Pay for Politicians and Candidate Selection: An Empirical Analysis

In this paper, we estimate the effect of pay for politicians on who wants to be a politician. We take advantage of a considerable 35 percent salary increase of Finnish MPs in the year 2000, intended to make the pay for parliamentarians more competitive. A difference-indifferences analysis, using candidates in municipal elections as a control group, suggests that the higher salary had the intended effect among women, whether measured by education or occupational qualifications. We also examine cross-party differences.pay for politicians, candidate selection, gender differences in politics

The Political Economy of Sin Taxes

We analyse the determination of taxes on harmful goods when consumers have self-control problems. We show that under reasonable assumptions, the socially optimal corrective tax exceeds the average distortion caused by self-control problems. Further, we analyse how individuals with self-control problems would vote on taxes on the consumption of harmful goods, and show that the equilibrium tax is typically below the socially optimal level. When the redistributive effects of sin taxes are taken into account, the difference between the social optimum and equilibrium is small at low levels of harm, but becomes more pronounced when consumption is more harmful.excise taxation, voting, self-control

Pay for Politicians and Candidate Selection: An Empirical Analysis

A growing theoretical literature on the effect of politicians’ salaries on the average level of skills of political candidates yields ambiguous predictions. In this paper, we estimate the effect of pay for politicians on the level of education of parliamentary candidates. We take advantage of an exceptional reform where the salaries of Finnish MPs were increased by 35 % in the year 2000, intended to make the pay for parliamentarians more competitive. A difference-in-differences analysis, using candidates in municipal elections as a control group, suggests that the higher salary increased the fraction of candidates with higher education among female candidates, while we find no significant effect for male candidates.pay for politicians, candidate selection, gender differences in politics

The Political Economy of Sin Taxes

We analyse the determination of taxes on harmful goods when consumers have self-control problems. We show that under mild conditions, the socially optimal tax rate exceeds the average distortion caused by self-control problems. Further, we show that in most cases the tax rate chosen in political equilibrium is below the socially optimal level

Ekonomisti verotuksen vuotokohtia etsimässä

Kirjoituksessa esitellään julkistalouden tutkimusta Okunin (1975) ”vuotavan ämpärin” ja Duflon (2017) ”ekonomisti putkiasentajana” -metaforiin pohjautuen. Näiden metaforien sovelluksena julkistalouden tutkijoita voidaan kuvata putkiasentajina, jotka pyrkivät paikantamaan vero- ja tulonsiirtojärjestelmän vuotokohtia sekä tarjoamaan tutkimustulosten avulla keinoja, joilla näitä vuotoja voidaan pienentää. Esimerkkejä vuodoista ovat talouden toimeliaisuuden, esimerkiksi työnteon, väheneminen verotuksen ja sosiaaliturvan seurauksena, tai veronkierto, joka suoraan vähentää kerättävien verotulojen määrää. Verojärjestelmätutkimus laajentaa perinteistä julkisen talouden tutkimusta veroasteiden vaikutusten tarkastelusta verojärjestelmän muiden yksityiskohtien, kuten verovalvonnan, vaikutusten arviointiin. Kirjoituksessa esitellään esimerkkejä sekä aiemmasta kansainvälisestä tutkimuskirjallisuudesta että viimeaikaisista suomalaisista tutkimuksista

The Incidence of Sin Taxes

We show that contrary to traditional incidence analysis, the burden of sin taxes does not necessarily fall most heavily on individuals with the highest level of consumption. We also derive a condition for cases where sin taxes improve individual welfare. We further argue that taxes on goods such as unhealthy food can be progressive when consumers have time-inconsistent preferences

The Welfare Effects of Health-based Food Tax Policy

This paper examines the effects of health-oriented food tax reforms on the distribution of tax payments, food demand and health outcomes. Unlike earlier work, we also take into account the uncertainty related to both demand estimation and health estimates and report the confidence intervals for the overall health effects instead of only point estimates. A sugar tax of 1 € / kg reduces the incidence of type 2 diabetes on average by 13% and it also leads to a reduction in coronary heart disease. The health effects appear to be most pronounced for low-income individuals, and the reforms may therefore reduce health inequality. This effect undermines the traditional regressivity argument against the heavy taxation of unhealthy food.sin taxes, food taxation, tax incidence, commodity demand, obesity, diabetes, coronary heart disease, bootstrapping

Revenue-maximizing Top Earned Income Tax Rate in the Presence of Income-shifting

We provide an analysis of the revenue-maximizing top earned income tax rate for a country with one of the highest levels of earnings taxation in the world, Finland, and compare it to the current level of taxation. We account for the effect of income-shifting possibilities in the calculations and find that the current top tax rate on earnings in Finland is likely to be below the revenue-maximizing rate. We provide an explicit account of assumptions behind the Laffer curve calculations and demonstrate that policy conclusions depend critically on non-trivial choices regarding, for example, how the current top tax rate is calculated. The assumptions in the Laffer curve calculations need to be made explicit if the calculations are to provide guidance for policy.</p