optimality properties of alternative systems of taxation of foreign capital income foreign source capital income taxes are examined from the point of view of optimal taxation in the framework of a simple economy with international real capital flows a taxonomy of alternative systems of such taxation is first presented showing how crediting and other tax parameters induce what are called source based residence based and related systems next tax rates are determined that are optimal from a single country s point of view given those of the others the achievability of these rates under the various systems is analyzed finally tax rates that are optimal from an international point of view are considered again achievability of an international optimum under the various systems is considered leading to the main conclusions that i a pure residence based system in all countries can achieve an international fiscal optimum ii it cannot however be sustained as an equilibrium

public good differentiation and the intensity of tax competition we show that in a setting where tax competition promotes efficiency variation in the extent to which firms can use public goods to reduce costs brings about a reduction in the intensity of tax competition this in turn brings about a loss of efficiency in this environment a minimum tax counters the reduction in the intensity of tax competition thereby enhancing efficiency split the difference tax harmonization also potentially enhances efficiency but would not be agreed upon by governments because it lowers the payoff to at least one of them this paper also presents an explanation for how traditionally high tax countries have continued to set taxes at a relatively high rate even as markets have become more integrated

divorce abortion and the child sex ratio the impact of divorce reform in china abstract this paper estimates the effect of china s pro women divorce reform on sex selection behavior within marriages the 2001 reform liberalized divorce in favor of women and secured women s property rights after separation the paper applies a regression discontinuity analysis on the child sex ratio and finds that the likelihood of having a son after a firstborn daughter decreased by 8 1 percentage points amounting to a reduction of 11 7 compared with the prior proportion of male children further analyses provide evidence in support of the hypothesis that improved divorce options empower women within marriage and enable them to avoid health damaging sex selective abortion the effect of the divorce reform is stronger in provinces where divorce is comparatively viable because of more lenient family planning policies governing fertility in the next marriage the effect is also stronger among women who face higher health costs of abortion

capital income and profit taxation with foreign ownership of firms abstract this paper establishes optimal rules for capital income and profits taxation in the open economy with or without foreign ownership of domestic firms we show that if there are constraints on the feasibility of profits taxation both saving and investment taxes generally enter the optimal tax package if instead profits can be fully taxed then source based investment taxes vanish if domestic firms are in part owned by foreigners then source based investment taxes can be used to shift income away from these to domestic citizens and they may even be used to finance lump sum transfers to domestic residents

do husbands and wives pool their resources further evidence this paper replicates results of an article showing that families with children increased expenditures on women s clothing relative to men s after implementation of a policy that shifted a child subsidy payment from the father to the mother these results were interpreted as evidence that families do not pool their income but allocate consumption based on income source however the current paper also finds an increase in relative spending on women s clothing among childless couples a sample the policy change did not impact alternative explanations are explored for observing these patterns but none can rule out either bargaining or income pooling

do husbands and wives pool their resources evidence from the united kingdom child benefit common preference models of family behavior imply income pooling a restriction on family demand functions such that only the sum of husband s income and wife s income affects the allocation of goods and time testing the pooling hypothesis is difficult because most family income sources are not exogenous to the allocations being analyzed in this paper we present an alternative test based on a natural experiment a policy change in the united kingdom that transferred a substantial child allowance to wives in the late 1970s using family expenditure survey data we find strong evidence that a shift toward greater expenditures on women s clothing and children s clothing relative to men s clothing coincided with this income redistribution

extended families and child well being studies of household behavior have established the distribution of resources among household members predicts spending and savings patterns however there is a paucity of evidence on the relationship between the well being of individual family members and the distribution of resources within an extended family including non co resident family members given the central role the family plays in many models of economic behavior this is an important gap in the literature using rich longitudinal survey data from the indonesia family life survey ifls evidence is presented on the relationship between three measures of health and education related human capital of children and the distribution of resources among extended family members ifls is ideally suited for this research since the survey collects detailed information about income and wealth from both coresident and non co resident family members the empirical model is founded on a natural extension of the collective model of household decision making chiappori 1988 1992 to the extended family the model is particularly appealing in this context because it places few restrictions on preferences of individual family members and does not specify a specific bargaining mechanism that underlies negotiations the collective model yields empirical tests of whether the behavior of family members is pareto efficient a special case of the model allows all family members to be completely altruistic which is observationally equivalent to a unitary model of family behavior that special case is rejected by the data however the restrictions of the efficient model are not rejected indicating that non co resident family members are able to co ordinate allocation decisions with respect to child human capital investments in such a way as to make no family member better off without another member being worse off

the taxing task of taxing transnationals financial and real investment flexibility tax competition and superior economic information by transnationals both create a rationale for corporate income taxation and limit the effectiveness of such taxation while these factors have led to a variety of transnational tax policies such as deferral double taxation apportionment and trade rules very few of these institutional features have been integrated into tax competition and agency models in this paper i show how the integration of investment flexibility tax competition and agency issues is crucial to our understanding of corporate tax policies

contraception as development new evidence from family planning in colombia there has been considerable debate in the last decade about whether or not family planning programmes in developing countries reduce fertility or improve socio economic outcomes this article provides new evidence by studying the expansion of one of the worlds oldest and largest family planning organisations profamilia of colombia it finds that family planning explains less than 10 of colombias fertility decline during its demographic transition as in wealthy countries however lowering the costs of first birth postponement produced important socio economic gains enabling young women to obtain more education and to work more and live independently later in life

dowry and intrahousehold bargaining evidence from china this paper analyzes the relationship between a woman s intrahousehold bargaining position and her welfare within marriage using household data from rural china simultaneity problems are overcome by using dowry to proxy for bargaining position omitted variable bias is addressed by using grain shocks in the year preceding marriage as an instrument for dowry instrumented dowry positively impacts numerous measures of a wife s welfare including household purchases the time allocation of household members and the woman s satisfaction with life offering strong evidence in support of collective models of the household

tax incentives for business investment a primer for policy makers in developing countries abstract the use of tax incentives is widespread even though the available empirical evidence on the cost effectiveness of such incentives in stimulating investment is highly inconclusive this paper is primarily intended as a primer on the use of tax incentives for policy makers especially those in developing countries it discusses the objectives cost effectiveness and transparency of implementing tax incentives assesses the comparative merits of alternative forms of such incentives and provides a review of the empirical literature its main conclusions are that the justification for the use of tax incentives should be limited to the rectification of market failures and that the preferred form of tax incentives are those that provide for faster recovery of investment costs

