This paper analyzes the effects of dividend tax reforms on tax revenues, income shifting, and earnings retention. It examines two significant policy changes in Israel during the 2010s. Using administrative tax records, we study a permanent five-percentage point increase in the dividend tax rate in 2012, and a temporary tax relief enacted in 2017. The permanent tax hike triggered an immediate surge of over 100% in reported dividend income and tax revenues. It did not generate a lasting shift in dividend flows. In contrast, the temporary relief of 2017 led to a sharp decline in dividend payments upon its expiration. Notably, firms increased earnings retention after the preferential rate ended, potentially anticipating similar future relief. We also find evidence of income shifting via wage-to-dividend conversions for tax planning. Finally, increased earnings retention after 2017 produced a 1- 2 percentage point downward bias in the top 1% income share due to unreported dividend income.

We use response curves in a repeated game to analyze key aspects of mutual deterrence: escalation, de-escalation, incomplete deterrence, and deterrence by denial. In this approach, episodes of violence are due to interacting response curves, which disincentivize opponents from attacking through both deterrence and compellence. Both sides punish attacks to maintain credibility in future episodes, disincentivizing larger attacks and yielding nonviolent lulls. We empirically estimate those curves using detailed incident data from the Israel-Gaza conflict between 2007 and 2017. Our estimates match the dynamics of the raw data: very frequent episodes of low lethality violent exchange. Response curves are stable and probably Markovian. They exhibit a posture consistent with incomplete deterrence: i.e., episodes de-escalate, but to a violent equilibrium. Israeli missile defense shifts the Gazan response curve to a less aggressive posture, as predicted by theory.

This paper studies the long-term effects of politically motivated violence on individuals’ political attitudes focusing on the Second Intifada (2000 – 2005). We conduct a large-scale survey that measures Israelis’ attitudes today and elicits their places of residence since 1985. The survey allows us to measure individuals’ direct exposure to terrorism and to account for potential selective migration. This, in combination with the fact that individuals’ characteristics are balanced with respect to their exposure to terrorism, enables us to overcome identification concerns and provide credible estimates of the causal effects of the Intifada on attitudes. The results indicate that exposure to terrorism during the Second Intifada caused a persistent and substantial shift toward right-wing attitudes that is still observable two decades later. Thus, our analysis provides systematic empirical evidence supporting the view that the Second Intifada soured a generation of Israelis on the idea of peace.

This paper assesses the validity of narrow deterrence theory between a State and a Non-State actor in the context of the Israel and Gaza conflict.  We build the most comprehensive data set on this conflict between 2007 and 2014 using original security reports from the United Nations, which capture over 16,000 Palestinian projectile launches and over 8,800 Israeli airstrikes, recorded with precise timing. We show that this conflict is characterized by short-lived episodes of violence separated by quiet interludes. Episodes tend to last less than one day and are followed by 3.5 days of calm, on average. Most episodes have no retaliation and consist only of provocations that go unanswered. Moreover, counter-retaliation does not induce subsequent episodes. We find that Israeli retaliation strongly correlates with Gazans’ initial number of attacks and type of rockets fired. Yet, rather than provoking an immediate increase in violence or de-escalation, retaliation seems to have no short-term effect. These findings support the concept of narrow deterrence and weigh heavily against the argument that retaliation perpetuates this conflict.

Conflict points around the world involve government forces fighting terrorist groups. In this type of warfare, there is a danger that counterterrorist efforts may backfire, providing ammunition for additional cycles of violence. We study this issue focusing on selective and indiscriminate house demolitions employed by Israel during the Second Intifada. We exploit the temporal and spatial variation of this policy to assess its impact on Palestinians’ political views. We find that the civilian population does not react to punitive house demolitions, a selective form of counterterrorism. On the contrary, Palestinians are more likely to adopt more radical political opinions in response to precautionary house demolitions, an indiscriminate form of counterterrorism. We also show that political radicalization induced by indiscriminate counterterrorism leads to an increase in future terror attacks. Overall, our analysis provides explicit empirical support to the mechanism behind the positive correlation between indiscriminate counterterrorism and future levels of violence.

