Urban land development in China is occurring on a massive scale and corruption is prevalent in the real estate sector through side deals between buyers and city officials. A recent study by Cai, Henderson, and Zhang (2013, RAND Journal of Economics) provides indirect evidence of this corruption through the use of two different types of auctions. The authors argue that the practices of city officials overseeing land sales amount to losses in city revenue in the hundreds of billions of dollars.
What have been the economic impacts of existing government tax and expenditure programs? Among the questions looked at here:
To what degree have existing social insurance programs such as Social Security, disability insurance, and unemployment insurance helped stabilize household consumption? What economic distortions are created in the process?
How can the provision of key public services such as education and health care be made more cost effective?
How have existing safety-net programs done in alleviating poverty and improving the future success of poor children? To what degree do these programs distort household incentives?
What have been the economic impacts of recent and proposed tax reforms?
Developing economies are typically characterized by low tax revenue and widespread tax evasion. This research shows that in such environments, it can be better to tax firms based on turnover rather than profits: while turnover taxes are known to distort production decisions, they are more difficult to evade than profit taxes. Analyzing administrative tax records from Pakistan, the study shows that the use of production-inefficient turnover taxes sharply reduces tax evasion and increases tax revenue.
By regulating when divorce can occur and how resources are divided when it does, divorce laws can affect people’s behavior and their wellbeing both during marriage and at divorce. Household survey data from the United States shows that the introduction of unilateral divorce in states that imposed an equal division of property is associated with higher household savings and lower female employment rates among couples that are already married. This paper develops a model of household behavior to account for these effects and study how current laws can affect the wellbeing of different household members.
Many families in Europe and North America have substantial assets in the form of housing and retirement accounts but little in the way of liquid wealth or credit facilities to offset short-term income falls. This research shows that these households respond strongly to receiving temporary government transfers, boosting the economy through increased consumption. The findings have far-reaching implications for the design of fiscal stimulus policies in a recession.
Does greater regulation of consumer financial products actually benefit consumers? This research, analyzing the CARD act enacted in the U.S. in 2009, suggests that it does. In particular, the act’s restrictions on hidden credit card fees were found to reduce borrowing costs (especially for consumers with low credit scores) without increasing interest charges and other fees and without reducing access to credit.