Imperialism is often practiced long after it has ceased to be economically profitable. This paper explores the persistence of imperialism along steady-growth paths. If the hegemonic state maxi mizes domestic welfare, it should eventually give up imperialism because its cost-benefit analysis turns negative. To shed light on contrary historical records, a model of endogenous ideology and war bias is developed in which the political elite cares about self-image. If that concern is strong enough, the political elite gradually identifies with its country's mission of hegemony and imperi alism persists. It is first driven by material concerns and later by ideal ones. Despite its divergent preferences, the population of the hegemonic state is unlikely to rise against imperialism.

An often neglected implication of couple taxation is its impact on marital sorting. A tractable model of such an impact is offered in this paper. It reveals that, as compared to joint taxation with income splitting, individual taxation makes higher-ability individuals more picky in the marriage market, which translates into a higher degree of economic homogamy in society. Furthermore, a shift from joint to individual taxation is predicted to reduce the average quality of marriages in the population.

The war between Ukraine and Russia does not only harm their respective populations: the rest of Europe is heavily affected. While some welfare losses for the EU are salient, the most significant one is not: it is the risk that the war escalates into a major nuclear conflict. A promising policy to minimize those losses exploits the desire of both Ukrainians and Russians to join the EU. I propose that they should if they immediately cease all fighting and subscribe to a distinctive, incentive-compatible, peace agreement brokered by the EU. Such an agreement would come at small costs to the EU, costs that would vanish in comparison to the risk of nuclear holocaust.

Equity and efficiency can both be promoted, under some circumstances, by means of a sovereign wealth fund that mainly invests in the world stock market and whose gains are earmarked to a social dividend. A simple overlapping generation model with a fraction of hand-to-mouth agents is developed in which the government uses public debt to create such a fund. The socially optimal size of the fund is strictly positive and determined according to a formula that can be empirically implemented. While this policy is similar to popular capitalism in aiming at a more egalitarian distribution of capital income, it is predicated on a different notion of good society.

We analyze the effects of governmental redistribution of income on migration patterns using an Italian administrative dataset that includes almost every Italian citizen living abroad. Since Italy takes a middle ground in terms of redistribution, both the welfare-magnet effect from more redistributive countries and the propensity of the high-skilled to settle in countries with lower taxes can be empirically studied. Our findings confirm the hypothesis that destination countries with more redistribution receive a negative selection of Italian migrants. Policy simulations are run in order to gauge the magnitude of those migration effects. Based on estimated elasticities, we find that sizable increases in the amount of redistribution in Italy have small effects on the skill composition of the resident population.

This report summarises some of the most relevant theoretical and empirical challenges associated with the measurement and analysis of multidimensional inequalities. Each section delves into a specific topic, presents a state-of-the-art review of the key findings in that particular area, and proposes a number of policy recommendations and avenues for further research. The themes covered in this report range from the multidimensional nature of human wellbeing and quality of life, the multiplicity of life domains in which substantial inequalities can be found, the dynamic nature of those inequalities, the transmission of advantages and disadvantages over time, the availability of new data sources for fine-grained data collection and higher spatial resolution policy-making, the interplay of individual effort and external circumstances when it comes to identifying a just distribution of opportunities in society, as well as the relevance of lifetime approaches for the study of economic inequalities within countries. The content of this work will provide help and guidance to policy-makers willing to understand and tackle inequalities from a broader multidimensional perspective, beyond the narrow limits of economic indicators alone.

In times of a declining labour share and an intense international tax competition, some form of market socialism may contribute to hold income inequality in check. However, the concept of market socialism involves three major pitfalls: cronyism, technological stagnation, and power concentration. These pitfalls could be avoided by an appropriate institutional design that includes the combination of public ownership with an extensive use of the stock market, an incentive-compatible mechanism for the takeover of private firms, and participatory democracy.

ZusammenfassungDie Regierung eines Landes kann sich zum risikolosen Zins verschulden und in den Weltaktienmarkt investieren. Die Aktienerträge werden abzüglich der Finanzierungskosten an die Bürger des Landes in Form einer sozialen Dividende weitergegeben. Welche Effekte hat diese Politik auf die Wohlfahrt der Bürger? Der vorliegende Beitrag identifiziert in einem einfachen theoretischen Rahmen Bedingungen, unter denen eine solche Politik eine Pareto-Verbesserung hervorruft und argumentiert für deren Einführung in Deutschland.

The government of a country with a good financial reputation could borrow from the international capital market and use the proceeds to endow a sovereign wealth fund that mainly invests in the world stock market. In expectation, this country would gain the equity risk premium multiplied by the size of the fund. This gain could be earmarked to a social dividend. This paper deals with the conditions under which such a policy is welfare-improving, discusses the optimal size of such a fund, and proposes an institutional framework for the management of public stock ownership.

