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Author: Fatih Guvenen Publisher: DIANE Publishing ISBN: 1437934900 Category : Business & Economics Languages : en Pages : 57
Book Description
Wage inequality has been significantly higher in the U.S. than in continental European countries since the 1970s. This report studies the role of labor income tax policies (LITP) for understanding these facts. Countries with more progressive LITP have significantly lower before-tax wage inequality at different points in time. Progressivity is also negatively correlated with the rise in wage inequality during this period. Wage inequality arises from differences across individuals in their ability to learn new skills as well as from idiosyncratic shocks. Progressive taxation compresses the (after-tax) wage structure, thereby distorting the incentives to accumulate human capital, in turn reducing the cross-sectional dispersion of (before-tax) wages. Illustrations. This is a print-on-demand publication; it is not an original.
Author: Fatih Guvenen Publisher: DIANE Publishing ISBN: 1437934900 Category : Business & Economics Languages : en Pages : 57
Book Description
Wage inequality has been significantly higher in the U.S. than in continental European countries since the 1970s. This report studies the role of labor income tax policies (LITP) for understanding these facts. Countries with more progressive LITP have significantly lower before-tax wage inequality at different points in time. Progressivity is also negatively correlated with the rise in wage inequality during this period. Wage inequality arises from differences across individuals in their ability to learn new skills as well as from idiosyncratic shocks. Progressive taxation compresses the (after-tax) wage structure, thereby distorting the incentives to accumulate human capital, in turn reducing the cross-sectional dispersion of (before-tax) wages. Illustrations. This is a print-on-demand publication; it is not an original.
Author: Fatih Guvenen Publisher: ISBN: Category : Income distribution Languages : en Pages : 57
Book Description
Wage inequality has been significantly higher in the United States than in continental European countries (CEU) since the 1970s. Moreover, this inequality gap has further widened during this period as the US has experienced a large increase in wage inequality, whereas the CEU has seen only modest changes. This paper studies the role of labor income tax policies for understanding these facts. We begin by documenting two new empirical facts that link these inequality differences to tax policies. First, we show that countries with more progressive labor income tax schedules have significantly lower before-tax wage inequality at different points in time. Second, progressivity is also negatively correlated with the rise in wage inequality during this period. We then construct a life cycle model in which individuals decide each period whether to go to school, work, or be unemployed. Individuals can accumulate skills either in school or while working. Wage inequality arises from differences across individuals in their ability to learn new skills as well as from idiosyncratic shocks. Progressive taxation compresses the (after-tax) wage structure, thereby distorting the incentives to accumulate human capital, in turn reducing the cross-sectional dispersion of (before-tax) wages. We find that these policies can account for half of the difference between the US and the CEU in overall wage inequality and 76% of the difference in inequality at the upper end (log 90-50 differential). When this economy experiences skill-biased technological change, progressivity also dampens the rise in wage dispersion over time. The model explains 41% of the difference in the total rise in inequality and 58% of the difference at the upper end.
Author: Fatih Guvenen Publisher: ISBN: 9781457845758 Category : Business & Economics Languages : en Pages : 57
Book Description
Wage inequality has been significantly higher in the U.S. than in continental European countries (CEU) since the 1970s. Moreover, this inequality gap has further widened as the U.S. has experienced a large increase in wage inequality, whereas the CEU has seen only modest changes. This paper studies the role of labor income tax policies for understanding these facts, focusing on male workers. The authors construct a life cycle model in which individuals decide each period whether to go to school, work, or stay non-employed. Individuals can accumulate skills either in school or while working. Wage inequality arises from differences across individuals in their ability to learn new skills as well as from idiosyncratic shocks. Countries with more progressive labor income tax schedules are shown to have (1) significantly lower before-tax wage inequality at different points in time and (2) experienced a smaller rise in wage inequality since the early 1980s. In a comparison between the U.S. and Germany, the combination of skill-biased technical change and changing progressivity of tax schedules explains all the difference between the evolution of inequality in these two countries since the early 1980s. Figures and tables. This is a print on demand report.
Author: Patricia Apps Publisher: CUP Archive ISBN: 9780521234375 Category : Business & Economics Languages : en Pages : 152
Book Description
The author presents a theory of institutional inequality in which, in analysing taxation she shows that tax incidence depends upon the causes of inequality.
