Institutional Affiliation: Uppsala Universitet
|On Bunching and Identification of the Taxable Income Elasticity|
with , , : w24136
The taxable income elasticity is a key parameter for predicting the effect of tax reform or designing an income tax. Bunching at kinks and notches in a single budget set have been used to estimate the taxable income elasticity. We show that when the heterogeneity distribution is unrestricted the amount of bunching at a kink or a notch is not informative about the size of the taxable income elasticity, and neither is the entire distribution of taxable income for a convex budget set. Kinks do provide information about the size of the elasticity when a priori restrictions are placed on the heterogeneity distribution. They can identify the elasticity when the heterogeneity distribution is specified across the kink and provide bounds under restrictions on the heterogeneity distribution. We also...
in Public Policy and Retirement, Trans-Atlantic Public Economics Seminar (TAPES), Sören Blomquist and Roger Gordon, organizers
|Tax Reform Evaluation Using Nonparametric Methods: Sweden 1980 - 1991|
with Matias Eklof, Whitney Newey: w6759
This paper evaluates the tax reforms carried out in Sweden between 1980 and 1991. We use a recently developed nonparametric estimation technique to account for labor supply responses. We decompose the tax returns to study how the separate components influence hours of work, tax revenues distribution. The results indicate that the reform was underfinanced and that the increased indirect taxation and redesigned transfer system almost eliminated the positive effects on hours of work due to the decreased marginal taxes on labor income. Further the predictions of a parametric estimated labor supply model. The responses of the parametric model is almost twice the size of the nonparametric.
Published: Blomquist, Soren, Matias Eklof and Whitney Newey. "Tax Reform Evaluation Using Non-Parametric Methods: Sweden 1980-1991," Journal of Public Economics, 2001, v79(3,Mar), 543-568. citation courtesy of