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This paper develops a differential game of tax avoidance by modelling the interactions between a taxpayer and the tax authority. This framework is particularly useful for explicitly modelling situations of conflict. The solution to the game is a non-co-operative Nash that depends on the resources that need to be used by the tax authority to enforce legislation and the cost to be borne by the taxpayer in tax compliance, provided that the curvature of the utility functions is bounded. Empirical evidence is provided for the value added tax (VAT) using a cross-section of OECD and non-OECD countries. OECD indicators of tax administration efficiency are included in the regressions. The empirical findings show that VAT efficiency, defined as the ratio of collections as a share of consumption to the statutory rate, rises the lower the VAT rate, the lower the share of administrative costs in tax revenue (proxying for the efficiency of tax administration), the more pro-competition the regulatory framework in product markets (measuring non-tax incentives for non-compliance) and the better the country’s governance indicators (regulatory quality, rule of law and government effectiveness). This paper is forthcoming in the Public Finance Review.

In this paper we develop a simple analytical framework to analyze “good” and “bad equilibria” in public-debt and growth dynamics. The “bad equilibrium” is characterised by the simultaneous occurrence, and adverse feedbacks between, high and growing fiscal deficits and debt, high risk premia on sovereign debt, slumping economic activity and plummeting confidence, whereas a “good equilibrium” is characterized by stable growth and debt and low risk premia. We use this framework to identify – both theoretically and empirically – the good and bad equilibrium levels of debt and policies that can help a country caught in a bad equilibrium to recover. The analysis shows that despite some output loss in the short run fiscal consolidation can help countries escape from the bad equilibrium trap. More broadly, we find that a combination of financial backstops, structural reform and fiscal consolidation is most effective in helping countries getting onto a sustainable path.

1. Macro-based effective tax rate (ETR) measures do not provide information on the level or distribution of marginal effective tax rates thought to influence household behaviour. They also do not capture differences in average ETRs facing different population sub-groups. I use EUROMOD, an EUwide tax-benefit model, to derive distributions of average and marginal ETR measures for fourteen countries. Results for each country show how many and which types of individuals face different ETR levels. I consider effective tax burdens on labour income as well as the marginal tax rates faced by working men and women. Results are broken down to isolate the influence of income taxes, social contributions and various types of social benefits ...

The statutory progressivity of the income taxes paid by wage earners, net of the standard cash benefits they receive, depend on the design and interaction of personal income taxes, social security contributions (SSCs) and cash benefits. In order to capture their combined impact, this paper presents statutory tax progressivity indicators for the 34 OECD member countries on the basis of average effective income tax rates and tax wedges which are calculated using the OECD’s Taxing Wages framework. The analysis shows a decreasing pattern of tax progressivity across income levels. In some countries, the tax system becomes regressive when the SSC ceiling has been reached. Also, child benefits increase progressivity (especially at low income levels) and their effect is larger than the flattening impact of SSCs, except at top income levels. Reductions in SSCs targeted at low-incomes and dependant spouse allowances increase progressivity in some OECD countries. Income-splitting systems typically have the opposite effect.

Over the past 15 years, tax reforms have profoundly changed the shape of OECD tax systems and rekindled interest in measuring effective tax burdens. Indeed, in order to understand past reforms or to evaluate the tax policies of particular countries, it is necessary to go beyond statutory rates since these sometimes bear little relation to rates actually paid. This paper updates and extends the Mendoza et al. estimates of average effective tax rates (AETRs) and presents new estimates based on modifications to the methodology to make some of the underlying assumptions more realistic. In particular, the assumption that all income from self-employment is capital income is dropped in favour of assuming that the self-employed earn both labour and capital income. This change raises estimates of the AETR on capital and reduces the estimated AETR on labour but does not alter the trends observed in the updated Mendoza et al. estimates. Both sets of estimates show that, on average, the ...

