B School for Public Policy

Better-informed policymaking through a deeper understanding of economics.

Attend monthly, 90-minute classroom-style sessions on Capitol Hill. Perfect for policy professionals, each “master class” covers a different issue in business and economics. Learn in an intimate and interactive experience taught by faculty from Penn and Wharton — one of the world’s leading institutions for business education.

Featured Content:

Addressing Personal-Income-Tax Manipulation with Tools from Psychology

In order to better understand the tax manipulation decision-making process—both legal uses of tax deductions and illegal tax evasion—this brief looks at the impact of gain/loss framing. Analysis of tax data confirms that tax decisions are influenced by “loss aversion.” For instance, taxpayers are more likely to pursue tax reduction activities when they make a loss smaller, as compared to when they make a gain larger. The brief looks at tools that policymakers have at their disposal for both deterring tax evasion and making existing tax incentives maximally effective. The brief discusses instances when such gain/loss framing interventions might be deployed, and provides estimates around the size of the revenue responses they may generate. The author estimates that if tax filers who face losses experienced the lower motivation to manipulate shown by those facing gains, annual tax revenue would increase by $1.4 billion. Even attempts at marginal interventions, though smaller in predicted effects, might be financially worthwhile.

US Workforce Development and Employer Tax Incentive Plans

There has been much talk recently about a skills gap in the United States. Even though unemployment is in the low 4% territory, there are still many jobs that companies seemingly can’t fill because the people applying for them may not have the skills necessary. But it raises an interesting question: Who is actually responsible for taking care of that gap? Peter Cappelli, Director of the Center for Human Resources and Professor of Management at the Wharton School and Host of In the Workplace, joins host Dan Loney on Knowledge@Wharton.

Investing in Human Capital: Who’s Responsible?

This seminar, presented by Peter Cappelli, will examine various aspects of workforce development: why employer investments in worker training have declined, including the role that tax treatments have played; wage trends; and the value of higher education for the American worker. Some attention also will be given to assessing the effect of the Work Opportunity Tax Credit and other incentive programs.
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There has been much discussion in recent years about a skills gap in the U.S., driven largely by employer complaints over filling jobs. The term “skills gap” can mean different things. Usually, it refers to a belief that there is something fundamentally lacking in the labor force. In the typical telling of the skills gap story, schools are failing to educate students effectively and are graduating students who do not have the skills employers need, thus creating a basic skills shortfall in the labor force as a whole. Others who talk about a skills gap really are referring to a skills shortage, meaning that at the current market price for labor, employers cannot hire the people they are looking for. The third sense of a gap entails a skills mismatch, and describes parts of the U.S.—for instance, North Dakota, when energy production there skyrocketed—where labor demand is booming but where people in the region do not have matching job skills. A skills gap, skills shortage, and skills mismatch are all different and theoretically could be going on all at once.