Emilson C. D. Silva

Pure public goods and income redistribution in a federation with decentralized leadership and imperfect labor mobility

Abstract We examine the non-cooperative provision of a pure public good by regional governments in a federation similar to the European Union, where regional governments are Stackelberg leaders and the central government is a Stackelberg follower — a federation with decentralized leadership. The center makes interregional income transfers after it observes the contributions to the pure public good. Imperfectly mobile workers react to regional and central governments’ policies by establishing residence in their most preferred region. Despite the degree of labor mobility, we show that the pure public good and interregional transfers are generally allocated efficiently in a federation with decentralized leadership.

Performance-based Wages in Tax Collection: The Brazilian Tax Collection Reform and its Effects

We use panel data from the Brazilian tax collection authority to examine the effects of a major incentive reform instituted in 1989 to improve tax enforcement. Beforehand, fine collections per inspection were relatively stable; however, a striking trend break occurred afterwards, which we attribute to the incentive reform not to changes in the macroeconomy or personal and corporate income tax rates. Our estimates suggest the growth in fines per inspection after the reform is about 75% above what it would have been without it and that there is substantial heterogeneity in the impact of the reform across tax regions.

Rotten Kids, Purity, and Perfection

Bergstrom has shown that beckers “Rotten Kid theorem” holds in a world of two commodities if their utilities are transferable. The present paper identifies a further circumstance in which the theorem is valid. We show that it also holds in the absence of transferable utility if the externalities are assumed to take the form of a single pure public good.

Local public goods, inter-regional transfers and private information

Abstract Suppose that the centre wishes to make transfers between member states of a federation to reduce inequality. However, it lacks precise information concerning the cost differences that are responsible for the initial income inequality. We examine the implications of asymmetric information for the design of the transfer scheme. We show that if member states’ inherent cost levels as local public good providers take discrete values, the first best, or ‘complete information’, transfer scheme may or may not violate incentive compatibility. If inherent cost is a continuous random variable, such a scheme certainly violates incentive compatibility. We also explore the possibility of binding participation constraints. In our model, a binding incentive compatibility constraint leads to a reduction in effort devoted to cost reduction, and a binding participation constraint will also lead to a violation of Samuelsons optimality condition for public good provision.

Exclusion and moral hazard: The case of identical demand

This paper examines the problem of costly exclusion of individuals from a public good. Previous analyses of exclusion have treated it as solely a question of technologies; in our analysis exclusion depends on technology and incentives. In this paper providers of the good design a mechanism to provide an optimal level of deterrence to free riders. If individuals are heterogeneous optimal deterrence may allow some free riders. We examine the effect of costs of exclusion on the Samuelson condition for optimal provision, and see that the desire to deter free riding leads to underprovision of the good irrespective of the degree of rivalry of the good.

Crime and Punishment and Corruption: Who Needs Untouchables?

Beckers result that fines should be maximized is also applicable to some social environments where law enforcers are corrupt. If the regulated activity is legal, the principal may efficiently deter crime without an anti-corruption unit. An opportunistic anti-corruption unit, even when corrupt, becomes useful for the principal when the activity is illegal, since the principals goal of maximizing fines motivates the unit to collect bribes from the enforcer, which subsequently induces the enforcer to be nearly completely honest, minimizing corruption. Therefore, we show that there is not necessarily an infinite regress originating with the puzzle of who polices the police. Copyright 2007 Blackwell Publishing, Inc..

Tax competition and federal equalization schemes with decentralized leadership

In a federation featuring decentralized leadership, regional governments compete by setting capital taxes in anticipation of the central governments fiscal-equalization and income-redistribution policies. As a benchmark, it is first demonstrated that the constrained socially optimal allocation satisfies the Pareto efficient conditions; therefore, it may be first best. It is also shown that the subgame perfect equilibrium for the decentralized leadership game is socially optimal. The anticipation of equalization of marginal utilities of public consumption and equalization of marginal utilities of private consumption provides regional governments with correct incentives in the setting of capital taxes.

Strategic effects of future environmental policy commitments: climate change, solar radiation management and correlated air pollutants.

We study the effects of environmental policy commitments in a futuristic world in which solar radiation management (SRM) can be utilized to reduce climate change damages. Carbon and sulfur dioxide emissions (correlated pollutants) can be reduced through tradable permits. We show that if nations simultaneously commit to carbon permit policies, national SRM levels rise with carbon quotas. Alternatively, if they simultaneously commit to SRM policies, the global temperature falls with each unit increase in the global SRM level. A nation always wishes to be a leader in policymaking, but prefers carbon to SRM policymaking. The globe prefers SRM policy commitments.

Regional Cohesion Maintenance, Spillovers, and Imperfect Labor Mobility

We follow Wellisch (1994) in examining the efficiency of regional policymaking in a model with interregional spillovers and in which individuals are attached to regions for cultural reasons. In addition, we assume that regions desire to maintain their social cohesion. We postulate that regional cohesion maintenance can be adequately formalized in terms of Rawlsian regional welfare functions. We show that in the absence of material (e.g., initial incomes, worker abilities) differences across individuals and with identical consumption tastes, regional governments behave efficiently, internalizing interregional spillovers, provided they anticipate perfect incentive equivalence promoted by labor mobility.

Ex-Convicts Face Multiple Labor Market Punishments: Estimates of Peer-Group and Stigma Effects Using Equations of Returns to Schooling

We produced a data set from a survey of a population of convicts in probation. We combined this new data set with an official data set from the Brazilian government to study labor market discrimination faced by ex-convicts. We were interested in estimating two potential effects of discrimination, statistical (stigma) and behavioral (peer-group) effects. Our econometric results suggest that stigmatization leads to a 39% reduction in the wage earned by ex-convicts relative to the wage earned by non-convicts. They also suggest that the peer-group effect accounts for a reduction in the relative earnings of ex-convicts of 1.1% per year of study. In addition, we also show that ex-convicts earn 3.1% less per year of experience than non-convicts.