American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 2 1 February 2010 http://www.aeaweb.org/issue.php?journal=POL&volume=2&issue=1 Journal Article Pitfalls of Participatory Programs: Evidence from a Randomized Evaluation in Education in India Abhijit V.BanerjeeMIT RukminiBanerjiPratham-ASER, Mumbai EstherDufloMIT RachelGlennersterMIT StutiKhemaniWorld Bank 1 30 Participation of beneficiaries in the monitoring of public services is increasingly seen as a key to improving their quality. We conducted a randomized evaluation of three interventions to encourage beneficiaries' participation to India: providing information on existing institutions, training community members in a testing tool for children, and training volunteers to hold remedial reading camps. These interventions had no impact on community involvement, teacher effort, or learning outcomes inside the school. However, in the third intervention, youth volunteered to teach camps, and children who attended substantially improved their reading skills. This suggests that citizens face constraints in influencing public services. (JEL H52, I21, I28, O15) http://www.aeaweb.org/articles.php?doi=10.1257/pol.2.1.1 10.1257/pol.2.1.1 http://www.aeaweb.org/aej/pol/data/2008-0073_data.zip http://www.aeaweb.org/aej/pol/app/2008-0073_app.pdf American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 2 1 February 2010 http://www.aeaweb.org/issue.php?journal=POL&volume=2&issue=1 Journal Article Tagging and Income Taxation: Theory and an Application HelmuthCremerToulouse School of Economics FirouzGahvariU IL Jean-MarieLozachmeurToulouse School of Economics 31 50 We derive a set of analytical results for optimal income taxation with tags using quasilinear preferences and a Rawlsian social welfare function. Secondly, assuming a constant elasticity of labor supply and log-normality of the skills distribution, we analytically identify the winners and losers of tagging. Third, we prove that if the skills distribution in one group first-order stochastically dominates the other, tagging calls for redistribution from the former to the latter group. Finally, we calibrate our model to the US workers using gender as tag. Welfare implications are dramatic. Only male high-wage earners lose. Everyone else gains, some substantially. (JEL H21, H23, H24) http://www.aeaweb.org/articles.php?doi=10.1257/pol.2.1.31 10.1257/pol.2.1.31 American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 2 1 February 2010 http://www.aeaweb.org/issue.php?journal=POL&volume=2&issue=1 Journal Article Input Constraints and the Efficiency of Entry: Lessons from Cardiac Surgery David M.CutlerLittauer Center, Harvard U Robert S.HuckmanHarvard U Jonathan T.KolstadU PA 51 76 Prior studies suggest that with elastically supplied inputs free entry may lead to an inefficiently high number of firms in equilibrium. Under input scarcity, however, the welfare loss from free entry is reduced. Further, free entry may increase use of high-quality inputs, as oligopolistic firms underuse these inputs when entry is constrained. We assess these predictions by examining how the 1996 repeal of certificate-of-need (CON ) legislation in Pennsylvania affected the market for cardiac surgery in the state. We show that entry led to a redistribution of surgeries to higher quality surgeons, and that this entry was approximately welfare neutral. (JEL I11, L13) http://www.aeaweb.org/articles.php?doi=10.1257/pol.2.1.51 10.1257/pol.2.1.51 http://www.aeaweb.org/aej/pol/data/2008-0032_data.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 2 1 February 2010 http://www.aeaweb.org/issue.php?journal=POL&volume=2&issue=1 Journal Article Tax Competition for Heterogeneous Firms with Endogenous Entry Ronald B.DaviesU College Dublin CarstenEckelU Bamberg 77 102 This paper models tax competition for mobile firms that are differentiated by their productivities. Because taxes affect the distribution of firms, they affect wages, prices, and the number of firms. From the social planner's perspective, optimal taxes efficiently distribute income between private and public consumption and are harmonized, providing the optimal number of firms. This is not a Nash equilibrium. As is common in such models, equilibrium taxes are inefficiently low. Furthermore, there is no pure strategy equilibrium with equal taxes resulting in too many firms. This illustrates a new distortion from tax competition and a new benefit from harmonization. (JEL H21, H25, H87) http://www.aeaweb.org/articles.php?doi=10.1257/pol.2.1.77 10.1257/pol.2.1.77 American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 2 1 February 2010 