An Analysis of Optimal Tax Revenue Sharing for Mexico

We develop an analysis that identifies the characteristics of an optimal system of shared tax collection and intergovernmental transfers. Mathematical optimization is used to find the level of taxes and intergovernmental transfers. Formulas for the optimal level of taxes and transfers to subnational governments are characterized. We suggest reforms to intergovernmental transfers to include the costs of tax inefficiency, some tax equalization transfer rules, and the marginal social benefits of local public spending. Future research could include local public spending with regional externalities, migration, and consider a dynamic model. This article proposes an original theoretical model of optimal tax coordination and transfers. The optimal level of taxes and transfers are identified. This paper proposes reforms to the participation formula for subnational governments.

Locked In - Locked Out: Inflexibility in UK Training

Trainee doctors and surgeons involved in UK trauma teams work within inflexible training systems. Examples include prohibitively strict regional transfer rules which lock trainees in and rigid recruitment pathways by a National Selection process which can lock them out of training. The 2020 coronavirus pandemic required systems to adapt, exposing inflexibilities in training frameworks. Training inflexibility is identified as a major but addressable problem – the pressing question is which actions to take to give trainees the autonomy to excel.

Need-Based Transfer Systems are More Vulnerable to Cheating When Resources are Hidden

Need-based transfer systems function to pool risk. Such arrangements are bound by two simple rules: Ask for help only when in need and, if you are able, give help to others who ask. But there is a temptation for individuals to break these rules for short-term personal profit. Here, we study one factor that may enforce honesty in need-based transfer relationships: the visibility of resources. Across three experiments employing a novel experimental economic game, breaking of both need-based transfer rules increased when resources were hidden rather than visible. Participants with hidden resources were (1) more likely to request help when not actually in need (greediness), and (2) more likely to not fulfill requests from others for help, even when they had sufficient resources available to help (stinginess). These findings highlight the visibility of resources as one potential limitation of cooperative risk pooling systems.