Lehrstuhl Volkswirtschaftslehre (Öffentliche Finanzen)

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    The effects of public inputs, goods and services on households’ and firms’ location decision
    (2018) Wittrock, Christian; Richter, Wolfram; Riedel, Nadine
    The aim of this dissertation is to contribute to the discussion on the effects of public inputs, goods and services (PIGS) on households’ and firms’ location decision. This work contributes to the debate providing greater insights on the empirical effects of PIGS on spatial mobility using detailed data for Germany. Chapter 2 assesses the short and long run impact of local grammar schools on employment in East German municipalities and finds evidence in favor of a 9% decrease in residential employment (those who work where they live) in locations with a low share of out-commuters and a reduction of house prices by 7% to 11% for all locations types if the only grammar school was closed. For the long-run since 1990, the empirical strategy estimates a 110% higher population and 70% higher house prices in municipalities with a grammar school in 2008 and high commuting costs. The effects in municipalities with low-commuting costs are 60% and 20% respectively. These results suggest that e.g. grammar schools, and thus public goods can play a substantial role for the spatial distribution of people and employment. More importantly, it demonstrates that increasing centralization of public goods in rural areas fortifies the trend in urbanization. Chapter 3 determines the effect of PIGS provision on firm foundation and location choices. Using data for West Germany it tests the implications of a theoretical model for firms’ location choice and identifies a negative effect of taxation and a positive effect of PIGS provision in the considered municipality. On top, the effect of an increase in neighbors tax rate and PIGS spending is positive supporting the notion of tax competition and spillover effects for PIGS between neighboring municipalities. Chapter 4 contributes to the previous chapter analyzing the sensitivity of firm foundations to changes in local taxation and PIGS provision when firms benefit from localization economies. While the former chapter depicts increasing attractiveness of locations with increasing provision of PIGS, an empirical setup shows that localization economies reduce the sensitivity of firm foundations to changes in location characteristics. The last chapter analyzes the impact of partisan politics on the local level in West Germany. Using three different estimation frameworks (Fixed Effects Regression, Regression Discontinuity Design and Instrumental Variable Regression) it does find evidence for mild partisan politics at best.
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    The role of political institutions and representation in economic policy
    (2014) Garmann, Sebastian; Richter, Wolfram F.; Seidel, Tobias
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    Work, Subjective Well-being and Capabilities
    (2014-02-07) Suppa, Nicolai; Richter, Wolfram F.; Roos, Michael
    Chapter 2: This chapter explores the link between poverty as capability deprivation and current life satisfaction. Using German panel data, I examine both whether capability deprivation does hurt and whether individuals eventually adapt. To detect capability deprivation I draw on the notion of an inadequate income together with nonconsumption data of specific commodities. Assumptions and conditions rendering this approach valid are scrutinised. The results indicate that capability deprivation reduces life satisfaction significantly. Moreover the evidence also suggests that individuals fail to adapt within the subsequent four to six years. Finally, the mere lowness of income fails to capture its inadequacy. Chapter 3: This chapter scrutinises the influence of job characteristics on subjective well-being. The capability approach perspective provides a profound conceptual underpinning that supports the interpretation of the results and guides the operationalisation of job characteristics. The empirical analysis employs both a confirmatory factor analysis and the common life and job satisfaction frameworks. Job characteristics are found to increase both job and life satisfaction significantly. Moreover, they also account for what has been called procedural utility and occupational differences in job satisfaction alike. The results suggest that exercises in this vein may help in setting the stage for a more comprehensive and compelling approach to human well-being. Chapter 4: Job characteristics have been studied from various perspectives. Their influence on labour supply, however, has mostly been neglected. The aim of this paper is thus twofold: First, we propose a consistent conceptual framework, based on Lancaster’s approach to consumer theory, for rationalizing such characteristics in conventional theoretical labour supply models. Within this framework, we investigate two main hypotheses: Favorable job characteristics imply (i) lower wage elasticities of labour supply but (ii) larger (less negative) income elasticities. Second, we provide new empirical evidence on the job characteristics-labour supply nexus by estimating a standard discrete choice model using Australian data. The empirical findings lend support to our hypotheses and thus buttress the importance of job characteristics in labour supply decisions.
