Ranking populations in terms of inequality of health opportunity: A flexible latent type approachJournal articlePaolo Brunori, Alain Trannoy et Caterina Francesca Guidi, Health Economics, Volume 30, Issue 2, pp. 358-383, 2021

We offer a flexible latent type approach to rank populations according to unequal health opportunities. Building upon the latent-class method, an approch increasingly adopted to estimate health inequalities, our contribution is to let the number of socioeconomic groups considered vary to obtain an opportunity-inequality curve for a population that gives how the between-type inequality varies with the number of types. A population A is said to have less inequality of opportunity than population B if its curve is statistically below that of population B. This version of the latent class approach allows for a robust ranking of 31 European countries regarding inequality of opportunity in health.

Measuring educational inequality of opportunity: pupil’s effort mattersJournal articleNiaz M. Asadullah, Alain Trannoy, Sandy Tubeuf et Gaston Yalonetzky, World Development, Volume 138, pp. 105262, 2021

The distinction between effort and other factors, such as family background, matters for correcting policies and normative reasons when we appeal to inequality of opportunity. We take advantage of a purposefully designed survey on secondary schools in rural Bangladesh to offer a comprehensive view of the importance of overall effort when measuring inequalities of opportunity in education. The analysis comprises decomposition exercises of the predicted variance of student performance in mathematics and English by source (effort, circumstances, etc.) and subgroup (within- and between-schools) based on parametric estimates of educational production functions. Pupils’ effort, preferences, and talents contribute between 31% and 40% of the total predicted variances in performance scores. The contribution of overall effort falls by 10% when the correlation between effort and circumstances is taken into account. These findings are robust to the choice of estimation strategy (i.e. combined within- and between-schools variation models versus multilevel random-effect models). All in all, these results advocate that social determinism in education can be mitigated by individual effort at school.

Land is back, it should be taxed, it can be taxedJournal articleOdran Bonnet, Guillaume Chapelle, Alain Trannoy et Étienne Wasmer, European Economic Review, Volume 134, pp. 103696, 2021

Land is back. The increase in wealth in the second half of 20th century arose from housing and land. It should be taxed. We introduce land and housing structures in Judd’s standard setup: first best optimal taxation is achieved with a property tax on land and requires no tax on capital. With positive taxes on housing rents, a first best is still possible but with subsidies to rental housing investments, and either with differential land tax rates or with a tax on imputed rents. It can be taxed. Even absent land taxes, one can tax it indirectly and reach a Ramsey-second best still with no tax on capital and positive housing rent taxes in the steady-state. This result extends to the dynamics under restrictions on parameters.

Egalitarian redistribution in the era of hyper-globalizationJournal articleGianluca Grimalda, Alain Trannoy, Fernando Filgueira et Karl Ove Moene, Review of Social Economy, Volume 78, Issue 2, pp. 151-184, 2020

Two traditional theorems of welfare economics posit a trade-off between a government redistribution targets and efficiency. We propose a third ‘claim’ of welfare economics, stating that in closed economies the actual efficiency costs associated with redistribution are small. We then examine the claim in the current phase of ‘hyper-globalization’. On the one hand, a race-to-the-bottom in taxation restricts the capacity to tax high-earners and the associated brain drain may affect a country’s long-run growth. On the other hand, demand for social insurance should be particularly high in an open economy, especially with advancing digitalization. Xenophobic sentiments may, however, offset this demand. We also discuss the impact of globalization on wage equalization and productive efficiency. We conclude against the idea that the welfare state is intrinsically unable to carry out its redistributive function in an era of globalization. However, its strategies and tools of intervention must be rethought.

