tax accounting principles and corporate risk taking we analyze the role of business taxation for corporate risk taking under different accounting principles such as mark to market lower of cost or market and historical cost we demonstrate that conservative accounting may imply incentives to overinvest in risky assets however with imperfect loss offsets the mark to market principle penalizes risky investment whereas more conservative accounting leaves the risk choice unaffected

dividend taxes corporate investment and q abstract taxes on corporate distributions have traditionally been regarded as a double tax on corporate income this view implies that while the total effective tax rate on corporate source income affects real economic decisions the distribution of this tax burden between the shareholders and the corporation is irrelevant recent research has suggested an alternative to this traditional view one explanation of why firms in the united states pay dividends in spite of the heavy tax liabilities associated with this form of distribution is that the stock market capitalizes the tax payments associated with corporate distributions this capitalization leaves investors indifferent at the margin between a corporation s decision to pay out dividends or to retain earnings this alternative view holds that while changes in the dividend tax rate will affect shareholder wealth they will have no impact on corporate investment decisions this paper develops econometric tests which distinguish between these two views of dividend taxation by extending tobin s q theory of investment to incorporate taxes at both the corporate and personal levels the implications of each view for corporate investment decisions can be derived the competing views may be tested by comparing the performance of investment equations estimated under each theory s predictions british time series data are particularly appropriate for testing hypotheses about dividend taxes because of the substantial postwar variation in effective tax rates on corporate distributions the econometric results suggest that dividend taxes have important effects on investment decisions

the importance of reporting conventions for the theory of corporate taxation abstract this paper shows that for the analysis of a tax policy it is important to be explicit about the reporting convention to which a corporation tax is required or allowed to adhere the paper shows that the corporation tax cannot be used to alter capital formation under uniform reporting a convention required by the majority of the oecd countries this tax is however a more useful policy tool in those oecd countries that have created the privilege of separate reporting fiscal depreciation makes the marginal valuation of equity differ from the marginal valuation of capital use of tax allowances directed to investment stimulus operates rather differently under the two reporting conventions

collective labor supply and household production this paper emphasises the importance of incorporating household production into the collective model of the household and considers how and to what extent the results of chiappori 1992 can be extended to this case this abstract was borrowed from another version of this item

the effects of welfare and tax reform the material well being of single mothers in the 1980s and 1990s abstract the tax and welfare programs that provide income and in kind benefits to single mothers have changed dramatically in recent years these changes began as far back as the mid 1980s and culminated with the 1996 welfare law that ended welfare as we knew it these tax and welfare changes have sharply increased the employment of single mothers and cut welfare rolls however little is know about the effects of these policy changes on the material well being of single mothers and their children studies of those leaving welfare have found that a substantial percentage have problems paying rent purchasing enough food and paying utility bills other studies found a decline in income among the worst off single mothers after 1994 or 1995 the goal of this paper is to examine the material well being of single mothers and their families before and after recent welfare and tax reforms using data from two nationally representative household surveys we examine the consumption patterns of single mothers and their families from 1984 2000 we find that the material conditions of single mothers did not decline in recent years either in absolute terms or relative to single childless women or married mothers this pattern holds for the average single mother as well as for low educated single mothers at both the 15th and 25th percentiles of the consumption distribution in most cases our evidence suggests that the material conditions of single mothers have improved slightly

the incidence and allocation effects of a tax on corporate distributions abstract to study the effects of double taxation first at the corporation level then at the shareholder level this paper analyzes a model with a tax on all corporate distributions to equity owners and no other taxes contrary to the common view the tax is shown to have no subtitution effect and in particular no effect on the corporate choice between debt and equity via retained earnings finance the analysis opens to question certain arguments commonly used to support integration of corporation and individual income taxes via dividend relief

chronic poverty in the united states this paper proposes a method of measuring chronic and transitory poverty using an axiomatically sound additively decomposable index of aggregate poverty our approach is contrasted with alternative methods of measuring poverty persistence we use our method to measure chronic and transitory poverty in the united states during the 1980s and late 1970s and find that chronic poverty is a more serious problem than previously thought between the late 1970s and mid 1980s poverty not only increased it became more chronic and less transitory in nature this is true for the population as a whole and for some but not all of the subpopulations we considered the latter were defined according to race type of social unit and educational qualifications of the head of the social unit all empirical analyses are based on data from the panel study of income dynamics

