Inequality, Social Distance, and Givingwith Nic Duquette (USC)
Standard theories predict that greater inequality will increase charitable giving, though tax return data suggest the opposite may be true. We develop a model which, incorporating insights from behavioral economics and social psychology, predicts when greater inequality will lower charitable giving. We test the theory in an experiment on donations to a real-world charity. By randomizing the income distribution, we identify the effect of inequality on giving behavior. Consistent with our model, heightened inequality causes giving to fall. Policy agendas that rely on charitable giving and other voluntary, prosocial behaviors to mitigate income and wealth inequality are likely to fail
Representation of the People: Franchise Extension and the ‘Sinn Féin Election’ In Ireland, 1918with Alan de Bromhead (QUB) and Alan Fernihough (QUB)
Electoral reforms in 1918 nearly tripled the number of people eligible to vote in Ireland. Following the reforms – the largest franchise extension in UK history – the previously obscure Sinn Féin party secured 73 of Ireland’s 105 seats, an outcome that precipitated a guerrilla war and ultimately independence from the United Kingdom. This paper examines the relationship between the franchise extension and the election results. We find little evidence of a connection between the two. New female electors appear less likely to have supported Sinn Féin. New male electors were slightly more likely to vote for Sinn Féin, but the magnitude of this effect was small and statistically insignificant. In fact, non-voting appears particularly high for both groups of new electors. Our results suggest that the extension of the franchise cannot explain Sinn Féin's victory. We conclude their electoral success was more likely driven by a change of heart on behalf of the Irish electorate, rather than a change in its composition.
Cycles and Frictions in Taxpayer Behavior
The magnitude of taxpayer responsiveness, a key parameter in public finance, varies through time. Using linked administrative data in Ireland and identifying responses from excess bunching at notches, I characterize which employee-employer pairs are best at reporting tax-advantaged incomes. Industry-specific shocks can distort these labor market pairings and shift economy-wide responsiveness to tax incentives. I document a marked decline in responsiveness during the Great Recession. One-third of this decline is attributable to decreased responsiveness by existing employee-employer pairs,and two-thirds to compositional changes in the labor force.
Does Statutory Incidence Matter? Earnings Responses to Social Security Contributionswith Barra Roantree (ESRI)
This paper provides evidence that statutory incidence is a determinant of taxpayer behaviour. For the case of tax notches, we show that taxes on net pay differ from dollar-equivalent taxes on gross costs. Irish social security taxes contain separate notches on employers' and employees' contributions. Exploiting administrative records, we find short-run earnings responses are stronger when subtracted from employees' wages than when added to employers' gross costs. This challenges the statutory invariance result of standard economic models. By decomposing responses by employer and employee characteristics, we explore mechanisms to explain the differential levels of responsiveness..
Political Fragmentation and Fiscal Policy
This paper examines the link between political fragmentation and tax policy. A model of government is presented where an n-member coalition chooses revenue and expenditure policies. I derive the response of tax policy to a change in the number of coalition partners. The model predicts that an increase in the number of parties leads to (i) lower taxes; (ii) lower expenditure; and (iii) lower social security transfers. These results are counter to the conventional wisdom that countries with more fragmented governments have larger public sectors. I test the model on a large panel of developed countries, and all three of the model's predictions are supported. My results have coefficients significantly different from, and of opposing signs to, the conventional wisdom. I estimate that moving from a two- to three-party legislature lowers tax revenue by 6.7%, expenditure by 9.5%, and transfers by 5.4%. These results are robust to a host of potentially important variables such as the ideological composition of government, changes in the tax base, and electoral cycle effects.
Optimal Pigouvian Taxation when Externalities Affect Demand
Purchasing a network good such as a cell phone generates the positive externality of making phones more useful for others. Should we subsidize cell phones? If pollution/fumes from cars make commuting by foot less desirable, people become more willing to pay road tax. How then should we tax car pollution? To address these questions, I extend and generalize the standard optimal commodity tax model to let the demand for an externality-generating good depend on society's total consumption of that good. The optimal tax rate depends on three factors: the demand elasticities of the good, the marginal social cost, and the response of consumption to the externality. These factors are additive and separable. I find that if a negative externality affects consumption enough, the optimal policy can be to subsidize it.
Crime and Unemployment in Ireland, 2003-2016
This paper investigates the relationship between crime and unemployment in Ireland during the Celtic Tiger boom, Great Recession, and subsequent economic recovery. Using unique administrative police station-level crime data and exploiting large variation in unemployment rates, I first document that a 10% increase in unemployment is associated with a 5% increase in thefts and burglaries. Instrumental variables show that a 1,000-person decline in employment causes 15-25 more thefts or burglaries per quarter. The property crime-unemployment relationship remained robust during the most recent period of substantial economic recovery, with areas where the recovery was fastest also experiencing sharper decreases in property crime.