Research
Working Papers
Estimating the Elasticity of Turnover from Bunching: Preferential Tax Regimes for Solo Self-employed in Italy.
SIEP Prize 2023
[ Abstract | Draft ]
To stimulate entrepreneurship, several countries adopt size-dependent regimes that tax businesses on the basis of turnover rather than profits. This paper investigates to what extent such regimes can affect sales turnover by exploiting a discontinuity in the tax schedule of Italian solo self-employed. I consider the notch created by the eligibility cut-off of the preferential turnover tax scheme. I find substantial and significant bunching below the turnover threshold, as some solo self-employed choose the turnover tax scheme over the profit-based tax regime. The effects of the turnover tax scheme on bunching are heterogeneous across sectors, with professionals, business intermediaries and retailers having the largest observed responses. For these three sectors, I estimate the turnover tax elasticity by exploiting a new theoretical framework that fits the institutional set-up and rationalises the observed responses to it. The baseline estimates for the two most productive sectors, professionals and business intermediaries, are 0.071 and 0.058 respectively. Lower compliance costs in the turnover tax regime explain less than half of these responses, therefore highlighting the key role of low taxation for bunching behaviour in high-value-added sectors.
A Theory of Public Good Provision with Heterogeneous Risk Preferences.
[ Abstract | Draft ]
People with different attitudes to risk have different views on the extent to which society should invest in certain (risky) projects. This paper presents a theory of optimal provision of a risky public good when individuals have heterogeneous preferences for risk and labour productivities. The public good has an insurance purpose as it allows individuals to shift risk from private to public consumption. When it is privately provided, the risk allocation in the economy is inefficient because people do not internalise the insurance gains of the public good for the other agents who have different preferences for risk. When the public good is publicly provided, and it is financed by a piecewise linear tax schedule on labour earnings and linear taxes on safe and risky (excess) returns on savings, a trade-off between insurance and equity arises. The progressivity of the labour income tax schedule and the desirability of imposing a tax on the safe return from savings crucially depend on whether the government prioritises redistribution towards low-income individuals or high risk averse individuals.
Work in Progress
The Gendered Effect of Working from Home (joint with L. Khoury (University Paris Dauphine-PSL) and Y. Souidi (Institut des politiques publiques))
Big-box Stores, Local Employment and City Shape (joint with L. Khoury (University Paris Dauphine-PSL))
A Criterion to Evaluate Social Welfare when Risk Preferences are Heterogeneous.
