JRC B2 Seminar: "Mispriced Authority: Arbitrage and Internal Capital Markets of Multinationals" - Anna Abate Bessomo
Abstract
Using the example of internal capital markets of multinational enterprises, I show theoretically that policies ignoring the internal allocation of authority, such as arm’s length transfer pricing, have negative consequences if decision-making is (partly) centralised. I show that these policies result in profit shifting through interest rate arbitrage, increase the tax elasticity of investment, and disincentivises decentralisation to local joint venture partners.
Speaker
Anna Abate Bessomo is a PhD candidate at the economics department of the European University Institute in Florence, Italy. Before that she studied in Ireland, the Netherlands, and Belgium. Her research focuses on organisational economics, with secondary interests in public economics, corporate governance, and applied micro theory.
JRC B2 Seminar: "The role of family social transfers in reducing child poverty in Portugal" - Sara Riscado
Abstract
One fifth of the children in Portugal live in households at risk of poverty, and reforms to strengthen fiscal support to families with children are often being proposed by scholars and policy makers. This paper uses the microsimulation model EUROMOD and data from the EU-SILC to assess the power of selected tax and benefit rules currently in place to reduce child poverty and to simulate hypothetical changes to these rules in a revenue-neutral set-up. To obtain a comprehensive view of the effects of these hypothetical policy changes, their impacts on the labour market are also quantified using a discrete choice labour supply model. Considering a parametric reform with a limited cost, the Rendimento social de inserção, the Portuguese minimum income benefit, is the most efficient instrument to reduce child poverty, being also the one generating higher labour market disincentives.
Speaker
Sara Riscado is an economist from the Public Finance and Structural Studies Unit of the Economics and Research Department of Banco de Portugal. Before that she was an economic analyst of the Fiscal Policy Unit of the JRC, and she has also worked in the Portuguese Council of Public Finance. Her research interests focus currently on public finance and applied microeconomics.
JRC B2 Seminar: "Statistical matching of household income and consumption surveys at the European Union level: a pragmatic and flexible strategy" - Manuel Tomás
Abstract
There is a broad consensus on the need to observe information on households’ income and consumption and other socio-economic variables within the same micro-dataset. However, in most European Union countries, these data are collected through two independent surveys: the Statistics on Income and Living Conditions (SILC) and Household Budget Survey (HBS). Previous literature points to statistical matching techniques as the most appropriate way to combine data from these sources. This paper presents a novel matching strategy between SILC and HBS applicable to all European Union countries (with complete information) for the 2010 and 2015 reference years. It results in a robust merging of the household disposable income (from SILC) and total consumption expenditure (from HBS) variables and all their respective components in a synthetic dataset. The strategy relies on a matching procedure implemented through a nearest-neighbor distance algorithm that considers as matching variables reliable proxies for the variables of interest that indirectly capture the information of common variables of the surveys once transformed into a single dimension. Apart from measuring welfare, inequality and poverty more comprehensively, our results can enhance the representation of households in economic models and Distributional National Accounts and serve to study relationships among the integrated variables.
SPEAKER:
Manuel Tomás is a researcher at the Basque Centre for Climate Change and is developing his Ph.D. Thesis in Economics at the University of the Basque Country. Before that, he worked as an Associate Lecturer at the University of Castilla-La Mancha. His research focuses on modelling consumer behaviour using different economic models to assess the macroeconomic, distributional, and environmental effects of energy and climate policies.
JRC B2 Seminar: "A new poverty indicator for Europe: The extended headcount ratio" - Tim Goedemé
ABSTRACT:
The methodology currently used to measure poverty in the European Union faces some important limitations. Capturing key aspects of poverty is done using a dashboard of indicators, which often tell conflicting stories. We propose a new income-based measure of poverty for Europe that captures in a consistent way in a single indicator the level of relative poverty, the intensity of poverty, poverty with a threshold anchored in time and a pan-European perspective on poverty. To do so, we work with a recently developed poverty index, the extended headcount ratio (EHC) and derive the relevant poverty lines to apply the index to poverty in Europe. We show empirically that our measure consistently captures the aspects typically monitored using a variety of indicators and yields rankings that seem more aligned with intuitions than those obtained by these individual indicators. According to our measure, Eastern Europe has a much higher level of poverty than Southern Europe, which, in turn, has a considerably higher level of poverty than North-Western Europe. In North-Western Europe, the evolution of our measure over time correlates most strongly with the at-risk-of-poverty rate, while in Southern and Eastern Europe, it correlates most strongly with at-risk-of-poverty with the threshold anchored in time.
SPEAKER:
Tim Goedemé is Senior research fellow of the Herman Deleeck Centre for Social Policy (University of Antwerp), where he directs research on poverty and social protection, and Associate Member of the Institute for New Economic Thinking at the Oxford Martin School (University of Oxford), where he is involved in the ‘Employment, Equity and Growth Programme’. His research topics include the definition and measurement of poverty and human needs in high-income countries, the adequacy and effectiveness of social policies, as well as environmental sustainability and the welfare state. Recently, he became responsible for setting up the research programme of the new Belgian Federal Institute for the protection and promotion of Human Rights.
