Recent papers
"Global Unanimity Equilibrium on the Carbon Budget" (2019)
Humberto Llavador and John E. Roemer Available at ssrn.com/abstract=3362590 Barcelona GSE Working Paper 1084 | Cowles Foundation Discussion Paper 2172 AbstractCarbon budgets are a useful way to frame the climate mitigation challenge and much easier to agree upon than the allocation of emissions. We propose a mechanism with countries agreeing on the global carbon budget, while the decision to emit is decentralized at the country level. The revenue is collected in a global fund and allocated according to endogenously defined weights proportional to the marginal cost of climate change. The proposal features a unanimous agreement of the national citizenries of the world and global Pareto efficiency. We run a simulation in the spirit of the Paris Agreement, with zero emissions after 2055. At the Global Unanimity Equilibrium, permits are priced at 90$/tC, yielding 1.3 trillion dollars annually. Africa, India and the less developed countries in Asia are the only net recipients, while the US and China are the largest net contributors |
"Inequality, Bipolarization, and Tax Progressivity" (2019)
Oriol Carbonell-Nicolau and Humberto Llavador American Economic Journal: Microeconomics Barcelona GSE Working Paper 1071 AbstractThe steady rise in income and wealth inequality in the last four decades, together with the evolution of a vanishing middle class, has raised concerns about potentially pernicious effects of these trends on social stability and economic growth. This paper evaluates the possibility of designing tax systems aimed at reducing income inequality and bipolarization. Using two fundamentally different metrics, we provide a unified foundation of tax progressivity whereby, roughly, taxes are progressive if and only if they are inequality reducing if and only if they are bipolarization reducing. |
"Elasticity Determinants of Inequality Reducing Income Taxation" (2020)
Oriol Carbonell-Nicolau and Humberto Llavador Journal of Economic Inequality doi: 10.1007/s10888-020-09461-8 AbstractThe link between income inequality and progressive taxation has long been considered a fundamental normative foundation for income tax progressivity. This paper furnishes necessary and sufficient conditions on primitives, in terms of the elasticity of income with respect to ability, under which various subclasses of progressive taxes are inequality reducing. The distributional effects of progressive income taxation are decomposed into two conditions on the wage elasticity of income, the tax rate effect and the subsidy effect, each capturing different aspects of the transition between before-tax and after-tax income distributions. The results confer a degree of useful flexibility to the theory, in that they allow the analyst to expand the universe of consumer preferences by suitably restricting the set of marginal-rate progressive taxes. As an illustration of the results’ practical implications, we provide a precise characterization of the subclass of (progressive) taxes that are inequality reducing for the constant elasticity of substitution (CES) and the quasi-linear utility functions. |
Climate Change
Sustainability for a Warming Planet (2015)
Humberto Llavador, John E. Roemer and Joaquim Silvestre Harvard University Press. Introduction. Winner of the X Catalan Economic Society Award 2016 |
"North-South Convergence and the Allocation of CO2 Emissions" (2015)
Humberto Llavador, John E. Roemer and Joaquim Silvestre Climatic Change 130(3):383-395. doi:10.1007/s10584-014-1227-8 AbstractMankind must cooperate to reduce GHG emissions to prevent a catastrophic rise in global temperature. How can the necessary costs of reducing GHG emissions be allocated across regions of the world, within the next few generations, and simultaneously address growth expectations and economic development? We postulate a two-region world and, based on sustainability and egalitarian criteria, calculate optimal paths in which a South, like China, and a North, like the United States, converge in welfare per capita to a path of sustained growth of 1% per year by 2080, while global CO2 emissions are restricted to the Representative Concentration Pathway RCP3-PD scenario: a conservative path that leads to the stabilization of concentrations under 450 ppm CO2, providing an expected temperature change not exceeding 2ºC. Growth expectations in the North and the South must be scaled back substantially, not only after 2080, but also in the transition period. Global negotiations to restrict emissions to an acceptably low level cannot succeed absent such an understanding. Feasible growth paths with low levels of emissions require heavy investments in education and knowledge. Northern and Southern growth must be restricted to 1% and 2.8% per year, respectively, over the next 75 years. Politicians who wish to solve the global-warming problem must prepare their polities to accept this reality.\return Key Words: Climate change, sustainability, North-South convergence, international negotiations. JEL Classification: D63, F53, O40, O41, Q50, Q54, Q56 |
"Sustainability in the Presence of Global Warming: Theory and Empirics" (2011)
Humberto Llavador, John E. Roemer and Joaquim Silvestre Human Development Research Paper 2011/05. Research commissioned by the UNDP for the Human Development Report 2011. |
"A Dynamic Analysis of Human Welfare in a Warming Planet" (2011)
