DOCSLIB.ORG

Dealing with the New Giants: Rethinking the Role of Pension Funds

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Dealing with the New Giants: Rethinking the Role of Pension Funds Dealing with the New Giants: Rethinking the Role of Pension Funds Geneva Reports on the World Economy 8 International Center for Monetary and Banking Studies (ICMB) International Center for Monetary and Banking Studies 11 A Avenue de la Paix 1202 Geneva Switzerland Tel (41 22) 734 9548 Fax (41 22) 733 3853 Tebsite: www.icmb.ch © July 2006 International Center for Monetar y and Banking Studies Centre for Economic Policy Research (CEPR) Centre for Economic Policy Research 90-98 Goswell Road London EC1V 7RR RH Tel: +44 (0)20 7878 2900 Fax: +44 (0)20 7878 2999 Email: [email protected] Tebsite: www.cepr.org British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Librar y ISBN: 1 898128 94 4 Dealing with the New Giants: Rethinking the Role of Pension Funds Geneva Reports on the World Economy 8 Tito Boeri Bocconi University and Fondazione Rodolfo Debenedetti and CEPR Lans Bovenberg Netspar and Tilburg University and CEPR Benoît Coeuré École Polytechnique, Paris Andrew Roberts Merrill Lynch International ICMB INTERNATIONAL CENTER FOR MONETARY AND BANKING STUDIES CIMB CENTRE INTERNATIONAL D’ETUDES MONETAIRES ET BANCAIRES International Center for Monetary and Banking Studies (ICMB) The International Center for Monetary and Banking Studies was created in 1973 as an inde- pendent, non-profit foundation. It is associated with Geneva s Graduate Institute of International Studies. Its aim is to foster exchange of views between the financial sector, cen- tral banks and academics on issues of common interest. It is financed through grants from banks, financial institutions and central banks. The Center sponsors international conferences, public lectures, original resear ch and publi- cations. It has earned a solid reputation in the Swiss and international banking community where it is known for its contribution to bridging the gap between theor y and practice in the field of international banking and finance. In association with CEPR, the Center launched a new series of Geneva Reports on the Wloia Economy in 1999. The seven subsequent volumes have attracted considerable interest among practitioners, policy-makers and scholars working on the reform of international financial architecture. The ICMB is non-partisan and does not take any view on policy . Its publications, including the present report, reflect the opinions of the authors, not of ICMB or of any of its spon - soring institutions. President of the Foundation Board Tommaso Padoa-Schioppa Director Charles Wvmilpw Centre for Economic Policy Research (CEPR) The Centre for Economic Policy Resear ch is a network of almost 700 Resear ch Fellows and Affiliates, based primarily in European universities. The Centre coordinates the resear ch activities of its Fellows and Affiliates and communicates the results to the public and private sectors. CEPR is an entrepreneur , developing resear ch initiatives with the producers, con - sumers and sponsors of resear ch. Established in 1983, CEPR is a European economics research organization with uniquely wide-ranging scope and activities. CEPR is a registered educational charity . Institutional (core) finance for the Centre is pro - vided by major grants from the Economic and Social Resear ch Council, under which an ESRC Resource Centre operates within CEPR. The Centre is also supported by the European Central Bank, the Bank of England, 32 national central banks and 41 companies. None of these organizations gives prior review to the Centre s publications, nor do they necessarily endorse the views expressed therein. The Centre is pluralist and non-partisan, bringing economic resear ch to bear on the analy - sis of medium- and long-run policy questions. CEPR resear ch may include views on policy , but the Executive Committee of the Centre does not give prior review to its publications, and the Centre takes no institutional policy positions. The opinions expressed in this report are those of the authors and not those of the Centre for Economic Policy Resear ch. Chair of the Board Guillermo de la Dehesa President Richard Portes Chief Executive Officer Stephen Yeo Research Director Mathias Dewatripont Policy Director Richard Baldwin About the Authors Tito Boeoi is currently Professor of Economics at Bocconi