political cycles and economic performance in oecd countries empirical evidence from 1951 2006 this paper examines whether electoral motives and government ideology influence short term economic performance i employ data on annual gdp growth in 21 oecd countries over the 1951 2006 period and provide a battery of empirical tests in countries with two party systems gdp growth is boosted before elections and under leftwing governments in the first two years of a legislative period these findings indicate that political cycles are more prevalent in two party systems because voters can clearly punish or reward political parties for governmental performance my findings imply that we need more elaborate theories of how government ideology and electoral motives influence short term economic performance

an examination of ethical influences on the work of tax practitioners as a contribution to the continuing debate about tax practitioner ethics this paper explores the main streams of western ethical thought that are relevant to tax practitioners work most typically deontology and consequentialism although virtue ethics and distributive justice are also considered it then goes on to consider the impact of such ethical influences on the professional ethical codes of conduct that govern tax practitioners work with specific reference to the uk and ireland and attempts to unravel the complex work and ethical environment of the practice of tax in terms of tax compliance and tax avoidance the paper then examines the prior studies on tax practitioners and ethics and the type of dilemmas that practitioners face in the context of their work the paper proceeds to examine empirically the extent to which tax practitioners take a consequentialist versus a deontological approach in their reasoning about moral dilemmas this is carried out by an innovative use of the defining issues test

does right or left matter cabinets credibility and fiscal adjustments abstract this paper tests the widely held assumption that left wing cabinets favor higher public spending and examines whether cabinet ideology affects the persistence of major fiscal adjustments in a panel of large fiscal adjustments in oecd countries during the last 40 years we find evidence that left wing and right wing cabinets are partisan the left tends to reduce the deficit by raising tax revenues while the right relies mostly on spending cuts our testable hypothesis is that cabinets can signal commitment by undertaking fiscal adjustments in ways that are not favored by their constituencies in other words the left gains credibility when it cuts spending while the right becomes more credible when it increases tax revenues probit estimates of the determinants of persistence in fiscal adjustments confirm that spending cuts by the left and tax increases by the right are associated with persistent adjustments the effect is significant for cuts in public spending public consumption wage or nonwage increases in total revenues direct taxes on businesses and other taxes we test for the role of several other determinants of persistence confirming that coalition and majority cabinets are associated with less persistence while periods of high or rising levels of indebtedness favor persistence the estimates of the impact of ideology and other variables on gdp and its components show that it is the size of the spending cut rather than cabinet ideology that is most important

how do budget deficits and economic growth affect reelection prospects evidence from a large panel of countries conventional wisdom is that good economic conditions and expansionary fiscal policy help incumbents get reelected but this has not been tested in a large cross section of countries we test these arguments in a sample of 74 countries over the period 1960 2003 we find no evidence that deficits help reelection in any group of countries developed and less developed new and old democracies countries with different government or electoral systems and countries with different levels of democracy in developed countries and in old democracies election year deficits actually reduce the probability that a leader is reelected with similar although smaller negative electoral effects of deficits in the earlier years of an incumbent s term in office higher growth rates of real gdp per capita raise the probability of reelection only in the less developed countries and in new democracies but voters are affected by growth over the leader s term in office rather than in the election year itself and apparently only by growth not attributed to global growth low inflation is rewarded by voters only in the developed countries the effects we find are not only statistically significant but also quite substantial quantitatively we also suggest how the absence of a positive electoral effect of deficits can be consistent with the political deficit cycle found in new democracies

do elections affect the composition of fiscal policy in developed established democracies this paper investigates the impact of elections on the level and composition of fiscal instruments using a sample of 19 high income oecd democracies during the period 1972 1999 we find that elections shift public spending towards current expenditures at the cost of public investment although we find no evidence for an electoral cycle for government deficit and overall expenditures we find a negative effect of elections on revenue attributed to a fall in direct taxation our results apply for predetermined electoral periods while endogenous elections seem to increase deficit and leave the composition of fiscal policy unaffected

