Following Chamley, Lucas, Laitner, and Aiyagari, this dissertation continues to explore the answer for the question of zero capital taxation by discussing how taxes on capital income, labor income, and property affect the economy in the context of a vintage capital model where the embodied technology grows exogenously. The government maximizes social welfare by finding the optimal combinations of the three tax rates in the steady state and examines the welfare gain/loss over and after the transitions caused by different types of shocks. The simulation method used here is linear approximation. My results show that in the steady-state economy, given a fixed level of gov- ernment expenditure and a zero property tax rate, the capital-income tax rate that maximizes steady-state utility may be negative, zero, or positive depending on the level of government expenditure. I also find that, for many values of government spending, the highest level of steady-state utility occurs with a subsidy to capital income and a tax on labor income. Finally, I find that when taxes on capital income, labor income, and property are available, capital-income taxes are generally the last resort to finance government expenditures. My results show that in the transitional economy, when tax rates are perma- nently changed and the government expenditure is near zero, the loss of utility over the transition from no taxes to capital subsidies is too large so the idea itself is not utility-enhancing. Secondly, I find that when the government expenditure is low and a positive technology shock occurs, social welfare in the economy without capital-income taxes may perform better in the early phase of the transition but worse in the later phase of the transition than that in the economy without property taxes. How- ever, the situation becomes the opposite as government expenditures increase. In addition, when one tax is allowed to change, a changing labor-income tax may bring more utility over the transition than the other two taxes. Finally, when the govern- ment expenditure is unexpectedly reduced, I find that using property taxes rather than capital-income taxes stimulates consumption and employment more given a higher initial level of government expenditure.

I use a canonical model similar to that of Golosov, Tsyvinski, and Werning (2006) to highlight salient properties of the standard tax system used to decentralize constrained efficient allocations. I first show that while labor and wealth taxes are mainly used for efficiency purposes, risk-sharing is achieved through lump-sum transfers. I then show through various examples that ignoring parts of the optimal tax system---a recurring theme in the literature---can lead to sizable welfare losses. In order to evaluate the causal effect of student loans on labor market outcomes, we exploit the eligibility for the need-based Stafford loan program (subsidized Stafford loans) to implement a regression kink design. Using a nationally representative sample of students graduating with a bachelor's degree in 1993, we establish that student loan debt leads to lower earnings after graduation. Estimates show that an additional hundred dollars of Stafford loan reduces 1994 annual income by about 0.1%. Extrapolating this result, earnings for an individual with the mean level of borrowing are 5% lower than those of an individual with no debt. The impact of an additional hundred dollars of student debt decreases income by 0.4% in 1997, and the impact of debt on earnings vanishes by 2003. Economic theory shows that there exists a simple mechanism consistent with the empirical finding, whereby more debt leads individuals to quickly find employment rather than wait for an ideal job. Crucial for this result is that student debt is not dischargeable in bankruptcy. Indeed, when debt is dischargeable, higher debt can cause individuals to search for higher paying jobs that are harder to find. Absent government or otherwise imposed restrictions, competitive loan markets are incompatible with identifiable subsets of the population subsidizing others. We use that insight to identify and measure inefficiencies in government student loan programs using linked survey and administrative data from the Beginning Postsecondary Student (BPS) longitudinal surveys. We use loan repayment histories to compute realized returns for borrowers. We then estimate considerable heterogeneity in expected returns based on ex ante observable characteristics, which suggests inefficiencies that private lenders might exploit by cream-skimming more profitable borrowers. We explore the potential for cream-skimming under different assumptions about the costs of capital for private lenders and study its implications for the pool of government student loan borrowers and expected returns to the government. Finally, we analyze the extent to which student loan limits can be modified based on borrower characteristics to equate expected returns and alleviate concerns about cream-skimming.