As far as we know, there is no study that identifies databases relating to the destination of doctorate recipients, including at international level. Young scientists unquestionably play an important role in research and innovation. Consequently, it is necessary to develop statistical sources to find out about the destinations of doctorate recipents. Such information is extremely valuable to the authorities for framing research and innovation policies.

This study has two objectives: first, to review existing statistical sources in the OECD countries, and to discuss their comparability. All told, 21 countries replied to the questionnaire on the existence of such databases, representing 25 data sources available for analysis. The analysis focused on the main aspects of the labour market for young researchers: the existence of queues for academic posts with, correlatively, post-doctoral training, relations between public research systems and industrial ...

This study focuses on the risk of automation and its interaction with training and the use of skills at work. Building on the expert assessment carried out by Carl Frey and Michael Osborne in 2013, the paper estimates the risk of automation for individual jobs based on the Survey of Adult Skills (PIAAC). The analysis improves on other international estimates of the individual risk of automation by using a more disaggregated occupational classification and identifying the same automation bottlenecks emerging from the experts’ discussion. Hence, it more closely aligns to the initial assessment of the potential automation deriving from the development of Machine Learning. Furthermore, this study investigates the same methodology using national data from Germany and United Kingdom, providing insights into the robustness of the results.

The risk of automation is estimated for the 32 OECD countries that have participated in the Survey of Adult Skills (PIAAC) so far. Beyond the share of jobs likely to be significantly disrupted by automation of production and services, the accent is put on characteristics of these jobs and the characteristics of the workers who hold them. The risk is also assessed against the use of ICT at work and the role of training in helping workers transit to new career opportunities.

The possible consequences of the advent of fully automated vehicles (AVs) for personal transport are assessed. A shared-user model is considered preferable to an owner-user model; public-sector intervention is considered necessary to secure the successful integration of AVs with mass transit. Interurban expressways are found to offer a better opportunity than urban roads of capturing the vehicles' potential traffic and safety benefits. AVs' performance in a mixed-fleet scenario is highly dependent on segregation from other road users, but segregation poses significant challenges.

The governance of a range of themes (such as demand management and security) is considered. In each case, challenges to achieving a socially desirable outcome are identified. Both laissez-faire and more interventionist styles of governance with respect to AVs present problems but laissez faire may carry greater risk. Decisions on governance should be based on meaningful dialogue with those who stand to be affected.

This paper reiterates the basic principles and rationale for valuing travel time savings. It explains the type of impacts that the valuation of travel time savings intends to capture and discusses whether and how those fundamental principles continue to hold with automation and increased possibility of productive time use while travelling. The paper also discusses implications for traffic management and urban form that follow from increased in-vehicle productivity.

Building on the automatic fiscal stabilisers literature, this paper assesses how automatic stabilisers have evolved over the past two decades by analysing changes in the personal income tax and social benefit systems. In three-quarters of the 35 OECD countries analysed, indicators of the strength of automatic stabilisers (aggregate elasticities of household income after tax with respect to the cycle and aggregate net replacement rates) changed little or moderately over the past two decades, suggesting broadly stable automatic stabilisers of household disposable income. The paper discusses pros and cons of several policy options to strengthen automatic stabilisers in the current environment. The effectiveness and possible side effects, particularly related to disincentives to work, vary across policy options. Consequently, policy reform proposals should be carefully assessed in a country-specific context and take into account other important policy objectives of tax and benefit systems.

It is often claimed that tax and welfare reforms that aim at enhancing efficiency may come at the cost of cyclical stabilisation. Reducing the generosity of welfare systems and lowering taxes may boost efficiency and output, and improve market adjustment to shocks. But, by reducing the size of automatic stabilisers, it may also imply less cyclical smoothing. This would be unwelcome in EMU given the loss of national monetary autonomy and the well-known pitfalls of active fiscal management. This paper argues that the alleged trade-off between efficiency/flexibility and stabilisation may not exist. We show that, if the initial level of the tax burden is high, reducing it may lead to higher output stabilisation in the event of a supply shock and higher inflation stabilisation in the event of a demand shock. The threshold level of taxation depends on the preferences of the central bank over inflation and output. Econometric and numerical simulations show that European countries — ...