Author: Zuliu Hu Publisher: International Monetary Fund ISBN: 1451947429 Category : Business & Economics Languages : en Pages : 22
Book Description
What are the effects of taxation on individual/entrepreneurs’ risk-taking behavior? This paper re-examines this old question in a continuous time life-cycle model. We demonstrate that the stream of uncertain income from human capital has systematic effects on demand for the risky physical capital asset. If labor supply is inelastic and real wages are known with certainty, then a labor income tax will reduce holdings of the risky physical asset. However, if there are random fluctuations in labor income, then the effect depends on the nature of interaction between wage risk and investment income risk. A labor income tax may actually raise demand for the risky capital asset if human capital risk and physical capital risk are positively correlated. The idiosyncratic risk and nontradability of human capital also have implications for optimal taxation. When the insurance and disincentive effects are jointly taken into account, a Pareto efficient tax structure implies a strictly positive tax rate.
Author: Thomas Piketty Publisher: Harvard University Press ISBN: 0674915585 Category : Business & Economics Languages : en Pages : 153
Book Description
Thomas Piketty—whose Capital in the Twenty-First Century pushed inequality to the forefront of public debate—wrote The Economics of Inequality as an introduction to the conceptual and factual background necessary for interpreting changes in economic inequality over time. This concise text has established itself as an indispensable guide for students and general readers in France, where it has been regularly updated and revised. Translated by Arthur Goldhammer, The Economics of Inequality now appears in English for the first time. Piketty begins by explaining how inequality evolves and how economists measure it. In subsequent chapters, he explores variances in income and ownership of capital and the variety of policies used to reduce these gaps. Along the way, with characteristic clarity and precision, he introduces key ideas about the relationship between labor and capital, the effects of different systems of taxation, the distinction between “historical” and “political” time, the impact of education and technological change, the nature of capital markets, the role of unions, and apparent tensions between the pursuit of efficiency and the pursuit of fairness. Succinct, accessible, and authoritative, this is the ideal place to start for those who want to understand the fundamental issues at the heart of one of the most pressing concerns in contemporary economics and politics.
Author: Nouriel Roubini Publisher: ISBN: Category : Capital levy Languages : en Pages : 48
Book Description
This paper examines the effects of taxation of human capital, physical capital and foreign assets in a multi-sector model of endogenous growth. It is shown that in general the growth rate is reduced by taxes on capital and labor (human capital) income. When the government faces no borrowing constraints and is able to commit to a given set of present and future taxes, it is shown that the optimal tax plan involves high taxation of both capital and labor in the short run. This allows the government to accumulate sufficient assets to finance spending without any recourse to distortionary taxation in the long run. When restrictions to government borrowing and lending are imposed, the model implies that human and physical capital should be taxed similarly.
Author: James Joseph Heckman Publisher: ISBN: Category : Education Languages : en Pages : 11
Book Description
Missing from recent discussions of tax reform is any systematic analysis of the effects of various tax proposals on skill formation. This gap in the literature in empirical public finance is due to the absence of any empirically based general equilibrium models with both human capital formation and physical capital formation that are consistent with observations on modern labor markets. This paper is a progress report on our ongoing research on formulating and estimating dynamic general equilibrium models with endogenous heterogeneous human capital accumulation. Our model explains many features of rising wage inequality in the U.S. economy (James Heckman, Lance Lochner and Christopher Taber, 1998). In this paper, we use our model to study the impacts on skill formation of proposals to switch from progressive taxes to flat income and consumption taxes. For the sake of brevity, we focus on steady states in this paper, although we study both transitions and steady states in our research
Author: International Monetary Fund Publisher: International Monetary Fund ISBN: 1451921330 Category : Business & Economics Languages : en Pages : 40
Book Description
This paper analyses the impact of government tax and subsidy policy on immigration of human capital and the effect of such immigration on growth and incomes. In the context of a two-country endogenous growth model with heterogeneous agents and human capital accumulation, we argue that human capital flight or “brain drain” arising out of wage differentials, say because of differences in income tax rates or technology, can bring about a reduction in the steady state growth rate of the country of emigration. Additionally, permanent difference in the growth rates as well as incomes between the two countries can occur making convergence unlikely. While in a closed economy, tax-financed increases in subsidy to education can have a positive effect on growth, such a policy can have a negative effect on growth when human capital flight is taking place. Since subsidizing higher education is more likely to induce substantial brain drain, it is likely to be inferior to subsidy to lower levels of education if growth is to be increased.
Author: Fatih Guvenen
Author: Fatih Guvenen
Author: Fatih Guvenen
Author: Fatih Guvenen
Author: Patricia Apps
Author: Jonathan Eaton
Author: Zuliu Hu
Author: Thomas Piketty
Author: Nouriel Roubini
Author: James Joseph Heckman
Author: International Monetary Fund