Open Access
Growth, inequality and extraction in Ibero-American democratizations
(2017) Ducoing Ruiz, Cristián; Torregrosa Hetland, Sara
Will democracy improve the distribution of economic welfare? Do dictatorships leave long-run legacies behind? In this paper we explore four Ibero-American countries with some common historical traits, but also different contexts: Spain, Portugal, Brazil, and Chile. The two Iberian nations suffered long periods of autocratic regime in the 20th Century, while our south American cases had relatively later and shorter dictatorships. We intend to assess the extent to which democratization brought about improvements in societal welfare, combining indicators of inequality and economic performance. We propose the applicability of the concept of Inequality Extraction Ratio, initially suggested for ancient societies but adapted by Milanovic (2013b) to the analysis of contemporary economies. Our hypothesis is that democratizations, while probably not able to achieve reductions in inequality, could have promoted decreases in relative extraction.
Open Access
Sistema fiscal y redistribución: La transición fiscal española (1960-1990)
(Universidad de Valparaiso, 2016) Torregrosa Hetland, Sara; Economía; Ekonomia; Institute for Advanced Research in Business and Economics - INARBE
La tesis analiza el sistema fiscal español entre los años 1960 y 1990, con especial atención a sus efectos en la distribución de la renta. Se abordan las reformas que tuvieron lugar durante la transición a la democracia, aportando una evaluación cuantitativa consistente de los cambios. A causa de la larga dictadura sufrida por el país entre 1936/39 y 1976, España introdujo las ideas fiscales del siglo XX con considerable retraso respecto de sus vecinos, manteniendo largamente un sistema de impuestos bajos, regresivos e ineficientes. Con el retorno de la democracia, diversas leyes de reforma fiscal pretendieron hacer el sistema más progresivo y capaz de generar mayores ingresos públicos, para la financiación de un incipiente Estado del Bienestar. El principio de progresividad, sin embargo, tuvo una aplicación práctica limitada. Los cálculos de la tesis lo muestran así, estimando la distribución resultante de la carga fiscal, la persistencia en las desigualdades de renta, y el fuerte impacto del fraude en la imposición personal. La interpretación ofrecida se sitúa entre el legado de la dictadura en la configuración del régimen parlamentario y el nuevo contexto económico, que combinaba la ralentización del crecimiento con una mayor apertura y movilidad internacional del capital.
Open Access
Income tax progressivity and inflation during the world wars
(Oxford University Press, 2021-10-05) Torregrosa Hetland, Sara; Sabaté, Oriol; Economía; Ekonomia
This paper studies the impact of inflation on income taxes in Sweden, the UK, and the United States during the world wars. As tax reforms were rising top marginal rates and reducing exemption thresholds, extraordinary levels of inflation eroded the real value of exemptions, brackets, and deductions. The micro-simulation of actual and alternative scenarios shows that inflation made the tax less progressive, particularly in Sweden during World War I and the UK during World War II. Nevertheless, its redistributive effect increased due to the related growth in tax revenue. Inflation contributed to transform a "class tax'' into a "mass tax".
Open Access
Did democracy bring redistribution? Insights from the Spanish tax system, 1960-90
(Oxford University Press, 2015) Torregrosa Hetland, Sara; Economía; Ekonomia; Institute for Advanced Research in Business and Economics - INARBE
The relationship between democracy, inequality, and redistribution has inspired extensive research, but consensus is still elusive. In order to contribute to this discussion, the author analyzes the Spanish case, where transition to democracy was accompanied by a comprehensive tax reform, aiming at increasing progressivity and revenue. But how effectively did it change the distribution of the tax burden? Was there a “fiscal revolution”? The results show that persistent regressivity (albeit decreasing) exacerbated income inequality, failing to attain convergence with more developed countries. The joint effect of the fiscal system, however, was slightly positive due to progressive social spending.
Open Access
The spanish fiscal transition: tax reform and inequality in the late twentieth century
(Palgrave Macmillan, 2021-09-19) Torregrosa Hetland, Sara; Economía; Ekonomia
This book provides an analysis of the process and outcomes of the tax reform, with a focus on progressivity, redistribution, and inequality. Between 1977 and 1986, Spain underwent a comprehensive tax reform which shaped its fiscal system until today. It was made in connection with the transition to democracy and indeed was understood as a fundamental part of the political change. The book situates the reform both within Spanish history and international trends in tax systems and connects it to the expansion of the welfare state and regional decentralization in Spain. The analysis reveals that the tax system failed to attain progressivity, and significant levels of fraud had a noticeable impact on inequality. Because of this, fiscal redistribution remained limited. In the new political economy of the second globalization, late democratic and fiscal transitioners were unable to emulate the path of the welfare state forerunners.
Open Access
The prevalence of publicly stimulated innovations: a comparison of Finland and Sweden, 1970-2013
(Elsevier, 2019-02-18) Torregrosa Hetland, Sara; Pelkonen, Antti; Oksanen, Juha; Kander, Astrid; Economía; Ekonomia
While the role played by the state in stimulating innovation in the private sector has been a prevalent interest in innovation research, studies analysing the impacts of public interventions have usually focused on individual policies, programs or projects. Public stimulation is hence often studied from a relatively restricted and temporarily confined perspective, leaving a macro-level and longer-term perspective unrecognized. This article provides further evidence on the matter by examining how many innovations in Finland and Sweden have been publicly stimulated through funding or research collaboration, over a period of more than four decades (1970-2013). Our main source is a new innovation database constructed following the Literature Based Innovation Output (LBIO) method, which gathers the most significant innovations of both countries for the study period, totalling approximately 4100 Swedish and 2600 Finnish innovations. Our results indicate that the public sector has played a very prominent role in stimulating private innovation in both countries, and with an increasing trend. This is especially true for Finland, where 35-55% of the innovations of the period have been stimulated by public funding and 25-65% by collaboration with public research. In Sweden, the share of publicly stimulated innovations has been somewhat lower and erratic, but has increased over time.
