Free online coursePublic Economics: Taxation, Social Insurance, Public Goods and Corporate Tax Policy
Duration of the online course: 32 hours and 4 minutes
New
Free Harvard course on public economics: taxation, tax incidence, optimal tax design, social insurance, public goods, externalities, and corporate tax policy.
In this free course, learn about
Foundations of Public Economics
Tax Incidence: Theory and Evidence
Efficiency Costs of Taxation
Optimal Taxation and Redistribution
Income Taxation and Labor Supply
Social Insurance: Unemployment, Disability, and Insurance Markets
Public Goods, Externalities, and Behavioral Public Finance
Corporate Tax Policy
Course Description
Public Economics: Taxation, Social Insurance, Public Goods and Corporate Tax Policy is a free online course from Harvard University that explores how governments raise revenue, design safety nets, and respond to market failures. It provides a rigorous yet practical framework for evaluating public policy with economic tools used in business, marketing strategy, and public-sector decision-making.
Learn how tax burdens are distributed across consumers, workers, and firms, and why legal responsibility for a tax can differ from who ultimately pays. Dive into the efficiency costs of taxation and the trade-offs policymakers face when balancing revenue needs with economic growth, incentives, and fairness.
The course also examines optimal taxation and income taxation, focusing on how taxes shape labor supply decisions and behavior. You will build intuition for evaluating reforms using concepts like incidence, deadweight loss, and behavioral responses, helping you interpret real-world policy debates more clearly.
Move beyond taxes to understand social insurance, including the economic rationale for programs that protect against risk and income shocks. Then study public goods and externalities to see when markets underprovide essential goods or overproduce harmful activities, and how policy can improve outcomes.
Finally, explore corporate tax policy, including how corporate taxes affect investment, wages, and competitiveness, and how policy design can influence firm behavior. By the end, you will be better equipped to analyze taxation and public policy questions with clarity and confidence.
Course content
Video class: Topic 1: Introduction | Economics 2450A: Public Economics57m
Exercise: Which set of conditions is required for the private market outcome to be Pareto efficient according to the first welfare theorem?
Video class: Topic 2: Tax Incidence Part 1 | Economics 2450A: Public Economics1h20m
Exercise: In a standard competitive partial-equilibrium model, what mainly determines who bears more of a commodity tax (economic incidence)?
Video class: Topic 2: Tax Incidence Part 2 | Economics 2450A: Public Economics1h17m
Exercise: In a difference-in-differences (DD) study of state cigarette tax changes, what is the key identifying assumption needed to interpret the DD estimate causally?
Video class: Topic 2: Tax Incidence Part 3 | Economics 2450A: Public Economics1h24m
Exercise: In an open-economy model with highly mobile capital and immobile labor, who bears the burden of a small country’s capital tax?
Video class: Topic 3: Efficiency Cost of Taxation Part 1 | Economics 2450A: Public Economics1h06m
Exercise: Under what condition is the Marshallian surplus triangle a valid welfare measure for the efficiency cost of a tax?
Video class: Topic 3: Efficiency Cost of Taxation Part 2 | Economics 2450A: Public Economics1h17m
Exercise: In a setting with pre-existing taxes in other markets, why can a single-market Harberger deadweight loss calculation be highly misleading for a small new tax (e.g., a small gasoline tax)?
Video class: Topic 3: Efficiency Cost of Taxation Part 3 | Economics 2450A: Public Economics1h13m
Exercise: In public economics, what best characterizes a reduced form approach compared with sufficient-statistic methods?
Video class: Topic 4: Optimal Taxation Part 1 | Economics 2450A: Public Economics1h20m
Exercise: In the Ramsey approach to optimal commodity taxation, why is the assumption that at least one commodity cannot be taxed important?
Video class: Topic 4: Optimal Taxation Part 2 | Economics 2450A: Public Economics1h03m
Exercise: In the Laffer-curve calculation with a constant linear tax rate, what is the revenue-maximizing tax rate when taxable income has an uncompensated elasticity ε with respect to the net-of-tax rate (1−t)?
