Taxation and Aggregate Factor Supply: Preliminary Estimates
This paper extends the analysis of aggregate factor supply to a model which accounts simultaneously for the consumption/saving and labor/leisure choices. A translog utility maximization model is used to derive the set of consumption and leisure demand equations; these in turn are estimated on U.S. aggregate time series data. The empirical results are striking: we estimate (quite precisely) substantial own and cross price elasticities for current and future consumption and labor supply. The implied interest elasticity of saving is approximately 0.4.The results suggest that previous studies of labor supply and/or consumption which have ignored cross-price effects are mis-specified. We also strongly reject the hypothesis that implicit social security had no effect on factor supply.
|Date of creation:||Dec 1977|
|Date of revision:|
|Publication status:||published as Boskin, Michael J. and Lawrence J. Lau. "Taxation and Aggregate Factor Supply: Preliminary Estimates." U.S. Treasury Compendium of Tax Research, 1978.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
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.:
- Sandmo, Agnar & Dreze, Jacques H, 1971. "Discount Rates for Public Investment in Closed and Open Economies," Economica, London School of Economics and Political Science, vol. 38(152), pages 395-412, November.
- Feldstein, Martin & Liebman, Jeffrey B., 2002.
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324
- Stiglitz, Joseph E & Boskin, Michael J, 1977.
"Some Lessons from the New Public Finance,"
American Economic Review,
American Economic Association, vol. 67(1), pages 295-301, February.
- Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-94, July.
- Barro, Robert J., 1974.
"Are Government Bonds Net Wealth?,"
3451399, Harvard University Department of Economics.
- Rosen, Harvey S, 1976. "Tax Illusion and the Labor Supply of Married Women," The Review of Economics and Statistics, MIT Press, vol. 58(2), pages 167-72, May.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0221. 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: ()
If references are entirely missing, you can add them using this form.