JRC B2 Seminar: "Wealth Inequality Dynamics in Europe and the United States: Understanding the Determinants" - Clara Martínez-Toledano
Abstract
This paper studies the interaction between the long-term dynamics of aggregate household wealth and the wealth distribution in Europe and the United States. We do so by building the first Distributional Wealth Accounts for Europe, including households’ assets, liabilities, investment flows, and the wealth distribution for most European countries from 1970–2020. We find that although aggregate household wealth to income ratios have followed a similar increasing pattern in both Europe and the United States since 1970, wealth concentration has increased much faster in the United States. Using wealth accumulation decompositions and counterfactual simulations, we show that the weaker rise in labor income inequality and the stronger rise in house prices relative to financial assets in Europe versus the United States seem to explain why Europe has experienced a more moderate rise in wealth concentration since the mid-1980s.
Speaker
Clara Martínez-Toledano is an Assistant Professor of Financial Economics at the Imperial College London, and Wealth Distribution Coordinator at WID.world. Before joining Imperial, she was a Postdoctoral research scholar at Columbia Business School. Her research interests are on household and public finance. Recent work focuses on understanding the determinants of wealth accumulation and wealth inequality dynamics within and across countries.
JRC B2 Seminar: "How important are the unit of analysis and equivalence scales when measuring income poverty and inequality? Evidence from Ireland" - Mark Regan
Abstract
We analyse the effect of varying equivalization scales and income-sharing units (households, tax-units and benefit-units) on inequality and poverty statistics using Irish microdata. We find that benchmark equivalence scales result in substantial variation in the degree of income poverty estimated at the household level, particularly for young children and the elderly. We test multiple permutations of child and adult weights in a set of hypothetical equivalence scales. Our simulation results show that over a range of commonly observed adult-child equivalence weights –0.5 to 0.7 for adults and 0.3 to 0.5 for children, Irish income poverty rates in 2019 ranged from 15.0 per cent to 19.5 per cent– most of this variation is attributable to changes in the adult weight. Inequality statistics tend to be less sensitive to the choice of equivalence scale but are sensitive to the choice of income-sharing unit. At the household level, the Gini coefficient varies between 0.29 and 0.32. At the tax-/benefit-unit level the range is elevated, with the Gini remaining stable over time but between 0.33 and 0.35. Other inequality metrics, such as the p90p10 ratio, exhibit increased volatility over the business cycle at sub-household unit levels.
Speaker
Mark Regan is a researcher at the Economic and Social Research Institute (Dublin, Ireland) and is affiliated to Trinity College Dublin. He recently completed a PhD in Economics at University College Dublin and previously lectured in Trinity College Dublin. His research interests include tax-benefit policy analysis and labour market scarring.
Theano Kakoulidou is a researcher at the Economic and Social Research Institute (Dublin, Ireland) and she is also affiliated to Trinity College Dublin. Before that she has worked as a special advisor to the Greek Minister of Labour as well as members of the Hellenic Parliament, while finishing her PhD at the Athens University of Economics and Business. Her research interests include labour, public and welfare economics.
JRC B2 Seminar: "Trends in Inequality of Opportunity in health over the life cycle: the role of early-life conditions" - Matija Kovacic
Abstract
This paper explores the evolution of inequality of opportunity in the prevalence of chronic diseases along the life cycle and across different birth cohorts for individuals aged 50 or older and residing in 13 European countries. We adopt an ex-ante parametric approach and rely on the dissimilarity index as our reference inequality metric. In addition to a commonly used set of circumstances, we pay particular attention to the role of adverse early-life conditions, such as the experience of harm and the quality of the relationship with parents. In order to quantify the relative importance of each circumstance, we apply the Shapley inequality decomposition method. Our results suggest that inequality of opportunity in health is not stable over the life cycle - it is generally lower at younger ages and then monotonically increases. Moreover, it varies between different birth cohorts and is generally higher for younger individuals than for older age groups. Finally, the contribution of adverse early life conditions ranges between 25% and 45%, which is comparable to the share of socio-economic circumstances but significantly higher than the relative contribution of other demographic characteristics, especially at younger ages.
Speaker
Matija Kovacic is a researcher in the European Commission's Joint Research Centre (Ispra). He is also affiliated with the Department of Economics at Ca’ Foscari University of Venice as a subject expert in Empirical Economics and Microeconomics. Before that, he was a post-doc researcher at the Ca’ Foscari University of Venice and the "Marco Fanno" Department of Economics, University of Padua. His research interests include the analysis of individual attitudes and choices; inequality; and health economics.
JRC B2 Seminar: "Public support for tax policies in COVID-19 times: Evidence from Luxembourg" - Javier Oliveira
Abstract
We study attitudes towards the introduction of hypothetical new taxes to finance the cost of the COVID-19 pandemic. We rely on survey data collected in Luxembourg in 2020. The survey asks for the agreement of respondents over: a one-time net wealth tax, an inheritance tax, a temporary solidarity income tax, and a temporary increase in VAT. All questions include different and randomly assigned tax attributes (tax rates and exemption amounts). We find a clear divide with relatively high support for new wealth and inheritance taxes on the one hand and a low support for increases in VAT and income taxes on the other hand. While 58% of respondents agree or strongly agree with a one-time tax levied on net worth, only 24% are in favor of a small increase in VAT. Support for any tax is however negatively associated with the size of the tax as measured by the predicted revenues. Our results indicate that a one-time wealth tax could raise substantial revenues and still garner public support.
Speaker
Javier Olivera is a researcher in the department of living conditions at the Luxembourg Institute of Socio-Economic Research (LISER) and full professor of economics at Pontificia Universidad Catolica del Peru (PUCP). He is also affiliated to the department of economics at KU Leuven. Before his academic career he worked in the public sector, advising policy in Peru. His research interests include public economics, socio-economic inequality, pensions, attitudes towards redistribution and taxation, intergenerational transfers, old age and economic demography.
