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Estimating Labor Supply Responses Using Tax Reforms

Richard Blundell, Alan Duncan and Costas Meghir
Econometrica
Vol. 66, No. 4 (Jul., 1998), pp. 827-861
Published by: The Econometric Society
DOI: 10.2307/2999575
Stable URL: http://www.jstor.org/stable/2999575
Page Count: 35
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Estimating Labor Supply Responses Using Tax Reforms
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Abstract

The 1980's tax reforms and the changing dispersion of wages offer one of the best opportunities yet to estimate labor supply effects. Nevertheless, changing sample composition, aggregate shocks, the changing composition of the tax paying population, and discontinuities in the tax system create serious identification and estimation problems. We develop grouping estimators that address these issues. Our results reveal positive and moderately sized wage elasticities. We also find negative income effects for women with children.

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