Micro versus Macro Labor Supply Elasticities: The Role of Dynamic Returns to Effort

• 成果类型: Article
• 署名作者: Kleyen, Henrik; Kreiner, Claus; Larsen, Kristian; Sogaard, Jakob
• 署名单位: Princeton University; National Bureau of Economic Research; Centre for Economic Policy Research - UK; Leibniz Association; Ifo Institut; University of Copenhagen
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20240554
• 发表日期: 2025
• 页码: 2849-2890
• 关键词: Optimal income taxation; optimization frictions; taxable income; earnings; workers; uncover; taxes; COSTS

摘要

We investigate long-run earnings responses to taxes in the presence of dynamic returns to effort. First, we develop a theoretical model of earnings determination with dynamic returns to effort. In this model, earnings responses are delayed and mediated by job switches. Second, using administrative data from Denmark, we verify our model's predictions about earnings and hours-worked patterns over the life cycle. Third, we provide a quasi-experimental analysis of long-run earnings elasticities. Informed by our model, the empirical strategy exploits variation among job switchers. We find that the long-run elasticity is around 0.5, considerably larger than the short-run elasticity of roughly 0.2. (JEL D31, H24, H31, J22, J31, J62)