Tuomas Matikka

I am an Associate Research Professor 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.

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

Peer-Reviewed Publications
American Economic Review: Insights 2(2): 255-268, 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

Working Papers

The Effects of Corporate Taxes on Small Firms
[new version] (03/2021)
(with Jarkko Harju and Aliisa Koivisto)
We study the impact of corporate taxes on firm-level investments and business activity 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 response, but 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 firm-level incentives have an effect on business activity especially among firms with closely connected owner-managers.

Discrete Labor Supply: Empirical Evidence and Implications
(with Tuomas Kosonen)
Winner of the IIPF Peggy and Richard Musgrave Award, 2017
We provide evidence of discrete labor supply and study the broader implications of this finding for estimating earnings elasticities. We utilize an income notch and a reform that shifted the location of the notch to study the labor supply mechanisms. We find transparent reduced-form evidence that this reform caused large earnings responses from a broad income range in the distribution, which is consistent with a discrete labor supply model rather than any variant of a continuous model. We then illustrate that conventional welfare-loss estimates can be downward-biased when labor supply is discrete instead of continuous.

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)
This paper studies how the frequency of payments affects consumption smoothing. In Finland, the frequency of pension payments for pension benefit recipients was based on the surname initial of the recipient. This generated as-good-as-random variation in monthly payment frequencies across households, providing a unique setup to analyze the causal impact of payment frequency. We find smoother consumption for households with two distinct monthly payments instead of one concentrated payment. This implies that more dispersed payment schedules can smooth spending spikes after payment dates.

Selected Work In Progress

Stairway to Heaven? Entrepreneurship and Income Mobility
(with Jarkko Harju and Toni Juuti)

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

The Effects of Tax Audits on Business Activity
(with Jarkko Harju, Kaisa Kotakorpi and Annika Nivala)

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]