efficient intra household allocations a general characterization and empirical tests the neoclassical theory of demand applies to individuals yet in empirical work it is usually taken as valid for households with many members this paper explores what the theory of individuals implies for households that have more than one member we make minimal assumptions about how the individual members of the household resolve conflicts all we assume is that however decisions are made outcomes are efficient we refer to this as the collective setting we show that in the collective setting household demands must satisfy a symmetry and rank condition on the slutsky matrix we also present some further results on the effects on demands of variables that do not modify preferences but that do affect how decisions are made we apply our theory to a series of surveys of household expenditures from canada the tests of the usual symmetry conditions are rejected for two person households but not for one person households we also show that income pooling is rejected for two person households we then test for our collective setting conditions on the couples data none of the collective setting restrictions are rejected we conclude that the collective setting is a plausible and tractable next step to take in the analysis of household behavior

rearranging the family income support and elderly living arrangements in a low income country this study examines the link between income and living arrangements our identification comes from exploiting a discontinuity in age in the benefit formula for the social pension in south africa in contrast to previous literature we find no association between pension income and elderly independence we do find that potential beneficiaries alter their household structure when they become pension eligible prime working age women depart and the presence of children younger than five and young women of childbearing age increase these shifts in coresidence patterns are consistent with a setting where prime age women have comparative advantage in work away from extended family relative to younger women the additional income from old age support may induce a change in living arrangements to exploit this advantage

spousal control and intra household decision making an experimental study in the philippines i elicit causal effects of spousal observability and communication on financial choices of married individuals in the philippines when choices are private men put money into their personal accounts when choices are observable men commit money to consumption for their own benefit when required to communicate men put money into their wives account these strong treatment effects on men but not women appear related more to control than to gender men whose wives control household savings respond more strongly to the treat ment and women whose husbands control savings exhibit the same response changes in information and communication interact with underlying control to produce mutable gender specific outcomes

intra household resource allocation an inferential approach if household income is pooled and then allocated to maximize welfare then income under the control of mothers and fathers should have the same impact on demand with survey data on family health and nutrition in brazil the equality of parental income effects is rejected unearned income in the hands of a mother has a bigger effect on her family s health than income under the control of a father for child survival probabilities the effect is almost twenty times bigger the common preference or neoclassical model of the household is rejected if unearned income is measured with error and income is pooled then the ratio of maternal to paternal income effects should be the same equality of the ratios cannot be rejected there is also evidence for gender preference mothers prefer to devote resources to improving the nutritional status of their daughters fathers to sons

testing the neoclassical model of family labor supply and fertility the mcelroy horney nash bargaining model of family demand behavior relaxes the restriction that nonearned income of husband and wife has the identical effect on family labor supply and commodity demands this restriction of the neoclassical model offamily behavior is tested for the determination of husband and wife labor supply andfertility based on the 1981 socioeconomic survey of thailand the neoclassical restriction is rejected for female labor supply andfertility another unexplored limitation offamily demand studies due to the sample self selection of intact marriages is empirically treated through alternative estimation strategies in this case a more sharply focused theory of marital behavior is needed to identify family demand models

the empirical content of nash bargained household behavior in households whose allocation decisions can be represented as nash bargained household decisions extrahousehold environmental parameters eeps serve as pure shifters of the threat points the comparative statics of changes in demands due to changes in these eeps are given these are incorporated into a comprehensive statement of the empirical content of nash bargained household behavior including a nash generalization of barten s 1966 fundamental matrix equation of the theory of consumer demand estimation and data requirements are discussed along with nested testing of the following structure the neoclassical model is nested in the nash bargained model which in turn is nested in an unrestricted model of household demands emphasized throughout is the enriched menu of explanatory variables for demand analysis provided by the nash model as well as the model s ability to jointly analyze i household formation and ii intrahousehold allocation decisions

foreign direct investment under oligopoly profit shifting or profit capturing abstract in this paper a model of taxation of foreign source corporate income is developed when the output market is not perfectly competitive profit shifting policies similar to those in the new trade literature are also present in the case of foreign direct investment fdi there are however important differences to the new trade theory since in case of fdi i corporate taxation and double taxation relief are the policy instruments rather than output or revenue taxes ii countries are not symmetric in the sense that the host country has the first right to tax the multinational s profit and the home country reacts by providing double taxation relief and iii output but not corporate taxation is specific to imperfectly competitive industries it is argued that a variants of a tax credit are analogous to export subsidies b when the home country operates a tax credit system the host country s incentive to capture the multinational s profit is bounded under imperfect competition c when the host country offers a tax holiday the home country should imitate this policy and d in the presence of perfect competitive industries double taxation relief is a good instrument to target imperfectly competitive industries

market opportunities genetic endowments and intrafamily resource distribution child survival in rural india the authors examine how intrafamily resource allocations respond to changes in economic conditions and to genetic differences in children by estimating the determinants of variations in the sex specific survival differentials of rural indian children based on standard census and household survey data they explore in particular the hypothesis that such differences are related to the relative returns to survival with households selectively allocating resources to children in response to variation in sex differences in their expected earnings opportunities as adults data are from the 1961 census and a 1971 household survey excerpt

tax competition in imperfectly competitive markets abstract the literature on strategic trade policy has shown that in imperfectly competitive markets governments have an incentive to subsidize exports of their own firms yet the consequence of the departure from laissez faire is a wasteful subsidy race in contrast this paper shows that even in imperfectly competitive markets there is a strong tendency for laissez faire to prevail the driving force is the firms willingness to exploit tax or subsidy differentials by relocating production a small tax differential induces firms to change their place of production the change in market structure has a negligible effect on the oligopoly equilibrium but a non negligible impact on government revenues when tax policy is non discriminatory governments gain lose by attracting all firms when production is taxed subsidized hence laissez faire is the only equilibrium since from the point of view of the two producing countries laissez faire nondiscrimination pareto dominates the intervention equilibrium discrimination nondiscrimination is a simple device to result in a mutual beneficial outcome

