are the self employed really jacks of all trades testing the assumptions and implications of lazear s theory of entrepreneurship with german data using a large representative german data set and various concepts of self employment this paper tests the jack of all trades view of entrepreneurship by lazear am econ rev 94 2 208 211 2004 consistent with its theoretical assumptions we find that self employed individuals perform more tasks and that their work requires more skills than that of paid employees in contrast to lazear s assumptions however self employed individuals do not just need more basic but also more expert skills than employees our results also provide rather limited support for the idea that human capital investment patterns differ between those who become self employed and those ending up in paid employment

emission taxes and optimal refunding schemes with endogenous market structure the purpose of this paper is to investigate optimal schemes for refunding the emission tax in a free entry market where the production process generates emissions we consider the regulation by a three part tax policy the government sets an emission tax a refunding scheme and an entry license tax in contrast to the case of the two part tax refund policy under no entry we show that even if it is impossible to obtain subsidies from outside the first best outcome is always attained further the government s budget constraint is binding under the optimal schemes our result implies that the tax refund system works effectively in a market with endogenous entry

stock market capitalization and financial integration in the asia pacific region the stock market capitalization smc of a country defined as the aggregated market value equity of companies in the respective equity market is commonly used to measure the widening and deepening of stock market activity smc also influences economic growth predictions and public consensus concerning the value of the stock market however no previous work has examined the role this variable plays in the process of financial integration this article provides an argument for the use of smc as a means of deciding which countries are acting as leaders in creating a fully integrated equity market in the asia pacific region a total of 12 countries in the asia pacific region were divided into emerging market and advanced market equity blocks we examine the relative size of the speed of adjustments derived from the error correction models following the engle granger two step procedure framework and apply the granger causality test the results suggest that hong kong special administrative region sar

identifying barriers toward a post growth economy a political economy view abstract in this paper we take a political economy perspective on barriers that inhibit a transition beyond the growth paradigm that is we frame transition barriers as looming conflicts of interest specifically we investigate potential transition barriers within three case studies first unemployment represents the most commonly cited reason why economic growth is considered indispensable second alternative indicators to gross domestic product gdp have not succeeded in replacing gdp as a standard metric of economic welfare third pension schemes rely on economic growth to offset demographic change in each of these three examples we identify actor interest constellations that foster the status quo of a growth economy we conclude that compensating some of those actors who would presumably be worse off in a post growth economy may be necessary though not sufficient for a transition

wealth and portfolio composition theory and evidence we examine a survey of 6010 u s households and estimate a model for household portfolio allocation we extend the conventional portfolio choice model in order to capture the observed incompleteness of household portfolios we show that the empirical specification of the joint discrete and continuous choice that characterizes household portfolio behavior is a switching regressions model with endogenous switching we go on to examine the impact of taxes on portfolio composition using detailed survey data to calculate precisely the marginal tax rate facing each household finally we estimate wealth elasticities of demand for a range of assets and liabilities

firm incentives to promote technological change in pollution control reply abstract the process of technological change in pollution control is broken into three basic steps innovation diffusion and optimal agency response firm incentives to promote these steps are then examined under five regulatory regimes direct controls emission subsidies emission taxes free marketable permits and auctioned marketable permits on a relative basis emission taxes and auctioned permits provide the highest firm incentives to promote technological change at times free permits generate lower incentives direct controls which are common regulatory tools usually provide the lowest relative firm incentives to promote technological change

differential income taxation and household asset allocation this article empirically investigates the effects of differential income taxation on households portfolio choice and asset allocation applying a two stage budgeting model of asset demand to german survey data the model is structured into the discrete and the continuous asset choice cross sectional variation in marginal tax rates appropriately instrumented as well as over time variation from a major tax reform are used to identify the tax effects households with higher tax rates are found to have relatively greater demand for tax privileged assets such as nonowner occupied housing mortgage repayments building society deposits stocks insurances and consumer credits than households with lower tax rates demand at higher tax rates is lower for owner occupied housing bank deposits and bonds

climate cooperation with technology investments and border carbon adjustment a central question in climate policy is whether early investments in low carbon technologies are a useful first step towards a more effective climate agreement in the future we introduce a climate cooperation model with endogenous r d investments where countries protect their international competitiveness via border carbon adjustments bca bca raises the scope for cooperation and leads to a non trivial relation between countries prior r d investments and participation in the coalition we find that early investments in r d render free riding more attractive therefore with delayed cooperation on emission abatement and ex ante r d investments the outcome is often characterized by high participation but inefficiently low technology investments and abatement

