Tuomas Matikka

I am a Chief Researcher at VATT Institute for Economic Research and a Postdoctoral Researcher at the Academy of Finland.

My research is focused on empirical public economics and labor economics, with a particular focus on the behavioral responses of firms and individuals to taxes and social benefits.

Contact information:
Email: tuomas.matikka(at)vatt.fi (or matikka.tuomas(at)gmail.com)
Phone: +358 295 519 461

Other affiliations: CESifo Institute (Munich, Germany)

You can download my CV here

Current Working Papers

Discrete labor supply: empirical evidence and implications
(with Tuomas Kosonen)
Winner of the IIPF Peggy and Richard Musgrave Award, 2017
We provide novel evidence of discrete labor supply responses to tax incentives and study the broader implications of discrete rather than continuous labor supply. We utilize an income notch and a reform that shifted the location of the notch in order to study the labor supply mechanisms. We find transparent evidence of discrete labor supply responses, revealing that wage earners even in the part-time labor market can face significant restrictions in their available labor supply choices. As an implication of discrete labor supply, we show that the conventional differences-in-differences and bunching elasticity estimates can be downward-biased when labor supply is discrete.

The effects of corporate taxes on small firms
[new paper] (03/2020)
(with Jarkko Harju and Aliisa Koivisto)
We study the impact of corporate taxes on firm-level investments, total output and input usage by exploiting a 4.5 percentage-point corporate tax rate cut in Finland in 2014. We use detailed administrative data and a differences-in-differences method comparing small corporations (tax rate cut) to similar partnerships (no change in tax incentives). We find no significant investment responses. However, we observe an increase in annual sales and variable costs, suggesting that corporate tax rates have an effect on business activity. The effects are driven by entrepreneurs who actively work in their firm, suggesting that the tax cut increased entrepreneurial effort.

Does sending letters increase the take-up of social benefits? Evidence from a new benefit program [paper] (updated 08/2019)
(with Tuuli Paukkeri)
The effectiveness of transfer programs in reducing poverty and inequality can be significantly reduced if eligible individuals fail to apply for them. This paper shows that benefit take-up can be influenced by sending targeted letters to the eligible population. We exploit the implementation of the guarantee pension program in Finland, which offered a monthly top-up benefit to low-income pensioners. The Social Insurance Institution sent information on the benefit together with application forms to a portion of the eligible population a month before implementation. We find clear evidence that this simple and inexpensive mailing increased take-up and prompted pensioners to apply sooner.

Once or twice a month? The impact of payment frequency on consumption behavior
First draft available upon request
(with Jani-Petri Laamanen and Tuuli Paukkeri)
We study how the number of payments within a month affects the consumption behavior of benefit recipients. In Finland, the payment dates of national pension benefits were based on the initial of the recipients' last name, whereas earnings-related pensions were paid at the beginning of the month. This generates as-good-as-random variation in payment dates and frequencies over the month, providing a unique setup to analyze the causal impact of payment frequency on consumption patterns. We find smoother consumption choices within a month for those with two monthly payments instead of just one. However, we find no impact on the consumption of unhealthy and addictive goods such as alcohol, tobacco and gambling.

Peer-Reviewed Publications
American Economic Review: Insights, forthcoming (June 2020)
(with Youssef Benzarti and Jarkko Harju)

Journal of Public Economics 173: 139-164, 2019.
(with Jarkko Harju and Timo Rauhanen)

How Do Small Firms Respond to Tax Schedule Discontinuities? Evidence from South African Tax Registers
International Tax and Public Finance 26(5): 1104-1136, 2019.
(with Wian Boonzaaier, Jarkko Harju and Jukka Pirttilä)

(with Jarkko Harju)

Business Owners and Income-Shifting: Evidence from Finland
Small Business Economics 46(1)
: 115-136, 2016.
(with Jarkko Harju)

Nordic Tax Journal 1(1): 100-107, 2017.
(with Kaisa Kotakorpi)
Winner of the Nordic Tax Journal Article Prize, 2018

Work In Progress

Providing Social Insurance to Entrepreneurs
(with Youssef Benzarti, Jarkko Harju and Alisa Tazhitdinova)

Social benefit thresholds and labor supply
(with Tomi Kyyrä and Jarkko Harju)

The effects of tax audits on business activity
(with Jarkko Harju, Kaisa Kotakorpi, Annika Nivala and Lauri Ojala)

Recent Policy Reports in Finnish

VATT Policy Brief  2/2019
(with Jarkko Harju)
Valtioneuvoston selvitys- ja tutkimustoiminnan julkaisusarja  25/2019
(with Jarkko Harju, Ohto Kanninen, Hannu Karhunen, Tuomas Kosonen and Jouko Verho)

Valtioneuvoston selvitys- ja tutkimustoiminnan julkaisusarja  72/2018
(with Jarkko Harju, Tomi Kyyrä, Olli Kärkkäinen and Lauri Ojala)

Valtioneuvoston selvitys- ja tutkimustoiminnan julkaisusarja  45/2018
(with Tomi Kyyrä and Hanna Pesola)

Tuloverotuksen vaikutus työn tarjontaan
Valtioneuvoston selvitys- ja tutkimustoiminnan julkaisusarja  5/2016
(with Jarkko Harju and Tuomas Kosonen)

Recent research activities

Discrete labor supply [paper]

Corporate taxes and small firms [paper]