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About Me

I am a Ph.D candidate at Toulouse School of Economics, in Toulouse, a wonderful city in the south west of France. I am expecting to complete my dissertation, under the supervision of Professor Helmuth Cremer (TSE and IDEI), in July 2008. Before coming to Toulouse, I obtained n 2003 my B.S. in Discipline Economiche e Sociali (a.k.a. DES) at Università Bocconi in Milan (Italy).  

The main focus of my research is in trying to incorporate insights from the psychological literature, such as time inconsistency, bounded rationality and cognitive biases, into the field of Public Economics and Political Economy.

This year, I am teaching assistant for the course in Microeconomics at UT1 (Licence - Fall and Spring), and Public Economics at TSE (Master 1).

When I am not working, I enjoy listening to music, reading and watching TV series.

My Curriculum Vitae

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My Papers

My dissertation consists of three essays:

Essay 1

An Egg today and a Chicken Tomorrow: A Positive Model of Social Security with Quasi-Hyperbolic Discounting                              (Job Market Paper)

Abstract

Strotz (1956) first suggested that people are more impatient when making short-run tradeoffs than long- run ones. Many experimental studies supports this conjecture. Motivated by recent evidence of the British Department of Work and Pension (2006), we apply this framework to retirement decisions: when deciding whether retire or not, individuals may weight too much the costs of remaining at work (i.e. disutility of working an additional year, implicit tax on continued activity) and too little the benefits of postponed retirement (i.e. increase of the Bismarckian component of the pension formula), that are perceived as too far in the future. Moreover, impatient individuals do not save enough for their post-retirement consumption, often regretting for this lack of commitment.
In this paper we propose a three-periods OLG model with quasi-hyperbolic consumers who save for post retirement consumption in the first period and choose retirement age in the second. We show that this assumption allows us to explain the observed drop in post retirement consumption and the high level of voluntary (i.e. not due to disability or dismission from the firm) early exit from the labor force. We also investigate the implications of time inconsistency for a political economy model in which voters determine simultaneously the size and the degree of redistribution of the pension system. We show that, when voting over the payroll tax, time inconsistent young workers, looking for a commitment device that increases both saving and retirement age, form a coalition with rich in order to decrease the size of the system. When voting over the degree of redistribution, they form a coalition with poor individuals to increase the flat part of the pension formula. Our model provides a political justification for the negative relationship between size and redistribution observed in most OECD countries (Disney 2004).

JEL Classification: A12, D91, E21, H55, J64  

Keywords: Hyperbolic Discounting, Majority Voting, Redistribution, Retirement Age, Saving Behaviour.

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Essay 2

Mirrlees meets Laibson: Optimal Dynamic Income Taxation with Quasi-Hyperbolic Preferences

Abstract

 
This paper studies a dynamic economy in which individuals suffer from time inconsistency à la  Laibson. The agents in the economy not only have different abilities, which are subject to idyosincratic shocks every period, but also differ in their degree of time inconsistency. We construct a tax system that implements in a competitive equilibrium a Pareto efficient allocation that is non-linear in labor income tax (à la Mirrlees) and linear in wealth taxes. This tax system can be seen as a commitment device for present-biased consumer. We find that, if the social planner is time consistent, it is optimal to discourage savings, a result in line with the literature. However, within our setting, the policy instrument necessary to implement this optimum is a subsidy and not a tax on wealth.
 
Keywords: Optimal taxation, capital accumulation, multidimensional screening, time inconsistency

JEL Codes: A21, H21

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Essay 3

I Will Survive: Capital Taxation, Voter Turnout and Time Inconsistency

Abstract

 
This paper reconsiders the debate around the political determination of capital taxation. In particular, we explain why capital taxes continue to survive in most OECD countries. The political economy literature on redistributive politics (Persson and Tabellini 2003) has emphasized the political power of the lower class: since labour income is more concentrated than capital income, the majority of the population benefits by overtaxing capital and undertaxing labour. However, evidence available for most developed countries shows that political participation (voting, lobbying, protesting etc.) is positively correlated with income. A paradoxical result emerges: why do rich individuals,who participate more in the political activity and own most of the capital, still favour a positive capital tax? Hence, voters' income is not the sole relevant variable in the political determination of the capital tax, but there are other forces that induce the upper class to prefer positive capital taxes. This apparent puzzle can be reconciled with a model that incorporates time inconsistency a la Laibson in individual preferences: it is in the interest of opportunistic political parties to propose a policy vector that is distorted toward capital taxation.
The intuition for our result is simple: time inconsistent individuals are politically more homogeneous (or “singleminded”) than exponential and, in order to finance a public transfer, they prefer to tax more capital income,
instead of labor income, since their accumulated saving are below the planned (and optimal) level and the distortive effects of a higher capital tax are not only reduced but also delayed in time. Politicians find easier to
please these voters by proposing a reduction of labor taxes and an increase of capital taxes.

JEL Classification: A21, D72
Keywords: Hyperbolic Discounting, Probabilistic Voting, Capiral Taxation, Voting Turnout, Saving Behaviour.

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