Heterogeneity in Income Tax Incidence: Are the Wages of Dangerous Jobs More Responsive to Tax Changes than the Wages of Safe Jobs?
AbstractIncome taxes distort the relationship between wages and non-taxable amenities. When the marginal tax rate increases, amenities become more valuable as the compensating differential for low-amenity jobs is taxed away. While there is evidence that the provision of amenities responds to taxes, the literature has ignored the consequences for job characteristics which cannot fully-adjust. This paper compares the wage response of dangerous jobs to the wage response of safe jobs. When tax rates increase, we should see the pre-tax compensating differential for on-the-job risk increase. Empirically, this paper finds large differences in the wage response of jobs based on their riskiness.
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Bibliographic InfoPaper provided by RAND Corporation Publications Department in its series Working Papers with number 706-1.
Length: 45 pages
Date of creation: Dec 2010
Date of revision:
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income taxes; value of a statistical life; tax incidence; compensating differentials;
Find related papers by JEL classification:
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
- J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-ACC-2011-02-12 (Accounting & Auditing)
- NEP-ALL-2011-02-12 (All new papers)
- NEP-LAB-2011-02-12 (Labour Economics)
- NEP-PBE-2011-02-12 (Public Economics)
- NEP-PUB-2011-02-12 (Public Finance)
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