international profit shifting within multinationals a multi country perspective abstract we model the opportunities and incentives generated by international tax differences for international profit shifting by multinationals the model considers not only profit shifting arising from international tax differences between affiliates and parent companies but also from tax differences between affiliates in different host countries our model yields the prediction that a multinational s profit shifting in a country depends on a weighted average of international tax rate differences between all countries where the multinational is active using a unique dataset containing detailed firm level information on the parent companies and subsidiaries of european multinationals and information about the international tax system we test our model and empirically examine the extent of intra european profit shifting by european multinationals on average we find a semi elasticity of reported profits with respect to the top statutory tax rate of 1 3 while shifting costs are estimated to be 0 6 of the tax base international profit shifting leads to a substantial redistribution of national corporate tax revenues many european nations appear to gain revenues from profit shifting by multinationals largely at the expense of germany

do parents favor boys in an optimizing model of parental allocation systematic differences in human capital investments betwen the sexes may originate in at least 3 ways 1 parents may respond to expected gender wage differentials 2 parents may respond to systematic differences by gender in the price of human capital investments 3 parental preferences may favor girls or boys in the sense that they value identical outcomes at the same cost more highly for one sex than for the other this paper analyzes the role of parental preferences in general and unequal concern in particular in the allocation of human capital investments among children the authors generalize their earlier model of the human capital investments among children to incorporate the possibility that the returns to such investments may include not only the childs own ecpected earnings but also the expected earnings of his or her spouse thus the model assumes that parents may value returns that accrue trough the marriage market as well as through education the relevant returns to education may include marrying a spouse with higher expected earnings the empirical analysis indicates that gender wage differentials like endowment differentials are mildly reinforced by the parental allocation of human capital investments marriage market outcomes are significant determinants of the allocation of human capital investments among children there is no evidence that parental preferences favor boys this study shows that parental preferences either exhibit equal concern or slightly favor gils

rational household labor supply traditionally household behavior is derived from the maximization of a unique utility function in this paper we propose an alternative approach in which the household is modeled as a two member collectivity taking pareto efficient decisions the consequences of this assumption are analyzed in a three good model in which only total consumption and each member s labor supply are observable if the agents are assumed egoistic i e they are only concerned with their own leisure and consumption it is possible to derive falsifiable conditions upon household labor supplies from both a parametric and nonparametric viewpoint if alternatively agents are altruistic restrictions obtain in the nonparametric context useful interpretation stems from the comparison with the characterization of aggregate demand for a private good economy

women s suffrage political responsiveness and child survival in american history women s choices appear to emphasize child welfare more than those of men this paper presents new evidence on how suffrage rights for american women helped children to benefit from the scientific breakthroughs of the bacteriological revolution consistent with standard models of electoral competition suffrage laws were followed by immediate shifts in legislative behavior and large sudden increases in local public health spending this growth in public health spending fueled large scale door to door hygiene campaigns and child mortality declined by 8 15 or 20 000 annual child deaths nationwide as cause specific reductions occurred exclusively among infectious childhood killers sensitive to hygienic conditions

labor market opportunities and women s decision making power within households abstract despite the perceived importance of labor market opportunities in shaping married women s outside option and their bargaining power within households as a result this link has received very little empirical attention using longitudinal data on who makes the decision on a wide range of issues within mexican households and data from the administrative records of the mexican social security institute this paper identifies the effects of relative changes in labor market opportunities for men and women on both working and non working women s decision making power i find that increases in labor market opportunities improve women s decision making power as well as children s health using differential labor demand shocks across mexican industries caused by china s admission to the wto gives similar results

improving child welfare in middle income countries the unintended consequence of a pro homemaker divorce law and wait time to divorce abstract this study identifies the impact of access to and the speed of divorce on the welfare of children in a middle income largely catholic country using difference in difference estimation techniques i compare school enrollment for children of married and cohabiting parent households before and after the legalization of divorce implementing pro homemaker divorce laws increased school enrollment anywhere from 3 4 to 5 5 percentage points and the effect was particularly salient on secondary school students i provide evidence that administrative processes influencing the speed of divorce affect household bargaining and investments in schooling with every additional six months wait to the finalization of divorce school enrollment decreased by approximately one percentage point the impact almost doubles for secondary schooling when contemplating development policies advocates policymakers and leaders should not overlook the impact changes in family policies and administrative processes can have on advancements in child welfare and ultimately economic development jel d12 d13 j12 i21 i25

intra household allocation of resources inferences from non resident fathers child support payments a large proportion of divorced and separated fathers form new partnerships the new partner s preferences are not likely to put much weight on expenditures on the man s children from his previous union thus his own and his partner s income would have different impacts on his child support payments if partners relative incomes affect bargaining power in household decisions this article exploits within father variation in the british household panel survey 1991 2005 to estimate the impacts of the intra household income distribution on child support payments and the father s welfare we find that a higher share of father s income in household income increases the probability of paying child support and its amount relative to household income

why do countries combine the exemption system for the taxation of foreign profits with domestic double taxation relief many european countries exempt foreign profits from domestic corporate taxation at the shareholder level however all corporate profits are taxed and double taxation relief is granted only for domestic corporate taxes this paper attempts to rationalize this tax policy in the presence of double taxation agreements which exempt foreign profits from domestic corporate taxation countries may use shareholder taxes to tax these profits the disadvantage of shareholder taxes is that they create incentives to sell domestic firms to foreigners but double taxation relief for domestic profits may preserve domestic ownership our results imply that national dividend tax policies may be a factor contributing to the empirically observed home bias in investment

the effect of sibling sex composition on women s education and earnings this paper documents the impact of siblings on the education of men and women born in the united states between 1920 and 1965 we examine the effect of the number and sex composition of a boy or girl s siblings on that child s educational attainment we find that throughout the century women s educational choices have been systematically affected by the sex composition of her siblings and that men s choices have not women raised only with brothers have received on average significantly more education than women raised with any sisters controlling for household size since sibling sex composition affects women s educational attainment and plausibly may be unrelated to other determinants of earnings it may provide a useful instrument for education in earnings functions for women our results suggest that standard estimates significantly underestimate the return to schooling for women