Humberto Llavador, John E. Roemer and Joaquim Silvestre Journal of Public Economics 95(11-12):1607-1620. doi:10.1016/j.jpubeco.2011.05.017 AbstractClimate science indicates that climate stabilization requires low GHG emissions. Is this consistent with nondecreasing human welfare? Our welfare or utility index emphasizes education, knowledge, and the environment. We construct and calibrate a multigenerational model with intertemporal links provided by education, physical capital, knowledge and the environment. We reject discounted utilitarianism and adopt, first, the Pure Sustainability Optimization (or Intergenerational Maximin) criterion, and, second, the Sustainable Growth Optimization criterion, that maximizes the utility of the first generation subject to a given future rate of growth. We apply these criteria to our calibrated model via a novel algorithm inspired by the turnpike property. The computed paths yield levels of utility higher than the level at reference year 2000 for all generations. They require the doubling of the fraction of labor resources devoted to the creation of knowledge relative to the reference level, whereas the fractions of labor allocated to consumption and leisure are similar to the reference ones. On the other hand, higher growth rates require substantial increases in the fraction of labor devoted to education. JEL classification D63;O40;O41;Q50;Q54;Q56 Keywords: Climate change; Education; Maximin; Growth |
"Intergenerational Justice when Future Worlds are Uncertain" (2010)
Humberto Llavador, John E. Roemer and Joaquim Silvestre Journal of Mathematical Economics 46(5):728-761. doi:10.1016/j.jmateco.2010.06.004 AbstractLet there be a positive (exogenous) probability that, at each date, the human species will disappear. We postulate an Ethical Observer (EO) who maximizes intertemporal welfare under this uncertainty, with expected-utility preferences. Various social welfare criteria entail alternative von Neumann Morgenstern utility functions for the EO: utilitarian, Rawlsian, and an extension of the latter that corrects for the size of population. Our analysis covers, first, a cake-eating economy (without production), where the utilitarian and Rawlsian recommend the same allocation. Second, a productive economy with education and capital, where it turns out that the recommendations of the two EOs are in general different. But when the utilitarian program diverges, then we prove it is optimal for the extended Rawlsian to ignore the uncertainty concerning the possible disappearance of the human species in the future. We conclude by discussing the implications for intergenerational welfare maximization in the presence of global warming. JEL classification: D63; D81; O40; Q54; Q56 Keywords: Discounted utilitarianism; Rawlsian; Sustainability; Maximin; Uncertainty; Expected utility; von Neumann Morgenstern; Dynamic welfare maximization |
Buen gobierno, pandemias… y calentamiento global (Economía y Salud, Blog AES, June 2020)
Sostenibilidad, Devoradores de Bienestar y Generaciones Olvidadas (La Maleta de Portbou No.37, Sept-Oct. 2019)
Voluntad política y liderazgo para un mundo más justo y sostenible (El Periódico, Dec. 2017)
La economía del cambio climático y los desacuerdos sobre la medición de sus consecuencias (Nada es Gratis, Nov. 2017)
Cambio Climático, sostenibilidad y desigualdad (Sociedad Española de Epidemiología, Jul. 2017)
Cambio climático, sostenibilidad y desigualdad (Economía y Salud, Apr. 2017)
Cambio climático, sostenibilidad y crecimiento (Cinco Días, Feb. 2017)
Sostenibilidad es la palabra del siglo XXI (El Nacional, Jan. 2017)
Political Economy
"Suffrage Rights" (2017)
Humberto Llavador Oxford Research Encyclopedia. Oxford University Press. doi.org/10.1093/acrefore/9780190228637.013.5 AbstractThe historical evolution of the right to vote offers three observations. First, almost all groups have seen their voting rights challenged at some point in time; and almost all political movements have sought to exclude some other group from voting. Secondly, reforms towards suffrage extension are varied: from the direct introduction of universal (male) suffrage, to a trickle down process of enfranchising a small group at a time. Thirdly, the history of franchise extension is a history of expansions and contractions. Much of the literature on the evolution of the right to vote builds on the following question: why would a ruling elite decide to extend the suffrage to excluded groups who have different interests in the level of redistribution and the provision of public goods? Two competing theories dominate the debate: Bottom-up or demand side theories emphasising the role of revolutionary threats; and top-down or supply side theories, explaining franchise extensions as the outcome of the strategic interactions of those in power and elites in the democratic opposition. A second question addresses the choice of a particular path of franchise extension, asking what explains different strategies and, in particular, the role of their accompanying institutional reforms. In contrast to the literature on the inclusion of the lower classes, women suffrage has been traditionally presented as the conquest of the suffragette movement. Current research, however, departs from this exceptionalism of women suffrage and shows certain consensus in explaining women’s suffrage as a political calculus, in which men willingly extend the franchise when they expect to benefit from it. Arguments differ though in the specific mechanisms that explain the political calculus. Finally, the literature on compulsory voting addresses the estimations of its impact on turnout; whether it translates into more efficient campaigning, improved legitimacy, and better representativity; and ultimately its effects on policies. |
"An Agenda-Setting Model of Electoral Competition" (2012)