This paper provides the first systematic analysis of the link between economic, political, and social conditions and the global phenomenon of ISIS foreign fighters. We find that poor economic conditions do not drive participation in ISIS. In contrast, the number of ISIS foreign fighters is positively correlated with a country's GDP per capita and Human Development Index (HDI). In fact, many foreign fighters originate from countries with high levels of economic development, low income inequality, and highly developed political institutions. Other factors that explain the number of ISIS foreign fighters are the size of a country's Muslim population and its ethnic homogeneity. Although we cannot directly determine why people join ISIS, our results suggest that the flow of foreign fighters to ISIS is driven not by economic or political conditions but rather by ideology and the difficulty of assimilation into homogeneous Western countries. These conclusions are consistent with those of the related qualitative literature that relies on the personal profiles of a small and selected sample of ISIS foreign fighters.

This paper focuses on the centralization program implemented in Israel in 2004 to analyze whether the administrative subordination of municipalities is an effective policy to deal with problems related to soft-budget constraint of lower level governments.  The results consistently show, for different specifications and samples of municipalities, that this program brought a substantial decrease of municipalities’ expenditures (mostly because of decreases on salary payments), and an increase of local property tax collection.  Our analysis shows that all of the fiscal impact of the program is due to the appointment of an accountant that reports directly to the central government, a relatively mild form of administrative subordination.  In contrast, more intrusive forms of subordination, like the central imposition of a recovery program, do not result in any substantial improvement of municipalities’ fiscal situation.  This leads us to conclude that a mild form of administrative subordination is an effective tool to cope with problems related to soft-budget constraints, whereas political subordination is not an effective tool to reach that goal.

This paper investigates whether the 9/11 attacks affected the assimilation rate of Muslims in the United States.  Terror attacks by Islamic groups are likely to induce a backlash against Muslims, thereby raising their costs of assimilation. We find that Muslim immigrants living in states with the sharpest increase in hate crimes also exhibit: (i) greater chances of marrying within their own ethnic group; (ii) higher fertility; (iii) lower female labour force participation; and (iv) lower English proficiency. These findings shed light on the increasing use of terror and concurrent rise in social tensions surrounding Muslim immigrants in the West.

This paper investigates whether attacks against Israeli targets help Palestinian factions gain public support.  We link individual level survey data to the full list of Israeli and Palestinian fatalities during the period of the Second Intifada (2000-2005), and estimate a flexible discrete choice model for faction supported.  We find some support for the “outbidding” hypothesis, the notion that Palestinian factions use violence to gain prestige and influence public opinion within the community.  In particular, the two leading Palestinian factions, Hamas and Fatah, gain in popularity following successful attacks against Israeli targets.  Our results suggest, however, that most movement occurs within either the secular groups or within the Islamist groups, but not between them.  That is, Fatah’s gains come at the expense of smaller secular factions while Hamas’ gains come at the expense of smaller Islamic factions and the disaffected.  In contrast, attacks by the Palestinian Islamic Jihad lower support for that faction.

This study investigates the effect of candidates’ expenditure on elections’ results focusing on run-off elections’ data. Our analysis, based on all run-off municipal elections in Israel between 1993 and 2008, shows that candidates’ share of the vote is not substantially affected by their campaign spending. This outcome contradicts recent results showing that, in a developing country where voting is compulsory, campaign expenditures have a significant effect on vote shares. Yet, it is in line with the evidence of earlier studies based on developed countries showing that the effect of campaign spending is limited. This leads us to suggest that campaign spending may be effective in developing countries with consolidating democracies because compulsory voting forces the relative poor population to turn out and vote, and this population is relatively more impressionable by campaign spending on media advertisements. 

This paper examines whether house demolitions are an effective counterterrorism tactic against suicide terrorism. We link original longitudinal micro-level data on houses demolished by the Israeli Defense Forces with data on the universe of suicide attacks against Israeli targets. By exploiting spatial and time variation in house demolitions and suicide attacks during the second Palestinian uprising, we show that punitive house demolitions (those targeting Palestinian suicide terrorists and terror operatives) cause an immediate, significant decrease in the number of suicide attacks. In contrast, Palestinian fatalities do not have a consistent effect on suicide terror attacks, while curfews and precautionary house demolitions (demolitions justified by the location of the house but unrelated to the identity of the house's owner) cause a significant increase in the number of suicide attacks. The results support the view that selective violence is an effective tool to combat terrorist groups and that indiscriminate violence backfires.