NICOLA PAVONI

This paper studies electoral competition over redistributive taxation between a safe incumbent and a risky opponent. With reference-dependent preferences, economically disappointed voters become risk lovers, and hence are attracted by the more risky candidate. We show that the equilibrium can display policy divergence: the intrinsically more risky candidate proposes lower taxes and is supported by a coalition of very rich and very disappointed voters, while the safe candidate proposes higher taxes. This can explain why right-wing populist parties are often supported by economically dissatisfied voters and yet they run on policy platforms of low redistribution.

Versione pubblicata: https://doi.org/10.1093/jeea/jvag028

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Versione pubblicata: https://doi.org/10.1093/ej/ueae042

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We study the delegation problem between a principal and an agent, who not only has better information about the performance of the available actions but also has superior awareness of the set of actions that are actually feasible. The agent decides which of the available actions to reveal and which ones to hide. We provide conditions under which the agent finds it optimal to leave the principal unaware of relevant options. By doing so, the agent increases the principal’s cost of distorting the agent’s choices and thereby increases the principal’s willingness to grant him higher information rents. We also consider communication between the principal and the agent after the contract is signed and the agent receives information. We show that limited awareness of actions improves communication in such signalling games: the principal makes a coarser inference from the recommendations of the privately informed agent and accepts a larger number of his proposals.

Versione pubblicata: https://doi.org/10.3982/TE5117

Versione working paper: manoscritto (PDF) · appendice online (PDF)

Versione pubblicata: https://doi.org/10.1093/jeea/jvad045

We study the design of child care subsidies in an optimal welfare problem with heterogeneous private market productivities. The optimal subsidy schedule is qualitatively similar to the existing US scheme. Efficiency mandates a subsidy on formal child care costs, with higher subsidies paid to lower income earners and a kink as a function of child care expenditure. Marginal labor income tax rates are set lower than the labor wedges, with the potential to generate negative marginal tax rates. We calibrate our simple model to features of the US labor market and focus on single mothers with children aged below 6. The optimal program provides stronger participation but milder intensive margin incentives for low-income earners with subsidy rates starting very high and decreasing with income more steeply than those in the United States.

Versione pubblicata: https://doi.org/10.1257/aer.20170581

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Versione pubblicata: https://doi.org/10.1515/bejm-2017-0147

• The Precautionary Saving Effect of Government Consumption (756 Kb)

Versione pubblicata: https://doi.org/10.3982/ECTA11905

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Versione pubblicata: https://doi.org/10.1016/j.red.2017.01.002

Versione working paper: IGIER Working Paper n. 574 (PDF)

Versione pubblicata: https://doi.org/10.1093/restud/rdw036

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Versione pubblicata: https://doi.org/10.1016/j.red.2015.01.001

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Versione pubblicata: https://doi.org/10.1016/j.jpubeco.2016.02.003

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Versione pubblicata: https://doi.org/10.1111/ecoj.12323

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Versione pubblicata: https://doi.org/10.1016/j.red.2012.07.002

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Versione pubblicata: https://doi.org/10.3982/ECTA7063

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Versione pubblicata: https://doi.org/10.1016/j.jet.2011.03.002

Versione pubblicata: https://doi.org/10.1111/j.1468-2354.2009.00532.x

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Versione pubblicata: https://doi.org/10.1016/j.red.2008.05.001

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Versione pubblicata: https://academic.oup.com/restud/article-abstract/75/1/65/1630491

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Versione pubblicata: https://academic.oup.com/restud/article/74/1/283/1596863

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Versione pubblicata: https://doi.org/10.1016/j.jmoneco.2006.06.006

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Versione pubblicata: https://doi.org/10.1162/jeea.2005.3.2-3.370

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Versione pubblicata: https://doi.org/10.1007/s13235-015-0137-3

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