Working papers results

In the last few years, the UK has adopted a fiercely competitive business tax policy by reducing the general tax burden on business and expanding individual regimes targeted to mobile factors: CFC rules, interest deductibility rules, and the Patent Box have made the UK very attractive for internationally mobile capital and profits. As the same time, the UK has strongly supported the OECD BEPS project aimed at reducing multinationals’ tax avoidance and, hence, we argue, at eliminating or constraining forms of tax competition among countries based on individual regimes targeted to mobile capital and profits. We claim that, especially in the implementation phase of the BEPS recommendations, there will be tensions between the UK competitiveness agenda and its support for the BEPS. Such tensions will be reconciled by shifting the UK tax competition policy from a mix of rate-based plus individual regimes policy to more of a rate-based approach. In this scenario, the government will have to tighten some specific measures aimed at attracting highly mobile capital and profits, such as the patent box regime and possibly interest deductions. At the same time, it will reduce the tax burden on both mobile and less mobile activities by implementing economy-wide cuts, allowed under BEPS. Most likely, such cuts would come from a further reduction in the headline corporate tax rate and the cuts announced in the July 2015 Budget should be interpreted in this light. Cuts in the headline rate essentially reduce the taxation on profits but they do not take account of the fact that for other decisions such as investment in tangible assets and information and communications technology, other elements of the tax code, such as capital allowances, are more important. To foster real investment, the government could consider an increase in capital allowances. Another option would be the introduction of an Allowance for Corporate Equity (ACE). The interesting feature of the ACE in the context of BEPS is that it reduces the incentive to classify financing instruments as tax-advantaged debt.

Discrimination in access to public services can act as a major obstacle towards addressing racial inequality. We examine whether racial discrimination exists in access to a wide spectrum of public services in the US. We carry out an email correspondence study in which we pose simple queries to more than 19,000 local public service providers. We find that emails are less likely to receive a response if signed by a black-sounding name compared to a white-sounding name. Given a response rate of 72% for white senders, emails from putatively black senders are almost 4 percentage points less likely to receive an answer. We also find that responses to queries coming from black names are less likely to have a cordial tone. Further tests suggest that the differential in the likelihood of answering is due to animus towards blacks rather than inferring socioeconomic status from race.

This paper provides some initial results of long-term trends in economic inequality in Catalonia from 1400-1800 ca. These first findings show that the evidence collected for Catalonia matches quite well with some hypotheses suggested previously in the literature. Namely, the high inequality levels prevalent across pre-industrial Europe; an inequality gradient that linked urban, more populated, and wealthier communities with greater inequality and vice versa; and the importance of the trends followed by the share owned by the wealthy as good predictors of economic inequality trends. However, at this stage, one of the most appealing propositions—the idea that economic inequality grew for the whole of Europe during the early-modern period, shaping a long left side of a “super Kuznets curve”—does not seem to be fully confirmed for Catalonia. From the mid-17th century, inequality growth seems to go hand-in-hand with growth in per capita GDP. In earlier periods, though, the inequality trend seems to be unrelated to economic growth and even, during the second half of the 16th century, there is some evidence of inequality decline coupled with economic growth.

In this paper we use a newly constructed dataset following 30,000 Italian individuals from high school to labor market and we analyze whether the gender composition of peers in high school affected their choice of college major, their academic performance and their labor market income. We leverage the fact that the composition of high school classmates (peers), within school-cohort and teacher-group, was not chosen by the students and it was as good as random. We find that male students graduating from classes with at least 80% of male peers were more likely to choose “prevalently male” (PM) college majors (Economics, Business and Engineering). However, this higher propensity to enroll in PM majors faded away during college (through transfers and attrition) so that men from classes with at least 80% of male peers in high school did not have higher probability of graduating in PM majors. They had instead worse college performance and did not exhibit any difference in income or labor market outcomes after college. We do not find significant effects on women.

ABSTRACT In this paper we allude to a novel role played by the non-linear income tax system in the presence of adverse selection in the labor market due to asymmetric information between workers and firms. We show that an appropriate choice of the tax schedule enables the government to affect the wage distribution by controlling the transmission of information in the labor market. This represents an additional channel through which the government can foster the pursuit of its redistributive goals.

