Abstract How large are billionaires' carbon footprints? While increasing evidence highlights large disparities in emissions between and within countries, detailed individual‐level data on emissions portfolios remain scarce. In this paper, we analyse the wealth composition of the top 500 billionaires and construct a dataset linking each of their assets to emissions. According to our ownership‐based emission accounting framework, every million US dollars held by billionaires is associated with more than 65 tonnes of equivalent per year – about 10 times the annual carbon footprint of the average person. Further, our estimates reveal an extreme concentration of wealth among the super‐rich and even greater concentration of emissions. About 50 billionaires account for around three‐quarters of total emissions in our sample, with publicly traded equity in Basic Materials, Industrials and Utilities accounting for a disproportionate share of attributed emissions. Emission intensity is key: 97 per cent of the variance in log emissions is explained by intensity differences, suggesting that scale effects play a limited role and carbon footprints are almost entirely driven by investment choices. The highest‐emitting billionaires – including some of the wealthiest – derive a substantial share of their emissions (between 44 and 66 per cent) from hard‐to‐abate sectors. Comparing alternative taxation schemes targeting both extreme wealth and emissions, we show that the introduction of a new progressive carbon wealth tax can potentially achieve three objectives: progressively taxing billionaires to curb inequality, targeting the most polluting activities, and raising substantial resources to finance a sustainable and equitable transition.
Abstract The analysis of regional growth or levelling up in income, health and human resources is a challenge as it involves measuring growth multidimensionally with ordered categorical variables. The lack of a cardinal measure and the ambiguity inherent in its arbitrary cardinalisation is the source of the problem. Here, noting that in a cardinal world a variable's mean has a probabilistic interpretation as the cumulation over its range of the chances of higher outcomes, rendering its conventional growth rate the rate of increase in those cumulated chances, probabilistic distance concepts are employed to develop analogous level and growth measures in multidimensional ordinal paradigms. We illustrate with an application to the United Kingdom, where regional disparities in incomes and well‐being in the UK have been high and persistent over time, prompting ‘place‐based’ or levelling‐up policies in recent years. We employ our new measures in an analysis of UK outcomes over the period 2010–2018, where we find that while there is strong evidence of growth, there is little evidence of levelling‐up type growth and, hence, little evidence of levelling up in the UK.
Abstract This paper examines how the quality of government spending changes at the end of the fiscal year, using administrative data from financing programmes for small and medium‐sized enterprises in South Korea. We assess spending quality based on the average sales growth of recipient firms. We show that while an early budget execution policy reduces year‐end volume spikes, the quality of spending still drops significantly at fiscal deadlines. Both theoretical and empirical results demonstrate that financing agencies shift towards lower‐risk investments at the end of the fiscal year, leading to lower returns even in the absence of spending surges.
Income inequality and poverty statistics are often adjusted for differences in the size and composition of households, with common practice being to use a set of 'equivalence scales': a function of the number of adults and children in the household. However, different - largely ad hoc - scales have been adopted by international organisations and national statistical organisations with little explicit justification. We derive equivalence scales from the expenditure patterns of households using data from the 1987-2015 Irish Household Budget Survey. We find that the Engel, Rothbarth and demand system approaches all yield scales for children that are substantially smaller than those used by ad hoc official scales, with estimates from AIDS and QUAIDS demand systems appearing to decline over time. Such a decline is particularly noticeable when a 3SLS estimator is used to correct for the potential endogeneity of total expenditure, which also leads to substantially smaller estimated scales for both adults and children. This suggests an increase in economies of scale over the period we examine, with important implications for the measurement of poverty and inequality.
Using comprehensive administrative data on Danish retirees' wealth, this paper documents how home-equity holdings vary across age, income and wealth groups. We show - using simulated equity-extraction scenarios - that accessing home equity could substantially increase retirement replacement rates throughout the socio-economic distribution. These findings suggest that policies facilitating home-equity extraction, such as expanded access to reverse mortgages, could meaningfully improve retirement liquidity, particularly for middle- and high-income households.
