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Existing literature shows that a ban on child labour may be self-enforcing under the extreme assumption that, above the subsistence level, no amount of consumption can compensate parents for the disutility of child labour. The present paper shows that a partial ban may be self-enforcing also in a more general model where education is an alternative to work, and the disutility of child labour can be compensated by higher present consumption or future income, but a total ban may not. It also shows that, in the absence of informational asymmetries, child labour can be eliminated and a first best achieved if the ban is combined with a credit-backed policy including a subsidy to parents, and a tax on skilled adults. A first best is out of reach if the use children make of their time when they are neither at school, nor working in the labour market is private information, because the policy maker then faces an incentive-compatibility constraint. The second-best policy reduces child labour, but not to zero. [ABSTRACT FROM AUTHOR]

While the descriptive impacts of the pandemic on women have been well documented in the aggregate, we know much less about the impacts of the pandemic on different groups of women. After controlling for detailed job and demographic characteristics, including occupation and industry, we find that the pandemic led to significant excess labor force exits among women living with children under age six relative to women without children. We also find evidence of larger increases in exits among lower-earning women. The presence of children predicted larger increases in exits during the pandemic among Latina and Black women relative to White women. Overall, we find evidence that pandemic induced disruptions to childcare, including informal care from family and friends. Our results suggest that the unique effect of childcare disruptions during the pandemic exacerbated pre-existing racial and income inequalities among women. [ABSTRACT FROM AUTHOR]

We study the Ricardian Equivalence Theorem in the presence of a reserve requirement. Banks pay depositors the deposit rate and receive the borrowing rate on loans. Equivalence fails because the reserve requirement drives a wedge between the deposit and borrowing rates implying that government faces a different intertemporal tradeoff than savers. A tax cut financed by an increase in government debt causes an increase in savings but only increases the supply of loanable funds by a fraction because of the reserve requirement. This causes interest rates to rise and consumption to fall. We also show that if the central bank pays interest on reserves at the borrowing rate, the various rates are equal, however, equivalence still fails. The reason is that future taxes to pay down the debt must be higher for the central bank to pay interest and consumption will fall in response. [ABSTRACT FROM AUTHOR]

Purpose: The paper aims to examine the role played by property tax in influencing strategic decisions regarding marital separation and divorce in Italian municipalities. Design/methodology/approach: The empirical analysis is conducted on a sample of 6,458 Italian municipalities by applying the ordinary least squares (OLS) and instrumental variables (IVs) approaches. Findings: The estimation results show a small increase in marital separations and divorces as the difference between the municipal secondary and primary home tax rate increases. Specifically, an increase of 1‰ in the property tax rate differentials is accompanied by an increase of six marital separations and four divorces per 1,000 inhabitants. Research limitations/implications: The main limitation of the analysis is that the strategic behavior of the married couple is inferred from econometric analysis with data aggregated at the municipal level. To investigate this phenomenon more precisely, it would be useful to have individual data collected by surveys on strategic divorce decisions due to property tax incentives. Originality/value: This study contributes to the scant existing literature on the tax incentives for strategic divorce. It is the first study to empirically investigate the effects of property tax on separation and divorce decisions by investigating the Italian context. In Italy, a property tax was introduced in 1993, encouraging "false" divorces by spouses with a second home since the tax on the secondary home was set at a rate higher than that on the primary residence. Moreover, there were no tax deductions and no additional tax breaks on the secondary home, while they were established on the primary one. Higher property taxes and the absence of tax breaks on the secondary home may have encouraged a strategic behavior whereby many married couples filed for false separation and divorce in order to recover part of property tax rebates. [ABSTRACT FROM AUTHOR]

This study examines the influence of fiscal councils on public opinion regarding fiscal issues. Using a survey-framing experiment on a representative sample of 900 inhabitants of the Czech Republic, the study evaluates how the framing of a message regarding the negative effects of rising government debt would impact the attitudes of respondents. The results show that framing the message as coming from the Czech Fiscal Council does not increase its credibility. Fiscal councils should not focus on persuading the public of their viewpoint on public finance issues, but rather utilize the knowledge of agenda-setting theory to gain media attention for fiscal issues.