Josep M. Colomer and Humberto Llavador SERIEs: Journal of the Spanish Economic Association 3(1-2):73-93. doi:10.1007/s13209-011-0056-5 AbstractThis paper presents a model of electoral competition focusing on the formation of the public agenda. An incumbent government and a challenger party in opposition compete in elections by choosing the issues that will key out their campaigns. Giving salience to an issue implies proposing an innovative policy proposal, alternative to the status-quo. Parties trade off the issues with high salience in voters’ concerns and those with broad agreement on some alternative policy proposal. Each party expects a higher probability of victory if the issue it chooses becomes salient in the voters’ decision. But remarkably, the issues which are considered the most important ones by a majority of voters may not be given salience during the electoral campaign. An incumbent government may survive in spite of its bad policy performance if there is no sufficiently broad agreement on a policy alternative. We illustrate the analytical potential of the model with the case of the United States presidential election in 2004. Keywords: Agenda, Elections, Political competition, Issues, Salience, Agreement JEL Classification: D72
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"Immigration Policy with Partisan Parties" (2011)
Humberto Llavador and Angel Solano Journal of Public Economics 95(1-2):134-142. doi:10.1016/j.jpubeco.2010.09.011 AbstractThis paper presents a model of electoral competition focusing on the formation of the public agenda. An incumbent government and a challenger party in opposition compete in elections by choosing the issues that will key out their campaigns. Giving salience to an issue implies proposing an innovative policy proposal, alternative to the status-quo. Parties trade off the issues with high salience in voters’ concerns and those with broad agreement on some alternative policy proposal. Each party expects a higher probability of victory if the issue it chooses becomes salient in the voters’ decision. But remarkably, the issues which are considered the most important ones by a majority of voters may not be given salience during the electoral campaign. An incumbent government may survive in spite of its bad policy performance if there is no sufficiently broad agreement on a policy alternative. We illustrate the analytical potential of the model with the case of the United States presidential election in 2004. Keywords: Agenda, Elections, Political competition, Issues, Salience, Agreement JEL Classification: D72
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"The Informational Value of Incumbency" (2009)
Carmen Beviá and Humberto Llavador Journal of Public Economic Theory 11(5):775-798. doi:10.1111/j.1467-9779.2009.01429.x AbstractThis paper exploits the informational value of incumbency: incumbency confers voters information about governing politicians not available from challengers. We propose a measure of incumbency advantage that improves the use of pure reelection success. We also study the relationship between incumbency advantage, ideological bias, and terms in office. Our argument emphasizes that incumbency affects candidates' chances of winning even if they had no opportunity to strategically utilize policies.
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"Why do Parties Exclude Important Issues from their Electoral Campaigns?" (2009)
Josep M. Colomer and Humberto Llavador Chapter 8 in The Political Economy of Democracy, Aragonés, Beviá, Llavador and Schofield (eds.). Fundación BBVA. |
"Voting with Preferences over Margins of Victory" (2008)
Humberto Llavador Mathematical Social Science 56(3):355-365. doi:10.1016/j.mathsocsci.2008.05.009 AbstractThis paper analyzes a two-alternative voting model with the distinctive feature that voters have preferences over margins of victory. We study voting contests with a finite as well as an infinite number of voters, and with and without mandatory voting. The main result of the paper is the existence and characterization of a unique equilibrium outcome in all those situations. At equilibrium, voters who prefer a larger support for one of the alternatives vote for such alternative, providing a formal argument for the conditional sincerity voting condition in [Alesina, Alberto, Rosenthal, Howard, 1995. Partisan Politics, Divided Government, and the Economy. Cambridge University Press, Cambridge] and the benefit of voting function in [Llavador, Humberto, 2006. Electoral platforms, implemented policies and abstention. Social Choice and Welfare 27 (1), 55–81]. Finally, we offer new insights on explaining why some citizens may vote strategically for an alternative different from the one declared as the most preferred. JEL classification: D72 Keywords: Margin of victory; Mandates; Plurality; Abstention; Strategic voting
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"Electoral Platforms, Implemente Policies and Abstention" (2006)
Humberto Llavador Social Choice and Welfare 27(1):55-81. doi:10.1007/s00355-006-0111-5 AbstractThis paper distinguishes between electoral platforms and implemented policies through a non-trivial policy-setting process. Voters are sophisticated and may care not only about the implemented policy but also about the platform they support with their vote. We find that while parties tend to polarize their positions, the risk of alienating their constituency prevents them from radicalizing. The analysis evidences that the distribution of the electorate, and not only the (expected) location of a pivotal voter, matters in determining policies. Our results are consistent with the observation of polarized platforms and moderate policies, and the alienation and indifference components of abstention. <\p> <\details> |
