determining appropriate feed in tariff rates to promote biomass to electricity generation in eastern ontario canada abstract on site data collection interviews and financial models were used to determine the feed in tariff fit rate required to encourage investment in the generation of electricity from currently unused biomass from the eastern ontario forest industry a financial model was adapted and run to determine the net present value internal rate of return and payback period associated with a 15 mw biomass to electricity facility the analysis suggests that ontario should consider a stronger incentive than the recently offered cdn 0 13 kw 1 h 1 for biomass to electricity if no customer for heat generated from the plant can be found fit rates between cdn 0 17 0 22 kw 1 h 1 are necessary to achieve a 15 internal rate of return and a simple payback of approximately 5 yr achieving a price of cdn 0 013 kw 1 of thermal output still requires elevated fit rates between cdn 0 15 0 21 kw 1 h 1 to meet economic performance criteria other barriers particularly regulations regarding the use of operating engineers in steam plants should also be addressed to facilitate development of biomass to electricity without these changes it is likely that biomass will be significantly under used and will not contribute to the renewable energy goals of ontario

taxation and international migration of superstars evidence from the european football market we analyze the effects of top tax rates on international migration of football players in 14 european countries since 1985 both country case studies and multinomial regressions show evidence of strong mobility responses to tax rates with an elasticity of the number of foreign domestic players to the net of tax rate around one around 0 15 we also find evidence of sorting effects low taxes attract highability players who displace low ability players and displacement effects low taxes on foreigners displace domestic players those results can be rationalized in a simple model of migration and taxation with rigid labor demand jel f22 h24 h31 j44 j61 l83

transfer fee regulations in european football abstract we analyze the impact of three different transfer fee systems on payoffs contract lengths training and effort incentives in european football the different regimes being used until 1995 pre bosman currently in use bosman and recently approved monti differ with respect to the transfer fee an initial club is entitled to depending on whether a player has a valid contract or not we show that the different systems differ only with respect to the contract length if the contract which maximizes the expected joint surplus of the initial club and the player is feasible under each system otherwise regime p is strictly dominated by regime b in terms of expected social welfare regime m leads to higher effort but lower incentives to invest in training compared to system b

focus on situation and policies for biomass power generation in china abstract nowadays china is faced with many issues such as increasing farmers income protecting environment and adjusting energy structure which may be solved by developing the biomass power generation industry however the lack of technical capability inadequate raw materials and challenges for grid feed in are all obstacles that prevent large scale production and industrialization in the biomass power generation industry therefore government should provide necessary policies to support and advance the biomass power generation industry this paper systematically analyzes the current laws regulations and policies implemented recently in china and provides a comprehensive review of the fiscal subsidies reduction and exemption of taxes tariff concessions the policies of investment and financing and the support of r d suggestions for relevant policies are proposed to address the existing problems

the incidence of income taxes on high earners in canada this article explores the brain drain explanation for the concentration of incomes in canada during the past 30 years namely that high skilled canadians make use of high salaries on offer in the united states to extract higher salaries at home if this is the case then for a given level of us salaries the threat to accept outside offers should be more credible when the canadian dollar is depreciating against the us dollar and weaker when the canadian dollar is appreciating the data are broadly consistent with this claim income concentration worsened during the depreciations of the 1980s and 1990s and eased when the canadian dollar began to appreciate in value the article develops a simple two parameter model based on the propositions that high earners in canada can use us salaries to bargain for higher salaries and that canadian high earners can shelter part of their income from personal income taxes it also offers some preliminary evidence about the parameter values consistent with available data the results suggest that higher top marginal personal income tax rates may potentially accentuate top end after tax income inequality if high earners are able to use their bargaining power to extract pay increases to offset higher tax rates then the burden of increased personal income taxes will be deflected elsewhere and may even have the perverse effect of making the after tax income distribution more unequal than it was before l incidence des impots sur le revenu des hauts salaries au canada cet article examine l hypothese des produits de base produits de base produits de base produits de base produits de base fuites des cerveaux comme explication pour la concentration des revenus au canada pendant les dernieres decennees c est a dire que les canadiens hautement qualifies se servent des salaires offerts aux etats unis pour negocier des salaires plus eleves au canada si tel est le cas la menace d emigrer aux etats unis est plus credible lorsque le dollar canadien deprecie contre le dollar americain et elle est moins credible pendant une appreciation les grandes lignes des variations des donnees vont dans le sens de cette conjecture la concentration des revenus a accru pendant les depreciations des annees 1980 et 1990 et cette tendance a renverse la direction suite a l appreciation du dollar canadien l article developpe un modele a deux parametres base sur les propositions que les hauts salaries au canada peuvent utiliser les salaires aux etats unis afin de negocier des salaires plus eleves et que les hauts salaries se servent de la planification fiscale afin de mettre une partie de leurs revenus a l abri des impots des estimations preliminaires pour les parametres sont presentees les resultats suggerent qu une augmentation du taux marginal d imposition pourrait meme accentuer l inegalite des revenus apres impots si les hauts salaries sont capables de negocier des salaires plus eleves face aux augmentations des taux d imposition le fardeau du nouvel impot serait refile ailleurs la distribution des revenus nets pourrait meme devenir encore plus inegale

