Economics Commons^™

The Effects Of Outside Income On Household Behavior: The Case Of Remittances In Jamaica, Andrew V. Stephenson

Economics Dissertations

Remittances significantly affect recipient households’ behavior. Using data from the Jamaican Survey of Living Conditions and the Jamaican Labor Force Survey ( 2001-2007), this dissertation explores the effects of remittances on labor market participation and household expenditures. Jamaica’s proximity to the United States and its diaspora of educated individuals shapes an economy largely dependent on remittances, thus providing an interesting case study.

First, we investigate whether remittances alter labor market behavior of married women in remittance-receiving households located in Jamaica. Remittances, the wife’s education, and wages are all treated as endogenous when estimating labor market participation and hours worked. Unlike …

The Determinants Of Private Contributions And Government Grants To Nonprofit Organizations, Amanda Lori Wilsker

Economics Dissertations

The nonprofit sector is becoming increasingly important to the U.S. economy both as an employer and service provider. Although most of the sector’s revenues are earned, the ability of the nonprofit sector to generate significant levels of unearned income in the form of grants and contributions reinforces the sector’s uniqueness. This dissertation uses the NCCS-Guidestar data to address questions pertaining to the determinants of nonprofits’ contributions and government grants. Each of the essays’ findings is discussed briefly below.

The first chapter examines the relationship between an organization’s finances and the level of government grants received. Because organizations choose to apply …

Essays On Fiscal Policy And Economic Growth, Tamoya A. L. Christie

Economics Dissertations

This dissertation comprises two essays. The first essay explores how the size of government, as measured by the level of spending, affects growth. Theoretical models suggest a nonlinear relationship; however, testing this hypothesis empirically in cross-country studies is complicated by the endogeneity of government spending and the accurate identification of turning points. This paper examines the nonlinear hypothesis by incorporating threshold analysis in a cross-country growth regression. Using a broad panel of countries over the period 1971-2005, the results show evidence in favor of a nonlinear effect, but not of the form predicted by theory. When total government spending is …

Studies On The Effects Of Sympathy And Religious Education On Income Redistribution Preferences, Charitable Donations, And Law-Abiding Behavior, Roberta D. Calvet

Economics Dissertations

The purpose of this dissertation is to identify the impact of moral emotions (sympathy and empathy) and religious education on individual behavior. This dissertation is divided into three main chapters. The first chapter examines the effect of sympathy and empathy on tax compliance. We run a series of experiments in which we employ methods such as priming, the Davis Empathic Concern scale, and questions about frequency of prosocial behaviors in the past year in order to promote and to identify empathy and sympathy in subjects. We observe the subjects’ decisions in a series of one-shot tax compliance game presented at …

Channels Of Adjustment In Labor Markets: The 2007-2009 Federal Minimum Wage Increase, Tetyana Zelenska

Economics Dissertations

In the debate on the economic effects of labor market regulation much work has focused on minimum wages. A legal minimum wage remains one of the most controversial policy issues. The controversy arises for two main reasons: first, there is no consensus over the economic impacts of the minimum wage mandate, especially its effect on employment, and, second, there is a disagreement over the empirical methods used to identify the minimum wage effects. Although the standard competitive model predicts that wage floors should have a negative impact on employment, empirical work shows mixed results.

This dissertation explores a number of …

How Should Environmental Policy Respond To Business Cycles? Optimal Policy Under Persistent Productivity Shocks, Garth Heutel

ECON Publications

How should environmental policy respond to economic fluctuations caused by persistent productivity shocks? This paper answers that question using a dynamic stochastic general equilibrium real business cycle model that includes a pollution externality. I first estimate the relationship between the cyclical components of carbon dioxide emissions and US GDP and find it to be inelastic. Using this result to calibrate the model, I find that optimal policy allows carbon emissions to be procyclical: increasing during expansions and decreasing during recessions. However, optimal policy dampens the procyclicality of emissions compared to the unregulated case. A price effect from costlier abatement during …

Optimal Policy Instruments For Externality-Producing Durable Goods Under Time Inconsistency, Garth Heutel

ECON Publications

When consumers exhibit present bias and are time-inconsistent, the standard solution to market failures caused by externalities—Pigouvian pricing—is suboptimal. I investigate policies aimed at externalities for time-inconsistent consumers. Welfare-maximizing policy in this case includes an instrument to correct the externality and an instrument to correct the present bias. Either instrument can be an incentive-based policy or a command-and-control policy. Calibrated to the US automobile market, simulation results from a model with time-inconsistent consumers suggest that the second-best gasoline tax is 18%–30% higher than marginal external damages. These simulations also suggest that social welfare is maximized with a gasoline tax set …

Budget Making And Intergovernmental Fiscal Relations In Pakistan, Roy W. Bahl, Musharraf Cyan, Sally Wallace

ECON Publications

Learning Objectives:

• Understand the institutional makeup of budget-making in Pakistan.
• Understand how institutions and policy often together define budget-making practices.
• Know and understand subnational governments and their roles in central government expenditure allocation and fulfilling national priorities.
• Know and understand provincial governments and capital budgeting.
• Know and understand transparency and intergovernmental transfers.

