Motivation to work, labor income taxes and life satisfaction: Hungary, Estonia, Continental Europe and the United States

The primary findings of this paper are that the increase in hours worked per employee comes at the expense of life satisfaction, and differences in labor income taxes cannot account for differences in time allocation. Once life satisfaction is included, the hypotheses of previous neoclassical economic studies is almost irrelevant in determining the response of market hours to higher taxes. We find a negative relationship between hours worked across countries and life satisfaction. In the countries with the highest hours worked (Hungary, Estonia), leisure is generally preferred to wealth and in the lowest hours worked ( France, Germany), wealth is preferred to leisure. (C) 2016 The Authors. Published by Elsevier B.V

Tax progressivity and entrepreneurial dynamics

This study examines how tax progressivity affects entrepreneurial dynamics in 18 countries. The results show that increased downside progressivity has a positive influence on the transition rate from nascent entrepreneurship to established business ownership. In addition, only downside progressivity calculated using marginal tax rates is related to the transition ratio, implying that it is marginal tax rates, and not average tax rates, that are used in the entrepreneurial decision-making process. This paper contributes to our understanding of entrepreneurial dynamics and the effect of tax progressivity on the transition from nascent entrepreneurship to established business ownership. © 2020 by the authors

Trust in Public Programmes and Distributive (In)justice in Taxation

In the tax psychology literature, there is a lack of empirical evidence on the degree of distributive justice in taxation. This article aims to test the relationship between trust in public programmes and distributive justice in taxation at the cross-country level. The sample consists of 47 countries. Trust in public programmes and distributive justice in taxation are measured based on data collected from Wave 7 of the World Values Survey, which took place worldwide in 2017-2022. An Ordered Probit Model was utilised for the empirical analysis. This study finds that if taxpayers support preferential organisations like the police and universities, they are less likely to support distributive justice, where the rich are taxed to support the poor. On the other side, if taxpayers support equitable organisations such as armed forces, courts, civil service, and elections, then they are more likely to believe in taxing the rich to support the poor. The current study’s findings have policy implications for governments intending to improve tax revenue collection. Additionally, the practical implication of the current study is that governments willing to combat income inequality should consider the differences between preferential and equitable organisations in their decision-making. There is congruence between taxpayers’ feelings toward distributive justice and their confidence in equitable organisations

Income taxes and the motivation to work: A review

Research on the impact that income taxes have on the motivation to work has a rich history using a variety of methodologies. In this paper, we attempt to connect the various streams of research, showing how the conclusions are the same and where they differ to give researchers a starting point for future research. The literature review groups previous studies into (i) traditional theoretical and empirical archival approaches, (ii) survey and observa- tional studies, (iii) experimental evidence, (iv) general equilibrium models and cross-country research, and possi- bilities for future research. The present study concludes that the effect of income taxes on the motivation to work cannot be explained by elementary economic theory, such as income and substitution effects. It is argued that an individual’s preference for work and leisure can also be affected by how those effects are applied and described. It is not only income taxes but also the preference for work or the culture of leisure in the country of origin that substantially affect the motivation to work

To Work More or Less? The Impact of Taxes and Life Satisfaction on the Motivation to Work in Continental and Eastern Europe

Using country-level data from 2000-2013, we test the relationship between life satisfaction (measured as how people evaluate their life as a whole rather than their current feelings) and the motivation to work (measured as aggregate hours of work). Our hypothesis is that even after controlling for average labor income tax rates in countries with high and low average hours worked, there is a significant negative association between the motivation to work and life satisfaction. The main findings of this paper are that the increase in the motivation to work per employee comes at the expense of life satisfaction, and differences in average tax rates on labor income cannot account for differences in time allocation. Once life satisfaction is included, the hypotheses of previous neoclassical economic studies are almost irrelevant in determining the response of market hours to higher average tax rates on labor income. In line with our assumption, we find a negative relationship between life satisfaction and the motivation to work in the cross-country examinations. In countries with the highest hours worked (Hungary, Estonia), wealth is generally preferred to leisure and in countries with the lowest hours worked (France, Germany), leisure is preferred to wealth

Does the introduction of the bond market reduce the interest rate on Kosovo banking industry?