consolidation of new democracy mass attitudes and clientelism adi brender allan drazendecember 2008when democracy is new it is often fragile or unconsolidated meaning that importantpolitical groups lack full commitment to the democratic process so that its survival is notassured what economic policies can a government use to try to prevent a reversion toautocracy one answer to this question begins with the argument that the threat to democracycomes from anti democratic elites the army groups such as the wealthy who bene ttedmost under the old regime the oligarchs who are seen as basically anti democratic andwho have the power to overthrow the new democratic regime the masses are seen asunambiguously pro democratic under this view policy to consolidate democracy shouldfocus on placating the anti democratic elites or colloquially but not inaccurately to buythem o this approach has received a superb treatment in daron acemoglu and jamesa robinson 2005 targeted economic policy to consolidate democracy can be viewed more generally sur vival of democracy and policy to enhance that can be thought of in terms of two fun damental questions the rst is how does the support of di erent actors a ect theprobability that democracy survives the second is then how do these important actorschoose whether or not to support the continuation of democracy or its overthrow thedesign of policy to address democratic fragility depends on the answers to these two basicquestions the policy prescription in the previous paragraph for example follows from theanswers it is the elites alone who are determinate and their support depends on givingthem enough that they are content not to overthrow democracy our research on the fragility of new democracies focusses on di erent but complemen tary issues while we agree that anti democratic elites pose a serious threat to fragile1

political representation and public contracting evidence from municipal legislatures abstract this study examines how partisan representation in multiparty legislatures affects direct expenditures contract allocation design and selection of politically connected firms as suppliers in public procurement for identification i exploit quasi random variation in partisan electoral outcomes near the effective representation thresholds in czech proportional municipal elections my regression discontinuity estimates suggest that partisan representation matters for public procurement for instance if local level political parties barely enter legislatures at the expense of the national parties municipalities decrease their direct procurement spending and allocate fewer contracts to the corporate donors of the national parties fewer contracts are awarded especially in pre election years and in auctions restricting competition among procurement suppliers the results are not associated with higher government fragmentation or selection of more competent candidates but rather with reduced political power of the national parties

voters as fiscal conservatives voters penalize federal and state spending growth this is the central result of my analysis of voting behavior in presidential senatorial and gubernatorial elections from 1950 1988 the composition of federal spending growth seems irrelevant the vote loss to the president s party from an extra dollar of defense or nondefense spending is the same however in gubernatorial elections expansion of state welfare spending exacts a disproportionate political price deficit financing of federal or state spending does not appear to matter politically i conclude by discussing the obvious question of why government budgets have grown in the face of this voter hostility

money politics and the post war business cycle abstract the political economy literature has enshrined as stylized fact the view that lower inflation and temporarily lower growth follow the election of republican presidents and has emphasized political manipulation of monetary policy as an explanation support for the monetary explanation comes in econometric work that largely ignores identification issues that dominate the literature on measuring the effects of monetary policy we generalize a standard vector autoregression framework to accommodate discrete political party variables we find almost no support for the view that political effects on the macroeconomy operate through monetary policy and only weak evidence that political effects are significant at all

political business cycles 40 years after nordhaus the aim of this article is to survey the huge literature that has emerged in the last four decades following nordhaus s rev econ stud 42 2 169 190 1975 publication on political business cycles pbcs i first propose some developments in history of thought to examine the context in which this ground breaking contribution saw the light of the day i also present a simplified version of nordhaus s model to highlight his key results i detail some early critiques of this model and the fields of investigations to which they gave birth i then focus on the institutional context and examine its influence on pbcs the actual research agenda finally i derive some paths for future research

the effect of fiscal performance on local government election results in israel 1989 1998 abstract we discuss the circumstances under which voters in local elections will reward fiscal responsibility and suggest that such circumstances evolved in israel in the mid 1990s we present empirical evidence that indeed fiscal performance of mayors substantially affected their reelection probability in the 1998 campaign but not in the 1989 and 1993 campaigns changes in the political environment enforcement of audit and financial reporting requirements tougher imposition of hard budget constraints and the development of local media are proposed as explanations the hypotheses that the fiscal variables reflect the income level at the locality or the mayor s success in extracting resources from the central government are tested and rejected

bootstrapping statistical inferences of decomposition methods for gender earnings differentials applying the standard bootstrapping technique with corrections for heteroskedasticity for a sample of the 1997 urban household survey in china the present article attempts to test 1 whether the commonly used decomposition methods for gender earnings differentials give significantly different results and 2 whether the explained component is significantly different from the unexplained component which is commonly referred to as discrimination within each decomposition method based on a national data set the empirical results indicated some significant differences in both tests the implication of the results is that the proposed bootstrapping technique can be regarded as a guideline on applying which approach to decompose gender earnings differentials among different methods without losing important information and on evaluating the relative importance of the decomposition components for any chosen method

