the dynamic effects of government spending policies in a two sector endogenous growth model this paper investigates the impact of government spending policies in a two sector model of endogenous growth endogenous growth arises because all factors of production physical and human capital are reproducible both temporary and permanent government spending shocks are examined the model implies that a permanent lump sum financed increase in government spending raises the long run growth rate this occurs because the negative wealth effects of a spending increase will increase labor supply on the other hand an income tax or wage tax financed rise in government spending reduces the growth rate the output effects of a temporary increase in government spending may be greater or less than a permanent increase in spending copyright 1995 by ohio state university press

estimating the impact of the hajj religion and tolerance in islam s global gathering we estimate the impact on pilgrims of performing the hajj pilgrimage to mecca our method compares successful and unsuccessful applicants in a lottery used by pakistan to allocate hajj visas pilgrim accounts stress that the hajj leads to a feeling of unity with fellow muslims but outsiders have sometimes feared that this could be accompanied by antipathy toward non muslims we find that participation in the hajj increases observance of global islamic practices such as prayer and fasting while decreasing participation in localized practices and beliefs such as the use of amulets and dowry it increases belief in equality and harmony among ethnic groups and islamic sects and leads to more favorable attitudes toward women including greater acceptance of female education and employment increased unity within the islamic world is not accompanied by antipathy toward non muslims instead hajjis show increased belief in peace and in equality and harmony among adherents of different religions the evidence suggests that these changes are likely due to exposure to and interaction with hajjis from around the world rather than to a changed social role of pilgrims upon return

paradoxes in biodiversity conservation biodiversity is important for human wellbeing but it is declining measures to conserve biodiversity are essential but may be a waste of effort if several paradoxes are not addressed the highest levels of diversity are in nations least able to practise effective conservation the flow of funds to international biodiversity conservation appears trivial when compared to the scale of biodiversity loss international agreements may not actually protect or conserve more than what would have been conserved anyway protected areas may be paper parks protected in name but not in practice the very act of protection may contain self destructive features because local communities can easily suffer loss of income and assets making them unwilling partners in the act of protection in turn this places the protected area at risk and may also divert unsustainable harvesting activities to non protected but equally diverse ecosystems in tackling these issues the real biodiversity challenge is redesigning conservation effort making it truly additional and making it compatible with poverty reduction

post 1500 population flows and the long run determinants of economic growth and inequality we construct a matrix showing the share of the year 2000 population in every country that is descended from people in different source countries in the year 1500 using this matrix we analyze how post 1500 migration has influenced the level of gdp per capita and within country income inequality in the world today indicators of early development such as early state history and the timing of transition to agriculture have much better predictive power for current gdp when one looks at the ancestors of the people who currently live in a country than when one considers the history on that country s territory without adjusting for migration measures of the ethnic or linguistic heterogeneity of a country s current population do not predict income inequality as well as measures of the ethnic or linguistic heterogeneity of the current population s ancestors an even better predictor of current inequality in a country is the variance of early development history of the country s inhabitants with ethnic groups originating in regions having longer histories of agriculture and organized states tending to be at the upper end of a country s income distribution however high within country variance of early development also predicts higher income per capita holding constant the average level of early development

public capital asymmetric information and economic growth we investigate the provision of public capital in an endogenous growth model with asymmetric information in a credit market with costly screening we show that the equilibrium contracts are characterized by the self selection of borrowers through identifying an additional adverse effect of taxation on growth we show that the optimal tax rate in our model is smaller than the output elasticity of public capital therefore our analysis justifies a more conservative tax policy in the presence of asymmetric information furthermore our model suggests a number of implications that appear to be well supported by preliminary evidence in cross country data jel classification d82 h21 041

the effect of taxes on investment and income shifting to puerto rico the income of puerto rican affiliates of u s corporations is essentially untaxed by either puerto rico or the united states this lowers the tax penalty on investment there and also makes it attractive to shift reported taxable income from the u s parent corporation to the puerto rican affiliate this paper investigates these two interrelated impacts of taxation by developing a structural econometric model of the joint decisions regarding investment and income shifting and estimating the model using firm level data on the activity u s corporations in puerto rico the results suggest that the income shifting advantages are the predominant reason for u s investment in puerto rico

