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 | New draft coming soon ]
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. The public good has an insurance purpose as it allows individuals to shift risk from private to public consumption. On the one hand, private provision of the public good is inefficient because people do not internalise the insurance gains of the other agents. On the other, public provision might fail to achieve the (ex-ante) first best outcome if agents cannot be targeted and compensated when the optimal policy does not reflect their specific risk preferences. When the government has full information, this paper argues that distorting intertemporal decisions by taxing safe capital income, on top of nonlinear labour earnings taxation, might be welfare-improving as it allows to increase insurance by changing individual savings behaviour while reducing labour-supply distortions.
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.
