Browsing by Person "Vietz, Jasmin"

Now showing 1 - 1 of 1

Improving public policy
insights on tax compliance and inequality
(2024) Vietz, Jasmin; Dwenger, Nadja
This thesis offers valuable insights for improving the design of public policies. First, it enhances the government’s ability to allocate public funds in a manner that aligns with citizens’ preferences by deepening the understanding of fair income distribution. Second, it investigates how informing citizens about the use of these public funds can improve tax compliance. Third, it highlights heterogeneity in individual decisions, enabling the government to incorporate this heterogeneity into public policy design. The thesis is structured into five chapters. Chapter 1 situates the research questions within the field of public economics, providing a comprehensive overview of existing literature. This establishes a foundation for understanding the relevance of the thesis and its contributions. Chapter 2, which is based on joint work with Nadja Dwenger and Ingrid Hoem Sjursen, explores fairness preferences. Hereby, the focus is on meritocracy. Meritocracy implies paying people according to their performance and consists of two principles: (i) paying people with equal performance equally (fair equality) and (ii) paying people with higher performance more (fair inequality). However, fulfilling both principles simultaneously can be challenging. Through an online survey experiment conducted with a representative sample of the US population, we provide experimental evidence on which principle individuals consider more important. Participants in the experiment are faced with the choice to either create equality among equals (implementing fair equality) or create inequality among unequals (implementing fair inequality). While one might expect meritocrats to value both principles equally, our experimental variation reveals that individuals are willing to incur a substantial personal cost for implementing one of the two principles. We find that roughly half of meritocrats in our sample choose to implement fair equality, while the other half opts for fair inequality. Chapter 3, which is based on joint work with Ingrid Hoem Sjursen, investigates non-pecuniary motives, specifically reciprocity, as determinants of voluntary tax compliance. In environments with low enforcement capacity, fostering voluntary compliance through non-pecuniary motives can be crucial for increasing public revenues. The chapter investigates whether informing citizens about tax benefits (i.e., public goods and services funded by tax revenue) enhances voluntary tax compliance. Furthermore, it examines whether the information’s impact changes if it comes from a religious sender rather than a tax official, and whether people react differently to the information when reminded about a regularly paid tax beforehand. To study these questions, we conduct a lab-in-the-field experiment among market traders in Tanzania, a country characterized by limited enforcement capacity. The results indicate that informing participants about tax benefits increases voluntary tax compliance, but only when they are not reminded about a tax they regularly pay. When reminded, the effect of the information turns negative. These effects are mainly driven by participants who receive the tax benefits information from a religious sender, rather than a tax official. Chapter 4 examines how culturally determined time preferences– specifically, the degree of patience –affect decisions to invest in continued education. The chapter uses an epidemiological approach to isolate the effect of patience on investments in continued education by focusing on immigrants living in Germany. Immigrants are influenced by the preferences prevalent in their countries of origin, but make decisions within the institutional framework of their new resident country. By combining German Microcensus data with a country-level measure of patience, the analysis explores how patience affects immigrants’ investments in continued education. The results show that immigrants from countries with higher average levels of patience are more likely to invest in continued education. This relationship holds for both first and second generation immigrants, though it is stronger for those who migrated at an older age or have spent less time in Germany. Chapter 5 synthesizes the findings and discusses their broader policy implications, highlighting how the insights gained from this thesis can inform public policy design. Additionally, the chapter identifies potential avenues for future research.