Papers by Pantelis Kammas
This paper examines the effect of political institutions on fiscal redistribution for a country-l... more This paper examines the effect of political institutions on fiscal redistribution for a country-level panel from 1960-2010. Using data on Gini coefficients before and after government intervention, we apply a measure of effective fiscal redistribution that reflects the effect of taxes and transfers on income inequality. Our findings clearly indicate that non-democratic regimes demonstrate significantly greater direct fiscal redistribution. Subsequently, we employ fiscal data in an attempt to enlighten this puzzling empirical finding. We find that dictatorial regimes rely more heavily on cash transfers that exhibit a direct impact on net inequality and consequently on the difference between market and net inequality (i.e., effective fiscal redistribution), whereas democratic regimes devote a larger amount of resources to public inputs (health and education) that may influence market inequality but not the difference between market and net inequality per se. We argue that the driving force behind the observed differences within the pattern on government spending and effective fiscal redistribution is that democratic institutions lead survival-oriented leaders to care more for the private market, and thus to follow policies that enhance the productivity of the whole economy.
Explorations in Economic History, Jun 1, 2023
Social Science Research Network, May 21, 2009
Edward Elgar Publishing eBooks, Mar 21, 2023
Journal of Comparative Economics, Feb 1, 2015
This paper seeks to examine the effect of income inequality on the structure of tax policies. We ... more This paper seeks to examine the effect of income inequality on the structure of tax policies. We first use a simplified theoretical framework which allows us to formalize the testable implications of the relevant literature. Subsequently, our analysis indicates that more unequal economies rely heavier on capital relative to labor income taxation. This relationship remains robust across various alternative measures of income inequality and most importantly through alternative political regimes. In addition, our analysis places the spotlight on the potential reverse causality between income inequality and structure of the tax policies and seeks to address it by making use of the most appropriate data and techniques.
Journal of Macroeconomics, Mar 1, 2013
This paper applies meta-regression analysis to the empirical literature that examines the impact ... more This paper applies meta-regression analysis to the empirical literature that examines the impact of international market integration on capital taxation. The main objective is to explore whether particular data, model specification and estimation procedures exert systematic impact on the reported findings. Our results provide empirical evidence that differences across studies can be attributed to differences in the measurement of globalization. Moreover, in contrast to the conventional wisdom, study characteristics related to the measurement of the tax burden on capital appear to have an insignificant effect on the above mentioned relationship. Finally the meta-analysis fails to confirm a negative effect of globalization on the taxation of capital.
Public Choice, Jun 23, 2007
In a panel dataset of 17 OECD countries over 1970–1997, we provide empirical support for the join... more In a panel dataset of 17 OECD countries over 1970–1997, we provide empirical support for the joint existence of the efficiency and the compensation effects of globalization. Our regression analysis shows that higher economic integration—and the associated external risk—lead to a need for social security policies that require higher taxes. The latter take the form of larger social security contributions
RePEc: Research Papers in Economics, May 1, 2019
This paper examines the impact of democratisation on tax structure in an agrarian economy where g... more This paper examines the impact of democratisation on tax structure in an agrarian economy where goods can be produced at home for self-consumption. We first develop a model of optimal taxation with heterogeneous agents where the good produced in the market is subject to a consumption tax, whereas the homogeneous good produced at home is burdened by a direct tax (such as land tithes). Contrary to conventional theory, our model suggests that extension of the voting franchise to poorer segments of the population exerts a negative impact on the share of direct to indirect taxes. Using unique national and regional tax data for the Kingdom of Greece -a typical agrarian economy where universal male suffrage was established in 1864 -we provide consistent empirical evidence. Greek governments adjusted tax policy in order to meet the preferences of the newly enfranchised electorate that constituted mostly peasants and farmers. This group was harmed substantially by direct taxes on land but was able to avoid indirect taxes through self-consumption. We also analyse a sample of 12 European countries over the same period and provide evidence for a similar change in the tax structure when the agricultural sector dominates the economy.
