitly distinguishing between the marriage-rate and the abuse-rate effect, this framework highlights how policies aimed at reducing domestic violence may have adverse effects.

This paper presents the concept of effective tax rates (ETRs) for a firm that increases its output by one unit choosing a cost-minimizing combination of inputs. The standard approach of calculating effective tax rate measures is shown to be a special case in this framework: output expansion by using only one single (capital) input. We compare the ETRs for output expansion with those of the standard approach and highlight differences and possible sources of misinterpretation. Moreover, our approach is able to capture an important feature of multinational firm activity: interdependent decisions along the production chain in multiple locations. We link our approach to the literature on BEPS, discuss policy implications and derive a “neutral” tax system that gives multinational firms the same investment incentives as a group of stand-alone firms in the same locations.

The paper explores how a small low-tax economy is affected by foreign corporate-tax shocks. To address this question, I develop a dynamic general-equilibrium model, in which multinational firms engage in both tangible and intangible FDI. Intangible assets arise from multinationals' R&D activities. Each multinational decides whether to place its intangibles in the parent firm or in an overseas affiliate. The placement decision shapes the intra-firm trade in royalties and R&D services. The model reveals that corporate taxes can directly impact arm's-length prices of multinational firms. I investigate territorial corporate taxation as well as worldwide taxation of intangible income.

We exploit the assignment mechanism of the APOIAR Program, a targeted initiative aimed at supporting the firms most affected during the COVID-19 pandemic, to provide causal evidence on the impact of grants on firm survival and performance in times of crisis. Using sharp and fuzzy regression discontinuity designs and drawing on a combination of administrative datasets, we find that eligible firms experienced a short-term increase in profitability in 2021, with €1 of support increasing net income by €0.658. However, these effects did not persist into 2022, and we found no significant changes in turnover or cost reduction, indicating that the increase in profitability was mechanically due to the subsidy. Firms allocated part of the grant to rental payments and purchases of office supplies, including modest investments in digitalization. Our findings suggest that these funds were particularly important for ex-ante less productive, with less cash on hand, and more indebted firms.

This paper evaluates the effectiveness of Special Economic Zones (SEZs) as instruments of economic development in South Africa. Drawing on rich administrative tax data and employing a difference-in-differences identification strategy, we examine how SEZ participation relates to firm-level outcomes, including sales, trade, employment, and wages. Contrary to the common expectation that SEZ participation boosts firm performance, the results suggest that SEZ firms generally underperform relative to their non-SEZ counterparts. This, however, appears to be due to an interim period between when South Africa passed the law creating SEZs and when their benefits were actually implemented. Thus, although we find no evidence that South African SEZs improve performance, there is an important interplay between firm decisions and the uncertainty that surrounds SEZ implementation.

This study provides causal evidence on how unconditional income support affects engagement with employment services. We analyse the Finnish basic income experiment, which replaced minimum unemployment benefits with a guaranteed income for 2,000 randomly selected unemployed individuals and removed all job-search requirements while leaving the supply of public employment services unchanged. Using administrative registers, we find a 5–6 pp decline in employment plans, and a 9 pp reduction in active labour market programmes. The decline is concentrated in programmes targeting individuals with the weakest employment prospects, while sanctions for non-compliance increase. These estimates likely represent lower-bound effects, as many treated individuals continued to claim unemployment benefits and remained subject to job-search requirements.

Estimates of effort peer effects are predominantly positive, from settings with piece-rate pay, observable individual output, and no external constraint on quantity. This paper estimates the same object where none hold. A statutory rule in the Israeli Civil Service raises a mother's required daily shift from 7.5 to 8 hours in the month her youngest child turns one, moving one team member's hours on a date fixed by a birth. The outcome is time-clock hours, a directly measured input, and the endogenous regressor is one named worker's hours rather than a group mean. The spillover is negative: a one-hour increase in a colleague's monthly hours reduces a teammate's own by 0.098 hours. Across the teammates observed in an average team that offsets roughly a third of the hours the rule adds. The response is concentrated in the first three months and inconsistent with the mechanical division of a fixed workload.

