Abstract We use newly linked tax records to show that the large responses of UK company owner-managers to personal taxes are due to intertemporal income shifting and not to reductions in real business activity. Around half of this shifting is short-term and helps prevent volatile incomes being taxed more heavily under progressive personal taxes. The remainder reflects systemic profit retention over long periods to take advantage of lower tax rates, including preferential treatment of capital gains. We find no evidence that this tax-induced retention increases business investment. It does, however, substantially reduce the tax revenue raised from high income business owners.
{"title":"Intertemporal Income Shifting and the Taxation of Business Owner-Managers","authors":"Helen Miller, Thomas Pope, Kate Smith","doi":"10.1162/rest_a_01166","DOIUrl":"https://doi.org/10.1162/rest_a_01166","url":null,"abstract":"Abstract We use newly linked tax records to show that the large responses of UK company owner-managers to personal taxes are due to intertemporal income shifting and not to reductions in real business activity. Around half of this shifting is short-term and helps prevent volatile incomes being taxed more heavily under progressive personal taxes. The remainder reflects systemic profit retention over long periods to take advantage of lower tax rates, including preferential treatment of capital gains. We find no evidence that this tax-induced retention increases business investment. It does, however, substantially reduce the tax revenue raised from high income business owners.","PeriodicalId":275408,"journal":{"name":"The Review of Economics and Statistics","volume":"162 ","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136018195","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}
Miguel Almunia, Jonas Hjort, Justine Knebelmann, Lin Tian
Abstract Are firms sophisticated maximizers, or do they appear to make mistakes? Using transaction data from Ugandan value-added tax returns, we show that sellers and buyers report different amounts 79% of the time, despite invoices being easily cross-checked. Our estimates suggest that most firms are “advantageous misreporters,” but that 25% are “disadvantageous misreporters” who systematically overreport own sales minus purchases such that their tax liability increases. Similarly, many firms—especially disadvantageous misreporters—fail to VAT-report imported inputs they themselves reported at Customs, increasing their liability. On net, unilateral VAT misreporting cost Uganda about US$384 million in foregone 2013–2016 tax revenue.
{"title":"Strategic or Confused Firms? Evidence from “Missing” Transactions in Uganda","authors":"Miguel Almunia, Jonas Hjort, Justine Knebelmann, Lin Tian","doi":"10.1162/rest_a_01180","DOIUrl":"https://doi.org/10.1162/rest_a_01180","url":null,"abstract":"Abstract Are firms sophisticated maximizers, or do they appear to make mistakes? Using transaction data from Ugandan value-added tax returns, we show that sellers and buyers report different amounts 79% of the time, despite invoices being easily cross-checked. Our estimates suggest that most firms are “advantageous misreporters,” but that 25% are “disadvantageous misreporters” who systematically overreport own sales minus purchases such that their tax liability increases. Similarly, many firms—especially disadvantageous misreporters—fail to VAT-report imported inputs they themselves reported at Customs, increasing their liability. On net, unilateral VAT misreporting cost Uganda about US$384 million in foregone 2013–2016 tax revenue.","PeriodicalId":275408,"journal":{"name":"The Review of Economics and Statistics","volume":"108 ","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136018598","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}
Philipp Ager, Katherine Eriksson, Ezra Karger, Peter Nencka, Melissa A. Thomasson
Abstract During the 1918–1919 influenza pandemic, many local authorities made the controversial decision to close schools. We use newly digitized data from newspaper archives on the length of school closures for 165 large U.S. cities during the 1918–1919 flu pandemic to assess the long-run consequences of closing schools on children. We find that the closures had no detectable impact on children's school attendance in 1920, nor on their educational attainment and adult labor market outcomes in 1940. We highlight important differences between the 1918–1919 and COVID-19 pandemics and caution against extrapolating from our null effects to modern-day settings.