ABSTRACT This paper examines how companies’ capital structure is affected by the corporate income tax system. Our analysis employs confidential company-level corporation tax return data in the UK. Our main identification strategy is based on variation in companies␣ marginal tax rates due to the existence of kinks in the corporate tax rate schedule. Using a dynamic adjustment model of capital structure, we find a positive and substantial long-run tax effect on companies' financial leverage. We show that there are considerable discrepancies between estimates of taxable profits reported in tax return data and in financial statements and that the estimated tax effect on capital structure using financial statements is likely to be biased downward. We find that companies adjust their capital structures gradually in response to changes in the marginal tax rate. Moreover, we find that the external leverage of domestic stand-alone companies and of multinational companies responds strongly to corporate tax incentives

ABSTRACT We investigate the effect of providing information about the benefits to children of attending formal child care when women intend to use formal child care so they can work. We postulate that the reaction to the information differs across women according to their characteristics, specifically their level of education. We present a randomized experiment in which 700 Italian women of reproductive age with no children are exposed to positive information about formal child care through a text message or a video, while others are not. We find a positive effect on the intention to use formal child care, and a negative effect on the intention to work. This average result hides important heterogeneities: the positive effect on formal child care use is driven by better-educated women, while the negative effect on work intention is found only among less-educated women. These findings may be explained by women’s education reflecting their work-family orientation, and their ability to afford formal child care.

ABSTRACT This paper reassesses the relationship between tax structure and long run income, using as indicators of tax structure both a new series of implicit tax rates based on Mendoza et al. (1997) and tax ratios, adopting a dynamic panel estimation strategy, and explicitly accounting for cross-section dependence in the panel. When implicit tax rates are used, the paper shows, the link between tax structure and long run income per capita is not robust to the adoption of different assumptions on observable and unobservable heterogeneity across countries. When tax ratios are used, there is some evidence of a negative impact of labour taxation on long run income, but this result is shown to capture non-fiscal effects coming from the evolution of the labour share. Turning to the short run, the research presented here finds strong evidence of a positive effect on per capita income of a tax shift from labour and capital taxation towards consumption taxation, which provides support for fiscal devaluations.

ABSTRACT Nell'ambito delle ricerche di storia economica, l'area lucchese appare relativamente trascurata dalla più recente storiografia italiana ed in particolare toscana. A parte indagini a carattere principalmente politico o demografico, il ricco patrimonio documentario conservato negli archivi lucchesi è stato fino ad oggi solo parzialmente sfruttato. Questa ricerca intende apportare nuovi dati e riflessioni inedite al dibattito che vede lo studio della disuguaglianza nella distribuzione della ricchezza come questione chiave nell’analisi dello sviluppo economico nel lungo periodo. Attraverso i dati rintracciabili negli estimi trecenteschi e cinquecenteschi e nel Catasto guinigiano dei primi anni del Quattrocento, fonti fiscali che si sono già dimostrate ottimi strumenti per misurare i livelli di ricchezza della popolazione censita e ricostruirne i trend macroeconomici di concentrazione, si cercherà di fornire un primo quadro d’insieme della distribuzione della proprietà nel contado della città della seta. Particolare attenzione sarà prestata anche al possibile impatto della Peste Nera che, stando alla storiografia più recente, pare aver determinato una lunga fase di declino nella disuguaglianza conclusasi solo attorno alla seconda metà del XV secolo. The area of Lucca seems relatively neglected by the most recent Italian economic historiography. Apart from research primarily devoted to political or demographic issues, some of which date back several decades, the rich documentary patrimony preserved in the archives of Lucca was until now only partially exploited. This paper aims to provide new data and reflections to the debate which sees the study of the inequality in the distribution of wealth as a key issue in the analysis of economic development in the long run. By using the data recorded by some fiscal registers (the estimi of the fourteenth and sixteenth centuries and the catasto guinigiano of the early fifteenth century), a kind of source which already proved to be an excellent tool to measure the levels of wealth of the surveyed population and to reconstruct its macroeconomic trends of concentration, we will try to provide a first overview of the distribution of property in the countryside of the city of silk. A particular attention will be paid also to the possible impact of the Black Death which, according to the most recent literature, seems to have led to a long period of decline in inequality ended only around the second half of the fifteenth century.

Abstract We document the connection between land reform and violent crime in Mexico using the counter-reform (the transformation of ejido land into private property) carried out in 1992. Using data at a municipality level, we exploit the fact that municipalities have different exposure to the reform. We report a significant impact of the land reform on the number of murders: In those municipalities with a higher proportion of social land, and therefore more exposure to the land reform, the number of murders decreased more than in those municipalities less exposed to the land reform. Our results suggest that clearly specified and consistently enforced land rights reduce gains from violence, therefore leading to lower levels of violence as measured by the number of murders.