AbstractI use a dictator game, with a preceding production phase, to explore how different sources of unearned inequality influence distribution decisions. The experiment introduces three inequalities: (1) inequality due to investment success, (2) inequality of initial endowments, and (3) inequality in a real-effort task requirement for receiving the initial endowment. I find that participants in rural Ghana respect each inequality, adjusting their allocation decisions in response to investment success, the distribution of initial endowments, and the effort requirement. Their distributional preferences suggest an interaction between the sources where those with high initial endowments are more likely to respect project success outcomes. Moreover, participants demonstrate a self-serving bias in fairness preferences, where those with high initial endowments and successful projects are more likely to respect inequality. Finally, I find a significant increase in self-allocations when participants must exert effort to receive their endowment. [ABSTRACT FROM AUTHOR]

Children represent the largest indirect beneficiaries of the U.S. social welfare system. Yet, many questions remain about the direct benefits of cash aid to children. The current understanding of the impacts of cash aid in the U.S. is drawn primarily from studies of in-kind benefits, tax credits, and conditional cash aid programs. A corresponding economics literature focuses on the role of income and the labor supply responses of parents, parenting skills, and early education as family investment mechanisms that reduce socioeconomic inequality in children's well-being. In contrast to the U.S., dozens of low- to middle-income nations use direct cash aid—conditional or unconditional—as a central policy strategy, with demonstrated positive effects across a host of economic and health measures and selected aspects of children's health and schooling. This paper reviews the economic research on U.S. safety net programs and cash aid to families with children and discusses what existing studies reveal about the impacts of cash aid on family investment mechanisms and children's outcomes. We specifically highlight gaps in understanding the impacts of unconditional cash aid on children. We then review nine contemporary unconditional cash transfer programs and discuss their promise and limitations in filling the U.S.-based economic evidence gap. [ABSTRACT FROM AUTHOR]

Property transaction taxes—also known as stamp duty—are widely viewed as an inefficient form of taxation. In this paper, we examine the welfare implications of removing stamp duty in a general equilibrium overlapping generation model with heterogeneous agents. Our model features an idiosyncratic shock to housing preferences, which may create mismatch or induce households to move. We calibrate the model to the Australian housing market, and conduct counterfactual policy experiments where stamp duty is replaced with recurrent property or consumption taxes. We find that removing stamp duty raises household mobility and reduces the degree of housing mismatch substantially. When examining steady states, we find that newborn households prefer entering an economy with a recurring property tax rather than one with stamp duty. In contrast, when examining the transition we find that existing households prefer replacing stamp duty with a consumption tax. [ABSTRACT FROM AUTHOR]

The prevalence of obesity has increased significantly worldwide, including in low- and middle-income countries. In Ecuador, a middle-income country, the government has implemented two policies to improve the quality of its population's diet: (1) a traffic-light (TL) nutritional labeling requirement for processed foods and (2) a special tax scheme for drinks with a high sugar content (HSC). This study examines changes in carbonated soft drink (CSD) sugar formulation and its associated impacts on sugar consumption after the implementation of these two policies. Sugar content in soft drinks was obtained from the National Agency for Health Regulation, Control, and Surveillance (ARCSA) and directly from the labels of carbonated soft drinks sold in the country. CSD monthly purchase data from January 2013 to December 2019 were obtained from the Kantar World Panel (Ecuador). Mixed reactions followed the introduction of the TL in the sugar content reformulation of CSD. In contrast, the implementation of the HSC tax scheme was followed by extensive efforts to reformulate CSD as all brands studied decreased their sugar content. We also found evidence that CSD consumption reduced significantly after the HSC tax scheme was imposed. Overall, sugar consumption linked to CSD decreased after the implementation of these two policies. Still, most of this decrease is related to reformulation activities observed after the HSC tax scheme was implemented. [ABSTRACT FROM AUTHOR]