{"title":"School Closures during the 1918 Flu Pandemic","authors":"Philipp Ager, Katherine Eriksson, Ezra Karger, Peter Nencka, Melissa A. Thomasson","doi":"10.1162/rest_a_01170","DOIUrl":"https://doi.org/10.1162/rest_a_01170","url":null,"abstract":"Abstract During the 1918–1919 influenza pandemic, many local authorities made the controversial decision to close schools. We use newly digitized data from newspaper archives on the length of school closures for 165 large U.S. cities during the 1918–1919 flu pandemic to assess the long-run consequences of closing schools on children. We find that the closures had no detectable impact on children's school attendance in 1920, nor on their educational attainment and adult labor market outcomes in 1940. We highlight important differences between the 1918–1919 and COVID-19 pandemics and caution against extrapolating from our null effects to modern-day settings.","PeriodicalId":275408,"journal":{"name":"The Review of Economics and Statistics","volume":"64 ","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136017520","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}
Abstract We exploit changes in U.S. visa policies for nurses to measure the origin-country human capital response to international migration opportunities. Combining data on all migrant departures and postsecondary institutions in the Philippines, we show that nursing enrollment and graduation increased substantially in response to greater U.S. demand for nurses. The supply of nursing programs expanded. Nurse quality, measured by licensure exam pass rates, declined. Despite this, for each nurse migrant, nine additional nurses were licensed. New nurses switched from other degree types but graduated at higher rates than they would have otherwise, increasing the human capital stock in the Philippines.
{"title":"Medical Worker Migration and Origin-Country Human Capital: Evidence from U.S. Visa Policy","authors":"Paolo Abarcar, Caroline Theoharides","doi":"10.1162/rest_a_01131","DOIUrl":"https://doi.org/10.1162/rest_a_01131","url":null,"abstract":"Abstract We exploit changes in U.S. visa policies for nurses to measure the origin-country human capital response to international migration opportunities. Combining data on all migrant departures and postsecondary institutions in the Philippines, we show that nursing enrollment and graduation increased substantially in response to greater U.S. demand for nurses. The supply of nursing programs expanded. Nurse quality, measured by licensure exam pass rates, declined. Despite this, for each nurse migrant, nine additional nurses were licensed. New nurses switched from other degree types but graduated at higher rates than they would have otherwise, increasing the human capital stock in the Philippines.","PeriodicalId":275408,"journal":{"name":"The Review of Economics and Statistics","volume":"180 ","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136018194","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}
Joshua Angrist, Peter Hull, Parag A. Pathak, Christopher Walters
Abstract We introduce two empirical strategies harnessing the randomness in school assignment mechanisms to measure school value-added. The first estimator controls for the probability of school assignment, treating take-up as ignorable. We test this assumption using randomness in assignments. The second approach uses assignments as instrumental variables (IVs) for low-dimensional models of value-added and forms empirical Bayes posteriors from these IV estimates. Both strategies solve the underidentification challenge arising from school undersubscription. Models controlling for assignment risk and lagged achievement in Denver and New York City yield reliable value-added estimates. Estimates from models with lower-quality achievement controls are improved by IV.
{"title":"Credible School Value-Added with Undersubscribed School Lotteries","authors":"Joshua Angrist, Peter Hull, Parag A. Pathak, Christopher Walters","doi":"10.1162/rest_a_01149","DOIUrl":"https://doi.org/10.1162/rest_a_01149","url":null,"abstract":"Abstract We introduce two empirical strategies harnessing the randomness in school assignment mechanisms to measure school value-added. The first estimator controls for the probability of school assignment, treating take-up as ignorable. We test this assumption using randomness in assignments. The second approach uses assignments as instrumental variables (IVs) for low-dimensional models of value-added and forms empirical Bayes posteriors from these IV estimates. Both strategies solve the underidentification challenge arising from school undersubscription. Models controlling for assignment risk and lagged achievement in Denver and New York City yield reliable value-added estimates. Estimates from models with lower-quality achievement controls are improved by IV.","PeriodicalId":275408,"journal":{"name":"The Review of Economics and Statistics","volume":"55 4","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136017525","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}
Abstract We estimate the effects of student loan access on educational attainment and labor market returns in New Zealand. We exploit the introduction of a national policy mandating a 50% pass rate for student loan renewals using a regression discontinuity design. Retaining loan access increases reenrollment for students around the threshold, and a majority eventually graduate with a bachelor's degree within seven years. We find that retaining student loan access leads to large labor market returns for struggling students. The additional debt from further borrowing is small relative to the earnings returns and declines quickly due to faster repayment.
