My fields of interest are Public Economics and Labor Economics.
Emmanuel Saez (main advisor), Alan Auerbach, Danny Yagan
We exploit a large and quasi-randomized 2.5 year-long income tax holiday to identify intertemporal labor responses of high-wage earners to net wage changes. In August 2013, the Argentine government exempted a group of wage earners from the income tax and left the remaining group taxed until February 2016, when the tax break was repealed. Eligibility was based on whether past wage earnings were below a fixed threshold, creating a discontinuity that treated workers who coexist in the same labor market (even in the same firm) with sharply different marginal and average tax rates—effectively 0% for workers below the threshold. Using rich population-wide administrative data and a regression discontinuity design, we estimate a precise and very small wage earnings elasticity of 0.017 to this large, salient, and temporary income tax change. Responses are larger for more flexible outcomes (overtime hours) and more elastic groups (job switchers and managers). We also find avoidance responses from new entrants who faced no tax if their first monthly wage was below the fixed threshold. The strategic entry below the threshold to dodge taxes required coordination with employers. Our evidence challenges the standard model of labor supply and demand, and points toward rigidities in the labor market which requires employer-employee cooperation for wage earners to respond to tax changes.
We explore how the way in which tax credits are disbursed affects employer's behavior, wages, and employment. We exploit a change in the payment system in Argentina that was gradually rolled out between 2003 and 2010. Under the old system, employers were in charge of delivering family allowances to their employees together with the monthly salary, and the transfer was deducted from employer social security contributions. For transparency purposes, the government eliminated the intermediary role of firms and started depositing the transfer directly into workers' bank accounts. Using employer-employee administrative data and an event-study design, we show that the way tax credits are disbursed matters for the final economic incidence. Our evidence suggests that employers shift part of the incidence of the transfer by paying lower wages. The mechanisms are consistent with a labor demand channel rather than pay equity concerns (e.g., effect mostly driven by small firms and new hires rather than incumbent workers). Our findings are therefore in line with the hypothesis that transfers are not all captured dollar for dollar by workers.
We disentangle the extent of imperfect competition in product and labor markets using plant-level data. We derive a formula for the ratio between markups and markdowns assuming cost-minimizing firms that face upward-sloping labor supply and downward-sloping product demand curves. We then separate this combined measure of market power by estimating firm-level labor supply elasticities instrumenting wages with intermediate inputs. Our results suggest that both markets exhibit imperfect competition, but the variation is mainly driven by markups. We also estimate the relative gains of removing market power dispersion on allocative efficiency, finding that markups are more important on TFP than markdowns.
SELECTED WORK IN PROGRESS
We estimate the response of firms and self-employed workers to two revenue taxes—Monotributo and Gross Receipts Tax—across the turnover distribution using rich administrative data from Argentina. We exploit several revenue-dependent discontinuities that provide incentives to underreport taxable income combined with a bunching design to estimate sales elasticities. We also explore heterogeneities by firm size, type of activities, and type of taxpayers. In the case of small firms, we find sizeable bunching below the thresholds that is stronger for higher tax incentives. The response is stronger in sectors that have more space for manipulation, such as service-based activities. In the case of medium and large firms, bunching is more muted but it suggests that even large firms are able to underreport their gross sales to avoid facing higher tax rates. Firms also seem to find more costly the indirect administrative cost of becoming a collection agent than the direct fiscal cost of the Gross Receipts Tax. We cannot rule out, however, that large firms adjust other margins (or taxes) to compensate for the higher tax pressure.
Two understudied areas in Public Finance are the role of tax professionals and the role of networks in tax administration and enforcement (Slemrod, 2018). In this project I seek to answer two questions: First, whether it is more cost-effective to communicate tax preparers or taxpayers to improve tax compliance; Second, whether there are spillover effects from targeted to non-targeted taxpayers that form part of the same network (those sharing the same accountant). To that end, I run a large scale randomized communication experiment where I send deterrence emails to taxpayers and/or accountants (about 100,000 taxpayers in the treatment group and 900,000 in the control group).
We study the relationship between tax filings and tax withholdings for the Argentine gross receipts tax on businesses and we shed light on the role of tax preparers in that relationship. Firms have to file a gross receipt tax return every month through a centralized online platform and can (i) claim a refund if the amount withheld in advance (third-party reported by suppliers and clients) exceeds the tax liability, or (ii) remit the difference if the tax liability is higher than withholdings. Using rich administrative data we first document sharp bunching exactly at the point where tax liabilities (reported by the firm) equal tax withholdings (third-party reported) and argue that this pattern is due to strategic under-reporting of income so that the tax balance matches the withholding shown by the online platform. Second, by linking firms to tax preparers through shared contact information we study the role of accountants on this behavior. We analyze how correlated are the behaviors of firms who share the same accountant (network). We find a positive relationship between accountants and the bunching behavior observed on their clients. We also exploit information on past audits and show that, within a network, non-audited firms respond to their peer's audit, suggesting that tax preparers might act as diffusers of information across firms.
