The Effect of Anticipated Tax Changes on Intertemporal Labor Supply and the Realization of Taxable Income

W. Looney and Monica Singhal

No 12417, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We use anticipated changes in tax rates associated with changes in family composition to estimate intertemporal labor supply elasticities and elasticities of taxable income with respect to the net-of-tax wage rate. Changes in the ages of children can affect marginal tax rates through provisions of the tax code that are tied to child age and dependent status. We identify behavioral responses to these tax changes by comparing families who experienced a tax rate change to families who had a similar change in dependents but no resulting tax rate change. A primary advantage of our approach is that these changes can be anticipated, allowing us to estimate substitution effects that are not confounded by life-cycle income effects. We estimate an intertemporal elasticity of family labor earnings of 0.75 for families earning between $35,000 and $85,000 in the Survey of Income and Program Participation (SIPP) and find very similar estimates using the IRS-NBER individual tax panel.

JEL-codes: H2 H31 J22 (search for similar items in EconPapers)
Date: 2006-08
New Economics Papers: this item is included in nep-pbe and nep-pub
Note: LS PE
References: Add references at CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
http://www.nber.org/papers/w12417.pdf (application/pdf)

Related works:
Working Paper: The Effect of Anticipated Tax Changes on Intertemporal Labor Supply and the Realization of Taxable Income (2006)
Working Paper: The effect of anticipated tax changes on intertemporal labor supply and the realization of taxable income (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:12417

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w12417

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().