{"title":"Do Academically Struggling Students Benefit From Continued Student Loan Access? Evidence From University and Beyond","authors":"Yu-Wei Luke Chu, Harold E. Cuffe","doi":"10.1162/rest_a_01144","DOIUrl":"https://doi.org/10.1162/rest_a_01144","url":null,"abstract":"Abstract We estimate the effects of student loan access on educational attainment and labor market returns in New Zealand. We exploit the introduction of a national policy mandating a 50% pass rate for student loan renewals using a regression discontinuity design. Retaining loan access increases reenrollment for students around the threshold, and a majority eventually graduate with a bachelor's degree within seven years. We find that retaining student loan access leads to large labor market returns for struggling students. The additional debt from further borrowing is small relative to the earnings returns and declines quickly due to faster repayment.","PeriodicalId":275408,"journal":{"name":"The Review of Economics and Statistics","volume":"661 2","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136018463","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}
Abstract After growing steadily for decades, in the mid-2000s, average US household energy consumption began declining. Using household-level data from the Residential Energy Consumption Survey and Current Population Survey between 1990 and 2020, we decompose overall changes in per-household consumption into three components: a) average income; b) cross-household income distribution; and c) consumption habits, which include energy efficiency. Growth of average income caused consumption to increase by 11 percent, and rising income inequality reduced consumption by 8 percent, nearly entirely offsetting the effect of income growth. Changes in habits also reduced consumption. Back-of-the-envelope calculations indicate an unexpected effect of rising income inequality: climate and air quality improvements valued at $9 billion in 2020 due to lower electricity consumption. The results indicate the importance of coordinating policies that address inequality and pollution.
{"title":"Rising U.S. Income Inequality and Declining Residential Electricity Consumption: Is There a Link?","authors":"Joshua Linn, Jing Liang, Yueming (Lucy) Qiu","doi":"10.1162/rest_a_01387","DOIUrl":"https://doi.org/10.1162/rest_a_01387","url":null,"abstract":"Abstract After growing steadily for decades, in the mid-2000s, average US household energy consumption began declining. Using household-level data from the Residential Energy Consumption Survey and Current Population Survey between 1990 and 2020, we decompose overall changes in per-household consumption into three components: a) average income; b) cross-household income distribution; and c) consumption habits, which include energy efficiency. Growth of average income caused consumption to increase by 11 percent, and rising income inequality reduced consumption by 8 percent, nearly entirely offsetting the effect of income growth. Changes in habits also reduced consumption. Back-of-the-envelope calculations indicate an unexpected effect of rising income inequality: climate and air quality improvements valued at $9 billion in 2020 due to lower electricity consumption. The results indicate the importance of coordinating policies that address inequality and pollution.","PeriodicalId":275408,"journal":{"name":"The Review of Economics and Statistics","volume":"52 4","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135460821","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}
Abstract Consignment auctions are two-stage mechanisms to (re)-allocate emission permits. Firms are first endowed with permits and then allowed to trade them. We determine theoretically endowments that enable efficient allocation, subject to incentive compatibility, individual rationality, and no deficit. All firms prefer efficient consignment auctions to efficient standard auctions, making them politically palatable. Firms' investment incentives align with the first-best in efficient consignment auctions. Grandfathering based on efficient long-run allocations induces efficiency-permitting endowments. A simple calibration to data from Southern California's RECLAIM program validates our no-deficit assumption and shows that grandfathering provides the best theoretical match for the empirically observed endowments.