We study the efficiency and distributional effects of price controls. Despite the controversy surrounding the effects of this regulation, surprisingly little has been done in practice to test the contrasting predictions. In this project, we aim to fill this gap by exploiting scanner data and quasi-experimental variation from price regulations introduced in the Argentine retail sector in 2014. We first study the effect of price controls on the supply of targeted products, spillovers on similar products, and explore how it differs by the level of concentration in the product's industry. Guided by these results, in the second part of the paper we estimate markups at the product level and explore whether price controls can affect the level of concentration in the industry. In the third part, we study the distributional and welfare effects of price controls.
Anatomía del Impuesto a las Ganancias sobre los Asalariados: Argentina 2000-2016
In preparation for Revista de Trabajo (Ministry of Labor, Argentina)
Investment in ICT, Productivity and Labor Demand. The Case of Argentina
(with Irene Brambilla), World Bank Policy Research Working Paper No. 8325 (January 2018)
Growth in Labor Earnings Across the Income Distribution: Latin America During the 2000s
(with Irene Brambilla), CEDLAS, Working Papers 182, CEDLAS, Universidad Nacional de La Plata, 2015.
An Empirical Analysis of Mark-ups in the Argentine Manufacturing Sector
(with Irene Brambilla), Department of Economics, Working Papers 104, Departamento de Economía, Universidad Nacional de La Plata, 2014.
Female Labor Supply and Fertility. Causal Evidence for Latin America
CEDLAS, Working Papers 0166, Universidad Nacional de La Plata, 2013.
Measuring Poverty in Argentina: the Food Energy Intake Method
(with Malena Arcidiácono), XLVII Annual Meeting of the Argentine Association of Political Economy, 2012.
Fiscal Decentralization and Economic Integration in Mercosur: Argentina and Brazil
(with Alberto Porto, Natalia Porto), Latin American Business Review, 15:3-4, 225-252, DOI: 10.1080/10978526.2014.931787
"Glocalization" and decentralization. The role of local governments in the new international context
(with Alberto Porto, Natalia Porto), Urban Public Economics Review, num. 20, pp. 62-93.
Chapters in books
La Calidad de la Administración Tributaria como Insumo de la Función de Producción Recaudatoria
(with A. Porto and W. Rosales), In Porto A. (editor), Temas de Economía de los Gobiernos Municipales, Buenos Aires: Ed. DUNKEN. 2012. ISBN: 978-987-02-6003-5.
Teaching Assistant at University of California, Berkeley
Public Economics 131 (Prof. Alan Auerbach) /// Fall 2017 /// Syllabus
Public Economics 131 (Prof. Emmanuel Saez) /// Spring 2017 /// Syllabus
Econometrics 140 /// Fall 2016 and Spring 2016 /// Syllabus
Microeconomics 100A /// Fall 2015 /// Syllabus
Teaching Assistant at Universidad Nacional de La Plata (UNLP)
Labor Economics (graduate) /// Spring 2013
Topics in Advanced Econometrics (graduate) /// Fall 2012
Microeconomics II (undergraduate) /// 2012-2014
Econometrics I (undergraduate) /// 2011
ECON 131: Public Economics (Spring'17)
This page contains section notes and other course materials
for ECON 131: Public Economics taught by Emmanuel Saez.
Office hours: Fridays 3-6pm, 630 Evans Hall
Section 1: Optimization Review -Updated 2017- /// (Solutions)
Section 2: Empirical Tools -Updated 2017- /// (Solutions)
Section 3: Tax Incidence and Efficiency Costs -Updated 2017- /// (Solutions)
Section 4: Labor Income Taxation -Updated 2017- /// (Solutions)
Section 5: Labor Income Taxation (cont.) -Updated 2017- /// (Solutions)
Section 6: Capital Income and Savings Taxation -Updated 2017- /// (Solutions)
Section 7: Externalities -Updated 2017- /// (Solutions)
Section 8: Public Goods -Updated 2017- /// (Solutions)
Section 9: Voting, Tiebout Model, and Local Public Finance -Updated 2017- /// (Solutions)
Section 10: Social Security and Insurance -Updated 2017- /// (Solutions)
Section 11: Moral Hazard and Social Security -Updated 2017- /// (Solutions)