This thesis provides three general equilibrium overlapping generations models to analyze the macroeconomic effects of endogenous life expectancy. I find that endogenous life ex- pectancy has substantial effects on the effective discount rate, the demographic structure of the economy and productivity through the health channel, which subsquently affect human and physical capital accumulation, welfare and fiscal policy. In Chapter 1, I study the presence and magnitude of macroeconomic externalities associated with obesity. I argue that focusing solely on the economic costs on health care spending ig- nores the effects of obesity on net social security benefits caused by higher mortality among obese individuals. To estimate the size of this externality, I develop an overlapping gen- erations model with rational choice with respect to food consumption and weight as in Lakdawalla and Philipson (2009), endogeneizing life expectancy, labour productivity and health care costs. The life-time net contributions of the top 30% of the BMI distribution are negative but quantitatively small, despite the fact that the model generates substantial wealth and income inequality, consistent with the observed socioeconomic gradient of obe- sity (Baum and Ruhm, 2009), which results in lower lifetime contributions. Furthermore, I perform two policy experiments (i) eliminating childhood obesity and (ii) eliminating the VAT exemption of food consumption, both resulting in significant welfare gains, with the former eliminating the obesity externality. In Chapter 2, I study the effects of health on optimal taxation, where health affects the level of utility, the probability of survival and productivity. The results suggest that health affects optimal taxation in the Ramsey problem via three channels. First, since health is a stock that naturally deteriorates over time, the optimal level of taxation of medical spending is not constant over the life-cycle. Second, the productivity-enhancing aspect of health affects labour supply decisions over the life-cycle, where it is optimal for the government to use age-dependent labour income taxes to minimize distortions in the labour market. If the government cannot condition health care spending and labour income taxes on age, then a non-zero capital income tax can be implemented to achieve the optimal allocation. Finally, productivity growth in the medical sector which directly or indirectly affects longevity has a heterogeneous effect on each cohort, which in the absence of age-dependent taxation creates an evolutionary path of the optimal capital income taxation. In Chapter 3, I examine the macroeconomic effects of an increase in the retirement age as a response to an ageing population and deteriorating dependency ratios. An increase in retirement age induces agents to increase medical spending. Households invest in their level of health in order to be fit to work for longer, since older agents that are affected by the retirement age reform have a lower level of health and increased working hours lost due to illness. Furthermore, the higher level of health raises life expectancy, partially offsetting the effects of the retirement age reform with respect to dependency ratios.

This dissertation contributes to the current understanding of human capital and its importance for earnings inequality and taxation. Human capital is typically defined as the stock of knowledge or skills acquired through education and working experience. The first chapter analyzes student borrowing behaviors in postsecondary education in the United States, the second chapter studies cross-country differences in earnings inequality within an endogenous growth model of human capital accumulation, and the third chapter examines the impact of endogenous human capital formations over a life-cycle on optimal fiscal policy. In Chapter 1, I document that new federal student loans for higher education in the United States have risen more than 5 times over the past 20 years. What caused this dramatic increase? I develop a heterogeneous life-cycle model of human capital accumulation to analyze individual college and borrowing decisions. Using this framework, I assess the quantitative contributions of changes in the college wage premium, college costs, maximum borrowing limits, and loan interest rates to explain the significant rise of federal student loans. I find that the calibrated model accounts for 57 percent of the actual increase in loans from 1990 to 2011. Increases in the college wage premium and college costs are important factors in generating the sharp rise in loans and, particularly, the increase in the fraction of borrowers and borrowing amounts. The expansion of credit availability and decreased loan interest rates have a relatively minimal impact on individual college and borrowing decisions. Chapter 2 explores why earnings inequality has been substantially higher in the US than in European countries over the last 30 years. I focus on the role of differences in tax progressivity, intergenerational earnings persistence, returns to education investments, and public education spending. I develop a growth model of human capital accumulation, and show analytically how those factors affect the dynamics of earnings inequality. The calibrated model accounts for 31 percent of the observed differences in earnings inequality between European countries and the US for 2003-07. Differences in returns to education investments and intergenerational earnings persistence are quantitatively important, suggesting the potential role of educational policy in ameliorating rising earnings inequality. Chapter 3, written jointly with Martin Gervais, analyzes the role of endogenous human capital accumulation in shaping optimal fiscal policy within a life-cycle growth model. We show that when investment in human capital is not verifiable---making the tax code incomplete---a non-zero capital income tax becomes optimal in order to alleviate the distortionary effects of the labor income tax on investment in human capital. This is true even if the government has access to a full set of age-dependent labor and capital income taxes. The main result is in sharp contrast to the finding in Jones et al. (1997) that all interest taxes are zero in infinitely-lived agent models with endogenous human capital formation.

