G. Dosi, M. C. Pereira, A. Roventini, M. Virgillito
Abstract In this work we develop a set of labour market and fiscal policy experiments upon the labour- and credit- augmented “Schumpeter meeting Keynes” agent-based model. The labour market is declined under two institutional variants, the “Fordist” and the “Competitive” set-ups meant to capture the historical transition from the post-WWII toward the post Thatcher-Reagan period. Inside these two regimes, we study the different effects of supply-side active labour market policies (ALMPs) vs. demand-management, passive labour market ones (PLMPs). In particular, we analyse the effects of ALMPs aimed at promoting job search, and at providing training to unemployed people. Next, we compare the effects of these policies with unemployment benefits meant to sustain income and therefore aggregate demand. Considering the burden of unemployment benefits in terms of the public budget, we link such provision with the objectives of the European Stability and Growth Pact. Our results show that (i) an appropriate level of skills is not enough to sustain growth when workers face adverse labour demand; (ii) supply-side policies are not able to reverse the negative interaction between flexibility and austerity; (iii) PLMPs outperform ALMPs in reducing unemployment and workers’ skill deterioration; and (iv) demand-management policies are better suited to mitigate inequality and to sustain long-run growth.
{"title":"What If Supply-Side Policies are Not Enough? The Perverse Interaction of Flexibility and Austerity","authors":"G. Dosi, M. C. Pereira, A. Roventini, M. Virgillito","doi":"10.2139/ssrn.3105496","DOIUrl":"https://doi.org/10.2139/ssrn.3105496","url":null,"abstract":"Abstract In this work we develop a set of labour market and fiscal policy experiments upon the labour- and credit- augmented “Schumpeter meeting Keynes” agent-based model. The labour market is declined under two institutional variants, the “Fordist” and the “Competitive” set-ups meant to capture the historical transition from the post-WWII toward the post Thatcher-Reagan period. Inside these two regimes, we study the different effects of supply-side active labour market policies (ALMPs) vs. demand-management, passive labour market ones (PLMPs). In particular, we analyse the effects of ALMPs aimed at promoting job search, and at providing training to unemployed people. Next, we compare the effects of these policies with unemployment benefits meant to sustain income and therefore aggregate demand. Considering the burden of unemployment benefits in terms of the public budget, we link such provision with the objectives of the European Stability and Growth Pact. Our results show that (i) an appropriate level of skills is not enough to sustain growth when workers face adverse labour demand; (ii) supply-side policies are not able to reverse the negative interaction between flexibility and austerity; (iii) PLMPs outperform ALMPs in reducing unemployment and workers’ skill deterioration; and (iv) demand-management policies are better suited to mitigate inequality and to sustain long-run growth.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124219261","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In many countries population ageing creates an implicit public debt. That is, if policies remain unchanged, the public debt will ultimately become unsustainable. This paper explores the optimal way to achieve debt sustainability. In particular, it asks when policy reforms should be made, how policies should be changed and which generations should make which contributions. As regards timing, we find that policy reform should anticipate future demographic change. As regards policy instruments, we find that optimal policy reform features changes in all available instruments. This implies less consumption of all types of goods; only pure public goods consumption may escape a reduction. The labour supply functions of the young and the old determine the allocation over policy instruments. In particular, the more elastic is the labour supply of the young, the smaller should be the increase in the tax rate on labour income; the more elastic is the labour supply of the old, the larger should be the reduction in transfers to the elderly. As regards generations, we find that the old share relatively little in the fiscal burden; future generations share more or less than the young, depending on future population size. In addition, we find that the change of the public debt is not a given, but a feature of optimal policies. In general,
{"title":"Paying for the Ageing Crisis: Who, How and When?","authors":"E. Westerhout","doi":"10.2139/ssrn.3099500","DOIUrl":"https://doi.org/10.2139/ssrn.3099500","url":null,"abstract":"In many countries population ageing creates an implicit public debt. That is, if policies remain unchanged, the public debt will ultimately become unsustainable. This paper explores the optimal way to achieve debt sustainability. In particular, it asks when policy reforms should be made, how policies should be changed and which generations should make which contributions. As regards timing, we find that policy reform should anticipate future demographic change. As regards policy instruments, we find that optimal policy reform features changes in all available instruments. This implies less consumption of all types of goods; only pure public goods consumption may escape a reduction. The labour supply functions of the young and the old determine the allocation over policy instruments. In particular, the more elastic is the labour supply of the young, the smaller should be the increase in the tax rate on labour income; the more elastic is the labour supply of the old, the larger should be the reduction in transfers to the elderly. As regards generations, we find that the old share relatively little in the fiscal burden; future generations share more or less than the young, depending on future population size. In addition, we find that the change of the public debt is not a given, but a feature of optimal policies. In general,","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-11-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127206783","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using linked housing and tax records from Denmark combined with a major reform of the mortgage interest deduction in the late 1980s, we carry out the first comprehensive long-term study of how tax subsidies affect housing decisions. The reform introduced a large and sharp reduction in the mortgage deduction for top-rate taxpayers, while reducing it much less or not at all for lower-rate taxpayers. We present three main findings. First, the mortgage deduction has a precisely estimated zero effect on homeownership. This holds even in the very long run. Second, the mortgage deduction has a sizeable impact on housing demand at the intensive margin, inducing homeowners to buy larger and more expensive houses. Third, the largest effect of the mortgage deduction is on household financial decisions, inducing them to increase indebtedness. These findings suggest that the mortgage interest deduction distorts the behavior of homeowners at the intensive margin, but is ineffective at promoting homeownership at the extensive margin and any externalities that may be associated with it.
