Less Cash, Less Crime: Evidence from the Electronic Benefits Transfer Program 

It has been long recognized that cash plays a critical role in fueling street crime due to its liquidity and transactional anonymity. In poor neighborhoods where street offenses are concentrated, a significant source of circulating cash stems from public assistance or welfare payments. In the 1990s, the Federal government mandated individual states to convert the delivery of their welfare benefits from paper checks to an Electronic Benefit Transfer (EBT) system, whereby recipients received and expended their funds through debit cards. In this paper, we examine whether the reduction in the circulation of cash on the streets associated with EBT implementation had an effect on crime. To address this question, we exploit the variation in the timing of the EBT implementation across Missouri counties. Our results indicate that the EBT program had a negative and significant effect on the overall crime rate as well as burglary, assault, and larceny. According to our point estimates, the overall crime rate decreased by 9.8 percent in response to the EBT program. We also find a negative effect on arrests, especially those associated with non-drug offenses. EBT implementation had no effect on rape, a crime that is unlikely to be motivated by the acquisition of cash. Interestingly, the significant drop in crime in the United States over several decades has coincided with a period of steady decline in the proportion of financial transactions involving cash. In that sense, our findings serve as a fresh contribution to the important debate surrounding the factors underpinning the great American crime decline. (PDF)

Stand Your Ground, Homicides, and Injuries

The controversies surrounding gun control policies have recently moved to the forefront of public’s attention in the United States and elsewhere. Since 2005, eighteen states in the United States have passed laws extending the right to self-defense with no duty to retreat to any place a person has a legal right to be, and several additional states are debating the adoption of similar legislation. Despite the implications that these laws may have for public safety, there has been little empirical investigation of their impact on crime and victimization. In this paper, we use monthly data from the U.S. Vital Statistics to examine how Stand Your Ground laws affect homicides and firearm injuries. We identify the impact of these laws by exploiting variation in the effective date of these laws across states over time. Our results indicate that Stand Your Ground laws are associated with a significant increase in the number of homicides among whites, especially white males. According to our estimates, between 28 and 33 additional white males are killed each month as a result of these laws. We find no consistent evidence to suggest that these laws increase homicides among blacks. Auxiliary analysis using data from the Supplemental Homicide Reports indicates that our results are not driven by the killings of assailants. We also find that the stand your ground laws are not related to non-homicide deaths, which should not respond to gun laws. Finally, we analyze data from the Health Care Utilization Project to show that these laws are also associated with a significant increase in emergency room visits and hospital discharges related to firearm inflicted injuries. Taken together, these findings raise serious doubts against the argument that Stand Your Ground laws make public safer. (PDF)

Health and Health Behaviors in the Worst of Times: Evidence from the Great Recession

While previous studies have shown that recessions are associated with better health outcomes and behaviors, the focus of these studies has been on the relatively milder recessions of the late 20th century. In this paper, we examine if the previously established counter-cyclical pattern in health and heath behaviors is held during the Great Recession. Using data from the Behavioral Risk Factor Surveillance System (BRFSS) between 2005 and 2011 and focusing on a wide range of outcomes capturing health and health behaviors, we show that the association between economic deterioration and these outcomes has weakened considerably during the recent recession. In fact, majority of our estimates indicate that the relationship has practically become zero, though subtle differences exist among various sub-populations. Our results are consistent with the evidence emerging from several recent studies that suggests that the relationship between economic activity and health and health behaviors has become less noticeable in the recent years. (PDF)

The Effects of Tax Administration Corruption on Tax Evasion: Evidence from Firm Level Data

In their attempt to maximize revenue collection, policy makers must deal with both corrupt tax officials and tax evaders.   While these issues are distinct and can exist without each other, they can easily become intertwined, possibly exacerbating the effects of both problems. A highly corrupt tax collecting agency may enable higher levels of evasion.  Conversely, if taxpayers are predisposed to evasion, their evasion of taxes give more opportunities for the corruption of tax officials. While a good deal of theoretical work has focused on the relationship between corruption and tax evasion, empirical research on the firm's evasion decision is sparse.  This study seeks to add to this literature by estimating the if corruption leads to greater levels of tax evasion at the micro level.  Using extensive firm level data gathered by the World Bank over several countries and years, this study employs propensity score matching in addition to standard econometric methods to provide robust results.  These analyses show that corrupt tax officials are a statistically and economically significance determinant of tax evasion.  Policymakers cannot attack tax evasion and expect results without addressing potential corruption issues first. (PDF)

Mind the Gap: A Decomposition of VAT Collection Shortfalls

The Value Added Tax (VAT) is an important source of revenue for a majority of the world's countries. Like any tax, the VAT is subject to revenue shortfalls in which collected revenue is less than expected collections calculated by the tax rate and tax base. This tax gap arises for a variety of reasons and understanding the root causes of the gap is a necessary first step in reducing or eliminating the gap. This study examines the contribution of four factors to the tax gap: willful tax evasion, errors in filing taxes, incompetence in the tax administration, and tax collector corruption. By combining firm level data from 79 countries with macroeconomic variables, this study finds that complexity leading to unintentional tax evasion and poor tax administration are significant drivers of the tax gap. Tax reform that reduces tax code complexity and increases the quality of tax administration services provides the largest marginal gains in reducing the tax gap. (PDF)

The Macroeconomic Effects of VAT Evasion and Enforcement

Lower tax revenues have a theoretically mixed effect on growth as they create more disposable income for investment, but simultaneously reduce funds for public goods. This study combines firm level data on tax evasion and enforcement from 79 countries with macroeconomic data to examine the effects of tax enforcement measures and tax revenue shortfall on economic growth.  This study finds that while increased enforcement measures reduce growth, high tax revenue collection serve to increase growth.  These results suggest that reforms focusing on increasing revenue without resorting to greater enforcement measures are desirable. (PDF)

Military Deployment and Birth Outcomes

In 2010, approximately 43,000 active duty service members became parents for the first time and nearly 88,000 children of active duty members were less than one year old.  Despite the wealth of work on the effects of deployment on family and child wellbeing, little work has examined the effects of military deployment of either parent during pregnancy and subsequent post-natal outcomes.   Most previous studies on deployment and birth outcomes have focused on the impact of deployment on future, not concurrent, pregnancies and generally find no relations between deployments and adverse future birth outcomes.  This study proposes to offer evidence for the impact of military deployment by using the exogenous variation in military deployment timings from the first Gulf War to Operation Iraqi Freedom (OIF) and Operation Enduring Freedom (OEF).  Using birth weight as the primary outcome of interest, we estimate the impact of parental military deployment on gestation using non-deployed military children as a reference group.  In addition to birth weight, other outcomes such as gestational age, birth defect incidences, and pregnancy complications are also be examined.