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Interview with Professor Florian Scheuer
Professor Scheuer, one of your main research fields
is tax policy with a focus on income taxation. What
is the main insight from your work in this field?
Florian Scheuer:
My goal has been to incorporate
more realistic accounts of labor markets into our
design of tax systems. For instance, during the
financial crisis, we saw examples of astronomically
compensated individuals whose contributions to
social output in the end turned out to be illusory. I
therefore started working on rent-seeking (joint
with Casey Rothschild from Wellesley). Take, for
instance, CEOs who can influence their own pay by
stacking a board of directors in their favor. When
some of the highest income earners are overpaid
relative to their economic productivity, does that
imply that we should impose higher taxes at the
top?
If CEO pay hikes are at the expense of workers
doing productive work, then raising taxes on CEOs
would increase more fruitful activities. But if top
earners make outsize profits from winning against
others in the same line of work, raising taxes could
backfire. One example of this is high-speed trading.
If the most profitable traders faced higher taxes,
that would discourage their activity. But this would
make it easier for others who compete against
them, potentially drawing more traders into the
fray.
Another example is my work on the taxation of
so-called superstars. The idea is that relatively small
differences in ability among workers are magnified
by technology or globalization that lead to drastic
differences in pay. In a classic example, the advent
of TV allowed a small share of performers to cap-
ture a massive audience, leaving other artists in the
dust. Many economists believe that these “superstar
effects” are a key driver of recent inequality trends.
Does this provide an argument for a more steeply
Florian Scheuer
recently joined the Department
of Economics at the University of Zurich, where he
was appointed to the Professorship in Economics of
Institutions, endowed by the UBS Center.
Professor Scheuer is a Faculty Fellow at the
Stanford Institute for Economic Policy Research
(SIEPR), a Research Affiliate at the Center for
Economic Policy Research (CEPR) and the CESifo
Network, as well as a Faculty Research Fellow
at the National Bureau of Economic Research
(NBER). He was awarded the W. Glenn Campbell
and Rita Ricardo-Campbell National Fellowship
and the John Stauffer National Fellowship for Public
Policy at the Hoover Institution for the academic
year 2015 to 2016.
Professor Scheuer’s current research focuses
on inequality and its public policy and political
economy implications. In particular, he has
worked on incorporating important features of
real-world labor markets into the design of optimal
income and wealth taxes. These features include
financial markets with aggregate uncertainty,
political constraints on tax policy and the resulting
inequality, as well as economies with rent-seeking
or superstar effects. His research has been
published in the
American Economic Review,
the
Journal of Political Economy,
the
Quarterly Journal
of Economics
and the
Review of Economic Studies,
among other journals.
Professor Scheuer received his PhD from MIT in
2010. Prior to his appointment to Zurich, he was
Assistant Professor at Stanford University and
Visiting Assistant Professor at Harvard University
and UC Berkeley.
Research
New Researchers
“We find that the critical
question to ask is whether
top earners are benefiting at
the expense of others, and if
so, at whose expense.”