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Labor Supply Response to Income Tax Information: Divergence between Stated and Revealed Preferences

Author

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  • Jun Takahashi
  • Yoshiyuki Nakazono
  • Kento Tango

Abstract

Complex tax incentives, such as means-tested tax transfers, are known to distort labor supply decisions (Chetty and Saez, 2013). This study conducts a randomized experiment to examine whether providing information about income taxation induces individuals to change their labor supply. The results show that tax information provision increases stated annual earnings by an average of 0.9%, and raises the probability of planning to earn above the threshold by 4.3%. However, this increase in stated intentions does not translate into actual labor supply, as revealed by the end-of-year follow-up survey. The findings suggest that while information can correct misconceptions and shift intentions, entrenched behavioral norms tied to institutional thresholds, together with psychological frictions, may limit the effectiveness of such interventions in changing actual behavior.

Suggested Citation

  • Jun Takahashi & Yoshiyuki Nakazono & Kento Tango, 2026. "Labor Supply Response to Income Tax Information: Divergence between Stated and Revealed Preferences," TUPD Discussion Papers 86, Graduate School of Economics and Management, Tohoku University.
    • Handle: RePEc:toh:tupdaa:86
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