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Empirical Public Economics 1. Content Empirical Public Economics MA Economics Prof. Dr. Mark Schelker, Université de Fribourg [email protected] Fall 2018 (FS2018) Dates: Wednesdays, 8.15 – 12.00 Classroom: Pérolles 21, F205 Credits: 4.5 ECTS 1. Content This seminar integrates recent contributions in public economic theory with the latest methods for causal inference in applied econometrics. We will discuss the most important empirical approaches in public economics and how these empirical methods are used to analyze selected topics in public economics. The participants will learn to evaluate empirical studies, to understand central topics in public economics and to plan their own research project. The focus will be on problems in public economics. Econometric concepts are primarily introduced to understand important economic issues and not for the sake of statistical modeling. In that respect the course is a natural companion to the course “Econometric methods and applications I” offered by Prof. Martin Huber. Basic knowledge of econometrics becomes more and more important for anybody who wishes to work for the government, NGO’s, or private firms. Econometric methods now belong to the standard toolkit of policy evaluation in the public sector or market research in private firms. Part I of the course covers important empirical tools in public economics such as instrumental variables, differences-in-differences, regression discontinuity designs, and synthetic control methods. Each empirical method will be presented by one student or a group of students. The presentations (approx. 25 minutes) should outline the main idea, advantages, disadvantages, and practical issues of the method as well as present one or two exemplary applications. Part II of the course covers selected topics in public economics. Each student or group of students will give a presentation on one of the topics (approx. 45 minutes) and about his or her own research proposal related to the topic (approx. 15 minutes). In the presentations, students should discuss the main research questions addressed in the previous literature, challenges in identifying causal effects, common identification strategies, main results and open issues. The written research proposals (approx. 5-6 pages) should include the following aspects: (i) Statement of research question; (ii) relevance of research question; (iii) theoretical framework and hypotheses; (iv) brief literature review; (v) empirical strategy; (vi) data. University of Fribourg 2 Prof. Dr. Mark Schelker Fall 2018 2. (Preliminary) Program Date Subject Part I: Empirical tools 19.09. Introduction and assignment of topics 26.09. Basics of empirical analysis: research design and causal analysis 03.10. -- 10.10. -- 17.10. Refresher empirical methods, student presentations Part II: Empirical applications in public Economics 24.10. tba 31.10. tba 07.11. tba 14.11. tba 21.11. tba 28.11. tba 05.12. tba 12.12. tba 19.12. tba University of Fribourg 3 Prof. Dr. Mark Schelker Fall 2018 3. Teaching assistance Simon Berset & Florence Stempfel Chair of Public Finance University of Fribourg Pérolles 21, office F512 Bd. de Pérolles 90 1700 Fribourg Phone: +41(0)26 /300 82 70 Email: [email protected] , [email protected] 4. Main texts Angrist, Joshua D. and Jörn-Steffen Pischke (2009). Mostly harmless econometrics. An empiricist’s companion. Princeton: Princeton University Press. Tresch, Richard W. (2008). Public Sector Economics. Palgrave McMillan, New York. Hindriks, Jean and Gareth D. Myles (2006). Intermediate public economics. Cambrigde: MIT Press. 5. Topics and Literature Part I: Empirical tools a) Instrumental variables Angrist and Pischke (2009): Chapter 4. Angrist, Joshua D. and Alan B. Krueger (2001). Instrumental variables and the search for identification: From supply and demand to natural experiments. Journal of Economic Perspectives 15(4): 69-85. b) Differences-in-differences Angrist and Pischke (2009): Chapter 5. Lechner, Michael (2011). The estimation of causal effects by difference-in-difference methods. Foundations and Trends in Econometrics 4(3): 165–224. c) Synthetic control method Alberto, Abadie, Alexis Diamond and Jens Hainmueller (2010). Synthetic control methods for comparative case studies: Estimating the effect of California’s tobacco control program. Journal of the American Statistical Association 105(490): 493- 505. Alberto, Abadie, Alexis Diamond and Jens Hainmueller (2012). Comparative politics and the synthetic control method. American Journal of Political Science 59(2): 495- 510. d) Regression discontinuity designs Angrist and Pischke (2009): Chapter 6. Lee, David S. and Thomas Lemieux (2010). Regression discontinuity designs in economics. Journal of Economic Literature 48(2): 281-355. University of Fribourg 