University , Milan and acts as Scientific Director of the Fondazione Rodolfo Debenedetti (www .frdb.org). He is research fellow at CEPR, IZA and Igier-Bocconi. His field of research is labour economics, redistributive policies and political economics. His papers have been published in the American Economic Review, the Glronal of Economic Perspectives, Economic Policy, the European Economic Review, the Glronal of Labour Economics, and the NBER Macroeconomics Annual. He has published seven books with Oxford University Press and MIT Press. After obtaining his Ph.D. in Economics from New Vork University, Boeri was Senior Economist at the Organisation for Economic Co- operation and Development from 1987 to 1996. He was also consultant to the European Commission, International Monetar y Fund, the ILO, the W orld Bank and the Italian Government. Ians Bosen_eod obtained his Ph.D. in 1984 at the University of California, Berkeley. He started his working career as an economist at the International Monetary Fund in W ashington D.C (1985-1990), after which he worked at the Dutch Ministry of Economic Affairs in the Hague. He was Deputy Director of CPB Netherlands Bureau for Economic Policy Analysis (Centraal Planbureau) and became a Professor of Economics at T ilburg University in 1998, where he ser sba as Scientific Director of the Center for Economic Resear ch (CentER). In 2004, he won the Spinoza prize as the second social scientist. W ith the prize money , he founded Netspar (Network for Studies on Pensions, Aging and Retirement) in which various pension funds, insurance companies, public agencies and universi - ties participate. He is currently scientific director of Netspar . Lans Bovenberg has published extensively in the leading international journals on a wide variety of topics: public economics, tax policy, environmental econom- ics, institutional economics, pensions and aging, international macroeconomics and labour economics. He is one of the most cited Dutch economists in the inter- national academic literature. At the same time, he has been the most cited Dutch economist in policy-oriented journals aimed at practitioners and policy-makers for the past fifteen years. Benoît Croé teaches Macroeconomics and Economic Policy at École Polytechnique in Paris. His research has dealt with the international monetary sys- tem and with euro area economic policy. He is the co-author of Economie de l'Euro (La Découverte, 2002) and of Politique Economique (De Boeck, 2004) and he was nominated for best young French economist in 2005. Mr Coeuré is a graduate of École Polytechnique and of École Nationale de la Statistique et de lAdministration Économique, and he holds a post-graduate degree in Economic Policy from École des Hautes Etudes en Sciences Sociales and a BA in Japanese. He has been the chief economic adviser of the director of the French T reasury, and he is currently the deputy CEO of France's debt management agency, Agence France Trésor. v Anaoet Ro_eots has worked as a fixed-income strategist for the past fourteen years, starting his career at UBS. He has worked at Merrill L ynch since 1998 and in 2003 was appointed chief European fixed-income strategist. His specialties include generating trade strategies in European & UK fixed-income markets and the growing world of global inflation-linked bonds. He has also developed a spe - cial focus on the fixed-income implications of ongoing regulator y & asset alloca- tion changes in the global pensions/insurance arena, primarily within the US, EMU and UK. His development work on inflation-linked bonds has involved him directly with many of the major government issuers of the product. Contents List of Conference Participants fu List of Tables uff List of Figures uff List of Boxes uff Acknowledgements ufff Clobtloa ufs Executive Summary us . Ortiooh . 1.1 A taxonomy of pension funds 2 1.2 Assessing the potential 8 1.3 Two extreme scenarios .2 1.4 Key issues .3 2 Incoomationai asymmetoies ana tee omtimai oodaniwation oc mension crnas 2. 2.1 Pension fund organization and governance 21 2.2 Improving financial literacy 26 2.3 Integration of the pension fund industr y: fragmentation, portability and competition 00 2.4 Public compared with private pension funds 03 0 Ae-oishind mension crnas tite maohet-_asea soirtions 09 3.1 A slow switch to market-based valuations 40 3.2 Lengthening the duration of fixed-income portfolios 13 3.3 The scope for market innovations 22 3.4 Conclusions 24 1 Omtimai oish-seaoind 29 4.1 From occupational defined-benefit plans to collective defined-contribution schemes 60 4.2 Optimal risk-sharing through hybrid pension schemes 30 4.3 Tax treatment of pensions 40 4.4 Conclusions 77 2 Ia_oro maohets ana erman camitai 79 5.1 Funding and human capital in an ageing society 79 5.2 Longevity and human capital 5. 