"Partisan Competition, Growth and the Franchise" (2005)
Humberto Llavador and Robert J. Oxoby The Quarterly Journal of Economics 120(3):1155-1189. doi:10.1093/qje/120.3.1155 AbstractWe present an argument for changes in the franchise in which an elite split along economic interests uses the suffrage to influence implemented policies. Through the influence of these policies on the character of industrialization, we analyze the effects of franchise changes on economic growth. We identify in the social structure of society an explanation for the connection between enfranchisement and growth: when (1) there exists an economic conflict among the elite, (2) landed classes are not politically strong, and (3) there exists a critical mass of industrial workers, we observe both growth and democratization. The lack of conditions (1) or (2) resolves in stagnant autocracies while the absence of condition (3) drives growth-deterring democratic expansions. We provide historical support for our argument by analyzing the experience of eleven countries. <\p> <\details> |
"Abstention and Political Competition" (2000)
Humberto Llavador Review of Economic Design 5(4):411-432. doi:10.1007/s100580000030 AbstractThe classical literature on spatial majority voting postulates that all citizens vote. The Median Voter Theorem (MVT) then obtains when parties have perfect information on voter behavior and are either office-seekers (“Downsian”) or ideological. This paper introduces abstention, a simple yet realistic modification. We show that the main features of the MVT survive to a large extent but subject to some qualifications. First, the winning policy does not bear any necessary relation to the median voter. Second, there exist examples in which the candidates choose different positions at equilibrium. Third, equilibrium may fail to exist or be unique. Finally, the equilibria of the model with office-motivated parties may differ from the ones where parties are ideological. JEL classification: D72 Keywords: Abstention, alienation, political competition, median voter theorem <\p> <\details> |
Welfare Economics
"Inequality Reducing Properties of Progressive Income Tax Schedules: The Case of Endogenous Income" (2018)
Oriol Carbonell-Nicolau and Humberto Llavador Theoretical Economics 13(1):39-60. doi.org/10.3982/TE2533 Barcelona GSE Working Paper 849 * DEE Working Paper 1492 AbstractThe case for progressive income taxation is often based on the classic result of Jakobsson (1976) and Fellman (1976), according to which progressive and only progressive income taxes—in the sense of increasing average tax rates on income—ensure a reduction in income inequality. This result has been criticized on the ground that it ignores the possible disincentive effect of taxation on work effort, and the resolution of this critique has been a long-standing problem in public finance. This paper provides a normative rationale for progressivity that takes into account the effect of an income tax on labor supply. It shows that a tax schedule is inequality reducing only if it is progressive—in the sense of increasing marginal tax rates on income, and identifies a necessary and sufficient condition on primitives under which progressive and only progressive taxes are inequality reducing. |
"An Equal-opportunity Approach to the Allocation of International Aid" (2001)
Humberto Llavador and John E. Roemer Journal of Development Economics 64(1):147-171. doi:10.1016/S0304-3878(00)00128-0 Reprinted in Kapstein and Rosenthal (eds.) Ethics and International Relations. Chapter 24, pages 495-519. Ashgate Pub Co. 2009. AbstractHow should international aid be distributed? The most common view is according to some utilitarian formula: in order to maximize the average growth rate of aid recipients or the growth rate of income of the class of recipient countries. Recently, the The World Bank [The World Bank, 1998. Assessing aid, World bank policy research report] has published a study demonstrating the importance of good economic management, within a recipient country, in transforming aid into economic growth. We identify good economic management with effort, and ask, how should aid be distributed to equalize opportunities [among recipient countries] for achieving growth, according to Roemer's theory of equal opportunity [Roemer, J.E., 1998. Equality of Opportunity. Harvard University Press, Cambridge, MA] Keywords: International aid; Equality of opportunity; Utilitarianism JEL classification: D61; D63; O19 <\p> <\details> |
Other
"Teaching Microeconomic Principles with Smartphones -Lessons from classroom experiments with classEx" (2017)
Marcus Giamattei and Humberto Llavador Barcelona GSE Working Paper 996 AbstractThe case for progressive income taxation is often based on the classic result of Jakobsson (1976) and Fellman (1976), according to which progressive and only progressive income taxes—in the sense of increasing average tax rates on income—ensure a reduction in income inequality. This result has been criticized on the ground that it ignores the possible disincentive effect of taxation on work effort, and the resolution of this critique has been a long-standing problem in public finance. This paper provides a normative rationale for progressivity that takes into account the effect of an income tax on labor supply. It shows that a tax schedule is inequality reducing only if it is progressive—in the sense of increasing marginal tax rates on income, and identifies a necessary and sufficient condition on primitives under which progressive and only progressive taxes are inequality reducing. |