Philippines: Designing A Local Government Enhancement Fund, Jorge Martinez-Vazquez

ECON Publications

The main transfer instrument from the central government to local government units (LGUs) in the Philippines, the internal revenue allotment, has been criticized for: its inability to equalize sufficiently, especially regarding the poorer municipalities and provinces, and its funds not having been spent efficiently. For some time, LGUs have petitioned the Government of the Philippines to expand the funding of the IRA. However, there appears to be ample consensus that any additional funding needs to be distributed in a manner that addresses the design flaws of the IRA. In this paper, options for the design of a possible new transfer, …

Intergovernmental Fiscal Relations And Local Public Finance: What Is Next On The Reform Agenda?, Roy W. Bahl

ECON Publications

Is China one of the world’s most decentralized countries, or one of the most centralized? In fact, it is both. On one hand, 70 percent of all government expenditures pass through the subnational government budgets. On the other hand, subnational governments have no in dependent (formal) taxing powers. The question that might be raised is whether the longer-term intention is to develop a system of local public finance that would give subprovincial governments more fiscal discretion, or whether some other structure is envisaged. Either way, the issue to consider is what specific reform packages would move China toward its goal.

Financing Metropolitan Areas, Roy W. Bahl

ECON Publications

No abstract provided.

Financing Subnational Governments With Decentralized Taxes, Roy W. Bahl

ECON Publications

This chapter is about the case for assigning taxing powers to subnational governments, and about the structure of this revenue assignment. As Musgrave (1983) put it in perhaps the seminal paper on this subject, ‘Who Should Tax, Where and What’? This review reconsiders the Musgrave questions after 25 years, asks whether the international trend in tax assignment is in step with what economists have prescribed, and concludes with some thoughts about the most likely future for the decentralization of tax systems. We begin with a discussion of the concept of revenue assignment, and with the theoretical justifications and a priori …

Do Companies View Bribes As A Tax? Evidence On The Trade-Off Between Corporate Taxes And Corruption In The Location Of Fdi, Jorge Martinez-Vazquez, Timothy Goodspeed, Li Zhang

ICEPP Working Papers

There is a large literature documenting that high host-country corporate taxes deter foreign direct investment. However, some recent papers have questioned the robustness of this result in developing countries. In this paper we investigate one possible reason: the presence of a trade-off between taxes and good governance. We find that taxes and governance interact and that taxes and corruption are substitutes so that the impact of taxes alone on FDI will be lessened when corruption is also present. Bribes and weak tax enforcement tend to reduce formal tax payments by more than the bribe, and bribery becomes the more important …

Taxing Soft Drinks, Roy W. Bahl

ICEPP Working Papers

This paper reviews the practice of levying an excise tax on soft drinks in sub-saharan African countries, and evaluates this practice against theoretical norms for levying an excise tax. The question is whether such taxes are justified or whether they are discriminatory and impose a welfare cost on the country. The paper concludes that the sin tax justification does not hold for soft drinks, nor do income distribution justifications. Arguably the best reason for such a levy is revenue, but this argument is weakened by a higher price elasticity of demand than usually supposed.

The Taxation Of Gambling In Africa, Francois Vaillancourt

ICEPP Working Papers

The taxation of gambling in Africa as a whole appears to have been the object of little attention. In this paper, we first present the importance of gambling for Africa from a world perspective then disaggregate that within Africa. We then turn to the nature and importance of taxation of gambling, focusing on the major markets identified in the first part of the paper. In the third part we present the available evidence on the incidence of gambling in Africa which is limited to South Africa.