5.3 The labour market for elderly workers: the retirement process 50 5.4 Labour-market flexibility 87 5.5 Conclusions 6. Aiscrssion ana Rornata_ies 90 Session 1 60 Session 2 103 Session 3 109 Session 4 127 Endnotes .02 References .06 List of Conference Participants Ernst Baltensperger Professor, Department of Economics University of Bern, Bern Vít Bárta Adviser to Vice-Governor Czech National Bank, Prague Rémy Bersier Managing Director, Head
Load more

Recommended publications
  • Optimal Taxation of Human Capital and the Earnings Function
    OPTIMAL TAXATION OF HUMAN CAPITAL AND THE EARNINGS FUNCTION BAS JACOBS Erasmus University Rotterdam A. LANS BOVENBERG Tilburg University Abstract This paper explores how the specification of the earnings function impacts optimal nonlinear taxes on human capi- tal under optimal nonlinear income taxation. If education is complementary to labor effort, education should be sub- sidized to offset tax distortions on labor supply. However, if education is complementary to ability, education should be taxed in order to redistribute income. If education is weakly separable from labor and ability in the earnings function, these two effects cancel and education should be neither taxed nor subsidized. 1. Introduction Should education be taxed or subsidized for redistributive reasons? Educa- tion subsidies are generally regressive due to the well-known ability bias in ed- ucation (Card 1999, Heckman, Lochner, and Todd 2006). In the absence of other instruments aimed at redistribution, the government may thus want to Bas Jacobs, Erasmus School of Economics, Erasmus University Rotterdam, Tinbergen Institute, Netspar and CESifo, P.O. Box 1738, 3000 DR Rotterdam, The Netherlands ([email protected]), URL: www.people.few.eur.nl/bjacobs. A. Lans Bovenberg, Tilburg University, CentER, Netspar, CESifo and CEPR, The Netherlands ([email protected]). Bas Jacobs gratefully acknowledges financial support from the Dutch Organization for Sciences (NWO Vidi Grant No. 452-07-013, “Skill Formation in Distorted Labor Markets”). Part of this research has been done while Jacobs was visiting scholar at the Center of Eco- nomic Studies of the Ludwig-Maximillians-Universitat¨ Munchen.¨ Comments and sugges- tions by seminar participants at the University of Konstanz and the 64th IIPF conference, August 22–25, 2008, Maastricht, the Netherlands, are gratefully acknowledged.
    [Show full text]
  • FUNDAMENTAL TAX REFORM in the NETHERLANDS Sijbren
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Research Papers in Economics FUNDAMENTAL TAX REFORM IN THE NETHERLANDS Sijbren Cnossen and Lans Bovenberg Abstract The Dutch Parliament has passed legislation for a new income tax that abolishes the current tax on personal capital income and substitutes it by a presumptive capital income tax, which is in fact a net wealth tax. This paper contrasts this wealth tax with a conventional realization-based capital gains tax, a retrospective capital gains tax which attempts to charge interest on the deferred tax, and a capital accretion tax which taxes capital gains as they accrue. None of the approaches meets all criteria for a 'good' income tax, i.e., equity, efficiency, and administrative feasibility. We thus conclude that the effective and neutral taxation of capital income can best be ensured through a combination of (a) a capital accretion tax to capture the returns on easy-to- value financial products, (b) a capital gains tax with interest to tax the returns on hard- to-value real estate and small businesses, and (c) a broad presumptive capital income tax, i.e., a net wealth tax, to account for the utility of holding wealth. We favor uniform and moderate proportional tax rates in the context of a dual income tax under which capital income is taxed separately from labor income. Keywords: capital income taxation, capital gains taxation, tax reform, wealth tax JEL Classification: H2 Sijbren Cnossen, Economics Faculty, Maastricht Universtiy, P.O. Box 616, 6200 MD, Maastricht, The Netherlands.
