Researcher introduction: Florian Buhlmann
We interviewed visiting researcher Florian Buhlmann for our researcher introduction series. Read the text below to see what Florian is working on.
Please introduce yourself
I’m Florian Buhlmann, a postdoctoral researcher from ZEW Mannheim. My career in Economics began at the University of Bonn, where I completed both my bachelor’s and master’s degree. I also studied abroad for a semester in Paris at the ENSAE. After finishing my master's degree, I went to the University of Mannheim to do my PhD. During that time, I joined ZEW and visited MIT in Boston. Broadly speaking my research belongs to the field of public economics. Taxes and income taxes are my specialty.
What kind of research are you currently working on?
In the paper that I presented here at VATT, we look at whether top income taxes affect firms through their CEOs. Stock market firms put a lot of effort into designing financial incentives for their CEOs. However, if taxes are changed, then these incentives might get distorted. What we find is that, if income taxes for CEOs increase, then the return on assets of their firms goes down. Consistent with the effect stemming from CEOs reducing their effort, we find that they are also less likely to reach their performance goals and more likely to engage in activity outside of their own board.
Which research projects will you be working on next?
In the CEO project, we looked at the very top of the wage distribution. I also work on a project where we look at the bottom of the wage distribution. We study a means tested benefits program in Germany with very high transfer withdrawal rates. The recipient’s effective marginal tax rates are very high, if they earn additional income – up to 100 percent. We plan to study how recipients of this benefit respond to the high withdrawal rate. In particular, we study labor supply decisions and want to estimate how much the design of the system traps recipients permanently into welfare.
Which question on economics would you like to answer to right now and why this particular question?
Outside my own field, I would like to know how to optimally design policies to reduce carbon dioxide emissions. In an ideal world, you could set a price (if you had only one country in the world). By setting an emission limit for firms and auctioning licenses, the price would adjust accordingly. But, the real world is much more complex. For example, if all countries don’t adopt the same pricing scheme, firms can just shift their carbon dioxide intensive productions to different countries. And even if you deal with that problem, setting a price on carbon could cost a lot of welfare because firms need time to adjust e.g., by building new plants. In addition, a large burden might be put on low-income earners.
Moreover, there are challenges in the measuring of carbon dioxide emissions, other environmental tradeoffs as well as problems related to political economy political economy. So, the question is how to design optimal policies given all these problems, so that the money we spend is used efficiently and negative side effects are avoided as much as possible.
What is it about carbon pricing in general that interests you?
It has a lot to do with the political implementation process. If I look at this from the German perspective, I think we have been trying to transition to renewable energy for a quite a while now. But the current war in Ukraine shows just how much we still depend on fossil energy sources. We have spent a lot of money on the energy transition, and I am wondering whether we did this efficiently or not. If not, how could we be more efficient?