using elasticities to derive optimal income tax rates this paper derives optimal income tax formulas using compensated and uncompensated elasticities of earnings with respect to tax rates a simple formula for the high income optimal tax rate is obtained as a function of these elasticities and the thickness of the top tail of the income distribution in the general non linear income tax problem this method using elasticities shows precisely how the different economic effects come into play and which are the key relevant parameters in the optimal income tax formulas of mirrlees the optimal non linear tax rate formulas are expressed in terms of elasticities and the shape of the income distribution these formulas are implemented numerically using empirical earning distributions and a range of realistic elasticity parameters

can state taxes redistribute income abstract the evidence presented in this paper supports the basic theoretical presumption that state and local governments cannot redistribute income since individuals can avoid unfavorable taxes by migrating to jurisdictions that offer more favorable tax conditions a relatively unfavorable tax will cause gross wages to adjust until the resulting net wage is equal to that available elsewhere the current empirical findings go beyond confirming this long run tendency and show that gross wages adjust rapidly to the changing tax environment thus states cannot redistribute income for a period of even a few years the adjustment of gross wages to tax rates implies that a more progressive tax system raises the cost to firms of hiring more highly skilled employees and reduces the cost of lower skilled labor a more progressive tax thus induces firms to hire fewer high skilled employees and to hire more low skilled employees since state taxes cannot alter net wages there can be no trade off at the state level between distribution goals and economic efficiency shifts in state tax progressivity by altering the structure of employment in the state and distorting the mix of labor inputs used by firms in the state create deadweight efficiency losses without achieving any net redistribution

bounds on elasticities with optimization frictions a synthesis of micro and macro evidence on labor supply how can price elasticities be identified when agents face optimization frictions such as adjustment costs or inattention i derive bounds on structural price elasticities that are a function of the observed effect of a price change on demand the size of the price change and the degree of frictions the degree of frictions is measured by the utility losses agents tolerate to deviate from the frictionless optimum the bounds imply that frictions affect intensive margin elasticities much more than extensive margin elasticities i apply these bounds to the literature on labor supply the utility costs of ignoring the tax changes used to identify intensive margin labor supply elasticities are typically less than 1 of earnings as a result small frictions can explain the differences between micro and macro elasticities extensive and intensive margin elasticities and other disparate findings pooling estimates from existing studies i estimate a hicksian labor supply elasticity of 0 33 on the intensive margin and 0 25 on the extensive margin after accounting for frictions

game theoretic analysis of competitive agri biomass supply chain abstract this research aims to explore the optimal strategies for managing competitive agri biomass supply chain first a game model of a supply chain consisting of one supplier and two buyers is used to develop the optimal strategies for the supplier and buyers as well as the total equilibrium profit then the industrial coexistence conditions are analyzed and the effects of the model parameters on game equilibrium are evaluated finally the methodology is illustrated with a case study in china

the effect of income taxation on the labor supply of married men in sweden abstract this paper presents labor supply functions estimated on a sample of prime age swedish males the model used takes account of the nonlinear character of individuals budget sets caused by the progressive income tax it also allows preferences to vary between individuals calculations with the estimated functions using a partial equilibrium framework indicate a sizeable effect of the income tax on hours of work the average expected deadweight loss of the income tax is found to be approximately 20 percent of tax revenue

the optimal elasticity of taxable income abstract the strength of the behavioral response to a tax rate change depends on the environment individuals operate in and may be manipulated by instruments controlled by the government we first derive a measure of the social benefit to affecting this elasticity the paper then examines this effect in the solution to the optimal income taxation problem when such an instrument is available first in a general model and then in an example when the government chooses the income tax base