do after tax returns affect mutual fund inflows abstract this paper explores the relationship between the after tax returns that taxable investors earn on equity mutual funds and the subsequent cash inflows to these funds previous studies have documented that funds with high pretax returns attract greater inflows this paper presents evidence based on a large sample of retail equity mutual funds over the period 1993 1999 that after tax returns have more explanatory power than pretax returns in explaining inflows in addition funds with large overhangs of unrealized capital gains experience smaller inflows all else equal than funds without such unrealized gains a large capital gain overhang discourages both gross fund inflows and gross outflows but the inflow effect dominates the outflow effect

the dual political economy of taxes and tradable permits abstract the widely accepted difference in the political economy of taxes and tradable permits results from overly simple models a more general model shows that the distributional impacts driving the political economy of grandfathered permits can be similar for both policies

carbon leakage grandfathering as an incentive device to avert firm relocation emission allowances are sometimes distributed for free in an early phase of a cap and trade scheme to reduce adverse effects on the profitability of firms this paper investigates whether grandfathering can also be used to avert the relocation of firms to countries with lower carbon prices we show that under certain conditions relocation can be averted in the long run even if the grandfathering scheme is phased out over time and immediate relocation is profitable in its absence this requires that the permit price triggers sufficient investments into low carbon technologies or abatement capital that create a lock in effect which makes relocation unprofitable

capital gains taxes and asset prices capitalization or lock in this paper demonstrates that the equilibrium impact of capital gains taxes reflects both the capitalization effect i e capital gains taxes decrease demand and the lock in effect i e capital gains taxes decrease supply depending on time periods and stock characteristics either effect may dominate using the taxpayer relief act of 1997 as our event we find evidence supporting a dominant capitalization effect in the week following news that sharply increased the probability of a reduction in the capital gains tax rate and a dominant lock in effect in the week after the rate reduction became effective this paper jointly tests two effects of capital gains taxation on equity trading a demand side capitalization effect and a supply side lock in effect while previous studies have tested these effects separately to the best of our knowledge this is the first study to evaluate them jointly and empirically document the relative dominance of each effect surrounding a change in a tax rate employing an equilibrium approach we show that these effects net tax impact on asset prices is ambiguous evaluating returns and trading volume around the 1997 reduction in the capital gains tax rate we find evidence that the capitalization and the lock in effects jointly affect trading in particular the capitalization effect dominates the lock in effect in the week following an increase in the probability of a reduction in the capital gains tax rate as buyers respond to information that future capital gains tax rates will be lower the lock in effect however dominates the capitalization effect after the rate reduction actually becomes effective taxation is one of the most prevalent market frictions in financial markets affecting investors decisions and distorting the valuation of assets capital gains taxes in particular play an important role in determining an investor s trading strategies and can ultimately affect asset prices because investors

garbage recycling and illicit burning or dumping abstract with garbage and recycling as the only two disposal options we confirm prior results that the optimal curbside fee for garbage collection equals the direct resource cost plus external environment cost when illicit burning or dumping is a third disposal option that cannot be taxed directly the optimal curbside tax on garbage changes sign the optimal fee structure is a deposit refund system a tax on all output plus a rebate on proper disposal through either recycling or garbage collection the output tax helps achieve the first best allocation even though it affects the choice between consumption and untaxed leisure

taxes institutions and foreign diversification opportunities abstract investors can access foreign diversification opportunities through either foreign portfolio investment fpi or foreign direct investment fdi the worldwide tax regime employed by the us potentially distorts this choice by penalizing fdi relative to fpi in low tax countries on the other hand weak investor protections in foreign countries may increase the value of control creating an incentive to use fdi rather than fpi by combining data on us outbound fpi and fdi this paper analyzes whether the composition of us outbound capital flows reflects these incentives to bypass home and host country institutional regimes the results suggest that the residual tax on us multinational firms foreign earnings skews the composition of outbound capital flows a 10 decrease in a foreign country s corporate tax rate increases us investors equity fpi holdings by approximately 10 controlling for effects on fdi investor protections also seem to shape portfolio choices though these results are not robust when only within country variation is employed

success in entrepreneurship a complementarity between schooling and wage work experience what makes a successful entrepreneur using danish register data we find strong support for the hypothesis that theoretical skills from schooling and practical skills acquired through wage work are complementary inputs in the human capital earnings function of entrepreneurs in fact we find that schooling only pays off in combination with wage work experience as the returns to schooling are insignificant when the entrepreneur has no wage work experience the results are extremely robust toward more flexible specifications including fixed effect estimations dealing with unobserved heterogeneity furthermore the interaction term is negligible for non entrepreneurs suggesting that the complementarity between wage work experience and schooling is a distinctive characteristic of entrepreneurs