Abstract In this paper, we analyse the effects of dividend tax reforms on tax revenues, income shifting and earnings retention. We examine two significant policy changes in Israel during the 2010s. Using administrative tax records, we study a permanent increase of 5 percentage points in the dividend tax rate in 2012 and a temporary tax relief enacted in 2017. The permanent tax hike triggered an immediate surge of over 100 per cent in reported dividend income and tax revenues. It did not generate a lasting shift in dividend flows. In contrast, the temporary relief of 2017 led to a sharp decline in dividend payments upon its expiration. Notably, dividend payments remained depressed after the preferential rate ended, consistent with increased earnings retention and possibly with anticipation of similar future relief. Finally, our counterfactual estimates imply that post‐2017 retention increased the downward bias in the reported top 1 per cent income share by 1–2 percentage points because income retained within firms is absent from personal tax records.
Fiscal drag arises when nominal tax parameters remain unchanged despite nominal income growth, thereby increasing effective tax rates and revenue. We use Spanish administrative tax records and a detailed microsimulation model to examine fiscal drag in personal income taxation through two complementary approaches. First, we estimate tax-to-base elasticities to assess the progressivity of the tax system and potential fiscal drag under homogeneous income growth. We uncover significant heterogeneity in elasticities across income sources, across the individual income distribution and in the underlying mechanisms. Second, we conduct counterfactual simulations to quantify the actual impact of fiscal drag from 2019 to 2023, finding that it accounts for about a third of revenue growth. Our findings offer insights for public finance modelling, revenue forecasting and tax policy design.
The rapid evolution of technology is reshaping labour markets by altering skill demands and job profiles. This paper introduces a novel skill-based measure of occupational technology intensity - the occupational technology skill share (OTSS) - that distinguishes between manual, digital and frontier technologies, including artificial intelligence (AI). Using natural language processing, generative AI and supervised machine learning, we develop an AI-powered skill classification that enriches occupation-linked skill labels with standardised GenAI-generated descriptions and structured indicators of technological content, enabling transparent classification by technology intensity. We compute OTSS for all occupations in the German labour market. For the average worker in 2023, manual technologies account for the largest share of skill content (42 per cent), followed by digital (38 per cent) and frontier technologies (20 per cent). Frontier technologies remain concentrated in specialised occupations, while digital technologies are widespread. Linking these measures to administrative data from 2012 to 2023 shows a broad shift from manual and digital toward frontier skills across occupations, and reveals a non-linear, U-shaped relationship between changes in frontier skill intensity and employment growth.
The canonical model of automation introduced by Acemoglu and Restrepo in 2019 (Journal of Economic Perspectives, 33 (2), 3-30) unambiguously predicts a decline in the labour share within sectors. Decomposing changes in the US labour share into within-sector and between-sector components, they show that within-sector changes indeed account for the bulk of the recent decline in the US labour share, while overall between-sector changes are quantitatively unimportant. However, by extending their single-sector framework to a multi-sector model and rooting it in an empirically tractable decomposition, in this paper we show that the small overall between-sector component conceals substantial, though offsetting, equilibrium changes in consumer demand resulting from sector-specific changes in factor quantities and total factor productivity growth. Although these equilibrium forces have not affected overall between-sector changes in the US labour share so far, their importance indicates that ever-declining labour shares due to technological progress, such as artificial intelligence, are not inevitable in the future.
In this paper, we empirically examine how collective bargaining agreements relate to firms' automation decisions and employment dynamics. Using novel administrative data on Dutch firms and workers, we link detailed information on collective bargaining coverage to automation expenditures at the firm level. Our analysis yields two main findings. First, firms covered by firm-level collective bargaining invest more in automation than uncovered firms, suggesting that collective agreements create cost-incentives for automation. Second, firms that were initially covered by firm-level collective agreements tend to experience smaller employment growth, which can contribute to the aggregate decline in collective agreement coverage.
