News

Katharina Pistor, the Michael I. Sovern Professor of Law at Columbia Law School, was awarded the 2014 Allen & Overy Law Prize in the European Corporate Governance Institute’s (ECGI) law working paper series for best paper. 

Professor Jagdish Bhagwati and Francisco Rivera-Batiz were featured on the Foreign Affairs magazine on a recent article titled "A Kinder, Gentler Immigration Policy: Forget Comprehensive Reform - Let the States Compete". The authors argue that even if immigration reform managed to get through congress, it would do little to stem illegal immigration or improve the plight of the undocumented. They argue that policymakers should shift their focus to a more humane, bottom-up approach: letting states compete for illegal immigrants.

Todd Kumler, Eric Verhoogen and Judith Frias

Abstract

Non-compliance of firms with tax regulations is a major constraint on state capacity in developing countries. We focus on an arguably under-appreciated dimension of non-compliance: under-reporting of wages by formal firms to evade payroll taxes. We develop a simple partial-equilibrium model of endogenous compliance by heterogeneous firms to guide the empirical investigation. We then compare two independent sources of individual-level wage information from Mexico -- firms' wage reports to the Mexican social security agency and workers' responses to a household labor-force survey -- to investigate the extent of wage under-reporting and how it responded to an important change in the social security system. We document that under-reporting by formal firms is extensive, and that compliance is better in larger firms. Using a difference-in-differences strategy based on the 1997 Mexican pension reform, which effectively tied pension benefits more closely to reported wages for younger workers than for older workers, we show that the reform led to a relative decline in under-reporting for younger workers. Within metro area/sector/firm size cells, the decline in under-reporting was greater in cells initially employing a younger workforce on average. The empirical patterns are consistent with our theoretical model and suggest that giving employees incentives and information to improve the accuracy of employer reports can be an effective way to improve payroll-tax compliance.

On March 2013, Ailsa Roell and her co-authors Thierry Foucault and Marco Pagano published a book titled "Market Liquidity: Theory, Evidence and Policy"  (Oxford University Press). In their book, the authors explain how markets work; why, sometimes, they don't work as we might wish; and how this affects regulation and corporate decision making. Covering the institutional structure of financial markets and the economic and statistical models we use to understand them, the book offers a more accurate and authoritative take on liquidity and price discovery.

Professor Arvind Panagariya, Jagdish Bhagwati Professor of Indian Political Economy at SIPA, was awarded the Padma Bhushan by the government of India in February 2012. Professor Arvind Panagariya, Jagdish Bhagwati Professor of Indian Political Economy at SIPA, has been awarded the Padma Bhushan by the government of India.