relativity mobility and optimal nonlinear income taxation in an open economy abstract recent evidence suggests that globalization has reduced the barriers to international labor mobility and induced more cross country social comparisons in an open economy with tax driven migration and consumption externalities relativity we derive an optimal tax formula that subsumes existing ones obtained under a maximin social objective and additively separable utility and sign the second best mirrleesian marginal tax rates for all skill levels we establish the thresholds of the elasticity and level of migration to determine when relativity and inequality act as complements or substitutes in shaping the optimal top tax rate under both nash and stackelberg tax competition if the migration probability of top income workers is approximately 50 numerical calculation using parameter estimates from empirical studies shows that the country with labor inflow outflow implements over 10 lower higher marginal tax rates than suggested by the autarky equilibrium of kanbur and tuomala 2013

taxation and the long run allocation of labor theory and danish evidence abstract inspired by hayek 1945 we study the distortionary effects of taxation on labor mobility and the long run allocation of labor across different profitable opportunities these effects are not well detected by the methods applied in the large public finance literature estimating the elasticity of taxable income and quantifying the efficiency loss from taxation our analysis builds on a standard search theoretic framework where workers are continually seeking better paid jobs but are also fired from time to time because of economic development and productivity shocks we incorporate non linear taxation into this setting and estimate the structural parameters of the model using employer employee register based data for the full danish population of workers and workplaces for the years 2004 2006 our results indicate that along the intensive margin the danish taxation generates an overall efficiency loss corresponding to a 12 reduction in total income it is possible to reap 4 5 of this potential efficiency gain by going from a high tax scandinavian system to a level of taxation in line with low tax oecd countries such as the united states the tax responsiveness of labor mobility and allocation corresponds to an elasticity of taxable income with respect to the net of tax rate in the range 0 15 0 35

labor supply and optimization frictions evidence from the danish student labor market abstract using danish administrative data i investigate the magnitude and nature of optimization frictions in the labor market of danish students danish students face a unique institutional setting that makes it possible to distinguish between different types of frictions and estimate their effect on individual utility i find that frictions significantly affect observed labor market outcomes in particular the empirical evidence points to inattention as the dominant type of friction in contrast my findings appear inconsistent with real adjustment costs price misperception and gradual learning overall optimization frictions reduce the utility of individuals by approximately 2 3 of disposable income

changes in the labor supply behavior of married women 1980 2000 using march current population survey data we investigate married women s labor supply from 1980 to 2000 we find a large rightward shift in their labor supply function for annual hours in the 1980s with little shift in the 1990s these shifts account for most of the slowdown in the growth of labor supply during this period a major development was the dramatic decrease in the responsiveness of married women s labor supply to their own and husbands wages their own wage elasticity fell by 50 56 while their cross wage elasticity fell by 38 47 in absolute value

tax harmonization and tax competition in the european union lessons from switzerland abstract this paper presents empirical evidence on individual income tax competition in switzerland tax competition has some influence on the spread of people with high income over the cantons and it is partly capitalised in dwelling rents however it neither leads to a collapse of public good supply nor makes redistribution by the fiscal authorities impossible thus if tax competition works well in switzerland there is no reason why it should have disastrous effects in a future european union

tax induced mobility evidence from a foreigners tax scheme in switzerland abstract we study location choice and residential mobility responses to local income taxes exploiting a special tax regime which applies to foreign employees residing in switzerland the institutional setting used generates a deterministic duration threshold at 5 years of stay in the country at which the local tax rates an individual faces simultaneously change in all municipalities we exploit this exogenous variation by applying a fuzzy regression discontinuity design to merged survey and administrative individual level data a dynamic location choice model allows us to derive testable hypotheses of individuals location choices and mobility decisions our estimated treatment effects provide causal evidence for tax induced residential choices and tax induced intra national mobility

exploration and scarcity noting that a suggested measure of natural resource scarcity resource rent is unobservable we show that rent is linked to observable marginal exploration cost a two period model of extraction and exploration reveals that rent is equal to this cost when discovery is certain under risky exploration cost data can be used to bound rent the model also indicates how exploration uncertainty affects the competitive firm s extraction and exploration decisions finally the behavior of u s oil and gas exploration costs suggests that these costs were rising in the postwar era which has different implications for scarcity than indicated by other measures of scarcity

using differences in knowledge across neighborhoods to uncover the impacts of the eitc on earnings we develop a new method of estimating the impacts of tax policies that uses areas with little knowledge about the policy s marginal incentives as counterfactuals for behavior in the absence of the policy we apply this method to characterize the impacts of the earned income tax credit eitc on earnings using administrative tax records covering all eitc eligible lers from 19962009 we begin by developing a proxy for local knowledge about the eitc schedule the degree of sharp bunching at the exact income level that maximizes eitc refunds by individuals who report self employment income the degree of self employed sharp bunching varies signi cantly

