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
AEJPol-2010-0115_data			08/03/2019 11:04:AM
LICENSE.txt	text/plain	14.6 KB	08/03/2019 07:04:AM

Project Citation:

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:
      H31 Household
      J31 Wage Level and Structure • Wage Differentials
      J24 Human Capital • Skills • Occupational Choice • Labor Productivity
      H24 Personal Income and Other Nonbusiness Taxes and Subsidies
      J22 Time Allocation and Labor Supply

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V1 [2019-08-03]

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