the role of foreign institutional investors in restraining earnings management activities across countries this study investigates the role of foreign institutional investors fiis in restraining earnings management activities of firms under varying levels of investor protection firms manage their earnings less when independent fiis are among their shareholders especially for firms in which monitoring is more valuable firms in weak investor protection countries and when firms have greater growth opportunities these effects are robust to a quasi exogenous shock to fiis shareholdings unobserved firm heterogeneity and alternative earning management measures fiis are associated with an increase in foreign director presence on corporate boards and audit committees

a tax cum subsidy regulatory alternative for controlling pollution insights from thinking about acid rain abstract a tax cum subsidy pollution control mechanism is proposed to mitigate against the potential efficiency losses caused by moral hazard in a self reporting method that prescribes a best available technology and trusts in the absence of expected cost penalties that it will be employed fully

air pollutant taxation an empirical survey abstract this paper provides an empirical analysis of the current taxation of the air pollutants sulphur dioxide nitrogen oxide and carbon dioxide in the scandinavian countries the netherlands france and japan political motivation and technical factors such as tax base rate structure and revenue use are compared conclusions are drawn characterizing the general concepts of the current policies

tax motivated trading by individual investors we study the stock trades of a large number of individual investors to investigate how tax incentives affect the realization of capital gains and losses we compare investors realization behavior in their taxable and tax deferred accounts and thereby identify the effect of taxes on trading decisions we reach four conclusions first we find clear evidence of a lock in effect for capital gains in taxable accounts relative to tax deferred accounts we find evidence of the disposition effect the tendency for investors to hold losses and sell gains in both types of accounts and especially at short holding periods the lock in effect is stronger for large stock transactions than for small ones second we find tax loss selling throughout the calendar year though it is most pronounced in december tax loss trading is more pronounced among investors who have realized capital gains elsewhere in the portfolio during the year third we observe substantial heterogeneity in individual investors propensity to trade controlling for this heterogeneity however does not alter the relation between a stock s past performance and the realization decision finally we find that relatively few investors repurchase stocks that they have sold at a loss even after the 30 day wash sale holding period has expired

no chance for incentive oriented environmental policies in representative democracies a public choice analysis abstract using the public choice approach this paper gives an explanation as to why in representative democracies in which political entrepreneurs attempt to maximize utility an incentive oriented environmental policy has hardly any chance of being implemented we discuss two main aspects first the reasons which make it difficult to enforce any kind of environmental policy in the competitive political environment and second why such a policy if it can be implemented at all is very often enacted with inefficient instruments in order to give a satisfactory explanation of these execution deficits we differentiate between voters politicians interest groups and bureaucracies behavior to show that there are conflicts with other policies and that individual rationality may be the greatest obstacle in implementing most incentive oriented environmental policies in the final section we provide five suggestions for overcoming these difficulties

comparing flexibility mechanisms for fuel economy standards since 1975 the corporate average fuel economy cafe program has been the main policy tool in the us for coping with the problems of increasing fuel consumption and dependence on imported oil the program mandates average fuel economy requirements for the new vehicle sales of each manufacturer s fleet with separate standards for cars and light trucks the fact that each manufacturer must on its own meet the standards means that the incentives to improve fuel economy are different across manufacturers and vehicle types although the problems associated with fuel consumption do not make such distinctions this paper evaluates different mechanisms to offer automakers the flexibility of joint compliance with nationwide fuel economy goals tradable cafe credits feebates output rebated fees and tradable credits with banking the policies are compared according to the short and long run economic incentives as well as to issues of transparency implementation administrative and transaction costs and uncertainty

personal taxation pension wealth and portfolio composition this paper emphasizes the roles played by personal taxation and pension wealth in portfolio choice and composition a theoretical discussion of the impacts of taxation and participation in social security and private pension systems on individual wealth allocation is followed by empirical evidence based on u s cross section data both effects prove to be significant anticipated social security and private pension benefits exert a measurable influence on household portfolio allocation their omission from an asset demand model may lead to a misinterpretation of the impact of taxation on portfolio composition

output based allocations in pollution markets with uncertainty and self selection we study pollution permit markets in which a fraction of permits are allocated to firms based on their output output based allocations which are receiving increasing attention in the design of carbon markets around the world e g europe california new zealand are shown to be optimal under demand and supply volatility despite the output distortions they may create in a market that covers multiple sectors the optimal design combines auctioned permits with output based allocations that are specific to each sector and increasing in its volatility when firms are better informed about the latter or must self select the regulator resort to some free i e lump sum allocations to sort firms out numerical exercises illustrate the policy relevance of our results the gains from considering output based allocations can be substantial