the plight of the biomass power generation industry in china a supply chain risk perspective abstract for the past several years the biomass power generation industry in china has witnessed notably rapid development however many biomass power generation manufacturers in china are currently making small profits or suffering losses and the entire biomass supply chain does not function well which not only poses a challenge for the stable operation of enterprises but also may impact the smooth development of the biomass power industry from the perspective of supply chain risk this paper explores the reasons for the current plight and the future obstacles that the chinese biomass power generation industry may face identifying such risks as market risk production risk technology risk economic risk and management risk in the upstream midstream and downstream of the biomass supply chain and ordering the degrees of risk controllability by the government and enterprises it is determined that joint effort by both the chinese government and the biomass power generation enterprises is an ideal choice for risk control coming out of the plight however at present more problems should go to the government for solutions than to the enterprises to guide the healthy development of the industry the chinese government should play a more prominent role in promulgating supporting policies in each stage of the supply chain and strengthening the supervision and control of biomass projects last specific measures taken by the chinese government and the enterprises are proposed

mobility and redistribution the ability of individuals to move freely from one jurisdiction to another is generally seen as a constraint on the amount of redistribution that each jurisdiction within a system of governments can undertake in this paper we look at this proposition by developing a positive analysis of income redistribution by local governments in a federal system we ask how much redistribution occurs when only local governments can have tax transfer instruments individuals can move freely among jurisdictions and voters in each jurisdiction are fully aware of the migration effects of redistributive policies local redistribution is shown to induce sorting of the population with the poorest households located in the communities that provide the most redistribution while the threat of out migration affects the potential for redistribution our results suggest that significant local redistribution is nonetheless feasible numerical computations indicate that the proportion of residents who are renters is a major factor affecting the local choice of level of redistribution

the elasticity of taxable income with respect to marginal tax rates a critical review this paper critically surveys the large and growing literature estimating the elasticity of taxable income with respect to marginal tax rates using tax return data first we provide a theoretical framework showing under what assumptions this elasticity can be used as a sufficient statistic for efficiency and optimal tax analysis we discuss what other parameters should be estimated when the elasticity is not a sufficient statistic second we discuss conceptually the key issues that arise in the empirical estimation of the elasticity of taxable income using the example of the 1993 top individual income tax rate increase in the united states to illustrate those issues third we provide a critical discussion of selected empirical analyses of the elasticity of taxable income in light of the theoretical and empirical framework we laid out finally we discuss avenues for future research jel h24 h31 j22

structural estimation of family labor supply with taxes estimating a continuous hours model using a direct utility specification this paper proposes a new method for estimating family labor supply in the presence of taxes this method accounts for continuous hours choices measurement error unobserved heterogeneity in tastes for work the nonlinear form of the tax code and fixed costs of work in one comprehensive specification estimated on data from the 2001 psid the resulting elasticities for married males are consistent with those found elsewhere in the literature but female wage elasticities are substantially smaller than those found in most of the literature simulations of recent tax acts predict small effects on the labor supply of married couples

taxation and the earnings of husbands and wives evidence from sweden i examine the response of husbands and wives earnings to a tax reform in which husbands and wives tax rates changed independently allowing me to examine the effect of both spouses incentives on each spouse s behavior i analyze the large swedish tax reform of 1990 1991 and find that in response to a compensated fall in one spouse s tax rate each spouse s earnings rise i compare these results to those of simplified econometric models used in the typical setting in which independent variation in each spouse s tax rate is unavailable i find that standard econometric specifications may produce substantially biased estimates

unwilling or unable to cheat evidence from a tax audit experiment in denmark this paper analyzes a tax enforcement field experiment in denmark in the base year a stratified and representative sample of over 40 000 individual income tax filers was selected for the experiment half of the tax filers were randomly selected to be thoroughly audited while the rest were deliberately not audited the following year threat of audit letters were randomly assigned and sent to tax filers in both groups we present three main empirical findings first using baseline audit data we find that the tax evasion rate is close to zero for income subject to third party reporting but substantial for self reported income since most income is subject to third party reporting the overall evasion rate is modest second using quasi experimental variation created by large kinks in the income tax schedule we find that marginal tax rates have a positive impact on tax evasion for self reported income but that this effect is small in comparison to legal avoidance and behavioral responses third using the randomization of enforcement we find that prior audits and threat of audit letters have significant effects on self reported income but no effect on third party reported income all these empirical results can be explained by extending the standard model of rational tax evasion to allow for the key distinction between self reported and third party reported income