recent trends in the size distribution of household wealth based on the survey of consumer finances the distribution of wealth in the united states became much more unequal in the 1980s and that trend continued albeit at a slower pace in the 1990s the only households that saw their mean net worth rise in absolute terms between 1983 and 1995 were those in the top 20 percent and the gains were particularly strong for the top one percent all other groups were particularly strong for the top one percent all other groups suffered real wealth losses including the median household and declines were particularly precipitous at the bottom racial disparities widened and young households also lost out over this period

energy taxation reasons for discriminating in favor of the production sector abstract if a small open economy wishes to restrict it s greenhouse gas emissions it has to decide whether to impose uniform taxes on all polluters or to resort to a discriminatory policy in practice countries tend to impose higher taxes on households and to tax the industrial sector more leniently this paper identifies conditions under which this is efficient it is shown that an efficiency maximizing tax planner discriminates in favor of the production sector if i there are restrictions on the taxation of lump sum income or if ii labor supply exerts market power

changing the rules midway the impact of granting alimony rights on existing and newly formed partnerships this article analyses the effect of a reform granting alimony rights to cohabiting couples in canada a collective household model with a matching framework predicts that changes in alimony laws would affect existing couples and couples to be differently for existing couples it benefits the intended beneficiary but for couples not yet formed it generates offsetting intra household transfers and lower intra marital allocations for the beneficiary our empirical analyses confirm these predictions among couples united before the reform obtaining the right to petition for alimony led women to lower their labour force participation but not among newly formed cohabiting couples

commodity tax competition between member states of a federation equilibrium and efficiency we first describe regional market equilibria whereupon consumers of each region allocate their purchases of private goods between domestic and nondomestic ones according to the structure of relative prices taxes and transportation costs next regional optimal tax levels and public good quantities are derived the tax of the other region being held constant fiscal competition arises from the ability of one region in choosing its tax to alter the tax base of the other

the engel curves of non cooperative households we provide a set of necessary and sufficient conditions for a system of engel curves to have been generated by a non cooperative model of family behaviour these conditions fully characterise the local behaviour of household level consumption in the cross section i e as a function of total income and distribution factors in this setting any demand system compatible with a non cooperative model is also compatible with a collective model but the converse is not true we describe how these nested conditions may be tested using standard instrumental variables strategies

designing tax policy in federalist economies an overview abstract the emerging economic federations of the european union russia and south africa along with the established federations in australia canada and the united states confront the task of designing the institutions for federal fiscal policy this paper reviews the literature on the design of tax policy in federalist economies we conclude that taxation by lower level governments can lead to significant economic inefficiencies and inequities the usual assignment view of federalis recommends central government policies for example resident based taxation or grants in aid to correct these failures these recommendations assume that the central government will act as a benevolent social planner the political economy view of federalism suggests that this assumption is in error and that additional federalist institutions must be considered alternative legislative structures and constitutional rules are considered

optimal tax and tariff policies with tax credits abstract this paper examines the optimal tax and tariff policies for a small open economy when mobile capital receives a tax credit for taxes paid to the host country for a capital importing country a tax on capital equal to the source country tax rate to capture tax revenue combined with a subsidy to encourage capital imports is the optimal policy results are also derived for cases in which only one of the instruments can be varied for a capital exporting country that cannot reduce its capital tax rate a subsidy to the sector using exported capital is desirable

on capital income tax policies under uncertainty this paper investigates corporate income and dividend taxation in a multi country world where production is subject to country specific productivity shocks singlecountry non cooperative tax policy is shown to imply a tax on foreign source dividends and a subsidy to domestic source dividends the optimal corporate tax may be negative if international portfolios are little diversified at the outset finally each country in a coordinating region should subsidize rather than tax domestic citizen s investment in equity in partner countries 1998 elsevier science b v all rights reserved

separate spheres bargaining and the marriage market this paper introduces the separate spheres bargaining model a new model of distribution within marriage it differs from divorce threat bargaining models e g manser brown mcelroy horney in that the threat point is not divorce but a noncooperative equilibrium within marriage this noncooperative equilibrium reflects traditional gender roles the predictions of our model thus differ from those of divorce threat bargaining models in the separate spheres model cash transfer payments to the mother and payments to the father can but need not imply different equilibrium distributions in existing marriages in the long run the distributional effects of transfer policies may be substantially altered by changes in the marriage market equilibrium

intrahousehold bargaining female autonomy and labor supply theory and evidence from india standard models of labor supply predict that unearned income decreases labor supply we propose an alternative noncooperative household model in which a woman s unearned income improves her autonomy within the household which raises her gains from working and can increase her labor supply we find empirical support for this model using women s exposure to the hindu succession act in india as a source of exogenous variation in their unearned income exposure to the hindu succession act increases a woman s labor supply by between 3 8 and 6 1 percentage points particularly into high paying jobs autonomy increased by 0 17 standard deviations suggesting that control of income is a potential channel for these effects thus policies that empower women can have an additional impact on the labor market which can further reinforce autonomy increases

fiscal competition and the pattern of public spending much attention has been given to the impact of fiscal competition on the level of public expenditure but relatively little to the impact on its composition using a broadly familiar and reasonably rich model of fiscal competition in the presence of mobile capital this paper establishes a systematic bias in public spending patterns starting from the non cooperative equilibrium and holding tax rates constant welfare would be improved by a coordinated reduction in the provision of local public inputs and a corresponding increase in the public provision of local public goods benefiting immobile consumers c 1997 elsevier science s a

household resource allocation in stepfamilies darwin reflects on the plight of cinderella the living conditions of american children have changed dramatically during the past 50 years in 1950 the vast majority of children were born to married parents and lived with both parents until they reached adulthood today over a third of all children are born to unmarried parents and over half will live apart from at least one of their parents before reaching age 18 larry bumpass and james sweet 1989 a majority of these children will live with a stepparent or foster parent and a substantial minority will experience multiple family disruptions and multiple changes in parental personnel numerous studies have shown that remarriage is not the panacea it was once thought to be children who grow up in two parent families consisting of a biological parent and a stepparent have outcomes very similar to children who grow up with only one parent and worse than children who are raised by both of their biological parents these differences cannot be explained by differences in income since stepfamilies and original two parent families enjoy similar levels of income one explanation for why children in stepfamilies do poorly is that stepparents are less altruistic and indeed may be quite hostile toward nonbiological children according to the theory of parental solicitude such feelings are rooted in psychological mechanisms that have evolved over time through the process of natural selection thus while household incomes may be similar for biological and nonbiological children investments in children may be quite different this paper examines differences in one input food consumption between different types of two parent families using data from the panel study of income dynamics psid these data contain information on all dyadic relationships within households between 1968 and 1985 and they allow us to identify several types of parent child relationships including biological adoptive step and foster relationships the paper addresses three questions