an econometric analysis of income tax evasion and its detection this article presents an econometric analysis of income tax evasion and its detection based on individual level data drawn from the internal revenue service 1982 and 1985 taxpayer compliance measurement programs i specify a model consisting of two equations the first measures the extent of evasion the second the fraction of evasion detected the empirical analysis explores the effects of income the marginal tax rate and various socioeconomic characteristics on filer evasion behavior and it assesses the variability in detection rates among irs examiners finally i use the empirical estimates to construct new estimates of the income tax gap the new estimates are very close to the previous irs estimates

the demand for tax return preparation services in this paper we focus on taxpayer choices of return preparation services using aggregate nested logit techniques we find that the demand for third party preparation responds to many factors age education employment status federal auditing and tax return characteristics perhaps most important among these is federal auditing higher federal audit rates increase the demand for tax practitioner services but do not affect the demand for other modes of third party assistance more generally as the tax burden increases or as uncertainty about true tax liability increases the demand for all modes of third party assistance increases

information and ira participation the influence of tax preparers abstract the steep drop off in the number of individual retirement account ira contributors after 1986 has led to suggestions that taxpayers misunderstood and over reacted to the restrictions on deductible contributions imposed by the tax reform act of 1986 tax panel data is used to investigate the role of taxpayer misunderstanding in the drop off in ira contributors after 1986 the hiring of a tax preparer is the transmission mechanism for knowledge of the deductibility rules after 1986 the results suggest that more information and promotion of iras would have increased the probability of contributing to an ira in 1987 for high income taxpayers but would have decreased this probability for middle income taxpayers taxpayer confusion over the deductibility restrictions appears to have been resolved by 1988 therefore taxpayer misunderstanding did not play a major role in the steep drop off in the number of ira contributors after 1986

taxpayers perceptions of practitioners finding one who is effective and does the right thing this paper examines australian taxpayers perceptions of their idealized tax practitioner as well as their perceptions of their current tax preparer the analysis was based on survey responses from 2 040 randomly selected australian taxpayers who completed the community hopes fears and actions survey author 2000 three dimensions were identified as underlying taxpayer judgements of their idealized practitioner a minority of the sample indicated that their ideal was a creative aggressive tax planning type a person who was well networked and familiar with tax office intelligence and enforcement priorities a second type of idealized practitioner engaged in the cautious minimisation of tax unlike creative accountants practitioners of this type avoided conflict while being sophisticated about identifying opportunities to minimise tax the most popular idealized type was the low risk no fuss practitioner who was honest and risk averse the data revealed that taxpayers are likely to find tax practitioners who have the attributes that they value most highly but that when taxpayers perceptions of their tax practitioner are combined with their ideals only two substantive dimensions emerge tax avoidance and doing the right thing our inability to distinguish tax practitioners who are seen to provide cautious and aggressive advice in practice has important implications for the growth of aggressive tax planning markets in the community

equilibrium political budget cycles political business cycle theories generally rely on nominal rigidities and voter myopia this paper offers an equilibrium theory that preserves some basic insights from earlier models though with significant refinements the political budget cycle emphasized here is in fiscal policy rather than output and inflation it arises via a multidimensional signal process one can consider the welfare implications of proposals to mitigate the cycle and the effects of altering the electoral structure copyright 1990 by american economic association

plea bargaining with the irs extensions and further results abstract chu journal of public economics 41 1990 319 333 proposes a tax scheme called fatota under which taxpayers are given the choice between paying a fixed amount of taxes and thus being exempted from tax audit or paying only what taxpayers claim they owe and being subject to tax audits for possible evasion in this paper we extend chu s finding with regard to the pareto improving property of fatota to a more general setting including nonlinear tax penalty schedules complicated audit rules and endogenous labor supply we also show that any tax system in which the highest income taxpayer faces audit risk and or tax distortion can be pareto improved upon by the introduction of fatota we relate this result to seade s journal of public economics 7 1977 203 235 celebrated finding in the optimal taxation literature that any income tax schedule with a positive marginal tax rate at the top of the scale can be replaced by another tax schedule which is strictly pareto improving

the electoral dynamics of human development this paper analyses the impact of elections on the dynamics of human development in a panel of 82 countries over the period 1980 2013 the incidence of partisan and political support effects is also taken into account a gmm estimator is employed in the empirical analysis and the results point out to the presence of an electoral cycle in the growth rate of human development majority governments also influence it but no clear evidence is found regarding partisan effects the electoral cycles have proved to be stronger in non oecd countries in countries with less frequent elections with lower levels of income and human development in presidential and non plurality systems and in proportional representation regimes they have also become more intense in this millennium