Kosovo does not have a bond market which would enable companies, people and other economic agents to have access to it, that would have been a substitute for the companies to get other sources of funds beside banking sector. The Kosovo economy has only one source of institutional money injected into the economy and that is the banking industry. Bringing back the money of Kosovo Pension and Saving Trust (KPST) to Kosovo would have been a huge injection for the economy to raise GDP and lower unemployment. Since the companies in Kosovo contain a lot of asymmetric information within their financial statements, clearing the way for KPST how to allocate their investments in Kosovo would be through alleviating asymmetric information. The paper stands on the general concepts of the asymmetric information and how to alleviate it within the financial market and particularly within the bond market. The other part of the paper concentrates on theoretical framework how to eliminate asymmetric information for the companies who want to get funding from KPST. Therefore, it is necessary to have healthy banks and better environment to have a sound bond market. On the other hand, bond market may increase the health of banks by enhancing market competition

Life Satisfaction and Tax Morale in Azerbaijan: Mediating Role of Institutional Trust and Financial Satisfaction

This paper examines the relationship between life satisfaction (measured as the self-reported satisfaction of each individual with their past life and goal achievements) and tax morale (measured as the likelihood of an individual’s intrinsic motivation to pay taxes). Using a large-scale survey dataset from Azerbaijan, it is documented that life satisfaction is positively associated with tax morale. Life satisfaction plays a significant role in increasing tax compliance practices. It is also important to note that there is a positive mediating effect of life satisfaction on tax morale through financial satisfaction and institutional trust. In line with our hypotheses, the results of a series of analyses remain robust to different models. These results imply that a higher level of life satisfaction may increase the proportion of individuals who report the highest tax morale in Azerbaijan. Our findings have policy implications for Azerbaijan and other governments aiming to alleviate high levels of tax evasion

Taxes and the incentive to work under flat and progressive tax systems in Slovakia

This study examines the impact of taxes on the incentive to work under flat and progressive tax systems. Of particular interest are the changes from progressive-to-flat and flat-to-progressive tax conditions. To measure the impact of taxes on the incentive to work under both scenarios, we relate hours worked with the effective marginal tax rates. Using national accounts data and the Prescott’s (2004) labor market model, Slovakian work hours were examined at points in time around the adoption of a flat tax system in 2004 and a progressive tax system in 2013. In Slovakia, there was a transition from a progressive to a flat tax system in 2004, followed by a reversion back to a progressive tax system in 2013. Theoretically, the incentive to work increases when a progressive tax structure is replaced with a flat tax, while the incentive to work decreases in the opposite case. However, the findings show that when Slovakia replaced its progressive tax with a flat one, the actual hours worked decreased, contrary to predictions. When the flat tax was abandoned in favor of a progressive tax structure, hours worked also decreased, but less than when the flat tax was introduced, and significantly less than predicted by the model. © 2021, Centre of Sociological Research. All rights reserved

Modelling 'productivity' of budget expenditure items before-and-after the oil boom in a resource rich country: Evidence from Azerbaijan

This research investigates the "productivity" of budget expenditure items (capital, education, health, social, administration, and other expenditures) in terms of encouraging non-oil output growth in the long-run while controlling for tax revenues and oil related factors. Authors employ ARDLBT approach to cointegration for the period of 2000Q1-2014Q4 to estimate long-run impact over non-oil GDP for each expenditure item, separately, in case of Azerbaijan. Estimation results provide statistically significant and positive contribution of all expenditure items, supported by Keynesian theory. However, productivity of all type of expenditures has significantly decreased after the oil boom. Research findings are useful for policymakers to consider while allocating budget expenditures. IJER © Serials Publications