4 Prof. Dr. Mark Schelker Fall 2018 Part II: Topics in public economics a) Income tax: Elasticity of taxable income and effects on labor supply Saez, Emmanuel, Joel Slemrod, and Seth H. Giertz (2012). The elasticity of taxable income with respect to marginal tax rates: A critical review. Journal of Economic Literature 50(1): 3-50. Keane, Michael P. (2011). Labor supply and taxes: A Survey. Journal of Economic Literature 49(4): 961-1075. b) Ad valorem taxes: Incidence and distributional effects of sales taxes and VAT Besley, Timothy J. and Harvey S. Rosen (1999). Sales taxes and prices: An empirical analysis. National Tax Journal 52(2): 157-178. Carbonnier, Clément (2007). Who pays sales taxes? Evidence from French VAT reforms, 1987-1999. Journal of Public Economics 91(5-6): 1219-1229. Gaarder, Ingvil (2017). Incidence and Distributional Effects of Value Added Taxes. Economic Journal, forthcoming Kosonen, T. (2015). More and cheaper haircuts after VAT cut? On the efficiency and incidence of service sector consumption taxes. Journal of Public Economics (131): 87–100. c) Commodity and excise taxes: Tax incidence Doyle, Joseph J. and Krislert Samphantharak (2008). $2.00 gas! Studying the effects of gas tax moratorium. Journal of Public Economics 92(3-4): 869-884. Marion, Justin and Erich Muehlegger (2011). Fuel tax incidence and supply conditions. Journal of Public Economics 95(9-10): 1202-1212. DeCicca, P., Kenkel, D. and Liu, F. (2013). Who pays cigarette taxes? The impact of consumer price search. Review of Economics and Statistics 95(2): 516–29. Kenkel, D.S. (2005). Are alcohol tax hikes fully passed through to prices? Evidence from Alaska. American Economic Review 95(2): 273–7. d) Tax avoidance: Income and sales tax avoidance Carrillo, Paul, Dina Pomeranz and Monica Singhal (2017). Dodging the taxman: Firm misreporting and limits to tax enforcement. American Economic Journal: Applied Economics 9(2): 144-164. Kleven, Henrik Jacobsen, Martin B. Knudsen, Claus Thustrup Kreiner, Soren Pedersen, and Emmanuel Saez (2011). Unwilling or unable to cheat? Evidence from a tax audit experiment in Denmark. Econometrica 79(3): 651–692. Kopczuk, Wojciech (2018). The Polish business “flat” tax and its effect on reported incomes: a Pareto improving tax reform? Working Paper, Columbia University. Slemrod, Joel and Shlomo Yitzhakin (2002). Tax avoidance, evasion and administration. Handbook of Public Economics, Volume 3, Amsterdam: Elsevier: 1425-1470. e) Social insurance: Moral hazard in unemployment insurance Chetty, Raj (2008). Moral hazard versus liquidity and optimal unemployment insurance. Journal of Political Economy 116(2): 173-234. University of Fribourg 5 Prof. Dr. Mark Schelker Fall 2018 Krueger, Alan B. and Bruce D. Meyer (2002). Labor supply effects of social insurance. In: Alan J. Auerbach and Martin Feldstein (eds.). Handbook of Public Economics, Volume 4. Amsterdam: Elsevier: 2327-2392. Lalive, Rafael (2008). How do extended benefits affect unemployment duration? A regression discontinuity approach. Journal of Econometrics 142(2): 785-806. Lalive, Rafael, Jan van Ours and Josef Zweimüller (2006). How changes in financial incentives affect the duration of unemployment. Review of Economic Studies 73(4): 1009-1038. f) Social insurance: Pensions and saving behavior Attanasio, Orazio P. and Agar Brugiavini (2003). Social security and households’ saving. Quarterly Journal of Economics 118(3): 1075-1119. Attanasio, Orazio P. and Susann Rohwedder (2003). Pension wealth and household saving: Evidence from pension reforms in the United Kingdom. American Economic Review 93(5): 1499-1521. Feldstein, Martin and Jeffrey B. Liebman (2002). Social security. In: Alan J. Auerbach and Martin Feldstein (eds.). Handbook of Public Economics, Volume 4. Amsterdam: Elsevier: 2246-2324. Gelber, Alexander M. (2011). How do 401(k)s affect saving? Evidence from changes in 401(k) eligibility. American Economic Journal: Economic Policy 3(4): 103-122. g) Welfare programs and labor supply Bargain, Olivier and Karina Doorley (2011). Caught in the trap? Welfare’s disincentive and the labor supply of single men. Journal of Public Economics 95(9- 10): 1096-1110. Lemieux, Thomas and Kevin Milligan (2008). Incentive effects of social assistance: A regression discontinuity approach. Journal of Econometrics 142(2): 807-828. Milligan, Kevin and Mark Stabile (2007). The integration of child tax credits and welfare: Evidence from the Canadian National Child Benefit Program. Journal of Public Economics 91(1-2): 305-326. Moffit, Robert A. (2002). Welfare programs and labor supply. In: Alan J. Auerbach and Martin Feldstein (eds.). Handbook of Public Economics, Volume 4. Amsterdam: Elsevier: 2393-2430. h) Parental leave and parental outcomes Baker, Michael, and Kevin
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