Dr Daniel Reck 32L.3.16

This course is compulsory on the BSc in International Social and Public Policy and Economics and BSc in Social Policy and Economics. This course is available on the BSc in Econometrics and Mathematical Economics, BSc in Economics, BSc in Economics and Economic History, BSc in Economics with Economic History, BSc in Environmental Policy with Economics, BSc in Geography with Economics, BSc in Government and Economics, BSc in Mathematics and Economics, BSc in Mathematics with Economics, BSc in Mathematics, Statistics and Business, BSc in Philosophy and Economics, BSc in Philosophy, Politics and Economics and BSc in Politics and Economics. This course is available as an outside option to students on other programmes where regulations permit and to General Course students.

Students should have completed Microeconomic Principles I (EC201) or Microeconomic Principles II (EC202) or equivalent. The capacity to read and understand applied research methods as covered in EC220/221 is highly desirable.

The first part of the Michaelmas term content focus on the foundations of public economics. We begin by introducing classical theories concerning equity, efficiency, and the rationales for government intervention in the economy. We discuss market failure in the context of public goods and externalities, including environmental policy. We also discuss problems of public choice and political economics, and the implications of recent research in behavioural economics for policymaking. We also study modern empirical methods that are used to evaluate the causal effects of public policies. The second part of the Michaelmas term considers social insurance policies, including unemployment insurance, disability insurance, retirement pensions, and public health insurance. We study the economic rationale for government intervention in social insurance and the optimal type and extent of interventions, and we relate this to empirical evidence on the causal effects of changes in social insurance policies.

In the Lent Term the course is devoted to tax and transfer programs. We begin by examining the incentive effects of taxes and transfers on labour supply, and then go on to consider migration, tax avoidance, and tax evasion. As inequality is a key input to tax and transfer policy, we critically examine the measurement of and trends over time in income and wealth inequality in various countries. We look at the effect of taxation on economic efficiency and explore the optimal taxation of commodities and income. Finally, we consider questions of tax administration and apply them in a developing country context.

15 hours of lectures and 10 hours of classes in the MT. 15 hours of lectures and 10 hours of classes in the LT.

This course is delivered through a combination of classes and lectures totalling a minimum of 50 hours across Michaelmas Term and Lent Term. This year, some or all of this teaching will be delivered through a combination of virtual classes, live streamed (recorded) lectures, and some flipped content delivered as short online videos.

Feedback is provided for one problem set and one mock exam each term (Michaelmas and Lent).

The recommended textbook for the course is Jonathan Gruber (2016) Public Finance and Public Policy, 5th edition, Worth Publishers. Many of the readings will be journal articles.

Exam (100%, duration: 3 hours, reading time: 15 minutes) in the summer exam period.