Using an agency model of firm behavior, the paper analyzes whether the cost of investment should be tax exempt. The findings suggest that, when managers engage in wasteful capital expenditures, welfare may decline if the cost of investment is tax deductible, as commonly advocated. The extent to...

In the United States, charitable contributions can be deducted from taxable income making the price of giving inversely related to the marginal tax rate. The existing literature documents that charitable giving is very responsive to tax subsidies, but often ignores the spillover effects of such...

In this paper we examine the desirability of subsidizing child care expenditures in a model where parents can choose both the quantity and the quality of child care services they purchase in the market. Our vehicle of analysis is a Mirrleesian optimal tax framework where child care services not...

We study the effect of long-term care (LTC) subsidies and supports on the wellbeing of unpaid caregivers. We draw on evidence from a policy intervention, that universalized previously means-tested caregiving supports in Scotland, known as free personal care (FPC). We document causal evidence of...

Researchers commonly "shrink" raw quality measures based on statistical criteria. This paper studies when and how this transformation’s statistical properties would confer economic benefits to a utility-maximizing decisionmaker across common asymmetric information environments. I develop the...

In this paper, we use an exogenous variation in tax regulations to analyze the impact of bonus depreciation programs on business investment. To promote economic convergence of Eastern and Western Germany after reunification, bonus depreciation tax incentives were granted for investments in...

The fraction of persons holding a college degree differs nearly two-fold across U.S. states. This paper documents data related to state educational attainment differences and explores possible explanations. It shows that highly educated states employ skillbiased technologies, specialize in...

We provide a measure of equality of educational opportunity in 54 countries, estimated as the effect of family background on student performance in two international TIMSS tests. We then show how organizational features of the education system affect equality of educational opportunity. Our...