    [Show full text]
  • Bovenberg & Goulder
    OptimalEnvironmental Taxation in the Presence of Other Taxes: General-EquilibriumAnalyses By A. LANS BOVENBERG AND LAWRENCE H. GOULDER* Most economies feature levels of public The present paper contributes to the analyt- spending that require more tax revenues than ical and empirical literature in three ways. would be generated solely from the pollution First, it extends earlier analytical work on op- taxes set accordingto the Pigovianprinciple, that timal environmental taxation in a general- is, set equal to marginalenvironmental damages. equilibrium setting by considering pollution As a consequence,tax systems generallyrely on taxes imposed on intermediate inputs. This is both environmental(corrective) and othertaxes. a useful extension because many actual envi- However, economists typically have analyzed ronmental regulations and taxes affect the environmentaltaxes withouttaking into account costs of intermediate inputs.2 Second, the pa- the presence of other, distortionarytaxes. The per investigates second-best optimal environ- omission is significantbecause the consequences mental taxes numerically. Here we expand on of environmentaltaxes depend fundamentally the analytical work by employing a numerical on the levels of other taxes, including income general-equilibriummodel of the United States. and commodity taxes. The use of a numerical model enables us to This paper examines how optimal environ- employ a realistic specification of taxes and mental tax rates deviate from rates implied by adopt a fairly detailed representationof pro- the Pigovian principle in a second-best setting duction and demand. Our paper thus combines where other, distortionary taxes are present. the strengths of analytical and numerical ap- Previous investigationsof this issue include the proaches: a stylized analytical model uncovers partialequilibrium analyses of Dwight R.
    [Show full text]
  • Economics 230A Public Sector Microeconomics
    University of California, Berkeley Professor Alan Auerbach Department of Economics 525 Evans Hall Fall 2005 3-0711; auerbach@econ ECONOMICS 230A PUBLIC SECTOR MICROECONOMICS This is the first of two courses in the Public Economics sequence. It will cover core material on taxation, public expenditures and public choice, and conclude with a consideration of the effects of capital income taxation on the behavior of households and firms. Economics 230B, the second semester in the sequence, will extend the discussion of optimal income taxation and consider more fully the behavioral effects of government policy and the institutional characteristics of important U.S. federal taxes and expenditure programs Class meetings: Tuesdays 9-11, 639 Evans Hall Office hours: Mondays, 10:00-11:30, and by appointment Prerequisites: This course should normally be taken after the completion of first-year Ph. D. courses in economic theory and econometrics. Requirements: Problem sets (2) - 30% Paper (5 page review) - 20% Final examination - 50% There is no required textbook for this course. All starred readings below are required and are either included in the course reader or, where noted, available on the web. Non-starred material will be useful for further reading on topics of interest and preparation for the public economics field examination. The following texts and collections, selections from which appear on the reading list, are also useful for background reference: A. Atkinson and J. Stiglitz, Lectures on Public Economics, McGraw-Hill (1980) A. Auerbach and M. Feldstein, eds., Handbook of Public Economics, North-Holland, vol. 1 (1985), vol. 2 (1987), vol. 3 (2002) and vol.
