http://repub.eur.nl/res/aut/12/ List of Publications en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/21359/ 2010-01-01T00:00:00Z This paper analyzes optimal linear and non-linear taxes on capital and labor incomes in a life-cycle model of human capital investment, financial savings, and labor supply with heterogenous individuals. A dual income tax with a positive marginal tax rate on not only labor income but also capital income is optimal. The positive tax on capital income serves to alleviate the distortions of the labor tax on human capital accumulation. The optimal marginal tax rate on capital income is lower than that on labor income if savings are elastic compared to investment in human capital, substitution between verifiable and non-verifiable inputs in human capital formation is difficult, and most investments in human capital are verifiable so that education subsidies can directly reduce the tax wedge on learning. Numerical calculations suggest that the optimal marginal tax rate on capital income is substantial. http://repub.eur.nl/res/pub/11768/ 2008-02-01T00:00:00Z http://repub.eur.nl/res/pub/17584/ 2008-01-01T00:00:00Z This paper explores how the specification of the earnings function impacts the optimal tax treatment of human capital. If education is complementary to labor effort, education should be subsidized to offset tax distortions on labor supply. However, if most of the education is enjoyed by high ability households, education should be taxed in order to redistribute resources to the poor. The paper identifies the exact conditions under which these two effects cancel and education should be neither taxed nor subsidized. In particular, with non-linear tax instruments, education should be weakly separable from labor and ability in the earnings function. With linear taxes, education should also feature a constant elasticity in a weakly separable earnings function. http://repub.eur.nl/res/pub/11783/ 2005-05-01T00:00:00Z Discusses the introduction of money illusion to rescue the double dividend, based on labor supply. Expansion of the environmental tax reform rather than contract employment; Effects of value-added tax on nominal labor productivity and nominal wages; Enhancement of incentives to supply labor. http://repub.eur.nl/res/pub/6587/ 2005-04-05T00:00:00Z This paper analyzes optimal linear taxes on capital and labor incomes in a life-cycle model of human capital investment, financial savings, and labor supply with heteroge- nous individuals. A dual income tax with a positive marginal tax rate on not only labor income but also capital income is optimal. The positive tax on capital income serves to alleviate the distortions of the labor tax on human capital accumulation. The optimal marginal tax rate on capital income is lower than that on labor income if savings are elastic compared to investment in human capital; substitution between inputs in human capital formation is difficult; and most investments in human capital are verifiable. Numerical calculations suggest that the optimal marginal tax rate on capital income is close to the tax rate on labor income. http://repub.eur.nl/res/pub/1158/ 2004-02-16T00:00:00Z De auteur schetst eerst kort het zware weer in de Nederlandse pensioenpolder alsmede de huidige deadlock tussen de overheid en de pensioenwereld. Om uit deze impasse te geraken moeten de verantwoordelijkheden van overheid en sociale partners helder zijn: de sociale partners zijn verantwoordelijk voor het pensioencontract. Vervolgens wordt een duivelse driehoek beschreven die de sociale partners parten speelt bij het expliciteren van pensioencontracten. Daarna presenteert de auteur twee manieren waarop de pensioenleeftijd deze duivelse driehoek onschadelijk kan maken. Houdbare solidariteit met kwetsbare ouderen wordt zo verzoend met een sterke, dynamische kenniseconomie waarin menselijk kapitaal beter wordt onderhouden en mensen risico’s aankunnen. http://repub.eur.nl/res/pub/899/ 2003-09-16T00:00:00Z In exploring the impact of tax policy on labor-market performance, the paper first investigates how tax reform impacts labor supply and equilibrium unemployment in representative agent models. The impact of tax policy on labor market performance depends importantly on various other labor-market institutions, such as minimum wage laws, wage bargaining, and unemployment benefits. In non-competitive labor markets, employment declines if a higher tax burden makes the outside option (i.e. unemployment) relatively more attractive. Marginal tax rates typically differ substantially