RePEc: Research Papers in Economics, 2015
RePEc: Research Papers in Economics, Sep 1, 2015
This paper seeks to examine the implications of policy intervention around elections on income in... more This paper seeks to examine the implications of policy intervention around elections on income inequality and fiscal redistribution. We first develop a simplified theoretical framework that allows us to examine election-cycle fiscal redistribution programs in the presence of a revolutionary threat from some groups of agents, i.e., when democracy is not ''the only game in town''. According to our theoretical analysis, when democracy is not ''the only game in town'', incumbents implement redistributive policies not only as a means of improving their reelection prospects, but also in order to signal that ''democracy works'', thereby preventing a reversion to an autocratic status quo ante at a time of the current regime's extreme vulnerability. Subsequently, focusing on 65 developed and developing countries over the 1975-2010 period, we report robust empirical evidence of pre-electoral budgetary manipulation in new democracies. Consistent with our theory, this finding is driven by political instability that induces incumbents to redistribute income-through tax and spending policies-in a relatively broader coalition of voters with the aim of consolidating the vulnerable newly established democratic regime.
Social Science Research Network, 2009
This paper investigates whether OECD countries compete with each other for mobile factors by usin... more This paper investigates whether OECD countries compete with each other for mobile factors by using various fiscal (tax-spending) policy instruments. We use a panel dataset of 20 OECD countries over the 1982-2000 period. There is evidence that international capital inflows (FDI) are affected by fiscal policy at home and abroad. Also, there is evidence of fiscal competition for mobile factors which takes place via capital tax rates. More precisely, we find that domestic capital tax rates react: (i) positively to changes in capital tax rates and (ii) negatively to changes in public investment spending in neighbouring countries. In contrast, evidence of such a strategic interdependence over public investment spending decisions is not established.
Journal of Economic Behavior & Organization
Benefit Foundation. We have benefited from comments and suggestions by Costas Azariadis, Stelios ... more Benefit Foundation. We have benefited from comments and suggestions by Costas Azariadis, Stelios Arvanitis, Manthos Delis, Claire Economidou, Vassilis Sarantides, Heinrich Ursprung and conference and seminar participants at the Meeting of the European Public Choice Society, the Ioannina Meeting on Applied Economics and Finance (IMAEF) and the University of Clermont Auvergne. The usual disclaimer applies.
European Journal of Political Economy
This paper advances the hypothesis that individuals in more ethnically fragmented societies, part... more This paper advances the hypothesis that individuals in more ethnically fragmented societies, participate less in social groups. More precisely, the empirical analysis places the spotlight on trade unions and investigates whether ethnic diversity affects the decision of workers to participate in them. The analysis takes place along two layers:(a) cross-country and (b) individual level. First, building on a set of innovative instruments derived from the parasite-stress theory of values and sociality, our cross-country analysis seeks to exploit exogenous sources of variations in ethnic diversity and to establish a convincing relationship between ethnic diversity and trade union density across countries. In turn, by following an epidemiological approach, our analysis attempts investigate variations on the behavior of individuals whose social values potentially differ, but they all live in a common economic and institutional setting. To this end, we employ individual level data from the European Social Survey (ESS) and we investigate whether migrants that cοme from more ethnically fragmented societies participate less in trade unions in their European countries of residence. Consistent with the prediction of the theory, both layers of the empirical analysis provide evidence of a negative and highly significant relationship between ethnic diversity and the decision of the workers to participate in trade unions.
MPRA Paper, 2015
Collective action problems, such as double parking behavior, are pervasive in everyday life. This... more Collective action problems, such as double parking behavior, are pervasive in everyday life. This paper presents the results from a field survey that was carried out at one of the main and busiest streets of the city of Ioannina in Greece, in order to investigate the effect of political ideology on double parking behavior. We find that individuals placing themselves either on the extreme Left or the extreme Right on a [0-10] political spectrum, are characterized by increased propensity of double parking behavior. Taking into account that both the extreme Left and the extreme Right Greek parties are strongly in favor of state intervention, our empirical findings could be read as follows. Subjects that believe in the superiority of state intervention rely heavier on incentives and constraints provided by the law and therefore in the absence of an effective monitoring mechanism they fail to internalize the social cost of their actions. In contrast, subjects that are in favor of decentralized market solutions, take into account the social impact of their actions even in the absence of a strong monitoring state mechanism.
