PLUS Economics research seminar

The Department of Econonomics of the Paris Lodron University of Salzburg (PLUS) invites researchers to present and discuss their latest research in economics and management.

Research seminar

Our research seminar is Tuesdays from 17:00–18:30. On-site talks take place in room HS 212 ( CHU1OG2.286). Online talks take place on Zoom. If you want to attend the seminar, please contact Lisa Windsteiger.

Title: Tax Competition Effects of a Minimum Tax Rate: Empirical Evidence from German Municipalities
Speaker: Thiess Büttner (FAU Erlangen-Nuremberg)

Abstract: This paper explores the effects of a federal law that obligates previously unregulated municipalities in Germany to set a minimum tax rate on firms’ taxable profits. In particular, we examine the tax-policy response of municipalities that compete locally with “tax-haven municipalities”, i.e. municipalities that originally have set lower and, in some cases, even zero tax rates. The analysis distinguishes treated and not-treated municipalities based on their distance to a tax-haven. Our results show that the majority of municipalities do not change their tax policy. Apart from the tax-havens, only high-tax municipalities show a response – they reduce the business tax rate without experiencing a decline in tax revenues.
Title: The tragedy of the common heating bill
Speaker: Harald Mayr (UZH)

Abstract: We study the distortion that arises when apartment buildings share a common heating bill. This situation resembles the tragedy of the commons. Individual metering solves the problem, but does it improve welfare? We propose a theoretical framework with shared billing and environmental externalities to derive a sufficient statistic for the welfare effect of individual metering. We then analyze the introduction of individual metering in 265 apartment buildings in Switzerland. Our event study estimates show that individual metering reduces annual heating expenses. Machine learning estimates reveal substantial heterogeneity in treatment and welfare effects, suggesting a role for targeted interventions in this context.
Title: Earnings Responses to Sudden Wealth: Inheritance, Inter-Vivos Gifts, and Lotteries
Speaker: Isabel Martinez (KOF Institute, ETH Zürich)

Abstract: We study individual earnings responses to positive wealth shocks from inheritance, inter-vivos gifts, and lotteries. In a life-cycle model we show how responses may differ across the three types of shocks because they occur at different ages. In addition, gifts tend to be targeted, and socio-psychological circumstances differ between the different shocks. We explore these differences in a panel of tax records for a large Swiss canton. We find consistently negative earnings responses, irrespective of the source of the wealth shock. The strongest responses are found for older workers – partly through early retirement–, and for women. Conditional on age, inheritance triggers weaker earnings responses than lottery winnings. Gifts are associated with the strongest reductions in subsequent earnings. However, strong pre-trends confirm them to be targeted and do not allow us to quantify the causal effect of inter-vivos giving. For instrumented gifts, however, no statistically significant earnings response is observed. This suggests that, when abstracting from targeting, behavioral effects mitigate labor supply reductions of donees.
Title: Innovating Market Exchange: The Amsterdam Exchange as a Blueprint for Modern Derivative Markets
Speaker: Johannes Flume (PLUS)

Abstract: Amsterdam stands out as the central European market of the seventeenth century. Centrally located to the south of the city’s Dam Square, the Brysa Amsterdamensis, build in 1611, was where the various threads of this commercial metropolis came together. By examining the architectural history of the building and the economic and legal functioning of this place, one can show why the Amsterdam Exchange can rightly be called the first modern liquid commodity and stock market, how it differed from other prominent trading places of the time and how the exchange acted as a legal innovator. A closer look at the operation of the exchange, in particular futures trading (termijnhandel), reveals how fundamental trading practices within the exchange revolutionized private and commercial law. The so-called recontre-system, implemented by the Amsterdam Exchange, constitutes the blueprint for the construction of any modern derivative markets. This, in turn, helps us dispel one of the greatest myths in economic legal history, namely, the gambling stigma. Contrary to such classic common notions of exchange trading, one can argue that futures are not breeding grounds for illegitimate betting, but instead innovate contract performances.
Title: Do co-ethnic commuters disseminate labor market information? Evidence from geocoded register data
Speaker: Dieter Pennerstorfer (JKU Linz)

Abstract: This article provides causal evidence of the significant role ethnic networks play in facilitating labor market integration by reducing information frictions. Using full population geocoded employer-employee matched Swedish register data, we investigate how co-ethnic commuters influence the work location of immigrants for their initial employment. We argue that these ethnic peers transmit job specific information from their places of work to fellow ethnic peers within the same residential neighborhood who seek jobs. We find that each additional commuter from the same ethnic network increases a new immigrant’s probability of finding employment in a specific neighborhood by 2.3%.
Title: Do Words Matter? The Value of Collective Bargaining Agreements
Speaker: Benjamin Arold (ETH Zürich)

Abstract: This paper proposes novel natural language methods to measure worker rights from collective bargaining agreements (CBAs) for use in empirical economic analysis.
Applying unsupervised text-as-data algorithms to a new collection of 30,000 CBAs from Canada in the period 1986-2015, we parse legal obligations (e.g. “the employer shall provide…”) and legal rights (e.g. “workers shall receive…”) from the contract text. We validate that contract clauses provide worker rights, which include both amenities and control over the work environment. Companies that provide more worker rights score highly on a survey indicating pro-worker management practices. Using time-varying province-level variation in labor income
tax rates, we find that higher taxes increase the share of worker-rights clauses while reducing pre-tax wages in unionized firms, consistent with a substitution effect away from taxed compensation (wages) toward untaxed amenities (worker rights). Further, an exogenous increase in the value of outside options (from a Bartik instrument for labor demand) increases the share of worker rights clauses in CBAs. Combining the regression estimates, we infer that a one-standarddeviation increase in worker rights is valued at about 5.4% of wages.
Title: Incorporating Micro Data into Macro Models using Pseudo VARs
Speaker: Gary Koop (Uni Strathclyde)

Abstract: Incorporating microeconomic data (e.g. from surveys or administrative data sources) into macroeconomic time series models is important if one wishes to gain an understanding of the distributional effects of policy decisions or macroeconomic shocks. This paper considers a simple method for doing so: model the microeconomic and macroeconomic data jointly in a large VAR and use Bayesian methods to ensure shrinkage and parsimony. This strategy is complicated by the fact that many microeconomic data sets are enormous and, thus, the resulting VAR would be enormous. The fact that many microeconomic data sets come in the form of repeated cross sections suggests a solution: create a pseudo-panel involving a smaller number of pseudo individuals and include them in the VAR. This paper develops methods to implement this strategy and carry out impulse response analysis and forecasting with the pseudo VAR. An empirical application involving the UK’s income distribution illustrates how a deeper understanding of the distributional effects of macroeconomic policy can be found using the pseudo VAR.

Previous research seminars: Winter 2023, Summer 2023, Winter 2022Summer 2022Winter 2021

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