across individuals. To explore the impact of specific tax policies, therefore, the paper relies on an applied general equilibrium model to investigate the consequences of tax reform with heterogeneous households. The model simulations reveal several trade-offs between various objectives, such as cutting unemployment, stimulating the participation of secondary workers into the labor force, raising the quality and quantity of labor supply, and establishing an equitable income distribution. The paper also analyses how efficiency considerations affect the optimal progressiveness of labor income taxes. Finally, the optimal progression of the labor income tax is investigated in the presence of search unemployment, heterogeneous households and distributional concerns. http://repub.eur.nl/res/pub/900/ 2003-09-16T00:00:00Z In de afgelopen jaren is er groeiende belangstelling voor de zogenaamde levensloopbenadering. Deze benadering verschaft een nieuw perspectief van waaruit een aantal maatschappelijke vraagstukken in hun onderlinge samenhang kunnen worden bezien. Deze bijdrage bespreekt de achtergrond van deze benadering. Paragraaf 2 beschrijft een drietal ontwikkelingen die bijdragen aan de actualiteit van het levensloopperspectief: de emancipatie van de vrouw, een langere verwachte levensduur en de daarmee gepaard gaande vergrijzing, en het grote belang van menselijk kapitaal in een moderne kenniseconomie. Deze ontwikkelingen laten de bestaande instituties op het gebied van met name inkomensbescherming en arbeid niet onberoerd. Paragraaf 3 beschrijft een aantal knelpunten op deze terreinen. Deze knelpunten bieden even zovele uitdagingen voor institutionele vernieuwing in de komende jaren. Paragraaf 4 concentreert zich daarbij op mogelijke hervormingen van de huidige faciliteiten voor inkomensbescherming tijdens de levensloop. De gevolgen van de veranderingen in de levensloop voor de manier waarop arbeidsrelaties vorm worden gegeven komen aan de orde in paragraaf 5. Paragraaf 6, tenslotte, concludeert. http://repub.eur.nl/res/pub/846/ 2003-09-09T00:00:00Z Pensioenfondsen bieden meerwaarde maar zijn kwetsbaar voor de vergrijzing en groeiende economische dynamiek. Een professioneler beheer van buffers en vroegtijdige afspraken over risicodeling zijn geboden om het fragiele intergenerationele contract te beschermen. Verder dient de vierde pijler van een robuuste oudedagsvoorziening, het arbeidsinkomen van ouderen, te worden versterkt door een beter onderhoud van menselijk kapitaal. Het koppelen van de fiscale facili?ring van pensioenbesparingen aan de levensverwachting draagt hieraan bij. http://repub.eur.nl/res/pub/815/ 2003-09-03T00:00:00Z This paper explores how EU countries can address various challenges (including the aging of the population) affecting their systems of old-age income support. It presents two scenarios illustrating the most important uncertainties surrounding the major developments that affect the pension systems of the EU. To diversify these risks, EU governments should act on several fronts. In addition to the formation of human capital (especially that of children), employment (especially that of older workers) should be boosted. This calls for social insurance reform with more emphasis on individual saving schemes. Pension schemes should be more explicit about how they share demographic and other risks. Countries that currently rely heavily on public pay-as-you-go (PAYG) schemes should stimulate private pensions by gradually reducing PAYG benefits collected by high-income earners, by issuing new financial instruments, and by conducting intergenerational risk sharing through the tax system. http://repub.eur.nl/res/pub/10948/ 2003-01-01T00:00:00Z De vergrijzingsproblematiek betreft alle Westerse landen. De gecombineerde effecten van een lager geboortecijfer, een lager sterftecijfer en de naoorlogse geboortegolf leiden ertoe dat de bevolkingsopbouw aan het veranderen is. Volgens het CBS zal het bevolkingsaandeel van ouderen (met een leeftijd van 65 jaar of hoger) de komende jaren stijgen van 13% naar ruim 22%. Deze verandering zal zijn weerslag hebben in de hele economie, en bijzonder gevoeld worden in de pensioensector. http://repub.eur.nl/res/pub/11786/ 2003-01-01T00:00:00Z http://repub.eur.nl/res/pub/1952/ 2000-01-01T00:00:00Z This paper develops an applied general equilibrium model to explore various tax cuts aimed at combating unemployment and raising labor supply. The model calibrates modern labor-market theories on wage setting, job matching, labor supply and labor demand on Dutch