I analyze the effect of two corporate tax breaks, bonus depreciation and the Domestic Production Activities Deduction (DPAD), on executive compensation in publicly traded US firms. I find both tax breaks significantly increase executive compensation. For every dollar a firm benefits from the tax breaks, compensation of the firm’s top five highest-paid executives increases by $0.17 to $0.25. The tax breaks increase compensation primarily in firms with weaker governance structures, suggesting the compensation response is driven by executive rent extraction. (JEL D22, G34, H25, M12, M52)
{"title":"Corporate Tax Breaks and Executive Compensation","authors":"Eric Ohrn","doi":"10.1257/pol.20210155","DOIUrl":"https://doi.org/10.1257/pol.20210155","url":null,"abstract":"I analyze the effect of two corporate tax breaks, bonus depreciation and the Domestic Production Activities Deduction (DPAD), on executive compensation in publicly traded US firms. I find both tax breaks significantly increase executive compensation. For every dollar a firm benefits from the tax breaks, compensation of the firm’s top five highest-paid executives increases by $0.17 to $0.25. The tax breaks increase compensation primarily in firms with weaker governance structures, suggesting the compensation response is driven by executive rent extraction. (JEL D22, G34, H25, M12, M52)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"213 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135931088","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the long-run effects of contact with individuals from other regions in early adulthood on preferences, beliefs, and national identity. We combine a natural experiment, the random assignment of male conscripts to different locations throughout Spain, with tailored survey data. Being randomly assigned to complete military service outside of one’s region of residence fosters contact with conscripts from other regions and increases sympathy and trust toward people from the region of service, as measured decades later. We also observe a long-lasting increase in identification with Spain for individuals originating from regions with strong peripheral nationalism. (JEL D12, D83, D91, J45, R23, Z13.)
{"title":"Interregional Contact and the Formation of a Shared Identity","authors":"Manuel Bagues, Christopher Roth","doi":"10.1257/pol.20210237","DOIUrl":"https://doi.org/10.1257/pol.20210237","url":null,"abstract":"We study the long-run effects of contact with individuals from other regions in early adulthood on preferences, beliefs, and national identity. We combine a natural experiment, the random assignment of male conscripts to different locations throughout Spain, with tailored survey data. Being randomly assigned to complete military service outside of one’s region of residence fosters contact with conscripts from other regions and increases sympathy and trust toward people from the region of service, as measured decades later. We also observe a long-lasting increase in identification with Spain for individuals originating from regions with strong peripheral nationalism. (JEL D12, D83, D91, J45, R23, Z13.)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"1 1","pages":""},"PeriodicalIF":5.3,"publicationDate":"2023-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90206847","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The ability to speak and understand a host country’s primary language is strongly associated with measures of immigrant integration. We estimate the causal effects of English language training for adult immigrants on participants’ civic and economic outcomes using randomized enrollment lotteries from a public adult education program in Massachusetts. Participation doubles voter participation and increases annual earnings by $2,400 (56 percent). Increased tax revenue from earnings gains cover program costs over time, generating a 6 percent return for taxpayers. Ours is the first randomized evaluation of adult English language training as a standalone intervention in the United States. (JEL D72, H75, I21, I26, J15, J24, J31)
{"title":"Immigrant Integration in the United States: The Role of Adult English Language Training","authors":"Blake H Heller, Kirsten Slungaard Mumma","doi":"10.1257/pol.20210336","DOIUrl":"https://doi.org/10.1257/pol.20210336","url":null,"abstract":"The ability to speak and understand a host country’s primary language is strongly associated with measures of immigrant integration. We estimate the causal effects of English language training for adult immigrants on participants’ civic and economic outcomes using randomized enrollment lotteries from a public adult education program in Massachusetts. Participation doubles voter participation and increases annual earnings by $2,400 (56 percent). Increased tax revenue from earnings gains cover program costs over time, generating a 6 percent return for taxpayers. Ours is the first randomized evaluation of adult English language training as a standalone intervention in the United States. (JEL D72, H75, I21, I26, J15, J24, J31)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"70 1","pages":""},"PeriodicalIF":5.3,"publicationDate":"2023-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84458480","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
By exploiting the large quantity and rich variety of special economic zones (SEZs) in China, this study investigates how such zones affect human capital investment. Results show that SEZs significantly increase the local high school enrollment rate, but the impact varies across zone types: technology-oriented zones encourage education, while export-led zones discourage it. The increased job opportunities and wage premiums inside SEZs for employees with high school education increase high school enrollment, while such opportunities and wages for employees with middle school education decrease enrollment. A very small portion of the impact, if any, can be attributed to increased income. (JEL I21, I26, J24, J31, O15, P23, R32)
{"title":"Special Economic Zones and Human Capital Investment: 30 Years of Evidence from China","authors":"Fangwen Lu, Weizeng Sun, Jianfeng Wu","doi":"10.1257/pol.20200492","DOIUrl":"https://doi.org/10.1257/pol.20200492","url":null,"abstract":"By exploiting the large quantity and rich variety of special economic zones (SEZs) in China, this study investigates how such zones affect human capital investment. Results show that SEZs significantly increase the local high school enrollment rate, but the impact varies across zone types: technology-oriented zones encourage education, while export-led zones discourage it. The increased job opportunities and wage premiums inside SEZs for employees with high school education increase high school enrollment, while such opportunities and wages for employees with middle school education decrease enrollment. A very small portion of the impact, if any, can be attributed to increased income. (JEL I21, I26, J24, J31, O15, P23, R32)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"14 1","pages":""},"PeriodicalIF":5.3,"publicationDate":"2023-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73122210","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper assesses the long-term consequences of voting for democracy. We study Chile’s 1988 plebiscite, which ended 15 years of dictatorship and reestablished democracy. Taking advantage of individual-level voting data, we implement an age-based regression discontinuity design comparing long-run registration and turnout rates across marginally eligible and ineligible individuals. We find plebiscite eligibility increased electoral turnout three decades later. The magnitude of the initial mobilization emerges as the mechanism. Plebiscite eligibility induced a sizable share of less-educated voters to register compared to other upstream elections. The event contributed to the emergence of one-party rule the 20 years following democratization. (JEL D72, D82, O17)
