The Speed of Earnings Responses to Taxation and the Role of Firm Labor Demand

• 成果类型: Article
• 署名作者: Gudgeon, Matthew; Trenkle, Simon
• 署名单位: Tufts University; IZA Institute Labor Economics
• 刊物名称: JOURNAL OF LABOR ECONOMICS
• ISSN/ISSBN: 0734-306X
• DOI: 10.1086/723831
• 发表日期: 2024
• 页码: 793-835
• 关键词: adjustment costs; optimization frictions; elasticities; EMPLOYMENT; income; unemployment; insurance; impacts; uncover; micro

摘要

This paper studies the speed at which workers' pretax earnings respond to tax changes along the intensive margin. We do so in the context of Germany, where a large notch in the tax schedule induces sharp bunching in the earnings distribution. We analyze earnings responses to two policy reforms that shift this notch outward and find clear evidence that frictions delay the earnings responses of more than 38% of workers. We propose that heterogeneity in firm labor demand plays a key role in generating the observed differences in the speed of workers' earnings responses and provide supporting evidence.