Abstract This paper argues that support for public care provision depends not only on material interests or institutional capacity, but also on culturally shaped beliefs about care. We develop a stylized model in which narratives influence whether individuals perceive care as a shared social responsibility, as economically productive, and as something others will also contribute to. These beliefs jointly shape support for redistribution by affecting expectations about reciprocity, vulnerability, and collective coordination. We test the model using two complementary empirical strategies: a cross-national analysis of World Values Survey (WVS) data linked to a historically rooted measure of care-related moral narratives derived from folktales, and an incentivized framing experiment examining how public versus private narratives of care affect real-stakes prosocial behavior. Across both approaches, support for redistributive care is strongly associated with narrative environments.
Abstract This paper examines whether government digital auditing improves corporate tax compliance in state-owned enterprises (SOEs). Using the staggered provincial rollout of China’s Golden Audit Project III (GAP III), we construct a firm-level panel of Chinese listed SOEs from 2013 to 2022 and estimate a difference-in-differences (DID) model. We find that digital auditing significantly reduces a tax avoidance proxy, consistent with higher tax compliance. The effect is robust to event-study tests, Cohort-Specific DID (CSDID) estimators, Propensity Score Matching DID (PSM-DID), alternative compliance measures, controls for concurrent reforms, lagged treatment definitions, sample restrictions, and placebo tests. Mechanism tests suggest that digital auditing improves compliance by enhancing accounting information quality and complementing regional tax enforcement. GAP III also reduces tax risk among initially low-compliance SOEs with greater initial reporting discretion, indicating that digital auditing curbs tax avoidance and stabilizes corporate tax reporting.
Abstract We quantify the effect of education public spending on earnings. We exploit heterogeneity across schools in the total change in resources induced by Chile’s 2008 Preferential School Subsidy (SEP) reform, a targeted voucher program. Our empirical strategy leverages pre-reform shares of disadvantaged students to construct instrumental variables that isolate exogenous variation in funding. We find that a US$100 increase in annual reform-induced school resources per student raises initial earnings by 4.8 %–8.8 % across student cohorts. The primary channel behind this effect is the allocation of funds to hiring full-time staff.
Abstract We examine a model in which firms produce goods that are both vertically and horizontally differentiated. While firms know the quality of their product, either high or low, it is unobservable to consumers. Firms signal quality to consumers, and we investigate how market rivalry and public enforcement influence their incentives to misrepresent quality, as well as the implications for consumer welfare. Our analysis reveals that stronger enforcement, by curbing false advertising, can drive a low-quality signaling firm out of the market. This strengthens the market power of a high-quality signaling firm, leading to higher prices and ultimately harming consumers.
Abstract Standard theory predicts that higher marginal costs reduce firm profitability. This paper studies how consumer moral preferences affect competition and welfare in a differentiated Cournot duopoly with certification. Firms may incur higher marginal costs by adopting morally desirable production practices, and consumers value the associated moral quality. When moral valuation is sufficiently strong, a higher marginal cost can increase a firm’s equilibrium profit even under linear demand, as the induced increase in willingness to pay outweighs the direct cost effect. Introducing certification strengthens the demand response by verifying moral quality but imposes a compliance requirement, thereby tightening the conditions under which higher costs are profit-enhancing. When moral valuation is strong, higher moral costs can also raise consumer surplus and social welfare.