the role of local officials in new democracies evidence from indonesia this paper shows that the body of appointed officials that a new democracy inherits from the previous regime is a key determinant of the extent of electoral fraud and clientelistic spending in new democracies i develop a model that predicts that appointed officials have stronger incentives to influence voters during national level elections because of their career concerns i test the implications of the model using data from indonesia s transition to democracy both the pattern of alignment of electoral results between village and district levels and the pattern of subsequent turnover of appointed village heads corroborate the predictions of the model

the influence of gender on faculty salaries in the united states 1969 89 this study estimates the earnings differential between the male and female faculty in the united states over a period of two decades 1969 1989 five micro level data sets are used for this purpose a modified version of the widely used oaxaca model is used in the estimations it is found that the racial earnings gap narrowed considerably more than did the gender earnings differential over this period a higher male female earnings gap at the professor level relative to junior ranks suggests that relatively recent entrants in the academic labour market face a less discriminatory environment than did their predecessors a controversial finding is that the discriminatory component of the earnings differential between male and female faculty fell between 1969 and 1984 but rose thereafter

gender and racial earnings differentials in academic labor markets this study estimates earnings differentials across racial and gender groups among college faculty and decomposes these differentials into the components attributable to differences in individual and institutional characteristics and that which remains unexplained we find that white females earn approximately 4 percent less than white males black males earn 7 4 percent more black females earn one percent more hispanic males earn 2 7 percent more hispanic females earn 1 7 percent less and asian males earn 7 7 percent more than comparable white males we also find a significant earnings penalty for being a naturalized citizen or noncitizen versus an u s born citizen

the emergence of political accountability when and how do democratic institutions deliver accountable government in addressing this broad question we focus on the role played by political norms specifically the extent to which leaders abuse office for personal gain and the extent to which citizens punish such transgressions we show how qualitatively distinct political norms can coexist because of a dynamic complementarity in which citizens willingness to punish transgressions is raised when they expect such punishments to be used in the future we seek to understand the emergence of accountability by analysing transitions between norms to do so we extend the analysis to include the possibility that at certain times a segment of voters are behaviorally intolerant of transgressions our mechanism highlights the role of leaders offering an account of how their actions can instigate enduring change within a fixed set of formal institutions by disrupting prevailing political norms we show how such changes do not depend on sun spots to trigger coordination and are asymmetric in effect a series of good leaders can and eventually will improve norms whereas bad leaders cannot damage them jel codes d72 p16 c73 copyright 2013 oxford university press

do the personal characteristics of finance ministers affect changes in public debt using a unique dataset of the personal characteristics of national finance ministers in western europe 1980 2010 i show that a finance minister s experience affects the national debt to gdp ratio the increase in the debt to gdp ratio is smaller if the finance minister stays in office for an additional year this result is robust to the inclusion of the personal characteristics of prime ministers and a measure of political stability however the magnitude of the effect is sensitive to how finance ministers are selected in the econometric model when more than one minister holds office during a particular year the estimation of interaction terms further reveals that experience particularly matters in election years or in times of negative gdp growth because an experienced finance minister has the power to restrict the usual increase in the debt to gdp ratio in contrast a finance minister s educational background and ideological leaning have no significant impact on the debt to gdp ratio

voting suffrage and the political budget cycle evidence from the london metropolitan boroughs 1902 1937 we study the opportunistic political budget cycle in the london metropolitan boroughs between 1902 and 1937 under two different suffrage regimes taxpayer suffrage 1902 1914 and universal suffrage 1921 1937 we argue and find supporting evidence that the political budget cycle operates differently under the two types of suffrage taxpayer suffrage where the right to vote and the obligation to pay local taxes are linked encourages demands for retrenchment and the political budget cycle manifests itself in election year tax cuts and savings on administration costs universal suffrage where all adult residents can vote irrespective of their taxpayer status creates demands for productive public services and the political budget cycle manifests itself in election year hikes in capital spending and a reduction in current spending

