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Hours Risk and Wage Risk: Repercussions over the Life-Cycle

We decompose permanent earnings risk into contributions from hours and wage shocks. To distinguish between hours shocks, modeled as innovations to the marginal disutility of work, and labor supply reactions to wage shocks we formulate a life-cycle model of consumption and labor supply. Both permanent wage and hours shocks are important to explain earnings risk, but wage shocks have greater relevance. ...

Wealth inequality and wealth taxes – an OECD Perspective

Sarah Perret, OECD, will present findings from a recent report on The Role and Design of Net Wealth Taxes in the OECD. The presentation will give an overview of the cases for and against net wealth taxes, as well as describe how wealth taxes have been designed in practice in the OECD countries that currently have or historically had net wealth taxes. Inheritance taxes, which constitute an...

Tax and Spending Shocks in the Open Economy: Are the Deficits Twins?

We present evidence on the open economy consequences of US fiscal policy shocks identified through proxy-instrumental variables. Tax shocks and government spending shocks that raise the government budget deficit lead to persistent current account deficits. In particular, the negative response of the current account to exogenous tax reductions through a surge in the demand for imports is among the strongest ...

Reform Proposal for Marriage Taxation in Germany: De Facto Income Splitting with a Low Transferable Amount

Two traditional options for reforming Ehegattensplitting, the joint taxation of married couples with full income splitting, are de facto income splitting (Realsplitting) or individual taxation with a transferable personal allowance. However, these proposals do not significantly reduce the marginal tax burden on the secondary earner’s income and therefore only minimally encourage married women to participate ...

Bank Levies Can Make Bank Balance Sheets More Resilient, but High Corporate Tax Rates Dampen the Effect

Following the global financial crisis of 2008/2009, many European countries introduced bank levies to enable financial institutions to share in the costs of future banking crises via resolution and restructuring funds. Simultaneously, bank levies can set an incentive for banks to reduce their leverage, thereby achieving a more stable capital structure. Using information from banks’ balance sheets, ...

Essays on Inequality: Income Distribution, (Just) Taxation and Well-being

This dissertation focuses on three dimensions of inequality: income, (just) taxation, and well-being. All chapters focus on a similar time horizon (2000 to 2015) and essentially on the same geographical area, Germany. The chapters are organized in four parts, each examining a specific research question and based on evidence from microdata - the German Socio-Economic Panel (SOEP). The analysis of chapter ...

Salience of Inherited Wealth and the Support for Inheritance Taxation

Abstract: We study how attitudes to inheritance taxation are influenced by information about the role of inherited wealth in society. Using a randomized experiment in a register-linked Swedish survey, we find that informing individuals about the large aggregate importance of inherited wealth and its link to inequality of opportunity significantly increases the support for inheritance taxation. The...

Ecological Tax Revenue Still Yields Lower Pension Contributions and Higher Pensions Today

The ecological tax reform that Germany implemented between 1999 and 2003 increased energy tax rates—especially on gasoline and diesel. Today, the ecological tax hikes yield an annual revenue of around 20 billion euros or 0.6 percent of GDP. The money is used to finance a higher federal grant to the public pension scheme. Calculations based on a pension simulation model show that the contribution rate ...

Green Finance: The Macro Perspective: Editorial

Do Benefits from Dynamic Tariffing Rise? Welfare Effects of Real-Time Retail Pricing Under Carbon Taxation and Variable Renewable Electricity Supply

We analyze the gross welfare gains from real-time retail pricing in electricity markets where carbon taxation induces investment in variable renewable technologies. Applying a stylized numerical electricity market model, we find a U-shaped association between carbon taxation and gross welfare gains. The benefits of introducing real-time pricing can accordingly be relatively low at relatively high carbon ...