Jarkko Harju

PhD in Economics
Senior Researcher at VATT Institute for Economic Research in Helsinki, Finland (www.vatt.fi/en)

Other affiliations: CESifo Institute in Munich, University of Turku
Email: jarkko.harju(at)vatt.fi,

Research interests
I concentrate on empirical research in the field of public economics. Lately, I have conducted research on the incidence of consumption taxes, the effects of income taxes on firm payout policies, and the effects of size-based thresholds on the behavior of small businesses. Currently I study the effects of environmental taxes (especially on private motoring). I also examine the questions related to tax evasion, and the issues related to public vs. private pension savings.

Peer-reviewed articles
"Firm types, price-setting strategies, and consumption-tax incidenceJournal of Public Economics, Volume 165, September 2018, Pages 48-72(with Tuomas Kosonen and Oskar Nordström-Skans)

"How do small firms respond to tax schedule discontinuities? Evidence from South African tax registers" Forthcoming, International Tax and Public Finance. (with Wian Bonzaaier, Tuomas Matikka and Jukka Pirttilä)

"Expanding access to administrative data: The case of tax authorities in Finland and the UK" Forthcoming, International Tax and Public Finance. (with Miguel Almunia, Kaisa Kotakorpi, Janne Tukiainen and Jouko Verho) 

"Dividend Taxes and Decisions of MNEs: Evidence from a Finnish Tax Reform" CESifo Economic Studies, 2017, 63(1), 45–77. (with Seppo Kari)

"The Elasticity of Taxable Income and Income-shifting: What is "Real" and What is Not?" International Tax and Public Finance, 2016, 23(4), 640-669. (with Tuomas Matikka)

"Business owners and income-shifting: evidence from Finland" Small Business Economics, 2016, 46(1), 115-136. (with Tuomas Matikka)

"Voluntary pension savings and tax incentives: Evidence from Finland" FinanzArchiv: Public Finance Analysis, 2013, 69(1), 3-29.

Work in progress
"What Goes Up May Not Come Down: Asymmetric Pass through of Value Added Taxes" (with Youssef Benzarti, Dorian Carloni and Tuomas Kosonen).  (paper) Revision requested, Journal of Political Economy.

Compliance costs vs. tax incentives: 
why small firms respond to size-based regulations?
" (with Tuomas Matikka and Timo Rauhanen). (
Revision requested, Journal of Public Economics.

"Missing Miles: Evasion Responses to Car Taxes (with Tuomas Kosonen and Joel Slemrod). (paper
Revision requested, Journal of Public Economics.

"The Incidence of Payroll Taxes on Wages, Employment and Profits: Evidence From Place-Based Payroll Tax Cuts" (with Youssef Benzarti). (first version)

"Are Taxes Turning Humans Into Machines? Using Payroll Tax Variation to Estimate the Capital-Labor Elasticity of Substitution" (with Youssef Benzarti). (first version)

"Car taxes and car fleet: Quantity and quality effects
(with Tuomas Kosonen, James Sallee and Joel Slemrod).

Do Cash Windfalls Affect Entrepreneurial Activity?
" (with Youssef Benzarti and Tuomas Matikka).

"Social benefit thresholds and labor supply" (with Tomi Kyyrä and Tuomas Matikka)

"Tax incidence in the fuel market: evidence from station-level data" (with Tuomas Kosonen and Marita Laukkanen) 

"Small firms and tax incentives: Effects on (real) economic outcomes" (with Aliisa Koivisto, Li Liu and Tuomas Matikka).

PhD thesis: "Essays on taxation - Evidence from tax reforms", University of Turku, Grade 6/7, Public defense December 5, 2013, opponent: Tuomas Pekkarinen.

Awards: Distinguished CESifo Affiliate Award (Public Sector Economics), 2014, IIPF Young Economist Award, 2014.

Referee in journals: American Economic Journal: Economic Policy, Journal of Public Economics, International Tax and Public Finance, CESifo Economic Studies, Labour Economics, National Tax Journal, Canadian Journal of Economics, Social Choice and Welfare.

Recent seminar presentations (selected): IEB Barcelona 2018, UC Berkeley 2018, EEA 2018, IIPF 2018/2017, CESifo Public Economics Area Conference 2017/2016/2015, EEA 2015, ZEW Public Economics Seminar 2015, OFS Oslo 2015.

Non-academic interests: Tennis, snowboarding, fishing and hiking.
Recent research stuff

What Goes Up May Not Come Down: Asymmetric Pass through of Value Added Taxes (paper)

This paper shows that prices respond more to increases than to decreases
in Value-Added Taxes (VATs). First, using two plausibly exogenous VAT
changes, we show that prices respond twice as much to VAT increases than
to VAT decreases. Second, we show that this asymmetry results in higher
equilibrium pro.ts and markups. Third, this asymmetry persists several
years after the VAT changes take place. Fourth, we document additional
empirical features of this asymmetry that are inconsistent with standard
incidence models. Fifth, using all VAT changes in the European Union
from 1996 to 2015, we find similar levels of asymmetry.

Compliance costs vs. tax incentives: 
why small firms respond to size-based regulations?

This paper studies the mechanisms behind the responses of small firms to size-
dependent regulation. We exploit the value-added tax (VAT) exemption threshold in
Finland. Both tax incentives (remitted VAT) and compliance costs (frequent filing of
VAT reports, understanding the VAT system etc.) change at this sales-based threshold
in a discontinuous manner. We utilize variation in both the VAT rate and reporting
requirements to provide evidence that the large observed output response is caused by
the compliance costs of VAT reporting rather than the level of the tax rate, highlighting
the key role of compliance costs among small firms and entrepreneurs.