marriage market divorce legislation and household labor supply this paper provides a theoretical framework for analyzing the impact of the marriage market and divorce legislation on household labor supply in our approach the sex ratio in the marriage market and the rules governing divorce are examples of distribution factors these factors are defined as variables that affect the household members bargaining position but not preferences or the joint budget set we extend the collective labor supply model developed by chiappori to allow for distribution factors we show that our model imposes new restrictions on the labor supply functions and eases the identification of individual preferences and the intrahousehold decision process the model is estimated using psid data for the year 1988 our results do not reject the restrictions imposed by the model also the sex ratio and divorce laws deemed favorable to women are found to affect labor supply behavior and the decision process in the directions predicted by the theory and to have sizable effects

taxation of outbound direct investment economic principles and tax policy considerations this paper reviews economic principles for optimality of the taxation of international profit from both a global and national perspective it argues that for traditional systems based on the residence of the investor or the source of the income nothing less than full harmonisation across countries can achieve global optimality the conditions for national optimality are more difficult to identify but are most likely to imply source based taxation however source based taxation requires an allocation of the profits of multinational companies to individual jurisdictions this is not only very difficult in practice but in some cases is without any conceptual foundation the taxation of interest income on a residence basis is also hard to justify if the aim of the tax system is to tax only the income arising from economic activity in a given country

savings in transnational households a field experiment among migrants from el salvador abstract we implemented a randomized field experiment that tested ways to stimulate migrants savings in their origin country we find that migrants value opportunities to exert greater control over financial activities in their home countries we offered u s based migrants bank accounts in el salvador randomly varying migrant control over el salvador based savings by offering different accounts across treatments migrants offered the greatest degree of control accumulated the most savings impacts likely represent increases in total savings there is no evidence that savings increases were simply reallocated from other savings mechanisms enhanced control over home country savings does not affect remittances sent home

birth order family size and achievement family structure and wage determination do birth order and the size of one s childhood family influence environment thereby potentially affecting future achievement this article investigates the hypothesis that they do presenting two major empirical findings first neither birth order nor childhood family size significantly influences the level or growth rate of wages a result that is consistent with previous research second family size is both a statistically and economically significant determinant of women s employment status women from small families work less than women from large families when they are young and more than women from large families when they are more mature

simple rules for the optimal taxation of international capital income in this paper we reconcile and extend previous results on the collectively optimal taxation of international investment income the weighted average rule of horst 1980 for example is shown to rest on unattractive assumptions on the set of instruments available ruling out any need for distorting taxes the principal contribution is to establish a new and strikingly simple weighted average rule encompassing the other key result in this area for the general case in which lump sum taxes are unavailable the ability to tax pure profits is perhaps restricted and distorting taxes on both domestic and border crossing capital income are optimally deployed

the real exchange rate under various systems of international capital taxation international organizations such as the organization for economic co operation and development oecd and the european community ec have promoted to varying degrees the liberalization of capital movements among their member countries the code of liberalization of capital movements an agreement drawn in 1982 by the oecd sets different degrees of capital liberalization among its member countries depending on the nature of capital transactions e g direct or portfolio investment the treaty of rome 1957 recommended among other things the liberalization of capital movements among the ec countries chapter iv articles 67 72 by and large capital movements in the ec have been liberalized since 1990 the remaining restrictions in the capital markets of some member countries such as greece ireland portugal and spain were to be eliminated by the end of 1992 2 these developments in the world capital markets have prompted a renewed interest among trade theorists regarding the response of key economic variables e g national income employment and welfare to the liberalization of capital movements with capital becoming more mobile internationally capital flows in a country depend among other things on the domestic and the foreign capital tax rate and on the prevailing system of taxing net repatriated capital earnings in the capital exporting countries frequently capitalexporting countries tax the net repatriated capital earnings according to a system i of tax credits under which tax payments by foreign capital invested in a capital importing country are credited toward its tax liability to the source capital exporting country 3 ii of tax deductions under which

will social welfare expenditures survive tax competition increasing economic openness creates demands for social welfare programmes designed to cushion the impact of economic changes but may also encourage governments to reduce tax rates to attract mobile economic resources competitive tax reductions could then prevent governments from being able to finance significant welfare spending alternatively economic globalization might improve the ability of governments to afford social welfare programmes and several considerations point in this direction first taxes on internationally mobile activity represent only small fractions of total revenue collections personal income taxes value added taxes and social insurance contributions finance most social welfare spending second international competition need not reduce taxes and indeed over the past 25 years corporate tax collections have remained high as fractions of gdp and total taxes third the vitality of a country s economy largely determines its level of social spending to the extent that incomes rise as a result greater economic openness should strengthen provision of social welfare copyright 2006 oxford university press

the seesaw principle in international tax policy abstract the standard analysis of the optimal international tax policy of a small country typically assumes that the country either imports or exports capital but does not do both this paper considers the situation in which a small country both exports and imports capital and can alter its tax on one or the other but not both in each case a seesaw relationship is identified in which the optimal tax on the income from capital exports imports is inversely related to the given tax rate on income from capital imports exports the standard results for optimal taxation of capital exports and imports are shown to be special cases of the more general seesaw principle

tax evasion in an open economy abstract ignoring tax evasion possibilities a value added and a cash flow income tax have similar behavioral and distributional consequences yet the available means of tax evasion under each can be very different under a vat avoidance occurs through cross border shopping whereas under an income tax it can occur through shifting taxable income abroad given evasion we show that a country would make use of both taxes in order to minimize the efficiency costs of evasion activity relying relatively more on whichever tax is harder to evade we then make use of aggregate danish tax and accounting data from 1992 to measure the amount of evasion that occurred under the two taxes while the estimates of evasion activity are small the figures imply that denmark could reduce the real costs of evasion activity by relying more on value added taxes

