Intertemporal Labor Supply Substitution? Evidence from the Swiss Income Tax Holidays

Isabel Martínez, Emmanuel Saez and Michael Siegenthaler

No 24634, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper estimates intertemporal labor supply responses to two-year long income tax holidays staggered across Swiss cantons. Cantons shifted from an income tax system based on the previous two years' income to a standard annual pay as you earn system, leaving two years of income untaxed. We find significant but quantitatively very small responses of wage earnings with an inter-temporal elasticity of .025 overall. High wage income earners and especially the self-employed display larger responses with elasticities around .1 and .25 respectively, most likely driven by tax avoidance. We find no effects along the extensive margin at all.

JEL-codes: H31 (search for similar items in EconPapers)
Date: 2018-05
New Economics Papers: this item is included in nep-pbe and nep-pub
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Published as Isabel Z. Martínez & Emmanuel Saez & Michael Siegenthaler, 2021. "Intertemporal Labor Supply Substitution? Evidence from the Swiss Income Tax Holidays," American Economic Review, American Economic Association, vol. 111(2), pages 506-546, February.

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Journal Article: Intertemporal Labor Supply Substitution? Evidence from the Swiss Income Tax Holidays (2021)
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