Abstract: We study the history and geography of wealth accumulation in the US, using newly collected historical property tax records since the early 1800s. The property tax in the US was a comprehensive tax on all kinds of properties (real estate, personal property, and financial wealth), making it one of the first “wealth taxes.” Drawing on a multitude of historical records, we construct wealth series at the city, county, and state levels over time offering a consistent, high-frequency, and long-term database of wealth in the US. We first document the long-term evolution of household wealth in the US since the early 1800s, showing that the US experience an extraordinary spur of wealth accumulation after the Civil war and until the Great Depression. Before the Civil war, enslaved people were assessed as personal property of the enslavers, which is both morally abhorrent and implies wrongly counting forced labor income flows as capital. The regional distribution of wealth and the effects of the Civil war look very different if we do not count enslaved people as property. Second, we study the spatial inequality in the US over the long run. The initial distribution of property and subsequent growth over 60 years are strongly correlated with geographic, economic, and demographic factors. In particular, wealth inequality has a robust negative correlation with growth in property over the long run. Finally, we study the role of public policy, specifically the property tax (i.e., a “wealth tax”) on local capital accumulation, using the large and long variation in property tax rates across more than 300 municipalities. We find significant elasticities on the intensive and extensive (migration) margins, as well as evidence for tax competition between cities.

Abstract: This paper leverages consumption data to evaluate the distributional effects of pension reforms. Using administrative data from Sweden, we show that on average workers who retire earlier have lower consumption while retired, experience larger drops in consumption around retirement, and show higher marginal propensities to consume out of wealth shocks. These findings imply that reforms incentivizing later retirement, as many countries have recently done, incur a substantial consumption smoothing cost. Accounting for selection on health and life expectancy further increases the redistributive cost of such reforms. Turning to other features of pension policy, we find that reforms that redistribute on the basis of early career labor supply would have opposite-signed redistributive effects, while differentiating on wealth may help to target pension benefits toward those who are vulnerable to larger drops in consumption around retirement.

Abstract: Do family policies reduce gender inequality in the labor market? We contribute to this debate by investigating the joint impact of parental leave and child care, using administrative data covering the labor market and birth histories of Austrian workers over more than half a century. We start by quasi-experimentally identifying the causal effects of all family policy reforms since the 1950s, including the introduction of maternal leave benefits in 1961, on the full dynamics of male and female earnings. We then use these causal estimates to compute gender inequality series for counterfactual scenarios regarding the evolution of family policies. Our results show that the enormous expansions of parental leave and child care subsidies have had virtually no impact on gender convergence.

Abstract: After a period of relatively strong economic and social mobility during the post-WWII decades, labor income is now quickly losing its capacity to fuel mobility across the wealth distribution of Western economies, with inheritance becoming again the main determinant of individuals’ ability to make it to the top of the wealth distribution. At a time where inheritance taxation therefore seems desirable from both equity and efficiency standpoints, most inheritance tax systems are broken. They have failed to be truly progressive, and have remained very unpopular among the public. In this paper, we propose general principles to guide an in-depth reform of inheritance tax systems, to make them more efficient, progressive and transparent. Using administrative survey data from France, we also discuss whether the revenue generated by these reforms can promote equality of opportunities, by guaranteeing a wealth endowment for all. Based on detailed simulations, we explain why inheritance taxation alone cannot deal with the current dynamics of concentration of wealth at the top of the distribution, and why it needs to be complemented by progressive taxation of wealth and/or capital income.

Abstract: La gestion des politiques publiques réclame des instruments qui permettent d’anticiper l’impact des mesures en place ou de réformes proposées en termes budgétaires d’une part et distributifs d’autre part. Les modèles de « micro-simulation » essaient de répondre à cette double préoccupation en appliquant à chaque ménage d’un échantillon représentatif de la population les modifications des règles gouvernant la redistribution monétaire (prélèvements et prestations) sur la base de la situation économique des membres du ménage et sa composition. Sont présents aujourd’hui sur la scène française trois modèles de ce type : cette diversité est souhaitable, ne serait-ce que par souci de transparence et de neutralité. Cependant, les divers modèles ne sont pas toujours basés sur les mêmes sources de données, n’offrent pas le même niveau de détail et ne simulent pas nécessairement le même ensemble de mesures, si bien que les bilans redistributifs publiés ne sont pas toujours complètement convergents. Cet état de fait risque de créer un certain flou dans l’opinion et d’instiller un doute sur la précision et la neutralité des modèles, d’autant plus que les médias s’embarrassent rarement de distinguos méthodologiques. Cette Note fait le point sur les instruments actuels de micro-simulation en France, formule quelques propositions afin d’éviter la confusion entre les divers résultats publiés, et dresse quelques perspectives d’évolution. Sur la présentation des résultats d’abord, il est souhaitable que chaque organisme de micro-simulation utilise dans sa publication principale, ou dans une annexe en ligne, une grille de lecture qui soit commune à tous. L’exercice de comparaison entrepris dans cette Note montre aussi l’intérêt d’une démarche plus systématique de confrontation de leurs pratiques à l’initiative des modélisateurs et/ou des utilisateurs c’est pourquoi nous préconisons d’institutionnaliser les échanges entre modélisateurs, utilisateurs et producteurs de données au sein d’un séminaire annuel. Ensuite, la granularité est une dimension clé de la micro-simulation : des données plus fines permettraient en particulier une meilleure appréhension des queues de distribution (les plus modestes et les plus aisés) et de la variation des inégalités « horizontales ». Il est ainsi recommandé d’explorer l’utilisation de données administratives exhaustives ou quasi exhaustives dans la double dimension des revenus et des caractéristiques démographiques et socio-professionnelles des ménages. Nous recommandons enfin de maintenir une stricte séparation entre les exercices focalisés seulement sur les effets mécaniques, qui permettent d’appréhender les effets redistributifs, et les exercices incorporant en sus des réponses comportementales qui permettent d’évaluer l’impact budgétaire. Une prise en compte plus systématique des effets distributifs et redistributifs de toute mesure de politique économique lors de sa conception et de sa mise en oeuvre est éminemment souhaitable, mais aussi analytiquement délicate. Une voie possible pour faire évoluer la frontière de la micro-simulation serait de lancer des appels à projet de recherche, au-delà du champ classique du système socio-fiscal.

Abstract: What is the most efficient way to respond to recessions in the labor market? To this question, policymakers on both sides of the pond gave two diametrically opposed answers during the recent crisis. In the US, the focus was on insuring workers, by aggressively increasing the generosity of unemployment insurance (UI). In Europe, to the contrary, policies were concentrated on saving job matches, with the massive use of labor hoarding subsidies through short-time-work (STW) programs, on which so little is actually known. In this article, we try to understand who got it right. Building on the vast literature on UI and on a recent stream of papers on STW, we first provide a framework to determine the relative welfare effects of STW versus UI. We then show that UI offers more insurance value than STW, but tends to exhibit larger fiscal externalities, due to moral hazard. We finally focus on how STW and UI affect labor market equilibrium and how this interacts with inefficiencies in the labor market. We review recent evidence showing that STW can be an effective way to reduce socially costly layoffs in recessions. Overall, we conclude that STW is an important and useful addition to the labor market policy-toolkit during recessions, with strong and positive complementarities with UI.