Browsing by Person "Dwenger, Nadja"

Now showing 1 - 5 of 5

Efficiency of selected fiscal policy instruments
(2017) Dekker, Vincent; Dwenger, Nadja
The thesis at hand intends to contribute to the understanding of behavioural responses to taxation by dedicating each chapter to the analysis of a different fiscal policy instrument. Chapter 2 focusses on the individual tax system in the Netherlands that exhibits tax brackets, as opposed to a smooth progressive tax system. The aim is to uncover the extent of behavioural responses to the kinks in the budget set that are created by the non-linear increases in the marginal tax rates at the tax brackets cut-off points. From the analysis it becomes evident that individuals react to jumps in the marginal tax rate. First, an extension to the classical bunching approach introduced by Saez (2010) and extended by Chetty et al. (2011) is provided. Because individuals face optimisation frictions, perfect bunching at the kink as predicted by theory is not observable. Rather, a window around the kink, known as the bunching window, is used in the analysis. Where prior research had relied on visual inspection to determine the size of the bunching window, a data-driven procedure is proposed instead, which is shown to be robust to variations in various parameters and takes away the researchers discretion in that matter. Thus, a methodological contribution to a comparably young, but growing field of research is made. Chapter 3 discusses the implications of the introduction of transfer pricing regulations (TPR) on intermediate goods trade. The chapter thus analyses an anti-avoidance measure implemented by many governments in recent years and evaluates the consequences for allocative and distributional efficiency. The empirical literature has shown that multinational enterprises (MNEs) utilise transfer prices to shift profits into (out of) low-tax (high-tax) jurisdictions. Evidence was given in prior literature that MNEs react sensitively to the introduction of TPR in reducing (increasing) their prices when they were overvalued (undervalued) before the implementation of regulations. Surprisingly, a reaction in quantities, i.e. shifts in production and trade flows, had not been analysed in the literature before. The results indicate a substantial quantity reaction and also a pricing reaction, which is shown to be in line with the literature. This suggests that before the introduction of TPR, firms shift more exports to low tax countries and less exports to high tax countries for tax optimising purposes. Following the introduction of TPR, especially the reduction in quantities traded with low tax countries is identified. Chapter 4 deals with a recently developed tax incentive for research and development (R&D), namely the intellectual property box (IP-Box). Said to foster innovation by the implementing governments, critics accuse the IP-Box regimes of providing yet another profit shifting opportunity for multinational enterprises (MNEs). The study assesses the implications that the introduction of IP-Box regimes has on innovation and shifting behaviour, in order to judge on the efficiency and effectiveness of such a policy instrument. Whilst most R&D incentives are ex ante tax incentives, i.e. incentives that act during the innovation process and before the innovative product was developed, IP-Boxes are an ex post tax incentive, thus only benefiting successful R&D. The analysis attempts to explore whether IP-Boxes are a local innovation enhancing device, as propagated by the countries implementing IP-Boxes, or merely facilitate profit shifting for MNEs by offering a substantially lower tax rate on income from intellectual property. The results clearly show that the shifting channel dominates the home innovation channel. Some evidence is found that home developed patents were crowded out by foreign developed and subsequently shifted patents. The total number of patents does not seem to react to the introduction of IP-Boxes, thus even questioning the global innovation enhancing effect of IP-Boxes. Given the nature of the country level data, it is not possible to investigate the different designs of IP-Boxes more thoroughly, although the implementation of a development condition should be part of every IP-Box regime. This ensures that, at least from a global or even European perspective, innovation must take place somewhere.
