Cowles Foundation Discussion Papers

Whether imposing higher taxes on business owners adversely affects business activity by constraining investment and inducing capitalist flight is a central question in the ongoing debate on how to tax the ultra wealthy. To shed new light, I exploit a series of related Norwegian reforms during 2021–2024 that increased dividend tax rates, removed migration-related capital gains tax loopholes, and nearly doubled the effective marginal tax rate on business wealth. These reforms spurred international debate and, allegedly, an “exodus” of Norwegian billionaires (Financial Times, 2023). While I document clear effects on migration, these responses are concentrated among the top 0.1% of the wealth distribution and mostly confined to 2022 and 2023. My results indicate that at most 100 individuals left due to the reforms. I find no evidence of significant outmigration or reduced inflows of startup founders or inventors. I estimate that absent any outmigration, wealth tax revenues would have increased by 75% from 2021 to 2024. Reform-driven outmigration lowers the revenue gain to 71.5%. My findings further show that outmigrating owners’ firms remain economically active and do not reduce investment. In a broader set of analyses, I examine whether business outcomes are affected, regardless of whether owners outmigrate, since firms may reduce investment both due to liquidity constraints or distortions to owners’ savings decisions. I compare firms owned by Norwegian individuals subject to the wealth tax with firms owned by foreigners and other tax-exempt entities. By merging historical ownership data from Orbis with the Norwegian shareholder register, I perform these analyses on both Norwegian and foreign-domiciled firms. Across settings, I find no evidence that Norwegian-owned firms pay out more dividends or invest less after the reforms, nor is there any evidence that the reform induced more bankruptcies. These findings indicate that the short-run economic costs of wealth taxation, in terms of migration and firm investment, are more limited than the public debate implies.

We study how information about school quality affects families’ choices and how scaling up the intervention changes its impact. In a randomized trial in Chile, we offer families a short video and a personalized school report card before they enroll their children. Treated families choose schools with higher test scores and value added. Among families reached before enrollment, treated children score about 0.2 standard deviations higher in fourth grade, with positive but less precise estimates on later assessments. We embed the experimentally identified demand shift in a structural model of school choice and competition to study equilibrium effects at scale. Capacity constraints and centralized assignment attenuate the demand-side gains, but the same shift in demand strengthens schools’ incentives to improve quality, and the supply response roughly offsets the congestion effect. More generally, equilibrium scaling can alter experimental effects in either direction because congestion and endogenous quality responses work against each other. We use the model to guide the design of a follow-up cluster-randomized experiment, focusing on the tradeoff between precision and contamination from equilibrium spillovers.

Work experience has been found to be a key determinant of work and wages for educated women, but it seems to play a smaller role for the less educated. For them, welfare, tax credits and family composition matter more, and increasingly so does participation in disability programmes. Here we document how labor supply, wages, health, and disability claims have evolved in the UK over the last three decades, and examine how reforms to tax credits, disability benefits and other welfare programs have changed work incentives over this period. We then introduce these features into an empirical dynamic structural model of life-cycle labor supply, human capital and disability benefit application, in which human capital combines health capital, experience accumulated in work, and education. Estimating the model on a panel of working-age women in the UK, we examine the interactions between experience capital and health capital in driving life-cycle earnings across different education groups. Our results highlight the importance of interactions in the disability benefit, welfare and tax-credit systems for understanding the life cycle pattern of hours, employment, earnings, and disability claims, and for evaluating policy counterfactuals.

Complementarities can have important welfare consequences, but quantifying these effects would seem to require identifying and valuing the underlying mechanisms separately. This paper shows that this need not be the case. I provide necessary and sufficient conditions under which baseline subsidized activity and the direct and total responses to a subsidy determine aggregate willingness to pay. A sufficient condition for valuing the equilibrium adjustment is that it has the same effect on utility as an additional subsidy common to all agents and relevant actions. The formula is easy to apply to existing estimates and guides the design of new experiments.

In the classic oligopoly games a Stackelberg leader often chooses exactly the action of an uncontested monopolist. We show that this is a theorem whenever the firms share an affine best response, characterize the demands that make best responses affine—linear, log-linear, shifted constant elasticity, and power demand, with strategic substitutes and strategic complements alike—and show that with such demand every firm can optimally ignore the future in any finite arrangement of sequential and simultaneous play whose simultaneous stages admit an interior equilibrium.

We link high-frequency geocoded protest data during Bangladesh’s 2024 Monsoon Revolution, Facebook measures of protest activity and social connectivity, university enrollment and demographics to establish: (1) campus protest precedes off-campus mobilization; (2) student concentration predicts both on- and off-campus protest, while non-student youth, educated adults, urbanization, and locations of “placebo” universities authorized but not yet operating do not; and (3) social connectivity to campus protests predicts off-campus diffusion one week later. Universities appear to incubate mass uprising by making dissent visible, coordinated, and capable of spreading beyond campus. Such patterns are also evident in U.S. Vietnam War protests and in global data. These results can rationalize why governments in Hungary, Turkey, Iran, India, Russia, Bangladesh, Israel, and the United States have targeted campuses to suppress dissent.