Does a Wealth Tax Improve Equality of Opportunity? Evidence from Norway

Authors: Kristoffer Berg & Shafik Hebous

Does parental wealth inequality impact next generation labor income inequality? And does a tax on parental wealth affect the labor income distribution of the next generation? We tackle both questions empirically using detailed intergenerational data from Norway, focusing on effects on wages rather than capital income. Results suggest that a net wealth of NOK 1 million increases wages of the children by NOK 14,000. Children of wealthy parents also have a higher labor income mobility. The estimated hypothetical wage distribution without the wealth tax is more unequal. Moreover, suggestive evidence indicates parental wealth is associated with higher labor risk taking.

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Supply and Demand Effects of Unemployment Insurance Benefit Extensions: Evidence from U.S. Counties

Author: Klaus-Peter Hellwig

I use three decades of county-level data to estimate the effects of federal unemployment benefit extensions on economic activity. To overcome the reverse causality coming from the fact that benefit extensions are a function of state unemployment rates, I only use the within-state variation in outcomes to identify treatment effects. Identification rests on a differences-in-differences approach which exploits heterogeneity in county exposure to policy changes. To distinguish demand and supply-side channels, I estimate the model separately for tradable and non-tradable sectors. Finally I use benefit extensions as an instrument to estimate local fiscal multipliers of unemployment benefit transfers. I find (i) that the overall impact of benefit extensions on activity is positive, pointing to strong demand effects; (ii) that, even in tradable sectors, there are no negative supply-side effects from work disincentives; and (iii) a fiscal multiplier estimate of 1.92, similar to estimates in the literature for other types of spending.

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The Sooner (and the Smarter), the Better: COVID-19 Containment Measures and Fiscal Responses

Author: Amr Hosny

This paper finds empirical evidence that faster and smarter containment measures were associated with lower fiscal responses to the COVID-19 shock. We also find that initial conditions, such as fiscal space, income, health preparedness and budget transparency were important in shaping the amount and design of the COVID-19 fiscal response.

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