Research
Working Papers
Estimating the Elasticity of Turnover from Bunching: Preferential Tax Regimes for Solo Self-employed in Italy.
(Job Market Paper) SIEP Prize 2023
[ Abstract | Draft ]
Turnover is a key indicator of economic activity, but we know little about how much entrepreneurs adjust it as a response to taxation. This paper exploits a discontinuity in the Italian tax schedule of solo self-employed to study turnover responses to taxation. I consider the notch created by the eligibility cut-off of the preferential turnover tax scheme. I find substantial and significant bunching by solo self-employed below the turnover threshold. The effects of the tax scheme on bunching are heterogeneous across sectors, with professionals, business intermediaries and retailers having the largest observed responses. I estimate the turnover tax elasticity in these three sectors by focusing on the marginal buncher. To do so, I build on Kleven and Waseem (2013) to develop a theoretical framework that fits the institutional set-up and rationalises the observed responses to it. Professionals have the largest turnover elasticity (0.066). Difference in compliance costs across regimes explains less than half of the observed responses, therefore highlighting the key role of low taxation for the observed bunching behaviour.
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. 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 policy does not reflect their specific risk preferences. With an application on capital income and endowment taxation, this paper shows it is possible to improve welfare by exploiting the different choices of the agents with different risk preferences.
Work in Progress
Estimating the Revenue Effects of Preferential Tax Regimes in Italy.
Social Choices with Heterogeneous Risk Preferences.
