HSS (F)2004 04/04 - Revised Cost of Capital Rate in Fees and Charges Recovery Policy (PDF 51 KB)

HSS (F)2004 04/04 - Revised Cost of Capital Rate in Fees and Charges Recovery Policy

Topics in public finance: social security and taxation

Summary The field of public finance focuses on the spending and taxing activities of governments and their influence on the allocation of resources and distribution of income. This work covers in three parts different topics related to public finance which are currently widely discussed in media and politics. The first two parts deal with issues on social security, which is in general one of the biggest spending shares of governments. The third part looks at the main income source of governments by analyzing the perceived value of tax competition. Part one deals with the current problem of increased early retirement by focusing on Switzerland as a special case. Early retirement is predominantly considered to be the result of incentives set by social security and the tax system. But the Swiss example demonstrates that the incidence of early retirement has dramatically increased even in the absence of institutional changes. We argue that the wealth effect also plays an important role in the retirement decision for middle and high income earners. An actuarially fair, but mandatory funded system with a relatively high replacement rate may thus contribute to a low labor market participation rate of elderly workers. We provide evidence using a unique dataset on individual retirement decisions in Swiss pension funds, allowing us to perfectly control for pension scheme details. Our findings suggest that affordability is a key determinant in the retirement decisions. The higher the accumulated pension capital, the earlier men, and to a smaller extent women, tend to leave the workforce. The fact that early retirement has become much more prevalent in the last 15 years is a further indicator of the importance of a wealth effect, as the maturing of the Swiss mandatory funded pension system over that period has led to an increase in the effective replacement rates for middle and high income earners. Part two covers the theoretical side of social security. Theories analyzing optimal social security benefits provide important qualitative results, by mainly using one general type of an economy. Economies are however very diverse concerning numerous aspects, one of the most important being the wealth level. This can lead to significant quantitative benefit differences that imply differences in replacement rates and levels of labor supply. We focus on several aspects related to this fact. In a within cohort social security model, we introduce disability insurance with an imperfect screening mechanism. We then vary the wealth level of the model economy and analyze how the optimal social security benefit structure or equivalently, the optimal replacement rates, changes depending on the wealth level of the economy, and if the introduction of disability insurance into a social security system is preferable for all economies. Second, the screening mechanism of disability insurance and the threshold level at which people are defined as disabled can differ. For economies with different wealth levels, we determine for different thresholds the screening level that maximizes social welfare. Finally, part three turns to the income of governments, by adding an element to the controversy on tax competition versus tax harmonization.2 Inter-jurisdictional tax competition can generate at least two potential benefits or costs: On a public level, tax competition may result in a lower or higher efficiency in the production of public services. But there is also a more private benefit in the form of an option for individuals to move to a community with a lower tax rate in the future. To explore the value citizens attach to tax competition we analyze a unique popular vote for a complete tax harmonization between communities in the third largest Swiss canton, Vaud. Although a majority of voters would have seemingly benefited from replacing the current tax rate by a revenue-neutral average tax rate, the proposal was rejected by a large margin. Our estimates suggest that the estimated combined perceived benefit from tax competition is in the range of 10%.

L' atur de llarga durada de les dones majors de 45 anys a Catalunya: una anàlisi exploratòria tenint en compte la classe social i la divisió sexual del treball

This article provides an in-depth study of long-term female unemployment in Catalonia.Long-term unemployment statistics reveal which social groups are most likely to experience difficulty re-entering the labour market. In this case, we found that women are mainly affected by this type of labour exclusion, in particular poorly qualified, working-class women who are aged over 45 and with family responsibilities.The article aims to explore how the overlapping of factors such as gender, age, social class, origin and the division of work based on gender are related to long-term female unemployment. Moreover, we were able to detect which conceptual tools provide us with the production/reproduction paradigm so as to be able to analyse the future of female unemployment. The methodology we used combines quantitative and qualitative approaches. On the one hand, the analysis of secondary statistical data focusing on Catalonia is useful in understanding the situation from a macro-social perspective. On the other hand, an exploratory discussion group enables us to investigate social imaginary practises among unemployed working class women aged over 45. This discussion group was held in Igualada -capital of the Anoia region - an area of Catalonia deeply affected by unemployment in the current economic crisis.