dividend taxes and international portfolio choice this paper investigates how dividend taxes influence portfolio choices using the response to the distinctive treatment of a subset of foreign dividends in the jobs and growth tax relief reconciliation act jgtrra of 2003 an open economy after tax capital asset pricing model is used to derive the hypothesis that jgtrra should lead to a portfolio reallocation by us investors towards equities in tax favored countries a difference in difference analysis that compares us equity holdings in affected and unaffected countries finds a substantial portfolio reallocation towards the former this effect cannot be explained by several potential alternative hypotheses including differential changes to the preferences of american investors differential changes in investment opportunities differential time trends in investment changed tax evasion behavior or changes in stock prices associated or contemporaneous with jgtrra

returns to schooling in self employment abstract this paper challenges the idea that returns to schooling in self employment are similar to those in wage work by establishing a non linear relationship with very low returns for most educational levels in self employment we conclude that previous log linear specifications in the self employment literature have missed significant variation in the true relationship between education and earnings

the political economy of refunded emissions payment programs abstract we study the effects on the equilibrium tax of refunding firms pollution tax payments can lobbying yield stricter environmental policy do imperfect property rights affect policy clean firms may favor higher pollution levies but insecure property rights reduce this incentive

emission taxes and optimal refunding schemes abstract we examine how refunding emission taxes to firms dependent on market shares should be designed while refunding is harmful under perfect competition a first best self financing tax tax refunding scheme exists if the marginal damage from pollution exceeds the marginal distortion in an imperfectly competitive output market with symmetric firms under pre investment in cleaner technology with short term abatement opportunities a first best refunding scheme exists if pollution refunding can be made dependent on both market and investment shares

environmental taxation and the double dividend in decentralized jurisdictions this research explores the implications for jurisdictional welfare of sharing environmental rents between private and public consumption an integrated model is developed from research literatures on jurisdictional competition the double dividend and on the design of tax refund instruments this model shows that jurisdictional welfare increases as environmental rents are initially allocated towards public consumption yielding a double dividend but that this dividend may or may not continue as all rents are shifted to public finance when the double dividend occurs the rent allocation both improves the efficiency of the tax system and reduces the private public consumption distortion that decentralized jurisdictional decision making creates in some parameter configurations there is an optimal rental allocation between the private sector and the local government at this optimum environmental and fiscal policies are set at their first best levels and decentralized jurisdictional decision making is globally efficient if less rents are allocated to public finance than this optimum fiscal and environmental policies will be suboptimal whereas if too much rent is allocated for public consumption fiscal and environmental policies will be set at levels above the global efficiency standard these results illustrate the crucial importance of environmental rent sharing for the efficiency of jurisdictional decision making

the political transaction costs and uncertainties of establishing environmental rights abstract the significance of transaction costs for the analysis of environmental policy is increasingly recognized this article focuses on one aspect of the topic the political uncertainty and transaction costs of establishing environmental rights our contribution is to model the political process around the rights establishment and to monetize the associated welfare costs the model includes both policy related and political institutional parameters including the extent to which environmental rights are shared with polluters the environmental benefits of the policy the policy s abatement costs and the relative political power of polluters and environmentalists the model is solved to give unique nash equilibria for the transaction costs of lobbying and for the probability of the policy s political success these results are then used to show the degree to which political actions can dissipate the expected economic surplus from environmental policymaking

a new database on the structure and development of the financial sector this article introduces a new database of indicators of financial structure and financial development across countries and over time the database is unique in that it combines a wide variety of indicators that measure the size activity and efficiency of financial intermediaries and markets it improves on previous efforts by presenting data on the public share of commercial banks introducing indicators of the size and activity of nonbank financial institutions and constructing measures of the size of bond and primary equity markets this article introduces a new database the first to provide comprehensive measures of the development structure and performance of the financial sector this database is the first to define and construct indicators of the size and activity of nonbank financial intermediaries such as insurance companies pension funds and non deposit money banks it is also the first to include indicators of the size of primary equity markets and primary and secondary bond markets in constructing the database authors carefully deflate measures and match stock and flow variables

marginal taxes and the asset portfolios of swedish households this paper focuses on the effects of marginal tax rates wealth income and a set of socioeconomic and demographic variables on the portfolio composition of households using detailed micro data on 2 000 swedish households in particular efforts are made to disentangle the effects of marginal tax rates on the portfolio behavior of households some econometric problems involved when estimating asset demand equations in the presence of incomplete portfolios are briefly discussed a final section examines the overall effect of marginal tax rates on asset demands by applying estimated discrete and continuous portfolio equations to compute different tax elasticities

crossborder dividend taxation and the preferences of taxable and nontaxable investors evidence from canada abstract we consider how fund managers respond to the conflicting preferences of their investors we focus on the conflict between the taxable and retirement accounts of international funds which face different tradeoffs between dividends and capital gains in principle managers could resolve this conflict through dividend arbitrage but a proprietary database of dividend arbitrage transactions shows that in practice they cannot thus managers must resolve it through their investment policies we find robust evidence that managers with more retirement money favor the preferences of retirement investors and further evidence for this view in the difference between u s and canadian funds portfolio weights