We provide causal evidence on the effects of short-time work (STW) subsidies on individual short‑ and medium‑run labor market outcomes. Comparing workers in firms whose STW applications were approved to otherwise similar workers in firms whose applications were rejected, we find that access to STW leads to higher employment income and a reduced risk of unemployment. These effects, however, fade out in the second year after treatment. Around half of the employment income effect stems from the intensive margin of falling unemployed with the other half attributable to lower wages for workers with rejected STW applications. The unemployment‑reducing effect is concentrated among low‑income employees, whereas high‑income employees benefit primarily through improved earnings.

This paper develops a two-region model of interjurisdictional minimum wage competition, demonstrating that such competition yields an inefficient minimum wage even in the absence of labor mobility. The inefficiency arises because mobile capital-whether technologically complementary to or substitutable for labor-drives strategic interaction across jurisdictions. The analysis yields two main findings. First, minimum wage competition unambiguously results in an equilibrium wage that falls short of the social optimum, irrespective of the nature of capital-labor technological interaction. Second, once capital taxation becomes an available policy instrument, the technological relationship between capital and labor determines whether the equilibrium minimum wage is excessive or insufficient.

This paper studies the effects of the Lex Bonny, a major Swiss place-based industrial policy introduced to support economically distressed regions in the 1970s. Using newly assembled historical firm-level data, we examine how the policy affected firm dynamics across municipalities over time. We estimate a series of difference-in-differences and spatial difference-in-differences models that exploit both policy eligibility and distance to treated areas. The results show no evidence of differential pre-trends and reveal a positive and persistent increase in the stock of firms in treated municipalities. These effects emerge gradually after policy implementation and are driven primarily by higher firm entry, rather than reduced exit or relocation. Overall, the findings suggest that the Lex Bonny stimulated firm creations.

In this paper, we develop a general equilibrium spatial model to study the effects of place-based subsidies under monopsonistic competition. In our model, firms and workers are perfectly mobile across a continuum of communities. Firms are locally oligopolistic, facing the downward sloping supply curve in a given community. The incidence of place-based policy falls on workers, landlords, and firms, the last of which has been traditionally left out of place-based policy analysis. Our model produces three sufficient statistics to evaluate the effect of place-based subsidies: changes in worker wages, landlord rents, and firm profits. We take the model to the U.S. administrative tax microdata to understand the extent of imperfect competition within local communities designated federal Empowerment Zones (EZs). We go on to provide the first long-run estimate of the program on worker welfare and evaluate how these results vary based on the degree of wage markdowns in each EZ.

The federal Historic Tax Credit (HTC) is one of the largest and longest running place-based development subsidies in the United States. Yet despite its scale, there is little causal evidence on whether the HTC induces new investment or simply transfers rents to property owners. We assemble a novel, geocoded dataset linking completed historic preservation activity to detailed commercial property and neighborhood level data. We provide new descriptive evidence on the scale and spatial distribution of the HTC. We then leverage the Tax Cuts and Jobs Act (TCJA) of 2017, which reduced the value of the credit, to estimate the causal effect of the HTC on property tax values and local economic outcomes. Finally, we exploit a spatial exposure strategy comparing Census tracts that receive an HTC-funded rehabilitation project to adjacent tracts that do not. Overall, we find evidence that the HTC both transfers rents and generates neighborhood-level externalities.

When local governments' funding opportunities are linked to the local economy, changes in the import and export competition may influence the revenue that local governments can raise. This paper estimates the effect of trade shocks on German municipalities' fiscal outcomes for the period from 1992 to 2012. We find that increased exposure to import competition has a detrimental effect on municipality revenues and expenditures, while additional export opportunities lead to positive effects. The adjustment of expenditures importantly depends on municipalities' initial fiscal and economic conditions. Municipalities with a higher initial debt per capita predominantly react by adjusting their debt repayment. In contrast, municipalities with a low initial debt per capita are able to limit the negative impact of import competition on local public investment and substantially expand their investment when export opportunities arise.

