Working Papers

• Behavioral Responses to Tax Systems: Evidence from Costa Rica's Corporate Tax Reform (with Jonathan Garita) Draft here

Heinz König Award 2025, 3rd prize, by the ZEW – Leibniz Centre for European Economic Research

Abstract: This paper examines firms' behavioural responses to Costa Rica’s 2019 corporate tax reform, which reduced the system’s distortions but decreased simplicity. Using 2016–2023 corporate tax return data and a difference-in-differences design, we analyse how firms adjusted to rich tax changes. Our descriptive analysis suggests that the reform reduced revenue and cost manipulation, previously evident in bunching around revenue thresholds and profit margin discontinuities. Furthermore, our causal findings reveal two key patterns. First, firms responded asymmetrically, reacting more strongly to tax cuts than increases, suggesting reported profits are downward sticky due to audit risks and evasion costs. Second, firms’ intensive margin responses were driven by marginal rather than average tax rates, contrasting with previous evidence showing that individuals misinterpret and over-simplify tax schedules. These findings align with profit-maximisation theory and suggest that well-communicated tax reforms can enhance efficiency without increasing compliance errors, even at the cost of reduced simplicity.

Work in Progress

• Low-Earning Workers and Social Security: Evidence from Costa Rica’s Contributions Reform (with Laura Abramovsky and Jonathan Garita).  Draft coming soon!

• Import Tax Evasion, Drivers and Recommendations for Tanzania (with Rufina Milamo).  

• Informality and Taxation: Evidence from a VAT Tax Base Expansion.

Publications

• Climate change perceptions and adaptive responses of small-scale farmers in two Guatemalan landscapes. Agronomía Centroamericana, 30 (2) (with Bárbara Viguera, Francisco Alpízar, Celian Harvey, Ruth Martínez-Rodríguez and Milagro Saborío-Rodríguez).

Policy Work

• Desarrollo de una propuesta metodológica y de una hoja de ruta para la medición de los recursos destinados a la niñez y adolescencia en Costa Rica: principales resultados del proyecto, UCR and UNICEF, 2020 (with Juan Robalino and Luis Oviedo) Document here.

• Impacto económico del impuesto al plástico, UCR and UNDP, 2019 (with Juan Robalino, Rudolf Lucke, and Luis Oviedo) Document here.

• Perspectivas de la energía eólica en Costa Rica: estado, retos y oportunidades, UCR, 2017 (with Pablo Sauma) Document here.