http://www.aeaweb.org/issue.php?journal=POL&volume=2&issue=1 Journal Article Time Is Money: Choosing between Charitable Activities Naomi E.FeldmanBen-Gurion U Negev 103 30 This paper analyzes the impact of a preferential tax-price for monetary donations on the joint decision to donate time (volunteer) and money. The methodological approach takes into account that consumption of each charitable good affects consumption of the other. Using data from a national survey on household charitable giving, the results show that donations of time and money are substitutes. However, a decrease in the tax-price of monetary donations also has a positive effect on donations of time that acts outside the change in relative prices. This more than offsets the substitution effect leading to an overall positive correlation between the two charitable goods. (JEL D64, H24, H31) http://www.aeaweb.org/articles.php?doi=10.1257/pol.2.1.103 10.1257/pol.2.1.103 http://www.aeaweb.org/aej/pol/data/2008-0055_data.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 2 1 February 2010 http://www.aeaweb.org/issue.php?journal=POL&volume=2&issue=1 Journal Article Playing with Fire: Cigarettes, Taxes, and Competition from the Internet AustanGoolsbeeU Chicago Michael F.LovenheimStanford Institute for Economic Policy Research, Stanford U JoelSlemrodU MI 131 54 This paper documents the rise of the Internet as a source of state tax-free cigarettes and its impact on taxed sales elasticities. Using data on cigarette tax rates, taxable cigarette sales and individual smoking rates by state from 1980 to 2005 merged with data on Internet penetration, this paper documents that there has been a substantial increase in the sensitivity of taxable cigarette sales to state tax rates that is correlated with the rise of Internet usage within states. The estimates imply that the increased sensitivity from cigarette smuggling over the Internet has lessened the revenue generating potential of cigarette tax increases significantly, although states are still far from the revenue-maximizing tax rates. (JEL D12, H25, H31, H71, L66) http://www.aeaweb.org/articles.php?doi=10.1257/pol.2.1.131 10.1257/pol.2.1.131 http://www.aeaweb.org/aej/pol/data/2007-0030_data.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 2 1 February 2010 http://www.aeaweb.org/issue.php?journal=POL&volume=2&issue=1 Journal Article The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution N. GregoryMankiwHarvard U MatthewWeinzierlHarvard U 155 76 Should the income tax include a credit for short taxpayers and a surcharge for tall ones? The standard utilitarian framework for tax analysis answers this question in the affirmative. Moreover, a plausible parameterization using data on height and wages implies a substantial height tax: a tall person earning $50,000 should pay $4,500 more in tax than a short person. One interpretation is that personal attributes correlated with wages should be considered more widely for determining taxes. Alternatively, if policies such as a height tax are rejected, then the standard utilitarian framework must fail to capture intuitive notions of distributive justice. (JEL D64, H21, H23, H24, J11) http://www.aeaweb.org/articles.php?doi=10.1257/pol.2.1.155 10.1257/pol.2.1.155 http://www.aeaweb.org/aej/pol/data/2008-0107_data.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 2 1 February 2010 http://www.aeaweb.org/issue.php?journal=POL&volume=2&issue=1 Journal Article Is the EITC as Good as an NIT? Conditional Cash Transfers and Tax Incidence JesseRothsteinPrinceton U 177 208 The EITC is intended to encourage work. But EITC-induced increases in labor supply may drive wages down. I simulate the economic incidence of the EITC. In each scenario that I consider, a large portion of low-income single mothers' EITC payments is captured by employers through reduced wages. Workers who are EITC ineligible also see wage declines. By contrast, a traditional Negative Income Tax (NIT) discourages work, and so induces large transfers from employers to their workers. With my preferred parameters, $1 in EITC spending increases after-tax incomes by $0.73, while $1 spent on the NIT yields $1.39. (JEL H22, H23, H24, H31, J22) http://www.aeaweb.org/articles.php?doi=10.1257/pol.2.1.177 10.1257/pol.2.1.177 http://www.aeaweb.org/aej/pol/data/2008-0114_data.zip http://www.aeaweb.org/aej/pol/app/2008-0114_app.pdf American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 2 1 February 2010 http://www.aeaweb.org/issue.php?journal=POL&volume=2&issue=1 Journal Article Front Matter i ii http://www.aeaweb.org/articles.php?doi=10.1257/pol.2.1.i 10.1257/pol.2.1.i