Advanced Search
MyIDEAS: Login to save this paper or follow this series

Equilibrium Search and Tax Credit Reform

Contents:

Author Info

  • Andrew Shephard

    (Princeton University)

Registered author(s):

    Abstract

    An empirical equilibrium job search model with wage posting is developed to analyze the labor market impact of UK tax reforms. The model allows for a rich characterization of the labor market, with hours responses, accurate representations of the tax and transfer system, and both worker and firm heterogeneity. The model is estimated with pre-reform longitudinal survey data using a semi-parametric estimation technique, and the impact of actual tax reform policies is simulated. The model predicts that the British Working Families’ Tax Credit and contemporaneous reforms increased employment, with equilibrium effects found to play a relatively minor role.

    Download Info

    If 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.
    File URL: http://www.princeton.edu/ceps/workingpapers/223shephard.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by Princeton University, Department of Economics, Center for Economic Policy Studies. in its series Working Papers with number 1336.

    as in new window
    Length:
    Date of creation: Sep 2011
    Date of revision:
    Handle: RePEc:pri:cepsud:223shephard

    Contact details of provider:
    Postal: Princeton, NJ 08544-1021
    Phone: (609) 258-5765
    Fax: (609) 258-5398
    Email:
    Web page: http://www.princeton.edu/~ceps/index.htm
    More information through EDIRC

    Related research

    Keywords: Labour market equilibrium; job search; wage dispersion; unemployment; monopsony; incidence; tax credits;

    Find related papers by JEL classification:

    References

    References listed on IDEAS
    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.:
    as in new window
    1. William M. Gentry & R. Glenn Hubbard, 2002. "The Effects of Progressive Income Taxation on Job Turnover," NBER Working Papers 9226, National Bureau of Economic Research, Inc.
    2. Jesse Rothstein, 2008. "The Unintended Consequences of Encouraging Work: Tax Incidence and the EITC," Working Papers, Princeton University, Department of Economics, Center for Economic Policy Studies. 1049, Princeton University, Department of Economics, Center for Economic Policy Studies..
    3. Bontemps, Christian & Robin, Jean-Marc & Van den Berg, Gerard J, 1999. "An Empirical Equilibrium Job Search Model with Search on the Job and Heterogeneous Workers and Firms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 1039-74, November.
    4. Thomas MaCurdy & David Green & Harry Paarsch, 1990. "Assessing Empirical Approaches for Analyzing Taxes and Labor Supply," Journal of Human Resources, University of Wisconsin Press, vol. 25(3), pages 415-490.
    5. Muriel Roger & Sébastien Roux, 2009. "Demande de travail et élasticité des heures au salaire," Discussion Papers (REL - Recherches Economiques de Louvain) 2009013, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    6. Ridder, Geert & van den Berg, Gerard J, 2003. "Measuring Labour Market Frictions: A Cross-Country Comparison," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3978, C.E.P.R. Discussion Papers.
    7. Jeremy Lise & Shannon Seitz & Jeffrey Smith, 2003. "Equilibrium Policy Experiments and the Evaluation of Social Programs," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers, University of Western Ontario, CIBC Centre for Human Capital and Productivity 20032, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
    8. Gadi Barlevy & H. N. Nagaraja, 2006. "Identification of Search Models with Initial Condition Problems," 2006 Meeting Papers, Society for Economic Dynamics 4, Society for Economic Dynamics.
    9. Jesse Rothstein, 2009. "Is the EITC as Good as an NIT? Conditional Cash Transfers and Tax Incidence," Working Papers, Princeton University, Department of Economics, Center for Economic Policy Studies. 1160, Princeton University, Department of Economics, Center for Economic Policy Studies..
    10. Albrecht, James & Axell, Bo, 1983. "An Equilibrium Model of Search Unemployment," Working Papers, C.V. Starr Center for Applied Economics, New York University 83-10, C.V. Starr Center for Applied Economics, New York University.
    11. Bulent Guler & Fatih Guvenen & Giovanni L. Violante, 2009. "Joint-search theory: new opportunities and new frictions," Staff Report, Federal Reserve Bank of Minneapolis 426, Federal Reserve Bank of Minneapolis.
    12. Ghazala Yasmeen Azmat, 2006. "The incidence of an earned income tax credit: evaluating the impact on wages in the UK," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 19859, London School of Economics and Political Science, LSE Library.
    13. Ghazala Azmat, 2006. "The Incidence of an Earned Income Tax Credit: Evaluating the Impact on Wages in the UK," CEP Discussion Papers dp0724, Centre for Economic Performance, LSE.
    14. Jolivet, Gregory & Postel-Vinay, Fabien & Robin, Jean-Marc, 2006. "The empirical content of the job search model: Labor mobility and wage distributions in Europe and the US," European Economic Review, Elsevier, Elsevier, vol. 50(4), pages 877-907, May.
    15. Bontemps, Christian & Robin, Jean-Marc & van den Berg, Gerard J, 2000. "Equilibrium Search with Continuous Productivity Dispersion: Theory and Nonparametric Estimation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(2), pages 305-58, May.
    16. Victor Chernozhukov & Ivan Fernandez-Val & Alfred Galichon, 2007. "Improving estimates of monotone functions by rearrangement," CeMMAP working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies CWP09/07, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    17. Hwang, Hae-shin & Mortensen, Dale T & Reed, W Robert, 1998. "Hedonic Wages and Labor Market Search," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 16(4), pages 815-47, October.
    18. Robert E. Hall & Alan B. Krueger, 2008. "Wage Formation between Newly Hired Workers and Employers: Survey Evidence," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 1095, Princeton University, Department of Economics, Industrial Relations Section..
    19. Gadi Barlevy, 2008. "Identification of Search Models using Record Statistics," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 29-64.
    20. Christensen, Bent Jesper & Mortensen, Dale & Neumann, George R. & Werwatz, Axel, 2000. "On the job search and the wage distribution," SFB 373 Discussion Papers 2000,108, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    21. Blau, David M, 1991. "Search for Nonwage Job Characteristics: A Test of the Reservation Wage Hypothesis," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 9(2), pages 186-205, April.
    22. Leigh Andrew, 2010. "Who Benefits from the Earned Income Tax Credit? Incidence among Recipients, Coworkers and Firms," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-43, May.
    23. Blundell, Richard William & Costa Dias, Monica & Meghir, Costas & Van Reenen, John, 2003. "Evaluating the Employment Impact of a Mandatory Job Search Programme," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3786, C.E.P.R. Discussion Papers.
    24. Bound, John, et al, 1994. "Evidence on the Validity of Cross-Sectional and Longitudinal Labor Market Data," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 12(3), pages 345-68, July.
    25. repec:fth:stanho:e-90-11 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

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

    Cited by:
    1. Hanming Fang & Naoki Aizawa, 2012. "Equilibrium Labor Market Search and Health Insurance Reform," 2012 Meeting Papers, Society for Economic Dynamics 959, Society for Economic Dynamics.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:pri:cepsud:223shephard. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Long).

    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.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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