{"title":"Do People Respond to the Mortage Interest Deduction? Quasi-Experimental Evidence from Denmark","authors":"J. Gruber, A. Jensen, H. Kleven","doi":"10.3386/w23600","DOIUrl":"https://doi.org/10.3386/w23600","url":null,"abstract":"Using linked housing and tax records from Denmark combined with a major reform of the mortgage interest deduction in the late 1980s, we carry out the first comprehensive long-term study of how tax subsidies affect housing decisions. The reform introduced a large and sharp reduction in the mortgage deduction for top-rate taxpayers, while reducing it much less or not at all for lower-rate taxpayers. We present three main findings. First, the mortgage deduction has a precisely estimated zero effect on homeownership. This holds even in the very long run. Second, the mortgage deduction has a sizeable impact on housing demand at the intensive margin, inducing homeowners to buy larger and more expensive houses. Third, the largest effect of the mortgage deduction is on household financial decisions, inducing them to increase indebtedness. These findings suggest that the mortgage interest deduction distorts the behavior of homeowners at the intensive margin, but is ineffective at promoting homeownership at the extensive margin and any externalities that may be associated with it.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128603312","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In 2006, the reform of the German fiscal constitution realigned legislative powers between the federal and the state governments. Since 2007, the German state governments have been allowed to design real estate transfer tax rates. We investigate whether government ideology predicts the levels and increases in the real estate transfer tax rates; and show that leftwing and center governments were more active in increasing the real estate transfer tax rates than rightwing governments. The result is important because many voters were disenchanted with the policies and platforms of the established German parties in the course of the euro and refugee crisis. Disenchantment notwithstanding, the established political parties are still prepared to offer polarized policies.
{"title":"The Real Estate Transfer Tax and Government Ideology: Evidence from the German States","authors":"Manuela Krause, N. Potrafke","doi":"10.1628/FA-2019-0014","DOIUrl":"https://doi.org/10.1628/FA-2019-0014","url":null,"abstract":"In 2006, the reform of the German fiscal constitution realigned legislative powers between the federal and the state governments. Since 2007, the German state governments have been allowed to design real estate transfer tax rates. We investigate whether government ideology predicts the levels and increases in the real estate transfer tax rates; and show that leftwing and center governments were more active in increasing the real estate transfer tax rates than rightwing governments. The result is important because many voters were disenchanted with the policies and platforms of the established German parties in the course of the euro and refugee crisis. Disenchantment notwithstanding, the established political parties are still prepared to offer polarized policies.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125429365","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This chapter provides an overview of an integrated and innovative approach adopted by the Prime Minister Narendra Modi led government, which assumed office in May 2014, to broaden and deepen delivery of social protection programs and schemes to Indian households. The government has accepted that social protection should be an integral part of India’s economic and social development strategies, and not be an appendage as has been the case previously. This approach recognizes that social protection programs should be designed to deliver public amenities and services to households, and not only focus on providing monetary payments alone. This is because the household welfare ultimately depends on consumption of public and private sector goods and services that monetary benefits and non-monetary services provide. This approach also recognizes that both market and non-market activities have the potential to enhance welfare; and the expenditure, time, energy, and effort reducing initiatives impacting on the households should be considered an integral components of a social protection system.