Xarxes interculturals als instituts: efectes de la composició social sobre el rendiment i les expectatives de l’alumnat d’origen estranger

El present informe aborda les variables que expliquen el rendiment acadèmic (entès com a obtenció del graduat escolar) per part de l’alumnat estranger en els centres d’educació secundària de Catalunya. L’anàlisi inclou dos tipus de variables: en primer lloc, les variables individuals (procedència i capital instructiu familiar) i, en segon terme, les variables relacionals (tipus de xarxa d’amistat segons capital instructiu i segons procedència). Al llarg de l’informe es detallen els efectes que aquestes variables, controlant per la composició social dels centres, tenen sobre les probabilitats d’obtenir el graduat escolar de l’alumnat estranger, en comparació amb l’alumnat autòcton. Les anàlisis han mostrat un pes central de les variables individuals en l’obtenció del graduat escolar, pes que és matisat per la composició social dels centres on s’escolaritza l’alumne. Alhora, s’ha observat l’existència d’un efecte de les variables relacionals basades en el capital instructiu, focalitzat especialment en l’alumnat estranger (independendentment del capital instructiu ) i l’alumnat autòcton de famílies poc instruïdes. Per la seva banda, les xarxes per procedència semblen incidir només en l’alumnat (autòcton i estranger) de capital instructiu familiar. En una segona part, l’estudi analitza l’efecte d’aquestes variables sobre les probabilitats d’escollir o Cicles Formatius de Grau Mitjà com a itineraris d’educació post obligatòria, fent esment alhora de les vies escollides per aquells que no han obtingut el graduat escolar (incorporació al món laboral, repetició de curs o realització d’un Programa de Qualificació Professional Inicial). L’anàlisi mostra de nou l’impacte del capital instructiu familiar a l’hora d’escollir itinerari, essent en aquest cas menys intens l’efecte de la procedència. Apareix com a peça especialment significativa el perfil de centre educatiu i les diferents polítiques d’orientació a l’educació post obligatòria. Les xarxes relacionals per capital instructiu apareixen com a significatives per a tots els alumnes, mentre que les xarxes relacionals segons procedència tenen efectes només sobre l’alumnat estranger.

Social bases of changing income distributions

On the backdrop of very little sociological concern with rising income inequality, this paper examines how key changes in sociodemographic behaviour may help shed additional light on changes in household income distribution and especially on long-term income dynamics and inter-generational mobility. The paper argues that the joint effect of rising marital homogamy in terms of human capital and labour supply contributes generally to widen the income gap between households. Only uner very restrictive conditions, namely when the labour supply of low educated women grows dis-proportionally fast, will women's earnings contribute to more equality. Finally, the paper suggests that women's rising employment commitments contribute positively to equalizing the opportunity structure both via the income effect and if quality care is available, also via more homogenous cultural and cognitive stimulation of children. Mother's work does not generally have adverse effects for children's development.

Social Security in Theory and Practice (II): Efficiency Theories, Narrative Theories, and Implications for Reform

166 countries have some kind of public old age pension. What economic forces create and sustain old age Social Security as a public program? Mulligan and Sala-i-Martin (1999b) document several of the internationally and historically common features of social security programs, and explore "political" theories of Social Security. This paper discusses the "efficiency theories", which view creation of the SS program as a full of partial solution to some market failure. Efficiency explanations of social security include the "SS as welfare for the elderly" the "retirement increases productivity to optimally manage human capital externalities", "optimal retirement insurance", the "prodigal father problem", the "misguided Keynesian", the "optimal longevity insurance", the "government economizing transaction costs", and the "return on human capital investment". We also analyze four "narrative" theories of social security: the "chain letter theory", the "lump of labor theory", the "monopoly capitalism theory", and the "Sub-but-Nearly-Optimal policy response to private pensions theory". The political and efficiency explanations are compared with the international and historical facts and used to derive implications for replacing the typical pay-as-you-go system with a forced savings plan. Most of the explanations suggest that forced savings does not increase welfare, and may decrease it.