LSE Research Online Documents on Economics, Oct 1, 2021
During the late 19th century, the increasing popularity of pudding in England, along with the out... more During the late 19th century, the increasing popularity of pudding in England, along with the outbreak of phylloxera plague in French vineyards had an unintended effect in the agrarian economy of Greece. In particular, these events escalated the international demand and production of currants in Greece during the 1870s, causing an unprecedented positive shock that was transmitted through trade in the agricultural population. Using novel data from historical archives, we explore how this exogenous event affected investment towards human capital. Consistent with expectations, in an agrarian economy that specializes in unskilled labour-intensive agricultural goods, this shock had a negative effect on human capital formation.
The social protection system of Cyprus consists of a comprehensive range of contributory and non-... more The social protection system of Cyprus consists of a comprehensive range of contributory and non-contributory benefits. The social protection system is constantly changing and adapting, and its architecture combines elements from a variety of welfare models. About 19.1% of GDP was devoted to social protection in 2016. This is well below the EU-28 level. And yet, the trend is upward: between 2005 and 2016, the share of expenditure on social protection in GDP increased by 2.5 percentage points (pp). The increase in the relative and real level of social protection spending is mostly driven by pensions, as a result of population ageing and the gradual ‘maturation’ of the pension system (an increasing number of pensioners with richer contribution records have entered the pension system in the last decade). As a result, the share of old-age benefits in total spending has increased – and will most probably increase further over the next decades due to demographic factors. On the other hand, the share of healthcare spending in total spending has decreased, bucking European trends. The underfunding of the healthcare system is a persistent problem in Cyprus, mostly due to procrastination in reforming the system. There has also been an increase in the share of means-tested benefits, which may be attributable to the adaptation of the welfare state to recent economic swings, as well as to the political attractiveness of targeted instruments. In terms of financing structure, social protection in Cyprus has many similarities to what pertains in the rest of the EU; but there are also differences. The system is financed 50% by government revenues and 45.3% by social contributions; half of those social contributions are paid by employers, and the other half paid by employees and self-employed persons. The share of general government revenues in total financing increased by 4 pp between 2005 and 2015, and the share of the category ‘other receipts’ decreased. Meanwhile more weight is gradually being placed on financing the system through social contributions. This latter trend is in contrast to the EU-28, where the share of contributions in total financing is declining in the majority of countries. Interestingly, a number of ongoing and planned reforms point to further increases in the share of social contributions in the total financing mix. Specifically, social insurance contributions (financing old-age benefits and other contributory benefits) have increased in 2019, and further increases are planned over the next decades. The new National Healthcare System, which is expected to be fully operational by 2020, will be financed by contributions levied on labour earnings, income from self-employment and pensions (the state will contribute, too). Breaking general government revenues down into their major constituent parts, it may be observed not only that the share of social contributions and general government revenues has increased, but also that the increases in government revenues have come mostly from: (i) increased VAT tax revenues and (ii) corporate income tax revenues. Personal income tax revenues remained relatively stable during the period under investigation. This financing mix presents some important advantages (lower risk of evasion, low collection and administrative costs and less distortion of work incentives). However, it must also be stressed that the increased reliance on social contributions in recent years (which is expected to continue in the future) makes the financing of the social protection system vulnerable to demographic ageing. This is a threat that should be addressed effectively in the near future. Moreover, policy makers should turn the spotlight on labour market conditions and institutions in Cyprus, and design appropriate reforms to mitigate the impact of increasing social contributions on labour costs.
Journal of Economic Behavior & Organization, 2020
This paper examines the impact of democratisation on tax structure in an agrarian economy where g... more This paper examines the impact of democratisation on tax structure in an agrarian economy where goods can be produced at home for self-consumption. We first develop a model of optimal taxation with heterogeneous agents where the good produced in the market is subject to a consumption tax, whereas the homogeneous good produced at home is burdened by a direct tax (such as land tithes). Contrary to conventional theory, our model suggests that extension of the voting franchise to poorer segments of the population exerts a negative impact on the share of direct to indirect taxes. Using unique national and regional tax data for the Kingdom of Greece -a typical agrarian economy where universal male suffrage was established in 1864 -we provide consistent empirical evidence. Greek governments adjusted tax policy in order to meet the preferences of the newly enfranchised electorate that constituted mostly peasants and farmers. This group was harmed substantially by direct taxes on land but was able to avoid indirect taxes through self-consumption. We also analyse a sample of 12 European countries over the same period and provide evidence for a similar change in the tax structure when the agricultural sector dominates the economy.