the effect of marginal tax rates on taxable income a panel study of the 1986 tax reform act this paper uses a treasury department panel of more than 4 000 taxpayers to estimate the sensitivity of taxable income to changes in tax rates on the basis of a comparison of the tax returns of the same individual taxpayers before and after the 1986 tax reform the analysis emphasizes that the response of taxable income involves much more than a change in the traditional measures of labor supply the evidence shows an elasticity of taxable income with respect to the marginal net of tax rate that is at least one and could be substantially higher the implications for recent tax rate changes are discussed

bunching at the kink implications for spending responses to health insurance contracts abstract a large literature in empirical public finance relies on bunching to identify a behavioral response to non linear incentives and to translate this response into an economic object to be used counterfactually we conduct this type of analysis in the context of prescription drug insurance for the elderly in medicare part d where a kink in the individual s budget set generates substantial bunching in annual drug expenditure around the famous donut hole we show that different alternative economic models can match the basic bunching pattern but have very different quantitative implications for the counterfactual spending response to alternative insurance contracts these findings illustrate the importance of modeling choices in mapping a compelling reduced form pattern into an economic object of interest

differential taxation and occupational choice we develop a framework to study optimal sector specific taxation where each agent chooses an occupation by comparing her skill differential with the tax burden differential across sectors because skills are not perfectly transferable the diamond mirrlees theorem according to which the second best entails production efficiency fails social welfare can be increased by inducing some agents to join the sector in which their productivity is not the highest at the optimum income taxes balance the marginal losses from inter sector migration with the marginal gains from tailoring tax schedules to the distribution of productivities in each sector tagging a calibrated model indicates that sector specific taxation generates substantive welfare gains when skill transferability decreases with income as it enables the government to increase average taxes on high earners with large wage premia

present situation problems and solutions of china s biomass power generation industry abstract with the reduction of global oil reserves developing renewable energy has become an important issue for each country biomass power is an important kind of clean energy as it has abundant resource and is environmental friendly in the past few years china biomass power industry has developed rapidly accompanied with some problems this paper analyzes the current situation of china biomass power generation from several aspects such as power structure resource distribution investment strength and policy environment etc we focus on the problems existed in practical operation and analyze the outstanding problems at last this paper offers several suggestions for future development on the relevant fields such as cost strategic planning and policy

incomplete markets intra industry firm heterogeneity and investment abstract we argue that as a result of incomplete factor markets firm specific variables representing selected characteristics of firms may influence and differentiate firms investment behavior within industries this paper operationalizes and test the framework with a simple institutionally motivated model of investment in uranium exploration our results suggest that cash flow and firm specific expertise influence and differentiate firms exploration investment behavior in the uranium industry these findings imply that the ways in which incomplete factor input markets distinguish firms also influence and differentiate their investment behavior

using notches to uncover optimization frictions and structural elasticities theory and evidence from pakistan we develop a framework for nonparametrically identifying optimization frictions and structural elasticities using notches discontinuities in the choice sets of agents introduced by tax and transfer policies notches create excess bunching on the low tax side and missing mass on the high tax side of a cutoff and they are often associated with a region of strictly dominated choice that would have zero mass in a frictionless world by combining excess bunching observed response attenuated by frictions with missing mass in the dominated region frictions it is possible to uncover the structural elasticity that would govern behavior in the absence of frictions and arguably capture long run behavior we apply our framework to tax notches in pakistan using rich administrative data while observed bunching is large and sharp optimization frictions are also very large as the majority of taxpayers in dominated ranges are unresponsive to tax incentives the combination of large observed bunching and large frictions implies that the frictionless behavioral response to notches is extremely large but the underlying structural elasticity driving this response is nevertheless modest this highlights the inefficiency of notches by creating extremely strong price distortions they induce large behavioral responses even when structural elasticities are small

income underreporting among the self employed a permanent income approach the consumption based method to estimate underreporting among self employed introduced by pissarides andweber 1989 is one of the workhorses in the empirical literature on tax evasion avoidance

agricultural supply chain optimization and complexity a comparison of analytic vs simulated solutions and policies abstract with worldwide food security emerging as a major policy issue moving forward the structure and optimization of key agricultural supply chains is of growing importance in turn while many working models of supply chain optimization have been developed to ensure analytic tractability others are building more precise characterizations of a supply chain as a complex system that may not be amenable to analytic solution this research examines an important agricultural supply chain from the perspective of developing effective solutions to complex internal optimization issues that could ultimately affect food security to this end the canadian wheat handling system is a complex export oriented supply chain that is currently undergoing extensive changes with respect to quality control we develop both analytic and simulation models of this supply chain with the ultimate goal of identifying effective wheat quality testing strategies in a complex operational and regulatory environment while the analytic model is founded on limited assumptions about individual behavior agent based simulation allows us to model farmers and handlers as rational and learning individuals who make decisions based on their own experiences as well as the experiences of others around them we then make explicit comparisons between solutions and policies generated using the simulation approach against those generated by the analytically tractable model of the wheat supply chain while the two approaches generate somewhat different solutions in many respects they lead to similar conclusions regarding the overall testing and quality control issue in wheat handling

