DOCSLIB.ORG

International VAT Harmonization: Macroeconomic Effects

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
International VAT Harmonization: Macroeconomic Effects MF SrqffPapers I 4 (December 1991) Vol 38, No. © 1991 lmcrnauonal Monetary Fund International VAT Harmonization Macroeconomic Effects JACOB A. FRENKEL. ASSAF RAZIN. and STEYEN SYMANSKY* Macroeconomic issues pertinent to the international and domestic effe cts of international VA T harmonization are highlighted, and VA T harmoniza­ tion policies envisaged for Europe in 1992 are outlined. An intertemporal model is developed to analyze the incentive effects of various tax policies and their welfare implications. Dynamic simulations reveal that the macroeconomic and welfare implications of VA T harmonization depend critically on the tax system and the degree of substitution governing tempo­ ral and intertemporal allocations of savings, investment, and tabor. The simulations also reveal a potential for significant conflictsof interest within each country and between countries. [JEL E2, E6, F4] COORDINATION of fiscal policy in general, and tax policy in partic­ ular,HE poses a major challenge in the move toward the single market Tin Europe slated for 1992. With the growing integration of markets for • Jacob A. Frenkel, Governor of the Bank of Israel, is also Professor of Economics at Tel Aviv University and a Research Associate of the National Bureau of Economic Research. He was Economic Counsellor and Director of the Research Department when this paper was written. He is a graduate of Hebrew University and the University of Chicago. Assaf Razin, Daniel and Grace Ross Professor of International Economics at Tel Aviv University and a Research Associate of the National Bureau of Eco­ nomic Research, is a graduate of the Hebrew University and the University of Chicago. He was a Visiting Scholar in the Research Department when this paper was written. Steven Symansky is Deputy Division Chief of the External Adjustment Divi­ sion of the Research Department. He is a graduate of the University of Wisconsin. The authors are grateful to A. Lans Bovenberg, David Bradford, Martin Fe ldstein, Peter Isard, Bennett McCallum, and Pat Kehoe for useful discussions, and Ravina Malkani for research assistance. 789 ©International Monetary Fund. Not for Redistribution 790 FRENKEL • RAZIN • SYMANSKY goods and services within the European Community (EC), the harmo­ nization of value-added taxes (VAT) has become a central issue in the discussion of fiscal policy convergence. VAT harmonization is seen as a means of recouping some of the revenues that have been lost in cross-border arbitrage. Also, in countries with high tax rates, the industrial sectors have been agitating for lower tax rates, which could help restore competitiveness and maintain market shares. In addition, in parallel with the integration of the goods and services market, the growing integration of capital markets has made the tax base associated with internationally mobile capital highly elastic. All of these factors suggest that European economic integration may well entail a significant restructuring of tax systems. Motivated by this background, this paper provides a dynamic analysis of key macro­ economic issues pertinent to an understanding of the international and domestic effects of VAT harmonization. In Section I we outline the VAT harmonization policies envisaged for Europe of 1991. In Section II we present the basic tax model. It is a neoclassical model with a microeconomic foundation and is therefore suitable for an analysis of the incentive effects of various tax policies and their welfare implications. The model allows for a rich tax structure and contains a detailed specification of public and private sector behavior. The analytical framework employs the saving-investment approach to analyzing international economic interdependence. It thus emphasizes the effects of changes in the time profile of various taxes on the inter­ temporal allocations of savings, investment, and tabor. These dynamic effects are supplemented by the more conventional effects of the level of flat-rate taxes on the margins governing the choice between tabor and leisure (such as the negative effect of consumption and income taxes on tabor supply), the choice between consumption and saving (such as the negative double-taxation effect of income tax on saving), and the choice of investment plans (such as the negative effect of the corporate income tax on investment). Our formulation focuses on the roles played by the level and time profile of taxes on income (wage and capital income tax), investment and saving incentives (investment and savings tax credit), taxes on consumption (VAT), and on international borrowing. In Section Ill we apply the tax model of Section II to examine the effects of international VAT harmonization. Throughout