This paper assesses the effects of corporate tax cuts on small firms and their workers. Following a reform in Quebec, Canada, firms receiving tax cuts expand and their workers’ earnings increase compared to workers and firms without tax cuts. We estimate that overall workers bear 35 percent of the tax burden, with larger incidence falling on those with ownership in the companies they work at, through increased profits. Additionally, workers across each tercile of the within-firm earnings distribution benefit from tax cuts, possibly because fair-wage concerns matter when after-tax profits rise due to close interactions among workers in small corporate environments. (JEL D22, H22, H25, J31, L25)
Governments increasingly use changes in tax rules to combat evasion. We develop a general approach to point-identify tax compliance along with supply and demand elasticities. Identification requires data on prices and quantities, variation in tax policy, and a demand or supply shifter. We illustrate our approach using data on Airbnb collection agreements, where taxes are enforced by shifting the statutory burden away from hosts and onto renters via the platform. We find that taxes are paid on roughly 0 to 1.6 percent of Airbnb transactions prior to enforcement. (JEL H25, H26, H71, K34, L83)
China’s CO 2 emissions trading system, the world’s largest, aims to significantly reduce CO 2 emissions. The system is a tradable performance standard (TPS), differing from cap and trade (C&T). We provide a dynamic general equilibrium assessment that uniquely considers institutional and fiscal features of China that affect policy costs and distributional impacts. Key findings: The TPS’s environmental benefits exceed its costs by a factor of five or more. Interactions with the fiscal system reduce or eliminate the TPS’s cost disadvantage relative to C&T. Introducing auctioning as a complementary source of allowance supply can reduce costs by 30 percent. (JEL D58, O13, P28, Q54, Q58)
Little is known about the role of race in the defense of low-income defendants by court-appointed attorneys. Exploiting the quasirandom assignment of court-appointed attorneys to cases, we test whether attorneys secure better deals for same-race defendants. Results indicate that while Black and White attorneys are similarly effective at representing White defendants, Black defendants who are represented by White rather than Black attorneys are 14–16 percent more likely to have their charges dismissed and 15–26 percent less likely to be incarcerated. Moreover, we find no evidence that having a different-race attorney increases the likelihood of reoffending in the future. (JEL H76, J15, K14, K42)
We study the effects of trade protection along supply chains. We focus on temporary trade barriers against China, which has been the main target of US trade protection during the last decades. To deal with endogeneity concerns, we use an instrumental variable strategy, exploiting changes in the identity of swing states across presidential terms and heterogeneous exposure to these political shocks across industries. We find that politically motivated trade protection generates winners and losers: It fosters employment growth in protected industries but hampers employment growth in downstream industries. Our estimates imply a negative overall impact on US jobs. (JEL D72, F13, F14, L14, O19, P33)