Decentralization In Jharkhand: Some Implications For Urban Service Delivery, Simanti Bandyopadhyay, O.P. Bohra, Aishana Sharma

ICEPP Working Papers

The main objective of the paper is to assess the status of urban decentralization in the state of Jharkhand in India and to relate it to some major implications on service delivery. We find that while some of the functions are assigned to the local bodies on paper, none of them are transferred by official notification which is a standard practice in India. As a result the functions are performed in an arbitrary manner. The functions which are assigned, are not necessarily performed by all the local bodies. The assignment of taxes and user charges is also optional. Even the …

In Government We Trust: The Role Of Fiscal Decentralization, Jenny Ligthart, Peter Van Oudheusden

ICEPP Working Papers

We measure the contribution of fiscal decentralization to trust in government. Using repeated cross-country survey data of individuals on several measures of trust in government over the 1994-2007 period, we estimate an ordered response model of the government trust and fiscal decentralization nexus. We control for unobserved country characteristics, macroeconomic determinants, and individual characteristics. Our main finding is that fiscal decentralization increases trust in government. More specifically, a one percentage point increase in fiscal decentralization causes roughly a four-fifths of a percentage point increase in government trust. The beneficial effect of fiscal decentralization on trust in government is neither limited …

Budget Transparency In Local Governments: An Empirical Analysis, Jose Caamano-Alegre, Santiago Lago-Penas, Francisco Reyes-Santias, Aurora Santiago-Boubeta

ICEPP Working Papers

The aim of this paper is to shed additional light on the determinants of budget transparency in local governments. Our work is based on a Likert-type survey questionnaire specifically designed to measure budget transparency in small municipalities. The questionnaire is based on the IMF’s revised Code of Good Practices on Fiscal Transparency (2007). Results from 33 Galician municipalities are used to assess its internal consistency and to test a battery of hypotheses on the determinants of budget transparency. While several previous findings of the literature are confirmed, some new results are also obtained.

The New Spanish System Of Intergovernmental Transfers, Antoni Zabalza, Julio López-Laborda

ICEPP Working Papers

This article analyses the workings of the new Spanish system of intergovernmental transfers, which has been in operation since 2009, and compares its expected effects with those of the model that was in force until 2008. The paper considers the effects of the new model at the base year of application and the growth over time of these effects. On the positive side, the reform has significantly reduced the dispersion of the distribution of resources per unit of need. On the negative side, the system has become very complex and obscure regarding the distribution criteria it uses; also, of the …

Municipal Finances In Latin America: Features, Issues, And Prospects, Jorge Martinez-Vazquez

ICEPP Working Papers

This paper takes an in-depth look at the current state of the local public finances in the Latin America region, identifies and analyzes some of the main challenges for improving efficiency, equity and effectiveness in the delivery of public services and it closes by offering a set of recommendations for policy reform.

Intergovernmental Transfers In Latin America: A Policy Reform Perspective, Jorge Martinez-Vazquez, Cristian F. Sepulveda

ICEPP Working Papers

This paper reviews some of the main issues with intergovernmental transfers in Latin America. The analysis is set against the backdrop of the basic normative principles of revenue assignments and the practice of sub-national government financing in the region. Own revenue collections and an equalization transfer program are key components of a sound sub-national fiscal structure. However, in most Latin American countries own revenue collections represent a minor share of sub-national revenues and equalization programs, if present, are generally not properly designed. Instead, sub-national finances in the region heavily rely on revenue sharing schemes with often multiple and unclear objectives …

Explaining Property Tax Collections In Developing Countries: The Case Of Latin America, Jorge Martinez-Vazquez, Cristian F. Sepulveda

ICEPP Working Papers

This paper analyzes the problem of collecting property taxes in fiscally decentralized developing economies. The property tax is arguably the most important source of own revenues for local governments around the world, and economists generally agree that, although imperfect, the property tax is a good local tax. In practice, however, the property tax does not always become a productive revenue source and local governments do not gain the fiscal autonomy required to realize the benefits of fiscal decentralization. This problem is rather common among developing economies and particularly severe in Latin America. One of the main reasons for the poor …

Program Evaluation, Performance Budgeting And Part: The U.S. Federal Government Experience, Katherine Willoughby, Paul Benson

ICEPP Working Papers

An examination of the history of budget reform in the United States indicates a perpetual tug of war between the executive and legislative branches of government for power. But surprisingly, in spite of this highly charged political process, there exists a consistent and common thread of concern for improving government performance and a desire to inject more “rationality” (measurement and evaluation) into budgeting decisions. In the past century, U.S. federal budget reforms have been centralizing (the Budget Act of 1921), activity-based (performance budgeting of the 1950s), focused on program evaluation (PPBS in the 1960s), management-oriented (MBO in the early 1970s), …

Report On The Bihar Pri Finance Study, Mark Rider, Prabhat P. Ghosh, Shaibal Gupta