Public Choice, 2016
This paper seeks to examine the implications of policy intervention around elections on income in... more This paper seeks to examine the implications of policy intervention around elections on income inequality and fiscal redistribution. We first develop a simplified theoretical framework that allows us to examine election-cycle fiscal redistribution programs in the presence of a revolutionary threat from some groups of agents, i.e., when democracy is not ''the only game in town''. According to our theoretical analysis, when democracy is not ''the only game in town'', incumbents implement redistributive policies not only as a means of improving their reelection prospects, but also in order to signal that ''democracy works'', thereby preventing a reversion to an autocratic status quo ante at a time of the current regime's extreme vulnerability. Subsequently, focusing on 65 developed and developing countries over the 1975-2010 period, we report robust empirical evidence of pre-electoral budgetary manipulation in new democracies. Consistent with our theory, this finding is driven by political instability that induces incumbents to redistribute income-through tax and spending policies-in a relatively broader coalition of voters with the aim of consolidating the vulnerable newly established democratic regime.
Journal of Comparative Economics, 2018
This paper seeks to examine the effect of the political regime on fiscal redistribution for a max... more This paper seeks to examine the effect of the political regime on fiscal redistribution for a maximum of 144 developed and developing countries between 1960 and 2010. Using data on Gini coefficients before and after government intervention allows us to apply a measure of fiscal redistribution which reflects the effect of taxes and transfers on income inequality. We find that dictatorial regimes redistribute more than democracies through taxes and transfers. Our empirical findings remain robust across several different specifications and estimation techniques. Subsequently, we employ fiscal policy data in an attempt to enlighten this puzzlingat a first glance -empirical finding. Our results indicate that democracies and dictatorships actually follow different patterns of redistribution. Dictatorships redistribute income mostly through cash transfers, whereas democratic regimes basically rely on public good services (such as health and education) and consequently redistribute income mostly through in-kind public services. We interpret our empirical findings in the context of a simple theoretical framework that builds upon .
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Papers by Pantelis Kammas
In terms of financing structure, social protection in Cyprus has many similarities to what pertains in the rest of the EU; but there are also differences. The system is financed 50% by government revenues and 45.3% by social contributions; half of those social contributions are paid by employers, and the other half paid by employees and self-employed persons.
The share of general government revenues in total financing increased by 4 pp between 2005 and 2015, and the share of the category ‘other receipts’ decreased. Meanwhile more weight is gradually being placed on financing the system through social contributions. This latter trend is in contrast to the EU-28, where the share of contributions in total financing is declining in the majority of countries. Interestingly, a number of ongoing and planned reforms point to further increases in the share of social contributions in the total financing mix. Specifically, social insurance contributions (financing old-age benefits and other contributory benefits) have increased in 2019, and further increases are planned over the next decades. The new National Healthcare System, which is expected to be fully operational by 2020, will be financed by contributions levied on labour earnings, income from self-employment and pensions (the state will contribute, too). Breaking general government revenues down into their major constituent parts, it may be observed not only that the share of social contributions and general government revenues has increased, but also that the increases in government revenues have come mostly from: (i) increased VAT tax revenues and (ii) corporate income tax revenues. Personal income
tax revenues remained relatively stable during the period under investigation. This financing mix presents some important advantages (lower risk of evasion, low collection and administrative costs and less distortion of work incentives). However, it must also be stressed that the increased reliance on social contributions in recent years (which is expected to continue in the future) makes the financing of the social protection system vulnerable to demographic ageing. This is a threat that should be addressed effectively in the near future. Moreover, policy makers should turn the spotlight on labour market conditions and institutions in Cyprus, and design appropriate reforms to mitigate the impact of increasing social contributions on labour costs.