We exploit monetary thresholds in Brazil's Procurement Law that assign public contracts

to procurement procedures with different degrees of formality and discretion.

Combining administrative procurement records with independent audit evidence

from the Office of the Comptroller-General (CGU), we implement a

regression-discontinuity design using audit-based measures of corruption and

procurement mismanagement. Rule tightening has no systematic effect on

corruption across outcomes, procurement types, or municipality sizes. In

contrast, stricter rules reduce procurement mismanagement in settings where

procedural standardization is most likely to matter: the first threshold

robustly lowers mismanagement in public works among smaller municipalities,

while the second provides more qualified evidence of lower mismanagement in

purchases. These effects tend to be stronger in smaller municipalities and

less stable as larger municipalities are added to the sample, consistent with

diminishing returns to formal rules as administrative capacity increases.

Procurement regulation therefore appears to improve local-government

performance primarily through administrative discipline rather than corruption

deterrence.

We study the extent of a one-size-fits-all approach in the design of public procurement (PP) tenders using comprehensive data from Finland. We show that crucial PP design features related to auction and contract rules tend to have significant lack of variation across different tenders for different industries within a contracting authority. We show that this organizational rigidness is due to both organizational level culture and individual employee level work habit formation with the latter being more important. We find that both greater organizational rigidity and deviating from the national industry norms are associated with lower number of bids and higher probability of zero-bid tenders, pointing to a potential efficiency loss from organizational rigidness in PP, and offering a solution that buyers should mimic how other organizations typically buy similar products rather than how they themselves buy very different products.

When political leadership is captured, bureaucrats may either become instruments of corrupt rule or act as a buffer that constrains its effects. We examine these competing expectations in the context of Italian municipalities infiltrated by mafia organizations. Leveraging a 1991 law that allows the central government to dissolve captured municipal councils, we study how bureaucratic performance responds when political corruption is abruptly removed. Using a difference-in-differences design with matched controls based on a machine-learning index of mafia-infiltration risk, we show that dissolutions substantially reduce payment delays, indicating improved bureaucratic performance. Evidence from administrative data and investigative reports suggests these gains are driven by behavioral responses—such as improved morale and reduced shirking— and allows us to rule out alternative mechanisms. The findings show that political capture weakens state capacity by distorting politician–bureaucrat relations, and that bureaucracies can mitigate its downstream consequences rather than amplify them.

This study examines how the size of political bodies affects local public finances in Italian municipalities. Using administrative data and a difference-in-differences approach, it shows that larger executives increase expenditures, mainly through investment spending financed by intergovernmental transfers, while larger councils tend to constrain spending. The results suggest that executive specialization and council fragmentation shape fiscal outcomes in opposite directions. Voters appear to reward executive-led spending, improving the political careers of mayors and executive members, but not councilors. Overall, the study shows how bargaining between differently sized branches of local government influences fiscal policy.

The paper examines whether, and at what level of public debt, European fiscal rules are associated with different cyclical patterns of fiscal policy. Using ex ante fiscal plans and output gap forecasts from European Commission Autumn vintages for 26 EU countries (2008–2019), we estimate annual country-specific measures of fiscal cyclicality through time-varying coefficient models. To address simultaneity, we complement a time-varying specification with a novel instrumental-variable estimator based on kernel methods, using an external demand shifter as instrument. The estimated coefficients are then related to the strength of fiscal rules, relying on continuous indices from the IMF and the European Commission within a panel threshold framework. A robust debt threshold emerges at around 87% of GDP: above it, stronger rules are associated with greater pro-cyclicality; below it, the relationship is weak. These findings suggest that in high-debt environments rule-based surveillance may amplify cyclical pressures unless flexibility is explicitly debt-contingent.

