Taxation in Matching Markets

Arnaud Dupuy (), Alfred Galichon (), Sonia Jaffe and Scott Kominers
Additional contact information
Alfred Galichon: New York University

No 13328, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We analyze the effects of taxation in two-sided matching markets where agents have heterogeneous preferences over potential partners. Our model provides a continuous link between models of matching with and without transfers. Taxes generate inefficiency on the allocative margin, by changing who matches with whom. This allocative inefficiency can be non-monotonic, but is weakly increasing in the tax rate under linear taxation if each worker has negative non-pecuniary utility of working. We adapt existing econometric methods for markets without taxes to our setting, and estimate preferences in the college-coach football market. We show through simulations that standard methods inaccurately measure deadweight loss.

Keywords: matching; taxation (search for similar items in EconPapers)
JEL-codes: C78 D3 H2 J3 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2020-06
New Economics Papers: this item is included in nep-cmp, nep-des, nep-lma, nep-mic, nep-ore, nep-pbe, nep-pub and nep-upt
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Citations: View citations in EconPapers (5)

Published - published in: International Economic Review, 2020, 61 (4), 1591-1634

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Related works:
Journal Article: TAXATION IN MATCHING MARKETS (2020)
Working Paper: Taxation in Matching Markets (2020)
Working Paper: Taxation in Matching Markets (2020)
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