We empirically investigate the distributional consequences of the Riester scheme, the main private pension subsidization program in Germany. We find that 38% of the aggregate subsidy accrues to the top two deciles of the population, but only 7.3% to the bottom two. Nonetheless the Riester scheme is almost distributionally neutral when looking at standard inequality measures. This is due to two offsetting effects: a progressive one stemming from the subsidy schedule and a regressive one from voluntary participation. Regressions of the participation decision suggest that a high level of household wealth significantly increases the probability of benefiting from the Riester scheme.

This paper revisits the standard model of labor supply under two additional assumptions: consumption requires time and some limited amount of work is enjoyable. Whereas introducing each assumption without the other one does not produce novel insights, combining them together does if the wage rate is sufficiently high. For top earners, work has a positive marginal utility at the optimum and above a critical wage level it converts into a pure consumption good. Their labor supply curve is first backward bending and then vertical. This can justify an optimal marginal tax rate on top incomes equal to 100%%. Top earners in the vertical half-line of the labor supply curve optimally refrain from spending their entire income. At the macroeconomic level, this can generate a lack of effective demand. With some qualifications, these findings carry over to models that include savings and philanthropy.

Current trends in the distribution of wealth trigger a social divide and threaten democracy. I propose to counter this evolution by enhancing the role of public capital as a redistribution and empowerment device. The governance of public capital requires two novel institutions: a socially responsible Sovereign Wealth Fund and a Federal Shareholder. This paper offers an account of their design and sources of financing.

2015 workshop on "Taxes, Subsidies, Regulation in Dynamic Models" at the University of Brescia.The workshop gathered scholars from around the world who have been investigating various issues in public economics through the lens of dynamic models.The first two articles in this special issue, by Di Corato (2016) and Panteghini and Vergalli (2016), are devoted to the effects of taxes and subsidies on firms' investment activities.Both employ the theory of real options and demonstrate its fruitfulness for public economics.This theory studies the opportunity to invest in an irreversible project (as a financial call option) in which the investor has the possibility, for some amount of time, to invest (to pay an exercise price), in expectation of some future uncertain returns.The task of the investor is to select the optimal timing to act, which is determined within a dynamic stochastic model. 1 The model developed by Di Corato mainly contributes to the literature that compares tax reductions and investment subsidies as alternative instruments to stimulate private investment initiative.One possibility is to subsidize the initial investment, and hence reduce its cost to the investor; the other is to reduce the taxes that are charged on future profits generated by the project.The existing literature on the comparison between subsidies and tax reduction suggests that the former pushes private investment stronger than the latter (e.g.Pennings 2005).In his paper, Di Corato examines the net benefit 1 See Dixit and Pindyck (1994) for an overview of the real option literature.

Wir gehen der Frage nach, ob die gegenwartige Vermogensungleichheit in Deutschland auf eine Dominanz von Erbschaften im oberen Bereich der Verteilung zuruckzufuhren ist. Auf Basis der PHF-Daten finden wir, dass die Vermogen der Deutschen zu etwa zwei Dritteln auf Eigenleistung und zu etwa einem Drittel auf Erbschaft zuruckgehen. Diese Proportion verandert sich entlang der Vermogensverteilung wenig. Insbesondere nimmt die relative Bedeutung von Erbschaften mit zunehmendem Privatvermogen nicht systematisch zu. Diese Ergebnisse sind robust hinsichtlich unterschiedlicher Altersgruppen, Vermogensdefinitionen und Kapitalisierungsmethoden fur die unteren 99 %.

This paper documents the magnitude, pattern, and evolution of lifetime earnings inequality in Germany. Based on a large sample of earning biographies from social security records, we show that the intra-generational distribution of lifetime earnings of male workers has a Gini coefficient around .2 for cohorts born in the late 1930s and early 1940s; this amounts to about 2/3 of the value of the Gini coefficient of annual earnings. Within cohorts, mobility in the distribution of yearly earnings is substantial at the beginning of the lifecycle, decreases afterwards and virtually vanishes after age forty. Earnings data for thirty-one cohorts reveals striking evidence of a secular rise of intra-generational inequality in lifetime earnings: West-German men born in the early 1960s are likely to experience about 80 % more lifetime inequality than their fathers. In contrast, both short-term and long-term intra-generational mobility have been rather stable. Longer unemployment spells of workers at the bottom of the distribution of younger cohorts contribute to explain 30 to 40 % of the overall increase in lifetime earnings inequality.

The current paper discusses the evolution of earnings inequality in Germany with an eye to its potential lessons for China. Inequality is assessed from two different perspectives: the distribution of annual earnings, and the distribution of lifetime earnings. This paper proposes to implement closer monitoring of lifetime earnings and take a proactive stance in the formation of the wage-bargaining regime.