Improving public policy
insights on tax compliance and inequality
(2024) Vietz, Jasmin; Dwenger, Nadja
This thesis offers valuable insights for improving the design of public policies. First, it enhances the government’s ability to allocate public funds in a manner that aligns with citizens’ preferences by deepening the understanding of fair income distribution. Second, it investigates how informing citizens about the use of these public funds can improve tax compliance. Third, it highlights heterogeneity in individual decisions, enabling the government to incorporate this heterogeneity into public policy design. The thesis is structured into five chapters. Chapter 1 situates the research questions within the field of public economics, providing a comprehensive overview of existing literature. This establishes a foundation for understanding the relevance of the thesis and its contributions. Chapter 2, which is based on joint work with Nadja Dwenger and Ingrid Hoem Sjursen, explores fairness preferences. Hereby, the focus is on meritocracy. Meritocracy implies paying people according to their performance and consists of two principles: (i) paying people with equal performance equally (fair equality) and (ii) paying people with higher performance more (fair inequality). However, fulfilling both principles simultaneously can be challenging. Through an online survey experiment conducted with a representative sample of the US population, we provide experimental evidence on which principle individuals consider more important. Participants in the experiment are faced with the choice to either create equality among equals (implementing fair equality) or create inequality among unequals (implementing fair inequality). While one might expect meritocrats to value both principles equally, our experimental variation reveals that individuals are willing to incur a substantial personal cost for implementing one of the two principles. We find that roughly half of meritocrats in our sample choose to implement fair equality, while the other half opts for fair inequality. Chapter 3, which is based on joint work with Ingrid Hoem Sjursen, investigates non-pecuniary motives, specifically reciprocity, as determinants of voluntary tax compliance. In environments with low enforcement capacity, fostering voluntary compliance through non-pecuniary motives can be crucial for increasing public revenues. The chapter investigates whether informing citizens about tax benefits (i.e., public goods and services funded by tax revenue) enhances voluntary tax compliance. Furthermore, it examines whether the information’s impact changes if it comes from a religious sender rather than a tax official, and whether people react differently to the information when reminded about a regularly paid tax beforehand. To study these questions, we conduct a lab-in-the-field experiment among market traders in Tanzania, a country characterized by limited enforcement capacity. The results indicate that informing participants about tax benefits increases voluntary tax compliance, but only when they are not reminded about a tax they regularly pay. When reminded, the effect of the information turns negative. These effects are mainly driven by participants who receive the tax benefits information from a religious sender, rather than a tax official. Chapter 4 examines how culturally determined time preferences– specifically, the degree of patience –affect decisions to invest in continued education. The chapter uses an epidemiological approach to isolate the effect of patience on investments in continued education by focusing on immigrants living in Germany. Immigrants are influenced by the preferences prevalent in their countries of origin, but make decisions within the institutional framework of their new resident country. By combining German Microcensus data with a country-level measure of patience, the analysis explores how patience affects immigrants’ investments in continued education. The results show that immigrants from countries with higher average levels of patience are more likely to invest in continued education. This relationship holds for both first and second generation immigrants, though it is stronger for those who migrated at an older age or have spent less time in Germany. Chapter 5 synthesizes the findings and discusses their broader policy implications, highlighting how the insights gained from this thesis can inform public policy design. Additionally, the chapter identifies potential avenues for future research.
Incentives to enforce and stimulate
microeconometric evidence from natural experiments
(2020) Treber, Lukas; Dwenger, Nadja
Incentives can be powerful tools to enforce behavior and to stimulate and steer the economy. However, due to the complexity of how incentives are perceived by economic agents, designing effective incentive structures is difficult. A better understanding of incentives enables policymakers to design such policies, ultimately increasing overall well-being. This thesis advances our knowledge on how incentives work, how they change behavior, and how to effectively use them.
Shaming for tax enforcement
evidence from a new policy
(2018) Treber, Lukas; Dwenger, Nadja
Can public shaming increase tax compliance through social pressure? Many tax authorities make ample use of public shaming. However, empirical evidence from outside the laboratory on how a new shaming law affects overall compliance is lacking. We provide the first evidence from the field, exploiting comprehensive administrative tax data and the introduction of a novel naming-and-shaming policy in Slovenia in 2012. The policy aims to reduce outstanding tax debt among the self-employed and corporations. Our empirical strategy exploits the variation across taxpayers in ex ante exposure to the shaming policy. We find that taxpayers reduce their tax debt by 8.5% to avoid shaming, particularly in industries where reputational concerns are likely to be important. The publication of the first naming-and-shaming list further reduces tax debt among shamed taxpayers because of social learning. This effect, however, is marginal in terms of revenue and tapers off quickly.
The local environment shapes refugee integration
evidence from post-war Germany
(2017) Braun, Sebastian Till; Dwenger, Nadja
This paper studies how the local environment in receiving counties affected the economic, social, and political integration of the eight million expellees who arrived in West Germany after World War II. We first document that integration outcomes differed dramatically across West German counties. We then show that more industrialized counties and counties with low expellee inflows were much more successful in integrating expellees than agrarian counties and counties with high in inflows. Religious differences between native West Germans and expellees had no effect on labor market outcomes, but reduced inter-marriage rates and increased the local support for anti-expellee parties.