Unemployment and labor force participation in Italy

Purpose Our main purpose is to test the unemployment invariance hypothesis in Italy. Design/methodology/approach This paper provides an empirical investigation of the unemployment and labor force participation in Italy. Findings Cointegration analysis results strongly suggest a clear long-run relationship between unemployment and labor force participation revealing a persistent and general added worker effect. Originality/value Our results seem to confute the unemployment invariance hypothesis

Tax salience: an experimental investigation

A basic principle in public finance is tax incidence equivalence (well known as Liability Side Equivalence Principle, LES). This principle holds that the burden of a unit tax on buyers and sellers is independent of who actually pays the tax. Moreover, economic theory assumes an individual behaviour model in which subjects act as if they have to fully optimize changes in tax policies by correctly processing information in their possession. However, a wide empirical literature focused on some psychological issues that have as yet not been considered theoretically. It is easy to assume that the introduction of tax-inclusive prices and tax-exclusive prices could lead to price misperception. This means that individuals could not perceive the exact burden of a tax when it is not salient (as it could be in the case of tax-exclusive prices). We conduct a laboratory experiment that attempts to answer two relevant questions: (1) Do subjects’ behaviour change with a less salient tax? (2) Is tax incidence independent of the responsibility to pay a more or less salient tax? Based on the results of Mann-Whitney U tests, concerning the first question we conclude that, in accordance to the theory of tax incidence, subjects’ behaviour is not affected by salience. On the other hand, concerning the second question, contrary to theoretical predictions, we report evidence of stark differences in average trading prices for LSE principle analysis. Most notably, we observe that tax-on-seller treatment prices are systematically higher, thus revealing a plausible tax-shifting phenomenon

Tax salience: an experimental investigation

A basic principle in public finance is tax incidence equivalence (well known as Liability Side Equivalence Principle, LES). This principle holds that the burden of a unit tax on buyers and sellers is independent of who actually pays the tax. Moreover, economic theory assumes an individual behaviour model in which subjects act as if they have to fully optimize changes in tax policies by correctly processing information in their possession. However, a wide empirical literature focused on some psychological issues that have as yet not been considered theoretically. It is easy to assume that the introduction of tax-inclusive prices and tax-exclusive prices could lead to price misperception. This means that individuals could not perceive the exact burden of a tax when it is not salient (as it could be in the case of tax-exclusive prices). We conduct a laboratory experiment that attempts to answer two relevant questions: (1) Do subjects’ behaviour change with a less salient tax? (2) Is tax incidence independent of the responsibility to pay a more or less salient tax? Based on the results of Mann-Whitney U tests, concerning the first question we conclude that, in accordance to the theory of tax incidence, subjects’ behaviour is not affected by salience. On the other hand, concerning the second question, contrary to theoretical predictions, we report evidence of stark differences in average trading prices for LSE principle analysis. Most notably, we observe that tax-on-seller treatment prices are systematically higher, thus revealing a plausible tax-shifting phenomenon

Experimental Evidence on Tax Salience and Tax Incidence

While a basic theoretical principle in public economics assumes that individuals’ behaviour is fully-optimizer with respect to the introduction of a tax, an increasing body of research is presenting evidence that agents decision making is often affected by non-negligible cognitive biases, which could be responsible for lower market performance as well as for deviations from standard theoretical predictions. This paper extends the latter strand of research focusing on two trend topics in public economics: tax salience and tax incidence. While the former refers to the prominence of the tax, the latter places emphasis on the statutory vs. factual division of tax payments. Is market performance affected by the salience of the tax? Is the incidence of a tax independent of which side of the market it is levied on (Liability Side Equivalence Principle, LES)? We address these questions through a laboratory experiment in which one unit of a fictitious good is traded through a double-auction market institution. Based on a panel data analysis, our contribution shows that a non-salient tax reduces both the allocational and informational efficiency of the market with respect to the instance in which the tax is salient. Moreover, we show that the Liability Side Equivalence Principle does not hold in practice

Individual and group preferences over risk: does group size matter?