This dissertation analyzes the optimal mix of direct and indirect taxes in an economy with multiple tax collecting authorities when both the taxes are subject to evasion and to what extent the tax compliance behavior of individuals in the United States are persistent and spatially dependent. Essay I derives and provides an intuitive interpretation of: (i) impact of the changes in the government instruments on tax evasion by firms, the expected prices they charge, and the expected tax rates they face; (ii) a generalized version of Ramsey rule for optimal commodity taxation which accounts for income tax evasion from either or both the tax authorities; (iii) generalized formulae for the optimal income tax rate for each of the tax authorities; and (iv) the tradeoff between optimal tax rates and audit probabilities for each of the tax authorities. It also re-examines controversies surrounding the uniform income taxes and the differentiated commodity taxes, and investigates how income tax evasion affects the progressivity of the income tax rates. It concludes that whether or not tax evasion calls for reductions in the optimal income tax rates hinges on how tax evasion and the associated concealment costs vary across individual taxpayers. Essay II introduces the twin issues of spatiality and persistence in the individual income tax evasion. While the issue of persistence arises through accumulated learning over time, spatiality arises for several reasons. Some these include the exchange of information between taxpayers; the social norm of tax compliance: an individual would comply if everybody in the society complies and vice versa; individuals faced with dynamic stochastic decision problems that pose immense computational challenges may simply look to others to infer satisfactory policies and interpersonal dependence works through learning by imitating rather than learning by doing. State-level annual per return evasion of individual income tax and related data were used to examine the above hypotheses and found supports for both of them in the individual income tax evasion in the United States.

This thesis consists of three essays on macroeconomic aspects of climate change. Technological Trends and the Intertemporal Incentives For Fossil-Fuel Use analyzes how (the expectations about) the future developments of different kinds of technology affect the intertemporal incentives for fossil-fuel use. I find that improvements in the future state of technologies for alternative-energy generation, energy efficiency and total factor productivity all increase fossil-fuel use before the change takes place. The effect of changes in the efficiency of non-energy inputs is the reverse, while the effect of changes in fossil-fuel based energy technology is ambiguous. These conclusions are robust to a number of variations of the assumptions made. The Role of the Nature of Damages considers to what extent the choice of modeling climate impacts as affecting productivity, utility or the depreciation of capital affects the behavior of integrated assessment models. I carry out my analysis in two different ways. Firstly, under some simplifying assumptions, I derive a simple formula for the optimal tax on fossil-fuel use that adds up the three different types of climate effects. Secondly, I use a two-period model with exogenous climate to analyze how the allocation of fossil-fuel use over time is affected by the effects of climate change. I find that this is sensitive to the assumptions made. Indirect Effects of Climate Change investigates how direct effects of climate change in some countries have indirect effects on other countries going through changing world market prices of goods and financial instruments. When calculating the total effects of climate change, these indirect effects must also be taken into account. I first derive these indirect effects in a many-country model. Reaching agreements about reductions in the emissions of greenhouse gases is made difficult by the negative correlation there seems to be between emissions of greenhouse gases and the vulnerability to climate change. I argue, based on a stylized two country example, that trade in goods will tend to make the countries' interests more aligned while trade in financial instruments will tend to make the countries' interests less aligned.

