Three Essays in Public Finance
Three Essays in Public Finance
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Date
2007-08-01
Authors
Singleton, Perry Douglas
Advisor
Duggan, Mark G
Citation
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Abstract
Much of public economics research examines the public sector's use
of policy to influence the behavior of individuals to achieve
societal goals. Because there may be many different policies to
achieve the same societal goal, public economists are generally
concerned with policy efficiency: Which policy among many will yield
the desired result with the least amount of distortion or welfare
loss? The aim of these three essays is to contribute to this
discussion by examining the intended and unintended consequences of
contemporary social policy.
The first essay estimates the elasticity of taxable earnings to
taxation. Taxation may improve social welfare by redistributing
income and to support public infrastructure. However, taxation may
also generate disincentives to work; so as tax rates rise, the
amount of income subject to taxation plausibly declines. Because the
net effect of proposed tax reform on government revenue depends on
how elastic taxable earnings are to taxation, the response of
earnings to taxation is fundamental in assessing the efficiency of
the US tax code.
The second essay examines the impact of increasing the Social
Security normal retirement age from 65 to 67 on the Social Security
Disability Insurance (DI) rolls. Although increasing the full
retirement age was intended to decrease program expenditures by
providing incentives to delay the transition to retirement, the
policy simultaneously increased the incentive to receive DI
benefits. DI benefits are are generally more generous and received
over a longer period of time relative to retirement benefits; so the
effect of increasing the normal retirement age on program
expenditures may be overstated if the rise in the DI rolls is not
taken into account.
The third and final essay examines a recent policy change to Title
38 which granted disability benefits to Vietnam veterans for
diabetes considered {\em presumptively} related to herbicide
exposure during military service. In this essay, we explore the
impact of this policy on the rolls and expenditures of the VA
disability compensation program.