Behavioural responses to income taxation in Norway

Michael Graber, Magne Mogstad, Gaute Torsvik and Ola Vestad

No 4/2022, Memorandum from Oslo University, Department of Economics

Abstract: In this report, we combine theory and empirical estimates for how labor earnings respond to changes in tax rates and non-earned income. We use lottery winnings to obtain variation in non-earned income and tax reforms to obtain variation in the net of tax rate. Combining this information with measures of extensive margin responses and the progressivity of the Norwegian income tax schedule, we are able to point identify uncompensated and compensated behavioral responses to income taxes and therefore to calculate efficiency losses and optimal income tax rates (for given welfare weights).

Keywords: income effect; labor supply elasticities; lottery winnings; efficiency loss; optimal income taxation (search for similar items in EconPapers)
JEL-codes: D15 H21 H31 H53 J22 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2022-10-27
New Economics Papers: this item is included in nep-lma, nep-ltv, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:osloec:2022_004

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