Replication data for: Income Taxes, Compensating Differentials, and Occupational Choice: How Taxes Distort the Wage-Amenity Decision

Principal Investigator(s): View help for Principal Investigator(s) David Powell; Hui Shan

Name	File Type	Size	Last Modified
1981			10/13/2019 07:05:AM
1982			10/13/2019 07:04:AM
1983			10/13/2019 07:04:AM
1984			10/13/2019 07:04:AM
1985			10/13/2019 07:05:AM
1986			10/13/2019 07:04:AM
1987			10/13/2019 07:04:AM
1988			10/13/2019 07:04:AM
1989			10/13/2019 07:05:AM
1990			10/13/2019 07:05:AM

Project Description

Summary: The link between taxes and occupational choices is central for understanding the welfare impacts of income taxes. Just as taxes distort the labor-leisure decision, they may also distort the wage-amenity decision. Yet, there have been few studies on the full response along this margin. When tax rates increase, workers favor jobs with lower wages and more amenities. We introduce a two-step methodology which uses compensating differentials to characterize the tax elasticity of occupational choice. We estimate a significant compensated elasticity of 0.03, implying that a 10 percent increase in the net-oftax rate causes workers to change to a 0.3 percent higher wage job. (JEL H24, H31, J22, J24, J31)

Scope of Project

JEL Classification:
      H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
      H31 Fiscal Policies and Behavior of Economic Agents: Household
      J22 Time Allocation and Labor Supply
      J24 Human Capital; Skills; Occupational Choice; Labor Productivity
      J31 Wage Level and Structure; Wage Differentials

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V1 [2019-10-13]

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