tax induced trading of equity securities evidence from the adr market we examine ex dividend date trading of american depositary receipts adrs using a sample of 1 043 dividends over the period 1988 to 1995 adr dividends are often subject to foreign withholding taxes creating incentives for certain investors to avoid the distribution adrs exhibit negative abnormal ex dividend day returns and their prices behave consistently with their related withholding taxes abnormal trading volume for taxable issues exceeds 130 percent and 300 percent of normal volume on the cum and ex dates respectively abnormal volume is an increasing function of foreign withholding tax rates and decreasing function of transactions costs this abnormal exdate trading activity is consistent with tax motivated trading this paper provides empirical evidence from a sample of american depositary receipts adrs that foreign taxes on dividend income are positively associated with abnormal ex dividend day trading activity researchers have long been interested in the question of whether taxes affect investor behavior around ex dividend days such work has implications for corporate financial and distribution policies and for government tax policies adrs provide a unique setting in which to examine the effects of taxes on investor trading behavior because of the unique features of the foreign withholding taxes that apply to them a number of studies have attempted to isolate the determinants of ex dividend day pricing and trading activity of u s equities and there is considerable evidence of tax induced investor behavior around the ex dividend day for common

how do governments actually use environmental taxes this paper empirically examines how governments actually use environmental taxes by looking to what extent their resort to this type of taxation is consistent with three alternative interpretation

a model of benchmarking regulation revisiting the efficiency of environmental standards the conventional economic argument favors the use of market based instruments over command and control regulation this viewpoint however is often limited in the description and characteristics of the latter namely environmental standards are often portrayed as lacking structured abatement incentives yet contemporary forms of command and control regulation such as standards stipulated via benchmarking have the potential to be efficient we provide a first formal analysis of environmental standards based on performance benchmarks we show that under specific conditions standards can provide efficient incentives to improve environmental performance

an optimal ad valorem tax subsidy with an output based refunded emission payment for permits auction in an oligopoly market in this paper we explores a hybrid mechanism of output based refunded emission payment and an ad valorem tax subsidy to remove the distortions emerging in the permit auction market and the product market we find that first best outcomes can be achieved under such a hybrid mechanism a clearing price equal to a pigouvian tax will endogenously result in the permit auction market moreover we extend the analysis to take into consideration the investment in abatement technology

refunded emission payments theory distribution of costs and swedish experience of nox abatement in this paper we discuss the effect of refunding environmental charges taxes are often resisted by polluters because they imply both abatement and tax costs when charges are refunded the incentives for abatement are essentially the same as for a tax as long as there are many producers the incidence and distribution of costs is however different lower net tax payments reduce resistance from the polluters and make refunded emissions payments politically easier to implement at a sufficiently high charge level to have significant abatement effects we describe and examine the refunded emissions payment scheme as a policy instrument and compare it with taxes and permits with regard to allocative properties distribution of costs property rights and consequently the politics of implementation as an empirical example the swedish charge on nitrogen oxides is analyzed

are international deposits tax driven abstract this paper investigates the impact of tax policy on international depositing non bank international deposits are shown to be positively related to interest income taxes and to the presence of domestic bank interest reporting this suggests that international deposits are in part intended to facilitate tax evasion at present only part of international interest flow are covered by either non resident interest withholding taxes or international exchange of information this incomplete coverage may be a reason that these policies currently appear to have little impact on international depositing

optimal consumption and investment with capital gains taxes this article characterizes optimal dynamic consumption and portfolio decisions in the presence of capital gains taxes and short sale restrictions the optimal decisions are a function of the investor s age initial portfolio holdings and tax basis our results capture the trade off between the diversification benefits and tax costs of trading over an investor s lifetime the incentive to rediversify the portfolio is inversely related to the size of the embedded gain and investor s age contrary to standard financial advice the optimal equity holding increases well into an investor s lifetime in our model due to the forgiveness of capital gains taxes at death taxes play an important role in the decision making process of individuals concerning their consumption and investment plans the taxation of returns on financial assets alters the benefits of saving for future consumption and thus affects the trade off between current consumption and investment moreover the ability of investors to defer the taxation of capital gains alters the relative valuation of stocks and bonds and thus affects the optimal portfolio composition of investors the deferral feature of capital gains taxes also affects the trade off investors face regarding taxes and diversification investors would like to maintain an optimally diversified portfolio over time

