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.
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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
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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.:
- 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 Cita.
- Nada Eissa & Hilary Hoynes, 2008. "Redistribution and Tax Expenditures: The Earned Income Tax Credit," NBER Working Papers 14307, National Bureau of Economic Research, Inc.
- repec:nbr:nberch:6795 is not listed on IDEAS
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