Research
Work-in-progress
Measuring Firm Activity from Outer Space
with Katarzyna Bilicka, Working paper.
To understand how global firm networks operate, we need consistent information on their activities, unbiased by their reporting choices. In this paper, we collect a novel dataset on the light that factories emit at night for a large sample of car manufacturing plants. We show that nightlight data can measure activity at such a granular level, using annual firm financial data and high-frequency data related to Covid-19 pandemic production shocks. We use this data to quantify the extent of misreported global operations of these car manufacturing firms and examine differences between sources of nightlight.
Unlocking Neighborhood Density
with Melanie Krause, Working paper (coming soon).
While city-wide density is linked to various economic outcomes, population density also varies strongly within cities. We advance the urban economics literature, by (i) examining density at the neighborhood level, (ii) splitting density into its three components building heights, crowding, and residential coverage, (iii) finding distinct latent profiles of density and its components, (iv) linking the profiles to socio-economic characteristics. To do so, we combine novel high resolution (10m x 10m) geo-spatial data on building height and footprints with Norwegian register data. The data indicates a high heterogeneity among the components of urban density for similar total density levels. In contrast to their income positive density elasticities at the city level, we find a negative association at the neighborhood level. Our findings also indicate a predictive abilities of socio-economic outcomes based on latent density profiles.
Compliance Costs, Corruption and the Differentiation of Bureaucratic Services
Working paper.
How to fight petty day-to-day corruption is a question often debated by politicians, by the public and in the economic literature. Early studies have noted that a simple and well-known way to fight day-to-day corruption is to create competition among corrupt officials. This paper shows that even a benevolent government might not encourage competition among officials in a way that eliminates corruption. This is due to a tradeoff between corruption and compliance costs. More differentiated bureaucratic services decrease compliance costs but increase the leeway for extortion.
Land Scarcity and Urban Density within Cities
with Melanie Krause, Working paper.
This paper studies how limitations on land suitable for development affect within-city variation in urban density and its three components: crowding, residential coverage, and building height. We use the high variation in geographical obstacles -- such as steep land slopes and the presence of water bodies within Norwegian cities -- as exogenous sources of development limitations. We show that such constraints can create scarcity of certain types of land. Scarcer land types have higher urban density which arises mostly from higher buildings. The effect operates through the heterogeneous citywide supply of land types, rather than through local geography.
Peer-Reviewed Publications
Journal of Development Economics 164, 2023, Data.
I analyze the effects of ethnic divisions on the provision of public goods in countries throughout the world. Using OpenStreetMap data, I construct a new, global dataset that pinpoints locations of public amenities, such as schools, hospitals, and libraries. I devise two new proxies to address the variability in the completeness of such data. I find that more autonomous subnational regions with a high degree of ethnic fractionalization provide significantly fewer productive public goods. Therefore, decentralization can decrease the provision of local public goods in areas characterized by higher levels of ethnic heterogeneity than those that prevail nationwide.
with Georg Hirte and Christian Leßmann
European Economic Review, 127(8), 2020.
We study the effect of international trade on interregional inequality from 1992-2012 within almost all countries of the world using satellite night-light based inequality proxies. For our analysis, we develop novel indicators for within-country trade cost heterogeneities that are based on exogenous geographical features. In order to deal with potential endogeneity issues, we utilize the occurrence of large natural disasters striking trade partners as instrument to generate exogenous variation in trade flows. In contrast to previous results, our IV estimates reveal that international trade aggravates economic disparities only in those countries that have a higher within-country heterogeneity in their access to the world market and their within-country trade costs.
Media outreach: 6th Lindau Meeting on Economic Sciences.
with Christian Leßmann,
European Economic Review, 92(1), 2017, 110–132, Data.
Outreach: Most cited article in the EER since 2017, by December 2020.
This paper provides a new dataset of regional income inequalities within countries based on satellite nighttime light data. First, we empirically study the relationship between luminosity data and regional incomes for those countries for which regional income data are available. Second, we use our estimation results for an out-of-sample prediction of regional incomes based on the luminosity data. These results enable us to investigate regional income differentials in developing countries that lack official income data. Third, we calculate commonly used measures of regional inequality within countries based on predicted incomes. An investigation of changes in the dispersion of regional incomes over time reveals that approximately 67-70% of all countries experience sigma-convergence. Forth, we study different major determinants of within-country changes in inequality, i.e., the determinants of the convergence process. We find evidence for an N-shaped relationship between development and regional inequality. Resources, mobility and trade openness are also very important.
with Katarzyna Bilicka,
International Tax and Public Finance, 27, 2020, 1051-1080.
This paper introduces heterogeneous profit shifting costs induced by corrupt tax officials to the analysis of profit shifting of multinationals. Using a theoretically derived corruption weighted tax differential, we show that corruption increases profit shifting of European firms. We use our estimates to calculate the implied tax revenue elasticities for European countries and find that countries with otherwise similar tax rates face lower tax revenue elasticities when they are more corrupt. This means that corruption negatively affects the revenue gains that countries could have from increasing their tax rates.
with Sugata Marjit and Marcel Thum
German Economic Review, 18(3),2017, 283–301.
This paper addresses tax loopholes that allow firms to exploit borderline cases between legal tax avoidance and illegal tax evasion. In general, tax loopholes are detrimental to a revenue-maximizing government. This may change in the presence of corruption in the tax administration. Tax loopholes may serve as a separating mechanism that helps governments maximize revenues and curb corruption, which may explain why developing countries only gradually close loopholes in their tax codes.
with Marcel Thum,
Scottish Journal of Political Economy, 63(4), 2016, 377-398.
We analyze the impact of tax policy on the market entry of firms in the presence of corruption and tax evasion. In a world with corruption, firms must bribe corrupt officials to enter the market. For a given level of bribes, higher tax rates and stricter enforcement of taxation decrease tax evasion but typically reduce market entry. However, when the level of bribes reacts to tax policy, higher taxes and stricter enforcement of taxation can have a double benefit. Up to a certain threshold, for which we develop a simple rule, stricter enforcement increases market entry and reduces tax evasion.
Policy Contributions
with Christian Leßmann und Arne Steinkraus,
ifo Dresden berichtet 22 (06) , 2015, 35-4.