tax progressivity income distribution and tax non compliance this article examines the determinants of tax non compliance when we recognise the existence of an imperfectly competitive tax advice industry supplying schemes which help taxpayers reduce their tax liability we apply a traditional industrial organisation framework to model the behaviour of this industry this tells us that an important factor determining the equilibrium price and hence the level of noncompliance is the convexity of the demand schedule we show that in this context this convexity is affected by the distribution of pre tax income the progressivity of the tax schedule and the way in which monitoring and penalties vary with income it is shown that lower pre tax income inequality as well as a less progressive tax code may cause more tax minimisation activities therefore the frequently advocated policy of reducing the highest tax rate may fail as a policy directed at improving tax discipline one way of offsetting the possible harm to tax compliance from a less progressive tax could be an adjustment of the penalty and monitoring functions

endogenous political turnover and fluctuations in sovereign default risk abstract a sovereign default model in which the sovereign derives private benefits from public office and contests elections to stay in power is developed the economy s growth process is modeled as a markov switching regime which is shown to be a better description of the data for our set of emerging economies in the model consistent with evidence the sovereign is less likely to be reelected if economic growth is weak in the low growth regime there is higher probability of loss of private benefits due to turnover which makes the sovereign behave more myopically this growth linked variation in effective discount factor is shown to be important in generating volatility in sovereign spreads

taxation with representation abstract in this paper a framework is developed for the joint analysis of tax preparation mode and tax non compliance estimation is performed using micro level audit data from the internal revenue service although tha availability of tax practitioners undoubtedly reduces many of the informational and computational barriers to tax compliance the results indicate that their use particularly the use of cpas and attorneys is associated with increased tax non compliance which may have negative implications for both tax equity and tax efficiency

quantifying loss averse tax manipulation this article presents evidence that loss aversion affects taxpayers as they file their annual tax returns and presents a framework for estimating the policy impact of this psychological phenomenon in my theoretical framework taxpayers manipulate the money paid to the tax authority through avoidance and evasion activities when taxpayers face the prospect of owing the tax authority money on tax day loss aversion generates the perception of a greater marginal utility of tax reduction and therefore motivates greater pursuit of tax reduction activities applying a bunching based identification strategy to u s tax return data i estimate that taxpayers facing a payment on tax day reduce their tax liability by 34 more than taxpayers owed a refund

effects of supervision on tax compliance evidence from a field experiment in austria we conduct a field experiment on tax compliance focusing on newly founded firms as a novelty the effect of tax authorities supervision on timely tax payments is examined interestingly results show no positive overall effect of close supervision on tax compliance

who profits from taxpayer confusion abstract when taxpayers are uncertain of true taxable income they must decide whether to resolve their uncertainty by seeking tax advice and then decide how much taxable income to report since tax advisors must sign their advisees tax returns the audit policy can depend on whether tax advice was sought in the optimal audit policy some taxpayers will not resolve their uncertainty and the optimal policy yields higher net revenue with uncertainty than without

employers discriminatory behavior and the estimation of wage discrimination this paper considers the linkage of empirical estimates of wage discrimination between two groups introduced by oaxaca 1973 to a theoretical model of employers discriminatory behavior it is shown that conditional on different assumptions about employers discriminatory tastes oaxaca s estimators of wage discrimination can be derived that the approach is more generally useful is demonstrated by deriving an alternative estimator of wage discrimination based on the assumption that within each type of labor e g unskilled skilled the utility function capturing employers discriminatory tastes is homogeneous of degree zero with respect to labor inputs from each of the two groups the estimators are compared empirically in an application to male female wage differentials

a multidimensional analysis of tax practitioners ethical judgments this study investigates professional tax practitioners ethical judgments and behavioral intentions in cases involving client pressure to adopt aggressive reporting positions an issue that has been identified as the most difficult ethical moral problem facing public accounting practitioners the multidimensional ethics scale mes was used to measure the extent to which a hypothetical behavior was consistent with five ethical philosophies moral equity contractualism utilitarianism relativism and egoism responses from a sample of 67 tax professionals supported the existence of all dimensions of the mes other than egoism regressions of ethical judgments and behavioral intentions on the mes dimensions indicate that ethical decision making is most heavily influenced by the moral equity dimension followed by the contractualism dimension in contrast the utilitarianism and relativism dimensions were only related to ethical judgments and behavioral intentions in isolated instances

