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.
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.
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:
Contact details of provider:
Postal: 1776 Main Street, P.O. Box 2138, Santa Monica, California 90407-2138
Web page: http://www.rand.org/pubs/
More information through EDIRC
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)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- David Powell & Hui Shan, 2012.
"Income Taxes, Compensating Differentials, and Occupational Choice: How Taxes Distort the Wage-Amenity Decision,"
American Economic Journal: Economic Policy,
American Economic Association, vol. 4(1), pages 224-47, February.
- David Powell & Hui Shan, 2010. "Income Taxes, Compensating Differentials, and Occupational Choice: How Taxes Distort the Wage-Amenity Decision," Working Papers 705-1, RAND Corporation Publications Department.
- Hui Shan & David Powell, 2010. "Income taxes, compensating differentials, and occupational choice: how taxes distort the wage-amenity decision," Finance and Economics Discussion Series 2010-04, Board of Governors of the Federal Reserve System (U.S.).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Benson Wong).
If references are entirely missing, you can add them using this form.