Essays in public economics [Elektronische Ressource] / vorgelegt von Björn Uwe Saß

Informations

• Publié par: universitat_mannheim
• Publié le: 01 janvier 2010
• Nombre de lectures: 17
• Langue: English

Extrait

Essays in Public Economics
Inauguraldissertation
zur Erlangung des akademischen Grades
eines Doktors der Wirtschaftswissenschaften
der Universit at Mannheim
vorgelegt von
Bj orn Uwe Sa
30. April 2010Dekan: Prof. Tom Krebs, Ph.D.
Referent: Prof. Dr. Eckhard Janeba
Korreferentin: Prof. Christina Gathmann, Ph.D.
Tag der mundlic hen Prufung: 8. Juni 2010
iiAcknowledgments
First and foremost, I wish to thank my advisor Eckhard Janeba for his excellent guid-
ance throughout the whole project of writing this thesis and for the encouraging and
motivating feedback he has given me. Even in a sometimes very tight schedule, he has
given high priority to stimulating discussions of the content of my research as well as to
the way of presenting it. It is a pleasure having him as advisor and I am grateful for his
dedication to supporting my research and his con dence in me.
I also wish to thank Christina Gathmann for her immediate willingness to support the
development process of the last chapter of this thesis. She has encouraged me to do
empirical research and has provided me with constructive and inspiring comments.
I have enjoyed a lot the cheerful atmosphere at the chair of Public Finance and would
like to thank my colleagues for the good time and the numerous constructive comments.
In particular, I thank Jennifer Abel-Koch and Gonzague Vannoorenberghe for many
relaxing and inspiring tea and chocolate breaks and I thank Nicole Borheier.
I further wish to thank those colleagues with whom I have cooperated a lot and those
who have contributed to so many hilarious visits to the Mensa, to passionate discussions
and to the joy of various tours and many beers together. Thus, I thank Galina Boeva,
Sarah Borgloh, Daniel Harenberg, Tanja Hennighausen, Heiko Karle, Maryam Kazemi-
Manesh, Sebastian K ohne, Michal Kowalik, Moritz Kuhn, Marie Paul, Christoph Rothe,
Alexander Ruddies, Melanie Schienle, Elisabeth Schulte-Runne, Heiner Schumacher and
Edgar Vogel. Besides, I thank my good friends beyond university.
I am deeply grateful to my family for everything.
iiiContents
1 Introduction 1
2 Immigration and Redistribution 7
2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 The model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2.1 Households . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2.2 Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2.3 The government . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 A simple economy without tax distortions . . . . . . . . . . . . . . . . . 15
2.3.1 The equilibrium . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.3.2 A simple poll tax and poll subsidy . . . . . . . . . . . . . . . . . 17
2.4 An economy with optimal income taxation . . . . . . . . . . . . . . . . . 20
2.4.1 Adjustment of the model . . . . . . . . . . . . . . . . . . . . . . . 20
2.4.2 The equilibrium . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.4.3 The impact of immigration . . . . . . . . . . . . . . . . . . . . . . 24
2.4.4 The e ects of a subsidy to the natives . . . . . . . . . . . . . . . 27
2.4.5 Letting all native agents bene t from immigration . . . . . . . . . 29
2.4.6 Characteristics of the tax transfer system after immigration . . . 31
2.4.7 Alternative redistribution in the undistorted model . . . . . . . . 32
2.5 Simulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.5.1 Scenario 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.5.2 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.5.3 Scenario 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.6 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
vvi CONTENTS
3 Taxation and Shadow Economic Activities of Firms 39
3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.2 A model with taxation and heterogeneous rms . . . . . . . . . . . . . . 42
3.2.1 Households . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.2.2 Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.2.3 Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.2.4 Pro t maximisation . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.2.5 The rm’s o cial - shadow sector choice . . . . . . . . . . . . . . 46
3.2.6 Firm sorting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.2.7 The equilibrium . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
3.2.8 Comparative statics . . . . . . . . . . . . . . . . . . . . . . . . . . 52
3.3 Numerical solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
3.3.1 Calibration and parameterisation . . . . . . . . . . . . . . . . . . 55
3.3.2 Numerical comparative statics . . . . . . . . . . . . . . . . . . . . 57
3.3.3 Di erential incidence of the linear and xed tax . . . . . . . . . . 61
3.3.4 Simulation of the 2007 VAT increase in Germany . . . . . . . . . 66
3.4 Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
3.4.1 Pro t tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
3.4.2 Non-registered rms . . . . . . . . . . . . . . . . . . . . . . . . . 69
3.5 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
4 Incentives in Early Childhood Care 73
4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
4.2 Institutional background . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
4.3 Theory and identi cation . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
4.3.1 Theoretical considerations . . . . . . . . . . . . . . . . . . . . . . 82
4.3.2 Identi cation strategy . . . . . . . . . . . . . . . . . . . . . . . . 83
4.4 Data and descriptive statistics . . . . . . . . . . . . . . . . . . . . . . . . 87
4.5 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
4.6 Robustness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
4.7 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
4.8 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105Chapter 1
Introduction
This thesis examines three di erent topics in the area of public economics. Chapter 2
looks at distributional issues that arise from immigration into an industrialised country
and possible mechanisms to compensate native losers. In Chapter 3, I examine in how
far a country’s tax system a ects a rm’s decision to evade taxes and produce in the
shadow economy. Chapter 4 analyses the impact of a special childcare policy on the
parents’ decision to make use of publicly subsidised nurseries. Although quite di erent,
the three topics also share some common elements.
In all three chapters, government policies play an important role, in particular tax or
transfer schemes. In this eld, two strains of the literature can be distinguished. While
there is a wide literature on optimal tax or transfer policies, there also is a literature
that focuses on policy reforms in an environment where historically grown structures are
in place. In this context, reforms seek to improve the status quo recognising that the
political process may not allow for the implementation of optimal, fundamentally new
policies.
I contribute to the latter strain of the literature by taking speci c pre-existing structures
into account when analysing the three di erent topics. Chapter 2 looks at immigration
into a welfare state that already has a redistributive policy in place. In particular, I study
the consequences of immigration and the necessity to adapt the country’s tax transfer
scheme to it. In the third chapter, I examine adjustments of existing rm taxes that seek
to reduce the extent of the shadow economy while not jeopardising government revenues.
Chapter 4 analyses the consequences on the parents’ childcare choice of introducing a
transfer to those parents of young children who do not make use of publicly subsidised
day care for their child. Here, the focus is on the evaluation of the speci c policy measure
taken.
A second common aspect of the di erent chapters is heterogeneity. The relevant agents,
i.e. citizens in the second chapter, rms in the third chapter or parents of young children
in the fourth chapter are heterogeneous groups. As a consequence, a particular tax-
12 CHAPTER 1. INTRODUCTION
transfer scheme does not a ect every single agent in the same way. Rather there are
speci c agents for which the policy is highly relevant whereas it is less so for others.
This aspect is linked to the third commonality of the three following chapters, namely
incentives.
By taking a speci c tax or transfer measure, the government changes the options of
an individual or rm and consequently the behaviour of the agents concerned. The
fundamental mechanism is that the government policy makes particular options more or
less attractive because the policy in uences the relative price of di erent alternatives.
Speci cally, this looks as follows.
In the second chapter, the government intends to redistribute from the winners to the
losers of immigration. As it cannot directly observe who the win