A CONTABILIDADE E O REAL VALOR DAS EMPRESAS: FOCO NO CAPITAL INTELECTUAL

Este trabalho mostra que a contabilidade pode não estar a evidenciar o real valor do património das empresas (um dos seus objectivos), constatamos nos últimos tempos, que os relatórios fornecidos pela contabilidade financeira não retratam certas realidades das empresas, visto que o valor contabilístico se distancia cada vez mais do valor de mercado, principalmente nas empresas de alta tecnologia e serviços, assim sendo as demonstrações financeiras podem estar experimentando uma perda de relevância para a tomada de decisões de investimentos, de crédito e de gestão. Dentro deste contexto, ressaltamos a necessidade de a contabilidade evidenciar naquelas demonstrações tais informações para que possa divulgar aos vários utentes da informação o real valor da empresa. Visto que o Capital Intelectual é importante para as empresas, torna-se necessário relatar não só informações financeiras como também não financeiras. Este trabalho apresenta um estudo descritivo/quantitativo da empresa CVTelecom, com o objectivo de avaliar o grau de divulgação do Capital Intelectual na empresa. A principal constatação foi o seguinte: uma participação activa da empresa em divulgar o Capital Intelectual, uma forma não normalizada através da divulgação voluntária do Capital Intelectual cujo veículo de divulgação, é o Relatório de Gestão e o Balanço Social. This work shows that the Accounting cannot be evidencing the Real value of the patrimony of the enterprises (one of their objectives), we verified in the last times, that the reports supplied by the Financial Accounting don't portray certain realities of the enterprises, because the value Accounting of the enterprises go away more and more of his market value, mainly in the companies of high technology and services, soon the financial demonstrations are trying a loss of relevance for socket of decisions of investments, of credit and of administration. Inside of this context, we emphasized the need of the Accounting to evidence in the demonstrations such financial information so that it can publish to the several users of the information the Real value of the company. Because the Intellectual Capital is important for the enterprises, it becomes necessary to tell not only financial information as well as any financial. This work presents a descriptive-quantitative study of the enterprise CVtelecom, with the objective of evaluating the degree of popularization of the Intellectual Capital in the enterprise and the impact in the performance of this enterprise. The main verification was the following: A participation active of the company in publishing the Intellectual Capital in spite of being in a way no normalized but a voluntary popularization of the Intellectual Capital, whose popularization vehicle is the Report of Administration and the Social Swinging.

Impacto das Políticas Públicas de Acção Social Escolar na Trajectória Escolar de Estudantes Provenientes Famílias Pobres: Santa Catarina – Santiago

O presente trabalho de investigação constitui um estudo de caso, realizado no Liceu Amílcar Cabral em Santa Catarina. O trabalho procura analisar a relação que existe entre as condições socio-económicas das famílias e o rendimento escolar dos seus educandos. Do mesmo modo, busca analisar as relações existentes entre as políticas de acção social escolar e a trajectória escolar dos alunos provenientes das famílias pobres, isto é, busca apreender e surpreender eventuais impactos das políticas educativas, particularmente as relacionadas com o apoio social, tentando, porém, considerar outros factores que intervêm no “sucesso” ou “fracasso” escolar. O material foi colectado a partir de questionários aplicados aos alunos e familiares e de entrevistas feitas aos responsáveis pela execução de programas de acção social escolar. As análises permitiram ver o paradigma histórico da actuação do Estado no sector, conhecer as apreciações que as famílias e os alunos fazem destas políticas, permitindo identificar indícios que apontam para o facto de que as políticas de acção social escolar têm tido resultados positivos sobre o rendimento escolar de estudantes provenientes de famílias pobres.

Social security, retirement, and the single-mindedness of the electorate

We propose a positive theory that is consistent with two important featuresof social security programs around the world: (1) they redistributeincome from young to old and (2) they induce retirement. We construct avoting model that includes a political campaign or debate prior to theelection. The model incorporates single-mindedness of the groups that donot work: while the workers divide their political capital between their age concerns and occupational concerns , the retired concentrate alltheir political capital to support their age group. In our model, theelderly end up getting transfers from the government (paid by the young)and distortionary labor income taxes induce the retirement of the elderly.In addition, our model predicts that occupational groups that work morewill tend to have more political power. The opposite is true fornon-occupational groups (such as the elderly). We provide some evidencethat supports these additional predictions.

Social security in theory and practice (II): Efficiency theories, narrative theories and implications for reform

166 countries have some kind of public old age pension. What economic forcescreate and sustain old age Social Security as a public program? Mulligan and Sala-i-Martin (1999b) document several of the internationally and historically common features of social security programs, and explore "political" theories of Social Security. This paper discusses the "efficiency theories", which view creation of the SS program as a full of partial solution to some market failure. Efficiency explanations of social security include the "SS as welfare for the elderly" the "retirement increases productivity to optimally manage human capital externalities", "optimal retirement insurance", the "prodigal father problem", the "misguided Keynesian", the "optimal longevity insurance", the "governmenteconomizing transaction costs", and the "return on human capital investment". We also analyze four "narrative" theories of social security: the "chain letter theory", the "lump of labor theory", the "monopoly capitalism theory", and the "Sub-but-Nearly-Optimal policy response to private pensions theory".The political and efficiency explanations are compared with the international and historical facts and used to derive implications for replacing the typical pay-as-you-go system with a forced savings plan. Most of the explanations suggest that forced savings does not increase welfare, and may decrease it.