the relative productivity hypothesis of industrialization the american case 1820 to 1850 a two sector model is used to explore the role of the agricultural sector in the process of industrialization our hypothesis is that areas industrialize earlier where the wages for females and children relative to those for adult males are initially low furthermore the lower this relative productivity of females and children in the pre industrial economy the proportionately more will their relative wages increase and the higher will be the ratio of manufactured to agricultural goods the model is used to interpret the conditions that fostered the rapid industrialization of the american northeast but not the south from 1820 to 1850

testing the endogenous growth model public expenditure taxation and growth over the long run endogenous growth models such as barro 1990 predict that government expenditure and taxation will have both temporary and permanent effects on growth we test this prediction using panels of annual and period averaged data for oecd countries during 1970 95 isolating long run from short run fiscal effects our results strongly support the endogenous growth model and suggest that long run fiscal effects are not fully captured by period averaging and static panel methods unlike previous investigations our estimates are free from biases associated with incomplete specification of the government budget constraint and do not appear to result from endogeneity of fiscal or investment variables jel classification h30 o40 validation du modele de croissance endogene depenses publiques fiscalite et croissance a long terme des modeles de croissance endogene comme celui de barro 1990 predisent que depenses gouvernementales et fiscalite vont avoir des effets temporaires et permanents sur la croissance on met cette prevision au test a l aide de donnees annuelles et pour certaines moyennes couvrant des sous periodes pour les pays de l ocde 1970 95 dans le but de departager les effets a court et a long terme les resultats valident fortement le modele de croissance endogene et suggerent que les effets fiscaux a long terme ne sont pas pleinement captures par des methodes utilisant des moyennes ou des methodes statiques contrairement aux resultats d enquetes anterieures les resultats proposes ne souffrent pas de distorsions attribuables a une specification incomplete de la contrainte budgetaire du gouvernement et ne semblent pas etre l effet d echo de l endogeneite des variables fiscales et de l investissement

the slave trade and the origins of mistrust in africa in a recent study nunn 2008 examines the long term impacts of africa s slave trade he finds that the slave trade which occurred over a period of more than 400 years had a significant negative effect on long term economic development although the article arguably identifies a negative causal relationship between the slave trade and income today the analysis is unable to establish the exact causal mechanisms underlying this reduced form relationship in this article we examine one of the channels through which the slave trade may affect economic development today combining contemporary individual level survey data with historical data on slave shipments by ethnic group we ask whether the slave trade caused a culture of mistrust to develop within africa initially slaves were captured primarily through state organized raids and warfare but as the trade progressed the environment of ubiquitous insecurity caused individuals to turn on others including friends and family members and to kidnap trick and sell each other into slavery sigismund wilhelm koelle 1854 p e h hair 1965 charles piot 1996 we hypothesize that in this environment a culture of mistrust may have evolved which may persist to this day we show that current differences in trust levels within africa can be traced back to the transatlantic and indian ocean slave trades combining contemporary individual level survey data with historical data on slave shipments by ethnic group we find that individuals whose ancestors were heavily raided during the slave trade are less trusting today evidence from a variety of identification strategies suggests that the relationship is causal examining causal mechanisms we show that most of the impact of the slave trade is through factors that are internal to the individual such as cultural norms beliefs and values jel j15 n57 z13

on the ineffectiveness of tax policy in altering long run growth harberger s superneutrality conjecture abstract in 1964 harberger conjectured that although theory predicts that changes in tax rates affect investment and growth in the long run in practice tax policy is an ineffective instrument to influence growth this paper provides theoretical and empirical evidence in favor of this view the growth effects of tax policy in the class of endogenous growth models driven by human capital accumulation are examined and numerical simulations of these models confirm the results harberger predicted cross country panel regressions estimated using a new method for measuring effective tax rates produce significant investment effects from taxes that are consistent with negligible growth effects these results are robust to the introduction of other growth determinants