In Chapter 1 of this thesis we examine two key empirical questions in public economics by exploiting the 2009 Polish tax reforms. First, we estimate the degree of substitution between employment and self-employment tax bases – on the extensive margin. In particular, we quantify the impact of changes in the differential in rates of taxation between the two tax bases on the propensity of taxpayers to declare any positive level of employment or self-employment income. Second, we contribute to the literature on elasticities of taxable income on the intensive margin – the responsiveness of taxable income to changes in marginal tax rates – by providing estimates which are more likely to be robust to changes in year-to-year income dynamics than previous estimates. To identify these effects, we exploit variation in marginal and total tax rates around the 2009 reforms which occurs independently of an individual’s position in the income distribution as a result of joint reporting with a spouse. At the same time, to obtain the extensive-margin responses, we exploit the uniqueness of the 2009 Polish tax reforms, which left the tax schedule un-changed for some types of self-employment while changing the tax schedule for the employed. The baseline estimates of the intensive-margin elasticities are around 0.2-0.3 for the employed and around 0.5-0.7 for the self-employed. The estimates jointly make possible the decomposition of the deadweight losses of the tax reform into intensive and extensive-margin responses, with the contribution of the extensive margin found to be around 7% of the total. In Chapter 2, we examine the optimal non-linear taxation in an environment in which individuals have the option of engaging in either employment or self-employment activity. We build on the estimates from Chapter 1 to calibrate an extension of the classic Mirrleesian model which allows for extensive-margin transitions between employment and self-employment. The results help rationalise the preferential tax treatment of self-employment income versus employment income given in certain tax systems. They also illustrate the ways in which the possibility of extensive-margin transitions between tax bases moderate the incentive to give such preferential treatment. Based on the parameterisation here, the presence of the extensive-margin ap- pears to have a limited impact on the optimal marginal and total tax rates faced by the employed and self-employed. This, together with the earlier decomposition of deadweight losses in Chapter 1 by types of response, points towards a limited role of the extensive margin as a consideration for optimal-tax design, at least as far as the employment and self-employment tax bases are concerned. Chapter 3 turns to a fundamental question in health economics: how do health states change over the life-cycle, and how does the risk of adverse health-shocks change over the life-cycle? Most economic models of individuals’ behaviour over the life-cycle, to the extent to which they incorporate a measure of health risk, assume a simplified unidimensional measure of health. We contribute to this literature by estimating a flexible dynamic factor model of health and health risk over an individual’s life using the rich health data from the Health and Retirement Study (HRS). We find that the many potentially collinear health indicators found in the HRS can broadly be summarized into four underlying factors. Three of these correspond to what may be termed subjective health measures, such as self-reported mobility, while a fourth corresponds to objective measures, including the number of overnight hospital stays, doctor visits and medical spending. The persistence of these underlying factors and the variance of their shocks are estimated as parameters of a vector auto-regressive process. We obtain results about the deterministic evolution of the health factors with age, the level of risk relating to each health measure, as well as heterogeneity by level of education. These are intended as building blocks of an ongoing project concerning the optimal design of disability insurance, given the health risks faced by individuals.

京都大学 / 0048 / 新制・課程博士 / 博士(経済学) / 甲第20654号 / 経博第554号 / 新制||経||282(附属図書館) / 京都大学大学院経済学研究科経済学専攻 / (主査)教授 小佐野 広, 教授 柴田 章久, 准教授 敦賀 貴之 / 学位規則第4条第1項該当 / Doctor of Economics / Kyoto University / DGAM