data. It represents the core of a larger applied general equilibrium model for the Netherlands called MIMIC. Simulations reveal that targeting in-work benefits at the low skilled is the most effective way to cut economy-wide unemployment. However, targeting is likely to damage the quality and quantity of labor supply. Tax cuts in the higher tax brackets boost the quantity and quality of formal labor supply but are less effective in reducing unemployment and in raising unskilled employment and female labor supply. http://repub.eur.nl/res/pub/11802/ 1998-01-01T00:00:00Z This paper deals with the so-called double dividend of an environmental tax reform. In a model with only labor and a polluting input as factors of production, we find that society faces a trade-off between internalizing environmental externalities and raising revenues in the least distortionary way. However, if capital enters the production structure, an ecological tax reform may render the tax structure more efficient from a non-environmental point of view, thereby raising not only environmental quality but also private incomes. http://repub.eur.nl/res/pub/1956/ 1998-01-01T00:00:00Z The tax reform proposals by the Dutch government include several shifts in the tax structure and a cut in the overall tax burden. This paper argues that these reform proposals reduce the unemployment rate only if the gap between wage incomes and unemployment benefits increases and the overall tax burden drops. Targeting the tax reduction to the unskilled seems the most effective way to cut unemployment. However, such targeted measures raise the marginal tax on other incomes, thereby harming the quantity and quality of labor supply. http://repub.eur.nl/res/pub/1957/ 1998-01-01T00:00:00Z Premium differentiation in disability insurance encourages employers to improve working conditions in order to combat disability. Furthermore, by introducing competition in disability insurance, the implementation and administration of the insurance becomes more efficient. This advantage does not apply to premium differentiation in unemployment schemes because the unemployment risk, which is correlated among firms, cannot be insured by private companies. Premium differentiation may even have unfavorable consequences by raising unemployment duration. http://repub.eur.nl/res/pub/11807/ 1997-01-01T00:00:00Z This paper explores how an environmental tax reform impacts pollution, economic growth and welfare in an endogenous growth model with pre-existing tax distortions. We find that a shift in the tax mix away from output taxes towards pollution taxes may raise economic growth through two channels. The first channel is an environmental production externality, which determines the positive effect of lower aggregate pollution on the productivity of capital. The second channel is a shift in the tax burden away from the net return on investment towards profits. The paper also shows that the optimal tax on pollution may exceed its Pigovian level if tax-shifting towards profits is large and production externalities are important. http://repub.eur.nl/res/pub/11818/ 1997-01-01T00:00:00Z With no revenue requirement, or where government can use lump-sum taxes, Arthur C. Pigou (1947) shows that the first-best tax on pollution is equal to the marginal environmental damage. Consumers then pay the social marginal cost of each item, the direct cost of resources, plus the indirect cost of pollution. Suppose government needs more revenue, however, and cannot use lump-sum taxes. In this second-best world, our intuition might tell us to raise all tax rates: the tax on any "clean" commodity should be raised above its first-- best level of zero, and the tax on a "dirty" good should be raised above its first-best Pigovian level (the marginal environmental damage) . Despite this intuition, a recent paper by A. Lans Bovenberg and Ruud A. de Mooij ( 1994 p. 1085 ) claims to "... demonstrate that, in the presence of preexisting distortionary taxes, the optimal pollution tax typically lies below the Pigovian tax...." This note argues that nothing is necessarily wrong with the intuition that all taxes should be raised. Nothing is wrong with the Bovenberg and de Mooij model either, but the above quote could be misinterpreted. I generalize their model to reconcile these opposing views. Earlier writers have expressed several versions of the "double-dividend hypothesis."1 These views are discussed more below, but a strong version of this hypothesis might claim that a revenue-neutral switch toward a tax on the dirty good