E-mail address: martinhalla jkuat. E-mail address: friedrichschneider jkuat. We would like to thank two anonymous referees and the Editor for their very helpful comments. The article has also benefited from comments and discussions with Bruno S. The usual disclaimer applies. This article was partly written during Martin Halla's visiting scholarship at the Institute for International Economic Studies at Stockholm University in He would like to thank for the stimulating academic environment and hospitality there.
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If you previously purchased this article, Log in to Readcube. Log out of Readcube. Click on an option below to access. Log out of ReadCube. In this article we study the social norms to abstain from cheating on the state via benefit fraud and tax evasion. We interpret these norms called benefit morale and tax morale as moral goods, and derive testable hypotheses on whether their demand is determined by prices. The main general conclusion of this article is that social norms which are widely accepted as determinants of individual economic behaviour are themselves influenced by economic factors.
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Tax Ratios in Macroeconomics: Do Taxes Really Matter?
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Share Give access Share full text access. Recent data on public spending also shows that governments around the world often rely on the private sector to produce and manage goods and services. And public-private partnerships PPP , in particular, have become an increasingly popular mechanism for governments to finance, design, build and operate infrastructure projects.
In the period alone, the total value of PPP projects in low and middle-income countries more than doubled. The following visualization shows the evolution of government expenditure as a share of national income, for a selection of countries over the last century. The source of the data is Mauro et al. The long-run series in this dataset cover mainly, but not exclusively OECD countries. The above-mentioned long-run series are complemented in this dataset by comparable recent estimates for most countries in the world.
If we focus on early-industrialized countries, we can see that there are four broad periods in this chart. In the first period, until the First World War, spending was generally low.
These low levels of public spending were just enough for governments to be concerned with basic functions, such as maintaining order and enforcing property rights. In the second period, between , public spending was generally volatile, particularly for countries that were more heavily involved in the First and Second World Wars. Government expenditures as a share of national output went sharply up and down in these countries, mainly because of changes in defense spending and national incomes. In the third period, between , public spending grew particularly fast.
As we show in more detail later, this was the result of growth in social spending ; and was largely made possible by historical increases in government revenues over the same period. Since the growth of government expenditure has been slowing down in early-industrialized countries — and in some cases, it has gone down in relative terms.
However, in spite of differences in levels, in all these countries public spending as a share of GDP is higher today than before the Second World War. Although the increase in public spending has not been equal in all countries, it is still remarkable that growth has been a general phenomenon, despite large underlying institutional differences. The following map uses the same data, for all countries, to show global patterns.
By using the slider at the bottom you can get a sense of the long-run trend in global government expenditures. The increase in absolute terms — rather than the shown relative terms — is much larger since the level of GDP per capita increased very substantially over this period. The visualization above shows that government spending in early-industrialised countries grew substantially in the 20th century.
The following visualization shows that this was the result of growth specifically in social spending. The steep growth of social spending in the second half of the 20th century was largely driven by the expansion of public funding for healthcare and education.
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The following visualization maps recent estimates of central government expenditure, as share of national incomes, across the world. The most striking feature in the chart below is the degree of heterogeneity between world regions. Central governments in high-income countries — particularly those in Europe — tend to control a much larger share of national production than governments in low-income countries.
Although there are many missing observations, the data suggests that the first decade of the 21st century was characterized by a broad positive trend. These estimates have to be interpreted with caution, since central government expenditure provides a somewhat distorted picture of total public spending, particularly in federal countries with large sub-national governments. As we discuss in the data quality section , it is unfortunately hard to find reliable cross-country data on expenditure below the central level.
The following visualization shows total public expenditure per capita, across all levels of government, for OECD countries. Some countries that are not members of the OECD, but that do report comparable statistics, are also included in this graph. As we can see, cross-country differences are persistently large. The visualizations above show that governments around the world differ considerably in size, even after controlling for underlying differences in economic activity and population.
Here we show that, as one would expect, governments also differ substantially in terms of how they prioritise expenditures.
Company Taxation in the European Union
The following visualization shows the share of government expenditure that is specifically allocated to education. As we can see, there are large and persistent differences, even within developing countries. We have already pointed out that governments in high-income country spend more resources than governments in low-income countries, both in per capita terms, and as share of their national incomes.
Here we focus on the social spending component of government expenses, and show that high-income countries also have higher levels of social spending, particularly in the form of transfers.
The following visualization, from Bastagli et al 2 , shows stacked social expenditure figures for different country groups. The different color segments in the bars reflect different components of social spending. The sizes reflect expenditure as share of GDP. This contrasts with the figures from sub-Saharan Africa, where social spending is much lower across the board, and where transfers play a less important role.
The visualization above emphasizes regional differences, but masks a great deal of heterogeneity within regions. The following visualization shows social protection expenditures as a share of total general government expenditures, across different OECD countries. Although there are some small cross-country variations in the way social expenditure is distributed, the three priorities are predominantly the same across the OECD. Old age expenditure in the form of pensions and elderly care typically receives the largest allocation of social spending, followed by health, with either family or incapacity-related benefits typically coming in third.
On average, OECD countries spend per cent of GDP on old age care, 6 per cent on health, and 2 per cent on both family and incapacity-related benefit. And the relative importance of these branches has remained largely constant since The following visualization shows the share of central government expenditure that goes to the compensation of government employees.
Compensation of employees includes all salaries and benefits both in cash and in kind. As we can see, the salaries of public servants and other government employees are an important component of public spending in most countries. Yet differences between countries are very large.
OECD Tax Policy Studies - OECD
Governments around the world often rely on the private sector to produce and manage goods and services. The following two visualization show the importance of public procurement in OECD countries and partner countries providing comparable data. The first chart shows the value of total general government procurement as percentage of GDP, while the second chart shows the relative weight of procurement within total expenditure i. As we can see, the public sector purchases from the private sector are significant in many high-income countries.
Public procurement comprises many different forms of purchases. Public procurement includes, for example, tendering and contracting in order to build large infrastructural projects.