    [Show full text]
  • Annual Report 2003
    TILEC ANNUAL REPORT 2003 Mailing address: TILEC Tilburg Law and Economics Center P.O. Box 90153 5000 LE Tilburg The Netherlands Phone: + 31-13-466 8789 Fax: + 31-13-466 8047 e-mail: [email protected] www: www.tilburguniversity.nl/tilec/ Visiting address: Warandelaan 2 Building Montesquieu Room Y122 5037 AB Tilburg The Netherlands TILEC - Tilburg University 3 Contents CONTENTS FOREWORD . 5 1. TILEC IN 2003 . 7 1.1. Overview . 7 1.2. TILEC and the outside world . 8 1.3. Highlights of 2003 . 12 1.1.1. Major Research efforts . 12 1.1.2. Workshops and Conferences . 14 1.1.3. Seminars . 15 2. PEOPLE . 17 2.1. Overview . 17 2.2. Management . 18 2.3. Faculty . 18 3. PUBLICATIONS . 20 4. ACTIVITIES . 23 5. COMMUNICATIONS . 24 APPENDIX A: PUBLICATIONS . 25 APPENDIX B: ACTIVITIES . 43 4 TILEC - Tilburg University TILEC - Tilburg University 5 Annual report 2003 Foreword FOREWORD On 29 and 30 January 2004, in Paris, the OECD organized a High-Level Ministerial Conference on Science, Technology and Innovation for the 21st Century. As noted in the background paper for that conference, 21st-century science systems face two major challenges: “pressures … to bet- ter respond to a more diverse set of stakeholders and the need to adapt to changes in the pro- cesses of knowledge creation and transfer. These have seen a shift from an organisational model based on scientific disciplines to one that places a premium on multidisciplinarity, institutional networking and a blurring between curiosity-driven and problem-oriented research.”1 As the Final Communiqué of the Conference makes clear, the participating Ministers of Education, Science and Technology and of Economics shared this vision.
    [Show full text]
  • Redistribution and Education Subsidies Are Siamese Twins
    Journal of Public Economics 89 (2005) 2005–2035 www.elsevier.com/locate/econbase Redistribution and education subsidies are Siamese twins A. Lans Bovenberga,T, Bas Jacobsb aUniversity of Tilburg, Netspar, and CEPR, The Netherlands bUniversity of Tilburg, Netspar, University of Amsterdam, and Tinbergen Institute, The Netherlands Received 17 October 2002; received in revised form 10 November 2004; accepted 13 December 2004 Available online 13 May 2005 Abstract We develop models of optimal linear and non-linear income taxation with endogenous human capital formation to explore optimal education subsidies. Optimal subsidies on education ensure efficiency in human capital accumulation and thus play an important role in alleviating the tax distortions on learning induced by redistributive policies. If the government cannot verify all investments in human capital, education policy offsets some but not all tax-induced distortions on learning. Non-pecuniary educational costs (benefits) may increase (decrease) subsidies on education, especially if they are complementary to work effort. D 2005 Elsevier B.V. All rights reserved. JEL classification: H2; H5; I2; J2 Keywords: Human capital; Education subsidies; Progressive taxation; Redistribution 1. Introduction Most OECD countries heavily subsidize higher education. These education subsidies are typically justified on the basis of perceived positive external effects of human capital T Corresponding author. CentER, Tilburg University, P.O. Box 90153, 5000 LE Tilburg, The Netherlands. Tel.: +31 13 466 2912; fax: +31 13 466 3066. E-mail addresses: [email protected] (A. Lans Bovenberg)8 [email protected] (B. Jacobs). 0047-2727/$ - see front matter D 2005 Elsevier B.V. All rights reserved.
    [Show full text]
  • Econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible
    A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Jacobs, Bas; Bovenberg, Ary Lans Working Paper Optimal taxation of human capital and the earnings function CESifo Working Paper, No. 2250 Provided in Cooperation with: Ifo Institute – Leibniz Institute for Economic Research at the University of Munich Suggested Citation: Jacobs, Bas; Bovenberg, Ary Lans (2008) : Optimal taxation of human capital and the earnings function, CESifo Working Paper, No. 2250, Center for Economic Studies and ifo Institute (CESifo), Munich This Version is available at: http://hdl.handle.net/10419/26295 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu Optimal Taxation of Human Capital and the Earnings Function BAS JACOBS A. LANS BOVENBERG CESIFO WORKING PAPER NO.