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    Fiscal policy and economic growth in the presence of intergenerational transfers
    (2012-01-04) Kunze, Lars; Richter, Wolfram F.; Holländer, Heinz
    This thesis is entitled ’Fiscal policy and economic growth in the presence of intergenerational transfers’. It is composed of four self-contained chapters and focusses on the growth and welfare effects of taxation and public spending. The common denominator of all four chapters is that they incorporate an endogenous growth process in an overlapping generations model to evaluate long-term policy implications when different generations are affected in different ways by fiscal policy. In the first and second chapter the implications of capital income taxation for the growth process are discussed. The analysis emphasizes the role of public and private intergenerational transfers in form of public pensions and bequests as well as intergenerational redistribution induced by public policies. Among other results, it turns out that the presence or absence of such transfers critically determines whether an increase of capital income taxes with additional revenue being devoted to cut wage taxes may enhance economic growth. In the third chapter, the focus of the analysis is on social security funding and its implications for economic growth. Whereas a pay-as-you-go pension scheme, as considered in chapter one, naturally includes intergenerational transfers from the current working generation to retirees, a fully funded social security system does not. Still, the presence of such transfers within the economy in form of private educational spending and bequests turns out to play a key role in deter- mining the impact of funded social security on economic growth. More specif- ically, it is shown that a funded pension scheme may harm growth if there are operative bequests within the family, and parents thus face a trade-off between educating their children and leaving bequests. By contrast, when bequests are inoperative, the Ricardian equivalence holds and an increase in forced savings is exactly offset by a reduction in private savings leaving capital accumulation and educational spending unchanged. Chapter four discusses the impact of fiscal decentralization on economic growth in the context of education funding. While the traditional theoretical literature on fiscal decentralization focusses mainly on efficiency issues, empirical evidence for a positive relationship between fiscal decentralization and economic growth turns out to be mixed. Some studies can confirm the positive impact of higher degrees of decentralization on economic growth, whereas others face difficulties in establishing a positive relationship and, in fact, obtain either no dependency or a negative one. The aim of the fourth chapter is therefore to further evaluate the theoretical linkage and, at the same time, to give an ex- planation for the discrepancy between the empirical literature. The analysis reveals that there exists a growth maximizing degree of fiscal decentralization. Furthermore, it is shown that some degree of fiscal decentralization is always superior (in terms of long-run growth and welfare) to a system where either local or central governments exclusively finance educational investments.
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    Optimal taxation of human capital
    (2011-05-19) Braun, Christoph; Richter, Wolfram F.; Schabert, Andreas
    This dissertation is on optimal taxation of human capital and tackles the following leading question: How should the tax system be optimally designed to promote the accumulation of human capital to maximize economic well- being? Chapter 2 discusses results derived by Bovenberg and Jacobs (2005) and Richter (2009), who show the education efficiency theorem: In a second-best optimum, the education decision is undistorted if the function expressing the stock of human capital features a constant elasticity with respect to education. I drop this assumption. The household inherits an initial stock of human capital, implying that the aforementioned elasticity is increasing. In a two-period Ramsey model of optimal taxation, I show that the education efficiency theorem does not hold. In a second-best optimum, the discounted marginal social return to education is smaller than the marginal social cost. The household overinvests in human capital relative to thefirst best. The government effectively subsidizes the return to education. Chapter 3 studies a Ramsey optimal taxation model with human capital in an infinite-horizon setting. Contrary to Jones, Manuelli, and Rossi (1997), the human capital production function does not include the current stock of human capital as a production factor. As a result, the return to human capital, namely labor income, does not vanish in equilibrium. In a stationary state, the household underinvests in human capital relative to the first best, i.e., education is distorted. Human capital is effectively taxed. The optimal tax scheme prescribes making the cost of education not fully tax-deductible. Chapter 4 studies second best policies for education, saving, and labour in an OLG model in which endogenous growth results from human capi- tal accumulation. Government expenditures have to be financed by linear instruments so that growth equilibria are inefficient. The inefficiency is exacerbated if selfish individuals externalize the positive effect of education on descendents' productivity. It is shown to be second best to subsidize edu- cation even relative to the first best if the elasticity of the human capital investment function is strictly increasing. The analysis allows one to iden- tify fundamental differences in the efficient dynamic taxation of human and nonhuman capital. Chapter 5 presents a numerical analysis of chapter 4's underlying model with selfish individuals. It turns out that the case for subsidizing education to account for distortionary labor taxation is rather weak. The still dominant justification for subsidizing education is to internalize intergenerational externalities.
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    Optimal Fiscal Policies in the Presence of Migration: A Dynamic Perspective
    (2008-04-01T09:38:42Z) Schuppert, Christiane; Richter, Wolfram F.; Holländer, H.