incentives to transfer profits a japanese perspective the intense interest in transfer pricing problems shown by academics and tax practitioners alike has deepened with the publication on 8 october 1997 of the uk inland revenue s consultative document and draft legislation on transfer pricing in particular there has been a spate of professional commentary and queries for example see atkinson and tyrrall 1997 bunn 1997 taylor 1997 antzcak 1998 fairpo 1998 the prevailing tone of many articles is an agreement that something needed to be done in this area to address a perceived problem in the growth and development of multinational corporations the removal of international trade barriers has created a global economy with unprecedented world trade world trade has increased by a factor of 16 since 1950 while total world output increased only 5 5 times intragroup transfers are a large proportion of this trade tax authorities are acutely aware of the need to protect their tax base by policing transfer pricing more actively than in the past atkinson and tyrrall 1997 p 18 goods which may be subject to transfer pricing account for about half of world trade adams 1997 much of the academic research on transfer pricing has concentrated on the global aspects of income shifting for example see harris 1993 harris et al 1993 klassen et al 1993 jacob 1996

a structural model of electoral accountability this paper proposes a structural approach to measuring the eects of electoral ac countability we estimate a political agency model with imperfect information in order to identify and quantify discipline and selection eects using data on u s governors for 1982 2012 we nd that the possibility of reelection provides a signi cant incentive for incumbents to exert eort we also nd a selection eect although it is weaker in terms of its eect on average governor performance according to our model the widely used two term regime improves voter welfare by 4 2 compared to a one term regime and nd that a three term regime may improve voter welfare even further

suspiciously timed trade disputes abstract this paper shows that electoral incentives crucially affect the initiation of trade disputes focusing on wto disputes filed by the united states during the 1995 2014 period we find that u s presidents are more likely to initiate a dispute in the year preceding their re election moreover u s trade disputes are more likely to involve industries that are important in swing states to explain these regularities we develop a theoretical model in which re election motives can lead an incumbent politician to file trade disputes to appeal to voters motivated by reciprocity

aggressive tax avoidance a conundrum for stakeholders governments and morality this is the conundrum that gives rise to the issue of tax avoidance although governments always seem to lack sufficient funds to support the needs of society tax codes are often written that offer a way out of paying taxes for some but not all constituents the ways out are referred to as loopholes that allow taxpayers to avoid taxes this paper first defines the basic terms of tax avoidance and tax evasion and then offers an ethical review of the morality of aggressive tax avoidance aggressive tax avoidance is then addressed in relationship a corporate entity s tone at the top the conclusion is drawn that use of the letter of the law to avoid payment of taxes sorely needed by governments for the good faith provision of public goods and services is ethically unacceptable several suggestions for change are provided including a new financial statement disclosure and the possibility of a published corporate ethics report

political booms financial crises political booms measured by the rise in governments popularity predict financial crises above and beyond better known early warning indicators such as credit booms this predictive power howev

sex discrimination in faculty salaries evidence from a historically women s university during the past several years a number of studies have appeared in this review and elsewhere examining the earnings and promotion of women faculty a finding common to most of these studies is that the female male salary differential is smallest at entry level but widens over time 2 indeed george johnson and frank stafford state after presenting such evidence for michigan state university we believe this qualitative result would be observed for any university in the united states for which the sample size is sufficiently large 1974 p 899 while the qualitative findings of faculty salary studies have been similar interpretations have differed on the one hand the human capital view attributes the widening sex differential or flatter female earnings profile to differences in acquired skill and productivity this literature emphasizes differences in continuous labor market experience hours of work and the relative teaching research division of labor on the other hand the discrimination view attributes the widening differential to increased labor market discrimination with respect to experience the sex differential is smallest at entry level where universities must compete and pay prevailing salaries to attract incoming faculty members however discrimination is more easily exercised in the internal university labor market by male faculty and administrators as job mobility lessens with age because of fixed costs tied moves 3 university specific job training a shorter benefit span etc the strongest evidence supporting the discrimination view is the existence of significant unexplained salary differentials even where detailed data exist on research and teaching performance the purpose of this note is to examine the salary structure at a large university which was historically the state s university for women but is now fully coeducational to our knowledge no other such study is available comparison of results from such a study with those already in the literature can shed light on the interpretation of salary differential studies we find somewhat surprisingly an exception to the finding by johnson and stafford and others of a widening femalemale salary differential with experience apart from some qualifications discussed below we find a small differential at entry but little difference in the reward structure to men and women with respect to experience ceteris paribus alternative interpretations of this evidence are provided while we cannot clearly test between the human capital and discrimination explanations for salary differentials our evidence strongly suggests that universities can and do exercise significant discretion in the awarding of salaries discretion which is presumably made possible by the not for profit nature of these institutions see armen alchian and reuben kessel section i briefly describes the data source while section ii examines specification and then tests for functional form section iii university of north carolina greensboro we thank terry g seaks and frank stafford for helpful suggestions we are equally responsible for the contents of the paper a partial list includes george johnson and frank stafford with later comments by steven farber and by myra strober and alice quester nancy gordon thomas morton and ina braden emily hoffman david katz marianne ferber and jane loeb ferber and betty kordick ferber loeb and helen lowry and james koch and john chizmar 2 there is debate over whether the differential begins to narrow late during the working life as argued by johnson and stafford see johnson and stafford 1977 and ferber loeb and lowry 3viewing mobility within a household context see jacob mincer the potential for discrimination against married women faculty may be higher than with male or unmarried female faculty