{"title":"Efficient Consignment Auctions","authors":"Bing Liu, Simon Loertscher, Leslie M. Marx","doi":"10.1162/rest_a_01389","DOIUrl":"https://doi.org/10.1162/rest_a_01389","url":null,"abstract":"Abstract Consignment auctions are two-stage mechanisms to (re)-allocate emission permits. Firms are first endowed with permits and then allowed to trade them. We determine theoretically endowments that enable efficient allocation, subject to incentive compatibility, individual rationality, and no deficit. All firms prefer efficient consignment auctions to efficient standard auctions, making them politically palatable. Firms' investment incentives align with the first-best in efficient consignment auctions. Grandfathering based on efficient long-run allocations induces efficiency-permitting endowments. A simple calibration to data from Southern California's RECLAIM program validates our no-deficit assumption and shows that grandfathering provides the best theoretical match for the empirically observed endowments.","PeriodicalId":275408,"journal":{"name":"The Review of Economics and Statistics","volume":"17 4","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135460092","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}
Abstract Migrants shape market access: they reduce international trade frictions and they affect the geographical location of demand. This paper incorporates both effects in a model of inter- and intra-national trade and migration calibrated to US states. It estimates the elasticity of exports and imports to migrants and shows that reducing US migrant population shares to 1980s levels would increase import (export) trade costs by 7% (2.5%) and decrease US natives' real wages by more than 2%. States with higher exposure to migrant consumer demand than to migrant labor competition would suffer more, as would states with higher export and import exposure.
{"title":"Migrants, Trade and Market Access","authors":"Barthélémy Bonadio","doi":"10.1162/rest_a_01380","DOIUrl":"https://doi.org/10.1162/rest_a_01380","url":null,"abstract":"Abstract Migrants shape market access: they reduce international trade frictions and they affect the geographical location of demand. This paper incorporates both effects in a model of inter- and intra-national trade and migration calibrated to US states. It estimates the elasticity of exports and imports to migrants and shows that reducing US migrant population shares to 1980s levels would increase import (export) trade costs by 7% (2.5%) and decrease US natives' real wages by more than 2%. States with higher exposure to migrant consumer demand than to migrant labor competition would suffer more, as would states with higher export and import exposure.","PeriodicalId":275408,"journal":{"name":"The Review of Economics and Statistics","volume":"7 3","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135460093","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}
Carlos Madeira, João Madeira, Paulo Santos Monteiro
Abstract We investigate how dissent in the FOMC is affected by structural macroeconomic shocks obtained using a medium-scale DSGE model. We find that dissent is less (more) frequent when demand (supply) shocks are the predominant source of inflation fluctuations. In addition, supply shocks are found to raise private sector forecasting uncertainty about the path of interest rates. Since supply shocks impose a trade-off between inflation and output stabilization while demand shocks do not, our findings are consistent with heterogeneous preferences over the dual mandate among FOMC members as a driver of policy disagreement.
{"title":"The Origins of Monetary Policy Disagreement: The Role of Supply and Demand Shocks","authors":"Carlos Madeira, João Madeira, Paulo Santos Monteiro","doi":"10.1162/rest_a_01383","DOIUrl":"https://doi.org/10.1162/rest_a_01383","url":null,"abstract":"Abstract We investigate how dissent in the FOMC is affected by structural macroeconomic shocks obtained using a medium-scale DSGE model. We find that dissent is less (more) frequent when demand (supply) shocks are the predominant source of inflation fluctuations. In addition, supply shocks are found to raise private sector forecasting uncertainty about the path of interest rates. Since supply shocks impose a trade-off between inflation and output stabilization while demand shocks do not, our findings are consistent with heterogeneous preferences over the dual mandate among FOMC members as a driver of policy disagreement.","PeriodicalId":275408,"journal":{"name":"The Review of Economics and Statistics","volume":"109 2","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135460101","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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