the analysis, the tax restructuring is constrained by the requirement that government solvency is maintained. Accordingly, changes in VAT rates are accompa­ nied by compensatory changes in other taxes. The effects of VAT harmo­ nization are illustrated by means of dynamic simulations. The simutations reveal that the effects of these tax changes on domestic and foreign levels ©International Monetary Fund. Not for Redistribution INTERNATIONAL VAT HARMONIZATION 791 of output, employment, investment. consumption, and other key macroeconomic variables depend critically on the degree of substitution governing temporal and intertemporal allocations, as well as on the tax system. Furthermore, it is shown that these characteristics of the eco­ nomic system also govern the precise welfare implications of VAT harmo­ nization. We show that VAT harmonization policy may generate signif­ icant conflicts of interest within each country as well as between countries. In Section IV we analyze the dynamic mechanism associated with changes in the time profile of taxes. Since VAT harmonization involves changes in the composition of taxes, we examine the dynamic conse­ quences of revenue-neutral tax conversions between income and con­ sumption (VAT) tax systems undertaken by a single country. The rev­ enue-neutrality requirement is motivated by inflationary fears or debt aversion. Reflecting our emphasis on the saving-investment balance, we demonstrate analytically that the effects of such changes in the composi­ tion of taxes depend critically on international differences in saving and investment propensities, which in turn govern the time profile of the current account of the balance of payments. These issues are examined by means of dynamic simulations in Section V, in which the role of current imbalances in global tax restructuring is analyzed. Concluding remarks are contained in Section Vl. I. VAT Harmonization: Europe 1992 The VAT harmonization policies envisaged for 1992 have long been an important component of the wide-ranging measures associated with the move toward the single European market. The process of harmonization started with the First Council Directive of April 1967 and has continued through various succeeding directives. The process has involved the adoption of VAT and the continuous convergence of rates and structures among members of the Community. Over the years, the Commission of the EC has drawn up various proposals for the approximation of VAT rates and the harmonization of its structure. Much of the discussion on the practical implementation of the approximation of VAT rates has concerned the position and width of bands within which various VAT rates should be placed, the products to which a reduced rate would be applicable, and the problem of zero-rated products.1 1 Zero-rated products involve the reimbursement oftaxes levied on inputs, with the result that the final good is completely untaxed. ©International Monetary Fund. Not for Redistribution 1. VA T Rates in the European Community -..1 Table \0 (In percent) N Revenue Contribution ( 1990) Statutory Rates Percentage of total Percentage of Country• Reduced rate Standard rate Higher rate tax revenue (1987) GDP (1987) Belgium (1971) 1.0, 6.0, 7.0 19.0 25.0, 33.0 16.3 7.2 Denmark (1967) 0.0 22.0 26.9 9.8 (1968) 5.5, 7.0 18.6 25.0 20.0 8.7 France ., Germany (1968) 7.0 14.0b 13.1 3.8 ;:o rn (1987) 3.0, 6.0 16.0 36.0 20.9 7.8 z Greece rn;<; Ireland (1972) 0.0, 2.2, 10.0 23.0 18.9 8.0 Italy (1973) 2.0, 9.0 18.0 38.0 13.1 4.7 r (1970) 3.0, 6.0 12.0 13.3 6.0 ;:o Luxembourg >- Netherlands (1969) 6.0 18.5 15.2 7.9 N z Portugal (1986) 8.0 17.0 30.0 18.8 7.7 . V> Spain (1986) 6.0 12.0 33.0 16.0 5.3 -< United Kingdom (1973) 0.0 17S 16.3 6.0 3:: >- z Memorandum items: V> ;<; EC Commission proposal -< A 4.0 to 9.0 14.0 to 20.0 abolished B 4.0 to 9.0 15 minimum abolished (1987, 2.1); European Economy 1988, 3.5.1); Sources: Cnossen and Shoup Table (March Table Commission of the European Community, "The Evolution of VAT Rates Applicable in the Member States of the Community," Inter-tax (1987 /3), 85-88: International Bureau of Fiscal Documentation, Tax News Service (various issues); International Monetary Fund (1989):pp. and Organization for Economic Cooperation and Development ( 1989). "Year of VAT introduction in parentheses. bThe rate will increase to 15 percent in 1993. <The rate was changed from 15 percent to 17.5 percent in 1991. ©International Monetary Fund. Not for Redistribution INTERNATIONAL VAT HARMONIZATION 793 For 1992 the Commission initially proposed a standard VAT rate ranging between 14 percent and 20 percent, and a reduced rate (applied to selected categories, such as foodstuffs) ranging between 4 percent and 9 percent. 2 The Cornmission also wanted to abolish the higher rate that presently exists in some member
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]