international exchanges as the basis for conceptualizing ethics in international business extant business ethics literature available for application to international business demonstrates some variety but no comprehensive principles while the domains of both international business and business ethics are expanding they are also becoming increasingly divergent at the same time the primacy accorded to the multinational enterprise in both fields ignores the socio cultural and political embeddedness of economic activities and multiple agencies in international business individuals firms nations etc some international business theorists have offered the view that international exchange should be the central building block for theories on international business in this paper it is argued that international exchange could be the fundamental unit of analysis for international business ethics as well the potentially unifying features of exchange norms and ethical principles leads the author to develop some core exchange ethics principles that are tested on three recent international business practices

do better paid politicians perform better disentangling incentives from selection the wage paid to politicians affects both the choice of citizens to run for office and the performance of those who are appointed first if skilled individuals shy away from politics because of higher opportunities in the private sector an increase in politicians pay may change their mind second if the re election prospects of incumbents depend on their in office deeds a higher wage may foster performance we use data on all italian municipal governments from 1993 to 2001 and test these hypotheses in a quasi experimental setup in italy the wage of mayors depends on population size and sharply rises at different thresholds we apply a regression discontinuity design to the only threshold that uniquely identifies a wage increase 5 000 inhabitants exploiting the existence of a two term limit we further disentangle the composition from the incentive component of the effect of the wage on performance our results show that a higher wage attracts more educated candidates and that better paid politicians size down the government machinery by improving efficiency importantly most of this effect is driven by the selection of competent politicians rather than by the incentive to be re elected

on the decomposition of wage differentials the often used method for decomposing wage differentials into human capital and discrimination components is reformulated so that both t he disadvantage or cost discrimination it imposes on a black or minority wage earner and the advantage or benefit it bestows on a white or majority wage earner can be estimated copyright 1988 by mit press

moral ethics v tax ethics the case of transfer pricing among multinational corporations in recent years there has been an increased awareness with regards to ethics in business more specifically the abundance of well publicized examples of cheating greed and hypocrisy has created some alarm about the general state of personal ethics josephson 1988 recent examples include the oliver north ivan boesky and jimmy swaggart cases the tax practitioner probably has little direct concern for matters of misconduct and ethical improprieties as mentioned above adherence to a code of conduct appears to circumvent the ethical conflict typically found in the business environment the tax practitioner s ultimate goal is tax minimization for clients this goal has the blessings of the courts and the writers of tax law

salary differentials by sex in the academic labor market this paper examines faculty time allocation decisions that are fundamental to the functioning of a university a random utility approach yields a grouped data multinomial logit model and predicts that time allocation decisions depend systematically on

electoral manipulation via voter friendly spending theory and evidence abstract we present a model of the political budget cycle in which incumbents try to influence voters by changing the composition of government spending rather than overall spending or revenues rational voters may support an incumbent who targets them with spending before the election even though such spending may be due to opportunistic manipulation because it may also reflect sincere preference of the incumbent for types of spending voters favor classifying expenditures into those which are likely targeted to voters and those that are not we provide evidence supporting our model in data on local public finances for all colombian municipalities our findings indicate both a pre electoral increase in targeted expenditures combined with a contraction of other types of expenditure and a voter response to targeting

