Monday, September 18th 2017 –  13:00 – 14:00

Maison des Sciences Économiques, Room S/3

 Maison des Sciences Économiques, 106-112 bd de l’Hôpital, 75013 Paris, Métro 5 Campo Formio, bus 57, 67, 27, 83 ou 47

Roland Rathelot
(Warwick)
with Marie Gadenne (Warwick) and Tushar Nandi (CSSS Calcutta)
Taxation and Supply Chains:
Evidence from Value-Added Taxes in West Bengal

Abstract:

How do tax systems in developing countries affect the efficiency of supply chains? West-Bengal (India) has a dual-tax system: firms whose size are below a threshold can choose between a VAT and a turnover tax. Firms that opt for the turnover scheme cannot issue tax receipts for their sales, so VAT-paying firms cannot deduct purchases from firms in the turnover scheme from their tax liability. All else equal, VAT-paying firms will prefer trading with VAT-paying firms than with firms in the turnover scheme.

We develop a theoretical framework to understand how firms’ production, choice of tax status (turnover vs VAT) and trading (choice of suppliers and clients) decisions are affected by tax policy. We then use administrative tax data on the nearly 200,000 firms paying taxes (in both the VAT or turnover schemes) in West Bengal over the period 2010 to 2015. On top of firms’ balance sheet, we have data on 4 billion firm-to-firm transactions which we use to characterize the production network in the economy.

We find considerable heterogeneity in firms’ tax status choices: (i) there is substantial bunching below the turnover tax threshold, (ii) 70% of firms eligible to both regimes choose to pay the VAT. Our evidence suggests that supply chain considerations drive this heterogeneity: we find that firms that enter our data in any given year are more likely to choose to enter the VAT scheme (as opposed to the turnover scheme) when their potential trading partners are in the VAT scheme.

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Monday, June 12th 2017 –  13:00 – 14:00

Maison des Sciences Économiques, Room 19

 Maison des Sciences Économiques, 106-112 bd de l’Hôpital, 75013 Paris, Métro 5 Campo Formio, bus 57, 67, 27, 83 ou 47

Johannes Boehm
(Sciences Po)
with Ezra Oberfield (Princeton & NBER)
Misallocation in the Market for Inputs: Enforcement and the Organization of Production

Abstract – How costly is weak contract enforcement? Using microdata on Indian manufacturing plants, we show that in states with weaker enforcement, as measured by judicial lags, production and sourcing decisions appear systematically distorted, with the effect concentrated in industries that rely more heavily on inputs that require customization. To quantify the impact of these distortions on aggregate productivity, we construct a model in which plants have several ways of producing, each with different bundles of inputs. Weak enforcement exacerbates a holdup problem that arises when using inputs that require customization, distorting both the intensive and extensive margins of input use. The distortions accumulate along supply chains.

Monday, May 29th 2017 –  13:00 – 14:00

Maison des Sciences Économiques, Room 19

 Maison des Sciences Économiques, 106-112 bd de l’Hôpital, 75013 Paris, Métro 5 Campo Formio, bus 57, 67, 27, 83 ou 47

Sara Biancini
(CREM, Université de Caen)
with Pamela Bombarda (ThEMA, Université de Cergy-Pontoise)
Intellectual Property Rights, MNFs and Technology Transfers

Abstract – We consider a framework in which firms based in the North offshore production of an intermediate good in the South. Firms can decide to import the intermediate from vertically integrated producers, or to outsource to independent contractors using a licensing contract based on a Northern blueprint. The developing country is characterized by incomplete contracts and an imitation risk related to weak IPR enforcement. Our model shows that, under reasonable assumptions on model parameters, a reinforcement of intellectual property rights (IPR) in the South can increase the relative share of imports from vertically integrated suppliers. Using the U.S. Related-Party Trade database from Antras (2015), we   find empirical evidence supportive of our key prediction.