investment and industrial expansion a corporate variables framework abstract the article proposes that firm investment and in turn industry expansion are determined by firm specific corporate variables in addition to the typically considered variables characterizing the firm s experience and expected conditions in a given market such as rate of growth of demand price and cost of capital defined to represent the internal characteristics of firms the particular corporate variables hypothesized to affect investment behavior include cash flow firm specific assets internal firm structure and corporate strategy the choice of the postulated corporate variables is motivated by the presence of factors associated with the failure or absence of markets an uncertain and complex environment the irreversibility of much capital investment information asymmetry and organizational boundaries

experimental evidence on the relationship between tax evasion opportunities and labor supply abstract motivated by the observation that access to evasion opportunities is distributed heterogeneously across the labor market this paper examines the extent to which labor supply elasticities with respect to tax rates depend on such evasion opportunities we first discuss the channels through which access to evasion affects labor supply responses and then set up a laboratory experiment n 205 in which all participants undertake a real effort task over several rounds subjects face a tax rate that varies across rounds and are required to pay taxes on earned income the treatment group is given the opportunity to underreport income while the control group is not we find evidence that participants in the treatment group respond differently to changes in the net of tax rate than participants in the control group the effect is more prevalent when tax rates fall additionally the direction of the treatment effect is dependent on the evolution of tax rates across rounds

hourly wage rate and taxable labor income responsiveness to changes in marginal tax rates recently a voluminous literature estimating the taxable income elasticity has emerged as an important field in empirical public economics however to a large extent it is still unknown how the hourly wage rate an important component of taxable income reacts to changes in marginal tax rates in this study we use a rich panel data set and a sequence of tax reforms that took place in sweden during the 1980 s to estimate the elasticity of the hourly wage rate with respect to the net of tax rate while carefully accounting for the endogeneity of marginal tax rates as well as other factors that determine wage rates we do find a statistically significant response both among married men and married women the hourly wage rate elasticity with respect to the net of tax rate is estimated to 0 14 0 16 for males and 0 41 0 57 for females in addition we obtain uncompensated taxable labor income elasticities of around 0 21 for men and 0 96 1 44 for women in contrast to earlier studies we also find significant income effects for males accordingly for males the compensated taxable labor income elasticity is about 4 percentage points higher than the uncompensated one

adjustment costs firm responses and micro vs macro labor supply elasticities evidence from danish tax records we show that the effects of taxes on labor supply are shaped by interactions between adjustment costs for workers and hours constraints set by firms we develop a model in which firms post job offers characterized by an hours requirement and workers pay search costs to find jobs we present evidence supporting three predictions of this model by analyzing bunching at kinks using danish tax records first larger kinks generate larger taxable income elasticities second kinks that apply to a larger group of workers generate larger elasticities third the distribution of job offers is tailored to match workers aggregate tax preferences in equilibrium our results suggest that macro elasticities may be substantially larger than the estimates obtained using standard microeconometric methods

bunching and non bunching at kink points of the swedish tax schedule recent microeconometric studies of taxpayers responsiveness to taxation have shown that intensive margin labor supply and earnings elasticities typically are modest and sometimes equal to zero however a common view is that long run responses might still be large since micro estimates are downward biased owing to optimization frictions in this paper we estimate the taxable income elasticity at a very large kink point of the swedish tax schedule using the bunching method during the period of study the change in the log net of tax rate reached a maximum value of 45 6 interestingly we obtain a precise elasticity estimate of zero for wage earners at this large kink the size of the kink allows us to derive tighter bounds on the long run elasticity than previous studies if wage earners on average tolerate 1 of their disposable income in optimization costs the upper bound on the long run taxable income elasticity is 0 39 we also evaluate the performance of the bunching estimator by performing monte carlo simulations