labor supply responses and welfare effects of tax reforms during the late 1 980s and early 1 990s taxation of wage income has undergone a change towards a proportional tax regime in many countries our analysis shows that gradual tax reforms in norway may have removed some of the distortions on worker behavior moreover we find that proportional taxes may reduce the inequality in the distribution of disposable household income yet when the distributional consequences are related to changes in individual welfare we find that rich households may benefit far more than households at the other tail of the income distribution because they earn more without any significant increase in effort

the vanishing harberger triangle this paper shows that the double taxation of corporate dividends or profit repatriations implies a nucleus theory of the corporation after the firm is set up with a small stock of original capital it enters a phase of purely internal growth during which no dividends are paid and no shares are issued the phase terminates when an efficient stock of capital has been accumulated and dividends are paid during the growth phases the tax distortion is inversely related to the tax burden and it is larger than conventional formulae for the cost of internal and external equity finance suggest

identifying deprivation profiles in spain a new approach usually an indirect approach for measuring deprivation or poverty is used with poverty lines however some studies have used a direct approach to measure deprivation or poverty the aim of this study is improving the identification of the poor people the central point of the concept of deprivation used is related to the opportunity to have or do something therefore deprivation means an inability to get the goods facilities and opportunities which are usual in the household environment since all of the needed variables are categorical the latent class model is used to solve this problem because it is the best model to achieve this objective

poverty and the distribution of material hardship public concern with poverty derives in large part from the assumption that low income families cannot afford necessities yet official poverty statistics focus on measuring income not on measuring material hardship two surveys of chicago residents measure whether families could afford food housing and medical care a family s official income to needs ratio explained 24 percent of the variance in the amount of material hardship it reported adjustments for family size age health noncash benefits home ownership and access to credit explain another 15 percent variations in permanent income explain almost none of the remaining variance in hardship among families with the same official income toneeds ratio material hardship varies by age family size and composition

tax policy reform the role of empirical evidence to understand the role of evidence in tax policy design this paper organizes the empirical analysis of reform under five loosely related headings i key margins of adjustment ii measurement of effective tax rates iii the importance of information and complexity iv evidence on the size of responses and v implications from theory for tax design the context for the discussion is the recently published mirrlees review of tax reform although the review focused on all aspects of tax reform this paper highlights the taxation of earnings it also comments on earnings taxation in the context of vat base broadening reforms and the taxation of capital

child care choices and children s cognitive achievement the case of single mothers we evaluate the effect of child care versus maternal time inputs on child cognitive development using single mothers from the nlsy79 to deal with nonrandom selection of children into child care we exploit the exogenous variation in welfare policy rules facing single mothers in particular the 1996 welfare reform and earlier state level policy changes generated substantial increases in their work child care use we construct a comprehensive set of welfare policy variables and use them as instruments to estimate child cognitive ability production functions in our baseline specification we estimate that a year of child care reduces child test scores by 2 1

the food stamp program and food insufficiency food stamp participants have higher food insufficiency rates than eligible nonparticipants even after controlling for other factors given the food stamp program s prominent role in the alleviation of hunger this is a counterintuitive result we conjecture that these higher rates are due to adverse selection insofar as households more likely to be food insufficient are also more likely to receive food stamps we establish a theoretical framework to address this adverse selection using a simultaneous equation model with two probits we show that once one controls for this adverse selection food stamp recipients have the same probability of food insufficiency as nonrecipients copyright 2001 oxford university press

causal effects of paternity leave on children and parents reserving a share of the parental leave period for fathers is considered necessary in order to induce fathers to take leave and to increase men s participation in child rearing we investigate how a parental leave reform directed towards fathers affected leave taking and in turn children s and parents long term outcomes a paternal leave quota greatly increases the share of men taking paternity leave we find evidence that children s school performance improves as a result particularly in families where the father has higher education than the mother we find no evidence that paternity leave counters the traditional allocation of parents labor supply