For 27 EU countries, for the period 1995-2024, this paper assesses the tax-and-spend versus the spending-and-tax hypothesis, in the context of fiscal rules and sovereign risk awareness. Results show that a one percentage point increase in revenue (spending) ratios leads to an increase of 0.87 (0.51) pp in spending (revenue) ratios, hinting that the average budget decision-making has been more dominated by the revenue side. Moreover, the single currency produces tighter fiscal synchronization between the two sides of the government balance sheet. In addition, stronger fiscal rules help decreasing government spending while contributing to increasing government revenues. Finally, regarding the tax-and-spend analysis, an increase in the sovereign ratings leads to higher spending ratios, which can be seen as fiscal authorities having a better assessment from capital markets, which accept some additional government spending.

This study investigates the impact of fiscal rule stringency on political corruption in developing countries. Using a panel of 108 countries over the period 1997–2020 and applying the Entropy-IV method, the results indicate that greater fiscal rule stringency significantly reduces corruption. This effect, which remains robust across several specifications, suggests that rule-based frameworks can generate side effects beyond their initial objective of mitigating deficit bias. The analysis also reveals that the impact of fiscal rule stringency is primarily observed in upper-middle-income countries and in contexts where executive power faces moderate institutional constraints. Moreover, we identify a threshold effect, indicating that while increasing stringency initially reduces corruption, excessively rigid fiscal rules may become counterproductive. Overall, these results suggest that what matters most is not the mere adoption of fiscal rules, but their design, credibility, and appropriate level of stringency.

This paper examines the cyclicality of tax expenditures, using panel data for both developed and developing economies. The analysis reveals that tax expenditures exhibit pronounced procyclicality in developing economies, whereas in developed economies they display a countercyclical pattern. These results are consistent with prior research on statutory tax and deficit adjustments across the business cycle. By using a stylized model, I show that observed behavior in developing economies is consistent with debt constraints; in particular, legitimate lagged report of tax expenditures in the formal budget, creates an incentive for non-transparent political maneuvering.

Tax incentives for charitable giving are a critical element of the policy infrastructure sustaining nonprofit organizations. This study examines the impact of Korea’s 2014 income tax reform—which converted donation deductions from an income deduction to a flat-rate tax credit—on the financial resource base of the third sector. Using administrative panel data of 100,000 wage and salary earners from the National Tax Service (2009–2018), we employ a difference-in-differences strategy to identify the reform’s causal effect. The reform significantly reduced both the probability of donating (by 0.8 percentage points) and donation amounts (by 7.48 percent), with effects concentrated among higher-income earners who constitute a disproportionate share of nonprofit revenue. Drawing on the philanthropic behavior and institutional context literatures, we discuss implications for nonprofit financial sustainability and offer policy lessons for countries considering similar reforms.

Employees can receive compensation in forms that are immediately taxable, such as wage and salary payments; tax exempt, such as employer-paid premiums for health insurance; or tax deferred, such as certain contributions to retirement plans. A higher tax rate makes it more attractive to receive compensation in the form of untaxed or tax-deferred benefits. Using data from IRS Form 990, this paper provides evidence about how tax rates affect the mix of taxable and other compensation received by a particular type of employee, the leaders of nonprofit organizations. Preliminary analysis suggests that nonprofit organizations located in states with higher top marginal personal income tax rates pay a higher share of compensation in non-taxable forms.

We study the effects of a temporary tax on high wages levied on employers in the Netherlands. The tax imposed a 16 per cent surcharge on the portion of wages above €150,000 in 2012–2013. Using employer–employee data and tax returns, and combining bunching, difference-in-differences and triple-differences designs, we find no effect on employees’ wages, implying that employers bore the full burden of the tax. In contrast, owner-managers reduced their pay to offset the surtax. The response to the tax persists for many years after its repeal. To prevent income relabelling, anti-avoidance rules set a minimum level of compensation for owner-managers. We find no response among those for whom these rules bind, suggesting that they can effectively limit tax avoidance. Our results show that the capital-labour income split in private businesses is sensitive to tax laws, that temporary taxes can have long-lasting effects, and that elasticities are shaped by policy design.