Inequality of opportunities in health and death: an investigation from birth to middle age in Great BritainJournal articleDamien Bricard, Florence Jusot, Alain Trannoy et Sandy Tubeuf, International Journal of Epidemiology, Volume 49, Issue 5, pp. 1739-1748, 2020

We assess the existence of unfair inequalities in health and death using the normative framework of inequality of opportunities, from birth to middle age in Great Britain.
We use data from the 1958 National Child Development Study, which provides a unique opportunity to observe individual health from birth to the age of 54, including the occurrence of mortality. We measure health status combining self-assessed health and mortality. We compare and statistically test the differences between the cumulative distribution functions of health status at each age according to one childhood circumstance beyond people’s control: the father’s occupation.
At all ages, individuals born to a ‘professional’, ‘senior manager or technician’ father report a better health status and have a lower mortality rate than individuals born to ‘skilled’, ‘partly skilled’ or ‘unskilled’ manual workers and individuals without a father at birth. The gap in the probability to report good health between individuals born into high social backgrounds compared with low, increases from 12 percentage points at age 23 to 26 at age 54. Health gaps are even more marked in health states at the bottom of the health distribution when mortality is combined with self-assessed health.
There is increasing inequality of opportunities in health over the lifespan in Great Britain. The tag of social background intensifies as individuals get older. Finally, there is added analytical value to combining mortality with self-assessed health when measuring health inequalities.

Talent, equality of opportunity and optimal non-linear income taxJournal articleAlain Trannoy, The Journal of Economic Inequality, Volume 17, Issue 1, pp. 5-28, 2019

We adopt a philosophical perspective of equality of opportunity and address the issue of whether outcome inequalities are legitimate when they come from differences in talent. We propose a cumulative definition of talent. In a dynamic setting, talent is a by-product of past-effort, current effort and innate talent, which becomes a residual as time goes by. It implies that talent can change from the status of a circumstance when people are young to an almost responsibility variable when people are getting older. We plug this definition of talent into the Mirrlees model of optimal non-linear income tax and we show that the conflict between the principle of compensation and the principle of natural reward boils down to the optimal income tax with Rawlsian weights in the second-best setting.

The Impact of the ‘Scellier’ Income Tax Relief on Building Land Prices in France / Impact du dispositif Scellier sur les prix des terrains à bâtirJournal articlePierre-Henri Bono et Alain Trannoy, Economie et Statistique / Economics and Statistics, Issue 507-508, pp. 91-114, 2019

This study assesses the impact of a tax incentive scheme to boost private rental investment in force in France from 2009 to 2012, called the “Scellier scheme” (after the name of the minister who promoted it), on changes in the price of building land. A difference in differences estimation is implemented, drawing on data from the BNDP database covering the period 2004 2010. The definition of the control and treatment groups is based on the boundary between municipalities which are eligible for the Scellier scheme and municipalities which are not. The estimation results suggest that the scheme had an inflationary effect and point to land price capitalisation, with an increase in the price per square metre of around 7 euros in the first year and of 8 to 9 euros over 2009 and 2010, without a significant rise of the phenome¬non in the second year, i.e. an increase of 8% in the first year and of 9 to 10% after two years. The regions where the market was the tightest saw the most rapid price increase, particularly the Mediterranean region.

Les impôts pour ou contre la production / Taxes on production: The good, the bad and the uglyJournal articlePhilippe Martin et Alain Trannoy, Notes du conseil d’analyse économique, Volume 53, Issue 5, pp. 1-12, 2019

La France se distingue par un nombre et un niveau élevé d’impôts sur la production. Ceux-ci peuvent être particulièrement nocifs en raison des distorsions qu’ils engendrent tout au long de la chaine de production : ils affectent directement les décisions des entreprises en termes de choix des modes de production et de prix et peuvent donc pénaliser leur productivité et leur compétitivité. En outre, ils augmentent le point mort des entreprises et peuvent expliquer, avec d’autres facteurs, la relative atrophie du secteur productif français. Dans cette nouvelle Note du CAE, Philippe Martin et Alain Trannoy examinent trois impôts sur la production parmi les plus importants et recommandent, en s’appuyant sur des travaux empiriques, de supprimer en priorité la C3S dont la nocivité n’a pas d’égal dans notre système fiscal, puis de s’attaquer à la CVAE. Cette stratégie de réforme et simplification de la fiscalité des entreprises pourrait s’accompagner, si les marges financières ne sont pas suffisantes, par des mesures visant à obtenir des recettes publiques de substitution moins nocives.