can capital income taxes survive in open economies optimal tax theory forecasts that small open economies should not tax capital income yet countries do tax capital income why the inconsistency this paper shows that use of the double taxation convention whereby governments credit taxes paid abroad against domestic taxes helps explain this inconsistency in particular capital income will be taxed if a dominant capital exporter acts as a stackelberg leader when setting its tax policy due to the convention other countries will then tax capital imports making it attractive for the dominant capital exporter to tax capital income without a dominant capital exporter however the model still forecasts no capital income taxes can taxation of capital income survive the increasing integration of world capital markets a number of recent papers suggest not diamond and mirrlees 1971 for example showed that a small open economy would not choose to tax the income generated by the physical capital located within the country this is because production would occur efficiently under an optimal tax system which requires that domestic investments earn the rate of return available on the world capital market in principle a country might still attempt to tax income earned on the savings of its residents however in practice income from savings invested outside the country is virtually impossible for a government to monitor individuals therefore can evade tax on such savings with very little risk as razin and sadka 1989 show such capital flight in theory eliminates any possibility of a tax on savings investors will simply transfer their funds abroad to avoid taxation yet virtually all countries do in fact tax the capital income earned by corporations and individuals located within their borders how can the theoretical forecast of no capital income taxation be reconciled with this simple observation it is difficult to use existing models with any confidence to analyze the implications of changes in capital income tax rates if these same models forecast that countries should never tax capital income

women s empowerment and wellbeing evidence from africa abstractwe use household survey data from senegal to model the effects of empowerment within the home on married women s wellbeing the estimated effects of empowerment are at least as large as more conventional development indicators such as household income the size of the empowerment effect is robust to alternative estimation techniques including an instrumental variables estimator

cross border marriage costs and marriage behavior theory and evidence this article analyzes cross border marriages between mainland china and hong kong hk we examine the effects of a reduction in cross border marriage costs following an increase in marriage migration quotas and the handover of hk to china we find that cross border marriages mainly involve men from the low tail of the hk attribute distribution we also find that hk women s position in the marriage market and within households deteriorated following the reduction in cross border marriage costs and that their disadvantaged position exerts an incentive effect on their labor market behavior these outcomes are consistent with our matching model

the wealth of mexican americans this paper analyzes the sources of disparities in the relative wealth position of mexican americans results reveal that unlike the racial wealth gap mexican americans wealth disadvantage is in large part not the result of differences in wealth distributions conditional on the underlying determinants of wealth rather mexican americans wealth disadvantage is attributable to the fact that these families have more young children and heads who are younger mexican americans low educational attainment also has a direct effect in producing a wealth gap relative to other ethnic groups even after differences in income are taken into account income differentials are important but do not play the primary role in explaining the gap in median net worth finally geographic concentration is generally unimportant but does contribute to narrowing the wealth gap between wealthy mexican americans and their white and black counterparts

decomposing the gender wealth gap in ecuador abstract unlike the gender earnings gap that has been amply studied the gender wealth gap has only recently begun to receive attention studies of the gender wealth gap have been concentrated on developed countries and have been limited by the use of household level data using individual level and sex disaggregated wealth data for ecuador this paper examines the pattern of wealth inequality across genders at different points of the wealth distribution for sole and then partnered household heads we use a new oaxaca blinder type decomposition method based on unconditional quantile regression to investigate the sources of the gap at different quantiles our results show that among sole heads the gap favors men across the distribution and is largest at the lower tail among partnered heads the gap is much less pronounced throughout the distribution actually reverting at the lower tail for both sole and partnered heads at the lower tail of the distribution the gender gap is primarily associated with differing returns to covariates at the median and upper quantiles gender differences in endowments ownership of savings accounts education and age drive the gap gender bias in inheritance plays a significant role only at lower and median wealth levels overall our results show stark contrasts with results for developed countries and important differences between sole versus partnered heads our study also adds evidence to the long standing debate over whether female household heads are poorer than male heads and calls for the pursuit of wealth differentiated policies and social programs to increase women s participation in the formal economy as well as the returns to their participation

strategic trade policy through the tax system if conventional instruments of strategic trade policy are unavailable the system of foreign profit taxation and transfer price guidelines may serve as surrogate policy instruments in this paper i consider a model where firms from two countries compete with each other on a market in a third country both firms have affiliates in the third country where part of the production takes place i analyse optimal policy choices of the firms residence countries aiming at strategically manipulating the competitiveness of their firms i show that first countries prefer the tax exemption system over the tax credit system if there is no intra firm trade second if the headquarters provide inputs for production in the affiliate countries prefer the tax exemption system if the transfer price for these inputs is close to the headquarters variable cost and if the residence country s tax rate is high however if transfer prices are high and the residence country s tax rate is low i show that the tax credit system is an optimal tax policy choice for both countries from a policy perspective the view that the tax exemption system is generally the best policy response if domestic firms competitiveness is a policy goal has to be qualified

tax competition under the threat of capital flight abstract a tax competition model has been constructed in this paper we have found that tax distortions can result from the mere threat of capital flight and the ensuing tax competition even though inefficient allocation of the world capital resources may no longer be a problem

corporate income tax competition double taxation treaties and foreign direct investment abstract in the presence of international capital mobility foreign direct investment is influenced by corporate income tax rates and the rules of how taxes paid in the host country are treated at home in this paper the exemption credit and deduction methods are considered as tax rules tax competition is modeled as a non cooperative game with respect to both corporate tax rates and the form of double taxation relief the subgame perfect equilibrium is shown to be independent of the tax rules since capital is inefficiently allocated the feasibility and the content of a cooperative contract between governments are analyzed it is argued that only the credit method requires neither compensatory payments nor fully harmonized tax rates this is consistent with the observation that tax credits are very often adopted in double taxation treaties

strategic behaviour and the rules for international taxation of capital this paper examines the welfare of a capital exporting or source country and a capital importing or host country under tax credit and tax deduction systems for the international taxation of capital because the two tax systems may create quite different strategic incentives for the countries the authors compare the equilibria in the tax setting game played by the two countries under each system they find that the tax credits system introduces an antitrade bias into the equilibrium contrary to initial impressions and that both capital exporting and capital importing countries will prefer the tax deductions scheme to tax credits copyright 1989 by royal economic society