    [Show full text]
  • Reforming Dutch Occupational Pension Schemes LANS BOVENBERG Tilburg University RAYMOND GRADUS VU University Amsterdam and CDA R
    Reforming Dutch occupational pension schemes LANS BOVENBERG Tilburg University RAYMOND GRADUS1 VU University Amsterdam and CDA Research Institute Abstract Dutch occupational defined-benefit plans suffer from a number of serious weaknesses, including ambiguous ownership of the surplus, back-loading of benefits, and lack of tailor- made risk management. To address these weaknesses, we propose collective individual defined-contribution plans that are actuarially fair. These schemes maintain important strengths of collective schemes, such as mandatory saving, collective procurement and pooling biometric risks. At the same time, they eliminate intergenerational conflicts about risk management and distribution through transparent individual property rights and tailor-made risk profiles. We show how the transitional burden due to the phasing out the back-loading of pension benefits can be addressed without a substantial increase in contributions. Introduction The Dutch pension system consists of three pillars (see also Bovenberg and Gradus (2008)). The first pillar is the AOW, which is the basic minimum public pension provided by the government to all residents. It provides a flat-rate pension benefit, which is related to the net minimum wage. As a direct consequence. poverty under elderly is very low in the Netherlands. The second pillar involves occupational pension schemes, which are part of collective labor agreements. The first and second pillars currently account for similar shares in the average incomes of retirees (see Knoef et al. (2013)). The third pillar comprises individual pension provisions, the premiums of which are deductable for income taxation. The third pillar is relatively small in the Netherlands. It provides only 5% of the retirement income 1 Corresponding author: [email protected].
    [Show full text]
  • National and Personal Saving in the United States
    IMF StaffPapers Vol. 37. No. 3 (September 1990) © 1990 International Monetary Fund National and Personal Saving in the United States Measurement and Analysis of Recent Tr ends * A. LANS BOYENBERG and OWEN EVANS An analysis of issues regarding the measurement of saving concludes that the observed declines in national, private, and personal saving rates in the United States cannot be attributed to measurement problems. Several factors that seem to have accounted for the decline in U.S. personal saving are examined. Structural changes in capital markets, as well as improve­ ments in wealth positions, living standards of the elderly, and private and public insurance mechanisms have all contributed to the declining trend in personal saving. Empirical results suggest that demographic fa ctors may also have played an important role. [JEL 023, 321] HE LOW level of national saving in the United States has generated Twidespread concern because it has reduced the prospects for future U.S. income growth. It is also seen as having contributed to a sharp widening of the U.S. trade deficit in the 1980s. Although the fall in public saving associated with a widening budget deficit has been widely publi­ cized, the private sector accounted for about an equal share of the fall in national saving, with a declining trend in personal saving explaining most of the weakening of the private saving performance. *A. Lans Bovenberg, an Economist in the Fiscal Affairs Department when this paper was prepared, is currently on leave at the Ministry of Economic Affa1rs in the Netherlands. He is a graduate of Erasmus University in Rotterdam and received his Ph.D.
    [Show full text]
  • The Optimal Taxation of Unskilled Labor with Job Search and Social Assistance
    NBER WORKING PAPER SERIES THE OPTIMAL TAXATION OF UNSKILLED LABOR WITH JOB SEARCH AND SOCIAL ASSISTANCE Jan Boone Lans Bovenberg Working Paper 9785 http://www.nber.org/papers/w9785 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 June 2003 The authors thank Li Gan, Bruce Meyer, Emmanuel Saez, two anonymous referees, participants at the 2002 Trans-Atlantic Public Economics Seminar in London and at the Tinbergen Institute Labour Day for helpful comments. The authors are responsible for all remaining errors. The first author gratefully acknowledges financial support from NWO, KNAW and VSNU through a Vernieuwingsimpuls grant. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research. ©2003 by Jan Boone and Lans Bovenberg. All rights reserved. Short sections of text not to exceed two paragraphs, may be quoted without explicit permission provided that full credit including © notice, is given to the source. The Optimal Taxation of Unskilled Labor with Job Search and Social Assistance Jan Boone and Lans Bovenberg NBER Working Paper No. 9785 June 2003 JEL No. H2, J2 ABSTRACT In order to explore the optimal taxation of low-skilled labor, we extend the standard model of optimal non-linear income taxation in the presence of quasi-linear preferences in leisure by allowing for involuntary unemployment, job search and an exogenous welfare benefit. In trading off low- skilled employment against work effort of higher skilled workers, the government balances distortions on the search margin with those on work effort. Higher welfare benefits typically reduce taxes paid by low-skilled workers and raise marginal tax rates throughout the skill distribution.
