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Taxes, Fringe Benefits, and Faculty

The growth of employee benefits in academe has closely paralleled their economy-wide growth. This study estimates a complete system describing the demand for benefits and wages using panel data on nearly 1500 institutions of higher learning. The demand for benefits is quite responsive both to changes in real income and to variations in the tax price of benefits. These conclusions are robust with respect to varying definitions of the sample aid of the tax price. They are not altered by estimates that account for unmeasured individual effects on demand. Simulations using the estimates suggest that the Tax Reform Act of 1986 sharply reduced the demand for benefits. Extrapolating the impact to the entire economy suggests that the annual flow of compensation shifted away from benefits by at least $9 billion.

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Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number saw1992.

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Handle: RePEc:upj:weupjo:saw1992
Note: Appears in Review of Economics and Statistics 74(2): 287-296
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  1. Ichniowski, Casey & Freeman, Richard B & Lauer, Harrison, 1989. "Collective Bargaining Laws, Threat Effects, and the Determination of Police Compensation," Journal of Labor Economics, University of Chicago Press, vol. 7(2), pages 191-209, April.
  2. Debra A. Barbezat, 1989. "The effect of collective bargaining on salaries in higher education," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 42(3), pages 443-455, April.
  3. Woodbury, Stephen A, 1983. "Substitution between Wage and Nonwage Benefits," American Economic Review, American Economic Association, vol. 73(1), pages 166-82, March.
  4. Robert J. Barro & Chaipat Sahasakul, 1983. "Measuring the Average Marginal Tax Rate from the Individual Income Tax," NBER Working Papers 1060, National Bureau of Economic Research, Inc.
  5. Richard B. Freeman, 1978. "Should We Organize? Effects of Faculty Unionism on Academic Compensation," NBER Working Papers 0301, National Bureau of Economic Research, Inc.
  6. Olivia S. Mitchell & Emily S. Andrews, 1981. "Scale economies in private multi-employer pension systems," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 34(4), pages 522-530, July.
  7. Long, James E & Scott, Frank A, 1982. "The Income Tax and Nonwage Compensation," The Review of Economics and Statistics, MIT Press, vol. 64(2), pages 211-19, May.
  8. Charles T. Clotfelter, 1985. "Federal Tax Policy and Charitable Giving," NBER Books, National Bureau of Economic Research, Inc, number clot85-1, July.
  9. Edward C. Kokkelenberg & Donna R. Sockell, 1985. "Union membership in the United States, 1973รป1981," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 38(4), pages 497-543, July.
  10. Clotfelter, Charles T., 1985. "Federal Tax Policy and Charitable Giving," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226110486, March.
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