gender role attitudes and the labour market outcomes of women across oecd countries this paper uses data from the world value surveys 1990 1995 1999 to investigate the impact of gender role attitudes and work values on women s labour market outcomes across 25 oecd countries anti egalitarian views are found to display the strongest negative association with female employment rates and the gender pay gap these views are however softening among recent cohorts on the other hand perceptions of women s role as homemakers which are likely formed in youth and linked to religious ideology are more persistent over time they could be implicated in the recent slowdown of the gender convergence in pay finally the unavoidable clash between family values and egalitarian views that takes the form of an inner conflict for many women the so called mother s guilt is another obstacle in the path towards greater gender equality in the labour market copyright 2005 oxford university press

the weight of history on european cultural integration a gravity approach cultural integration is a european obsession given the growing evidence on the role of culture as a determinant of economic development this issue is of importance to economists some literature hypothesizes that the variation of the relative strengths of cultural assimilation and differentiation gave rise to different patterns of economic development quamrul ashraf and oded galor 2007 while other literature emphasizes the importance of specific cultural traits for institutional and economic development among those social trust has received particular attention recently the literature has looked into the historical origins of social trust relating contemporary cross regional differences in trust to historical events such as the free city states experiences in northern italy guido tabellini 2008 luigi guiso paola sapienza and luigi zingales 2008 or the slave trades in africa nathan nunn and leonard wantchekon forthcoming going even further back in history ruben durante 2010 links current regional differences in trust to climatic variability since the year 1500 while such evidence on the longterm persistence of cultural traits is intriguing little remains understood concerning the rate at which cultural values change under the influence of such historical events cultural persistence and cultural heterogeneity are the two sides of the same coin historians have hypothesized that one reason behind the complexity of european integration may be the fact that europe as opposed to china or north america has never experienced a single unifying historical experience wim blockmans 2006 the model in this paper estimates the contribution to cultural integration or its counter

on the taxation of human and physical capital in models of endogenous growth abstract this paper studies the effects of factor income taxation and of subsidies to human capital accumulation in models of endogenous growth it examines in particular how these effects depend on the specification of the leisure activity and on the technology and tax treatment of the sector producing human capital it shows that the negative effects of factor income taxes on economic growth are stronger when the human capital sector is a market good under these circumstances a subsidy to human capital accumulation can offset the direct growth effects of labor taxation making it akin to a consumption tax the paper then briefly discusses the normative implications of the analysis for the optimal taxation of factor incomes

the quiet revolution that transformed women s employment education and family the modern economic role of women emerged in four phases the first three were evolutionary the last was revolutionary phase i occurred from the late nineteenth century to the 1920s phase ii was from 1930 to 1950 phase iii extended from 1950 to the late 1970s and phase iv the quiet revolution began in the late 1970s and is still ongoing three aspects of women s choices distinguish the evolutionary from the revolutionary phases horizon identity and decision making the evolutionary phases are apparent in time series data on labor force participation the revolutionary phase is discernible using time series evidence on women s more predictable attachment to the workplace greater identity with career and better ability to make joint decisions with their spouses each of these series has a sharp break or inflection point signifying social and economic change these changes moreover coincide by birth cohort or period the relationship between the development of modern labor economics and the reality of women s changing economic role is explored the paper concludes by assessing whether the revolution has stalled or is being reversed women who graduated college in the early 1980s did not opt out but recent cohorts are too young to evaluate this abstract was borrowed from another version of this item

on the dynamics of growth and fiscal policy with redistributive transfers abstract this paper continues the study of optimal fiscal policy in a growing economy by studying the case in which the government simultaneously provides three main categories of expenditures public production services public consumption services and state contingent redistributive transfers we make two contributions to the literature firstly we set up a dynamic general equilibrium model of endogenous growth in which rational voters choose the capital tax rate and the allocation of total tax revenues between productive government expenditures public production services and non productive ones public consumption services and redistributive transfers we study the properties of these policies and their impact on growth secondly we deliver analytic results for the long run and transitional dynamics of optimal fiscal policies and endogenous growth in particular we establish existence and investigate the possibility of uniqueness and dynamic determinacy and how this possibility is affected by the chosen allocative and redistributive policies

effective tax rates in macroeconomics cross country estimates of tax rates on factor incomes and consumption abstract this paper proposes a method for computing tax rates using national accounts and revenue statistics using this method we construct time series of tax rates for large industrial countries the method identifies the revenue raised by different taxes at the general government level and defines aggregate measures of the corresponding tax bases this method yields estimates of effective tax rates on factor incomes and consumption consistent with the tax distortions faced by a representative agent in a general equilibrium framework these tax rates compare favorably with existing estimates of marginal tax rates and highlight important international differences in tax policy

