Public Economics Lectures Part 1: Introduction

Bianchi, Gudmundsson, and Zoega 2001
Large, salient change: ∆ log(1 − MTR) ≈ 43%, much bigger than
most studies
Note that elasticities reported in paper are w.r.t. average tax rates:
ε L,T /E = ∑(L 87 − L A )/L A
∑ T 86 /E 86
ε E ,T /E = ∑(E 87 − E A )/E A
∑ T 86 /E 86
Estimates imply hours elasticity w.r.t. marginal tax rate of roughly
0.29
Is this a Frisch or Hicksian elasticity?
Public Economics Lectures ()Part 5: Income Taxation and Labor Supply 103 / 217