The Tax They Pay May Be Your Own: Promotion, Taxes and Labour Supply
A model of labor supply is formulated in which increased effort results in an increase in the probability of promotion. A simple benchmark model is extended in two directions. The first emphasizes the link between labor supply and saving decisions. The other takes account of the interaction between workers via contests for promotion. A general insight the emerges from the analysis is that when studying the effects of wages and taxes on incentives to work, it is sometimes the after-tax incomes of other workers--in particular senior workers who have already been promoted--that are of crucial importance. Copyright 1994 by The editors of the Scandinavian Journal of Economics.
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Volume (Year): 96 (1994)
Issue (Month): 4 ()
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