Un impôt immobilier tout en un : rendement, progressivité et faisabilitéJournal articleGuillaume Bérard et Alain Trannoy, Revue de l'OFCE, Volume 161, Issue 1, pp. 177-224, 2019

Nous étudions la faisabilité d’un impôt foncier unique (IFU) sur le patrimoine foncier et immobilier des ménages qui remplacerait tous les impôts existants portant sur ce type de patrimoine, en particulier, la taxe foncière, l’IFI, les DMTO, la taxe sur les plus-values immobilières et l’impôt sur les revenus fonciers perçus par les propriétaires bailleurs. La valeur du patrimoine net de la dette immobilière, moins un abattement sur la valeur de la résidence principale de 50 000 euros, serait taxée au taux de 1 % jusqu’au seuil de l’IFI (soit 1,3 million d’euros) et à hauteur de 1,5 % au-delà. Les recettes seraient partagées entre l’État et les collectivités territoriales au moyen d’un fonds de péréquation. Après avoir présenté les raisons qui légitiment notre proposition de réforme, nous procédons à une première évaluation du rendement de l’impôt et du profil de la charge fiscale en fonction du revenu, de la taille familiale et de l’âge en mobilisant l’enquête Patrimoine de l’INSEE. La décorrélation partielle des revenus et des patrimoines immobiliers permet difficilement d’en faire un grand impôt de rendement, même si la recette fiscale espérée est équivalente à la recette perdue des impôts remplacés. Un plafonnement de l’IFU en termes de revenu disponible briderait assez rapidement son rendement.

De l'utilité de l'impôt pour freiner l'effet de levier du « hors-bilan » des banques / About the Utility of Taxation to Curb the Impact of Leverage Effect of Banks Off-Balance SheetJournal articleJean-Paul Nicolaï et Alain Trannoy, Revue d'économie financière, Volume N° 131, Issue 3, pp. 151-169, 2018

[Fr] Les normes comptables IFRS ont intégré dans le bilan des banques l'essentiel des instruments financiers dérivés que nous considérons ici sous le terme de « hors-bilan », au prix d'une certaine invisibilité de leur « effet de levier ». Nous décrivons l'activité des banques de financement et d'investissement et montrons que ces instruments dérivés correspondent à une fonction d'intermédiation du risque dans l'économie où les banques ne « portent » pas ce risque au bilan, contrairement au métier bancaire traditionnel de « transformation ». Nous décrivons la banque comme une source d'« accroissement des possibles de la taille du marché » que nous définissons au préalable d'une manière générale. Une telle source, comme toute innovation, est synonyme de risque. Le « hors-bilan » bancaire apparaît dans ce cadre comme un effet de levier sans limite naturelle. Nous étudions alors ce que pourraient être des fiscalités adaptées à trois objectifs différents : corriger et capter les rentes, limiter le risque systémique, maîtriser l'« accroissement des possibles ». Une assiette considérant une mesure des engagements en valeur absolue associés aux positions sur les produits dérivés, dans le bilan des banques, paraît pertinente pour limiter l'accroissement des possibles et, partant de là, le risque.
[Eng] The accounting standard IRFS have integrated the bulk of derivatives (the off-balance sheet in this paper) in the balance sheet of the banks at the cost of masking their leverage effect. We describe the bank activity and we show that these derivatives correspond to a financial intermediation function of the banking system, which supplements the standard lending role of banks. We show that the banking activity naturally increases the possibility set of the capital market that we define in general terms. As all innovations, this increase bears additional risk. The off-balance sheet appears in this framework as bringing a leverage effect without natural limit. We study what could be the role of different types of taxes: first, correcting and capturing the rents, second, limiting the systemic risk, third, mastering the “growth of the feasible set”. A tax base consisting in financial liabilities (in absolute value) associated to positions on financial derivatives may be viewed as well-focused to limit the growth of the possibility set and therefore of the risk.