This paper evaluates the impact of tax rebates on luxury durables, using Thailand's 2011 car tax rebate as a case study. Utilising a stochastic dynamic model with heterogeneous agents, where cars serve as both luxury goods and illiquid assets, the study finds that the policy effectively boosted consumption by targeting households with a high propensity to spend. However, it was regressive, primarily benefiting high-income households and leading to prolonged negative effects on household spending and saving. Additionally, the policy caused second-hand car prices to drop. This enabled lower-income households to purchase used cars at lower costs, but further prolonged and deepened cuts in non-durable spending and savings. Using the estimated parameters and the shocks to the interest rate in the policy experiment, the simulated short-run elasticity of intertemporal substitution for Thailand is low - typically between 0 and 0.1. Wealthier and older households increase spending in response to the rate increase, whereas poorer and younger households tend to boost saving instead.
Abstract How do wealthy individuals respond to wealth‐tax reforms? We analyse behavioural responses to changes in wealth‐tax rates, estimating the causal effects of an unprecedented municipal reform in Norway. We leverage variation from the municipal reform reducing the marginal tax rate on wealth exclusively in the northern Norwegian municipality of Bø from 0.85 to 0.35 per cent, since 2021. Mimicking the behaviour of a tax haven, Bø represents the first municipality in Norway to reduce the municipal wealth‐tax rate since 1978. We document a significant increase of 45 per cent in average taxable wealth in response to a 1 percentage point drop in the wealth‐tax rate. We also estimate a significant but more modest jump of 4.8 per cent in the weighted mass of wealth‐tax payers in the treated municipality. Migration effects of the reform dominate: internal mobility of wealthy tax payers appears as the major behavioural response to the change in the net tax rate. While these effects are pronounced at the municipal level, they do not suggest a large‐scale exodus at the national level, indicating that migration to avoid wealth taxation is not an inevitable outcome of localised preferential tax regimes.
We study the effect of the largest childcare subsidy scheme in Ireland, a country where, historically, mothers provided childcare and did not participate on the labour market. In 2019, the cost of full-time centre-based childcare was among the most expensive in the OECD. At the end of 2019, a means-tested childcare subsidy was introduced to improve childcare affordability, but nothing is known of the maternal labour supply effects. We model the joint decision of labour supply and childcare for lone and coupled mothers of children under six. Mothers are likely to respond to the introduction of childcare subsidies in 2019 by switching from informal childcare to formal childcare (12 percentage points), and by slightly increasing their participation in the labour market (0.5 percentage points). We simulate that recent (2023) reforms of the National Childcare Scheme, which increase the generosity and the scope of the subsidy, will increase mothers' participation by one further percentage point, but also substantially decrease the demand for informal childcare. Extending childcare subsidies to informal care (such as childminders and nannies) would decrease the demand for formal childcare and further increase maternal labour supply.
In this paper we examine different channels through which poverty affects child outcomes, as well as the evidence regarding the magnitude of their impacts. We begin by discussing the family investment model, which highlights the constraints that poverty or lack of income pose on a family's ability to purchase goods or services that contribute to the child's overall development, and the family stress model, which emphasises the emotional toll that experiencing poverty can have on parents and (directly and indirectly) on children. We then devote special attention to a more recent perspective on the family stress model, originating at the intersection of cognitive and developmental psychology and behavioural economics, which posits that another pathway through which poverty-induced stress can affect family well-being is through the effect of poverty on parental cognitive functioning.
This paper revisits the problem of power analysis and sample size calculations in randomised experiments, with a focus on settings where inference on average treatment effects is conducted using randomisation tests. While standard formulas based on the two-sample t $t$ -test are widely used in practice, we show that these calculations may yield misleading results when directly applied to randomisation-based inference – unless certain assumptions are met. We demonstrate that differences in potential outcome variances or unequal group sizes can distort the behaviour of the randomisation test, leading to incorrect power and flawed sample size calculations. However, a simple adjustment – studentising the test statistic – restores the validity of the randomisation test in large samples. This adjustment allows researchers to safely apply standard power and sample size formulas, even when using randomisation inference. We extend these results to a range of experimental designs commonly used in applied economics, including stratified randomisation, matched pairs and cluster-randomised trials. Throughout, we provide practical guidance to help researchers ensure that their design-stage calculations remain valid under the inferential methods they plan to use.