origins and consequences of changes in u s corporate taxation 1981 1998 foreign direct investment hat u s corporate tax policy is partly determined by partisan and organizational forces as well as by domestic economic forces is a standard theoretical view scholars find that democratic presidential administrations have differed from republican administrations in that the former tended to increase the tax burdens of corporate taxpayers other studies report that increasing business political activity has had an ameliorating effect on business tax burdens on the economic side corporate tax policy is counter cyclical investment inducing and linked with growth and investment in long run structural relationships in at least two important ways however the structure of the american economy differed in the 1980s and 1990s from earlier periods first the u s economy internationalized with the oil shocks of the 1970 s serving as globalization s annunciation second economic agents became increasingly sophisticated in anticipating how governments would respond to economic events and how these government policies would in turn affect economic events the rational expectations revolution led president reagan among others to conclude that traditional u s macroeconomic policies were ineffective some scholars argue that these structural shifts changed the dynamics of u s corporate tax policy they theorize that in open economies like the

measuring the well being of the poor using income and consumption we examine the relative merits of consumption and income as measures of the material well being of the poor consumption offers several advantages over income because consumption is a more direct measure of well being than income and is less subject to underreporting bias measurement problems with income are problematic for analyses of changes in well being of the poor because the biases appear to have changed over time and are correlated with government policies on the other hand income is often easier to report and is available for much larger samples providing greater power to test hypotheses we begin by considering the conceptual and pragmatic reasons why consumption might be better or worse than income then we employ several empirical strategies to examine the quality of income and consumption data first we compare income and consumption reports for those with few resources as well as their assets and liabilities to examine measurement errors and under reporting second we examine other evidence on the internal consistency of reports of low income or consumption third we compare how well micro data in standard datasets weight up to match aggregates for classes of income and consumption that are especially important for low resource families fourth we validate income and consumption measures by comparing them to other measures of hardship or material well being although the evidence tends to favor consumption measures our analyses suggest that both measures should be used to assess the material well being of the poor

an up to date joint labor supply and child care choice model abstract norwegian parents of preschool children base their care choices on a completely different choice set from their predecessor now there is essentially only one type of nonparental care center based care and on the parental side fathers take a more pivotal role in early childhood care in the present paper we develop and estimate a joint labor supply and child care choice model that takes account of these new characteristics on the assumption that this model points to current and future modeling directions for several other economies too estimations suggest that the average wage elasticity for mothers is 0 25 0 30

taxes investment and q this paper attempts to provide a unified analysis of the effects of taxation on the equilibrium value of marginal q under alternative financial policies it is shown that the q approach does not avoid all the specification problems associated with analyses based on the cost of capital the theoretically and empirically crucial relationship between average and marginal q is also examined and it is shown that under uk and us tax rules the possibility of winding up precludes persistent undervaluation in equilibrium there have now been a considerable number of empirical studies of investment behaviour based on some variant of tobin s q defined as the ratio of the firm s market value to the value of its capital stock see for instance jenkinson 1981 oulton 1981 poterba and summers 1981 summers 1981 and von furstenberg 1977 the q approach is seen as having the empirical advantage compared in particular with the more traditional approach based on the cost of capital of allowing expectations to be brought directly into the study of investment behaviour by relying on asset prices to digest all relevant expectations and reflect them in observable data an immediate difficulty however is that whilst the incentive to invest is related to the effect on shareholder wealth at the margin and hence to marginal q only the value of average q is directly observable the consequent difficulty of implementation is not however considered here see bailey and scarth 1980 and hayashi 1982 for discussion of conditions under which marginal q can be inferred from average q rather this paper is concerned with the prior question of how personal and corporate taxation affects the equilibrium value of marginal q for there has as yet been no systematic analysis of the effects of taxation on the equilibrium value of marginal q comparable with the analysis of the relationship between taxation and the cost of capital in king 1974 thus auerbach 1979a b bradford 1981 and edwards and keen 1984 have all considered how taxes affect q when the marginal source of funds is either retained profit or the sale of new equity and the distinction between these two cases has also been recognized in the empirical work of poterba and summers 1983 but the important case in which debt is the marginal source has been ignored the effects on marginal q of the constraints that typically need to be imposed in modelling financial policy have also been neglected this paper attempts to fill these gaps in the literature by providing a general analysis of the relationships between taxation financial policy investment and q the paper also examines the implications of the special tax provisions that may apply in the event in the firm s ceasing operations winding up this bears upon one of the unresolved issues associated with the new view of equity finance auerbach 1983 namely the suggestion that if dividends are taxed more heavily than capital gains