Open Access
Inequality in tax evasion: the case of the Spanish income tax
(Emerald, 2020-03-11) Torregrosa Hetland, Sara; Economía; Ekonomia
Purpose: the purpose of this paper is to estimate tax evasion and its impact on progressivity, redistribution and the measurement of inequality, using microdata from the Spanish income tax for 2001-2004. Design/methodology/approach: the approach follows Feldman and Slemrod (2007) by exploiting the relation of charitable donations with the composition of income but introduces two methodological innovations, which could be useful for further studies: correction for sample selection with a Heckman two-step setting and the calculation of different evasion rates for top incomes with an interaction term. Findings: evasion in capital incomes was significant throughout these years. Financial incomes were reported at around 50-70 per cent of their real value, with the lowest estimates corresponding to the top decile. Revenues from fixed capital display similarly low compliance rates for the top 10 per cent. Tax evasion in self-employment incomes (direct assessment) is estimated at 20 per cent for 2001. Mostly because of a composition effect, this means that fraud was higher at the top of the income distribution, thus having a regressive impact. Inequality statistics and top income concentration estimates should, therefore, be revised upwards. Originality/value: this is the first paper to estimate the distributive impacts of tax evasion in Spain, and one of very few internationally.
Open Access
Resource abundance and public finances in five peripheral economies, 1850s-1930s
(Elsevier, 2022-01-13) Peres-Cajías, José; Torregrosa Hetland, Sara; Ducoing Ruiz, Cristián; Economía; Ekonomia
The resource curse literature has established that taxation of natural resources might limit the long-term development of fiscal capacity in resource-rich countries. This article explores if, and how, natural resource abundance generates fiscal dependence on natural resource revenues. We compare five peripheral economies of Latin America (Bolivia, Chile, Peru) and Scandinavia (Norway, Sweden) over a period of 90 years, between 1850 and 1939. Both groups were natural resource abundant, but in the latter natural resource dependence decreased over time. By using a novel database, we find that fiscal dependence was low in Norway and Sweden, while high and unstable in Bolivia, Chile and Peru. This suggests that natural resource abundance should not be mechanically linked to fiscal dependence. An accounting identity shows that sudden increases in fiscal dependence were related to both economic and political factors: countries' economic diversification, and attitudes of the relevant political forces about how taxation affects the companies operating in the natural resource sector.
Open Access
Natural resources curse in the long run? Bolivia, Chile and Peru in the nordic countries' mirror
(MDPI, 2018-03-26) Ducoing Ruiz, Cristián; Peres-Cajías, José; Badia-Miró, Marc; Bergquist, Ann-Kristin; Contreras, Carlos; Ranestad, Kristin; Torregrosa Hetland, Sara; Economía; Ekonomia
The new estimates of the Maddison Project show that GDP per capita ratio at purchasing power parity (ppp) between Bolivia and Finland has changed from 0.68 ca. 1850 to 0.16 in 2015; similarly, that between Chile and Norway from 0.65 to 0.28. The aim of this article is to present a review of the literature and available quantitative evidence to understand how these extreme differences became possible between countries with similarly enormous natural resource endowments. Specifically, the article seeks to: (a) identify some stylized facts that may help understand the divergence between Andean and Nordic countries; (b) identify key historical processes that explain the divergent effect of natural resource abundance in Andean and Nordic economies. In order to achieve these objectives, four topics are covered: GDPpc, population, trade and taxation. The analysis comprises three Nordic countries (Finland, Norway and Sweden) and three Andean countries (Bolivia, Chile and Peru) from the mid-Nineteenth Century to present day. The sample size, time span covered and thematic approach provide new evidence regarding previous work.
Embargo
War inflation and taxation
(Routledge, 2025-05-30) Sabaté, Oriol; Torregrosa Hetland, Sara; Economía; Ekonomia; Institute for Advanced Research in Business and Economics - INARBE
Warfare has been commonly associated with increasing levels of inflation, with important implications for tax systems. In this chapter, we first review the literature on war finance and inflation, considering both the fiscal causes of inflation during wartimes and the effects of inflation on tax revenues. Second, we focus on developments in the income tax during the World Wars, building upon our previous work (Torregrosa-Hetland and Sabaté, 2022). We describe the mechanisms through which inflation affected progressivity and redistribution, by reducing the real value of exemptions, brackets and deductions ("bracket creep"). This led to the incorporation of new taxpayers into the income tax system and increased significantly the tax burden of those already included. Third, we study the issue of income tax legitimacy in the face of war inflation using a novel dataset of parliamentary debates and press articles in the United Kingdom. Other episodes of bracket creep have been associated with legitimacy challenges. We use natural language processing techniques to examine whether the effects of inflation on tax progressivity were a topic of discussion in national parliaments and the press, and the extent to which MPs and journalists identified inflation as a challenge to income tax legitimacy.