Video class: Topic 4: Optimal Taxation Part 3 | Economics 2450A: Public Economics55m
Exercise: When is a work subsidy like the Earned Income Tax Credit (EITC) more likely to be optimal in an optimal tax model with labor supply responses?
Video class: Topic 5: Income Taxation and Labor Supply part 1 | Economics 2450A: Public Economics1h27m
Exercise: Why do modern empirical studies often use tax reforms as instruments when estimating labor supply elasticities?
Video class: Topic 5: Income Taxation and Labor Supply part 2 | Economics 2450A: Public Economics1h15m
Exercise: What is the main reason the electricity evidence suggests that lack of bunching at kinks is not primarily due to a small structural elasticity?
Video class: Topic 5: Income Taxation and Labor Supply part 3 | Economics 2450A: Public Economics1h16m
Exercise: Why can a temporary one-year elimination of income taxes generate an especially large estimated labor supply elasticity?
Video class: Topic 5: Income Taxation and Labor Supply part 4 | Economics 2450A: Public Economics59m
Exercise: Why do many modern public finance studies focus on estimating taxable income elasticities rather than hours-work elasticities?
Video class: Topic 5: Income Taxation and Labor Supply part 5 | Economics 2450A: Public Economics57m
Exercise: How does the size of a price (or tax) change affect the ability to infer the structural elasticity when small frictions are present?
Video class: Topic 6: Social Insurance Part 1 | Econ2450A: Public Economics1h22m
Exercise: In the Rothschild–Stiglitz model with asymmetric information about risk types, what typically happens in a separating equilibrium?
Video class: Topic 6: Social Insurance Part 2 | Econ2450A: Public Economics1h01m
Exercise: In the second-best optimal unemployment insurance problem, what key trade-off determines the optimal benefit level?
Video class: Topic 6: Social Insurance Part 3 | Econ2450A: Public Economics1h12m
Exercise: In the moral hazard vs. liquidity framework for unemployment insurance, what does the liquidity effect capture?
Video class: Topic 6: Social Insurance Part 4 (Guest Lecture) | Econ2450A: Public Economics1h21m
Exercise: What is the positive correlation test commonly used to detect in insurance markets?
Video class: Topic 6: Social Insurance Part 5 | Econ2450A: Public Economics58m
Exercise: In a regression discontinuity (RD) study of unemployment benefit extensions, what feature identifies the causal effect of eligibility on unemployment duration?
Video class: Topic 6: Social Insurance Part 6 | Econ2450A: Public Economics1h20m
Exercise: Why is screening (and related hassle costs/waiting periods) especially important in disability insurance (DI) compared with unemployment insurance (UI)?
Video class: Topic 7: Public Goods and Externalities Part 1 | Econ2450A: Public Economics59m
Exercise: Under uncertainty about pollution abatement costs, what determines whether a price instrument (tax) or a quantity instrument (cap) is preferred?
Video class: Topic 7: Public Goods and Externalities Part 2 | Econ2450A: Public Economics1h05m
Exercise: Why can automatic enrollment in retirement plans increase 401(k) participation without changing anyone’s budget set?
Video class: Topic 7: Public Goods and Externalities Part 3 | Econ2450A: Public Economics1h15m
Exercise: In the model of a pure public good, what does the Samuelson rule state at the Pareto-efficient allocation?
Video class: Topic 8: Corporate Taxation Part 1 | Economics 2450A: Public Economics27m
Exercise: In the new view (cash-rich, internally financed) model of corporate taxation, which tax change affects the firm’s investment decision?
Video class: Topic 8: Corporate Taxation Part 2 | Economics 2450A: Public Economics1h17m
Exercise: Why have U.S. corporate tax revenues fallen sharply as a share of GDP even though the statutory corporate tax rate has changed little?
Video class: Topic 8: Corporate Taxation Part 3 | Economics 2450A: Public Economics1h15m
Exercise: How can the effective (marginal) tax rate on dividends be inferred when investors face different dividend tax rates?
Video class: Topic 8: Corporate Taxation Part 4 | Economics 2450A: Public Economics34m
Exercise: Under a worldwide tax system with deferral, what incentive does taxing repatriations at the difference between the foreign tax rate and the domestic corporate rate create?