innovation and diffusion of environmental technology industrial nox abatement in sweden under refunded emission payments we study the actual process of technical change in the case of nox abatement from large stationary sources that have been regulated by very forceful policies in sweden considerable progress has been made in lowering aggregate emissions and this paper seeks to disaggregate average industry improvements to study how much of it is due to innovations by first movers and how much is achieved by adoption and diffusion of technology we find both factors very important innovation has been rapid the best firms have cut emissions on the order of 70 in spite of this reductions have actually been even more rapid for the majority of firms so that the median firms have caught up with best practice we analyze various characteristics of the technological change observed

emission taxes and tradable permits a comparison of views on long run efficiency we compare three different views on the long runefficiencies of emission taxes which includethresholds inframarginalexemptions and of tradeable emission permitswhere some permits areinitially free the differences are caused bydifferent assumptions aboutwhether thresholds and free permits should besubsidies given only to firmsthat produce or full property rights treatingtax thresholds as well asfree permits as property rights would departfrom the conventional view but would allow greater flexibility in makingeconomic instruments bothefficient and acceptable such flexibilitycould be very important inachieving efficient control of greenhouse gasemissions

reflections on the double dividend debate we survey the history of carbon taxation the range of market based instruments mbis of environmental control and the state of the double dividend debate in order to suggest directions for future research into mbis returning mbi revenues as lower distortionary taxes rather than as lump sums raises aggregate welfare but we favour mbis which raise little or no revenue for reasons of political acceptability to interest groups at the same time the overall case for any environmental improvement is weaker because of general equilibrium interactions with prior distortionary taxes research seems most necessary on quantifying the efficiency benefits of market control of heterogeneous polluters the benefits of environmental improvement the tax interaction effect and the various information costs of an mbi all on a case by case basis for different pollutants and places

environmental tax reform efficiency and political feasibility although market based environmental measures like uniform co2 taxes reach a given standard at minimal cost they do not prevail in real world policies an effciency oriented environmental policy fails as it involves a redistributen of pollution rights resulting in a strong and generally effective opposition of the groups that forego economic rents the present paper analyzes the tradoff between efficiency and political feasibility of several co2 tax and reimbursement schemes using a computable general equilibrium model of switzerland the simulation results indicate that a policy combining a uniform co2 tax with differentiated labor subsidies preventing intersectoral redistribution is a better solution for the tradeoff than the presently existing tax schemes in various countries

case study evidence that direct regulation remains the main driver of industrial pollution avoidance and may benefit operational efficiency abstract environmental regulation is required to reduce industrial pollution to levels that are socially acceptable and economically efficient but there is debate over the most efficient form of such regulation typically a limited range of environmental and economic parameters are accounted for in the econometric studies that inform that debate this paper integrates evidence from two separate studies to assess a broad range of parameters related to the efficiency of industrial environmental regulation questionnaire responses from 25 italian manufacturers of building chemicals and 28 irish pharmaceutical manufacturers provided evidence on the environmental effectiveness and operational impacts of different regulatory instruments combined with extensive emissions data from irish pharmaceutical manufacturers survey results enabled a quantitative estimation of pollution avoidance specifically attributable to direct regulation the monetised social benefit of avoided pollution was found to be equal to direct compliance costs chemical manufacturers in italy and ireland stated that direct regulation is a more important driver of industrial environmental performance than economic or voluntary regulation and their responses indicated that direct compliance costs may be countered somewhat by stimulated operational improvements it was concluded that direct regulation is an effective approach for multi pollutant control in an industrial context and that the efficiency of such regulation may be underestimated in studies that do not consider the full range of pollutants and operational effects

dividend taxes and firm valuation new evidence dividend taxes and firm valuation new evidence by alan j auerbach and kevin a hassett the jobs and growth tax relief act of 2003 jgtra03 reduced the tax rates on dividends with the highest statutory tax rate of 35 percent falling to 15 percent an interesting twist on the dividend tax cut was its temporary nature the provision as passed was effective only through 2008 and as recent congressional deliberations have illustrated the extension its supporters envisioned was by no means certain this large dividend tax reduction along with its sunset provision offers an unusual natural research experiment on the effects of dividend taxation the theory of dividend taxation suggests three possible scenarios for the effects of the dividend tax reduction under the tax irrelevance view the marginal shareholder is a tax free entity or a taxable investor who ignores or can offset incremental taxes and the dividend tax reduction has no effect on equity values or firm behavior under the traditional view the marginal source of equity finance is new share issuance and the tax reduction feeds through to the firm s user cost and stimulates extra capital formation share values rise in the short run but after full adjustment the higher capital level reduces the marginal revenue product of capital enough to offset the dividend tax reduction leaving equity prices the same under the new view the marginal source of finance is retained earnings and the dividend tax cut is capitalized into the share price of the firm but has no investment effect understanding the economic consequences of the dividend tax reduction requires knowledge of the empirical relevance of these competing views our previous paper auerbach and hassett 2005 performed an event study analysis of a large panel of firms to determine how firm attributes affected the valuation response over eight key event dates leading up to the 2003 legislation our results taken together rejected outright