the effects of the value added tax on revenue and inequality this paper examines the impact of the introduction of the value added tax on inequality and government revenues using newly released macro data we present both conventional country fixed effect re

macroeconomic effects from government purchases and taxes for u s annual data that include world war ii the estimated multiplier for temporary defense spending is 0 4 0 5 contemporaneously and 0 6 0 7 over 2 years if the change in defense spending is permanent gauged by ramey s defense news variable the multipliers are higher by 0 1 0 2 since all estimated multipliers are significantly less than 1 greater spending crowds out other components of gdp particularly investment the lack of good instruments prevents estimation of reliable multipliers for nondefense purchases multipliers in the literature of two or more likely reflect reverse causation from gdp to nondefense purchases increases in average marginal income tax rates measured by a newly constructed time series have significantly negative effects on gdp when interpreted as a tax multiplier the magnitude is around 1 1 the combination of the estimated spending and tax multipliers implies that the balanced budget multiplier for defense spending is negative we have some evidence that tax changes affect gdp mainly through substitution effects rather than wealth effects

ecosystem services as substitute inputs basic results and important implications for conservation policy abstract in recent decades conservation advocates have often emphasized the contributions of ecosystem services to the production of other products a demonstration of the value of ecosystems as inputs into production would motivate their conservation such arguments often offer the observation that ecosystem services can substitute for purchased inputs and thus reduce costs if this is true however it has another important implication a producer who is preserving local ecosystems so as to maximize her own profit will produce less output if she further increases her reliance on ecosystem services this may induce leakage by which one producer s greater reliance on ecosystem services indirectly motivates others to preserve fewer natural ecosystems i demonstrate this result in a simple but canonical model and calibrate my findings to a celebrated example to show they could be quantitatively significant my results suggest another reason that appeals to ecosystem services as a motivation for conservation should be made with care at the most basic level they emphasize the importance of being clear about what we mean by conservation do we want to save some diversity in many places or nearly all indigenous diversity in a few places

efficient multiple use forestry may require land use specialization considered at the landscape scale economically efficient multiple use of forests may require land use specialization if managers attempt to satisfy legitimate multiple use demands from society by managing all lands for all outputs both commodity and amenity values of the forest may be inappropriately supplied and management inputs may be inefficiently deployed these results run counter to some of the prescriptions called new forestry

on the origins of gender roles women and the plough the study examines the historical origins of existing cross cultural differences in beliefs and values regarding the appropriate role of women in society we test the hypothesis that traditional agricultural practices influenced the historical gender division of labor and the evolution of gender norms we find that consistent with existing hypotheses the descendants of societies that traditionally practiced plough agriculture today have less equal gender norms measured using reported gender role attitudes and female participation in the workplace politics and entrepreneurial activities our results hold looking across countries across districts within countries and across ethnicities within districts to test for the importance of cultural persistence we examine the children of immigrants living in europe and the united states we find that even among these individuals all born and raised in the same country those with a heritage of traditional plough use exhibit less equal beliefs about gender roles today jel codes d03 j16 n30 copyright 2013 oxford university press

corporate tax elasticities a reader s guide to empirical findings corporate taxes exert a variety of effects on business behaviour a wealth of empirical evidence assesses the magnitude of these behavioural margins of taxation this article offers an up to date review and aims to provide common ground by computing for each distortion the semi elasticity of the corporate tax base we pay particular attention to international investment where it is not a priory clear whether marginal investment decisions or discrete locations are most important using anextension of the meta analysis of de mooij and ederveen 2003 we explore the extent to which existing studies reveal differences in effect size between the intensive and extensive margins of international investment

average marginal tax rates from social security and the individual income tax we extend previous estimates of the average marginal tax rate from the federal individual income tax to include social security our computations consider the tax rates on employers employees and the self employed the income that accrues to persons with earnings below the ceiling and the effective deductibility of employers social security contributions from workers taxable income the next effect of social security on the average marginal tax rate is below 02 until 1966 but then rises to 03 in 1968 04 in 1973 05 in 1974 06 in 1979 and 07 in 1982 this abstract was borrowed from another version of this item