how can scandinavians tax so much american visitors to scandinavian countries are often puzzled by what they observe despite large income redistribution through distortionary taxes and transfers these are very high income countries they rank among the highest in the world in terms of income per capita as well as most other economic and social outcomes the economic and social success of scandinavia poses important questions for economics and for those arguing against large redistribution based on its supposedly detrimental effect on economic growth and welfare to form a basis for the discussion table 1 shows tax revenues and income tax rates in the three scandinavian countries denmark norway and sweden as compared to other european countries and the united states we see that the tax to gdp ratio and the tax rates on income are much higher in scandinavia than elsewhere the top marginal tax rates are about 60 70 percent in the scandinavian countries as opposed to only 43 percent in the united states the contrast is even more striking when considering the so called participation tax rate which is the effective average tax rate on labor force participation when accounting for the distortions due to income taxes payroll taxes consumption taxes and means tested transfers this tax rate is around 80 percent in the scandinavian countries implying that an average worker entering employment will be able to increase consumption by only 20 percent of earned income due to the combined effect of higher taxes and lower transfers by contrast the average worker in the united states gets to keep 63 percent of earnings when accounting for the full effect of the tax and

migration and optimal income taxes abstract the issue addressed in this paper is the optimal taxation of incomes earned in the home economy and of incomes earned abroad when people can migrate as a preliminary the optimal taxation of home incomes when there is migration and no taxation of foreign incomes is discussed then in a more general setting we deal with optimal taxation of different kinds of labour when another kind of labour is not taxable and show how this bears on the taxation of foreign incomes the last sections of the paper analyse a simple model in which people choose between taxable labour at home taxable labour abroad and untaxable labour a condition is found implying that the optimal tax on foreign income is higher than on the home income of a person of equal utility

equality under threat by the talented evidence from worker managed firms does workplace democracy engender greater pay equality are high ability individuals more likely to quit egalitarian organisational regimes the article revisits this long standing issue by analysing the interplay between compensation structure and quit behaviour in the distinct yet underexplored institutional setting of worker managed firms the analysis is based on novel administrative data sources which allow constructing a simple ordinal measure of the workers ability type the article s key findings are that worker managed firms have a more compressed compensation structure than conventional firms and high ability members are more likely than other members to exit

relocation of the rich migration in response to top tax rate changes from spanish reforms a spanish reform granted regions the authority to set income tax rates resulting in substantial tax differentials using administrative data we find that conditional on moving taxes have a signi

a feedstock supply model integrating the official organization for china s biomass generation plants abstract shortage of feedstock has hindered the development of china s biomass power generation because it is highly difficult to collect straw in china we pioneered a new feedstock supply model in which the formal official organization of villagers committees is introduced different from the previous feedstock supply patterns the immaterial utility of relative stakeholders and the impact of villagers committees on farmers behavior are considered in this paper to compare this pattern s performance with that of the conventional ones this paper developed a multi agent model specifically for china s situation we applied the model to simulate the operation of a biomass supply chain the results show that the proposed feedstock supply pattern can significantly increase the profits of biomass plants biomass supply amounts and farmers participation and in contrast with the broker pattern it can lower feedstock prices through disintermediation sensitivity analyses show that preferential feed in tariffs are still necessary for biomass power and that the new pattern can ease the government s subsidy burdens additionally farmers opportunity costs for supplying biomass their perceptions of immaterial utility and the cooperative s financial resource schemes of the public welfare fund all have differing impacts on the achievement of the new pattern

expenditure response to health insurance policies evidence from kinks in rural china abstract this paper utilizes administrative data to analyze expenditure responses to the health insurance policy in rural china and clear visual evidence of bunching is observed at the kink point a static response model with optimization frictions estimates that a complete elimination of the reimbursement would cause the total expenditure per visit to decrease by 34 5 and approximately one third of the studied population makes decisions with errors heterogeneous expenditure responses and optimization frictions are observed across demographic groups cost benefit and counterfactual analyses indicate that the current policy generates the greatest welfare gains

reprint of bunching at the kink implications for spending responses to health insurance contracts abstract a large literature in empirical public finance relies on bunching to identify a behavioral response to non linear incentives and to translate this response into an economic object to be used counterfactually we conduct this type of analysis in the context of prescription drug insurance for the elderly in medicare part d where a kink in the individual s budget set generates substantial bunching in annual drug expenditure around the famous donut hole we show that different alternative economic models can match the basic bunching pattern but have very different quantitative implications for the counterfactual spending response to alternative insurance contracts these findings illustrate the importance of modeling choices in mapping a compelling reduced form pattern into an economic object of interest

the choice of organizational form by closely held firms in sweden tax versus non tax determinants this article makes use of individual data from 2004 to 2008 on owners of closely held businesses in sweden to estimate the role of both tax and non tax determinants in the choice to be a closely held corporation chc versus a proprietorship although lower income individuals face relatively neutral incentives higher income households face strong tax incentives to be corporate the data suggest a strong response to these tax incentives many conventional non tax determinants are confirmed in the data as well copyright 2013 the author 2013 published by oxford university press on behalf of associazione icc oxford university press