    [Show full text]
  • Women in Economics: a Lifelong Discouragement
    ESB Solutions ESB Solutions EXPOSITION Women in economics: a lifelong discouragement The gender gap in economics science is worse than in other Although understandable as an initial hypothesis, this disciplines. Are women treated differently than men, in does not do justice to existing knowledge, also in eco- nomics, about the influence of environmental factors school and during their careers? and prejudice as to preferences and behaviour. Three examples in economics can illustrate this bias. First, Huberman (2001), inspired by Merton HENRIËTTE n 1993, Hein Schreuder argued in ESB that (1987), explains the investor home bias as ‘familiarity’: PRAST in economics the difference between men and people more often opt for shares in companies that are Professor at Tilburg women would automatically disappear: the literally or figuratively close to home. As a consequence, University and number of female students was increasing, and not only do they diversify their financial capital insuf- member of the ‘fromI low to high’ this would result in more female doc- ficiently, they also place too many eggs in the basket in Senate for D66 toral students and academic staff. Eline van der Heijden which their human capital is invested. Secondly, in a (1993) had her doubts about this, and enumerated the Harvard Business Case, Avery (2012) shows that Coca structural obstacles that women faced when choosing Cola misjudged the use of the word Diet in Diet Coke: economics and making a career in it. men did not buy it, because the word ‘diet’ evokes a Ten years later Aart Jan de Geus, the Minister of realm unbefitting to the stereotypical man.
    [Show full text]
  • This Paper Is Part of NBER's Research Program in Public Economics. Any Opinions Expressed 1994 by A. Lans Bovenberg and Lawrence
    NBER WORKING PAPER SERIES OPTIMAL ENVIRONMENTAL TAXATION IN THE PRESENCE OF OTHER TAXES: GENERAL EQUILIBRIUM ANALYSES A. Lans Bovenberg Lawrence H. Goulder Working Paper No. 4897 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 October 1994 We are grateful to Jesse David and Steven Weinberg for excellent research assistance, and to the National Science Foundation (Grant SBR-9310362) and IBM Corporation for fmancial support. This paper is part of NBER's research program in Public Economics. Any opinions expressed are those of the authors and not those of the National Bureau of Economic Research. 1994 by A. Lans Bovenberg and Lawrence H. Goulder. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, includingnotice, is given to the source. NBER Working Paper #4897 October 1994 OPTIMAL ENVIRONMENTAL TAXATION IN THE PRESENCE OF OTHER TAXES: GENERAL EQUILIBRIUM ANALYSES ABSTRACT This paper examines the optimal setting of environmental taxes in economies where other, distortionary taxes are present We employ analytical and numerical models to explore the degree to which, in a second best economy, optimal environmental tax rates differ from the rates implied by the Pigovian principle (according to which the optimal tax rate equals the marginal environmental damages). Both models indicate, contrary to what several analysts have suggested, that the optimal tax rate on emissions of a given pollutant is generally lessthanthe rate supported by the Pigovian principle. Moreover, the optimal rate is lowerthelarger are the distortions posed by ordinary taxes. Numerical results indicate that previous studies may have seriously overstated the size of the optimal carbon tax by disregarding .pre-existing taxes.
    [Show full text]