competition in interregional taxation the case of western coal markets for many products are dominated by small group of states or countries with a natural advantage in the marketplace because of some initial endowment of resources favorable climate or location the purpose of this paper is to explore how such markets involving a few political jurisdictions interact noncooperatively we examine how such a market might be structured and operate and the extent of monopoly rent that can be extracted in the absence of collusion we answer these questions for an empirically estimated model of western u s coal in which two states montana and wyoming dominate production we demonstrate that in this market the amount of rent that can be extracted is greatly reduced through competition relative to a cartel nevertheless even with two producing states competing against each other significant rents can be captured significant enough to refute the contention that little rent can accrue without a cartel

strategic taxation of the multinational enterprise a new argument for double taxation abstract this paper analyzes the social welfare effects of multinational enterprise taxation by home and host governments in a general equilibrium model direct foreign investment arises to employ a firm specific asset abroad either a tax credit or deduction for foreign taxes paid results in the host fully taxing locally earned economic profits welfare endogenous market structure and profit results are identical in tax credit and deduction regimes because it lowers host government taxation in the subgame perfect equilibrium double taxation of foreign earned profits emerges as a weakly dominant strategy for the source government

taxing foreign profits with international mergers and acquisitions a large part of border crossing investment takes the form of international mergers and acquisitions in this article we ask how optimal repatriation tax systems look like in a world where investment involves a change of ownership instead of a reallocation of real capital we find that the standard results of international taxation do not carry over to the case of international mergers and acquisitions the deduction system is no longer optimal from a national perspective and the foreign tax credit system fails to ensure global optimality the tax exemption system is optimal if ownership advantage is a public good within the multinational firm however the cross border cash flow tax system dominates the exemption system in terms of optimality properties

how does intergenerational investment respond to changes in the marriage market evidence from china abstract this paper examines how intergenerational investment responds to changes in the marriage market two major channels are modeled and empirically tested first expecting gender specific impacts on the future marriage market for their children parents adjustments in educational investment differ by the gender of children and second changes in marriage market conditions have contemporaneous impacts on intrahousehold bargaining because they change existing couples remarriage options which affects their educational investment in their children we test our model by exploiting a policy change in favor of local urban men in the urban marriage market in china we find that educational investment by local local couples decreases for sons but changes little for daughters consistent with the decrease in children s educational investment female favored consumption decreases while male favored consumption increases these results provide evidence of interaction between the intrahousehold bargaining and the future marriage prospect effects

gradualism in tax treaties with irreversible foreign direct investment bilateral international tax treaties govern the host country taxation for the vast majority of the world s foreign direct investment fdi of particular interest is the fact that the tax rates used under these treaties are gradually falling although the treaties themselves do not specify any such reductions since there is no outside governing agency to redress treaty violations such reductions must be both mutually beneficial and self enforcing furthermore the optimal tax rates must be less than those initially set otherwise no reductions would be necessary to explain such behavior we model a two country setting with two way capital flows in particular only part of fdi is immediately reversible as the extent of irreversibility increases the likelihood of pareto optimal tax rates obtaining as a self enforcing outcome in the initial period is reduced more modest tax reductions from the non treaty levels are still possible these limited tax reductions generate an increase in bilateral fdi as countries increase the stock of capital in one another further reductions in taxes become self enforcing depending on the extent of irreversibility and asymmetry pareto optimal tax rates may be obtainable in the long run thus the amount of inbound investment a country can attract may be related to the commitment to which its outbound investment binds it this final insight provides an additional rationale for the observed pattern of capital flows in which those countries with the greatest outbound capital flows are also those with the highest inbound flows

did unilateral divorce raise divorce rates evidence from panel data since early 1996 at least eight states have begun to consider rolling back unilateral and no fault divorce a major reversal of the liberalizing trend in divorce laws which began around 1970 the proponents of tightening the divorce regime often argue that making divorce more difficult will strengthen families however both theoretical and empirical evidence is decidedly mixed over whether the no fault revolution actually contributed to the sharp increase in divorce rates in the united states observed over the last 30 years in this paper i address the dispute by using a panel of state level divorce rates including state specific trends allows unobserved state divorce propensities to trend linearly and even quadratically over time and reveals that unilateral divorce raised divorce rates significantly and strongly excerpt

intrahousehold allocation and bargaining power evidence from chile abstract until 1999 children born out of wedlock in chile had fewer child support rights than those born to married couples i interpret a change in this law as an increase in the household bargaining power of women in cohabiting relationships using a panel of cross sectional data i find a decrease of 1 8 percentage points in the probability of working among men and an increase of 1 2 percentage points in school attendance of children under 19 these results provide evidence that contradicts the predictions of the unitary household model as well as the nash bargaining model the labor market outcomes support a model in which a reduction in men s relative bargaining power is understood as a tax on their wages

must losing taxes on saving be harmful abstract internationalization offers enhanced opportunities for individuals to place savings abroad and evade domestic saving taxation this paper asks whether the concomitant loss of saving taxation necessarily is harmful to this end we construct a model of many symmetric countries in which public goods are financed by taxes on saving and investment there is international cross ownership of firms and countries are assumed to be unable to tax away pure profits countries then face an incentive to impose a rather high investment tax also borne by foreigners in this setting the loss of the saving tax instrument on account of international tax evasion may prevent the overall saving investment tax wedge from becoming too high and hence may be beneficial for moderate preferences for public goods

gender differences in wealth at retirement recent economic trends like the growing prevalence of defined contribution retirement plans have made individuals increasingly responsible for their own financial security financial security greatly depends on the ability to accumulate adequate wealth edward wolff 1998 wealth can be a significant source of retirement income for individuals less and less able to rely on social security and employerprovided defined benefit pension plans one concern in the current economic climate is the persistent gap in wealth between men and women several papers for example lucie schmidt and purvi sevak 2006 have found that the gap is significant even after controlling for individual characteristics this paper contributes to the literature by studying the role of risk preferences in addition to other characteristics specifically it addresses the following research question controlling for other factors do gender differences in risk preferences contribute to the gender wealth gap at retirement the underlying premise is that women are more risk averse than men which is supported by previous research for example robert b barsky et al 1997 a simple theoretical model of household decision making illustrates that retirement wealth is a function of income earned over the lifetime and risk aversion the model is empirically tested using data from the health and retirement study hrs 1 results show that the gender gap in wealth persists even when risk preferences are added to the set of controls thus the unexplained gap remains a cause for concern