and away from taxation of clean goods can improve environmental quality and reduce the overall cost of tax distortions. By implication, this view might suggest that any additional revenue requirements should be met by raising the tax on the dirty good by more than taxes on clean goods. The important and correct result of Bovenberg and de Mooij is that this strong view is flawed.2 Even if the pollution tax helps solve an environmental problem, it likely worsens other tax distortions. Thus, the tax on the dirty good should rise by less than the tax on the clean good. Bovenberg and de Mooij focus on the differential between the tax rates on the clean and dirty goods, but they never quite say so. They assume the tax on the clean good is always zero, so their dirt tax is the differential. With this choice of normalization, starting with the dirt tax at the Pigovian rate, additional revenue would be raised by the labor tax while the dirt tax (differential) would fall. However, other normalizations are equally valid and sometimes preferable. In their model, the extra labor tax is equivalent to a uniform tax on both goods. Thus, from the same starting point with the dirt tax at the Pigovian level, an equivalent policy would raise both the commodity tax rates. The total tax on the dirty good would then exceed the Pigovian level. Bovenberg and de Mooij clearly understand this point, but their readers might not. Therefore, the first purpose of this note is just to clarify the interpretation of their results. The second purpose is to explore the role of "normalization" in a model with tax rates on both goods and on labor. Any one tax rate can be set to zero, as a conceptual matter, but implementation of some taxes might be easier than others as a practical matter. http://repub.eur.nl/res/pub/11851/ 1996-01-01T00:00:00Z Milieuheffingen houden meestal een verandering van eigendomsrechten in: van de vervuiler naar de overheid. Het ligt voor de hand dat zo'n verschuiving veel weerstanden in de samenleving oproept. Daarom is het verstandig om deze verschuiving zoveel mogelijk te beperken, bijvoorbeeld door heffingen gepaard te laten gaan met positieve prikkels voor vermindering van de vervuiling. De recent gepresenteerde voorstellen van de werkgroep 'Vergroening van het fiscale stelsel' bevatten hiervoor een goede aanzet. http://repub.eur.nl/res/pub/11858/ 1996-01-01T00:00:00Z Na hervormingen in de bijstand, WAO, ZW en de nabestaandenwet overweegt de regering nu ook de WW in een nieuw jasje steken. Meer prikkels voor werkgevers zouden het gebruik van deze regeling moeten ontmoedigen. In het onderstaande artikel betogen Bovenberg en De Mooij dat dit geen oplossing biedt voor de lage instroom van werklozen in het arbeidsproces. Bovendien kan minder verzekering een ongunstig effect hebben op de werking van de arbeidsmarkt. Teulings komt in zijn reactie op dit artikel tot een andere conclusie. http://repub.eur.nl/res/pub/11844/ 1994-01-01T00:00:00Z Een verschuiving in de belastingdruk van de lagere arbeidsinkomens naar het middenkader heeft volgens het model MIMIC van het CPBpositieve effecten op de werkgelegenheid. Dit hangt vooral samenn met het loonmatigende effect van hogere marginale tarieven in het model. Echter, MIMIC houdt geen rekening met een aantal ontmoedigende effecten van hogere marginale tarieven. Het totale effect van een 'Robin Hood'-beleid is niet op voorhand duidelijk. http://repub.eur.nl/res/pub/11889/ 1994-01-01T00:00:00Z Verlaging van het belastingtarief in de eerste schijf, gefinancierd met verhoging van het tarief in de andere schijven, is in het MIMIC-model van het Centraal Planbureau goed voor de werkgelegenheid. Onlangs werd .in E5B betwijfeld of het CPB de gevolgen van zo'n 'Robin Hood'- beleid goed weergeeft. Het is echter de vraag of de niet-kwantificeerbare effecten wel van zo 'n groot belang zijn. http://repub.eur.nl/res/pub/1948/ 1994-01-01T00:00:00Z It is sometimes argued that by using the revenues from environmental taxes to reduce distortionary taxes on labor, governments can reap a ‘double dividend’, namely, not only an improvement in environmental quality, but also a reduction in the efficiency costs associated with raising public revenue. By employing a general equilibrium model, this paper finds that, contrary to common wisdom, environmental taxes typically render the overall tax system a less efficient instrument to finance public spending. Furthermore, high estimates for the marginal efficiency costs of existing taxes weaken, rather than strengthen, the case for environmental taxes.