Cette thèse est une étude appliquée de la taxation optimale et du risque du revenu en amérique latine, en particulier pour l'argentine, le chili, la colombie et le mexique. En faisant face a des niveaux élevés d'inégalité de revenu, l'impôt sur le revenu est pour l'amérique latine un outil essentiel de redistribution qui jusqu'à présent, n'a pas été pleinement exploité. L'un des objectifs de cette thèse est de voir jusqu'où ces pays sont à leur niveau optimal de taxation afin d'explorer la capacité d'amélioration que ce type de charge peut avoir dans chacun des pays de l'étude. Le risque du revenu est une autre caractéristique importante des économies en développement tels que celles trouvées en amérique latine. Etant donné leur vulnérabilité aux chocs macroéconomiques externes, ces économies ont tendance à être particulièrement volatiles. Dans ces conditions, les individus en amérique latine sont sujets à des revenus plus risques que les individus qui vivent des pays développés. La présence du risque a un effet sur comment les agents répondent aux changements divers de l'économie. C'est pourquoi, l'etude des niveaux de risque et en particulier comment les revenus plus risqués affectent la taxation optimale, est l'un des piliers de cette thèse. Le risque du revenu peut être décomposé en deux éléments, permanents ou transitoires. La dernière partie de cette thèse est consacrée à évaluer dans quelle mesure le risque de revenu présente dans chaque pays est causée par un composant permanente ou une composante temporelle. / This thesis is an applied study of optimal taxation and income risk in latin america, in particular for argentina, chile, colombia and mexico. Having to deal with high levels of income inequality, income taxation is for latin america a key tool of redistribution that until now has not been fully exploited. One of the aims of this thesis is to see how far are these countries from their optimal level of taxation, in order to explore the capacity of improvement that this type of tax may have in each one of the countries in the study. Income risk is another important characteristic of developing economies such as those found in latin america. Given their vulnerability to outside macroeconomic shocks, these economies tend to be particularly volatile. under these conditions, individuals in latin america are prone to riskier incomes than the individuals living in developed countries. The presence of risk has an effect on how the agents respond to divers changes in the economy. That is why, studying the levels of risk, and in particular how the riskier incomes affect optimal taxation, is one of the pillars of this thesis. Income risk may be decomposed into two components, permanent or transitory. The last part of this thesis is devoted to estimate how much of the income risk present in each country is caused by a permanent or a temporal component. Given the lack of panel data for latin american countries, these estimations were performed introducing pseudo-panel techniques into traditional panel data methodologies. Comparisons between pseudo-panel results and panel data results were made when the data was available.

<p>This thesis consists of a summary and four papers. The first two papers are theoretical contributions within the area of optimal taxation and public expenditures under asymmetric information between the government and the private sector, and the last two are empirical contributions to the literature on local public expenditures.</p><p>Paper [I] concerns the optimal use of publicly provided private goods in an economy with equilibrium unemployment. The paper points out that imperfect competition in the labor market gives rise to additional policy incentives associated with the self-selection constraint, which motivates adjustments in the public provision of private goods. It also addresses employment related motives behind publicly provided private goods.</p><p>Paper [II] addresses optimal income and commodity taxation in a dynamic economy, where used durable goods are subject to second-hand trade. In our framework, the government is unable to directly control second-hand transactions via commodity taxation. We show how the appearance of a second-hand market affects the use of commodity taxation on the new durable goods as well as the use of income taxation.</p><p>Paper [III] relates the existence and size of the flypaper effect to observable municipal characteristics. The analysis is based on a political economy model, which implies that the effect of a change in the tax base on the majority voter's tax share will be crucial for finding a flypaper effect. The empirical part is based on Swedish data on municipal expenditures and revenues for the period 1996-2004. The results show that the size of the flypaper effect varies among municipalities depending on the relative composition of grant and tax base.</p><p>In Paper [IV], the composition of municipal expenditures in Sweden is analyzed by estimating a demand system for local public services, in which tax revenue collection is treated as endogenous. The estimation is based on the QAIDS specification and uses panel data for the period 1998-2005 and for six local public services. The results show that the point estimates of the income elasticities are positive (with one exception), whereas the point estimates of the own-price elasticities are negative and less than one.</p>