aggressive tax avoidance by managers of multinational companies as a violation of their moral duty to obey the law a kantian rationale managers of multinational companies often favour an aggressive tax avoidance strategy that pushes the legal limits onto the advantage of shareholders and the disadvantage of the spirit of democratically legitimized tax laws the public and media debate whether such aggressive behaviour is immoral aggressive tax avoidance is a subset of the aggressive legal interpretations potentially observable in all fields which places little weight on the will of a democratically legitimized legislation a thorough ethical analysis based on the deontological approach of kant demonstrates that aggressive tax avoidance as a special case of operating on the edge of legal boundaries is potentially immoral applying the kantian contradiction of conception or will test shows that this maxim might not be conceived or willed as a general law of nature if all natural or legal persons aggressively interpret laws on all subjects and in every imaginable situation then central principles of the system of law we all rely upon would be severely compromised therefore aggressive tax avoidance by managers of multinational companies may violate the managers moral duty to obey not only the letter but also the intention or spirit of the law the validity of the argumentation depends critically on the formulation and interpretation of the respective maxims and on assumptions about the legal system preserving central elements of kantian philosophy the article demonstrates the complexity of a philosophical argumentation which tries to justify the moral intuitions that underpin the common negative evaluation of aggressive legal strategies in business

ethics in tax practice a study of the effect of practitioner firm size while much of the empirical accounting literature suggests that if differences do exist big four employees are more ethical than non big four employees this trend has not been evident in the recent media coverage of big four tax practitioners acting for multinationals accused of aggressive tax avoidance behaviour however there has been little exploration in the literature to date specifically of the relationship between firm size and ethics in tax practice we aim here to address this gap initially exploring tax practitioners perceptions of the impact of firm size on ethics in tax practice using interview data in order to identify the salient issues involved we then proceed to assess quantitatively whether employer firm size has an impact on the ethical reasoning of tax practitioners using a tax context specific adaptation of a well known and validated psychometric instrument the defining issues test

fairness in international trade and investment north american perspectives this article reviews the practices and differing sets of attitudes north americans have taken with respect to fairness in international trade and proposes a set of common considerations for ongoing debates about these matters after reviewing the asymmetrical relations between canada the united states and mexico and the impact of multilateral trade agreements on bilateral trade between these countries the article looks at four typical normative views with respect to trade held by north americans these views variously emphasize concerns for protectionism liberal fair play distributive justice and dissent in the name of the environment or the working classes acknowledging that the debates over what is fair are not likely to be easily resolved we call for open political processes that allow these debates to proceed and we identify five common points of reference that might usefully inform these debates these comprise 1 respect for flexibility 2 the importance of institutions 3 greater attention to the commutative justice principles for fair exchanges and corresponding guarantees so that all countries possess basic power to bargain on their own behalf 4 the need to find fitting balance between local national regional and international trade and 5 more concern for the ways false pricing and abusive transfer pricing distort international trading relations

the political economy of fiscal deficits a survey this paper surveys recent literature both theoretical and empirical regarding political explanations for fiscal deficits political economy suggests conflicts of interest may lie behind the emergence of deficits 1 opportunistic politicians generate deficits to win elections even in conflict with general welfare 2 conflicts of interests between politicians partisan preferences create incentives for at least some incumbents to run deficits and 3 conflicts of interest between different social groups or regions generate tensions in the allocation of government resources leading to overspending this paper reviews these different strands of the literature it also covers contributions that highlight the crucial role of budget institutions in determining the extent to which the political motivations to generate deficits are indeed translated into poor fiscal outcomes promising avenues for future research are highlighted

persistence of politicians and firms innovation we empirically investigate whether the persistence of politicians in political institutions affects the innovation activity of firms we use 12 000 firm level observations from three waves of the italian observatory over small and medium enterprises and introduce a measure of political persistence defined as the average length of individual political careers in political institutions of italian municipalities standard ols shows no raw correlation between political persistence and firms innovation activity however once the causal effect is isolated by means of instrumental variables using death of politicians as an exogenous source of variation of political persistence we find a robust negative relation between political persistence and the probability of process innovation this finding is consistent with the view that political stability may hinder firms incentive to innovate to maintain their competitiveness as long as they can extract rents from long term connections with politicians

trigger points and budget cuts explaining the effects of fiscal austerity we propose and solve an optimizing model which explains counterintuitive effects of fiscal policy in terms of expectations if government spending follows an upward trending stochastic process which the public believes may fall sharply when it reaches specific trigger points then optimizing consumption behavior and simple budget constraint arithmetic imply a nonlinear relationship between private consumption and government spending this theoretical relation is consistent with the experience of several countries jel e62 e21 textbook aggregate demand models suggest simple relationships between the government budget and economic activity a cut in the government deficit for example depressing consumption and output though such models heavily influence the design of stabilization policies their micro foundations are unclear and their sharp predictions are not always consistent with reality in many countries large cuts in government spending carried out as part of stabilization programs have led to expansions rather than contractions in economic activity the absence of simple relationships be