In this paper we investigated group size impact on risk aversion when a majority rule is applied. Drawing on the widely used Holt and Laury’s (2002) lottery pairs, we observed a risky shift for both individual and groups regardless of their size. However, groups choices are shown to be closer to the risk-neutrality prediction. More interestingly, whereas smaller groups attitudes can be safely approximated by individual choices, larger groups reveal a statistically different risk-loving attitude. This risky shift becomes more prominent as group size increases

Experimental Evidence on Tax Salience and Tax Incidence

While a basic theoretical principle in public economics assumes that individuals’ behaviour is fully-optimizer with respect to the introduction of a tax, an increasing body of research is presenting evidence that agents decision making is often affected by non-negligible cognitive biases, which could be responsible for lower market performance as well as for deviations from standard theoretical predictions. This paper extends the latter strand of research focusing on two trend topics in public economics: tax salience and tax incidence. While the former refers to the prominence of the tax, the latter places emphasis on the statutory vs. factual division of tax payments. Is market performance affected by the salience of the tax? Is the incidence of a tax independent of which side of the market it is levied on (Liability Side Equivalence Principle, LES)? We address these questions through a laboratory experiment in which one unit of a fictitious good is traded through a double-auction market institution. Based on a panel data analysis, our contribution shows that a non-salient tax reduces both the allocational and informational efficiency of the market with respect to the instance in which the tax is salient. Moreover, we show that the Liability Side Equivalence Principle does not hold in practice

Individual and group preferences over risk: does group size matter?

In this paper we investigated group size impact on risk aversion when a majority rule is applied. Drawing on the widely used Holt and Laury’s (2002) lottery pairs, we observed a risky shift for both individual and groups regardless of their size. However, groups choices are shown to be closer to the risk-neutrality prediction. More interestingly, whereas smaller groups attitudes can be safely approximated by individual choices, larger groups reveal a statistically different risk-loving attitude. This risky shift becomes more prominent as group size increases

Sales impact of servicescape's rational stimuli: a natural experiment

Environmental psychologists suggest that people feelings and emotions determine what they do and how they do it. We used the stimulus organism respons model (SOR) as an inspiring theoretical basis for our empirical contribution. We conducted a natural field experiment in six stores, settled in six different Italian cities, of a Swedish-founded Dutch-based multinational group, that designs and sells ready-to-assemble furniture, kitchen appliances and home accessories. We provided empirical evidence about the effects of a rational-functional stimulus, i.e. the availability of a new tool for collecting items that is more comfortable and less cumbersome for consumers. Through both a non-parametric and parametric testing, we found a positive effect of the stimuli in terms of sales

Sales impact of servicescape’s emotional and rational stimuli: a survey study

Environmental psychologists suggest that people feelings and emotions determine what they do and how they do it. According to the stimulus organism respons model (SOR), the environment creates a behavioral/emotional response in individuals that, in turn, induces approach or avoidance behaviors. We conducted survey in six stores, settled in six different Italian cities, of a Swedish-founded Dutch-based multinational group, that designs and sells ready-to-assemble furniture, kitchen appliances and home accessories. Firstly, we apply the SOR model to evaluate loyalty program participation impact on consumers receipts. Subsequently, we provide empirical evidence about the effects of an emotional-sensorial stimulus (i.e. the presence of the restaurant inside the store). Through both a non-parametric and parametric testing, we found that environmental stimuli have a positive effect in terms of sales

Sales impact of servicescape’s rational stimuli: a natural field experiment

Environmental psychologists suggest that people feelings and emotions determine what they do and how they do it. We used the stimulus organism respons model (SOR) as an inspiring theoretical basis for our empirical contribution. We conducted a natural field experiment in six stores, settled in six different Italian cities, of a Swedish-founded Dutch-based multinational group, that designs and sells ready-to-assemble furniture, kitchen appliances and home accessories. We provided empirical evidence about the effects of a rational-functional stimulus, i.e. the availability of a new tool for collecting items that is more comfortable and less cumbersome for consumers. Through both a non-parametric and parametric testing, we found a positive effect of the stimuli in terms of sales