AbstractThis study analyzed whether gender is an important factor in explaining the behaviour of taxpayers towards tax compliance. The study extended the theory of planned bahaviour to establish the factors influencing the behaviour of taxpayers towards tax compliance across gender. Primary data was collected from 390 taxpayers using a closed-ended questionnaire set. Descriptive and inferential statistical tools were used to analyze the data. Descriptive data were presented using the mean and standard deviation, while inferential data were analyzed using a multivariate regression analysis and a univariate and independent t-test. Findings from the survey showed that the predictor variables contribute 51% in explaining the taxpayers towards tax compliance of which 84.23% is for male taxpayers while 71.86% is for female taxpayers. The results further revealed that there is a statistical difference in the behaviour of taxpayers towards tax compliance. Female taxpayers are more influenced by tax knowledge, perception of government spending and roles of tax authority while male taxpayers are more influenced by tax penalties, economic factors and tax rates. Gender contributes 55.1% to taxpayers’ beheviour towards tax compliance. The study contributed to the current literature by establishing the predictor variables that influences the behaviour of taxpayers towards tax compliance which can be used as a basis when designing a tax compliance policy and program.

This study investigates the conditions under which welfare fraud and incomplete take-up emerge simultaneously and persist for a long time, which has been observed in many countries, particularly Japan and Germany. To do this, we extend models of statistical discrimination and taxpayers’ resentment to simple models of population dynamics. We find two stable boundary equilibria in the first model. One of these equilibria entails low welfare fraud and 100 % incomplete take-up, and the other entails high welfare fraud and 100 % take-up. In contrast, we find a unique stable equilibrium in the tax resentment model, which is interior and thus allows for the coexistence of welfare fraud and incomplete take-up in a long run. Hence, we conclude that this unique long-run equilibrium of the dynamic taxpayers’ resentment model provides a better explanation for the observation of simultaneous and persistent presence of welfare fraud and incomplete take-up in actual economies. [ABSTRACT FROM AUTHOR]

We examine how means-tested childcare subsidies affect parental labor supply. Using the introduction of reduced childcare prices for low-income families in Norway in 2015, we show that these subsidies may have the unintended effect of discouraging work rather than promoting employment. First, structural labor supply simulations suggest that a negative parental labor supply effect dominates, ex ante. Ex post, we find a small and insignificant effect of means-tested childcare subsidies on parental labor supply in the reform year. We find no statistically significant bunching around the income limits in subsequent years, but we do find negative labor supply effects in subsequent expansions of the reform. Our results suggest that in a context where both parental employment and participation in formal childcare are high, means-tested childcare subsidies may have unintended parental labor supply effects. [ABSTRACT FROM AUTHOR]

We study the impact of changing the existing terminology to describe the rules governing Social Security retirement benefits. We provided respondents from a nationally representative online panel with information pertinent to the decision of when to claim Social Security retirement benefits. The content of the information treatments was identical for all respondents, but some were randomly given an alternative set of terms to refer to the key claiming ages (the experimental treatment group), while others were given the current terms (the control group). Despite the minimal nature of the change, there were significant differences in outcomes. Those in the treatment group spent less time reading the information, but their understanding of the Social Security program improved more than the control group. In addition, the treatment delayed retirement claiming intentions by an average of about two and a half months and increased the recommended claiming age to vignette characters by a similar magnitude. The effects were particularly strong for those with low levels of financial literacy. The relative gains in knowledge persisted several months after the treatment. [ABSTRACT FROM AUTHOR]

Economic disruptions generally create winners and losers. The compensation problem consists of designing a reform of the existing income tax system that offsets the welfare losses of the latter by redistributing the gains of the former. We derive a formula for the compensating tax reform and its impact on the government budget when only distortionary tax instruments are available and wages are determined endogenously in general equilibrium. We apply this result to the compensation of robotization in the United States. [ABSTRACT FROM AUTHOR]