fiscal deficits and growth in developing countries this paper examines the relation between fiscal deficits and growth for a panel of 45 developing countries based on a consistent treatment of the government budget constraint it finds evidence of a threshold effect at a level of the deficit around 1 5 of gdp while there appears to be a growth payoff to reducing deficits to this level this effect disappears or reverses itself for further fiscal contraction the magnitude of this payoff but not its general character necessarily depends on how changes in the deficit are financed through changes in borrowing or seigniorage and on how the change in the deficit is accommodated elsewhere in the budget we also find evidence of interaction effects between deficits and debt stocks with high debt stocks exacerbating the adverse consequences of high deficits

women s liberation what s in it for men the nineteenth century witnessed dramatic improvements in the legal rights of married women given that these changes took place long before women gained the right to vote they amounted to a voluntary renouncement of power by men in this paper we investigate men s incentives for sharing power with women in our model women s legal rights set the marital bargaining power of husbands and wives we show that men face a tradeoff between the rights they want for their own wives namely none and the rights of other women in the economy men prefer other men s wives to have rights because men care about their own daughters and because an expansion of women s rights increases educational investments in children we show that men may agree to relinquish some of their power once technological change increases the importance of human capital we corroborate our argument with historical evidence on the expansion of women s rights in england and the united states

religion and economy religion has a two way interaction with political economy with religion viewed as a dependent variable a central question is how economic development and political institutions affect religious participation and beliefs with religion viewed as an independent variable a key issue is how religiosity affects individual characteristics such as work ethic honesty and thrift and thereby influences economic performance in this paper we sketch previous studies of this two way interaction but focus on our ongoing quantitative research with international data

the timing and persistence of fiscal policy impacts on growth evidence from oecd countries the literatures testing for aggregate short run or long run growth impacts of fiscal policy use quite different methodologies the former generally focuses on temporary fiscal shocks the latter typically have no short run dynamics or assume homogeneity we use regression methods that treat heterogeneous short run dynamics explicitly within a long run model results suggest that previously estimated long run growth effects of fiscal policy are typically achieved quickly consistent with results from short run models in principle these short run effects persist in practice regular fiscal policy changes in oecd countries mean that persistent increases or decreases in growth rates are rare the recent global recession has brought renewed interest in the question can fiscal policy affect the growth rate of output if so are these effects temporary affecting only output levels over the longer run or permanent so that output growth rates are persistently higher perhaps surprisingly the literatures looking for growth impacts of fiscal policy over the short run say up to five years and over the longer run of 10 years or more have tended to be quite distinct and followed quite different methodologies this article considers how far the results from these two literatures are consistent to do so we apply the heterogeneous panel econometric methods mean group and pooled mean group proposed by pesaran and smith 1995 pesaran 1997 and pesaran et al 1999 to an annual panel dataset for oecd countries these methods allow both long run equilibrium relationships and short run dynamic adjustments around those equilibria to be investigated simultaneously in brief our results support the conclusion that changes in fiscal structure that is between different types of tax

is economics useful for public policy economists have always played an important role in major public policy debates even so i believe that the role of economists in these public policy discussions has often been misguided because it has typically relied upon best practices stated in the form of general guidelines or even universal principles however best practices are not best if the specific situation does not conform with the assumptions that underlie the advice so my first conclusion is a cautionary and negative one specific circumstances differ so profoundly across individuals firms markets countries and time that most any attempt to define best practices that apply in all circumstances will lead to profoundly misleading public policy recommendations however even if economics cannot identify the truth it can often identify a truth so my second conclusion is a more positive one economists should continue to develop multiple theories that inform public policies but we should also focus our efforts on identifying and testing the critical assumptions that drive the results of these theories recognizing that the validity of any assumptions will depend intimately on specific circumstances i illustrate these two main conclusions with specific examples from my own work i conclude with some best practices recommendations of my own recognizing the obvious irony of such an effort

the role of economic theory in modelling the long run this argues for a closer link between the modelling of the long run relations in applied economics and the intertemporal equilibrium notion from economic theory this abstract was borrowed from another version of this item