ICEPP Working Papers

The Report on the Bihar Panchayat Raj Institution Finance Study examines the autonomy, capacity, and accountability of local self-governments in the State of Bihar. This report is based on data collected from a set of 3 surveys conducted on a stratified random sample of 5 Zila Parishads, 10 Panchayat Samitis, and 50 Gram Panchayats, during the period beginning on the 15th of March 2009 and ending on the 31st of July 2009. Chapter 1 describes the sampling methodology, questionnaires, and the scope of work for this study in greater detail. Chapter 2 provides an overview of recent elections in the …

Gp Financial Management Capacity And Pri Financial Management Reform Efforts In West Bengal, Katherine Willoughby, Juan Luiz Gomez-Reino

ICEPP Working Papers

The State of West Bengal in its Annual Financial Statement of 2009-2010 called for “decentralization with accountability.” In addition to an expanded welfare system and the promotion of self-reliance at the local level, the State has been concerned with improving livelihoods through significantly enhanced funding to its local governments. To be effective, decentralization should move to the level of villages in rural areas in addition to accommodating urban municipalities. The Government of West Bengal (GOWB) has a strong interest in increasing the service delivery to constituents and has encouraged development in the area of financial management by providing incentives, training, …

The Design Of A Performance-Oriented Fiscal Transfer In West Bengal, Andrey Timofeev

ICEPP Working Papers

Based on other studies in this series commissioned by DFID and the World Bank this draft report outlines a tentative proposal for a new fiscal transfer to Gram Panchayats (GPs) to phase in, as the current DFID project (Strengthening Rural Development, SRD) phases out in 2011. According to current discussions, two primary goals of the new grant appear to be 1) improvements in the organizational capacity of GPs and 2) improvements in accountability and financial management. If the new grant is to rely on the village development committees (GUS) for identification of service needs, the annual funding would have to …

Public Infrastructure Investment, Output Dynamics, And Balanced Budget Fiscal Rules, Pedro R.D. Bom, Jenny Ligthart

ICEPP Working Papers

We study the dynamic output and welfare effects of public infrastructure investment under a balanced budget fiscal rule, using an overlapping generations model of a small open economy. The government finances public investment by employing distortionary labor taxes. We find a negative short-run output multiplier, which (in absolute terms) exceeds the positive long-run output multiplier. In contrast to conventional results regarding public investment shocks, we obtain dampened cycles in output and the labor tax rate. The cyclical dynamics are induced by the interaction of households' finite life spans, the wealth effect on labor supply, and the balanced budget fiscal rule. …

Designing The Local Government Enhancement Fund For The Philippines, Jorge Martinez-Vazquez, Yongzheng Liu

ICEPP Working Papers

The main transfer instrument from the central governments to local government units (LGUs) in the Philippines, the IRA (Internal Revenue Allotment), introduced in 2001, has been criticized for two main failings: its inability to equalize sufficiently, especially regarding the poorer municipalities and provinces, and that its funds have not been spent in an efficient manner. Recently LGU associations have petitioned the Government of the Philippines (GoP) for an expansion in the funding of the IRA from 40 percent of internal revenue collections to 50 percent, and several draft Bills have been prepared. There appears to be ample consensus that if …

Benchmarking Tax Administrations In Developing Countries: A Systemic Approach, Jamie Vazquez-Caro, Richard M. Bird

ICEPP Working Papers

Benchmarking as a way of establishing standards for evaluating the performance of tax administrations has become increasingly popular in recent years. Two common approaches to benchmarking are ‘benchmarking by numbers’ – the quantitative approach and ‘benchmarking by (presumed) good institutional practice’ – the qualitative approach. Both these approaches consider each component or aspect of the tax administration separately. This paper suggests a contrasting approach to benchmarking, the purpose of which is less to allow others to assess the performance of a tax administration than it is to permit an administration to understand and improve its own performance. This systemic approach …

Status Of Pri Finances In West Bengal Final Report, Sally Wallace

ICEPP Working Papers

Rural government decentralization in West Bengal has been a focus of the state government since the state’s 1973 Panchayat Act. The three-tiered Panchayat Raj (PRI) system provides a role for governance at the district, block, and gram panchayat levels. The Government of West Bengal (GOWB) has been providing support and assistance to the PRIs to improve service delivery and governance. To date, the perceived problems related to the PRIs include a lack of fiscal decentralization to the PRIs, a lack of untied and own source revenues and expenditure authority, limited capacity especially at the GP level for meeting public service …