This paper studies how tax‐and‐transfer progressivity influences aggregate fluctuations when interacting with household heterogeneity. Using a simple static model of the extensive margin labor supply, we analytically characterize how a degree of progressivity influences differential labor supply responses to aggregate conditions across heterogeneous households. We then build a quantitative dynamic general equilibrium model with both idiosyncratic and aggregate productivity shocks and show that it delivers moderately procyclical average labor productivity and a large cyclical volatility of aggregate hours relative to output. Our quantitative exercises suggest that progressivity at the bottom of the income distribution shaped by the phasing out of transfers is key for these findings. Finally, we provide suggestive empirical evidence on the heterogeneity of employment responses across the wage distribution. [ABSTRACT FROM AUTHOR]

Previous work has shown that nonlinear taxation can affect the willingness to undertake risky investments. We show that similar results can arise if agents are uncertain regarding future tax rates. Uncertain taxes distort investment decisions when tax rates are correlated with marginal productivity. We demonstrate this result in a simple theoretical framework, which can also explain some well-known results on the effects of tax progressivity and tax asymmetry on investment. Time-series estimates for the post-WW2 era suggest a negative correlation between effective tax rates and total factor productivity in the USA, yielding an effect on firm investment equivalent to an investment subsidy of around 1 percent. Our results have wide-ranging implications for a variety of tax-related work, including effective tax rates, optimal audit policy, and principal-agent problems between investors and managers. [ABSTRACT FROM AUTHOR]

We analyse the different fiscal treatment of married and cohabiting couples across all EU Member States using microsimulation methods. Our article highlights important differences across EU countries' tax–benefit systems, where seven countries show substantial bonuses for married couples and four exhibit marriage penalties. On a micro level, we find that these marriage bonuses/penalties differ substantially across household types and income. From a policy point of view, our results suggest that the abolishment of marriage-related tax–benefit components in countries with marriage bonuses would leave some households financially worse off but would increase governments revenues that could be spent to targeted support of specific groups. From both an equity and efficiency point of view, this abolishment would be desirable. [ABSTRACT FROM AUTHOR]

Many nations incentivize retirement saving by letting workers defer taxes on pension contributions, imposing them when retirees withdraw their funds. Using a dynamic life-cycle model, we show how 'Rothification' – that is, taxing 401(k) contributions rather than payouts – alters saving, investment, consumption, and Social Security claiming patterns. We find that taxing pension contributions instead of withdrawals leads to delayed retirement, somewhat lower lifetime tax payments, and relatively small reductions in consumption. Indeed, the two tax regimes generate quite similar relative inequality metrics: the relative consumption inequality ratio under taxed-exempt-exempt (TEE) is only 4% higher than that in the exempt-exempt-taxed (EET) case. Moreover, results indicate that the Gini measures are also strikingly similar under the EET and the TEE regimes for lifetime consumption, cash on hand, and 401(k) assets, differing by only 1–4%. While tax payments are higher early in life under the TEE regime, they are slightly lower in the long run. Moreover, higher EET tax payments are also accompanied by higher volatility. We therefore find few reasons for policymakers to favor either tax approach on egalitarian or revenue-enhancing grounds. [ABSTRACT FROM AUTHOR]

Abstract We investigate whether a universal basic income (UBI) programme should replace New Zealand’s public pension system. A UBI programme would increase the number of social benefit recipients and hence increase tax rates. Not only the basic income itself but also its accompanying tax rate hikes would influence intra- and inter-temporal choices of households. We use an overlapping generations model and show that households’ preferences would be time-inconsistent—in hindsight, households regret having saved too little. There are three major findings of this study. First, the public pension system would be preferred to a UBI programme increasing the tax rate of income. Second, a UBI programme increasing the consumption tax rate would be preferred to the public pension system by households at most ages, but they would reverse the preference later in their lives. Third, a decrease in the population growth rate would make the reversal of the preference more noticeable. [ABSTRACT FROM AUTHOR]

