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Effects of Tax Reform on Labor Supply, Investment, and Saving

Author

Listed:
  • Barry Bosworth
  • Gary Burtless

Abstract

The U.S. tax system received two major overhauls during the 1980s: the tax cuts of 1981 and the Tax Reform Act of 1986. Supporters of both reforms argued that major changes in tax policy could boost saving, investment, labor supply, and entrepreneurship. Eventually, it was argued, such changes could reverse the slowdown in economic growth that began in the early 1970s and spur improvements in American living standards. The aim of this paper is to assess whether the goals of increased labor supply and capital formation were achieved.

Suggested Citation

  • Barry Bosworth & Gary Burtless, 1992. "Effects of Tax Reform on Labor Supply, Investment, and Saving," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 3-25, Winter.
    • Handle: RePEc:aea:jecper:v:6:y:1992:i:1:p:3-25
    Note: DOI: 10.1257/jep.6.1.3
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.6.1.3
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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