Bunching and Adjustment Costs: Evidence from Cypriot Tax Reforms q

• 成果类型: Article
• 署名作者: Mavrokonstantis, Panos; Seibold, Arthur
• 署名单位: University of Mannheim
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2022.104727
• 发表日期: 2022
• 关键词: income tax; Bunching; Kinks; optimization frictions

摘要

We study adjustment costs in behavioral responses to income taxation, exploiting tax reforms that create and subsequently eliminate income tax kinks in Cyprus. Reduced-form evidence reveals substantial adjustment frictions attenuating bunching and de-bunching responses. Combining the empirical bunch-ing moments with a structural model of frictional earnings supply, adjustment costs are estimated between EUR 93 and EUR 238 for wage earners. Moreover, we uncover important asymmetries in adjust-ment frictions, where bunching at a kink is costlier than de-bunching away from the kink. Finally, we find that self-employed individuals face considerably lower adjustment costs than wage earners.(c) 2022 Elsevier B.V. All rights reserved.