This paper documents sharp bunching in third-party reported employment earnings at a basic exemption for social security contributions among older workers. Beginning in 2012, workers age 60-64 who were receiving a public pension were required to make social security contributions equal to 9.9 percent of their employment earnings above a basic exemption threshold of $3,500. Using administrative data on third-party reported earnings and a differences-in- bunching estimator we document sharp bunching at the $3,500 threshold. We argue that our results represent new evidence on the role of firms in mediating the earnings response to payroll taxes.

Using Austrian administrative corporate tax return data, we examine how MNEs respond to three major anti-base erosion and profit shifting (anti-BEPS) policies: (i) interest and royalty deduction limitations, (ii) private Country-by-Country Reporting (CbCR), and (iii) controlled foreign corporation (CFC) rules. We find that limits on interest and royalty deductions curb income shifting out of Austria, with little evidence that exposed MNE entities substitute into alternative shifting channels. In contrast, private CbCR largely offsets these effects, while also incentivizing MNEs to increase economic activity in foreign low-tax affiliates. Exposure to the CFC rule similarly leads MNEs to increase economic activity abroad and continue income shifting, consistent with efforts to qualify for active-income safe harbors under the Austrian regime. Overall, our evidence suggests that anti-BEPS measures have nuanced effects. Some measures effectively constrain income shifting, whereas others primarily induce real economic responses without reducing the extent of income shifting.

The decentralized structure of crypto-assets constrains third-party reporting and weakens tax enforcement. The European Union’s eighth revision of the Directive on Administrative Cooperation (DAC8) addresses this gap by extending mandatory reporting and automatic cross-border exchange of information to crypto-asset service providers. This paper examines how cryptocurrency markets respond to this expansion of tax transparency. Using an event study design, we analyze daily returns for the 32 largest cryptocurrencies around the formal adoption of DAC8. We document a statistically significant negative abnormal return of 0.61\% at the 1\% level. The results are consistent with markets pricing higher expected enforcement and reduced after-tax returns following the integration of crypto-assets into a harmonized transparency regime.

This paper studies whether revolving-door moves from the tax administration to the private sector create private surplus for firms and rents for workers. Using linked administrative employer–employee data from Norway and Finland, we track hires of former tax-administration employees and outcomes for both hiring firms and movers. Firm-level event studies show that tax payments decline after a hire. Worker-level event-study difference-in-differences designs show sharp wage increases at the transition. We use a triple-difference specification isolates the premium specific to tax-administration-to-private moves from general job-switch wage gains. The results suggest that enforcement-specific know-how is tradable. Firms’ tax payments drop after acquiring this expertise, and workers capture part of the surplus through higher wages. We interpret the findings through a framework that distinguishes compliance-capital from avoidance-capital, with welfare implications ranging from reduced administrative frictions to revenue displacement and distorted competition

This paper examines the efficacy of tax amnesty programmes in developing countries using administrative tax data from Zambia. I assess the impact of the 2017 tax amnesty programme on compliance among small and medium-sized firms. I find that programme eligibility increases compliance on the extensive margin, raising the probability of reporting positive sales by 17–17.9 percent and of making a tax payment by 16.5 percent. However, the amnesty has no significant effect on reported sales or taxes paid on the intensive margin. Among enrolled firms, the programme generates short-lived improvements in on-time filing and sales reporting, while on-time payment and tax payments remain largely unaffected. A cost-benefit analysis shows that the fiscal cost of waived penalties and interest exceeds the additional revenue generated. The finding suggests the amnesty acted as a temporary compliance stimulus rather than a sustainable revenue-enhancing intervention, highlighting the need for ex-ante evaluation and improved compliance initiatives.