Monday, May 15th 2017 –  13:00 – 14:00

Maison des Sciences Économiques, Room 19

 Maison des Sciences Économiques, 106-112 bd de l’Hôpital, 75013 Paris, Métro 5 Campo Formio, bus 57, 67, 27, 83 ou 47

Evgenii Monastyrenko
(PhD candidate, PSE)
with Julian HINZ (Kiel Institute for the World Economy)
Bearing the Cost of Politics: Consumer Prices and Welfare in Russia

Abstract – In August 2014 the Russian Federation implemented an embargo on select food and agricultural imports originating from the European Union, United States, Australia, Canada and Norway. The measure was designed to be the response to economic sanctions against Russia by harming foreign producers of the targeted products. We aim to estimate the consequences of such abrupt restrictions on international trade for consumer prices and welfare in Russia. We employ detailed monthly data on consumer prices in Russia between 2011 and 2016 at different administrative levels. A simple difference-in-differences approach suggests that self-imposed embargo induced a well-predictable rise in the prices of targeted goods in the short run. Regions of Russia with previously above-average levels of food imports from sanctioned countries experienced a stronger impact. In the medium run imports from other sources replaced previous imports from embargoed countries and in the long run – after one year – domestic production significantly diminished the initial price surge. Meanwhile, a time trend in non-targeted goods suggests that their prices have been also altered. We hypothesize that the policy shock is translated to non-targeted sectors by means of input-output production linkages. We further quantify the outcomes of embargo using a Ricardian model with sectoral linkages, trade in intermediate goods and sectoral heterogeneity in production.

Monday, April 3d 2017 –  13:00 – 14:00

Maison des Sciences Économiques, Room 19

 Maison des Sciences Économiques, 106-112 bd de l’Hôpital, 75013 Paris, Métro 5 Campo Formio, bus 57, 67, 27, 83 ou 47

Alessandro NUVOLARI
(Sant’Anna School of Advanced Studies, Pisa)
with Brian A’HEARN (University of Oxford) and Alexia DELFINO (London School of Economics)
Rethinking Age-heaping, a Cautionary Tale From Nineteenth Century Italy

Abstract – A swelling stream of literature employs age-heaping as an indicator of human capital, more specifically of numeracy. We re-examine this connection in light of evidence drawn from nineteenth century Italy: census data, death records, and direct, qualitative evidence on age-awareness and numeracy. Though it can stand in as an acceptable proxy for literacy, our findings suggest that age-heaping is most plausibly interpreted as a broad indicator of cultural and institutional modernisation rather than a measure of cognitive skills.

Working paper available here.

Monday, March 20th 2017 –  13:00 – 14:00

Maison des Sciences Économiques, Room 19

 Maison des Sciences Économiques, 106-112 bd de l’Hôpital, 75013 Paris, Métro 5 Campo Formio, bus 57, 67, 27, 83 ou 47

Julien PRAT
(CNRS, CREST)
with G. Felbermayr (Ifo Munich) and G. Impullitti (University of Nottingham)
Firm Dynamics and Residual Inequality in Open Economies

Abstract – Wage inequality between similar workers has been on the rise in many rich countries. Recent empirical research suggests that heterogeneity in firm characteristics is crucial to understand wage dispersion. Lower trade costs as well as labor and product market reforms are considered critical drivers of inequality dynamics. We ask how these factors affect wage dispersion and how much of their effect on inequality is attributable to changes in wage dispersion between and within firms. To tackle these questions, we incorporate directed job search into a dynamic model of international trade where wage inequality results from the interplay of convex adjustment costs with firms’ different hiring needs along their life cycles. Fitting the model to German linked employer-employee data for the years 1996-2009, we find that firm heterogeneity explains about half of the surge in inequality. The most important mechanism is tougher product market competition driven by domestic product market deregulation and, indirectly, by international trade.

Monday, March 6th 2017 –  13:00 – 14:00

Maison des Sciences Économiques, Room 19

 Maison des Sciences Économiques, 106-112 bd de l’Hôpital, 75013 Paris, Métro 5 Campo Formio, bus 57, 67, 27, 83 ou 47

Lise PATUREAU
(Université Dauphine, LEDa)
with  C. POILLY (Université Aix-Marseille)
Addressing International Competitiveness Issues: The role of Pricing-to-Market

Abstract – Echoing recent developments within the Euro area, the paper investigates the role of price-and market-driven policies in enhancing international competitiveness. We investigate the effects of two reforms, a product market deregulation and a fiscal reform that reduces the labor payroll tax rate, on international relative prices and external imbalances. Importantly, we show that the endogenous PTM behavior of firms affects the effectiveness of both reforms on trade competitiveness, with an effect playing in opposite directions. In a long-run perspective, endogenous markups thus reduce the exchange rate depreciation induced by the fiscal reform, whereas amplifying the effectiveness of product market deregulation. Taking into account the transitional dynamics of the reforms substantially modifies the picture though. The labor tax reform proves to be more effective in improving the current account and depreciating the real exchange rate in the aftermath of the reform, even under endogenous markups. This result generalizes to other macroeconomic variables, such as GDP, hours worked and consumption.