collective labor supply and welfare the paper develops a general collective model of household labor supply in which agents are characterized by their own possibly altruistic preferences and household decisions are only assumed to be pareto efficient an alternative interpretation is that there are two stages in the internal decision process agents first share nonlabor income according to some given sharing rule then each one optimally chooses his or her own labor supply and consumption this setting is shown to generate testable restrictions on labor supplies moreover the observation of labor supply behavior is sufficient for recovering individual preferences and the sharing rule up to a constant finally the traditional tools of welfare analysis can be adapted to the new setting

the oecd model tax treaty tax competition and two way capital flows model tax treaties do not require tax rate coordination but do require that either credits or exemptions be applied to repatriated earnings this contradicts recent models with a single capital exporter where deductions are most efficient i incorporate the fact that capital flows are typically bilateral with symmetric countries credits by both is the unique and efficient treaty equilibrium this equilibrium weakly dominates the nontreaty equilibrium with asymmetric countries the treaty need not offer improvements without tax harmonization with harmonization it is always possible to reach efficient capital allocations while increasing both countries welfares only if neither uses deductions

the schooling decision family preferences intergenerational conflict and moral hazard in the brazilian favelas this paper experimentally analyzes the schooling decisions of poor households in urban brazil we elicit parents choices between monthly government transfers conditional on their adolescent child attending school and guaranteed unconditional transfers of varying sizes in the baseline treatment an overwhelming majority of parents prefer conditional transfers to larger unconditional transfers however few parents prefer conditional payments if they are offered text message notifications whenever their child misses school these findings suggest important intergenerational conflicts in these schooling decisions a lack of parental control and observability of school attendance and an additional rationale for conditional cash transfer programs the monitoring they provide

international capital tax evasion and the foreign tax credit puzzle in this paper we examine how the presence of international tax evasion affects the choice of a foreign tax credit by a capital exporting region since the credit raises the opportunity cost of concealing foreign source income it can be employed to discourage evasion activity international tax evasion can thus help to rationalize the adoption of a tax credit in excess of a deduction equivalent rate jel classification h21 h26 evasion fiscale pour le capital international et le probleme du credit d impot pour le fardeau fiscal a l etranger ce memoire examine comment la presence d evasion fiscale pour le capital international affecte le choix du credit d impot pour le fardeau fiscal a l etranger par une region qui exporte du capital puisque le credit d impot accroit le cout d opportunite du camouflage de la source etrangere de revenus c est une technique qui peut etre employee pour decourager l evasion fiscale voila qui peut expliquer qu on adopte un credit d impot qui est plus genereux que ce qui constituerait la deduction dans un systeme ou le fardeau fiscal a l etranger est simplement deduit du revenu imposable

alimony rights and intrahousehold allocation of resources evidence from brazil can family policy affect well being of individuals without altering the resources available to their families this article examines the extension of alimony rights and obligations to cohabiting couples in brazil for women in intact relationships alimony rights upon dissolution should improve outside options strengthening their negotiating positions and increasing their influence over intrahousehold allocation of resources robust econometric evidence indicates that more decision power in the hands of women impacts hours worked by female adults and investments in the education of children this suggests that family policy and models of family decision making should take intrahousehold heterogeneity of preferences into account

marriage and divorce informational constraints and private contracting the relationship between divorce rates in the united states and laws regulating divorce are analyzed using data from a special current population survey undertaken in 1979 with particular reference to the adoption by many states of no fault divorce laws the author utilizes a contract theoretic framework to examine the impact of both legal and informational constraints on several aspects of the marriage relationship 1 the probability of divorce 2 compensation at divorce i e the terms of the divorce settlement 3 the probability of entering marriage and 4 incentives for investment in marriage specific capital two different models are developed the first assumes that ex post information about the value of each spouses opportunites at divorce is symmetric and that since divorce would only occur if the joint benefits outweigh the joint costs the law has no effect on the divorce rate the second model asserts that the existence of asymmetric information results in a fixed wage marriage contract and that divorce would be higher in states that allow unilateral divorce the evidence supports the first of these hypotheses excerpt

capital income taxation and the current account in a small open economy abstract this paper analyzes the effects of capital income taxation on the current account noting the difference between two international tax rules the residence principle and the source principle an increase in the residence tax rate reduces foreign asset holdings in the long run and creates a current account deficit on the other hand an increase in the source tax rate increases long run foreign asset holdings because the king fullerton 1984 effective tax rate responds positively to the increase in both taxes it does not predict the effects of taxation on the direction of international capital investments

tax competition and tax coordination in an optimum income tax model abstract the paper uses the self selection approach of stiglitz 1982 to study tax competition and tax coordination in a many country optimum income tax model in the model the government can impose a non linear tax schedule on wage income and a source based tax on mobile capital in an uncoordinated equilibrium it turns out that countries can use the capital tax instrument to weaken the self selection constraint the paper presents examples where positive and negative capital taxes are optimal from a single country perspective if the production function is weakly separable between labor and capital it can be shown that the optimal capital tax is zero the paper also shows that contrary to the standard tax competition model the uncoordinated equilibrium can be efficient if the wealth distribution the endowments with capital among individuals is egalitarian a coordination of capital taxes does not affect welfare for non egalitarian wealth distributions a coordinated increase in capital taxes can raise or lower welfare depending on the redistributive impact of a higher capital tax

household bargaining and excess fertility an experimental study in zambia we posit that household decision making over fertility is characterized by moral hazard due to the fact that most contraception can only be perfectly observed by the woman using an experiment in zambia that varied whether women were given access to contraceptives alone or with their husbands we find that women given access with their husbands were 19 less likely to seek family planning services 25 less likely to use concealable contraception and 27 percent more likely to give birth however women given access to contraception alone report a lower subjective well being suggesting a psychosocial cost of making contraceptives more concealable