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Dutch literature

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Alternatives to the current system of separate tax accounting, such as the proposed Common Consolidated Corporate Tax Base in Europe, would apportion a firm’s worldwide profits using formulas based on the location of employment, capital or sales. This paper offers a new method of evaluating the accuracy of these apportionment rules and the ownership distortions they create. Evidence from European company accounts indicates that apportionment formulas significantly misattribute income, since employment and other factors on which they are based do a very poor job of explaining a firm’s profits. For example, the magnitude of property, employment and sales explains less than 22 percent of the variation in profits between firms, and the prediction estimates from using such a formula exceed half of predicted profits 64% of the time, and exceed twice predicted income 11% of the time. As a result, the use of formulas rewards or punishes international mergers and divestitures by reallocating taxable income between operations in jurisdictions with differing tax rates. The associated ownership distortion is minimized by choosing factor weights to minimize weighted squared prediction errors, for which, based on the European evidence, labor inputs should play little if any role in allocation formulas. But even a distortion-minimizing formula creates large incentives for inefficient ownership reallocation due to the enormous variation in profitability that is unexplained by formulary factors, implying that significant resource allocation costs would accompany European adoption of formulary apportionment methods.

Zonder onderwerpscode: economie

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This paper describes a series of school-based randomized trials in over 250 urban schools designed to test the impact of financial incentives on student achievement. In stark contrast to simple economic models, our results suggest that student incentives increase achievement when the rewards are given for inputs to the educational production function, but incentives tied to output are not effective. Relative to popular education reforms of the past few decades, student incentives based on inputs produce similar gains in achievement at lower costs. Qualitative data suggest that incentives for inputs may be more effective because students do not know the educational production function, and thus have little clue how to turn their excitement about rewards into achievement. Several other models, including lack of self-control, complementary inputs in production, or the unpredictability of outputs, are also consistent with the experimental data.

Zonder onderwerpscode: economie

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There are large and important differences between blacks and whites in nearly every facet of life - earnings, unemployment, incarceration, health, and so on. This chapter contains three themes. First, relative to the 20th century, the significance of discrimination as an explanation for racial inequality across economic and social indicators has declined. Racial differences in social and economic outcomes are greatly reduced when one accounts for educational achievement; therefore, the new challenge is to understand the obstacles undermining the development of skill in black and Hispanic children in primary and secondary school. Second, analyzing ten large datasets that include children ranging in age from eight months old to seventeen years old, I demonstrate that the racial achievement gap is remarkably robust across time, samples, and particular assessments used. The gap does not exist in the first year of life, but black students fall behind quickly thereafter and observables cannot explain differences between racial groups after kindergarten. Third, we provide a brief history of efforts to close the achievement gap. There are several programs -- various early childhood interventions, more flexibility and stricter accountability for schools, data-driven instruction, smaller class sizes, certain student incentives, and bonuses for effective teachers to teach in high-need schools, which have a positive return on investment, but they cannot close the achievement gap in isolation. More promising are results from a handful of high-performing charter schools, which combine many of the investments above in a comprehensive framework and provide an "existence proof" -- demonstrating that a few simple investments can dramatically increase the achievement of even the poorest minority students. The challenge for the future is to take these examples to scale.

Zonder onderwerpscode: economie

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This paper describes an experiment designed to investigate the impact of aligning student, parent, and teacher incentives on student achievement. On outcomes for which incentives were provided, there were large treatment effects. Students in treatment schools mastered more than one standard deviation more math objectives than control students, and their parents attended almost twice as many parent-teacher conferences. In contrast, on related outcomes that were not incentivized (e.g. standardized test scores, parental engagement), we observe both positive and negative effects. We argue that these facts are consistent with a moral hazard model with multiple tasks, though other explanations are possible.

Zonder onderwerpscode: economie