Most programs of taxation and income maintenance imply that the tax rate faced by an individual changes at different levels of labor supply. As a result, the individual's budget constraint is kinked which presents problems for the empirical study of labor supply. This paper develops econometric...

The majority of enterprises in China are controlled by local governments at the provincial, city, county, township and village levels. We study the effect of regional decentralization on soft budget constraints in these enterprises. We show that fiscal competition under (foreign) capital...