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

childcare subsidies wages and employment of single mothers this paper develops and estimates a model for the choice of part time and full time employment and the decision to pay for childcare among single mothers the results indicate that a lower childcare price and a higher full time wage rate both lead to an increase in overall employment and the use of paid childcare the part time wage effects are found to be too small to have significant behavioral implications an analysis of cost effectiveness indicates that the additional hours of work generated per dollar of government expenditure is larger for a childcare subsidy than a wage subsidy

corporation tax finance and the cost of capital this paper examines the influence of corporate tax exhaustion on the firm s financial and investment decisions a dynamic programming model is used to establish effective marginal tax rates in the presence of a tax system that permits the carry forward of losses to future periods the paper demonstrates that internal optimal financial structures may result which do not require the imposition of external constraints the cost of capital is highly sensitive to the current taxable earnings of the firm and the implications of this for such tax transfer activities as leasing are discussed

the quality of employment qoe in nine latin american countries a multidimensional perspective abstract this paper proposes a methodology for measuring the quality of employment from a multidimensional and public policy perspective in latin american developing countries argentina bolivia brazil chile colombia ecuador mexico paraguay peru and uruguay using household and labour force survey data from 2015 the purpose of this paper is to demonstrate that the qoe can be measured using a multidimensional methodology that can inform policy makers about the state of their labour markets in a way that complements traditional variables such as participation or unemployment rates which are not always good indicators of labour market performance in developing countries with large informal sectors building on the framework of the capability approach as well as on previous work on multidimensional poverty we use the alkire foster af method to construct a synthetic indicator of the quality of employment qoe at an individual level we select three dimensions that must be considered as both instrumentally and intrinsically important to workers and the functions and capabilities generated by their employment situation income job security and employment conditions job security is then divided into two sub dimensions occupational status and job tenure as is employment conditions social security affiliation and excessive working hours a threshold is then established within each dimension and sub dimension to determine whether a person is deprived or not within each dimension before establishing an overall cut off line and calculating composite levels of deprivation the results generated by this indicator are first highly relevant to policy makers as they allow for the precise identification of groups of vulnerable workers as well as of dimensions and indicators which contribute to deprivation in the labour market second they extend the debate about employment in developing countries to variables not commonly considered by the literature as being critical to the well being of workers and their dependents such as occupational status and job tenure third this paper highlights important difference between latin american countries both in terms of the overall qoe index result as well as its component dimensions while chile presents the best results in the region paraguay presents the worst followed by mexico bolivia and peru however chile peru columbia and brazil for example have the biggest problem with job rotation finally the paper highlights that low rates of unemployment are not necessarily related to low rates of deprivation in terms of the qoe in fact in some countries analysed e g mexico the opposite is true

the demand for quality in child care we estimate a model of demand for quality related attributes of child care group size staff child ratio and provider training the model is estimated jointly with equations for mode expenditure on and hours of care and the mother s labor supply the results show that a lower price of child care in a particular mode leads to substitution toward that mode and an increase in the use of paid child care a decrease in the price of care causes an increase in hours of care demanded and a decrease in the demand for qualityrelated attributes income effects on demand for quality are small

