Public Finance in a Changing World PDF
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PUBLIC FINANCE IN A CHANGING WORLD Also by Peter Birch S¢rensen TAX POLICY IN THE NORDIC COUNTRIES (editor) Public Finance in a Changing World Edited by Peter Birch S0rensen Professor of Economics University of Copenhagen Denmark Editorial matter, selection and Introduction © Peter Birch Sf(lrensen 1998 Chapters 1-10 (inclusive) © Macmillan Press Ltd 1998 Softcover reprint of the hardcover 1st edition 1998 978-0-333-68221-0 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 1998 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world ISBN 978-1-349-14338-2 ISBN 978-1-349-14336-8 (eBook) DOI 10.1007/978-1-349-14336-8 A catalogue record for this book is available from the British Library. This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. 1098765432 07 06 05 04 03 02 01 00 99 Contents List of Tables vii List of Figures viii Preface ix Acknowledgements x Notes on the Contributors xi Public Finance in a Changing World: Introduction and Summary Peter Birch S~rensen Part I Alternative Perceptions of Government 1 The Role of the State in Fiscal Theory Richard A. Musgrave 35 2 Government Role and the Efficiency of Policy Instruments Vito Tanzi 51 Part II The Welfare State, Entrepreneurship and Employment 3 Social Insurance, Incentives and Risk-Taking Hans-Werner Sinn 73 4 Unemployment in the United States: The Problem and a Proposal Robert Haveman 101 5 Unemployment and Public Finance in Europe Frederick van der Ploeg 126 v vi Contents Part III Public Finance with Many Jurisdictions 6 Factor Mobility and Redistributive Policy David E. Wildasin 151 7 Theory and Practice of Confederate Finances 193 Dubravko Mihaljek 8 Reform and Coordination of Company Taxes in the European Union Sijbren Cnossen 221 Part IV Economies in Transition: Raising Revenue and Allocating Property Rights 9 Tax Reform in Transition Economies: Experiences from the Croatian Tax Reform Process of the 1990s Manfred Rose and RolfWiswesser 257 10 The Sales Policy of the Treuhandanstalt as a Privatization Strategy Gerlinde Sinn 279 Index 297 List of Tables 2.1 The growth of general government expenditure, 1870-1994 54 2.2 The size of revenue from financial repression 61 2.3 Seigniorage revenue in 26 developing countries, 1984 62 2.4 Tax revenue from implicit financial taxation in selected countries, 1971-86 averages 63 4.1 Net new jobs created in ten countries, 1979-93 102 4.2 Unemployment rates in the United States, by age and race 104 4.3 Percentage allocation of males aged 18-64 across work-pattern categories, 1973-92 104 4.4 Variance of logarithm (VLN) of earnings, 1973-91, male workers aged 18-64 107 4.5 Expenditures by government on education, training and employment, and social services/other, United States, 1970-92 112 5.1 DECO unemployment rates, 1993 129 5.2 DECO sectoral trends in employment growth, 1979-90 130 5.3 Unemployment benefit replacement rates by duration, 1991 139 5.4 Number of unemployed per staff member in employment offices and related services, 1992 141 8.1 European Union taxes on company earnings in 1996 224 8.2 Tax rates on labour and capital income in the Nordic countries 241 vii List of Figures 3.1 Private insurance versus social insurance 77 3.2 Risk productivity, ideal insurance and redistributive taxation 84 3.3 Moral hazard 89 3.4 The excessive welfare state 90 3.5 The redistributive paradox 92 3.6 The optimal tax problem 95 3.7 Optimal taxation and the redistributive paradox 96 4.1 Changes in earnings across the earnings distribution, year-round, full-time male workers aged 25-64, 1973-93 106 4.2 Changes in earnings across the earnings distribution, year-round, full-time female workers aged 25-64, 1973-93 107 4.3 Real hourly wages for men, by level of education, 1973 and 1993 108 4.4 Earnings of cohorts of men aged 25-34, by education, 1975-90 109 4.5 Poverty in the United States, 1959-94 111 4.6 Public expenditures on labour market programmes, as a percentage of GDP 114 6.1 Attainable distribution of income with migration 159 6.2 Fiscal transfers and migration with and without mobility costs 173 9.1 Determination of the personal allowance in the Croatian income tax system 273 viii Preface This volume brings together a selection of papers which were originally presented at the 51st Congress of the International Institute of Public Finance on 'The Changing Role of the Public Sector: Transitions in the 1990s', held at Universidade Nova in Lisbon in August 1995. All papers were subsequently refereed and edited for publication. As editor, I am grateful to the many anonymous referees who helped seeing the papers through to the final stage. Copenhagen PETER BIRCH S0RENSEN ix
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