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Millionaires or Job Creators: What Really Happens to Employment Growth When You Stick It to the Rich?

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  • Ahiteme N. Houndonougbo
  • Matthew N. Murray

Abstract

We provide empirical evidence on the consequences of relatively higher tax burdens on the rich for aggregate employment growth using a newly constructed time series for 1947 through 2011 derived from the US Statistics of Income. In response to shifts in the relative federal tax burden toward the rich, we find statistically significant positive effects on employment growth in the short run and some evidence of negative effects on employment growth in the long run. Among our robustness checks, we use the Romer and Romer narrative record analysis to restrict our sample to a period of exclusively exogenous tax changes. The results hold in the restricted sample and are also consistent across alternative specifications and estimation methods, including unrestricted and Bayesian vector autoregressive.

Suggested Citation

  • Ahiteme N. Houndonougbo & Matthew N. Murray, 2019. "Millionaires or Job Creators: What Really Happens to Employment Growth When You Stick It to the Rich?," Public Finance Review, , vol. 47(1), pages 112-141, January.
    • Handle: RePEc:sae:pubfin:v:47:y:2019:i:1:p:112-141
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    Cited by:

    1. Sohani Fatehin & David L. Sjoquist, 2021. "State and Local Taxes and Employment by Wage Level," Economic Development Quarterly, , vol. 35(1), pages 53-65, February.

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