What social security: Beveridgean or Bismarckian?

Why are Bismarckian social security systems associated with largerpublic pension expenditures, a smaller fraction of private pension andlower income in-equality than Beveridgean systems? These facts arepuzzling for political economy theories of social security whichpredict that Beveridgean systems, involving intra-generationalredistribution, should enjoy larger support among low-income people andthus be larger. This paper explains these features in a bidimensionalpolitical economy model. In an economy with three income groups,low-income support a large, redistributive system; middle-income favoran earning-related system, while high-income oppose any public system,since they have access to a superior saving technology, a privatesystem. We show that, if income inequality is large, the voting majorityof high-income and low-income supports a (small) Beveridgean system,and a large private pillar arises; the opposite occurs with lowinequality. Additionally, when the capital market provides higherreturns, a Beveridgean system is more likely to emerge.

Is altruism important for understanding the long-run effects of social security?

This paper quantifies the effects of social security on capital accumulation and wealth distribution in a life cycle framework with altruistic individuals. The main findings of this paper are that the current U.S. social security system has a significant impact on capital accumulation and wealth distribution. I find that social security crowds out 8\% of the capital stock of an economy without social security. This effect is driven by the distortions of labor supply due to the taxation of labor income rather than by the intergenerational redistribution of income imposed by the social security system. In contrast to previous analysis of social security, I found that social security does not affect the savings rate of the economy. Another interesting finding is that even though the current U.S. social security system is progressive in its benefits, it may lead to a more disperse distribution of wealth.

Indentifying human capital externalities: Theory with an application to US cities

The identification of aggregate human capital externalities is still not fully understood. The existing (Mincerian) approach confounds positive externalities with wage changes due to a downward sloping demand curve for human capital. As a result, it yields positive externalities even when wages equal marginal social products. We propose an approach that identifies human capital externalities whether or not aggregate demand for human capital slopes downward. Another advantage of our approach is that it does not require estimates of the individual return to human capital. Applications to US cities and states between 1970 and 1990 yield no evidence of significant average -schooling externalities.

Empresas, instituciones y red social: la Compañía Hispanoamericana de Electricidad (CHADE) entre Barcelona y Buenos Aires

En este trabajo se presenta la vinculación entre la Casa de América de Barcelona y la Compañía Hispanoamericana de Electricidad (CHADE) en Buenos Aires a través del estudio de tres momentos: primero, la fundación de la asociación y la presencia de Francisco Cambó en el Centro Jurídico Iberoamericano; segundo, la fundación de la CHADE para salvar los capitales alemanes del pago de reparaciones económicas a los Aliados por su participación en la Primera Guerra Mundial; y tercero, la conversión de la asociación americanista barcelonesa en Instituto de Economía Americana (IDEA)-Casa de América para reforzar su naturaleza internacional en consonancia con la Sociedad de Naciones, así como el declive de la asociación por la interrupción de remesas de capital del Cono Sur que llegaban a Barcelona en forma de subsidios para la asociación americanista.

Social Investment Policies in Times of Permanent Austerity

The objective of this paper is to identify the political conditions that are most likely to be conducive to the development of social investment policies. It starts from the view put forward by theorists of welfare retrenchment that in the current context of permanent austerity, policy is likely to be dominated by retrenchment and implemented in a way that allows governments to minimise the risk of electoral punishment (blame avoidance). It is argued that this view is inconsistent with developments observed in several European countries, were some welfare state expansion has taken place mostly in the fields of childcare and active labour market policy. An alternative model is put forward, that emphasises the notion of "affordable credit claiming". It is argued that even under strong budgetary pressures, governments maintain a preference for policies that allow them to claim credit for their actions. Since the traditional redistributive policies tend to be off the menu for cost reasons, governments have tended to favour investments in childcare and active labour market policy as credit claiming tools. Policies developed in this way while they have a social investment flavour, tend to be rather limited in the extent to which they genuinely improve prospects of disadvantaged people by investing in their human capital. A more ambitious strategy of social investment sees unlikely to develop on the basis of affordable credit claiming. The paper starts by presenting the theoretical argument, which is then illustrated with examples taken from European countries both in the pre-crisis and in the post-crisis years.