Browsing by Person "Dwenger, Nadja"

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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.
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.