Econ 131

Syllabus

Overview

The course examines government redistributive programs from a normative perspective, focusing on the fundamental conflict between efficiency and equity (social justice) considerations. Subject to time constraints, we will attempt to cover the following topics:

1) Foundations: measurement of the excess burden (DWL) of the tax and transfer system and the simple arithmetic of Harberger triangles.

2) Mechanism design in action: optimal redistributive labor income taxation and the role of differential commodity taxation.

3) Universal versus selective welfare programs: workfare versus welfare.

4) Means-tested transfer programs: poverty alleviation, utility maintenance and the notion of welfare deservedness, combining means-testing with workfare.

5) Selected advanced topics: social insurance, social stigma and ‘shaming’, mandatory parental leave, minimum wage and the deserving poor, re-distribution in the presence of tax competition, behavioral public economics.

Requirements:

Take-home final (open book/open questions) exam held during the final week of the semester (70 percent). Students will have an option to choose from two alternative time slots (morning/afternoon sessions). More details will be provided about the exact format, as we approach D-Day.

Homework assignments (30 percent): 5 assignments (each will credit you with 6 percent).

Class attendance: Due to Covid 19, we switch to virtual synchronous teaching mode. Lectures will be at scheduled time slots via Zoom and will include Q&A. Students are encouraged to attend but for those unable, the lectures will be recorded. Homework assignments will be solved during the recorded lecture meetings.

Enthusiasm for the study of policy issues!!!

Office Hours

I will handle weekly extended OH (~2-3 hours) via Zoom to allow for further discussion of course materials.

Readings:

(1) Intermediate Public Economics, Jean Hindricks and Gareth Myles, MIT Press, 2006 (Main Textbook)

(2) The Economics of Taxation, Bernard Salanie, MIT Press, 2003 (for advanced students with strong analytical background).

(3) Selected articles (referred to in class)

(4) Class lecture notes (will be uploaded to the course website)