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Taxation and the Labor Supply: Decisions of the Affluent

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  • Robert A. Moffitt
  • Mark Wilhelm

Abstract

We examine the effect of the 1996 Tax Reform Act on the labor supply of affluent men. The Act reduced marginal tax rates for the affluent more than for other taxpayers. Using instrumental-variables methods with a variety of identifying variables, we find essentially no responsiveness of the hours of work of high-income men to the tax reduction. However, we do find hourly wage rates of such men to have increased over the period.

Suggested Citation

  • Robert A. Moffitt & Mark Wilhelm, 1998. "Taxation and the Labor Supply: Decisions of the Affluent," NBER Working Papers 6621, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:6621
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    References listed on IDEAS

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    1. Robert A. Moffitt, 1972. "The Labor Supply Response in the Gary Experiment," Journal of Human Resources, University of Wisconsin Press, vol. 7(4), pages 477-487.
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    6. Triest, Robert K, 1992. "The Effect of Income Taxation on Labor Supply when Deductions Are Endogenous," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 91-99, February.
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    8. Showalter, Mark H. & Thurston, Norman K., 1997. "Taxes and labor supply of high-income physicians," Journal of Public Economics, Elsevier, vol. 66(1), pages 73-97, October.
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    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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