Many cars sold today are already capable of some level of automated operation, and prototype cars capable of driving autonomously have been - and continue to be - tested on public roads in Europe, Japan and the United States. These technologies have arrived rapidly on the market and their future deployment is expected to accelerate. Autonomous driving promises many benefits: improved safety, reduced congestion and lower stress for car occupants, among others. Authorities will have to adapt existing rules and create new ones in order to ensure the full compatibility of these vehicles with the public’s expectations regarding safety, legal responsibility and privacy. This report explores the strategic issues that will have to be considered by authorities as more fully automated and ultimately autonomous vehicles arrive on our streets and roads.

Performance of fiscal policy, while good in international comparison, is not sufficient to prepare for future ageing-related spending increases. Subject to macroeconomic developments, the pace of consolidation could be more ambitious than currently planned, with a view to reducing the debt burden below 60% of GDP by 2020. Austrian fiscal policies have tended to be pro-cyclical in upturns, mainly because spending was not adequately kept in check. Stronger fiscal rules and a reform of inter-governmental fiscal relations could help contain expenditure dynamics. Efficiency-raising reforms in key spending areas such as pensions and other social expenditures, health, and education are also highly needed to reduce spending and ensure the provision of high-quality public services at lower cost. In this regard, Austria should make full use of the performance budgeting framework it plans to introduce from 2013. Higher potential growth could also take off some of the pressure on public finances. There remains significant room to rebalance the tax structure towards less distortive sources of revenue, thus supporting employment and growth.

Austria has a model of “separate gender roles” in work, family and life arrangements which persists despite efforts to better balance these roles. Irrespective of their education level - which is higher for new generations than men’s - the majority of women with children withdraw fully or partly from the labour force until their children reach school age, and beyond. This pattern has provided the Austrian population with generally high quality family services, but buttressed gender inequalities, and deprived society from the activation of existing talent, and therefore from additional household incomes, fiscal revenues and potential output. Gender differences in life-time career and income paths, well-being, and participation patterns in public life generate increasing dissatisfaction in growing segments of society, among both women and men.

In December 2007 and December 2009, Austria’s Federal Parliament decided on a far-reaching, comprehensive budget reform package. The introduction of a legally binding medium-term expenditure framework, of accrual budgeting and accounting as well as performance budgeting marks a decisive change, not only in steering the budget, but even more so in the Austrian administrative and political culture.

Both legislative decisions were finally taken unanimously. This article describes the respective change management and gives an overview of the main Austrian reform elements.

Austria enjoys strong material well-being and high quality of life. Steady convergence with top GDP per capita levels translated into decisive improvements in household disposable incomes while significant redistribution has ensured low income inequality and poverty. This has been combined with gains in leisure time, especially time spent in retirement, low unemployment, high environmental standards, rising life expectancy, a well-functioning social support network and high subjective well-being. This performance was achieved with a unique combination of supportive conditions for a dynamic business sector, priority for family based care, a wide supply of public services, and a well-functioning social partnership. Particularly remarkable for a small open economy has been the degree of stability, which may have contributed to Austria’s high quality of life. However, a number of weaknesses also exist. Older, unskilled and in particular people with migrant background, have lower labour market attachments. Outcomes in education and health care are subject to inequalities. Family services are still mainly carried out by women, who have closed the gap in education attainment with men but face tensions between work and family responsibilities and a high wage gap. The gaps experienced by people with migrant background are in several dimensions larger than in the average OECD country. This Working Paper relates to the 2013 OECD Economic Survey of Austria (http://www.oecd.org/eco/surveys/austria-2013.htm).

Austria proudly claims to be the first country to make training firm work compulsory in secondary commercial schools and secondary colleges for business administration. In its other secondary schools offering vocational training and colleges, training firms may be chosen as an additional programme.