{"title":"An Analysis of Post-2014 Social Protection Initiatives in India","authors":"M. Asher","doi":"10.2139/ssrn.2972448","DOIUrl":"https://doi.org/10.2139/ssrn.2972448","url":null,"abstract":"This chapter provides an overview of an integrated and innovative approach adopted by the Prime Minister Narendra Modi led government, which assumed office in May 2014, to broaden and deepen delivery of social protection programs and schemes to Indian households. The government has accepted that social protection should be an integral part of India’s economic and social development strategies, and not be an appendage as has been the case previously. \u0000This approach recognizes that social protection programs should be designed to deliver public amenities and services to households, and not only focus on providing monetary payments alone. This is because the household welfare ultimately depends on consumption of public and private sector goods and services that monetary benefits and non-monetary services provide. This approach also recognizes that both market and non-market activities have the potential to enhance welfare; and the expenditure, time, energy, and effort reducing initiatives impacting on the households should be considered an integral components of a social protection system.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"115 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127579452","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper we consider amoral taxpayers who access amoral tax preparers in order to receive help in evading taxes. Taxpayers are aware of having a biased perception of the audit probability, but are unable to correct such bias without the help of a tax preparer. The market for tax preparation, characterized by imperfect competition, is described according to the conjectural variation approach. We show that according to the direction of the bias the tax preparer can suggest either a larger or a smaller evasion with respect to the one that the taxpayer would have implemented without the advice, resulting in an evasion smaller or larger than that observed in tax reports of unbiased taxpayers. Such ambiguity provides a motivation for the ambivalent attitudes of tax administrations towards tax preparers. It also turns out that sanctions on taxpayers are more effective than sanctions on tax preparers in order to deter tax evasion.
{"title":"Is There Any Induced Demand for Tax Evasion?","authors":"Carla Marchese, A. Venturini","doi":"10.2139/ssrn.2968443","DOIUrl":"https://doi.org/10.2139/ssrn.2968443","url":null,"abstract":"In this paper we consider amoral taxpayers who access amoral tax preparers in order to receive help in evading taxes. Taxpayers are aware of having a biased perception of the audit probability, but are unable to correct such bias without the help of a tax preparer. The market for tax preparation, characterized by imperfect competition, is described according to the conjectural variation approach. We show that according to the direction of the bias the tax preparer can suggest either a larger or a smaller evasion with respect to the one that the taxpayer would have implemented without the advice, resulting in an evasion smaller or larger than that observed in tax reports of unbiased taxpayers. Such ambiguity provides a motivation for the ambivalent attitudes of tax administrations towards tax preparers. It also turns out that sanctions on taxpayers are more effective than sanctions on tax preparers in order to deter tax evasion.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115199501","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
: GST is one of the most crucial tax reforms in India which has been long pending. The proposed goods and services tax is in fact the brainchild of ex-finance minister Mr.P.Chidambran .It was supposed to be implemented from April 2010, but due to political issues and conflicting interests of various stakeholders delayed. The goods and services tax is the biggest and substantial indirect tax reforms since 1947.The main idea of GST is to replace existing tax like value added tax, exise duty, service tax and sales taxe.The consumer shall also be equally benefited by avaling the goods and services at lower price as the cascading effect will be eliminated under proposed GST. The revenue of both central government and state government shall be increased in long run. It is expected to iron out wrinkles of existing indirect tax system and play a vital role in growth of India. The only hurdle to cross over in implementation of GST at the earliest is the disagreement of some of the state to do implement it.
{"title":"Goods and Services Tax in India","authors":"Ravi Raj","doi":"10.2139/SSRN.2946241","DOIUrl":"https://doi.org/10.2139/SSRN.2946241","url":null,"abstract":": GST is one of the most crucial tax reforms in India which has been long pending. The proposed goods and services tax is in fact the brainchild of ex-finance minister Mr.P.Chidambran .It was supposed to be implemented from April 2010, but due to political issues and conflicting interests of various stakeholders delayed. The goods and services tax is the biggest and substantial indirect tax reforms since 1947.The main idea of GST is to replace existing tax like value added tax, exise duty, service tax and sales taxe.The consumer shall also be equally benefited by avaling the goods and services at lower price as the cascading effect will be eliminated under proposed GST. The revenue of both central government and state government shall be increased in long run. It is expected to iron out wrinkles of existing indirect tax system and play a vital role in growth of India. The only hurdle to cross over in implementation of GST at the earliest is the disagreement of some of the state to do implement it.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"77 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-04-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130930353","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The seeds for the 2007-09 financial collapse were sewn over many years and nurtured by ill-advised governmental housing policy, the presence of pervasive fraud both large and small and the widespread failure of personal integrity. A chronology of bad choices made by individuals and the daisy-chain of complicit truth-bending and fraud at many levels of the mortgage loan origination and securitization food-chain is presented. This paper contributes to the accounting, banking, business and personal ethics, economic, mortgage lending, regulatory and policy making literature in several ways. First, it identifies about 20 different precipitating causes scholars have attributed as being responsible for the financial crisis. Second, this paper identifies about another 20 categories in the economic flow-chart of mortgage lending and securitization where fraud and facilitating payments of some sort constitute a lapse in personal ethics that contributes to the crisis. Next is a discussion of how governmental policy and lack of prosecutions may set the stage for a future replay of the 2007-08 experience. Finally, a discussion is presented of how psychology and behavioral science may help us to better understand the pattern of bad choices by individuals that caused so much economic loss and personal suffering.
