Working Papers Series

Papers below are in pdf.

Saku Aura

WP 06-07
Supply Constraints and Housing Prices
Saku Aura and Thomas Davidoff

This paper analyzes the effects of land use constraints on housing prices. We provide a new framework for evaluating policy when mobility across regions is allowed but limited. A key result is that loosening regulatory constraints within individual regions would have little effect on prices for plausible parameterizations. For example, we show reasonable conditions under which, even if every building in Manhattan were 100 stories tall, prices would fall by less than 15 percent.

JEL Codes: R21, R14, R38
Keywords: Housing Supply and Markets; Regulatory Policies; Land Use Patterns.

WP 05-05
Optimal Commodity Taxation When Land and Structures Must Be Taxed at the Same Rate
Saku Aura and Thomas Davidoff

We show that the optimal property tax rate rises with the ratio of land rents to structure and land development costs. California’s high ratio of income to property tax revenue and the distribution of Federal housing subsidies thus appear geographically misplaced. Proportional taxation of non-housing commodities is not optimal, even when elasticities with respect to wages are identical. Absent externalities, the desirability of transportation taxes and“anti-sprawl” growth controls hinge on the relative importance of time versus money in commuting costs.

JEL Codes: H21; R13
Keywords: Keywords: Property Taxes, Henry George Theorem

WP 04-08
Estate and Capital Gains Taxation: Efficiency and Political Economy Considerations
Saku Aura

In this paper a simple dynastic overlapping-generations model with homogeneous agents is used to analyze the optimal use of capital income tax, labor income tax and estate tax. The results of this analysis add to the conventional wisdom about capital income taxation: while it is true that in the long run the estate tax rate should be set to zero, it is also true that other capital income taxation is a usable policy tool even in the steady state.

The other contribution of the paper is the building of a simple dynamic political economy model where the structure of capital taxes is determined. In a median-voter framework with no policy commitment, estate taxation is used too heavily as a capital-tax-revenue-collecting tool relative to the second-best optimum for the social planner.

JEL Codes: H21, H24
Keywords: Capital Income Taxation, Optimal Taxation, Political Economy

WP 04-07
What's in a Name?
Saku Aura with Gregory D. Hess

Plenty. This paper analyzes two broad questions: Does your first name matter? And how did you get your first name anyway? Using data from the National Opinion Research Center’s (NORC's) General Social Survey, including access to respondent’s first names from the 1994 and 2002 surveys, we extract the important ``first name features'' (FNF), e.g. popularity, number of syllables, phonetic features, Scrabble score, `blackness’ (i.e. the fraction of people with that name who are black), etc ... We then explore whether these first name features are useful explanatory factors of an respondent's exogenous background factors (sex, race, parent's education, etc...) and lifetime outcomes (e.g. financial status, education, occupational prestige, perceived social class, and whether they became a parent before 25). We find that first name features on their own do have significant predictive power for a number of these lifetime outcomes, even after controlling for a myriad of exogenous background factors. We find evidence that first name features are independent predictors of lifetime outcomes that are likely related to labor productivity such as education, happiness and early fertility. Importantly, however, we also find evidence based on the differential impacts of gender and race on the blackness of a name and its popularity that suggest that discrimination may also be a factor.

JEL Codes: D1, J1, J7
Keywords: Names, Identity, Discrimination.

WP 02-17
Uncommitted Couples: Some Efficiency and Policy Implications of Marital Bargaining
Saku Aura

This paper studies married couple’s dynamic investment and consumption choices under the assumption that the couple cannot commit across time to not to renegotiate their decisions. The inefficiencies that can arise are characterized. Efficiency properties of different divorce asset division regimes are examined. A stylized common law regime is shown to lead to a fully efficiency in a simple model while it is shown that under community property regime the couple is unlikely to attain full efficiency. The effect of inability to commit across time on the savings level is examined under a tractable special case of the model.