an exploratory game theoretic analysis of biomass electricity generation supply chain this study proposes a game theoretic approach to model and analyze the process of utilizing biomass for power generation considering three players distributor facility developer and participating farmer we characterize the nash equilibrium of the sequential game and discuss its features a special attention is devoted to the analysis of the impact of incentives and initial target on the equilibrium in which the biomass is part of electricity production

constitutional change and inequality in scotland what scope does a sub national economy have to affect the level of inequality does a policy menu consistent with the theories of fiscal federalism provide for an ability to affect inequality measures or does this ability require the powers of a nation state in this paper we discuss these questions in the context of the debate around the scottish independence referendum in which inequality has played a prominent role and ask whether independence further devolution or simply different policies under the current constitutional framework are capable of helping scotland make the transition to a less unequal income distribution we provide a series of estimates of the impact of different policy choices upon inequality in scotland and discuss inequality reduction in the context of different constitutional options

mobile labor multiple tax instruments and tax competition abstract the tax competition literature shows that local governments keep property tax rates inefficiently low to prevent capital outflows thereby underproviding local public goods this paper adds mobile labor and an alternative tax instrument to the model jurisdictions have access to a property tax levied on land and capital plus either a head tax or a labor tax scale economies in public good provision create incentives to use the property tax but these incentives are not accompanied by increased incentives to underprovide public goods in contrast underprovision is associated with the use of a distortionary labor tax

tax bunching income shifting and self employment abstract this paper proposes a dynamic extension to saez 2010 bunching formula that allows us to distinguish bunching based on real responses and income shifting we provide direct evidence of income shifting and pronounced bunching in taxable income for the danish self employed if income shifting was neglected in this case we would estimate a taxable income elasticity in the range of 0 43 0 53 and conclude that taxable incomes were highly sensitive to changes in marginal tax rates we show however that more than half of the bunching in taxable income is driven by intertemporal income shifting implying a structural elasticity of 0 14 0 20

the elasticity of taxable income in the presence of deduction possibilities several recent studies show that the elasticity of taxable income eti is not a sufficient statistic for the welfare costs of taxation due to factors such as tax base shifting this paper provides an additional argument demonstrating the non sufficiency of the eti namely tax deductions building on a theoretical framework which incorporates deductions in a standard optimal tax model we show that the eti is not sufficient for welfare analysis if i deductions generate externalities and if ii deductions are responsive to tax rate changes while the first condition should arguably hold true for the majority of tax deductions we provide an empirical examination of the second condition relying on rich german panel data from administrative tax records we exploit several tax reforms that were implemented in germany between 2001 and 2008 our main estimates indicate an overall eti between 0 54 and 0 68 and an elasticity of deductions with respect to the net of tax rate of about 0 9 these results suggest that the eti is not sufficient to calculate the welfare cost of taxation

marginal tax rates and tax favoured pension savings of the self employed evidence from sweden in recent years the study of how individuals respond to policies that aim at promoting pension savings has emerged as a vital area of economic research this paper adds to this body of literature by estimating the tax price elasticity of contributions to tax favoured pension savings accounts on a population of self employed individuals i exploit a unique total database over the swedish population that covers the years 19992005 using instrumental variables i obtain a tax price elasticity estimate of 0 51 and an income elasticity estimate of 0 13 whereas ordinary least squares ols produces estimates that conflict with consumer theory

immigration and welfare magnets this article investigates if the location choices made by immigrants when they arrive in the united states are influenced by the interstate dispersion in welfare benefits income maximizing behavior implies that foreign born welfare recipients unlike their native born counterparts may be clustered in the states that offer the highest benefits the empirical analysis indicates that immigrant welfare recipients are indeed more heavily clustered in high benefit states than the immigrants who do not receive welfare or than natives as a result the welfare participation rate of immigrants is much more sensitive to changes in welfare benefits than that of natives

adjustment cost and incentives to work evidence from a disability insurance program abstract how important is adjustment cost for individuals who face a change in work incentives induced by a policy change i provide the first estimate of adjustment cost in the context of a disability insurance di program by exploiting a policy change that increased work incentives by increasing the exemption threshold i use bunching at the thresholds to estimate adjustment cost and earnings elasticity the estimates of adjustment cost are quite sizeable and heterogeneous the estimates of earnings elasticity from both static and dynamic models are larger than the elasticity estimated with no adjustment cost suggesting that adjustment cost attenuates the responses to work incentives policies designed to increase labor supply will work if the work incentives are large enough to offset the adjustment cost accounting for adjustment cost then might explain the disparate findings on the effects of an increase in work incentives on the labor supply of beneficiaries of di programs