do countries compete over corporate tax rates this paper tests whether oecd countries compete with each other over corporate taxes in order to attract investment we develop two models with firm mobility countries compete only over the statutory tax rate or the effective average tax rate while with capital mobility countries compete only over the effective marginal tax rate we estimate the parameters of reaction functions using data from 21 countries between 1983 99 we find evidence that countries compete over all three measures but particularly over the statutory tax rate and the effective average tax rate this is consistent with a belief amongst governments that location choices by multinational firms are discrete we also find evidence of concave reaction functions consistent with the model outlined in the paper

mothers and sons preference formation and female labor force dynamics this paper argues that the growing presence of a new type of man one brought up in a family in which the mother worked has been a significant factor in the increase in female labor force participation over time we present cross sectional evidence showing that the wives of men whose mothers worked are themselves significantly more likely to work we use variation in the importance of world war ii as a shock to women s labor force participation as proxied by variation in the male draft rate across u s states to provide evidence in support of the intergenerational consequences of our propagation mechanism

on the origins of gender gaps in human capital short and long term consequences of teachers biases abstract we estimate the effect of primary school teachers gender biases on boys and girls academic achievements during middle and high school and on the choice of advanced level courses in math and sciences during high school in tel aviv israel we measure bias using class gender differences in scores between school exams graded by teachers and national exams graded blindly by external examiners for identification we rely on the random assignment of teachers and students to classes in primary schools our results suggest that assignment to a teacher with a greater bias in favor of girls boys has positive effects on girls boys achievements such gender biases have also positive impact on girls boys enrollment in advanced level math courses in high school these results suggest that teachers biased behavior at early stages of schooling has long run implications for occupational choices and earnings at adulthood because enrollment in advanced courses in math and science in high school is a prerequisite for post secondary schooling in engineering computer science and so on

the transitional dynamics of fiscal policy long run capital accumulation and growth this paper analyzes the effects of fiscal policies in a non scale growing economy with public and private capital the equilibrium dynamics are characterized and we contrast the dynamic effects of government expenditure on investment and expenditure on consumption under four alternative modes of tax financing most of our attention focuses on the numerical simulations of a calibrated economy the results emphasize the lengthy transition periods which implies that policies have sizeable level effects leading to substantial welfare effects even though long run growth rates are unaffected the paper highlights the intertemporal dimensions of fiscal policy and the tradeoffs these involve for economic performance especially growth and welfare

corporate taxes growth and welfare in a schumpeterian economy abstract i take a new look at the long run implications of taxation through the lens of modern schumpeterian growth theory i focus on the latest vintage of models that sterilize the scale effect through a process of product proliferation that fragments the aggregate market into submarkets whose size does not increase with the size of the workforce i show that the following interventions raise welfare a granting full expensibility of rd b eliminating the corporate income tax and or the capital gains tax c reducing taxes on labor and or consumption what makes these results remarkable is that in all three cases the endogenous increase in the tax on dividends necessary to balance the budget has a positive effect on growth a general implication of my analysis is that corporate taxation plays a special role in schumpeterian economies and provides novel insights on how to design welfare enhancing tax reforms

comparative advantage information and the allocation of workers to tasks evidence from an agricultural labour market we use data from an agricultural labour market in which workers receive both time and piece rate wages and shift frequently among employers and tasks to assess the roles of comparative advantage information problems and preferences in determining the allocation of workers the estimates which impose minimal structure not implied by economic theory are consistent with a one factor productivity model and indicate that information asymmetries are present but workers are sorted according to comparative advantage in particular the disproportionate presence of female workers in weeding activities is due not to worker or employer preferences but to comparative advantage and statistical discrimination