coasean bargaining in the presence of pigouvian taxation coasean arguments against the pigouvian perspective are well established a central tenet in this criticism argues that a pigouvian tax may be a source of inefficiency if parties were to bargain in the presence of a pigouvian tax allocative inefficiencies would occur the so called buchanan stubblebine turvey theorem by analyzing a coasean environment where the appropriation of property rights is costly we show coasean bargaining in the presence of a pre existing pigouvian tax may be superior this has implications for policy where dual regulatory environments exist such as regulation at the state and federal level as well as environmental liability and litigation

the effects of human capital interventions on entrepreneurial performance in industrialized countries this paper provides a systematic review of studies on the effects of human capital interventions on entrepreneurial performance in industrialized countries we identify 21 experimental and quasi experimental studies published before september 2018 these studies examine the effects of business training formal education and entrepreneurship education their performance outcomes include firm profits firm size and entrepreneurial earnings the main finding across these studies is that these interventions do not have statistically significant effects formal education is the only exception showing positive effects on firm profits and entrepreneurial earnings yet these effects are small in magnitude evidence is inconclusive regarding effect duration these findings stand in stark contrast to correlational studies which tend to find large positive correlations between human capital interventions and entrepreneurial performance we therefore conclude that correlational studies tend to overestimate the benefits of human capital interventions moreover our estimates show that the interventions are associated with moderately low additionality

taxation portfolio choice and debt equity ratios a general equilibrium model this paper explores the portfolio behavior of investors differing with respect to both tax rates and risk aversion emphasizing the role of constraints on individual and firm behavior in ensuring the existence of and characterizing portfolio equilibrium under certain conditions on the securities available in the market which also are necessary for shareholders to be unanimous in supporting firm value maximization investors will be segmented by tax rate into two groups one specialized in equity and the other in debt though the relative wealths of the two groups determine the aggregate debt equity ratio each firm will be indifferent to its financial policy

cross border tax evasion under a unilateral fatca regime abstract cross border tax evasion has emerged in recent years as a central issue in tax enforcement traditionally the legal regime governing cross border tax enforcement was based on information exchange upon request in 2010 the us congress enacted the foreign account tax compliance act fatca which seeks to induce foreign financial institutions ffis to participate in a global regime of automatic information reporting of the income of us residents to the us government this paper presents a simple theoretical model of cross border investment that analyzes the consequences of this unilateral fatca regime the model emphasizes cross border investors heterogeneous intrinsic motivation to comply with tax law as well as the impact of information reporting requirements on the cost of providing financial services in fatca compliant equilibria in which ffis report information to the us government ffis face a higher cost of providing financial services increasing the fees charged to their accountholders consequently tax compliant behavior such as investing via their domestic financial sector becomes more costly for foreign residents under certain conditions a unilateral fatca regime causes increased cross border tax evasion among residents of foreign countries this result is robust to various extensions

investor base and corporate borrowing evidence from international bonds abstract we examine international bond issues by us firms to study the benefits of investor taste for cross border security issuances we proxy for firms international investor taste with the fraction of prior international bond holding in firms domestic and international bonds and find that international investor demand increases with such taste moreover the offering yield spreads on international bonds are lower than domestic offering yield spreads for these internationally recognized firms and they have higher probability of issuing internationally such international recognition may occur for instance if the diversification benefits of adding the security to investor s portfolio outweigh the negative effects of higher renegotiation costs for international compared to domestic investors

cap and trade taxes and distributional conflict enacting market based environmental regulation such as emissions taxes and cap and trade programs often create rents that are contested by agents in this paper we create a framework that compares social welfare from alternative market based environmental policy instruments under the presence of rent seeking we show that contrary to the commonly held view non revenue raising instruments nrris are in many cases preferable over revenue raising instruments rris we find that the choice of instrument depends on the size of a potential revenue recycling effect and the level of preassigned rents

dividend taxation and household dividend portfolio decisions evidence from the u s jobs and growth tax relief reconciliation act of 2003 abstractthis study examines the dividend clientele hypothesis by focusing on the preferential tax treatment of qualified dividends provided by the 2003 jobs and growth tax relief reconciliation act jgtrra in the united states using the public use tax file data the author finds that the ratios of dividends to long term capital gains before the 2003 tax act significantly declined with household tax rate differentials between dividends and long term capital gains but such a negative tax effect on the ratios disappears afterwards this seemingly tax inefficient composition of dividends and long term capital gains after the tax act arises from households ability to reduce their tax burdens on stocks by exploiting the new preferential tax treatments on qualified dividends under jgtrra that is households in the upper tax bracket hold significantly greater shares of qualified dividends relative to ordinary dividends after the tax act

