IDEAS home Printed from https://ideas.repec.org/p/kee/keeldp/98-13.html
   My bibliography  Save this paper

Labour Supply and the Incidence of Income Tax on Wages

Author

Listed:
  • Paul Bingley
  • Gauthier Lanot

Abstract

In the simple framework of a static model for equilibrium wages and labour supplies, we show that the incidence of income tax on equilibrium wages can be measured independently from the individual labour supply elasticity. This extends recent work by Blundell, Duncan and Meghir (1998) and Eissa and Liebman (1996), who estimate labour supply elasticities, and Gruber (1997), who estimates tax incidence on earnings. Our measurements are based on a large multi-level longitudinal data set of Danish private sector establishments and workers. We show that, allowing for labour supply response, there is strong evidence for partial shifting of the burden of income tax from worker to employer. Higher marginal tax rates are associated with increases in gross wages and earnings.

Suggested Citation

  • Paul Bingley & Gauthier Lanot, 1998. "Labour Supply and the Incidence of Income Tax on Wages," Keele Department of Economics Discussion Papers (1995-2001) 98/13, Department of Economics, Keele University, revised Nov 1999.
    • Handle: RePEc:kee:keeldp:98/13
    as

    Download full text from publisher

    File URL: http://www.keele.ac.uk/depts/ec/wpapers/9813.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Åsa Hansson & Karin Olofsdotter, 2014. "Labor Taxation and FDI Decisions in the European Union," Open Economies Review, Springer, vol. 25(2), pages 263-287, April.
    2. Azmat, Ghazala Yasmeen, 2006. "The incidence of an earned income tax credit: evaluating the impact on wages in the UK," LSE Research Online Documents on Economics 19859, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    tax incidence; labour supply; matched employer-employee panel data.;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kee:keeldp:98/13. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Martin E. Diedrich (email available below). General contact details of provider: https://edirc.repec.org/data/dekeeuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.