progressive taxation and long run growth since the emergence of early endogenous growth models larry e jones and rodolfo e manuelli 1990 sergio rebelo 1991 a large body of work has studied the growth effects of tax reform while virtually all of this literature has confined itself to the analysis of flat rate taxes tax codes are generally progressive this paper therefore explores the effects of progressive taxes in conventional growth models with heterogenous households in such frameworks the tax code helps to determine simultaneously the pre tax income distribution and the rate of technical progress we present three main findings first we show that when variations in tax codes stem from differences in progressivity shares of tax revenue in gdp or income may constitute poor proxies for average marginal tax rates in particular we find that the decrease in progressivity associated with the tax reform act of 1986 tra 86 lowered the u s average marginal tax rate by 0 06 to 0 37 percentage points depending on the model used at the same time however the endogenous adjustment in the distribution of income produced by this progressivity change contributed to raising the tax share of income by approximately 0 8 percentage points because marginal tax rates are not easily observable empirical work often has to make use of tax shares in income as an alternative to the degree that lower marginal rates entail less tax distortion our study suggests that relying on tax shares may cause less progressive tax codes to be incorrectly perceived as more distortional second we find that the progressivity decrease implied by tra 86 helped raise u s per capita gdp growth by 0 12 to 0 34 percentage points given the prominence of tra 86 compared with other u s tax reforms over the past four decades these growth effects while not negligible as in robert e lucas 1990 shed doubt on the potential for tax policy to alter significantly prospects for u s long run growth finally consistent with previous work our analysis suggests that the progressivity change associated with tra 86 had a significant effect on income inequality resulting in a 20to 24percent increase in the gini coefficient of income we carry out our analysis using two prototypical endogenous growth models augmented to include a nondegenerate distribution of income these models one first formulated by robert j barro 1990 and the other by rebelo 1991 account for two polar extremes regarding the use of tax proceeds on the one hand in rebelo s two sector framework tax revenue is spent in a way that affects neither the marginal utility of private consumption nor the production possibilities of the private sector on the other hand in the environment envisioned by barro 1990 all tax revenue serves to finance public services that enhance private production interestingly the results we have just described emerge irrespective of the framework under consideration

measuring the average marginal tax rate from the individual income tax the economic effects of taxation depend on the configuration of marginal tax rates we consider here the appropriate measure of a marginal tax rate for the federal individual income tax which has a graduated rate structure and allows for numerous legal and illegal deductions from total income our conclusion is that the explicit marginal rate from the tax schedule is the right concept for many purposes hence we construct approximately weighted averages of these marginal tax rates for 1916 80 when weighted by adjusted gross income the arithmetic average of marginal tax rates is 5 in 1920 2 in 1930 6 in 1940 20 in 1950 23 in 1960 24 in 1970 and 30 in 1980 we also discuss the dispersion of marginal tax rates as well as the behavior of average tax rates and deductions from taxable income one noteworthy result concerns the fraction of adjusted gross income that accrues to families that face a marginal tax rate of at least 35 this fraction quadruples from 1964 to 1980 this abstract was borrowed from another version of this item

gender differences in land inheritance schooling and lifetime income evidence from the rural philippines this article examines the difference in lifetime incomes arising from parental preferences in the allocation of land inheritance and investments in schooling between sons and daughters in the rural philippines sons are preferred with respect to land inheritance receiving 0 15 additional hectares of land while daughters are treated more favourably in schooling investments receiving 1 5 more years of schooling however differences in both current and life cycle incomes between sons and daughters are insignificant this suggests that filipino parents allocate intergenerational transfers to equalise incomes among their children without sacrificing efficiency

the growth effects of tax rates in the oecd this paper explores the merits of macro and micro based tax rate measures within an open economy fiscal policy and growth model using annual data for 15 oecd countries we find statistically small non robust long run growth effects of macro based average tax rates on capital income and consumption but some evidence for average labor income tax effects changes in micro marginal income tax rates at both the personal and corporate levels yield statistically robust gdp responses of modest size both domestic and foreign corporate taxes appear relevant in general tax effects on gdp operate largely via factor productivity rather than factor accumulation

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

dynamic analysis of an endogenous growth model with public capital this paper develops an endogenous growth model with productive public capital along with private capital in a spirit similar to that of r j barro 1990 since the authors model includes two stock variables it has transitional dynamics unlike most of the previous studies on endogenous growth including barro s where concerns are restricted to the steady state analysis first they show that the transitional path is unique and stable second the character of the transitional path is explored third the authors show that the optimal tax rate is smaller than the rate that maximizes the national growth rate with a log linear utility function copyright 1993 by the editors of the scandinavian journal of economics