We analyse the effects of the Dutch Act on Extraordinary Measures for Urban Problems. This allows local governments to prohibit non-employed households from entering into public housing in targeted neighbourhoods to improve social mixing. We show that the Act is largely ineffective in changing the demographic composition of neighbourhoods. At the same time, due to prominent advertising of targeted deprived neighbourhoods, a stigma may have been created. We adopt a hedonic price approach and use a boundary-discontinuity (within 100 m of neighbourhood borders) to quantify the overall effect of the policy. We thus exploit spatio-temporal differences in house prices and find a sizeable price reduction of about 3–5%. The magnitude of this effect is confirmed for two other national place-based policy programmes, adding to the external validity of these findings. Our results suggest that neighbourhood stigma is important, which implies that individuals living in deprived neighbourhoods experience dis-utility from living in a place with a low status. [ABSTRACT FROM AUTHOR]

We study the added-worker effect in the Netherlands with large-scale administrative panel data for the period 1999–2015. Conditioning on samples with similar employment histories, we employ differences-in-differences to estimate the effect of a male partner's unemployment shock on the female partner's income. We find a modest added-worker effect of 2–5% of the male partner's income loss, as compared to the much larger compensating effect from social insurance schemes. The added-worker effect largely disappeared at the beginning of the Great Recession, but resurfaced a few years later. Over the years, profits from self-employment have become more important in dealing with unemployment shocks. [ABSTRACT FROM AUTHOR]

We compute participation tax rates across the EU and find that work disincentives inherent in tax–benefit systems largely depend on household composition and the individual's earner role within the household. We then estimate participation elasticities using an IV group estimator that enables us to investigate the responsiveness of individuals to work incentives. We contribute to the literature on heterogeneous elasticities by providing estimates for breadwinners and secondary earners separately, according to their potential earnings. Our results show an average participation elasticity of 0.0–0.1 among breadwinners and 0.1–0.4 among secondary earners in the EU as well as a high degree of heterogeneity across countries. [ABSTRACT FROM AUTHOR]

This paper explores the determinants of gender differences in male and female' relative economic position using intrahousehold microdata from Pakistan. Through a feminist lens, the study utilizes a novel procedure to estimate the intrahousehold gender differences, by comparing the respondents' responses regarding their relative economic position. The finding confirms a statistically significant gender differences in the mean values of a respondent's relative subjective well-being. Moreover, the study finds that the determinants of the respondents' subjective well-being are not exclusively limited to household per capita income, but also determined by the household's demographic structure, sanitation facility, physical insecurity as well as food insecurity of the household. Furthermore, food insecurity has a negative effect on female's subjective well-being, significantly, whereas physical insecurity mainly affects male well-being. Thus, the study concludes that the relative economic position by gender differ significantly and driven by gender specific empowerment variables. [ABSTRACT FROM AUTHOR]

Households with children may Tiebout (1956) sort to safe cities. Cities that cut funding for police protection may become less attractive to households with children, spurring housing developers to build smaller houses with fewer rooms. Voting data on police tax levies using regression discontinuity suggests that newly-built houses have more rooms in cities that renew rather than fail their tax levies. The treatment effect peaks in the second year after the tax levy at 1.9 rooms, a sizeable difference over the mean of 6.6 rooms. House size tells a similar story: the difference between newly-built houses in communities that pass and fail public safety tax levies is 317.6 square feet (29.5 square meters), representing 15% of the mean house size in the sample. The results become evident 2 years after the tax levy and persist in the third year before petering out in the fourth year. The effect may stem from communities signaling a decreased commitment to public safety, rather than an increase in the crime rate itself, because cutting small tax levies has about the same effect on house size as cutting large tax levies. [ABSTRACT FROM AUTHOR]