taxation and household portfolio composition us evidence from the 1980s and 1990s abstract this paper explores the relationship between household marginal income tax rates the set of financial assets that households own and the portfolio shares accounted for by each of these assets it analyzes data from the 1983 1989 1992 1995 and 1998 surveys of consumer finances and develops a new algorithm for imputing federal marginal tax rates to households in these surveys the empirical findings suggest that marginal tax rates have important effects on asset allocation decisions the probability that a household owns tax advantaged assets such as tax exempt bonds or assets held in tax deferred accounts is positively related to its tax rate on ordinary income in addition the portfolio share invested in corporate stock which is taxed less heavily than interest bearing assets is increasing in the household s ordinary income tax rate holdings of heavily taxed assets such as interest bearing accounts decline as a share of wealth as a household s marginal tax rate increases

examining the formation of human capital in entrepreneurship a meta analysis of entrepreneurship education outcomes abstract effective human capital formation through the medium of entrepreneurship education and training eet is of increasing concern for governments as eet is growing rapidly across the world unfortunately there is a lack of consistent evidence showing that eet helps to create more or better entrepreneurs we undertake the first quantitative review of the literature and in the context of human capital theory find that there is indeed support for the value of eet based on 42 independent samples n 16 657 we find a significant relationship between eet and entrepreneurship related human capital assets r w 217 and entrepreneurship outcomes r w 159 the relationship between eet and entrepreneurship outcomes is stronger for academic focused eet interventions r w 238 than for training focused eet interventions r w 151 we find evidence of heterogeneity in many of our correlations and recommend that future studies examine potential moderators to more clearly delineate eet effect sizes we also find a number of methodological weaknesses among the studies analyzed and that those studies with lower methodological rigor are overstating the effect of eet recommendations to improve the quality of future work in the field are provided

refunded emission taxes a resolution to the cap versus tax dilemma for greenhouse gas regulation regulatory instruments for greenhouse gas control present a policy dilemma market based instruments such as cap and trade function to reduce regulatory costs but because they provide no guarantee that costs will be reduced to acceptable levels it is infeasible to set caps at sustainable levels emission taxes provide cost certainty but their comparatively high cost makes it infeasible to set tax rates at levels commensurate with sustainability goals however there is a straightforward solution to this dilemma just as cap and trade uses free allowance allocation to minimize regulatory costs an emission tax s cost can be mitigated by refunding tax revenue in such a way that emission reduction becomes profitable a refunded tax like cap and trade with free allocation would be revenue neutral within the regulated industry marginal competitive incentives for commercializing emission reducing technologies would not be diminished by the refund and the refund could actually make it politically and economically feasible to increase the incentives by an order of magnitude whereas cap and trade merely caps emissions at an unsustainable level while subjecting the economy to extreme price volatility refunded emission taxes could create a stable investment environment with sustained incentives for emission reduction over a long term investment horizon

international diversification during the financial crisis a blessing for equity investors abstract this paper empirically investigates international equity investors foreign portfolios before and during the financial crisis by estimating a gravity model for 22 source and 42 destination countries during 2001 2009 the results show a significant negative relationship between foreign equity holdings and stock market correlations during the financial crisis while there is no relationship before the crisis when distinguishing between active and passive rebalancing the results clearly indicate a significantly negative relationship between active rebalancing and correlations during the crisis these findings hold as well at the individual country level when allowing for source country specific coefficients an analysis from the perspective of each source country s representative investor who optimizes mean variance utility shows that active rebalancing provides sizeable utility gains during the crisis finally there is even a significantly negative relationship between future correlations and active rebalancing since 2007 suggesting that prior to the crisis investors already repositioned their country weights to markets with lower correlation during 2008 2009

the sufficiency strategy would rich world frugality lower environmental impact abstract one alleged weapon against unsustainable environmental impact is for the wealthy to consume less this sufficiency strategy is to complement the efficiency strategy of lowering ratios of resource inputs to economic outputs the former would reduce the affluence factor in i pat the latter the technology factor that the latter strategy suffers from a consumption rebound is widely recognized this paper identifies a similar rebound when the affluence factor is autonomously lowered the lower initial demand lowers prices which in turn stimulates new demand by others the strategy moreover addresses only the rich raising questions of its theoretical maximum efficacy its proponents usually conflate frugality with the north south dichotomy and intra generational with inter generational equity moreover there are difficulties with the supporting arguments that frugality is good for one s own sake as well as for the environment and that the rich should lead the way to living more lightly personal behaviour change is furthermore not a substitute for international political efforts finally since all changes in right side factors of the i pat equation change other right side factors such indirect attacks on impact should be abandoned in favor of supply and emissions quotas