{"title":"Voting for Democracy: Chile’s Plebiscito and the Electoral Participation of a Generation","authors":"Ethan Kaplan, Fernando Saltiel, Sergio Urzúa","doi":"10.1257/pol.20210338","DOIUrl":"https://doi.org/10.1257/pol.20210338","url":null,"abstract":"This paper assesses the long-term consequences of voting for democracy. We study Chile’s 1988 plebiscite, which ended 15 years of dictatorship and reestablished democracy. Taking advantage of individual-level voting data, we implement an age-based regression discontinuity design comparing long-run registration and turnout rates across marginally eligible and ineligible individuals. We find plebiscite eligibility increased electoral turnout three decades later. The magnitude of the initial mobilization emerges as the mechanism. Plebiscite eligibility induced a sizable share of less-educated voters to register compared to other upstream elections. The event contributed to the emergence of one-party rule the 20 years following democratization. (JEL D72, D82, O17)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134951734","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
According to theory, “sin taxes” are welfare improving if consumers with low self-control respond at least as much to the tax as consumers with high self-control. We investigate empirically if demand response to soft drink and fat tax variations in Denmark depends on consumers’ self-control. We use a unique home-scan panel that includes a survey measure of self-control. When taxes increase, consumers with low self-control reduce purchases less strongly than consumers with high self-control. When taxes decrease, both groups increase their purchases similarly. The results show an asymmetry in price elasticities by self-control that is more pronounced when taxes increase. (JEL D12, D91, H25, H31, I12, I18, L66)
{"title":"Sin Taxes and Self-Control","authors":"Renke Schmacker, Sinne Smed","doi":"10.1257/pol.20200479","DOIUrl":"https://doi.org/10.1257/pol.20200479","url":null,"abstract":"According to theory, “sin taxes” are welfare improving if consumers with low self-control respond at least as much to the tax as consumers with high self-control. We investigate empirically if demand response to soft drink and fat tax variations in Denmark depends on consumers’ self-control. We use a unique home-scan panel that includes a survey measure of self-control. When taxes increase, consumers with low self-control reduce purchases less strongly than consumers with high self-control. When taxes decrease, both groups increase their purchases similarly. The results show an asymmetry in price elasticities by self-control that is more pronounced when taxes increase. (JEL D12, D91, H25, H31, I12, I18, L66)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134951951","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Many countries use CCTs targeted to parents to promote schooling. Attendance conditions may work through two channels: incentivization and information. If children have private information, (i) providing attendance information to parents may increase attendance inexpensively relative to CCTs and (ii) it may be more effective to incentivize children, who have full information, than parents. Tackling both questions in a unified experimental setting, we find that information alone improves parental monitoring and has a large effect relative to our CCT. Incentivizing children is at least as effective as incentivizing parents––importantly, not because parents were able to appropriate transfers to children. (JEL D82, D83, I21, I22, I28, L31, O15)
{"title":"Incentivizing School Attendance in the Presence of Parent-Child Information Frictions","authors":"Damien B. C. M. De Walque, Christine Valente","doi":"10.1257/pol.20210202","DOIUrl":"https://doi.org/10.1257/pol.20210202","url":null,"abstract":"Many countries use CCTs targeted to parents to promote schooling. Attendance conditions may work through two channels: incentivization and information. If children have private information, (i) providing attendance information to parents may increase attendance inexpensively relative to CCTs and (ii) it may be more effective to incentivize children, who have full information, than parents. Tackling both questions in a unified experimental setting, we find that information alone improves parental monitoring and has a large effect relative to our CCT. Incentivizing children is at least as effective as incentivizing parents––importantly, not because parents were able to appropriate transfers to children. (JEL D82, D83, I21, I22, I28, L31, O15)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"125 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134951961","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the 2011 Austrian pay transparency law, which requires firms above a size threshold to publish internal reports on the gender pay gap. Using an event-study design, we show that the policy had no discernible effects on male and female wages, thus leaving the gender wage gap unchanged. The effects are precisely estimated, and we rule out that the policy narrowed the gender wage gap by more than 0.4 p.p.. Moreover, we do not find evidence for wage compression within establishments. We discuss several possible reasons why the reform did not reduce the gender wage gap. (JEL J16, J31, J71, K31)
{"title":"Does Pay Transparency Affect the Gender Wage Gap? Evidence from Austria","authors":"Andreas Gulyas, Sebastian Seitz, Sourav Sinha","doi":"10.1257/pol.20210128","DOIUrl":"https://doi.org/10.1257/pol.20210128","url":null,"abstract":"We study the 2011 Austrian pay transparency law, which requires firms above a size threshold to publish internal reports on the gender pay gap. Using an event-study design, we show that the policy had no discernible effects on male and female wages, thus leaving the gender wage gap unchanged. The effects are precisely estimated, and we rule out that the policy narrowed the gender wage gap by more than 0.4 p.p.. Moreover, we do not find evidence for wage compression within establishments. We discuss several possible reasons why the reform did not reduce the gender wage gap. (JEL J16, J31, J71, K31)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135359255","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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