Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/219995
Authors: 
Alpino, Matteo
Asatryan, Zareh
Blesse, Sebastian
Wehrhöfer, Nils
Year of Publication: 
2020
Series/Report no.: 
ZEW Discussion Papers No. 20-028
Abstract: 
What are the effects of austerity on distributional policy? We exploit the autonomy of Italian municipalities in setting non-linear income taxes and the exogenous introduction of a fiscal rule to show that austerity increases income tax progressivity. Consistent with this evidence, we find that in a panel of countries austerity correlates with higher marginal tax rates on top- but not on average-earners. The increase in progressivity in Italy is driven by high-skilled mayors, while low-skilled mayors raise taxes uniformly. In the election after the reform, high-skill mayors have higher reelection odds than low-skill mayors, while there was no difference beforehand.
Subjects: 
austerity
fiscal rules
non-linear income taxation
difference-in-discontinuity
JEL: 
D78
H24
H70
Document Type: 
Working Paper

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