The Policy Elasticity
AbstractThis paper illustrates how one can use causal effects of a policy change to measure its welfare impact without decomposing them into income and substitution effects. Often, a single causal effect suffices: the impact on government revenue. Because these responses vary with the policy in question, I term them policy elasticities, to distinguish them from Hicksian and Marshallian elasticities. The model also formally justifies a simple benefit-cost ratio for non-budget neutral policies. Using existing causal estimates, I apply the framework to five policy changes: top income tax rate, EITC generosity, food stamps, job training, and housing vouchers.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19177.
Date of creation: Jun 2013
Date of revision:
Note: DEV HC HE LS PE
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Find related papers by JEL classification:
- D6 - Microeconomics - - Welfare Economics
- H0 - Public Economics - - General
- I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-05 (All new papers)
- NEP-PBE-2013-07-05 (Public Economics)
- NEP-REG-2013-07-05 (Regulation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nada Eissa & Hilary Hoynes, 2008.
"Redistribution and Tax Expenditures: The Earned Income Tax Credit,"
NBER Working Papers
14307, National Bureau of Economic Research, Inc.
- Eissa, Nada & Hoynes, Hilary, 2011. "Redistribution And Tax Expenditures: The Earned Income Tax Credit," National Tax Journal, National Tax Association, vol. 64(2), pages 689-729, June.
- Jacob Fishman & V. Kerry Smith, 2013. "A Direct Test of the “Explanation” for Incomplete Stratification in Vertical Sorting Models," NBER Working Papers 19387, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.