{"title":"Personal Ethics & the U.S. Financial Collapse of 2007-08","authors":"L. Trautman","doi":"10.2139/SSRN.2502124","DOIUrl":"https://doi.org/10.2139/SSRN.2502124","url":null,"abstract":"The seeds for the 2007-09 financial collapse were sewn over many years and nurtured by ill-advised governmental housing policy, the presence of pervasive fraud both large and small and the widespread failure of personal integrity. A chronology of bad choices made by individuals and the daisy-chain of complicit truth-bending and fraud at many levels of the mortgage loan origination and securitization food-chain is presented. This paper contributes to the accounting, banking, business and personal ethics, economic, mortgage lending, regulatory and policy making literature in several ways. First, it identifies about 20 different precipitating causes scholars have attributed as being responsible for the financial crisis. Second, this paper identifies about another 20 categories in the economic flow-chart of mortgage lending and securitization where fraud and facilitating payments of some sort constitute a lapse in personal ethics that contributes to the crisis. Next is a discussion of how governmental policy and lack of prosecutions may set the stage for a future replay of the 2007-08 experience. Finally, a discussion is presented of how psychology and behavioral science may help us to better understand the pattern of bad choices by individuals that caused so much economic loss and personal suffering.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"120 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-11-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128128003","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Employing the available social accounting matrix, this paper examines the impacts of different public education consumption schemes on Cambodian macroeconomics, the labour market and household welfare. The results from the simulation scenarios in the CGE model revealed that the reallocation of public spending from primary and secondary education to higher education produced a negative impact on the wage rate of low and fairly educated labour, dropped outputs, and reduced household welfare, which had adverse effects on macroeconomic variables in general. However, the shift of public spending from administration to the three education sectors, showed positive impacts on the economy, household income and welfare. Given the factor endowment structure of the Cambodian education sector, the policy that focuses on higher education by providing more spending to this sector did not yield results as good as keeping the initial education spending structure.
{"title":"Cambodia Macroeconomic Impacts of Public Consumption on Education €€Œ a Computable General Equilibrium Approach","authors":"Sothy Ear, Sokcheng Sim, Khiev Pirom","doi":"10.2139/ssrn.3164263","DOIUrl":"https://doi.org/10.2139/ssrn.3164263","url":null,"abstract":"Employing the available social accounting matrix, this paper examines the impacts of different public education consumption schemes on Cambodian macroeconomics, the labour market and household welfare. The results from the simulation scenarios in the CGE model revealed that the reallocation of public spending from primary and secondary education to higher education produced a negative impact on the wage rate of low and fairly educated labour, dropped outputs, and reduced household welfare, which had adverse effects on macroeconomic variables in general. However, the shift of public spending from administration to the three education sectors, showed positive impacts on the economy, household income and welfare. Given the factor endowment structure of the Cambodian education sector, the policy that focuses on higher education by providing more spending to this sector did not yield results as good as keeping the initial education spending structure.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"140 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126699315","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we estimate the effect on emigration of the permanent income tax reductions implemented in Israel during the period 2004–2010. We find that emigration flows from Israel declined, especially for brackets that benefited from a larger tax reduction. We also find that the effect is stronger for younger workers than for older ones, a result consistent with the former group deriving expected tax benefits over a longer duration of time.
{"title":"The Effects of Permanent Income Tax Cuts on Emigration from Israel","authors":"Tomer Blumkin, Y. Margalioth, M. Strawczynski","doi":"10.1093/CESIFO/IFAA001","DOIUrl":"https://doi.org/10.1093/CESIFO/IFAA001","url":null,"abstract":"\u0000 In this paper, we estimate the effect on emigration of the permanent income tax reductions implemented in Israel during the period 2004–2010. We find that emigration flows from Israel declined, especially for brackets that benefited from a larger tax reduction. We also find that the effect is stronger for younger workers than for older ones, a result consistent with the former group deriving expected tax benefits over a longer duration of time.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-09-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116896945","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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