taxation corporate financial policy and the cost of capital the cost of capital plays an important role in the allocation of resources among competing uses in a decentralized market system the purpose of this paper is to organize and present what is known and what is hypothesized about the effects of taxation on the incentive to invest via the cost of capital taking full account of important issues that arise independently from the question of taxation included in the analysis is a discussion of empirical findings about the interaction of inflation and taxation in influencing the incentive to invest and a treatment of taxation and uncertainty this abstract was borrowed from another version of this item

accelerated depreciation and the cost of capital the effects of various investment incentives particularly accelerated depreciation on the cost of capital of a profit maximizing firm have been widely discussed during the last few years recent contributions include those of sandmo 1974 bergstrom 1976 boadway 1978 and alworth 1979 a shortcoming of these contributions however is that few efforts are made to provide economic interpretations of the results obtained in this note i derive the cost of capital in a simplified way in terms of a standard marginal investment project the emphasis is on explaining the effects of accelerated depreciation on capital cost in economic terms the deferral of corporation tax brought about by acceleration of depreciation allowances is often compared to the acquisition of an interest free loan from the treasury the deferred corporate tax is thus regarded as a source of finance to the firm it turns out that the effects of accelerated depreciation on capital cost may well be interpreted in a way that conforms to this intuitive view of tax deferral by means of a general expression for capital cost as a weighted average of the costs of debt and equity the deferred corporate tax may be conceived of as a substitute for either equity or debt or both

job loss credit constraints and consumption growth we use direct evidence on credit constraints to study their importance for household consumption growth and for welfare we distentangle the direct effect on consumption growth of a currently binding credit constraint from the indirect effect of a potentially binding credit constraint which generates consumption risk our data is focused on job losers we find that less than 5 of job losers experience a binding credit constraint but for those that do they experience significant welfare losses and consumption growth is 24 higher than for the rest of the population however even among those who are currently unconstrained and who are able to borrow if needed consumption responds to transitory income

a structural model of child care and the labor supply of married women this article empirically examines married women s labor supply and child care expenditures the article uses winter 1984 85 data from the survey of income and program participation to estimate a fu

child care costs and family labor supply this paper presents a theoretical and empirical analysis of the effects of child care costs on family labor supply and the demand for market child care the model is a framework for cross section estimation of the effects of child care costs on labor supply and child care use it applies to households having young children requiring continuous care and in which both the mother and 1 other potential child care provider are present the 3 potential sources of child care are the mother the potential informal provider and the market using data from the 1980 baseline household survey of the employment opportunity pilot projects this empirical analysis uses a subsample of 6170 households in which there is a married woman under age 45 with her spouse present at the time of the survey at least 1 child under age 14 and nonmissing data on key variables results show that 1 higher market child care costs discourage women from working even when an informal source of care is available indicating that such informal care is an imperfect substitute for market care 2 a higher wage rate for the mother encourages her to work thus a higher wage rate increases the probability of using market child care 3 the number of children requiring care has a negative impact on the probability of the women working with the largest impact caused by younger children 4 nonwage income has a negative impact on the probability of the woman working and 5 black women are more likely to work than whites and are statistically more likely than whites to use market child care if they do work this family labor supply model predicts that the cost of market child care will affect household decisions on labor supply and child care use estimates of a qualitative choice model provide strong confirmation that child care costs affect such decisions the responsiveness of the labor supply of mothers to child care costs demonstrated in this study indicate that such subsidies do have their intended effect of encouraging labor supply the fact that a large proportion of current child care subsidies benefit primarily middle and upper income families via the income tax credit suggests that the labor supply effets of such subsidies may in practice be stronger for less needy families than for low income families employer subsidized child care may become an increasingly popular tool for attracting mothers into the labor force

a structural model of labor supply and child care demand this paper specifies and estimates a structural model in which the decision to purchase market child care and the quality purchased is made simultaneously with the employment decision of the mother separate analyses are performed for married mothers and single mothers the structural estimates are used to simulate the effects and costs of changes in the federal child care tax credit the simulations indicate that a refundable child care tax credit would distribute child care benefits more equally across the population by increasing the shares of subsidies received by low income families and would induce a considerable increase in expenditures on market child care labor supply also increases but by considerably less than child care expenditures a surprising result is that despite large increases in child care