The literature on optimal robot taxes generally uses model environments in which the displacement effect of automation does not lead to involuntary unemployment. In this paper, we study optimal taxation of robotic capital in an environment in which a binding minimum wage makes involuntary unemployment a long-run equilibrium outcome. In our dynamic general equilibrium model with heterogeneous worker groups and income redistribution, the robot tax is a key determinant of the equilibrium shares of unemployed and minimum-wage workers. Our theoretical contribution is a closed-form solution for the lowest robot tax rate that blocks automation when the minimum wage is binding. We then calibrate the model to the United States and compute optimal robot taxes. Restricted to linear income taxation, the Ramsey planner sets a positive robot tax that distorts the assignment of tasks between workers and robotic capital to the point at which no task is automated. This second-best policy maximizes social welfare along a balanced growth path, at a small efficiency cost. The aggregate welfare gain relative to the status quo is an extensive-margin effect: the robot tax reallocates some of the unemployed workers from unemployment insurance into employment. We also show that an optimized income tax-subsidy system and an optimal robot tax are complements in creating welfare gains, whereas a non-binding minimum wage closes the reallocation channel by eliminating involuntary unemployment. Alternative calibrations do not alter these findings.
This paper argues that an individual region’s local public goods (LPGs) function as a double-edged sword for other regions: while they generate familiar positive spillovers, they simultaneously provoke regional concern over relative provision. Armed with this novel insight, we revisit the classical public-finance problem of LPG provision. We demonstrate that once LPGs are modeled as a double-edged sword, the direction of bias under decentralized versus centralized provision — whether undersupply or oversupply — is theoretically ambiguous. Crucially, this indeterminacy persists irrespective of whether the social planner accounts for regional concern over relative LPG provision. Beyond its theoretical implications, our framework provides a natural economic rationale for prominent real-world phenomena, specifically the widespread emergence and proliferation of gated communities.
We study whether concise fiscal information affects citizens’ stated willingness to pay taxes. We use a four-wave randomized survey experiment conducted in Spain during 2020–2021. Treated respondents received quantitative information on general government revenue as a share of GDP in Spain and selected comparator countries, presented in the survey as a broad indicator of the aggregate fiscal burden, together with a brief discussion of the trade-offs associated with taxation. The treatment increases stated willingness to pay higher taxes for improved public services and social benefits. The main ordered-logit estimate implies an increase of about 4.7 percentage points in the probability of expressing a positive willingness to pay more taxes. The result is robust to alternative codings of the outcome, alternative classifications of prior beliefs, and additional checks addressing interpretation and content specificity. We interpret the estimates as immediate stated responses to fiscal information, rather than as persistent changes in underlying preferences or behaviorally revealed willingness to pay.
Governments provide incentives for the transition to a green economy. Often, such policies include the subsidization for the purchase of environmentally friendly products. We examine the effectiveness of such green policies when consumers are environmentally conscious and pay limited attention to subsidies. We study the effect of subsidy salience on firms’ environmental product qualities, pollution levels and subsidy pass-through. Moreover, we describe the optimal policy mix when the government can increase salience at a cost.
